What Would You Do If You Ran Yahoo?

George Steinbrenner, controversial owner of the Yankees, bought the team for $8.8M in 1973, with just $100,000 of his own money. When he passed away last week, the franchise, according to The Economist, was estimated to be worth some $1.3B. Having grown up a Red Sox fan, I may not like his team or tactics, but one has to admire what Steinbrenner built. He took an asset that had lost its shine and made it incredibly valuable — not to mention putting together one of the game’s greatest teams in the process.

Speaking of assets that have great potential, what would you do if you had the chance to run Yahoo? Talented serial entrepreneur Niel Robertson posed this intriguing question yesterday evening over dinner. (Congratulations to Niel who just publicly announced Series C funding from Google Ventures for his crowd-sourced paid search company Trada.)

From an operational perspective, there’s a lot of blocking and tackling, of course. A little more efficiency on a business the size of Yahoo can generate a lot of return. Or, as Geoff Moore puts it, figure out what’s core and what’s context. But ultimately, operational efficiency alone won’t make you a market leader – if that’s your goal.

You could try to merge with another player: eBay, for example. But that seems complicated  to pull off, and even if you succeeded, to what end?

Great technology companies are great at one, maybe two things. For Microsoft it was the operating system and Office. For Oracle, the database. For Google, search, then search plus advertising. For Apple, mobile, then mobile plus media. The question is, what can Yahoo or MySpace be great at?

Yahoo, certainly, has a lot of assets, and two in particular: access to data that lets it monetize better than almost anyone else, and a very large audience. That audience, properly monetized, could be incredibly valuable.

The ad industry is ripe for consolidation.

Yahoo could offer the best alternative monetization solution to Google. The Avis to Google’s Hertz. Start with the Right Media asset and the access to users via its content and search offerings and build out from there.

Acquire the best behavioral targeting, data, optimization, placement, and conversion solutions around. Deliver the smartest monetization offerings from acquisition to conversion to measurement, first across all Yahoo properties, then across every property on the web. Continue to build out the non-search audience – for example by picking up Demand Media and smaller (1M+ users) offerings. Focus on two core assets: monetization and audience aggregation.

There’s only one George Steinbrenner, of course. The kind of turnaround Steinbrenner pulled off takes an ability to envision a triumphant future in the face of great doubt by others in the present. What would you do if you ran Yahoo?