Yahoo Cleans House, Same Mess

About the most consistent behavior you'll ever find in corporate America is the old One Two Punch:

1. Hiring new people to bring about new changes and restore profitability
2. Firing the people who failed to bring about new changes and restore profitability

And so we have Yahoo, the inept slumbering giant, finally waking up to the fact that the internet isn't Hollywood and that the Web isn't downloadable television. Which brings us to most revent events, in which Yahoo announced not only the imminent departure of Terry Semel (slated for March, 2007), but the immediate departure of Lloyd Braun, who according to Reuters News Service, is "a former ABC TV executive hired two years ago to help Yahoo blend its Internet services with Hollywood-style showmanship."

Actually, both Semel and Braun are entertainment executives, and therein lies the reason for Yahoo's Number Two punch. Yahoo never should have hired either of these guys, if they had known anything about Hollywood. Had Yahoo known the real story on how Hollywood deals really work, they would have avoided both of these guys like the plague:

Neither of them had any internet experience. Neither of them had any done real business deals. But both of them were highly educated in the art of the schmooze, the major weapon of the "let's-do-lunch" crowd, where talent and acumen carry no currency at all. In Hollywood, it's all about ego and the deal. And this time, neither Semel nor Braun are leaving the party with much of either.

Sitting on mountains of corporate hubris, they moved much of Yahoo's offices down to the west side of Los Angeles, where much of the new entertainment media is located. The reason? You got me. Maybe it was a closer commute for Braun and Semel. Maybe it was a massive show of ego for Braun and Semel to parade in front of their Hollywood pals. For the record, Yahoo's roots are planted squarely in Northern California -- as are its foremost business interests.

That may explain why Yahoo's stock languished in a narcoleptic haze while the buzz masters at Google ate their lunch.
Which brings us back to Punch Number One: Hiring new people to bring about new changes and restore profitability. The same Reuters article reports Yahoo's CFO, Susan Decker, as a potential successor as CEO.

Can you say Caretaker Manager?

"Out of the frying pan, and into the fire," I believe the saying goes. I guess Yahoo still hasn't learned that to run an internet-based business, you need an entrepreneur who knows how to run an internet-based business. The last thing you thing is a bean-counter, schooled in the practice of analyzing enterprise from a balance sheet perspective.

You just watch: If Decker gets the gig, the first public comment will ring of "cost-cutting," "getting back to our core business," "restoring profitability" and "focusing on what our audience wants." In other words, the corporate code for, "Hey, I'm getting millions, plus options if I can just make it beyond the minimum term of my contract."

Hey, what about a brand strategy? What if Yahoo could actually could get everyone rowing the boat in the same direction, behind a brand that everyone could articulate with accuracy and precision? What if all of its programs and products and services echoed that brand strategy, reinforcing Yahoo's value to users and the market?
Think that would work?

Tell you what: You call your agent and if likes the deal, let's do lunch.

Dumping Semel, Yang and Yahoo

In case you didn't hear the party horns on Wall Street, word is out that Yahoo's ill-selected, ill-fated and generally ill CEO, Terry Semel, has finally been ousted as Yahoo's CEO. That's the good news. The bad news is that his CEO slot has been filled by Jerry Yang, one of the able founders of Yahoo.

The worse news? None of it matters.

In the immortal words of Pete Townsend, "Meet the new boss, same as the old boss."

Just about everyone has the story wrong on this one. The Los Angeles Times quotes analyst Trip Chowdry of Global Equities Research as saying, "Any person less than 30 has never heard of Jerry Yang...They know the founders of YouTube. They know the founders of Facebook and MySpace." That may be true. But who cares? Nobody any age gives a rat's ass about who creates or manages an online entity -- certainly not Wall Street. Believe me, if a trained monkey sat in the CEO chair at Yahoo and produced Google-like numbers, nobody would care at all. They'd be happy, but they simply wouldn't care.

