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It’s Official: PayPal President Scott Thompson The New Yahoo CEO
AllThingsD reported late yesterday that PayPal president Scott Thompson would likely be named CEO of Yahoo. It’s now official; Yahoo just put out its formal press release announcing Thompson’s appointment.
In appointing Thompson, Yahoo is choosing a leader with a deeper technology and product background than prior CEO Carol Bartz who was abruptly terminated last September. In the interim Yahoo CFO Tim Morse has been serving as CEO.
Not going to sell itself now
There had been an expectation that Yahoo was going to sell itself or a significant minority stake to a private equity buyer or another company (perhaps even Microsoft). However the appointment of Thompson would seem to contradict that scenario. (Update: Yahoo Chairman Roy Bostock said in the Thompson press release that the company was still considering a sale of assets.)
Thompson was PayPal’s CTO prior to being named president. Before that he worked for a technology subsidiary of Visa. And before Visa he was CIO of Barclays Global Investors. The Yahoo board undoubtedly likes Thompson’s resume, which offers a diverse mix of skills and capabilities.
PayPal has been eBay’s most successful business unit of late, outshining its parent. Thompson’s departure from PayPal will be something of a blow but probably only a temporary one to the payments platform, which is seeking to establish a leadership position in mobile.
The larger and more important question is whether Thompson has the capacity to bring new vigor and focus to Yahoo, the company and the brand — both of which badly need innovation and energy. Another question is whether he’ll seek to bring in his own team or do any sort of reorganization. Numerous personnel changes and reorgs over the past few years have been damaging to Yahoo morale and momentum.
Confronting a range of challenges
Thompson and a renewed focus on product could help stabilize Yahoo. But what we might call “structural” changes in the online ad market (including the rise of Facebook and Google in display) have perhaps irrevocably eroded Yahoo’s once dominant leadership in its bread and butter segment: display advertising. Thompson is also going to be inheriting a search deal that has underperformed and failed to live up to revenue expectations for Yahoo.
What Thompson is not is an advertising or media executive. However current Yahoo EVPs Blake Irving and Ross Levinsohn can more than compensate in those areas, provided that they’re retained or stay, as the case may be.
Mobile is another area that Yahoo badly needs to focus on. While it had an early leadership position in mobile product development and advertising that has been entirely erased by Google in the past two years. Thompson’s knowledge of and experience with the mobile market may also be extremely helpful to Yahoo.
Does he have the right mix of skills?
I had earlier written that Yahoo needed to find its own version of Steve Jobs. That may be too much too ask. But perhaps in Thompson Yahoo will get a fresh start with a new CEO who has the right mix of knowledge, skills and temperament to pull the company out of its protracted slide.
Below is a video from the 2009 Web 2.0 conference in San Francisco at which Thompson spoke about PayPal and mobile payments.
Postscript: Yahoo has officially confirmed Thompson’s appointment as CEO. Yahoo Board Chairman Roy Bostock also indicated in the press release that the company is still considering a sale of some of its assets:
“Scott’s primary focus will be on the core business, and as CEO and director, he will work closely with the Board as we continue the strategic review process to identify the best approaches for the Company and its shareholders. As part of this process, Yahoo! is considering a wide range of opportunities for the Company’s business, as well as specific investments or dispositions of assets,” added Bostock.
Postscript II: Now a couple of reactions from financial analysts who cover Yahoo. They’re consistent, seeing Thompson as a positive hire but expressing some concern about his lack of experience with digital advertising.
Mark Mahaney, Citi:
We Are Marginally Positive On YHOO’s CEO Hire – Mr. Thompson was with PayPal for the past five years – he has been CEO of PayPal since 2008 and before that he was SVP and CTO of PayPal . . . We believe Mr. Thompson has strong technical and organizational skills (like Carol Bartz) and should bring that rigor to Yahoo!. His track record at PayPal was excellent. However, we are somewhat concerned that he does not have strong media/advertising experience, which we believe Yahoo! needs, given the structural issues surrounding the company’s Search and Display initiatives. And by selecting Mr. Thompson, Yahoo! is explicitly pursuing a Growth strategy, whereas we believe a Value strategy might be more appropriate.
Ben Schachter, Macquarie Capital (USA):
We’ve always been impressed with how Scott Thompson led PayPal, and believe that his experience and track record of execution rank him amongst the Internet sector’s more capable executives. YHOO should benefit from Thomspon’s leadership, but we must admit that we find the appointment somewhat surprising given Thompson’s background as a specialist in the online payments/technology space. YHOO has been in the midst of an identity crisis, unsure of its place on the Internet. We look forward to seeing how Scott defines Yahoo, but at this very early stage that vision remains unclear. All else equal, we would have preferred to see the Board hire a candidate with deeper experience in the online advertising/media space, but Thompson could surprise by defining and executing YHOO’s vision in an unexpected way.