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Episode IV: Carol Bartz, A New Hope (or Change We Can Believe In?)

Published: January 19, 2009

Author: David Rodnitzky

There’s no question that a lot has to change at Yahoo to give the company a chance to remain a viable company going forward. As loyal readers of this blog know, I’ve been calling for such change for some time, first by critiquing Terry Semel’s $230 million annual salary, then by questioning Jerry Yang’s appointment to CEO, and more recently by pleading with Yahoo to hire an outsider to replace Yang. By now, even those who bleed purple must know that the status quo ante ain’t working and can’t continue.

But we all know that change for the sake of change is pointless, so the real question we have to ask today is whether newly appointed CEO Carol Bartz is the right kind of change (the kind we can believe in). From the little I’ve read about Ms. Bartz, and the anecdotal info I’ve gleaned from employees who worked for her at AutoDesk, I’m prepared to throw my support behind her. I say this for a few reasons:

1. She’s not a Yahoo insider. The mere fact that she has never worked at Yahoo or been on the board, or even come from another search engine is a bonus as far as I am concerned. An insider, I fear, might want to cling to the Yahoo of 2000; that is, the idea that Yahoo can compete head to head with Google as a legitimate search alternative. Let’s face it, search is owned by Google, 100%. The fact that anyone still uses Yahoo, MSN, or other search engines is more and more an anomaly. To be successful, Yahoo is going to have to carve its own niche, and while search may be part of that niche, Yahoo is going to have to find something else that they can dominate that isn’t currently owned by Google.

Personally, I still like the Flickr and del.icio.us acquisitions as potential areas Yahoo could increase focus on. Obviously Yahoo still has a stronghold in banner buying, and that could be another area of focus. Yahoo needs something it can be #1 in, and to carve that niche will require new thinking previously non-existent at the high levels of Yahoo’s current management.

2. She’s Got Experience Turning a Company Around. Ms. Bartz allegedly did a great job re-making AutoDesk into a market-leader. I’m not sure whether this was the result of better management, better strategy, or just increased efficiency, but having past experience turning a frog into a prince is about the most important experience you can have coming into the head role at Yahoo.

3. She’s Got Balls. OK, I know that was crass, but I couldn’t help myself. My inside source at AutoDesk tells me that Ms. Bartz is not afraid to call bullsh*t when necessary, and doesn’t tolerate corporate politics and brown-nosing. My sense is that Yahoo is bloated and political right now – there are a lot of people coasting and a lot of people kissing a lot of ass to move up the latter. Just as Mark Hurd allegedly did at HP, if you simply get rid of the bad managers, promote the good managers, and implement strict financial accountability, you can do wonders for a company.

4. She Can’t Do Much Worse. I thought it was hilarious that Yahoo’s stock actually dropped when Ms. Bartz announced that her ‘gut’ told her not to do a search deal with Microsoft. Personally, I thought it was a very encouraging sign. It tells me that she is not desperate for some quick cash and quick exit. It’s also a smart negotiating tactic (just imagine how much Microsoft’s offer would have dropped if she had said that her gut told her to sign ASAP!). Yahoo’s stock is down about 65% from a year ago – I’m betting that basic blocking and tackling will improve the bottom line in a matter of quarters.

So welcome aboard Ms. Bartz. The bad news is the Yahoo ship is on the verge of hitting a massive iceberg, the good news is you’ve seen this situation before, and you’ve got your hands on the wheel. Here’s hoping you can steer the company to safety!

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