Dear Ms. Bartz,
I just finished reading your demoralizing letter regarding recent layoffs at Yahoo over at All Things Digital. Although I’m only a Yahoo user, not an employee, I am a heavy user of your Flickr product — a product that I’ve enjoyed and loved for many years now. As such, I watch how Yahoo is run with keen interest, mostly because I’m worried about how your corporate leadership will affect that site which I love so much.
For your first year of your reign at Yahoo you gave yourself a grade of B-, this past year you seemed a little more defensive and gave yourself a grade of simply “pass.” You’ve had the you know what kicked out of you, of course, by most of the tech and financial press over the past few years and have come back swinging yourself in odd ways. Telling Mike Arrington to “f*** off” for instance.
The market, we know, is frequently one of the most efficient graders of all. There is no grade inflation there.
On the day that you were announced as the new incoming CEO of Yahoo, January 14, 2009, Yahoo’s stock price closed at $12.41 per share. Now on the one hand that price vs. today’s price of $16.46 looks pretty good. In fact that’s over a 32% return since you’ve been at the helm. But the thing is that you took charge coming off the worst year in the stock market in recent history so we can’t really credit all of that to you.
In fact while Yahoo has been up +32% since you took over. Your competitors have been up quite a bit more. Google is up almost +100% in the same time period. Apple is up +275%, even the old slowpoke Microsoft is up +51%. The Nasdaq Composite is up +79% and the S&P 500 is up +53%. In short, Yahoo’s stock performance under your tenure thus far has been a laggard — but you already know this.
I suppose I wouldn’t really care about the stock price of Yahoo except for the fact that I think you’re just letting one of the best products at Yahoo, Flickr, languish. In your letter to your employees you say, it’s “no secret that we’re cutting investment in underperforming and non-core products so we can focus on our strengths (like email, the homepage, search, mobile, advertising, content and more)”
Email? The homepage? search ? mobile? advertising? Yawn.
You know what I don’t see in there? Flickr. Photos. I’m assuming that you consider Flickr one of those “underperforming and non-core products.”
Do you even realize what you have with Flickr? It’s the largest well organized library of images in the world. Not only that, it has a very strong social networking component. In fact, Flickr may represent (if managed correctly) your single biggest opportunity to launch a much larger and more lucrative social network (and stock photography agency as well). Have you spent any time in any Flickr groups? They are addicting. People live in them. They play games in them. All kinds of activity goes on in them every day. And if you took the time to really explore the social side of Flickr, you’d learn this, and figure out a way to grow it.
But you know what? You haven’t taken the time to really explore the social side of Flickr. Hell, you don’t even have an account yourself on Flickr. One of the most highly visible and trafficked Yahoo properties and you don’t even have an account there. Would it be so hard to have your assistant set up an account for you and post some photos of some mountains from a family vacation two years ago?
I listened in on your first analysts conference call. On the call you mentioned that your daughter was using Facebook to share photos. There was an opportunity right there for you to plug your own photo sharing site. Flickr needs you. They need you to be a cheerleader for the site. It would be good for morale to hear you mention the site once in a while. It also seems like a no brainer from a PR perspective. I know if I were CEO at Yahoo I sure as hell would have a Flickr account. In fact I’d set up accounts really on all of the services that I was commander and chief of and I’d actually use them from time to time to build a familiarity with what works and what doesn’t.
Now here’s what really galls me. Despite the overall dismal performance of your stock price. Despite the fact that your competitors are building traction when you are not. Despite the fact that much of your best talent is leaving in droves (I know Stewart Butterfield left before you got there but you really should read his resignation letter). Despite the fact that you won’t come down out of your ivory tower to actually get down in the trenches and work with us (your users) to figure out how we can make your products better. Despite all of this. You, yes you, were the highest paid CEO in the Standard & Poors 500 last year.
That’s right. At least according to this report you made $47.2 *million*. Now in addition to paying you all that dough, you also wasted $100 million on a stupid ad campaign saying that the “internet was under new management, yours.” Carol, if the internet was under new management “mine,” I sure as hell wouldn’t be deleting my own Flickr group with over 3,000 members now would I?
Imagine what an insult it is to your Yahoos when you send them out a memo saying that their unit is an under-performing and non-core product. That they get to watch their co-workers laid off just before Christmas while you reap in amazing piles of dough personally. This is not leadership. Leadership would be you coming out and saying you feel their pain and that you will be working for a $1 salary next year and will continue to work for $1 per year until you can get the company turned around. Do you really need more and more millions of dollars anyways? I guarantee you it’s not going to be a thin Christmas at the Bartz household this year.
And your complaint about the fact that your layoffs were leaked ahead of your actually axing people? Get over that. Your acrimony towards bloggers, your iron clad commitment to containment and secrecy within the Yahoo ranks isn’t working. People want honesty and transparency these days. So be transparent. Be human.
I’m sorry to be so blunt and so harsh on you in this letter. I dispute both your grades of B- and “pass.” I’d give you a fail for your first two years. A failure to grow the stock price. A failure to inspire the troops. A failure to innovate. I wouldn’t care so much except for the fact that you currently own what is one of the most important and significant cultural treasures of our lifetime. Flickr. And Flickr holds so much promise and so much could be done to innovate there and it just doesn’t feel like you give a damn.
Flickr will be here long after you are and its cultural significance to our world will outlast your quarter to quarter financial results. While not being your most profitable unit by any measure, understand what it is that you have. Use its strengths. Be its cheerleader. Figure out how you can harness the social networking potential there. I’d be happy to talk with you about ways that you could improve it if you had an interest.