One of CEO Marissa Mayer’s strategies for turning Yahoo around is acquisitions. Yahoo has bought a jaw-dropping 41 companies in two years, Yahoo M&A Jacqueline Reses says, most of them small deals with startups.
But despite Yahoo’s love of owning startups, it’s not interested in investing in them, Reses says. She has no plans to start a venture arm, she said, even though such venture firms, where corporations incubate the tech and talent that they want, is all the rage these days. (Everyone from Google to SAP has one.)
During a panel session at the Fortune Brainstorm conference in Aspen, Colorado, on Tuesday, Reses explained:
We don’t have venture arm. I worked in private equity for decade, so it wouldn’t be foreign. But Yahoo is in a transformation right now. We need to, as an executive team, focus on that. We need 100% of our attention on our core business. … Venture investing is a hobby … it would be nice if we had time to have a hobby. But [we don’t want to] take up the time of executives to think through if a [startup] investment opportunity is great. We’ll focus on acquisitions that are great as opposed to small investments.
That’s an interesting perspective for several reasons. Most corporate venture capital firms are legally independent organisations, separately staffed. The company’s corporate executives aren’t the ones fielding pitch meetings.
Secondly, should CEO Marissa Mayer want to staff up such a thing, she already has an in with the venture world: She’s married to one. Husband Zack Brogue is a founding partner of Data Collective, a fund that specialises in “big data” startups.
To be sure, Reses wasn’t really knocking the idea of corporate venture firms in general. “Big tech companies that do own venture arms, for them it is the right strategy,” she added.
But startups backed by one of them, particularly a direct rival like Google Ventures, make her wary when she’s shopping, she said.
“When we look at companies backed at those funds we always ask, ‘Why are they selling and why not selling to their own sibling?'” she said, meaning why isn’t the company that funded them buying them.
Another issue with corporate-backed startups is the negotiation process. Because Yahoo wants entrepreneurs to feel comfortable selling to it, it has an “open book” policy and shares a lot of info about Yahoo with a potential acquisition, she said. So she’s “concerned about information flow” to rivals or others involved with corporate-backed startups.
That said, if she gets satisfactory answers on these things and everyone still wants the deal, she would go ahead and make an offer, she said.