And by bloomberg, a provider of multimedia news and Information Services worldwide. Captioning sponsored by Rose Communications from our studios in new york city, this is charlie rose. Rose Marissa Mayer is here, c. E. O. And president of yahoo slm since 20126789 prior she was at google where she was one of the first 20 ploas. On taking the challenge to run yahoo she inherited a legender Iconic Company in internet history. People want the company to succeed and they want her to succeed. She does not do many interviews and were pleased to have her here to talk about the future and the past. We begin with the future as many know yahoo became because of founder jerry yang, they own 40 of the Chinese Company alibaba. They sold 50 of that stake in 2012. They still own 20 of alibaba said to be valued at more than 25 billion. There was conversation of a spinoff then the board decided on a reverse spinoff which meant considering a sale of core operated businessed of committees selected by the bore. Marissa announced a plan to return this Iconic Company to greatness. And thats what he with want to talk about. I am pleased to have her back on this am ra, welcome. Thank you for having me. Rose very good to see you. I know you dont do this often, but were excited to you have here. Im excited to be here. Rose tell me how you see yahoo today and what you want to do to do what you wanted, laid out, return this Iconic Company to greatness. What is the plan . Well, yahoo was the original internet icon. And something that is a huge part of peoples daily lives, so half of your viewers today, more than half will use a yahoo product sometime 20ed. And today, and its just an amazing opportunity to say how can we take something that was such a huge part of dales lives in 1995, 2,000, even today and transician it as we are seeing such huge shifts in the Technology Industry with mobile, with video, with wearables. Theres so many great opportunities in terms of how do we guide people. Yahoo started out as verry and daves guide to the world wide web. How can we be that guide in the modern and how can we be that modern version of that. Weve come so far. Im really proud of our progress but theres still a lot more to do. And on the other side we have some tremendous assets. We have a large stake that yoo yahoo japan. We also have, as you machined, the alibaba steak. And so there is quite a lot to do overall. Theres the operating business of how do we provide this service to a billion users every month, everything from mail to our home page news, search, sports, finance. And how do we manage these large assets that we have in china and japan. So the board has decided to do what . To have conversations about spelling the core selling the core assets. Obviously as you can imagine the alibaba asset has grown to be really large inside of yahoo. And one of the things were looking at is how do we create the most value for shareholders. And one of the elements of that is really around how do we get alibaba into an entity by itself. Because by doing that we unlock all kinds of opportunities in terms of tax efficiency, in terms of greater valuations, et cetera. And so one of the things we endeavor to do in 2015 is a forward spin, talking our alibaba stake and moving it, ultimately we decided to pause that plan and now we are looking at can we do the reverse spin or can we do a strategic alternative with the operating business. That could be a sale, it could be a merger. To ultimately basically get both the operating business of yahoo and the stake in alibaba into separate corporate entities. You are downsizing the core business by 42 . We have over the past few years. We have just become a lot more efficient overall. Our services today, still see terrific traffic. They generate great advertising revenues but when we look at where we want to put our energy, we really want to have fewer ar rohr arrows, strategic pushes with more people on them. So weve really tried to krises en what is the focus of yahoo. Over the years we have done so many Different Things from autos, to personals. Today our focus is search, mail and tumblr. Those are three Global Platforms that we run. And then in terms of vertical news, sports, finance and lifestyles. What will this do for you . And how will you make this successful . Well, i think the big thing that im really focused on is our endusers. In terms of how do we make sure we provide them with the best possible service, the best possible mail, the best possible news. An theres also the shareholders. That we want to generate the most possible value for. There are a lot of great opportunities in this asset base to really unlock a lot more value. There are Big Five Companies in yahoo used to be one of them but its not in that ranking now. Apple, google, amazon, facebook and microsoft where. Does amazon fit because if you think of search which you listed as one, google is a huge, huge factor. Where do you find a place in search . You look at email. When i look at the future, search today, web search is what a lot of people think about. And web search is excellent. Im really proud about how far the Search Industry has come. But when you look at how should search work on a mobile phone, i think it should be something very different than what we see today, to understand a lot more but as a person. The classic example i will use is if i type in jfk into web search, im probably looking for the John F Kennedy wikipedia page. If i type in jfk and you can tell from my phone that im racing down the freeway heading towards an airport and you know from my email that i have a receipt to be on a flight later that day, chances are im trying to find out when pie flight to jfk is, what gate it is leaving from, is it on time, et cetera. So there is a new form of search that is really emerging in mobile. Which i refer to as personal assistant. You see some of this with google now, siri, cortana. We really think given our heritage insert there is a lot that