General Musings

This section is where you'll find my thoughts on life from the eyes of an entrepreneur.  The biggest challenge is balancing the success and obligations that success brings as the more successful one becomes, it seems the more obligations they have to the world.  Feel free to comment as you follow my journey and general musings regarding that journey. 

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General Musings on Life & Entreprenuership 

The Formula for Yahoo!'s Success -- HINT, It's Not Their Newly Announced CEO!

(01/04/2012) Mark A. Cenicola

Yahoo! has announced, yet another new CEO. Will this person do any differently than past CEO's?  Not likely because they didn't hire someone with the right feature set.

Scott Thompson is probably a wonderful CEO in a company that's on the right path that is simply looking to not get derailed on completing their mission.  He served as president of Paypal while it more than doubled its active user base.  However, Paypal was already on an upward trend and as long as someone competent was there to watch over that growth, it's likely many quality executes could have not screwed up a path already defined.

The problem with Yahoo!'s latest CEO continues to be the same.  Thompson is not a company founder or a turnaround professional that's going to drastically shake up Yahoo! which it needs to get back to growth.  Successful company founders are successful because they had vision, drive and could thrive in environments where resources where scarce.  They excel at doing whatever is necessary to accomplish their mission. 

In fact, Jerry Yang did it with Yahoo!.  He took a company from nothing and turned it into the largest website directory on the Internet.  Yang is one of the most successful entrepreneurs of the young Internet generation.  However, very few founders can do it twice, especially with their own company.   

Yes, Steve Jobs did it twice, but that's the reason Apple is the most successful (and richest) technology company of all time.  Yang failed miserably in his second coming, mainly because he didn't bring a new vision to the company or see an opportunity to do something he couldn't do before.  He had already done what he set out to do.  Jobs still had much more to accomplish when he came back.

There are two types of executives that can help Yahoo! revitalize itself.  However, one type requires the other in the waiting.

The first type is a turnaround professional.  This is an executive that is going to cut deep across the board not with just personnel, but spinning off or winding down projects that don't fit within the core mission of the organization.  So why didn't Carol Bartz work out well? 

Bartz was supposed to be that turnaround person, coming in to save the day and get Yahoo! back on it's growth feet.  While she did sell off or close divisions, you could see that it was done slowly and also not because of some core focus in which those divisions didn't fit.  

You have to identify the mission before embarking on the journey.  Bartz didn't seem to have a properly defined mission that could rally an entire organization to achieve.  She wasn't able to cut her way to success.  There was no vision for what the future Yahoo! would look like and therefore, no mission would be successful anyway.

The second type is a company founder.  A company founder is someone who takes an enormous risk in order to achieve a vision in which they are extremely passionate.  That vision doesn't always start out well defined, but over time becomes clearer and turns into a mission.  Once clearly defined, a founder acquires the confidence they need to overcome insurmountable obstacles along the way to accomplish their mission.

Yahoo! has already been founded, so how can a founder help them when Yang has already failed?  Notice, that I didn't write "Yahoo! founder," I simply wrote, "company founder."  There is a way to fold in a passionate company founder into Yahoo!.  By rallying the organization around a core mission, a company founder is what they need to turn things around.

In order to do this, Yahoo! needs a turnaround professional who realizes that once they've maximized the value of the company's assets and streamlined operations, it's time to bring in a savior that can leverage the vast resources Yahoo! has available to it.  This is just like what Apple's leadership did when they acquired Jobs' company, NeXT.  In a short amount of time Jobs ousted the person that brought him back and took over CEO duties.  We all know what happened from there.

This is exactly what Bartz should have done and what the new CEO should do.  Thompson is not a turnaround professional and I'm sure he wants to be CEO for more than a year.  Turnaround professionals don't and shouldn't stick around for very long.  You can see that this formula doesn't add up very well.

Yahoo! is in the process of selling off their asian assets in a multi-billion dollar deal.  That's great, but how are they going to use the money?  Without a plan to need or use that money, it's inevitably going to be used poorly such as a big one time dividend or a stock buyback (my thoughts on stock buybacks). 

This maneuver will leave them with no asian assets with money to squander which could have been used to support growth if a focused missioned was defined.

Before it's too late, hopefully someone that knows the formula for turning around a once great company will apply it to Yahoo!. For their convience, Yahoo!'s success formula is: 1) Identify a company with a passionate founder(s) that has the opportunity to change the world.  (2) Purchase their company. 3) Put them in charge with full control over all the resources necessary to make their vision a reality.  4) Stay out of their way and watch the magic.

Yahoo! could have already done this with Mark Zuckerberg and a little company called Facebook.  Well before that, another couple of founders named Sergey and Larry offered their help.

You can expect Thompson to be gone in a couple of years since he doesn't fit the criterial to make the once formidable Internet giant a success again.  Eventually, Yahoo! applies the above formula or ceases to exist.

Mark A. Cenicola April 04, 2012 ~ 8:37 AM
New CEO, Same old Tactics
Actually, this CEO is doing the exact same thing as previous CEO's. Yahoo! sued Google just before they went public, like they are now doing with Facebook. Except Facebook isn't going to lie down and roll over. They laid off plenty of staff members before under Carol Bartz (see http://searchenginewatch.com/article/2050242/Carol-Bartzs-Leaked-E-mail-RE-Yahoo-Layoffs). They even shook up the board. None of these tactics are new. Yahhoo! should buy an exciting company like Pinterest for a ridiculous amount of money and put their team in charge. That would be a significant deviation from past turnaround attempts. The good things about Yahoo! are that they have a great balance sheet, have turned consistent profits and have assets that can be turned into cash. Usually companies that have significant balance sheet issues and poor performing assets lay people off. Yahoo! lacks strategy, not capital and assets. It's sad when you have so much money and no idea what to do with it.
Phil Simon April 04, 2012 ~ 7:25 AM
mildly disagree
Thompson's sure not the founder and, I agree with you, founders bring something special to the table. Yet he's doing things that previous CEOs didn't do--e.g., considering massive layoffs (thousands, I hear), spearheading the lawsuit against Facebook, etc. Why? Same-old, same-old hasn't worked for Yahoo. I doubt that he'll be successful because one person (even a CEO) typically can't turn around formerly powerful tech companies.