23 ms·

Yahoo’s Brain Drain Shows a Loss of Faith Inside the Company

151 points by scottfr 11y ago

swingbridge 11y ago
Just scanning across headlines of the last few days: - San Francisco commercial real estate at record highs, passing NYC in price per square foot (which last happened just before things imploded last time around) - Multiple SF area tech companies running rounds of layoffs - VC funding took a nose dive last quarter - Quite a few unicorns or near unicorns having their valuation tank post-IPO, having a difficult fundraising round or seeing their valuations slashed on private markets One can debate if the Valley is in a full blown bubble, but seems increasingly obvious at a minimum there's a significant cooling off on the horizon.
- Apocryphon 11y ago
  It'd be nicer if the cooling down effect led to a plateauing of those record high rents, even if dropping is too much to hope for.
- w1ntermute 11y ago
  I think we can all agree that this year is going to be pretty ugly, both in the tech industry and the broader economy. With the Fed planning to hike interest rates repeatedly, the Chinese economy in a tailspin, and the VC bubble rapidly deflating, there seems to be little doubt that winter is coming. And it's not all the VCs and other pundits on Twitter saying everything's going to be OK that are going to suffer as a result. None of the problems that we caught just a glimpse of during the financial crisis were really fixed - they were just patched over with some spit and duct tape. The interest on that technical debt will have to be paid sooner or later.
  - fratlas 11y ago
    Do you think this will seriously affect job opportunities for devs? I'm an almost-grad who switched from electrical engineering because the jobs were abysmal, and the bad luck seems to be following me :-)
    - w1ntermute 11y ago
      The fact that you know about this problem already puts you far ahead of all the people who are still unaware. The best option (if you're not a senior) is to do a summer internship, which leads to a full-time offer. The next best is to get interviews through personal referrals. If all else fails, whiteboard like crazy and do your homework on the companies you're applying to, which will be a lot (hundreds).
      - fratlas 11y ago
        I just assumed most devs would be worried about the potential affects of the bubble. Currently typing this from my summer intership, so your comment has given me so hope, thank you!
    - tsunamifury 11y ago
      Don't worry about it or listen to the HN doom-sayers, they like to exaggerate and self-aggrandize. Broadly -- software, the web, social products, automation, or advertising aren't going anywhere in the next two years. These are all driven by development and require developers. High competition markets might slow leading to not getting a massive out of school offer. But you'll get offers if you're looking. Honestly you're better off starting your career at a middle point or low point in the market rather than a high point. You'll be better calibrated for the ups and downs and you are far more resilient and flexible. I graduated in 2009, when there were no jobs and it was awful. I slowly climbed my way to Google and on into an exciting future.
      - pfarnsworth 11y ago
        You really have no idea. 2009 was mild for SV. The dotcom bust per-capita was worse than the autoindustry layoffs in the 80s. I lived through it. It was very hard, and some people I know were out of jobs for 2 years. Our company had half a dozen layoffs in 12 months and we shrank by 50%. If 2016 is half of what 2001 was, then most new grads won't get jobs.
        11y ago
  - tootie 11y ago
    I don't get it. The Fed is raising rates because the economy is recovering.
    - dredmorbius 11y ago
      The Fed has two mandates -- its "dual mandate": 1. Control inflation. 2. Manage unemployment. They are, unfortunately, directly at odds. Fighting inflation tanks the economy (that's what Paul Volker did in the late 1970s, to tackle "stagflation", and Jimmy Carter's 2nd term hopes), and promoting employment tends to hot up inflation. Over the past 8 years, the Fed (and other central bankers) have dumped unholy amounts of liquidity into the global economy. That is, they've been "printing money", except that the Fed doesn't actually print money, it simply wills it into existence. It's done this after reducing its own lending rates (the prime rate) to effectively zero wasn't sufficiently stimulating the economy. It's slightly more complex than that: the Fed distributes that money by buying "assets" from major banks -- it's an auction process, but the goal of the Fed isn't to get valuable assets[1], only to manage how that money's introduced to the economy and keep tabs on its value by way of inflation, as I understand it. For whatever the reasons, inflation hasn't actually been a problem, though the reasons why are elusive, and several alternatives have been suggested: 1. The money's gone into financial instruments, including stocks and real estate. The rise in major stock market indices and the Fed's balance sheet (its money supply injections) pretty much exactly track one another. 2. It's gone into offshore tax havens. Last numbers I've seen are about $7 trillion from the US, and $25-30 trillion globally, from various sources. The ICIJ and The Guardian have run a multi-year expose on off-shore investment havens, and other financial sources have reported on this. 3. Chasing other investments. Silicon Valley VC money comes from somewhere, and much of it chases start-ups whose ultimate valuation is either advertising potential, or buy-it-to-kill-the-threat-to-us (WhatsApp's purchase by Facebook). Advertising's terrifying because a tremendous amount of it is financial services -- about 40% in "FIRE" industries: finance, insurance, and real estate. Pull the plug on easy money, and all three of those tailspin. Which gets us to why fighting inflation is seen as such a bad thing. Usually the argument given is "inflation hurts those with fixed incomes", by which most people think of the elderly on social security or pensions. But we've learned how to fix that: you index those systems to inflation, hence SSI's COLA adjustment -- the cost-of-living factor that boosts Social Security payments. Who really get hurt by inflation are those who are holding dollar-denominated assets. Lenders. That's banks, and holders of bonds (debt), which aren't themselves inflation adjusted. If you've got a home mortgage, inflation is your best friend, because it reduces the amount of your debt (in real terms) while your income increases. Banks, on the other hand, hate that, because their assets (your mortgage) falls in value. So: the Fed is raising rates to stem inflation fears, even though inflation's been fairly much a non-player. Probably because banks and other lenders / bondholders are getting nervous. And to give itself more maneuvering room. There's a whole bunch more in this, such as what money "really" is (in a functional / role sense, not the boring old fiat-vs-gold-backed debate), what, whether, why, and how economic growth is, can be extended, is justified, and is based on, and whether or not inflation is an unavoidable element of a collapsing economic system. On that last, the fate of the (specie-based) Roman denarius is quite interesting. But stay tuned. Things might get interesting. ________________________________ Notes: 1. Told to me directly by a regional Fed branch president in a public Q&A.
