Marissa Mayer’s Five Mistakes

The noose is tightening around Yahoo! CEO Marissa Mayer. On Tuesday, Feb. 2, the California-based Internet engine announced a new redundancy scheme concerning 15 percent of its employees. And its board is ready to accept a buyout, all while pursuing severing its Internet activities. Arriving in July 2012 to great fanfare, the former Google star-employee has not been able to relaunch the Californian search engine. A review of her chief mistakes:

Growth Always in Decline

It’s been Ms. Mayer’s priority since her nomination to revive the growth in sales, which have only declined over the past several years. To reach this goal, the CEO established a list of strategic development sectors: mobile, video, traditional advertising and social media, sectors that have been renamed “Mavens.” Ms. Mayer also led a vast policy of acquisitions, notably buying the microblogging platform, Tumblr. And she initiated several new product launches.

Three and a half years later, the results are mixed. Certainly Ms. Mayer’s proactive policy was able to stop the hemorrhage. But growth isn’t always in the cards. In the past year, net sales — except the traffic acquisition cost, amounts transferred to partner sites — suffered a 7 percent drop. However, “Mavens” activities registered a 26 percent growth in revenue. This is nonetheless insufficient to compensate for the decline in traditional activities, like ad banners and online search.

Buying Tumblr

Among the numerous startups Yahoo! bought over the last three years, Tumblr was the biggest gamble, and therefore the biggest mistake. Ms. Mayer didn’t hesitate to sign a $1.1 billion check to get her hands on the young New York company. The director saw an opportunity to get a foothold in the fields where Yahoo lags behind: social media, traditional advertising and mobile technology. The company also hoped to expand its audience by reaching younger consumers.

Two and a half years later, the promises have never materialized. And Yahoo just took action: The search engine just depreciated the value of Tumblr by $230 million, realizing that they had overpaid, spending more than Facebook for Instagram. In early 2015, Ms. Mayer decided to merge the social network’s business team with Yahoo’s. The objective was to generate $100 million in sales for 2015. “We experienced a slower ramp in monetization than we initially expected,” Ms. Mayer acknowledged Tuesday, Feb. 2.

Video Ambitions

Another priority area for the former Google executive was video. Ms. Mayer first tried to buy Daily, the French platform now owned by Orange. However, this time, she collided with shareholder reluctance. Several months later, the company also abandoned its acquisition of News Distribution Network, an American company that plays clips on the sites of major media companies. The director was also aiming to buy Hulu, a movie-on-demand service, but her offer was judged insufficient.

To satisfy her ambitions, Ms. Mayer invested heavily. For example, she paid a fortune to poach the famous American TV journalist Katie Couric to create news programs. Yahoo! also acquired the archives of the cult TV program, Saturday Night Live, and financed original content to supplement its Yahoo! Screen platform. In addition, it failed to attract star YouTubers, before allowing their product to compete with Google’s subsidiary. Yahoo! Screen closed its doors at the beginning of January.

The Talent Drain

At first, Marissa Mayer’s arrival brought about a surge of enthusiasm at the heart of an enterprise in crisis. The director celebrated the hike in the number of CVs the company received. But this only lasted a little while. The lack of results, falling stock prices and staff losses lowered employee morale. They have become a target audience for recruiters from other companies in the region. According to The New York Times, more than a third of employees jumped ship in the past year.

In an attempt to contain the migration of talent, Yahoo! recently modified its policy on stock options, allowing employees to use them after a month instead of a year. Ms. Mayer also gave out big bonuses to keep her best engineers and directors. This was all in vain: Departures have in fact multiplied in the last months, and not only among lower-ranking staff. In September 2015, Kathy Savitt, marketing director and head of the Media division, left her post.

Parting with Alibaba

Ms. Mayer’s most glaring mistake at this time remains not severing ties with the Chinese online shopping giant, Alibaba. The business still holds 15 percent of Alibaba’s shares, valued at around $24.5 million. Pressured by investors, Mayer agreed to abandon these stocks and redistribute the most valuable assets to stockholders. She even thought she had found a [way] to double-deal, which would mean paying zero taxes, a savings of around $10 billion.

At the end of 2015, Ms. Mayer had to abandon her project due to a question of legality: The U.S. financial administration refused to give the green light to the operation, leaving a shadow of doubt about eventual legal proceedings. In its place, the board now wants to proceed with severing Internet activities. Yahoo!, a symbol of the early days of the web, would thus be transformed into an empty shell. Only the Alibaba stake would be saved, a scenario long rejected by Ms. Mayer.