4 ms·

My knowledge of business at this level is incomplete. What would be the implications of replacing Yahoo's board of directors?

gizmo 18y ago
Depends on the people you appoint. If you get a combination of technical people and business people who both want Yahoo to thrive as an underdog all will be good. Yahoo will stay independent and will probably do some great things in the next few years. Without Yang the new board will have to prove itself, so you can expect the new board to spend a lot of money in research/acquisitions. When a company is fighting for its survival you can expect great things to happen. So with a new board Yahoo will have to innovate and surprise us all. If you appoint people for one purpose (selling the company), then that's exactly what will happen. Because the purpose of a merger between Microsoft and Yahoo is (partially) an "increase in operational efficiency" Ballmer will definitely get rid of thousands of jobs (= save money). Therefore, before the merger happens a lot of good people will leave (for google) and a lot of mediocre people don't want to wait for the axe to fall. The stock would normally crash as a result, but the promise of MS buying Yahoo will keep it reasonably healthy. (If MS walks away after the board is changed Yahoo is fucked.) So MS buys Yahoo, the shareholders and board of directors get their money and wall street is happy. Ballmer will start handing out pink slips and save billions. MS shareholders will be very happy. So in the short term the MS-Yahoo deal works out for everybody. MS and Yahoo shareholders get more money and a lot of waste is cut out of Yahoo. Okay, it doesn't work out for the employees who become redundant, but that's to be expected. On the long term it doesn't look so great. The merger will make it even harder for MS to adapt to changes as it becomes even bigger, and squabbles within MS will make it harder to get anything done for everybody. The entire deal is basically a short-term versus long-term issue. Either you want to cash out now (and sell Yahoo) or you want to wait it out and hope things get better. Yang, as one of the founders, thinks long term and stays positive. Investors and shareholders, by their very nature, think short term. Hence the conflict.
- rw 18y ago
  "Okay, it doesn't work out for the employees who become redundant, but that's to be expected." This is actually, you know, a really bad thing for them. They have families and no trust funds.
  - gizmo 18y ago
    I'm not trivializing the matter. Nobody likes to fire and nobody likes to get fired. But a lot of people are let go after every merger - that's just how it works. So if a merger makes sense financially then you have no choice.
    - raganwald 18y ago
      There's a very specific fiduciary responsibility with public companies. There are widows with some of their retirement savings invested in tech stocks like YHOO, and the board must act in their interests. I suggest that with YC-scale businesses there's a very different dynamic. Imagine starting such a thing, building it to 100+ employees, and then selling out in such a way that 75+ of your folks are let go by the buying company that just wanted the technology and/or customers. When you go to start your next venture, the VCs will ask how the last one went, and when they hear about the payday for shareholders, they will shower you with money. Everyone likes a winner. But when you go to recruit talent, and they ask you how the last one went, what do you plan to tell them?
      - mattmaroon 18y ago
        Well, ideally your employees who were let go would make a nice chunk off of stock options. Not FU money for the latter half most likely, but a business with 100 employees will generally sell for a pretty good chunk of money.
      - gizmo 18y ago
        You're not making much sense. There's no secret. Nobody's hiding anything. So I would tell them the truth. What could I possibly achieve by lying in the scenario you describe? You're suggesting that people would rather work for somebody with no experience and no money than for somebody who has already built and sold a successful venture? I don't get it.
deleted 18y ago
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gizmo 18y ago

Depends on the people you appoint. If you get a combination of technical people and business people who both want Yahoo to thrive as an underdog all will be good. Yahoo will stay independent and will probably do some great things in the next few years. Without Yang the new board will have to prove itself, so you can expect the new board to spend a lot of money in research/acquisitions. When a company is fighting for its survival you can expect great things to happen. So with a new board Yahoo will have to innovate and surprise us all. If you appoint people for one purpose (selling the company), then that's exactly what will happen. Because the purpose of a merger between Microsoft and Yahoo is (partially) an "increase in operational efficiency" Ballmer will definitely get rid of thousands of jobs (= save money). Therefore, before the merger happens a lot of good people will leave (for google) and a lot of mediocre people don't want to wait for the axe to fall. The stock would normally crash as a result, but the promise of MS buying Yahoo will keep it reasonably healthy. (If MS walks away after the board is changed Yahoo is fucked.) So MS buys Yahoo, the shareholders and board of directors get their money and wall street is happy. Ballmer will start handing out pink slips and save billions. MS shareholders will be very happy. So in the short term the MS-Yahoo deal works out for everybody. MS and Yahoo shareholders get more money and a lot of waste is cut out of Yahoo. Okay, it doesn't work out for the employees who become redundant, but that's to be expected. On the long term it doesn't look so great. The merger will make it even harder for MS to adapt to changes as it becomes even bigger, and squabbles within MS will make it harder to get anything done for everybody. The entire deal is basically a short-term versus long-term issue. Either you want to cash out now (and sell Yahoo) or you want to wait it out and hope things get better. Yang, as one of the founders, thinks long term and stays positive. Investors and shareholders, by their very nature, think short term. Hence the conflict.

rw 18y ago
"Okay, it doesn't work out for the employees who become redundant, but that's to be expected." This is actually, you know, a really bad thing for them. They have families and no trust funds.
- gizmo 18y ago
  I'm not trivializing the matter. Nobody likes to fire and nobody likes to get fired. But a lot of people are let go after every merger - that's just how it works. So if a merger makes sense financially then you have no choice.
  - raganwald 18y ago
    There's a very specific fiduciary responsibility with public companies. There are widows with some of their retirement savings invested in tech stocks like YHOO, and the board must act in their interests. I suggest that with YC-scale businesses there's a very different dynamic. Imagine starting such a thing, building it to 100+ employees, and then selling out in such a way that 75+ of your folks are let go by the buying company that just wanted the technology and/or customers. When you go to start your next venture, the VCs will ask how the last one went, and when they hear about the payday for shareholders, they will shower you with money. Everyone likes a winner. But when you go to recruit talent, and they ask you how the last one went, what do you plan to tell them?
    - mattmaroon 18y ago
      Well, ideally your employees who were let go would make a nice chunk off of stock options. Not FU money for the latter half most likely, but a business with 100 employees will generally sell for a pretty good chunk of money.
    - gizmo 18y ago
      You're not making much sense. There's no secret. Nobody's hiding anything. So I would tell them the truth. What could I possibly achieve by lying in the scenario you describe? You're suggesting that people would rather work for somebody with no experience and no money than for somebody who has already built and sold a successful venture? I don't get it.

deleted 18y ago

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