free html hit counter Semel Gets His Fortune Profile | John Battelle's Search Blog

Semel Gets His Fortune Profile

By - March 29, 2004

semelLong profile of Yahoo CEO Terry Semel with integrated Yahoo back story and prediction that Yahoo will make it to the Fortune 500 list in five years or less. One intersting note: Yahoo used to be driven by the engineers, but has outgrown that approach. Sound familiar?

I believe the article may be behind a sub wall, if so, here are a few excerpts:

“Everyone talks about what he did with movies and entertainment,” Yang says, “but what he really did was pioneer how to take a piece of content and get it out there. He has a distribution mentality, which at the end of the day is what Yahoo does on the Internet. And so when we started talking about Yahoo generically as a distribution company, we both just went, ‘Gosh, this is going to be really cool.’ “…

Indeed, one attraction of the Yahoo job, Semel says, is that in spirit Yahoo reminded him of Warner Bros. in the 1970s: “It had a great brand and great people, but its business was broken.” Meanwhile, the way Yahoo made money—through advertising—was as old as the entertainment business. “The idea of being CEO didn’t scare me because I felt like I had been there before.”…

Semel, who at 58 was twice as old as the average Yahoo employee, had so much to learn that even some of his senior staff worried he would not get up to speed fast enough to lead effectively. “He’d say some things where you’d just go, ‘Oh, my God, he doesn’t know,’ ” says Jeff Mallett, Yahoo’s former president and now a co-owner of the San Francisco Giants. “We’d be talking to him about buddy lists and Yahoo’s server protocols [the standards the company's thousands of computers used to communicate], and he’d say, ‘What’s a buddy list? What’s a server? What’s a protocol?’ He didn’t know that you could log on to AOL from the Internet instead of using AOL client software.”…

The way Yahoo was structured, it looked like a deal with way too many points. “The company had 44 business units when I got there,” he says. “I’m not sure if GE has 44 business units.” After methodically meeting with every one of Yahoo’s divisions, he slimmed the organization to five, then four, groups—media and entertainment, communications, premium services, and search. He also created what has come to be known as the product council. Before Semel arrived, new products grew out of the brains of engineers. But there was little coordination or planning across divisions. The product council’s goal is to ensure that every division head knows about every major product in the pipeline….

The search deals are classic examples of how Semel thinks, manages, and cuts deals that work. Eighteen months ago Yahoo wasn’t even a player in search. It relied on partners: Google for search results, Overture Services for search-related advertising. Now, after buying Overture and Inktomi, Yahoo has its own offering and is Google’s biggest competitor. AOL and MSN, the other two Internet portals, would love to be the greatest threat to Google but can’t make that claim yet. “I can’t tell you how many times in meetings someone said, ‘Google is too far ahead. We can’t catch them,’ and Terry said, ‘We have to,’ ” says a former Yahoo executive. Yet once the deals were done, he refused to rush a product to market, despite intense internal pressure to do so. Instead, he had Yahoo’s engineers rebuild its acquired search technology almost from scratch. Now, even though Google still gets all the buzz, Yahoo’s search is actually better in features like local search and shopping. “We didn’t get into search to do what everyone else is doing. We got into search to change the game,” Semel says.

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