Web 2.0 Podcast: A Conversation with Yahoo!

by Daniel H. Steinberg

The Web 2.0 Summit concluded with a conversation with Yahoo!. Program chair John Battelle spoke to Yahoo! co-founder and co-creator David Filo and with Bradley Horowitz, VP of Yahoo!'s product strategy group.

You can download the audio as an mp3 or download the video as an mp4, or you can subscribe to the audio podcast or to the video podcast. Check out the entire set of Web 2.0 Summit podcasts.

Intel Software Network Intel Software Partner Program

This episode is sponsored by the Intel Software Network.

Transcript created by Casting Words.

Announcer: The Web 2.0 Summit concluded with A conversation with Yahoo Program Chair, John Batelle spoke to Yahoo co-founder and co-creator David Filo and Bradley Horowitz, VP of Yahoo's Product Strategy Group. Here's Web 2.0 Summit Program Chair, John Batelle in A Conversation with Yahoo.

[music intro]
John Batelle: You probably noticed a pattern that I do at the conferences is that I tried to get a senior person from everyone in the platform company to come and talk to us. I think they really are some of the foundations of our industry. This year I'm so pleased that David Filo agreed to come.

David is one of the quietest superstars of the this industry. Doesn't like to come up here and do these conversations necessarily. He's very smart, very fun to talk to, but I really wanted to also talk about business. David is sort of the product guy. He's not necessarily the business guy at the company. David agreed to come but he said "You know, if you want to ask me business questions pair me up with Bradley."

Bradley is the VP of Product Strategy. He does a lot of thinking around Yahoo's business. Between the two of them, I get to ask all the questions that I want to ask of Yahoo. We had Terry Semels last year and we had Jerry Yang the year before. Now we are getting a fourfecta here with David Filo and Bradley Horowitz. Please come up here you guys. You ready? Hey, David...

[audience applauds]
David Filo: Thank you very much. All right, you sit here. Bradley, thank you for coming. I like your shirt, man.
Bradley Horowitz: Thank you.
John: All right. As we settle in here. Now, David I'm going to start with you. You kind of strike me as if... You look in the audience probably 30% - 40% of the folks there are entrepreneurs who would love to be in your shoes. But I'm not sure there still be in the math after 12 years. You co-founded the company 12 years ago. That's a long time and you still going to work everyday. Why?

[audience laughs]
David: You mean there was an option. [laughter] Does that means I can leave?
John: I think pretty much you could do what you want. There's an awful lot of people in your shoes that have gotten into exotic yachts or buying luxury resorts or starting new companies and then starting another one and then starting another one. What is it about Yahoo that keeps you from coming back?
David: I think that when you look back, 12 years ago, obviously things were getting started. I think back then if someone has said that I would still be here 12 years later at the same place I wouldn't beleive it, and wouldn't think that I'd want to do it. Here we are, 12 years later.

I think today we are in a more exciting position than we were then. Then it was obviously exciting because things were just getting started, but if this conference here and all the great thing people are demoing and all the new ideas and all that kind of stuff, it doesn't seem like a 12 year old mature industry in a way. In some many ways it feels like they're getting started.

Because of that, I think there is some parts that have mature more than others. If you think and look across the landscape there's is so many great ideas. So many new things. So many ways that former whether is media or whatever it is we are still doing our daily lives is changing at such a rapid pace. It feels like we are still at the very beginning of that. I think just the opportunity of analyze it just keeps me motivated and keep me wanting to come back and build stuff and be part of that revolution that is still happening.
John: I want to ask a question to both of you. Starting wit
h you: What do you do everyday when you come to work? What is your to-do list? What's your role now in the company?
David: I focus primarily on technology issues and that's everything from low level stuff like boring things like servers and networks and data centers. How to scale the infrastructure that we have to looking at the platforms we should be building for applications we want to deliver services. It's trying to look across the company and understanding what are these platforms we should be building and lets us look at our employees be more innovative, how to get products to market quicker, what things should go open in the outside world so that third parties can work on that. Pretty much focused is on technology up and down the whole stack...
John: Right. That's everything?
Bradley: Well, I come in the morning, and I spent three sometimes up to four hours working on my MySpace profile. [laughter/applause] Keep it minimized, check it through out the day. [laughter] I guess my role is best identified as innovation. I have a program there that's run by Catarina Feik and Chad Dickerson was helpful in setting this up called Hack Yahoo That captures the spirit of what I'm trying to do. Is not Hack Yahoo because I don't like Yahoo. I love Yahoo. It's Hack Yahoo for its own good.

