Yahoo – the CEO drama continues

Four CEOs in five years! Yahoo was a symbol of innovation and success in its first few years of life. Founded by two Stanford Ph.D. students (Yang and Filo), Yahoo defined the Internet era of communities and sharing. It still has an enviable community using various services like email, finance, news, etc. It has lost much advertising dollars to Google. Terry Semel came from Hollywood and wanted to make it a media company. That did not work. Terry flew in every week on a private jet from LA to San Francisco and was driven in a limo to work every day. His compensation was way higher than many other CEOs at similar valley companies. Jerry Yang returned as CEO for the second time and botched up a lucrative offer from Microsoft. Yang was no Steve Jobs on his second return to the company he founded. He turned down the Microsoft offer to buy Yahoo at $47 per share (current share is $15.50). There was indeed an “identity” crisis at Yahoo.

Then came Carol Bartz and she talked tough and tried to straighten out the confusion, but results did not show any positive impact. She was let go last year, after being fired over phone from the board chairman. Then the board picked Scott Thompson, a well-reputed executive from Paypal (eBay) to head the company just a few months ago. He started reducing redundancy and bring clarity to Yahoo’s core business. He let go 2000 employees recently. Several top skills left the company. As he was settling in, came the news that his resume had information on his degree that is not right. Most likely that error existed for a while, but one disgruntled investor questioned his integrity and the board on not doing due diligence before hiring him as CEO. Yahoo and Scott did a poor job responding to this and the result was his departure yesterday.

With all the business problems at Yahoo and its anaemic growth, a strong leader is needed to refocus the company on what it is best at – innovating new solutions for keeping the community loyal. After all, Yahoo gave many technologies such as Hadoop and HDFS in managing Big data. Without a strong execution-oriented CEO,  it will fade away like many dot-com era companies.

It is hard to believe that Yahoo was once valued at $100B (current valuation $18.9B).


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