Yahoo Needs Mark Cuban

Most of the commentary about Yahoo’s short term troubles has focused far too much on Yahoo’s short term troubles.

Danny Sullivan offered a little more insight today suggesting correctly that Yahoo has got a lot more going for it than most, including the market at large, seem to suggest. Yet Danny may still be barking up the wrong tree to suggest that modest changes and a better Google deal will resurrect Yahoo’s market prospects. That might have worked some time ago, but I think a much better plan is very simple: Hire Mark Cuban and Donny Deutsch as morale building maniacs and cutthroat competitors. These guys are flamboyant and will put the big buzz and the fear back into the correct side of this equation: the underperforming part.

Yahoo is still a fantastic *company*, but I think the morale and innovation is so low at all levels that the best approach is major shakeup (rather than just talking about a major shakeup) . This would include large success incentives for old and new blood, and probably include a pretty sharp axe for the heads of those who are not enthusiastic about powerfully resurrecting the prospects of what is still a great company.

Given the mass exodus of executives right now it should be crystal clear to everyone that there is a leadership crisis at Yahoo. Jerry Yang is a brilliant guy and appears to retain a lot of loyalty even as people abandon the ship. Yet for reasons that nobody seems to understand he clearly has been unable to rally the troops to the degree needed at Yahoo. Part of the problem – I’m beginning to think a huge part – is the failure of the troops. Although most critics focus almost entirely on Yahoo’s top level management, I think one of the problem dynamics that came about as Yahoo grew was that despite a core group of dedicated engineers a large number of workers and middle managers simply put in their time, lived lavishly in the gravy days, and watched as their options lost value while Google and successful startup employees became rich. Very rich. It is more than a little demoralizing knowing that thousands of people no brighter or more capable than you are sitting on millions in GOOG value while your YHOO stock and options are decreasing in value.

I remember first seeing this “morale differential” between Yahoo and Google in person at a search conference in Las Vegas in 2005. Where the Google engineers and staff were almost giddy with excitement the Yahoo folks were often uninspired, and I remember clearly how one of the higher level managers was a lot more interested in the parties than evangelizing on behalf of Yahoo’s budding publisher network. There were some really clear exceptions to this such as the incomparable Jeremy Zawodny who gave a brilliant presentation about his extensive blogging experiences as Yahoo’s informal and unofficial blogger laureate. Until his departure last week Jeremy has been one of the reasons to think Yahoo could turn around. Although I’m happy to see the management folks leave I worry that Yahoo’s engineering teams remain a key asset as Yahoo’s traffic is still close to the world’s largest online footprint depending on what metric you use to count people and pageviews.

So Yahoo the answer is simple: Mark Cuban and Donny Deutsch, morale building maniacs. You may have blown the chance to let Microsoft bail you out of the troubles though Carl “I’ll be back” Icahn will certainly come back into the picture as he should. Oh, and he will put in Mark Cuban.

Discloure: long on YHOO

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