Creating a process by which we can do what we are really good at which is delivering a high quality product to half a billion people. I should know that there are still some oportunity amongst the nine we are here at the panel before us obviously. We serve a very large audience. We want to innovate and be able to put products in market that may not need to be inhibited by those factors of large international audience, guaranteed uptime. Things we may or may not end up doing. Much more speculative and much more innovative. That's a large part of my day.

I also look after Yahoo Developer Network and kind of an irony if I'm going to be hacking Yahoo they also have me as part of the process. They way that we get product built from green lighting a project to the actual development, methodology that there is.
John: That's a very good segue to the next question I want to ask. I don't know, there is no easy way to put this, I think there is a perception around Yahoo, maybe I should turn this around. A year ago when Terry was here, there was a very clear perception around Yahoo It is just bought Flicker and, and it clearly got web 2.0 and Terry was the turnaround CEO story of the year from 2002 - 2005 an so on.

A year later it got kind of a vibe, which I feel that I'm at least I think I'm soaking it in right that Yahoo has slow down somewhat. There isn't as much going on. Perhaps, Google has pulled away. I think it might have something to do with search and modernization of search and the ability of necesarily compete on that level. Am I picking up what you are picking up. Is it part of your job to perhaps help goose Yahoo a little bit in terms of hacking Yahoo.
Bradley: I think that I'm picking up what you are picking up in terms of the media, in terms of outside perception.
John: All right as a media guy I'll acknowledge that perhaps.
Bradley: There's a little of that.
John: But you know, if the media thinks that, you're going to have an issue.
Bradley: Well I think the issue is that, you can really think about yahoo as having two lines of business. The first is audience creation, we have these great engaging products that bring people back and have massive audiences. The second is the modernization of those experiences in ways that are not decremental to the experience but provide value to the publisher, the advertiser, and ultimately the user as well.

And as we've been very honest about, full public disclosure, we have not done as well as we could do on the modernization aspect of that. And that certainly cast a shadow on all the other successes. But if you look at what we've been doing over the past year, Flickr has grown by 15 times over the past year, we've launched products like yahoo answers which was developed organically and gone onto 16 million uniques. We've done things like which just reached its millionth user.

So, in addition to kind of growing the products themselves organically, we've began to knit them together in ways that impact the entire network experience. So that Yahoo doesn't have social media products, its a social media company. You go to Yahoo Travel and you see Flickr photos, you go to Yahoo Tech and you see answers integrated in with that. There is a lot of behind the scenes knitting together, which is probably not a headline, it may not even be a buzz in the blogosphere.

It's hugely beneficial for the users and i think as we make progress on the modernization side, and when that catches up... Yahoo has been growing faster than the internet as a whole so I think we have huge opportunity to apply success in modernization against that growth in the product in your audience.
John: I wanted to get back to the modernization, but, David, I wanted to get your take on this in particular as it related to Google. As I've noted before, two guys at Stanford come up with a great idea, drop out happily of their doctoral programs, and create humongous brand. That is the core story of Yahoo, and that is the core story of Google. Its kind of eerie. What do you make of Google, do you think about Google, do you worry about Google?
David: Clearly, they started out competing in one area, they are now competing in many more areas with us, so we clearly think about them, we think about all our competitors. What do I think of them as a company? Obviously they've been very successful, they've put out some very good stuff, and we worked with them when they were a small company. At that time we weren't really competing with each other, obviously today we are.

