When David Filo Gets Excited, I Get Excited

David Filo isn't known for speaking out publicly. That's why his endorsement of Marissa Mayer as Yahoo! CEO is so significant.

Read the full post on Forbes

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The Internal Situation at Yahoo! Is Spiraling Out of Control

The Scott Thompson affair is quickly spiraling out of control at Yahoo! with employees already in or about to be in open revolt. Messy or not, he must go now.

Read the full post in Forbes

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Microsoft, Silver Lake, THL: Where to Yahoo!?

By Eric Jackson11/29/11 - 12:00 PM EST
NEW YORK (TheStreet) -- Last night, we learned that Microsoft(MSFT_) is likely to team up with Silver Lake on a leveraged recapitalization bid for 20% of Yahoo!(YHOO_). Also, THL(formerly known as TH Lee) is thinking of making an outright bid for the company.

There have been a lot of rumors floating around regarding what will happen with Yahoo! Let's review the key players and the possible outcomes.

The key stakeholders in this drama are:

Jerry Yang and David Filo. The two co-founders of Yahoo! still own about 9% of the company. Although Yang is the public face of the pair, Filo actually has a much bigger stake in Yahoo! But they typically vote together. They don't want to see their baby dismembered. So their optimal outcome would be to see Yahoo!'s core business undergo a renaissance in the years ahead and returned to its place of prominence in the Silicon Valley hierarchy. Many have guessed that Jerry didn't want to sell the company to Microsoft and wants to be aligned with private equity in order to retain control of his baby.

Capital Research. This big mutual fund headed up by famed media investor Gordy Crawford has been a large investor in Yahoo! for a while. They've also been a public critic at times. Remember when Gordy called for a recount of the 2008 shareholders' vote and we learned that the votes cast against Chairman Roy Bostock and other directors was much higher than what was initially reported. They own 6.8% of the company and would like to see the highest price possible -- even if they have to wait six months instead of two months.

Third Point. Dan Loeb is the newest large shareholder in Yahoo! He's now the second largest shareholder giving him a big voice with the board. He's also gone "activist" with Yahoo!, telling them he intends to push for change if he doesn't see the board acting in his (and other shareholders') best interests. He's already asked for two board seats. It's likely he'd launch a proxy contest in the spring if he didn't think the board was moving fast enough.

...

Read the full post in TheStreet here

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Five Ways Yahoo! Could Redeem Itself

By Eric Jackson
RealMoney Contributor
8/13/2010 11:25 AM EDT
Click here for more stories by Eric Jackson

Yesterday I read a fantastic analysis of the reasons Yahoo! (YHOO - commentary - Trade Now) has been stuck in the mud for 12 years now. The piece was authored by Paul Graham, who once sold his start-up to Yahoo! and then spent time working for the company.

Graham points out that Yahoo! has had a couple of particularly fatal flaws over the years.

First, the company made too much money from the likes of Procter & Gamble (PG -commentary - Trade Now) and Internet startups with dumb venture-capital cash as they were overpaid for worthless banner ads. Why innovate with something like AdWords when you're making stupid money?

The fact that it was doing so well in the early days, ventures Graham, is why it never felt compelled to seriously develop search (or to buy Google(GOOG - commentary - Trade Now), for that matter), as this seemed like such a small market compared to that of Internet portals.

Another point Graham makes is that Yahoo! never wanted to be a technology company -- and, as such, it brushed off hardcore technology types who were, in turn, were never compelled to stay at the company.

Graham's piece does shed some light on what the thinking in Sunnyvale, Calif., has been for more than a decade now. Still, it's sort of like understanding the logic of a drug addict. How do you make sense of nonsense?

We all know that Yahoo! slipped into Alice in Wonderland some time ago. It used to be that people speculated about what Yahoo! needed to do to turn itself around. Now, with Carol Bartz on the job, you don't hear even that -- just apathy and more Yahoo! people quitting.

So, what are the things that an investor should look for as signs that it's time to enter a long position in the stock?

