Product First: Marissa Mayer Takes Yahoo

On Tuesday, Yahoo announced that Marissa Mayer would be its new chief executive, and the news landed like a shock in an industry that had stopped expecting shocks. Mayer was Google's twentieth employee, its first female engineer, and the executive behind the famously clean Google homepage. She was thirty seven, and she was taking over a company that had lost the search war, missed social, and fumbled mobile. The appointment broke every expectation: the board had been expected to pick a media executive or an outsider, and it had picked a product person from the company that had destroyed Yahoo's search business. This is the July 2012 story, and the story is the lesson: ...

Product First is the subject of this article: the surprise appointment that gave the internet's first giant a second chance, and the bet that product sense could save a company that had lost its way. The hire is the anchor, the woman is the message, and the lesson is about the difference between a product company and a media company.

1. The Announcement

The announcement came on Monday, July 16, with the appointment effective the next day, and the speed was part of the surprise. Yahoo had been searching for a chief executive for months, the board had interviewed a parade of candidates, and the speculation had settled on the usual suspects: media executives, turnaround specialists, and outsiders with no ties to the valley. The choice of Marissa Mayer was none of the above. She was a product executive from Google, the company that had built the search engine that made Yahoo's search business obsolete. The board had made a choice that no one had predicted.

The context made the choice bolder. Yahoo was the pioneer of the consumer internet, the company that had shown the world what a portal could be, and the company had been in decline for years. The revenue was flat, the morale was poor, and the chief executives had come and gone in a blur. The board was under pressure from the activist investor Daniel Loeb, whose Third Point fund had been pushing for change, and the most valuable asset on the books was not the portal but the stake in Alibaba. The announcement was the story, and the story was the bet.

2. The Woman

She had joined Google in 1999, as employee number twenty, when the company was a search engine with a mission and a mess. She was Google's first female engineer, and she had risen through the ranks to run Search Products and User Experience, the teams that decided how the search results looked and felt. The Google homepage, the white space, the single box, the speed, the refusal to clutter: the design that became the most recognizable interface on the internet was her domain. She was famous for the details, the shade of blue in a link, the number of results on a page, and the obsession with the user's experience.

The technology industry was dominated by men, the executive suites were the last place that diversity had reached, and a woman taking over the internet's most famous troubled giant was a story that wrote itself. The press covered her as a product genius, a Google star, and a working mother, and the coverage was the first wave of the attention that would follow every move. She was thirty seven, she had spent her entire career at one company, and she was about to run a company with billions in revenue and a decade of decline. The stage was enormous, and she had chosen it.

3. Yahoo's Fall

Yahoo had been founded in 1994, before Google, before Facebook, before the search wars, and the portal had been the front door of the web. The directory, the news, the mail, the finance pages, the fantasy sports: Yahoo had invented the categories that the internet would come to live in. The company had been worth more than a hundred billion dollars at the peak of the boom, and the crash of 2000 had begun the long decline. The search war had been lost to Google, the social wave had been missed, and the mobile revolution had found the company unprepared. The pioneer had become the also-ran.

The decline had a rhythm, and the rhythm was the problem. The company had gone through several chief executives in a few years, each with a plan and each with a partial mandate, and the plans had not worked. The revenue was flat, the products were aging, and the talent was leaving. The most valuable piece of the company was the stake in Alibaba, the Chinese e-commerce giant, and the stake was the punchline of every analysis: the company's future was owned by someone else. The board had tried media executives, and the media executives had failed. The board had tried insiders, and the insiders had failed.

4. The Board's Pick

The board's reasoning was visible in the choice. The activist pressure from Daniel Loeb had made the search public, and the public search had made the board look weak. The choice of Mayer was the board's way of saying that the company would be saved by product, not by cost cutting, and the choice was also the board's way of saying that the old rules did not apply. The product executive was the gamble, and the gamble was the logic: Yahoo's problem was not the brand, the traffic, or the balance sheet. The problem was the products, and the products needed a product person.

Yahoo had been written off by the engineers who had built the companies that were eating it, and the write-off was the real death. The company could not hire the talent it needed, because the talent did not believe the company had a future. The board needed someone whose name would make the engineers look twice, and Mayer's name did that. She had the credibility of Google, the legend of the homepage, and the attention of the press. The hire was the first product, and the product was hope. The hope was the bet, and the bet was the announcement.

5. The Pregnancy

The news of the appointment arrived with a second headline: Mayer was pregnant, and the news of the pregnancy broke the same week. The timing was sensitive, the questions were personal, and the coverage was a minefield. The board had known, the company had prepared, and the chief executive had made her own choice about the announcement. The supporters praised the company for hiring the best person regardless, and the skeptics asked about maternity leave, succession, and the timing of the appointment. The conversation was the conversation of the moment, and Mayer handled it by stating the facts and moving on.

The pregnancy was the context, not the job, and the coverage struggled to keep the two apart. The company said the plans were in place, the board said the support was unconditional, and the press noted that the first female chief executive of Yahoo in years was also the first to make the announcement on her own terms. The details of the coming months were not the story of the week, and the story of the week was the appointment. The pregnancy was the fact, and the fact was handled. The job was the point, and the point was the product.

6. The Bet

The bet was product first, and the bet had a philosophy. Mayer's signature phrase was simple: I am a product person, and the phrase was the strategy. The company had been run by dealmakers, by media men, and by caretakers, and the products had withered. The new chief executive believed that great products would fix the traffic, the revenue, and the culture, and she said so in her first days. The engineers would be listened to, the design would be respected, and the company would build things that people loved. The vision was clear, and the vision was the risk.

The risk was the size of the task. The company had thousands of employees, hundreds of products, and a decade of neglect, and the product person was arriving with a playbook from a company that had never faced Yahoo's problems. Google had the search monopoly, the cash machine, and the culture of product worship; Yahoo had the traffic, the brand, and the decline. The playbook would have to be rewritten, and the rewriting would take time, and the time was the one thing the company could not buy. The analysts asked whether anyone could fix Yahoo, and the answer was the appointment.

7. The Skeptics

The company had been in decline for a decade, the decline had survived multiple chief executives, and the new chief executive had never run a company before. The Google playbook had worked at Google, and Google had been the company with the wind at its back. The skeptics noted that the most valuable asset was the Alibaba stake, that the stake was not a product, and that no amount of design would change the arithmetic of the portfolio. The questions were the questions that the board had faced in every search: what is Yahoo for, and why should anyone care?

Yahoo still reached hundreds of millions of people, the brand was still known, and the assets were not nothing. The company had the mail, the finance, the sports, and the news, and the properties still had users who returned every day. The problem was not the audience; the problem was the experience, the advertising, and the direction. The product person would fix the experience, the experience would fix the engagement, and the engagement would fix the revenue. The logic was clean, and the logic was the bet. The skeptics and the defenders agreed on the stakes. They disagreed on the odds.

8. The Lesson

The lesson of the Mayer week is that a company in decline is usually declining for a reason, and the reason is usually the product. Yahoo had the brand, the traffic, and the money, and the company had lost because the products had lost. The board had finally chosen a product person, and the choice was the recognition that the company was a product company after all. The bet was that the right person, the right philosophy, and the right attention could reverse the decline. The bet was the boldest the board had made, and the boldness was the point.

The second lesson is about the power of the unexpected hire. The board had been expected to pick a safe name, and the safe names had failed. The unexpected choice brought attention, credibility, and a chance, and the chance was the company's best asset. The product person was the message, and the message was the strategy. The company would be judged by the products it shipped, and the products would be judged by the people who used them. Product First is the July 2012 story, and the story is the lesson: the product is the company, and the company is the product.

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