Yahoo’s Other Challenge: Retaining Acquired TalentBy Dow Jones Business News, April 30, 2015, 04:24:00 PM EDT AAA By Douglas MacMillan
A few times a year, Yahoo Inc. organizes dinners for the entrepreneurs who sold their startups to the Internet company and still work there.
The dinners are a chance for the more than 50 young stars–such as Nick D’Aloisio, the 19-year-old whiz kid who sold news aggregation service Summly for $30 million–to swap tips on how to navigate within a big company. Sometimes they also vent their frustrations to Chief Executive Marissa Mayer, said people who have attended the meetings.
Keeping happy this group, dubbed Foundrs, is vital for Ms. Mayer, who has relied on small acquisitions to replenish her workforce and save the company from Internet irrelevance. In just under three years, she has spent more than $2.1 billion to acquire 52 startups, more deals than any tech company but Google Inc. over the same period, according to CB Insights.
Ms. Mayer defends the strategy as necessary to reinvigorate a staff that was too dependent on stagnating legacy businesses. While the CEO has cut nearly 3,000 workers since 2012, she has added about the same amount over that time, many of them through acquisitions.
“If you actually look at the achievements of some of the people who have been acquired at Yahoo, you would argue [ this strategy] has been wildly successful in order to help change the products,” said Jacqueline Reses, Yahoo’s chief development officer, who oversees acquisitions.
As Ms. Mayer’s turnaround attempt drags on, her challenge will be to retain a jumble of acquired engineers, designers and product managers who may find a 12,000-person tech giant unappealing compared with life inside a startup.
“Yahoo is slow to change and bureaucratic, and that can easily frustrate individuals from startups that are used to doing things quickly, without having to check with HR or legal,” said John Sullivan, a professor of management at San Francisco State University.