Felix Salmon

Is Marissa Mayer the right CEO for Yahoo?

Felix Salmon
Aug 26, 2013 21:28 UTC

Nicholas Carlson, Joe Weisenthal, and Henry Blodget deserve many congratulations on Carlson’s monster 22,500-word profile of Marissa Mayer. It features the kind of deep reporting one normally only finds in books, and it sheds a lot of light on what is going on at Yahoo — both at the senior executive level and at board level. What’s more, Carlson was fortunate enough to get just the right amount of access to Mayer — enough to be able to fill in the necessary details, get lovely bits of color, and ask her the questions he needed to ask, but not so much that he became captured. (In general, with very few exceptions, the more time that a journalist spends with his subject, the more favorable the resulting profile will be.)

After reading Carlson’s piece, it’s clear that Mayer has genuinely changed Yahoo for the better, over the course of the year that she’s been running it. What’s not clear, yet, is whether Yahoo’s board made the right choice in picking Mayer over the alternative choice, Ross Levinsohn. Especially since the choice of Mayer was pushed through by two men — Dan Loeb and Michael Wolf — who aren’t even on the board any more.

When Loeb first took his large stake in Yahoo and pushed for a shake-up, his plan was clear. Yahoo was massively undervalued on any kind of sum-of-the-parts analysis, thanks to its large stakes in Alibaba and Yahoo Japan. As a result, if a new CEO were to come in and shake things up radically, the chances of value being destroyed were relatively low, while the amount of potential upside was enormous. So Loeb was itching to roll the dice.

What’s fascinating about Carlson’s account is the way in which Loeb, along with Wolf, his handpicked lieutenant, managed to override Yahoo’s chairman, Fred Amoroso, who favored Levinsohn over Mayer. Loeb’s 5% stake in the company was significant, but far from controlling — yet somehow, in practice, Loeb managed to get exactly what he wanted, even when he disagreed with the chairman of the board.

The choice of Mayer is particularly interesting in light of the fact that Levinsohn’s plan was in many ways more disruptive than Mayer’s. Yahoo has always struggled with the question of whether it is a media company or a technology company, and Levinsohn wanted to settle that question once and for all: he would sell Yahoo’s search business to Microsoft, while receiving MSN.com and lots of money in return, and move to using Google’s superior search product instead. And he could increase Yahoo’s Ebitda by 50%, even while he shrank Yahoo to a mere 4,000 employees — down from well over 15,000 as a technology company. At the end of the process, Yahoo would be a large, lean media machine, with more than 700 million unique visitors every month. Yahoo could sell those readers to advertisers, and make a fortune.

Given the inherent difficulty of competing over the long term not only with behemoths like Google and Apple but also with countless startups all wanting to eat your lunch, Levinsohn’s strategy made a lot of sense. You could get a lot of buzz by hiring a young, photogenic technology icon, who could then go on a massive shopping spree with shareholders’ money; that might well cause investors to boost your p/e multiples over the short term. But that basically would just turn Yahoo stock into a timing game, with the trick being to get out just as the honeymoon period is ending, and before shareholders start demanding financial returns on their M&A investments.

Loeb is a hedge fund manager: his job is to be good at timing games, buying low and selling high. And that’s exactly what he did at Yahoo. He sold his shareholding, and gave up his board seats, after the stock went up. But the job of the board, and of the board chairman, and of the CEO, is not to enrich and enable here-today-gone-tomorrow speculators. Rather, it’s to create permanent value. And it’s far too early to tell whether Mayer is capable of doing that.

Indeed, it’s still too early to tell what Mayer’s strategy really is. Levinsohn had a strategy — one which was clearly thought-out, and which would produce a focused, profitable company. Mayer, on the other hand, had, well, an excellent grasp of detail. Carlson has nailed down the timing: Yahoo’s board met with Mayer on July 11, 2012, and she gave an impressive presentation.

She described her long familiarity with Yahoo and its products. She described how Yahoo products would evolve over time under her watch. Her presentation included an extraordinary amount of detail on Yahoo’s search business, audience analytics, and data. She talked about fixing Yahoo’s culture with more transparency, perks, and accountability. She named her perceived weaknesses, and explained how she planned to address them — including by hiring people who had the skills she didn’t have.

