Yahoo's Management Exodus Could Be a Very Good Thing 10 comments
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Wall Street, the media and the blogs are unanimous in their view that the management exodus at Yahoo! (YHOO) this past week is a terrible thing and shows the the company is in shambles. The rats are leaving the sinking ship, as it were.
I'll take the opposite side of that argument, because someone has to
Jeff Weiner, Usama Fayyad, Qi Lu, Brad Garlinghouse, Vish Makhijani, Caterina Fake, Joshua Schachter, and Stewart Butterfield are all talented people who will be missed. I know quite a few of these people and I would love to have the opportunity to work with them in the future.
But the truth is, Yahoo! needs some new blood in its executive ranks. That new blood can come from within the company or from outside the company.
Yahoo! probably needs more people to leave in the coming months, particularly senior people who have been around for a long time.
And it needs to reach into its organization and tap people on their shoulders and say 'its your time to step up'. And it needs to go find some new leadership who can bring talent with them
Yahoo has over 500mm worldwide unique visitors a month. It has massive reach. It has massive scale. There is no reason it cannot and will not be an important business going forward
It needs to focus on monetization, rationalizing its products and services, and making money, lots of it.
All of this is still very possible. But it's clearly a turnaround of sorts and needs to be approached that way. The best turnaround people I know start with a challenge to the team. 'Are you ready to dig deep and work really hard for the next five years to get this thing working again? If yes, let's do it. If no, then you have to leave now.'
That's what is happening at Yahoo! - and it can be a very good thing.
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This article has 10 comments:
Thank you
Take Usama Fayyad, for example. He's peddled several companies owned by friends/extended family for Yahoo to buy out for overpriced sums of money. It wasn't too hard since his wife was the CTO's (Farzad Nassem) cousin. Then, after the acquisition, folks in the company wonder what the heck it was bought for.
Or, Brad Garlinghouse, do you really think he is responsible for Yahoo Mail/Messenger/etc being good? No, it was the engineers in those teams! He has plenty of failures under him too. The new Yahoo Mail was so slow for the first year, it convinced many Yahoo mail users to switch to Gmail. The new release of Yahoo Photos was even slower then the new Yahoo Mail (see the pattern), until it was canned. The only reason Brad was saved the embarrassment for that failure was the Search team purchased Flickr after Brad decided he didn't want it!
The Flickr folks it seems were only waiting for the last payout from their buyout to leave. Seems like a longtime plan.
From my sources inside the company, Qi Lu is a loss, but can you really expect people to work one place forever. I think he's worked there for 10 years or so.
Thanks Fred for a fair and insightful article.
I think that a MicroHoo or a YaSoft will not be a good idea for the Internet Market, if this will happen then I will move out to another email service, to another internet search, I don't want to be a Micro-internet-custome... (windows is sufficient for me).
Wow, so Usama is married to Zod's cousin? That explains a lot!
Internet click fraud is underestimated by web-traffic auditors. The fraud is deceptively downplayed by major financial beneficiaries and their small time accomplices or affiliates. Big or not, no online advertiser is immune from growing the fraud. There is mounting unease and concerns over the fraud on all websites that have affiliate programs. These serious, legal issues are not being addressed by the law makers in most countries.
US Rep. Bobby Rush, D-Ill., Rep. Joe Barton, R-Texas, the Commerce, the Justice Department, Trade and Consumer Protection panel, the House Small Business Committee panel, the Senate Judiciary Committee’s antitrust panel, the House Energy and Commerce Committee’s Commerce, Trade and Consumer Protection panel and the Senate Commerce Committee and all law makers, for example, must also scrutinise the pending/proposed Yahoo-Google deal, and its impact on defrauded advertisers, big or small.
By some logical estimates, click fraud could be over sixty percent. However, even one percent of $90 billion of global 2008-2009 Internet ad spend is too high, mainly because advertisers, big or small, are still deceived, overcharged by millions and thus defrauded every day.
Read how, for example, "Yahoo protects online fraudsters, locks out legal ethical experts," web links here tyneham.wordpress.com , del.icio.us/tyneham?se... where some cases are cited, www.networkworld.com/c... , tyneham.blogspot.com , tyneham.newsvine.com
It is interesting how the 1500 employee lay off received so much attention, however, OVER 10% of total powersellers were laid off/suspended because of flawed aggressive policy poorly implemented has not had a placement. This is proved by:
blog.sellerdome.com/?p...
