When Marissa Mayer took over as Yahoo's CEO in July, the company was in desperate need of a new vision.
Earlier that summer, Scott Thompson, Yahoo's then-CEO, left the company amid a résumé fiasco just 130 days into his tenure. Thompson's departure was just the tip of the iceberg amidst company troubles: Yahoo's fundamental business has been tottering for several years.
In September 2012, Yahoo's yearly revenue growth clocked in at negative 1%, which was, sadly, a substantial improvement over its previous year's negative growth rate of 24%.
"There is a lot to do," Mayer noted a statement upon joining the company.
No doubt that strategy will include acquisitions, as Mayer proved last week when she put her first official "stamp" on Yahoo with Stamped, a New York City-based start-up founded in 2011 that lets users share things or places they recommend with friends.
"We're looking for smaller-scale acquisitions that align well overall with our businesses," Mayer said last week in a shareholder conference call. Specifically, Mayer said she is interested in acquiring companies for less than $100 million, an acquistion strategy made popular by Mark Zuckerberg (barring the billion-dollar purchase of the zero-revenue Instagram of course).
"I think one of the things that is lost on people is because so many of the high-profile tech acquisitions are above the $1 billion mark, people tend to think that tech acquisitions are all in that space, and that's just not the case," Mayer said. "Many acquisitions...are less than $100 million."
Yahoo has the money to the make plenty of deals, too.
Ken Goldman, the company's CFO, noted that despite lagging company growth, there's still "abundant liquidity" (to the tune of $2 billion) that the company can deploy.
"Our primary objective as a new management team is to leverage our assets, competitive strengths and available resources to transition this company from financial stability to a growth business," he said.
In other words, Stamped is probably just the first start-up to be acquired this year.
According to Mayer's statements, Yahoo's acquisition strategy will likely be focused on three core categories: content, mobile, and search.
Start-ups that deal in user-generated content are an obvious acquisition for Mayer. While CEOs of other large Web properties have focused on syndication deals and partnerships, Mayer believes the future lies in ownership of that content.
"I do think that there are some elements of content that we do need to own," she said. "I actually think it's also important to do user-generated content. For example, I think that Yahoo Answers is an undervalued property at the moment."
User-generated video site Vimeo, for instance, could be on the road to acquisition. In February, a source tipped off PandoDaily that IAC, which owns Vimeo, is looking for a buyer. Yahoo, which does not own a video vertical in the way Google owns YouTube, could be looking for new channels to beef up its video content.
Tiny start-ups that have drawnly intensely loyal, albeit niche, followings could also be in Mayer's sightlines. A good example of this type of potential acquisition would be Instapaper, a tool that lets users bookmark Web pages to read later, on whatever device they're using. And Circa, the "news experience" mobile start-up launched earlier this month by Cheezburger founder Ben Huh seems almost destined for an eventual acquisiton.
Another obvious acquisition target in user-generated content would be Quora, the question-and-answer site founded in 2009 in Palo Alto by Adam D'Angelo and Charlie Cheever. Rumors swirled in July that Yahoo was considering a purchase of thet 50-person start-up, but a deal never materialized. A Quora acquisition wouldn't be cheap, either. The company's latest round of fundraising gave the company a $400 million valuation.
"Integrations around Yahoo could drive traffic like they did for Yahoo Answers," one Quora user noted. "
Pinterest, too, could be a dark horse target for acquisition. In May, the site raised a round of funding that put its valuation at $1.5 billion, which would make the acquisition an order of magnitude above what Mayer would like to pay, but if Mayer is looking to make a splash in the Valley, Pinterest could be a huge one. (We're not the first to speculate about this deal, either.)
Mobile, too, will be a major initiative for Mayer and her vision of Yahoo's future. In her call with shareholders last week, Mayer noted that somewhere in the "near future," Yahoo will become a "predominantly mobile company," with half the workforce working under the mobile platform.
This is good news for a huge swathe of mobile-based start-ups and engineers.
"We do need more mobile engineers here," she said.
There's a few start-ups in this space that could make sense for an acquisition. Path, for instance, seems destined for a high-profile acquisition, but Dave Morin, the company's founder, insists he wants to continue to grow organically.
Flipboard, the Palo Alto-based social news reader, would dovetail nicely with Yahoo's news vertical, but like Path, Flipboard might be too expensive for Yahoo's strategy. The start-up has raised more than $60 million with a $200 million valuation, as of May 2011.
Lastly, Mayer intends to double down on Yahoo’s original value proposition: Search.
"Search is a core daily habit for all of us and a fundamental user behavior, the top priority for Yahoo," she said. "We'll focus on reshaping Search, driving smart distribution deals and making organic investments to grow our market share. There's a clear upside potential here, and it's time now to execute against it."
In other words, Mayer will likely be courting search start-ups that can beef up Yahoo's algorithmic chops in the ad-tech space.
One possible start-up that seems ripe for a Yahoo takeover is Criteo, a Palo Alto-based retargeting firm that has drawn comparisons to Google AdWords. Several rumors have been swirling in San Francisco about a Criteo acquisition. One source even phoned the San Francisco Chronicle with a terse line: "'Blue Horseshoe likes Criteo'--a reference to a scene from the movie Wall Street, where a banker calls a reporter to tip him off about a coming acquisition."
The elephant in the room, of course, is whether any of these start-ups will want to be acquired by Yahoo. A major challenge Mayer will be forced to overcome will be the stigma of Yahoo as a corporate, sterile environment, compared to the hacker-friendly halls of Google and Facebook.
Mayer sees things differently. "I've been hearing from various entrepreneurs and investors that people are excited at the prospect of potentially selling their companies to Yahoo," she said. "They think this is a great place great place for companies to land."
When pressed about attracting this type of talent, Mayer's candid response was candidly simple (or naive). How do you get the best talent? Give them free food!
"We've also begun to offer what is a standard here in Silicon Valley at top companies and start-ups: free food for our hard-working employees," she said.