WIRED:IT LOOKS LIKE it's going to be Yahoo's "year of the three emperors". The company entered 2012 without a company head, after its board summarily dismissed Carol Bartz, the chief executive of only two years. The new chief executive, Scott Thompson, started in January, and lasted less than five months, after being ousted this week following a shareholder proxy battle and accusations he had faked a computer science degree on his resume. Thompson had been in the middle of scything through Yahoo's employee count and, judging from discussion board posts, did not seem to be popular with at least some of the remaining staff.
Thompson was swiftly replaced by an interim chief executive, Ross Levinsohn, Yahoo’s head of global media.
I’m sure the second question Levinsohn will be asked by Yahoo employees (after “Am I going to be sacked?”) will be “What are we this time? A tech company or a media company?”
It’s what everybody always wants to know about Yahoo, and the company has managed to evade the question (or act as though it has) for 18 years now.
The truth is, Yahoo probably had a chance to be one or the other, but never managed to decide. Its DNA in the 1990s was in its employees, but in a way that differed from almost everywhere else in Silicon Valley.
Yahoo employed a lot of people, and asked them to curate and manage the web. Where other companies has product managers and developers, Yahoo had editors, and managing editors and senior editors. That didn’t come from the media world so much as from Yahoo’s original unique selling point as a human-edited guide to the web.
Google fairly trounced that vision of exploring the internet in the early 2000s, and so, presumably following the clues in the company title headcount, Yahoo went after the concept of becoming a media hub. In 2001, the company hired Terry Semel, a Warners executive, as chief executive. Semel eventually cashed out with over half a billion dollars in earnings in 2007, but his successors Jerry Yang and Carol Bartz both continued the “media-driven” theme of modern Yahoo.
Yahoo’s new chief executive may at last be in tune with what that really means.
Increasingly on the internet “content” and “media” stand as proxies for the real revenue driver – advertising. Yahoo has always been an advertising company, transforming the billions of monthly hits on its legacy of top websites into ad impressions. Of course, this is true for almost all of the free commercial internet, just as it’s true of almost all commercial broadcast media. But for Yahoo, as with most traditional media, stressing advertising in your corporate description is like wagging the dog’s tail. Google is an advertising company that exploits its technological advantages to sell space.
The New York Times is a newspaper that exploits its own media to sell space.
Curiously, the regency of Semel, portrayed as the consummate Hollywood-style distribution dealmaker, was Yahoo’s high point as a technology incubator.
Startup purchases like Upcoming and Flickr heralded the flurry of the Web 2.0 boom; under the subsequent boss, Jerry Yang, pure research operations like Yahoo Labs and innovation centres like Brickhouse in San Francisco picked up the brightest and most promising technologists. During that time, the company even turned to outsiders to give advice. Steve Jobs’s advice, according to former Yahoo executive Patrick Houston, was to ask “What is all this content bullshit? You’re not a content company. You’re a technology company.”
But somehow, Yahoo fumbled it, possibly because the real challenge – transitioning such innovation into revenue – was always unclear. While Google had an uninterrupted opportunity to gather up ad revenue in the rest of the web, Yahoo struggled to create a ecosystem among its own properties.
And maybe that’s where the problem continues to lie. Yahoo never managed to stitch together advantages from its disparate assets. Innovative products like Fire Eagle, a geolocating service that could have geolocated all Yahoo’s properties, were never successfully exploited. Even popular and profitable services like the Flickr photo site succeeded only in boarding themselves up away from the rest of the Yahoo bureaucracy.
What Yahoo needs to do is unask the question, because media and technology are no longer the categories by which a company is judged. These days any sensible media giant is also a technological leader.
The problem Yahoo faces is that its technological lead – being the first on the web – is long over. The world and its stockmarkets are already marching off into mobile and new forms of internet interactivity. Even Google, Yahoo’s successor in so many ways, is struggling to break out of the public web into the content hidden behind Facebook’s and Twitter’s facade. Yahoo has to pull the same trick, but somehow leapfrog not one but two generations of media technology.
Yahoo has enough momentum and enough properties to sweep into the mobile or app world at the last minute. But that involves co-ordinating both its technologists and media assets to aim for a united goal, one that may not make its stockholders happy today, but keep Yahoo alive and profitable tomorrow.
It needs to stop choosing between content and technology, and decide to use both.