That evening, the board decided to hire Mayer. The following morning, the board went through the motions of listening to a similar presentation from Levinsohn, along with his key lieutenants. But they’d made up their mind. Wolf started questioning Levinsohn aggressively, while Loeb spent a lot of the presentation playing with his BlackBerry (!) — and even disappeared off to the bathroom for a particularly important part of Levinsohn’s presentation.

Mayer did what she said she would do. She went on an aqui-hiring spree, buying more than 20 startups in her first year, culminating in the billion-dollar acquisition of Tumblr. She brought passion and buzz back to what had been a very demoralized company. And she sweated the small stuff: she would approve or reject, for instance, every single call or email that the PR team wanted to make to a reporter. She also dived head-first into a huge redesign of Yahoo Mail, taking personal responsibility to ship an awesome product in record-quick time.

On the surface, the results were fantastic. Yahoo’s new products, whether internal (Yahoo Mail, Flickr) or bought in (Tumblr) are best in class. Talented engineers actually want to work for the company again. And the stock price speaks for itself.

Screen Shot 2013-08-26 at 4.36.09 PM.png

But here’s the thing: it’s still far from clear what Mayer’s long-term strategy might be, or whether there even is one. Carlson does an excellent job of demonstrating how little she cared about anything on the business side of Google, and also of how distant she is when it comes to managing her direct reports at Yahoo — the people in charge of actually bringing in all the revenues. Mayer is more product manager than CEO, which maybe explains why she got on so well with David Karp — another person whose expertise is very much in the realm of product design rather than business-side nitty-gritty. When your company is your product, then the product manager as CEO can work very well. (See: Zuckerberg, Mark.) But Yahoo is not a product; it’s not even really a suite of products. To use the 90s terminology, it’s a portal — it’s a place where traffic can be aggregated and then monetized.

Yahoo’s doing very well on the traffic front, coming in top of the most recent Comscore rankings. But revenue is falling, and product design is only one of very many skills that Yahoo’s CEO needs. It’s also not even clear that Mayer is very good at that: although the new Yahoo Mail turned out lovely in the end, Carlson also recounts how Shashi Seth, the Mail team leader, along with his lead designer and his product manager, all departed shortly after their new Yahoo Mail shipped. Like Dan Loeb, perhaps, they decided it might be best to quit while they were ahead, rather than stay hitched to Mayer’s star. And these are the people in Yahoo who know Mayer best.

Mayer was extremely good at the job she held at Google until 2010 — essentially doing everything in her power to make the user experience as great as possible. Yahoo’s current users, too, have every reason to be happy that she has the CEO job — their experience is almost certainly better, as a result, than it would have been under Levinsohn. And for the time being, Yahoo’s employees and its shareholders are all happy as well. But I can’t help but feel that the CEO of a public $30 billion company, especially one which makes nearly all of its money by selling ad space to media buyers, needs certain management skills, and a passion for improving the company’s bottom line. Otherwise, Yahoo is likely to join the long list of companies where the people who sold their stock into the aggressive corporate stock buyback program ended up much better off than the loyal shareholders who didn’t.


Marissa Mayer, the Stanford genius, began her career at Google and thirteen years later, Google’s Geek Goddess switched loyalties. Wooed by Yahoo in 2012, Mayer became the youngest female CEO of her time There’s one thing about Marissa Mayer that everyone agrees to: she is among the smartest people you could meet. Mayer went to STANFORD UNIVERSITY only after scrutinizing the PROS AND CONS of 10 colleges that she had been accepted at. http://www.bidnessetc.com/business/maris sa-mayer-one-of-silicon-valleys-most-pow erful-women/

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Leadership lessons from a Wall Street consultant

Felix Salmon
May 30, 2012 06:22 UTC

I’ve been spending much more time than usual on Facebook, over the past week — you’d think the company has been in the news, or something like that. And so I found myself this evening clicking on a classic clickbait headline — “Two Lists You Should Look at Every Morning” — which had been shared approvingly by my ex-boss, and which came with the somewhat respectable logo of the Harvard Business Review.

