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Post Semel Top 10 Problems Facing Yahoo

Wow, big news over at Yahoo - Terry Semel steps down as CEO and Jerry Yang takes over the helm (with Sue Decker sitting pretty closely next to him as the new company President). Big corporate shake-ups like this are always big news, no matter the circumstances, but in this case, this outcome is hardly surprising. Google's success cast a very long shadow over Yahoo and his failure to react made a changing of the guard the only sensible option. Now, whether the back to the future approach of appointing Jerry Yang is the right move, only time will tell.

In any event, the Yang/ Decker team has a lot to do. Here, in no particular order, are the top ten problems facing Yahoo right now:

1. They've lost the search wars. For a bunch of reasons (history, exec team, product decisions, etc.) years ago they let Google become the brand for search. To fix this will take more than a few algorithmic tweaks. A holistic product approach is needed.

2. Search is where the money is. Losing the search war wouldn't be so bad if search wasn't THE most lucrative business on the net. But it is. And everyday Google grows stronger and richer because of it.

3. The Yahoo brand doesn't stand for anything. Certainly not for search - not for news/ email/ finance/ local/ etc. either. Pick a category and own it.

4. Because the brand doesn't stand for anything, they have no power users. Look at great web companies like eBay, Google, YouTube, MySpace, Facebook, etc. - not only do they have tons of users, but they have tons of users who evangelize the company. The closest thing Yahoo has to a power user is their email customers, and that's only because there is actual switching costs in changing email providers. This not what you call a power user/ company evangelists.

5. Speaking of email, well if search is the Fort Knox of the internet, then email is the tree fort in your back yard. Email monetization sucks. i.e. again, not your ideal power user.

6. News monetization sucks too. Well, in most categories anyway. Unfortunately for Yahoo news is probably their second strongest category, after email.

7. Directionally, the company is lacking. This is probably a result of their lack of brand, but needs some internal discipline to fix. Get your troops marching in the same directions.

8. Unfortunately though, motivating the troops at this time will be difficult. Recent staff losses have hurt, but the folks who are still there seem a bit disgruntled. Case in point, the infamous the Peanut Butter manifesto. Can you picture a shiny, happy Googler writing that?

9. Speaking of peanut butter, services like music, personals, etc. aren't going to save your bacon either. There's too much competition which leads to too little market share, which leads to a further diluted brand. Cut the fat.

10. The corp. development wars aren't going well either. In addition to losing a few high profile acquisitions (see Facebook, YouTube, etc.), the perception is that the acquisitions they have made have been after the fact, consolation prizes.

Ok enough bad news. Time for some good news. Despite all of this, Yahoo is uniquely positioned to fix these problems. They are cash rich, have a ton of traffic and have a lot of very smart people there who are extremely capable of fixing all of this. The question is whether or not they will. Good luck Mr. Yang.


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