Sometimes You Need a Geek, not a Deal Maker

Fred Vogelstein writes in the current issue of Wired about how Yahoo is losing (or lost) the war with Google over search advertising. It’s brutal.

“When Terry Semel became co-CEO of Warner Bros. in the early 1980s, he was steeped in the marketing and distribution plumbing of Hollywood. So it’s no surprise, in retrospect, that his legacy is as one of Hollywood’s biggest innovators and risk takers. He grew Warner’s revenue to nearly $11 billion when he left in 2001.

But now, despite Semel’s achievements in Hollywood and early success at Yahoo, Silicon Valley is buzzing with a familiar refrain: Wouldn’t an executive with a little more technology savvy be a better fit? Semel has been Yahoo’s CEO for nearly six years, yet he has never acquired an intuitive sense of the company’s plumbing.

He understands how to do deals and partnerships, he gets how to market Yahoo’s brand, and he knows how to tap Yahoo’s giant user base to sell brand advertising to corporations. But the challenges of integrating two giant computer systems or redesigning a database or redoing a user interface?

Many who have met with him at Yahoo say he still doesn’t know the right questions to ask about technology. “Terry could never pound the table and say, ‘This is where we need to go, guys,'” one former Yahoo executive says. “On those subjects, he always had to have someone next to him explaining why it was important.”

One could have made a convincing argument two years ago that such deep technical knowledge didn’t matter much. But now we have empirical evidence: At Yahoo, the marketers rule, and at Google the engineers rule. And for that, Yahoo is finally paying the price.”