You don't get paid $360M over 5 years and get to defend yourself from failure. She was paid specifically to fix things, and if she can't do it, she should get 90% of that money clawed back.
That said, I think everyone associated with Yahoo has to come to grips with the fact it will never again reach it's high status as before. It has a lot of money, and it just goes to show you that money won't produce innovation. They need to take that money, break Yahoo up into pieces, sell it, and then whatever money they have they should fund 100,000 startups and see what rises from the ashes.
The only other thing that Yahoo has besides it's pile of money is it's brand name. People know and trust Yahoo. I would probably take that and then expand horizontally, into things like banking, insurance, etc. Really boring things that aren't high growth like Uber, but things everyone needs and might be enticed to join because of the Yahoo name.
Buying things like Tumblr, Polyvore, etc are a waste of time because every startup in the Valley is hoping to score an oversized buyout from Yahoo, and then GTFO once their holding period is over. There is zero incentive to continue innovating after Yahoo touches them, so don't bother buying companies anymore.
They need to take that money, break Yahoo up into pieces, sell it, and then whatever money they have they should fund 100,000 startups and see what rises from the ashes.
We're a little crazy. Think of the families of the people who work at Yahoo.
We're also a little overbearing. Who are we to say what others should do with what they own?
I can't believe how every time this topic comes up, cutting free food for the employees is a talking point. Providing basic necessities (food, transportation, non crowded offices, sick days, etc.) to make sure your employees are happy and productive seems to me like step 0 of any successful business venture. Of course don't serve them caviar and foie gras, but I really don't get why everyone seems to think that cutting a basic cafeteria is a vital piece of any "let's put the company back in the green" plan.
Well I do get why so many finance people think that way, it just makes me sad that they're the ones calling the shots.
This kind of thing is par for the course from private equity. I'm surprised they only suggested firing 3/4 of the staff and they didn't suggest outsourcing everything to the lowest cost body shop in Bangalore.
PE is all about giving a temporary boost to stock price and cashing in quickly before the long term damage becomes apparent, mixed in with a healthy disdain for the people who do all the actual work.
>not many ways to do Google/SV-quality free employee food for much less
may be they brought me into a wrong cafeteria :) - when i went for an interview at Google, the food was so-so, and in no way beating a $10 lunch at a typical commercial place (and even less so a $20 lunch at a restaurant). A colleague of mine went there recently for some business meeting - the same impression about the food.
Google serves 3 meals a day. Most just eat lunch, a good bit eat breakfast, and dinner is the least attended. That said, there are still lines for every meal.
Those numbers seem high given that I personally spend $20 a day on food for all meals (whereas corporate meals are probably covering 1.5 meals per day) and don't get much by way of economies of scale (despite my most valiant Costco efforts).
Not the person you are asking, but I can answer yes to that at the same price point, and we are talking about cheap fast food either. $25+ for a meal is not cheap.
That's breakfast, lunch, and probably 5% dinner (a small minority of HQ), including cleanup costs (washing dishes, etc). You have to have some over-capacity as its a cafeteria - you can't run out of food at any time, so throw in an extra 10% - 20% food.
Then add in snacks and drinks, which come out to a few dollars a day per employee, including stocking costs, running the coffee bars, etc. That's a few drinks from the fridge, a coffee or two, a few bags of snacks a day.
And I don't know anyone working at any SV tech headquarters who don't eat the food every day. Personally I've maybe eaten not at work for breakfast and lunch...10 work days in the past year?
While the HQ gets economies of scale, smaller offices are more expensive. Y! SF catered for a long time before finally also switching over to Bon Appetit. Y! NYC provided a daily seamless stipend before they finally built out the in-house dining area.
Add in non-full time contractors as well, who generally get the eat at the cafeteria as well.
Bon Appetit is a standard, albeit higher end, food services company. They serve colleges as diverse as Cornell, Oberlin, the College of Idaho, Lewis and Clark, etc. It's the same company used by Google, Oracle, and eBay. It's hard to describe them as over-priced and overly-luxurious.