The article in question isn’t long, but it is pretty much everything you hate about the HBR. It’s written by some consultant who loves to talk about “leadership” a lot, and who loves to use phrases like “platform for talent”. What’s more, he’s ever so keen on focus, and eliminating distractions. Apparently, when you’ve got some dead time while standing in an elevator, the wrong thing to do is to use that time for something productive, like dashing off a quick email. Email, you see, is a distraction from more important things, like, um, working out who else might be in the elevator. Or, single-mindedly trying to win some pointless gong:

After the CEO busted me in the elevator, he told me about the meeting he had just come from. It was a gathering of all the finalists, of which he was one, for the title of Entrepreneur of the Year. This was an important meeting for him — as it was for everyone who aspired to the title (the judges were all in attendance) — and before he entered he had made two explicit decisions: 1. To focus on the meeting itself and 2. Not to check his BlackBerry.

What amazed him was that he was the only one not glued to a mobile device. Were all the other CEOs not interested in the title? Were their businesses so dependent on them that they couldn’t be away for one hour? Is either of those a smart thing to communicate to the judges?

There was only one thing that was most important in that hour and there was only one CEO whose behavior reflected that importance, who knew where to focus and what to ignore. Whether or not he eventually wins the title, he’s already winning the game.

This one story is reasonably impressive in that it inadvertently tells you everything you need to know about the leadership industry. For one thing, the people who are most successful, in this industry, tend to be obscene flatterers: whatever your client does, he does it better than any of his competitors, and he’s “winning the game”. When CEOs ask for advice, what they really want is flattery: they want to be told how brilliant their decisions are, and that the only thing which would make those decisions even more brilliant would be if they were made even more decisively.

And secondly, CEOs will go to extraordinary lengths to be flattered: not only by paying consultants enormous sums of money to tell them how brilliant they are, but also by putting enormous effort into maneuvering to be awarded a profoundly meaningless title like Entrepreneur of the Year. Our CEO, here, could have tried to get something vaguely useful out of the meeting, by trying to learn from the various other entrepreneurs and judges who were there; instead, he treated it as a zero-sum competition, where there could be only one winner.

Such a person laps up stuff like this:

The speed with which information hurtles towards us is unavoidable (and it’s getting worse). But trying to catch it all is counterproductive…

A study of car accidents by the Virginia Tech Transportation Institute put cameras in cars to see what happens right before an accident. They found that in 80% of crashes the driver was distracted during the three seconds preceding the incident. In other words, they lost focus — dialed their cell phones, changed the station on the radio, took a bite of a sandwich, maybe checked a text — and didn’t notice that something changed in the world around them. Then they crashed.

The world is changing fast and if we don’t stay focused on the road ahead, resisting the distractions that, while tempting, are, well, distracting, then we increase the chances of a crash.

This being an HBR blog post, and therefore more of a book excerpt than an actual blog post, there’s no link to the study in question. But it comes up pretty easily with a Google search. And guess what:


It turns out, if you look at all of the crashes in the survey, just one third of them were associated solely with the “secondary tasks” being talked about here, and only about 40% had secondary tasks as a contributory factor at all. The only way you can get anywhere near 80% is in the fact that 78% of crashes were associated with secondary tasks or non-specific eye glances, or driving-related inattention to the forward driveway (for instance, looking to the side when changing lanes), or drowsiness.

Evidently, what happens when you really focus on your work, when you start every day by making “good time to pause, prioritize, and focus”, what you end up with is stupid exaggerations and errors like saying 80% when the true number, freely available online, is only 40%.

Or maybe what you end up with is a life lived in a bubble of self-affirmation, where the glorious serendipity of Twitter or Facebook — even the occasional link emailed to you by a well-meaning friend — is ruthlessly pruned from your life, so that you can digest only information pre-chewed for you by subordinates and consultants, all of whom are extremely well versed in the art of telling you exactly what you want to hear.

