It's Complicated

Interview with Jerry Yang

We sit down with Jerry Yang, Co-Founder of Yahoo!, to discuss the early days of Yahoo!, how he met Jack Ma and pulled off one of the best investments in tech history, what he’s doing now, and how to win in China.

April 4th, 2018   |    By: The Startups Team    |    Tags: Stories, Funding

One of our  favorite interviews we’ve done was with Yahoo! Co-Founder Jerry Yang. Not just because of what he’s done, but because of the time we did it.

There are a lot of interesting moments in history to interview Yang — ours was just after Alibaba went public in the largest global IPO in tech history.

This was a massive vindication for Yang, who originally brought the deal to Yahoo!, and argued against Yahoo! selling half of its stake off years later. He needed the vindication: Yang was supposed to be the Steve Jobs founder hero coming in to save Yahoo! back in 2008. He initially turned down a $40 billion acquisition by Microsoft, was eventually ousted as CEO, and Yahoo!’s long slide continued.

It’s hard to assess his legacy: On the one hand, that Microsoft deal would have been far larger than Yahoo!’s eventual sale to Verizon. On the other, the greatest value of Yahoo! in its later years were those Asian assets that it wouldn’t have had without Yang.

In this interview, we talk to Yang about the early days of Yahoo!, how to win in China, what he’s doing now and got the low-down on how he met Jack Ma and pulled off one of the best investments in tech history.

Jerry Yang: This November will be 20 years since David and I started in the servers at Stanford, and in many ways certainly for me it seems like an eternity. I was with a bunch of Stanford [kids] last night, and I realized none of them were born when Yahoo! was started.

It’s really a sense of not only one generation but it’s probably multiple generations of Internet companies. Things were very different, although we can talk about things are different, but they stay the same even though everything we do now is accelerated at a much greater pace, but also at much greater critical mass.

Because nobody really understood how the Internet was going evolve or the Web specifically was going to evolve back then, and because the Internet and coming from an academic and research and government environment it has always been very highly collaborative.

People from universities and researchers really helping each other. I think there’s always a sense of camaraderie and sense of helping each other when there is something very exciting going on.

I remember Yahoo! going at Stanford, it was quickly becoming one of the most trafficked websites. We were getting IP addresses from over 90 countries coming in in the first few months. The IT administrator at Stanford was extremely…instead of saying, “Oh, my god. You guys are doing something bad,” they were pulling resources and trying to get more connectivity to help us.

It was in that spirit, and I think Marc [Andreessen] and Jim Clark at Netscape, same thing. Jim had a strong connection at Stanford. You can tie the roots all back to Stanford.

Even as we started to get commercialized because there was no money involved, there were services. They had a browser, that was a great tool, they had a server software, that was a great tool so they need to highlight a bunch of great websites that are being created, and we had a nice collection of them.

I said this to Marc this day, without their early help and, obviously, their early recognition, Yahoo! Certainly wouldn’t have grown up.

The Startups Team: Did you realize you were starting a company?

Jerry Yang: No. We were doing our PhDs at Stanford and if you’ve done PhDs, you do everything you can avoid doing your PhD. We were intramural basketball champions twice and played every softball league you can imagine.

We were trying to procrastinate and we were trying to figure out how not to do our thesis. Even then, we knew our careers after we get our degrees were probably in the startup environment, and that was something that Dave and I both really felt like we wanted to go do.

When the Internet came along…we tried to come up with ideas. I always joke because one of our ideas was selling textbooks online and that tells you how bad entrepreneurs we are. Obviously, Mr. Bezos has done a little better job than the rest of us.

The whole time we were working on Yahoo! As a hobby, we never knew that was going to be a business. I just remember one day we came back from one of the softball games and we had these messages on this old answering machine where you hit rewind and you play and there was a venture capitalist calling. And it was more than one.

Before we knew it, we’re like, “Oh, my God. If all these people think we could be fundable, maybe we ought to look at this and think this as our business idea.” That’s how it started.

The Startups Team: We want to get into the differences and similarities because you also moved here with your family, you had grown up in the area, gone to Stanford. Obviously, San Jose, that Valley’s changed tremendously over the time you’ve lived there.