We have no idea if the food estimate is correct. The article mentions that many people in Yahoo interviewed by the reporter think the investor's numbers are widely off.
My guess the $108m includes other things than just food.
Agree. But I am sure it wasn't "lunch lady land" food but instead prepared with the utmost of care by a private chef who had serious chops to create "healthy" meals. This probably wasn't (wild guess?) local school district fare.
"but I really don't get why everyone seems to think that cutting a basic cafeteria"
Providing a cafeteria is fine however not charging for the food in the cafeteria is another thing. It's seen as excess when things aren't going well. It's ignored or possibly thought of positively when things are going well. A similar but different example is private jets. Always get chopped when things are bad. But they have value for sure. Executive time is important and it's not just the luxury as is often thought by outsiders.
It doesn't take free food to make employees happy and productive if they are already earning good salaries.
Executive jets only make sense for short-notice travel.
Hell, even NBA teams have cut down, and all or almost all of them now fly chartered airline (mostly Delta).
Same 'red carpet' experience though not all the luxury and trappings, and this is for a group of people typically making between the group $100-200M a year.
Never said they did. I meant when you categorize "CEO of household name company making 8 digit salary" with "group of world leading athletes making 8 digit salary", and in these days, the latter group (who arguably is going to have the biggest issue with ego) is okay with a Delta chartered 757 for the team, but a CEO who is losing money hand-over-fist absolutely has to be in a new Gulfstream V...
The only difference is the need for a corporate jet is short-notice travel (in which case, there are cheaper options than outright ownership), versus the major league team's more scheduled transit.
I personally like to use the free food or sodas as a canary. When the company isn't doing too good, those are the first perks to get cut, because it looks good -- however it doesn't really rescue a failing company. So as soon as the free soda dries up, it is time to put out your resume.
But you'd expect a CEO to be able to hire someone to negotiate the cost down.
$38 a day per person for what should be a company-wide catering concession is unusually generous.
Meyer generally seems to have made some hard-to-justify spending decisions.
She won't be the first or last CEO to go on a spending spree - see also Autonomy, etc. But the usual idea is to get some value from the shopping trips. If that's not happening, it's a strong signal that the CEO isn't shopping with clue.
I think the board could have been much more critical of the Polyvore deal in particular.
It's very much part of the private equity playbook.
I read in a PE deck once that they saved nearly a million a year during restructuring by swapping out organic chicken in the cafeteria with regular chicken
"any successful business venture" There are a vast number of successful companies, ones who actually turn a profit, who don't provide either food or transport to their employees.
Two of the most successful companies on the planet (Apple & Exxon) don't have free food. There is nothing wrong with charging say $5 for a (subsidized) meal. It cuts down waste and communicates to employees that the company is working to reduce your costs, and also that they want you to make good decisions (not waste food).
It's only two examples, but I think it's more than a coincidence. Also, those two companies seem to have more stable workplaces for employees. Yahoo seems to be a mess over the past decade.
well I have experienced new management whose first item at hand was to insult everyone already there. from telling them they will be made in a world class organization to stating on a five point scale everyone is a two unless they prove otherwise, a two being "performing less than expectations". It ain't just finance people
Providing basic necessities (food, transportation, non crowded offices, sick days, etc.) to make sure your employees are happy and productive seems to me like step 0 of any successful business venture.
Wut?
Providing employees with pay commensurate with the market and their abilities is step 0.
They can buy their own damn food.
Is this really the level of entitlement people have now? Because it's pretty impressive... I mean, why stop at just food and transportation? If employers need to provide "basic necessities" to be a "successful business venture", why not include dormitories? Free clothing? Healthcare services?
It's OK to give the plebes some scraps from the table when profits are rolling in, but when the business is in trouble, they need to suffer too. Regardless of whether it's material to profitability, it's just not right for the common folk to be eating while the poor CxOs and fund managers might lose millions.