So what does it mean that this self-evidently ignominious blog post, two three years after it was written, is still being passed around the upper echelons of the consultant-sphere, complete with its 270 comments? (“Wow this is incredible story for me . I will do my best to apply this in my everyday life.”) Part of it is that the post seems to have turned into something of an HBR evergreen, a bit like “Six-pack abs! See results in just 9 days!” over at Men’s Health. And that fact, in itself, is telling. HBR’s readers, it seems, are perennially starved for little blog posts telling them that they’re not self-centered enough, and that they should try to cut down on annoying things like paying attention to unexpected things the outside world might send their way.

If you want to be a leadership guru, pay attention. Don’t say anything which requires actual thought: just give your clients permission to do as little as possible, while remaining magnificently untroubled by self-doubt. Then you, too, might end up with lucrative consulting contracts for “Allianz, American Express, Brunswick Group, Goldman Sachs, Morgan Stanley, Deutsche Bank, JPMorgan Chase, FEI, GE Capital, Merck, Clear Channel, Nike, UNICEF, and many others.” Yeah, I noticed how finance-heavy that list was, too.


I don’t know about anyone else, but whether it was in school or in the workplace, I’ve always encountered people who I’ve thought “are terrible at leading”. Some people just naturally know how to be successful and who can lead others in the same direction. But then there are some who are awful at both. I never wanted to be the latter so I’m always looking for ways to grow personally, professionally, and as a leader to be as successful as I can. A friend lent me a book she just read called “How to Avoid the Common Failure” by Michael Horton. You can find out more on his website http://www.hortonadvantedge.com and you can pick up the book at http://www.gettothepointbooks.com. She highly recommends doing both. It’s a great reference and motivational book to really give you a push in the right direction!

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The problem with Marc Andreessen

Felix Salmon
Apr 26, 2012 15:47 UTC

2005-new.jpg It’s easy to see why Marc Andreessen is grinning on the front cover of Wired magazine this month. Inside, there’s an interview where he’s introduced as a “tenacious pioneer”, one of “our biggest heroes”, and someone who was so far ahead of the curve on his “five big ideas” that he had them “before everyone else”.

It’s easy to admire Andreessen, a man whose disarming and engaging blog was a must-read during the financial crisis, when he would provide some very smart perspective from the point of view of a wealthy man, thousands of miles away from the epicenters of the crisis, who had some very sharp insights into what was going on. He then launched Andreessen Horowitz, and the blog became more of a public seminar in how to be senior management, which is great if you like that sort of thing. And it’s true that the five big ideas in the interview are all pretty revolutionary things, although I don’t think he actually had them all first.

But Andreessen has never really been a public intellectual. His single greatest achievement — the creation of the world’s first web browser, Mosaic — took place under the auspices of the National Center for Supercomputing Applications at the University of Illinois. But ever since then he’s been a red-blooded capitalist, founding and funding a long series of for-profit companies, and becoming one of the wealthiest and most powerful men in Silicon Valley in the process.

And when you look at Marc the capitalist, rather than at Marc the ideas guy, the hero-worship becomes a bit more difficult. I certainly like the way that he’s dragging Silicon Valley into the world of philanthropy, where it’s historically been very weak. But a lot of my own Wired story, last month, can be read as a push back against the IPO culture which Andreessen, almost more than anybody else, has managed to create.

“Silicon Valley is full of venture capitalists who have become dynastically wealthy off the backs of companies that no longer exist,” I wrote in that piece, and Andreessen is Exhibit A if you want to look for such a person. His first company, Netscape, lost the Browser Wars and ended up getting sold to AOL. His second company, Loudcloud, was (to be charitable) too far ahead of its time, so it “pivoted” into something called Opsware; eventually Andreessen managed to sell it off to HP. His third company, Ning, was even less successful, and ended up buried somewhere in Glam Media. None of them exist today in any recognizable form; none of them ever made much money; and none of them even really made it as far as building anything approaching a permanent income stream.

The Netscape IPO, in 1994 1995, was in its own way revolutionary. It broke the rules by going public without ever having made any money, and it also had that eye-popping first-day rise, from the issue price of $28 to as high as $75 in the first day’s trading. For the first time, people in Silicon Valley understood that you could make enormous sums of money just by timing the markets — buying in at a low valuation and selling at a high valuation — even if the underlying company never made any money at all.

