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Leadership of Jerry Yang, Co-Founder of Yahoo Report

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Updated: Jun 8th, 2022

Introduction

Entrepreneurial abilities and skills are often taught in theory to give students an understanding of their importance, traits, and applications. However, one of the most effective ways is to study real-life examples from a career of well-known business people who have applied these skills to overcome challenges. Consequently, this paper will look at the entrepreneurial and leadership traits of Jerry Yang, co-founder of Yahoo, to identify the essential skills for a successful business.

Biography

Jerry Yang is co-founder of Yahoo and is included in the Forbes list of the wealthiest people. Yang was born in Taiwan and was given the name Chih-Yuan at birth (Olson, 2014). When Yang was two years old, his father died, and eight years later, he and his extended family moved to San Jose because of the possibility that Taiwan being annexed to China. Yang had mathematics skills and built his first computer in high school, and later then entered Stanford for a computer engineering course (Olson, 2014). At Stanford, Yang met and became a friend of future Yahoo co-founder David Filo. This year was the beginning of the history of one of the largest and most successful search engines in the 1990s.

The creation of Yahoo is the story of the hobby and knowledge of two Yang people who wanted to make the Internet more convenient. In 1994, they spent plenty of time on the Internet searching for materials for their alchemic works, but since the sites were not organized and not logical, this process took too much time. For this reason, Yang and Filo created “David and Jerry’s Guide to the Web” for friends by collecting the best sites, dividing them into categories, and creating a search engine (“David Filo & Jerry Yang,” n.d.). Over time, there were more sites, the system expanded, and more and more people started to use it.

In 1994, the creators renamed the system to Yahoo, and by 1995 more than a million surfers a day were visiting it. However, Yang and Filo did not make any profit (David Filo & Jerry Yang,” n.d.). For this reason, Yang and Filo found venture capital, hired a CEO, and were the first who started to locate advertisements on site. In 1996 their stocks cost $ 33, and the companies were valued by $ 850 million in total (David Filo & Jerry Yang,” n.d). Yahoo has developed every year by concluding agreements with partners, online stores, and websites.

However, Yang’s biography also demonstrates the blunders and setbacks that caused him to leave the company. In 2007, Yang became the CEO of Yahoo; however, many partners and business people called him “too nice” because he did not confront competitors and did not make tough decisions for the company (Effron, 2018). In addition, in 2008, Yang refused to sell Google shares to Microsoft for 62% more than the market value; as a result, Yahoo acquired Verizon in 2017 for 4.5 billion, or 10% of Microsoft’s offer (Effron, 2018). For these reasons, Yang’s management style was often criticized, which forced him to leave the post of CEO in 2009 and company in 2012. However, Yang is the founder of AME Cloud Ventures, a board member for Workday, Alibaba, and Lenovo, and his net worth is $ 2.3 billion (“# 359 Jerry Yang,” n.d). Consequently, the businessman has every chance to implement as successful as the project as Yahoo.

Leadership Traits

Assessing Yang’s leadership skills is challenging because management style can change over time and experience and depend on companies’ corporative culture. For this reason, one can note that Yang’s leadership traits have also evolved and elicited both approval and criticism from experts and staff. However, qualities such as a people-oriented approach, focus on innovation and democracy are defining for Yang throughout his career.

In Yahoo’s early days, both co-founders realized that they had no business experience on which their company’s success depended. For this reason, they hired Motorola Inc. executive Tim Koogle as company president and CEO (Stone, 2016). Consequently, it is difficult to judge Yang’s management decisions during this period, since responsibility for the company’s activities was shared. However, during this period, the company introduced many innovations, such as direct links to stores or material from online publications, which could be Yang’s suggestion at least partially (Stone, 2016). In addition, in 2005, Yang was one of the lead negotiators with Alibaba and contributed to Yahoo’s opening and operating in Japan and China (Olson, 2014). Consequently, while there is not enough material on Yang’s leadership ability as one of the company’s co-founders, Yahoo’s success during this period shows Yang and Filo’s management skills.

However, during the period when Yang became CEO, many analysts expressed their opinion about his leadership style, and the results of his work are the best confirmation of them. Yang’s advantage as CEO of Yahoo was that he was an insider, developed the company from scratch, and was an example to employees. One of his famous quotes is, “If you’re not in the game to win, you shouldn’t be in the game, and that’s the way that I try to encourage the whole company to think about it” (Shiels, 2008, para. 13). Thus, Yang showed the traits of a charismatic and democratic leader and insisted on attracting talent and investing in people. This trait remained with him after leaving Yahoo, since, in an interview as the founder of AME Cloud Ventures, he continues to support this principle (Tawakol, 2018). This people-oriented approach is a useful trait for employee motivation, which, together with an insider’s position, enables the creation and maintenance of corporate culture.

However, this trait, softness, and democracy of Yang’s style became a disadvantage that led to failure. First, Yang did not make tough decisions inside of the organization, so one of the specialists noted that the first task of the next CEO after Yang is to fire people, since he is too close to the company (Effron, 2018). In addition, Yang’s reluctance to make tough decisions was also reflected in his inability to confront competitors as this can involve conflicts. Some of Yang’s colleagues and entrepreneurs noted that he was “too nice a guy” and that this approach is ineffective in fighting competitors like Google (Effron, 2018). This feature, coupled with the refusal to sell Microsoft stock, led to Yang’s resignation in 2009 and a decline in the company’s success.

