With this move will come the inevitable speculation about how this will bolster Yahoo's chances of competing against Google. Just last week I was interviewed by Bloomberg TV and was asked about that very topic. At that time I mentioned that the biggest difference between the two was the lack of corporate focus at Yahoo and the fact that focus, at least on the search side, has never been an issue for Google.
My belief is that there's a lot behind the scenes that we're not privy to that will explain Yang's appointment as CEO when it becomes public knowledge. My suspicion is that there may be an acquisition deal in the works and this is a "feel-good" move to help shore up Yahoo's eroding stock price until the deal can be finalized. But whether or not that's the case, I did want to take a few minutes to make some comparisons between Google and Yahoo in light of Monday's news.
Sacred Cow = Balanced Ecosystem?
Search is the sacred cow at Google. More correctly, the search user experience is the sacred cow of Google. And it's the quality of that search experience that has driven the vast majority of Google's revenue and has put them in the position where they can pose a significant threat in virtually every information channel in the world.
Recently I was worried about search appearing to take a backseat at Google. With all the media hype surrounding Google's moves into other channels, I was worried that perhaps the corporation itself had lost sight of how important search was in their overall strategy.
It appears my fears were misplaced. Google's Matt Cutts was quick to comment on a blog post that search is still integral to everything that Google does and that the team was hard at work improving that search experience. Shortly after that, the personalization and universal search announcements began to roll out of Google labs. From everything I've been seeing, Google is more intent on improving the search user experience than ever and is using universal search and personalization as the hub that will drive a much more extensive user interaction with Web content and information. Of course, a more efficient delivery of advertising goes hand-in-hand with that strategy.
I've always been a big believer in corporate sacred cows. These are the untouchable tenets that drive the overall strategy of the company. From everything I've seen, heard or read about Google, the search user experience is its sacred cow. The company is focused on engineering the most effective and relevant connection between users and their desired content. The advantage of the sacred cow is that it gives an unquestionable rallying point for the company. All else is fair game but that single strategic foundation is what keeps the company on track.
Yahoo has no sacred cows. In all my conversations with the company there's a lot of talk about community and a balanced ecosystem. Those very terms suggest compromise. There are a ton of Yahooers (although, like the Yahoo share price, this number is eroding as well) who are passionate about their jobs and would love to see their particular interest elevated to the status of the corporate sacred cow, but they've become frustrated with the lack of support from the CxO level. Just last year, Sue Decker was quoted saying that Yahoo is quite content to be No. 2 in the search game. In fact, the company's strategy was trying to hang on to their eroding market share. It was, in effect, a public capitulation to Google. That announcement hit the Yahoo search team squarely in the gut. They definitely were not ready to give up on search.
Eric Schmidt = Terry Semel?
From the outside, it may appear that Eric Schmidt and Terry Semel served fairly similar roles. In both cases they are cofounders still actively involved in the business. The cofounders were incredibly young and lacked traditional "business expertise." And both Schmidt and Semel stepped in with a significant amount of past experience.
But there the similarities ended. From the very beginning, Schmidt understood that while he served as CEO, Page and Brin were always going to take a very active role in running Google. And Schmidt stepped into his role with a tremendous amount of respect for the sheer intellectual horsepower that Page and Brin brought to Google. He never wanted to remove them from their decision-making roles. He understood that they were a key element in Google's success.
Semel, on the other hand, came from the Hollywood Warner Bros. power structure and was intent on making Yahoo the new entertainment giant.
That strategy, however, had one fatal flaw. No one at Yahoo, least of all Semel, understood that media consumption was going to be an entirely different game online. Prepackaged bits of content, carefully packaged for easily digested consumer consumption, pushed out to us by a media giant - this was not how we were going to find our entertainment in the future. Now, we were completely in control and we would choose what, where and when we would watch. We didn't need a power channel pushing us content. We needed a better tool for finding the content we were interested in. The rules had changed and Yahoo didn't have a new version of the rulebook. No one had the rulebook, because it hadn't been written yet.
Larry + Sergey = Jerry + David?
Finally, to me the biggest difference between Yahoo and Google is in the day-to-day role of the founders. Brin and Page have never backed off from their control positions at Google. In fact one of the running jokes at Google is their tendency to swoop in, roll up their sleeves and bury themselves in the minutiae of one particular item or project, much to the frustration of the team working on it. There is a Google-wide conspiracy aimed at trying to keep their hands off of any important code. As frustrating as this micromanaging might be to the individuals involved, it does give the two an intimate knowledge of everything that's happening at the company. Their voracious intellectual appetite gobbles up this tremendous amount of detail and somehow digests it into strategic decisions that are very seldom wrong. Someone recently told me that one of the reasons that Brin has some challenges relating to the real world is that he's never been wrong in his life. He doesn't know what it means to fail.
David Filo and Jerry Yang, while still actively involved in Yahoo, have been quietly influencing from behind the scenes. They're easier-going and not nearly as intense as Brin and Page. They suggest rather than demand. They stepped back, willing to let Semel run the show. In traditional wisdom, they did exactly what entrepreneurs and cofounders should do. They passed the torch on.
But in this case, it didn't work. Yahoo lost its way. Brin and Page's nettlesome but much-needed day-to-day involvement kept Google on track. Yahoo was left to founder and flopped back and forth, never being exactly sure what it was.
Even in the few hours since the announcement was made (as of the writing of this column) there has already been reports that the management change is exactly what Yahoo needs. Jerry Yang is recognized as a champion for the user experience on Yahoo and, in stepping back into the CEO's old role, seems to signal a return to the fundamental principle of the user's importance. In my view, it's too little too late. If users were really that important to Yahoo, why were they pushed out of the driver's seat in the first place?