Advertising: The Future of Yahoo!

I met with Chris Jaffe today, who runs the Advertising User Experience Division here at Yahoo!. We talked about where he thinks the best opportunities are at Y!, and where the future of Y! lies. Not surprisingly, he believes that advertising is the place to be, and admits that in the past Y! placed it's B level engineers in advertising (with A level in product development). Now he is seeing this trend reverse as Yahoo! enters its "teenage years." In his meetings with Sue Decker, they have both agreed that the future of Y! is moving away from its owned content (yahoo.com) and into advertising partnerships with content owners (Ford, P&G, NBC).

One area that he believes Google is much farther behind than Y! is in TV advertising--currently advertisers on TV barely know what demographic is watching their ad, and in the near future Yahoo! will be providing data that is just as detailed as what is available for online ads.

Chris also discussed the area where he believes Google is still killing Yahoo!: scalability. All of the advertising tools at Google are automated--they just need to feed the "Adwords fire" and the auctions will take care of themselves. Y! still has a large salesforce, and in his opinion 3/4 of these people are un-needed (saving only the people who deal with Fortune 50 companies). Hopefully I will be able to discuss this in more detail with Robi Ganguly, who is also on my team and working in the division focused on improving scalability.

I believe that Chris truly agrees with the vision of Sue and Jerry here (he said that he has turned down multiple offers in the last 8 months), but he is concerned that they may not be able to deliver in time. In his opinion, if APEX hasn't launched in 18 months and blown away the competition, then Yahoo! is toast. And looking at Panama, this is a legitimate concern.

As for me, he believes that right now is the time to start a company or move into technology--the internet space is established but still moving very quickly, and there are very smart people who have figured out how to be successful (he mentioned Meebo as a great example). He also believes that you can move into consulting at any point in time, and that the experience you get working in the Valley will make you a more intriguing candidate for any job.

Google Q2 Revenue Down

Shares have dropped 8% in after hour trading.

I can hear people celebrating around my cube :)

Yahoo! Q2 Results

Today we had an all-hands meeting at Yahoo! to discuss the Q2 results and what is in Yahoo's future. Jerry Yang focused on how to change Y! three years down the road. His vision of Y! is a deep, active marketplace of consumers, advertisers, and publishers/developers. The opportunity exists in turning data into insights, which can then be turned into revenue generation. The problem is that Y! has become too separate from the Web. One change that he would like to make is rid Y! of its "closed garden" mentality--allow users to access content that is not on the Y! network. Additionally, he would like to change the company's focus away from deals with advertisers and content providers, to becoming partnerships. He has given himself 100 days to buy alignment with leadership, and evolve the organizational structure.

So, what do I think is wrong with Yahoo!?
-Decisions take too long to move through the organization--Y! needs a flatter hierarchy
-Culture is "9-6 job"; people are not enthusiastic about working here--changing this needs to start at the top
-People are protective of their turf within Y!, but do not necessarily make decisions that are in the best interest of the entire company

This last point is best illustrated through an example I heard yesterday. Someone within the division I work in (SDS) found out that a group of 100+ engineers were being laid off due to downsizing at their company. SDS moved in to interview as many candidates as possible, and was interested in many of them to hire. Realizing that other divisions at Yahoo! might also be interested, SDS told them about the opportunity as well. Now these divisions are angry at SDS because they were not informed earlier, and SDS has gotten the "pick of the litter." My guess is that in the future, if another opportunity like this ever occurs, there will be no communication between divisions for fear of being ostracized. Not a great thing when Yahoo! is trying to focus on "hiring the brightest people and placing them in areas where they will add the most value," as Jerry Yang mentioned in the all-hands meeting this morning.

Meeting with Bradley Horowitz

On Friday, I had a meeting with Bradley Horowitz, Head of Advanced Development Division at Yahoo!. Bradley had given a talk for the Executive Speaker Series the first week of my internship, and I was very interested in his role as 'innovation leader' at Yahoo!. We discussed the difficulties of maintaining an entrepreneurial culture at a company the size of Y!, which are exacerbated by how quickly Y! has grown. One major problem that I have seen is that Y! has no platform--there are very little best practices across the network, and products/business units are still verticalized with little communication. Bradley mentioned that fixing this problem is one of Jerry Yang's priorities, and that very soon he will implementing a major change to address this problem.
I also asked Bradley how a company like Y! can keep its best employees; what stops them from leaving for startups or starting their own companies. Bradley runs Brickhouse, which addresses this problem, but he agreed that there is nothing Y! can do (or should do) if an employee has a great idea and wishes to pursue it outside of Y!. However, if the employee chooses to pursue his/her idea within Y!, than instead of a 1:1000 chance of success, it will be more like 1:100 or 1:50. So basically it comes down to people's risk tolerances--starting your company at Y! will never make you a billionaire, but it can make you a millionaire.

Human Tetris

Check out this new Japanese game show where humans act like tetris pieces. Perhaps a new Wii game?