Monday, June 18, 2007

Semel Resigns

In a breaking NY Times article, Semel resigns as Yahoo's CEO and is replaced by Jerry Yang, a Yahoo co-founder. This is not surprising as Yahoo was having a difficult time with revenue growth and cultural issues (see Brad Garlinghouse's Peanut Butter memo).

As a search marketing agency, seeing Yahoo adrift is not something to celebrate. The populace is better served when there is real competition in the marketplace. Having Google dominate is not good for the user, media or for Google itself as the desire to innovate dimishes with growing share. This happens regardless of who is in charge.

There are many reasons behind this, but there's an exodus mentality in the once highflying company. People feel strangled by a culture that has stifled innovation and is living the blame game. From my experience in a company that strayed from its core strength, AltaVista, I can tell you that search needs to be managed differently than a content site. You can't let the business guys run a search site. Super smart, passionate engineers are more important. It is an area with incredible investment, where developmental impacts are difficult to quantify and assess. Yet, each small improvement cumulatively improves the experience.

Doing competitive rack-ups is a waste of time as well, because features don't really matter. 95% of searches are web searches so you need to really understand what users are looking for and have measurement tools that analyze activity in detail from inputs like the toolbar. Then you need a process whereby that analysis informs the engineer about improvement they can make to this n-level product development beast.

You need to think super long term. Quarter to quarter revenues are not really of any value. For example, it is more important for an ad to lend value to the natural search results on the page than for the company to pump short term per page revenues. You need to pump money in for a long period before you see an impact.

This is what Google has successfully done - focus on the engineering and invest for the long terms. Because Yahoo's management was more media-oriented, it has had a difficult time. Hopefully, this change will allow Yahoo to regain its footing.

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