Yahoo Hires PayPal President for CEO

Yahoo officially named PayPal president Scott Thompson to take over as its CEO. Thompson brings a deep knowledge of technology to this challenging position. Will it be enough to get the beleaguered search company back on the right track?

You can read Yahoo’s official announcement here. It’s interesting to note that Thompson was a dark horse for this job; many outside observers didn’t have him on any of their lists. He clearly brings a different perspective from his predecessor, Carol Bartz, who was abruptly fired a few months ago.

Let’s start with his background. Kara Swisher notes that Thompson is a “genuine Internet geek.” He became president of PayPal in early 2008, coming to that position after serving as the company’s CTO, charged with handling its information technology, product development, and architecture. He worked at IT in his three previous companies (Inovant, Barclays Global Investors, and Coopers and Lybrand) creating and overseeing global architectures and technologies. Translation: he’s understands how to handle large systems, make them grow and scale, and keep them secure in the face of extensive demands – even when they’re handling sensitive information, such as financial transactions.

Perhaps the most relevant factor for Yahoo is that Thompson was guiding PayPal’s mobile strategy. As the father of three teenagers, he gets mobile’s importance for the future. At the 2009 Web 2.0 conference in San Francisco, he observed that none of his children use their phones to actually make phone calls; nor do they use ATMs. They keep in touch with their friends via text messages and Facebook, and they handle most financial transactions electronically. They rarely if ever use e-mail.

As Greg Sterling noted on Search Engine Land when writing about Thompson’s appointment, “Mobile is another area that Yahoo badly needs to focus on. While it had an early leadership position in mobile product development and advertising, that has been entirely erased by Google in the  past two years. Thompson’s knowledge of and experience with the mobile market may also be extremely helpful to Yahoo.”

Good as Thompson is in some areas, there are certain skills he lacks. He has no background in advertising or media. Sterling believes that Yahoo executive vice presidents Blake Irving and Ross Levinsohn, if they stay on board, can easily compensate for those weaknesses. But whether they stay is an open question; new CEOs tend to bring in their own teams. At the moment, there’s no way to tell whether Thompson will do this, or if Irving and Levinsohn will choose to leave on their own.

What does this latest development mean for the various asset-related deals in the works for Yahoo? Ray Bostock, the company’s chairman of the board, indicated in the press release announcing Thompson’s appointment that Yahoo “is considering a wide range of opportunities for the Company’s business, as well as specific investments or dispositions of assets,” so some of those may still go forward. Expect to see a deal involving China’s Alibaba Group and Japan’s SoftBank for the purchase of at least part of Yahoo’s stakes in Alibaba and Yahoo! Japan sometime in the coming months.

Does Thompson have what it takes to drag Yahoo out of its deep slump and fully into the twenty-first century? He may not be Steve Jobs, but he’s been living and working in the future perhaps more than any Yahoo CEO in recent memory – and he seems unencumbered by inconvenient prejudices for or against particular technologies. To judge from his conference presentation, rather that being afraid of change, or considering it a necessary evil, Thompson embraces it. He brings both hope and a badly-needed breath of fresh air to the troubled search company – both of which it has lacked for far too long. I wish him good luck with this monumental task; he’s going to need it.

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