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Stratagem
 
EXCLUSIVE INTERVIEW
“Yahoo!’s leadership seems to lack patience & vision”
Sascha Segan, Managing Editor – Mobile at The PC Magazine
Issue Date - 02/02/2012
 
B&E: Scott Thompson is the fourth CEO at Yahoo! in five years. Do you think he is better than Carol Bartz or other past CEOs of Yahoo!? Can he turn around Yahoo!?
Sascha Segan (SS): Yahoo!’s board is in a panic mode because it doesn’t see a clear path to success for Yahoo!, and Bartz wasn’t offering a strong narrative strategy for turning the company around. The board isn’t patient right now and Bartz’s cuts didn’t seem to result in an immediate major change. That said, I don’t see why Thompson’s resume is inherently better than Bartz’s here; this seems more about “That wasn’t working, let’s just try someone new!”

B&E: When Bartz was fired in September last year, many people criticised the move as illogical. I mean – under her the company’s shares did improve by up to 7%. Did she deserve the boot so soon?
SS: It’s debatable. Bartz said she had a long-term growth strategy, but obviously the board wasn’t patient enough for that. She definitely tried to pare down and focus things, but that resulted in a lot of short-term staff turnover which negated at least some of the benefits of a more focused approach.

B&E: Thompson has no experience in media and Internet management. He is a fresh candidate to save Yahoo!. What are the first things he must tackle? Also, how much time does he have at hand?
SS: What is Yahoo!? And what is it selling? How is it capitalising on current trends of the Internet behaviour? And why should advertisers and other clients invest with Yahoo! as opposed to the top industry leaders? Any Yahoo! CEO needs to answer those questions simply and definitively. I think the board has made it pretty clear that you need to have an answer to those questions within 24 months. It also sounds like the company is full of confused, conflicting silos which aren’t working together well and aren’t sharing a vision. A good Yahoo! CEO needs to turn his company into a single team.

B&E: Some say that Yahoo! lacks a real “focus” and identity. Do you think so?
SS: Yes, and that’s one of the company’s core problems. Yahoo needs to decide what it is and what its core consumer business is, because as an advertising company, it needs to deliver consumers. Bartz stepped away from providing search and social book-marking and focused more on the “everyone’s home page” approach, but you could argue that the portal idea is pretty 1990s. The company needs to tell a simple, clear story much better, and to establish an enthusiastic, focused team which believes in that story.

B&E: Lack of proper marketing and advertising is also said to be one of the root causes of why Yahoo has not been able to appeal to advertisers. Do you think so?
SS: The lack of identity and lack of marketing go hand in hand. It’s hard to effectively market a company without a clear identity. Even I don’t know what Yahoo’s identity is.

 
B&E: Yahoo! gets 700 million unique visitors every month. Should it not implement a strategy to monetise the traffic?
SS: Obviously. If Yahoo! is an ad-based company, it wants to both monetise and grow that traffic. The first task is for the salespeople to have a clear idea what they’re selling, and enthusiasm for it. They also need to explain why what they’re selling is better than what everyone else is selling.

B&E: Much is known about how Yahoo missed the chance to buy Google and Facebook when these properties were young. Had Yahoo bought them, what would the situation be with Yahoo today?
SS: That’s a question based so far back in the branching paths of time that it’s very hard to say. For instance: if Yahoo! had bought Google, could it have remained the preeminent search engine on the Internet?

B&E: Another mistake Yahoo!’s CEO Jerry Yang made was by saying “no” to Microsoft’s offer of buying Yahoo! for $44.7 billion in 2008. How big a mistake was that?
SS: That was a huge mistake, and such a classic “founder” mistake. Consolidating the best of Microsoft’s properties with the best of Yahoo!’s would have made for a strong web services, and obviously Yahoo!’s investors would have ended up happier.

B&E: Many experts are suggesting that the company should sell off its 45% stake in China’s Alibaba and 35% in Yahoo! Japan. Would this be wise?
SS: Bartz obviously had problems dealing with Yahoo!’s Asian partners. It doesn’t have to be so. “Horizontal content provider to the world” is a great pitch for an ad-based company, and China is a weak spot for competitor Google. But as the new CEO Thompson doesn’t appear to be much of a China hand, and success in China is all about connections, experience and social clout, it might be wiser to take cash now rather than pursue a business you know you’ll fail at.

B&E: Yahoo in 2020 – where do you see the company headed?
SS: I think a Microsoft buy is on the cards. Yahoo! has a lot of great properties, but its leadership seems to have neither patience nor vision, and its team seems confused. A Microsoft merger would end Yahoo as we know it, but the combined properties would be in a stronger position than either company’s elements alone.
          

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