If you follow the tech news, you heard that Marissa Mayer just became CEO of Yahoo!
The big question is what happens next, which products/services become a priority and what direction does Mayer take Yahoo.
We need to understand how Yahoo describes their business currently, here are a few quotes from their 10-K, Yahoo is a “premier digital media company” and “Yahoo! Properties currently fall into three categories: Communications and Communities; Search and Marketplaces”
Their revenue is generated from three areas: Display, Search and Other. Display generates $2.1B or 43% of revenue. Search generates $1.8B in revenue or 37% of revenue. Other generates $970M in revenue or 20% of revenue. If you look at the revenue trends of these areas, search revenue is decreasing, other is decreasing but display is roughly consistent the last few years. It is not a surprise that search revenue is decreasing, they have been losing marketshare for many years, Yahoo is in third place when it come to search engine traffic, behind Google and Microsoft.
A few thoughts and suggestions as to what happens next for Yahoo:
- There are 14,100 Full Time employees at Yahoo (per their 10-K). That is a lot of employees and provides a great opportunity for Yahoo to reassess and identify their star players. There will be some additional lay-offs
- They have $2.2B in cash and short-term investments. Similar to what Facebook, Google and Twitter are doing, they can make some acqui-hires or small acquisitions ($100M or less), mainly to bring on new product people with specific skill sets
- Hire 20+ highly competent/skilled developers to engage the startup communities in areas such as Bay Area, LA, Seattle, Boulder, Austin, Boston, NYC, Durham, Tel-Aviv, London, Berlin, Shanghai etc. These would be developer outreach professionals, helping spread the word about some of Yahoo’s APIs (current and future) and scouring the communities to identify developer talent
- Bring on a handful of professionals to engage the investor community, specifically to identify emerging startups that could be partnership opportunities and/or acquisition targets. These people would work with accelerators such as Y Combinator, Techstars, 500 Startups, etc. and early stage funds such at SV Angel, Lerer Ventures, 500 Startups, First Round Capital, True Ventures, etc.
- Ad-tech is an evolving sector and there are always some new technologies being developed, there is an opportunity to make a few acquisitions in this space, especially since display is their main revenue stream
- They need to make a big push on mobile, they don’t seem to have any strategy in this area, this includes viewing content, communication and ecommerce
- ecommerce is big opportunity and they should become a player in this area. There continues to be a trend of content and ecommerce being done in unison. Yahoo can integrate ecommerce to existing content
- They have some interesting things on high-end content (video) and would like to see them focus more in this area. I like what YouTube is doing with its premium channels, could see Yahoo doing something similar
- Become specialized in a few verticals within search where they can become the number one player
- Flickr is a property that needs some immediate attention. Either enhance this area and focus on people profiles (such as Facebook) or sell it off it is not part of their core offering
- They need to figure out what they do with Alibaba. There has been some bad blood between both companies but Mayer might be able to fix that relationship