Tough Week For Jerry At Yahoo

As hard as it is to watch, it's got to be infinitely tougher for Yahoo CEO, Jerry Yang, to go through. This week saw the exodus of more of Jerry's executive team, including most recently execs from the search business. That's tough, and the worst may not be over. And now, those who left earlier are venting their frustrations to the press about how Yang handled, or mishandled (depending on your viewpoint), his first year as CEO and most recently, Microsoft's unsolicited offer.

Yang is described as someone who is patient, extremely hard working, and has a vision for where he wants to take the company. The problem is, Wall Street didn't take too kindly to Yahoo's plans to develop a combined search and display advertising platform. That was the first vote of no confidence, resulting in a stock value drop low enough for Ballmer to make his play at Yahoo.

Jerry's reaction to the Microsoft offer? Go make a poison pill-like deal with arch enemy Google for display advertising, a deal that obviated the need for that combined search & ad platform Yahoo's been sinking money into. Oops. The next vote of no confidence is coming now, with execs leaving the company. After Yahoo followed through and inked the Google ad deal, it's no wonder those execs heading for the door include leaders from the search business. Google's the big bad competition, and the chief driver behind getting into search + ad display. Microsoft might not be the date Jerry wanted to take to the prom, but from my viewpoint, Jerry way over reacted and beat Yahoo with the ugly stick a few too many times. Thus, the consequences we see happening now.

Have we seen the last of the Yahoo leavers? Probably not, but it's hard for anyone to tell if the other shoe's done falling yet or not. The question now is, what to do next? Keep on keeping on? Or do something bold, radical, or possibly even more drastic than the Google deal? The latter options don't appear to fit Jerry's style, but then again, he did do the deal with the devil, Google. Desperate times call for... well, you know how the saying goes.

If I put my Monday morning quarterback helmet on for a minute, how Jerry Yang handled his first year as CEO caused me to remember back to what one of Avis' former CEOs, Robert Townsend, had to say. (I'm going way back now.) I heard Townsend on a series of management learning tapes called Up The Organization where he advised, when you are in a new job, don't wait to take action. Don't wait because you've got about a six month grace period where you can probably get away with just about any decision you want to make. His logic was that they aren't going to fire you in the first six months for fear of looking stupid for hiring you in the first place. That's how I remember what Townsend said those many years ago.

Times have certainly changed since Townsend gave that advice, but I'll bet there's still a little bit of truth in his words. When you have a change of leadership, people want to see some signs of where you plan to take them. When you're the CEO, a lot of other people such as the BOD, stockholders, and the stock market, are looking for the same too. (Here's where Townsend's advice about getting away with just about anything probably doesn't apply completely for the CEO role.) In hind sight, Yang's likely been too slow to react to Google's competitive threat. Developing a new platform is likely a multi-year effort before it starts to mature enough to produce the revenue results required. Maybe Microsoft and Yahoo combined could take on Google and make a significant dent in Google's business. Who knows.

For now, both Jerry Yang and Yahoo look like they're floundering, and that rocky shoreline is getting bigger by the minute. Honestly, I'm not sure Yahoo has a lot of options at this point. The Feds want to scrutinize the Google deal, and at the same time, Jerry needs to apply some kind of corporate tourniquet and stop the hemorrhaging. Patience doesn't seem like the best virtue to rely on at the moment. Maybe that Microsoft deal won't look so bad over time. I wouldn't be surprised to see that trial balloon circling back around for another attempt at a landing. Who knows, maybe Yang will even be the one to make the first move and approach Ballmer first. Now, wouldn't that be a surprise.

Okay, time to get back to reality and take the Monday morning football helmet off. I think it was squeezing my head a little too tightly. lol

UPDATE: I came across this Motley Fool article this morning that also speculated maybe Yahoo's downfall was all part of a master plan of Ballmer's. (But then they negated their own idea.) I had the same thought, like, putting that young rookie quarterback to the test by blitzing him. Even though The Fool sorto of retracted that idea, I'm not so sure. This might have been one of the scenarios Ballmer thought at least possible. Hmmm.

UPDATE: TechCrunch is now reporting that while Yang did meet with Feds about the Google deal early in the week, Jerry's been MIA ever since. No one knows where he is or has been all week. A deep, dark depression? Or some super secret business deal in the works? Both? Who knows. TC is calling for some much needed leadership during these chaotic times at Yahoo. As much as we're all talking about Yahoo in the blogosphere and in the press, can you imagine much work is happening amongst Yahoo employees? TC's right about needing leadership right now. Nature abhors a vacuum and so does leadership.

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