We've never had, if I look at our 12 year history, we've never had a shortage of competitors. 12 years ago it was how are we going to compete against AOL/Time Warner at the time and Microsoft...etc..

Those set of competitors obviously change over time, but we've never had a shortage of them. We have competitors like those folks, and today Google, Microsoft, still have the still big media companies. We also have all the possibilities that are in this room today, which are the next thing, the next MySpace, the next YouTube. Those are just as much a threat to our business as Google, or Microsoft, or any of those competitors.

So, we're always thinking about competitors, more importantly we're always thinking about where we need to be because of them and also independent of them we need to evolve as a company. Where we are today is very different from where we were five years ago, or five years prior to that.

The one constant is that we know things are going to change, we know that five years from now things are going to be very different than they are today. The leader in search five years from now, who knows who that is going to be. It might be Google, it might be us, it might be some start up that hasn't been started yet. That applies across all our different products and services.

What we need to do we need to continue to evolve, we need to understand what the consumers want, we need to build the best products and services. If we don't do that, we're not going to succeed, if we do that, which we've been doing over the last 12 years, we will be successful.
John: Let me pick up on search, I'll ask both of you to answer this question from your own point of view. Technology and Business you mentioned, Bradley, monetization and I agree, one of my thesis is that because of the extraordinary monetization of Google search they have the ability to just bid more for companies than anyone else. They can outbid anybody for the search business of MySpace, or YouTube.

So that monetization hurts you not just in the perception of wall street, but also in what strategic options you have as a company. Where are you in addressing that from a technological standpoint, Panama is the search monetization platform that your just beginning to roll out. How's it going, and what are your expectations?
David: First I'll just say that again we've had competitors since day one, we'll always have competitors. We've had competitors much larger than us, Microsoft is the best example, if they wanted to they could outspend us on anything. Whether it's an acquisition, funding a project, you name it they could outspend us. They have the money. So thats not going to define our success or failure, thats the environment we operate in, we have to go out there and build better proxy services, we have to take advantage of unique opportunities that we have. We've looked at thousands of companies over the years, generally companies we really want, we get. I don't think thats going to change.

But to answer your question about monetization directly, that is something that we've just started rolling out. So far we have a few hundred advertisers in the system and we're transitioning slowly since we're coming up on the Christmas season and we want to make sure we do everything right.
John: You need to protect our current revenue streams.
David: Right, and theirs, since they are very dependent on us to deliver leads and such. We're obviously being cautious, the plan is to get advertisers converted to the new system over the course of Q4, and then to Q1. So far so good, the feedback has been positive, we'll continue to build on that. We expect once we get everyone transitioned in Q1, then in 07' we can start to really leverage the new platform. The real motivation behind it was to build the next generation advertising platform.
John: Do you see the opportunity to go beyond the current market standard which is clearly the point set by Adwords, do you see the opportunity to go well beyond that?

