Yahoo re-org: A view from the ranks
When word first leaked last week about the coming reorganization at Yahoo (YHOO) my immediate reaction was, ‘What, they didn’t do that two years ago?’ I had the same reaction when the shell-game-type shuffling finally was announced Thursday. Then came the following over my transom. Give it a read. It’s from a Yahoo employee who decided to e-mail me directly with a unique view of what’s going on inside the company. I guarantee it’s better than any analysis you’ll see in the media on the subject. It also makes you wonder, does Yahoo’s board, which includes corporate luminaries like VJ Joshi of Hewlett-Packard (HPQ) and Bobby Kotick of Activision (ATVI), have the slightest idea what’s up at Yahoo?
Here’s the e-mail:
“I wanted to let you know about some of the good things going on at Yahoo. We are poised to double free cash flow in two years; we have the right people in the right places; our senior management is aligned with our shareholders; our employees are fully behind our senior management; and our advertisers are delighted with our services. This is the dawning of Yahoo’s best era ever. Things could not be better!
Ok, so there are some details to be worked out about how we actually meet those revenue targets, the fact that our new org chart shows absolutely no changes at the top, and the fact that we can’t get our stock price anywhere near what Mircosoft (MSFT) offered. But those are really just details, aren’t they? A few headwinds now will only make our sailing that much smoother later.
Take the new re-org announced today as one example. It had only one objective: solely to make our organization better aligned with our corporate priorities. Perish the thought that it had anything to do with personal power plays or internal politics. Sure, we just had a major re-org in January, which was really just a completion of the re-org that we had in October. But we work in the Internet, and we have to be nimble and responsive to the market demands. Just by example, when Hillary Schneider was promoted in Spring of last year to run HotJobs, Autos, Real Estate, Local, Shopping, Travel and Personals, we were all moved across campus into one larger org for no reason other than to ensure that our customers would be better served. Then, when Hillary moved on to run Sales for Yahoo (but kept HotJobs) at the end of the summer and we were moved back to our old homes, it was only to meet the needs of our customers again. When that uber-org was divided up in November and Autos and Real Estate went to our old Media group while the others fell under the Search group, it was because our customers demanded it. When the head of this group switched places with the head of the Search group in January just in time to do annual reviews for all of the people in their new orgs, well, you knew all along that our customers would be reaping the benefits. Now that this re-org will put all of those properties back under Hilary – except for Local, which is going to be under the group called Global Products (just out of curiosity, what is the opposite of Local?) – I can say with the utmost confidence that our customers will be delighted with the greater efficiencies that this structure will bring. (As a side note, the Engineering team, which has for the past few years re-org’d in lock step with the business re-org’s will not in fact re-org in lockstep this time, because quite frankly, they don’t need to be better aligned with the business teams.)
Sure, we have lost a few executives over the last week – eight in six days by my count. The fact that so many are leaving in such a short period of time right after we announced the end of all discussions with Microsoft might appear to be a lack of confidence in our own prospects, but I can assure you that nothing could be further from the truth. If you read the official announcements, their motives were made clear: all of them had decided either to spend more time with the families or pursue other opportunities. End of story.
As for the Microsoft offer, well, I can’t emphasize how relieved we are that we did not sell ourselves short. All of us who are working in the trenches know the full potential of Yahoo! Sure, we may be losing market share in search to Google (GOOG) every month and we may be losing market share in pageviews to social networks, but our future has never been brighter! As the market grows and our share declines, our opportunities for growth only increase! Simple math there. We have another 80% of the search market left to capture – Google only has about 30%. Now, whose future is truly brighter?
As for the Google deal, HOORRAY! Now, you might be thinking that we employees – particularly those in Search – who have spent most of our waking hours trying to do battle with Google might in some way be disappointed that we are now getting into bed with the enemy. Au contraire! We love it! Nothing indicates a job well done better than outsourcing your own job to the competition. Am I right, or am I right? After all, it is not as if we had sold the entire search team to another company for a premium price – that would have been a slap in the face! By contrast, outsourcing as much of the search business to Google as legally allowed in exchange for near term cash, that is much more re-assuring. It tells us all that we are truly valued.
So, as you can see, things here are great. Hope you are doing half as well.”
“…and our advertisers are delighted with our services….”
As an Internet Marketing Strategist who advertises on Google, Yahoo and MSN, I can only say as an advertiser that Yahoo’s advertisers are NOT delighted with their services, in fact using their advertising services leaves me with a headache! Don’t even get me started on MSN…I can only imagine this employee was happy the Microsoft talks fell through due to Yahoo not wanting to join forces with a company who has just as bad as an advertising platform as they do.
