Yang: Just for fun What brought you and David
together?
Yang: David was actually my teaching assistant at Stanford
in a computer architecture class. That professor gave me one of my worst
grades ever. When I got my homework problem sets back, I would go to the
TAs and complain about my grade.
Did he change it?
Yang: No.
Later, when I went to graduate school, I needed a partner to do something
in lab. You always knew that if you were ever going to do something, you'd
want to do it with David because he's one of the brightest guys you'll ever
meet, he's the most technology-savvy and has a great business mind. And
he's like a rock--he never gets flustered, and he's just really, really
solid. We were obviously great friends before we started doing this. That
helps a lot.
Was there ever a
defining moment when you realized that you were really on to something with
Yahoo?
Yang: We never thought of [Yahoo] as a real
business until it became a business. And when it became a business, we're like, "OK, well,
now we have to figure out what we do next." There's this huge, fast-moving train
called the Internet. And we're just half a mile ahead laying the tracks to
make sure it doesn't go off the cliff. It's felt like that since the very beginning.
Being a public figure probably
puts a little more pressure on you, too.
Yang: Yeah, I think that's true. The quarterly microscopic
analysis by the Wall Street community is both good and bad. I think that we
have to make sure that we constantly have a clear message to the Street.
You have to have a lot of discipline.
What's your message to the
Street?
Yang: It's been pretty consistent ever since we went
public: We know what business we're in, we're in a branded navigational
space. We want to bring as many eyeballs through Yahoo to get them to other
services as possible. We're intent on growing the business in the next couple of years. I think the
profitability, for us, is accidental. We run a disciplined business and try
to break even. We're going to focus on being a break-even business
for the next couple of years. And that's been very consistent from the very
beginning.
Yahoo has made it a
business fundamental to make partnerships, with Softbank to do Yahoo Japan,
with Ziff-Davis for a magazine. Did you know early on that partnerships
would be so important to your business?
Yang: Well, I don't know who thought about the partnership
part of it as being a critical part of our strategy, but I think we've
always known that if we try to do everything ourselves, it is going to take
much too long. And I think we never doubted the fact that the Internet was
going to grow much faster than any of us can keep up with. So the more you
can pool resources and create a common structure so that we can all benefit, the
faster we can grow the business. I think that sounds obvious, but there's a lot of cases in which we have
to work at partnerships to make it work. And partnerships are things that
have to be a win for us; it has to be a win for a partner and has to be a win for our
end-users. And if that doesn't happen, it's going to be very, very difficult.
We work with a lot of traditional media companies--broadcasting companies,
local affiliates. We have about 20 local affiliates that we work with. We don't intend on doing our own
productions. We don't have the facilities, we don't want to get into that business. But because of our local
affiliates' relationships--for example, we do a little segment every
night--they call in and say, "We're doing a story on how to get your cat out
of a tree. Tell me all the Internet sites there are on the Web for getting
your cat out of a tree." And we help them with stuff like that.
Probably one of the biggest assets that we have today is the kind of
partnerships we've developed over time.
You were an engineer, and
only in your early 20s, when you started the company. Did you have any
training in business?
Yang: Neither David nor I were business people. What has
made us successful so far is that we aren't necessarily focused on the
business side of things. We're more product people; we're much more
[engaged in] figuring out what is the ultimate coolness vs. sort
of how to cut the deal today--that sort of a thing.
But I've learned more than I thought I ever could have in the last two and
a half years. Both of us have gone through more than we ever thought we could go
through in an entire lifetime in two and a half years.
You get thrown into this and you either sink or swim. We're both
very, very competitive people and we want to swim. You do what it takes to
stay afloat. I enjoy the relationship part of what I do and I'm still learning a
ton and by no means do I think I'm good at it yet, but I think it's been such an
amazing ride for us to be in contact with so many different people that when you like what
you do, you keep wanting to do more of it.
Is it ever intimidating to
you to deal with people who are so much older than you are, especially when
you went public?
Yang: I think it never intimidates us because I guess part
of it is that what we do is so new. Most people are looking at us to
figure out what the answer is as much as we're looking to them for help. So
I think that almost from the very beginning--from meeting the venture
capitalists to going public to talking to partners--we certainly have been
nervous, we certainly have been adrenaline-driven, in some instances we may
even have been intimidated. But I think that at the end of the day, we are
confident of what we've got.