• A revamping of the board. Following the shameful rejection of Microsoft's (MSFT - commentary -Trade Now) $34-per-share buyout offer a couple of years ago, it will only be safe to own the stock again once all the directors responsible step down, in my opinion. Until then, I think Roy Bostock, Art Kern, VJ Joshi, and Gary Wilson, and Eric Hippeau should be reminded that they have embarrassed themselves with their out-of-touch actions.
• Clarity on what this company is and what it wants to be. Carol Bartz has been asked this question at least twice over the past year, and she's provided miserable responses. She may be a cost-cutter, but she has no clue what she's trying to build at Yahoo!. It's perfectly fine if she just wants to do a little bit of this and a little bit of that, but she should state that clearly instead of letting people guess.

• ....

• [*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]

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Yahoo!'s Board Can Do the Right Thing

For some reason, the New York Post continues to get juicy tidbits leaked to it about 3 times a year. People whispering in the ear of Kara Swisher and Kevin Delaney I understand, but the New York Post? Good for them, I guess.

Today's tidbit in the Post - if it is true, although it certainly seems plausible to me -- is that Roy Bostock and Ron Burkle are confused and put off by Jerry Yang's "emotional" rejection of Microsoft's offer for the company. Robert Kotick and Eric Hippeau are also supposed to be on Jerry Yang's side, according to the article.

It wouldn't suprise me if this was in fact Jerry Yang's reaction. Last month, 3 days before the surprise bid from Microsoft, I was asked by TheDeal.com's David Shabelman whether I thought Yahoo! would sell itself to the company from Redmond:

"I honestly believe that Jerry Yang and David Filo have no interest in selling the company," he said. "Other people could decide differently, but they're pretty big shareholders and carry a lot of weight. It's not going to change shareholders calling for a sale, but I think people underestimate how the two co-founders are so against a sale."

Last year, leading up to Yahoo!'s annual meeting, I promoted the idea that other Yahoo! shareholders should consider voting "against" 7 of the 10 directors on the Board -- in order to force some much needed change in the company. The only directors who I didn't think should go were Jerry Yang, VJ Joshi, and Ed Kozel (primarily because Jerry was a co-founder and Joshi and Kozel had actually purchased shares in the company fairly recently, instead of just selling or vesting).

I wasn't the only shareholder who felt angry at the board, as this review shows. The Compensation Committee members (Bostock, Burkle, and Art Kern) each received at least 31% of shareholders voting "against" their re-election. However, all directors received an abnormally high percentage of shares cast "against" them.

It's because of this high protest vote by shareholders that I've said it's now ironic that we - the shareholders and owners of Yahoo! - must sit back and await the decision of the Yahoo! board on what will create the most shareholder value for us. I - and several supporters from last year's "Plan B" group - became very concerned when we heard it leaked to the Wall Street Journal last Saturday that Yahoo!'s board would reject Microsoft's offer. The decision seemed at odds with the board's fiduciary responsibility to us to create the highest possible value for our shares.

Therefore, we've relaunched our "Yahoo! Plan B" Group to unequivocally state that we want Yahoo! to sell out now (whether to Microsoft or someone else at the highest price possible) to maximize the value of our shares in the here and now. We absolutely want no part of an independent Yahoo! whether it's as a $17 a share company pre-bid or even if News Corp took a 20% stake.

I don't care if the best is yet to come for Yahoo! I don't care if Yahoo! truly reaches its ambition of getting on every advertiser's "must buy" list (which really means Yahoo! hopes to make advertiser's say, "well, we're done; we've just decided to do all our paid search stuff on Google.... Hey, maybe - to keep Google honest - we should throw a couple of bucks at Yahoo! too?") or becoming my "start page." I want to cash out, hopefully at $40, definitely at $36, and maybe even at $31. We don't want to crouch down in our airline seats, with our hands clamped behind our necks, preparing to drop back down to $18 and say, "alright guys, go to it, and get this puppy to $50 as quick as you can."

