mayerAt one point during the long, painful, multi-year talks between Yahoo and Alibaba and Softbank, there was a very complicated deal on the table that would sell off Yahoo’s stake in Alibaba. But to avoid taxes, Yahoo would have to reinvest the money in a variety of ways quickly. One of them was M&A. I was talking to a VC at the time who was salivating over the prospect. “It would be a shot of adrenaline to the heart of Silicon Valley,” he said.

Well, that deal fell through, and a different one was struck. But Yahoo CEO Marissa Mayer has delivered a shot of adrenaline to the heart of Silicon Valley nonetheless with a spending spree that rivals any big turn-around effort I’ve seen in covering this industry. It has included sexy consumer products like Tumblr that people wonder how Yahoo will make the most of and not-so-sexy consumer products like the continually pivoting Qwiki that people wonder why Yahoo wanted.

Mayer was already popular in Silicon Valley. But now she’s really popular.

I will confess, like a lot of people, I still have no idea how all of this stuff will come together to make Yahoo’s core assets relevant again. People say Mayer is a “product person,” but what this product vision is and how it is different from Yahoo’s status quo has gone from vague to crazy-quilt confusing.

This is a big company, and its challenge is that a lot of its verticals like Sports and Finance are too good and too popular to kill — but not good enough to wrap a credible, product-led turn-around story. Yahoo’s problem has long been that it has too many silos, that it needed to focus. And the better ones are more around media than technology. A Noah’s Ark of startups doesn’t seem like the antidote to that.

But one thing at a time. While these moves may not herald a bold new monetization plan, product roadmap, or a way to move Yahoo’s core assets into the 21st century, they are putting some of the pieces into place that could enable those things. And when you’re starting from as big of a deficit as Yahoo was, you take baby steps.

It’s tempting to think Mayer is flailing around and making moves just to make them, that she’s putting out press releases to drive the stock price. But if you look closely, you could also argue that she’s doing the opposite of some slash-and-grab, quick-fix Band-Aid of a turn-around job. She’s trying to solve Yahoo’s core cultural problems before she gets to the product and monetization fixes that will really cement a major change at the Sunnyvale giant.

Even I have to admit, while I don’t get the acquisition strategy for its parts, a turnaround in sentiment around Yahoo — both on Wall Street and in Silicon Valley — is working. And a few months ago that seemed impossible.

Here are some wins she’s racking up that aren’t as immediate as revenue that could nonetheless prove important in actually getting this Titanic to float again:

  • The stock – It may seem backwards to a lot of entrepreneurs who prefer building to marketing, but the stock price — a sometimes arbitrary amalgam of confidence, buzz, and perception– is key to driving reality in a case like this. A rising stock price does a few key things that matter. It keeps investor pressure off Mayer, so she can actually focus long term, not quarter-to-quarter. Eventually she is going to have to make some bold product bets that will take time to come to fruition. It also gives Yahoo a currency that matters and incentivizes acqui-hires to stay around.
  • People take Yahoo’s calls again – A real nadir in Yahoo’s ability to do anything meaningful was several years ago when it tried to acquire Yelp, and the team balked, because they didn’t want to work at Yahoo. When you can’t even acquire talent for a premium, you are hosed.
  • So now Mayer can acquire companies. But aren’t acquihires a lousy way to get talent?  Yes. Everyone says these moves are about talent, but the quality of the talent still left at a struggling acqui-hire candidate is a big question mark. Sometimes it’s excellent. Sometimes it’s not. If the talent will actually stay is another big if. And how hard that talent will work while it’s there is yet a third big if. A lot of people refer to their lock-up times at a giant like Yahoo or Google as “vacation.” But baby steps. Compared to where Yahoo was in an earlier era, the fact that a company like Tumblr would sell to them with a straight face isan  improvement. Yahoo didn’t get in this hole overnight, and it won’t get out of it overnight.
  • Creating a better environment so the new talent (if indeed it’s great talent) doesn’t leave – It’s the little things that make up a culture, and Mayer has been steadily focusing on little things in house, while she feverishly does deals to inject more talent. Things like giving the team UP bands, better food, iPhones, and the like. These telegraph to the team that they matter. And those little things do more than raises or empty promises about the future, especially as everyone is talking up the new talent coming in.

Here’s the thing, though. Her work is not close to done. All those soft or semi-intangible turn-arounds in how Yahoo is regarded by people who can influence its future won’t be enough to actually turn the company around.

The next thing Mayer has to do is cut staff in a big way. Whenever you are trying to change a culture, there are floaters in-house who resist that change. And everyone knows this company is still too bloated. The people invested in the old way things were done at Yahoo will drive the new talent out, if she lets them. There are two reasons a big layoff is — regrettably — important: To help change the culture, and to make the company leaner and more profitable.

We, and plenty of others, have criticized her for not doing this already. But to be fair to Mayer, separating wheat from chaff is easier said than done. By now, she’s been at the company long enough to assess things, and her new rules about people coming into the office have likely helped managers determine who is pulling their weight, and who is not.

A big layoff before bringing in a lot of talent, and doing little things to make the people she wants to keep feel more appreciated, could be a major morale blow to a company that doesn’t need another major morale blow. By delaying it, you could argue, she’s succeeded in making Yahoo a place people will fight to keep a job at.

[Image courtesy Fortune Live Media]