What Marissa Mayer, Steve Ballmer, And John Sculley Have In Common?

Did you know in 2007, the co-founder and then CEO of Yahoo, Jerry Yang refuted an offer from Steve Ballmer to purchase the internet giant for $47 billion—62% premium over Yahoo’s then share price. Jerry wanted $53 billion; Ballmer refused, saving himself a lot of potential trouble, considering last month Verizon Communication acquired the same Yahoo for $4.48 billion, 10% of amount of what the ex-CEO of Microsoft proposed.

A greater part of the credit of sealing the deal with Verizon goes to Marissa Mayer. Mayer was brought in by Yahoo executive board with a lot of expectations. She had everything Yahoo needed at that time cunningness of Google, vision of Steve Jobs, and enterprise experience of Microsoft.

Google and Yahoo came into existence around the same time, year 1998 and 1997 respectively. Apparently, in their twenty years run, while Yahoo ousted six CEOs, Google had only two CEOs excluding the founder. Google’s first CEO Eric Schmidt still serves as the executive chairman of Alphabet, the parent company of Google led by Larry Page, the CEO of Google before Sunder Pichai arrived.

Former Googler, Mayer was handed over a company’s command that was irreparable. But the board saw Steve Jobs in her. The time she spent at Google — is remembered as one success after another.

After all, Mayer started off at Google spectacularly well, designing its home page, creating its product management structure, and becoming the face of the company. She became one of the most powerful people at one of the world’s most powerful companies.

Terrible decisions; wrong timing

The Apple founder returned to the company and restored its lost glory by launching revolutionary services and devices after another that transformed the second decade of 21st century. When Jobs took over as CEO in 1997, the computer company was at its all-time low, the stock slumped to a 12-year low, the cash crunch became severer and investor were losing interest. No doubt, Condé Nast Portfolio ranked the guy who fired him from Apple, John Sculley as the 14th worst American CEO of all time.

Two bald guys: Ballmer and Sculley exemplify how vulnerable even large organizations are from bad leadership. Ballmer stint at Microsoft is often called the ‘lost decade’ of the software giant. He did more damage to the company than good. I guess had he bought Yahoo back in 2007 for the ten times the price what it’s worth today, he would have been 14 points higher than where John Sculley is now on the worst CEOs list, Yahoo would cease to exist and Jerry Yang would have a place much above Mark Cuban, whose company, Braodcast.com, Yahoo bought on the cusp of dotcom bubble for $5.7 billion, ironically, a billion less than what Verizon paid for Yahoo itself. The deal made Mark Cuban an overnight billionaire. The comedy television series Silicon Valley’s character Russ Hanneman is closely inspired by Mark Cuban.

Fascination with wrong Acquisitions

Yahoo shut down much of its broadcast services in 2002 and broadcast.com has since been discontinued. Yahoo has a terrible history with acquisitions, almost every company they ever acquired is either shut or is about to. Under Marissa, Yahoo board approved 53 acquisitions for a total of $2.3 billion, including $1.1 billion for Tumblr. Many criticized Mayer for her wrong timing, insensible decision, bleeding investors’ money. For example, Google paid less than $50 million to buy Blogger, Tumblr’s biggest rival at one point.

Ballmer although made what Microsoft is today, in his fourteen years tenure as the CEO of Microsoft (2000-2014), he made some terrible decisions.

If Mayer’s senseless startup buying spree left you perplexed, Ballmer’s bad acquisition worth more than $20billion will send you shock waves.

Ballmer somehow convinced Microsoft board to approve $7.1bn acquisition of Nokia’s former Devices and Services business in April 2014, leading to various conspiracy theories.

According to a few sources Stephen Elop, the CEO of Nokia at the time of negotiations and an ex-Microsoft, had a good relation with Ballmer and a few board members since his time at Microsoft, which he used to gain traction with the members and ultimately to seal the multi-billion deal for a mobile company that was on the verge of bankrunpcy.

A deal that would write off $10 billion from Microsoft’s balance sheet three quarters later and will cause 18,000 to lose their jobs.

That’s not it, with aQuantive, Microsoft wanted to compete with Google, so it tunneled through its deep cash pile and purchased aQuantive, a digital marketing company for $6.3 billion, which will write off $6.2 billion from its balance sheet.

Ballmer had a habit of making mistakes over and again.

We all know what happened to Sculley’s pet project Apple Newton after millions went into its R&D.

Unwariness towards market trends

When Marrisa Mayer became the CEO, the market realities were quite different from what they were when she joined Google. Still started repeating her ex-employer’s strategy, every bit of it. She bought Tumblr. She over-invested on Yahoo Mail and, to everybody’s horror, Yahoo Messenger. She saw them as potential competitors to Blogger, Gmail, and Hangout. Perhaps, she was wearing Google Glass.

Sculley made the same mistake, he thought he can sell computers the way bottled soda is sold. He elevated the price of Macintosh from $1500 to $2500, making it out of bounds for an average person.

Ballmer developed a mobile App platform to compete with iOS and later, tried to sell smartphone running on it when the market had inclination towards iPhone and Android. He ignored everything that is going in the tech world and decided to take on the likes of Apple and Google hand-on-hand, trying to repeat Windows vs Macintosh history. That did not repeat nonetheless; The rest is history.

Amazon in the meanwhile developed a Cloud Platform, branded it under AWS. AWS went on to become the market leader in cloud computing business, making it most profitable business unit under Amazon.com. Microsoft is catching fast but with so much of enterprise experience it would have been dominating the segment today had it not intertwined in a pointless mobile war lead by Ballmer.

A lesson learn is a lesson earned

Today, history is not written in blood, but in valuation. We live in a world of hyperinflated prices that never see the day of light. Or the want doesn’t arise, not at all. Who had thought the very Yahoo that defined the web for us, will struggle to stand on its own one, Microsoft will support open source development and resort to distributing Windows free after years of war with pirates and spending thousands of dollar under “Windows Genuine Advantage” program. Or Apple, after Sculley’s debacle, will turn out to become the world’s most valuable company under the command of his founder CEO.

It’s the CEO who make or break a company. While a capable CEO can bring back a company from ashes, an unworthy turn even the biggest of companies to ashes. We have seen everything. The decision to select a CEO rests upon the board, which constitutes of humans; human who make mistakes.


Written by: Shahid Mansuri, CEO at Peerbits, one of the leading Android App Development companies.

Have you read?

peerbits

peerbitsVerified account

Digital Evangelists at Peerbits
Peerbits, a digital mobile solutions company, with proven expertise in delivering customized mobility solution for over 5 years.
peerbits
I wanted to say thanks... Knowledge is like a kiss. You must share it to enjoy it.
  •  
    13
    Shares
  •  
  • 6
  •  
  • 7
  •  
  •  
  •  
  •  
  •  
  •  

Leave a Reply

Previous ArticleNext Article