“The only thing worse than a company that’s accustomed to failure is a company that is failing and unaccustomed to admitting it.”
That was my take on AOL and Yahoo!, respectively, back when Tim Armstrong stepped in to turn around AOL and Carol Bartz had her reign at Yahoo!. And recent events have proved it correct.
I was at a dinner that my friend and co-investor, Oren Michels from Mashery, was hosting. The guest list featured a cross section of digital leadership, including Geoff Judge, Jeff Clavier, Ian Sigalow, Jeff Stewart and Scott Kurnit.
Scott spoke about the lack of respect he’d experienced during a recent meeting at Yahoo! That led us into a broader conversation about the growing challenges facing Yahoo! and AOL — another behemoth in digital content — as Google and Facebook asserted their dominance in programmatic advertising.
By then, AOL was accustomed to failure, dating back to the ill-fated merger with Time Warner. But at least they were addressing it. They had long since lost their edge as an innovator. (For some, the very name AOL evokes the quaint days of dial-up.)
After becoming AOL’s CEO in 2009, Tim Armstrong made the smart decision to sell the numbers. It was painful, with all the layoffs, but it had to be done. By 2015, the numbers had become attractive enough for Verizon to acquire “a proven platform that could get it back into the services and content market,” as Fortune put it.
Contrast that to the course that Yahoo! charted in recent years. First there was Carol Bartz, the Howard Stern of digital CEOs, with her constant cursing for attention. She famously said her goal when she took over at Yahoo! was to find some “friggin’ breathing room.” When that didn’t work, Yahoo! turned to Marissa Mayer, who went on what amounted to a $3B spending spree.
It was a strategy that was destined to fail. If you’re an innovation-driven company, the one thing you can’t buy is the thing you need most: time.
Sure, you might be able to save yourself by segueing into a financially centered company that tries to drive results as opposed to innovation. The two aren’t necessarily at odds, but they’re very different. And in the end, Yahoo! was neither.
So Tim Armstrong, head of a company that knew it was failing and did something about it, effectively devoured Yahoo!, the company that was also failing but had too much hubris to even admit it.