Category Archives: Yahoo

How Do You Solve A Problem Like Yahoo?

On his blog Jeremy Zawodny poses an open question regarding Yahoo’s malaise:
The less obvious problem is a deeper cultural issue. It’s an institutionalized lack of accountability that makes it easy to blame others (upper management, other product teams, “market forces”, and so on) for things that don’t happen.
Of course you can acquire your way to greatness; that’s the core of the success of companies like Cisco and HP. The problem is that buying successful teams/products doesn’t always work. But if that’s not working there are a couple of possible reasons why: 1) you’re not integrating the acquisition properly; 2) the acquisition wasn’t a good fit in the first place; 3) your strategy changed between the time you made the acquisition, etc., etc.
It’s also possible that if your acquisition strategy isn’t working, you’re just not doing enough of it. Cisco (to use the canonical example) snaps up an absurd number of companies each year, and that company has a culture and a process to support that efficiently.
Bad company culture isn’t nobody’s fault, and no product team within a bad culture can be successful forever. Responsibility for systemic cultural problems has to land at the feet of executive management; middle managers can’t be responsible for fixing it. (I know, I’ve tried.)
There’s an excellent term from the startup world that applies to Yahoo: “bias toward action”. There is no bias toward action at Yahoo, and there hasn’t been for years. There’s very little reward for accomplishing anything, and there are no consequences for doing nothing.
If Yahoo’s CEO, whoever that’s going to be this week, could wave a magic wand and fix one problem at the company, I’d fix that one. But that’s not the wand that Carol Bartz is waving (she’s elected to solve a problem that’s far easier, which is cutting costs).

AOL/Yahoo! Sure, Whatever.

I’m not enthusiastic about flogging this sickly horse; if you guys want to merge your businesses, you know, knock yourselves out.

Both companies should have been taken private years ago so they have some breathing room to reinvent themselves without having to worry about the innovation-killing tyranny of quarterly earnings growth. Maybe a hostile takeover of Yahoo! by AOL will be the tonic that both companies need to find a new direction.

However: Remember a few years back when Kmart bought Sears using a boatload of private equity dough? It was supposed to bring every Kmart store up to the level of value and service that Sears was known for. Instead, the takeover just sort of Kmart-ified every Sears store. I’m just saying.

The Great Yahoo! Developer Experiment is Over

From Yahoo! comes word that a number of popular developer products, including the MyBlogLog APIs as well as Maps and Local APIs, are soon to be shut down.

The announcement is as tone-deaf as it is disingenuous; it starts by saying that Yahoo’s “commitment is unwavering” and then goes on to vaguely enumerate the number of products they’re eliminating. (Which begs the question: What does “unwavering” actually mean to Yahoo? If your surgeon has an “unwavering” commitment to your health, is it OK for her to occasionally perform surgery without anesthesia? How much am I permitted to waver and still be able to say that I’m unwavering? Could it be possible that to Yahoo, “unwavering” actually means the opposite of what everyone else in the world thinks it means?)

This is a big problem because for every API that is taken away, applications will break. It’s a bigger problem for Yahoo because the more thoughtlessly they manage their platform, the more difficult it will be for anyone to trust them in the future.

When I went to work for Yahoo in 2005 I was given the mission of opening the company to third-party innovation through Web services and other developer products, to create a platform that would endure for the ages, enabling developers to create amazing new applications (and, hopefully, accelerate Yahoo’s business). It’s become clear to me now that this was really just a poorly-conceived experiment, not a serious attempt at creating a platform, and I say this not as an ex-Yahoo employee, but as someone who advises businesses on platform integration today. In other words, my reaction to this is professional, not personal.

So my professional advice for prospective platform providers is to do whatever you can to avoid emulating Yahoo. For developers and companies who are thinking about doing any kind of integration with Yahoo, do whatever you can avoid them until the company’s commitment to providing an open platform is more clear. From a developer and platform perspective, Yahoo is unsafe at any speed.

Yahoo Pulls Plug on Shopping API

I’ve been getting a few pings from folks regarding Yahoo’s plans to transition its Shopping property to a third party. My team at Yahoo launched the Shopping API in August 2005 (although I don’t work for Yahoo anymore so I can’t provide insider answers on what’s going on here).

Since the new partner service (PriceGrabber) apparently doesn’t have a public API, that essentially kills this API. Killing an API is a very big deal, not just because it kills applications — it kills your credibility as a platform provider. I’d be very reticent about adopting any technology integration provided by Yahoo until things settle down over there. That said, there would have been a potentially interesting opportunity for PriceGrabber to provide a compatible API and make the developer switchover fairly seamless. It’s anyone’s guess as to why they elected to not do that.

