Henrique De Castro, former Yahoo COO


Henrique De Castro, former Yahoo COO


As has long been rumored, Yahoo COO Henrique De Castro is departing Yahoo.

I had reported last week that he was in big trouble — he was not in attendance at any major events at CES that Yahoo had at the high-profile event, as he had been last year — and was working on a story about his expected departure. Yahoo had declined to return a number of emails this week about his status.

Now we know why. According to a regulatory filing, De Castro is toast as of tomorrow.

Yahoo PR will likely try to put a pretty face on this departure. But he was fired, except he will get a very big severance per the rich contract he was awarded when he was hired in late 2012 from Google.

[Update: In an internal memo, Yahoo CEO Marissa Mayer confirmed the firing.]

Consider: His total compensation in 2012 was close to $40 million.

This is clearly a big correction for CEO Marissa Mayer, since De Castro was her first major hire to be her No. 2.

Interestingly, despite giving off the impression they did, the pair actually did not work closely at Google, according to dozens of sources there. Therefore, Mayer did not seem to grok the many signals that De Castro had a troubled time there near the end of his tenure.

Considered whip-smart and clever, the former business consultant also made a number of powerful enemies at Google, including top ad product execs Susan Wojcicki and Neal Mohan, among many others. In preparation for a longer article I was working on about him, I had done dozens of interviews about De Castro’s time there and few — even those who liked him (and he can be very charming personally) — were positive.

The move to remove him is also not unexpected within Yahoo and increasingly without. Insiders at the company had taken to calling him “Dead Man Walking” to me many times in recent weeks and De Castro himself had begun to reach out to many Internet execs for advice.

Ad industry people had also told me that De Castro had disappeared from the scene, too, despite a lot of prominent appearances only months ago. I saw him at a Silicon Valley event in December and he seemed less flashy and ebullient than he had been in the past. (He also talked to me, which is a Yahoo no-no under Mayer, so I figured something had to be up.)

Why jettison him now? Because Yahoo is set to announce its quarterly results later this month and most expect them to continue to lag the Internet industry badly once again. A person close to the Yahoo board had told me a week ago that De Castro’s fate would be settled before that report came out.

In addition, De Castro — who was a polarizing figure at Google, where Mayer had hired him from — quickly became the same polarizing figure at Yahoo.

Perhaps most problematic: In recent months, according to numerous sources, he and Mayer had developed a tense relationship that many in meetings with the pair found it hard not to notice. “They just did not get along and did not hide it at all,” said one person in several meetings. “It was really awkward.”

He had also been fighting for power with the new sales head Ned Brody, M&A head Jackie Reses and marketing head Kathy Savitt. In other words, everyone inside the Mayer inner circle.

In fact, Brody, a former AOL exec, had rolled his eyes to many who asked about De Castro’s absence at CES and his status. Savitt had been seeking control of Yahoo’s media unit, which had been under him. And Reses had long since grabbed Yahoo’s business development unit, another former De Castro charge.

In other words, “Boardwalk Empire,” but without the cool clothes and snappy banter.

Besides these interpersonal issues, perhaps most critical was that De Castro was unable to move the advertising business, which has continued to lag as Mayer’s two-year anniversary nears.

As I noted last week about De Castro’s looming troubles:

That pressure to perform in the advertising space has caused a lot of tension inside Yahoo, said a multitude of sources, especially between Mayer and COO Henrique De Castro. Sources present at a number of meetings both attended said the relationship had become less cordial than previously and that Mayer has begun to significantly insert herself in content and media efforts.

Mayer brought De Castro over from Google, where she was also an exec, last year, with the hope that he would be able to turbocharge the struggling ad business at Yahoo. Despite a giant paycheck she gave him and a lot of internal rejiggering, that has not happened as yet, and it has caused the persistent rumors of his departure to surface periodically inside and outside the company.

The noise has gotten louder recently, perhaps in anticipation of the fourth-quarter results, though he might be redeemed once Stream Ads kick in. In addition, De Castro still has not replaced former Yahoo media head Mickie Rosen — a key job — since last year, which has also prompted speculation about his ongoing role. Many sources said De Castro’s relations with Ned Brody and Kathy Savitt have also become tense, with Savitt angling to take over media and Brody more prominent as the face of Yahoo’s ad push. Brody came to Yahoo after a tussle with AOL, his former employer, to run ad sales.

Where all this jockeying — and it is just that, no matter what Yahoo PR puts out — leaves De Castro is anyone’s guess at this point.

Where it leaves him is with a big pile of Yahoo’s money for very little results.

Where it leaves Yahoo is without a No. 2, although I don’t expect Mayer to replace him.

Here is Yahoo’s filing with the Securities and Exchange Commission about De Castro:


Perhaps if the programing Yahoo is now using worked, maybe things would be different. Buy Mayer has pissed on every user by forcing NEO on them. NEO doesn't work. It's full of bugs. My dog could have written a better program. Mayer needs to leave before Yahoo is so badly destroyed that we will all leave.


She can't just blame Henrique and get away with the disastrous revenue performance. What is her strategy? Buying a bunch of silly startups?


People I know at yahoo despise Marissa


Look, I don't think she's a very good leader, certainly not a visionary nor a particularly strong line manager. But there's one thing the pixie with the smoker's rasp is not, and that's dumb. I think she knew exactly what a polarizing figure Henrique is and hired him to hedge her bets. If she and he were able to turn around the ad biz, she'd be hailed as some sort of genius for seeing behind the rough personality and grooming a star If they failed, she could hang him out to dry, and people like Kara would blame it all on Henriaue. And buy herself another year in the process.

Marissa has shown that she can spend hundreds of millions, even billions, on poorly-thought-out acquisitions. You really think she's going to lose sleep over this guy's golden parachute?


And despite this debacle Marissa Mayer will escape unscathed and unquestioned. Over $60 million for abject failure is not only a mark on De Castro but also on Mayer. There is no other way to sugar coat this; in one of her first major hiring decisions, she completely blew it. The best thing she can do at this point is to step up, take ownership of it and make sure it doesn't happen again.


She never takes ownership of failure.


@JayPeeWhy take ownership of failure when you can blame a fall guy?


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