A Contrarian Take On Marissa Mayer's Future At Yahoo
Hiring Marissa Mayer was a huge statement for Yahoo, but as a wise man told me privately, the company gets no points for simply anointing her. To use a sports analogy, it’s akin to hiring a defensive-oriented coach at a franchise known historically for its offense (or vice versa). The move made headlines, but only results will matter.
In Silicon Valley the move drew applause, but there’s a silent majority who are wondering: “Is Yahoo really ready to pause and reset strategy?” This might be why Mayer’s first memo’s message was “Keep Moving,” realizing that Yahoo “has been through a lot of change in the past few months, leaving many open questions around strategy and how to move forward. I am sensitive to this. While I have some ideas, I need to develop a more informed perspective before making strategy or direction changes.”
Everyone is expecting Yahoo to take a 180-degree turn and move away from being “the premier digital media company” to taking on Google and Facebook head-on through products, innovation and technology. It’s perfectly plausible that Mayer’s pitch to the board was a utopian, bold and ambitious plan to reclaim some of the value created by Google, Facebook (and Twitter) over the past decade at the expense of Yahoo’s market cap. Let’s face it: an outsider (coming from Google, no less) can make that pitch to the board, awhil n incumbent like interim CEO Ross Levinsohn had to (I’m speculating) stick to what he views as the reality on the ground, which is what the New York Time’s David Carr echoed very recently: “In business, people will tell you that everything else is secondary to being first. And Yahoo, despite its tattered reputation, is No. 1 in 10 content categories, according to the measurement service comScore, including news, finance, sports, entertainment and real estate.”
Former Yahoo executive Mike Walrath (who sold RightMedia to Yahoo) was brutally candid when he opined: “I think the idea that Yahoo was ever a ‘truly great technological innovator’ is a myth. Yahoo’s strength has always been its audience and media assets, not its great technology. Their last 2 CEOs have been ‘product leaders’ who could ‘help return the company to its roots of product development and technical innovation.’ It hasn’t worked. The more Yahoo tries to fight Google, Facebook and the like on front lines of product/technology innovation, the more they play into their opponents’ strength, and the further behind they fall. Yahoo has been tilting at windmills trying to fight Google for more than 10 years, and the results are clear.”
In fact, I think it will be easier (but not necessarily successful) for Mayer to take the billions from the proceeds of the Alibaba sale and acquire Yelp (Yahoo Local?), Twitter (Yahoo Social?), Groupon (Yahoo Commerce?) and/or Foursquare (Yahoo Mobile?) than try to build, develop and grow internally (maybe that’s why Twitter and Foursquare investor Fred Wilson recently wrote: “Yahoo Is No Longer Dead To Me”?)
But acquiring those companies is expensive -- and integrating them into Yahoo will be challenging, with no recipe for success. Indeed, Mayer wasn’t only Google employee #20, she was there until recently, seeing Google’s shift toward becoming a media company, acquiring Zagat, funding video content at YouTube, etc. In that vein, in some ways, Google is trying to be more like Yahoo. So why would Yahoo now try to emulate Google?
Enter the Contrarian View
As such, I will take a contrarian view (what else is new?) and suggest that before long, Mayer’s alleged outlook will change from clashing against Facebook and Google via products, innovation and technology to innovating via technology to deliver enhanced content and advertising experiences as personalized products (or something like that). My company provides video content to Yahoo as an official partner, so I will avoid getting too specific, but it’s clear to me where Mayer can help Yahoo in video and where she can’t, where she can help them improve and be successful and where she will fall flat on her face and lose the ground made up by those who have made Yahoo Video successful.
Wanting is one thing, knowing is another
Mayer is no idiot: she left Google for redemption after Google CEO Larry Page excluded her from his inner circle. An unremarkable or unsuccessful Yahoo tenure will only validate Page’s decision; a successful one will vindicate her. But her tenure can only be successful if, and only if, she plays to Yahoo’s strength, which is media and content. Boards and investors sometimes realize that with increased risk comes return, but executives tend to be risk-averse and pragmatic (Mayer’s got all the money she needs, and she wants to win).
As per Levinsohn, the decision to go with Mayer was tough, and given everything he’s done since joining Yahoo, perhaps unfair. But life’s unfair, and it goes on; I’m guessing he’s already being courted by starry-eyed boards elsewhere. As such, life’s good for him, as his stock has soared since replacing his predecessor. He can stay or he can go; either way, he’s a winner.
In an ideal world, Mayer and Levinsohn combine forces and accelerate Yahoo mojo in media by leveraging technology to innovate how consumers engage with content, which would play to both their strengths.