In terms of Silicon Valley, one thing that’s changed dramatically is there is now this sort of cult of the founder and this belief that founder shouldn’t be replaced to CEOs, which is very different than the time that you guys were coming up.

Do you think if Yahoo! had been started today — and there was been pressure on you or Dave to stay on as CEO — would it have become a different company?

Jerry Yang: Wow. I don’t know. Now that I’m the business…I go, “Oh, my God. Investing companies is really, really hard.” I’ve been doing it for a couple of years now, and I would definitively say that if David Filo and Jerry Yang stand in front of me and pitch me, I would never fund them.

The Startups Team: Why not?

Jerry Yang: Because we had no experience, we had no business plan, and we had a really competitive space. I don’t know why Mike Moritz funded us, I’m sure it wasn’t that much money to him, but he still had to take on the headache of grooming us, and coaching us, and getting us through the hoops.

At least for me — and you’re going to have to ask Dave this — but at least for me, there was never a question that we wanted to be founders.

We wanted to stay close to the product, we wanted to be able to really think about what’s coming next, and there were just so much to do that felt like we didn’t have the expertise and we certainly didn’t have our own ability to run the company. Our first CEO was Tim Koogle and I can’t think of a better person.

In retrospect, I can’t really see ourselves changing that, understanding the culture, that change, and everything else. But, certainly, back then, that wasn’t a best use of our talent if we had any. That certainly wasn’t best use of our talent.

The Startups Team: Of all the Yahoo! CEOs, which is your favorite?

Jerry Yang: I think I was my favorite.

The Startups Team: Steve Ballmer’s attempt to buy Yahoo! just as you returned to run the company was obviously a huge turning point. For people who weren’t in the Valley at the time when you came back to run Yahoo!, there was — and I don’t know how much it’s still there today — but there was such a love for Yahoo!

People just felt like Yahoo! was this iconic company that they loved and they wanted to get back to being healthy. I saw at the time the love the people inside that company had for you. People would go to the Yahoo! Christmas party like it was their prom. They were they were so high-fiving and thrilled the day you so said you wouldn’t sell.

Tell us, did you make the right move in retrospect?

Jerry Yang: I think that as CEO, you really have to make decisions. [CEOs] get all the input but at the end of the day, you have to work with your board and you have to make the decisions.

Steve Ballmer and I, we like each other, we know each other very well, and I would actually say we’re friends. We just never got our deal done. It wasn’t because I didn’t want to sell Yahoo!. That’s the way the media portrayed it. The fact is they actually didn’t want to buy us just as much as we didn’t want to sell it.

The Startups Team: What do you mean? Why was there an offer made then?

Jerry Yang: Obviously, they made the offer, and these are all facts and they ended up withdrawing the offer. If they wanted to buy the company then you don’t really withdraw offers. What happened in between obviously is a lot of media speculation and things like that.

For me, my obligation was to the shareholders. It’s one of those things where I feel like until a company is sold and not sold, and it was going to be a very long process no matter what. Then making sure that our employees and making sure our customers, and making sure our users are taken care of, that was job one.

The transactional piece to me was, it was interesting. That was definitely not something that you learn in business school. At the end, I think we all felt like they were not going to do a deal and we were not going to be able to do a deal with them, and life goes on.

The Startups Team: When you came back into Yahoo!…. This was after Jobs had come back to Apple. This was after Michael Dell had just come back.

There was a sense of this mythic narrative, not only done by the press but by Wall Street — of the returning founder.

Do you think you really got a fair shake to be that returning founder? Were you given enough time?

Jerry Yang: Somebody asked me the other day. The first six months or so, I think it was summer I became CEO and then February, obviously was the Microsoft episode. We spent some time really thinking through the company. We had a great set of meetings with our management team.

I was very, very fortunate that Steve Jobs came and talked to our team and he was great. He was like, “Jerry, you should fire half of your VPs.” I’m like, “Which half?” He’s like, “It doesn’t matter.” It’s typical Steve.

For all these stories about Steve being very rough, he really cared. I felt fortunate, obviously even then. Knowing what we know now, I just felt fortunate that I interacted with him. Nobody can be him. We can all emulate parts of him, but nobody can be him and he loved what he did.

The moments that I think…I always say that when you have a CEO job, it’s never all going to be good and it’s not all going to be bad. You can’t have the good without the bad. I don’t really look at it that I get a fair shake or not, that was my job.

