Yahoo's Yang: When Love Is Not Enough

by: Sam Gustin November 18, 2008 | about stocks: YHOO    

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Sam Gustin writes: During Jerry Yang's 18-month tenure as chief executive of Yahoo (YHOO), no one ever doubted his love for the company. "All of you know that I have always, and will always bleed purple," Yang wrote in a letter to employees Monday announcing that he will step down.

But in Silicon Valley, as in the rest of corporate America, love is not enough, even coming from the visionary founder of one of the web's most recognizable names. Execution must follow. And that is where Jerry Yang failed.

It's been clear for months that Yang was entirely unsuited to manage the company  he co-founded in 1995. Yang should never have been named C.E.O. He should have remained as Chief Yahoo, the position to which he returns, and left the actual management of the business to someone else who didn't carry the emotional baggage that he brought to the job.

Yang's downfall highlights a fundamental business lesson -- especially true in Silicon Valley -- that Yahoo failed to heed: A visionary founder does not a successful C.E.O. make. Google (GOOG) co-founders Larry Page and Sergey Brin understood that when they brought in Eric Schmidt, a seasoned tech executive, to run their company. Facebook's wunderkind founder Mark Zuckerberg is still trying to achieve that balance with new C.O.O. Sheryl Sandberg.

What Yahoo has needed for the last two years -- and needs now more than ever -- is an experienced manager who will lay out a strategic mission focusing on the company's strengths, while trimming unnecessary assets and resources. Yang was simply too emotionally attached to Yahoo to make the tough decisions in the best interest of the company, until it was too late. Tragically, Yang's loyalty was to the idea of Yahoo, not to the interests of Yahoo's owners, its shareholders.

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This article has 5 comments:

  •  
    Nov 18 03:07 PM
    And worst of all analysts have hammered Yahoo with terrible PR as a result (of Yang's dumb love). Whoever comes in must concentrate on an upturn in the PR department, either do something positive about negotiating with Microsoft or come up with an equally strong good idea that will kill off the Microsoft blabber.
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  •  
    Nov 18 03:50 PM
    I tend to agree with whomever it was who said, on another blog but quoting some market luminary, that what makes great CEOs great is choosing the right company to be CEO of at the right time. There are lots of companies run by experienced, apparently fully capable CEOs that are spinning into the ground. There are lots of CEOs who are "ruthless about cost cutting" and end up with dead companies.

    I agree with Bloggs, too, that a huge part of Yahoo's troubles have nothing to do with its actual capabilities or organization, but are around the market's perceptions.

    I've seen a lot of people say, over the last year, "Why don't Jerry and Sue do something." But nothing that I've seen anyone suggest seemed likely to have a good result for the company (the Microsoft option would have been a nice windfall for some of the shareholders, in the short term, at the expense of giving up any hope of long-term gains). The commenters generally haven't been any better than Yang and Decker at suggesting what actions would make the company better.

    Yang and Decker have, in fact, been doing things that actually have made the company better and offer a certain amount of hope for the future, assuming the market gets back to a state that allows anyone to prosper. We'll see what happens; it's hard to be optimistic at the moment - there are no quick solutions to anything when the economic world is this screwed up.
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  •  
    Nov 18 04:49 PM
    Let's face it boys and girls....Yahoo's goose is cooked. Sure maybe they were a hot ticket 10 years ago when obsolete concepts like web portals were all the rage. But these days the company has no growing revenue streams and in fact is already in serious decline as they are losing ad market share to Google on a daily basis. Couple that with the fact that Yang can't manage his way out of a wet paper bag and voila, you've got yourself the financial disaster known as Yahoo! But if we look on the bright side, pretty soon YHOO will be on sale dirt cheap on the pink sheets along with SIRI. Hell I'll probably even buy a few thousand shares when it gets to $0.25 or so.
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  •  
    Nov 18 06:21 PM
    I'm a yahoo and google user. I'm biased. I strongly believe that if Yahoo were to develop it's own back-end software similar to Google Adsense, they would do quite well on third-party sites. Webmasters that were fortunate enough to live in the United States and be part of the trial run of Yahoo's own publisher network were making a lot more money per click than those that were forced to use google - sometimes five to ten times more money! At one time, almost every webmaster wanted to switch from google adsense to Yahoo's program - but they never fully released the program out of beta and into the international scene. They screwed up. A big chunk of google's revenue comes from other people's content sites, not even from google itself... and Yahoo can break into that arena with the correct platform - which has yet to be fully developed.

    Now Yahoo is lagging, but it can break into that market and directly compete with google for ad space on third party publisher sites.
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  •  
    Nov 19 12:45 AM
    Yahoo is not too late, they have contents and the most stayed place in the internet.

    Make somekinda of adsense that make people able to choose where their ads will be placed easily.. that alone will generate enough money.

    Think about this, 1$/ads/day multiply by people multiply by pages... thats should do it.

    There are tons of ways to make yahoo more profitable, it just needs some creative thoughts and will to do it, something that yahoo lacks right now.


    Mike
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