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Nilofer Merchant

Can Mayer Save Yahoo and How?

By Nilofer Merchant on Aug 01, 2013 04:11 pm

Today, BusinessWeek ran a front cover story on Marisa Mayer’s leadership of Yahoo, asking what seems like a 10-year old question, ‘can it be saved?’ Having grown up in Silicon Valley and worked in tech most of my career, I have followed every move, shake, disaster and firing that has happened there. cover_3041

Because the Yahoo situation gives insights on what to do in epic struggle, let me share 3 positive indicators I see reflected in Brad Stone’s piece, and other research I’ve done.

1. Operations over Capital Structure. Before Mayer took over, the last two CEOs were incredibly focused on turnaround strategies, which is too-often (and wrongly) mostly focused on the capital structure. Capital structure has to be sufficiently in place cause every business needs make sure it has the cash it needs to operate, but it is one of those “necessary but not sufficient” items. I have seen too many leadership teams and boards in my 20+year career develop this hyper-focus on the balance sheet or who-should-own-the-company-type-concerns, vs. doing what is necessary to build a business. Unless you focus on a user and deliver that thing that only you can offer to them, you are focused on entirely the wrong thing. [As in: Entirely. The. Wrong. Thing.] Mayer’s focus on new product development and talent acquisition (while expensive through acqui-hire) is a refreshing sign and seeds for future growth.

2. Singles, then Doubles, Then Home Runs. A lot of what has to happen in a messed up company is to build new muscles and new muscle memory of what works. If the company has poor momentum, what you have to do is start to show progress. The way you build momentum is to do a new this, then a new that, and then build on those things by doing a little bit more this and a little bit more that. In other words, you don’t need to hit a bunch of home runs. What you have to do is show people momentum that you are acting fundamentally differently. You need to create a success, even a small success for a future direction. Yahoo has done that in a few ways. The Weather App was a sign that they could do great design on Mobile. (As evidenced that they were the Winner of an Apple Design Award 2013). Then Yahoo launched Axis and Yahoo Travel. Axis became the #2 app for iPad across the board and in the top 25 for iPhone overall. So showing that Yahoo can have relevance in the (hot) mobile space showed the internal Yahoo engineers that there is something here worth fighting for. It changes the dialogue from “oh, dear, not more bad news” to “oh, that is cool”.

3. Set Claim to New Horizons. Now after about a year of being at Yahoo, it’s getting clear to me that Mayer is starting to set a horizon for where Yahoo could go next. In the book #Social Era, I talked about the fact that there are five types of communities (otherwise known as the 5Ps of Community) “Proximity, Passion, Purpose, Practice & Providence” and communities are central to how value gets created. While Facebook serves providence (Hey, I knew you in high school) and Linked In serves mostly Practice (We both worked in Marketing), few organizations are addressing how communities of purpose connect, and work.

Now, Mayer uses the term “interest graph” to communicate her take of this, and by using this particular language, she’s drawing a line of distinction between what Yahoo does vs. Facebook does. Facebook is the social graph – people you know, and might have met along your life. And she’s saying that Interest is the next generation… Interest is the set of things you’re interested in, and it combines search, mail, mobile usage, content consumption and so on – things that Yahoo knows because of who they uniquely are.

To me, the interest graph is what “find” is to “search” – how can you tell me something I don’t already know I’m interested in (without being creepy of course). Everyone in the media world already knows that the average # of clicks to find what you are looking for in Google land has grown to 13 clicks. (13 clicks!) In net, search has gotten harder over the years. Each one of those clicks Google monetizes so they seem to have no problem with this consumer problem. If Yahoo serves up with delight that which you wanted based on some more predictive technology, and based on your actual interests, it could be “the find” of the Internet.

Mayer talks about the interest graph at the World Economic Forum, in this video:

The tendency of Silicon Valley (and the related business press) is to think of one or two companies as totally owning everything, and then saying everyone else is a part the past. I remember a conversation with a former FB product manager who was trying to tell me the web didn’t exist before FaceBook, and I had to remind myself that I actually hand-coded CNN’s first web page in – check this – 1996. So, yeah, people who don’t have context don’t get it. And all industries have a history. So, of course, the full stories of any “come back” are nuanced ones and only history makes it easy to see what worked and what didn’t. But just a thing to remember: even tired old companies have comebacks. Look at Apple; they certainly did.