Yup... I think she was out of her league in terms of negotiation. She's a talented and user-focused product person, but not a leader/negotiator/employer.

As I noted before, she was never at the senior VP level at Google (i.e. reporting to the CEO). So she just didn't have enough experience at that level.

It seems like she got the CEO job based on name recognition, and not a track record of leadership and business acumen.

It's interesting to consider the outrage about CEO pay in light of this. Sure, there are plenty of shitty CEOs who don't deserve their compensation. But you have to respect the fact that, at this level, if you aren't sharp, you'll be fleeced by your peers (i.e. De Castro, and whoever negotiated the Mozilla deal). You don't want to work for a CEO who is getting the short end of the stick all the time.

In addition to Steve Jobs' talents as a product person, he also never got the short end of any deal. (I'm saying that as a person who has never really used Apple products.) I was astounded that he basically did a reverse takeover of TWO COMPANIES -- Apple when he returned, and Disney via Pixar. He negotiated with all the thugs in the movie and music businesses. There aren't many tech CEOs who can do that.

I forget where, but I recall some anecdotes about being on the other side of the table with Bob Iger... saying that those guys basically threatened to physically harm you, and that their threats were actually credible!!! Like you should be scared for your life when messing with those guys :)

> Sure, there are plenty of shitty CEOs who don't deserve their compensation. But you have to respect the fact that, at this level, if you aren't sharp, you'll be fleeced by your peers (i.e. De Castro, and whoever negotiated the Mozilla deal). You don't want to work for a CEO who is getting the short end of the stick all the time.

I always assumed there were some shark lawyers behind these deals, does the CEO really ignore advice and go it alone? In Mayer's case it really does seem so, but a non-sharp CEO should still be able to not be eaten alive if they bring good counsel to the table (though I guess that itself is the sign of being sharp!).

I think it's selling Marissa short to say she just didn't understand the contracts or her legal options and potential consequences.

I think she understood the consequences but thought that the risk was worth the reward. In some cases I think personal hubris was involved.

I don't do Billion dollar deals but I've done my share of 7 figure ones. At some point in every negotiation you need to tell your attorney that you understand the risks and you're willing to accept those risks or nothing would ever get signed. I think Marissa was convinced the Mozilla deal would be huge for Yahoo. She likely didn't think or care if the company got sold (honestly in that case she's probably out so there's no personal risk for her) and she was convinced DeCastro would be able to do at Yahoo what he was able to do at Google.

> I think it's selling Marissa short to say she just didn't understand the contracts or her legal options and potential consequences.

So she understood the consequences, but just had no clue as to their likelihood or didn't care because she would be set financially? It's horrible either way, she should not be negotiating deals at all.

there is a favorable interpretation of this for Meyer.

they're in a bidding war for mozilla with Google and Bing. Yahoo needs their traffic and is willing to exceed the price of the other buyers.. but it's well known that Yahoo has been struggling for years. So a cautious Mozilla would not take their offer unless it was substantially higher, or had some kind of protection if yahoo fails. Yahoo offers this clause, since Mozilla wouldn't do the deal otherwise.

Remember Mozilla wasn't desperate. They could have accepted another offer for at least $300m/year. Yahoo would have been seen as higher risk... people talk every few months about yahoo like it's a miracle they still exist.

Now, I don't know what happened. but yahoo agreeing to this does not necessarily mean Marissa is incompetent or didn't care or whatever.

Right. I have a feeling that this is shocking mostly because of the context, and not necessarily because of the agreement itself. How many other high risk agreements have been made in the world? I'm pretty sure most of the human universe runs on this kind of thing, we just either don't find out about it because it pays off, or it doesn't matter, because the context isn't exciting. I said "wow" when I first read it, but only because of what I know about the whole Yahoo and Marissa situation, not because it seems like a particularly crazy deal by itself.

> but just had no clue as to their likelihood

Likelihood is probability based on factors, each of which has different weight and is again based on other factors. In hindsight, the likelihood seems obvious; when she was making the decision, not so much.

Back in the nineties Excite did a similar deal with Netscape. Not a billion dollars but it was something like $70 million when Excite only had a fraction of that in the bank.

It worked for them in the short term. The traffic enabled them to raise more money and eventually IPO.

Mayer probably thought a similar shoot-the-moon risk was necessary for Yahoo.

> At some point in every negotiation you need to tell your attorney that you understand the risks and you're willing to accept those risks or nothing would ever get signed.

Amen to that!

> I always assumed there were some shark lawyers behind these deals, does the CEO really ignore advice and go it alone?

The leadership / negotiation prowess includes the ability to pick, hire, delegate and trust good people.

It is not a coincidence that she was neither able to negotiate a good deal but also failed to negotiate hiring competent advisors. There is a large overlap there.