Here is the funds presentation about yahoo if you are interested. For what its worth, I think the fund significantly overplays their hand as to how effective their turn around plan would be.
https://regmedia.co.uk/2015/12/14/yahoo-springowl-presentati...
The one thing that I do think the report gets right is yahoo's head count is way too high. They should have a head count of around 4000/people to be in line with their Peers wrt revenue/employee.
I think the biggest issue Yahoo faces is that their competitors are Facebook, Google and Microsoft. And Yahoo is trying to run itself like those companies.
When you have huge piles of money coming in every quarter then you can spend freely on acquisitions to try and buy talent teams and products to jump start your company. Or put another way, making huge sums of money hides alot of bad decisions.
Yahoo, unfortunately isn't making piles of money and this makes it very hard to compete when your closest competitors each have large near monopolies to generate money. Yahoo just has no margin for error, and its not really clear that even if they did everything right, that they could turn the company around.
It would be like Canada trying to fight a war with the US, no matter how well you execute, you'll loose in the long run as your enemy has almost unlimited funds compared to yourself.
Unfortunately during Mayer has destroyed alot of value during her tenure. Without Alibaba and Yahoo Japan, Yahoo is down almost 40% since she started.
Bring in a new CEO, cut head count very deeply so you don't have to do it again.
> "Marissa Mayer is a hero for taking on the challenge at Yahoo." -Marc Andreessen
Only in the confused world of Silicon Valley is accepting $100M+ to fail considered heroic. Giving the money back would be kind of heroic.
Steve Jobs took a nearly bankrupt company and turned it into the richest company in history. And he didn't care about making money off it at all, or he'd have been the richest person in the world too. That's heroic.
Elon Musk put 100% of his personal fortune into risky world-changing startups. That's heroic.
> Steve Jobs took a nearly bankrupt company and turned it into the richest company in history. And he didn't care about making money off it at all, or he'd have been the richest person in the world too. That's heroic.
Well, let's walk that back a bit. Saint Jobs always cared a great deal about his ownership stake in Apple, to the point where he burned bridges in order to retain and increase it. He wasn't exactly poverty stricken, either.
> "Apple's market (capitalization) has risen from less than $2 billion to over $16 billion under Steve's leadership since his return to the company two and a half years ago," Apple board member Ed Woolard said in a statement.
> "Steve has taken no compensation thus far, and we are therefore delighted to give him this airplane in appreciation of the great job he has done for our shareholders during this period," Woolard said.
> Only in the confused world of Silicon Valley is accepting $100M+ to fail considered heroic. Giving the money back would be kind of heroic.
THANK YOU!!!!
It's pure insanity. Not only have we reached the point where entrepreneurial reward for managerial risk has become the norm, but you can get it while FAILING MISERABLY!!!
I guess if you want to consider a company that had a major hand in slavery. But if you restrict yourself to modern times you find:
Apple just completely crushed its Q1 earnings, delivering its most profitable quarter ever — and the most profitable quarter for any company during any quarter in history.
"In 2008, struggling Tesla nearly collapsed during the financial crisis. When Tesla needed cash to fund the Model S, Musk chose to bankrupt himself — giving up the money he earned from his success with PayPal — rather than let it die. He sunk his last $35 million into the company, the New York Times reported."
In the meantime, at SpaceX, Musk and top executives had spent most of December in a state of fear, but on Dec. 23, 2008, SpaceX received a wonderful shock. The company won a $1.6 billion contract for 12 NASA resupply flights to the space station. Then the Tesla deal ended up closing successfully, on Christmas Eve, hours before Tesla would have gone bankrupt. Musk had just a few hundred thousand dollars left and could not have made payroll the next day.
I hope Yahoo! succeeds. My $0.02 on how to fix it:
- fix the navigation across all Yahoo! properties. Google does a solid job of this. It's clear what is google, what is gmail, what is google analytics, app-engine, etc. Yahoo has no such clarity.
