Top 5 Myths About Yahoo

Jerry Yang is a Bad Leader

In 1994, Stanford University doctoral students Jerry Yang and David Filo built the first Yahoo Web portal as a lark. When their ad-hoc list of favorite Web sites starting drawing hundreds of thousands of visitors a day, they dropped out of school and launched one of the most successful businesses of the dot-com age.

Since they were engineers, not businessmen, Yang and Filo hired fellow Stanford alum Tim Koogle to be their suitably experienced CEO. Yang and Filo stayed on as "Chief Yahoos."

At Yahoo, Yang has earned a reputation as being fiercely competitive and fiercely loyal. He famously choked back tears as he announced Yahoo's first layoffs in 2000 [source: Pham]. BusinessWeek recently included Yang in its list of the "25 Most Influential People on the Web" [source: BusinessWeek].

When Yang was called to replace departing CEO Terry Semel in 2007, he reacted in typical "Yahoo-first" style, taking an annual salary of $1 [source: Pham]. (Compare that to Semel's $70 million annual salary.) Analysts were split on Yang's ascension: Many thought his appointment would be an excellent way to raise morale [source: Wharton]. Others thought that Yang's lack of day-to-day business experience would be his Achilles heel. It turns out that both camps were right.

The Yahoos love their fearless, dressed down techie leader, but he only lasted 17 months in the CEO slot, blowing a generous buyout offer from Microsoft and bobbling a potential partnership with Google. As it turns out, Yang isn't a bad leader, but he may be a bad businessman.

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