Why Scott Thompson Is The Right CEO For Yahoo

Scott Thompson

[credit provider=”Mashable” url=”http://www.youtube.com/watch?v=XqweXRxF_D8&feature=related”]

Yahoo is the biggest turnaround challenge in the Valley. Investors want them to sell. Talent is leaving out the back door to hot start ups. Innovation appears to be lacking. Valley opinion of Yahoo has never been more negative.Right now, Yahoo badly needs two key things: positive leadership for a team that’s been badly beaten down, and critical analysis to build a cohesive strategy that the company, investors and customers can rally around.

Scott has been on Zuora’s board since 2008, and I can tell you from firsthand experience that he has the skills to do just that.

I have so many great Scott stories, but I have one in particular that the Yahoo crew should know. Early on, Zuora was seeing some strong adoption, and I was feeling pretty good about myself. Scott took me down a rung, saying, “This is all great, but you haven’t proven to anyone that YOU can make your team successful. That’s your job, and you’re on the hook.” It was one of those moments where the colour of the world changes, and you can see a whole new path ahead. That’s the kind of leadership Scott can provide.

But the prevailing wisdom is that Scott has the wrong background to save a seemingly unsave-able company. He lacks advertising experience; he isn’t close enough to consumers; or he doesn’t have the chops to run a huge brand like Yahoo.

If you focus on that, you’re missing the core issue. The real problem with Yahoo is not that ad revenues are flat. That’s just a symptom. The real problem is that Yahoo has completely forgotten about what it means to be a tech company.

Who are the powerhouses in Silicon Valley? Google. Facebook. Apple. Salesforce. What do they all have in common? They are all tech companies at the core. Tech rules in Silicon Valley, no matter what Madison Avenue would like you to believe, or how they would like companies such as Yahoo to behave. These companies have succeeded by setting the innovation agenda in their own markets. Yahoo knows this because it used to be one of them.

Where did Yahoo go wrong? When it forgot its roots and decided it was a media company. Starting with Terry Semel’s leadership, Yahoo started resembling a publishing house. My guess is that someone probably had to show Terry how to run a browser. Ad industry-watcher Digiday summed up how Madison Avenue feels about Scott:

“… based on some of Thompson’s comments — that Yahoo will be ‘back to innovation, we’ll be back to disruptive concepts’ — there’s a fear that Yahoo is still pining for its cutting-edge past rather than focusing on its media future.”

But who in their right mind – in Silicon Valley – would ever trade a tech business model for a media business model, especially in this last decade? Does anyone really want to be like AOL?

In recent years, Yahoo has been more about content deals than creating a great user experience. More about increasing ad inventory than changing the world. And for the last year, it has been about… well, I’m not really sure what it was, but it sure wasn’t innovation. Instead of hiring great engineers, the company became all about how to maximise the eyeballs on Jersey Shore clips.

That’s why Scott makes sense. Scott has his roots in technology as the CTO of Visa and PayPal. Scott is a tech guy. He understands tech guys. He appreciates tech guys. He took PayPal back to its roots. PayPal built a great experience for users, a great experience for merchants and a great experience for developers. He made things brain dead simple and scaled it around the world.

As people give Scott advice (and I’ve read a lot of it), here is my two cents: yes, Yahoo has a lot of content. But to be successful, bring Yahoo back to its roots as a technology company. Yahoo is still a trusted brand around the world. It still has a massive user community. It still has great technology. (Disclaimer: I still fire up My Yahoo as my browser home page. I know this dates me.)

Another unique trait of Silicon Valley leaders is that they move on from past missteps. They build on their strengths and create innovations that propel them into new markets. If there is a tech company today that needs to recapture this philosophy, Yahoo is it.

Just for comparison, consider Yahoo today vs. Apple’s woes of the 1990s (don’t worry, I’m not going to compare Scott to Steve Jobs). Apple had lost its way, focusing on products and markets that diverted from its core. But it rebuilt itself based on its reputation and loyal following. And after losing talent for years, it hired great engineers, refocused on innovative technology and rebuilt a technology leader.

So to the Yahoo team, you just got a great leader. Forget about the pundits. Forget about being a media company. You have great assets. The tech industry loves a comeback story. I believe you can make Yahoo a great tech company once again.