Return of the CEO

Losing its lead in Internet traffic and ad revenue along with its chance to win the search market, Yahoo aims to reinvent itself.  But with a slowing economy and downward forecasts for earnings, how bad are things for Yahoo? That could depend on Microsoft’s plans to buy the struggling Web portal.

Return of the CEO

Does Yahoo CEO Jerry Yang have what it takes to revive the company's fortunes?

Yang and David Filo created Yahoo while they were grad students at Stanford, but when they formed a company in 2005, they ceded top management duties to others, starting with Yahoo's first CEO Tim Koogle. Yang was always part of the management team, and often served as its public face, but until now he and Filo have shared the cheerfully vague title of Chief Yahoo.

That's one reason many skeptics, including former employees, doubt Yang can serve as Yahoo's equivalent to Apple's Steve Jobs—instead of returning to take the reins of the company he started, as Jobs did at Apple, Yang is taking leadership of the company for the first time.

The comparison strikes home for Chris Tung, a former Yahoo interaction designer who now works for Apple.

"In terms of innovation, you're always going to take a risk," he says, but at Yahoo things tended to get bogged down in "analysis paralysis"—fiddling with usability tests and metrics gathering to postpone decision making.

"You cannot have innovation by consensus," Tung says. "You need someone who has the clarity of vision, the confidence, sometimes just the utmost brashness to push it through." From a distance, at least, Yang never displayed those qualities, he says. "I never saw him, or anyone else there, have that clarity of vision, that ability to push things through."

Ken Rudman, a former Yahoo product manager, expresses more faith in Yang, calling him "extremely competent" and suggesting he has learned the ropes by working closely with Yahoo's previous CEOs. "I do think he could be successful," Rudman says. "Is he what Wall Street is looking for? I don't know."

Other former rank-and-file employees who spoke with Baseline, on and off the record, have at best lukewarm impressions of Yang's leadership skills, though some hold out more hope for Susan Decker, Yahoo's new president.

One former executive who believes Yang is the right choice is Tim Sanders. Sanders, who became part of Yahoo when the company acquired Broadcast.com, established himself as a closer of big deals as chief solutions officer, and still serves as DJ at the company holiday party. (After the publication of his book Love Is the Killer App, Sanders left in 2005 for a career as an inspirational speaker, writer and management consultant.)

Yang "has been groomed for years to do this, since the moment Yahoo began," Sanders says. "He's been part of every important meeting, every acquisition, every product release. He's a punch-you-in-the-arm, tellyou- that-you're-wrong kind of guy, but he also makes you feel good about your contributions. And he has such a passion for the Yahoo brand."

Although Sanders thinks Yahoo has made its share of mistakes, he says its current problems are "less about the things Yahoo did wrong than some breathtaking things Google did right. When the history of Yahoo is written, we're going to look back at this as a period of time, unfortunately longer than one would have hoped, of readjustment and realignment, and having a fierce competitor."

If the challenge is for Yang to channel Steve Jobs, Sanders says one way to do it would be to use the negativity about Yahoo as a motivator and challenge employees to prove the skeptics wrong. "I would show them all the negative press about Apple from 15 years ago," says Sanders, recalling a time when shrinking marketshare for the Macintosh seemed to spell doom for that company. "But they stuck to their guns, they found the iPod, and the world has changed."

In much the same way, Sanders says, "I think the public statements of arrogance from Google could be used as great motivators" to help Yahoo find its own next breakthrough product.

One sign Yang is thinking along the same lines: He invited Jobs to an October meeting of Yahoo—as a motivational speaker.—D.F.C