An Open Letter to Washington
We’ve all had the good fortune to found Internet companies and nonprofits in a regulatory climate that promotes entrepreneurship, innovation, the creation of content and free expression online.
However we’re worried that the PROTECT IP Act and the Stop Online Piracy Act–which started out as well-meaning efforts to control piracy online–will undermine that framework.
These two pieces of legislation threaten to:
* Require web services, like the ones we helped found, to monitor what users link to, or upload. This would have a chilling effect on innovation;
* Deny website owners the right to due process of law;
* Give the U.S. Government the power to censor the web using techniques similar to those used by China, Malaysia and Iran; and
* Undermine security online by changing the basic structure of the Internet.
We urge Congress to think hard before changing the regulation that underpins the Internet. Let’s not deny the next generation of entrepreneurs and founders the same opportunities that we all had.
Marc Andreessen, co-founder of Netscape and Andreessen Horowitz
Sergey Brin, co-founder of Google
Jack Dorsey, co-founder of Twitter and Square
Caterina Fake, co-founder of Flickr and Hunch
David Filo, co-founder of Yahoo!
Reid Hoffman, co-founder of LinkedIn
Arianna Huffington, co-founder of The Huffington Post
Chad Hurley, co-founder of YouTube
Brewster Kahle, founder of the Internet Archive and co-founder of Alexa Internet
Elon Musk, co-founder of PayPal
Craig Newmark, founder of craigslist
Pierre Omidyar, founder of eBay
Biz Stone, co-founder of Obvious and Twitter
Jimmy Wales, founder of Wikipedia and the Wikimedia Foundation
Evan Williams, co-founder of Blogger and Twitter
Jerry Yang, co-founder of Yahoo!

After turning down the acquisition offer from Microsoft a couple of years ago, Yahoo! seems to be less interested in selling themselves as a whole. After an investor buys a 20% stake in the company, Yahoo! would then take on debt to finance a stock buyback.

Jerry Yang and David Filo holds roughly a 10% stake in the company. The board may consider a bid for the entire company if it is strong enough and if the terms are appealing enough.

Some of the other investment companies that are reportedly a part of the consortium includes Andreessen Horowitz, Kohlberg Kravis Roberts, THL Partners, and Hellman & Friedman.

Yahoo! partner company Alibaba Group of China is discussing a possiblity with the Blackstone Group about making a bid to buy the company as a whole. Yahoo! Inc. currently owns 40% of Alibaba so this would be a way for the Chinese company to get the stake in their company back.

Dear Yahoos:

In our recent all hands meeting, we talked about the Board’s strategic review to help return the Company to a path of robust growth and industry-leading innovation. While our teams are working to evaluate the many opportunities by which Yahoo! can continue building on our success, all kinds of people have been – and will continue – speculating in the media about where that work is headed, so we thought it best to provide you with some additional context directly from those of us who are closest to it. We don’t have specific news to share with you today, but we are committed to communicating with you directly from time to time – especially given the level of external swirl – so that you know where we are in the process. You can expect periodic updates from us and we encourage you to communicate with us as well.

At the heart of what we are doing is our belief that Yahoo!’s core strengths are not only relevant to where users are going today, but can serve as a foundation for the next phase of our company’s growth. Consider our strengths: we have 680 million users worldwide. We have nine of the #1 properties in the U.S., and we are a leader in display advertising. Our brand is iconic – we are not the only ones who bleed purple. By whatever measure you want to use – engagement, quality of products and services, our value to our advertisers – we all feel that we have what it takes to succeed. Also, our Asia assets remain one of our top priorities and we continue to work well with the teams there. As you may have seen, Alibaba Group has just announced a liquidity event for its employees that reflects a continued appreciation in its value, and therefore of the value of our stake.