Creative deal-making which combined the assets of Yahoo! with MySpace, Facebook, eBay, etc. all would have been welcome -- and probably easily approved -- by shareholders prior to February 1st at 6am et (before the Microsoft offer arrived). Since that offer was put out on the table (clearly and cleanly dangled in front of us), we understandably want that or better -- not less and more complex. Yahoo! doesn't do complexity well.

It's nice to know that there are some Yahoo! directors who understand this line of reasoning. I applaud Bostock and Burkle if the Post story is true. They - and other Yahoo! directors - have the chance at a major do-over here in the eyes of us, the shareholders. They can and should do the right thing, by sticking to their guns and forging ahead in our interests.

Where will the other Yahoo! directors fall in this "divided" boardroom? Wilderotter -- the newest Yahoo! director -- clearly must see this offer with the freshest eyes. As an old-timer (14 years on the Yahoo! board, just like Hippeau), I would guess Kern is siding with Jerry. Ed Kozel - although friendly with Jerry - is one of the most level-headed members of this board, I have heard from someone who knows. Level-headed does not equate with "emotional." Joshi and Wilson are quieter but - I suspect - more open to a deal than not. [Kara Swisher disagrees with me on Kozel and Joshi. She puts them squarely "on the fence."]

So, if you do the numbers, this board should do a deal. That's what their shareholders want. Jerry Yang and David Filo are amazing people. Their "baby," that has grown into a 14,000 person company and one of the most trafficked sites on the Internet in 14 years, is a remarkable accomplishment with great assets. However, we - the shareholders - are now the owners of this company and we should decide how we want to see value created from our investment. We will see the most value from a deal now -- and that deal will most likely be with Microsoft.

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AllThingsD - Voices: A New Day for Yahoo

From today's Voices section of AllThingsD:

(Thanks to Kara Swisher for the invitation.)

A New Day for Yahoo

June 20, 2007
by Eric Jackson
President, Jackson Leadership Systems

I hadn’t expected Terry Semel to step down on Monday. Less than a week before, after Yahoo’s annual meeting in Santa Clara, Calif., he approached me. He was quite affable, considering that we had had a pointed exchange during the earlier Q&A session and that I led a group of 100 shareholders owning 2 million shares who had submitted a nine-point “Plan B” to the company for creating additional value, where point No. 1 was to remove him as CEO. Despite that, he said he was interested in holding a “constructive dialogue” with our group of shareholders. He gave every indication that day that he intended to fight on (with, yes, “fire in the belly”).

Several commentators didn’t think that Yahoo would change all that much following the shareholder vote, partially because Jerry Yang (and also co-founder David Filo) is “not a boat rocker.” (Kara Swisher did acknowledge that she was wrong in this post.) Something obviously had changed between last week’s annual meeting and Monday’s closing-bell announcement. Jerry Yang is the new CEO, with Sue Decker as the company’s president.

In the wake of this news, analysts, commentators and pundits started reading the tea leaves about what the changes signified. Some saw Yang as purely an “interim” CEO who didn’t really want the job. Some said that he was too close to Semel and wouldn’t deviate from the prior strategy. Others inferred that Yahoo was more likely to put itself up for sale (including–surprise–a few investment bankers). One big complaint leveled against Yang was that he’d never run a 12,000-person company before. No, he just helped create and build a 12,000-person company.

As a shareholder, I couldn’t be happier with the leadership moves announced Monday. Yang will be extremely successful in his new role. He wants this now–not for himself, but for the users, employees and shareholders of the company. What’s more, he can and will be successful.

Here’s why: In the weeks leading up to the shareholder vote in Santa Clara, I was contacted by email or phone by almost a dozen current or recently departed Yahoo employees. What’s clear is that Yang and Filo are universally beloved. “David Filo would send out IMs to others on the product/engineering side when some bug turned up at 2 a.m.,” boasted one very impressed ex-Yahoo. Several people asked me: Can we “draft” them to play even bigger roles at the company? They’re getting their wish.

