Yahoo Mess: More Proof That Media Companies Don’t Know Anything About Dealing with the Media

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Embattled Yahoo CEO Scott Thompson speaks at the Web 2.0 Summit conference on November 15, 2010, when he was president of PayPal; his bio on the Web 2.0 site still says he received a degree in accounting and computer science from Stonehill College.

And so it ends. This morning, All Things D’s Kara Swisher — whose stories about Yahoo’s crisis over the widely-circulated but false statement that its new CEO Scott Thompson earned a degree in computer science have made for compelling reading — reported that Thompson was stepping down. Yahoo has now confirmed it. The company has named veteran Internet executive Ross Levinsohn as interim CEO and said it’s allowing dissident stockholder Dan Loeb and two of his associates onto its board.

The whole saga began back on May 3rd when Loeb sent a letter to Yahoo disclosing the questionable status of Thompson’s computer-science degree, which was mentioned in his official Yahoo biography and had been listed in SEC filings.

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If you’re fond of Yahoo and rooting for it to reverse its fortunes — as I am — it’s a relief to see Thompson go. The once-mighty web company has suffered from a bizarre string of humiliating episodes dating back at least to February of 2008, when it failed to agree to Microsoft’s extremely generous, never-to-be-equaled takeover bid. If it had allowed Thompson to stay in place, it couldn’t have moved past the current disaster. And even if Thompson’s claim that he didn’t insert the bogus credential into his biography is true, the notion that he never noticed it over the course of more than a decade strains credulity to the breaking point.

Among other things, the Thompson disaster is a reminder that media companies such as Yahoo are often truly incompetent when it comes to something they should theoretically know better than anybody: dealing with the media in times of crisis.

When Loeb first accused Thompson of fudging his résumé, Yahoo blithely issued a statement which said that the false computer-science degree was “an inadvertent error” — like there’s any other kind? — and praised Thompson’s background and leadership. At that point, shortly after Loeb lobbed his bombshell, there’s no way that anyone at Yahoo other than Thompson could have known what was going on; the company should have declined comment other than to say it was looking into the matter and would report back later.

It then let Thompson send two inevitably-leaked memos to Yahoo employees in which he gave a classic non-apology and told them not to pay attention to the mess; both of the missives made Thompson and Yahoo look worse than they would have if he had said nothing at all. And then Thompson’s “explanation” — hey, it was somebody else’s fault! — was leaked, spurring Yahoo’s headhunter to release an angry rebuttal.

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The moment that I read Kara’s first story on all this, I figured out that Thompson was toast. I was wrong only in thinking that the endgame would come within a few days rather than a week and a half later:

(“Apothekered” is a reference to HP, the other big tech company that has a knack for being embarrassed, repeatedly, by its CEO choices.)

I’m not dredging up my tweet because I think I was prescient; I’m doing so because it was immediately, painfully obvious to a poorly-informed outsider like myself that he’d be forced to depart. Being inside Yahoo didn’t help clarify the situation. It apparently made it impossible to understand what was going on. (At least if you were near the top — I’ll bet the rank-and-file Yahoos instinctively understood what the outcome would be.)

If Yahoo had quietly and quickly assessed the circumstances, communicated with the outside world sparingly but clearly, and then booted Thompson out, it would have gotten praise for making the best of a truly dismal situation. Instead, I suspect, the phrase “inadvertent error” will remain a stinging in-joke in Silicon Valley for a long time to come.