- Animats 11y ago
  Definitely a bubble, but this time, the VCs and private equity are the losers, because the "unicorns" haven't gone public. Not as bad as last time, because this time, most of the startups have at least enough revenue to pay their running expenses.
  - soldergenie 11y ago
    Startup employees which took a pay cut in exchange for equity are going to be the biggest losers. At least VCs and private equity have some level of protection against a decline in valuation from their preferred shares/liquidation preferences. It won't protect them against bankruptcy, but it is a lot better than nothing. Employee's generally don't have that type of protection, and the liquidation preferences also decrease the value of the common shares after a down round. So even with a relatively modest decline in overall valuations, a lot of employees are going to end up with worthless options/shares after a down round.
    - hibikir 11y ago
      Hopefully that will be a good lesson that will hit the next group of young and bright eyed developers. It's not as if equity is necessarily bad, but unless you are a founder, you have ZERO control over what is going to happen to your equity. If the plan is not to exit after just a few years, you could be stuck for a long time, if just because without an IPO, you won't even be able to keep your equity if you leave, even if it's just because you can't pay the taxes. I think that educating recent graduates about what are the realistic outcomes of betting on equity. For every early google employee, there are thousands of people whose equity was worth nothing. Even options in big companies can be worth nothing, if they were handed to you at very high prices. When people learn the real risks, we'll see employees getting either a whole lot more equity, or salaries will go up. Either way, good for the industry.
- riebschlager 11y ago
  Everything you just mentioned, plus stuff like this[1] really make this seem like a bizarro replay of the 1920s. That does not bode well. [1] http://fortune.com/2015/12/16/yahoo-holiday-party/ http://fortune.com/2015/12/16/yahoo-holiday-party/
  - deleted 11y ago
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- cenal 11y ago
  The VC bubble is already popping and it's going to affect this year but I don't think it will have as much of an impact on the economy as the Chinese stock market collapsing to more realistic valuations. Let's also keep in mind that the world is becoming more automated, not less, so this isn't going to be last time we see bubble valuations in our lifetime.
- flylib 11y ago
  VC funding announced in first week of 2016 is significantly more then first week of 2015 as a counter argument
- castell 11y ago
  Is the cooling off phase only in VC funded software companies in the SF area? Or also in Fintech, bio, med, etc? What about NY, London? Also what happened with public companies that had their IPO just a few months before the Dot-com bubble in March 2000? Are there good books about the Dot-com bubble? What is the outlook for SaaS companies? If there are less VC funded startups, should they focus on enterprise sales?
watmough 11y ago
My own impression of Yahoo from years back is that if something as critical as the YUI toolkit sucked, which it did, then Yahoo had limited prospects. Perhaps an odd thing to base an opinion on, but compare stock charts on Google versus stock charts on Yahoo. The Yahoo ones were clunky and sucked. Compare Yahoo Mail with GMail, and Yahoo sucked in comparison, being riddled with giant ad-banners. Even now, Yahoo search results suck, which is really noticeable when FireFox periodically resets my search engine to Yahoo. Suddenly my results suck, and back to Google I go. I don't know what Marissa Meyer has been doing, because it doesn't seem to be apparent in Yahoo getting better at anything really.
- swingbridge 11y ago
  Well strictly so far as the markets are concerned Yahoo the core company died a long time ago. Just happens that some previous executives made a few great investments (Alibaba) that paid off big. Per current market cap, Yahoo the company has a negative valuation.
- drcode 11y ago
  What's funny is I just bought Netflix stock solely because I saw how awesome their Falcor toolkit is.
  - deleted 11y ago
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dawnbreez 11y ago
Why do so many execs rely on cutting jobs indiscriminately? They don't know who the problem workers are.
- kasey_junk 11y ago
  Because there is a lot of evidence that most employees are essentially fungible, at least at the scale of these large companies. I've literally been in a meeting where 1 team that was twice as productive as another was cut because that wasn't enough to make up for the fixed cost differential (rent, benefits, regulatory costs etc).
  - bad_user 11y ago
    > there is a lot of evidence that most employees are essentially fungible In software development I don't believe it. This smells like wishful thinking from management for which non-fungible employees are a problem. I'd like to see the evidence you're talking about.
    - phamilton 11y ago
      There are many companies that openly hire for middle of the road developers. It's easy to do, just pay middle of the road salaries. In my experience at these companies, there is sufficient bureaucracy that high performers hit bottlenecks due to the org structure, reducing everyone down to the lowest common denominator anyway. So even an otherwise talented dev can be replaced by a less talented one.
    - effie 11y ago
      Why not? Software development is a technical work which can be performed by thousands of people on the job market. All it takes to replace someone at such a job is time and HR effort to find a person with required level of experience and reasonable pay requirements.
    - jaggederest 11y ago