So, let’s go over the case for Yang as CEO:

1. Nobody knows the business as well as he and Filo do. These two guys are the corporate DNA. When you walk into the lobby at Yahoo, you are inundated with an internally focused marketing/morale-boosting campaign called “We Were; We Are,” complete with black-and-white shots of the early days at the Stanford computer lab, contrasted with colorful modern images of Yang and Filo. They have continued to be intimately involved in the business and know where it needs to go.
2. He’s already off to a fast start. For a guy who some say was reluctant to take the job, he appeared remarkably energetic in Monday’s analyst call announcing the changes. His instincts and alacrity will serve him well.
3. He knows how to do deals. Yang architected the very significant partnership with SBC (now AT&T) in early 2001. More recently, in 2005, he did the deal with Alibaba.com. Critics have pointed to Broadcast.com and GeoCities as examples of expensive acquisitions he was involved in that didn’t pan out. This was a different time, however, when Yahoo had a different market cap itself. His instincts were correct (on video and social networking, way before they were seen as “growth” areas). He won’t be shy to do deals in the months ahead, which the company will benefit from.
4. He’s got the mental strength. It would not have been easy for Yang to go through the last few days leading up to Monday’s announcement. Semel is a friend. Yang wanted it to work. But he was obviously ready to take on this responsibility.
5. It’s his time. None of us has experience until we get experience. Yang hasn’t run a 12,000-person company, but he’s worked there every day of his professional life. He’s 38, not 25. And he–like Filo–loves this company more than anyone else. More important, though, the two co-founders feel a responsibility for the company. It’s a critical time and Yang’s ready. Back in business school, I took a class in which we read and discussed key passages from Shakespearean plays and the business lessons they taught. Yang reminds me of Prince Hal, the 20-something, fun-loving prince from “Henry IV.” Hal’s father and courtiers worry that he won’t be ready later to ascend to the throne. Yet, when fate calls, Hal closes one chapter of his life and becomes King Henry V–one of the most revered in the monarchy’s history. My sense from watching Yang at the meeting and since then (and the same goes for Filo) is that the flip has switched. These guys are all-in, in a way they haven’t been before.
6. Sue Decker’s there to help. As a leader, you rely on those around you to help you in areas where you are weaker. Yang’s lucky to have someone as capable as Decker working closely with him.

So, what does this mean for Yahoo’s shareholders? Unlike some, I strongly believe that Yahoo will remain independent. Yang and Filo built this company. They aren’t there to flip it. Yahoo will be much more aggressive in acquiring other companies. And they will look to win on new battlegrounds with Google. It was encouraging to read that they will release the next version of Yahoo! Go (their mobile product) on Friday.

The two most important competitive advantages any company has are its culture and its people. Yahoo’s been blessed with great people through the years, but morale has taken a hit of late. With Yang ensconced as CEO, and with Decker’s and Filo’s support, people are excited again in Sunnyvale. It’s about We Were, We Are, but also what We Will Be.

Eric Jackson is president of Jackson Leadership Systems, a leadership, strategy and governance consulting firm. This year, he led a “Plan B” group of 100 Yahoo shareholders with more than 2 million shares in an Internet-based activist campaign to unlock value at the company.

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A Yahoo Investor Hopes to Provide Impetus for Change

From today's WSJ:

By KEVIN J. DELANEY
June 9, 2007; Page A2

Yahoo Inc. shares have dropped about 10% from a year ago, and its revenue growth has fallen every quarter. That has disgruntled some investors, who plan to confront the Internet company's management at its annual meeting Tuesday.

That shareholder confab isn't expected to produce any immediate changes to the Sunnyvale, Calif., company's management or strategy. But at least one activist investor believes it could add momentum to campaigns to overhaul its top brass and shift tacks.

High on the list of shareholder complaints is the allegedly outsize compensation of Chief Executive Terry Semel, a former Hollywood executive who joined Yahoo in 2001. Mr. Semel's total compensation last year of $71.7 million put him at the top of the list of highest-paid CEOs at Standard & Poor's 500 companies that have filed with regulators this year, according to an Associated Press analysis of the filings.

