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    Finnegan's Wake

    (April 10, 2002) - In conclusion to the fastest search on record, Dan Finnegan was named to the Hot Jobs CEO slot earlier this week. Finnegan, until moments ago, was Knight Ridder's head of Interactive stuff. A seasoned political player with media company expertise (and roots as a journalist), Finnegan is an interesting choice for the job. Given his involvement in the CareerBuilder acquisition, one wonders if Knight Ridder uses non-compete agreements or if there is a murkier back-room agenda brewing.

    As a long time player in the newspaper industry, Finnegan brings the biases and social networks of the newspaper industry more squarely into play in our universe. While we can readily imagine the comfort of a decision to lead off with a vested corporate insider for Yahoo's senior management, we wonder if the idea doesn't add insularity while granting Monster an incredible competitive advantage. We can imagine a good deal of smirking around the halls of TMP as the stories of CareerPath, the recent CareerBuilder coup, and the many botched newspaper investments are recirculated.

    Clearly, Yahoo envisions a traditional classified advertising revenue stream that expands rapidly in the near term. The proposition, we suppose, is that HotJobs sales calls will now include mentions of Yahoo. What the players seem to have failed to recognize is that this is, effectively, a new brand launching in a space with competitive branding investments.

    An explanation is probably in order. Yahoo is an incredible media brand with a great deal of traffic. Skippy is an incredible peanut butter brand with millions of buyers. Neither Skippy nor Yahoo have a meaningful brand in the employment space for several reasons that include the historical lack of a product in the market and the absence of brand investment in our unique universe. To make a product or service credible, there is some traction available from brand extension. But, the proposition that Skippy or Yahoo actually provide value remains to be proven in day to day combat. That means that Finnegan is about to take on the chore of creating a brand that will have to be built out of the equity of two existing brands. 

    It's a rookie idea that will swallow more investment than it returns in revenue in the short and medium term. To grasp this better, ask yourself whether or not you think Daimler is going to invest much in making the case that their Jeep brand is really an offshoot of Mercedes. We think not. That's just not a good way to do brand management.

    Add this to the fact that CEOs who immediately follow founders have an unusually short life expectancy and the raw politicization of newspaper owned entities (can you imagine the recent Headhunter coup in a real company?) and you have a recipe for a soap opera. Unfortunately, Yahoo needs raw revenue.

    The newspaper's approach to the market is still a rich kid's approach to toys. Even though the online marketplace has taken a huge chunk of revenue away from them, they still behave as if it were a big company problem. (What's a billion or two in revenue?) They have consistently failed to understand the fundamentals of wealth creation and, as a result, wasted Billions of dollars in the failed defense of their incumbency. There are useful alternatives, but they build capital at early stage entrepreneurial rates and thus fail as investment candidates.

    For Finnegan to succeed, he'll need to spend some time with Richard Johnson and Dimitri Boylan. Their shirtsleeves management approaches, including attendance at every career event and a working knowledge of the sales development process will be foreign territory. Meeting Yahoo's needs for cash will require growing the brand nearly independently of the new ownership in spite of the fact that the Yahoo brand is so prevalent elsewhere.

    In the national marketplace, it's not a Coke-Pepsi brand war. The silly people who claim this perspective have not really digested Pepsi's ad budgets. It's a Coke - Yoohoo (the chocolate beverage) brand war. Describing it as Coke-Pepsi assumes that the players share a belief in advertising and have similar brand strength in the exact same markets. Brand extension simply works better within markets than across them. Jeep can introduce a new model more effectively than Daimler can imprint itself even in the narrow automotive market. HotJobs is a better standalone play than a Yahoo brand extension.

    The good news for Finnegan is that his skills in navigating policy terrain will come in extremely handy as he manages the conflicting messages from headquarters. It is extremely clear that he'll spend nights dreaming about hiring a numbers oriented COO who drives sales. 

    - John Sumser © TwoColorHat. All Rights Reserved.



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    Materials written by John Sumser © TwoColorHat. All Rights Reserved.
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