Yahoo had realized that its own auction site, which it started after eBay, was lagging its rival. The companies began exploring a possible deal. Whitman wanted to report directly to Koogle, adding that while Koogle had no problem with that, Mallett insisted the veteran Hasbro executive should report to him.
EBay declines to comment on the talks, as does Yahoo. Bob Kagle, an eBay director and a general partner at Silicon Valley venture firm Benchmark Capital, declines to discuss the talks but says: "Yahoo had a very defined culture that they're very proud of and comfortable with.
Among other things, they were not comfortable with the impact that integrating another large and successful company might have on that culture. Koogle, asked about critics' suggestions that Yahoo's top-management insularity is now a weakness, said the CEO search was the answer.
The search adds to the growing list of challenges facing Yahoo. Its sales force is struggling to replace the tens of millions of ad dollars dot-coms were lavishing on the portal just a little over a year ago. Some of its international operations, considered critical to growth, are in turmoil: The heads of four Yahoo international units have resigned in the past month.
Last week, it adopted a shareholder-rights plan to fend off any such attempt. The top-down style worked fine in a rising market. Yahoo had no trouble luring talent. It was still small enough that top executives could be personally involved in many matters.
As recently as a couple of years ago, Siminoff and Singh were negotiating all the ad deals themselves, sometimes bringing in Mallett to close them, ad executives say. When the dot-com boom arrived, Yahoo was besieged by companies begging to advertise on its site. It went on a hiring binge. From employees in , it went to in and 1, in That's when Yahoo's management style began to look like a liability, some advertisers say.
The Yahoo spokeswoman notes that several of the company's general managers are responsible for the financials of their units.
She says Yahoo believes very strongly in "pushing decisionmaking down to the lower levels. Yahoo acquired lots of other Internet companies, but it became apparent to executives at these companies that their input wasn't welcome in the inner circle. The result was that Yahoo lost some of the sort of talent that it badly needs today, now that old economy realities are hitting the young company.
Take Thomas Evans, chief executive of GeoCities, a company that operated a network of personal home pages. A former president of U. In several meetings, Yahoo's top brass tried to persuade Evans to accept a midlevel job developing relationships with advertisers, the Journal reported, offering him far less responsibility than he had hoped.
In one meeting, Evans warned the young executives they were alienating the clients they would someday need the most. Referring to the company's aggressive sales tactics, he said: "People hate you.
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