What Yahoo! needs to do better – and we’ve talked about this – is accelerate innovation, reignite inspiration, and give our users what they want now – great content that is engaging and easy-to-use on any device and provides an experience in which they can participate and contribute. Perhaps most importantly, we need to anticipate what they will want next. That is the path to enhancing the value of Yahoo! for all of its stakeholders, including its users, customers, shareholders, partners and Yahoos everywhere. Our strategic review is designed to help us map out the best way to achieve that.

At this point, we cannot offer many specifics about the Board’s review; we’ve just gotten started. You should know that the entire Board and management team are fully aligned and unanimous in their views regarding the scope of this work. Allen & Company was a logical choice to help us in this review, because they have been one of our advisers for some time, and this is familiar territory for them. Achieving success in our sector is intrinsic to what they do for a living, and they will be constructive partners.

Our advisers are working with us to develop ideas that we will pursue proactively. At the same time, they are fielding inquiries from multiple parties that have already expressed interest in a number of potential options. We will take the time we need to select and structure the best approach for the company, its shareholders and employees.

In addition, as we announced previously, the Board has commenced a search for a permanent Chief Executive Officer. That process also continues.

When we have updates that we can share we will do so. There will be plenty of rumors and speculation as different parties try to advance their agendas in the media – but it is important that we not be distracted by the rumors and speculation.

You are instrumental to the success of our business – we can’t do it without you. While we will move with a sense of urgency, this process will take time. Months, not weeks. We know that’s a lot of potential distraction, but we believe it will be worth the wait. We are forging a path to a next phase of growth for Yahoo! that feels like our best days: fun, full of possibility, and always in search of how to deliver the new thing people want from us. Together, we can write the next great chapter in the Yahoo! story and secure our place as one of those rarities: an internet company that endures.

Jerry Roy David

From: Jerry Yang [redacted]
Sent: Tuesday, September 06, 2011 8:37 PM
To: [redacted]
Subject: today’s news

All –

Moments ago we announced a leadership reorganization under which Tim Morse has been appointed interim Chief Executive Officer, effective immediately, replacing Carol Bartz, who has been removed by the Board from her role as Chief Executive Officer.

We want to thank Carol for her service to Yahoo! during a critical time of transition in the Company’s history, and against a very challenging macro-economic backdrop. We wish her all the best in her future endeavors. In the meantime, we are commencing a search for a permanent Chief Executive Officer and expect to engage the services of a nationally recognized executive search firm to help us identify candidates for the position as expeditiously as possible.

We believe Tim is an excellent choice to serve in this interim role and lead the Company. As most of you know, he has a very strong operational and financial background and will serve as an excellent chief executive and guiding voice for Yahoo!.

The Board has also named key senior Yahoo! executives to a newly formed Executive Leadership Council (ELC) tasked with supporting Tim in managing the Company’s day-to-day operations until a permanent chief executive is appointed. We have great confidence in Tim’s abilities and in those of the other executives who have been named to the ELC. In addition to Tim, who will also continue in his role as Chief Financial Officer of Yahoo!, the ELC will consist of Michael Callahan, Executive Vice President, General Counsel and Secretary; Blake Irving, Executive Vice President and Chief Product Officer; Ross Levinsohn, Executive Vice President, Americas; Rich Riley, Senior Vice President & MD, EMEA Region; and Rose Tsou, Senior Vice President, APAC Region. David Filo and Jerry Yang will each continue as Chief Yahoo and will provide counsel to Tim and the ELC.

In addition, the ELC will support a comprehensive strategic review that the Board has initiated to position the Company for future growth. We are confident that we have talented teams in place and see enormous opportunities on which Yahoo! can capitalize, and right now we are focused on leveraging the Company’s leadership and current business assets and platforms to execute against these. We fully intend to return the Company to a path of robust growth and industry-leading innovation. We are committed to exploring and evaluating possibilities and opportunities that will put Yahoo! on a trajectory for growth.

