Yahoo!'s Misguided Manifesto

Here again, Yahoo! should start with accounting for Garlinghouse's performance. Under his watch, Yahoo! Messenger let a huge opportunity for voice-over-Internet protocol, or VoIP, slip through its fingers as eBay snapped up Skype. And Yahoo Mail dropped behind Google's Gmail as the most prestigious Web-based email domain.

That performance has been more chunky than smooth, yet Yahoo! has gotten off easy. Earlier, Garlinghouse was CEO of VoIP leader Dialpad, which promptly spiraled into bankruptcy, but not before Garlinghouse laid off 90 of his 140 employees. A 2002 case study of Dialpad in the Harvard Business Review discussed how Garlinghouse struggled with a failed business model while rival Net2Phone won a $1.4 billion investment from AT&T as well as deals with Microsoft and Yahoo!.

Before Dialpad, Garlinghouse was a venture capital investor at CMGI, one of the most spectacular dot-com blowouts. Its stock has fallen from $164 in 2000 to $1.40 today. CMGI wasn't content to be an overvalued, money-losing Internet company; it wanted to breed dozens of them, some under the brown thumb of Brad Garlinghouse.

In 2003, Garlinghouse drifted into Yahoo!, where a signature deal was acquiring -- no kidding -- Dialpad to create a VoIP division you've probably never used. It's not clear if Garlinghouse owned any of the Dialpad shares that Yahoo! bought in the transaction, but Dialpad seems to have since morphed into one of the superfluous lines of business that Garlinghouse is now advocating shuttering.