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Exactly one year ago to the day, I wrote about Yahoo being a casualty in the search war. The war has taken its toll and Yahoo is on life support today.
It all began when Jerry Yang made the catastrophic mistake of hiring Terry Semel in 2001. Terry had a backward view of the world. His experience was in Hollywood where everything was packaged. The internet business, however, is like a “live play” where you have to think on your feet. And thus, he was not equipped to move Yahoo forward as he was lost himself. He did not even know what email was when he came to Yahoo and he was baffled when employees would send email. He thought they should just pick up the phone and call or walk over to their desks to talk to each other.
Terry’s lack of insight lead Yahoo down a path of portalization, where information was pushed to the user. He failed to see that the next generation of internet technology was changing the balance of power on multiple fronts such as electronic publishing, digital marketing, storage and retrieval – all areas suited to search – which Google packages and delivers today using a simple interface.
He ended up turning Yahoo from a technology company to a media company with marginal economies of scale. In fact, Farzeed Nazem, CTO, spent more time filing papers with the SEC over stock options purchases and sales than doing his job, as there was no need for him. It was an internal joke that he was in hibernation.
Susan Decker would routinely tell the press that “Yahoo’s goal is not to be number one in search” as Terry had convinced them that a company driven on celebrity power would overcome anything.
The only thing Yahoo had left was eyeballs. I was not convinced Yahoo could continue on this path and I asked Terry if a Microsoft take over of Yahoo was inevitable. Terry was puzzled. He was absolutely clueless about what was going on. He was more worried about where Brad Pitt and Tom Cruise might be next so that he could be there and splash some Yahoo money and impress his Hollywood buddies. Terry knew Hollywood was all show and no cash; but with Yahoo money, he could rule Hollywood.
By this time last year, Jerry realized that things were in free fall and he took the helm to avoid a crash landing. Two weeks prior to the Microsoft takeover, I informed Jerry and company that a takeover was imminent. Jerry did not even realize how low they were to the ground. Microsoft offered Yahoo $44 billion and in the end, Yahoo surrendered to Google for pennies.
I believe Jerry Yang is resilient and he might still be able to turn the company around if he remains at its helm after the shareholders meeting on August 1.
As for Terry Semel, he has left behind a trail of destruction. He has made Silicon Valley brainiacs the butt of jokes in Hollywood and he made 500 times more money sinking Yahoo into the ground than he made doing his best work. Today, Terry is still busy selling Yahoo stock and he has sold over $600 miilion to date.
Channels: jerry yang, life support, Terry Semel, tom cruise, Yahoo
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Excellent summary of a complicated story.
Comment by JF — June 20, 2008 @ 7:12 AM
Semel was an absolute disaster. It is a shame what he did to the company. But in the end Yang did screw up too.
Comment by brian lithglow — June 20, 2008 @ 7:20 AM
Daya, you should be on the Yahoo board or hell running the company as you seem to understand this Web stuff all too well.
Good job.
Carl
Comment by carl i — June 20, 2008 @ 7:39 AM
yes daya take over the helm at yahoo consumers and markets need competition
Comment by Anonymous — June 20, 2008 @ 7:58 AM
Daya, please help us. Be our commander in chief. You have the knowledge and balls to stand up to Google. Hurry employees need you.
Comment by sad employee — June 20, 2008 @ 8:16 AM
Why not he can’t do any worse. Anyone who can turn the Webguild around (it used to suck now it rocks) from nothing to outing con artists like oreilly and standing up to GODGLE (we are not evil), has my vote.
Comment by Anonymous — June 20, 2008 @ 8:27 AM
wasn’t he the third google founder?
Comment by smart search — June 20, 2008 @ 8:39 AM
There is one universal truth. “There is no bad press.” Given all the articles and blogs that have come up about Yahoo! recently they’re on everyone’s minds. Maybe people should try using them for their search occasionally. You might be pleasantly surprised.
Comment by SeanBlader — June 20, 2008 @ 8:58 AM
As a Y! employee who was here during the Semel days and is sticking around, this is so far from the truth it is ridiculous.
The bottom line is, Y!, despite being a target for the press and wild blog posts with little-to-no accountability, is a the top destination for web browsers. We’re not going away. Get used to it.
Comment by Anonymous — June 20, 2008 @ 1:46 PM
Y! Employee too. We need help. These blogs help get the message to higher ups. They don’t listen to low level employees.
Comment by Anonymous — June 20, 2008 @ 6:00 PM
I am not a Y! employee nor a shareholder. However, after reading this immature article, I feel pity (BTW, Pity is Daya in Hindi) about the quality of analysis and the cheap usage of blame to get fame for self or Webguild and spat on a 600M executive compensation. Y! is a brand in crisis and the recent departure of top execs is probably a good thing. Read the following blog:
http://seekingalpha.com/article/82264-yahoo-s-management-exodus-could-be-a-very-good-thing?source=yahoo
Y! may need to unlearn for its survival that it started as a Directoy/Search company. It is a New Media company and should focus on what is best for its consumers, advertisers and producers. One may compare it with the Media companies
instead of Google and Microsoft.
And yes, Daya you may want to mature your analysis and balance your comments.
Comment by Anonymous — June 23, 2008 @ 9:56 AM
Come on! He is simply stating his account of events. He did not get Yahoo into this mess. The smart mature folks at Yahoo did. Yahoo surrendered to Google last week. Who did that senseless thing? The smart mature folks at Yahoo. He has basically laid out how incredibly foolish Yahoo’s management was and is. They are immature. These grown men put Yahoo in this mess it is today. This kid is just pointing it out. Grow up!
Or as Jerry Yang would say, “Go To Hell!”
Comment by bigwig — June 23, 2008 @ 11:05 AM
reminds me of when Steve Jobs brought John Scully onboard at Apple and nearly sunk the company.
Pepsi and Hollywood, all the same thing, selling sizzle not steak
Comment by Anonymous — June 23, 2008 @ 1:44 PM