- apply SEO to the Yahoo! site. If I search for "yahoo domains management", Google (or Yahoo) should take me to the correct landing page.
- Yahoo for "business" services are very opaque and it's not clear where to go to see a unified list of things one has access to, particularly domains. Google also does a solid job of this (though worse over time, oddly).
- When I see the Yahoo logo I sort of cringe. Make it smaller and less obtrusive. Purple means "visited link" on the internet.
- Don't let scammers use your affiliate program. The BitTorrent installer installs malware that makes Yahoo the default search in all browsers on the user's computer. This is a horrible representation of your brand.
- The smart TV developer portal has been down for a few days (at least). I wanted to make an app for my new TV but can't read the documentation.
- People inside the company probably know all these things. If they are not incentivized or rewarded for doing something about them, that is probably the root of whatever cultural problems exist there. Everyone should feel some pride and ownership, and want to fix obvious glaring issues. Someone should probably have presented you with plans to fix all these things. Promote that person.
those are all tiny product details that won't fix the company. I am not saying you are wrong, I am saying there is a bigger reason why all those product defects exist. It's the culture. It's the talent.
I don't know, I think what he is saying are small steps toward the overall goal of fixing the company.
There isn't a magic bullet with Yahoo. They gradually lost their dominance and succumbed to irrelevance. The fix will also be gradual and with small steps
The media's Mayer pile on is getting old. Every article is focused on her personally, as opposed to the company as a whole. I understand how echo chamber effects and memes work, but this seems a bit extreme even for the internet.
It's like blaming someone who dropped a last second touchdown pass for losing the game. Yes, it would have been nice if that player could have done a better job. But it would also have been nice if everyone else on the team hadn't made any mistakes either, making a last second play unnecessary.
She was very well compensated for failing, but that doesn't mean that she acted in bad faith. Many executives have compensation packages that are heavily based on performance. Apparently hers wasn't. Ultimately there is a lot of blame to go around for the demise of Yahoo!, not the least to other half dozen CEOs they've had in the last decade or so. You win the fight today based on the preparations and positioning you did years ago. For all her mistakes, that's not on Mayer.
I've tried several finance portals, and Yahoo's is far and away the best. With a single url, I can get a snapshot of the stocks I'm interested in, thumbnails of the day's performance, links for more detail, etc.:
Finance is still usable, but has been getting worse.
For example, they used to have "basic charts" that were clear and easy to comprehend. Then they removed that feature (but kept the link in the sidebar for many months). The remaining "interactive charts" are IMO not as easy to comprehend. Also they are missing features. E.g. with the old charts it was easy to quickly see when historical stock splits had occurred. With the new charts you have to hover over each big "S" icon.
It all smacks of 2nd rate people putting in a 3rd rate effort, just to show they're doing something. But what they're doing is by no means an improvement to what was there previously.
Edit: forgot to mention that, compared to Yahoo, Google Finance is a pathetic joke. It's a night and day difference. It's like Google is actively trying to be bad.
Surely there must be a finance portal that's better. I wouldn't mind paying for something good.
I have been using Yahoo! Email (from time when it was sbcglobal), Flickr, reading Yahoo! Finance, and having Yahoo! News as my home page. I do not use any of these any more.
Here is my list how to fix Yahoo!:
1) fix Yahoo! Email (MS did it with outlook.com - Yahoo! could do the same)
2) fix Flickr (i.e., API should work, iPhone upload, some IA, etc.)
3) fix Yahoo! Finance (I remember that they disabled Yahoo! groups for stocks at one point of time - after that flop they never recovered)
4) fix Yahoo! News
I'm not really sure what needs to be "fixed" but something so I can start using the above service again.
