Yahoo!’s new CEO, Marissa Mayer, is making decisions that highlight the difference
between satisfying short term financial investors and building a business.
In her announcements to and conversations with staff, she emphasizes product.
In her public presentations and in the company’s public filings, she emphasizes product.
In her musings about what to do with Yahoo!’s money (the $4B anticipated cash infusion from selling Alibaba comes to mind), she emphasizes product.
Yahoo! is just one of many companies that have, over the centuries, faded into nothing because they took a casual approach to product. That thinking is dangerous enough if a company makes nuts and bolts or other basic goods, industries in which the products may not change dramatically, but customers might and competition from lower cost producers are certain to do so. In high tech, especially in consumer high tech, however, sitting still and taking the gradual approach is not very different from tying concrete blocks to your investment dollars and tossing them into the nearest lake.
Kodak is a great example. RIM and Yahoo! are better examples.
Ok. Yes. Investing a company’s money in building the business is risky. Lots of companies have made bad decisions. Microsoft, as recent write-offs have illustrated, has been less than brilliant. HP screwed up with Palm, Compaq, and EDS.
But if you’re risk averse you shouldn’t be investing in tech stocks.
So the analysts who are downgrading Yahoo!’s stock based on Ms. Mayer’s decisions and direction are speaking to an investor community that shouldn’t buy any tech stock, let alone Yahoo!’s. If you’re not risk averse and you’re willing to invest in tech companies, look closely at Ms. Mayer and Yahoo!. It’s too early to predict success, but at least there’s a chance of it.
Yahoo!’s Board of Directors has brought in a stream of CEOs (five since Jerry Yang gave up the post in 2009). In choosing Marissa Mayer, they clearly were not looking for someone who would turn the company into a cash cow. If Yahoo!’s investors, current or potential, are not happy with the choice of CEO, they need to dump the Board and find a new strategy. Ms. Mayer is close to ideal for the direction the company should take, and her focus on product is right on the money (pun intended).
The big question is: Can Marissa Mayer bring the company with her. Yahoo! is, after all, made up of people even more than it is made up of money. Money is relatively easy to move; people are harder. Money creates the opportunity for innovation, but people are the actual innovators.