Yahoo's Garlinghouse Speaks Truth / Rolls Dice

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It will be interesting to see how Terry Semel reacts to Brad Garlinghouse's "peanut butter manifesto," which was essentially open letter accusing Terry of incompetence.  Garlinghouse took pains to note that Yahoo's problems come "straight from the top."  He also obviously either leaked the memo himself or knew that it would be leaked (little difference).  Regardless of what happens, Yahoo shareholders should thank him.

According to the Journal, Yahoo! COO Dan Rosenzweig has embraced the memo--sort of.  Specifically, he has assembled a task force to look into Garlinghouse's observations "over two months."  Given that most of the complaints/recommendations can be grasped in 0.2 seconds, this two-month-rumination period seems an example of exactly what Garlinghouse is complaining about.  It is also probably a way for Rosenzweig to hedge his bets (protect reputation with troops by listening, protect job by not jumping wholeheartedly on board).  No word from Terry, as yet, but he will have to respond, if only internally.

How aggressive a move was this?  Imagine if one of Sumner Redstone's senior lieutenants had written the same memo, suggesting that the company's problems come "straight from the top."  There might be something left of him in the morning, but not much. 

In any case, the Garlinghouse attack demonstrated exactly what Yahoo desperately needs more of: 20/20 vision, passion, and balls.  Garlinghouse is right: Yahoo has amazing assets.  And he's also right that the company has gotten fat and lazy.  Whether Garlinghouse survives his own grenade blast remains to be seen, but he's done the rest of the company (and its shareholders) a favor.

Comments

[Eric]

Garlinghouse is right, if not diplomatic. Terry should go - now. However, it's not Rosensweig but Susan Decker who should take over. She would get much more support internally.

Jerry Yang and David Filo are critical at this crossroads for Yahoo!:

http://breakoutperformance.blogspot.com/2006/11/open-letter-to-jerry-yang-and-david.html

Cheers,

Eric

[Nimrod]

Can you post the letter from Garlinghouse?

[Victor]

I find it amusing that Garlinghouse is citing Yahoo's strategy as the obvious weakness it is when many Wall Streeters not long ago were citing it as a strength relative to Google's "lack of diversity".

It shows how many commentators have almost no idea what they're talking about.

[Mike]

Victor,

It will make your points weak if you are so biased about google. Google has a lots issues and it will come down to earth someday. Google are releasing so many products and except search all of them are failures.

Mike

[Still Inside]

Victor,

For what it's worth, I can be found on these pages perhaps a year ago complaining about Google's defocus from the only true Internet cash cow that is paid search. Google has since toned down the rhetoric to the point where one might wonder how much influece a silly little blog like this might have.

The laws of how-you-make-money-on-the-Internet are no different for Yahoo.

Garlinghouse basically said, "shit's gotta change". Well no duh. We're all watching as one of the country's greatest assets turns to shit.

The question is: change, but how?

If I hear somebody over there say, "it's search, stupid" then maybe we might get somewhere. Otherwise, write them off.

Yahoo should focus absolutely every asset and every available resource on winning the Search war. The head of Search at Yahoo should be the same person that is the head of Yahoo. They could reorganize all of the business units such that they fit into the new search-centric reporting structure. The primary metric driving the company would be search marketshare, and they'd need to invent some new metrics like, "number of Google users we converted this week" (I'm sure they can hire somebody from Verizon or Sprint to setup such a database).

Its possible that Yahoo turn the tide against Google by focusing the company in this way. Possible. Going with a three pronged, four pronged, 17 pronged or any other approach that involves ineffectual, easily bent little *prongs* is not going to stop Google from becoming a defacto monopoly in search, and then use that position to own anything and everything else that Yahoo does.

It is not certain that they can win, or even avoid a total loss. It is certain that there will be no more Yahoo if they don't at least try. It is, after all, the very act of trying that Garlinghouse seems to miss the most.

Let see if either of these guys can grow some testicals. Let's hope they try.

SI

[Peter]

Garlinghouse should be fired stat for incompetence - anyone seen that new Mail product? Awful on every level.

Semel should have been gone years ago.

As for how Garlinghouse is doing a 'favor' for 'the rest of the company' - that is a purely nonsensical statement. Methinks that the 20% of people who are fired will not consider being fired a 'favor'. This dude is a SVP for **** sake - how much more dictatorial control does he need before he has his business units performing well?

Yahoo Groups?
Yahoo Mail?
Yahoo 360?

They're all garbage. I use Yahoo Mail sometimes, still, because I used it before Gmail existed - that's the only reason. It's my spam email address, now. The new Mail Beta is too slow. Groups haven't been given any functionality in years. 360 - what's 360? No Flickr integration. No video integration. Garlinghouse has been there for three and a half years. He started as a VP and is now an SVP after threatening to take Yahoo trade secrets to MySpace. He has accomplished nothing positive.

[rc]

Being a recent ex-Yahoo there is a critical part of the memo that most people seem to miss:

'Kill the redundancies. Align a set of new BU's so that they are not competing against each other. Search focuses on search. Social media aligns with community and communications. No competing owners for Video, Photos, etc. And Front Page becomes Switzerland. This will be a delicate exercise -- decentralization can create inefficiencies, but I believe we can find the right balance.'

This is essentially a power-play by Garlinghouse. Search has taken the ball and ran with social media for two main reasons:
- They have the people that get it over there, whereas it is obvious when you look at Comms and Communities that they didn't get it (and they make products that are not friendly for early adopters like the god-awful implementation of Messenger on the Mac.)
- The algorithimic war in search is over, Google won, only by changing the game with social media can Search get back and play ball

[br]

This dude Garlinghouse has put out to market a bunch of crappy products, and embarasses his bosses in this memo, even if it speaks truths.

They gotta fire him, and one has to question if Semel gives a crap about anything, after all the money he made in Yahoo over the past 5 years.

They got lucky, and had made a few great moves, while the competition languished.

But, that new email client, really does suck. Gotta fire the guy who introduced that - Garlinghouse.

[mojo@yahoo.com]

my two cents:

sue decker and terry semel must stay.. in my humble opinion it is dan r who does not have the leadership to manage his troups of SVP´s and VP´s... it is a loyality of terry that he still strenght dan r.

and whats really missing at Y! are those entrepreneurs who are going to do a job.. not only powerpointings and meetings --- they need more of the sort of closer