Andreessen’s current company, Andreessen Horowitz, is devoted to doing exactly that. Andreessen Horowitz does provide a bit of expert advice and name recognition, but at heart it doesn’t make anything at all; its sole predictable income stream is the management fee it skims off while investing other people’s money. Those investors, in turn, are not particularly interested in creating long-lasting standalone companies which have large profits and create jobs. Instead, they’re primarily interested in buying into any company, no matter how flash-in-the-pan, where Andreessen Horowitz can exit its investment for a large multiple of whatever it bought in at.

After all, that’s how Andreessen made his money. I’ve never met anybody who thought that Netscape was a good acquisition for AOL, or that HP gained much from buying Opsware beyond getting Andreessen to sit on its famously-dysfunctional board. (He became the semi-official spokesman for the board in 2010, which did almost nothing to improve the board’s reputation, but did quite a lot to hurt Andreessen’s.) In many ways, Andreessen’s entire fortune has been built on the greater-fool theory: if you build something trendy enough, there’s probably going to be a huge lumbering company out there somewhere willing to overpay for it. Hence the buzziness of the Wired interview — clouds! social! SAAS!

Andreessen’s also very shilly, when it comes to his own businesses: when Ning finally died, for instance, he put up a blog post all about how the team there had “brilliantly executed a dramatic transformation of the company”. The fact is, as a close reading of the Wired interview will attest, that while Andreessen does have a lot of good ideas, brilliant execution is not at the top of his list of abilities. His own social-media company went nowhere, and his consolation prize — a seat on the Facebook board — is so important that Mark Zuckerberg didn’t even bother to consult him before dropping $1 billion on Instagram. His main job there is to ensure that Mark can do whatever he wants, to provide a layer of insulation between Zuckerberg and shareholders. Meanwhile, the Twitter guys didn’t let Andreessen Horowitz invest in their company, forcing AH to buy its stake in the shadowy secondary market instead.

While Andreessen is very good at making money, then, he’s much less good at creating lasting value for the long-term shareholders of his companies. In his world, buy-and-hold public shareholders are the patsies, the people left holding the bag when the fast money has long since departed. He’s smart; the rest of us are chumps. I guess it makes perfect sense that he’s recruited Larry Summers as a Special Advisor.

Update: I should have mentioned (I was going to, and forgot) that Mosaic 0.9b is, to this day, my favorite-ever web browser. It was a beautiful thing, which worked wonderfully. And yes, in large part it was responsible for The Internet As We Know It today. Andreessen’s influence is felt far beyond the companies he started. But there’s another thing that Netscape started, which is the monster funding round which is so big that no one (except a true giant like Microsoft) will dare compete. A correspondent writes:

Firms such as his have been leading truly insane rounds lately, sometimes in excess of $100 million. This is a different kind of investment than traditional venture capital. Under the old model, a hundred companies raised a million dollars each. Market competition then (theoretically) selected the best. Under this new model, kings are made, and there is no competition. Who would compete with a company that just raised $100 million in a day? Who would invest in a company that would dare to compete with such a sudden colossus?

This kingmaker strategy (also at work in the payments world, see Square) is the opposite of portfolio diversification. It encourages the formation of massive bubbles. And it locks out true innovation to the extent that the kingmakers choose incorrectly–which they often do.

Update 2: Chris O’Brien, writing in 2009 when Andreessen Horowitz was launched, made much the same points in a more rigorous and quantitative way. It’s a really good post, you should read it.



Thanks for the linkback. My post came when Andreessen was just jumping into the VC game. He and I both agreed that the VC industry was in steep decline and the result would be that a handful of big firms would end up with the lion’s share of investors and deals. He was absolutely confident that his new firm could be among the 5 to 10 big firms left standing, though I was a bit more dubious. The game’s not over, certainly, but their track record so far has given them a lot of momentum. Given the way entrepreneurs revere him and the firm, it seems like he’s got a shot.

Now, whether this ultimates is a good thing or a bad thing for the larger tech economy, well, we’ll see.

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Steve Jobs’s philanthropy

Felix Salmon
Aug 30, 2011 16:26 UTC

Andrew Ross Sorkin takes a look at the private life of Apple’s chairman today, passing on rumors about activity he clearly doesn’t want publicized, in the face of stony silence from Apple. But hey, Sorkin’s a journalist, I guess that’s what journalists do.

