How's Yang staying busy? By going out of town. In a super-high-res photo of the crowd taken by the New York Times, a sharp-eyed tipster spotted a microscopic glimpse of Jerry Yang in the VIP stands at Barack Obama's swearing-in ceremony.

Reminds one of the time Yang couldn't make up his mind whether he was going to attend the Beijing Olympics or stay home and rescue Yahoo, which remains besieged on one side by Microsoft and on the other by Google. Given his track record as CEO, attending events like the inaugural and staying away from the office may be the best thing Yang can do for Yahoo.

(Photo by New York Times)

A ludicrously patchy trial balloon lifted off this week, airing the notion that Microsoft might fund some kind of complex buyout of Yahoo, at a knockdown price of $20 billion — less than half what Microsoft offered last February. It was swiftly shot down: If Microsoft wanted to get its hands on Yahoo, why would it loan someone else the money to buy it?

Another tall tale is making the rounds: that Sue Decker, Yahoo's president, is still a candidate to replace founder Jerry Yang, who's stepping down from the CEO job after a disastrous year and a half. (Anyone care to bet on whether one of the "sources familiar with the search" who told CNET News that Decker was a contender was Decker herself?)

Decker, a former investment banker, wrecked her credibility with Wall Street through overoptimistic forecasts. Never a strong manager, she similarly killed whatever loyalty Yahoos had left for her through her mistreatment of key underlings. (She had Wenda Harris Millard, Yahoo's former U.S. sales chief, locked out of her office over the weekend when Millard told Decker she was planning to leave — and only months later thought to invite Millard to a farewell party, which Millard refused to attend.)

What Decker has going for her: She's already in place, and is a known quantity. If Yahoo's CEO search utterly fails to find an outside candidate and doesn't settle on a board member, Decker is the board's only option. John Chapple, a board member who was previously CEO of Nextel Partners, has said he's no longer interested. One of the outside possibilities, Vodafone CEO Arun Sarin, has reportedly dropped out. Another, former Autodesk CEO Carol Bartz, has yet to express any enthusiasm. But what does it matter that you have a known quantity, when you have taken that quantity's measure and found it lacking? Insiders whisper that Yang, Yahoo's dithering founder, is loyal to a fault, and that's the only reason Decker has not been fired.

If Yahoo ends up with no choice but Decker, it will surely spell the end of the company. What options will she have, other than to sell it at a cut-rate price to Microsoft?

How depressing for a company once worth more than $100 billion, which promised to bridge Hollywood and Silicon Valley and dominate new media. It still has formidable assets, and valuable businesses. Why does no one know what to do with them?

Yahoos could hardly expect a generous gift in a year when the company went through two rounds of layoffs; failed acquisition talks with Microsoft amidst a neverending rumor mill; countless defections — including the departure of Qi Lu, Yahoo's top search scientist, to Microsoft; and a stock that dropped into the single digits. But nothing might have actually been better than the empty gesture of giving money to other people in lieu of a gift.

Getting nothing was the problem Yahoo's settlement winners had two years ago, when Yahoo's managers forced them to work unpaid overtime to launch a new online-advertising platform called Panama — the one that was so effective that Yahoo turned to Google for help selling ads earlier this year. The suit, Salsgiver v. Yahoo, has been settled and checks have been issued, with some plaintiffs getting $10,000 to $12,000, before tax, for their troubles. (One plaintiff tells Valleywag that 75 percent of the settlement came in the form of taxable salary, with the rest paid as a penalty.)

And what did Yahoo get for its troubles? A system that launched too late and rapidly proved outmoded. The reason why Yahoo ran up overtime for Panama was an abundance of caution; it spent a long period of time testing the new system, to make sure advertisers wouldn't encounter bugs. But the announcement that Panama would be late shocked Wall Street; by the time it rolled out in 2007, Yahoo's stock had already taken a hit, and continued to slide as CEO Terry Semel quit that summer.

He was replaced by founder Jerry Yang, whose 18-month reign has proved even more disastrous. The stock tumble prompted by Panama's delays opened the door for Microsoft's $44.6 billion takeover. Yang's clumsy negotiations with Microsoft dealt another blow to morale at an already unhappy company. Panama has been replaced by another platform, APT, which also shows no signs of beating Google.

