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A conversation with Yahoo CEO Carol Bartz

Carol Bartz talks with CNET's Molly Wood and Tom Krazit on a range of topics, including Facebook's privacy settings and whether Yahoo plans to buy the Huffington Post. Spoiler alert: no swearing.

Yahoo was on people's lips last week--from hookups with Facebook to rumors of a Huffington Post buyout to news that CNN had replaced it in the No. 1 spot in ComScore's "general news" rankings. (Don't take that last too seriously, though.)

So, it was a good time for us to sit down with CEO Carol Bartz and get her thoughts on everything from the company's burgeoning content strategy to combating spam in Yahoo Mail and Yahoo Messenger. Below are impressions of the conversation from CNET's Tom Krazit and Molly Wood; for the full conversation, check out the video.

Now playing: Watch this: Yahoo's Carol Bartz on privacy, partnerships, and spam

Molly: I thought Ms. Bartz was one of our most interesting interviews yet. She's direct, especially for a CEO; she's clearly aware of the media's tendency to oversimplify topics, strategies, and complex businesses; and she's got a fairly healthy sense of perspective about the insular nature of Silicon Valley. I can imagine her telling her charges to block out the madding crowd and get down to the work of serving the 600 million people who use the site. I also think she's a CEO with a long-term view, which is good and bad. It's good to have a sense of perspective; but she's in a fast-moving industry, one where it's easy to be caught and passed. And I still wonder if Yahoo's interests are too far-flung to make focus even possible, much less a priority.

Tom: It's been 18 months since Bartz took control of a disorganized and floundering Yahoo. And while she has produced a few quick wins in paring down Yahoo's sprawling array of businesses and finally executing a search deal with Microsoft, investors appear mostly unimpressed. To be fair, she's had to deal with one of the worst advertising recessions in history, but senior Yahoo executives have been heading for the exits at an alarming rate. Bartz's unique style and precise command of George Carlin's seven dirty words (spoiler alert: she didn't swear in this conversation) usually make for an entertaining interview as she moves Yahoo in a tricky direction away from its technology-oriented roots toward a more content-oriented media company.

Molly: Out of the gate, we asked Bartz about her content strategy. Yahoo's made big moves recently, from acquiring Associated Content to integrating Twitter and Facebook into Yahoo pages for easier sharing of, she hopes, Yahoo stories. And there have, of course, been those persistent questions about a Huffington Post acquisition. Bartz describes Yahoo's content strategy as "three-legged," made up of its independent content, licensed stuff, and "crowd-sourced"--much more local content that's dramatically beefed up by the Associated Content purchase.

Tom: Yahoo has a lot of content and a lot of eyeballs reading and watching that content. The company has been moving to produce more of its own content over the past year. However despite a number of high-profile editorial hires, it's hard to produce enough fresh content to satisfy 600 million users. Enter Associated Content, which isn't going to produce the Next Great American Novel or anything but will be able to fill Yahoo's sites with cheap SEO-friendly content. Bartz said Yahoo will have to keep producing great content in order to keep its audience and keep improving people's experience on Yahoo with personalized content made possible by investments in technology.

Molly: As often happens with Yahoo, Bartz is relying on the size of the audience and its adoption of new features and content to keep the company growing. When asked how she'll grow Yahoo into even more of a content powerhouse, she says, "we have 78 percent of the U.S. Internet population that comes to our site. It's not much to worry about as long as we keep really great information on our site," as well as making it personal and mobile. Oh, and as to whether they'll buy Huffington Post, she says, "we wouldn't comment, but we already have a great relationship."

Tom: I probably would have lost money betting on Carol being more coy than Arianna Huffington when it comes talking about the relationship between their two companies. (Huffington spoke of a "deep partnership" between the two companies last week.) But Huffington Post needs traffic, and Yahoo needs content, so it's a match made in synergy heaven.

Molly: I asked Bartz about her content competitors, considering that she paints such a broad brush. As with many of her answers, the gist is: "everyone." For example, she says, "we lead in all these areas. OMG is our celebrity entertainment site. We have twice the traffic of TMZ, but everybody thinks it's the opposite. We just have great scale." How can you have 600 million users and still be anonymous? I think Bartz seems frustrated that Yahoo is underestimated, although she didn't explicitly say so.

Tom: Bartz has expressed that frustration before, blaming it mostly on an insular view held by residents of either U.S. coast. She pointed out that Yahoo ran home page tests in Cleveland and Detroit--which may as well be in a foreign country to the average Bay Area resident--that were well received. She also repeated a line she's said several times before: that as she travels around the world in airports, when people find out she's the CEO of Yahoo, they light up and tell her how much they like the site. She does not appear to get the same reception at the Mineta San Jose Airport.

Molly: On privacy concerns, especially in light of Yahoo's deeper integration with Facebook, Bartz said Yahoo is the "most trusted company in tech" and takes privacy very seriously--as well as "the neighborhood," meaning spam and phishing links and such. "We work really, really hard on having our privacy policies be extremely simple," she says. "It's important to people." I asked her what she, personally, believes about user privacy and she said it's a personal choice how much information you choose to reveal, but it should be a choice, "and it should be very clear to them how to dial in those choices."

"I don't really think we're getting battered, except to the extent that people think innovation is a handset or something... You don't do what we're doing without innovation. So, I don't spend a whole lot of time worrying about that. What we're doing right is that 600 million people are coming to us every month."
--Carol Bartz, CEO, Yahoo

She declined to say that Facebook's actions around user privacy are untoward, but did say, "I would admit a lot of their policies are pretty confusing. But they're a young company. They're going to learn from this."

Tom: Bartz steered very clear of bashing new-partner Facebook CEO Mark Zuckerberg over privacy issues--which many others have not been shy about--but she appeared to get off message a bit during this part of the discussion. This is a hard one for Internet executives; they know that Facebook has hit on a gold mine when it comes to keeping consumers engaged on a Web site for a prolonged period of time, and advertisers like that. But they seem personally puzzled by the trend toward sharing personal information so wantonly. There's obviously a generational gap between Bartz and her fellow big-name technology executives and Zuckerberg's crew.

Molly: It seemed to be about time for a question about focus. I asked Bartz to try to specify the top two or three properties she thought were the most important to Yahoo. "The home page, Mail--we're the largest Internet mail system in the world. We take that very seriously. Finances, people would go crazy if finance wasn't around. And our search results page. And you know, you can't like, drop your children," she said. Suddenly news, sports, entertainment, and everything else become equally important, although I thought she brought it around to, actually, a decent little mission statement for Yahoo: "People want to be informed, they want to be entertained, they want to be educated, and they want to communicate. And that's what Yahoo is all about." If only she always stated it so concisely!

Tom: It's a lot to wrap your head around. Bartz noted that Yahoo's size gives it an edge in competing across all these different areas, and it has a storied brand in Internet years. Fifteen years might as well be a century in this business.

Molly: I asked Bartz the question we're always asking ourselves at CNET: "Are you a media company or a tech company?" To her credit, she didn't say "both." Bartz said they are a "media company powered by amazing technology." Now, as Tom pointed out, that sidesteps the question of whether, say, Yahoo Mail is itself a technology product. Her answer: "Of course not! Is eBay an auction company or a technology company? Is Amazon a book company or a technology company?...Everybody wants these simplistic little boxes to put people in." But despite the historical confusion about which path Yahoo might choose, Bartz, at least, clearly sees herself atop a media conglomerate and not an engineering company.

Tom: The perennial Yahoo debate continues. There are still an awful lot of engineers at Yahoo who have to shake their heads every time they hear Bartz talk about Yahoo as a media company. She correctly points out that most people who use Yahoo don't get hung up in what the company considers itself to be; they just use its services. Still, Bartz wants Yahoo to be seen as a bedrock company in Silicon Valley, up there with Google, Intel, Apple, Cisco, and the rest of the tech royalty. Note there's not a media company among those names.

Molly: Now, possibly we're in the same Silicon Valley bubble that Bartz seems frustrated by, but our audience certainly doesn't find Yahoo as relevant or successful as she paints the company to be. So I asked her, in light of the frequent negative press Yahoo seems to get, what's going right at Yahoo? Her answer was half cheerleader and half her standard reaction: block out the noise, concentrate on the light. "I don't really think we're getting battered, except to the extent that people think innovation is a handset or something. I can sit down 10 minutes with someone and convince them that we have a lot of innovation. You don't do what we're doing without innovation. So, I don't spend a whole lot of time worrying about that. What we're doing right is that 600 million people are coming to us every month."

Again, though, my sense about Yahoo has long been that they're relying on numbers to carry them through, and Bartz seems to have adopted that uniquely Yahoo approach. But I'd argue there's a big difference between innovating by building a phone (I couldn't tell if she was taking shots at Google, Apple, or both, here) and innovating by getting ahead of the industries that have turned out to be explosive growth areas: search and social networking, both of which Yahoo's now out-sourcing.

Tom: This is perhaps the biggest source of frustration with Yahoo--Susan Merritt, who used to work in the product group at Yahoo Personals, commented last week in light of the company's decision to outsource personals to Match.com that "Yahoo stopped having great ideas a long time ago." For at least the third time in the last several months, Bartz compared her short tenure at the top to that of Steve Jobs eighteen months into his return to Apple, pointing out that it took Jobs several years to deliver a financial return in line with his redevelopment efforts. The difference, of course, is that Jobs reinvented Apple around new ideas and personally oversaw the development of ground-breaking products. Bartz has followed his lead in simplifying Yahoo's focus in her time in control of the company, but I have yet to hear anyone compare her product development skills to one of the greatest executives Silicon Valley has ever produced.

Molly: We talked a bit more about whether users translate into dominance, and Bartz reiterated a fairly strong point: that in the case of many of their properties, the numbers are the same as dominance. I, for one, hope she won't rest on that laurel and will continue to, if she'll pardon the word, innovate on ways to keep user engagement high and figure out how to make those picky investors happy. I'm curious to see how the strategy of partnering with winners plays out, and whether running with the cool kids will make Yahoo a cool kid once again. Personally, though, I'm still a big fan of focus.

Tom: We ended on one of Bartz's greatest challenges--it's one thing to debate whether or not Yahoo is relevant among the digierati versus the Joe Sixpacks of the world, but is Yahoo relevant among the talented engineers and businesspeople who want to work on cool technologies and make fortunes? The steady stream of Yahoo executives out the door has been one of the more pervasive stories about the company over the last year (fairly or unfairly), although Bartz dismissed any worries about whether or not she can attract talent. "There's a lot of things that attract people to Yahoo. It's a wonderful brand, it's a chance to hone your skills in a content area or a technical area. We have 14,000 people, so somebody's finding it fun."

There certainly are worse places to work. However, it's fair to say that Silicon Valley's best and brightest would rank a few other potential employers ahead of Yahoo. What's the best way to change that? Develop some confidence in Yahoo as a business and technology leader, and get the stock moving again.

What do you think? Has Bartz inspired confidence in Yahoo? And if you could pick an area for the company to focus on, what would it be? Join the conversation in the comments below.