      The problem is that you're assuming productivity is based on individual merit in these companies. They're so large that essentially nothing about your personal output has any real effect on your individual productivity. It's equal parts politicking, luck, and self-promotion that garners you kudos, not actually getting anything done. In a dysfunctional organization, like I daresay yahoo is at this point, you don't lose anything by firing people who are unable to contribute due to organizational problems. As an example, when I worked at AT&T, individual and project success was decided essentially based on the whim of management. I don't think we went 3 months with the same remit, organization, management structure or goals. In that kind of situation, much like I perceive Yahoo to be, there's really no point in attempting to achieve productive work since the targets change before you can actually do anything. It's pathologically better to focus on shifting blame and self-aggrandizement, so that when things inevitably fail you can dump it on a scapegoat. There's a reason I don't work there any more.
Animats 11y ago
"Last March, Ms. Mayer told the staff at an all-hands meeting that the bloodletting was finally over. Shortly thereafter, she changed her mind and demanded more cuts." Of course there's a loss of faith in the CEO. That's been a continuing problem with Meyer. She said Yahoo was getting back into search. (Yahoo resells Bing; Yahoo hasn't had its own search engine since 2008 or so.) That didn't happen. She said Yahoo was going into video. That was canceled. There were a bunch of acquisitions, many of which just disappeared. Nobody can figure out what Yahoo is really for any more. The company minus Alibaba has negative market value. It's that bad.
- jrcii 11y ago
  >Nobody can figure out what Yahoo is really for any more. This is the key to their problems. Companies need to be able to articulate very specifically: this is what we do and who we are. Everything else follows from there. Yahoo's answer to this is, "We're a media company" and no one knows what that means including Yahoo.
- iofj 11y ago
  One does get the impression Yahoo's being driven by activist shareholders at this point. The flipflops don't look like the CEO wants to change strategy, but are the result of political battles in the boardroom. Because the stock is tanking, there's a lot of change in the boardroom and then you have sudden shifts in strategy.
  - cmurf 11y ago
    That's a micromanaging board, and no CEO should put up with that because as the most public face of a company it'll make the CEO look far worse than "the board". But OK, she's getting paid a metric f ton of money so maybe she doesn't care how bad the boards' micromanaging makes her look.
    - rdtsc 11y ago
      The longer she can ride the gravy train the better for her. So she probably will do whatever the board decides that week. (The Board):"Let's have more cuts" (Her):"Ok". (The Board):"We should buy a startup" (Her):"Ok." I can't believe she doesn't know or nobody told her the ship is sinking (or the gravy train is headed to a dead end). She knows it. But yeah as you said, at this point she is just playing the game of "let's see how long I can hang on here". In the end she can point fingers to "the board", "internal naysayers", "it wasn't much that could be done", etc, etc. The board can point to her. Employees and customers will point to both and so on.
tyre 11y ago
By the time the NYTimes runs this story, it's already over. Internally, employees know well in advance when a company is headed downhill. When I was at LivingSocial, the best employees left at what appeared (externally) to be the peak of the company. The trend was already apparent. Once you get to layoffs and press stories, your best employees have already gone. Two sayings that apply here: 1) If you're not growing, you're dying 2) People don't leave companies, they leave managers Retention is all about opportunity: personal and organizational. A talented employee with many other opportunities must believe that those above them are beyond competent (providing room for personal growth) and that the company is trending in a direction to make vast organizational change. People, especially top talent, want to be a part of something larger than themselves. When Marissa Mayer started, that bought Yahoo time. They had the appearance of organizational change. Once that honeymoon period ended, however, there isn't much to hold a great employee to Yahoo. At this point, if the best people are leaving, how do you recruit other A+ players? You can't. People are the core of a company and Yahoo is many years down the line of rotting from the inside out.
- numair 11y ago
  > 2) People don't leave companies, they leave managers I would love to hear others' thoughts on this statement. It sounds good, but is it real? Would you stay at a company in whose purpose you don't believe, if you liked your manager?
  - tyre 11y ago
    To be clear, that isn't the assertion of that statement. It says that (in general) people who do leave, leave because of bad management. It does not say that people who stay, stay because of their managers. Your statement may also be true or false, but it is independent of the original.
    - systems 11y ago
      you seem to be the only one who got it right the opposite of something is not always true you wouldnt stay in a company because it have clean bathrooms but you will surely leave if it has dirty bathrooms having a good manager should be the norm having a bad one, is not acceptable easy
musesum 11y ago
I wonder if ordering workers back to office had a long term effect on moral? http://www.nytimes.com/2013/02/26/technology/yahoo-orders-home-workers-back-to-the-office.html?pagewanted=all&_r=1 http://www.nytimes.com/2013/02/26/technology/yahoo-orders-ho...
- joeax 11y ago
  Absolutely. If I were working there when this happened I would have started looking.
- jaggederest 11y ago
  That was when I knew it wasn't going to work. I personally know several people that I would gladly hire (if given the chance) who quit rather than move. Not only that, but the people who did have to move are going to resent the company for making them do it. It was really a stealth layoff, and anyone who had prospects elsewhere bailed out at that point.
msoad 11y ago
When your average CEO makes 200~300x more money than you, why should you be faithful? When you end up paying for executives screw ups and your salary is the first "cost" to cut of, why should one be faithful to Corporate America?
- jessermeyer 11y ago
  the CEO will not hesitate to fire you if it is in their best business interest. do not believe that being loyal to a company is accompanied equitably.
- phamilton 11y ago
  Why should you be faithful in any situation? The answer's the same: they pay sufficient amounts of money to compensate for the stress and effort.
  - Raptor22 11y ago
    Define sufficient.
    - prawn 11y ago
      Surely it goes without saying that "sufficient" in that case is defined by each employee?
      - phamilton 11y ago
        And confirmed by the fact that they show up to work.
- adventured 11y ago
