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'We are not a search company'

Carol Ann Bartz looks a lot younger than her 61 years, which is surprising given that since coming out of semi-retirement in January this year.

Kushan Mitra | Print Edition: December 13, 2009

Carol Ann Bartz looks a lot younger than her 61 years, which is surprising given that since coming out of semi-retirement in January this year to take up the CEO’s job at Yahoo! Inc. she has had her hands full with fixing the troubled Internet giant. The online pioneer, the original dot-com superstar and media darling had been shuffling around in the shadows, but with her ability to speak her mind, Bartz has been able to get things done at the Sunnyvale headquarters of Yahoo! In India recently, she spoke about everything from self and Yahoo! to Google, social web and free content. Excerpts:

It’s been over 10 months since you took over. Your last quarterly results were good with revenues climbing. But you did say that margins were still “terrible”. Why?
Essentially, margins have two effects: revenues or cost. We have costs where we want them and we can grow the business with the same level of cost. That is a way of improving margins.

So, will more revenues at the same costs mean more development work out of India? You have a pretty large base already.
In fact, India is our second-biggest employee site outside of California (it’s smaller than the one in Sunnyvale but bigger than the one in Beijing). So, it is very important.

What sort of research and development (R&D) work are you doing out of India right now?
Cloud Computing, which is very important to our infrastructure. Also, a lot of search R&D, video searching, search monetisation, and so on. The cricket site was developed here.

What happens to search R&D after the deal with Microsoft?
The good way to think about the Microsoft search deal is to liken it to an Intel chip inside a computer. They are doing the back-end for us. We are going to work on the experience part and so, we will keep our search scientists. For example, when you search for “movies” we will have to see that you don’t get 10 blue links but movie timings and reviews. So, we will start doing some of the thought process on what we think you are looking for. The whole front-end experience will be different from Bing. It will be Yahoo! Search, it is different, will look different, and we will continue to innovate on top of that.

Where do you think Yahoo! lost its direction over the past few years?
The year before I took over, things were quiet because of the hostile acquisition thing (Microsoft bid to buy Yahoo! outright for $44 billion in February 2008). Once you get into such a situation, lawyers control things. And so, the company could not go out and promote itself.

If you look back at the data, you will see that the recession actually started in September 2007. We were like the frog in a boiling pot—Oh yeah! Life is great and then, Boom! I think the company got caught with some early recession trends with display advertising, and then, Microsoft. But I wasn’t at Yahoo! then, so this is only an assumption from the outside.

Yahoo! owns some of the world’s most popular web properties, such as Flickr, Yahoo! Finance and Delicious. What are you doing with these valuable pieces of real-estate on the web?
We have the largest collection of number 1 properties on the Internet pretty much across the world. Look at India, for example, where three out of four Internet users come to Yahoo. That is amazing. And it is across demographics— kids, young people and adults. We are number 1 in mail, messaging, news, movies and cricket. You can go country by country and that is what we are.

Your new advertising campaign is encouraging people to go to your home page. But there are users who might never visit your home page but still visit the "Yahoo web" such as Yahoo! Mail, Yahoo! Finance or Flickr. What about promoting these sites?
Well, the advertising is essentially talking about the combination of “your” world or the “me” world with the Internet. The only reason the homepage is invoked is because we have followed up with a new homepage. So, that is a sort of reminder to go check it out. As the ad campaign continues it will be on various products, e-mail, finance, sports, whatever. This is just the beginning. We are very happy with wherever you enter. Just enter (laughs).

We process 100 billion e-mails a month and 400 billion are kept back because of spam; 500 billion e-mails hit our systems every month.

You are moving towards a more "mobile web" thinking on mobiles. What is that all about?
In the US, Yahoo! is the number 1 mobile website. We have deals with over a 100 carriers and have 96 per cent coverage in the Indian market. We realise that in many parts of the world, the mobile will be the only screen and getting information onto that screen is very important.

Do you see Yahoo! also playing a role in the "embedded" Internet with a whole class of traditionally non-computing devices now having Internet access?
Only to the extent that wherever the Internet goes, Yahoo! goes. It is not as if we are trying to be part of the embedded technology per se.

People constantly compare Yahoo! with Google. Is that fair?
No. People keep on comparing us with Google and it is funny because we are not a search company. Yes, half our revenues come from search, but only three per cent of the time spent on the Internet is for search. The rest of the time people are being entertained, communicating, being social and that is what Yahoo! does very well. Google has to grow beyond search, and I hope you keep calling them a “search company” so that they can stay frustrated (smiles).

Rupert Murdoch recently attacked the concept of “fair use”. What do you say?
I agree with him. Rupert Murdoch is fortunate that he has a publication like The Wall Street Journal that is so unique that he can charge. The problem is that most other outlets are doing the same news and one cannot charge if the others don’t. But, the reason he did not target Yahoo! is because we actually push more people to other Internet sites than any other website. That is why we have a lot of content partners.

So, you believe this partnership model for content is the way forward?
Indeed. But I don’t see that all of a sudden everybody is going to figure out how to charge for content.

But exclusive content may not be “free” anymore?
“Free” is an interesting concept. Nothing in this world is free. Just like you talk about Open Source Software! Well, it is the same programmers who have a day-job being paid by a software company that are volunteering for open-source at night. If all of a sudden there were no reporters because nobody was paying for content, what would happen? I faced this in the software industry all the time. People would steal software. That doesn’t exist for very long before you are out of business.

What was the one overriding factor that made you take this job?
Honestly, I was not looking for a job and really did not think I would come out of retirement. But Jerry (Yang, Co-founder of Yahoo!) kept on bugging me at Cisco board meetings, where we sit on the board, and he would not leave me alone even when my first reaction was to tell him to go hire a media mogul. But I got intrigued because it looked like a basic, old software-development problem.

Basic software-development problem, why do you say that?
Because the Internet is software! It is about getting things out on time, on quality, deciding which projects you are going to do and delivering a great experience. For those people back in the dot-com (pre-1999) days who announced the “end of software”, how do you think everything gets up there? It’s software.

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