What about you personally?
Has the attention, the money, changed your life?
Yang: I guess not. For both David and me, we were doing
[Yahoo] when there was no money in it. Had we wanted to do it for
money, we would have sold it very early on, because there was a lot of
money dangling in front of us. We started with nothing and we have very
little to lose. Just having that sort of mentality is really liberating in
some ways.
To tell you the truth, I look at the stock once a day, when it closes, and I
don't even know how many shares I have. It's so irrelevant to me right now.
I mean, I'm 28--I don't need the money, I don't want the money, I don't want to pay
taxes. It's all on paper, it's all in stock. It's some big amount...it
almost seems unreal, it almost doesn't matter. It's more money than I'll
ever need and I don't necessarily need more of it.
We're actually very cheap people. David is certainly; I am as well.
Value-conscious is the way I like to put it. And I don't believe in wasting
money, I don't believe in blowing it off. I believe in doing what we need
to do to live well and to be able to contribute.
Maybe when I'm 40 I'll be sick of everything and do something
different, but right now our mindset is still very much that of people who
are in their 20s and early 30s.
Silicon Valley seems more
politically conscious than ever before. Do you think that's being driven any
by a new generation of entrepreneurs, such as yourself?
Yang: I think Silicon Valley has traditionally been a
community that really worried about its own interest for a long time. And
that's not bad at all--I think that's positive. But I also think that what has been produced out of this area has
been influencing not only the country, but around the world in a way that is so
profound and so sustained that a lot of people are not only trying to figure out
what makes this place tick, but people in this trade are beginning to figure out how
we can continue to prolong this interest. And I think a lot of people sort of say
it's about time that the community got galvanized around securities litigation and
some of the bigger issues like encryption, privacy. And we realized as a
community that we have some voice and that voice should be heard across a pretty broad
interest group.
I don't know if I'm part of that new consciousness. I think the younger generation,
the people who have achieved some level of success in this area, have a
civic duty to continue to try to do what's right for our region and for our growth. And I
think that's bringing in a lot of economic benefits, but I'm not sure I like the
way that this sort of portrayal has been--that it's the new guys that are sort of
getting awareness and all that stuff. I think a lot of the older generation of
Silicon Valley executives have done a lot to promote the causes of Silicon Valley on
Capitol Hill, etc. I think it's as much the media seeking out the new aspect of this more
than anything else. I think it hasn't really been necessarily that because of
the new Internet companies there is a new political consciousness. I think
it's just a gradual coming of age of the political process being involved in Silicon
Valley.
I think the fact that [Vice President Al] Gore pays more attention
to Silicon Valley and Clinton pays more attention to Silicon Valley has as much to do with all of this as
anything else, even if the Internet didn't happen (well, maybe they won't pay as much
attention if the Internet didn't happen), but I don't necessarily attribute it to our
involvement.
But yet you're 28 you've
met Vice President Gore.
Yang: If I was 48 and running Yahoo or founding Yahoo, I
would be talking about the same thing. It's really the maturity of the industry
rather than the people in it. Now, we may bring a different perspective. I
think that we've always had a sense that, if this industry gets into a
certain stage of maturity, there has to be some necessary interaction with
the government. And we're just trying to play that role in a
cooperative manner, rather than sort of going on our own until it's too
late, then you have to interact. I don't think that's healthy.
I understand that recently
there was a little bit of disagreement amongst the search engines about
whether to carry ads for adult sites or not.
Yang: We're very free speech and free First
Amendment-oriented. We also see the right to advertise as not nearly as
sacred as the First Amendment, but it's certainly a very important element of our society.
To be able to have influence over consumers through advertising is a major
basis of our free-market system. So I really look at it as a censorship issue. When you exclude
certain advertisers, then you're denying them the opportunity to reach their
consumers. And I think especially with the sexual advertising, it's a tough
call. But, for example, we don't allow tobacco advertising and we don't allow hard
alcohol. On those you can draw a line and say they're bad for you and
they're healthy. But the advertising policies with regards to sexual content is that we a) pay
a lot of attention to it, meaning that we make sure that it satisfies some very strict
guidelines in terms of what it appears on and how it's soliciting; and b)
that it's very, very targeted. You have to really look for that stuff to see that
advertising. And as long as those two things are happening, there's no reason that we
should move down to the path of setting policies of saying that you don't accept
those kinds of advertising.
