On Sunday, Yahoo!, what was at first a search giant, but now doesn’t seem to know what it is, other than good at covering sports and bringing more content producers to the NFL Draft, lost its sixth CEO since 2001 and just added its seventh: Ross Levinsohn. Here’s the tally: Tim Koogle, Terry Semel, Jerry Yang, Carol Bartz, Tim Morse, Scott Thompson and now Ross Levinsohn.
I’ve watch Yahoo since 2000, and befriending a woman who worked in the marketing department for a company that, even then, was literally too bureaucratically big for its pants at about 3,000 people. Now, Yahoo stands at 12,000 workers as of 2006; an increase of four times what it was at the turn of the century, and it may be even larger than that, since it’s 2012 as of this writing. (UPDATE: by 2008, Yahoo had 15,200 employees)
Now let’s see, Yahoo’s still primarily an Internet-based firm, right? Help me with this. Instagram was recently bought for $1 billion by Facebook. That places Instagram within a – believe it or not – comparative striking distance of Yahoo.
According to an October 2011 NY Times post on Jack Ma, the head of Chinese search company Alibaba, who said he was interested in buying Yahoo, Yahoo is worth $17.1 billion. But get this: Instagram grew to its point of acquisition with just 15 people – that’s it. So what the hell’s Yahoo doing with all of those people? Well, that’s part of Yahoo’s ‘Bureaucratic DNA’ as I call it, and that very Bureaucratic DNA is killing Yahoo’s ability to succeed at something more than sustaining itself.
While Yahoo was “Jerry and David’s Guide to the World Wide Web”, it was, unlike Google, not known for technical innovation, but for buying and partnering with other companies. In 2000, Yahoo leaned on Google to be its search engine, when it could have simply hired other SF Bay Area students who had their own interesting takes on the search engine, and move forward in an entrepreneurial way. But that’s not what Yahoo does. Yahoo is a giant party of people that do things, but they don’t create things that change the World. Yahoo exists because its people are too busy working their titles and playing the corporate bureaucratic game of justifying what they do with creative word play.
That’s the climate that allowed its now former CEO to get that job by fibbing on his resume. And consider what Scott Thompson lied about: he said he had a degree in computer science. Computer science.
In other words, he was trying to do, in an individual way, what Yahoo has been doing for years: fake his way into the new World of nerds and programmers that is far more advanced than the 1990s, when Yahoo! was born, and when many of the executives now fighting for position to control Yahoo were just getting started. Yes, they were in a tech World, then, but not like the one we have today, or even after 2004, when companies like Google came into their own, and YouTube was just getting started. Moreover, at that time, many, many new programming languages came to fore, and helped make more effective Internet applications – all of this tech leaving the 1990s techies in the dust.
What did Yahoo do? Buy and deal its way in, so it could maintain its relevance – that’s what Scott Thompson did. So while it’s no surprise Yahoo hired him, or for that matter his replacement Ross Levinsohn, it’s also no surprise that Yahoo’s not creating anything that’s disruptive.
The problem with Yahoo is it has people creating things, but the company seems afraid to allow what they make to be disruptive. Yahoo is said to fail at Social Media, yet it has millions using Yahoo! Groups. I’ll bet someone at Yahoo has figured out how to update Yahoo! Groups, and I’ll bet that someone’s being routinely ignored. Yahoo has the Yahoo Publishers Network, which, with a little tweaking of it, and the Yahoo Search system, would be excellent to make new content that Yahoo itself could monetize. But that’s not done.
Yahoo has to stop mainly doing deals with companies, get into colleges like Cal and Stanford, find out who’s doing what, and bring them in to remake the company by making cool applications. It’s a known fact that if you want to hit it big in the Internet space, fast, you have to make something that college students think is cool to use – so cool they can’t do without it. So cool, their image is judged by it.
That was Google in 1997.
What I remember about Google was in conversations with friends who were at Stanford, and talking about this, again, cool new search engine that had a different and more effective way of finding what one needed. That goes under the heading of “If I knew then what I know now..” But that’s the point: Yahoo! has to take a new risk, and dive right in to college. It has to go to its existing content makers and programmers and give them a chance to show everyone what their ideas are. Yahoo! needs to have a Pixar-style Friday beer bust – an entire day spent on nothing other than watching presentations of what its people have been creating, and with the employees voting to implement the coolest stuff. If it works, great; if not, next?
Will Yahoo! ever be that way? Right now, with all of these bureaucratic yahoos doing what bureaucratic yahoos do best, fighting for control, the answer is no. (And that includes American hedge fund manager Daniel S. Loeb, who’s a hedge fund manger, not a content creator. Frankly, given two years, I could turn Yahoo around for the better.)
If Yahoo! wants to become a real 21st Century tech firm, it has to make the change I describe to be that company – to be that way. Yahoo’s Bureaucratic DNA must be destroyed.