Terry Semel took the top position at Yahoo in May 2001. The dot-com bubble had burst, and terrorists destroyed the World Trade Center just a few months after that, killing thousands and throwing the already weakened US economy into a tailspin. Semel was brought on board because Yahoo was already performing poorly, and it was thought that a change of direction was needed. Semel's background included a stint as co-chairman and co-CEO of Warner Brothers, so he approached it from the standpoint of content rather than technology.
Content is often used to sell advertising, so what Semel did next was no coincidence. With the new market realities showing the connection between search and advertising, he successfully overhauled Yahoo's sales force. His smart moves include hiring ad industry veteran Wenda Harris Millard as Chief Sales Officer and acquiring Overture.
These and other steps boosted Yahoo's annual revenues nearly nine-fold to $6.4 billion as of last year. In fact, Yahoo quadrupled its market value after Semel came on board. But whatever honeymoon Semel had wasn't going to last. Some say his time was up as early as 2003; others might date it to February 2004, when Yahoo stopped using Google's technology in its searches and chose to use its own. Perhaps it would have been good to see a technology person take over the helm at that point, because getting this part right was clearly going to be more important in the future.
If that wasn't clear in February 2004, it should have been clear in August 2004. That's when Google, three years younger than Yahoo, had its initial public offering. On its first day of trading, it hit a market capitalization of $23 billion. Yahoo's market capitalization at that time was $39 billion. If someone wasn't alerted by the fact that Google was that close to Yahoo's cap after only one day of trading, they really should have been.
Eric Jackson, CEO of consulting company Jackson Leadership Systems and one of the shareholders who led the grassroots revolt, sums it up for a lot of people: "I think that Semel was the right person at the time he came in in 2001. He did a lot of great things to stabilize the company and set it on its path after the bubble burst, but shareholders were looking for some new blood and direction." But will they actually get what they want?
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