  The average CEO in America doesn't make 300x more than the average employee. That's nothing more than bad propaganda. The top several dozen CEOs in the S&P 500 or Fortune 500 are solely responsible for causing that claim, by dramatically swaying the average (and only within the top corporations). Not only is the median much lower among that group, but the average American CEO only makes single digits times what the average employee does. The average CEO is not running a top 50 corporation, they're running a small business with less than 50 to 100 employees.
stygiansonic 11y ago
One quote in particular sticks out for me: "Others said they were actively looking for their next jobs — a task made more difficult because of the taint of failure that potential employers sometimes associate with anyone at the struggling company." For those with experience hiring, do you find this to be generally true? Would it really count as a black mark to have worked at a "failing" or "struggling" company, independent of your own experience/skills/accomplishments or would it really depend on the situation/candidate? I realize this isn't a black/white question and is likely more of a gray area.
- nzoschke 11y ago
  Not true in my hiring experience. A good hiring manager is trying earnestly to see how the candidate's skills fit into the job req, and how the personality fits into the team. The name of the company you worked for last is not really that important. There are talented folks on the market right out of school, from failed startups, and leaving boring or stagnant companies. I do suppose that experience at some companies, like AWS or Google, is a real bonus. But you need to be careful of this too. Experience at Google doesn't mean the engineer learned all the best practices and isn't a jerk.
  - hitekker 11y ago
    While that isn't true in my hiring experience as well, it's very true that, in general, people will trip over themselves for a chance to anonymously pass negative "honest" judgement on others. Especially if the person passing judgement has a position of prestige or power, i.e. it's a hiring manager in a company that just IPO'd. Another way of saying this is that any potentially negative detail on a resume will be invariably perceived as negative by someone. Not because it's right but because people are people.
- wsc981 11y ago
  "One Yahoo employee who was interviewed said she was praying to be laid off so she could collect a severance payment and move on with her life." Would you think this particular employee would be valuable? I think many of the best employees have already left. Good employees will easily find new jobs and won't need the severance payment, I would think. I think in general Yahoo employees will be less attractive for employers now, compared to perhaps half a year ago.
rudedogg 11y ago
Douglas Crockford (author of "Javascript: The Good Parts") shares some thoughts on Yahoo, and what he would do if he were CEO: https://www.youtube.com/watch?v=8HzclYKz4yQ https://www.youtube.com/watch?v=8HzclYKz4yQ
- Andrex 11y ago
  Thanks for this link! Haven't watched a good Crockford talk in a while.
rrrrtttt 11y ago
In my small corner of numerical computing, pretty much every name I know on the east coast who doesn't hold a university position has moved to Yahoo Research in recent years. So at least their research lab does not seem to experience a brain drain.
- chubot 11y ago
  Oh really, what field / subfield are you in? Do they have an east coast research lab or are the people you know moving to the west coast? They had a huge brain drain of their research lab like 4 years ago after some past company turmoil. Andrei Broder and dozens of other researchers left. They might be building it up again, but I feel it's unfortunate for those being hired, because research is usually one of the first things to get cut when a company is in financial difficulty. Research is long term, and Yahoo doesn't appear to have a long term plan unfortunately.
throwaway_exer 11y ago
Having worked at Yahoo a few times ... The press usually reports senior executives leaving as constituting a "brain drain." But if even the CEO's are worthless, as the last 5 have been, how can the senior executives be expected to have any brains? The real Yahoo brain drain is the loss of experienced engineers. And since option blocks are no longer offered to engineers, nobody with any experience is going to join. The only people left are long-time employees with old option grants, recent grads who got rejected from Facebook, and H1B's by the thousands.
- phamilton 11y ago
  Don't forget the acquisitions.
- x1024 11y ago
  Implying that H1Bs are less talented than american workers. Russia and China say "hi, lol, ignore us at own peril"
  - DrScump 11y ago
    That's not what was written. If that's your connotation, that reflects on you, not him/her. Throwaway_exer listed 3 categories of workers who don't have the same freedom to choose to jump as other workers and said nothing about their comparative talent.
    - x1024 11y ago
      Thank you. I did, in fact, misunderstand.
CrowFly 11y ago
There's a loss of faith outside the Company, too. I can't imagine anyone becoming an employee of Yahoo today.
jlebar 11y ago
I wonder what all this means for Mozilla, who tied their fate to Yahoo...
- chc 11y ago
  How did they tie their fate to Yahoo? I thought allowing Yahoo to buy the default search engine spot in Firefox was as far as the relationship between the two went.
wslh 11y ago
Can someone explain how Yahoo P/E is still high at ~121 ?
- malz 11y ago
  Because Qtrly Earnings Growth (yoy): -98.90%
akhilcacharya 11y ago
My question is where these Yahoo employees are leaving to (outside of Facebook and Salesforce).
csvan 11y ago
When I was in high school (2005-ish), Yahoo mails were everywhere, most of my friends used AIM, etc. I haven't used either for long now, but it's sad to see the company dying all the same.
jroseattle 11y ago
I was at AOL years ago when Starboard started a proxy fight with Tim Armstrong. They were "activists", which is to say they were looking for public support to break up and sell the company. Armstrong took them on and brought his own public offensive, explaining why the AOL long-term strategy was better than the short-term breakup that Starboard was touting. Armstrong prevailed in his quest and eventually Starboard bowed out, eventually selling a chunk of their position in the company. Two years later, AOL was bought by Verizon. Armstrong was a relatively strong leader in that situation. He was a salesman at heart and knew he needed to reinforce his strategies (however non-plausible those might have been) with the company, the Board, the shareholders and AOL customers. Mayer looks like none of that to me, and remarkably tone deaf against Starboard. Sorry to those Yahoos still hanging on, but Starboard are simply vultures for distressed companies. Not sure how long it will last, but the chances of an independent Yahoo being open for business in 3 years is really low.