we can do for our users, using some of their preferences, using email. Obviously with their permission. But to really rethink how search can and should work. Rose what percentage of search will that be . Today our market share is somewhere around 10 overall. But i think that when you look at the broader world of search, mat jort of searches are going to be done from mobile phones. And the other thing we know, we have an analytic platform for mobile called fluri. The other thing we no know is 8 of time is spent in browsers. The other 82 is spent in applications. And today web search really remains condition fined to the browser. We want to look at how can we really unlock the information, data and capabilities of all those different apps to help make peoples phone more ak be that is a promise 350e78 have been talking about for awhile. That search will move to apps. Yes. Do you see that happening. I do. With how much velocity. I think that will happen. People always tend to overestimate the short term and underestimate the longterm in these things. But i think that when you start to see some of the big advances we have had in voice search and image recognition, a lot of the big hard Computer Science problems have been solved in recent years. And when i look at the app ecosystem, the fact that we now have apps on our phone that can help you get an uber, book a restaurant, get a flight, and if i know what your preferences are in terms of what services you like to do each of those things, i can help, you know, a search assistant can help pull all of that together and make your life a lot more seemless. Rose when you came to yahoo there was high expectation because of where you had come from, and the role you had played at google. Do you think the expectation for you was too high . You had great ideas that you wanted to in a sense take the google experience. And you looked at yahoo. You knew what the future was going to be in terms of mobile. You saw that coming. You understood the possibilities of mobile ads. Yahoo had been a company that had generated revenue because of ads. I think that the hopes were high because theres a Terrific Team at yahoo. There is just great people behind the products. I think you can feel it, when you use yahoos website. There is great personality, great opportunity. I think that people love to cheer for yahoo. And when you know. Rose from the exptations for you enormously high . I mean i think that expectations were high because the brand is very iconic. The team there was really, really excellent. There was a lot of personality in the brand. People like to cheer for it. And i think that its a strategy that makes sense. I think it still is a strategy that makes sense. Mobile is yahoos future. When you look at what we have been strong in, male, search, news, sports, finance, those are all the things people like to do on the phones. So there is a great opportunity for us. I mean it made a lot of progress over the past few years. We went from basically having almost no users on mobile to having 600 million users on mobile. Having almost no revenue in terms of mobile advertising. And last year between mobile, video, native and social we had 1. 6 billion of advertising, that is a business that we have grown in less than three years. Why is there so much criticism. They look at what you have done since 20126789 and they say she came in and there was a flurry of acquisitions. And most of them didnt work. She spent some 2 billion and most of them have not worked, and they have been written off. Well, i would say that we i actually think they did work. I think it really was a matter of we needed to rebuild some of the talent base. We had at the time about 50 engineers in a company of about 14,000 working on mobile. Today we have more than 500 engineers working on mobile. We have one of the biggest App Development shops in the world am im really proud of that. But we had to build that show. We built that through talent acquisitions so we saw the benefits of those acquisitions. Because of various accounting rules, yes, we did see a write down but my view that is not because of acquisitions werent successful. Even with respect to tumblr. Yes, and tumblr obviously we have fallen slightly behind where he hope to be in terms of our plans am im still very optimistic about tumblr it is a great plat for especially for millenial, we see the time spent there being really, really high. Overall i think its a great opportunity to take things like native advertising and mobile and tumblr is growing really nicely overall in terms of mobile daily active users. And its really a creative expressive platform. Look at the 3. 5 years since june, july of 2012 since you have been there. And here we are, in march of 2016. When you look at what has happened, what did you do wrong . I think that one, i dont think the story is yet played out. I think that when we look at this, we have a new Strategic Plan for the company. And we can see the turn around. A lot of tech turn around. We do take five, six, seven years. It is rare once they are able to turn a tech company around, apple being one. I can see our Strategic Plan am we can see how its really working. The 600 million mobile users, the 1. 