Transcript of Kara Swisher - 06/18/2008

The following is a transcript of the conversation with Kara Swisher:

Chip Griffin: Kara Swisher started covering digital issues for the "Wall Street Journal" San Francisco bureau in 1997. Along with Walt Mossberg, she is the co-host and co-producer of D: All Things Digital, a major high tech conference. And she has thoughtful and provocative blog called Boomtown, allthingsd.com. She's joining us today to discuss the current state of Yahoo.

So, is it really just a matter of time before Jerry Yang feels the pressure and has to go from Yahoo, or is there some doubt?

Kara Swisher: Well, he doesn't have to go from Yahoo. I think what I was trying to say is there's a lot of people that want him to go, and still think he's the great leader, as much as they like him. And let me just say, he's a very lovely person. And he's a great visionary for having started Yahoo, but he might not be the manager needed to run the company in a much more difficult environment, and in one in which - after the Microsoft takeover thing fell apart - is a little bit more thorny for him, especially.

Chip: Now, you've assembled a list of some potential Yahoo CEOs. And I guess, what do you think that next CEO for Yahoo would need, if Yang were to step down?

Kara: Well, someone who has to understand advertising, very obviously, online advertising. Google has run away with the market in search advertising, and it's a very tough business. The display advertising business has a lot of competitors like AOL and Microsoft and now Google, when they bought Double-Click.

So, it's got to be someone who really knows how to compete in the new online advertising space. And it's got to be someone who can really manage and make cuts when necessary. And that's one of the issues around Jerry; he's very slow at making decisions, or considered slower than most people.

And I think, that's very natural, since he started the company. It's hard to - let me say it's sort of hard to hurt the baby in any way, kind of thing. So, he or she has got to be someone who is able to make the hard decisions and to define Yahoo, which is still quite undefined considering it's been around a while.

A lot of people don't know exactly what Yahoo is. Is it a search engine, is it a content site, is it a software site? And so it's someone who's really got to be able to be definitive about exactly what businesses Yahoo should be in going forward.

Chip: Because theoretically the new CEO would take it one of those directions more prominently than the other.

Kara: Yeah. It's just defining who you are. And we had Jerry Yang and Sue Decker, who's the president of Yahoo, at our conference recently, about a month ago, on the stage. And they actually couldn't define what Yahoo was very well.

I think, that's what the problem is. It's not very clear. You know what Google is; you know what Microsoft does. And it's really hard to say what is Yahoo's greatest growth area in the future. Many people think their content and their aggregation of Internet content is really important. Other people think their mail and communications area is important.

And obviously, advertising is important, but since they're so far behind in the search space, many people think they should just give that up because they're never going to catch up to Google.

Chip: Now, you just mentioned Sue Decker, and you also mentioned her in your piece. If there were to be a change of leadership, isn't it more likely that they would go outside the company?

Kara: I don't know. Yahoo's a very inbred place, and it has been for many years. They're almost too collegial, I would say. They give a little too much credit to people in the company and they're very insular in that fashion. It's just the nature of the company.

And so, it would be very hard for them not to give it to Sue Decker, who's been waiting in the wings for a long time. At the same time, I said, "Why didn't they give it to her a while ago, if she was that good?" Why not put her in place and see what she can do.

And I think, unfortunately, she's been tarnished in this takeover deal, because a lot of people feel that Yang and her didn't handle it very well, the negotiations. And now their stock is at $23 a share and Microsoft offered $33, so that's a $10 delta that I think a lot of investors are kind of pissed about.

And they don't believe that she and he can get that back at least to the $33 level and then beyond. You want it to grown. So, it's a question whether she has what it takes to do that, or has lost the trust of the employees and Wall Street to do it.

Chip: Right. And you also threw out some, I guess, I would say, suggestions that would be more entertaining for us outsiders to look at.

Kara: Yes, I was just a little bit entertaining. But, some of them are quite serious. My view was like, let's start thinking about who would be good. And I put out some names and every one of them had a different quality that I thought was important.

Chip: Let's talk for a minute about perhaps the most entertaining one, Mark Cuban.

Kara: Yeah.

Chip: We all agree that would be quite a shake-up.

Kara: Oh, it would be. That's his job, to shake things up. He's a really interesting guy. He sold his company to Yahoo many years ago, called broadcast.com - a company he was part of and a principle in. And he immediately sold the dot-com shares the minute he got his hands on them, and he was right. He sort of times it perfectly, because the bubble sort of burst right after he sold it.

He, of course, went on to buy teams, and is very wealthy. He's actually, I think, wealthier than Jerry Yang. Even though he sold a much smaller part of his company to him, which is somewhat ironic. And he's had a very colorful life. He's quite smart. He's been invested in a lot of interesting companies, more than people realize.

And I thought he was just really this idea of shaking things up and being unorthodox, which is something that Yahoo needed. Which is why I picked him, the willingness to try anything. I mean, what he's doing with his sports teams is very innovative. And Yahoo is really well known for being conservative, excessively conservative, when other companies are not.

And other companies, at least in the Internet space, probably do a little better if they have a little bit more innovative spirit.

Chip: You also mentioned another Marc who would not be as flamboyant, certainly, but at least as innovative. And that's Mark Andreessen.

Kara: Absolutely. Mark Andreessen. The reason I picked him is because it's visionary quest. I mean, everybody talked about Jerry Yang being visionary. Well, why not pick the original visionary of the Internet, Mark Andreessen.

And interestingly, Andreessen's gone on to some very big successes in companies, he's had several that he's sold for billions of dollars, and working on another one in the social networking space called Ning.

And I just felt that he was really interesting because he understand scale, he's very well respected. He's a technologist, which is really important. That's the problem and Yahoo is engineers are sort of... morale is quite low there among engineers. And he is sort of an iconic figure. I thought he'd be good in that regard.

And also, he's very savvy. He's invested in a lot of interesting Internet companies. He's a known quantity. He's someone who would be inspirational. And I think, paired with someone who's a good COO, he might be quite a good choice.

Chip: You also took a look at someone who, but for fate, might have been CEO of Yahoo many years ago, Meg Whitman.

Kara: Indeed, Meg Whitman. Well, the reason I put her in there - everybody has their flaws, and not all of them are available. I mean, none of them really pretty much are available. Because they were going to merge Yahoo and eBay many years ago, and Meg was going to be the CEO of the company, but there were all these internal politics at Yahoo that prevented that from happening.

It would have been a really interesting merger, I think. History would have been quite different. They were very close. And I just think she definitely had a difficult last few years at eBay, but I still think, she's an interesting choice because of leadership. And that's one of the things that I think a lot of people think has been lacking at Yahoo.

While you really like Jerry Yang, is he the strong leader that's needed? And she certainly is. She's well known for her sort of take-no-prisoners approach to things. And I always think, as long as you figure out the direction and you have a leader, people really crave that. And I think, she really represents that to me in that regard.

Chip: Now, you also had a disclaimer that you were not trying to suck up to your boss, but you included him anyway.

Kara: Yeah. Well, he's not my boss, precisely; I never speak to him.

Chip: Right. [laughs]

Kara: I actually interviewed him on stage at D, and I gave him quite a hard time before they bought Dow Jones. Peter Chernin's the COO of NewsCorp, I don't know if he has a president title or not. But, the reason I was thinking of that was I was trying to think of a media executive who would be strong, and there's lots of them out there. There's Bob Eiger from Disney, there's Galman from Viacom.

But, I felt Chernin was someone who really does get the feel, does get the Internet and is not afraid of it. They own MySpace, which is a natural merger partner for Yahoo. And Rupert Murdoch's been trying desperately to have that happen, because it's fairly difficult. MySpace stuck inside NewsCorp has been problematic for that company, in the face of competition from Facebook.

But, I felt he knew the advertising market, he understood the Hollywood market. That's an area that Yahoo has excelled in compared to Google. And it would go in a different direction from Google, because they really cannot compete head-on with Google in the technology space. Google just really towers through that.

So, I thought it would be an interesting choice to pick a media executive like Chernin. He represents that to me. And the direction that Yahoo could go that's a little bit different. He obviously has the advertising experience and he's known as a really strong leader. And he's probably not going to become the number one at NewsCorp, because Rupert Murdoch is running it forever.

Chip: Right, right.

Kara: He's not going to be stopping any time soon. We just interviewed him on stage, I have to tell you, the guy's not slowing down one second. And then, his sons are quite adept and in training and very sharp cookies. So, Murdoch will be running that company for that next foreseeable future. And there's more Murdochs. He has young kids too.

Chip: Right. Now, you spent a lot of time looking at this industry, and you bring up the media company aspect. Do you think that's really where Yahoo can create its best niche going forward?

Kara: Absolutely. The big lie about Yahoo is it's technology company. It uses technology. But, when I started covering Yahoo, when it first was founded really years ago, it was a directory of sites on the Internet that people hand-selected.

I did a story on these surfers who would hand-select sites. That's a media company. The "Wall Street Journal" hand-selects our stories, you know what I mean? In a different way. You have to think of it like that. It has an audience and it's selling advertising to that audience. It's not anything else but that.

And I think, you have to think of it as an audience company, as an advertising company, as a company that's creating content. But, it's just different content. Instead of a movie, it's email. Instead of a television show, it's social networking.

It's the same idea, it's what people are doing with their time, and that's what's really important. And Yahoo should be trying to have people on their site more of the time. And that's going to be their challenge, because there's a lot of options now for young people, especially. So, that's a critical issue going forward, I think.

Chip: I really appreciate you taking the time to be with us, Kara, today.

Kara: No problem.

Chip: I wish we had more time, but I know we're up against the clock. And I really appreciate it.