Wired magazine at its best - describing Yahoo's failure in competing against Google. Fred Vogelstein goes through the history, and gets in some hard hits against Terry Semel.

It starts by re-telling how Yahoo had a chance to buy Google back in 2002, but couldn't afford it:

Terry Semel -- a legendary Hollywood dealmaker, a guy who didn't even use email -- had not come to Silicon Valley to meekly merge with the geeky boys of Google. He had come to turn Yahoo into the next great media giant. Which might explain why the face of the famously serene CEO was slowly turning the color of Yahoo's purple logo, exclamation point included. "Five billion dollars, 7 billion, 10 billion. I don't know what they're really worth -- and you don't either," he told his staff. "There's no fucking way we're going to do this!"

Instead, they decided to buy Inktomi and Overture. Which was a great reaction, but Overture came with a lot of baggage. The climax of the story deals with Yahoo's inability to decide just how to integrate Overture - whether to keep it as a standalone division, or try to pull it into Yahoo's engineering culture.

Yahoo executives tried to have it both ways. They attempted to placate Microsoft by maintaining Overture as a stand-alone brand. At the same time, they planned an overhaul of Overture's technology, a project code-named Panama. It was a disaster. With no clear delineations, Yahoo and Overture executives fought over turf. Yahoo hired and fired a half-dozen engineering chiefs at Overture during the first year. Overture salespeople competed for business with Yahoo salespeople. And Meisel, Overture's CEO, was ineffective -- either inept or hamstrung by bureaucracy, depending on whom you ask. Decisions big and small, from trying out new features to agreeing on budgets, had to be cleared by committee after committee in Sunnyvale. "It was a clusterfuck," one of the participants says.

The denouement is a damning indictment of Semel, saying he might know how to do Hollywood deals, but he never understood technology and the Silicon Valley culture.

But the challenges of integrating two giant computer systems or redesigning a database or redoing a user interface? Many who have met with him at Yahoo say he still doesn't know the right questions to ask about technology. "Terry could never pound the table and say, 'This is where we need to go, guys,'" one former Yahoo executive says. "On those subjects, he always had to have someone next to him explaining why it was important."

All dead on. A must read for anyone who wants to understand the state of Yahoo today.

Labels: yahoo

¶ 1/16/2007