The settlement of the Salsgiver lawsuit closes the door on the Panama debacle. But the $10 million the company is said to have shelled out is only a down payment on all the bills coming due from Yahoo's long eyars of mismanagement.

No one seems to think the right employees were let go at the bloated Internet giant. The more we learn about Yahoo's layoffs, the more we can understand why Yang's security detail feared trouble. Read one Yahoo's account of how the company showered bonuses and praise on what managers said were its best employees — and then put them out on the streets a few month later:

You wanted more baffling stories on Yahoo's lay off? Well, I am one of the laid off employees. I have been with them ever since they acquired my company (Overture), which was over 7 years now.

Here are some good and laughable bits of information:

1. They honored some of us back at the end of September with the Yahoo Superstar award. The cash price for this award is quite big, and the party up in San Francisco was spectacular. Numerous people who received this award (which is given out only to 50 people out of 14,000 employees worldwide) got laid off.

2. After the first lay off in February Yahoo gave out so called "retention bonuses" in April. The bonus was given to those employees who deem so valuable that Yahoo cannot afford to lose them. The bonuses came with a nice letter from Jerry, calling you one of the "most valuable employees" in the company. Some of us "most valuable players" were laid off last week.

3. Yahoo said they wanted to get "fit" but in reality kept a bunch of non-producing, constantly calling in sick losers. It isn't surprising that the company is going down hill. Yahoo has a history of getting rid of the actual talent, while the ass-kissing, incompetent slackers remain around. Problem is, after most of the truly talented people who actually knew what they were doing got laid off, or quit, it leaves the one with fancy titles and no clue in charge.

4. Also, a funny piece of info: Yahoo gave passes for the Southern California holiday party, which took place last Saturday, to laid off employees. I guess numerous "happy" laid off ex-Yahoos went to the party to give a piece of their mind to Jerry, who oddly enough attended. I thought two comments were pretty hilarious:
1. See you at Microsoft
2. You laid off my husband in February, we just had a baby, I got laid off on Wednesday. Now you at least can put a face with some of the people you put out on the street.

I am actually happy about no longer working there. I already have another job lined up with more pay, better people and no bullshit. Most of us feel relieved that we are no longer there. The company has been run into the ground for the past 2 years. The mood is horrible, people are scared and demoralized. What was once a great work environment and such a fun place to work for is now a morgue. Let's hope that the next severance packages will be as generous as these ones.

There are still a few "good" Yahoos left working there. Some of them are simply too scared with the current economy to go and look for something else, especially if they have children and families. Not all Yahoos consist of execs who make enough money to not give a damn. There are some left who simply need a paycheck to survive. To those guys my heart goes out.

Sincerely,
Expelled

Nothing sets the office rumor mill going like a layoff. Everyone's jockeying for position and looking for information; no one actually works in the runup to a corporate cull. Here are some of the things I heard in the aftermath of last week's layoffs at Yahoo:

• At one Yahoo office in southern California, 20 out of 50 employees on a single floor had their mail slots removed from the mailroom and placed on top of a bookcase — a week before the layoffs. "Talk about forewarnings," a Yahoo wrote us. "I thought yahoo had more class than that. I had worked at AOL for many years and they were not as bad as that."
• A host of small projects launched right before the scheduled layoffs — suggesting that their creators were worried they'd get laid off and the projects would never see the light of day if they didn't rush them out.
• Saddest note from a Yahoo: "I am currently with Yahoo as QA Lead and looking for opportunities with Valleywag. PFA my resume herewith. I can be reached at 408-XXX-XXXX."
• Yahoo aid off a bunch of people who had just finished training their replacements in India. A sensible business move, and yet oh so Dilbert.
• From a fired Yahoo up north:
  

  I got laid off in the Canadian office a couple of months ago. The idiot HR person followed the script you leaked to the letter.

  Here's some background:
  - My manager went on mat-leave.
  - Her temporary replacement was THE stereotypically awful manager: ignorant, mean, interested only in kissing the CEO's ass by slagging everyone who reported to her, and proposing ridiculous changes to a set of processes that the particular teams had established over three years of development and constant success (really: this particular team was the only team in the entire Canadian and European collection of offices that had this level of success).

