Semel's Smartest and Dumbest Moves

David and Tom Gardner recently interviewed Yahoo! (: YHOO) CEO Terry Semel on The Motley Fool Radio Show on NPR. This is the third of four parts.

TMF: Looking back over your career, what is one thing you now know about business that you wish you knew when you first started?

Semel: When I first started, like everyone, I probably had lots of anxieties about will this work and will they like me and can I ever do that and can I do the other thing? What I realized looking back is that sometimes and certainly in certain fields it matters less whether you were the valedictorian of your college. I know it does in other fields. It is the only qualification at times.

But I have been fortunate to be in businesses where it really was about determination. It was really about working hard. It was really about taking the time to learn the business from the ground up and to ultimately learn how to manage companies and manage people and build great teams. So to me I am glad to be at a place now where I don't have those anxieties. I know how to do it. If I am lucky enough to be surrounded by great people, I think there is no reason why I can't succeed.

TMF: So there is hope for all of the C students out there?

Semel: I say it every time I address graduates, and people stopped inviting me -- although I did UCLA's this past year. I had always congratulated the valedictorians and, of course, I mean that. And the people who have gotten great grades and great awards for that. But I often talk mainly to the people who worked hard to get their Cs, for them to realize that the opportunities are just as great in the world ahead for them and that they shouldn't quit. If anything, they just have to work a little harder.

TMF: Terry, you've been Yahoo!'s CEO for more than two years now. Your smartest business decision and then your dumbest business decision in that time?

Semel: My smartest decision was to come here. That might be a stretch for most people, but I was at a point in my life where I never would have dreamt that I would actually want a job or work for a company. I thought I would be an entrepreneur. I wasn't thinking about how much I would get paid or how much money I would make. I just wanted to know how good a challenge it would be.

TMF: The Internet was in trouble then. You really stepped in at a time when there was not a lot of buzz going on.

Semel: A few days after I arrived, I realized just how bad things were. It was a tough time for the Internet and a tough time for Yahoo!. Yet I saw so many possible opportunities if we could just hang in and keep changing and keep growing. So probably, if you would restate the question, the best decision and the worst decision... the best was to do it. I am really thrilled that I have done it and I look forward to a lot more good things that I and the company can pull off in the next bunch of years.

The dumbest decision. Well, I have made a lot of those.

TMF: We had the 7-Eleven CEO on a few months back. He said the dumbest decision he'd made was to have 7-Eleven-branded pantyhose.

Semel: That would be a bad decision. (Laughter.) I agree with him.

Well, I hope I haven't made any terrible decisions, but I probably have. I probably waited a little too long to make some of the personnel changes that I knew almost from the first day that had happened in some of the senior levels in the company. I did it because I was hoping that things would work out and that the people who had some of the experience would see the fact that life has changed and the world has changed and that I could help convert them and so I probably did make a mistake and I did let some of it go on way too long. And probably could have advanced some of the improvements and some of the growth opportunities that Yahoo! had, had I made those changes faster.

I was doing a bit of a balancing act because I had to personally learn an awful lot about Yahoo! and Yahoo!'s business. I was a little concerned that if I moved too quickly on changing, some of the folks who I knew I would have had to change eventually, there would be a void for the company's sake. So it was a bit of a balancing act, and I think I was too slow.

Tomorrow: Semel plays "Buy, Sell, or Hold."