Jerry Yang, at 38 considered by some to be "over the hill" in internet years, thinks Yahoo's issues are all about absent talent. According to the Los Angeles Times:

Yang said on a conference call with analysts Monday that filling key management jobs would be among his highest priorities. "A company such as Yahoo is all about talent," Yang said. "We have positions we need to fill. We need to convince people that this is a great place to work."

Wrong-o-ritos, Jerry. The old "We Need To Get Talent In Here" is what guided Yahoo's ship on to the rocks back at the turn of the century when someone, somewhere, decided that Yahoo's future lay in entertainment and brought Semel in as its captain. If you want to read what a huge mistake that was, you may be interested in these two articles, which pretty much predict how and why Yahoo would and did find its way into this unholy mess.

Clearly, Yahoo's problems are not about management. They're not rooted in talent. Sure, those are problems that plague the company and contribute to its demise. But Yahoo's real issues begin at the bottom: Like Wal-Mart, Yahoo has an identity but no brand strategy. So it doesn't matter who's at the helm. It doesn't matter what kind of talent you bring:

If people can't articulate why Yahoo is "the only solution to their problem," they have no reason to choose, use and evangelize that brand. And that's the point that Semel, Yang and Wall Street simply don't want to hear.

Word on the street is that Yahoo's current CFO has her CEO training wheels, waiting in the wings to eventually step in to the CEO's chair. Personally, Yahoo is probably better off with Pete Townsend. At least he can see things clearly.

That Sinking Yahoo Feeling

Once upon a time, a long time ago, there was this thing called the internet. It was brand new and really big. It was not only big, it was growing even bigger every day. Doubling in size every few months, adding billions of lines of content and welcoming millions of new visitors every day.

Getting a handle on all of that content was no easy trick. America Online tried, as did Lycos, Excite and a few other long-forgotten names. Of the early birds, none succeeded quite as handily as Yahoo, which quickly ascended to become the search engine king. The techie company with the typically quirky internet name rose above all others, culminating in its going public at an unheard of pre-bubble valuation.

Yahoo's rise typified the high tech soar-and-crash arc that soon became all too familiar. Except in Yahoo's case, they didn't crash. They survived. They struggled through the bubble burst, emerging from the digital Armageddon with a fairly firm grip on their title as the king of all search engines.

Yahoo stock, as battered as anyone's, slowly regained its health, but it never recovered to be the company it once was. But the reason it didn't recover isn't because of the rise of Google. And it isn't because Yahoo's technology was laggard. In fact, Yahoo had the most to gain and the least to lose in its post-bubble resurrection.

And yet, today, the company is struggling to catch its breath. Its stock languishes as insiders dump whatever they still hold. A fickle public has abandoned whatever allegiance it once had, preferring brands that are more responsive to their needs, while Yahoo's management desperately tries to pull more rabbits out its tattered top hat.

Of course, if you've been reading my stuff, you would have read years ago how it was pretty much over for Yahoo back then. It began with the hiring of Terry Semel, a man seemingly bent on converting Yahoo into the world's first internet television network. There's an old saying in the tech world: "When all you have to sell is hammers, everything looks like a nail." To Terry, a seasoned and successful entertainment executive, the internet must have looked like one big TV, just waiting to be programmed.

Anyone who knows now - or knew then - about the internet, also knew that the web was never destined to become an entertainment medium. Sure, you can find entertainment media on the web. But it doesn't take the memory of an elephant to recall the dismal days of WebTV, when even the wizards of Microsoft finally figured out that our PC's were never going to be televisions - and vice versa.

That's why they call it the digital convergence. It means that everything digital can exist here, not just one, overriding medium.

Yahoo and its crack team never did get that. They still don't. When Semel came aboard, the first thing he did was completely overlook the on asset that Yahoo had going for it: the preferred search engine. Asleep at the switch, his team let everything from paid ads to pay per click to paid inclusion all go to seed. That Google overtook Yahoo is no big deal. Anyone with the right resources could have taken it away from Yahoo. They were practically giving it away.

