Yahoo it seems is not doing well. They have significant YOY declines in advertising revenue. Their strategy for the past two years have been to acqui-hire talent, improve popular yahoo products, and bring exclusive content and media through acquistion or hiring folks. Yahoo thinks this will pay off in the end.

It seems like a great strategy. How could you lose by improving your services and products? Well, you could lose by not taking into account just how much those asset improvement would help your bottom line. In Yahoo case the ROI might take much longer than the the public market has an appetite for. The effects of those improvements might take 5-10 years, before people start saying “yahoo mail is cool”, “did you see that on flickr”. It also might never happen. Once a product or company is deemed uncool in the consumer market it is very difficult to make it cool. Especially when you have investor pressure from the public markets. Just ask Michael Dell.

There probably have been a few turnarounds in history of public companies, in which a old uncool company went to being cool. The only one I can think of is Apple. However Apple had a deep visionary and product person who was thinking about new products for a very very long time. It’s not like Steve Jobs just came into Apple optimized some things and turned things around. He was thinking about those problems for years and years. His experience at NeXT and Pixar, also helped.

For Yahoo time is not on their side. It just will take too long before people start saying Yahoo is cool, if ever. Shareholders are demanding quick improvements. In the short term, they can optimize and fix their ad platform asap, and buy them some time.

They can also think different and focus on some core strengths they have. Yahoo still is one of the highest trafficked sites on the internet and it has been for quite a while. They invented Hadoop, and have great experiences in building infrastructure and have solid engineers who have significant experiences in big data and scaling.

Yahoo should bring Hadoop home. With the AliBaba IPO money, they should buy a company like Cloudera and get into the enterprise big data and cloud business. They start being a consulting firm for big data focusing on Hadoop related technologies. They have authenticity and expertise in this area. The big data business will be growth enterprise business for years to come. At this stage they should make a pivot into being that business. They would be competing with firms such has IBM, Oracle, SAP, HP, Microsoft etc. With good execution they could grab a signficant portion of that market.

They should also sell off all of Yahoo products and rise a sizable nest egg to help them while they are transitioning into enterprise. This will get investors excited. Yahoo can tout how they know how to scale on commodity hardware and how they handle more traffic than any solution that HP, Oracle, or SAP has implemented. They should focus on Yahoo branded Hadoop, HBase, etc. Altough this strategy of turning enterprise to is risky, it presents new opportunity and it something that investors might get behind.