Yahoos Terry Semel Speaks

Excerpts from a WSJ interview with Yahoos CEO:

WSJ: Yahoo today is in much better shape than when you arrived. What was the toughest part of the turnaround?

Mr. Semel: The single biggest set of fires at the beginning really related to people. Unfortunately, there were layoffs. But there was the need, I felt, for even more people in certain core businesses. I didn’t want the company to fall behind. At the same time, I had to think about what were the two biggest opportunities on the Internet at that moment and what would they perhaps look like going forward.

I looked at the Yahoo flowchart, and I saw it had 44 business units and realized neither I nor anyone else could ever manage 44 different business units. It had to be much clearer. It turned out to be six business units, which ultimately became four.

Of the two biggest opportunities in the Internet in ’01, one was access. Two of our competitors [the America Online unit of Time Warner Inc. and Microsoft’s MSN] were doing a terrific job by being Internet service providers. That was a business Yahoo was not in. The opportunity for Yahoo had to come in broadband, and that led early on to the conversations that ultimately became the partnership with SBC. [Yahoo provides co-branded high-speed Internet service with SBC Communications Inc.]

On the other side, Yahoo had and still has great scale, a very large consumer base. That speaks well to an advertising business. We would bring in people who could run a sales company. What we had to do initially was to change the entire experience and the relationship both with our consumers and with advertising agencies and advertisers.

WSJ: What did you de-emphasize?

Mr. Semel: Lots of small things, things like FinanceVision, [which provided business-theme Webcasts]. … I thought it was a cool idea, but I thought it was ahead of its time, and I didn’t see it as an essential. There were many other things like FinanceVision that were not playing to a large portion of Yahoo users. What I kept saying is let’s focus on the things people use Yahoo the most for.
When I would think quietly, I would think core strength: scale; big opportunity, not small.

WSJ: What is the future of search?

Mr. Semel: We’ve probably just finished phase one as an industry. Initially, the great need was to amass all of the information and to provide it in the most efficient and effective way so that users could access that information. What we are going to see, in phase two, will be much more specific. The same information could be presented taking into account your location, so that if you are looking for a plumber or a pizza parlor it doesn’t turn out to be 3,000 miles away from where you are searching but rather several miles from your house. In our case, it is also about integrating the very large communities and groups who represent millions of people who have very specific interests and spend a lot of time on Yahoo expressing those interests through chats and through groups and communities. The advantage that Yahoo has is that we are providing a lot of those services outside of search today.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.