The Market For Yahoo!'s CEO
Elizabeth CorcoranWho do you think will get the top job? Intrade and Forbes.com want to hear from you.
The stakes for picking the next chief executive of Yahoo! are beginning to mount--quite literally.
Online
market-predictions firm Intrade, in conjunction with Forbes.com, is
opening a market for people to speculate on the next chief executive of
Yahoo!
Forbes pulled together a list of candidates for the job. (See "In Pictures: Candidates For Yahoo!'s CEO.") And we want to hear your opinions, too.
Silicon Valley
has been rife with ideas about who could lead the Internet pioneer
since co-founder Jerry Yang said he would step down. Such speculation,
much like picking the Cabinet members for the upcoming Barack Obama
administration, spurred Intrade and Forbes to start a market that lets
people put down their predictions about who might become Yahoo!'s next
CEO. Intrade delivers not just the wisdom of the crowd but the
attitudes of those who care enough about an issue to put a little
something at risk.
Intrade, which launched its marketplace in 2001, has some 200,000 registered members. The number of active users is in the tens of thousands, says John Delaney, chief executive of Intrade, which is based in Dublin, Ireland.
Any one transaction is relatively small, on average about $25 apiece. (Intrade charges 5 cents per transaction.) But those stakes add up: Trading on contracts about whether John McCain or Barack Obama would win the U.S. presidency totaled $28 million. Pundits all across the political spectrum, from the Cato Institute to AEI Brookings, as well as the U.S. Federal Reserve, the European Central Bank, the Bank of Japan and the political candidates themselves have gotten data from Intrade, says Delaney.
"The markets we list for trading that fascinate people the most are highly correlated to current events," Delaney observes. Until the election, political questions drove activity on Intrade. Now attention has shifted to the economy, he says.
Here's how it works. Intrade opens a market, say, by listing the candidates for Yahoo!'s chief executive spot. Members then take a position on a "contract" that corresponds to the probability that they think the event will take place.
Each single contract, like a share, has a maximum value of $10. Winning trades close at 100 points (or $10). Losers get 0. Say you think that candidate A has a 10% chance of getting the Yahoo! top job, you would buy shares in that candidate at $1. If you're right, you will be rewarded with $9 per share you bought.
Precisely who gets
picked to run Yahoo! is attracting intense interest, particularly in
technology circles. Although the Internet pioneer has been perceived to
be adrift, it still boasts some of the highest traffic of any site on
the Web. Many--including the U.S. Federal Trade Commission--continue to
see Yahoo! as a significant competitor to Google
"It is a very big opportunity. Yahoo! is an extraordinary asset," notes John Battelle, chairman of Federated Media Publishing. Battelle conducted an onstage interview with Yang in early November at the Web 2.0 conference in San Francisco, less than three weeks before Yang said he would relinquish the CEO spot.
The question is inextricably bound up in what direction the board feels the company should take. In his conversation with Battelle at Web 2.0, Yang set off a fresh round of speculation by asserting that "today I'd say the best thing for Microsoft to do is to buy Yahoo!."
"Intrade is about providing transparency about what might happen tomorrow," Delaney asserts. And so far, Intrade's results are looking pretty good.
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