'Google isn't our only competitor'
Words like Turmoil, Exodus, Overhaul, became synonymous with Yahoo over the past year. First, Founder Jerry Yang got flak from the shareholders for botching a $31-a-share (later revised to $33-a-share) bid from Microsoft at a time when Yahoo’s share was near a four-year low of $19.18. Today, Yahoo’s stock is at around $12, down more than 100 per cent from the high of around $28 that it had reached after the bid. Yang himself had to step down to make way for a new CEO, Carol Bartz, whose entry prompted President Susan Decker to quit. As Bartz restructures Yahoo in the backdrop of a worsening global recession, and more key persons at the top quit in rapid-fire succession, Co-founder David Filo discusses the road ahead.
I think what she said is that we are pretty much open to any and all ideas in that space. She has gotten together a group of people in the company to look at that question and come up with an answer. Hopefully, she can start talking about it more in the near future. Right now, we have no plans to sell it. But we’ll continue to explore all options. Until then, we’re extremely focussed on search. We think we are well-positioned in that market. We’ll continue to invest in it. It is one of our top priorities.
What are the options for the Yahoo search deal?
The biggest option for us is to continue to invest in it and continue to grow our share because right now, globally, we are a strong #2 player to Google. And in some markets like Japan and Taiwan, we lead them. We feel there’s a lot of potential upside for us. Of course, there are other options. Microsoft had given indications last year that they were interested in doing something with us. We tried to do something with Google on the monetisation front that ended up not working. But those are the things we’ll continue to explore.
Yahoo has laid off nearly 1,200 people and frozen salaries this year. Will the cost-cutting trend continue?
Traditionally, we review salaries once a year and this year we decided not to give any raise. Given the global economic condition, this was the obvious thing to do. So, we’ll have to obviously re-evaluate that in 2010. Hopefully, lots will change in 2009 for the better. In terms of other cost-cutting measures, we don’t have any specific initiatives right now. We feel good about our costs as we look forward in 2009. We are still generating a lot of cash as a company. But now with Carol on board, she may want to re-audit the company in certain ways. So, we may end up focussing the company on a slightly different set of priorities.
Display advertising has been worst hit in the downturn. Yahoo’s ad revenue is stagnant at $1.59 billion over the last quarter…
Advertising is still the dominant revenue source for Yahoo. And that will continue to be the case in the future. So, we’ll continue to focus on that. We launched the APT platform last year, which aims at providing publishers and advertisers with a unified, simple and intuitive interface. We have already started to see the benefits from that. And we continue to invest in our search monetisation. We hope to increase our sales force and sell more inventory. We also see more advertising moving to the Internet from other media. People are increasingly spending more time on the Internet, although the time spent by people on the Internet compared with the traditional media isn’t being reflected by the advertisers.
Is Yahoo-AOL an option? Does it have potential to strengthen the display advertising portfolio?
It certainly has potential in a number of ways. We’ve been in talks with them for a while now. And we continue to evaluate those options. Of course, you can look at their assets and see what the potential benefits are. Doing something like that would be a very big undertaking for us. It’s, of course, a big thing for them to sell that piece of their business. There are very big decisions that have to be made on both sides of the table. So, people are being very thoughtful about it.
After IE, Mozilla, Safari and Chrome, is a Yahoo browser coming?
Certainly not now. Yahoo has always been fair about working across every type of device but we don’t view this as our expertise area. We focus on building services that run on the browsers, networks and devices. So, we are not interested in building our own phone but we are interested in building an operating system for the phone.
There has been a steady exit of senior management from Yahoo. How are you going to retain talent?
We hired Carol at the senior-most level and a year ago we hired a CTO, and he’s got the tech organisation in a much better place than we were in. So, at the highest levels we are very happy with where we are. We’ve had a number of departures, but there’re all kinds of reasons why that might have happened.
Was Susan Decker (the President) fired by Carol?
The board very seriously considered Sue as an option. Carol was an option as well. They interviewed many other candidates. And then, in the end the board decided on Carol as the CEO. …I think Sue decided it was better for her to leave the company and explore other opportunities. Of course, she was a great asset to the company for the past eight plus years. And for that we are extremely grateful to her.
Will search continue to be your focus or are we looking at Yahoo as a media company?
No. Search is absolutely high priority.... In fact, in the last four months or so we’ve seen our search share stabilise. Relative to the rest of the market, Google has been growing. Really no one else has. We’ve declined a bit over the last year. But we have stabilised over the past few months and there is a great opportunity ahead of us. Search is the core of each of our experiences. How and why is Yahoo opening its search technology?
We are opening search in a number of ways. We have something called a search monkey. Before we did these things, if you were to go to Yahoo search and type in a query, you would get a list of results obviously controlled by Yahoo. So, we wanted to give developers the ability to influence what that search result page looks like. Instead of just having 10 links that come back and how we decide to present them, search monkey opens up that interface so that people come in and customise what that interface looks like.
The second way we are opening up is through this initiative called BOSS, which is pretty much opening up the infrastructure of Yahoo search. It took us hundreds of millions of dollars and many man years of engineering time to build search. We said, let’s open it up! This allows students and developers to quickly create a new search experience that otherwise will be impossible. The idea is to foster innovation in the search space because we think this will be good for us in the long run. It’s better for us to have innovation happen on our platform rather than around it. We will figure out over time how to monetise this.
Is Yahoo defining the future of the web with a new front page, a social mail, opening and innovating search?
We are extending our interface, adding a social component to it. For example, if you have uploaded pictures or read an article or buzzed it, your friends will be notified. Yahoo mail is becoming a melting pot for social activity with your address book, Flickr, Messenger. We are bringing it together in one place on Yahoo FrontPage. So, instead of everyone seeing the same thing we want to start personalising it.
Is Yahoo planning to enter the social networking space?
We are very strongly present in that space with Flickr and mail. But we are not going to create a new destination or brand. It’s about integrating the existing properties. So, your front page will become more social. It’s about making yahoo.com more social.
Last year end, Yahoo invested in an Indian company, Call Ezee (a Chennai based dial-in service). How does local search fit into the Yahoo paradigm?
Local is a very key component of search in general. It is one of the areas we are very focussed on and are looking at to understand the intent of search better. In the course of 2009, you are going to see very dynamic presentations. We already have Glue, which helps you get the web, image, blog and video results all neatly presented on one page. So, likewise, we are doing many different things to make the search experience interesting.
What are the challenges of running the business in emerging markets like India?
From our perspective, we would obviously want more people to have fast and stable Internet access. Another challenge is that different markets have different requirements in terms of products. Some of our products are very global in nature. So, we have to be able to adapt to the local markets and culture.
With Carol at the helm, will we see Yahoo as a tech firm with Google as the main competitor?
Oh no! We have lots of competitors. Google is certainly one in the search space. Then we have different competitors in different markets. Microsoft is the biggest competitor in the mail space. In terms of our media properties, Google is not a competitor at all. In news, we are competing with the CNNs of the world and in sports with ESPN, etc.
Yahoo's dilema |
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— Tejaswi Shekhawat