David Sure, I think everyone sees huge opportunity out there. Google is doing what they're doing today, there is no reason to think we can't do better. We'll see how things turn out. We are putting the pieces in place to be able to do that in the next few months.
John: Bradley, are you feeling confident, are you feeling excited, do you feel like this product is going to kick butt?
Bradley: Absolutely, the early feedback is really good and it's good in the realm of the experience for the advertiser. It changes some of the way that advertisers think about campaigns to a more wholistic view and that's exciting. And I think as I said before we're doing so well on the product side, still the number one internet site in the world that if we get that bit right and apply that kind of modernization toward the progress we made on the product, it's exciting.
John: But you wouldn't want to make any forward looking statements, now would you?
Bradley: That's not what I do. [laughing] The only thing I talk about that's upcoming is
John: [laughing] Ah, another acquisition indeed. Actually let's talk about that. Yahoo is seen, certain by many in this crowd, as a potential next business card logo, What are the things that you look for? I asked Ross Levinson this. As you said, you've looked at thousands of companies, you've bought dozens. So what are the things you found in common between those dozens?
Bradley: Well obviously it starts with a great product service idea, something that's going to fit into what Yahoo's doing today or something that we want to be doing. The big aspect of it is the people. The people are probably the most important part. There are a lot of ideas out there, and it's really the people that can have the passion around it and can take it and turn it into something much bigger.
John: Is there something unique about the kinds of companies Yahoo buys as opposed to any other company?
Bradley: I think we've done a great job, especially in the last couple years, in the micro-acquisition. You've mentioned upcoming. That's three people, but three people that have made a huge difference in the center mass of their area. They're integrated with a local team in the company, and they've just been huge personalities in the company. I think we have a special competence in kind of bringing in small teams, keeping the integrity of those teams, and maximizing the impact of the individuals.
John: Sort of like the equivalent of a seed-funding? You've got to look, you get them while they're small?
Bradley: Yes, yes. I mean...
David: The idea is to try to create great environment within Yahoo and we also try to continue to improve on that. But we want to create an environment that someone can take an idea from the outside, in a small company as Bradley mentioned, bring them into Yahoo and then make it that much more successful. We've started to be better at that. I think we've learned a lot from the acquisitions we've done and we'll continue to do more of them.
John: I feel responsible because of all these folks. I imagine they might want to know about this. There's been a lot of rumors lately, which perhaps I can give you an opportunity to dispel them, about Yahoo merging with another large internet company. Microsoft, for example. Can you dismiss those entirely for us, so we can move on to the next question?

David: There's not much to say about it. Over the 12 years of our history, rumors come and go and people have speculated.
John: You're not going to make me look like a complete idiot when like tomorrow, the news is announced?
David: I think it's pretty safe to say nothing will be announced tomorrow.

[Laughter and applause]
John: Excellent.
David: But again, these things have been talked about for years and...
John: Well right of course, I understand, but you understand I had to ask. So, one of the things that everyone talks about now is openness. It's a mantra now. AOL made announcements about opening up their API's. Bruce Chisholm struggled with how open he could be at Adobe. What's your take on that, and is that a central tenet of your business? I remember the first year in 04, I had Dan Rosenswig here and he was asked by someone, Mark Cantor, I think it was, about allowing data to come out of Yahoo and being open with that. So where does the company stand on that now? You make these decisions in terms of the platform, right?
David: Yes, definitely. it's a very important thing to us. Bradley can talk more about it, but over the last year or so, we've gotten a lot more serious about opening up API's. Clearly he thinks through, whether it's acquisitions like Flickr, who from Day One, they've been very open. We've taken some of those learnings, we've had other API's over the years, but recently we've really had a more concerted effort to go after specific things, get the API's out there, open them up and...
John: Isn't this partly what, Bradley, you're responsible for? And by the way, if you have questions can you guy move to the microphones now because we're going to run out of time otherwise.
Bradley: I think Yahoo really embraces openness not only in the sense of platforms and API's but as a cultural quality. We're a company that's not necessarily secretive. We go out there, we allow people to present at academic conferences, talk about what they do in ways that are very open. We partner well. We work very closely with a number of other companies. We've recently opened up Yahoo physically and had an open hack day where we invited developers to come onto our campus, gave them the coaching and tools they would need to mash up something great together. We had Beck come and play. He's the Lou Reed of your kid's generation.
Interviewer: Hey, hey... [laughing] We love Beck.
Bradley: Yeah, we love Beck. [laughing] We're open but I think it extends beyond just the platform and obligatory opening up the different products and services. I think it's a cultural tenent of the company from how we think about data to how we think about users. It's one of the core pillars of what it means to be in Yahoo.
John: Great. All right, we have a lot of questions so let's get to them. Then try to make them quick because we are...
David Fox: Hi there. David Fox from "The Astrologer". You've just did a new deal around recipes and that sort of seems different than some things you've done in content, where you've brought a number of players together to create a recipes area. What's your content strategy? Some areas need to be exclusive, and that one seems to have many vendors involved?
David: So the question's about content in general?
John: Content strategy, general media content strategy...
David: We've been in the content business in some sense since 11 years ago when we put up our first news stories and today obviously, we have many more properties in different areas. So we've always, for the longest time, we've taken the approach of going out and finding the best content and making it available to our users. More recently, we have been dabbling in creating some of our own content, and you'll see us continue to dabble in different areas and try different things out.

