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Can a ‘hard reset’ turn around Yahoo’s ship?

Yahoo Chief Executive Marissa Mayer (R) appears on NBC News' "Today" show in New York, February 20, 2013.


Steve Jobs? Sorry. Bill Gates? Not interested. Larry Ellison? Later.

None of those technology icons would have had a strong enough résumé to land a job at a company run by Marissa Mayer. If you're not from a top graduate school, there's no room for you at Yahoo Inc. That's the message the chief executive officer reportedly sent to recruiters recently at an all-staff meeting in an attempt to attract higher-calibre employees.

Ms. Mayer was first exposed to elitist hiring policies at Google Inc., where she made her mark as a programmer by helping develop breakthrough products such as G-mail and Google Maps.

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"That was the shtick at Google for a while and the joke in [Silicon] Valley is that's why they had to buy Android," said Steve Blank, who teaches a popular entrepreneurship course at Stanford University, Ms. Mayer's alma mater.

While Mr. Blank said he is a "big fan" of the Yahoo boss, he called her hiring plan "myopic," noting it would ultimately preclude hiring high-school dropouts such as Messrs. Jobs, Gates and Ellison (the leaders of Apple Inc., Microsoft Corp. and Oracle Corp., respectively).

"[With] A+ students, typically get you the smartest person sitting in the corner of engineering, not the person who's going to lead you out of the darkness," he said

Ms. Mayer, 37, was brought in to Yahoo to do just that, after the Web-search pioneer endured a 10-year slide that saw it eclipsed by Google, and later Facebook, as a top tech destination. Since Yahoo unsuccessfully attempted to buy both of those competitors – it offered $1-billion (U.S.) for Facebook in 2006 – critics say the company has lost its way.

"That ship is going in one direction and it's going slow," said David Vik, who spent five years building a vaunted corporate culture at online retailer Zappos, which instilled a four-day work week and encouraged employees to telecommute.

"Yahoo doesn't have a lot of stuff that's relevant. I love Yahoo Mail, but other than that I don't know what Yahoo does that's a commodity to me. There's nothing I can hold like an Apple iPhone," Mr. Vik said.

Apple would be a good case study for Ms. Mayer. Mr. Jobs brought it back from the brink when he returned to the company he co-founded after a 12-year hiatus. Mr. Blank said Mr. Jobs may have had the vision, but the key to Apple's rejuvenation was to surround himself with a terrific support staff that included current Apple CEO Tim Cook and Jon Rubinstein, who was pivotal in developing the game-changing iPod.

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"Steve came in with a vision and those guys executed," said Mr. Blank, noting that one of Mr. Rubinstein's first duties was to fire 1,000 engineers, whom Mr. Jobs had deemed irrelevant. "I don't know if [Ms. Mayer] has that, or can assemble that very quickly."

Google co-founder Larry Page also scrapped a bunch of projects after assuming the CEO reins from Eric Schmidt.

Last month, Ms. Mayer kicked a hornet's nest when she announced her plan to end Yahoo's long-held practice of allowing many of its 11,000 employees to work from home. The move was rebuked by high-profile entrepreneur Richard Branson, another billionaire dropout and founder of Virgin Group, who decried her stance on telecommuting as "old-school thinking."

That sentiment was echoed by Renee Shimada Siegel, a long-time Silicon Valley entrepreneur, who took shots at Ms. Mayer's maternal abilities in an opinion piece for, provocatively titled: "Why I feel sorry for Marissa Mayer's baby." She took Ms. Mayer to task for building a nursery next to her office while restricting the ability of other mothers at Yahoo to work from home. "It's as if 1985 called and wants its HR policies back," Ms. Siegel wrote.

Supporters say Ms. Mayer is just trying to change a broken corporate culture that has contributed to Yahoo's decade-long tailspin. "It's the short-term medicine that's required to kill the disease," said Brendon Wilson, director of project management at Nok Nok Labs, a cyber-security start-up in Palo Alto, Calif.

Putting an end to remote work is an attempt by Ms. Mayer to regain control of an entitled work force, which could ultimately lead to a thinning of the herd by attrition, he suggested. Accept the decision "or you're not part of the gang," is the message Ms. Mayer is sending, said Mr. Wilson, who for years worked remotely from his native Vancouver, before moving to Silicon Valley.

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Greg Cohn, a former Yahoo executive who left in 2011 to launch Ad Hoc Labs, lauded Ms. Mayer for having the guts to tackle the impact of absentee employees, which he blamed for the company's stagnation over the past several years.

"It is absolutely the case that people took advantage of slack management supervision there in the past, and it was a huge hit to productivity," said Mr. Cohn, recalling that it could take a week to schedule a face-to-face discussion. "That kind of culture can be really difficult to change without a 'hard reset.'"

The key question now for Ms. Mayer is whether that reset will be enough to change the perception of Yahoo in the minds of the engineers and program coders she hopes to steal from her Silicon Valley rivals.

"At the end of the day it's not going to be [about] any of the personality stuff," Mr. Blank said, noting that the only important question for shareholders is: "Did she have a focused and consistent strategy that brought in more revenue than when she was hired?"

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