Yahoo and the Merry-Go-Round

So news is just in… in fact, I’m breaking the news on this one that the next CEO to be brought in to the beleaguered, once colossal, tech giant Yahoo is Santa Claus.  Yes, you heard it here.  Ol’ Saint Nick, the rotund, rowdy, and rocous titan of industry has cheerfully accepted his new appointment citing his excitement to be able to bring a little joy to the withering ranks of boys and girls at Yahoo.

 

 

Okay – so that’s a joke.  But…. what is not a joke is the literal merry-go-round of corporate chiefs that are coming in and out of Yahoo.  The latest appointment of former Google Engineering Diva, Marissa Mayer, has got me thinking.

The specifics of my “thinking” centered on:

  1. What criteria and process is the Yahoo Board going through in regards to “fixing” the problem?
  2. Why Marissa Mayer may not be the best fit for this particular task
  3. How the process itself seems completely counter to the entrepreneurial roots that Yahoo comes from
I wish I had more time to ruminate on this but unfortunately with 3 kids and more work calling I’m going to distill my thoughts into the most succinct of terms. (*editor’s note –  too lazy to write a full analysis)
(a) Luck, skill and smarts can’t fix broke:
*Marissa Mayer did awesome things at Google.  I won’t detract from her accomplishments.  Only thing I would say here is that …maybe the root of the Yahoo problem isn’t the CEO – maybe it is more fundamental.
(b) Applying traditional management tactics to un-traditional environments equals #FAIL
*Once again – Google Engineering Diva is awesome, however, I guarantee when she was in the trenches at Google with the engineering team she didn’t try to pull this BS with them > What Marissa Mayer Really Brings to Yahoo  …. (i.e. “you do it or I find another team”… OUCH).  This management tactic is more reminiscent of Chainsaw Dunlap (i.e. Coleman Corp) than it is an inspirational technology exec.
(c) Revolving doors don’t instill trust they create fear
*I think this makes like the 3rd or 4th CEO in a very short time-span for Yahoo.  I have to imagine that if you’re at Yahoo the only thing you’re hearing right now is the abandon ship alarm.  Let’s face it the root of this company and Google are in innovation, having fun and doing what you love.  If that has been lost then the only question and guiding principle is how do you get you’re mojo back.  Recycling execs wouldn’t seem like the first priority to me?
So glad I got that out of my head.  Carry on.

 

 


Groupon – Lesson for Entrepreneurs?

So this may be admittedly old news, and I also am willing to acknowledge that looking in the rear view mirror is a luxury entrepreneurs don’t have… that being said, WTF Groupon?

Here is the quick timeline: (1) Groupon sees interesting opportunity to take what effectively amounts to a coupon book online to the masses, (2) Groupon is first mover and grabs headlines and market share, (3) Big Gorilla (aka Google) sees success and wants in, (4) $6 Billion dollar offer to Groupon and it is denied, (5) Groupon goes public and now is in fierce competition with lots of other “johnny-come-latelies” in market that is getting saturated with price pressures & margins are quickly eroding.

I could ruminate on this to great length but I think I’ll keep it simple and to the point.  Here are the items that I’ve learned from this unfolding drama between Groupon and Google from an entrepreneurship perspective:

(1) Recognize Luck vs. Skill – Not trying to incite a riot here but let’s be honest, Groupon is a local advertising / coupon book taken to the web.  They did awesome with it and executed flawlessly.  My point with this one is that sometimes right time, right place and the synchronicity of all the variables coming together needs to be acknowledged and appreciated and taken advantage of.

(2) Be Mindful of the Market – I think most persons if they project out could have realized the business model of Groupon is one that is damn hard to defend against.  The technology is widely available, the secret sauce of sales is their massive sales team and copy writers.  As we see today everybody is in the local coupon space.  Being mindful of the market and realistic about the business you’ve created (see point #1) are key.

(3) Think Worst Case – 1000 scenarios could have manifested post Google offer presentation. However, the worst case scenario was that Groupon turned down the money and saw their healthy lead in the marketplace becoming infiltrated with wanna-be’s and others who may have been equally cash rich.  Jump til’ today – guess what happened?…. it’s a straight out bare fisted, gang fight in this market that Groupon competes in.  In an alternative scenario, upon acceptance of the $6 Billion clams that Google was offering here is what would have happened –  (a) Groupon team got handsomely rewarded for 2 years of effort, (b) They got a buyout company with deep pockets and already massive leverage / data and reach into local markets, (c) They transferred the market risk to the buyout entity.   I like the latter a bit better.

(4) Recycle and Innovate.  What do entrepreneurs love? In my opinion, they love the thrill of the hunt, creating something from nothing, and absolutely loving what they do.  Maybe Andrew Mason so loved Groupon that upon the $6 Billion offer from Google he decided his love child was better off going it along.  I’m not sure.  One thing I can say is that for me – continually innovating is my passion.  At a $6 Billion buyout offer from Google, Groupon and the guys that created and made it successful could have a hell of a lot of passion to continue their entrepreneurial pursuits.