The column is headlined “The Mystery of Steve Jobs’s Public Giving,” but really there’s no mystery at all: there is no public giving from Steve Jobs. Sorkin isn’t happy about this. “Most American billionaires have taken up philanthropy in a public way and helped inspire future generations of charitable giving,” he writes, concluding that “perhaps” in future years Jobs might “inspire his legions of admirers to give.”

Some of Sorkin’s points are good ones. There’s no good reason, for instance, for Jobs failing to reinstate Apple’s philanthropic programs, which he cut on the grounds of wanting “to restore the company’s profitability.” Similarly, Apple’s failure to match its employees’ charitable giving does make it stand out — and not in a good way — from its Silicon Valley peers.

I think this is maybe a downside of Jobs’s famous micromanaging: if he’s personally not interested in something, then his entire company becomes uninterested in it.

Now there are good reasons why Jobs might not be much of a philanthropist, at least in public. For one thing, it’s far from clear that seeing billionaires give away lots of money and put their names on hospital wings does any good at all in terms of inspiring other people to make charitable donations. So if a private man like Jobs wants to make his charitable donations privately or anonymously, I don’t see much if any harm in that. And the coverage of Jobs in recent days is proof positive that he’s hardly in need of good press.

On top of that, effective philanthropy is hard work. Just ask Bill Gates. If it’s as difficult to give away money as it is to make it, and if you’re already stretched between making Apple insanely great, spending time with your family, and dealing with personal health issues, then it’s reasonable not to even try on the philanthropy front.

The sad fact of the matter is that Jobs’s wife, Laurene Powell Jobs, will almost certainly outlive him; what’s more, she is more familiar with the philanthropic world than he is, sitting on the boards of Teach for America and the New Schools Venture Fund, among others. Jobs is a technology visionary; that doesn’t make him a great philanthropist. Maybe he’s simply and lovingly trusting his wife to be able to take care of such things after he’s gone. That would be a very admirable and selfless act.


It baffles me, absolutely baffles me, how so many people don’t care about billion dollar corporations NOT being philanthropic!

We absolutely SHOULD care when we see a human being, or a corporation, marinating in hundreds of millions of dollars (or BILLIONS) and not using some it to help other human beings or the world at large.

This is a lesson we teach our children: SHARE. But for some reason, when it comes to corporations and business people, it’s no longer about helping the environment or animals or humans; it’s about buying homes, yachts, and showcasing and hoarding your wealth!

Steve Jobs could have been a wonderful role model for not only someone who developed cool gadgets, but also for being humane and compassionate.

He is an incredibly innovative man — but he is also a pure, unadulterated, capitalist pig (like many, many other *supremely* rich humans on the planet).

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Thanks, Steve

Felix Salmon
Aug 24, 2011 23:26 UTC

It’s a sad day: only this morning I was reminiscing about my days exploring the Apple Macintosh in Palo Alto in 1984. Like much of the world right now, I’m reliving Steve Jobs’s greatest hits on YouTube, I’ve got a bit of a tear in my eye, and yet I can’t imagine how Jobs could possibly go out on a higher note than this.

Jobs took Xerox PARC’s ideas about what the personal computer could be and made them reality; he brought back Apple Computer from the brink of death to being the most valuable company in the world; he created a whole new class of electronic device, with the iPad; he even reinvented the telephone. And, of course, he’s still around, at least for the time being — he’ll stay on as Apple chairman (and, in one of the most touching parts of his resignation letter, as “Apple employee”).

So thank you, Steve, for everything you’ve done. You’ve relieved me of more money than I care to mention in public, and I don’t begrudge you a cent of it. In fact, even with the massive run-up in Apple’s share price over these past years, I’ve always been convinced that the best use of $1,000 or so has always been to buy an Apple computer, rather than Apple stock. The extra productivity conferred by the machine, I’m convinced, will give you a much better return on your money than any equity.