151 points by scottfr 11y ago

Just scanning across headlines of the last few days: - San Francisco commercial real estate at record highs, passing NYC in price per square foot (which last happened just before things imploded last time around) - Multiple SF area tech companies running rounds of layoffs - VC funding took a nose dive last quarter - Quite a few unicorns or near unicorns having their valuation tank post-IPO, having a difficult fundraising round or seeing their valuations slashed on private markets One can debate if the Valley is in a full blown bubble, but seems increasingly obvious at a minimum there's a significant cooling off on the horizon.

Apocryphon 11y ago
It'd be nicer if the cooling down effect led to a plateauing of those record high rents, even if dropping is too much to hope for.
w1ntermute 11y ago
I think we can all agree that this year is going to be pretty ugly, both in the tech industry and the broader economy. With the Fed planning to hike interest rates repeatedly, the Chinese economy in a tailspin, and the VC bubble rapidly deflating, there seems to be little doubt that winter is coming. And it's not all the VCs and other pundits on Twitter saying everything's going to be OK that are going to suffer as a result. None of the problems that we caught just a glimpse of during the financial crisis were really fixed - they were just patched over with some spit and duct tape. The interest on that technical debt will have to be paid sooner or later.
- fratlas 11y ago
  Do you think this will seriously affect job opportunities for devs? I'm an almost-grad who switched from electrical engineering because the jobs were abysmal, and the bad luck seems to be following me :-)
  - w1ntermute 11y ago
    The fact that you know about this problem already puts you far ahead of all the people who are still unaware. The best option (if you're not a senior) is to do a summer internship, which leads to a full-time offer. The next best is to get interviews through personal referrals. If all else fails, whiteboard like crazy and do your homework on the companies you're applying to, which will be a lot (hundreds).
    - fratlas 11y ago
      I just assumed most devs would be worried about the potential affects of the bubble. Currently typing this from my summer intership, so your comment has given me so hope, thank you!
  - tsunamifury 11y ago
    Don't worry about it or listen to the HN doom-sayers, they like to exaggerate and self-aggrandize. Broadly -- software, the web, social products, automation, or advertising aren't going anywhere in the next two years. These are all driven by development and require developers. High competition markets might slow leading to not getting a massive out of school offer. But you'll get offers if you're looking. Honestly you're better off starting your career at a middle point or low point in the market rather than a high point. You'll be better calibrated for the ups and downs and you are far more resilient and flexible. I graduated in 2009, when there were no jobs and it was awful. I slowly climbed my way to Google and on into an exciting future.
    - pfarnsworth 11y ago
      You really have no idea. 2009 was mild for SV. The dotcom bust per-capita was worse than the autoindustry layoffs in the 80s. I lived through it. It was very hard, and some people I know were out of jobs for 2 years. Our company had half a dozen layoffs in 12 months and we shrank by 50%. If 2016 is half of what 2001 was, then most new grads won't get jobs.
      - 11y ago
- tootie 11y ago
  I don't get it. The Fed is raising rates because the economy is recovering.
  - dredmorbius 11y ago
    The Fed has two mandates -- its "dual mandate": 1. Control inflation. 2. Manage unemployment. They are, unfortunately, directly at odds. Fighting inflation tanks the economy (that's what Paul Volker did in the late 1970s, to tackle "stagflation", and Jimmy Carter's 2nd term hopes), and promoting employment tends to hot up inflation. Over the past 8 years, the Fed (and other central bankers) have dumped unholy amounts of liquidity into the global economy. That is, they've been "printing money", except that the Fed doesn't actually print money, it simply wills it into existence. It's done this after reducing its own lending rates (the prime rate) to effectively zero wasn't sufficiently stimulating the economy. It's slightly more complex than that: the Fed distributes that money by buying "assets" from major banks -- it's an auction process, but the goal of the Fed isn't to get valuable assets[1], only to manage how that money's introduced to the economy and keep tabs on its value by way of inflation, as I understand it. For whatever the reasons, inflation hasn't actually been a problem, though the reasons why are elusive, and several alternatives have been suggested: 1. The money's gone into financial instruments, including stocks and real estate. The rise in major stock market indices and the Fed's balance sheet (its money supply injections) pretty much exactly track one another. 2. It's gone into offshore tax havens. Last numbers I've seen are about $7 trillion from the US, and $25-30 trillion globally, from various sources. The ICIJ and The Guardian have run a multi-year expose on off-shore investment havens, and other financial sources have reported on this. 3. Chasing other investments. Silicon Valley VC money comes from somewhere, and much of it chases start-ups whose ultimate valuation is either advertising potential, or buy-it-to-kill-the-threat-to-us (WhatsApp's purchase by Facebook). Advertising's terrifying because a tremendous amount of it is financial services -- about 40% in "FIRE" industries: finance, insurance, and real estate. Pull the plug on easy money, and all three of those tailspin. Which gets us to why fighting inflation is seen as such a bad thing. Usually the argument given is "inflation hurts those with fixed incomes", by which most people think of the elderly on social security or pensions. But we've learned how to fix that: you index those systems to inflation, hence SSI's COLA adjustment -- the cost-of-living factor that boosts Social Security payments. Who really get hurt by inflation are those who are holding dollar-denominated assets. Lenders. That's banks, and holders of bonds (debt), which aren't themselves inflation adjusted. If you've got a home mortgage, inflation is your best friend, because it reduces the amount of your debt (in real terms) while your income increases. Banks, on the other hand, hate that, because their assets (your mortgage) falls in value. So: the Fed is raising rates to stem inflation fears, even though inflation's been fairly much a non-player. Probably because banks and other lenders / bondholders are getting nervous. And to give itself more maneuvering room. There's a whole bunch more in this, such as what money "really" is (in a functional / role sense, not the boring old fiat-vs-gold-backed debate), what, whether, why, and how economic growth is, can be extended, is justified, and is based on, and whether or not inflation is an unavoidable element of a collapsing economic system. On that last, the fate of the (specie-based) Roman denarius is quite interesting. But stay tuned. Things might get interesting. ________________________________ Notes: 1. Told to me directly by a regional Fed branch president in a public Q&A.
Animats 11y ago
Definitely a bubble, but this time, the VCs and private equity are the losers, because the "unicorns" haven't gone public. Not as bad as last time, because this time, most of the startups have at least enough revenue to pay their running expenses.
- soldergenie 11y ago
  Startup employees which took a pay cut in exchange for equity are going to be the biggest losers. At least VCs and private equity have some level of protection against a decline in valuation from their preferred shares/liquidation preferences. It won't protect them against bankruptcy, but it is a lot better than nothing. Employee's generally don't have that type of protection, and the liquidation preferences also decrease the value of the common shares after a down round. So even with a relatively modest decline in overall valuations, a lot of employees are going to end up with worthless options/shares after a down round.
  - hibikir 11y ago
    Hopefully that will be a good lesson that will hit the next group of young and bright eyed developers. It's not as if equity is necessarily bad, but unless you are a founder, you have ZERO control over what is going to happen to your equity. If the plan is not to exit after just a few years, you could be stuck for a long time, if just because without an IPO, you won't even be able to keep your equity if you leave, even if it's just because you can't pay the taxes. I think that educating recent graduates about what are the realistic outcomes of betting on equity. For every early google employee, there are thousands of people whose equity was worth nothing. Even options in big companies can be worth nothing, if they were handed to you at very high prices. When people learn the real risks, we'll see employees getting either a whole lot more equity, or salaries will go up. Either way, good for the industry.
riebschlager 11y ago
Everything you just mentioned, plus stuff like this[1] really make this seem like a bizarro replay of the 1920s. That does not bode well. [1] http://fortune.com/2015/12/16/yahoo-holiday-party/ http://fortune.com/2015/12/16/yahoo-holiday-party/
- deleted 11y ago
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cenal 11y ago
The VC bubble is already popping and it's going to affect this year but I don't think it will have as much of an impact on the economy as the Chinese stock market collapsing to more realistic valuations. Let's also keep in mind that the world is becoming more automated, not less, so this isn't going to be last time we see bubble valuations in our lifetime.
flylib 11y ago
VC funding announced in first week of 2016 is significantly more then first week of 2015 as a counter argument
castell 11y ago
Is the cooling off phase only in VC funded software companies in the SF area? Or also in Fintech, bio, med, etc? What about NY, London? Also what happened with public companies that had their IPO just a few months before the Dot-com bubble in March 2000? Are there good books about the Dot-com bubble? What is the outlook for SaaS companies? If there are less VC funded startups, should they focus on enterprise sales?