This study shows that between 15k-30K e bay powersellers who account for $3000-$20,000 in seller fees paid to e bay each month from sellers. This is the only company separating itself from its long time customers, many, like myself, who has been with the company fatefully since inception and made it a community before new management. This seems a larger story than a simple layoff of e bay employees. Ebay saves money by laying off paid employees, but e bays profit takes a hit by getting rid of partners who contribute to e bay profit. For example: 20,000 powersellers/partners laid off/suspended that account for an average of $5,000 per month seller fees = $100,000,000 each month in seller fees not received by e bay. That is $1,200,000,000 per year in revenue given up for aggressively flawed policy by current management. Figure that on 20% margin and facing the headwinds of a slowed economy. The idea current ebay management had was by getting rid of 10% of its selling partners was going drive back 32% of its buyers, however, that has clearly not been the case, because the policy change was flawed and implemented with such aggression over a short period of time, 6 months total, 3 months aggressively.
Ebay seems to have driven away buyers by this and the new search method that sellers or buyers don't like with no concern of management. The company has managed to drive its investors away in the same motion as stock prices show a drop since new management put in place 6 months ago, before market crash. Ebay management charged its sellers/partners for decline in its core business and seems not to have taken into account the increased competition of walmart, best buy, circuit city and many others putting marketing dollars into the online sector of business. Ebay pushing away its partners, sellers and buyers, is only going to make profit softer and push away investors. With 70% more competitors in the market e bay only dropped 30% seems a strong market hold for e bay and a reason to support its partners in a currently working policy rather than place blame partners and will prove to decline its future market share as pointed out by many market analysis and Powersellers.
Ebay, through the wild west style new management, took a look at itself and realized it had a drop in the number of sellers buying on its site. It decided it was because of bad "buyer experience" and immediately, it seems without full thought of backfire, decided it was the sellers fault. In some cases, this may be true, but it is most likely because of a misunderstanding or lack of communication between ebay, the seller and buyer. If e bay would set up a system so that all involved understood the agreement that was fair for all, then buyer satisfaction would be a great number and managements approval ratings would not be in the 20% range "22% “Approve", see the link below and see what employees are saying about CEO John J. Donahoe:
www.glassdoor.com/Revi... to see Mr. Donahoe's DSR rating.
Note the 168 Reviews under the rating.
This is the only CEO that I know of that has its partners/buyers/seller... asking for them to step down:
www.petitiononline.com...
It is doubtful that the sellers, as well as buyers, who make up the success or frailer of the core business rating of John J. Donahoe would be that high. It should be noted that there was a lay off, but this rating was only 1% more well before the layoff. All you have to do is see the off e bay blogs of e bay sellers and buyers to know how they fell now. I say "off ebay" because e bay understandably deletes any blog on there site where people speak out.
Instead of working within the community, that once believed that "people are basically good", took on a policy that made its tight net community fell like "criminals under big brother" and strong feelings of dislike for the symbol that was once regarded by its employees, buyers and sellers. Ebay has aggressively pushed away its partners will prove to decline its future market share and a relationship that may go un repaired when new management is called upon. When the culture was "people are basically good" employees at e bay were chronic buyers on e bay, now that has changed. It should also be noted that the sellers they suspended are also big buyers on e bay generally.
Ebay has withstood the .com storm because of a superior system and its ability to hold steady to the working core business policy. Its customers fell that is no longer the case and many companies like bonanzle.com and OLA.COM (onlineauction.com) and Ebid.net are rushing to try to meet seller and buyer demands that ebay seems unwilling to meet. Many small auction sites have tried to compete in the past but been successful in driving traffic. Now a once complacent audience of e bay buyers and sellers are seeing the changes and the likely hood they are being driven away through aggressive, unfair, flawed policy changes and are taking note to change to someone with the old values that made ebay a community that worked. You can see from the link below the demand that is being driven away from e bay by Bonanzle, Ebid.net, onlineauction.com Ubid.com that would have been unheard of 6 months ago.
www.quantcast.com/bona...
www.quantcast.com/ebid...
www.quantcast.com/ubid...
www.quantcast.com/shop...
Notice the chart of hits per month going up on these auction sites. Now look at e bays chart, it shows the amount of volume coming to the site is declining:
www.quantcast.com/ebay...
This is a small amount of buyers and sellers compared to e bay, but it does show a market who is hungry to meet the demand of current buyers and sellers, and what is maybe most important that buyers and sellers are finding the ability for change. A safe sales platform that is demanded, products that are truly less for buyers, not just advertised as less, but are less for now because sellers are driving buyers to the site.
