My first reaction to the news that Jerry Yang is leaving Yahoo! was that this was the passing of an era. I first met Jerry in 1994 when he was still a PhD student at Stanford, before he and David Filo left to run Yahoo! full time. Through bubbles and two economic downturns, Jerry has always been omnipresent in Silicon Valley.
But all good things come to pass. With the arrival of Scott Thompson as the new CEO of Yahoo!, it makes sense that Scott be given a clean slate upon which to write the future of Yahoo!. This is very much the norm for incoming CEOs, where founders are asked to take a diminished role or expected to leave the company completely.
This is the case with Jerry all the more so, as he was (is?) a vehement supporter of Yahoo! remaining independent. Regardless of Jerry’s real or perceived position toward independence or selling off assets such as Alibaba or Yahoo! Japan, it’s still all baggage hanging on from a previous era. Scott and Yahoo! need the freedom to set the vision and strategy for Yahoo!, unencumbered by the past. The last thing Scott needed was the ghost of Yahoo! Past — embodied in the very real, very smart, founder and former CEO of Yahoo! — sitting at the boardroom table.
So what does the future bring for Yahoo!? While many people have written off Yahoo! but I’m less inclined to do so for the following reasons:
- Loyal users. It’s amazing to me that Yahoo! attracts 700 million unique and very loyal users each month. That’s somewhat less than Facebook’s 800 million users, but it’s huge by any standard. Through thick and thin, they have stuck with Yahoo!, despite having a plethora of other options available to them. But how there continues to be continued erosion so Yahoo! will have to invest in it’s “front doors” of Mail, MyYahoo!, and Home Page, as well as new offerings around it’s user engagement vision. As my colleague Rebecca Lieb commented in this article, “”Yahoo is a very vaguely defined company strategically,” Lieb said. “It has a million or zero identities. It’s everything and nothing.”
- Access to implicit social and interest graphs. The emails and address books of those 700 million users create an implicit social graph, similar to the one that Google is trying to tap via Google+. Front page content reading leads to tremendous data about what those 700 million people are interested in. This is gold for future targeted advertising, but Yahoo! has done little to develop or market these capabilities.
- Advertisers wanting to reach those users. Yahoo! will generate about $5 billion in revenue this year, most of it from advertisers with whom it has a direct relationship. But those revenues are declining as other options are growing.
- Technology chops. Yahoo! has had the ability to be ahead of the market, from purchasing Flickr and Delicious to starting an early form of a social network in Yahoo! 360 back in 2005. I continue to admire and use Yahoo! Pipes and it’s developer APIs remain excellent. What it’s lacked is a clear vision of how those investments tie into a coherent vision and strategy for Yahoo’s relationships with users and advertisers.