If you do the math you realize that the holiday party cost a few hundred bucks per attending employee.
Compared to other large SV companies - that are not under fire in the press - this was a cheap holiday party.
"No more parties. We're going to use the to retrain employees (instead of firing them) and avoid layoffs."
Mayer is turing out to be a terrible CEO.
This article describes the various multi-million dollar parties.
http://www.businessinsider.com/yahoo-ceo-marissa-mayer-blows...
If you cut perks, your best and brightest will leave much quicker, the elves leave middle earth. And then your company is essentially screwed, because you'll lose all of your key personnel. And you won't save very much money. This is the way of the bean-counters who know nothing of human motivation and morale. $1000 per employee is less than a percentage of their yearly salary.
If you instead decimate the company, many who survive the culling will be thankful to the company that they are keeping their job, and you'll actually save ~10% in salary costs and future obligations.
(The clever employees who see this coming will leave way before either scenario anyway)
Notice how I phrased it. It's not cost cutting. It's about investing in employees. That is something the "best and the brightest" love.
They are also not very interested in training, because they don't need it. They want to work on cutting-edge projects.
"Training" is something that the poor performers are going to flock to, because it benefits them. Which is the polar opposite of what the top performers want.
Instead, I'll just point you to Deming's work on management. He transformed Japan's post war economy into the powerhouse it is today. He's also responsible for the much of the transformation here in the USA during the 1980'ss & 90's.
Long story short: it's the goal of management to make workers successful. Re-training is the absolute best way of advancing the company.
Cutting perks will gut the company morale.
Re-training on the job is already available at most SV companies of this size. You want it, you get it.
The original article that called out the lavish party was explicitly doing so to paint Marissa as a CEO that spends frivolously, and the author wanted her to move that money from employees to the investors instead.
I wouldn't be so sure. I love a good conference. I don't care much for the content, but the networking opportunities are great. I mostly do trainings to build my "Rolodex;" I feel that this will only help me when I decide on starting my own business (I want to sell something that other businesses will use, and knowing someone inside of a business >>>> cold calling)
Someone remind me again why corporations pay their CEOs over 100m/year? And tell me about value, that's a huge chunk of change for someone in Yahoo!'s position, they could use that money to keep employees working.
Second, CEOs get paid lots of money because the market punishes firms that aren't growing and have no-name CEOs, and the cost of a name-brand CEO is probably more than cancelled out by avoiding that penalty. By the time Mayer was recruited, the market consensus was that Yahoo needed a turnaround CEO. There are no cheap turnaround CEOs for companies managing 4-5B in annual revenue.
Mayer's entire yearly salary is a rounding error compared to the total headcount cost of operating Yahoo, which is widely believed to be both tremendously overstaffed and larded with third-party contractor contracts.
Further, ask yourself: what exactly does it accomplish for Mayer to forego a salary in order to keep 1% (check my math, I might be way off) of Yahoo's workforce employed if that workforce isn't doing anything to improve Yahoo's outlook? Yahoo isn't a charity: everything it's employees do ostensibly have to have some hope of providing a return on investment.
http://thinkprogress.org/economy/2014/06/17/3449737/ceo-pay-...
The real question is: do success rates improve for sinking companies that hire a expensive CEO versus those that keep their existing leadership or hire no-name CEOs?
I skimmed the paper and couldn't find a counter argument, but I didn't understand all the jargon.
It's here in this picture:
http://static2.businessinsider.com/image/566edfb272f2c150028...
It is, however, weird to me that everyone's so quick to blame Mayer for that. She didn't make up the game. The game stays the game. If it wasn't Mayer presiding over the decline of Yahoo --- probably still after acquiring Tumblr! --- it'd've been someone else.
Disagree. If you bought YHOO in mid-2012 before Marissa joined, you'd have doubled your investment by now. I understand there's the option value of having invested in some better stocks, and YHOO's correlation to BABA, but one could still do a lot worse than doubling the investment.
https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&...
