As a former Yahoo board member, current Weather Company CEO, and before that the chief of several advertising and technology businesses, David Kenny is well-placed to comment on what he thinks could see ailing Yahoo return to its former glory.
So when we caught up with him at the World Economic Forum Annual Meeting in Davos last week, we asked him just that.
Kenny — also once rumoured to be a Yahoo CEO candidate — believes that Marissa Mayer’s near-four-year tenure as Yahoo CEO has been somewhat overshadowed by the “financial engineering” involved in deciding the destiny of the company’s stake 15% in Alibaba. Yahoo hired Mayer from Google, because she led the development of some of its most successful products and is a “great” product leader — but she and the team have had too much of their time taken up by Alibaba, according to Kenny.
In December, Yahoo flip-flopped on its year-long plan to spinoff its Alibaba stake into a separate holding company over fears tax regulators would challenge the spinoff and impose a multi-billion dollar bill. Now Yahoo is looking at a move that will see it bundle its internet business and its stake in Yahoo Japan into a separate publicly-traded company. That spinoff (which will still incur a tax bill, but nowhere near as large as the original plan) may take more than a year, which has irked some investors. The most likely outcome for Yahoo now is a sale, according to SunTrust’s Robert Peck.
Kenny thinks despite the lingering spinoff plans, a standout product could solve Yahoo’s problems.
“What’s kept Google growing and Facebook leading right now is constant innovation and new products. Unfortunately, Marissa and the team have been distracted,” Kenny said.
We challenged that Yahoo has been attempting to do just that — despite the distractions. It bought Tumblr for $1.1 billion, but that has failed to really boost ad revenue or capture attention like other millennial-focused platforms like Snapchat, Facebook, and YouTube have.
Meanwhile, Yahoo has spent more than $1 billion buying up ad tech companies like Flurry and Brightroll, pieces that have not yet been “put together” efficiently, according to Kenny.
And then there’s the Yahoo Weather App, for example. It’s an app that’s often referred to as “beautiful” in reviews, thanks to the way it pulls photos from the Yahoo-owned Flickr image-hosting site. But Kenny says that while it’s a great way to show off the Flickr property, it’s a “superficial” app that uses Weather Company data but does not monetise in the way the Weather Company’s apps do.
Ultimately, Yahoo needs to double down on producing the kind of standout products that nobody else has — not watered-down versions of other products. And Kenny is still confident there’s some time for Yahoo to do that.
“They have a lot of data, a lot of resource, a great brand, there’s a lot of things that can be done,” he added. “The soul of Yahoo is its products.”
The Weather Company’s new era
Our chat with Kenny came three months after IBM announced its plans to buy The Weather Company’s product and technology business. The deal does not include the TV company, The Weather Channel, which will now licence weather forecast data and analytics from IBM under a long-term contract.
The deal has yet to close, so Kenny could not yet reveal the new position he is taking within IBM. Cameron Clayton, the Weather Company’s president of product and technology, will head the division once it becomes part of IBM.
IBM gives The Weather Company the opportunity to considerably expand its global footprint as its new parent company has a presence in practically every geographical market, Kenny explained.
The Weather Company offers IBM’s Watson platform with millions of new datasets, allowing IBM to offer its clients insights on everything from how to reduce traffic to using forecasts to predict where best to sell their products. Kenny said The Weather Company’s ad tech offering is also set to become “more sophisticated” now marketers can link weather data with their sales and CRM data through the IBM cloud platform.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.