Yahoo’s Susan Decker

The former financial analyst has taken Silicon Valley by storm.
A CFO InterviewSeptember 1, 2005

Since Joining the Internet giant at the bottom of the dot-com bust in 2000, Susan Decker, 42, has taken Silicon Valley by storm. She is widely credited with leading Yahoo’s charge into the search arena, which today accounts for half the company’s revenues. A former financial analyst, she has earned Wall Street’s respect for her candid approach to reporting earnings.

What does it mean to be a strategic CFO?

[Laughs] It could mean that I have no experience in any of the normal CFO disciplines. The way we conceptualize the role here is as the lead on thinking about how to create value for the company over many, many years — not next year or next quarter.

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Early on, Yahoo created a great brand, but it was a classic [Web] portal — the door that could get you where you were going, but not necessarily into the room you wanted to go to. With Terry [Semel, Yahoo’s chief executive officer] at the helm, we agreed first that we wanted to build or buy key areas of Internet content. We already had E-mail and [instant messaging]. We also wanted to own search, music, careers, and personals — and we wanted to integrate community or personalization across the network.

Within this framework, I try to think: How are we going to create the most market value down the road? Each of the six verticals has a different business model. When we were thinking about getting into search, for example, we quantified that, at that time, no service would offer more market value to the company than search. Every point [of market-share increase in] search is worth several hundred million dollars in value to us.

How does Yahoo differentiate itself from the other big players — Google, AOL, Amazon, Microsoft, and eBay?

AOL, Google, and eBay started with a singular focus. Yahoo started broad, and now we’re building great areas of depth. Because we have many more fully built product categories than many of our peer companies, we think we can integrate them in a way that helps us build a moat.

How does your background as a financial analyst shape your perspective as a CFO?

As an analyst, I tended to be very focused on value and free cash flow. When I came in as CFO, I was probably less focused on the value implications of day-to-day accounting.

But I don’t want to say accounting isn’t critically important. I lean toward conservative choices. We’ve made choices that were dilutive to GAAP EPS, but were value creating. On Wall Street, you need to think about what the market already expects about a particular company. Here we ask, what is the market saying right now? For example, back in the days when the Internet sector was melting down, we were pretty proactive about making sure the market knew how much of our revenue might be exposed.

Finally, I see it as my role to have very transparent communications and to reduce volatility where we can.

What have you learned over the past few years?

I don’t know where to start! In a company as dynamic as this, you have to be thinking about what’s right today and what will be right in the next 12 months. What are we going to look like? How do we start staffing those positions? How do we evolve the great talent we have? I spend a lot of time setting the tone and the vision, finding the people, and rethinking the priorities and accountabilities. I sort of view my role, and the role of my peers, as steward of something that’s going to be here in 20 years, we hope in 50 years. I hope that when I leave, we’ll all have created a place for the next generation of leaders.

What does the Chinese market want from Yahoo?

Well, I think they want just about everything we have to provide. I’d say one difference is that, because there are four times as many mobile phones in China, there is a faster-developed wireless market in terms of getting basic information, games, and entertainment services on your phones. Another difference is that payment systems are not as developed in China, so the classic E-commerce types of services really haven’t developed as much yet. [Editor’s note: That may change soon. As CFO went to press, Yahoo announced a $1 billion investment to purchase a 40 percent stake in, one of the major Internet operators in China.]

What do you think are the three biggest risks Yahoo faces?

One risk is just keeping clarity of focus. We spend a lot of time as a team trying to make sure we’re forcing ourselves to make choices.

The second [potential risk] is making sure we have leadership and expertise around the world. We have great talent, but the fact that our business is growing so quickly, and in many cases changing, means that we need to keep bringing in people with new skills. And as we get bigger, broader, deeper, and more institutionalized, we have to reward employees for narrowing their expertise.

A third [risk] is that there are fewer natural enforcers of discipline than there were when access to capital was more restricted. All companies need to be very focused on the discipline they put on what kinds of investments they would make, because there are all kinds of things getting financed now.

Who, or what, would you say has had the biggest influence on you?

When I was an analyst, Warren Buffett was the big influence. And that’s the way I look at businesses and think about value.

— Interview by Julia Homer