Yahoo’s Four Issues
December 26, 2008
TheStreet.com ran Eric Jackson’s “Reasons behind Yahoo’s Four Year Slump” here. Mr. Jackson does a good job of summarizing the received wisdom about the company’s challenges. Few can disagree that Yahoo’s leadership has been uninspired. Mr. Jackson moves quickly to identify product leadership leadership and the company’s organizational structure challenges. I wanted to add several observations that, in my opinion, also contribute to the company’s singular lack of effectuality:
First, the Yahoo technology generates one offs. News releases accompany these initiatives. That’s great for the public relations company and for the developers who hop on the Yahoo bandwagon. Build Your Own Search is a good example. Yahoo makes it easy for search developers to piggyback on Yahoo’s Web index. The excitement is certainly due to Yahoo’s making this service available without charge. Google offers some free searching too, but from what I hear the GOOG is quick to contact those developers who come to Google’s attention. Fees are never far from Googzilla’s mind. My point is that monetization does not seem to be a top priority at Yahoo. In today’s business environment, I think that is an issue.
Second, over the years Yahoo has acquired a wide range of companies. Based on the information I have, Yahoo had been content to let these outfits chug along. Yahoo was on the portal path when the GOOG decided to focus on search and seek inspiration from the Overture paid search service. The GOOG, whether by luck or input from former Altavista.com engineers, created a relatively homogeneous computing infrastructure. Not the Yahooligans. After collection companies, some of these outfits operated as services available within a portal, portlets, if you will. Instead of integrating acquisitions into a homogeneous platform, Yahoo has a more heterogeneous infrastructure. As a result, agility and cost control are difficult, if not impossible, for Yahoo to deliver on a daily basis.
Third, Yahoo has managed to create the internal environment that preceded the Pan Slavic initiatives of the last century. One the surface, Yahooligans get along and love one another. In the day to day dealings, I have heard that the sweetness and light dissipates. With cultural issues in information technology and the types of management and leadership problems at which Mr. Jackson hints, I think Yahoo is in a vulnerable position.
What will happen in 2009? The Yahoo of the 1996 to 1999 period will become a dim memory. The 2009 Yahoo is morphing into an America Online with a different logo. Now tell me why I am wrong. Just offer up some holiday facts to support your position.
Stephen Arnold, December 25, 2008
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