With all the talk of Yahoo and AOL merging in some fashion now that Carol has been fired as CEO of Yahoo, it’s a little hard to imagine that being very successful. While I think she did some things right (notably trying to get rid of businesses that weren’t doing much for the company), I’m not sure she ever got to the essence of the problem at Yahoo.
As a company, Yahoo spent years investing profits from very easy to understand and profitable businesses into things that were risky bets in new areas that could help the company “grow audience” or “deepen engagement” (yes, the MBA types speak like this there). But most of those experiments failed and continued to suck the money away from other more sensible ventures. Many public companies face this problem at some point in the evolution–it’s natural to want to grow.
Worse yet, nobody could seem to articulate what Yahoo really is, especially when they shut down search operations and largely handed the keys to Microsoft, one of the only companies that can afford to try to compete with Google.
Yahoo is a a Web 1.0 attempt to be all things to all people. And it doing so, it seems crippled by its own audience and scale. People are paranoid of changing things for fear of losing a few percent of clicks on their most profitable pages, product evolution be damned! Meanwhile, the Internet has continued to evolve.
There was a point in time when the most sensible thing to do was to take the most successful pieces of Yahoo and spin them off into separate entities that are no longer burdened by needing to follow all the Yahoo rules and having their profits used to prop up other business areas that never really took off.
I’m not sure that’s a viable option anymore, but I suspect it’s worth thinking about. Might Yahoo! News or Yahoo! Finance find that they can really thrive if they suddenly became their own 50-75 person companies? What about Yahoo! Sports and it’s popular fantasy sports leagues? I’m not sure if Shine would make it on its own or not, but why not find out?
Yahoo! Mail is a whole different beast. It’s very capital intensive (not as bad as Search was, but it’s still a beast) and I’m not sure the various redesigns ever helped to raise click through rates the way some spreadsheet jocks thought they would (who really clicks ads in their email client?). Where would it even be today without the AT&T DSL partnership and the various other long-term users picked up out of laziness due to being the default when someone “gets the Internet” in their new house or apartment?
It feels like the more I look at it, the more things haven’t changed a lot in the last 5 or 6 years. Yahoo is a content aggregation and delivery service for the masses. And like the larger publishing and media world, there are a few “verticals” that draw most of the eyeballs and make the bulk of the money. And that really makes you wonder about the costs of having everything else hanging around, needing engineers, and product managers, and designers, and so on.
It’s too bad that Microsoft deal fell through a few years ago. Holding out for $42/share vs. $37 a share (or whatever the real spread was) all seems rather silly and short sighted at this point, doesn’t it?
Can Jerry Yang pull together enough investors to take the company private? Maybe. But can he make the changes that Yahoo really needs to make in order to be a major player 3-5 years down the road? I have no idea.