  - I was the senior member of the team, and I had been at the company longer than this temp-replacement, so we butted heads.

  - The temp-replacement was close friends with the brand new HR manager.
  - The temp-replacement and her HR friend gave me a disciplinary letter, in which they flat-out lied, claiming that co-workers had said things about my performance that they hadn't. When those co-workers found out, they complained to HR, and my letter was suddenly taken back.

  - After a few months of clashing with the temp-manager, and a few months before the mat-leave was to end, I got the layoff-speech.

  - The temp-manager made sure to re-org (another typical yahoo move), and give herself a new managerial role, so that when the mat-leave does end, that person now reports to the person who was her temp-replacement.

• And from Southeast Asia, word comes that people had access to Yahoo's Backyard intranet a day before the layoffs. That also happened in the U.S. in February's layoffs.
• The leaked layoff instructions we ran proved helpful:
  

  I too received the tell-tale call yesterday, December 9th. It's interesting how the script was posted on valleywag.com, since that is EXACTLY what my manager said to me. LOL! I too find it interesting that the position I was hired for was being cut due to "reduction is workforce" and yet that very same position is currently posted on Hotjobs (which is a part of Yahoo). One would think that if Yahoo is truly making a reduction in their workforce then why would they have a post for the same position which they just laid you off from?

• Worst reporting on the layoffs: Dawn Kawamoto's breathless piece in CNET News, which reported a "twist" in Yahoo's severance package. The "twist"? Yahoo's 1,500-some laid-off employees would stay on the payroll through mid-February. However, that's not an exciting new severance program; it's simply Yahoo complying with a federal labor law called the WARN Act, which requires 60 days' warning to employees affected by a mass layoff.
• A tipster at Brickhouse, Yahoo's San Francisco "incubator" office, reports that layoff plans were clear a day ahead of schedule:
  

  Moving boxes showed up to at the Brick on Tuesday night. if you've ever been to the Brick, you know that there's no receptionist and no way to hide them. Very classy, Sunnyvale, "Don't let the door hit you..."

Of course not! Check out the unnecessary verbiage — all lowercase letters, as is Yang's too-lazy-for-the-shift-key wont — and the presumptuous empathizing, as Yang sends out a memo about the company's mass layoff of 1,500 employees. Is it any wonder that Yahoo's board has decided to fire Yang, too? He assumes its a "tough time" for all of his charges. It has never occurred to him that many Yahoos might cheer the company's shedding of deadwood — Yang included.

The memo:

yahoos,

today, most of our layoffs in the US are happening, and they've been underway in other regions around the world.

this is a tough time for all of us and i wanted to take a moment to reach out to you.

saying goodbye to colleagues and friends is never easy. they all are dedicated members of our yahoo! family, who worked beside us and shared our passion.

but as you all know, we must take actions to better perform in today's turbulent global economy. while we've found efficiencies in many parts of our business, laying off employees is unfortunately unavoidable. our difficult decision to let colleagues go reflects the changes we're having to make to better align costs with revenues - something businesses in virtually every sector are also having to do.

for those who are affected by these layoffs, i am extremely grateful for your contributions to yahoo!. we realize the impact this will have on you. that's why, consistent with our past practices, we're making every effort to support you with severance packages and other services.

the reductions we're making are very hard, but they are also very necessary - as we focus on the long-term health of our business. to those who are leaving us, i extend my heartfelt thanks on behalf of yahoos everywhere - you will be missed.

thanks,
jerry

Mass layoffs are always traumatic. But Yahoo's human-resources department is not approaching this with any particular grace.

December 10 has long been rumored as the date for the layoffs. (We first heard in October.) Nevertheless, some Yahoo employees were in the dark — until they logged on to the Yahoo intranet and noticed that the HR department had booked every single conference room at the company's Sunnyvale, Calif. headquarters. Others are hoping to be laid off, figuring anything's better than Yahoo.

How the layoffs will go down: Commenter yanged describes the process:

There are requests for the little people to be in the office by 9 a.m. If they can't, they must be available by cell for the next 6 hours. Nobody sure what that all means. Are people going to get in early, pretend to do work all day, hoping not to get that knock on the door or phone call from the manager? After waiting for months, are people going to have to sweat it for hours and hours waiting to see if they will be tossed overboard?

Who will get the ax: No one's safe. Upper management at the company insisted that departments across the board make personnel cuts. But finance will be hard hit; a source inside that group says 50 percent of the workforce could go. Likewise HR, since fewer employees require fewer administrators. Kara Swisher, the AllThingsD blogger, thinks entire projects might be eliminated. Yahoo currently lists more than 100 websites and services. Does it really need Yahoo Pets, Yahoo Avatars, Yahoo Ecards? Let me put it this way: If it's a Yahoo site you've never heard of, it may well be on the chopping block.

Will this fix Yahoo? No. Sadly, Yahoo needs to fire another 2,000 people or so to get to a sensible size. If only outgoing CEO Jerry Yang, the indecisive blitherer, had made some hard decisions in his first 100 days on the job, like he promised to do last summer, these Yahoos might not be having to find new jobs in the worst recession in living memory.

Why is CEO Jerry Yang all smiles in these pictures with employees, some of whom he's about to lay off? Well, he's losing his job, too — as soon as the company finds a replacement. (The search is going so poorly that the company may end up tapping a board member out of sheer expediency.) Perhaps that sense of impending loss has allowed the company's billionaire founder to chum around so convincingly with rank-and-file Yahoos at a suburban racetrack south of San Francisco, dolled up to look like a poor imagining of Las Vegas.

The smiles and parties are part of Yahoo's problem. Remember that this company, which started as a collection of links Yang kept online, grew to be worth $100 billion and emerged from the dotcom bust without peer among Internet portals. Back then, a company mandate to embrace fun made up for long hours spent crushing rivals.

But Yahoo is now worth a sixth of its peak price, and its culture has since turned into a toxic parody of the kind of public-school self-esteem programs Garry Trudeau once mocked in Doonesbury. Work and achievement aren't properly celebrated at Yahoo. Instead, just showing up to work seems to be what counts. To keep up with Google, Yahoo lavished salary hikes and raises on employees; it now has an uncomfortable number of the overpaid and underworked. Long before the economy turned sour, Yahoo needed to cut back a good quarter of its workforce. As gloomy as the prospect of its coming layoffs are, Yahoo will still have too many employees. But its shareholders paid millions to throw them a party anyway.

More shots of Yahoo's last hurrah are on Flickr, the photo site whose employees surely wish it wasn't owned by Yahoo.

(Photo of Yang with employee by zhouyaoji, group shot by remfan)

That's because Murdock is the same guy who campaigned for the job of Apple CEO back in 1997, when Steve Jobs was only working as the company's interim chief. He emailed Jobs and Oracle CEO Larry Ellison, a close friend of Jobs and an Apple board member at the time, to make his pitch. In a prank, Jobs and Ellison told Murdock he had the job. He later had to be told not to show up at Apple's campus.

I don't know if Yahoo should reject him so readily. Here's Murdock's bio:

Hi and welcome to the site. I wanted to take a moment and give you a bit of background on me and why I am here. I am a US NAVY DISABLED VETERAN. I got my start in computers in 1975/1976 and very early on saw the potential for these machines in our lives. It's amazing how far they've come from the days when we carried paper tape and then cassettes for data storage. Now that and more fits on a simple USB stick.

The power of the web like the computer systems amazed me when it was first unleashed to the public. I can remember sitting in my office at Pixar Animation Studios (when we were still named PIXAR) and thinking...this thing called a browser has some potential, one day people will use this like they use a newspaper. In fact, this will probably replace newspapers.

See? Total visionary. Under Yang, Yahoo has been busy making deals with newspapers rather than predicting their doom. Murdock might be a better CEO than Yang, at the least — and that, sadly, is no joke.

A video from Murdock on Yang's departure:

We haven't gotten anyone from Google or Yahoo to confirm this bit, but we're told cops interrupted a call Schmidt was making to Yahoo CEO Jerry Yang to discuss how to get a proposed advertising deal past government regulators. The deal was blocked. Schmidt, who endorsed Barack Obama late in the election cycle and got tapped to his board of economic advisors, could use his newfound political clout to get the pesky law overturned. The cell-phone rule, or the antitrust one — we're not sure which one is more bothersome to him. (Photoillustration by Richard Blakeley)

If so, Microsoft may have gotten Yahoo's search business on the cheap. Our tipster writes:

Today is the end for Yahoo Search. Sean Suchter just left for Microsoft. Everyone in the office is shocked. I've been on the Yahoo Search team for a while and he is the one key executive that it all depends on. If Microsoft has convinced him to leave and join them, they won't need to buy Yahoo Search. We will just all join Microsoft anyway. I am definitely going to send him my resume.

Rumor has it that Yahoo already lost a search executive, Qi Lu, to Microsoft; but Suchter commanded the loyalty of many within Yahoo's search group. These names may not mean much to anyone outside engineering circles in Silicon Valley, but they amount to this: If Microsoft has recruited Suchter, it has gotten the heart of Yahoo's search technology without the fuss of actually buying it.

That will please many on Wall Street who want Yahoo to get out of search; the company could save billions of dollars a year in expenses by dropping the business altogether, and serving up search results from Microsoft or Google's index of the Web instead, as sites like Facebook and AOL.com do today. Yang had an expansive vision of Yahoo as a one-stop shop for advertisers where they could buy both search and banner ads. But he dealt the image of Yahoo's search a blow when he tried to do a deal with Google to have the search giant sell some of the ads that appear on Yahoo's search results. Regulators in D.C. blocked the deal, but the damage was done.

Engineers like to be on a winning team — or at least one that's fighting the good fight. Microsoft may be an underdog in Web search, with a pitiable market share which keeps shrinking, but its top executives are obsessed with beating Google — and they seem more secure in their offices than Yang. Microsoft still has an unsavory image in Silicon Valley, but for coders who have been dealt a drubbing for years by Google, it's an adequate revenge vehicle.

Here's the memo on Suchter's departure:

From: Tuoc Luong
Date: 11/18/08 3:43 PM
To: Yahoo Search Team

Hi Everyone,

Unfortunately, I have to give some bad news to you. Sean Suchter has resigned. Sean’s last day will be December 19th.

Some of you will find this news shocking given that Sean has been a Gibraltar rock at Yahoo and in particular for the Search team. . I understand this.

I will point out that we’re on a good trajectory. We’ve released some good products and capabilities and the industry is beginning to take notice. We’ve closed the gap in Algo relevance and making great strides in building the next generation differentiated search experience and step function in relevance – not to mention infrastructure overhaul that prepares us for the future.

I came here to take on Google because I believe Yahoo above all is best positioned to take the battle to Google. I think we’re on the right path to changing the tide and would love to see everyone make the journey but I respect Sean’s personal decision. I’m committed to continue the battle against Google as long as Yahoo positions Search to be competitive (and I believe we are). I hope each and all of you feel the same way and stand with me to battle Google.

I’ve asked Arnab to step up and take over Sean’s role as head of YST. Just as Sean has been a strong arm for me, Arnab has been a strong arm for Sean. Although Sean casts a large shadow, I believe Arnab will step up to fill the hole with your support. Arnab will cast his own shadow as the new leader of YST and it’s the same YST team that has deliver great products like Search Assist, Secure Scan, SearchMonkey, BOSS, numerous MLR and QRW release to close the GAP in core relevance.

Sean and Arnab have been communicating to the YST leaders about the changes. Arnab has been thinking and discussing the new organization with people. He will send out an e-mail describing his organizational thoughts and plan for YST soon. I believe with the support of other leaders (myself, Bharat, Yongdong, Nam, ..etc), Arnab will fill the void and continue the battle with Google. I urge everyone to support Arnab in his new endeavor.

Tomorrow, I’ll be holding an all managers meeting to discuss the changes and Q&As.

Please wish Sean the best in his future endeavor and congratulate Arnab in his new role.

Thanks

Tuoc

(Image via donquijote.cc)

Call it a brown paper bag, convenience store hold-up style, if you want. When Jerry is adamant about staying just a few weeks ago, and suddenly he changes his mind, something convincing came his way. Convince = Incentive at his level.

Apple, where cofounder Steve Jobs returned to power in 1998, is up 600 percent since the beginning of 2002. Amazon.com, where Jeff Bezos has reigned as CEO more or less uninterruptedly since the online retailer's founding, tripled its worth. Google, where cofounders Larry Page and Sergey Brin form a troika with hired-hand CEO Eric Schmidt, has also tripled in value since its inital public offering in 2004. These gains remain despite the stock market's punishing fall.

What about Yahoo, eBay, and Microsoft, where founders handed over the company to professional managers? They are all back where they started almost seven years ago. Under former CEO Terry Semel, Yahoo had a brief golden age in 2004, where it outperformed all the other big Internet companies; it ended just as Google began its relentless rise. Meg Whitman overstayed her welcome at eBay, presiding over its stagnation before handing over the CEO job to John Donahoe — like Whitman, also a management consultant by training. Microsoft CEO Steve Ballmer has proven that he's no Bill Gates; the stock has flatlined under his leadership.

Under Yang, the stock has gone down, down, down, interrupted only by the hope that Microsoft might buy the company and in so doing, give its employees the leadership and sense of purpose they so desperately crave. Does that disprove the value of founders? No. Rather, it suggests that by abandoning his company when it was merely a toddler to be reared by strangers, that he was never much of a father figure to begin with.

Experience is underrated in Silicon Valley. Novices are thought to do better than old hands. But the truth is that the intensity of actually running a startup — raising money, hiring people, assembling desks by hand — is better training than that provided by most business schools.

Looked at that way, Yang gave up way too early, hiring a professional CEO when the company only had five employees. A graduate-school dropout, Yang had no management experience, and no predilection for the task. He is still, to this day, famously indecisive and fatally nice.

Steve Jobs has rarely spoken about the heartbreaking experience of being cast out of Apple, the company he cofounded. In June 2005, though, he gave a commencement speech at Stanford University and openly discussed it. "I didn't see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me," he said. "The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life."

Yang's exit, like his entrance, is far too soft. He will remain CEO until the board finds a replacement; he will remain Chief Yahoo after that. Such kid-gloves treatment does him no favors.

For his own good, Yahoo should exile Yang, as Apple did with Jobs, and give him a chance, at last, to prove himself. His golf score may suffer; his nights may prove sleepless. But they say tough economic times are when the best companies are born. Perhaps he'll correct the mistakes he made at Yahoo with his next company. And maybe — if there's still a Yahoo left to welcome him back, if it hasn't been swallowed up by Microsoft or News Corp. or AT&T — he'll return to his first company a conquering hero. And prove that Silicon Valley's tale of the prodigal founder isn't so mythical.

1. The all-too-sacred cows. When he first became CEO in July 2007, Yang promised that there would be "no sacred cows" and a 100-day action plan. Instead, his efforts became mired in Yahoo's famous bureaucracy; the cows were spared. While the company had layoffs last February, they were not nearly enough; next month, Yahoo is cutting another 1,500 employees.

2. The Microsoft deal. In retrospect, Yang should have taken the $45 billion offer Steve Ballmer made in January and run. With the stock trading below $11, the company is now worth a third what Microsoft would have paid.

3. The Google deal. Google and Yahoo had struck a tentative deal to have Google sell ads on some of Yahoo's search pages; because Google is more effective at selling such ads, the deal would have added an estimated $800 million a year to Yahoo's bottom line. But Microsoft executives, enraged at being spurned by Yahoo, made so much trouble for Google and Yahoo in Washington, D.C., that Google CEO Eric Schmidt chose to walk away rather than accept a deal that would set a precedent for regulating Google's monopoly on search advertising.

4. The Carl Icahn insult. Corporate raider Carl Icahn pressed hard to get Yahoo back to the negotiating table with Microsoft, then tried to unseat Yahoo's board. Yang and the board retaliated with a campaign on Yahoo's homepage which suggested Icahn was clueless about technology. Days after the diss on Yahoo.com, Yahoo's directors relented and nominated Icahn to a board seat. While he's been mostly quiet, Yang's unplanned exit is a sign that he has not forgotten the slight.

5. Jerry Yang. Since becoming CEO, Yang has been pressed for an answer on the most basic of questions: Why should he be the one to run Yahoo? His answers have boiled down to this: Because he founded the company. A Newsweek article last month proved his last chance to articulate why he should be CEO, and he botched it. "Bleeding purple," to use Yahoo's in-house jargon for being passionate about the company, is not enough of a reason. Just because it bleeds doesn't mean it leads.