If someone offered me a shitload of money to run a sinking ship, I would have taken the job, just as she did. With this level of compensation, she's all set for life, does not need another job ever. But, with her connections and name recognition, she will have no trouble finding one - trust me. It is a systemic problem with boards of directors hiring incompetent (but well-known) executives who keep screwing up one company after another. All about connections.
The decision to keep the BABA chunk versus spinning it off or distributing it to shareholders was CEO's decision, there were other interests at play urging other outcomes.
She still had a handle on the cost structure of the underlying business - expenses related to employee headcount, office leases, new project investments, outsourcing vs keeping things in-house - impacted the stock price to some extent, things could've been much worse.
I think she was set for life well before Yahoo! offer, and in light of recent developments with GOOG her Alphabet holdings might have appreciated at faster pace than her Yahoo! holdings.
Moreover, her decisions are not terribly out of line with her predecessors' decisions - Scott Thompson and Carol Bartz layed off, outsourced and cut expenses as well.
Could she have done a better job? Perhaps. Was she the absolute worst CEO Yahoo! could've landed? Probably not.
Columns from cringely paint a interesting, changing picture over the year http://www.cringely.com/tag/yahoo/page/2/
For the sake of exposition, let's say Mayer makes some $$MM/y, the exact number isn't really important to my point past a certain level, which she most certainly is.
What is she being paid that amount for? Let's explore each of the obvious options I see, and an expected common reaction (Had written logical, but that's not what I meant, since many common reactions are far from logical).
- To restore the company.
This clearly did not happen, if this was her job, she failed at it, and for most "normal people", getting paid that $$MM/y seems very off compared to what we might receive in such a failure.
- To as you say, preside over the decline. (age gracefully)
The argument I'll pose for the anti-Mayer sentiment in this case can be applied more broadly, but is most fitting here. One might expect this sort of role, in parity with firings, would include policies of waist tightening at all levels. I'm not even making a stance for or against these things in this argument, but the press about a slew of very exorbitant and very material benefits when paired beside firing of boots on the ground (again, not taking a stance, just observing the contrasting sentiments) give the _PERCEPTION_ of "let them eat cake", to put it glibly.
- To as you say as well earlier, be a face for the markets.
If we chose this explanation, realize the "figurehead effect" is a two way street. A famous CEO makes markets look positively on the company (is the thesis) regardless of the company, so if a company is doing badly, should not that emphasis also be on the CEO? It seems disingenuous that the CEO gets the credit for success but not for failure. I'm not saying this is logical, but it is consistent to placing significant value on a figurehead.
This last argument is the weakest, given that the markets probably take into account perceived CEO skills as part of "figurehead" status, but the BROADER market (sentiment of the people) likely can't inspect that deeply. So if the financial market loves kingmaking, the people get to see a king, and have their own expectations which do go both ways (in terms of lionizing success c.f. elon musk, and demonizing failure)
At the end of the day, each of these universes results in a very negative sentiment towards Mayer, thus my not being as surprised at that outcome.
She's being paid to take the personal risk of career-ending failure. It's a way for her to hedge the bet she made that she could turn the company around.
This goes for all CEOs, the high salary is not compensation for labour, it's a risk premium the shareholders pay to get someone to take the job. For example, in many jurisdictions, the CEO is personally responsible for certain crimes that employees are committing, e.g. the CEO can go to jail if the company commits tax fraud.
That said, it's also a complete old boys' network and the risk premiums are extremely inflated, but that's nepotism for you.
And I don't really think anything is career-ending for that matter. I mean, look at the mess there was after Carly Fiorina and she's found other things to do.
Your final line re: network/inflated premiums seems to agree with the broader sense of what I was saying, unless I'm misunderstanding?
"The beatings will continue until the morale improves" .... ever heard of that?
Again, I'm not suggesting cost cutting. I'm suggesting a move from frivolous expenses, to those which help make the employees more successful.
As I commented before, Deming was all about training employees over firing them.
The link you posted contains great tips for assembly-line factories filled with replaceable hourly workers. SV is.. not that.
