Every year Jerry Yang and David Filo, the founders of Yahoo!, by some measures the world’s largest internet company, engage in a bout of sumo wrestling. (This year Mr Filo won, but Mr Yang says that he is still pushing for “a recount”). At other firms this would be a gimmick requiring awkward laughter from employees. But at Yahoo!, where the founders are widely respected for their exceptionally ego-free personalities as much as for their prowess as computer geeks, the fun is genuine. Unlike at Google, which was also founded by two Stanford University students and is now Yahoo!’s arch rival, it has always been understood that Yahoo!’s founders left the unpleasant bits of actually running the company to others.
Hence the surprise this week when Mr Yang was promoted from board member and “chief Yahoo” (his official title) to chief executive, thus replacing Terry Semel, who will stay on as non-executive chairman of the board. That time was up for Mr Semel—a former Hollywood mogul who is 26 years Mr Yang’s senior—had become clear in recent weeks. Yahoo! has fallen badly behind Google in the crucial areas of web search and related advertising, and is trailing its rival in revenues and profits. At Yahoo!’s annual meeting last week, shareholders staged an embarrassing protest vote against Mr Semel and allied board members.
Things may still get worse for Yahoo! before they get better. The current quarter was supposed to be the first to show concrete gains in profitability from a large management shake-up last December and from a new search-advertising technology, called Panama, that was introduced earlier this year. But Susan Decker, who has been rising through Yahoo!’s ranks amid the recent turmoil and this week became president, said that Yahoo! was now suffering from slower growth in display advertising, traditionally its strength. This too may have something to do with Google, which recently bought a display-advertising firm in order better to attack Yahoo!’s lead in this market.
Ms Decker, who was an investment banker before joining Yahoo! seven years ago, and was its finance director until December, has for a while been rumoured as a possible successor for the top job. But Yahoo!'s board apparently did not consider her ready for it yet.
But Mr Yang? “I look forward to the challenge,” he said this week, suggesting that he intended to be more than an interim boss while the board searches for an outside candidate. He does have certain strengths. Yahoo! has been losing the talent war with Google and other rivals, with disaffected engineers walking out—most notably Farzad Nazem, known as “the Zod”, who quit as Yahoo!’s chief technologist this month. Morale is low. Mr Yang, himself an entrepreneur who clicks with geeks, is likely to be better at keeping engineers engaged and attracting new ones.
Mr Yang may also be better at talking to start-ups that Yahoo! wants to buy. Mr Semel notoriously bungled several important deals, including one with Facebook, the second-largest but currently “hottest” social-networking website. Where Mr Semel was arguably too old and dithering to hit it off with types such as Mark Zuckerberg, Facebook’s 23-year-old boss, Mr Yang may be simultaneously bolder and more laid back, as he hinted this week by promising “speed, clarity and discipline.”
Even so, Mr Yang is unlike other founders in the technology industry who have returned as boss when their firms hit hard times. Michael Dell personally led his eponymous computer-maker to success before handing over to another boss in 2004, only to retake the chief-executive title this year. Apple’s Steve Jobs was forced out in a boardroom putsch in 1985 and then returned in 1997. Mr Yang has never personally managed a big and complex company. Whether he would be more or less likely to sell the company he once founded—to rumoured suitors such as Microsoft, eBay, News Corporation or Time Warner—remains to be seen.
