
Yahoo’s Brain Drain Shows a Loss of Faith Inside the Company - scottfr
http://www.nytimes.com/2016/01/11/technology/yahoos-brain-drain-shows-a-loss-of-faith-inside-the-company.html?
======
tyre
By the time the NYTimes runs this story, it's already over.

Internally, employees know well in advance when a company is headed downhill.
When I was at LivingSocial, the best employees left at what appeared
(externally) to be the peak of the company.

The trend was already apparent. Once you get to layoffs and press stories,
your best employees have already gone. Two sayings that apply here:

1) If you're not growing, you're dying 2) People don't leave companies, they
leave managers

Retention is all about opportunity: personal and organizational. A talented
employee with many other opportunities must believe that those above them are
beyond competent (providing room for personal growth) and that the company is
trending in a direction to make vast organizational change. People, especially
top talent, want to be a part of something larger than themselves.

When Marissa Mayer started, that bought Yahoo time. They had the appearance of
organizational change. Once that honeymoon period ended, however, there isn't
much to hold a great employee to Yahoo. At this point, if the best people are
leaving, how do you recruit other A+ players? You can't.

People are the core of a company and Yahoo is many years down the line of
rotting from the inside out.

~~~
numair
> 2) People don't leave companies, they leave managers

I would love to hear others' thoughts on this statement. It sounds good, but
is it real? Would you stay at a company in whose purpose you don't believe, if
you liked your manager?

~~~
darkandbrooding
Would you _join_ a company in whose purpose you don't believe?

I find it rare for people to take an opportunity with a company they don't
feel good about, regardless of how much they might like the interviewing
manager. IMO those who do accept such an offer are just resume surfing, and
weren't going to stick around regardless.

~~~
branchless
Millions of people are in this bucket - they are doing it to pay the rent.

------
swingbridge
Just scanning across headlines of the last few days:

\- San Francisco commercial real estate at record highs, passing NYC in price
per square foot (which last happened just before things imploded last time
around)

\- Multiple SF area tech companies running rounds of layoffs

\- VC funding took a nose dive last quarter

\- Quite a few unicorns or near unicorns having their valuation tank post-IPO,
having a difficult fundraising round or seeing their valuations slashed on
private markets

One can debate if the Valley is in a full blown bubble, but seems increasingly
obvious at a minimum there's a significant cooling off on the horizon.

~~~
w1ntermute
I think we can all agree that this year is going to be pretty ugly, both in
the tech industry and the broader economy. With the Fed planning to hike
interest rates repeatedly, the Chinese economy in a tailspin, and the VC
bubble rapidly deflating, there seems to be little doubt that winter is
coming. And it's not all the VCs and other pundits on Twitter saying
everything's going to be OK that are going to suffer as a result.

None of the problems that we caught just a glimpse of during the financial
crisis were really fixed - they were just patched over with some spit and duct
tape. The interest on that technical debt will have to be paid sooner or
later.

~~~
fratlas
Do you think this will seriously affect job opportunities for devs? I'm an
almost-grad who switched from electrical engineering because the jobs were
abysmal, and the bad luck seems to be following me :-)

~~~
tsunamifury
Don't worry about it or listen to the HN doom-sayers, they like to exaggerate
and self-aggrandize. Broadly -- software, the web, social products,
automation, or advertising aren't going anywhere in the next two years. These
are all driven by development and require developers. High competition markets
might slow leading to not getting a massive out of school offer. But you'll
get offers if you're looking.

Honestly you're better off starting your career at a middle point or low point
in the market rather than a high point. You'll be better calibrated for the
ups and downs and you are far more resilient and flexible.

I graduated in 2009, when there were no jobs and it was awful. I slowly
climbed my way to Google and on into an exciting future.

~~~
pfarnsworth
You really have no idea. 2009 was mild for SV.

The dotcom bust per-capita was worse than the autoindustry layoffs in the 80s.
I lived through it. It was very hard, and some people I know were out of jobs
for 2 years. Our company had half a dozen layoffs in 12 months and we shrank
by 50%. If 2016 is half of what 2001 was, then most new grads won't get jobs.

