Earlier this week, Yahoo scored quite a coup by announcing Marissa Mayer would be taking over as the company’s chief executive officer.
Yahoo hasn’t had a great track record with CEOs lately. Former PayPal executive Scott Thompson was forced to depart over allegations he’d faked his academic credentials, or at least permitted false information to float around for years. Before Thompson, the outspoken Carol Bartz had steered Yahoo’s course, but she was summarily dismissed in September 2011 after struggling for two years to turn around Yahoo’s fortunes following Microsoft’s abortive hostile takeover attempt in 2008. In the gaps, Yahoo CFO Tim Morse and executive VP Ross Levinsohn sat in as interim CEOs. That makes Mayer effectively Yahoo’s fifth chief in less than a year, although it’s more accurate to say Mayer is Yahoo’s fourth CEO (following Yang, Bartz, and Thompson) in four years.
Yahoo’s situation is bleaker than mere executive turnover. The company might still have 700 million users a month, but founder Jerry Yang cut all ties at the beginning of the year, Yahoo ceded the back end of its search business to Microsoft, the company leadership has been facing shareholder revolt for most of the last three years, and Yahoo just sent 2,000 employees packing — a move that surely did nothing to improve morale amongst the rank and file. Yahoo has also essentially been left behind in social networking and the mobile revolution, and forced to sell off some of its Asian holdings to raise cash to keep itself afloat.
What can Mayer do to succeed at Yahoo where so many have failed before her?
Getting Mayer on board represents a major score for Yahoo. If Google had a rock star, it was Mayer. Mayer had been with Google for 13 years, and was famously Google’s 20th employee. The story goes that her somewhat reluctant interview with Google founders Larry Page and Sergey Brin devolved into rapid-fire discussion of data analysis techniques. Her graduate work had been focusing on artificial intelligence and algorithms for recommending Web pages, and she fit right in with Google’s nascent geeky and experimental culture. Mayer didn’t come to management of an Internet technology company with an MBA in her hand and a selection of power suits; she came with full geek credentials.
Despite skills that are rare even in the technology industry, Mayer has never seen technology as an end to itself: instead, it’s about making every day life easier, more efficient, and maybe a little bit fun. During her 13 years at Google she oversaw some of the company’s highest-profile projects, becoming widely known as the voice of the user as Google struggled to walk the tightrope between offering sophisticated functionality and a comprehensible interface. Mayer oversaw key aspects of Google’s user experience, including Google’s famously succinct and unadorned home page, Google Toolbar and the icons in Chrome, and crucial products like Google’s core Search functionality, Google Images, Google News, and Google Books. Mayer did the initial design for Gmail, and coded the guts of Google’s initial efforts at product search. It was reportedly years before subsequent Google engineers were able to improve on her work.
Mayer let her own sense of taste and style suffuse some of Google’s offerings. She was one of the main backers of Google’s now famously-elaborate (and often quite geeky) Google Doodles, as well as Google’s Art Project, which uses Street View technology to take users on virtual tours of world-class museums. Most recently Mayer has been in charge of Google’s location-based and mapping services, key to the company’s mobile-focused strategy.
But, perhaps most significantly, Mayer has been one of Google’s most visible spokespeople. Mayer is not just someone who is comfortable working late nights sweating product details; she’s comfortable in the public eye, whether that’s showing up in designer-wear at major events or interviewing international pop icons. Mayer has been described as a “girly girl,” but the fact is that she’s astonishingly smart, articulate, poised, and has never felt a need to walk around with a chip on her shoulder.
Mayer’s weak spots
During her tenure at Google, Mayer has been responsible for leading very large product teams. As head of location and local services, she oversaw the efforts of more than 1,000 engineers engaged in one of Google’s most strategically important businesses. But the CEO role of a company like Yahoo is much broader than leading development of a particular set of products. The CEO serves not just as the public face of the company but is also responsible for setting strategic direction and negotiating the often-tricky politics of the industry, as well as the company’s own board and leadership. The CEO role is more about fostering relationships with partners and competitors than understanding the fundamentals of, say, predictive search algorithms or scaling location-driven services. Mayer may very well excel as a CEO as well as she has at everything else, but she will have to prove it. And Yahoo’s board of directors is famously… conflicted.
Mayer got a glimpse of upper-level management when she joined the board of mega-retailer Walmart recently, but it’s clear that she will be relying on Yahoo’s existing executive team to get her up to speed and help her negotiate aspects of Yahoo’s business where she doesn’t have direct experience. Despite being a tech-industry media darling, one of those areas of inexperience is at the core of Yahoo’s current strategy: traditional media. Yahoo has recently been banking on amplifying its connections with traditional media outlets to boost its content offerings, particularly video. And if there’s one industry with entrenched players, it’s traditional media. Look how long it took Steve Jobs to convince record labels to sell music digitally, let alone offer it without DRM. And tech rock stars really don’t get any bigger than Steve Jobs.
Nearly immediately on the announcement Mayer was was leaving Google to become Yahoo’s CEO, Mayer also revealed she and her husband (entrepreneur Zachary Bogue) were expecting their first child in October. To the credit of Yahoo’s board, their response when Mayer disclosed the pregnancy to them was reportedly, “So what?” Happily, the days when mothers shouldn’t work and women can’t be CEOs are long gone. But it does mean that Mayer will be simultaneously taking on not just one of the highest-stress jobs in her life, but two: CEO and parenthood. Mayer’s tenure at Google has no doubt made her a millionaire hundreds of times over, so there’s little doubt she has the personal resources to overcome most of the everyday obstacles new mothers face. Juggling parenthood and a high-profile, high-stress job isn’t easy for anyone, but if nothing else, Mayer has certainly set a very high bar for herself.