Perhaps behind De Castro is a competent group of lawyers or advisors as well.

> It is not a coincidence that she was neither able to negotiate a good deal but also failed to negotiate hiring competent advisors. There is a large overlaps there.

Though she did negotiate herself one hell of a contract. When it personally counts she finds competent people to negotiate!

That's a good point.

Right, you need to be knowledgeable enough to delegate. It's genuinely a tall order to be able to figure who is a good product leader, who is a good CTO, who is a good CFO, who is a good litigator, head of HR, etc. Those fields are so disparate, and if you don't know enough about them, you won't be able to judge talent.

It's exactly the same reason that programmers need to be interviewed by programmers, and programmers prefer to work for managers that were programmers. You really do have to understand something about someone's job if you will manage them (and potentially fire them).

People with specialized knowledge will do all sorts of things to mislead you about their job performance -- doesn't matter if it's an engineer, lawyer, or finance person.

Coming from the Middle East, it's obvious to me that Americans overestimate the difficulty and importance of negotiation, and this is because they never negotiate outside of a business context. The responsibility of the negotiator is to evaluate the available offers and be able to come up with constructive counteroffers. The only way you get screwed is if you act rashly or irrationally. In other words, you're saying that CEOs get astronomical compensation because they can be relied on not to act in gross negligence.

How does a middle eastern background help here?

In some places you can negotiate for a sack of rice. A television. A taxi ride. A dress.

When you live in such places you become used to the ebb and flow of negotiating, the give and take.

If the only time you negotiate anything, it's worth millions, you might not be well practiced.

You've explained practice as a component, but not what that yields.

What are the lessons of haggling, then?

If you haggle on an everyday basis, you eventually start trying out different strategies, from lowballing to starting with a high offer to anchoring.

Dont know how effectivr that would be in an 8 figure deal, but I reckon the lessons are somewhat applicable

Jobs's skill in negotiating was such that there was a standing order at Sun that no contract could be finalized with Apple, While Steve Jobs physically present in the room. The objective was to allow his reality distortion field to dissipate, such that a more dispassionate assessment could be made. I'm wondering if that suggests that Steve didn't have a particularly good negotiating strategy, but simply a force of emotive presence. I guess that is actually a form of negotiating, but probably one that is difficult to teach others.

> Jobs's skill in negotiating was such that there was a standing order at Sun that no contract could be finalized with Apple, While Steve Jobs physically present in the room.

wow. if true, that's the strongest evidence i've ever heard in favor of jobs' negotiating skills.

have you got a source for that? not that i don't believe it, i'd just like to read more about it, in context.

Here is one: https://books.google.com/books?id=m_B9vFa0H1AC&pg=PT34&lpg=P...

i just bought it. only four bucks for the kindle edition. here's a link, for anybody else who might be interested.

https://www.amazon.com/Steve-Jobs-1955-2011-Bloomberg-Busine...

Thanks, fantastic cite.

This makes me wonder what effect will having a celebrity CEO have on the negotiating table.

Would you be as good at negotiating if you're dealing with Leonardo DiCaprio? Or would the 'halo effect' be too overwhelming?

i mean, sure, you have to be sharp to be the CEO. and she is sharp. she's earning millions and giving millions to her friends, is she not? i mean, are we looking at the same information here?

but giving someone a $58m bonus (severence... lol) for a year of work is not a consequence of 'sharp' vs. 'not sharp', it's a consequence of simply not giving a shit about the money because half (or more) of your motivation is probably pilfering the company coffers for you and your cronies to begin with.

none of the yahoo story seems like incompetence to me. it seems like a straight up robbery. everyone calling her incompetent, or dumb, or whatever, has got 'naive' stamped across their forehead.

Well yeah, the answer is probably somewhere in between -- it's partly that she gets paid no matter what the deal is, and part naivete. Even if you are purely self-interested, then you will be motivated to:

1) develop a reputation for being a good negotiator, because that will help in future negotiations

2) actually build the company rather than raid it, because that will lead to better jobs down the road / better reputation.

I mean, she's not a finance type. Those guys do just raid and rob. Someone who wants to raid companies doesn't join a 10 person startup out of college, toiling away to acquire users.

> Someone who wants to raid companies doesn't join a 10 person startup out of college.

haha. dude. she's in her 40s and worth $500M (and growing) now. she is obviously pilfering yahoo and enriching herself and her friends. things change. people change. sometimes for the worse.

ironically, the corporate raider types are the ones who are currently trying to stop her, because she is killing the golden goose that has lined their pockets for decades.

to be quite honest i wouldn't be surprised if her loyalties still lay with the google cabal. you know what one great way to get rid of a major competitor is? become ceo and sack the joint. genius!

