Yahoo’s Experimental Labs Are On The Verge Of Shutdown

February 2, 2016 - Written By Daniel Fuller

Yahoo didn’t have a great 2015 and, if things don’t improve soon, 2016 won’t look much better. CEO Marissa Mayer has been forced to make a few tough decisions, including tons of layoffs and even outright shuttering offices. It shouldn’t come as much surprise, then, that their Yahoo Labs venture, similar in nature to Alphabet’s Google X, is underperforming severely, warranting the possibility of doing away with it entirely. Yahoo Labs works on ventures like artificial intelligence, speech recognition and other things outside the company’s core business sphere. The floundering division is Yahoo’s foothold outside of their key market, allowing them to play around with new trends and create their own. As much as it may open up Yahoo’s portfolio, it seems like Yahoo Labs may be on the way out. Mayer is apparently determined to save it, though. After previous CEO Scott Thompson almost shuttered it in 2012, Mayer came in and gave it a bump up in the form of 250 employees in 7 countries by 2014.

In many ways, this makes Yahoo Labs Mayer’s pet project, but on a much larger scale than normal. More than a pet project, however, Mayer saw labs as a place to experiment with ideas like machine learning that could help core business eventually, as well as a way to recruit the cream of the crop, eager to prove themselves on challenging and innovative projects. Unfortunately, financial constrictions in 2014 forced Mayer to hand down orders to shut down any project not directly related to Yahoo’s core businesses. On top of being relegated to cash cow projects, frustrated lab workers, some of who had relocated across countries, wound up as some of the biggest targets for the coming storm of layoffs. A former employee recalled those times, saying, “We had hired a lot of people, and in some cases, relocated them to the US from elsewhere with families — and 18 months later, they were part of this recurring layoffs… By the end of 2014, it was clear the storm was raging.”

Yahoo’s financial situation simply couldn’t justify the existence of Labs any longer, but as a ground for innovation, Mayer is continuing efforts to save it. One former employee chimed in on the matter; “With research, you could spend years on a project and nothing could come out of it… But Yahoo’s not in a position where they could wait several years for some breakthrough technology.” Another issue was cross-department chemistry, as well as credit for work. Another former employee gave their two cents, saying, “Personal chemistry between the product unit leaders and the Labs managers involved comes into play. Some engagements were very successful and harmonious, and some weren’t,”. With the company for sale, the fate of Yahoo Labs is still up in the air for the moment, but things don’t look good for the out-of-the-box venture center, should Yahoo’s current financial woes continue.