05:04 AM

YHOO: Semel's Departure Signals Return to Roots

When Yahoo! appointed Terry Semel as CEO it marked an understanding that it is a media company. Mr Semel came from the top ranks of California media industry and he was to lead Yahoo! into the next phase of its growth.

But Yahoo! was too early in this transition. It realized that it is a media company, which was good but it hadn't realized that there was still a lot of money left on the table in terms of using technologies to publish media. This gave Google a way to break into the market and build up its business using servers and algorithms to publish pages of content and advertising.

Yahoo! was using media professionals to do similar things, but people are more expensive than a bank of servers running software, which is a far more scalable business model.

Similar Roots

The roots of the two companies are extremely similar. The founders of both companies went to Stanford University. Both companies flourished on the back of search. And both companies used inexpensive PC platforms to build out their services.

Chief Yahoo

Yahoo! now returns to its roots with Jerry Yang, the co-founder taking the CEO position. I remember interviewing Mr Yang in a dingy two room office space in a strip mall in SIlicon Valley, just after the company recieved a $1m VC investment. I still have the business card Mr Yang gave me, "Chief Yahoo" it said.

As "Chief Yahoo" Mr Yang will bring the company back to its technology roots and that's where it stands to gain the most. It left far too much money on the table for Google when it moved away from its technology roots.

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