Marissa Mayer Gets It – New Yahoo CEO Wants More Engineers

By | July 20, 2012
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As a Yahoo(YHOO) shareholder, I was thrilled with the news that Marissa Mayer would become CEO. I share her

Image representing Yahoo! as depicted in Crunc...

engineering background, but found it difficult to explain to outsiders exactly how this changed the game for Yahoo, particularly in terms of the company’s ability to attract top engineering talent.  I’ve always had a hard time convincing non-engineering management that engineers are not Legos- they don’t all have identical skills and speeds. In fact, there’s a power law, where the top engineers are an order of magnitude more productive and innovative than the rest.

Though it is true that the man-month is mythical, there is also a powerful network effect that can be unleashed by having talented engineers interact in unstructured ways.  This is the secret of Google’s(GOOG) 20% time, and Facebook’s(FB) famous Hackathons.

I was pleased then, to see “Marissa Mayer To Board: Yahoo Needs More Engineers” at Business Insider this morning.

We know what one of those ideas is, and it’s pretty simple: Mayer wants to hire more front line engineers – a lot more.

According to a source familiar with Mayer’s conversations with Yahoo’s board prior to her hiring, she told the board that a quick examination of its headcount and org structure made it clear to her that the company does not have the kind of engineer-to-everyone else ratio that Google or Facebook has, and that fixing that ratio would be among her top priorities.

This might seem like an obvious move, but consider that before Yahoo’s board hired Mayer, it considered making Ross Levinsohn CEO. One of his first moves was going to be to get rid of thousands of engineers by shipping off Yahoo’s ad tech business.

Likewise, Carol Bartz’s signature move was shipping Yahoo’s search business – and many of the engineers running it – off to Microsoft.

Having spent years working at a declining former internet high-flier, I know all too well that this is the only solution to Yahoo’s problems. To create a culture of innovation, but to also give the talented hires the autonomy and authority to actually innovate, and to get their innovations to market.  Solving this second problem is something Mayer has first hand experience with from her time at Google, but its irrelevant without step one- hire top talent who can create unexpected innovation.
It is true that Mayer will be well-compensated for her efforts.  It is not without risk, though the risk is overstated given the very modest value shareholders have accorded to the US stub once the Alibaba and Yahoo Japan stakes are factored out.  I hope the company will reconsider its previous plan of returning the proceeds from the Alibaba sale to shareholders and instead redeploy it to building the infrastructure to develop and deploy innovative products to the company’s still significant user base.
Disclosure: The author holds shares of YHOO
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