Tuesday, July 16, 2013

Close the Company, Keep the People

It has been just over a year since Marissa Mayer took over management of Yahoo!.

Mayer was one of the original employees at Google, and was already fabulously wealthy.  Moreover, she was expecting her first child within weeks after taking over the top job.  It did not make sense that she would want to take on the seemingly impossible task of rescuing Yahoo from the tech company graveyard.

So far, at least, she has proved the skeptics wrong.  Yahoo's stock is up more than +70% over the past year.  Mayer and her team have gone on an acquisition binge, and selling off assets.  In addition, she seems to be succeeding in making Yahoo seem "cool" again, which obviously helps in attracting and retaining key employees.

CNN Money carried a good article about Mayer's first year at Yahoo yesterday.  One of the things that struck me, however, was her approach to buying other tech companies.

In her first year at the helm, Yahoo has bought 16 different tech start-ups.  However, only three of the purchased companies still operate independently.  Most the acquisitions were apparently targeted at gaining tech talent, and not necessarily the companies themselves:

"[Mayer] is pulling in people who are excited about mobile, people who want to build a winning culture," said JMP Securities analyst Ron Josey. "Yahoo needs that badly. That cannot be understated, given that [Mayer's] main strategy is to make Yahoo a company that builds products people are excited to use every day." 

But Yahoo has been mainly interested in those companies for their engineering talent, also known as the "acqui-hire" method. Yahoo shut down all but three of the 16 companies it purchased in the past year, and many of the startups' teams joined the company's mobile staff. (Only blogging platform Tumblr, gaming infrastructure creator PlayerScale and video app Qwiki have survived.) 


It should be interesting to see how the next year unfolds.