Here at Reuters, I made sure that I could work on a Mac before I accepted this job, and even though we’re standardized on PCs, you see Apples all over the company, up to and including the CEO’s office. None of that is going to change with Jobs’s departure as CEO. Does Apple still have an outsize personality who can slice away extraneous features on hardware, say no to the demands of the marketplace, and give us not what we think we want but what we never knew we wanted? I think it does: Jony Ive fits the bill quite nicely. And Apple’s amazing relations with its suppliers — the way that it can get chips and hardware into its devices that the rest of the world can’t get its hands on for any amount of money — is now baked in to the organization, rather than being reliant on a single man.

The formula, then, is clear. And with or without Jobs, Apple is, for the foreseeable future, going to coin simply astonishing amounts of money. It made $7.3 billion of profit just in the last quarter, on revenues of an almost unimaginable $28.6 billion. That makes Apple one of the most profitable companies the world has ever seen — and makes its stock look almost cheap, even at a market cap of $350 billion.

No one man can be responsible for all or even most of that kind of performance. Jobs has always been the exception who proves the rule as far as the cult of the CEO is concerned — he’s one of very, very few CEOs who really did make an enormous difference to their company. But even so, he’s just one guy, and he’s built around him a super-talented team who know exactly what’s expected of them. We’re not going to see Tim Cook coming out and talking about “one more thing” at a WWDC keynote presentation, but we don’t need to. Apple is a dominant company now, and is more than big enough to be able to withstand a leadership change at the top.

Today’s news, and tomorrow’s, will rightly be all about Jobs. But in a few years’ time, I look forward to the seeing the case studies showing how Apple, seeing an entirely predictable event coming down the road, set up an elegant and model handover from Jobs to Cook. Jobs knows that he will be judged on this — and I’m quietly confident that he’s done it perfectly.


At the risk of offending friends and colleagues who labour in the anonymity of the South Bay, I’m moved to laughter when I read of someone contrasting the suburbs of Cupertino and Santa Clara, and hoping to draw out a real distinction.

The vast swath of that portion of Santa Clara Valley has long been filled out by cookie-cutter suburbs. Cupertino is no different in any meaningful regard than Campbell, Los Gatos, Sunnyvale, Mountain View, Palo Alto, or even the less-dense areas of the city of San Jose.

That Apple chose Cupertino back in the eighties is an accident of time and circumstance. That they choose to remain there is (I believe) more of happenstance–they want to move into the former Hewlett-Packard campus that existed long before Apple was even formed.

I don’t fault those who live and work in the South Bay for being proud of the firms that are part and parcel of the physical geography of the place. Just as I wouldn’t do so in any of the other places where I’ve worked where a significant concentration of an industry’s wealth is forced into narrow geographic confines (cf. Wall Street, Hollywood).

To Kaleberg’s point about the corrosive effects of “crowning glory” architecture: I share the feeling that Apple’s efforts in this regard will prove to be a distraction–not a major one, but just enough so that the carefully balanced spinning wheel that is the Cook-led company can suddenly find itself in dangerous precession.

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No change in how the IMF picks its leader

Felix Salmon
May 19, 2011 20:07 UTC

The IMF has released a one-page factsheet on the selection process for its top job, which is not very easy to understand. But the main message is reasonably clear: we have a process for choosing the managing director which we’ve followed in the past, and we’re not going to make any indication that the process will be any different this time around.

There are basically two ways that the managing director can be chosen. There’s the smoke-filled-room approach which has always been used in the past, and which will, it seems, be used this time too. Here’s how the IMF describes it:

An Executive Director may submit a nomination for the position. When more than one candidate is nominated, as has been the case in recent years, the Executive Board aims to reach a decision by consensus.

Alternatively, there could be a more qualifications-driven approach, as suggested by Mohamed El-Erian, with “an internationally balanced committee” evaluating applicants based on qualifications alone (rather than nationality), and putting forward two or three finalists for the board to vote on, based on the same criteria.

The official criteria make no mention of nationality, of course — but they don’t need to. Since we’re now officially using the same process that was in place in 2007, it’s reasonable to assume that the same kind of candidate is going to win. In other words, Christine Lagarde — who has all of DSK’s qualifications, plus the added bonus of being a woman. Maybe next time we’ll have a transparent selection process. This time it’ll be business as usual.

