I have little to add to the flurry of coverage of Terry Semel’s departure (or should we say semi-departure) from Yahoo but this bit of historical perspective. (Apologies in advance for a certain amount of over-simplification! I’m writing today in between family events…)
Semel took over Yahoo during the worst of the dotcom downturn, an era largely forgotten in today’s Web 2.0 euphoria. His hiring there needs to be understood in parallel with the AOL/Time Warner saga. During the same time that Semel was retooling Yahoo in Hollywood’s direction, the Time Warner brass were conducting their counter-revolution against the AOL upstarts who’d seemed to have snookered their shareholders.
At that moment in industry history, everyone was making the same bet: the Web as a technology platform was a money-loser. Cash was king. You had to charge for services if you could, and keep selling ads if you could; if you could do either, you’d be OK, and if you could do both, you could prosper. The future, in other words, lay with those who bet on media, not on technology.
For Time Warner, it was patently clear that, as the dotcom debris gathered and the Web seemed to be something that could be blissfully forgotten, media represented the only future that mattered. (Since AOL was never a great technology company — its triumph was marketing — it would be hard to quarrel with that call.)
For Yahoo, born of the Web, the choice was tougher: Yahoo’s was always an ad business, but the company was justly proud of its technology, too. Semel’s background and focus sent the message that the Web was calming down into an online version of broadcast: gather eyeballs and sell them. That worked, up to a point; Semel did help rescue Yahoo from the bubble-bust, and the company survived to become one of the industry’s leaders.
On the other hand, it also missed the boat on the biggest change that was incubating throughout that era. Google’s extraordinary new business was entirely technology-based. The bet Semel failed to make on the technology side proved to be the one that mattered most. And the smart but relatively small moves Yahoo would later make to try to catch up — investments in Flickr and so on — couldn’t make up for that big miscall.
The boom-bust cycle that governs the Net world enforces a short-term amnesia: When a bubble is on, everyone thinks technology is all that matters, and when a bust is on, everyone thinks cash is all that matters. As in any market, the best returns are captured by those who make smart (and smartly timed) counter-cyclic bets.
To this outsider, Semel doesn’t appear to have been the Hollywood idiot some now see. But he steered Yahoo with the cycle. And that just wasn’t unconventional enough to produce the biggest sort of win.
[tags]yahoo, terry semel, web industry[/tags]
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