Ged Carroll

Barusch gets story wrong

Published: (Updated: ) in business | 商業 | 상업 | ビジネス, ethics | 倫理 | 윤리학, online | 線上 | 온라인으로 | オンライン by .

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Last week I commented on a blog post by Ronald Barusch called Dealpolitik: Yahoo!’s survival plan. In his post Barusch critiques Yahoo! Inc.’s pursuit of different options for the company. Part of his critique reflected on Microsoft’s hostile takeover bid for the company three years ago:

True, with hindsight the Yahoo board made a world-class blunder in turning down the Microsoft $33 per share bid over three years ago. But the board has to make the best of today’s situation.

Whilst I agree with the Barusch central thesis that the company needs a new direction or possibly a new owner, and don’t have any particular sympathy for the board, I don’t think that the argument for new management at Yahoo! should centre around the Microsoft takeover bid.

I explained in my comment to the Barusch article that whilst I didn’t have sympathy for the Yahoo! board, I also didn’t think that the whole picture of the Microsoft deal was reflected in the article. I think that there is a serious argument to be made for the Microsoft deal being a flawed structure, with a distinct possibility of it not a viable deal in the first place. There are two main strands to my thinking:

It was interesting that neither Microsoft, the media or Yahoo! broached the likely antitrust implications publicly at that time. Which I suspect is partly a credit to good execution by Microsoft’s corporate communications team.

The Microsoft bid was a powerful lever that helped Microsoft secure the search deal it wanted with Yahoo!. Though Microsoft has failed to reap the full commercial gains partly because it’s AdCenter technology wasn’t as good as the Yahoo! Panama project it replaced – and neither were as good as Google’s own advertising technology.

What should the Yahoo! board have done, and what should it do next probably has more options in it than football fans arguing over the performance of their team manager and I don’t have the definitive answer.

But I suspect my comment may have been bounced from the Wall Street Journal Online site because it throws a spanner in the works of the Mr Barusch. His nice, neat storyline with the Microsoft deal opportunity as an inciting incident into a downward spiral of a digital greek tragedy. Mr Barusch and his colleagues don’t want the evidence to get in the way of a good story

As an aside, it also shows how powerful storytelling is as a way to game media | public relations in favour of the PR over the journalist. People like stories, they think in stories and it makes it easier to efficiently and effectively file easy copy or blog posts.

So if the Microsoft hostile takeover bid wasn’t the inciting incident what was?

My own personal opinion is that spiral probably goes at least as far back as Yahoo! overpaying for its purchase of – a business that had some 13.5 million USD in revenue per quarter, acquired for 5.9 billion USD in Yahoo! stock back in 1999. It was a bad deal, and it adversely affected Yahoo!’s approach to strategy, risk-taking, decision-making and speed of execution. This is likely to affected Yahoo!’s thinking on its attempted acquisition of a young Google.

I believe that the damaged approach to strategy was a major factor in Brad Garlinghouse’s famous peanut butter memo from 2006 (though as Techcrunch summised it was also a political power-play and as I mentioned at the time, Garlinghouse was as much to blame in many respects as other senior executives.)

Investor Paul Graham thought that Yahoo! was screwed by cultural traits baked into the organisation’s cultural DNA as far back as 1998: