Did Someone Say PBJ?

november 20, 2006

TheStreet.com is running a great rebuttal to The Peanut Butter Manifesto.

So, now heads must roll at Yahoo!. If so, I'd like to nominate the first one: Brad Garlinghouse. Who is Brad Garlinghouse? He's the Internet's own Charlie Brown, a Yahoo! senior vice president prone to griping about peanut butter in his fatuously titled "Peanut Butter Manifesto," in a stark revelation of the managerial crisis that has swamped Yahoo!'s headquarters, is being taken far too seriously.
The article goes onto explain the deeds of Garlinghouse and also what good has come from those deeds.
Yahoo! should start with accounting for Garlinghouse's performance. Under his watch, Yahoo! Messenger let a huge opportunity for voice-over-Internet protocol, or VoIP, slip through its fingers as eBay snapped up Skype. And Yahoo Mail dropped behind Google's Gmail as the most prestigious Web-based email domain.That performance has been more chunky than smooth, yet Yahoo! has gotten off easy. Earlier, Garlinghouse was CEO of VoIP leader Dialpad, which promptly spiraled into bankruptcy, but not before Garlinghouse laid off 90 of his 140 employees. A 2002 case study of Dialpad in the Harvard Business Review discussed how Garlinghouse struggled with a failed business model while rival Net2Phone won a $1.4 billion investment from AT&T as well as deals with Microsoft and Yahoo!. Before Dialpad, Garlinghouse was a venture capital investor at CMGI, one of the most spectacular dot-com blowouts. Its stock has fallen from $164 in 2000 to $1.40 today. CMGI wasn't content to be an overvalued, money-losing Internet company; it wanted to breed dozens of them, some under the brown thumb of Brad Garlinghouse. In 2003, Garlinghouse drifted into Yahoo!, where a signature deal was acquiring -- no kidding -- Dialpad to create a VoIP division you've probably never used. It's not clear if Garlinghouse owned any of the Dialpad shares that Yahoo! bought in the transaction, but Dialpad seems to have since morphed into one of the superfluous lines of business that Garlinghouse is now advocating shuttering.
An unnamed Yahoo and I have had talks about layoffs. He made a good point, which is echoed by this article. Yahoo! will probably not have to layoff people because people will start jumping ship soon -- if this kind of turmoil continues internally, we will start (and I think it has already started) losing some very bright and smart people to our competitors. Should we layoff people? No. Should be put duplicate efforts together? Yes. Think what awesome product would come out of the marriage of the brain powers of del.icio.us and myweb! Think of the product that would come out if the brains between flickr and photos started to work together! Don't consolidate and layoff people. Consolidate projects and put all the brain power together.
Here's Garlinghouse in that 2002 Harvard case study on the peril of "irrational" layoffs: "If you cut your headcount, you destroy your ability to grow ... so you cut your headcount again to reduce burn. The result: a death spiral!"
Boy, Garlinghouse should really take the advice of...err...himself. I am advocating that all Yahoos go out and buy a nice jar of Extra Crunchy Skippy and leave it at Garlinghouse's cube.

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