When e bay was a "venue", now it is felt by many of its sellers that it acts as an employer or landlord or big brother, by design of new policy, it was profitable for sellers and a great value for buyers. Sellers drove traffic to the site because buyers knew they could get many of the items for a large percentage below retail, at or below wholesale. Seller fees, total have gone up, $0.35 listings are great, but the back end is higher making the total successful sale higher for the buyer and then pushed to the customer. All the discounts given now with the new promotion is good marketing, but those discounts/profit must come from somewhere, it is a known fact that nothing is free. I suspect the seller will foot the bill for this discount, this will cause price to go up or profit to go down. Profit for sellers once offering wholesale prices. This will mean to raise prices or move to a site like OLA.COM or Ebid.net that does not charge listing or final value fee. This will make that seller profitable and give its buyer a low price.
E bay is being accused of being a follower in the last few months and is trying to make itself like Amazon and other .com retailers. Ebay sellers who use Amazon report little to no sales. E bay has a niche (wholesale products) and Amazon has a niche (books, CDs with unmatched distribution etc) and both worked independently of each other, this is why Ebay sellers are not successful on Amazon and Amazon sellers are not successful using ebay. New ebay management, and even investors, have had a hard time realizing Amazon is a different market plan. Many e bay sellers are leaving to do Amazon but it is feared this will not prove successful for them. The e bay system worked and most were satisfied, buyers and sellers could realize other bad buyers or sellers. I sold $30,000 on Amazon per year with my 82 unique product catalog, but sold 1.7 m on ebay with the same catalog. It would be much different if the items were not $100+, if they were books, cds then Amazon would by far be superior.
Buyers and sellers are not happy anymore and the numbers will continue to show as long as this management stays. Economy will play a roll, that is why ebay can't afford to gamble with management that has proven to drive its partners, sellers and buyers, away. The company is large enough it will be around for a long time, maybe not in the online auction sector effectively as it was before, but it is still a mystery to many who use or used to use the site why this management has been allowed to make this aggressive of a change. If this is where they wanted to go, it would takes years to change a company this size effectively, it can't be done in 6 months times and certainty not given a slow in the economy.
Things are not happy under new management/John Donahoe management has made no one happy, employees, sellers or buyers or its investors. It has been a 6 month meltdown since new management fumbled a working system.
I talked to the owner of onlineauction.com 1-800-900-2828, Rowen Grisham, a previous e bay powerseller who seen improper change coming long before many sellers and buyers realized. He said he had seen a flood of sellers and buyers calling to learn about the site in the last 4 months. Rowen Grishamw says they are about to roll out a goggle search program that will make it more visible. This is just one example of where e bay buyer and seller base is going. Grisham seems to want to supply its sellers and buyers with a fair service, as when the ebay site was born and acted as a venue rather than an employer. Small companies that are hungry and taking advantage of a situation where ebay is not satisfying its demand.
Anyone considering investing or putting time into future sales may want to take a look at the aggressive, flawed policy’s they have put in place, there are little to no direct policy as there has been. Sellers, buyers and investors wouldn't be leaving if there was any good reason to stay.
Some of E bay's management ideas were good, however, has done a poor job or implementing the new changes and communicating to its buyers, sellers only after a few months of effect, some loosing there e bay business because of improper, unmonitored data, is still learning and it seems no one knows the answers even at the top account managers level. Its buyers do not realize that the DSR DETAILED SELLER RATING, the 5 stars under the feedback rating is not based on a 100 point scale like every other system in the free world. For example, from 1 to 5, 1 is poor, 3 is average and 5 is excellent. With e bay, 4,5 is average and 5 is good, I am glad they didn't have my math teachers in Collage. So many times buyers rate a 3 when they don't realize they are giving the seller a unacceptable rating that could potentially suspend his/her account from e bay as so many has been suspended in the last 3 months because of improper data that has been now used as the bible of e bay to rate seller performance. It should also be noted that a flaw in the data of the 5 star DSR is that if a customer is happy, they fell that leaving positive feedback served its purpose and they have caused a positive vote to the seller, e bay has not educated the buyer, so they do not leave a star rating at all, and are not required to and a large % do not, but leave a positive feedback as it is not required. But the buyer who is mad and is leaving hasty feedback will be more than motivated to leave a 1 or 2 for all stars. For this reason, good sellers offering great service and products are being suspended from e bay by record numbers, this cuts the life cord of the seller as well as core business at e bay and the reason buyers come to the site and investors invest in the company.
Ebay may have ruined their market flair for both buyers and sellers forever. Too many restricting rule changes, increased charges, paypal demands, seller ratings. This has ultimately destroyed their bottom line.
