Yahoo says mobile isn't an internal 'hobby' anymore (Q&A)

CEO Marissa Mayer wants to turn the firm around by making it big in mobile. CNET talks to the man she chose to make that happen.

Adam Cahan, Yahoo's SVP of mobile and emerging products, thinks Yahoo's mobile efforts are on the right track. Brian Ach/Getty Images

SUNNYVALE, Calif. -- Adam Cahan was handpicked by Yahoo CEO Marissa Mayer to lead the effort to transform the Internet portal into a mobile-first company.

Nineteen months into that mission, Cahan, who joined Yahoo when it bought his "second screen" social TV platform "IntoNow" in 2011, says things are starting to look up. "We're rounding the corner," he said. "We're at that user moment where we have enough meaning in terms of scale there."

Mayer and Cahan have shaken things up since the mobile unit went live in October 2012. Yahoo has refreshed smartphone and tablet apps like Flickr and Mail, introduced a new property called News Digest, and bought almost 40 companies.

And mobile is no longer a "hobby," Cahan says.

During an hour-long interview at Yahoo headquarters in Sunnyvale, Calif., in late May, Cahan opened up about making money on mobile, why Yahoo's investment in Chinese e-commerce giant Alibaba won't change his strategy (at least for now), how the company is playing in developing mobile products, and how much Mayer gets into product development. Below is an edited transcript of the conversation.

Q: You've likened Yahoo's task in mobile to starting a revolution -- gathering people, resources, and so on. Nineteen months in, where do you think you stand in that revolution?
Cahan: We're rounding the corner. Our latest numbers we shared -- we're 430 million monthly users now. We've shared that we've added over 100 million in the last eight months alone. We've shared that we're getting to this scale that's quite meaningful. We're No. 1 or No. 2 in most categories. We're arguably Top 5 overall. There's lots of dimensions you can slice it.

We're at that user moment where we have enough meaning in terms of scale there. So then you start to focus on things like monetization.

How are monetization efforts going so far?
Cahan: We launched a product called Gemini. Gemini is a big bet on our part on where we think mobile advertising in particular, but advertising in general, is going. And it basically comes down to a couple of simple ideas. One is, one marketplace. Have a consolidated place where, whether you're bidding on search or what we call native ads, that it's all coming under one marketplace. Two is, we think native ads are really the future of where we think mobile monetization is going. And the reason we called it Gemini is, it's a twin. It's supposed to feel for the user like it's part of the experience.

One of the things that was broken early on in mobile was we were bringing a lot of the desktop metaphors to our devices. Quite literally, we were taking the display ad and shrinking it, and sticking it on the screen. To me, that's a broken metaphor. That's a miss. You're really not looking at the context of what a user is doing, the experience of what a user is doing, and saying how do I make it feel like it's part of the experience. I think we're seeing tremendous strides there. And I'm a big believer.

Cahan says Mayer is "very" hands-on with product releases. Ethan Miller, Getty Images

Can you share numbers or advertising partners on Gemini?
Cahan: In general, I would say that mobile will out-monetize desktop. On an RPM (revenue per thousand impressions) basis, you can actually see that it's more valuable. It's a highly targeted personal device. The real estate in there should be more valuable. Intuitively, it seems right.

Yahoo has bought a lot of companies. You've got 500 mobile engineers now, up from around three dozen two years ago. What are some of the benefits and challenges of a team growing so quickly?
Cahan: When we started, we asked ourselves about a couple of guiding principles. Hey, is mobile going to be big? Turns out, it's going to be big. There's a platform shift coming. That's where users are. Are we there?

Then we started asking ourselves, who builds mobile products at Yahoo? And we came to this startling situation where we could really only identify about 37 people in a company of about 12,000 to 13,000, and it was astounding. And we came to that realization that, wow, we are late to the game. Let's just acknowledge we are 12 months -- maybe 18 months -- late to the game. We need to play really rapid scale catch-up.

In order for us to build products, we need to have people. We have to have extraordinarily talented engineers, designers, product managers who can deliver and create these product experiences. And we used talent acquisition as one of those ways of getting us to scale.

Acquisitions have come in many different forms...not all acquisitions are the same. There's a very big difference between what you might describe as a transformative acquisition -- something like Tumblr. A billion dollar acquisition. They had user growth and penetration, and they were going to be and are a very big business.

I would tell you that Summly -- the summarization technology that's responsible for News Digest -- Aviate, IQ engines, we have a bunch of these that are focused on technology that we really wanted to use and scale. And then there's talent. That's, "Wow, we really love this team and they really know how to do stuff together. We'd love to bring them on board."

That's kind of the spectrum. The vast majority have been, by the numbers, talent deals. And so what do we do? Step one is, we have to figure out if folks are talented. We have a screening process. We have technical reviews and other things to vet folks. But then it's a cultural fit. Are we excited about the same kinds of things? Here's the stuff that we're working on. Is that the stuff that you're excited about doing?

How hands-on is Marissa Mayer with product releases?
Cahan: Very. In the sense that, for all of us, she provides the final editorial decision. There are times when the answer is no. But, it happens. Essentially, she's the editor in chief who makes it all work.

Any examples of that?
Cahan: Every time we go in for a product review there are refinements. There's never a first-time "You're good to go." Products are an interesting evolution on how you get to that state. They start with philosophy and perspective, but how you bring that to life is an iterative process.