> become ceo and sack the joint.

I believe that is now known as "Elop-ing."

Or "pulling a Trump".

As someone already pointed out, she filled her bank and made her friends rich as well. It will be enough for her, her family, her children, grandchildren and all their friends.

It is not like she'll need to quickly look for a job and will be ruined if nobody hires her afterwards. She could retire any second and do nothing for the rest of her life, which she might as well do.

This discussion is almost too silly to have, but: She was the 20th or so Google employee. All that was true before she took the job at Yahoo. So if that was really her goal then there was no reason to even take the job. Some people actually like doing things.

Do you really think her plan all along was to steal from Yahoo? She was already incredibly rich, and no amount of pilfering was going to get her onto the billionaire list.

Quite opposite, in fact. The only way for her to get to the billionaire club would be if Yahoo was a wildly successfully turnaround. She clearly wanted to be Big Boss pretty bad, though.

> Do you really think her plan all along was to steal from Yahoo?

uh, does it matter? that's how it ended up.

I seem to remember that many companies handle compensation on the CXO level with a committee of members of the board. It seems they dropped the ball as much as she may have, or she did suddenly show those supposedly lacking skills when dealing with her superiors.

agreed. Jobs' negotiation skills are "legendary" in the valley.

I think she is what Game of Thrones would call a "summer child". Her entire career prior to Yahoo had been spent at a company where a) they had only experienced an upward trajectory, and b) she was never exposed to the real business side of things (as you pointed out).

Basically, she negotiated every deal, acquisition, etc. as if the absolute best case was a certainty, because that was the limit of her experience. Now she knows that cargo-culting free food and fancy parties does not a successful business make.

> Basically, she negotiated every deal, acquisition, etc. as if the absolute best case was a certainty

Sometimes the situation calls for rolling the dice and hoping for the best. Before we call her business acumen in to question, we should know the incentives set forth to her by the board, and what agenda they may have set for her. Incentive wise, stock options often push executives towards riskier plans of action.

And agenda wise, it may be that she's been brought in to sell to a competitor like Google. Outbidding Google for the FF contract seems like a reasonable plan to buy more things Google is interested in. Recruiting executives from Google to help negotiate a buyout might also be a good plan if they bring enough information with them.

To be fair this is generally the last acts of any dying company. Try to buy/hire your way out of irrelevance only to burn up the last bits of liquidity your investors could hope to get back.

What would you call Google's billion dollar payout to Apple to be the default search engine?

Or Google's other traffic buying programs.

Last acts of a dying company?

Google is light years ahead of Yahoo in PR.

I would call it roughly 5% of Alphabet's Q1 2016 revenue.

So yay monopoly and cartels?

Maybe? At least anecdotely I almost always see spending cuts over and over until the workforce is dwindling with no promises of job security. This seems bizarre to me but I don't have data to say how common it is. Maybe it's different with a more media focused company?

Damn, I would have done his job for ... well, let's say just $25M and only another $10 or so in severance ... It would have been a bargain!

I think she's trying to buy more time with this decision. Think about it, she's not stupid, nor blind. She knows what she's doing and she screwed up with Starboard. She's trying to buy additional time with a rough contract like this. Who will want to buy Yahoo when they are on the hook for $1 Billion? No one, that's who. It's wise but...it might be too little too late.

I don't know a ton on how to take a company private, especially after she's in a position she's in now but...if I were her, I'd leverage everything I had and take Yahoo private. Just like Dell did and turn the company around without all the public pressure.

Chief Operating Officer is rather high up. 108m for 15 months is not actually that crazy depending on their role and risks.

PS: I know it seems crazy but CXX jobs other than CEO can really make ~85million per year. Often because they could be the CEO of another company.

That is certainly crazy compensation for someone who was fired after 15 months. It was so crazy that shareholders actually sued the company for authorizing it.

> PS: I know it seems crazy but CXX jobs other than CEO can really make ~85million per year. Often because they could be the CEO of another company.

$85m a year would be top 5 CEO and that top 5 typically changes based on who got a big grant that year. It's certainly not typical compensation. In fact he was the highest paid COO in the country.

Depends on how you calculate it. CEO's want to minimize taxed income so they play a lot of accounting games. The ever popular 1$ salary is often very expensive on net.

I think everyone here is discussing total compensation.

Does that include use of a company jet and a personal assistant for non work items? However, I am more thinking of stock options. Jobs for example was given options that would have been worth 10 billion with a B when they vested. Sure short term options have a market price but options you can exercise in 10 years are hard to come by.

Presumably you should be generating that much of value. It's crazy because I'm pretty sure a single person at Yahoo isn't generating $108m worth of value.