Being founder, it’s a little different. It’s also your company. I really felt like you do the best you can and you make the best decision you can, and how it shakes out it shakes out. It’s probably hard to believe, but I never really paid attention to what people said, because at the end of the day, in some respect, they don’t know what’s really going on.

There’s one thing that I believe, which is things will sort out in the end if you make the right decisions. If you didn’t trust your own decisions or you didn’t trust your own value system at the time you make a decision, you always end up paying for it. Even if it’s the popular thing to do.

Maybe I’m different that way, but I think in five to ten-year chunks and I don’t really care what people say tomorrow.

The Startups Team: I got to say, when I think about my fictionalized dramatized version of Jerry Yang in my head, which I do a lot, I picture you like that scene in Walter Isaacson’s book where Steve Jobs had just been fired from Apple and he’s just listening to that Bob Dylan song in repeat that says, “The loser now will be later to win.” It’s like, you’ve had the world’s biggest victory lap in the last month, with Alibaba going public, in the largest global IPO ever.

Everyone is like, “Jerry Yang, that sucker. Carol Bartz is coming and save us” and now you’re Jerry f*cking Yang. You’ve got to love the vindication.

Jerry Yang: I really don’t look at it that way. I know that’s what the most recent press like to say. I love Jack and Joe and the team in Alibaba, but I wish I had built Alibaba. I’m an entrepreneur but I didn’t. I was lucky enough to invest in them.

It’s not just me, obviously, Terry was the CEO and these are not things that where a founder could say, “CEO, let’s just do this.” He put his heart and mind into it and there’s the whole team behind it. I feel like we were in the right place at the right time with regards to Alibaba.

Never in our wildest dreams can we imagine they would be the company it is today.

The Startups Team: Is it true that you met Jack Ma because he was your tour guide at the Great Wall of 1997?

Jerry Yang: He was not my tour guide, but he was my government official…He was tasked to handle me.

The Startups Team: Talk about making lemonade out of lemons. You go to China, you’re handled by a government dude and he ends up making you the biggest pile of riches in the history of Silicon Valley.

Jerry Yang: That’s life.

The Startups Team: For most of us, yes.

Jerry Yang: It’s my life. Sorry.

Last year I was in China and he gave me a picture of that day when we were on the Great Wall, and we were obviously 18 years younger, whatever we were. He remembers it, I remember it and I think it’s interesting that we went away. He went off and left the government and went back to Honduras and started Alibaba.

Yahoo! was trying to do what he could do in China, and we were having a hard time. We were getting our butts kicked by this competitor. I’m like, “Who are these guys?” They say, “It’s a guy named Jack Ma.” I’m like, “Is this the same Jack Ma?”

Real credit goes to Masayoshi Son at Softbank who found Jack when he was starting the business. Forget about me being an investor that made a good bet. Masa was in way earlier.

The Startups Team: He didn’t sell half of that stake, like Yahoo! did.

Jerry Yang: This is the same Masa that invested in Yahoo! when we were tiny.

The Startups Team: Why do you think he’s so good?

Jerry Yang: Why? He’s getting better, which is scary. Masa has innate sense for people and he literally will look at you or have a meal with you and basically, he’s all in. Granted that whatever he was betting on you wasn’t his entire fortune, but he bets his entire fortune all the time.

He’s analytical, he can think through all the issues, but when he sees the right opportunity he jumps on it. I don’t think anybody has been better.

The Startups Team: Are you like that? Do you ever go all in?

Jerry Yang: No. I take a little longer before I trust people. That’s just the way I am. I would say that we’re all very loyal people. Once we trust people it’s for better for worse kind of thing. Masa is a huge character in all of this, and I think he’s by far the best investor in the space.

He’s had a lot of the up and downs, but if you just look at value creation through Yahoo!, Yahoo! Japan and Alibaba…Then not including his empire he’s built in Japan in Sprint. He’s an incredible guy.

The Startups Team: Do you think you’ll ever start another company?

Jerry Yang: I have to say two-and-a-half years ago, when I left Yahoo!, I was really intimidated. I was really intimidated by what’s going on in the technology scene. I felt like I had lost touch with what entrepreneurs are doing today, especially the really RD-stage stuff.

I really wanted just to learn. I think I have an experience that a lot of entrepreneurs would want to hear from and get advice on. Every entrepreneur is different. It’s not like I can go write a book or go give a bunch of talks. I felt like if I could just get close to entrepreneurs, help them, and in this world, helping them means invest in them, I could get a feel again.

Two-and-a-half years in, I’m still learning. Maybe someday, maybe tomorrow, I’ll get an idea, and I want to go do it again, but right now, I’ve said this before, it’s like the golden era of innovation. You have cloud. You have mobile. You have commerce accelerating. You have hardware in vogue again.

I was literally three blocks down the street here, and they’re launching 26 satellites at Planet Labs tomorrow. I mean, satellites.

It’s just the abundance of ideas. You could start your company on AWS. You could start your company with a network of entrepreneurs that are going to help you. You have incubators and accelerators. You have coaches and mentors.

The Startups Team: It’s a different game now.

Jerry Yang: You have angels. It’s a totally different environment. There’s flaws, there’s strengths, there’s weaknesses, but on average, I will say that every week or every two weeks that I’m meeting people, there’s one idea that goes, “Oh, my God, if these guys just execute it, it would change the world.”

It wasn’t like that. It wasn’t like that even 10 years ago. I just think this is a really unique time. It’s not happening globally, but if you go to Berlin, you go to London, you go to Beijing, you’re seeing the kind of energy that you really haven’t seen in a long, long, long time.

The Startups Team:  One thing we think is amazing about the Valley is how quickly you can go from being the whizkid, the person everyone is talking about to like so yesterday’s news.

Remember when Andreessen was getting together with Mark Zuckerberg, and Andreessen had been literally the poster child for the wave of Internet? He was on the cover of Time with no shoes on and sitting on a throne, and Zuckerberg was like, “Tell me again what Netscape did.”

Jerry Yang: That’s just Zuck being Zuck.

The Startups Team: Point being, we’ve met a lot of people who read tech blogs every day maybe wouldn’t recognize you walking down the street. Is that hard for you?

Jerry Yang: No. I think if you are being identified with the things you do, that’s fine. That’s why we do it. I think if you think you are what you do and you think that you deserve to be then you’re fooling yourself. You really should only trust what you are and what you can do by yourself.

I think the exercise of having been yesterday’s news and then being not recognized and being able to really go to anywhere, meet anybody, listen, learn, that’s what makes me happy.

To me sitting in a meeting where my mind is racing 100,000 miles an hour, I’m going, “Oh my God, this guy is way smarter than me,” makes me happy. I don’t want somebody to tell me that I’m great for the 15,000th time. That doesn’t make me happy.

It’s a weird thing. I’m sure everybody thinks I’m crazy, but at my age, having been through what I’m through, I go by the happiness index. I don’t really care about what everybody else thinks. That’s very liberating, Sarah. It’s great.

The Startups Team: Is it weird for you not having a formal role at Yahoo! anymore?

Jerry Yang: Yeah. No, I think I left on Martin Luther King Day in 2012 because it was Monday and there was nobody in the office. I’ve been back once. I don’t miss it. I miss the people. I miss the culture. I miss everything. I don’t miss not going to the office. The reason is [David Filo] is there.

Filo is my partner. The fact that he’s there, he’s the founder, he’s on the board. Marissa is leveraging him in a way that is really great for the company. It’s really great for Marissa to do that. I said to Filo, I said, “Filo, you tell me because you’re the founder now, if you’re happy with what’s going on, I’m happy. My votes with you.”

As long as Filo’s happy, I don’t really miss it.

The Startups Team: Do you feel like it’s still your thing? We remember at one point, there was like AOL was doing something with a Netscape brand. When we asked Andreessen about it. He was like, “You know, you can only put your eyes out so many times. At some point, I had to just divorce myself from it.”

Jerry Yang: Time and distance is always good. Look, I’m very realistic. I’m always going to be identified with Yahoo!, one way or the other. Of course, we love to see Yahoo! even continue to be more successful overtime because if Yahoo!’s good, then we look good. Even if we have nothing to do with it.

