How Will Yahoo CEO Carol Bartz Open Mouth and Insert Foot Next?

 
 
By Clint Boulton  |  Posted 2009-08-09 Email Print this article Print
 
 
 
 
 
 
 

You really have to feel bad for Yahoo's employees and its board of directors, but this is getting to be comical. Yahoo's board jettisoned Jerry Yang last November for being a waffling, ineffective leader.

Yahoo turned to Carol Bartz, a tough-talking, profanity-dropping straight-shooter who had done wonders for CAD software maker AutoDesk. Under her leadership, AutoDesk revenues increased from about $300 million to more than $1.5 billion, and the company's share price increased nearly tenfold.

But now she is beginning to look like a leader playing a game of open mouth, insert foot. At least twice since the start of her reign at Yahoo started last January, she has said things publicly that have come back to haunt her.

At the All Things Digital D7 conference in May, Bartz said that any company interested in doing a deal with the Web portal for its search business would have to pay "boatloads of money."

You all heard the surprise July 29 when Yahoo and Microsoft announced their 10-year search ad deal:

Instead of a boatload of money upfront -- analysts were expecting $1 billion to several billions of dollars based on Bartz's boatloads pronouncement -- Microsoft agreed to pay Yahoo a revenue-per-search rate of 88 percent for the first five years.

When pressed about the lack of an upfront payment by financial analysts, Bartz explained:

Having a big cash payment upfront doesn't help us from an operating standpoint. What was most important to us was a significant TAC rate so that we could therefore have revenue to support an expense line, so that we could invest in the business.

That didn't sit well with investors; Yahoo's shares tumbled 11 percent after the deal was announced and now sit at $14.62. Financial analysts also noted dissatisfaction with the lack of an upfront payment.

When asked about this gaffe, Bartz told the New York Times in an Aug. 2 story: "I made a mistake. I was never interested in doing it for upfront money. That doesn't help me operate a business."

Bartz then went on to commit another verbal faux paus in the same interview, which came to light in an Aug. 7 Times blog post, where she is quoted saying: "We have never been a search company. It is: 'I am on Yahoo. I am going to do a search.'"

Search engine experts and pundits had a field day with this one, especially Search Engine Land's Danny Sullivan:

Yahoo was indeed a search engine. It was the very first "feature" that Yahoo offered. Long before email, or IM, or Yahoo Sports or Yahoo News, there was Yahoo the search engine. Search was Yahoo's origin story. To say Yahoo was never a search engine is like saying Superman wasn't originally from Krypton or that Spider-Man was never bitten by a spider.

I suspect Bartz is now learning painful lessons about leading a popular search and Web services portal. See, Bartz isn't hiding out in the stodgy enterprise world, where incorrect comments may sometimes be glossed over or forgiven in favor of more sober discussion.

No, Bartz is swimming in a treacherous sea the Web 2.0 media and blogger sharks love to soak red with the blood of executives who make inane or flat-out wrong comments.

Every little thing is parsed. Media and blogs pick over every single bit of high-tech minutiae. Combine this bloodthirsty pack with a swooning company everyone is waiting to see implode, and you have a recipe for disaster.

Bartz is at Yahoo, the oldest, last and most successful consumer Web portal. Hundreds of millions of users still use Yahoo every day to search (20 percent of the world's Web searchers use Yahoo), read about news, and grab applications and other cool, fun stuff.

Yahoo has offered many things in its storied, lately suffering life, but as Sullivan pointed out, Yahoo slithered out of the primordial Internet swamp as a search engine in 1995.

Bartz is no fool, even if the media is making her seem like one by spotlighting her quotes. In the comments section of the "we have never been a search company" Times piece from Friday, one Times reader said Bartz needs to stop speaking in absolutes.

I agree, but Bartz should do a couple of other things as well. One: She should learn her company's history and, two: think before she speaks.

She could learn some lessons from new friend Microsoft CEO Steve Ballmer or even Google CEO Eric Schmidt on how to speak to the media about the search, online ads and Web services market.

She will save herself, her Yahoos and the board a lot of grief if she follows those two rules. Oh, she also needs to pull off a miracle, with Yahoo now out of search. Who is buying this reinvention as a display ad and mobile Web services provider? Honestly?

That's another topic for another day.

In the meantime, let's have some fun with this as a guessing game. Call it: How Will Carol Bartz Open Mouth and Insert Foot Next? The floor is yours.

 
 
 
 
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