~~~
tsunamifury
No I do have an idea, and I think you'd be better off not making silly
assumptions. I was unemployed and living in my car for 18 months in SV,
because I wasn't yet tech-trained in 2009. If you were an engineer casting
your cold eye on the world, I'm sure you turned your nose up at the millions
of us who were't in tech then. Or maybe we just didn't count us as real
people.

~~~
pfarnsworth
Your past experiences are truly irrelevant to the point you made and what I
was responding to. And your ad hominem attacks are misplaced as well.

You have admitted you didn't go through the 2001 bust, so you, by definition,
have no idea what it was like. Dismissing talk of 2016 being a bad year as
doom-saying, exaggerating or self-aggrandizing clearly shows you have no idea
how bad it can get for the industry as a whole. I don't care if you were
unemployed and living in a car for 18 months in 2009/2010, because it's
irrelevant to the point. There are plenty of people unemployed and living in
cars even during the dotcom boom. But 2009/2010 weren't anything compared to
the depths of the dotcom bust.

~~~
dang
The user you're replying to was too aggressive in their comment, but you're
doing that as well. Please just be nice when commenting here.

~~~
pfarnsworth
No, I wasn't too aggressive at all. I used very unaggressive words, on purpose
in fact. What's worse than two people disagreeing is some nanny police or
censorship mod who is overly policing every single word used. Please don't
turn HN into that kind of forum.

~~~
dang
It sounds like I misread you.

------
Animats
" _Last March, Ms. Mayer told the staff at an all-hands meeting that the
bloodletting was finally over. Shortly thereafter, she changed her mind and
demanded more cuts._ " Of course there's a loss of faith in the CEO.

That's been a continuing problem with Meyer. She said Yahoo was getting back
into search. (Yahoo resells Bing; Yahoo hasn't had its own search engine since
2008 or so.) That didn't happen. She said Yahoo was going into video. That was
canceled. There were a bunch of acquisitions, many of which just disappeared.
Nobody can figure out what Yahoo is really for any more.

The company minus Alibaba has negative market value. It's that bad.

~~~
cscurmudgeon
> The company minus Alibaba has negative market value. It's that bad.

Umm no. The stock has tax implications priced in.

YAHOO STOCK = ALIBABA + YAHOO + YAHOO_JAPAN - TAX_FOR_ALIBABA

All the breathless press about Yahoo core being zero works only if set
TAX_FOR_ALIBABA = 0.

No way a company making billions of dollars can logically have negative market
value.

~~~
e15ctr0n
From yesterday's article 'How to Value Yahoo’s Core Business'
[http://www.nytimes.com/2015/12/10/business/dealbook/how-
to-v...](http://www.nytimes.com/2015/12/10/business/dealbook/how-to-value-
yahoos-core-business.html)

 _With Yahoo exploring a separation of its core business, the world may soon
know what the company — minus its lucrative stake in Alibaba — is worth.

As of Wednesday, that figure is a negative (yes, negative) $13 billion.

How can a company that has $4.5 billion in revenue and one billion users be
worth less than zero?

Let’s walk through the numbers.

The value of Yahoo’s stake in Alibaba is $32.5 billion and its stake in Yahoo
Japan is $8.6 billion. The company’s net cash — or cash minus debt — is $4.2
billion. All told, that is $45.3 billion.

But stock market investors are assigning a valuation of $32.5 billion, based
on Wednesday’s trading. The news that Yahoo was halting a spinoff of its stake
in Alibaba, the Chinese e-commerce giant, choosing instead to explore a
spinoff of Yahoo’s core Internet operations plus its stake in Yahoo Japan,
sent shares lower, widening that gap.

On average, analysts value Yahoo’s core based on five times projected Ebitda –
some a little higher, some a little lower. That yields a market capitalization
of $4.6 billion if Yahoo were an independent company. Tack on the 35 percent
stake in Yahoo Japan, worth about $8.6 billion, and you’ve got a $13.2 billion
business that could be spun out.