I think the philosophy of the people on the other side tends to be we should be
able to use the industry to sort of impose self-censorship, not only on advertising,
but perhaps even on other content. And I just don't think that's the right direction
because I think the whole point of defeating the CDA [Communications
Decency Act] is to a) preserve the First Amendment rights and b) try to find ways to protect the kids. And if you
compromise one or the other too much, it defeats the purpose.
So that's sort of our viewpoint, and until we come up with an overall solution that
solves those two very fundamental issues, taking on advertising on sex sites, it's not
going to help and it certainly could hurt our business. So I think we want to do what's
right for the long term and not try to be too reactive and too short-term about some
of these things.
What about rating? People
have held up filtering software as being the answer to heading off any
censorship from the government. But isn't rating software also a manner of
censorship, depending on who's making the software?
Yang: Yeah. I think the rating issue is going to be
critical in the next few months, maybe a year, to try to define because figuring out how those things will get rated
themselves is a very difficult task. You look at the TV ratings war and you look at
the movie ratings and you look at the music industry rating their own
music--assuming that you can even come up with a very well-defined rating
system, I believe that the task is to incentivize people to allow them the option to
rate themselves. And for those people who do rate themselves, give them a little
bit more incentive and give them some way of saying that, "Here is a better way of
looking at content. Should you choose to look at and rate content, here's a better
way to look at it."
But we're not in the camp of excluding content that is not rated because I think it
will take a long time to get the kind of critical mass. And if you cut the Web at its
knees where you say all of sudden, tomorrow, Yahoo only has the rated sites,
well, it's certainly not healthy for the Web and it's certainly not healthy for our
business.
So what role do you two
play since you hired CEO Tim Koogle?
Yang: David is still pretty much the chief technology
officer. He makes sure our Web site, which is probably one of the largest
in the world, makes sure it runs properly, makes sure we have the right infrastructure, makes sure we have the bandwidth
[and] machines. He also tries to figure out the next level of challenge. What
happens if multimedia comes on? What happens if high-speed access becomes a
reality? What is our role? So he's much more the technology guy.
I think I'm probably more on the business development side, which
thinks about what we need to do in the next 12 months to be competitive, to be
serving our users, to be forming business models that make sense to build
partnerships.
We have much more of an influence role rather than a control role. For us,
the success of what I do and David does is our ability to convince people
in this company that without proprietary interests, we don't have any sort of
functional interest. So our goal is, we get rejected more than we get accepted. And
I think that's the way it ought to be because people are developing their own sense of
what's right and what's wrong and we're just sort of trying to guide them
in the right direction.
We're very much the facilitators. We're trying to make Yahoo run better; we're
trying to make Yahoo a better partner for people outside and we're trying
to make other people a better partner for us.
NEXT: Filo: The net Net
saturation, a documentary film crew from Stanford filmed our team's
videotaped interview. His office white board was covered in Japanese
writing, kanji, in preparation for working with Yahoo Japan, the company's
joint venture with Softbank. And Yang seems to thrive on talking to Wall
Street analysts and reporters, when the newlywed's not traveling far more
than he'd like.
In the first year it was doubling every month and it's kind of slowed down.
As we get bigger the growth will obviously slow down. You can't continue to
double every month. But it continues to grow relatively quickly. And so a
lot of the problems that we solved in the past with certain
solutions no longer work. So you have to, a lot of times, redo problems that
used to work but don't anymore. And as more users come in, you have to deal with
that in trying to spread the Web site, not just having it in one location but in
multiple locations. Now we're moving to internal sites. So dealing with all of this,
at least the operations side of managing all the data and all the users and all the
stuff is a pretty big challenge.
Just going outside and playing tennis or golf or going
skiing or even watching TV just doesn't happen anymore. I keep thinking
that over time that will change. It will as the industry matures. I'm sure
we'll be spending less time devoted to working on this, but for right now
it's still, it pretty much consumes all my time.