Proxy-advisory services Institutional Shareholder Services Inc. and Proxy Governance Inc. are recommending that shareholders vote against re-electing members of Yahoo's compensation committee to its board because of concerns about what they see as excessive awards to Mr. Semel. "Semel is rewarded when times are good -- pay for performance -- and when times are bad -- retention," wrote ISS in its report. Mega options grants to the CEO are "particularly troubling in light of the company's recent poor stock performance and corporate performance," it added.

Speculation has swirled for years around the timing of the retirement of Mr. Semel, who is 64 years old, but Yahoo has always dismissed it. A Yahoo spokeswoman said the company's executive compensation is designed to "attract and retain key executive and employee talent and to link compensation to the company's performance and increases in long-term stockholder value." As part of a three-year arrangement, Mr. Semel's salary dropped to $1 in May 2006 from $600,000 previously. He was also awarded stock-option grants (priced at the market value of Yahoo shares when granted) on 6.8 million shares as part of his 2006 bonus and the three-year retention pact.

Shareholder activist Eric Jackson of Naples, Fla., says investors holding about two million Yahoo shares, or less than 1% of its capital, have agreed to back his "Plan B" for the company. That plan includes replacing Mr. Semel and the majority of the company's directors for missteps, including failing to gain on rival Google Inc. in search advertising. Mr. Jackson predicts heated questions from shareholders during Tuesday's meeting. But he says his main hope for change is for co-founders Jerry Yang and David Filo, who each hold smaller-than-10% stakes in Yahoo, to look at the shareholder-meeting votes and the company's performance and "come to the decision themselves that the company needs to move in a new direction."

The Yahoo spokeswoman said the company is always interested in its shareholders' views. But she said that Mr. Semel had outlined a clear strategy focused on three key priorities: "narrowing the gap in search monetization, extending our lead in display advertising and securing leading positions in the major emerging areas of social media, video and mobile access."

Yahoo investors Tuesday will also vote on two shareholder proposals that stem from Yahoo's disclosure of information to the Chinese government that helped lead to the imprisonment of at least one dissident. One proposal calls for the creation of a board committee on human rights and the other for new company policies related to censoring and disclosing information at a government's request. Yahoo's board has recommended that shareholders vote against the proposals, saying the company is already taking measures to address such issues.

Write to Kevin J. Delaney at kevin.delaney@wsj.com

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An Open Letter to Jerry Yang and David Filo

Dear Jerry and David:

I am writing this letter to you as a loyal Yahoo! user since 1996. Who could have imagined that, what started out as an experiment in the Stanford computer lab in 1994, would grow to become what is today a media titan? Who would have imagined that, 12 years later, you would be working in a megalopolis in Sunnyvale, rubbing elbows with heads of state, and -- most importantly -- positively influencing the lives of millions of Yahoo! users?

I knew Yahoo! was a special company when, about 10 years ago, I was writing my doctoral dissertation at Columbia Business School on the effects of officers' and directors' backgrounds on their firms' IPO and post-IPO performance. With the help of a couple of Columbia College undergrads, I was coding the IPO prospectuses for all the software and restaurant/hotel chain IPOs between 1994 and 1996. Yahoo! was a different kind of company the moment I saw the two of you listed as Chief Yahoos! on the management team. Since then, you've only gone on to prove to everyone what a special organization is Yahoo!

Although the historians might quibble, there have really been two phases in Yahoo’s development as a company: (1) under Tim Koogle's leadership and (2) under Terry Semel's leadership. You both had a hand in selecting these CEOs and both were right for their time.

