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Microsoft and Yahoo!s post-acquisition cultures

And so it happens – Microsoft bid to buy Yahoo for 44.6 billion dollars this morning at $31 dollars a share (considerably above yesterday’s closing price for Y! stock). But this is not a post about economics but innovation, company mindset and culture. Microsoft and Yahoo are two very different companies – and having visited both their headquarters in the past in Redmond and California, it is hard for me to imagine how things will evolve if the deal goes through.

Microsoft is a huge company, with a culture that’s very different from Y!s. It offers products that fit into a very traditional mindset, whereas Yahoo was trying to change from that into a culture based on innovation, more in touch with its hacker roots. The Yahoo Brickhouse effort (which I’m a huge fan of) in particular, was a great example of that shift.

How companies react to mergers, acquisitions and new additions to teams has been one of my interests for a while. In theory, diversity fuels innovation because each company will have it’s own set of practices and answers to problems. This fuels discussion and hopefully the emmergence of a new set of signature practices on the new – and definitely more purple – Microsoft. This is quite likely a good thing for them.

What I wonder about though, is how some of the people now at Yahoo – who don’t particularly enjoy the Microsoft mindset – will react to this piece of news. Or how the stockholders will react. I guess we’ll see, but it’ll be an interesting next few days.

If you want to read up on the news of the acquisition bid, check the press release, the coverage at Techcrunch, or Techmeme, that will likely be on fire today.

8 comments
  1. Pedro Custódio says: February 1, 20083:58 pm

    Fred,

    it’s just as you write, I honestly think that it’s going to be extremely difficult to say no to such [brutal] proposition of value.

    Personally I think that we can only benefit from diversity in cultures from both companies and all the other out there, what makes them unique also guarantees a decent flow of innovation and values. The way I see it the side effects of having a mono-culture can only help limiting our options, kill innovation or somehow dramatically under mine it.

    It’s going to be interesting as you mention to witness how two very different cultures may merge together, looking at a positive side of this and if it indeed goes thru, the result is unpredictable, of course, but an injection of the counter culture in yahoo and it’s openness in Microsoft can only do wonders, no?

    Strange Friday I would say…

  2. Alan Wilensky says: February 1, 20086:38 pm

    Big clash of cultures. Very.

    I have contacted a few mid level management people at Yahoo who could be described as, ‘Yahoo Purple Lifers”. They have intimated that they will stay and work to make any cultural changes to the organization, and I quote, “as painful as possible for the new Microsoft directors and division Veeps, short of insurrection”.

    I’ll try and write something up on this attitude that seems pervasive, on my blog, over the weekend. There has been plenty of bitterness over the layoff’s already.

  3. Paul Bennett says: February 3, 20089:49 pm

    Best case scenario is MS will help Yahoo actually *make money* and Yahoo will help MS grok cross-browser web development (if there’s any communication between web teams in both camps).

    Worst case scenario is that MS will just consume Yahoo and the Yahoo as we know it will disappear (alomng with it’s recent innovations) as just another bland MS branded ‘product’.

    This would be a real shame. Although I don’t like everything Yahoo do (the new Yahoo mail is a bit of a leap backwards in usability terms) I do love their recent all-out innovation attitude. The developer tools they’ve released are top-notch and the involvement with the web community as a whole has been fantastic. MS have shown that a bit more too, with their UIE7 / IE8 development, but nowhere near the extent that Yahoo have.

    With Yahoo’s embrace of open-source and a heavy reliance on PHP, will this mean MS will be changing platforms like they did when Hotmail moved to IIS? Will MS just end up porting their web developers over to Yahoo when their open source web teams decide to leave for greener pastures?

  4. Matthew Griffin says: February 4, 200812:55 pm

    I don’t see this being a good match for anyone—especially us. When behemoths join forces to become even larger behemoths, we are the ones who eventually suffer. Beyond that, though, I just think it’s a bad match. Different corporate cultures, different mindsets, different aims. You name it and it’s different.

  5. Daniel Barradas says: February 6, 200812:47 am

    The way I see it M$ is just saying “we suck big time at web and we failed miserably in our attempts”. No surprise there.

    Was there any other choice for them? They are burying them selfs year after year. Microsoft always bought/copied their way up. The copy part on the web failed. They’re buying. At a killer price too. Not a “big” surprise.

    Since the announcement I’ve been asking myself who else could they have bought?

    Have you seen Google’s David Drummond post? Even they are afraid. And with good reason too.

    Personally I think that if the deal goes through (and unless US government steps in because of some kind of monopoly it will go through – too much $$ at stake) it will be bad for everyone. Y! will lose. The end user will lose.

    Microsoft is a dominatrix kind of corporation, they’re not pro open source and Y!s culture will probably die. Why? Because M$ won’t change. M$ has been the same for several years. You rarely hear of them in the news for the right reasons. They use and abuse. It’s their way.

    And although I understand M$’s move. I don’t really know if Y!s employees won’t create a mayhem (like Alan Wilensky hinted before).
    Will M$ finally get its “piece of the cake” to battle google. In the end it just might backfire.

    But I tell you this much … I really hope I’m wrong and the deal won’t go through.

    Just my two cents :)

  6. Goncalo Fonseca says: February 8, 20083:33 pm

    Money vs Culture?
    Between them, I think both will gain something: Money!
    I fail to see what we will gain from this: Culture.

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