Eric Jackson is the managing director of SpringOwl Asset Management, a Yahoo investor that’s proposing a new turnaround plan for the company.
Last week, Yahoo (YHOO) CEO Marissa Mayer decided to go on the Charlie Rose Show for an hour to explain her new 3 year turnaround plan (developed after her first 3.5 years on the job).
Mayer doesn’t do these kinds of interviews often. And, when she does, she selects a very particular type of interviewer (senior, respected, old tech). Rose had interviewed her a couple of years ago at Davos. He’s well known, well regarded, and friendly.
Of course, he’s no techie. There were several points in the interview where someone who follows Yahoo closely could have pushed back on Mayer’s claims. Rose could not and did not.
There was one point which Mayer made which I wanted to follow up on here. There is, of course, a narrative that Mayer likes to impress on investors as a defence for why her turnaround has been so disappointing: Yahoo was in a really challenged position before she came up.
There is some merit to this. It was certainly recognised by investors at the time of her arrival. For the first 2 years of Mayer, I was a staunch defender of hers. I reminded investors that Mayer inherited a really difficult position.
Although Yahoo was and is fortunate to have so many users coming to its desktop site (1 billion or so), everyone knew that it needed to develop mobile sites which users would flock to in equal numbers. Facebook (FB) users would have to come to a fast and effective mobile app in 2012 if Facebook built it (and they did). You don’t have to go to a mobile app to get your Yahoo email and most didn’t go to Yahoo.com as their jumping off point on mobile out of habit.
Building up some popular mobile apps would have taken any Yahoo CEO time. We’re coming up on 4 years for Mayer and she basically has nothing to show for it. Yahoo Mail as an app is barely hanging on in the Top 100 apps and Tumblr is now out of the Top 100. That’s it. Yahoo’s got nothing else.
Mayer likes to explain that there were few “mobile” engineers when she started. During the Rose interview, she says at different points in the conversation that there were 30, 50, 60, and 100 “mobile” engineers when she started. Then, she proudly boasts that Yahoo now employs 500 “mobile” engineers.
500 sounds like more than 100, but it sounds awfully small considering that Yahoo had close to 12,000 employees and contractors at the end of 2015. That’s only 4% of the workforce dedicated to the area which all shareholders would agree is the most pressing existential crisis facing the company.
4%? That’s it? What are the rest of the 12,000 employee workforce doing? Pushing papers in Sunnyvale? Working on the grand new mobile search product Index for Yahoo which Mayer cut zero employees from during the recent 1,500 layoffs, yet which she never mentioned as an exciting new area for Yahoo to Rose?
I called my contacts of current and former Twitter (TWTR) and Facebook (FB) employees and asked: how many “mobile” engineers do those companies have compared to Yahoo’s 500?
Their first question back was always: What’s a “mobile” engineer? Almost all their engineers work on their mobile products. It’s rare to have any engineers who classify themselves as “desktop only” engineers.
With that said, most estimates were that Twitter has around 1,500 “mobile” engineers (or 3x Yahoo) while Facebook had 2 — 3,000 “mobile” engineers (or up to 6x Yahoo).
So if these numbers are accurate, which I believe them to be from my sources, why would Mayer be boasting that 4% of our current workforce is — almost 4 years into her tenure — dedicated to “mobile” engineering, while 38% of Twitter’s workforce and 24% of Facebook’s workforce is allocated there?
To be at comparable levels to Facebook, Yahoo should be employing nearly 3,000 “mobile” engineers, not 500. That’s a big gap.
As you peel this onion of all these various comments Mayer made during her interview defending her record at Yahoo, you end up increasingly scratching your head at just how she justifies to herself various basic management ideas. And, of course, it leads you to conclude that there’s a clear reason about why she’s now embarking on a new 3 year turnaround plan after a 3.5 year disintegration plan.