Thanks to your hard work and dedication, we have created something extraordinary here at Yahoo!. These changes will position us for future growth and will enable Yahoo! to continue building on our success.

We don’t want to lose any of our momentum during this time, and we know we can count on all of you to continue doing your jobs to the best of your abilities. We should all remain focused on delivering the high level of service and innovation that our customers, advertisers and partners have come to expect from us.

In case you have not already seen it, please look over the press release we just issued. We hope you will join us at an all-hands meeting tomorrow, where Tim, the ELC, David and Jerry will be happy to answer any questions (look for the invite shortly).

As you might expect, these developments may generate considerable interest from the media. If you are contacted by a reporter, please refer them to our corporate communications team.

We want to thank you again for your commitment to Yahoo! and continued hard work. We appreciate all you do.

David Filo
Co-founder and Chief Yahoo

Jerry Yang
Co-founder and Chief Yahoo

Roy Bostock
Chairman of the Yahoo! Board of Directors

[BusinessInsider]

[TechCrunch]

Carol Bartz, the new CEO of Yahoo! will be earning $1 million per year before taxes and withholdings.  Bartz will also be eligible to make an annual target bonus of 200% of the annual salary based on company performance.  She will also be granted stock options of 5 million shares.  In terms of time off, Yahoo! will offer Bartz 4 weeks of vacation per year, 10 paid holidays, and 2 personal floating holidays.

The SEC document also acknowledges that President Sue Decker will be resigning and Jerry Yang will be assuming the role as Chief Yahoo! once again.

The first thing I thought of when reading this document was that this was an impressive salary to be receiving as a CEO, hired from an external company.  But then I remembered Terry Semel’s compensation…

In June 2007, Semel resigned as CEO of Yahoo! due to shareholder dissatisfaction of his salary.  In 2006, Semel’s salary was $1, but he had stock options worth $70 million.  Semel made over $500 million through his tenure at Yahoo!  Semel was granted options of over $110 million as a bonus to join Yahoo!  Semel still has another 18.6 million unexercised stock options in Yahoo!

Clearly the position that Yahoo! is in right now isn’t as good as it was before.  If Bartz is able to undo the mistakes that Semel and Yang made in the past, then I’m sure she’ll see a substantial amount more heading her way.

[via ZDNet]

Some of the issues that Bartz will have to deal with as CEO is market share loss from Google Inc., multiple deals landing on the table that includes the breaking up of Yahoo!, a potential merger with AOL, and a declining stock price.

Bartz is known to be a very tough CEO.  She pushed for professional management practices at Autodesk and tame the culture set by John Walker, founder of the company.  When Bartz stepped up as CEO of Autodesk in the 1990s, the company was bringing in $350 million.  In 2006 when Bartz stepped down, Autodesk was bringing in about $1.6 billion.

Although Bartz has very little experience on the Internet, “Maybe that would be a good thing for Yahoo! right now,” stated Seth O. Harris Jr., an EVP and high tech recruiter at Cook Associates.  Employees may be looking for someone with strong operational experience.  Yang was a bit of an emotional CEO, thus the reason for turning down the Microsoft offer.  And Terry Semel, the CEO before Yang, was too much of a glamorous deal maker.  It’s about time Yahoo! becomes more operational efficient.

The board still has to put an offer together, but it is believed that it will be given out next week.  Yahoo! wants to choose a new leader before their fourth quarter earnings announcement.  If Bartz does become the new CEO, then it shows that Yahoo! prefers to have someone with consumer products experience of Internet advertising.   Bartz is currently the exec. chairman of Autodesk and a board member of Cisco Systems Inc.  Jerry Yang is also on the Cisco board.

Earlier this week at CES, Yahoo! announced that they have signed deal with Samsung, LG, and Sony for converging the Internet with TV.  TVs manufactured with these partners will have the option to run widgets on the side.  The widgets will be able to play YouTube clips, send out Twitter tweets, network on MySpace, and view images on Flickr.