It was clever of Yahoo to announce the initial Panama roll-out on an otherwise depressing conference call (a well-handled subterfuge that, for a few minutes, distracted people), and it was also a relief to hear Terry finally acknowledge that the company’s performance has been weak instead of trying to protest that 19% growth is fantastic relative to all other media. This said Yahoo!’s problems are deeper than a bad quarter caused by weakness in a few customers’ businesses.
Yahoo! has lost the competitive fire that made it a powerhouse in the late 90s, and it has even lost the recovery momentum it developed in the early years after the crash. Some of this is the result of a maturation of its core business–graphical advertising–but more is due to the lack of a sense of competitive urgency. From the outside, it seems as though Yahoo!’s senior managers, having rescued the company from a brush with death, have collectively decided that they’ve done enough and that just being “good” is now good enough. (A less charitable interpretation, one I’ve floated before, would be that the company got fat, happy, and lazy.) Unfortunately, Yahoo is now competing against companies for whom being good isn’t enough (Google) as well as against old media giants that are thrilled to finally be playing in the Internet big leagues (Newscorp). And these companies are kicking Yahoo!’s ass.
I am hesitant to point fingers without knowing more details, but it seems to me that Yahoo!’s lack of urgency starts at the top. It’s not just that Terry often sounds as though he is delivering the quarterly conference call from a Barca-lounger (although if he speaks with this much urgency and passion when trying to rally the Yahoo troops, it’s no wonder the company has hit the snooze button). It is that, despite the incessant delays in the new ad-serving system, despite the loss of market share to Google in almost every key product area, despite having to be embarrassed into action in Finance and email, despite an inability to compete for major acquisitions (YouTube), despite the inability to articulate a clear, overarching strategy, Terry appears to have made little or no effort to scare his team into shape. Given the company’s stumbles this year–a year in which it has gone from being No. 1 to an increasingly distant and feckless No. 2–one imagines that at least a couple of heads should have rolled.
Yahoo is still brimming with talent–Terry, Sue Decker, Dan Rosensweig, and others–and its global brand and franchise remain the envy of every media company in the world. The company has clearly lost its edge, however, and if it doesn’t regain it soon, the latter asset will simply wither away. If Terry doesn’t want to grab Yahoo’s people by the lapels and make them desperate to win again, then he should step aside and let someone else do it. And if he wants to, but can’t, then Jerry and the other remaining folks who once had the fire should ask him to go.