The Best Interview with Jerry Yang since his Promotion

Yang insists he's the man to make Yahoo click

From today's Telegraph. 12:44am GMT 30/10/2007

Jerry Yang is already pacing the carpets of Duran Duran when I enter. He had the choice of any of the meeting rooms on the sixth floor that are named after 80s pop groups, but Duran Duran it is.

Other floors of the non-descript red-brick building on Shaftesbury Avenue that comprises Yahoo's UK headquarters are named after icons, music festivals and beaches, but the opportunity to speak to the company's new chief executive on Bondi Beach are denied me.

Such details, along with table tennis tables and bean bags, are the signs of the frivolity that once defined internet companies in the heady era of the late 1990s, but for Yahoo at least, the days of such levity are long gone. That would explain Yang's apparent eagerness to get started.

He's on a whistlestop tour of Europe to explain his new vision for Yahoo – a vision that, it has to be said, has been sorely lacking over the past few years. During a period in which Google has almost doubled to around $675 a share, Yahoo's share price has stagnated and remains below the $35 at which the stock started 2005.

Yang founded Yahoo as a college project 13 years ago but has only recently, after the resignation of Terry Semel, been recalled to take the helm. But he insists that it would be inaccurate to talk about "what went wrong" at Yahoo under Semel's stewardship.

"If you look at Yahoo over the past few years, we have been generating revenues north of $5bn and operating cash flow of over $1.9bn, so people shouldn't look at companies with that kind of profile and ask what went wrong. Yahoo today is a great consumer brand, one of the strongest brands on the internet."

But Yang is far from blind to the challenges ahead and is conscious of the criticism the company has faced in recent years. It has been attacked for being complacent, for failing to appreciate the changing face of the internet, and crucially, for failing to keep pace with arch-rival Google.

Yang appears slightly sensitive about the issue. "People probably overplayed Yahoo's position to be able to do something about that and underplayed how truly good Google is at taking a technology and building a business around it."

Nevertheless, that's the kind of success Yang must now try to emulate and he admits Yahoo has been slow to rise to the challenge in the past.

"Obviously, we feel we have not been able to capture all of what is going on in the internet marketplace. In search, we find ourselves doing OK, we are not thrilled with it but we are not out of it. One of our determinations has been, 'How do we get Yahoo back on the growth track?'
Consumers are starting to be more open in the way they choose their internet experience, whether it is through social networks or more user-driven activities and we want to be more exposed to that. We can be growing a lot faster than we currently are and do a lot better than we currently are."

After taking over as chief executive, Yang embarked on a 100-day strategic review to establish how to do exactly that and, now the review is over, he has highlighted three things. He wants Yahoo to become the internet starting point for consumers; to become the "must-buy" platform for advertisers; and to be the internet platform that attracts the most software developers.

In an acknowledgement of the famous "peanut butter" memo, in which one Yahoo executive accused the company of spreading itself too thinly, Yang admitted: "We have taken this idea that we can do two or three things well and not a thousand little things. It probably means we won't focus on a bunch of other stuff. We are in that process of identifying what makes it and what doesn't make it."

Yahoo has already signalled it is assessing its options for Kelkoo, its shopping comparison site, and it may stop creating much of its own content. But that has not been enough for some Yahoo watchers, who have accused Yang of merely tinkering at the edges and failing to address the real problems.

"People keep looking for big announcements," he smiles. "If that's what is required, we'll do it, but we are rational and logical about how we are doing it. This is not a one-day or one-week kind of thing. You have to look over the next two or three years and I think that is going to define a very different company.

"There is an amazing amount of work we have done already to move from a business that a year ago was primarily about generating a consumer experience and page views. We primarily sold it with our own sales team. Where we are headed is a still very strong consumer proposition but with a sales solution for not only our network but also a broader set of partners on and off our network and on mobile devices. There are still a bunch of places that we have to change and that is why we are emphasising that Yahoo is still in transformation."

And Yang is convinced that if he does it right, he can wean people off Google. "We have to find that core value proposition that we really feel consumers will come to Yahoo for. There are a lot more things we can do to improve that."

One of them, he says, is to improve the social networking element of Yahoo, but he has no regrets about failing to land a stake in Facebook, either last year, when Yahoo was said to be in talks with the business, or more recently, when Microsoft bought a stake for $240m.

"If you look at what Microsoft got, which looks like a little more than 1pc of the company and they get to sell advertising on Facebook, that obviously made sense to Microsoft, but..."

I suggest he doesn't think the Seattle software giant got a good deal, but Yang is diplomatic in his response. "It takes a buyer and a seller and once you make the deal you make the deal.

"We have a very good partner in Bebo which is probably one of the strongest social networks around. We understand a lot about what social inventory ought to do and how people are monetising it and hopefully we can be quick to take advantage of our knowledge."

Likewise, Yang is unwilling to talk about News Corp, with whom Yahoo was said to have discussed selling a stake in itself in return for MySpace earlier this summer. "I am not going to rule anything out. If there are the right deals or the right combinations of assets we would look at it, but my goal is to make Yahoo stronger and healthier."

As for Terry Semel, Yang still refers to him as his mentor, despite his departure as chief executive. "For him, it was a moment in time thing. He felt like he had got the transformation started but he also recognised that, in order to get it where we needed to go, it was quite a bit more execution and hands on, and that wasn't what he wanted to do in this phase of his life."

Now that Yang is back running the company he founded, he says he has brought a "sense of urgency" to the job.

"We have to make some pretty quick decisions," he says. "We have to potentially change the way we do business at Yahoo and change how we approach building our products. We need to keep trying and changing things until we get it right."

Yang concludes by insisting he is the right man to lead the turnaround. "I understand where the company has been; I understand the history; and I certainly hope I understand what the future is." Yang's fellow shareholders certainly hope so too.

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