We're going to partner with folks for content, we'll do some of our own, and obviously user-generated content is huge for us, and that's where all the social stuff comes in and that's becoming increasingly important, so I think that you're going to see always a mix from us, of trying to take the best stuff out, whether it's user-generated, whether it's another media company or whether it's our own stuff.
John: Over here.
Audience member: Yeah, for David, what are your top two or three challenges in scaling the network, as in the number of servers and computing power has to increase?
David: So, his question is about the network in particular?
Audience member: Yeah, the physical network infrastructure.
John: There's been a real theme here at the conference about scaling the platform. There's only a handful of companies that have invested in the kind of infrastructure that you possess. As a matter of fact, some of them are now talking very openly about turning that infrastructure into an asset like Amazon, Google. Is that your plan and what are the challenges, I think is the question, of scaling that infrastructure?
David: Well the challenges are, if you have hundreds of thousands of computers, how do you do that cost effectively? How do you consume as little power as possible, how do you cool it effectively? Where do you locate these things for redundancy and how do you manage these? How do you try to take hundreds of thousands of computers and make it look like one operating environment for a developer to come along and deploy an application.

So, it's a lot of different things. It's everything from the physics of it to where do you find the space? What's the right way to do that to what are the platforms that we need to build to be able to allow developers to come in and build stuff on top of that. Across the board there's a lot of challenges.
John: Are you having any problem building datacenters? We heard earlier there was almost fisticuffs over electricians in Washington. Not really, I'm making that up. But there was some competition not for developers and coders but literally for electricians who could help wire up datacenters.
David: Yeah, there's definitely some of that. There's certain components of the systems you can find in short supply because of a lot of the building that's going on. It's not just us. There's outsourcers that want to do this for other companies. There's a big glut of this that came on the market through 2000. Kind of the same environment. For the last five years it was a lot slower but we're kind of back in that environment where the glut's run out so people are in that building again.
Ray Philipos: Ray Philipos, Bell Canada. In the earlier panel we heard one teen say that if Google were a person they'd want to be friends with them. And we heard another teen say, well, Yahoo's kind of silly, I wouldn't do anything serious on Yahoo. What do think is driving those perceptions and how do you see that changing over time?
David: Well I think that the girl said that she viewed Yahoo as being silly and obviously, for kids that's good. We do have things for kids.
John: Your name is Yahoo.
David: Yeah, we have things like games, we have music, we have things that are fun. So for kids we definitely want that perception. There was also one of the adults on the panel that said she viewed Yahoo as a very trusted brand. That's certainly something that we want to get across as well. We've been around for 12 years, I think a lot of our consumers have grown to trust us. We take that very seriously.

We want to continue to expand on that, so things like privacy. We want people to feel their data is safe with us. The products we put out there we want them to be reliable, we want them to be up 24/7 anytime you come. We don't want to lose your data, all those kinds of things. We take very seriously. That is a lot of the hard work that goes into making something. I think on the outside you don't see any of that work, but to really make that work and to really build that trust and to get that from the users is a lot of hard work over many years. We certainly want that.

