Yahoo’s People Loss Is Long Overdue

If headlines are to be believed, there is a massive exodus of staff from Yahoo at the moment. The flight of the Yahooites (Yahoos…what’s the collective noun for Yahoo employees??) started before the Microsoft takeover bid, but has actually accelerated post the bids failure. Now no rational company would want to lose talent like Caterina Fake, Stewart Butterfield, Jeremy Zawodny or Joshua Schachter, but lets ignore the few headline losses and look at the bigger picture.

Yahoo = FAIL. It has done so for a long time. Despite a couple of decent acquisitions, and despite the real fact that until a couple of months ago Yahoo still maintained the number one position online for traffic, Yahoo lost the imagination of those who matter a long time ago.

In part Yahoo lost first adopters, but it’s a consumer play so that actually doesn’t matter that much when it comes to their bottom line. But it lost everyone’s imagination. Yahoo may have had the numbers but it has been Google getting all the press. And when that much noise is being made about a key competitor it doesn’t matter that you started from a superior position, eventually the noise becomes a self fulfilling prophecy in fact, as it has with Yahoo.

A great example is Facebook and MySpace. Facebook has had the first adopter community and the broader buzz for around 2 years, despite starting from a position way behind MySpace. The most recent comScore figures show that in the United States, both are now equal. In coming months Facebook will likely surge ahead of MySpace in the United States.

Here’s what I think about the people purge at Yahoo. Despite the loss of some great talent, the purge is well and truly about time. Yahoo needs radical change if it has any chance of being a serious player in the years ahead. Having now sold out to Google in advertising, its last hope is to become a major player again in social networking and 2.0 style services. I can’t name one standout service from Yahoo in the last year. New blood can only mean new ideas, where the old ideas have failed. I often mention competition as a great thing, and it applies here. We all need Yahoo to survive and go well. We need Yahoo to be competitive to keep Google on its toes. We need Yahoo to become the great internet company it once was.