Below are some notes from Gordon Hodge’s chat with Yahoo! co-founder and Chief Yahoo!, Jerry Yang who spoke at the Thomas Weisel Partners (TWP) Internet & Telcom Conference. Gordon Hodge is a Partner in the Research Departmnet at TWP. This is not an interview I conducted, just what I picked up from the chat.

How happy are you with the competitive landscape of Yahoo!?
-We’ve been clearly positioning ourselves as a broader internet services company. If you look at what we do today in terms of being more and more essential to users and advertisers, we’re making great progress. Driving the consumers to making the internet more integral to their lives. Audience growth and engagement, we’re doing great. That’s not to say that our competitiors aren’t also doing well. You have the ability of start ups to come out of nowhere and become great companies. That’s what keeps us on our toes. We’ve had some big competitors over the last couple years - AOL, Microsoft, Google, eBay - and the competitive dynamics have only gotten more intense. If you look at the internet gaining share relative to other markets - all these things get our juices flowing. That’s what drives us.

Some have characterized you vs. your competitiors: Google is a technology company, Y! is a media company. Do you agree with that?
-I think it’s hard to run an internet company that’s of the scale we’re talking about that doesn’t have a core competency in technology. We’ve always emphasized that Y! can be the more human internet service. To achieve that without a commitment around technology, that I think would not be possible if we want to be a leader in the space. We love the media model. But if you say that we’re a media company that looks like CNET or iVillage, I’d disagree. If you say that we’re a technology company like Google or Microsoft, I’d disagree.

Your title is Chief Y! - where do you spend your time?
-As an entrepreneur, I’m living the dream. Both David [Filo] and I are more passionate than ever. Our role continues to change as the needs of the company change. I feel like my role has been to work closely with the team and stay ahead and figure out where Y! can be best positioned. One area I’m personally involved in is to figure out where we can drive more innovation around a platform approach - how do we enable more web developers (to develop on top of Y! APIs).

Spend a lot of time building Y!’s presence in China. How is the integration with Alibaba going? How did you assess the risks involved?
-I think we always have taken a view that China is a long term project. The opportunity to be in China is huge. It is not wihtout potential pitfalls. At the same time, you have to balance the risk of not participating. We have journalists getting arrested for free speech violations, and you feel horrible. Are we doing better over the long run? Can we get the government to have a dialogue? If you want to do business there, you have to comply. [Elinor Mills from CNET did much better than I did covering this point.]
-On Alibaba, they run our Y! branded services in China. We’ve had 5 months of working together. Jack Ma takes charge in a nacent market and the growth is incredible. I still think it’s fairly early. I think Jack has been smart to take a partner.
-China is just too big of a market to have a Y! Japan like situation. Although Y! Japan has a portal and auction dominance, Alibab has a big competitor in EachNet (eBay). Search is a war btw 2-3 players (the usual suspects: ourselves, Google, Baidu, and Microsoft is investing heavily) and local players (30-40 start ups). If you are a big scaled player, you’re going to be a big company. Will you have the precesne of Y! Japan? I don’t think you need to.
-Social media phenomenon. It’ll be interesting to see how the government deals with open expression through services like The Facebook.

What investments are you making?
-I look at Y! as a very long term enterprise. Infrastructure, Advertising, Audience. That’s the business. Our efforts going beyond the PC (the 3 screen strategy - PC, TV, Mobile), that’s an exciting long term play for us.
-Y! can put the user in the middle and develop services around him. When you go down that strategy, you have to put Y! where the user wants us.

Search
-The #1 priority for the company is to continue to excel in advertising. Display advertising (branding) and search advertising. Brand/Dsiplay - we have a leadership position that we want to expand and grow. Tremendous opportunity as fortune 1000 companies make the transition. Search - we are not happy where we are today. It is a year when we’ll push hard on improving our own functionality. We’re looking for opportunities to drive the intersection between search and brand. We think that we can serve an advertiser really well by leveraging the strength of both.

How do you see search evolving (social search)?
-We can do better search with people. I think we’ll always have people do programming at an editorial level, but this is about leveraging the people using these services and having them guide relevancy. If I trust someone about SF restaurants, if I knew his filter, the searches would be better. Social Search. You start [with] people you know, but [then you have] broader people (b/c so many people have recognized that person as the expert). It is something that has a huge potential. It combines the user participation model and the algorithmic model. You have the 6 degrees of separation model…to run that as a service/technology is a challenge.

Open Initiatives, Content Development Strategy
-Content is going to be one of the biggest drivers of whether the internet continues to grow the way it has. We employ different strategies - machines that crawl, user generated content (Y! groups, flickr, etc.), head content (created by creative professionals from larger creative houses). How do we take these three areas and facilitate those to exist on a platform that works? How do you take those three things and create a unique experience? Every little thing we do has to have its own P&L.

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