Wednesday, April 10, 2013

Is Yahoo buying companies or people?

The lesson that will remain with me after reading about internal organizational analysis over the past week is the value of maintaining a pool of talented employees throughout your organization who have the potential of moving up the org chart into leadership positions as vacancies arise. Although not a highly publicized factor, I believe an internal capabilities audit conducted by Marissa Mayer shortly after taking the reins as Yahoo CEO revealed a critically depleted "leadership bench" and the flurry of recent acquisitions is her reaction to that finding.

A recent New York Times article titled, "Chief Tries to Infuse Yahoo With a Start-Up's Spirit" by Jenna Wortham and Nicole Perlroth describes Yahoo's recent purchases of Summly, Stamped, OnTheAir,, Propeld, and Jybe primarily as an attempt to bolster the company's mobile platform portfolio, undoubtedly a benefit for a tech company desperately trying to gain ground on Google. However, I believe an equally important factor, if not the driving force behind, the decision to bring these start-ups into the Yahoo fold is their young, forward thinking leadership who now sit on Yahoo's "leadership bench".

Viewing the personal involvement of Yahoo CEO Marissa Mayer in these deals through the lens of building a leadership team makes the purchases, and dollars paid, more justifiable. For example, Summly, a news aggregation app, cost Yahoo $30 million. There is nothing overly exciting about the product and it doesn't have a vast user base either. Yahoo has said that one factor in it's decision was the opportunity for Nick D'Aloisio, the app's CEO, to help lead the company (Yahoo) in mobile. In the words of a MasterCard ad campaign from a few years ago, acquiring an app whose technology may or may not be relevant in the future - $30 million, keeping it's 17 year old creator away from your competitors - Priceless.

Now put yourself in the leadership shoes of an upstart mobile technology company that Yahoo is interested in acquiring. If you're able to look past the millions of dollars likely on the table, how comfortable are you with joining the organization? Do you believe Yahoo has corrected its "acquire and neglect" style of integration that we saw with Flickr before Mayer dedicated the resources to upgrade the product over the past few months? Would you accept Marissa Mayer's offer?

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