Reviving Yahoo: Marissa Mayer's grand challenge

Yahoo CEO Marissa Mayer says she wants to give Yahoo users "something valuable and delightful that makes them want to come to Yahoo every day." She will need to explain how it will differ from what her predecessors tried to deliver.

CNET

A crucial question for Yahoo over the last several years and five CEOs has been "What is Yahoo's mission?"  The current mission statement reads: "Yahoo! creates deeply personal digital experiences that keep more than half a billion people connected to what matters most to them, across devices and around the globe."

When Carol Bartz became CEO in 2009, she said the mission was "to consistently deliver awesome consumer and advertiser experiences, everywhere in the world we do business." 

In his keynote at the Consumer Electronics Show in January 2008, Yahoo co-founder Jerry Yang, who was also CEO at the time,  outlined his vision for the company. "We call this life with an exclamation point," Yang said. "At Yahoo, we want to be the most essential starting point for your life," and "take the complexity of the Web and simplify your life through very powerful technologies."

In 2007 Yahoo's mission was to "connect people to their passions, their communities, and the world's knowledge." 

Essentially, Yahoo is a massive web portal, a collection of services ranging from email and shopping to search and dating. And, every CEO since 1995 has attempted to make Yahoo a global destination for everything and everyone connected to the Internet.

We are still waiting for  newly appointed Marissa Mayer  to declare her view of Yahoo's mission, or her priorities, beyond an echo of her predecessors. "My focus at Google has been to deliver great end-user experiences, to delight and inspire our end users," she told the New York Times. "That is what I plan to do at Yahoo, give the end user something valuable and delightful that makes them want to come to Yahoo every day."

Yang's statement is closest to what Yahoo has aspired be -- "the most essential starting point" for Internet users -- and struggled to become as it was lapped by Google, Facebook and others who developed very profitable services that prevailed over Yahoo's. 

After 18 years of existence, Yahoo has something to show for its effort, with 700 million monthly users, $5 billion in revenue and leading content properties, such as News, Sports and Finance. The company has also invested in original video content in the last few years, and claims 21 of the 25 most-watched Web series. 

Remaking Yahoo? 

Mayer brings her product execution focus and familiarity with consumer-oriented services down the road from Google's Mountain View headquarters to Yahoo's Sunnyvale campus. Steven Levy, author of "In The Plex: How Google Thinks, Works, and Shapes Our Lives," wrote yesterday that he was impressed by Mayer's "ability to quickly perform intellectual triage, mentally poring through ambient data to reach a conclusion, and confidently declaring a course of action." 

Improving on Yahoo's products such as Flickr or Connected TV  won't be enough to get wind behind the sails. She will need to lean into the content side of the business, and extract more value from each page and video stream. 

Like Google, Yahoo plays by the numbers, with a focus on more personalized user experiences, which can lead to higher ad revenues. The Yahoo home page, for example, displays about 13 million combinations of stories daily on the homepage, using demographic data and usage tracking to optimize the experience. The company has made public a data visualization tool that displays near real-time statistics on home page activity. 

 

Yahoo's home page

Mike Walrath, formerly the CEO of Right Media, a digital advertising firm sold to Yahoo in 2007 for about $800 million, doesn't believe that Mayer is the right person to lead Yahoo. In a blog post, he wrote:

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 CEO's 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.

A CEO who understands the media opportunity, and understands that in the world of media "good enough" is good enough when it comes to technology, feels like the right leader for Yahoo. 

Waltrath thinks the media-savvy former interim CEO Ross Levinsohn would have been a better choice. On the other hand, some industry watchers are more positive about what Mayer can do at Yahoo.

Netscape founder and venture capitalist Marc Andreessen said the choice of Mayer was a "big statement on Yahoo's part," and "great for the Valley."

When asked about Mayer's appointment during the earnings call, CFO Tim Morse, said, "We need to be good at certain technology, and we need to be great at content." He noted that Mayer brings strong technical credentials to the job and that company has "exceptional and deep media expertise."

CNET

Mayer may take the approach that the new Yahoo board of directors seems to embrace in dealing with major product areas where Yahoo has fallen way behind, such as social networking. Under the leadership of one of her predecessors, Scott Thompson, Yahoo sued Facebook for patent violations in March 2012, a decision which invited much contempt in Silicon Valley. Another of her predecessors, Ross Levinsohn, made peace with Facebook in July, cross-licensing patents and proposing to work together more closely on premium media experiences distributed across both Yahoo and Facebook, as well as more integration of Facebook on Yahoo for event coverage. 

A question for Yahoo and Mayer is whether to resurrect efforts to engineer its own social network (the Yahoo 360 project to wire up the portal was shelved after several years of development), as Google did with Google+, or continue to embrace Facebook, or even Google+.

She will also have to decide what do with Yahoo search, which is on the decline. In June, Google was up slightly from the previous month at 66.8 percent share of U.S. searches, followed by Bing, up a bit at 15.6 percent and Yahoo at 13 percent, down 0.4 percent from the previous month.

Mayer could go the partner route with her former employer, but Yahoo has a long-term partnership with Microsoft to use Bing technology as part of its search experience. 

The younger generation of highly active Internet users also presents a challenge for Yahoo today.They don't typically start their day with Yahoo, and are more apt to spend their online time on sites like Facebook, Google, Youtube, Netflix  and Zynga. Mayer will have to find ways to bring new users into the Yahoo fold.

Mayer is starting the job fully aware of what her predecessors went through in trying to bring Yahoo back to life. It's the kind of challenge that really ambitious and confident people accept. Instead of one or two thousand people waiting for guidance at Google, she has 12,500 somewhat traumatized employees looking for direction and concerned about job security. 

If she's looking for advice, former Xerox CEO Anne Mulcahy, once offered this insight about how to orchestrate a successful corporate revival, said: "If you are a big company, the only way to deliver progress quickly is to get people aligned around a common set of objectives. Otherwise, it looks good but it doesn't stick." Mayer will need to articulate those objectives and demonstrate that, unlike preceding CEOs, she can transform a tarnished Yahoo image. Everyone will be watching.

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