One of the first questions that Jerry Yang and his top lieutenants pondered after he became chief executive of Yahoo last summer was whether the company could remain independent. They quickly answered yes. But Mr. Yang, who founded Yahoo along with David Filo in 1995, had a harder time coming up with convincing answers for many of the more complex questions facing the company. How exactly would an independent Yahoo sharpen its focus, shed marginal projects and become a stronger competitor to Google, the runaway leader in online search and advertising?
Mr. Yang, a cerebral, highly analytic executive who, by all accounts, cares deeply about the company he helped build and its workers, appears to have run out of time to answer those questions. A $44.6 billion bid from Microsoft is once again forcing Mr. Yang and his board to consider the viability of Yahoo as an independent company.
This time, Mr. Yang, 39, faces enormous pressure as he decides whether to try to rescue the company from the clutches of Microsoft, or accept the bid and watch Yahoo become part of Microsoft’s arsenal in its no-holds-barred brawl with Google.
Some analysts and several current and former Yahoo executives are, meanwhile, wondering whether things would be different had Mr. Yang been quicker at making some of the tough choices that Yahoo faced.
“He came on board, announced a 100-day strategic review and promised there would be no sacred cows,” said Mark Mahaney, an analyst with Citigroup. “One hundred days went by, and no cows were slaughtered.”
It took until last week, more than six months into Mr. Yang’s tenure, for him to announce that Yahoo would cut 1,000 employees. At the same time, however, Mr. Yang warned investors that he had decided to make larger-than-expected investments in the business. The announcement sent the company’s shares down to their lowest level in more than three years, precipitating Microsoft’s bid.
“Why couldn’t those things be hashed out in the first 100 days?” Mr. Mahaney asked.
Yahoo declined to make Mr. Yang available for an interview. But other Yahoo executives strongly defended his short tenure, saying Mr. Yang had quickly set priorities and laid out a precise strategy for making Yahoo more competitive.
“We have moved quickly and aggressively to implement our strategy,” said Hilary Schneider, an executive vice president in charge of Yahoo’s network of advertisers and publishers.
By most measures, Mr. Yang is one of the most successful entrepreneurs in Silicon Valley history. He helped build Yahoo from an early directory of Web sites into a sprawling Internet giant that offers services from online dating to e-mail that are used by nearly 500 million people around the globe. His wealth is estimated to top $2 billion.
Early on, as Yahoo’s business grew, Mr. Yang and Mr. Filo recognized that they did not have the experience to run the company. They called themselves Chief Yahoos and hired others to fill the chief executive post: Tim Koogle and then Terry S. Semel. Mr. Filo worked as an architect of Yahoo’s computer systems. Mr. Yang played the role of strategic adviser and represented Yahoo in front of investors and business partners.
Last June, Yahoo investors became increasingly disenchanted with Mr. Semel, as Yahoo struggled to compete with Google in the online search business and faced growing threats from successful social networks like MySpace and Facebook.
Mr. Semel resigned and Mr. Yang was unexpectedly thrust into the chief executive job. He inherited a long list of problems, including a demoralized work force and a company that had grown bureaucratic and cluttered with too many projects.
At the time, Mr. Yang said his years as a Yahoo strategist had prepared him well for the job. And he dismissed speculation that his tenure would be short-lived.
But many Yahoo executives, as well as some of Mr. Yang’s friends, say he accepted the job only reluctantly, out of a sense of responsibility and care for his company.
Mr. Yang himself, at times, suggested that some of the burdens of his new role weighed heavily on him. Speaking to Yahoo advertisers at a conference in October, he described the chief executive job as “lonely.”
“As a founder everybody loves you,” he said. “When you become C.E.O., you can tell somewhat the behaviors change.” He later added: “You have to make tough calls.”
Mr. Yang is generally well liked by Yahoo’s workers, and his appointment helped improve employee morale. He took steps to restore aspects of the company’s start-up culture, for example, by being more open about the challenges facing it. He held some meetings with executives in the middle of the cafeteria.
Mr. Yang and Yahoo’s president, Susan L. Decker, also moved quickly to hash out a strategy. The two thought that Yahoo’s business plan was basically sound but that the company needed to be better managed and had to get out of some businesses that were not vital to its future. They reorganized to make business units more accountable, and they made some acquisitions to build Yahoo’s advertising and e-mail technology.
“They have moved faster than they have in the past and focused on increasing the value they provide to the advertiser,” said David W. Kenny, chief executive of Digitas, an interactive marketing agency that is part of the Publicis Groupe.
Mr. Yang and Ms. Decker also began meeting regularly with an expanding group of top executives in the offices of Stone Yamashita Partners, a consulting firm in San Francisco. According to executives who attended those meetings, Mr. Yang and Ms. Decker were quick to outline Yahoo’s top priorities: becoming a starting point for consumers on the Web, developing technology and relationships to sell ads on Yahoo and other Web sites, and opening up Yahoo to outside programmers and publishers.
But to achieve those, Yahoo also had to cut some things. In particular, it had to prune its sprawling Internet portal so that employees could be reassigned to crucial projects.
