Friday, January 16, 2009

Tough Old Bird That Fits The Bill.

No, not a review of Christmas dinners past, but rather a short-form summary of what the Valley has been saying about Carol Bartz, the newly-minted replacement for Jerry Yang at Yahoo! (Here and here for just two examples.)

Ms. Bartz is most well known for her turn-around marathon at Autodesk, where she took a floundering also-ran and dragged them kicking-and-screaming into the brave new world of Windows (and yes, that was indeed the state-of-play in the industry a mere 16 years ago.) Oh, and all this off the back of finding out on day 2 of her tenure that she had breast cancer. Add to that stints at Sun and her board seats at Cisco (with Yang) and Intel (with now ex-president Decker) and she's clearly demonstrated tenacity, dedication and a sustained level of energy that's very impressive, all good characteristics for CEO taking over a faded web queen like Yahoo!

There has been much heated discussion around whether or not her lack of Internet experience will be a handicap. Without having an insider's perspective on what the real problems are that Yahoo! is suffering from it's frankly very hard to say, but my feeling is that it's actually a net positive. After all, the board has tried bringing in a media type to fix things on the basis that it was a content problem and that failed, then they fell back to a deeply technical Internet insider and that failed even more spectacularly. Therefore, focusing instead on straightforward "adult supervision", applied liberally and with force, is the medicine most likely to have the greatest immediate restorative benefits, and she seems to fit that particular bill perfectly.

Downsides? Cost. If this is a full and accurate summary, Bartz has clearly negotiated a very rich compensation package. In 2009, salary plus bonus is targeted at $3m with an additional $2.5m in cash to come from 25% of the value of the forfeiture payment; add to that $15.5m in stock grants plus an additional 5 million shares (though with an extended, performance-based vesting schedule.) Even allowing for the size and position Yahoo! holds in the market, this is a generous set of terms. Of course, if she delivers significant shareholder value then no one will complain. However, if this turns out to be a mistake then it will be one that Yahoo! pays for through the nose.

Getting back to the basics, my own theory is that great CEOs share one common characteristic, even across all of the broad swathe of skills, backgrounds and temperaments from which they are drawn, and that's acute self-awareness. "Know what you are good at, and hire wisely to back-fill the gaps", in short. Seems to me she's just that kind of executive and that Yahoo! might well have found themselves a safe pair of hands to hold the tiller for the new few years. And that will be good for everyone. Competition is important, even in the brave new world of Webiness. Leaving it all in the hands of Google won't benefit them or us in the long run; ditto Microsoft.

Ah yes, and speaking of Redmond. Bet Balmer is currently wondering whether or not Microsft may have mised a trick here. By not bailing Yahoo! out of the hole they've been in these past couple of months, have they offered a wounded competitor the chance to now regroup and come back even stronger? Time will tell, but they may just have been a bit too clever for their own good. Again.

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