Terry Semel's Leadership Legacy: Inspiring Talented People to More

NEW YORK (TheStreet) -- Last week, I read this article about Jeff Weiner's comments at a Pando fireside chat. It had the long but intriguing title: "Jeff Weiner never wanted to work at Yahoo, but it's the best thing that ever happened to him."

Weiner is one of the many talented Yahoo  (YHOO) alums who has gone on to great success post-Yahoo. Although Yahoo had successes while Weiner was at Yahoo -- it reached a $60 billion market capitalization in early 2006 and was often the No.1 or No.2 property in markets it competed in -- it also had many well-documented failures such as passing on buying Google  (GOOG) and Facebook  (FB) . Yet, in the interview, Weiner calls his time at Yahoo "the most invaluable period of learning in my entire career."

And, in large part, he credits that learning to working for his boss and mentor at the time Terry Semel. Describing Semel, Weiner says:

"He's very thoughtful, very generous, he engenders great loyalty, he has great business sensibilities, and a golden gut. There's just something very endearing and familial about it. You don't feel as if you're being manipulated in any way because it's coming from a good place. And he literally thought it will be this great adventure, and it was. It changed my life."

It got me to think about Terry Semel and his legacy as a leader.

Yesterday, I was on CNBC and was asked late in the interview about my recent criticisms of Marissa Mayer's leadership at Yahoo in relation to Terry Semel's leadership. The point of the question was that Semel got lots of criticism at the time but things worked out pretty well under his watch and so shouldn't Mayer just be allowed more time too.

There are, of course, big differences between Yahoo when Semel took over vs. the company Mayer took over two years ago. But I think there are also significant leadership differences between the two.

And I say this as a guy who criticized Semel in 2007 and lobbied that he be removed as CEO leading up to the 2007 shareholders meeting. Of course, at that time, I saw Yahoo as an incredible collection of consumer web assets which didn't seem to be fully taking advantage of its brand and traffic. I blamed Semel publicly then for this failure to fulfill what I thought was Yahoo's potential. And he quit a couple of days after I led a lot of shareholders to vote against his re-election to the board that year (in large part, I think, based on his compensation).

As time goes on though, I've had the chance to meet many of the folks who worked with Semel and followed their success after leaving Yahoo. Here's a quick summary (and I'm sure I'm missing some too):

  • Jeff Weiner now runs LinkedIn  (LNKD)
  • Dan Rosensweig runs Chegg  (CHGG)
  • Sue Decker serves on the boards of Berkshire Hathaway BRK, Intel  (INTC) , and Costco (COST)
  • Mike Murphy is VP of global sales at Facebook
  • Bradley Horowitz oversees G+ for Google
  • Qi Lu is EVP of Apps and Services for Microsoft  (MSFT)
  • Gideon Yu was CFO of YouTube and Facebook and most recently was president of the 49ers
  • Wenda Millard is the president of MediaLink
  • Greg Coleman is the new president of BuzzFeed
  • Katie Stanton just got promoted to the VP of Global Media for Twitter  (TWTR)
  • Phu Hoang is the CEO of DataTorrent
  • Lloyd Braun runs Whalerock Industries
  • Chad Dickerson is the CEO of Etsy
  • Brad Garlinghouse is the CEO at Hightail
  • Stewart Butterfield is the founder of Slack
  • Sam Pullara is a partner at Sutter Hill Ventures
  • VIsh Makhijani is the president of Udacity and ex-Yandex and Zynga  (ZNGA)
  • Toby Coppel works for Richard Branson's Virgin in London
  • Marco Boerries is the CEO at NumberFour
  • Mike Marquez is the co-founder at Morado Venture Partners
  • Ash Patel is also co-founder at Morado Venture Partners

That's a murderers' row of tech talent in that list. And what's also interesting is that it's a balanced list of engineers, product, media, sales, finance and operations.

I was once told by a venture capitalist, "I always like hiring people for my start-ups from Yahoo from that era vs. from Google, because I know the Yahoo people are smart but humble. They've seen the highs and lows. They are more realistic about how the world works."

Semel also had Eric Hippeau -- now at Lerer Ventures -- Ron Burkle, and Bobby Kotick of Activision  (ATVI) on his board of directors.

And I've also been told by some from the list above that Semel played an instrumental role in shaping the careers of Oprah, Steven Spielberg, Whoopi Goldberg, Tom Cruise and George Clooney.

So what's Terry Semel's legacy?

From a strategy perspective, he knew early on that Yahoo needed to be a media company that uses technology. He built up the offices in Burbank and Santa Monica, Calif. He brought in Lloyd Braun to build original content. When I think of how Yahoo tried to buy Hulu and Netflix  (NFLX) , or how they're wanting to build up "premium video" to sell ads against, or promoting a concert a day for a year, or partnering with ABC News and CNBC, these are all following a path which Semel set. It wasn't media or technology, it was media through technology.

But to me, I think Semel's greatest legacy is all those people who he attracted to work with him, who stayed with him, who learned from Yahoo's mistakes and who went on to great success elsewhere.

Certainly we are all judged by our successes in our careers. But in a company with thousands of people, no CEO does it alone. A big part of "your" success as a leader doesn't come through work you do but work others do who work for you.

I think a big part of how you judge a leader is by how many great leaders they nourish and develop beneath them over their career. On that score, Semel did an extremely good job.

And this is an area for which I have grave concerns about Marissa Mayer. She's unquestionably smart but I have been told by several different sources that she currently has 36 direct reports. I can't confirm that. The only reporting on this issue of direct reports which I've seen is in Nicholas Carlson's long bio piece on her in which he says she had 25 direct reports in her first year at Yahoo. (And whether the number today is 36 or 25 or somewhere in between, my points below still remains valid.)

If Mayer has 36 direct reports, she will never attract great talent to work with her. The average CEO today, according to Harvard Business Review, has 10 direct reports, which is up from 5 direct reports as of 20 years ago. Having 36 direct reports -- to me -- says that Mayer doesn't want to get work done through others. She wants to do all the work herself.

If you're a talented person but your boss has 35 other direct reports, how are you going to get any quality face time with her? How is Mayer going to do mid-year and full-year performance reviews with her reports and have time to do any other work as CEO at Yahoo?

If you don't get any face time with her, why are you reporting to her? You have to do your job, but still run things by the boss, with whom you can't get face time.

Having 36 direct reports is totally impractical and sends the message: I don't trust you to make the right decision, so you need to run it by me first. Top talent won't stand that attitude for long. They will say, "If you don't trust me or you can't make time for me, I'm going to go to another company and leader who does."

Who's left when the best people leave this situation? People who learn to let the boss make all the decisions. Yes men and women. This tends to just encourage the manager to make even more decisions him- or herself.

There was a lot to learn from Semel's tenure as Yahoo CEO. In some ways, I think Mark Zuckerberg has made a number of choices in running Facebook out of a fear to not fall into the same traps that Yahoo did (e.g., making a lot of big and bold acquisitions rather than playing it safe, and setting up a dual-class share structure). Semel's time as leader also shows that, but for a couple of decisions here or there, Yahoo could still be an Internet colossus. Thank goodness they made the Alibaba investment decision.

The bottom line is that great leaders attract and develop talent which becomes great leaders. You can't even be in the game to begin with, unless you have a deep bench of talent around a leader. Semel attracted and developed some fantastic people while at Yahoo.

At the time of publication, the author was long YHOO. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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