If the transaction ultimately is taxed, the bill would be a lot smaller for
the Yahoo core plus Yahoo Japan entity than the original plan to spin off its
Alibaba stake. Assuming a 41 percent tax rate, as CRT did in Wednesday’s note,
Yahoo would pay $5.4 billion in taxes, versus $13.3 billion in taxes if it
spun out Alibaba – potential savings that amount to $8 billion. That’s an
extra dollar back for each share outstanding. Yet, interestingly, the stock
lost 45 cents a share Wednesday._

~~~
cscurmudgeon
Yeah. NYT is not exactly intelligent when it comes to finance or anything
technical. Not one mention of the mess that is happening in China moving
prices up and down.

> Yahoo shares rise as board meets and considers sale of Web business

[http://www.reuters.com/article/us-yahoo-divestiture-
shares-i...](http://www.reuters.com/article/us-yahoo-divestiture-shares-
idUSKBN0TL1OG20151203)

The popular press makes it own narrative which may or may not be true.

If you want intelligent reporting in finance, stick to WSJ.

------
throwaway_exer
Having worked at Yahoo a few times ...

The press usually reports senior executives leaving as constituting a "brain
drain." But if even the CEO's are worthless, as the last 5 have been, how can
the senior executives be expected to have any brains?

The real Yahoo brain drain is the loss of experienced engineers. And since
option blocks are no longer offered to engineers, nobody with any experience
is going to join.

The only people left are long-time employees with old option grants, recent
grads who got rejected from Facebook, and H1B's by the thousands.

~~~
x1024
Implying that H1Bs are less talented than american workers. Russia and China
say "hi, lol, ignore us at own peril"

~~~
DrScump
That's not what was written. If that's your connotation, that reflects on you,
not him/her.

Throwaway_exer listed 3 categories of workers who _don 't have the same
freedom to choose to jump_ as other workers and said nothing about their
comparative talent.

~~~
x1024
Thank you. I did, in fact, misunderstand.

------
stygiansonic
One quote in particular sticks out for me:

" _Others said they were actively looking for their next jobs — a task made
more difficult because of the taint of failure that potential employers
sometimes associate with anyone at the struggling company._ "

For those with experience hiring, do you find this to be generally true? Would
it really count as a black mark to have worked at a "failing" or "struggling"
company, independent of your own experience/skills/accomplishments or would it
really depend on the situation/candidate? I realize this isn't a black/white
question and is likely more of a gray area.

~~~
nzoschke
Not true in my hiring experience.

A good hiring manager is trying earnestly to see how the candidate's skills
fit into the job req, and how the personality fits into the team.

The name of the company you worked for last is not really that important.
There are talented folks on the market right out of school, from failed
startups, and leaving boring or stagnant companies.

I do suppose that experience at some companies, like AWS or Google, is a real
bonus.

But you need to be careful of this too. Experience at Google doesn't mean the
engineer learned all the best practices and isn't a jerk.

~~~
hitekker
While that isn't true in my hiring experience as well, it's very true that, in
general, people will trip over themselves for a chance to anonymously pass
negative "honest" judgement on others. Especially if the person passing
judgement has a position of prestige or power, i.e. it's a hiring manager in a
company that just IPO'd.

Another way of saying this is that any potentially negative detail on a resume
will be invariably perceived as negative by someone. Not because it's right
but because people are people.

------
jroseattle
I was at AOL years ago when Starboard started a proxy fight with Tim
Armstrong. They were "activists", which is to say they were looking for public
support to break up and sell the company. Armstrong took them on and brought
his own public offensive, explaining why the AOL long-term strategy was better
than the short-term breakup that Starboard was touting. Armstrong prevailed in
his quest and eventually Starboard bowed out, eventually selling a chunk of
their position in the company.

Two years later, AOL was bought by Verizon.

Armstrong was a relatively strong leader in that situation. He was a salesman
at heart and knew he needed to reinforce his strategies (however non-plausible
those might have been) with the company, the Board, the shareholders and AOL
customers.

Mayer looks like none of that to me, and remarkably tone deaf against
Starboard. Sorry to those Yahoos still hanging on, but Starboard are simply
vultures for distressed companies. Not sure how long it will last, but the
chances of an independent Yahoo being open for business in 3 years is really
low.

------
msoad
When your average CEO makes 200~300x more money than you, why should you be
faithful? When you end up paying for executives screw ups and your salary is
the first "cost" to cut of, why should one be faithful to Corporate America?

~~~
phamilton
Why should you be faithful in any situation? The answer's the same: they pay
sufficient amounts of money to compensate for the stress and effort.