Terry Semel was appointed CEO in 2001 and he has had a number of big accomplishments over his tenure. These include:

1. Stability. After the deflation post-bubble, Terry brought a sense of calm and order. He righted the ship when it was needed. Numerous Yahoo! executives complimented how he instituted a number of policies and procedures which helped give a greater sense of stability to the organization.
2. SBC. The first of its kind, Terry played a role in doing the deal with SBC that married Yahoo!'s rich content with broadband. It's proved to be a dynamite deal for Yahoo! in the years since.
3. Media expansion. Terry's brought 24 years of Hollywood contacts and know-how and helped build on Yahoo!'s initial foray into new media and accelerate it. Today, richer content is available on Yahoo! in more breadth and depth that any other site. Although companies like Brightcove and Joost get ink for what their plans are in internet and TV, Yahoo! is leading the way. 'The Nine' is a model of what's to come, as we continue to move forward.
4. Overture. As the WSJ reported, Yahoo! snapped up Overture where MSFT feared to tread. In retrospect, this was a huge blunder for them and win for you.
5. del.icio.us & Flickr. Need we say more? Huge accelerators for Yahoo!, showing how a large platform can take a great idea and move it to the next level.
6. Jack Ma. Alibaba.com's investment was a stroke of genius for Yahoo! from 2 respects. It gave you a foothold into a market leader in China (just as the early Yahoo! Japan-Softbank deal did back in the day) and it gave you (indirectly through Alibaba) a great leader in Jack Ma -- someone who will play a key role as Yahoo! moves ahead in the coming years.
7. Engineering Excellence. Yahoo! has always coveted this trait. It's what made you what you are and is what will see you through the next 20 years.

Why it’s time for Terry Semel to go:

Despite these great successes, there came a time for TK to move on and now is the time for TS to pass the baton. Here's why:

1. He’s going to be 64 in February 2007. Neither you both nor Terry expected that this job would last 10 years. Five years has been suitable to make the changes he and you both wanted him to make. He has certainly left Yahoo! a better place than how he found it. Now is the perfect time to enjoy retirement, moving back full-time to Bel Air and making a significant contribution to a number of important boards across the country.
2. He’s lost the support of Wall Street. Following last quarter's disappointing results vis-a-vis Google and with Panama's delay, there is pressure from Wall Street to demonstrate that he's in control of this ship. The continued excuses given, and the reports of discontent from within the organization (see below), have exacerbated this problem within the last few weeks.
3. He’s lost the support of the Yahoo!s. Everything published in Valleywag needs to be taken with a grain of salt. Yet, reports of booing within internal company meetings are not helpful. A few weeks ago, we published a post on what steps Terry could take to turn things around within Yahoo! It was surprising to read the number of strong comments that came back from current or past Yahoo!s which displayed such strong emotion against Terry. It's clear the organization would respond well to a fresh approach. The "Peanut Butter Manifesto" is not a direct indictment of Terry, but it is symptomatic of a general malaise existing within the ranks showing that change is necessary -- and now.

What Should be Yahoo!'s Phase Three?

Let me clear. If a change is not made now, I think there is substantial risk that the organization will be taken out as a stand-alone firm. Microsoft, Comcast, Disney, Google, Viacom, and even News Corp. would love to add this jewel to their collection. I don't believe Yahoo! users, employees, and shareholders would be best served by this. What's more, the hedge funds are starting to circle. There will inevitably be suggestions of their own for what actions to take. You need to get ahead of this train.

It's easy to point out problems, but what are some solutions? What is needed now at Yahoo!, beyond just a new CEO for the sake of one, to take it into its third phase of growth for the next 5 - 10 years?