Since Mayer was named Yahoo’s CEO, there’s been no shortage of suggestions about how she should approach the job, ranging from Flickr fans urging her to revitalize the service, tech magnate Marc Andreessen recommending she fire 10,000 employees, to suggestions as specific as eliminating BlackBerries. But it’s clear Mayer has a few key tasks on her plate:
Refine Yahoo’s product map
For years, Yahoo has been taking a shotgun a approach to its product offerings, acquiring a dizzying array of companies to have cement a foothold in fields it believes will be important… then largely failing to capitalize on those investments. Yahoo has been largely bypassed by the mobile revolution, and despite efforts to integrate Twitter and Facebook with its core product offerings, the social-networking revolution has largely also skipped over Yahoo, too. Yahoo still has a mammoth user base worldwide, but for many of them, Yahoo has ceased to be a destination so much as a place to to drop by with idle time.
Mayer will need to roll through Yahoo’s current slate of product offerings and pare them down to the bone. Yahoo’s handful of success stories like Yahoo News, Yahoo Finance, the now-struggling Flickr, Yahoo Mail, and, yes, even its search business may stay. Duds like Yahoo Notepad, Yahoo Buzz (did you know there was a Yahoo Buzz?), Yahoo Inquisitor, Yahoo Health, Yahoo Greetings, Yahoo Education, Yahoo Axis, and Yahoo Directory may find themselves on the chopping block. Yahoo can’t be content merely being a player in a selection of businesses — it has to find core competency.
Mayer is going to have to walk a careful line with the conflicting interests that have made Yahoo such a mess in recent years. While that is going to involve alienating a few people, that’s also going to mean making friends with Yahoo’s investors. After all, they’re the ones who put Mayer in the top chair. In particular, Mayer will have to keep activist investor Daniel Loeb on board with her eventual strategy, and work on convincing Loeb and other investors to stay the course and give her strategy time to succeed.
Mayer will also have to come to terms with Ross Levinsohn, who was serving as Yahoo’s interim CEO before her appointment. In the wake of Scott Thompson’s departure, Levinsohn had outlined a rather AOL-like strategy to turn Yahoo into a “premiere digital media company.” His approach entailed not only producing original content but also acting as a hub for content from other media industry partners. The same approach has mostly failed to produce stellar results at AOL, which has been pursuing it for several years, but Levinsohn actually has the background to maybe make it work: He used to run digital operations for Rupert Murdoch’s News Corp, and knows the media industry. Mayer and Levinsohn previously worked together when Google and MySpace struck a lucrative search partnership back in 2006, so it’s possible the two will find a way to work together now. However, Levinsohn had indicated some interest in taking Yahoo’s top chair, and this might amount to the second time in a year he’s been passed over as Yahoo CEO. He might be ready to move on to something else.
Yahoo originally ceded the back end of its Internet search business to Microsoft for short-term gain (lowered costs and payments from Redmond), and the benefits of that arrangement have largely run their course. If Yahoo wants to chart its own course again, it may need to consider cutting itself free of Microsoft’s shackles, or at least recasting the arrangement more in its favor.
Part of that may involve making some alliances with companies besides Microsoft. It’s unlikely that Mayer’s transition from Google to Yahoo will be like Stephen Elop’s transition from Microsoft to Nokia, which quickly saw Nokia cozying up to Microsoft and making an all-or-nothing bet on Windows Phone. Mayer won’t turn Yahoo into a de facto Google subsidiary. However, Mayer will very much want to look at aligning with Google’s competitors. That may mean recasting its deal with Microsoft, but it also may mean strategic partnerships with Silicon Valley neighbor Apple. Apple has been investing in creating its own advertising and mapping services, but Yahoo’s ad business is still bigger than Apple’s, and Yahoo can bring Flickr to the table, which may be appealing now that Facebook has spent $1 billion on Instagram.
Stop the brain drain
Perhaps most importantly, Mayer will need to find a way to keep Yahoo’s core talent, and bring in fresh blood to reinvigorate the company. At Google, Mayer is no doubt used to working with motivated engineers who believe they are working for a winner in the technology sector. At Yahoo, Mayer will no doubt face disillusioned product teams who have endured layoffs, product stagnation, and years of watching their once-leading company struggle. Mayer will need to invest in attracting and retaining top-flight engineering talent. Some of that will no doubt be through acquisitions, but hopefully most of it will be through simple retention, or hiring engineers to work on product maps that have been purchased from someone else and repurposed for Yahoo.
How much time does Mayer have?
Marissa Mayer is not the first CEO Yahoo has brought in to stop the bleeding. That would have been Carol Bartz, who Yahoo hired back in 2009 to staunch losses and redirect the company in the wake of the disastrous sideswipe of Microsoft’s $45 billion hostile takeover offer. Yahoo still has not recovered from that encounter, and investors are unlikely to let Mayer forget that. They’ve been waiting for almost five years to see their investment in Yahoo return to anything approaching the value it had when Microsoft tried to take over. Some may tire from the fight, but many will not be satisfied until they see a sustained upward trend on Yahoo’s stock price.
How long does Mayer have to show results? Yahoo’s famously ineffectual board of directors gave Bartz a little over two and a half years. If we were to guess, Mayer has until the end of 2014 to show solid progress in her leadership of Yahoo. That’s not a lot of time.
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