You know why Yahoo moved its corporate headquarters to Santa Monica, California? Because the studios at Paramount were already leased. Yahoo is not an entertainment company, no matter how much Semel wants to believe it is. The market doesn't believe it, if you go by Yahoo's stock performance over the last five years. See anything you like from January 2006 onward? Bear in mind that at this writing, the Dow Jones Industrial Average is at its record all-time high. And where's Yahoo? In the digital toilet, having lost half its value in the first ten months of 2006.

Neat trick.

Adding to that sinking feeling is the fact that most of the rats are deserting the Yahoo ship. Insiders, including Jerry Yang, can't dump this stuff fast enough.

Why is this happening? For the same reason it happened earlier: no brand strategy at Yahoo. You have the captain of the ship setting his course for Hollywood, while the boat was built for the internet. Clearly, nobody is at the helm of this rudderless ship, which means it's only a matter of time before it runs up on the rocks. While overblown, overvalued stocks like Google continue to beguile and amaze the Wall Street know-nothings, Yahoo can't even muster the strength to do that.

Then again, maybe Semel and Company have something up their sleeves. Maybe they have a plan to finally focus on what Yahoo's real brand strategy is. Or maybe they have a plan to stick to a plan that the public can perceive as something other than a quirky name.

Or maybe they're just taking swimming lessons.

Yahoo: Money for Nothing

You have to hand it to the folks at Yahoo. No matter how many chances they're given, they keep tripping over themselves. I've been watching Yahoo ever since they were knee-high to a modem. In that time, they've gone from the powerhouse of search engines to the Jerry Lewis of the internet.

It's companies like Kodak and Yahoo that make me such a strong believer in the economy of the United States. Where else could major, publicly-held institutions keep failing year after year and still bluff the public into investing even more millions into their eventual demise?

Yahoo is the typical modern American tragedy: A first mover in a category which it dominated for years, Yahoo watched in dismay as Google ate its lunch in record time. Under what could only be called the denial-driven dictatorship of Jerry Yang, Yahoo coughed up any and all dominance it once held by simply refusing to brand itself. Nobody knew why they should stay loyal to Yahoo, so nobody bothered to.

Nobody was quite as confused about Yahoo's brand as Terry Semel, the showbiz CEO who took over Yang's mission of driving the company into the ground. For some reason (speculated in past issues of this blog), Semel had visions of Yahoo becoming the center of internet entertainment. It was a grand, totally naive dream, however, that failed every single opportunity given to it. In the end, Semel left Yahoo users even more confused, and its shareholders even more destitute.

With Yang finally being given his walking papers, Carol Bartz assumed command of Yahoo's sinking ship. Suddenly, new hope abounded. Maybe, just maybe, Bartz could right the brand that never was. Unfortunately, the hope sank quickly as it became apparent that Bartz's dog and pony show was actually the same old song and dance. Even a joint program with Microsoft did little to enthuse anyone; two high-awareness non-brands joining together did nothing to raise the hopes -- or stock prices -- of either one.

Now comes word that Yahoo is launching a $100 million ad campaign -- glaringly mislabeled as a "re-branding" -- which further illustrates its incompetence:



Once again, the adage proves true: When you try to be something to everyone, you end up being nothing to anyone. Once again, by not articulating what Yahoo is, or why it should be "perceived as the only solution to its prospects' problems," Yahoo is spending millions to actually say nothing at all.

Am I missing something here? Does anything in these ads say anything at all to you about why you should use Yahoo? Or how Yahoo offers you something you can't find anywhere else? Is anyone at Yahoo aware that they could run these ads in Braille and they'd have the same effect?

A lot of people maintain I'm a harsh guy. I'm not a harsh guy. I'm just a guy who hates to see mediocrity and failure being passed off as professional success. I call 'em as I see 'em. And from what I see, Yahoo's future is looking bleaker by the minute.