In 2007, Jobs famously told Yahoo it had to choose a path
Yahoo needed to decide whether it would focus foremost on media or technology,
Jobs told the small group of assembled executives, according to one
executive who attended the meeting. -- BusinessWeek, 2009
I can't find the quote now, but one exec said they knew he was right, but they just couldn't decide. I think this conundrum continues to be at the heart of the Yahoo! problem -- they just can't decide.
The SpringOwl proposal essentially says Yahoo should just get with the program and be a Media company. And, I like that pitch. The playbook is essentially:
1) Massively cut staff, and some other one-time things like real estate
2) Stop trying to compete on hard tech like search, because they can't beat Google or Facebook
3) re-monetize the home page and create a more walled garden by creating apps that kick ass over competitors (note these are now media competitors) and are directly fed by the media channels that are working: they like finance and sports to start.
To me, this plan reads well, although I don't buy the austerity on top of layoffs angle -- who would continue to work there? One way or the other, you're going to have to provide a competitive comp, upside and lifestyle story unless they move to Kansas.
I don't know if it really gets the value creation they say it will, but if well executed, I think this is a believable way for Yahoo! to carve out its best shot at a niche and audience. If I imagine a Yahoo Finance app made by truly great devs up against any number of competitors, I think it could be a win. Same with say fantasy sports apps, team-oriented apps, all those could tie together very well.
The article brings up the important point on Yahoo's acquisitions. For the billions it spent, it got barely anything in return. The real canary in the coal mine was Summly. Mayer paid 30M for an app that licensed its core machine learning (which is why she bought the app in the first place). Unsure how anyone could have expected Tumblr to be a smart acquisition at that price.
Yahoo is the MySpace of search. She raised it's profile but ultimately there's very little Marisa could have done to change that. If NetFlix was clearly such a great investment at the time it would have been worth what it is today.
Mayer was given garbage.
She realized this very quickly.
The aim then shifted to maximal extraction of money from the corpse.
This is best accomplished with a a lot of smiles and earnest window dressing.
I am genuinely curious, Tencent (of China) looks very similar to Yahoo! esp. being portal business, why are they flourishing and why the heck can Yahoo! not copy Tencent's strategy. It looks very obvious to me, that Yahoo should be more like Tencent and probably have Hulu/Vimeo, Whatsapp/Telegraph or whole slew of mobile apps and games etc.
Tencent is one of the most successful social network company ever, which Yahoo is nowhere close. The social as of Tencent as a business has been good for years. If Yahoo just copies the product and the strategy to launching more social + mobile apps, it still needs more years until successful (if it can).
Think about G+.
Well, it helps that Tencent simply had to observe the West then copy them for product ideas, due to China's isolated Internet.
ICQ/MSN? QQ
eBay? PaiPai
WhatsApp? WeChat
Dropbox? Weiyun
PayPal? TenPay
Uber? Dididache
Those are just copies of Western products, they even have an extensive history of copying other Chinese companies to the point that the CEOs of Alibaba and SINA have accused Tencent of blatant copying.
In response, quoting straight from Tencent's CEO and chairman:
"[To] copy is not evil."
They do have quite a bit of innovation too, but I'd say the company is about 50% copy and 50% innovation.
That said, I think everyone associated with Yahoo has to come to grips with the fact it will never again reach it's high status as before. It has a lot of money, and it just goes to show you that money won't produce innovation. They need to take that money, break Yahoo up into pieces, sell it, and then whatever money they have they should fund 100,000 startups and see what rises from the ashes.
The only other thing that Yahoo has besides it's pile of money is it's brand name. People know and trust Yahoo. I would probably take that and then expand horizontally, into things like banking, insurance, etc. Really boring things that aren't high growth like Uber, but things everyone needs and might be enticed to join because of the Yahoo name.
Buying things like Tumblr, Polyvore, etc are a waste of time because every startup in the Valley is hoping to score an oversized buyout from Yahoo, and then GTFO once their holding period is over. There is zero incentive to continue innovating after Yahoo touches them, so don't bother buying companies anymore.