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Brad Garlinghouse updates Yahoo 'Peanut Butter Manifesto'

Yahoo should spend its capital acquiring companies with dynamic leadership, such as Flipboard and Gravity, says former Yahoo executive who's now CEO of YouSendIt.

Michael Arrington interviews YouSendIt CEO Brad Garlinghouse
Dan Farber/CNET

NEW YORK--In 2006, Brad Garlinghouse became known for his "Peanut Butter Manifesto," a highly critical analysis of Yahoo's management and business strategy. He wrote:

"We want to do everything and be everything--to everyone. We've known this for years, talk about it incessantly, but do nothing to fundamentally address it. We are scared to be left out. We are reactive instead of charting an unwavering course. We are separated into silos that far too frequently don't talk to each other. And when we do talk, it isn't to collaborate on a clearly focused strategy, but rather to argue and fight about ownership, strategies and tactics. Our inclination and proclivity to repeatedly hire leaders from outside the company results in disparate visions of what winning looks like--rather than a leadership team rallying around a single cohesive strategy."

At the time he was the senior vice president in charge of services including Yahoo's home page and mail. Nearly six years later, Yahoo is still struggling to find its center and find a leader.

In an interview at TechCrunch Disrupt with Crunchfund's Michael Arrington, Garlinghouse, now CEO of cloud storage company YouSendIt, said that Yahoo, which he left because he doubted that it could be turned around, can be saved. He pointed to the gloom and doom around Apple in 1996, and its subsequent resurrection as a parallel to what could happen at Yahoo.

"In 1996, the cover of BusinessWeek was about the death of an American icon and at the center of that was Apple Computer. Apple is now the most valuable company in the world. Period," he said.

Of course, Yahoo would need to find its own Steve Jobs, who returned to Apple in 1996, about a decade after he was booted out of the company he co-founded. It won't be Yahoo co-founder and former CEO Jerry Yang.

Garlinghouse recommended that Yahoo spend its billions in capital acquiring companies with dynamic leadership. He mentioned Mike McCue, a founder of Flipboard and Tellme Networks, and Amit Kapur, former Myspace COO and now CEO of Gravity.

"As a leader, Mike McCue would be transformative to the culture of Yahoo," he said.

Over the past several years Jerry Yang, Carol Bartz, and Scott Thompson have been living in the Peanut Butter world, trying to turn Yahoo around and come up with a cohesive strategy.

Garlinghouse gave Thompson, who recently was forced to resign over a false claim on his resume, some credit for making some progress. "The early indications were he was taking to heart a lot of things that had to happen," he said.

Arrington asked Garlinghouse whether he was in the running for CEO at Yahoo. He demurred that "at various times" there had been "informal outreach about the company." He added, "Yahoo is a great company and anyone should be proud to be CEO," a similar line to what the current interim CEO Ross Levinsohn has said.

He gave Levinsohn kudos for his performance so far, although it's not clear he deserves all the credit since he has been in the position a week. "Ross in one week has done what three CEOs could not get done," Garlinghouse said, referring to the deal to sell back half its stake in China e-commerce giant Alibaba for $7 billion.

Garlinghouse also shared some details about Yahoo's failed attempt to acquire Facebook. The two companies had a "handshake" agreement for $1 billion, but when Yahoo's stock price went down, CEO Terry Semel changed the offer to $850 million. Combined with Yahoo's rejection of Microsoft's $44 billion acquisition offer in 2008, the failure to snare Facebook will go down as major lost opportunities in the annals of the Internet.