I've been at companies who followed the above and ended first an annual 4th of July party, then scaled back the Christmas holiday party, then started cutting semi-regular, informal, socialization activities over lunches and what not.
There was nothing more damaging to morale at that firm than killing the few times a year we got to have a bit of fun on the company's dime. We worked hard so the CEO could buy another house, and the reward was "no bonuses, no parties this year." I watched the life drain out of that place.
Killing employee morale activities costing millions won't save jobs lost by spending billions or implementing anti-employee policies.
We had record profits last quarter. Our market is growing. And we don't get jack squat for perks. We come in, work, go home. No holiday parties. Not even free coffee. I used to complain...actually still do. But, that's the expectation now. Hope it improves, but not holding my breath.
On the other hand my salary is 10% more than my previous company which had free snacks, Christmas gifts, etc.
For example we just had a 5 day architecture design workshop...people from different parts of the US flew in to participate. So that's flight, hotel, rental car, meals, etc.
However we only got breakfast one day, and no lunch. To me it makes sense to provide food to get people to come in early and have light discussions over food. Make more use of everyone's time.
You'd have a hard time arguing against a year-end party.
If the company is not doing well, it's a morale booster.
If the company is doing well, then hey, why not have a party?
But Yahoo is competing for Silicon Valley software engineers, and perks are very common, so if you don't have free food, free snacks, office parties, events, and other benefits, you'll have to pay your employees a lot more.
Perks are incredibly cheap for the company, because people value them much more than they would the corresponding pay raise.
So if you don't understand this, it looks bad that company "wastes" millions on perks, because you don't see the many more millions it saves on salary.
This is so obviously true that it's a cynicism generator on HN, with people routinely commenting about how Google's free food is a kind of scam. But what's true and what rings true depends on the prevailing narrative, and the prevailing narrative about Mayer and Yahoo is that she's fiddling while Rome burns.
You know what I want as a perk? The company turns off at 5pm. That's it, no more work, go home, no exceptions. Company email shuts down, no access on your smartphone until 9am.
Now that's a perk. I'll buy my own junk food[0], and I'll go to parties with my friends, not my coworkers.
[0] or, well, I won't - another problem with the perks, I want to snack on carrots and skim greek yogurt, not chips, candy, and beer.
That's not in the interest of most companies, so you'll have to start your own if that is what you want.
> I'll go to parties with my friends
The holiday party is completely optional. Most employees didn't go.
> I want to snack on carrots and skim greek yogurt
Our snack fridges are full of that, there's more healthy snacks than unhealthy around.
It's in the interest of companies to have happy employees. Following respectful working hours is one of the ways to do that. Doesn't have to be 9-5, if 10-6, 11-7, etc. is more of your thing.
I don't care about free food, I care about work/life balance. Office parties and free food type perks, which are just intended to keep you at the office longer, worsen my work/life balance.
That's not in the interest of most companies, so you'll have to start your own if that is what you want.
Nor is it in the interest of anyone with delayed sleep phase. Maybe a more universal form of that perk is "the employee turns off when they leave the office, but can choose their own hours".
Yes, I would prefer a $100 bonus. The amount might decrease to the point that it's useless at larger companies due to economies of scale...
If so, the choice is really between "$100 worth" of partying and $65 of after-tax cash.
For that matter, do corporations pay sales tax? If not, it's more like $100 of partying vs $58 of your choice of any consumption.
(Hence why it's not always as simple as "just give me the money".)
I didn't go to the first two and only attended after that to make nice with teh boss.
Marissa
> I wonder how easy it'll be for her to find a job
Marissa's net worth is well into nine figures. I wouldn't worry about her too much.
And she can always run for president as a Republican.
From the comments on this part of the thread, you'd think Yahoo was some kind of Internet colossus before Mayer took their reins, rather than an overgrown relic kept alive and profitable through sheer inertia.
I think a much more likely explanation is that Marissa failed because she brought no new ideas to the table, and also made a whole bunch of boneheaded blunders like this:
http://gawker.com/5987043/yahoo-ceo-marissa-mayer-installed-...
and this:
http://nypost.com/2016/01/18/marissa-mayers-job-safety-joke-...
while she unashamedly pocketed $36M for her first six months worth of work.
