How Marissa Mayer’s MaVeNs Became a Disaster [UPDATED]

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Update 2: Feb 20, 2016: Yahoo! has officially admitted what was making the buzz on the internet for some time – Yahoo! is up for sale.  The company has formed “Strategic Review Committee of Independent Directors” who would put in their brains to find “strategic alternatives”. To make things clear, Yahoo! is all set to field offers which would be reviewed by this team of lawyers and bankers.

Update 1: Feb 2, 2016: With the announcement of Yahoo! Q4 2015 results, Marisa Mayer is found quoting something in the latest press release that indicates a lot about what’s on the cards and what’s going on in Marissa Mayer’s head. Cutting workforce, closure of various departments, closing off offices but more important than anything else, an indication to entertaining bidders to sell Yahoo!.

For those of us who have been on the Internet since its early dial-up days, the name Yahoo! Inc. (NASDAQ:YHOO) will bring back a host of memories. Before there were Google and its search engine, Facebook and its social media and even Amazon and its shopping network, there was Yahoo. And they had all of it; everything from chat-rooms to mail clients and, of course, their very own search engine. So, how does a company, once valued at well over $128 billion loose over three-quarters of its valuation to end up at a measly $34 billion? We look deep into the disaster story that is Yahoo! and try to find who originally is at fault.

With recent events, it is easy to pin the blame on Yahoo’s CEO and ex-Googler Marissa Mayer. One of the highest paid CEO’s in the business, Mayer promised a turnaround for Yahoo with her “MaVeNS” strategy falling flat on its face. However, the basis of MaVens are mobile, Video, Native Advertising and Social networking services from Yahoo, and on paper, they seem to form the backbone of the modern mobile-first internet. So where did all of it go wrong? To find out we take a closer look at the four basic pillars of Mayer’s promised resurrection in an effort to analyse the current situation, Yahoo finds itself in.

Mobile and Native Advertising: Yahoo goes BooHoo!

Mobile Browser Global Market Share

Despite their early start in the desktop search market, Yahoo failed to capitalise on their lead and had to concede defeat to Google. In 2012, when Mayer took over the helm of Yahoo!, the rise of smartphones was imminent, and she planned her resurgence based on the world where Yahoo! would be the first choice of the mobile search homepage!

This was a brilliant idea and given Mayer’s previous experience with Google and her work on the Google homepage. However, the execution was flawed, and several underlying factors made this project doomed from the get-go.

  • The mobile and app development team at Yahoo was woefully understaffed. Combining that with the aggressive deadline set by the recent CEO and the results were hurried and failed to impress.
  • Mayer decided to involve herself in each and every nitty-gritty of the development process and as a consequence lost track of the bigger picture. Several conflicting ideas were floated among various ideas, and that delayed the product launch further.

As a result, despite, millions being spent in new hires like Google sales executive Henrique De Castro, brought on as Chief Operating Officer sales goals were not met and eventually cost Yahoo! to the tune of $58 million in compensation and severance when Mayer fired him after just 15 months.

google3 (1)

The same trend can be seen in the Native Advertising Business where rash decisions were taken without thinking about the ramifications of the actions. A few notable ones that have come forward during Mayer’s tenure are

  • An ad on the homepage that hampered load times for Yahoo Mail was removed. That ad in itself added $70 million to the coffers of the company, but Mayer sacrificed the revenue for user experience. However, there was no backup plan for future revenue.
  • Yahoo Ad Manager was debuted at CES 2014, and although it wasn’t ready, Mayer brought it to the limelight to disastrous results as only 2 in 10 campaigns outperformed the previous system.
  • In a bid to go mobile first, Yahoo tried to break free of the clutches of Microsoft, who have had a decidedly horrible run as far as mobile is concerned, but Mayer failed to wriggle out of the previous contract.

Consequently, the future of search looks pretty grim for Yahoo as it currently stands to the loose ground even more than it already has to newcomers like Twitter and Facebook in the Ad Revenue market.

Video and Social Networking


The acquisition of Tumbler by Yahoo! for a whopping $1.1 billion has mostly been a bust. While Mayer bets big on the social photo sharing scene taking off, and that turned out to be true, the execution for Tumblr was yet again flawed. This led to competitors like Instagram, and Even Pinterest take the lead away from Yahoo. Tumblr revenues at the point of acquisition was $10-15 million, and even after three years, the numbers have not risen. The primary reasons can be briefly summarised as

  • Lack of new engaging content that would create an invested consumer base.
  • The monetization model through sponsored posts was not able to generate sufficient revenue.
  • The integration with Yahoo’s own food, fashion and lifestyle magazines was not done well enough to create revenue by synergy.


Shine, Yahoo’s fashion magazine with its 500 million monthly page views, appealed to a mass audience, not a narrow and affluent one. However, when Marissa took over, she decided to redesign the target audience completely which ultimately led to the magazine worth $45 million in yearly revenue being shot down.

In its place came Katie Couric and her $5 million a year deal for being their global anchor despite reports that her videos were failing to generate revenue for the company. Also on the hiring list was a slate of expensive journalists to helm a series of new “digital magazines.” Mayer hired David Pogue,  the gadget columnist of The New York Times’, to take over as the editor at Yahoo Tech. Former Page Six editor Paula Froelich was put in charge of  Yahoo Travel, and the makeup star Bobbi Brown would oversee Yahoo Beauty. However, all of these failed to generate enthusiasm for the video services of Yahoo. Mayer’s plans to produce original content like “Orange is the New Black” and compete with video streaming services like Netflix fell flat as Yahoo by then had lost both the financial ability and the glamour of a top tier company required to attract fresh talent.

Looking Into The Future: Mayer and Yahoo!

yahoo performance

The future of Mayer as the CEO of Yahoo! seems to be murky, to say the least. Yahoo seems to be headed for a downward spiral and had it not been for the Ali Baba stake; some analysts have valued Yahoo’s core business at even negative market valuations.

However, selling off the stake in Alibaba may not be the best bet for Yahoo! at the moment as they may have to pay heavy tax penalties for their share in the Chinese Giant to the tune of nearly $10 billion. However in a recent development, the board of Yahoo! has been rumored to be deliberating on selling off their core businesses, Mail, Tumblr and Search as individual entities which should fetch the company around $4 billion. The board though has a much bigger problem to deal with as Pivotal analyst Brian Wieser wrote in a note.

“Realizing value is far from assured. The big question is whether anyone would actually show up with a meaningful bid”

However, companies like Verizon and IAC/InterActiveCorp (IACI.O) are in the list of candidates who’d be willing to snap the company up for their huge consumer base and related data. Interestingly, Ivan Feinseth, an analyst at Tigress Financial Partners has commented that private equities may be interested in the Mavens businesses of Yahoo.

So what exactly does the future hold for Yahoo? There will be no fairytale comeback for this company and the flurry of talent leaving the company puts the writing on the wall. Yahoo! is, apparently, destined to die a slow death and fade into obscurity. It seems that their maverick CEO had only hastened the inevitable.


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