Benner on Tech: Starboard Swipes at Yahoo

Katie Benner is a Bloomberg View columnist who writes about technology, innovation, and the cult and culture of Silicon Valley. She lives in San Francisco.
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People are Talking About…

Maybe every company gets the activist investor it deserves.

Starboard, the activist hedge fund that’s been dogging Yahoo, is back with more demands of the company’s management team. In a long letter, Starboard says that the company should focus on making the core of Yahoo -- its ad-sales business -- better. Specifically, the hedge fund wants Chief Executive Marissa Mayer to cut costs, license the company's intellectual property, sell or otherwise monetize its real estate, buy back stock and spin off Yahoo Japan in a tax-efficient manner.

Some of these suggestions -- such as cost cutting -- make sense, and the company has started winnowing down its very large workforce. Some of them aren't very creative, such as buy backs. Combined, these prescriptions show that Starboard is at just as much at loss as the company is when it comes to making the core of Yahoo better. These suggestions are all just different ways to futz with Yahoo at the margins and create near-term stock gains. But they do nothing to address the company’s anemic advertising business.

At least Starboard’s prior plan to merge Yahoo with AOL -- which is noticeably absent from this recent letter -- addressed some of the issues that are hurting Yahoo’s core business. It was a terrible plan to tie two struggling Internet brands together and “unlock value” largely through a series of massive layoffs, but at least it was about advertising.

Now, Starboard is upset about the fact that Yahoo shares have fallen since the company announced the Alibaba spinoff, and it wants some short-term gains. None of the stuff that Starboard wants now will significantly move the needle for Yahoo, except for maybe spinning off Yahoo Japan. That deal isn’t a bad idea, but it’s best done after the Alibaba spinoff happens later this year.

Fixing Yahoo is going to take hard work that won’t necessarily produce much stock appreciation over the next few months. If we don’t see real improvements to Yahoo’s business, especially in search and video, over the next few months, then I may start agreeing with Starboard’s take that the only way to make the company better is to milk it for near-term gains now and then sell it later.


Ellen Pao v. Kleiner Perkins: Yesterday Ellen Pao kicked off what could be days of testimony in her trial against Kleiner Perkins. Pao seemed poised on the stand yesterday, but the defense has yet to begin its cross examination, which is when the sparks will really fly. Check out Re/code’s live blog of the proceedings, the New York Times's take on how badly Kleiner looks in all of this, and the Verge on why the secret to successfully investing while female is to never complain. 

ClassPass is like a more elegant Groupon that could have a big, negative impact on the companies with which it partners, the New York Times reports.

CyActive, an Israeli cybersecurity startup, was acquired by PayPal for around $60 million, according to ZDNet.

Dollar Shave Club says that sales should hit $120 million this year, after hitting $4 million in 2012, $19 million in 2013 and $65 million last year, Fortune reports.

Gigaom, an influential tech blog, ran out of money and shut down, reports the Verge.

Periscope, a mobile-streaming video app, was acquired by Twitter, according to Business Insider. Deal terms weren’t disclosed.

Stitch, which makes an app for salespeople, was acquired by Salesforce rival SugarCRM, TechCrunch reports.

Venture investors may be less important to startups than they were in the past, a CB Insights report shows.

Google Ventures wants us to live longer, or even forever, Bloomberg reports.

People and Personnel Moves

Max Motschwiller left Kleiner Perkins Caufield & Byers to join the late-stage venture firm Meritech Capital Partners as a partner, Fortune reports.

Brooks Buffington and Tyler Droll, the founders of anonymous messaging service Yik Yak, talked to Gigaom about the growth of their app, competition and online bullying.



The watch is here! The watch is here! On April 24 it will be available in nine countries, and the most expensive model starts at $10,000. Bloomberg has a roundup of all the non-watch news that came out of yesterday’s event, including the even more affordable Apple TV. Apple Pay is now accepted at 700,000 locations in the U.S. The company’s streaming music service may be $9.99 a month after all, Billboard reports.

The company is giving its shuttle drivers a 25 percent raise and improving working conditions for drivers, reports the Wall Street Journal.


The company is shutting down FriendFeed on April 9, Re/code reports.


Media advisor Gordon Crovitz says that “Netflix is a poster child for crony capitalism.”

Security Watch

The White House’s proposed Consumer Privacy Bill of Rights is under fire from the Consumer Financial Protection Bureau for being too weak, the Wall Street Journal reports.

Media Files

HBO unveiled its streaming service, HBO Now, during Apple’s Spring Forward event, the Los Angeles Times reports. Starting next month, you can subscribe to the $14.99-a-month service using the HBO Now app, only on Apple devices.

John Malone wants his Liberty Media to buy Universal Music Group from Vivendi, the New York Post reports.

Kevin Spacey will produce and narrate a six-part CNN series called "Race for the White House," reports CNN/Money.

News and Notes

Vodafone hopes that its new maternity-leave policy will support female leaders, Bloomberg reports.  All female employees around the world will get a minimum of 16 weeks paid leave and full-time salaries for 30-hour workweeks for up to six months after they return to work.

Gulf states are turning to tech in an attempt to diversify their economies away from oil, Bloomberg reports.

China’s largest tech firms’ executives are often members of the parliament, too, reports the Wall Street Journal.

After ruining our ability to spell and write complete sentences, online communication is now warping our syntax, writes journalist Clive Thompson.

Big data is having a hard time penetrating the world of government stats, FiveThirtyEight reports.

America needs its own emojis, argues the New York Times.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.