Many sellers, buyers and investors alike have a dedicated special interest and hope management changes and ebay will turn themselves around, but it is going to take some quick and correct policy change back to the system that worked to undo what has been done in what would be considered by many as well as a powerseller account manager in a telephone conversation said that this is "the most aggressive change e bay has ever done" it is costing sellers there business and driving buyers away from the site. The Best Match search is fatally flawed and $0.35 listings are not going to fix that.
Sellers of the unique items that made eBay famous (and who paid listing fees) are leaving in record numbers, while eBay brokers deals with corporate sellers of new stuff you can get anywhere who don't pay listing fees deteriorate the profits. And their buyers are following them. Watch the Q4 and Q1 09 figures. A company of this size can keep up appearances for some time, but its customers, its customers customers, that is sellers and buyers, are speaking up and cannot be ignored in the long term, the leader of these policy's are and continue to drive away the core business of e bay and investors are taking notice.
E bay bought Bill Me Later, I would have been surprised just 6 months ago, but I am unhappy to report that I am not at this time, the reason is this management has taken down the tread that holds e bay together as can be seen by its buyers and sellers everywhere complaining about the flawed aggressive policies that have taken place over the last few months, maybe you have heard some of them or are one of them. Every comment citing that the previous system was not broken. E bay has had community and trust, this 13 year trust has been violated and has failed both sellers and buyers in just a few months of unfair, faulty policy change that has taken a ship this size and turned it so fast that it is out of control and is facing a challenge to bring the ship back to course as it was before in the core business, although still ignored by management at this time, this is just in the core business, this shows the danger of a lateral move like credit right now. Take into account there couldn't be worse timing as the world economy will not view this favorably given recent events. This policy change was over a short aggressive period, but the negative impact will make it difficult to navigate back in position, if this venture is not successful, it will be even worse for ebay, its investors, and the management that follows. The core business has taken a great hit world wide, now it is committed to a market that is new. A new market during the time when its core business is in jeopardy due to flawed policy and a slowed economy with management proven only to drive away customers. This will prove a challenge that may take years to repair relationships of its sellers and buyers when it has been realized by investors concerned on top of unpopular credit service. Migration back to the system with effective proven 12-15 record, built by previous management over 12-15 years, seems to be the only way to save the future profits and stability the company once enjoyed.
It could prove to be a successful venture, but e bay current management wants its investors to trust it in a huge risk buy, when the investors are clearly concerned and most can see that e bay can not run its core business in a way that is satisfying to its customers, causing them to leave, look for other suppliers that will eventually be able to meet demands of the once complacent sellers and buyers. Employees, buyers, sellers are all saying the same thing, why is e bay letting this happen. Nothing to gain, much to loose.
It would be hard for anyone with basic knowledge of the problems with recent policy of the core business to buy this, having been a seller and buyer for 10 years, it makes it even harder to buy. Why would smart investors believe they will run it any different than there core auction business.
I can say, I am happy to report my family, who bought stock when they seen my success on e bay back in the late 90s, sold there stock when I explained the new managements flawed, unfair, and aggressive policy handed down. The stock has followed since this and many are betting with there dollars fell it will continue to fall. Maybe Jim Cramer, hyper as he is, has a point when he said he could not get behind the company, and that someone should buy the company "and put them out of their misery." It is hard to argue with him, stock sold back in march, when these policies were being talked about, not yet implemented aggressively, sold ebay seems to be the smart move. Stock was $30-$32 per share at that time, March 2008 new management took over, it dropped every since as can be tracked from any stock quote chart. Yes, the economy took the abrupt hit, stock price had already plummeted by 1/3, $19-$22 per share, before it happened that our country was in trouble from bad credit/debt. Some say they wouldn't want to touch this a credit market at this time. I would also not want to answer to shareholders when they learn what long time sellers and buyers have seen in the past few months.
I think this report on NYtimes has some good in site of the problems facing the company with the current buy:bits.blogs.nytimes.com...
Maybe enough people will sign to make it worthwhile?
www.petitiononline.com...
Let me say, I LOVE E BAY, it is just sellers and buyers don't like what new management has done to its strong culture. We have a vested interest and love for the old e bay culture.
Just one of the PAST buyers and sellers temporarily driven away by new management, it will be interesting to see what the new management that is suspected to come will do to the culture. Hopefully Auctionbytes is right in looking for a replacement for JD and you can see the 150+ comments below the article shows not one good thing to say about this management blog.auctionbytes.com/...
Good thing for golden parachutes I guess, maybe that will soften the fall?