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Yahoo's Emphasis Is 'Better,' Not 'New'

Yahoo's Emphasis Is 'Better,' Not 'New'

SUNNYVALE, Calif. -- In listing his biggest accomplishments as Yahoo's product chief, Blake Irving gave an answer that speaks to the company's painful legacy of layoffs, aimlessness and stalled growth.

"I helped create some belief," he said.

Yahoo has amassed one of the largest online audiences in the world -- 680 million users. It is the fourth-largest site; only Google, Microsoft and Facebook are larger. Yet it does not get the same kind of respect from the public, from advertisers and certainly not investors, who have grown impatient waiting for the turnaround promised by Carol A. Bartz, Yahoo's chief executive.

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She has been trying to revive Yahoo by focusing on its strengths in news, sports and entertainment and increasing revenue from online display advertising. So last year she hired Mr. Irving to give Yahoo a lift. Yahoo's e-mail service and news sites attract more than 250 million users; if they were stand-alone sites, they would rank among the largest in the world. Its sports, finance and news sites are among the company's most visited properties.

But after years of losing ground to rivals as the company tried to fight Google in search, battled Microsoft's takeover attempt and neglected some of those core properties, Yahoo is seeking innovative products and new blockbusters that will win Internet users' attention and attract advertisers.

Since starting, Mr. Irving said, he has created a new vision for Yahoo's products, cleared a path for building them and given discouraged workers something to believe in.

But innovation has been slow during his tenure, and the company's finances have yet to improve. Revenue declined modestly in 2010 while competitors like Google gained. It is expected to be much the same story this year.

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Yahoo has to keep up with a rapidly evolving industry, said Benjamin Schachter, an analyst for Macquarie Securities. Its efforts in social networking failed, and it outsourced its Web search to Microsoft. Yahoo now faces the risk of losing any presence on mobile devices, where people are spending an increasing amount of time. "They need to remain relevant," said Mr. Schachter, who on Wednesday will be among Wall Street securities analysts in a meeting to hear Ms. Bartz give them a reason to believe.

Mr. Irving has improved many of the company's products, Mr. Schachter said. "They seem to be moving in the right direction. We just want to see it in the numbers."

Mr. Irving, 51, is central to the turnaround effort. Ms. Bartz lured him a year ago from the rolling campus of Pepperdine University in Malibu, Calif., where he was a business professor. She wanted to tap his 15 years of experience in building products for one of the biggest online audiences, at Microsoft. As vice president for Microsoft's online platforms group, Mr. Irving oversaw most of that company's sprawling Internet empire. He had also held a variety of product roles for major Microsoft services like Hotmail, MSN Instant Messenger and NetMeeting, the video conference platform.

Mr. Irving said Yahoo's huge audience and Ms. Bartz's mandate to create a new vision for the company persuaded him to accept the challenge. "There are very few places in the world where you can do what you can do here," he said.

But first he needed to start changing Yahoo's culture. Mr. Irving, with a shaved head and earring, affects a rock-and-roll image. A former professional jazz musician, he keeps an electronic drum set in a conference room near his cubicle and cranks up Rage Against the Machine in the office late at night. Mr. Irving compared his role at Yahoo to his experience as a drummer. The rhythm section lays down the foundation, listens carefully to the other musicians and then interacts with them during their solos, he explained. "You're leading and you're not," Mr. Irving said.

In some of his early meetings, he gave his staff a list of his core values, beginning with, "I have a sense of humor, and it's important to me." But he's had to make serious changes. He thought that Yahoos, as the employees call themselves, spent far too much time debating -- to the company's detriment -- whether advertising annoyed Yahoo's users. He ended that chatter by declaring in a new list of corporate principles that products can be both innovative and profitable. He also said that there was safety in risk and that products should be built to work on all kinds of Internet-connected devices, and not just for computers.

Mr. Irving said he would not have joined Yahoo if he thought it would be impossible to bring back its luster. In recent years, what Yahoo was doing right got unfairly lost in the focus on what it was doing wrong, he said.

Although many of his business aphorisms seem obvious, they resonated with employees hungry for discipline after years of disorder. Prabhakar Raghavan, Yahoo's chief strategy officer and head of its research labs, pointed to a memo Mr. Irving had sent out that said "celebrate success, not launches."

It turned out to be a hit; product team members now frequently cite it, Mr. Raghavan said. Generating traffic and revenue should be the focus, not merely churning out products that few people use, as Yahoo has done in the past. "That's the kind of thing that brings about cultural transformation," Mr. Raghavan said.

Yahoo is taking a low-key approach to its products under Mr. Irving. Instead of introducing a slew of new services and hoping for excitement, it has been making minor upgrades to existing products.

One of Yahoo's more ambitious enhancements is Search Direct, which lets search engine users get answers without having to click on the results. A new version of Yahoo Mail is being tested that is supposed to make the service faster and better at deleting spam. Flickr, Yahoo's photo storing site, will soon have a new photo browsing feature.

Livestand, a digital newsstand for the iPad, is one of the exceptions, a new product rather than an improvement on an old one. It is among Yahoo's biggest bets made by Mr. Irving. The new app, which is supposed to make its debut later this year, will let users create personalized digital magazines. Publishers are still being recruited for the effort.

Making more inroads on mobile devices like the iPad is vital to Yahoo. Despite the company's early momentum, Google has leapfrogged ahead in recent years with its Android operating system, now the leading smartphone operating system.

Yahoo has created about 18 iPhone and iPad apps, and it struggles to build ones that set it apart from the competition. Last month, it acquired IntoNow, an app that lets television viewers socialize and that recognizes shows by analyzing just a few seconds of audio dialogue.

Building products is part of Mr. Irving's job, but so is killing those that are unsuccessful. Yahoo recently sold Delicious, a social bookmarking service. Other products deemed expendable included a blog tool, MyBlogLog, the AlltheWeb search engine and Yahoo Buzz, a service that lists popular news articles.

When word leaked out in December about his plans to discontinue a number of products, Mr. Irving posted a message on Twitter in which he threatened to fire any employee responsible for disclosing the information. In an interview months later, Mr. Irving laughed about the event that earned him ridicule on technology blogs. But he still stood by his decision to prune some of the company's products.

"If you were not going to stay committed to a product or give it the resources it needs, why would you continue?" he said.

"He's not shy," said Mike Kerns, Yahoo's vice president for social and personalization. "He will definitely share his opinion."

First Published: May 23, 2011, 4:00 a.m.

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