Is Yahoo! Spread Too Thin?
Posted by: Rob Hof on November 19, 2006
Everybody’s talking about the “peanut butter” memo from Yahoo! Senior VP Brad Garlinghouse, which Paul Kedrosky posted and the Wall Street Journal wrote a story around Saturday (behind a subscription wall). In the memo, Garlinghouse says Yahoo! has spread itself too thin, like peanut butter on bread, and doesn’t have a strong vision of where it wants to go.
It’s a strange memo in the sense that, as Mike Arrington points out, it doesn’t appear to be one of those memos purposely leaked to galvanize the troops or investors to reposition the company. It’s too strong for that.
But as the Sunday New York Times article, as well as several other commentators point out, Yahoo!’s plight doesn’t look as dire as the memo may imply. It continues to lose ground to Google in terms of how well it makes money off its traffic, but Yahoo!’s still in front on traffic and it’s still growing. Better, in other words, to have the traffic in the first place and then at least have the potential—even if delayed—to make more money off it.
Indeed, some folks aren’t impressed with Garlinghouse’s memo, though it certainly does nail some key challenges at Yahoo! in surprisingly stark terms. John Furrier calls it a “fantasyland” memo because it “felt nothing like leadership or innovation to me. Sorry but if I were a peer or coworker of Brad I would not have been inspired. It offered nothing tangible other than ‘generic’ process management jargon and concepts.” Dave Winer’s take feels the most on-target to me:
First, Yahoo’s stock is doing okay, the company is growing and profitable.
It’s also diversified, which is another way of saying everything that the memo complains about.
They have turf battles and they duplicate each others’ work. In other words, Yahoo is a big company.
There is no way to make them lean and focused, that’s not how big companies work. Sheez, some small companies have a hard time being lean and focused.
Yahoo should continue to buy their innovation from outside, because that’s where innovation comes from.
What Yahoo may need is someone who can speak for them, who can give an exciting speech, who can lead all the external forces, and internal ones too. What they may be missing is an eloquent founder-type who, when people need to settle a difference, can come in and make the choice. At Microsoft, in the old days when Microsoft worked, people could ask themselves What Would Bill Do? Google has Larry and Sergey. Yahoo may need a leader. But they’ve got a pretty good foundation to build on. And they could probably go a long, long way without great leadership, since most American companies don’t have that.
And come on — bleeding in purple and yellow? Garlinghouse is a bad ripoff of Guy Kawasaki.
In any case, it’s clear that such advice can only be addressed by the top dog. So if nothing else, CEO Terry Semel needs to step up on the leadership front.