News Column

Lack of Corporate Focus Leaves Yahoos in Limbo

Sept. 21, 2011

Patrick May

yahoo inc, corporate culture

Yahoo (YHOO) has always worn its jovial corporate color on its sleeve. There were purple ad campaigns, purple bicycles to create buzz and co-founder Jerry Yang's pledge to always "bleed purple."

Lately, though, what a lot of employees at the Sunnyvale Internet giant are feeling is blue.

"I get recruiters calling me saying, 'Do you know anyone at Yahoo you'd like to save?' " said one former online-ad executive who left the company a few months back. "They call it 'the purple Titanic.'"

With the soap opera surrounding last week's public beheading of controversial CEO Carol Bartz -- the famously potty-mouthed exec called her board "doofuses" after they fired her -- the curtain was pulled back on a company that some former and current staffers describe as adrift. Revenues are falling. Good ideas die on the vine. And while younger Turks like Google (GOOG) and Facebook look finely tuned and sharply focused, Silicon Valley's content-driven trailblazer now seems lost in the fog.

"Compared with Google, whose business units are more independent and act like startups, we're an older tech company, and a lot of people who've been here a long time got set in their ways," said Kenny Liao, a 28-year-old who left Yahoo earlier this month after four years in corporate strategy. "New ideas require too much buy-in from everyone. Managers have their numbers to hit, and if they see something new coming up that might hurt their area, they tend to get territorial and play it safe."

'Yahoo culture' at fault

While Bartz, who took over in 2009, has been criticized for alienating employees with her brash style and her failure to articulate a clear corporate vision, Liao says the fault lies with "the whole Yahoo culture, not just Carol. For the company as a whole it's been hard to get things done."

Founded in 1994 by Stanford University graduate students Yang and David Filo, Yahoo achieved brand-name bragging rights in the earliest days of the Internet. Riding its wildly popular finance, news and sports properties to become an online powerhouse, the website continues to draw millions of dedicated fans, kicking out steady if flat revenue.

Yet after surviving the dot-com bust, Yahoo has floundered in recent years. The Great Recession battered its customer base and spawned a dizzying barrage of layoffs and staff shake-ups.

"Everyone at Yahoo these days is suffering from re-org fatigue," said one woman who has been working at Yahoo for the past five years. "It's distracting, and it's demoralizing."

While investors grew frustrated, keeping Yahoo's stock price essentially flat the past three years, the company struggled to use its content, search and social networking tools to monetize its still-impressive online traffic. Although Bartz was unable to rally the troops as hoped, some former employees say the early magic that Yang and Filo infused was already dissipating long before the new CEO arrived.

When Yahoo's former creative director Cynthia Maller joined the company in 1999, the Internet seemed full of promise, and Yahoos, as the employees would call themselves, were encouraged to dream big.

"In the early days, we all loved the brand and felt very loyal to Jerry and David," said Maller, who left the company in 2006.

Maller said that when she first came to work at Yahoo, "It was a place where you could invent things and never worry about making mistakes. Nobody was afraid of losing their jobs, and you had these incredibly brilliant engineers and ad-sales guys."

After the dot-com bust, "A lot of those people left, the economy took a downturn, and the fear set in," she said. "And I think that's one of the reasons Yahoo never lived up to its potential. The consensus culture took over, and people got scared."

Bartz, a former Autodesk CEO credited with turning that company around, was known more as a cost-cutter than a visionary. Her software background quickly raised concerns over how well she'd handle the reins at a media-focused Internet company. One longtime Yahoo advertising executive who left the company in 2008 said Bartz was just the sort of tough leader the company desperately needed at the time.

"The company lacked direction and focus, not just at the vision level but even at the day-to-day level," said the executive, who like other alumni asked that he not be identified because his new company works with his old one. "The expectation for Carol was to solve the short-term challenges, and she did a solid job of it, but Yahoo still lacks that long-term vision.

"I think Yahoo tried to do too many things and that resulted overall in none of them doing that well," he said. "Instead of being great at one or two things, they were mediocre at many."

'Execution is problem'

With Bartz gone and Chief Financial Officer Tim Morse filling in for now, speculation is rampant over whether Yahoo will put itself up for sale, break up into pieces or somehow figure out a clear path forward. Many who have worked there in better times fear it'll be an uphill battle.

"Yahoo has a ton of great and innovative ideas, but the execution is the problem," said one former executive. "Getting cross-functional teams to work alongside one another is a challenge for any company, but it seems to be even more inhibiting for Yahoo."

Another one-time manager said Yahoo shares a similar fate with other Silicon Valley companies that have been passed over at the ball. "That's the nature of technology," he said. "Just like RIM (Research In Motion) and others, you can be the darling until someone prettier comes along.

"That's both the beautiful and the brutal side of tech," he said. "Once that 'it factor' is lost, it's hard to get it back."

Contact Patrick May at 408-920-5689; follow him at patmaymerc on Twitter.


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Source: (c) 2011 the San Jose Mercury News (San Jose, Calif.)


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