Yahoo Trying to Make Entrepreneurial Magic From Within

Yahoo has a new plan to compete with Google.  No, it isn't the much-hyped Panama.  It's a move to combat the perceived success at innovation at its Valley rival.  Yahoo execs decided that they didn't want to keep acquiring small startups as a way to get new ideas, but would rather incubate startups inside of the company.

To that end, they have created something called The Brickhouse located in downtown San Francisco rather than at Yahoo headquarters in Silicon Valley.  The effort is headed by Caterina Fake of Flickr fame and will reward employees who come up with successful ideas with some sort of financial bonus.  The terms are not disclosed in the Business Week account of the plan, but it suggests that while potentially significant it won't be on the same level as what an entrepreneur might receive in an acquisition.  Then again, the risk is lower for the employee since the have access to Yahoo resources, audience, and of course their regular salary while they're working on the new projects.

This week saw the launch of its first major project, Pipes.  Pipes appears to be a largely inside baseball play within the tech community with more of an infrastructure feel that a consumer appeal. 

The question is will Brickhouse work?  The article notes that similar concepts have failed in the past.  I've looked into the idea of creating a similar effort and decided it wouldn't work, though I don't have the resources of Yahoo at my disposal.

So will Brickhouse work for Yahoo?  Obviously only time will tell.  But it has some inherent problems:

• will entrepreneurial sorts within Yahoo with really great ideas find the benefits of Yahoo resources outweigh the potentially greater upside of going it alone?
• can an entrepreneurial effort really achieve its full potential when the pressure of survival -- and the strategic decision-making it forces -- is taken away?
• will Yahoo execs actually be able to create an environment that fosters the entrepreneurial spirit rather than smothering it?
• will Brickhouse projects be able to create the aura of magic around Yahoo that Google currently enjoys (fairly or not)?
• will the effort help retain bright employees?

This will be interesting to watch. 

For more reading on this check out: PaidContent.

Technorati tags: Google, Yahoo, BusinessWeek, Business Week, Caterina Fake, Flickr, Brickhouse, Pipes

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[Mark Vane]

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