Brian Grey Blog

The highlight of the week for me had to be Kara Swisher’s onstage interview of Yahoo! CEO Carol Bartz at the AllThingsD Conference. It’s been no real secret that Carol was pretty fired up (to put it mildly) early on in her Yahoo! tenure about the “leaks” that helped fuel Kara’s insightful – and generally spot on – blog posts about Yahoo!.

So when Kara scored the Bartz interview for the afternoon panel at D on Wednesday this week it was a must attend for conference goers. I fully anticipated a defensive Carol, backed into a corner fending off Kara’s body jabs about how she was going to save Yahoo! from it’s death spiral. Oh, and at a minimum I projected the over/under at about 5 F-bombs from Ms. Bartz.

Now I have to say I was pretty impressed with Carol. Charmed I might say. She was witty, funny, sassy and brassy. She kept Kara moving around the proverbial ring, only allowing a glancing blow here and there. Certainly nothing that required her to retreat to her corner stool and yell: “Cut me Mick!”.

Even as Kara pushed Carol to the edge and even received for her efforts a complimentary “f@&k you” from the Yahoo! CEO, the crowd only roared with laughter. Smitten with every wry smiling glance she made, I really started to believe Yahoo! was on it’s way back. Heck, I could just sense the operational rigor that was being slathered over the company even as we all sat there in Carlsbad.

But then Carol lost me a bit. Right there at the D Conference, a Wall Street Journal affiliated event no less, she pulled out the front section of the Journal and turned it around to show the audience the full page Gatorade ad on the back page. She then asked why Gatorade was running this ad in print and not on Yahoo!. After all she stated, Gatorade couldn’t get any clicks on a newspaper ad but they could online.

And that’s when I realized there was more work to be done at Yahoo! by Carol and team. I suspect there are a number of reasons Gatorade preferred the WSJ ad over a Yahoo! ad:

- the creative was as a tall as a todler and when compared to a 300×250 ad online the brand impact was much bigger in print

- clicks isn’t what Gatorade was buying here – they want brand lift (see the point above)

- perhaps the sales process – including lead time and audience metrics – weighed in the Journal’s favor (in fact, Carol alluded to Yahoo! needing to be an easier media opportunity to buy for marketers)

Ultimately, I really liked Carol Bartz. And while the Gatorade example had a few holes in its thesis, I got the sense that she is more than equipped to patch them up in the months ahead. Or at least until somebody shows up with a ton of money as she alluded to near the end of the interview.

I promise this will be my last Yahoo! related post (at least for 2008). The news last week that Jerry (as a former Yahoo! GM I feel I can get away with just referring to Jerry Yang as “Jerry”) is stepping down as CEO has every pundit jumping on board with their $.02 on who should be the next CEO.

Silicon Alley Insider ran a poll last week letting readers pick who should be the next Yahoo! CEO. This morning’s NYTimes has a piece from Saul Hansel about how Yahoo! really needs an editor-in-chief. You know, somebody who has the uber vision of how to magically combine the concept of “user experience” with “advertiser/marketer experience” across the myriad of products and services on the Yahoo! Network.

Hmmm. Sounds like a pretty tall order. And it is. Here’s how Yahoo! should position itself (go ahead and throw this log on the fire of “what Yahoo! should do”):

The debate about Yahoo! as a search company competing with Google is over. The debate about Yahoo! as a content company competing with creative driven media outlets like News Corp. and Disney is also moot. What does Yahoo! have more than anything? Users. Audience. Intelligence about that Audience. That sounds like a pretty valuable distribution network (some would say “platform” but I am getting sick of everyone saying they are a “platform”).

So what about the following. In fact, there’s probably an old PPT deck on the computer I turned in when I left Yahoo! in 2005 that sketches out the idea of Yahoo! as a distribution network for everything. At their scale, there is huge value in being a “middleman”. Be the “Comcast” of the Internet. Do as many deals as possible to get content, products, services, whatever plugged in to the Yahoo! Audience.

Outsource search to Microsoft already, save that painful expense to be redirected to making more things available for your audience to do on Yahoo! — even if it’s stuff that points your users to 3rd parties. There’s money in being the broker between your Audience and those 3rd party products and services. Invest in inserting Yahoo! as a middleman between the Audience and Advertisers — directly and through agency relationships. Be the king of the self serve platform for torso and long-tail publishers, build deep relationships with the “head” marketers.

You better figure out how to do this while you have the audience — before the Audience gets served by other middlemen on the horizon (e.g. Apple iPhone, Facebook, Myspace). Embrace the app developer community — this is now happening, but make it a bigger, more visible priority. This will help recraft the Yahoo! culture and brand.

Ok, I am rambling a bit now. Just feels like Yahoo! needs to embrace their role as middleman. With an Audience that big — that at least today is still coming multiple times a day — give them as much value as you can for their sake, for the marketing community’s sake and for Yahoo!’s sake.

That’s it. No more Yahoo! chatter for rest of this year. I’m going to leave 2009 open in the hopes that there’s something positive to write about then.

Embedded within The Deal’s piece about how MSFT should sell their OSB (“Online Services Business” aka MSN) is an interesting piece of math interpolation. Citing Cowen and Co. LLC analyst Jim Friedland’s analysis, all of Yahoo! is supposedly valued somewhere between $29-36 billion ($20 – $25 per share), with the low end being what MSFT would theoretically be willing to pay.

The Deal then estimates that selling Yahoo!’s search business to MSFT would be valued at $19-20 per share. Thus, assuming the low end of MSFT’s bid for all of Yahoo! compared to the NPV of the Y! Search business implies that the rest of Yahoo! – notably the millions of users who engage with mail, messenger, media properties, etc. are would what?….a couple billion dollars?

Either that says a lot about what content companies all aspiring to fill up the mid and long-tail are worth, or we’re still in the world of inefficient monetization of online audiences compared to dollars flowing to offline channels?

I hope very much for the latter.

Reading Kara Swisher’s two-part interview of Jerry, I can’t help but think back to October 2001 when I joined Yahoo!

Back then, the Y! stock was south of $10 per share, the company had already done two RIFs earlier in the year and ended up doing a third in early December less than two months after my start date. By the holidays that year I recall the Yahoo! workforce being right around 2,000 employees.

From there it ended up being a pretty good ride for the next couple years – ad market came back, product focus got sharper, the company made some good acquisitions (see Overture). Of course, the looming menace up the street (GOOG) would cast a shadow that has trapped Yahoo since 2004-05. And we’ve seen the rest of the story play out from there.

Here we are 7 years down the road and Yahoo! still has a huge audience – and one that is still really committed to many of the products and services on the Y! network. The user comment on Kara’s piece poses an interesting question. Why is YHOO under performing vs. other digital media brands? Should the #2 online audience really be out market cap’d $106B to $17B?

As a sentimental YHOO shareholder, I’d like to think this was October 2001 all over again.