Ben Metcalfe has some “cautionary” words which I think describes Yahoo’s lack of developer/platform strategy pretty well. The company’s developer releases over the past few years have mostly fallen flat for a variety of reasons (lack of business value for third parties being foremost, I would say, although there’s also a very unfortunate lack of organizational focus and unclear articulation of product strategy and tactics at work here as well). It was not clear to me that enough of Yahoo’s execs valued third-party developers in 2006 when I left the company, but it’s quite clear that they value third-party developers and open integration even less today.

New Management and “Colorful Language” At Yahoo!

Link: Yahoo Picks Former Autodesk Chief to Succeed Yang

In a conference call with analysts, [incoming CEO Carol Bartz] acknowledged that Yahoo faced significant challenges but said she believed that the company’s strong brand and market position gave it a “huge opportunity.”

Ms. Bartz also delivered some of the colorful rhetoric she has become known for. “I think Yahoo has unfortunately been battered in the last year and that has caused it to look internally and be protective,” Ms. Bartz said. “That’s nonsense for such a great company and such a great franchise.” She said that after reviewing the business, she planned to turn Yahoo’s focus outward. She also said that Yahoo had some great assets that “frankly, could use a little management.”

As a former Yahoo manager whose job description was to employ the use of colorful rhetoric to encourage the company to face outward, I can say with confidence that this is right on the money. (A lot of current and former colleagues I’ve talked to agree that Yahoo’s culture — which emphasized getting along rather than winning — has been one of its biggest problems, and this cultural problem is rooted more deeply and goes back further than anything related to its relationship with Microsoft.)

I’m really looking forward to seeing what Carol Bartz can do here.

Microllsoft

People have been talking over the weekend about the failed Microsoft/Yahoo takeover talks. As a Yahoo shareholder and former employee I’m disappointed that it’s going to be quite some time before we get our money out of that stock (note to self: in the future, always sell ESPP shares the day you leave). I empathize with my many pals who work for both companies — however you feel about the takeover, it sucks having to go to work every day under a cloud of uncertainty.

But as someone who has also made his living on the Microsoft platform for years, I feel like I’m in a position to think about what Microsoft — the company that has been desperately casting about for a cogent internet strategy since 1995 — might do next.

When I was at the Web 2.0 Expo week before last, I was talking to a guy who asked me what I thought of the show. I told him I was disappointed — there were a lot of companies who were working on “me-too” social networking products, and a lot of old school companies that really had no business being there (Disney, Oracle). But I didn’t see anything really exciting or disruptive. I told the guy that I had yet to see the next company that was going to put 100,000 people out of work. What I meant was that I didn’t see anything industry-changing.

The ultimate type of business disruption — and the one that is ultimately the most difficult to achieve — is to disrupt yourself. I’ve said for a while that one of the reasons why Microsoft has failed to build a compelling network of web properties is because they are afraid of disrupting themselves. If you want to make a great leap, you can’t serve two masters — and in Microsoft’s case, they’re serving both the Windows master and the Office master. It’s pretty obvious that this is the case when you pay attention to Microsoft’s words and deeds — calling your maps product “Windows Live Local” probably isn’t the most egregious example, but to me it’s a clear sign that whoever named this thing isn’t really thinking about kicking ass, they’re worried about not upending the status quo.

Well, sorry guys. The web will continue to be about upending the status quo for some time to come. You can either play it safe and be upended, or be the one doing the upending. For companies like Microsoft and Yahoo!, there’s really no middle ground.

At the same time, many people in the past few years have said that the “nuclear winter” atmosphere for technology IPOs can’t last forever, that there should be some alternative for web startups short of an IPO. Some people have referred to this as the “rollup” — one well-heeled company that would go around developing products, or acquiring companies as needed, much in the way that Cisco used to do.

Microsoft should create a company to do this. A new company — an independent subsidiary — not beholden to anyone in Redmond. This company would have the mandate to acquire and create great web properties that people actually want to use and that will make money. No one inside Microsoft would have day-to-day control or authority over this company (aside from the sort of high-level oversight that you’d expect from a board of directors).

The new company would have to be based in Silicon Valley. It would have to reward its employees with equity that actually means something. The company must have the freedom to use the best technology to create the best solutions — and if that means Linux, or whatever, so be it. The new company should be permitted to do whatever it takes to attract talented workers from wherever it needs to — including poaching employees from Microsoft itself, if that made sense.