watmough 11y ago

My own impression of Yahoo from years back is that if something as critical as the YUI toolkit sucked, which it did, then Yahoo had limited prospects. Perhaps an odd thing to base an opinion on, but compare stock charts on Google versus stock charts on Yahoo. The Yahoo ones were clunky and sucked. Compare Yahoo Mail with GMail, and Yahoo sucked in comparison, being riddled with giant ad-banners. Even now, Yahoo search results suck, which is really noticeable when FireFox periodically resets my search engine to Yahoo. Suddenly my results suck, and back to Google I go. I don't know what Marissa Meyer has been doing, because it doesn't seem to be apparent in Yahoo getting better at anything really.

swingbridge 11y ago
Well strictly so far as the markets are concerned Yahoo the core company died a long time ago. Just happens that some previous executives made a few great investments (Alibaba) that paid off big. Per current market cap, Yahoo the company has a negative valuation.
drcode 11y ago
What's funny is I just bought Netflix stock solely because I saw how awesome their Falcor toolkit is.
- deleted 11y ago
  [deleted]

dawnbreez 11y ago

Why do so many execs rely on cutting jobs indiscriminately? They don't know who the problem workers are.

kasey_junk 11y ago
Because there is a lot of evidence that most employees are essentially fungible, at least at the scale of these large companies. I've literally been in a meeting where 1 team that was twice as productive as another was cut because that wasn't enough to make up for the fixed cost differential (rent, benefits, regulatory costs etc).
- bad_user 11y ago
  > there is a lot of evidence that most employees are essentially fungible In software development I don't believe it. This smells like wishful thinking from management for which non-fungible employees are a problem. I'd like to see the evidence you're talking about.
  - phamilton 11y ago
    There are many companies that openly hire for middle of the road developers. It's easy to do, just pay middle of the road salaries. In my experience at these companies, there is sufficient bureaucracy that high performers hit bottlenecks due to the org structure, reducing everyone down to the lowest common denominator anyway. So even an otherwise talented dev can be replaced by a less talented one.
  - effie 11y ago
    Why not? Software development is a technical work which can be performed by thousands of people on the job market. All it takes to replace someone at such a job is time and HR effort to find a person with required level of experience and reasonable pay requirements.
  - jaggederest 11y ago
    The problem is that you're assuming productivity is based on individual merit in these companies. They're so large that essentially nothing about your personal output has any real effect on your individual productivity. It's equal parts politicking, luck, and self-promotion that garners you kudos, not actually getting anything done. In a dysfunctional organization, like I daresay yahoo is at this point, you don't lose anything by firing people who are unable to contribute due to organizational problems. As an example, when I worked at AT&T, individual and project success was decided essentially based on the whim of management. I don't think we went 3 months with the same remit, organization, management structure or goals. In that kind of situation, much like I perceive Yahoo to be, there's really no point in attempting to achieve productive work since the targets change before you can actually do anything. It's pathologically better to focus on shifting blame and self-aggrandizement, so that when things inevitably fail you can dump it on a scapegoat. There's a reason I don't work there any more.

