Why did Yahoo's Marissa Mayer fail? Five reasons why Marissa Mayer failed to perform a turnaround
After nearly five years as CEO at Yahoo, Marissa Mayer has resigned, walking away with $23 million in her pocket.
Mayer stepped down from her role as the company finalised its deal with Verizon, which purchased the technology firm for a reported $4.5 billion this week.
Mayer was celebrated as a progressive hire to turn the faltering internet giant around in 2012, with a focus on its core display advertising, email and financial products the priority as it continued to lose the battle for search to her ex-employer Google.
It still seems harsh today to blame Mayer for all of Yahoo's failings. The company was in dire straits when she took over and would have taken a miraculous effort to get the company back to where it was during the dot com boom.
Listen: The UK Tech Weekly Podcast discusses Marissa Mayer's Yahoo legacy
However her record as CEO is riddled with missteps, from strategic to financial. Here are the five defining mistakes of her tenure.
1. Poor acquisitions
Mayer's mergers and acquisition strategy at Yahoo is basically a graveyard at this point. It may not necessarily have been the wrong strategy for Yahoo (just look at how Instagram has worked out for Facebook) but her execution proved disastrous.
Mayer made 53 acquisitions during her time at the company, with at least 41 being subsequently shut down (anyone remember Bread?).
The worst of the bunch though appears to be Tumblr, which Yahoo paid $1.1 billion in 2013 and admitted in 2016 that it had lost $230 million in value since.
2. Revenue
Yahoo's core display advertising business was in decline before Mayer took over, as the company failed to keep up with rivals like Google and Facebook as more eyes and advertising shifted towards mobile. On her watch display and search ad revenues have dropped by double digits.
Mayer hired chief revenue officer Lisa Utzschneider in 2015, paying her a reported $18 million a year to find new sources of revenue for the company and pick up its core advertising business. Utzschneider also left Yahoo this week, pocketing a further $16,536,363 severance package.
The two executives essentially failed to either buoy Yahoo's core business or leverage assets to find new revenue sources.
3. Strategy
This accounts for the fundamental failure of Mayer's tenure: to execute a genuine turnaround plan for a company that had most likely become a poisoned chalice before she had signed on.
Mayer's approach appears to have been acquisition heavy, relying on bringing in talent from emerging technology areas (mobile, programmatic advertising, social media) to build new products or revenue sources. However, she has been criticised for what amounted to a scattergun strategy, never settling on a defined direction in terms of a product or revenue source.
The thing is, who knows if there was another CEO in the Valley that would have had enough imagination to truly transform the company during this time? What we do know is that it wasn't Mayer.
4. Leadership
Mayer's leadership included a few significant gaffes, including banning working from home in 2013, shortly after she took just two weeks for maternity leave after giving birth to her first child - a move which fairly or unfairly attracted a lot of media attention.
Her general leadership has been heavily criticised by the media, investors and employees (a Glassdoor approval rating of 66 percent, way below Silicon Valley averages). Criticisms levelled at the CEO included a lack of focus, imagination or desire to listen.
5. Ignoring security
Mayer may not be in charge of security at Yahoo, but when some of the biggest and most damaging data breaches in internet history happen on your watch, there is probably something systemically wrong.
Yahoo discovered that one billion of its accounts had been compromised in December 2016, in what has been described as the largest data breach in history.
Verizon subsequently got a $350 million discount on its acquisition price of Yahoo and Mayer lost her annual bonus.
0 Comments