The new company would have an opportunity to throw off all kinds of bad habits, not only those practiced by Microsoft, but by large and small internet companies everywhere. Experiment with new ways of selling software online (not just licensing, and not necessarily advertising-driven). Put in the effort to make everything you do accessible from any mobile phone on the day it’s launched. Support stuff like OpenID and give users the freedom to add and move their data around freely. Dare to release a new product each month (as my team did when we were at Yahoo) and let the marketing and PR people catch up with you if they can. Reinvent web email in a way that makes Gmail look like a childish joke. Dare to sell products that will sell 1 million copies at $20 each instead of products that will sell 1,000 copies at $2,000 each. Provide standard APIs and interoperate with competitors’ products — not just as a way to kill them, but in a way that serves the ultimate interests of users.

Because that’s really what this is about — realizing that your customer is not the IT manager of a medium-sized midwestern insurance company, but the 120 employees of that company. Forgetting the user in favor of the IT manager (or your competitors) is why most users hate most enterprise software; I assert that it’s also why a lot of people have been frustrated by Microsoft today.

A big part of this would also be staffing the right people into the right roles. Microsoft’s geographical location (i.e., far away) and its historic resistance to hiring senior people from the outside (i.e., people with experience running large internet properties) act like a giant anti-talent force field; the new company would not have that problem. People would want to work for this company for the same reasons they wanted to work for Microsoft in the 80s and 90s — to get amazing things done and to have an impact.

My intuition has always been that Microsoft should have created this company ten years ago, and that they might have actually done so if they weren’t in the middle of some fairly profound legal problems. But Microsoft should not let its antitrust problems of the past prevent it from doing this. Just because the federal government tried to break up Microsoft in the past does not mean that spinning out an independent web subsidiary is a bad idea today.

Creating a new and independent web product organization could finally put Microsoft on the map with respect to the internet. It would take a few years, but it sure as heck wouldn’t cost them $45 billion.

Update: In an interview yesterday, Bill Gates said that Microsoft won’t be pursuing any new acquisitions to make up for not closing the Yahoo deal. He also said “now at this point, Microsoft is focused on its independent strategy.” Wait a minute: Microsoft has a strategy? When did this happen?

Dear OpenSocialTards,

Link: Announcing the OpenSocial Foundation

Banding together to make a half-dozen social networks interoperable is not the same as having critical mass. It is the equivalent of having fifteen women band together to give birth to a child.

Also, creating a nonprofit foundation to manage your endeavor does not automatically make you equivalent to Firefox.

Cheers. I’m always here if you need anything.

Jeffrey

Nonsensical NY Times Story on MSFT/YHOO Integration

To hear the New York Times’ John Markoff and Matt Richtel describe it in their largely fact-free story on the technical integration that Yahoo! and Microsoft will need to do if the merger goes through, you’d think that a Yahoo-Microsoft integration will amount to a cleaning of the Aegean stables.

The writers did take the time to interview someone who did a Unix-to-Microsoft port of a web site after it was purchased by Microsoft, but that port was done eight years ago. And this wasn’t Microsoft’s 1998 Hotmail acquisition (which some people consider to be the gold standard for Microsoft cocking up an acquisition of a *nix-based web property).

So the question is, from a technical integration perspective, could things have possibly changed in the past eight to ten years?

Well, of course they have. The one guy with direct knowledge that Markoff and Richtel interviewed (who now works for O’Reilly and should really know better) was probably migrating from Solaris to some version of Windows NT. One could imagine that LAMP as we know it today was not in the picture. And there are a broad spectrum of software engineering best practices that were not in place back then which go unmentioned in the article.

So ultimately, the piece leaves out several key facts that almost completely scuttle their thesis:

  1. Microsoft has worked with Zend to make PHP run well on Windows Server. In my February 1 post on the merger, I theorized that Microsoft did the Zend deal specifically to make it easier for them to digest companies (like Yahoo!) that extensively utilize PHP. The Markoff/Richtel piece does not mention the Microsoft/Zend deal at all. It does mention that PHP’s inventor works for Yahoo, but it’s a fact that Zend contributes far more to the language today and this has been the case for many years. At any rate, a reader of the Markoff piece could come away with the impression that PHP doesn’t run on windows at all, which is totally bogus.
  2. The hellacious Unix-to-Windows migrations of the late 1990s often hinged on the ability to get Oracle running on Windows, which was a big challenge then and remains a challenge today. But Yahoo uses very little Oracle in its customer-facing properties; the big database in use there is MySQL, which runs quite well on Windows today. I wouldn’t guess that Microsoft would migrate MySQL-on-FreeBSD to MySQL-on-Windows, but they could do it as an intermediate step if they wanted to get a merged Yahoo! running on Windows. But there is no mention of databases at all in the Markoff piece.
  3. FreeBSD, while prevalent at Yahoo!, is not actually the operating system that most companies in Silicon Valley (or anywhere) use. I’ve heard more than one Yahoo! engineer state that the company’s choice of that operating system is a hindrance for a number of reasons. Migrating to Anything But FreeBSD (whether it’s Linux, Windows Server, or Solaris) will have several key benefits — not the least of which being the fact that very few recent college grads are learning FreeBSD today. Another implication for this is that when Yahoo! acquires a company, they acquire that company’s operating system choice as well (all the company’s recent acquisitions, including Flickr, run on Linux, not FreeBSD).
  4. Both Yahoo! and Microsoft have made extensive investments in XML web services, both inside and outside the firewall, which should ease technical integration somewhat. You may recall that XML web services were considered cutting-edge and exotic in 1999. There is no mention of web services in the Markoff piece.
  5. The Windows Server that Microsoft sells today is not the piece o’ crap that Windows NT circa 1999 was. Period. The fact that Microsoft’s server technologies no longer suck is key, but it’s not mentioned in the Markoff piece.
  6. Probably the most ill-informed assertion is that Yahoo! is totally open source or that Microsoft is totally proprietary — or that either of these things would matter on a technical integration level even if they were completely true. But let’s imagine for a moment that someone needed to hack at the kernel of Windows Server to perform some Yahoo!/Microsoft integration task (which seems far-fetched, but let’s just imagine). Are we really to think that getting access to that code would be a deal-killing problem?

More Thoughts on YHOO/MSFT

  1. Zend and Microsoft have done a lot of work in the last year to make PHP run well on Windows. I never understood why Microsoft devoted resources to that, but now it is clear: it’s going to make technical integration between the two organizations go much more smoothly.
  2. This will hopefully be the death knell of the awful “Windows Live” branding for consumer web stuff.
  3. Maybe now somebody will release a .NET OpenID 2.0 library that actually works.
  4. Big losers here from a tech supplier perspective: FreeBSD and MySQL.
  5. Another potential big loser is Adobe; having a gigantic global audience will help with adoption of Microsoft’s various Adobe-killing initiatives like Silverlight, which would never otherwise have penetrated the consumer web without a large built-in audience like Yahoo’s.

Yahoo’s Last Chapter

My wife (who, like me, used to work for Yahoo!) rolled her eyes this morning when I told her about the Microsoft offer. We used to excitedly hear rumors of this kind of thing every three to six months but they were only rumors. Now it’s the real deal, and I have to say, I’m excited (and not just because of the 48% bump in YHOO this morning on the news).

I think this is a good thing for both companies. It will be a good thing for most of the people within Yahoo! who are left after the two businesses combine, although one would be naive to think that a lot of people aren’t going to lose their jobs because of this. But we knew that there was going to be a big restructuring anyway; my sense is that the Microsoft-led post-acquisition restructuring may cut deeper but may wind up with a better, more focused organization in the long term. My guess is that the Jerry Yang restructuring was going to nip and tuck at underperforming sales and marketing people; I assume that the Steve Ballmer reorganization will take aim at underperforming managers, too.

I think there are things in each companies’ DNA that the other company lacks. Microsoft was always skittish about having a meaningful physical presence in Silicon Valley and they are utterly clueless about how to do consumer Internet; that could end here with the stroke of a pen. For its part, Yahoo always paid lip service to transforming itself into a platform but could never devote the resources to making it happen.

Anytime the Microsoft rumor started up around Yahoo!, you’d hear embittered griping by people (mostly engineers who had been with the company for more than a few years) who’d say they’d never in a million years go to work for the evil Microsoft. They now have the chance to put their money where their mouth is, but I suspect that the people who haven’t left already will stick around for a while. It’s really not worth quitting your job because someone is trying to separate you from your beloved FreeBSD.

Update: Over breakfast we were wondering whether another prospective suitor might step in to bid against Microsoft. Google probably wouldn’t for a couple reasons, not the least of which being that they may have just sunk $4.6 billion into wireless spectrum. On his blog, Fred Wilson theorizes maybe News Corp. but probably not, and since there’s a credit crunch on, he doesn’t see anyone else stepping up.