Hey, Marissa, Where Are Those Pink Slips?

By Sarah Lacy , written on September 3, 2012

From The News Desk

We are roughly eight weeks into Marissa Mayer's tenure as Yahoo's new CEO. And in most cases, she seems to be doing the opposite of what Scott Thompson did. That's a plus.

There are no patent lawsuits or consultants running the show, and she's been more open and less combative with the rank and file -- even getting rid of the turnstiles in the executive building D.

She's made feel-good moves, like offering free lunches and authorizing iPhones, and raised the bar for what it takes to get hired at the big purple dinosaur. There's even talk of some new, high-profile hires.

And yet, I keep waiting for the big headline that will show Mayer is serious about turning Yahoo around: Yahoo to Lay Off Thousands. So far, it hasn't come, nor are there rumors of it coming any time soon. Most of the news has been about what Mayer is adding to Yahoo; not what she is taking away. And while that may gain her affection from the staff, it's clearly not the way to turn around the company.

Since the days of Jerry Yang -- that's four CEOs ago, for anyone who's lost track -- nearly every analyst and informed company watcher has said that Yahoo is just insanely bloated and in need of a drastic, drastic reduction in staff. Most CEOs have responded with comparatively small cuts.

In fact, the need for a large scale layoff is one of the biggest reasons people have argued for years that Yahoo should go private. Venture capitalist Marc Andreessen, who once kicked the tires of buying all or part of the company, told us at the time of Mayer's appointment she needed to cut on the order of 10,000 people and do it quickly.

From our post at the time:

This single decision will telegraph three things that are all central questions for a Yahoo under Mayer: How big of a bet is she making on the people there versus outsiders? How much does she expect to grow the company organically versus by acquisition? And is she willing to free up the company’s cash for aggressive investment in new areas?
So far, those important questions all remain unanswered. Meanwhile the rot of previous regimes is all still hanging around, slowing things down and demoralizing those on staff who genuinely want to make things better. Every startup CEO will tell you one of the most important things to do is fire fast. If Yahoo wants to act like a startup, that's where it needs to start.

I recently spoke to a Yahoo exec who has had a hard time getting developers to build a basic product for him. It seems many of them were laid off under the Thompson/Boston Consulting Group regime but allowed to stay at the company for up to a year as lame ducks. Not surprisingly, they're not very incentivized to work hard.

I'm sure this "rot" and "bloat" are all very nice people, and no one wants to be the person laying off 10,000 of them. But no one I've spoken to at Yahoo thinks the last few years of layoffs have truly cut all the fat. This is something everyone seems to accept has to happen.

Isn't the CEO paid $100 million to do the hard things that need to be done?