The Facebook and Yahoo CEOs: Dumb and dumber

Posted by Rob Enderle

If Facebook has a core demographic, it is probably the 12-22 year old user the platform was originally designed around. However, we’ve been hearing for some time that the above-mentioned demographic is likely tiring of the service.  

This so-called Facebook "fatigue" was neatly illustrated early this month when the Pew Research Center released a report concluding teens were tiring of the service and losing interest. Interestingly, all this happened just before Yahoo bought Tumblr, an unprofitable social networking platform focused on a similar demographic. 

Yes, you read that correctly. Yahoo went and bought a customer base that is unprofitable with a two-year attention span -  announcing a plan to make the service profitable in about the same timeframe they are likely to lose those same customers. Now Facebook’s inability to retain customers is pretty dumb, but shelling out a billion dollars to buy the most fickle demographic in social networking is even dumber. Clearly, youth and inexperience are driving foolish behavior.

Zuckerberg the Fool

It is hard to point to a multi-billionaire and call him a fool, as building that kind of wealth isn’t the act of a foolish man. Nevertheless, failing to recognize you are in over your head and unnecessarily putting that wealth at risk is definitely not the smartest move. To be sure, Zuckerberg built a product for people he didn’t really understand, given he thought folks who  used Facebook were stupid. Actually the words he used were even more derogatory. While later comments suggest Zuckerberg has learned a lot since he made disparaging remarks, it appears his core beliefs probably haven't changed all that much.  

From his perspective, Facebook users are "Dumb F," and well, we’ll leave that word to his actual quote. Essentially, the problem is to effectively design and keep relevant a product you believe is only used by stupid people. This clearly makes the creation and success of the offering accidental - meaning Zuckerberg lacks the capability to understand and reach the core audience that Facebook currently serves. As such, it should come as little surprise that users are losing interest in the service. 

You can’t really, at least over a sustained period of time, retain customers you clearly despise. As such, Zuckerberg likely should have stepped out of the CEO role and passed it on to someone more socially inclined and thought better of his or her target audience.  

Mayer the Fool in Training

New CEOs are under a ton of pressure and Yahoo's Merissa Mayer is no exception.  Coming after a string of more experienced failed CEOs for Yahoo, her chance of being successful was pretty remote. Under massive pressure to make things happen, Mayer is clearly having leadership teething problems as reflected by her abuse of executive power in eliminating telecommuting and being the poster child for competitive mothering (the practice of showcasing just how good you are at favoring work over your kids).  

She has yet to articulate a strategy for Yahoo which was struggling with its future and clearly saw Tumblr, an increasingly popular unprofitable social media company as her Hail Mary. Unfortunately, she clearly missed the problems that MySpace suffered and Facebook is currently struggling with, namely retaining the young demographic. Yes, Meyer paid a huge sum to buy a customer base that is anything but loyal to brands, products, or even appearances for more than a few years at a time. This is largely because its members are going through massive emotional, educational, and social changes as they move between schools and into careers (or back home to mothers and fathers given the job market still largely sucks).    

So $1B out of her war chest to buy into a market that Facebook is showcasing as disloyal and difficult to retain suggests that while Zuckerberg is dumb, Mayer may be remembered as even dumber.  

Wrapping Up:  Lessons Learned

If you are going to run a company that sells something, the folks at the top should really have some expertise about what it is you are selling. So yes, the head of a social network site should have some kind of core social networking skills, meaning, an engineer likely shouldn’t lead the effort given social engineer is an oxymoron.  

The other lesson? Take a good look around before making a massive move like buying Tumblr. If the market leader is having issues because the very same customer base is fickle, then perhaps buying or building a service like LinkedIn which doesn’t have the same problem, or steering clear of social networks would be the better path.

Remember, Netscape failed trying to out Microsoft Microsoft as did Sun. Meanwhile, Yahoo almost failed trying to out Google Google, and Redmond clearly ran into a wall trying to out Apple Apple with Zune. Perhaps a better path is to go someplace where no one else has yet set up shop, kind of like Steve Jobs’ Apple did, along with Google and Microsoft, at least initially.

Frankly, it is somewhat funny how these highly paid folks don’t seem to get what should be a relatively easy and clearly demonstrated lesson - seeming like they would rather chase each other in a competition about who is the dumbest. Go figure.