~~~
Raptor22
Define sufficient.

~~~
prawn
Surely it goes without saying that "sufficient" in that case is defined by
each employee?

~~~
phamilton
And confirmed by the fact that they show up to work.

------
watmough
My own impression of Yahoo from years back is that if something as critical as
the YUI toolkit sucked, which it did, then Yahoo had limited prospects.

Perhaps an odd thing to base an opinion on, but compare stock charts on Google
versus stock charts on Yahoo. The Yahoo ones were clunky and sucked.

Compare Yahoo Mail with GMail, and Yahoo sucked in comparison, being riddled
with giant ad-banners.

Even now, Yahoo search results suck, which is really noticeable when FireFox
periodically resets my search engine to Yahoo. Suddenly my results suck, and
back to Google I go.

I don't know what Marissa Meyer has been doing, because it doesn't seem to be
apparent in Yahoo getting better at anything really.

~~~
drcode
What's funny is I just bought Netflix stock solely because I saw how awesome
their Falcor toolkit is.

------
rrrrtttt
In my small corner of numerical computing, pretty much every name I know on
the east coast who doesn't hold a university position has moved to Yahoo
Research in recent years. So at least their research lab does not seem to
experience a brain drain.

~~~
chubot
Oh really, what field / subfield are you in? Do they have an east coast
research lab or are the people you know moving to the west coast?

They had a huge brain drain of their research lab like 4 years ago after some
past company turmoil. Andrei Broder and dozens of other researchers left.

They might be building it up again, but I feel it's unfortunate for those
being hired, because research is usually one of the first things to get cut
when a company is in financial difficulty. Research is long term, and Yahoo
doesn't appear to have a long term plan unfortunately.

------
rudedogg
Douglas Crockford (author of "Javascript: The Good Parts") shares some
thoughts on Yahoo, and what he would do if he were CEO:

[https://www.youtube.com/watch?v=8HzclYKz4yQ](https://www.youtube.com/watch?v=8HzclYKz4yQ)

~~~
Andrex
Thanks for this link! Haven't watched a good Crockford talk in a while.

------
musesum
I wonder if ordering workers back to office had a long term effect on moral?
[http://www.nytimes.com/2013/02/26/technology/yahoo-orders-
ho...](http://www.nytimes.com/2013/02/26/technology/yahoo-orders-home-workers-
back-to-the-office.html?pagewanted=all&_r=1)

~~~
joeax
Absolutely. If I were working there when this happened I would have started
looking.

------
dawnbreez
Why do so many execs rely on cutting jobs indiscriminately? They don't know
who the problem workers are.

~~~
kasey_junk
Because there is a lot of evidence that most employees are essentially
fungible, at least at the scale of these large companies.

I've literally been in a meeting where 1 team that was twice as productive as
another was cut because that wasn't enough to make up for the fixed cost
differential (rent, benefits, regulatory costs etc).

~~~
bad_user
> _there is a lot of evidence that most employees are essentially fungible_

In software development I don't believe it. This smells like wishful thinking
from management for which non-fungible employees are a problem. I'd like to
see the evidence you're talking about.

~~~
phamilton
There are many companies that openly hire for middle of the road developers.
It's easy to do, just pay middle of the road salaries.

In my experience at these companies, there is sufficient bureaucracy that high
performers hit bottlenecks due to the org structure, reducing everyone down to
the lowest common denominator anyway. So even an otherwise talented dev can be
replaced by a less talented one.

------
csvan
When I was in high school (2005-ish), Yahoo mails were everywhere, most of my
friends used AIM, etc. I haven't used either for long now, but it's sad to see
the company dying all the same.

------
jlebar
I wonder what all this means for Mozilla, who tied their fate to Yahoo...

~~~
chc
How did they tie their fate to Yahoo? I thought allowing Yahoo to buy the
default search engine spot in Firefox was as far as the relationship between
the two went.

------
akhilcacharya
My question is where these Yahoo employees are leaving to (outside of Facebook
and Salesforce).

------
wslh
Can someone explain how Yahoo P/E is still high at ~121 ?

~~~
malz
Because Qtrly Earnings Growth (yoy): -98.90%

------
CrowFly
There's a loss of faith outside the Company, too. I can't imagine anyone
becoming an employee of Yahoo today.

