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Will Yahoo, Twitter find success in rebooting business?

Yahoo is working on streamlining its strategy, while over at Twitter there's a new permanent CEO. What’s making these tech giants adjust how they do business? Hari Sreenivasan talks with Jon Kelly of Vanity Fair.

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  • GWEN IFILL:

    This has been a busy couple of weeks for some of America's biggest tech companies. Many have been releasing their profit reports. For some, the time has come to find a way to reach a larger audience, earn more money, and stay relevant to an ever-changing market.

    Hari Sreenivasan, in our New York studios, has that story.

  • HARI SREENIVASAN:

    If you look at your news feed in the technology section, there's been plenty of news about Apple earning billions of dollars off of iPhones and other devices.

    But other big names, particularly Twitter and Yahoo!, are trying to adjust their approach. Yahoo!'s chief executive, Marissa Mayer, said she will soon launch a plan to streamline her company, which now finds itself using Google for some search and advertising results.

    Over at Twitter, there's a new permanent CEO, Jack Dorsey. He's a co-founder of the company and charged with broadening Twitter's appeal at a time when Snapchat and other apps are rising.

    Jon Kelly is a contributing editor at "Vanity Fair" who covers this sector, joins us now.

    So, let's start with Twitter first. I mean, there's almost this Jobsian mythos, right, about the founder coming back to save the company, to take it to the new heights. And where is Twitter, and why has it sort of seemed to have fallen out of favor?

  • JON KELLY, Vanity Fair:

    Well, there certainly is a Jobsian mythology.

    And, in part, that's because Dorsey and Twitter want to promote that sort of mythology, certainly for very obvious reasons. But Twitter suffers from the same sort of problem that Yahoo! has. It was a hot company in its past, and it's struggling to recapture that heat and to satisfy the expectations of its investors, who expect that it will.

  • HARI SREENIVASAN:

    And it's not a new start-up. It's a 10-year-old company. Right? And so when you start to think of 10-year-old companies, you think of like, wow, Facebook has really taken off in this almost same amount of time.

  • JON KELLY:

    No, it's true. It's very funny. In the modern tech landscape, a mature company, an old company is 10 years old.

    So Twitter at year 10 is trying to recapture the growth that it experienced its first few years in the public market. And that may be an impossible job as it looks for new users and it looks for new audiences and it looks for new ways to create revenue streams out of new products, like Moments, which they recently unveiled.

    It's possible that Twitter may be a successful company. It's also possible that it's a boring company.

  • HARI SREENIVASAN:

    There was a fascinating article just a few days talking about it is still used by the "ists," the journalists and the activists, right, but nobody else.

  • JON KELLY:

    Yes, Right.

  • HARI SREENIVASAN:

    Lots of people come to visit Twitter, but they don't seem to stick around. And so I guess Moments is an opportunity for them or trying to capture those first eyeballs?

  • JON KELLY:

    Well, Twitter's real heat owes itself to its role during the Arab Spring, which I think made it a truly international force for democracy.

    It was what a Silicon Valley company hoped to be. It hoped to change the world and make it a better place. Now people find that Twitter is kind of cumbersome and tricky to use. It's a place for people to communicate. It's very hard to bring in new users when you are saying to them essentially, you have to start to follow hundreds if not thousands of people to get live news.

    So, Moments hopes to reclaim Twitter space in that universe and in the news ether and to play a bit of catchup to what Snapchat did. And they seem to think that they have some heat there and some opportunity because indeed they're already trying to get revenue against this.

    So, clearly, they see this as a big part of their next year, and if not the next two or three years in catching up revenue.

  • HARI SREENIVASAN:

    Speaking of revenue, Yahoo!, not a small company, not a small amount of revenue. What, is it a billion dollars or so?

    Compare that, though, in the eyes of normal shareholders, Apple and the massive mounds of cash that they're sitting on, right? What's Marissa Mayer's report card now? Shareholders have given her a pretty long kind of lead time and said, fine, here's a checkbook, go buy a bunch of companies, if that's what you think it's going to take.

    But Yahoo! hasn't performed the way that they thought that it would.

  • JON KELLY:

    Well, in a funny way, Mayer reminds me of Dorsey. She's somebody who was given perhaps an impossible job. Yahoo! is truly a first-generation Internet company. It came of age in the early '90s. How many of those companies still exist? Amazon, eBay, but few others are still around.

    So, it's not surprising that Yahoo! is looking back toward its glory days. Now, the hiring of Mayer was seen as this almost transformational opportunity. Her first day on the job, she was literally greeted with Shepard Fairey-style Obama hope posters with her face on them.

  • HARI SREENIVASAN:

    And you can go nowhere but down after that.

    (LAUGHTER)

  • JON KELLY:

    No, I know. It's tough. Ask the president.

    But I think that they felt she and only she could deliver a transformative product, their own version of an iPod, their own version of some sort of Jobsian fantasy brought to life that would transform the company. And you know what? It's very, very hard to do that.

    And, indeed, Mayer had this three-year air cover, where Alibaba, which they owned a 50 percent stake in, was going to go public. So, she had three years in which to operate and roll out some hot product. And it hasn't happened.

    And in January, the Alibaba spinoff occurs, and then Yahoo! is truly wearing no clothes.

  • HARI SREENIVASAN:

    On its own.

  • JON KELLY:

    It's on its own.

    It does earn revenue of about $1 billion a quarter. That's about what it hit in this most recent quarter. And there are certainly many companies that would love that kind of revenue, but not in the Valley.

  • HARI SREENIVASAN:

    So, the shift — also, she emphasized mobile when she came in and trying to make Yahoo! much more mobile-friendly, because the world has moved to those platforms, and is not as P.C.-centric or as laptop-centric as we used to be.

  • JON KELLY:

    Yes. Right.

  • HARI SREENIVASAN:

    Right? So, has that worked? She's also made some big acquisitions.

  • JON KELLY:

    Right.

    So, Yahoo! was, in all fairness to Marissa Mayer, nowhere on mobile when she arrived in 2012. And that's a scary proposition. So, when you think about the billion dollars in revenue that Yahoo! earned this quarter, compare it to Apple, which essentially created the smartphone, and made $50 billion in this quarter, and you get a sense of where people are reading.

    And, indeed, Twitter, which is focused on catching up to Snapchat and WhatsApp, its — all of its mission is attempting to get on to the phone in front of you. That's where more than half of the audience is.

    And that's where Mayer has been — certainly, she's tried to be as prodigious as possible in creating new products. But when she arrived, Yahoo! Mail didn't even have a functioning application on the smartphone.

    So, it's very, very difficult to see what their long-term expectations are.

  • HARI SREENIVASAN:

    All right, Jon Kelly of "Vanity Fair," thanks so much for joining us.

  • JON KELLY:

    Thank you.

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