Yahoo Names the Who, Now the What?
Mindshare, January 2012
Yahoo has ended a four-month search for a replacement to Carol Bartz with the hiring of a new CEO, former PayPal president Scott Thompson. Yahoo Chairman Roy Bostock said Thompson was hired owing to his "impressive track record as a business leader taking existing online businesses and building them up." Thompson presided over impressive growth at PayPal and has it on track to become the largest business unit for parent company eBay. Under his leadership, PayPal more than doubled its active user base and its top-line revenues ($1.8bn to $4bn). Similar to Bartz, Thompson has been generally described as strong tech-centric leader. However, by all personal accounts they approach business in two radically different ways. What remains the same is the company’s desire change its fortunes. To do that, Thompson will have to address the following five questions: What is Yahoo?
Immediately upon Bartz’s firing, two camps emerged around the future of Yahoo: those who believed it was a tech company, and those who believed it was a media company with a future in content. On Yahoo’s conference call announcing his appointment, Thompson said, "Yahoo's core business is creating great experiences for users" that should have "excellent technology and content, not one or the other." Can the same company that had to get out of search tech really afford to do both tech and content? What to do with Alibaba?
If Yahoo is going to try and do tech and content – and do them both well, then it needs more in its war chest. An obvious solution is for Yahoo to sell its stake in Alibaba. Jack Ma and Alibaba remain interested in taking the stake back, worth as much as $17bn according to a late 2011 Forbes report. Given past attempts have been reportedly strained by Bartz’s tact, new leadership may be a boon to the prospects for a sale finally happening. How can Yahoo play catch-up in mobile & social?
Yahoo has aggressively added their own social layer in recent few months with the launches of Livestand, a tablet app designed to provide personalized content in a singular experience, and IntoNow, a social app built around shared TV experiences. This idea of building on top of the social graph and on existing platforms versus creating a stand-alone product feels appropriate for Yahoo today. Thompson would be wise to leverage the power of Yahoo’s 700 million users to further cozy up to Facebook with such apps. In mobile, while acknowledging a gap in position in the market, Thompson said, "We will be great across all devices. When they want some information, Yahoo will be the first place they go." How does Yahoo’s primary revenue business, display advertising, fit into the strategy?
For the last decade, Yahoo has consistently touted the potential of its user data. In terms of scale and depth, few organizations can match the breadth of consumer intent and interest that Yahoo can. Thompson, like every Yahoo CEO before him, indicated that he felt the ability to innovate will come from analyzing the data. It is a daunting task, but a necessary one if Yahoo is to better monetize their display inventory and deliver meaningful connection opportunities to advertisers. How does Yahoo become a hot destination again?
No, not for consumers, but rather, how does Yahoo in a hot Silicon Valley market with Google, Facebook, Apple and emerging IPO opportunities at every turn become a desired destination for talent? There was a time when the Yahoo “Purple People” culture was real and tangible. The digital industry still roots for Yahoo to get it right, but there’s a clear challenge ahead in retaining top talent.
Now that Yahoo has settled on a CEO there’s a daunting task ahead. Less than four years ago the company was offered $33 per share in Microsoft’s final acquisition attempt. Since that time, the stock has fallen sharply, trading in the low teens for most of the past two years, while the search engine which once led the industry has desperately tried to redefine itself as it was forced out of the search technology business. That said, it’s a new day for Yahoo; whether it returns the exclamation point to the Internet giant remains to be seen.Written by Chris Copeland, CEO, GroupM Search