Lessons learned from Yahoo: How failure makes you better

By Richard Nieva , written on January 24, 2013

From The News Desk

There is no place in the world that celebrates failure as much as Silicon Valley. But even in a Valley culture where failure is often a badge of honor, Yahoo takes the cake.

We know the story: Web 1.0 king turned perennial not-quite-comeback kid. And for Yahoo alums, this has been an asset, said Chad Dickerson, chief executive of Etsy, the ecommerce site known for selling vintage and handmade items and clothing.

“I feel like I learned so much from Yahoo that I applied day to day,” said Dickerson, during a fireside chat with Sarah Lacy during PandoMonthly in New York City.

“Are you applying the opposite?” asked Lacy, laughing. “Not always,” Dickerson said.

Dickerson is even-handed about his time at Yahoo. He cites his working with world's experts on legal and security reviews when launching new products as something he brought with him to Etsy – a dysfunctional funhouse itself when he got there. But he also pointed to the red tape at a large, siloed company like Yahoo, as opposed to a startup.

For example, once he needed to buy two servers for the company, and was referred to a group called the hardware review committee, which had to grant permission for the purchase. At Etsy, in the same sitation, he charged the suckers to his credit card and that was that. “That’s a really small thing, but I think that the bureaucracy of a large company, in very small, incremental ways, adds up,” he says.

And when they pile up high enough, you get the cautionary tale that is Yahoo. (Though, for the record, Dickerson doesn’t believe the company is doomed, and is “cautiously optimistic” about Marissa Mayer’s tenure.)

The takeaway, though, is just because the company is in a bad way, it doesn’t mean the players were duds. “We had this massive array of broad talent,” said Dickerson. “I’ve talked to a lot of people about it, and as a company – and we were considered failures ourselves because we were there – we weren’t able to make it work.”

Dickerson cites a study that looked at a number of the top startups, and found that most successful CEOs are ex-Yahoo, than from any other company. One of the best examples of that is Jeff Weiner, who has turned LinkedIn into a successful public company -- the social network Wall Street is actually bullish about.

“I talk to a VC friend of mine that’s invested in a number of companies out of Yahoo or were bought by Yahoo,” said Dickerson. “And we were talking about how there’s something about losing that makes you better.”