I have written several posts here and at Mashable regarding what Yahoo has been doing lately on the development side. Today, I want to look at Yahoo as a whole. I do this because Yahoo is taking a beating from many blogs and media outlets. They also do not seem to be responding to anything except the latest merger or acquisition rumor. Let me state that I am not an economist or financial advisor or even an MBA. I am a software developer by trade with some management experience. I have been in this industry for almost 15 years and many companies have come and gone during that time. Today, I wanted to describe a plan that allows Yahoo to get back to a core business or two so that they may survive and eventually grow once again.
Perception is Reality
Something I learned long ago while in the consulting industry is that “perception is reality”. If people think that you are not doing your job, then people will believe that. If people read that a company is floundering, people will believe that. Yahoo has been in turmoil for a while now. There has been a severe brain drain at the executive (VP and above) level. This does not include the assumed brain drain in the engineering teams either. The perception is that Yahoo is in a death spiral. Jerry Yang leads Yahoo during this time, and is seen as inneffectual at best. Disappointingly, I believe it is time for Mr. Yang to step aside and let someone else take the lead. Jerry can remain on the board and stay employed as an advisor or consultant. The perception of Jerry Yang is terrible right now, and my guess is that finding a new leader will boost the current feelings about the company. The other side of this is that the new leader must be charismatic and vocal. I am not talking “foot in mouth” vocal like Steve Ballmer, just someone who can talk to the media and give them a solid idea of where Yahoo is going. Someone who can tell the media not to worry about potential mergers, but that the real story is what they are doing to survive and grow.
Like a Car, Parts are Worth More Than the Whole
If you go to the Yahoo home page, you see a nice list of services and a slightly cluttered layout. This is where some work is clearly needed. Yahoo went on a buying spree for a while and has a bunch of disjointed properties. If you go to the full list of “services”, you see an incredible list. If you are trying to trim down expenses and run a lean organization, there is no way you can support these 104 services. Every letter in the alphabet, except Q, is represented. That is ridiculous. So, your first step is to find properties that are sellable assets and liquidate them. In Yahoo’s case the parts are worth more than the whole.
The first obvious sellable asset is Flickr. Yahoo can get a very nice purchase price for Flickr and Microsoft would probably pay handsomely to get such a hot property. Dump the hosting and connectivity properties like Domains, DSL, GeoCities and WebHosting. Keep only the pieces that you need to build a storefront for a small business. These would be sold cheap to companies like GoDaddy and Earthlink, but cash is required when in a tight economy. The other “major” sale would be Zimbra. Someone would buy it for a decent amount.
Focus Is Needed
Once you have sold some assets and received some cash, more belt tightening is needed. It is time to slash aggressively, and you start with services that do not fit with the core future. So, if the property is not related to MyYahoo or the new social direction, close it. Services like Bix, Jumpcut, and the various greeting cards can be shut down. There are other services that are better and more widely accepted. You do not have the time and cannot afford the effort to compete in these areas right now. Besides slashing services, you want to consolidate services as well. People do not need to see “Broadway” as a service. Completely merge all of the “Entertainment” properties into Yahoo! Entertainment and manage it as a whole. All of the content can be grouped together similar to the newspaper model. You can highlight the major sections and even have submenus within each section, but when people are looking for movies, they know to go look at the Entertainment section. Lastly, all of the content properties are part of the MyYahoo! brand. If people personalize their site, that is great, if not they still use the default site that you have created.
Consolidate all search services into one search service that figures out what you are looking for. If necessary, just copy the Google model of having links or tabs for the various types of content. One search is much simpler than trying to determine which service to use. Consolidate all of the “social” services into one service. All of the recent announcements with Yahoo! OS and the social platform are great, but you need to consolidate the properties now before people get confused. In addition, remove the 360 and MyBlogLog monikers and put everything under one roof, the new social Profile. Yahoo has a really good idea here with adding social features to the existing user base. They have a huge, untapped social network of users with their Mail and Messenger products.
Obviously, the last question is what to do with Delicious and Buzz. These are critical pieces to the social puzzle, and are probably the few services that you want to keep their original naming. However, they should have tight integration with the new social direction. These two products and the mainstream users could create a very strong force in the social space.
Now, Work It
One final point needs to be made. Work It. When was the last time you saw television advertisements for Yahoo. How about web advertising? Do you see many press releases any more? Yahoo has one of the largest user populations in the world. Capitalize on that basic popularity and funnel users into the social services. You may feel that you do not want to lose or alienate users, but there is more at stake here. If they do not aggressively work this network, Yahoo will eventually be purchased for pennies compared to what the user base is really worth. Why would this happen? Perception. It really looks like Yahoo is in a death spiral regardless of how much traffic they get. Now they just need to convince us that they are not. They need to convince us that they are going to fight. They need to do something besides fight off rumors that they are being purchased. Do Something. Anything. Even if it is just a blog post calling me a moron. At least that would show us that you care.