Yahoo's problems have absolutely nothing to do with Mayer having a "nursery" put into her office. She could have taken minimum wage and no other compensation, and no part of this story would have turned out differently, except they might have sold the company by now.
Arguments about Mayer's performance on threads like these are frustrating because the consensus (elsewhere, not here) seems to be that her first order of business should have been a significant layoff. But at this point, now that we have lurid stories about logos, nurseries, and poorly-timed jokes, there's no winning: their core business has been on a downward trajectory since long before she took over, and nobody believes they're appropriately staffed.
Later
For what it's worth, if you look at what I'm saying, nowhere am I claiming that Mayer is a good CEO. But I have doubts as to whether a good CEO could have done much to change the outcome here, except perhaps by fetching a better price at auction for Yahoo.
Of course they don't. That's not the point. Putting a nursery in her office was not a boneheaded blunder because the cost of the nursery (or her salary) made the difference between the company succeeding and not. It was a boneheaded blunder because at the same time she put the nursery in her office she also rescinded all telecommuting. That had an understandably (and predictably!) devastating effect on morale. The message was: I (Marissa) deserve to have this perk that makes my life more convenient, but you, silly rank-and-file employee, do not. I don't even care if you can demonstrate that you can be productive from home, I don't have time to sort that out. I'm much too busy and important for that sort of trivia. So you're just going to have to suck it up and deal with your commute.
> her first order of business should have been a significant layoff
Could be. Whatever it is she should have done, she manifestly hasn't done it yet.
> I have doubts as to whether a good CEO could have done much to change the outcome here
People were saying the same thing about Apple before Steve Jobs came back. Sadly, in this case we will probably never know because that experiment will never be done.
I'm saying something simple. You claim that Mayer had 4.6B of cash flow to play with turn around Apple. My response is simply (a) no she didn't, and (b) to the extent she had real revenue to work with, it was an encumbrance: she was tasked with turning around a company for which 30% of its income was people routing their search queries to Yahoo. It's hard to think of big moves you can make that don't somehow jeopardize that revenue stream. She's boxed in.
(Then you look at the activist shareholder critiques of her tenure, and it's like, "she spent 10MM buying iPhones for everyone on her staff", and I'm like, it's fucking 2014, almost nobody but Apple has figured out how to make huge amounts of money on mobile but pretty much everyone thinks it's the most important thing in the world to do, and she's, what, buying the staff computers to do that with? Sheesh.)
Did she rise to the occasion and do something unprecedented in business history, like Jobs did? No she did not. Executive hired to do the impossible fails to do the impossible, film at 11.
Certainly turning Yahoo around was never going to be easy. And it can be difficult to distinguish between "impossible" and merely "hard." We cannot possibly settle that question here and so there's no point in getting deeper into those weeds.
I will point out this though: I'm choosing to give Marissa and the Yahoo board the benefit of the doubt and assume that they disagreed with you, that they all thought it was possible. I'm also giving them the benefit of the doubt in assuming that they weren't necessarily wrong. Because the alternative is to believe either that 1) they are all idiots for thinking it was possible or 2) that they hired Marissa knowing full well that she was going to fail no matter what she did, and she accepted the offer and pocketed the $36M for her first six months on the job knowing full well that she was going to fail no matter what she did. That seems to me to be a much more damning accusation than anything I've said or implied. That they undertook a clearly impossible task is not actually a defense for a CEO who accepted an eight-figure salary IMHO.
What I do know is that at the time of her hire, on these very boards, people were singing her praises for the most part. Because the Valley protects its own.
Steve Jobs isn't the benchmark here. Maybe it was an impossible task to right the Yahoo ship, but what exactly did she do that was positive or innovative...at all?
I was suprised she didn't fire more people.
I thought it was a mistake to bring all telecommuting employees in.
I know she meant well, but all she did was irritate employees. There was no way these employees were going to bond, and magically turn into a Google love fest.
