Let's begin with the end. No one knows if Marissa Mayer will execute, but Yahoo's hiring of her as CEO definitely passes the sniff test of giving them some 'benefit of the doubt' runway.
Why do I say this? First and foremost, this move was proceeded by a bunch of course-correction actions that Fred Wilson noted today in his post, 'Yahoo Is No Longer Dead To Me.'
In other words, it fits within the larger context of "we (finally) get it."
No less important is the underlying question of, "Is Yahoo save-able, and is it worth saving?" Here, I think the answer is more positive than not.
For one, the company has over 700M unique users worldwide per month, over 150M of which are in the US.
Those are BIG numbers, all the more impressive when one considers how completely the ship has been floating adrift for multiple years. Where there's users, there's hope.
Two, pretty much everyone has 3-5 Yahoo services that they use over the course of a month. I am hardly a Yahoo fanboy, and still find myself using Yahoo Finance (daily), Sports (weekly), Flickr (monthly) and Groups (monthly). In other words, the company is far from irrelevant with its users.
Three, expectations have been beaten down so far for this company that even the slightest hint of focus and directional improvement will give the company the kind of halo effect that makes recruiting easier, gets users to take a second look and gets advertisers motivated to double down.
After all, folks are comparing this story to Apple's turnaround, which is laughable. Apple was a negative margin company in a commoditized space with a duopoly gorilla stepping on it (Wintel), and was massively bleeding cash.
This aint Apple, this aint RIMM, this aint HP.
If anything, the tech space has 5-6 mega players that while they are all reasonably within a step or two of Yahoo's universe, none of them can quite do what Yahoo does.
Think about it. There's Amazon, Apple, Facebook, Google, Microsoft and eBay, and that's about it.
Obviously, lots of interesting startups and disrupters, but no one with the hybrid of services, media, advertising and a smattering of technical chops that Yahoo has.
Again, this just argues that Yahoo is far from irrelevant, from far dead and far from the mother of all turnarounds. Not that it will succeed without herculean effort.
So what should Yahoo do to succeed? First and foremost, "Tear down those walls, Mr. Gorbachev."
Let's face it. Everyone who has paid attention knows that Yahoo has long had good (enough) parts.
Their challenge has been that those parts are poorly integrated, owing to a: A) Silo'd business unit oriented culture; and B) Puritanical approach to commingling user data into one composite data-driven profile.
By that, I mean that whereas Facebook started from the concept that the profile is the context of the user's experience and identity, and then found ways to increasingly stitch more contexts and more actionable events into it, Yahoo is positively in the dark ages in this one.
Consider, that just today I clicked on the Yahoo Profile, and see the above message practically warning me that I am making a choice with unknown dubious value. Needless to say, I did NOT click. Good work, guys.
If there's any moral of the story from Facebook and Apple's success over the past 7-8 years is that everything stems for deep integration - value, experiential richness, user engagement, monetization, etc. In my opinion, this is job one.
Armed with this logic, Mayer needs to define what's the core of Yahoo, how the company will integrate it, what they won't do and what winning looks like. Easy to say, hard to do, but NOT unfathomably hard.
Two final thoughts. Everyone assumes that M&A strategy MUST be a near-term linchpin of Yahoo's turnaround, but I hope that Mayer does not go this path immediately (Note: the media, investment banking and venture communities are motivated by self-interest and intellectual laziness on this one).
Why? We already know that most M&A fails, and that the digestive energy expended from integrating disparate cultures is fraught with peril.
Keep it simple, Mayer. Define the core, fix the core, THEN re-assess.
Then again, most CEOs like to build empires, and M&A is the 'big swinging dick' move of new CEOs.
But of course, Mayer has no dick, so maybe there's hope. :-)
Lastly, know this. It will take only the tiniest amount of execution proof for the stock to begin to turnaround, such that the company will have: A) Cheaper currency for M&A if they desire it; or B) One of the big 5-6 calling to acquire it at terms advantageous to Yahoo.
Even better, with cash flow comes the ability for Yahoo to write their own story on their own timeline.