With more than 420 million users around the world, Yahoo can claim a high spot on the Internet echelon. But it wasn’t always smooth sailing for the Sunnyvale-based company.
When Yahoo’s chairman and CEO, Jewish Brooklyn native Terry Semel, first arrived at the company in 2001, it had just lost $98 million on revenue of $717 million. Semel was determined to put Yahoo back in the black.
His strategy worked. Last year Yahoo earned $1.2 billion on sales of $5.3 billion — and those 420 million users aren’t bad, either.
On Jan. 25 Semel addressed 300 donors to the S.F.-based Jewish Community Federation who gathered for the JCF’s first Business Leadership Council breakfast.
Semel, once one of the most powerful figures in Hollywood and now one of the most commanding leaders in Internet technology, started the keynote address by announcing that he was not a morning person.
“I prefer to take an hour to reflect and catch up in the morning,” he said.
Soft-spoken but authoritative, Semel discussed the importance of philanthropy in business. “Business and philanthropy go hand in hand,” he said. “I came from a lower-income family in Brooklyn, yet by the age of 10 or 12 I’d already been taught the importance of giving.
“You need to start kids off that young so that it becomes a habit. To accomplish things you also have to give. At first maybe with time, then later with money, and eventually even both if you are able.”
At the age of 10 it was a dollar from his allowance; today, Semel no longer thinks on a small scale.
“I now think in terms of hundreds of millions,” he said, “but the same principles apply whether it’s a two-person philanthropy organization or a giant like Yahoo.”
Tikkun olam, repairing the world, is how Semel operates both in philanthropy and business. He recalled how, as an ambitious young man working as a sales trainee at Warner Bros. in the mid-1960s, his boss would arrive shouting and yelling at all and sundry.
“There and then I decided I would not do that. How people are treated is vital.”
Semel, who graduated in 1964 with an accounting degree from Long Island University, went on to become chairman and CEO of Warner Bros. During his 24-year career there, Semel and his business partner, Robert Daly, helped shape the company into one of the world’s largest media outlets, generating nearly $11 billion in total revenue from businesses in 50 countries.
In 1999, Semel and Daly pressed their hands into wet concrete outside Hollywood’s legendary Mann’s Chinese Theater. With the executives thus immortalized in Hollywood lore, the ceremony marked the last day of work for the two at Warner Bros.
In May 2001, after an 18-month hiatus, Semel joined Yahoo as CEO and chairman immediately after the dot-com collapse in Silicon Valley.
“I was looking for a challenge. I didn’t take the position for the money,” he said.
Whether he was looking for it or not, Semel has netted $403 million by exercising Yahoo options and selling shares. He still owns shares and options worth more than $230 million.
The credit of Yahoo’s success, Semel said, goes to his staff and their practiced team ability.
“It’s always about team. No one wins if it rests on one star athlete. The superstar ideal will not get you to the Super Bowl, it’s not sustainable. It has to be the team. And we [at Yahoo] actually like each other — we love the challenge.”
Last year Yahoo added 220 people a month and now employs about 10,000. Daniel Rosensweig, Yahoo’s chief operating officer, said, “Terry’s a Brooklynite at heart. He expects a new fight every day.”
One of the biggest challenges Semel faces is adapting the company to fit its users’ ever-changing preferences.
“The big change in technology is that we used to have someone else program everything for us,” he said. “Someone else programmed television, so you watched what was on when it was on. Internet has turned the user into programmers — we want what we want, when we want, and we get it.”
On Friday evenings, Semel boards his private jet in Sunnyvale and returns to his family and home in Bel Air for the weekend. There he is able to relax for a couple of days knowing that he has helped grow Yahoo into a company that has the widest global reach of any Internet site.
Not shabby for a man who, prior to joining Yahoo, had rarely gone near a computer.
Semel may constantly redirect attention to his team, but he is very much an individual. “I would not have succeeded had I not been true to myself. I never wanted to be the guy who looks back and says ‘I wish I’d done this, done that,'” he said.