For some reason, I still think about happily doing your work at home, and then having to come into work and bond. Yes, I think it's important, at innovative companies, for employees to be present, all around the camp fire, but it's someting that needs to be done from day one.
In my world, I still stumble upon a yahoo page, but it's usually by malware on my old laptop I just haven't fixed. I'm glad they haven't changed their look, and then suprised.
Yahoo reminds me of just how dispensable these companies are in the bigger picture. Yahoo could dissapear, and I wouldn't even flinch. I don't even know anyone with a Yahoo email anymore.
Their next CEO should be an unknown, who's really into his/her tinkering stage in life. Young, crazy, motivated, bursting with angst. Gave this person a strong financial team, but don't hire the right looking candidate on paper.
What Apple lacked was a clear focus on what their business needed to be, which was selling hardware, not licensing the OS or making business software, or any of the other bad ideas they had from trying to compete with Microsoft directly.
What no one here or anywhere else seems to have an answer for is "What is Yahoo's core business". It used to be the Yellow Pages for the Internet, and now it's basically a Media company with some legacy stuff like web email.
-- http://thenextweb.com/apple/2010/06/02/steve-jobs-90-days/#gref
-- "Steve Jobs", Isaacson, pg 314
That's probably indicative that we are not CEO material :-)
It was the worst state the company had been in, but the losses had stopped even before Jobs took over. Not to understate Jobs accomplishments. Just saying a competent CEO could turn Apple from a doghouse company to a profitable company. It took a genius CEO takes a company from the the doghouse to the most valuable in the world.
Yes, I hear this idea that once someone has made this much money that they are fine just stepping out of the game and living off their earnings. But one doesn't stay a part of the Triple Comma Club™ if they spend like she was spending as CEO. (without some sort of replenishment)
Her net worth is around $300 million. I'm sure she could maintain her spending habits off interest alone.
If you work at declining companies like Yahoo, HP, etc you should already consider your job lost. Just show up for the paycheck while planning your next move. This has to be what >90% of people are doing as-is. People aren't that stupid... are they?
This is CERTAINLY not the last round of layoffs at Yahoo as it positions itself for sale. Same goes for every declining business in every industry in every country in every era of business history.
It's only a "surprise" for a society that does not yet understand to what degree technology is about to create power monopolies of unseen magnitude.
In principle, Google could become the Internet.
Oh wait...
That was a RELATIVELY good purchase.
- Tumblr was reorganized and lost its independence [1]. Not a sign of happiness with their progress.
- Tumblr has an enormous third-party CDN bill, to the extent that even $100mm of yearly revenue wouldn't come close to covering the expanse. Their traffic levels are greater than those of some entire CDN providers, and the rates they negotiated were not particularly rock bottom. Yahoo has to get out from under that situation to ever make Tumblr a profitable enterprise.
- Tumblr has very little monetizable content. Yahoo ads on Tumblr sites have still not come to fruition after several years of management claims that it's around the corner. They will presumably face a user revolt if and when it does roll out. Display ads only appear in the admin dashboard, which has far lower hit rates than the public facing sites themselves. The vast majority of sites are permanently non-monetizable because they are one of: porn, illegal content, branded corporate sites like yahooeng.tumblr.com. Yet to discard sites like those is to severely damage Tumblr's traffic rankings, which is the only thing they have to sell ads against (if they sold ads).
I see a lot of similarities between Tumblr and a Yahoo acquisition from a previous era: GeoCities. They're both instances of Yahoo spending too much to buy what they think is the latest hot thing that will build their userbase, and instead getting nothing in return but a giant bill and a no way to gain money or prestige off of the product.
[1] http://www.businessinsider.com/tumblr-is-getting-sucked-into...
http://www.engadget.com/2016/02/03/tumblr-lower-valuation-ya...
† for want of better term
As for Marissa, I wonder how easy it'll be for her to find a job. "I bought Tumblr, I threw lavish parties when we really couldn't afford it... my company was about to go under until someone purchased it... BUT, I did get people to stop working from home!". "Hire me?"
Edit - Marissa, not Melissa.