Animats 11y ago

"Last March, Ms. Mayer told the staff at an all-hands meeting that the bloodletting was finally over. Shortly thereafter, she changed her mind and demanded more cuts." Of course there's a loss of faith in the CEO. That's been a continuing problem with Meyer. She said Yahoo was getting back into search. (Yahoo resells Bing; Yahoo hasn't had its own search engine since 2008 or so.) That didn't happen. She said Yahoo was going into video. That was canceled. There were a bunch of acquisitions, many of which just disappeared. Nobody can figure out what Yahoo is really for any more. The company minus Alibaba has negative market value. It's that bad.

jrcii 11y ago
>Nobody can figure out what Yahoo is really for any more. This is the key to their problems. Companies need to be able to articulate very specifically: this is what we do and who we are. Everything else follows from there. Yahoo's answer to this is, "We're a media company" and no one knows what that means including Yahoo.
iofj 11y ago
One does get the impression Yahoo's being driven by activist shareholders at this point. The flipflops don't look like the CEO wants to change strategy, but are the result of political battles in the boardroom. Because the stock is tanking, there's a lot of change in the boardroom and then you have sudden shifts in strategy.
- cmurf 11y ago
  That's a micromanaging board, and no CEO should put up with that because as the most public face of a company it'll make the CEO look far worse than "the board". But OK, she's getting paid a metric f ton of money so maybe she doesn't care how bad the boards' micromanaging makes her look.
  - rdtsc 11y ago
    The longer she can ride the gravy train the better for her. So she probably will do whatever the board decides that week. (The Board):"Let's have more cuts" (Her):"Ok". (The Board):"We should buy a startup" (Her):"Ok." I can't believe she doesn't know or nobody told her the ship is sinking (or the gravy train is headed to a dead end). She knows it. But yeah as you said, at this point she is just playing the game of "let's see how long I can hang on here". In the end she can point fingers to "the board", "internal naysayers", "it wasn't much that could be done", etc, etc. The board can point to her. Employees and customers will point to both and so on.

tyre 11y ago

By the time the NYTimes runs this story, it's already over. Internally, employees know well in advance when a company is headed downhill. When I was at LivingSocial, the best employees left at what appeared (externally) to be the peak of the company. The trend was already apparent. Once you get to layoffs and press stories, your best employees have already gone. Two sayings that apply here: 1) If you're not growing, you're dying 2) People don't leave companies, they leave managers Retention is all about opportunity: personal and organizational. A talented employee with many other opportunities must believe that those above them are beyond competent (providing room for personal growth) and that the company is trending in a direction to make vast organizational change. People, especially top talent, want to be a part of something larger than themselves. When Marissa Mayer started, that bought Yahoo time. They had the appearance of organizational change. Once that honeymoon period ended, however, there isn't much to hold a great employee to Yahoo. At this point, if the best people are leaving, how do you recruit other A+ players? You can't. People are the core of a company and Yahoo is many years down the line of rotting from the inside out.

numair 11y ago
> 2) People don't leave companies, they leave managers I would love to hear others' thoughts on this statement. It sounds good, but is it real? Would you stay at a company in whose purpose you don't believe, if you liked your manager?
- tyre 11y ago
  To be clear, that isn't the assertion of that statement. It says that (in general) people who do leave, leave because of bad management. It does not say that people who stay, stay because of their managers. Your statement may also be true or false, but it is independent of the original.
  - systems 11y ago
    you seem to be the only one who got it right the opposite of something is not always true you wouldnt stay in a company because it have clean bathrooms but you will surely leave if it has dirty bathrooms having a good manager should be the norm having a bad one, is not acceptable easy

musesum 11y ago

I wonder if ordering workers back to office had a long term effect on moral? http://www.nytimes.com/2013/02/26/technology/yahoo-orders-home-workers-back-to-the-office.html?pagewanted=all&_r=1 http://www.nytimes.com/2013/02/26/technology/yahoo-orders-ho...

joeax 11y ago
Absolutely. If I were working there when this happened I would have started looking.
jaggederest 11y ago
That was when I knew it wasn't going to work. I personally know several people that I would gladly hire (if given the chance) who quit rather than move. Not only that, but the people who did have to move are going to resent the company for making them do it. It was really a stealth layoff, and anyone who had prospects elsewhere bailed out at that point.

msoad 11y ago

When your average CEO makes 200~300x more money than you, why should you be faithful? When you end up paying for executives screw ups and your salary is the first "cost" to cut of, why should one be faithful to Corporate America?

jessermeyer 11y ago
the CEO will not hesitate to fire you if it is in their best business interest. do not believe that being loyal to a company is accompanied equitably.
phamilton 11y ago
Why should you be faithful in any situation? The answer's the same: they pay sufficient amounts of money to compensate for the stress and effort.
- Raptor22 11y ago
  Define sufficient.
  - prawn 11y ago
    Surely it goes without saying that "sufficient" in that case is defined by each employee?
    - phamilton 11y ago
      And confirmed by the fact that they show up to work.
adventured 11y ago
The average CEO in America doesn't make 300x more than the average employee. That's nothing more than bad propaganda. The top several dozen CEOs in the S&P 500 or Fortune 500 are solely responsible for causing that claim, by dramatically swaying the average (and only within the top corporations). Not only is the median much lower among that group, but the average American CEO only makes single digits times what the average employee does. The average CEO is not running a top 50 corporation, they're running a small business with less than 50 to 100 employees.

