Last night on CNBC’s Fast Money we had the founders of Aviate, a company that has developed a mobile home-screen that was recently acquired by Yahoo for $80 million, watch the interview here:
I had a few takeaways…
First, kudos to these guys for building something and selling it for $80 million. But, I would not be surprised to look back in a year or so and identify Yahoo’s string of Acqui-hires and pinpoint where their mobile/social strategy went wrong. For the last ten years the knock on Yahoo was that it was a has been as far as innovation and its ability to attract talent was impossible as the most skilled programmers were drawn to Google, Facebook and almost every other mobile startup. Yahoo CEO Marissa Mayer has stated on many occasions that Yahoo has gotten its mojo back and resumes from the best and brightest have been flooding in. Maybe that’s the case, but I am not sure Mayer trying to replicate the startup culture from over a decade ago at Google is going to do the trick. Making lots of patchwork acquisitions while making a bunch of 20 something hipsters very rich and then trying to integrate their nascent technologies and their personalities part of Yahoo’s culture may be a tall task.
As it relates to Aviate, they have created what appears to be a smarter home-screen than those on Android phones, and let me be clear – only on Android phones – as Apple would never allow a third party home-screen to takeover their operating system. So right out of the gate Yahoo has bought a product that excludes a massive part of North American mobile market share. This could speak what could be a growing rift between Apple and Yahoo as it was recently reported that Apple has chosen the Weather Channel’s weather app to replace Yahoo’s in this September’s iOS8 release.
Then there is Android, which is owned by Google. Yahoo is creating a product that is supposed to make the mobile Android experience better. How long do you think Google will let that last before they integrate the supposed best features of Aviate into their latest versions of Android. No one has been successful at these homes-screen overlays. Facebook tried it with HOME more than a year ago.
Sorry guys, this product is DOA.
One last thing, we discussed Yahoo for almost 5 minutes last night on the program, and not once did we utter the word Alibaba. Which probably implies that, at least for now, Alibaba is in Yahoo’s stock price. The roadshow for the deal should start in July and the rumor is that we see an early August IPO. But at this point, given Yahoo’s price action since Alibaba’s S-1 filing for IPO on May 6th and its F-1 filing on June 16th with updates to the prior filing, it seems pretty clear that investors are inclined to “Sell the News.” Especially if you consider the prior year’s positive performance had most to do with the rumor of impending Alibaba ipo. The 6 month chart below shows the fairly dramatic turn on NEW Alibaba news:
So maybe Mayer gets it right with some of the recent hires. Tumblr appears to the be the most promising, and to be honest I think they probably succeed there, but I don’t see Tumblr as a social network, more of a modernized blogging platform with more stylized social features. But the $10 billion question on most Yahoo investors’ tongues is whether or not Yahoo will deploy their Alibaba cash in an intelligent way as the company really has an amazing opportunity to re-invent themselves. A do-over so to speak.