Yahoo co-founder Jerry Yang chose the name of his company, in part, because it referred to someone who is rude, unsophisticated and uncouth...

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Yahoo co-founder Jerry Yang chose the name of his company, in part, because it referred to someone who is rude, unsophisticated and uncouth — not the starchy executive jockeying for splashy deals.

The 39-year-old billionaire has relished the title of Chief Yahoo that he picked up after he and friend David Filo started the Internet search company in 1995 as graduate students at Stanford University.

The loyalty he and his employees have since built with one another has helped him rebuff numerous merger overtures, including ones from Microsoft.

But Jan. 31, the Redmond software giant offered a huge payday to Yahoo shareholders with a bid valued initially at $44.6 billion, or 62 percent above the stock’s value at close of trading on the day of the offer.

It’s an offer that puts Yang in the spotlight, a place he doesn’t particularly like. He prefers to leave the chief executive role to others as he rolls up his sleeves and dives into ways to keep Yahoo on technology’s leading edge.

The Yahoo board reportedly has decided Microsoft’s unsolicited bid is too low and plans to reject it today, a person familiar with the situation said Saturday.

Yang, who said last week that Yahoo is examining options, may consider a partnership with bigger rival Google, or ways to wrest a higher offer from Microsoft.

Until last year, when Yang took over the helm as Yahoo’s CEO, he had just one employee reporting to him: his secretary.

Now, he has 14,000. He has been fiercely loyal to his troops, a guy who struggled unsuccessfully to hold back tears as he announced Yahoo’s first layoffs, in 2000.

Last week, in a widely reported e-mail to employees, he attempted to rally the staff, exhorting them to keep up their work as the drama of the takeover bid plays out. “your hard work and strong commitment are more important than ever before,” he wrote in characteristic, all-lower-case style.

At Stanford in 1994, Yang and Filo built a site called “Jerry’s Guide to the World Wide Web.” The next year, they created a company around the Web site and called it Yahoo, an acronym for “yet another hierarchical officious oracle.”

Later, it would also stand for “you always have other options,” said Ellen Siminoff, who worked at Yahoo for six years in the 1990s. The acronym then embodied the spirit that drove Yang and others at the company, she said.

“People worked hard and ran fast because they realized they always had to stay ahead of the competition,” she said. “In those days, you couldn’t get your clothes on fast enough to get to work. And you couldn’t find a spot in the employee parking lot on Saturdays.”

An idea guy

As with many entrepreneurs, Yang was more comfortable in the realm of big ideas and broad strategy than the day-to-day tasks of running a company. So Yang and Filo hired Tim Koogle as the first CEO.

“People always asked me why I took myself out of the day-to-day operating responsibility,” Yang said in an interview with Fortune magazine in 2000. “But that’s never what I wanted to do, and besides, I knew so little about business that I didn’t want to slow things down when the company began to scale up.”

That made Yang a curious choice when the company’s board tapped him to take over the top job last June from Terry Semel, analysts and former Yahoo employees said.

Unlike Semel, who was the company’s charismatic face for five years, Yang is soft-spoken and cerebral. While Semel took heat for his $70 million annual compensation package, Yang opted for an annual salary of $1, joining Silicon Valley chiefs Steve Jobs at Apple and Eric Schmidt at Google, according to

“It’s a way of leading by example,” said Bill Coleman, chief compensation officer at

Such gestures make Yang an iconic figure at Yahoo. Even so, he likes to walk around the Sunnyvale, Calif., offices in his khakis and cashmere sweaters, chatting with people.

Behind the friendly face, however, is a fierce intellect.

“He’s stuck with his company every step of the way. And now that company is worth $44 billion. That’s not an accident. Jerry has raw talent,” said Vince Broady, who oversaw Yahoo’s entertainment division until last year.

Yang also relishes a good rivalry.

Likes a winner

“As quiet, humble and modest as he is, the guy wants to win,” said Jim Brock, a former senior vice president of communications and consumer services.

In recent years, however, Yang has been watching his company lose ground to Google.

Yahoo also failed to capitalize on the social-networking phenomenon that catapulted Web sites such as MySpace and Facebook to popularity among a young, Web-savvy generation.

As Yahoo’s fortunes slid, Yang took another hit, one that’s more personal.

The Taiwanese-born Yang was visibly humbled in Congress when lawmakers in November called Yahoo executives moral “pygmies” for their decision in 2004 to turn over to Chinese police the names of journalists who had used Yahoo services to share material advocating democratic reform.

The information led to the imprisonment of two Chinese journalists.

A week later, Yahoo announced it had reached an out-of-court settlement with the families of the two journalists involving a personal pledge from Yang to help free their sons.

Yang’s efforts in turning around Yahoo also have not garnered praise.

“He’s certainly a capable guy in terms of doing a startup, but he hasn’t demonstrated a capability to be the CEO of a company of the size and scope of Yahoo,” said Rob Enderle, principal of the Enderle Group technology-consulting firm in San Jose.

“He has been running the company for seven months, and the only major change he’s made is a layoff,” Enderle said. “He hasn’t shown any creativity in terms of fixing the problems of the company. In fact, he seems to still be trying to figure out what they are.”


Ali Diab, a former Yahoo executive who had worked on the company’s search technology for four years, said the criticism wasn’t fair.

“Yahoo acquired a lot of companies in the last five years,” Diab said. “As a result, there were a lot of redundancies.”

Yahoo’s recent decision to cut 7 percent of its work force will help streamline the company, which had grown slow and cumbersome in recent years, Diab said.

“Decisions were taking much longer than they should have for key areas, like search, maps and e-mail,” he said. “As a result, we let Google get ahead of us.”

By pruning back staff, Yang is “doing quite a bit to get people to focus on fewer things,” Diab said.

“He’s returning Yahoo to the early days of being very entrepreneurial. That’s a good thing.”

Information from Bloomberg News

is included in this report.