Can Yahoo Turn Itself Around?

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There’s no shortage of dissenting opinions in the digital world. When a timely topic inspires an especially interesting discussion between two of its inhabitants, we’ll endeavor to bring them together here for comment, although it’ll probably resemble “Spy Vs. Spy” more often than Eye To Eye. Which is cool with us.

In this inaugural edition of Eye To Eye, Mark Cuban and Eric Jackson answer the following question about Web giant Yahoo.

Yahoo, which is hemorrhaging senior execs, just laid off 2,000 employees and underwent a massive restructuring under CEO Scott Thompson. Meanwhile, it’s embroiled in a questionable patent lawsuit/countersuit with Facebook. What is the one major thing you think it needs to do to turn itself around?

Mark Cuban headshot

Mark Cuban Founder and Chairman, HDNet

Easy answer. Change the culture. Going back 17 years, Yahoo has had a culture of consensus. They tried to get everyone, from the BOD on down to agree. Everyone had to be on the same. There was no place for outliers. Yahoo would have great ideas and then create committees to try to monetize them. That is the worst thing a company can do. You have to give small groups the chance to run with ideas, not slow them down with politics and people. There is nothing worse for a company than to revert to the mean on everything. Yahoo leadership has to lead. They have to open doors for creativity and dissension. They need to encourage people to be different and find new ways to break conventional wisdom not only inside Yahoo, but outside as well, and then get out of the way when they do. Then they have to get lucky and birth something that gives them momentum. There is no shortage of brainpower or leverage-able foundations available to Yahoo. They just have to build the culture that lets those opportunities explode rather than tries to contain them.
Eric Jackon headshot

Eric Jackson Founder and Managing Member, Ironfire Capital

After years of active neglect, there’s no one silver bullet to turn around Yahoo!’s core business. They need to revamp the sales organization, upgrade technology to serve its 700 million users and better monetize traffic. However, the single biggest thing Thompson could do to improve morale would be to articulate a winning strategy for the core business which is achievable and different from Facebook or Google. Just saying they’re the “premier digital media company” isn’t enough. The answer is betting big on user-generated reviews and curation in their core properties through M&A and internal development (and Rafat Ali discussed this a few months ago). User-gen is a lot cheaper than original content. Possible acquisitions (from a cash-rich split) could include TripAdvisor, Yelp, HomeAway, Zillow, OpenTable, and StockTwits. Those properties become more valuable with Yahoo!’s traffic and (yes, Scott) data. This strategy also gets Yahoo! into mobile.

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