Editor’s note: This is the first column from our new regular contributor, Jason Calacanis. Every couple of weeks, Jason will be offering advice to a company facing a crossroads. This week: Yahoo.
Yahoo proves the most underrated rule of business: scale wins.
While we live in an age of excellence, where awesome products break out to levels never before seen (DrawSomething, Pinterest, and Facebook), the truth is the world is plagued with laggards.
These consumers give up their aol.com and yahoo.com email addresses when they, or their seven-year-old Dell computers, die, and they can’t remember their passwords any more. Then they tell their nieces and nephews that their email “broke,” and those nieces and nephews set them up on Gmail.
Despite a decade of product decline, filled with horrific strategy decisions and massive executive turnover, Yahoo still has scale.
Randy Falco couldn’t kill AOL, despite the fact that he didn’t use email!
Carol Bartz couldn’t kill Yahoo despite the fact that she was so clueless about product she couldn’t answer the basic question of “What is Yahoo?” (let alone throttle herself in the press).
Here’s my five-point advice for Yahoo today.
1. Accept that you’re a portal
Portals provide users with everything they need under one trusted brand and a unified experience: photo sharing, search, content, email, and stock quotes.
And that’s awesome.
There is nothing wrong with being a portal.
The irony of Yahoo’s misfortune is that it centers around one thing: Google.
For years people asked why Yahoo wasn’t doing as well as Google, and the pundits and analysts didn’t have a good answer. Google was only a hyper-efficient search engine and ad network for those years, and Yahoo was content, search, and communications (i.e., IM and email).
After Google trounced Yahoo in search, it added content with its YouTube purchase and expansion.
YouTube is now ~2x the size of Yahoo in the US.
Content also saved AOL. The flood of users turning off AOL dialup and email accounts has been filled in nicely by a collection of content sites including Huffington Post, TechCrunch, and the handful I started (Engadget, Autoblog, and Joystiq among the larger ones) and sold to AOL.
Yahoo, the world’s best portal: own it, love it and focus on it!
Figure out ways to make Yahoo Sports, Email, Flickr, and Finance do interesting things together like David Filo did with My Yahoo and Yahoo IM back in the day.
The integration of content and communication is, after all, what has made Twitter so successful (i.e., folks read Tweets more than they post them).
Providing full service in a trust environment is a noble mission and it’s needed. Google lacks the human touch, AOL has given up on being a portal, Facebook’s own users don’t trust it, and Twitter is very one dimensional by design.
2. Poach the top 100 content creators in the world
It’s time to go on the offensive. Instead of throwing a crazy long-ball and trying to buy Gawker (not for sale) or Business Insider, do the next best thing: raid them.
You’ve got a charismatic leader in Ross Levinsohn (he’s not interim, btw — he’s permanent), and he could easily round up the most sought-after columnists and video hosts in the world.
Writers are rarely treated like rock stars — or even developers. Once in a long while you get a Christopher Hitchens, but more often than not you have to leave journalism and blogging to become a VC, CEO, or screenplay writer to get your payday.
Yahoo could clean up with their checkbook in small order. Go to Walt Mossberg or Peter Rojas for tech, Gabe Snyder or David Carr for media, and right on down the line. Sports, moms, finance, travel, cooking, and media.
Offer deals like $1 million in stock and $500k in cash — a year.
And let those content owners retain ownership of their work with Yahoo owning perpetual licenses and a 10-year exclusive from the day they leave. Writers love owning your “masters” — even if it doesn’t really matter.
You do that, and folks like Arianna Huffington, Nick Denton, and Henry Blodget will grind their teeth all night long.
And that’s what it’s all about — making the competitors *feel* you. Raising the stakes. Going on the offensive.
That’s only $50 million in cash a year and a tiny amount of stock for the top 100 voices in America!
That’s 90 percent less than buying Instagram, Bebo, or Foursquare, and it would draw just as many uniques — not to mention advertisers!
Plus Yahoo would be RELEVANT again. Everyone would be talking about Yahoo. That’s important, too.
3. Video, video, and video
YouTube has 150m+ US visitors, and Yahoo doesn’t have a video-hosting service.
Video sales are crushing it at Yahoo, despite the fact that it hasn’t been a deep focus. Ross needs to go 1,000x on video. Yahoo needs to provide the most insane video platform ever created and offer it free to everyone on the planet.
Basically take the features and elegance of VIMEO and combine it with the scale of YouTube.
Additionally, Yahoo should offer content providers a 70-30 split just to frack with YouTube’s 55-45 split.
Again, you need to make competitors feel you.
4. Two headquarters, two presidents, two missions
Yahoo should break the company into two: content and services. Content based in Los Angeles, and services (software) at the current HQ in Sunnyvale.
Each group should have its own leader, and Ross should judge them on their ability to create awesome products. These two leaders need to have elite-level product visions.
On the content side, it should be someone like Henry Blodget or Gabe Snyder or Elizabeth Spiers. Folks who have proven they can land and develop great talent.
On the services side, well, obviously someone who has built awesome products in the past like Kevin Rose (too late!), Jack Dorsey (not available) or Paul Buchheit (not available). Since those folks are not available ,you can always steal their right-hand people. That’s worked for me in the past. :-)
Ross can handle any issue around the two different departments. For example, if the leaders fight over the home page, how email promotes content or content promotes email, well, Ross needs to make the final call.
Those two groups then should go to war trying to out-do each other in a healthy intra-company competition. This is the kind of corporate morale stuff that people can sink their teeth into.
Who will grow uniques more in 2013: content or services?!
The winner gets the Yahoo Cup and a 10 percent bonus, the loser gets a 5 percent bonus, and the president has to wash the other president’s car.
You get the idea, have fun with it.
Sun’s staff lived for one day’s practical joking for a decade. Add some fun to the joint because the Yahoo campus looks like a George Romero set these days.
5. Mobile first
Obviously all of these efforts should focus on mobile first and use Yahoo’s massive desktop footprint to ship hundreds of millions of downloads.
If you land some amazing sports writer, start by launching his blog on tablets and smartphones and then work backwards to the site. You’ll get more attention for this move as well.
It’s a trick the press (almost) always falls for: “OMG this is only available on iPhone and not android in the Web, what was Yahoo thinking?!?!”
Thanks for the press, sucker tech blogger!
Ross is the right human for the job. The board just has to let him execute for five straight years with the following benchmarks:
a) Percent increase in video views
b) Number of high-end contributors landed
c) Average tenure of high-end contributors (i.e., can you keep them)
Now, I know some folks might say “go all content and drop/don’t invest in the services piece” like AOL is doing, but the services business at Yahoo is simply too big to let it go. Flickr and Yahoo Mail are great products and need to be nurtured and developed.
You want to fix Flickr, here’s a newsflash: Make it free for unlimited storage. Build a desktop app that rivals Windows and iPhoto. Provide free API-driven storage to any app developer who wants to store images — for free.
Oh yeah, add free HD video — of any size — to Flickr. Seriously, spend some of those cash reserves in a bold way delighting users. That’s how Gmail kicked your ass, isn’t it?
The future is content + services, and Yahoo is an extraordinary position to be excellent at both.