There is always emotional attachment. There’s a lot of pride if you ask me what emotions come through.If you’ve looked at the Yahoo! alumni, we’re this unspoken story about just a number of Yahoo! people that are in a valley playing leadership roles. I’m really proud of that.

There’s many aspects of what’s going on that makes you proud of having started Yahoo!, seeing where the people are and the culture has gone. There’s a lot of pride. That’s all you can ask for. It’s like a kid, it’s growing up and it’s going to do what it wants to do. If you can’t be proud of it, then I think that would be so.

The Startups Team: Can we ask you the most obnoxious question we’ve ask you so far?

Jerry Yang: Why start now?

The Startups Team: Which was the bigger screw up: Not buying Google or not buying Facebook?

Jerry Yang:  If they were both true, they would have been both. We didn’t buy both. It’s a great story to say that I had the choice, and I didn’t exercise that choice.

The Startups Team: It’s not that simple.

Jerry Yang: No. First of all, Larry and Sergei, they were not going to sell the company. I don’t think Zuck was going to sell the company. It was true back then. It’s even more ludicrous to think that people think that was even possible now.

They’re great entrepreneurs. When you meet Larry and Sergei, even back in the day, they had a vision. They had a really determined view of the world that I think is playing out. Zuck’s the same thing. He’s become this incredible visionary. He has figured out a great sense of management and a great sense of running a large company. These are not easy things to figure out.

I have a lot of respect for them. Maybe it wasn’t with me, maybe it was somebody else, I certainly never was sitting around saying, “Let’s not buy these guys.” That wasn’t my call. Maybe it was somebody else.

The Startups Team: Do you think the world has ultimately better because those two weren’t bought by Yahoo! or whoever? If they ever stayed independent and built these things?

Jerry Yang:  You’re asking a question that probably I would never know the answer to. These entrepreneurs, knowing what we know now are shining at the brightest, running their show. It’s hard to see anybody — forget about us — buying them and be able to do better. Maybe. Who knows.

These guys had a level of imagination and independence that allowed them to be where they are.

The Startups Team: We’ve got to talk about China, because you are the only Silicon Valley guy who’s had success in China. Even still you’ve had failures in China, it wasn’t 100 percent. Do you do a joint venture? Do you expand there? Do you ignore it? Do you have your own rules like Google? Do you play by the government’s rules?

No one gets it right it seems.

Jerry Yang: I don’t think anybody knows. It really depends on whether you are in the consumer business or not. I don’t think it’s an accident that Yahoo!’s not successful there. I don’t think Google’s not successful. Facebook. It goes back to AOL. eBay, even Amazon.

We all can’t be idiots. The great entrepreneurs — if you look at Baidu, Tencent, and Alibaba — they end up being greater, bigger companies than all the US-based companies.

I think that certainly for a while in the 2000s, they were not ready to have American companies in there. Everybody dealt with it differently. We recognized that and we decided to turn our operations into an investment.

Google did it differently, and Facebook is trying to do different things. I don’t think the story’s over. It’s really dangerous to say, “This is China, and that’s going to be the same forever.”

The people there are changing. You know that country’s going to continue to change. The government is not one thing, just like an American government is not one thing. They have internal continual tensions about what to do.

My belief is that if the quality of life of people there continue to rise, and education continue rise, and the proverbial middle class continue to grow, then people are going to want more.

They’re going to want not to sustain themselves, they’re going to want to have more consumables, they’re going to want to have more disposable income, and they’re going to want to be able to have choice.

Ultimately, society from that perspective will change. Some people want to see you go faster. Somebody want to see you go slower. The trend continues to be a more educated and more global set of citizens.

That eventually will bring them to the same standards as a global population, a global economy. Every company’s going to go through a different experience. It’s going to go a different journey.

The Startups Team: Is there one thing you absolutely shouldn’t do when it comes to China?

Jerry Yang: It depends on where your horizon is. A lot of people say, “Google should have never pulled out.” Maybe they’ll be right in the long run, but certainly for now, they’re going to have a hard time wanting to go back even if they wanted to.

I think that people underestimate the Chinese. They have a very, very long-term view. They’ve gone through a lot worse than probably most people remember, as a culture and as a country. People underestimate how quickly they might change.

They will change, but it’s at their own rules and their own pace and their own kind of thing. It’s not right or wrong. That’s just the way it is.

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