Yahoo Alumni on What Went Wrong

Weak culture, bloated middle management among top criticisms

For board members at the top of the company, the problem with Yahoo may have been outgoing CEO Carol Bartz, but people with experience on the ground say the situation is much more complicated.

Former Yahoo employees say that while the buck had to stop with Bartz, the company suffered from a bloated middle management, a lack of urgency, and a weak culture, much of which was seeded before Bartz’s arrival in 2009.

“Pre-Carol there was definitely a management deficit that had built up over time, just like when you spend on your credit card and don’t pay it down,” said a former Sunnyvale, Calif.-based executive who left Yahoo earlier this year for another tech firm. “This was definitely a tough, tough organization to turn around because it’s already big and global and this industry moves so fast and it moves so quickly away from where Yahoo has strengths. It would be a tough challenge for anybody, and it was a few years in the making before she got there.”

Still, he added that Bartz likely was not the best fit from the beginning.

Facing mounting competition from its Silicon Valley neighbors, Yahoo needed a visionary leader with good intuition about the industry, he said, but Bartz was a “management talent” who deferred to those beneath her.

That kind of strategy may work when times are good, but not for companies in Yahoo’s position, he said.

“The leader at the top should know a few make it or break it bets and just drive them to get them done,” he said. “[That takes] a unique skill set . . . and would have been a better fit. And it’s pretty universal that that wasn’t her strength.”

Others say that while Bartz wasn’t a visionary, her no-nonsense style was good for the company at the time.

“She was a very straightforward person. She was very direct. You could have a conversation with her and accomplish in 15 minutes what would have taken much longer with another person,” said Tim Mayer, currently COO of search marketing startup Trada, who worked at Yahoo from 2003 to 2010. “[That directness] was something that the company needed at that time, a leader that would hold people accountable.”

But Mayer, who left Yahoo as vp of search market share, said that many of Yahoo’s big bets in personalization, social, and mobile didn’t work out. While Yahoo is a huge, global company with lots of moving pieces and responsible individuals, “the CEO is ultimately responsible.”

A former Yahoo executive, who started working in the company’s New York office before Bartz's arrival, said, “I have a ton of respect for Carol . . . She’s a badass, she’s exactly what the company needed.”

When he ultimately decided to leave the company, he said, the famously “no-bullshit” Bartz sat down with him and listened to his observations on what was wrong at Yahoo. After the meeting, he

continued, she quickly brought his recommendations to senior staff, openly acknowledging her own miscalculations.

“[She said,] ‘It’s OK to be wrong; let’s just get things right quickly,’” he said. “Time and again this was the role I watched her play . . . I left feeling that if only Yahoo were a private company, she’d be the perfect person to get this ship righted.”

Observing the media commentary around Bartz’s dismissal, he said too much blame is being dumped on her.

“Yahoo doesn’t know itself . . . It has a culture problem,” he said, echoing comments made by other former Yahoo employees who spoke to Adweek. “I don’t think it’s a CEO problem. I think it’s much more systemic and pervasive than that.”

From the middle managers on up to the board, this source said, Yahoo was struggling to understand its own identity. Bartz was taking the steps to achieve that clarity, through trimming the fat, simplifying the organization, and getting a product delivery discipline ingrained in the company. However, without a clear sense of the big picture, middle managers seemed to act in the best interest of their own divisions and not necessarily in the best interest of the company.

Other former Yahoos also pointed to middle management as a key problem with the company.

“For sure they can cut a lot of the middle management,” said one Yahoo employee who left for another tech company earlier this year. He also noted that when he’d look at the parking lot at 5:30 p.m., it wouldn’t be empty, but it would be getting pretty thin.

“Employees had one foot out the door, like they were looking for their next gig,” he said.

Corporate bureaucracy also meant that Yahoo couldn’t stay nimble enough to keep up with Silicon Valley startups. The company has very talented product people, he said, but the process constantly got in the way.

“If you wanted to get a deal done . . . the process to get something approved there was unbelievable,” he said. “It’s something that goes on in any big company but felt like it was an antiquated process that needed updating in some regards.”

Another former Yahoo Sunnyvale employee who left for the startup world this year said that one of the bigger problems at the company is its organizational structure.

“They’re not adequately incenting the right people,” she said. Not only does she think that Yahoo employees are valued higher outside the company than they are inside the company, she said that the incentive structure doesn’t encourage employees to focus on the areas that the business wants to grow.

As a stream of high-level executives left Yahoo, she said, the perception was that the company wasn’t fighting back. Those departures created a culture of uncertainty, dragged out the decision-making process, and ultimately led to other waves of lower-level departures.

In one of her roles at Yahoo, this source said, she had four bosses in seven months.

“It just feels like it’s churning,” she added. “People change and decisions that you thought were marching orders are no longer marching orders.”

But while onetime Yahoos may know their former employer’s weaknesses, they also know its strengths. Many of the company’s products, reach, and people still hold significant value, they said collectively, and, with the right changes, it could still have a strong future.

“It could still make a play in mobile or gaming. Those markets are still open, and with Yahoo’s audience, there’s a big opportunity there,” said Mayer. “Most startups dream about having that amount of traffic.”

Additional reporting by Anthony Ha

Publish date: September 9, 2011 © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT