Yahoo's Yang faces daunting to-do list; perception problems

Yahoo CEO Jerry Yang has a daunting to-do list and his first mission may be convincing people he's the right guy for the job.

Just because investors and Yahoo observers may be happy to see Terry Semel go doesn't mean Yang is the right person for the job despite his "conviction and enthusiasm." In fact, it took about 20 minutes for the heckling to begin. Valleywag quickly noted that Yang is no Steve Jobs, who is the prototype for founders who return to save a company. That comparison isn't exactly fair. Even Dell founder Michael Dell's return as CEO may not be an apt comparison.

Why? Jerry Yang never ran Yahoo in the first place. Sure he co-founded Yahoo with David Filo as the company hatched from a few Stanford servers to become an Internet giant. Sure Yang knows Yahoo better than anyone. Sure Yang will keep advertisers from getting spooked about the company.

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But...Yang is an insider. And Yang being named CEO brings up an interesting question: If Yang is such a great choice why wasn't this done sooner? The Semel story (see Techmeme) would have been a lot sweeter if he left in 2005. Why wasn't Yang brought off the bench sooner? Why keep your future CEO playing ambassador for the company when Semel was clearly struggling--and plotting a graceful exit.

As far as perception goes Yang is missing a key component of the founder-returning-to-save-a-company tale--he never left. Yang has been involved with Yahoo management and worked closely with Semel. Couple that fact with this one--Yang was never CEO in the first place as Tim Koogle and then Semel ran Yahoo--and you have a conundrum.

Even now Yang is overseeing technology and corporate functions, but his bigger role is playing head cheerleader. Sue Decker, now president of Yahoo, is the operations person. All that's fine--most CEOs have a great operations person--but you'll get critics who contend that the power split only means Yang isn't ready for the whole enchilada.

Is any of this fair? Nope and I think Yang is going to get a bum rap. Give him a few quarters and let's see what he can do. But Yang faces an uphill climb convincing all of Yahoo's constituents that he's up for the task. On a conference call, Yang said all the right things. He's ready and perhaps in a year Yang as CEO will be portrayed as a founder all grown up story.

But before we get there Yang has some work to do. Here's the to-do list:

• Recruitment: How is Yang going to get first class technology talent with a beaten-down stock price and an image as Google whipping boy? Yang noted that engineers like to work on big important projects. First up, Yang has to rally the troops, boost morale and stem an exodus. He also needs a CTO. HR will be first on Yang's list.
• Come clean on Yahoo's issues: Yang pointed out that Yahoo has a lot of great assets--and it does. Yang also noted that Yahoo's strategic bets on social media and ad markets makes sense. All of that's true. But one quote sounds like denial to me. "I won't be satisfied until the external perception of Yahoo matches reality," said Yang. An outsider wouldn't talk perception. An outsider would say we're broken and here's the fix. Yang almost sounds defensive.
• Head to Wall Street: Yahoo had an interesting dance about its second quarter. Decker noted that Yahoo's quarter is in line with guidance, but near the lower end of the company's projected ranges. Why not just get the warning over with now? The playbook goes like this: Get new CEO and lower the expectations dramatically to make him or her look good. Yang will have to play the Wall Street game better than Semel.
• Deliver the metrics: Reading between the lines it sounds like Yahoo's Panama ad system will increase revenue per search just as the display business slips. That won't cut it. Yang will have to deliver some upside surprises somehow.

None of this will be easy. In fact Yang will have a difficult time initially because an outsider would at least enjoy a honeymoon.