When Marissa Mayer was snapped up from an executive role at Google to become Yahoo’s seventh CEO in less than five years, she was explicitly brought on to turn around the internet giant that has been struggling for the last decade.
Now, three years into her efforts to engineer that miracle, the critics seem to be calling her efforts a failure despite her repeated warnings that it would take years.
On Wednesday the company announced that it’s abandoning Mayer’s attempt to spin off its stake in the online Chinese e-commerce giant Alibaba and instead will try to sell the company’s core business. The news came after an activist investor, Starboard Value, had started signaling doubt about her original plan and pushing for the larger sale out of fear that the Alibaba spinoff wouldn’t actually secure the tax benefits everyone hoped for.
It’s a huge rebuke to the way Mayer has tried to turn the company around. Even as investors began asking about the idea of selling off the core business back in September, she stayed focused on making Yahoo great again. “We believe deeply in the future potential of Yahoo and the transformation we are pursing to bring an iconic company back to greatness,” she said at the time.
The pressure from an activist investor isn’t new for the company — it faced such a challenge from Carl Icahn in 2008 — but it’s an issue female CEOs are more likely to grapple with. According to an analysis by Bloomberg, just one of the companies in the Standard & Poor’s 500 index that have female CEOs has any of the most common defenses against hostile takeovers, compared to 23 percent of those with a male CEO.
The move might lead to Mayer losing her job. Investors have already started whispering that they’d like to see her go. One analyst said many of his investor clients have questioned whether her job is “stable,” while another went so far as to draw up a list of potential replacements for her.
Certainly Mayer has made questionable decisions in her attempt to right Yahoo’s ship. Acquisitions and new initiatives in search, mobile, and online video have cost the company hundreds of millions of dollars without generating growth in revenue or users. It spent $100 million on original video content, $42 million of which it has said it will write off. Executives have started leaving for other places. Sales and shares have both been falling this year. It’s expected to earn less than half of what it did the year she came on board.
Yet she may have been set up for failure from the start. The company grew to a multi-billion corporation by, as Nicholas Carlson wrote in an in-depth profile of its history, “solving a problem that no longer exists” for internet users, and getting it back to that kind of growth may have been impossible for anyone. She did manage to stabilize a company that had been in rapid decline and even notched a win in 2013 — Yahoo sites got the most monthly visitors out of other internet rivals for the first time since 2011. That was all after six other chief executives couldn’t figure out how to turn the company around. But she may have been doomed from the start. “History shows that struggling teach companies rarely regain momentum,” wrote Robert Cyran earlier this month. “Top engineers flee, new technologies and rivals are ignored and sclerosis sets in.”
As a female executive, this isn’t surprising. She seems to have faced down a phenomenon that has become familiar to the business world’s women. By being brought in to clean up a declining, messy company, she was perched on top what has become known as the “glass cliff.” Researchers have repeatedly found that women, as well as people of color, are more likely to be put in charge of a company when it is already experiencing troubling results, rather than in times of good performance. Difficult periods tend to make companies feel they need to try something new, like a CEO who isn’t white and male. It’s not impossible for these outsiders to engineer turnarounds, but the job is even more difficult than taking the helm of a healthy company. So women are also more likely to end up pushed out of leadership roles.
The people brought in to replace them are more likely than not white men. The story has played out for many other women. And it’s part of why there are so few women executives to begin with — particularly if women keep getting reputations for being bad managers when they were handed nearly impossible tasks to begin with.
If Mayer loses her job over Yahoo’s failure to retake its position as an internet giant, some of her own actions will certainly be partly to blame. But the biggest mistake she may have made was accepting the job in the first place. She will be another example of the many women who were asked to clean up a mess and then canned when they couldn’t.