6 billion of mobile video, native and social, we like to call it mafens revenue. Those are, that is the future that we built ourselves. When i came to yahoo in 2012, i came because i really wanted to work hard. I thought it was a great challenge. I sat down and met with all the different Business Leaders and reviews the business lines. Every single one was in decline. And no one had any ideas how to turn it around. It was a series of c. E. O. I was the 7th c. E. O. In 61 months. And so they you know, but they were all in decline. So i came in, i thought wow, this is even harder than we thought it would be. Went to the board and said okay, we have a problem because if were going to do a turn around we have to get the business lines growing again. No one knows how to get these business lines growing again. Yahoo had been the king of the banner ad. Banner ads are still very popular and effective. But mobile is where the action is. Mobile is where the action is, problematic is taking over. We had to build ourselves a new future. And we had to build it quickly enough and to a scale that actually matters to yahoo today. Our mobile video, native revenue is material, overall, to the company. And were really proud of that. We had to take it from you know a few Million Dollars to today, a billion dollars, one of the Fastest GrowingBusiness Plans i have ever seen in my career. And you know, so im very, very proud of what we did. But we needed to decide in our turn around how did we stabilize that declining revenue. Cuz there was a lot of it. 4 to 5 billion a year that is in decline. And then be able to grow fast enough to offset that. And actually show the type of growth you expect from a consumer internet. Some people make two points. One is the expectation level and the deficit of the challenge that you faced. There were declining revenues. But here you see yourself in a situation in which you have activist stockholders, shareholders, making certain demands. And the board deciding to say yes, well consider selling these core assets. And you on the other hand trying to develop a plan to make the core assets function, pluing eliminating some businesses you werent in, that you had found unsuccessful. But theyre completely complimentary. Because for us, at least for the shareholders the bigway to unlock value is to separate the alibaba stake. There are two ways to do that. One through a spin, spinning it separately that another Public Entity. Rose you didnt do that because why didnt you. We did do the forward spin. Rose because. Because overall the market was concerned about various tax liabilities and outcomes there. Now were looking at the reverse spin. Rose right. And were doing work on thasm but at the same time were also looking at a sale of the core am but in effect, those two processes, looking at either a sale or a merger or different alternative in terms of the overall Strategic Outcomes for the core are the same as the reverse spin. The only difference is you end up with a Public Entity at the end because you 13u7b into a Public Company or ultimately a privately held company. I think that either of those outcomes would be really good for yahoo. You can see outcome there where we could actually become stroarng in our strategic execution. Either because we get more mobile distribution or because some of the things that we need to do that are difficult in the public markets. Ultimately could be done, you know, more privately or in the context of a larger company. And so overall i can see an outcome here where we can achieve the operation of the alibaba stake which is critical for unlocking value while we also get a boost to the core operating business for yahoo. Rose when you sold one half of your stake in 2013, 12, 13. Uhhuh. Rose what happened to those revenues. Oh, the proceeds from the sale were returned to shareholders. So today weve just over 2 billion on acquisitions, its true but we have returned almost 10 billion to shareholders. So for every dollar we spenld on acquisitions we return more than 4 to shareholders. And so weve done a significant number of buy backs and returned a lot of the value to the shareholders which we think is appropriate. If there is a sale, do you go with the company . I think that the biggest piece for me is how do we take this Iconic Company and get it to the right place. And that is apart from the alibaba investment. I would say that is question for me is the primary issue is yahoo, our technology, the employees, the services, the endusers, how do we get that to the best possible place for why hoo and find it the best possible future. Im secondary to that. But i do. You put all this time and sort of the care of these assets and redesigning these assets. I assume you would like to go where these assets are i love that. And i think the people there are terrific. I love our user base. I love the products that we get to work on. Its really, really exciting and i would love to see it through. But obviously we will obviously honor our commitments to our shareholders it was also said in Silicon Valley and a story about one of the other firms, and i assume it may be true for you. A talent flight, that you really in circumstances like there have to increase the prem yu you pay for Key Employees at a time like this. They are part of our future, that they are a me part of our future. And certainly right now talent is a hot issue. At every company. In Silicon Valley. Especially for us, and certainly we have had to take some steps in terms of compensation to make sure the people understand how we valued our efforts. How difficult was it for you in the year since 2012 to get a Firm Position in terms of mobile ads, because your predecessors had not left you in a Firm Position, so you had to play catchup . Yeah, thats right. So i when i came to yahoo my thesis was wrong, how do you take all the Great Services on desktop and bring them over to moibl. When i got to yahoo i spent the first two weeks or so every time around lunch hanging out in the cafeteria. Just talking to people, talking to anyone who would talk to me. What did you learn. I finally ran into a mobile engineer and his name was tony. And i said well tony, what are you doing. He said im a mobile engineer. I said great, how big is our mobile team. And he said about 30 people. I was like i dont have a great poker face so he can just tell right away that i was really taken aback that it was only 30 people. And so he said well dont worry, there are more of us. I said how many more. He said there are more of us embedded in the team. Like maybe twice that. And i was like oh, so like 60. And then i went to the i said how many jeers do we have in the company who work on mobile. And they said well like a h