So in the short analysis, I think this was a bone headed decision. I sure as hell hope it wasn’t motivated by greed and the belief that if Google would pay $6 Billion then surely we must be worth $10 …. sadly, however, I do believe there was a bit of dollar / valuation chasing taking place on this one.  In the end, no one but the team will know whether they made the right decision – but for me, in the lens of the rear view I certainly have learned some valuable lessons from what they did. So for that Groupon, thank you….and no I won’t be making any buyout offers any time soon.

 

Previous Articles & Interviews re: Groupon

Interview with Andrew Mason (CEO) via All Things Digital – Summer 2010

Buyout Offer from Google Details via All Things Digital – Winter 2010

Success of Google Offers & Should Groupon Have Taken the Deal – Fall 2011

The Next Great Heist…Misinformation

Misinformation and the Internet
The Next Great Heist…Misinformation

Okay so I have seen my fair share of Die Hard-esque, conspiracy laden action movies and would like to think of myself as a generally level headed individual.  Seriously, who could really believe that some Internet savvy, greedy, terrorist organization could take control of an entire US network infrastructure and cause wide spread pandemonium like what happens in Die Hard 4. Even better, what about the James Bond movie, Tomorrow Never Dies, where a crazy media mogul tries to start a war by leveraging his global media empire combined with the basic vulnerability of a absurdly naive viewing audience. The movie Tomorrow Never Dies was filmed in 1997 and since then we have experienced the rise of Google, heightened popularity of social media platforms, and a general ability to be plugged in and reporting from almost anywhere.

It is in this new modern day, “always-on” society that I wonder: Have we created such a highly integrated, Internet driven society that our basic vulnerabilities are significantly higher today than they might have been even five years ago? (i.e. Are the plot lines of these two movies referenced above really that far out of line?)

Case in point, in 2008 there were 2 occurrences that received moderate news coverage but had a more significant impact than what the standard news media portrayed. Both occurrences involved misinformation and big swings in the public stock prices of two very large companies.  The bigger issue behind both of these stories was the fact that because of the interconnectedness of our modern day world, the misinformation spread quickly and caused downstream affects that were extremely significant. The two publicly traded companies affected in these two instances were Google (GOOG) and United Airlines (UAUA).

The United Airlines scenario is particularly intriguing.  Over the weekend of September 6, 2008 (Saturday) an article was posted to the South Florida Sun Sentinel website that indicated United Airlines was filing for bankruptcy.  The shocking article was actually true with just one problem. The actual bankruptcy filing of United Airlines had occurred approximately six years prior in 2002.  Here is the interesting part, through the wonders of the Web, website visitors began clicking on the article in heavy volumes while visiting the newspaper’s website.  This caused the article to grow in popularity and actual be featured on a most popular article section of the website.  This in turn caused Google’s news reader bots to recognize the significance of the article and index it within the Google news ecosystem.  One search later by an investment advisory / news shop in South Florida and a subsequent Bloomberg update and Voila!, massive sell-off of United Airlines on Monday, September 8th, 2009. How massive?  Below is the trading activity from September 2, 2008 to September 10, 2008.  On the panicked Monday sell-off, United Airlines (UAUA) traded in volumes that were nearly triple from the previous Friday.  More importantly, the stock which had closed at $12.30 a share on Friday reached a intra-day low on Monday of $3.00. The delta of $9.30 a share represented the evaporation of $1.4 Billion, Yes that’s BILLION. Obviously, the move downward on Monday was countered when investors realized the story was old and not relevant.  The thing I find most poignant about this scenario is that it shows both the fragility and strength of our networked society.

Information regarding details of United Airlines bankruptcy filing:  http://www.out-law.com/page-9418

United Airlines Trading Surrounding Bogus Bankruptcy Filing
United Airlines Trading Surrounding Bogus Bankruptcy Filing

The other scenario in 2008 involved Google.  Similar concept, misinformation and interconnected systems cause momentary blip and erratic pattern in trading.

Link to Valleywag article  http://valleywag.gawker.com/5057089/googles-share-price-swings-200-in-a-few-minutes

So what’s the point?

The point is simply a recognition on my part that :

(A) we are more connected and that creates awesome opportunities and also more risks

(B) this interconnectedness could be used by greedy criminals (you know the Die Hard 4 kind) to manipulate markets and momentarily guide opinion and therefore behavior

(C) within this environment we need to craft governmental legislation that will ensure we all are allowed to benefit from the good but limit our downside risk.

In short, I love technology, the Internet and sometimes these social apps. Well sometimes not the social apps, especially when a semi-friend from high school updates me on the fact that they are folding laundry with Tommy.  Either way, it is clear to me that some of these far-fetched plots of Tinsel town could potentially be more viable as we continue to migrate ourselves, our businesses further into the Internet as evidenced by 2 incidents in 2008 (GOOG & UAUA).