Some people need to face reality. I hope this email was not meant to fool shareholders. When you keep losing market share it is an indication of moving to a wrong direction. Period.
I left Yahoo out of frustration over a year ago. I gave them some powerful technologies, with proven capabilities of beating Google in one area of search, but middle and upper management failed to fully grasp what I had delivered.
The problem is, instead of being run by technocrats who can map a technical strategy for success, Yahoo is being run by politcos and bureaucrats, who are happy with a go-slow approach and status quo.
I’m sorry to see Yahoo crumbling in slow motion, but I’m glad not there to witness it first hand.
Wow. The political mongering sounds just like what goes on inside Apple. Aside from our genius CEO, upper middle managers inside Apple are power hungry SJ wannabees with inflated egos, slick slides in which one person takes all the credit from their team so they can rise up the ranks and where you see employees so insecure about losing their jobs (and identity, false albeit) that their only way of survival is to power play and be rude constantly – all to move up the ranks. i blame the upper mgmt who are comfortable and never really address these issues until there is chaos.
As a former Yahoo I can say this e-mail is spot on. These constant reorgs don’t solve any of the root problems: too many management layers, not enough focus on product innovation and users, to name a couple. For example why don’t the key properties such as Mail and Search report straight into the CEO? Instead they report into a EVP who reports into a President who reports into the CEO. The reason (as this e-mail points out) is it’s more about protecting your turf than organizing around a lean management structure that can make better decisions more quickly.
I’m another former Yahoo, left 4 years ago. The rot had begun even back then. I knew things were going the wrong direction when it became clear to everyone that one particular SVP rewarded slick Powerpoint slides over actual content and ideas. People behave according to incentives set by top management, so what do you think happened? Yep, people slaved for days or weeks to make just the right Powerpoint to wow out-of-touch senior management. Backstabbing, grandstanding and bureaucratic battles began to dispplace a grassroots culture of passion for products and improving the lives of our customers. One of my fellow Yahoo carpoolers described it as “soul-crushing.” He was right.
An aspect to this story largely absent from the media is Sue Decker’s role in creating this mess. Sue was an awesome CFO, but an operations and web strategy leader? Come on! She’s a bean counter. She has *never* worked in the trenches to create Internet products or run large teams. Her contact with the “little people” is virtually nil. Her victorious putsch against Dan Rosensweig was a sad day for Yahoo — Dan actually knew something about building internet products and inspiring, running and and leading teams. Sue has a dead hand.
Sadly, it’s true — Yahoo has become the new AOL. The fault lies at top, where there have been no changes for years. Time for management to take responsibility and step aside. Denial ain’t just a river in Egypt.
Sad but true.
It’s official. Yahoo is the new AOL. Know anyone proud about working at Yahoo? That’s what I thought…
Sounds just like any other big company where egos and power plays can outweigh real attempts to improve performance. Going through the same old shite where I work …
It is sad to see that people have this elquence and sarcasm when they can see their stuff published out on the web but shut up when they get the chance to say the same things in internal meetings and all-hands in companies like Yahoo. If you are unhappy where you are, leave. If you feel unhappy and not empowered where you are say so to your boss, then leave. People’s lives are dependent on the success of some companies, good people that believe in what they do and focus on delivering a good job. If you don’t feel that way, don’t spoil it for them, but just leave. Like, now.
There whole business is falling apart. I have used many of the job boards and theirs has gone down in value every month the last 2 years. HotJobs is garbage.
As another rank and file insider…
I worked in the part of the organization that is described above (with shopping, travel, real estate, autos, etc), and everything said is true word for word.
We were consolidated, physically moved to another building, then pulled apart (first hotjobs, then autos and real estate) and sent back to our original homes. All within about five months. Now we will reorg again.
Personally I’ve had 4 managers and 4 cubicle relocations in one year’s time, and this is fairly common. The constant shuffling definitely adds to the already mounting challenges.
Two other organization/staff changes were made during this time as well. One was when apex project was being staffed, the engineering ranks of the listings uber org was raided. Then there was the mass firings which all but shutdown personals.
Most of the organizational changes have little to do with logically grouping the businesses, but instead are power plays at the VP level and up. You see, there are very little similarities to be had between the businesses, so the execs measure themselves by how many business units they oversee. Its kind of like they are shuffling trading cards.
The organization is also filled with lots of talkers and do-nothings. Layer upon layer of management offering only indirection. Tons of “business people” and very few engineers really cranking the gears. The ratio continues to get even worse as the best engineers receiving little credit for their work head for the exits.
