Yahoo tackles existential problem with engineering

By Rob Cox
July 17, 2012

By Rob Cox

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Yahoo is tackling an existential problem not with a philosopher king, but an engineer. The internet grab bag has hired Marissa Mayer, one of the few females to rise up through Silicon Valley’s geek hierarchy, to be its next chief executive. She’s certainly qualified – and no doubt itching – to become CEO of something. But Yahoo’s manifold problems won’t so easily be solved by rewriting computer code.

That’s not to take away from Mayer’s many accomplishments. As Google employee number 20, she knows Yahoo’s biggest nemesis better than just about anyone. While there, she was either intimately involved in, or responsible for, a variety of products, from the core search business and Gmail to its efforts to provide local content and Google Maps.

She has also been a Google evangelizer, speaking at conferences and bringing a touch of estrogenic glamour to a company founded by two roller-hockey-playing boy engineers from Stanford overseen by a chairman whose dating history has provided fodder for Silicon Valley gossip websites. Her years as the nerd queen in a complex full of men bodes well for her ability to retain and recruit the hacker set to Yahoo.

The riddle she must solve, though, is not easily deciphered from the Javascript on Yahoo’s home page. Is Yahoo a tech company or a media and marketing business? The last CEO, Scott Thompson, tried straddling both. He was a marketing guy in engineering drag: he even lost his job for embellishing his computer science credentials. Mayer has the engineering cred, but it’s not clear she has the marketing chops. Keeping acting CEO Ross Levinsohn to complement her skills would be wise.

At least Mayer should be better able to focus on solving the enigma of Yahoo’s raison d’etre. The thorny sale of a big chunk of China’s Alibaba is now on a trajectory to bring in some $7 billion. A similar arrangement awaits to be struck with Yahoo Japan. Combined, these two stakes appear to make up a majority of Yahoo’s $19 billion of market capitalization.

It would not be surprising to see Mayer push for keeping more of these proceeds inside the company. All ambitious new CEOs need money for deals and other projects. For that to happen, she’ll need to mollify Dan Loeb, the hedge fund manager who successfully grabbed three seats on Yahoo’s board. Engineering a vision for shareholder money will be unlike any other project Mayer has confronted.

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Enjoyed reading this article. Picking Mayer fits in with their strategy of becoming a digital media company.

Yahoo has to do something to appease investors. They hinted at returning some of the Alibaba sale to shareholders, and it’s on schedule within the six months time frame set during the announcement.

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