stygiansonic 11y ago

One quote in particular sticks out for me: "Others said they were actively looking for their next jobs — a task made more difficult because of the taint of failure that potential employers sometimes associate with anyone at the struggling company." For those with experience hiring, do you find this to be generally true? Would it really count as a black mark to have worked at a "failing" or "struggling" company, independent of your own experience/skills/accomplishments or would it really depend on the situation/candidate? I realize this isn't a black/white question and is likely more of a gray area.

nzoschke 11y ago
Not true in my hiring experience. A good hiring manager is trying earnestly to see how the candidate's skills fit into the job req, and how the personality fits into the team. The name of the company you worked for last is not really that important. There are talented folks on the market right out of school, from failed startups, and leaving boring or stagnant companies. I do suppose that experience at some companies, like AWS or Google, is a real bonus. But you need to be careful of this too. Experience at Google doesn't mean the engineer learned all the best practices and isn't a jerk.
- hitekker 11y ago
  While that isn't true in my hiring experience as well, it's very true that, in general, people will trip over themselves for a chance to anonymously pass negative "honest" judgement on others. Especially if the person passing judgement has a position of prestige or power, i.e. it's a hiring manager in a company that just IPO'd. Another way of saying this is that any potentially negative detail on a resume will be invariably perceived as negative by someone. Not because it's right but because people are people.
wsc981 11y ago
"One Yahoo employee who was interviewed said she was praying to be laid off so she could collect a severance payment and move on with her life." Would you think this particular employee would be valuable? I think many of the best employees have already left. Good employees will easily find new jobs and won't need the severance payment, I would think. I think in general Yahoo employees will be less attractive for employers now, compared to perhaps half a year ago.

rudedogg 11y ago

Douglas Crockford (author of "Javascript: The Good Parts") shares some thoughts on Yahoo, and what he would do if he were CEO: https://www.youtube.com/watch?v=8HzclYKz4yQ https://www.youtube.com/watch?v=8HzclYKz4yQ

Andrex 11y ago
Thanks for this link! Haven't watched a good Crockford talk in a while.

rrrrtttt 11y ago

In my small corner of numerical computing, pretty much every name I know on the east coast who doesn't hold a university position has moved to Yahoo Research in recent years. So at least their research lab does not seem to experience a brain drain.

chubot 11y ago
Oh really, what field / subfield are you in? Do they have an east coast research lab or are the people you know moving to the west coast? They had a huge brain drain of their research lab like 4 years ago after some past company turmoil. Andrei Broder and dozens of other researchers left. They might be building it up again, but I feel it's unfortunate for those being hired, because research is usually one of the first things to get cut when a company is in financial difficulty. Research is long term, and Yahoo doesn't appear to have a long term plan unfortunately.

throwaway_exer 11y ago

Having worked at Yahoo a few times ... The press usually reports senior executives leaving as constituting a "brain drain." But if even the CEO's are worthless, as the last 5 have been, how can the senior executives be expected to have any brains? The real Yahoo brain drain is the loss of experienced engineers. And since option blocks are no longer offered to engineers, nobody with any experience is going to join. The only people left are long-time employees with old option grants, recent grads who got rejected from Facebook, and H1B's by the thousands.

phamilton 11y ago
Don't forget the acquisitions.
x1024 11y ago
Implying that H1Bs are less talented than american workers. Russia and China say "hi, lol, ignore us at own peril"
- DrScump 11y ago
  That's not what was written. If that's your connotation, that reflects on you, not him/her. Throwaway_exer listed 3 categories of workers who don't have the same freedom to choose to jump as other workers and said nothing about their comparative talent.
  - x1024 11y ago
    Thank you. I did, in fact, misunderstand.

CrowFly 11y ago

There's a loss of faith outside the Company, too. I can't imagine anyone becoming an employee of Yahoo today.

jlebar 11y ago

I wonder what all this means for Mozilla, who tied their fate to Yahoo...

chc 11y ago
How did they tie their fate to Yahoo? I thought allowing Yahoo to buy the default search engine spot in Firefox was as far as the relationship between the two went.

wslh 11y ago

Can someone explain how Yahoo P/E is still high at ~121 ?

malz 11y ago
Because Qtrly Earnings Growth (yoy): -98.90%

akhilcacharya 11y ago

My question is where these Yahoo employees are leaving to (outside of Facebook and Salesforce).

csvan 11y ago

When I was in high school (2005-ish), Yahoo mails were everywhere, most of my friends used AIM, etc. I haven't used either for long now, but it's sad to see the company dying all the same.

jroseattle 11y ago

I was at AOL years ago when Starboard started a proxy fight with Tim Armstrong. They were "activists", which is to say they were looking for public support to break up and sell the company. Armstrong took them on and brought his own public offensive, explaining why the AOL long-term strategy was better than the short-term breakup that Starboard was touting. Armstrong prevailed in his quest and eventually Starboard bowed out, eventually selling a chunk of their position in the company. Two years later, AOL was bought by Verizon. Armstrong was a relatively strong leader in that situation. He was a salesman at heart and knew he needed to reinforce his strategies (however non-plausible those might have been) with the company, the Board, the shareholders and AOL customers. Mayer looks like none of that to me, and remarkably tone deaf against Starboard. Sorry to those Yahoos still hanging on, but Starboard are simply vultures for distressed companies. Not sure how long it will last, but the chances of an independent Yahoo being open for business in 3 years is really low.