Every experience has, "You know, this isn't really quite working." And sometimes for me, even as a product leader, I need that. I need that extra set of eyes that isn't as steeped in it, and hasn't been looking at it every day for N number of months. I need an outside perspective that looks at it fresh and says, "Hmm, I hear you but actually that's not working. You're telling me it will do this, and it's not doing that." We value that feedback a lot. She plays a very strong role in terms of that product leadership.

The other thing I would say is, as a company, I do think there is a lot to be said about a CEO and what their background is. In my opinion, the best companies are either founder-led or product-led. And it's a very different thing if you look at the top of a company and it's not somebody in that state. I think the companies that we would point to that are most innovative and are the most exceptional in that regard typically have a product leader or founder at the head.

Yahoo CEO Marissa Mayer, Mobile Chief Adam Cahan, and former Flickr Head of Product Markus Spiering. Sarah Tew/CNET

Yahoo will get a lot of cash -- from $10 billion to $12 billion by some estimates -- after Alibaba goes public. What are your thoughts about another big acquisition?
Cahan: That's really a Marissa and Ken Goldman [Yahoo's CFO] question. When you look at how they've answered it, I think they've been pretty straightforward around what our expectations are. So, I'm not going to say anything that's different from what they've said.

The one thing I will qualify is, from my perspective, and from what the Mobile and Emerging Products team is trying to do, ultimately, we're here to create and build and scale our users there. And Alibaba...I can't operate around it. So it's not something I really spend a lot of time on, to be honest.

One more Alibaba question...
Cahan: You can try. [laughing]

After they filed for their IPO, there were many news reports, including one I wrote, that Yahoo is now under more pressure to deliver. How do you respond to that?
Cahan: I don't think it's any different than what we've been feeling all along. At the end of the day, the journey for Yahoo is the proof in growth. What we want to show the world is that we can return this company to growth.

We've started to show people that growth, in terms of user growth. I think we've shown recently in some quarters some small growth -- at least trending in the right direction. I think generally speaking, that's the mandate. We will know we've been successful when we return the company to growth. So I don't feel any more or less pressure in terms of Alibaba. From an operating perspective, which is where I sit, there's not a lot I'm going to do one way or another to affect that outcome. So instead I'm going to focus on the core growth story.

Yahoo is in a lot of different categories -- from online video to search. But you, probably more than anyone, know that at a modern tech company, mobile touches everything. What is your role among the nonmobile teams at Yahoo?
Cahan: I'll tell you my philosophy. When Marissa and I looked at this opportunity and said, let's create a mobile team, and let's make it independent because we need to have that focus, my initial reaction was, that doesn't make sense to me. If mobile is going to be big, everybody should be focused on mobile. Why would we have an independent organization?

The answer is pretty simple in my mind: No organizing principle is perfect. It's never perfect. It solves for something. The question is what is the right organizing principle to solve for what you're trying to accomplish? In the interim, what we said was, because we needed to make sure that it was the focus of somebody, it made sense to create an organization for mobile. In the long term, is that the right idea? I don't know. And frankly, my promise with Marissa is that we were going to revisit it every year and ask ourselves, is it the right way to organize? I think what we said was, for right now it is. And the reason is because we needed to scale that competence and capability.

The analogy that I use is, in the previous landscape, [mobile] was everyone's responsibility. It was also no one's responsibility. And so you ended up in a world where it was a hobby, and it was an "and" statement. We have all this stuff that we're doing, oh, and mobile. There was no concerted effort. It's a massive platform shift. It's a huge growth opportunity. Ultimately is it going to be, let's have a mobile and emerging products team? I'm not sure. And I don't know when the right time is, but I think we will revisit it and constantly ask ourselves, what's the best way to organize for this right now?

You bought artificial intelligence service Aviate earlier this year. Where do you see Aviate's role in tying together the mobile experience?
Cahan: Aviate is a very meaningful product for us. Because it is a platform or an understanding, where I see Aviate going is ultimately in many ways the next generation of how I think about search.

We have the perspective that says your device has so many context inputs and signals, you should have your device anticipate your query. There's no reason you should put text into a box. That is a metaphor from a previous dimension. What we did on our laptops and PCs was very much a text input type of world.

For example, the latest Apple devices have 5 new sensors. Samsung has 10 new sensors. You've got everything from ambient light to accelerometers to fingerprints to time of day to gyroscopes. These devices have unbelievable inputs. When you bring all of that context together, it's remarkable what you can understand about a user. So Aviate plays that role. How do I surface these experiences for you?

Do you see Aviate as a stand-in for Yahoo not having a mobile operating system like Apple with iOS and Google with Android?
Cahan: It's a fantastic question. At some level, it really is which part of the experience is the most powerful? Certainly there's a lot of reason to believe that the home screen, if you will, is one of the most important. Because that's what you're interacting with. At the end of the day, that's what you as a user are engaged with. So I do think there's an interesting question about where we can operate on the device -- the OS, the home screen, the lock screen, all of these different elements. There's a lot of room to play in there.

There have been reports about Yahoo working on other mobile search products. Can you say anything about those?
Cahan: As a general principle, we never talk about products that don't exist.

What I will say is this...we already have brought together a much richer experience than the blue links world. And it's a world that is bringing together a lot of the content experience that we have access to, a lot of the knowledge that we have, the ability to understand entities and information and structured data, and present that to a user in a compelling way.

In general, search as a category is never in a place where it is defined. Our thirst for knowledge and information is forever going to be in a path of innovation. And if anyone ever stopped and said search is what it is today and that's what we should expect in the future, I would say, you're missing the plot.

There's no world in which you and I are going to look at search the way it is today and say, "Done. Good." We will never be satisfied there.