It must have been a heartbreaking decision, but Jerry Yang, co-founder of venerable but battered search engine Yahoo, agreed to step down as the company's CEO as soon as the board of directors finds someone else to fill that role. In this article I plan to take a look at the factors that got Yahoo into its current mess, and how it may go forward.
As any parent knows, when you're there for the birth and helping to raise your baby, it takes over your life – and it's hard to let go. Yahoo is only 13 years old, but that's a long time in Internet years. Jerry Yang hasn't been CEO for the entire time; his most recent stint has lasted 18 months so far. But in many ways, it's clear that he still thinks of it as his baby – and, like a parent, he may be blind to his child's very real problems, and therefore unable to help solve them.
These problems have been brewing for a long time, but those outside the company got their first real look at them when an email written by Brad Garlinghouse, a senior vice president at Yahoo, leaked to the press. The November 2006 memo took the company to task. It focused criticism on the leadership, and stated the author's opinion that many of the company's problems relate to being involved in too many different projects, products, and initiatives. The email came to be known as the “Peanut Butter Manifesto” because he said Yahoo was spreading itself as thin as peanut butter.
Some date Yahoo's problems back to the appointment of Terry Semel as CEO in 2001. Semel's background boasted serious chops in the entertainment and content industries, since he served 24 years at Time Warner, most recently as chairman and co-CEO, before accepting the top spot at the search engine. By this time Google had begun garnering tremendous market share, and some at Yahoo thought they could compete by recasting themselves as a content-focused firm.
Yahoo also tried to become competitive by buying other companies, with a special focus on Web 2.0 firms. Del.icio.us and Flickr were two of the more prominent purchases, and they are still leaders in their respective fields of shared social bookmarking and photo sites. In general, these purchases fit into Yahoo's strategy of focusing more on content, and in fact Yahoo won some battles in this arena, even with homegrown content. No one can deny the popularity of Yahoo News, or of Yahoo's financial portal, for example.
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