The fortunes of Twitter

Felix Salmon
Apr 14, 2011 20:17 UTC

How much are high-value employees worth in Silicon Valley? Quite astonishing amounts of money:

Dorsey came back to Twitter after the company had tried and failed to lure two senior product managers from Google. In both cases the company was fairly close to closing the deal when Google made counteroffers, showering them with restricted stock grants that are reported to be worth more than $50 million in each case. (Clearly, product people are in high demand in Silicon Valley.)

But then again, $100 million is just 1% of what Google was willing to pay for Twitter:

Last fall Microsoft, Google, and Facebook itself all considered buying the company. Microsoft never made an offer, according to sources, but Facebook is believed to have offered $2 billion for Twitter, and Google, by far the most serious, offered as much as $10 billion.

The offers last fall came just five years after Evan Williams bought back Twitter’s parent for $5 million. Going from $5 million to $10 billion in five years is pretty impressive even by Silicon Valley standards, and especially so in a company which never seems to have had a very good CEO or a helpful board.

There’s no shortage of drama at Twitter these days: Besides the CEO shuffles, there are secret board meetings, executive power struggles, a plethora of coaches and consultants, and disgruntled founders.

That kind of thing seems to have worked wonders so far. The main lesson here, I think, is that for all the talk of “leadership” and the like, the most successful CEOs are just the CEOs who happen to sit atop the most successful companies. Sometimes they’re good managers, sometimes they’re not. And there’s little non-circular evidence to suggest that good managers do measurably better than anybody else once they get the CEO job.


I was a software product manager for seven years and never imagined anywhere close to that kind of money. I’m guessing that in the business press this is a generic title for anyone who has both “manager” and “products” in their title, which opens the door to some senior management and development folks.

Posted by Curmudgeon | Report as abusive

English masters of the dead bat

Felix Salmon
Jun 17, 2010 18:54 UTC

John Gapper isn’t letting the World Cup get to him: he knows that when it comes to Tony Hayward’s Congressional testimony today, the sports metaphor of choice has to come from cricket rather than football. “Tony Hayward plays a dead bat to Congress” is his headline, and he’s right: Hayward isn’t interested in winning anything, here, he’s just interested in letting the hearing time out by being infuriatingly passive and unhelpful. He’s simply letting the attacks come, refusing to show any spark of humanity or willingness to engage.


Here, then, are two masters of the dead bat. One of them epitomizes England across the Caribbean and the world; the other one is Geoffrey Boycott. I wonder whether Hayward was a cricket fan as a lad.

(Photo by Larry Downing for Reuters)


We already know why the BOP failed. Sorry, but your pro-BP nonsense won’t work with everyone.

There is no and will be no “investigation” – that’s simply gratuitous pablum. Why wait for something that will never be generated?

Posted by Unsympathetic | Report as abusive

CEO succession planning: broken

Felix Salmon
Jun 17, 2010 03:23 UTC

If you make it to CEO of a major public company, chances are you’re pretty competitive. And if you’re that competitive, chances are you’re not going to stop being competitive just because you’re CEO. And if you’re CEO, there’s a very good chance that you’re chairman of the board as well. Put that all together, and you get one of the biggest problems when it comes to principal-agent disconnect: a lack of succession planning.

A new report from Stanford Business School lays out the gory details:

More than half of companies today cannot immediately name a successor to their CEO should the need arise…

While 69% of respondents think that a CEO successor needs to be “ready now” to step into the shoes of the departing CEO, only 54% are grooming an executive for this position…

A full 39% of respondents cited that they have “zero” viable internal candidates…

The majority of firms – 65% – have not asked internal candidates whether they want the CEO job, or, if offered, whether they would accept.

One look at Citigroup is all that it takes to see how crucial succession planning is. (Talking of which, who is Pandit’s designated successor? There isn’t one, because he’s too weak to have one.) But we live in a world of celebrity CEOs, where boards would rather hire in some star from elsewhere after being placed in the lurch than elevate an internal candidate suffering from familiarity-breeds-contempt syndrome.

Personally, I like the idea of forcing the CEO to never be the highest-paid person in the company. But I doubt that one company in 1000 pays more than one or two employees more than it pays its CEO.