The google deal improves yield per query, but does nothing to fix the declining query volume and market share. It’ll squeeze out a little cash in the near term, but yahoo probably won’t have meaningful search market share in 5 years anyway.
The saving grace could be apex project (exchange for transacting display advertising between publishers and advertisers). Its a better idea than panama (market for search keywords), because yahoo’s got its own sites and a few credible partners to create the critical mass to make the exchange successful. That is if the technology works and can be launched on time… (unlikely)
As for me, I’m biding my time and looking for what’s next…
Hey, the CEO, upper managment etc. with Yahoo sure arn’t going to give up their big fat salaries to benefit their stockholders! Warren Buffet has the right idea, “If the company doen’t make money, he doesn’t get a pay check!” Perhaps we should think this stock thing out and make every expense accountable, salaries pending on performance, and what’s best for the stock holders! Sell!
From a Live Search guy: our product didn’t exist 3 years ago, it was pretty poor a year ago, it is comparable now and it will be very competitive by end of year. We will not give up, we have the resources and (surprise, surprise) very little process/bureaucracy. We would *love* to hire good engineers from Yahoo to speed up things. We pay well, benefits are great (check glassdoor.com for a cross-section) and we have positions open in CA and WA. We spend the whole day looking at customer DSAT and improving our product. There is no evil plan folks, just engineering – don’t believe the haters.
Sue Decker has shown her over the years as the ultimate poison pill at Yahoo. All the top executives who have worked with her ended their yahoo posts miserably, except those who were brought in by her, like her best man, etc. The only exception is Jerry Yang, who is still the CEO, but who knows for how long. The matter of fact is, as the internal power struggles intensifies, only those who are good at playing politics or kicking asses will stay; true leadership or technical skills are of only the least concern. The entropy of Yahoo is too high now.
Yahoo is a ship creaking at all seams and the employees know can hear the water coming in very well (despite the management playing some fake, soothing music). This is a most dangerous situation: valuable high-tech employees stick with a company because they feel inspired and motivated, not because they can’t get a well-paying job elsewhere.
As to your correspondent, we hope to hear more from him. Always appreciate good humour, even if you are on a sinking ship!
interesting and right on point I expect. when I left Yahoo! a year ago after 8 years I felt the exact same way and had the same frustrations. it is exhausting to see that they are still doing the same shell game, but now with greater and greater stakes.
What a royal mess, and what a great guy/gal to see the Dilbert-style humor in all this! One word of advice: if you don’t like your management, vote with your feet.
As a former Yahoo who left 5 years ago this all sounds frighteningly familiar. I had 8 different managers in 4 years and was in 10 different “groups.” Yahoo will never again succeed if they don’t find a way for employees to feel ownership in their products again. There is too much focus on who is doing what instead of what they are doing.
Didn’t all Yahoo! shareholders sell just before the first Microsoft deadline? Hmm, guess it was just me.
Wow, as a Yahoo shareholder this makes me cringe. But it is indeed funny. And poignant. And sad.
It would sound like yahoo doesn’t have a game plan thats working, instead everyone is playing at it… common american management anymore. However, without understanding the decision making structure how am I to say this is Yang’s fault or simply some VP that might be one of those that left? Jerry’s been back a year, is this him? Is it Decker? Gives us some meat, not some cynical employee who if you think about somes to reflect the need for change or an end to senseless change that we apparently haven’t identified the source.
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Wall Street watchers think of capital markets and financial players out west as being on the "other" coast. That's not how it's viewed in the Pacific time zone. From the venture capitalists of Sand Hill Road to the bond kingpins of Orange County to the corporate finance department at a certain software company in Redmond, Wash., there's plenty going on "out there." Adam Lashinsky should know. A native of Chicago, he has covered West Coast finance for a decade, with an emphasis on money matters in Silicon Valley. If it involves money and it's happening west of the Mississippi, look for it in Go West. 
I’ve met with dozens of Yahoo top execs over the course of the last 20 months, and can absolutely confirm the accuracy of this email’s insights. Yahoo needs to look and feel more like a customer-centric, technically driven and innovative team with a plan to emerge as something much greater.
Any company wanting to win big in the search engine market is required to outmaneuver the Google force, not chase it. Look at Salesforce.com’s stellar results and Marc Benioff’s leadership. This is a prime example of
where the rapid pace of innovation through collective collaboration results in a sustainable leadership position. So powerful, that even Google has modelled some of their teams in like fashion. Yahoo needs a senior exec and board re-org, not a company-wide one.