SAN FRANCISCO -- Web 2.0 Summit -- Despite being one of the most scrutinized CEOs in the country, Yahoo's Jerry Yang bravely took the stage yesterday afternoon to answer questions about Google (Nasdaq: GOOG), Microsoft Corp. (Nasdaq: MSFT), Yahoo Inc. (Nasdaq: YHOO), and where it all went wrong.
Yang is carrying the weight of two failures: a potential acquisition by Microsoft and an advertising deal with Google, commonly thought to be its only saving grace. He was yesterday described by The Wall Street Journal as "digging himself into an ever-deeper hole."
Not exactly good times.
And, on stage yesterday at the Web 2.0 Summit, in the midst of being peppered with understandably unforgiving questions by John Battelle, founder of Federated Media, Yang expressed disappointment mixed with some desperate hopes that a deal will still come through from somewhere (anywhere).
On Microsoft, Yang said both sides were to blame for not coming together. "To this day, I'd say the best thing for Microsoft is to buy Yahoo. I don't think it's a bad idea at all at the right price... whatever the price is," said Yang.
"We were willing to sell the company... They walked away from a public offer. We were ready to negotiate. We wanted to negotiate a deal. We felt we weren't that far apart. At the end of the day they were through and since have been very clear that they don't want to buy the company."
Yang claims Yahoo went back to Microsoft, willing to take its offer, but at that point the company had lost interest. "We said, look, even at the price you were suggesting, do you want to do the deal? They said no."
And as far as a potential search deal goes, whereby Yahoo would sell its search business to Microsoft (something it once opposed), Yahoo is now "open-minded" -- but Microsoft remains, for the time being, aloof.
Microsoft isn't alone in leaving Yahoo at the altar. Yesterday, Google called off a search advertising deal which had been under scrutiny by the Department of Justice. Discussing the destruction of that deal, a somewhat numb Yang heaped the blame on Google for changing its mind, and the government for not understanding the market.
"Google clearly decided they didn't want to stay in the deal," said Yang. "Why did Google pull out? I think you have to ask them. It's certainly disappointing they didn't want to defend the deal."
So where is Yahoo now? With no acquisition and no search deal, Yang still managed to muster up some high hopes for its launch of an open platform for developers, which he calls the "core identification" of what Yahoo wanted to accomplish as a company. Furthermore, he says, despite the fallout of a Google deal, Yahoo is "doing better at search than before this whole thing started."
But overall, Yang, crouched low in his chair, expressed a meek change of tune and a desire to rekindle some talks: "There's nothing we'll say, 'No, we absolutely won't do.' "
Three things that fascinate me, but first, I should note that I think it was ridiculous for Yahoo not to take Microsoft's original offer and I would have liked to have seen shareholders force them to. Also, I love that Nicole says "hissy fit".
1) It is not and should not be the chief mission of a CEO to increase shareholder wealth. Shareholders generally neglect the long term, gripe about the short term, and listening entirely to them is a good way to run a company into the ground. Certainly a CEO should be responsible to the shareholders and be held accountable, but that doesn't mean that his only purpose should be to make them instantaneously rich.
2) I'd like to hear a cogent argument that convinces me that competition is both necessary and sufficient for a better internet. Yahoo vs. Google or Yahoo + Google: which is better for the consumer? I think you can make arguments on both sides, but one is not automatically better simply because it involves competition. That competition is the only route to innovation is shortsighted, and relies on the idea of carrots and sticks. People intrinsically want to build a better product - it is mentalities like 1) that crush that desire.
3) I love it when people start pulling out corporate conspiracy theories. I highly doubt that it was Google's brilliant strategy to start some elaborate campaign to pull down Yahoo here and make them unbuyable. I'm more with Nicole in suggesting that they certainly used the results to their advantage, acting on an existent situation rather than creating said situation.
Though financially the deals with Microsoft and Google could have satisfied the shareholders of Yahoo, I do believe that an independent Yahoo would better serve the users of the Internet. The Internet is not at all about money only, it is about service and protection for consumers. Marrying Yahoo with either Microsoft or Google could only lessen competition and increase control of the cyberspace by one giant company. Somehow, the failure of the deals should challenge Yang and company to find other ways to make Yahoo continually relevant so that it acquires the money that it and its shareholders could have been gained through those deals.
I completely agree with you. I posted similar message at yahoo finance message board on friday. I am completely dumbfounded the board is keeping Yang on his job. Exodus of new talent on the YaWHO is on rise and even the fresh breadth of top management like Flickr co-founders (Stewart Butterfield and Caterina Fake ) has left the company. The company is in the hands of old stalwarts whose personal ego is going to take the yahoo further into sink hole.
BTW, I agree with Nicole's comments not as much as blueprint, but Yahoo pretty much played into Google's hands. Right from agressively opposing Microsoft merger by counter offering a search deal and walking away from it after Microsoft decided to kill the deal once for all (or hopefully for Yang, may be not).
By "survive", I mean to continue to be separate entity and not just another division of some other company. Yahoo has been around for so long, I would hate to see it become "MSN/Yahoo", then eventually "MSN Search" (nothing against MSN).
As for my nick, it's a play on a few things, one of which is that I started way back in the days of 1200bps modems (and liked it!)
what did you mean by survive? like defunct, or bought out at the bottom? Yahoo going completely defunct would be similar to a bank fallout in my opinion. So we don't want that if we like things the way they are and want it to get better smoother.
I really enjoyed watching the video of Jerry Yang's interview at Web2.0 Summit only a day late(link below to Contentinople), but I'm also smiling that I was able to watch it soon enough to feel the excitement..also the video was very well captured in my opinion.
your nick is awesome btw...it provides a quick 'euphoria' as you immediately think of how far it's come since computers first used 'modems' commercially.
I've always liked Yahoo, but with the running back to Microsoft with "ok, now we'll take your deal" and the failure of the Google deal, doesn't Yahoo look a bit desperate? I hope they survive and do well, but it sure doesn't look good.
I think wired called it a little too early and is looking inside of the box of the current economic mess and its tremors. I firmly believe Yahoo is a sleeping GIANT right now and will come out on TOP when it's all said and done. If they weren't anything spectacular, why did the SEC reject the GoHoo proposal? =-
Did I say sleeping? sure if consider top3 site in the world sleeping, and that they pretty much been around since the beginning.
I wonder what Yang can achive with the open platform for developers. According to wired Yang is on the top of the list of the CEOs who need to be fired
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