Op-Ed: Yahoo boss steps down, but what’s wrong with the company?

Posted May 14, 2012 by Paul Wallis
Super un-competitive former Internet pioneer Yahoo is still in the cellar-dweller class after the ignominious departure of CEO Scott Thompson. Thompson’s departure may be just a further humiliation but it’s not the whole story. That’s much worse.
Former Yahoo CEO Scott Thompson
Former Yahoo CEO Scott Thompson
You have to wonder how much more embarrassment is possible. Thompson’s departure was based on a false claim of qualifications. The most basic review of any resume includes checking information. Apparently the world’s former top search engine couldn’t or wouldn’t check that information.
Yahoo’s saga of irrelevance started with the rise of Google, but Google wasn’t the problem. It was Yahoo’s culture. Yahoo’s stock price since 1996 is a rather graphic illustration of what happens when a major internet company becomes a minor. The price peaked at $120 in the midst of the tech bubble and is now staggering along at a truly sad $15.19.
The fact is that Yahoo has been cutting its own throat by every means possible. Not only could it not make any impression on the Google juggernaut, it couldn’t even hold up its own individual performance. The “Google generation” since may not even know it exists.
Yahoo’s market share, in fact, barely goes above the unavoidable Bing, which was added on to Windows and does almost nothing as a search engine. Yahoo’s revenue has been hit by a market which uses Google as a verb and apparently uses Yahoo as a way of introducing themselves to consenting cattle at rodeos from what I’ve seen on the news.
Yahoo’s coma hasn’t necessarily been good for the Internet. Strong search competition might make searches a bit less ridiculous. It might make the internet a more efficient place. Who knows? It hasn’t happened.
So what’s wrong with Yahoo?
Theories, unkind and otherwise, abound:
The corporate culture crashed and burned in the dot-com frenzy.
Yahoo developed the fatal factions which often destroy companies and fragment market initiatives into “my little friend has an app” type ventures at absurd costs.
The market killed Yahoo by default as Google’s price soared. Talent left and took the intellectual capital with it.
These are theories, but there’s definitely an unholy smell of some legitimacy in some of them. Why would a good tech company, and Yahoo definitely was one in its heyday, turn into a turkey which plucks itself?
Yahoo’s big problems are:
1. Very low visibility in its core market.
2. No strong unique products.
3. No drivers for participation for consumers.
4. An apparent lack of ideas in all these areas.
These situations happen also to be the exact opposite of the case with Yahoo’s competitors. Yahoo is theoretically capable of matching Google in several areas, including having its own browser/cloud/etc., and it’s not doing any of these things. Why not?
The best thing that could happen to Yahoo is a new dynamic, however that’s achieved. A buyout is the most likely scenario. A miracle is the other. You can only downsize something that doesn’t work so far. After that, you need to get results.
The markets no longer expect much from Yahoo. It’s seen as a loser company, a company which lost its way and isn’t much of an option even for day traders. Until that changes, the question “What’s wrong with Yahoo?” is a valid one.
One more thing, for what it’s worth: The points 1-4 are the full spectrum of a company which can’t win. Until Yahoo delivers on all points, it’s game over.