Finding Alibaba: How Jerry Yang Made The Most Lucrative Bet In Silicon Valley History (BABA; YHOO)

From Forbes:

Jerry Yang is giving a quick tour of the conference room at his private investment firm in Palo Alto, Calif. It’s dotted with gifts and photos from his 20 years in Silicon Valley. Yahoo’s 45-year-old billionaire co-founder stops before a glass deal toy on a low table.

“Um, I have no idea what that is.” He peers more closely, checks the date: September 2012. “That is… that was after I’d gone. I think that was the last deal I worked on at Yahoo.”

The plaque commemorates what may have been one of the dumbest business decisions of all time. Yahoo’s board agreed to sell 523 million Alibaba shares, half of its stake, back to Alibaba at $13 apiece. Yang hadn’t been so keen to sell. They did anyway. By then he’d quit the board. Sure enough, Alibaba’s IPO last month rocked global markets. Shares of the Chinese e-commerce giant are now worth around $90. Yahoo still has a 16% stake worth $36 billion, but it left almost as much money on the table–some $35.5 billion–as its entire current market capitalization.

Changing the subject, Yang spots a nearby photo: “Stanford! You know, I’m a Stanford kid through and through.”

Where’s all the Yahoo memorabilia? Yang smiles. “We come here to go to work. It’s not a museum. I feel like this is a place to look forward and not look back too much.”

Typical Jerry Yang: self-effacing and as cool as an engineering supernerd can be. When the official history of Silicon Valley is (re)written, it will be hard to judge which of Yang’s achievements is bigger: starting Yahoo or betting early on Jack Ma, chairman and CEO of Alibaba.

Nine years ago, before Yang was CEO of Yahoo, he spent $1 billion of Yahoo’s money for 30% of Ma’s company. He knew the asset would be hugely valuable someday and refused to sell Yahoo to Microsoft when Steve Ballmer came calling in 2008, a decision that cost him his CEO job. Yahoo’s current CEO, Marissa Mayer, can do whatever she wants to put a better face on things, but Wall Street has marked her business down to zero. It’s now a proxy for Alibaba, and that was all Yang’s doing.

“It’s not like I did anything,” he says, shrugging and tossing all the credit to Ma and his deputy, Joe Tsai. “They built the company. I didn’t.”...MUCH MORE