What we mean to different people is going to be different things because we have so many different properties and so, I think it's a combination of those things.
Bradley: And you've got to understand the teen's vernacular. When somebody says, that was really sick man, that's good. Silly's good, we like silly. Yahoo's fun. That's a perception that we don't mind at all.
John: Ok, we have time for two more. Over here, Dave?
Dave McClure: Dave McClure from Florida. I think you guys have done a great job with Flickr, Upcoming and and more of that. I don't think you guys get enough credit for social networking and until Google pulled the trigger on YouTube I don't think Google was doing a lot of the social networking work on the side.

But, I'm puzzled. You guys have not pulled the trigger on a large major blogging platform. If you did something with Facebook or SixApart I think that would be great. But I don't see that happening. Do you guys feel a visceral and urgent need to get a large content property into your network? And does Terry feel that way? Does the board feel that way? As a Yahoo shareholder, I would be calling Terry up right now and saying, "What the Fuck? Why haven't you done something yet?" Do you guys feel that way, or not? And please explain?
John: Dave, do you have an interest in SixApart?
Dave: I do not but I think Vox is the hottest new blogging platform around. WordPress is great but Vox really has it done right. If you guys could buy that product and port it across all your users I think it's be a huge win. If you don't pull the trigger on Facebook or SixApart, I don't know what the fuck is going on.

[Crowd Laughter]
John: There's some feedback.

[Crowd Applause]
David: I can take some of that.
John: You have Yahoo360, which I wouldn't say has been a huge hit.
David: I'll talk about that. First of all, Dave, there's going to be no news tomorrow, as Dave had said. But 360 is something that we put out to market, it's the closest thing we have right now to an author and blogging platform. I think people are very used, when we put a product to market, it's generally number one or number two in it's category. Whether it's sports, finance, movies, TV. People are used to Yahoo dominating those categories. There's 17 major internet categories where we're number one or number two.

We put 360 out there and we learned a lot from it. We learned a lot, we listened a lot and 360 may be doing a 180. So, it may change and adapt to address opportunities that you don't see in the product today. So stay tuned with 360.
John: You going to rename it 520?

[Crowd Laughter]
David: I don't know about that. That'd be silly.
Bradley: That space is very interesting to us.
Man: One more question. Does Terry feel passionate about blogging?
John: Does Terry feel passionate about blogging?
David: Yeah.
John: Does Eric Schmidt feel passionate about blogging?
David: Social media is definitely one of the key focuses. It's been the key focus for the last year, it continues to be one of the key focuses for the company. And blogging is a huge part of that. So, we're absolutely interested in it. We'll do things and we hope that five years from now we're going to be a very major player in that space. We want to, as Riley mentioned, we've tried things like 360, we'll continue to try things internally, we'll look at acquisitions, and I think we'll be a much bigger player in that space as time goes on.
John: Last question right here.
Matt Stansberry: Yeah sure, Matt Stansberry, Tech Target. All the web giants are doing some really dramatic, drastic things from a real estate perspective up in Oregon. I'm wondering if brick and mortar infrastructures are a limiting factor now for Web 2.0 companies. These old limiting factors.
David: No, I think so far we've been able to build what we need in time for what we need. So, as I mentioned earlier, there's some glitches here and there in terms of getting stuff, but in general it hasn't been a hindrance to us. There are a lot of other third party companies out there now that are building capacity that we can take advantage of as well. I don't foresee it being a major concern for us.
John: All right, well, please join me in thanking both these guys for coming to talk to us about Yahoo. Thank you very much. I hope you guys stick around for the party afterwards and chat with us.

[Music plays and crowd Applause]
Announcer: Yahoo's David Philo and Bradley Horowitz at the Web 2.0 Summit, 2006.

Daniel H. Steinberg is the editor for the new series of Mac Developer titles for the Pragmatic Programmers. He writes feature articles for Apple's ADC web site and is a regular contributor to Mac Devcenter. He has presented at Apple's Worldwide Developer Conference, MacWorld, MacHack and other Mac developer conferences.