However, Yang’s current work stage demonstrates such qualities as innovation, thoughtfulness, and critical approach that work well with Yang’s democratic approach. For example, Yang’s company AME Cloud Ventures, which aims to support startups and finance the development of data, cloud, and hardware, is a relatively new and innovative direction for a business. Besides, Yang is determined to seek new solutions to increase the performance of existing systems and create more advanced artificial intelligence systems and voice assistants (Tawakol, 2018). Consequently, Yang is not afraid of new and risky decisions. However, he emphasizes that all risks must be reasonable, and preparation for meetings or making decisions must be thorough and based on a critical approach. In this case, a quick response is not necessarily a matter of a few hours, but perhaps a few weeks that will bring the most productive results (Tawakol, 2018). Yang said, ” I invest in things for the long term and have a long horizon and the flexibility” (Swisher, 2013, para. 7). This statement also confirms the entrepreneur’s successes when he predicted Alibaba’s growth and bought its hares (Olson, 2014). Yang’s rhetoric became more determined and tough, but he continues to talk about the importance of interaction and collaboration and shows himself as a democratic leader committed to investing in employees and their inspiration. Consequently, while Yang’s leadership traits have their drawbacks, his focus on collaboration, innovation, and employee inspiration allows him to do his job successfully.

Challenges, Fails, and Innovations

Previous analysis of Jerry Yang’s leadership and career shows that his most tremendous success was launching Yahoo, and his greatest failure was the refusal to sell the company to Microsoft. Yang and Filoo’s first challenges were to launch Yahoo into the market with no business experience. The co-founders overcome this problem by getting funding from venture capital company Sequoia Capital and hiring Tim Koogle as company president and CEO (Stone, 2016). Koogle’s management experience and the technical implementation of Yang and Filo’s ideas made the company one of the most successful in a short time.

However, the main Yang’s mistake that launched a series of negative changes that led to his loss of the CEO post and the gradual failure of the company was a lack of toughness and underestimation of competitors. Yang was reluctant to make tough decisions, fire employees, and confront competitors, which soon allowed Google to take the first positions. In addition, the refusal to sell Yahoo to Microsoft is considered by most analysts to be the biggest failure, since the interconnection of these events led to the situation that Yang’s followers were unable to fix. Consequently, Yang stepped down as CEO because he could not overcome the challenge due to a lack of management experience. Yang’s other misstep was hiring Scott Thompson as CEO, who was an incompetent executive and forged his resume (Stone, 2016). However, in this case, Yang quickly corrected himself and fired Thompson three months later, and then resigned himself. These facts demonstrate Yang’s inability to lead the company in a competitive environment.

At the same time, nowadays, Yang faces challenges in the field of innovation where competition is weaker due to the small number of companies with technologies. For example, Yang studies the Southeast Asian market and invests in projects such as technology development for space exploration and longevity, which are underdeveloped areas of business (Lee, 2019). Berkeley Lights, one of the startups in which Yang has invested, has already signed a trade agreement to sell Nikon’s optics for Beacon, “a multipurpose platform for cell research and development” (Lee, 2019, para. 10). Consequently, Yang’s success since leaving Yahoo demonstrates that his experience and skills enable him to meet challenges in innovative business areas. Thus, these failures as CEO and Yang’s concurrent success with Alibaba, AME Cloud Ventures, and other companies he serves as a board member or founder can demonstrate two conclusions. On the one hand, the current success of Yang’s projects can mean that the entrepreneur has learned from his adverse experiences and changed his approach to decision-making. On the other hand, Yang’s leadership and professional qualities are likely most useful for assessing and making technological decisions, but they are not enough for managing the activities of a company in a competitive business environment.

Conclusion

Therefore, Jerry Yang’s example demonstrates that even the most successful entrepreneurs make mistakes and cannot overcome all the challenges of the business environment. Yang’s failure as CEO of Yahoo showed that he lacked toughness in decision-making despite his advantages as a democratic leader. This shortcoming prevented Yang from saving Yahoo in a competitive environment and keeping the company at the top position. In addition, the rejection of a lucrative deal and the lack of proactive action to strengthen the position of Yahoo demonstrated that Yang underestimated his competitors. However, the fact that Yang today remains a successful entrepreneur, board members of large companies, and finances innovative business areas suggests that his talents lie in a different sphere. Yang is a strong analyst with critical thinking and long-term vision, as evidenced by his successful cases with Alibaba and other tech companies. However, negative experiences have taught the entrepreneur that his leadership and entrepreneurial traits are most suitable for teamwork, while the role of the CEO is less suitable for him.

References

#359 Jerry Yang. (n.d.). 2020, Web.

David Filo & Jerry Yang. (n.d.). 2020, Web.

Effron, M. (2018). 8 steps to high performance: Focus on what you can change (ignore the rest). Harvard Business Press.

Lee, J. (2019). Jerry Yang’s latest tech interests: Space exploration and longevity. Nikkei Asian Review. Web.

Olson, P. (2014). Finding Alibaba: How Jerry Yang made the most lucrative bet in Silicon Valley history. Forbes. Web.

Shiels, M. (2008). Hey Microsoft, Yahoo thinks you should buy it. BBC News.

Stone, (2016).What sank Yahoo? Blame its ‘nice guy’ founders – Jerry Yang and David Filo. Bloomberg. Web.

Swisher, K. (2013). Jerry Yang is back (and investing more than ever). All Things Digital. Web.

Tawakol, O. (2018). Work smarter: Jerry Yang, co-founder of Yahoo, founder AME Cloud Ventures. Voicea. Web.

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