1. Dan Rosensweig will have to go too. Dan has also failed to be embraced by the Yahoo!s. There is a distance which appears to exist. No leader can drive an organization forward when this trait is present and it's a difficult thing for the leader himself to flip the switch on and change. Quite simply, the Yahoo!s will not follow Dan as their leader. He is also seen as too close to Terry. This will be difficult. It was difficult to say goodbye to Jeff Mallett, but it was for the best of the organization.
2. Internal CEO over External. All the academic studies agree that an internal CEO is a less risky proposition than an external one. However, an external CEO is needed when the organization needs a dramatic shift. You both were more than justified to make that shift 5 years ago when you brought in Terry. The environment is different today. A respected internal leader would be embraced and rallied around by the Yahoo!s. You have the perfect candidate within your midst.
3. Don't appoint a COO. Recent evidence exists that appointing a COO is linked to negative firm performance. Apparently, CEOs who appoint COOs are out of touch with some of the important operational aspects of the business.
4. Your continued product leadership will be critical. Most organizations don't have the benefit of the two sage founders continuing to play an active and helpful role. You have made a huge difference to Yahoo! in the last 5 years and you will continue to be strongly needed as we move into the company's phase three, especially on the product side.
5. Elevate more internal talent like Jack Ma, Bradley Horowitz and Brad Garlinghouse. Jack has been a great addition you've picked up through acquisitions and investments (through the investment in Alibaba.com). Bradley is playing an important role with your "talent brickhouse." Reward their hard work and show the rest of the Yahoo!s that success gets rewarded. Don't shoot the messenger with Brad. Thank him for his passionate memo by rewarding him. Demonstrate to the entire organization that Yahoo! welcomes this passion; it doesn't try to snuff it out.
6. Indefinite Moratorium on Celebrity Appearances at Yahoo! The stars of this company are its employees. This isn't Hollywood. This is a business. Celebrities don't bring up team morale; great leadership does. Tom Cruise has left the building and let's keep him and other A-listers away.
7. Articulate the Vision. The new CEO must articulate a definitive vision for Yahoo! As I said above, you have a vast array of assets. You can truly define how we will all interact with the Web and rich content moving forward. Yet, the company's leadership has failed to. Into this vacuum, the Skype guys have wrestled this opportunity away from you and are seen - currently - as the 'thought leaders' with Joost. It's not too late. Take back the mantle by having Yahoo! blare its vision from the hilltops and then achieve it!
8. Streamline, Streamline, Streamline. Kudos to Brad for identifying this in his manifesto. Yahoo! has become bloated and -- consequently -- inefficient. Let me quote him: "• YME vs. Musicmatch • Flickr vs. Photos • YMG video vs. Search video • Deli.cio.us vs. myweb • Messenger and plug-ins vs. Sidebar and widgets • Social media vs. 360 and Groups • Front page vs. YMG • Global strategy from BU'vs. Global strategy from Int'l". Inefficiency = opportunity. Just streamlining these areas alone should go a long way towards the cutting headcount by 15 - 20% that he suggests.
9. Build a Culture of Personal Accountability. This starts from the top, but through effective performance management, challenging assumptions, pushing for change, rewarding success, and learning from (as opposed to burying or chastising) failure, you will ensure that no one at Yahoo! will ever say "that's not my job." Everyone has to have a vested and maniacal interest in seeing this organization achieve its vision.
10. Reconnect with the "!". As companies grow, they must build in process and policies. They cannot operate like a 10 person, 'cowboy culture' start-up. But the best companies remember their roots. Yahoo! has incredible roots. To me, it all goes back to the "!". Somewhere in the last 5 years, Yahoo lost its "!". It's still there and the Yahoo!s need to be reminded of it. When they are, I'm sure they'll rise to the challenge like they never have before.

You both control 9% of this organization. You are the co-founders. You have a responsibility to make the tough calls that will ultimately take this company to its next level of development. I applaud your continued passion and the courage you've demonstrated through the last 12 years. We will support you and we will support Yahoo!.... Leadership starts at the top.

Sincere regards,

Eric Jackson

Update: 6/20/07: In January, we launched a "Plan B" Community to gather Yahoo! shareholders who want to propose a new way forward for Yahoo! which will greatly increase shareholder value compared to the past 2 years. Go here to sign-up to the community: http://www.youchoose.net/pledge/yahoo_shareholders_unite_for_plan_b.

You can also read our finalized "Plan B" here: http://breakoutperformance.blogspot.com/2007/02/finalized-plan-b-sent-to-yahoo-today.html.

This is the first time shareholder activism has utilized the web, blogs, and wikis. We have a wiki version of the current iteration of our "Plan B" here: http://yahoo.wikia.com .

We wish Jerry, Sue, and David the best of luck in this exciting new stage for the company.

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