Transcript: Marissa Mayer at Fortune MPW

An unedited transcript follows:

PATTIE SELLERS: Good crowd still here. Thank you for staying.

Welcome back, Marissa.

MARISSA MAYER: Thanks for having me.

PATTIE SELLERS: Marissa has been to the Most Powerful Women Summit many times, as many of you recall last year Marissa was not here because Macallister Bogue was born the day before the Women’s Summit started last year.

MARISSA MAYER: It’s true. It was an eventful Sunday night.

PATTIE SELLERS: So now Marissa is ‑‑ it’s kind of amazing, you are number eight on the Most Powerful Women’s Summit.

MARISSA MAYER: Thank you for that.

PATTIE SELLERS: You’re number one on our 40 under 40 list, which came out a few weeks ago. And you’re a Fortune 500 CEO. That’s the trifecta.

MARISSA MAYER: Andy had sent me a note saying, there’s an interesting trifecta about to happen. And it’s really ‑‑ it’s flattering, but I think a lot of it has to do with Yahoo! and the opportunity that’s there.

PATTIE SELLERS: It has had. We would not have put you at number eight on the Most Powerful Women list or at number one on 40 under 40 if the turnaround at Yahoo! so far, and I realize that it’s a work in progress, but it does appear at this point to be for real. The stock is up over 100 percent since Marissa started in the job in July 2012. (Applause.) And I think most of the people in this audience know that this is after a whole lot of smart people tried to turn Yahoo! around.

And this has happened under a CEO who actually had never run a P&L before in her career at Google.

MARISSA MAYER: That’s not true.

PATTIE SELLERS: Explain that, because I’ve actually said that in stories.

MARISSA MAYER: Okay.

PATTIE SELLERS: Correct me, go ahead.

MARISSA MAYER: Google was organized functionally, but we had P&Ls. So the real P&L is the P&L for the company, but inside of Google the different product groups have P&Ls.

PATTIE SELLERS: So your local and location business that you were running at Google until you were recruited for the Yahoo! job in 2012, you actually had a P&L that you were judged on. It’s good to have that correct. It’s good to have that corrected. You had never run, certainly never run a public company. You had joined Google when it was very, very tiny. I remember you telling me about Sergey and Larry interviewing you over a ping-pong table in a makeshift office.

MARISSA MAYER: Yes.

PATTIE SELLERS: And she had like 13 job possibilities ‑‑ not ‑‑

MARISSA MAYER: It was the height of the first boom, so it was 1999. It was a good year to be a graduate in computer science.

PATTIE SELLERS: So Google was the only place you worked. But what have you really had to learn on the job at Yahoo!? What has been the steepest learning curve?

MARISSA MAYER: I think, you know, a fellow CEO said to me that the interesting thing about being CEO that’s really striking is that you have very few decisions that you need to make, and you need to make them absolutely perfectly. And his point really was that you can delegate a lot of the decisions but there are a few decisions, and sometimes it’s not obvious, that you need to really watch, and that can really influence the outcome. And that’s something watching for those decisions every day and wondering to yourself is this one of them or is this one where it doesn’t really matter what the decision ends up being?

PATTIE SELLERS: So if you had to name, and I’m going to ask you to name, three decisions that you have made that are the most important in the 15-16 months since you’ve been CEO, what are they?

MARISSA MAYER: I think that the company’s commitment to mobile is probably the biggest one. It sounds funny, but when I got there we were still issuing Blackberries to every employee. Blackberry is a great product, and really useful. But I think that Yahoo!’s future is going to be rooted in mobile apps. And we know that we need to have apps on some of the core platforms, and so iOS and Android, probably the two most important platforms for us. We obviously have application ‑‑

PATTIE SELLERS: And you gave free smart phones to everybody in the company.

MARISSA MAYER: Right. The company issues smart phones, but it was really important for people to be able to experience our products. We call it dogfooding, where people try the products and give us feedback.

PATTIE SELLERS: Dogfooding?

MARISSA MAYER: As in eat your own dog food. So we make the stuff, and then we use it every day. And so I think that was really, really important.

I think that, and I’ll just group them as a set of decisions, but the collective decisions around the team, and for me the team is incredibly important. And so everything from getting the right people in as CMO, and I actually met my CMO Kathy Savitt at this conference, I think, two years ago. But bringing in Kathy as my CMO, Jackie Reses as our chief development officer, Ken as my CFO, Enrique as my COO, and then tremendous product leads, as well as getting the company recruiting again. Year to date we’ve hired 1,000 engineers. We’ve hired ‑‑ I think now we’re edging up above 60 world class computer science Ph.D.s as we rebuild Yahoo! Labs. That’s incredibly important.

PATTIE SELLERS: Marissa reported earnings the other day, and kudos to you for getting here. I mean, you jumped on a plane after you reported earnings, so thank you for that. And I think you said in the earnings report that you got 17,000 resumes in the last quarter?

MARISSA MAYER: We did. We actually we celebrated in September because we were like, wow, we got 12,000 resumes, which is basically a resume for every single person who works at Yahoo!, which basically means that how in demand it is that we get a resume for every job that we have in the company each week. And then we’ve also seen a spike since then all the way up to 17,000. And that’s up from 2,000 in January. So we’ve seen an 8X increase in the number of people who want to come and work at Yahoo!, which is just tremendous.

PATTIE SELLERS: So one more decision, what’s the third important decision?

MARISSA MAYER: I think the third important decision is probably Tumblr. I think the decision to do a large acquisition that’s not yet accretive, but overall it’s a really big bet in terms of what’s happening with that platform, what’s happening with creative expression on the web. And how people are going to choose to connect and express themselves in the future.

PATTIE SELLERS: So Tumblr is the largest of your 24 acquisitions that you’ve made, $1.1 billion was the cost of the acquisition. What is your overall strategy in terms of your acquisition strategy, and why Tumblr?

MARISSA MAYER: Sure. I mean, I think each acquisition has its own story as to why we’ve done it. There have been some of them that have been pure talent acquisitions. Stamped was our first acquisition, a group of ten people. It was someone I’d known previously, and was running a great company. They were doing this kind of foursquare for things, where you checked in and punched for things that you liked. Had a great run of it, had a fair number of users, but just really hadn’t hit the tipping point that they wanted it to hit.

And I said, okay, you’re a great group of 10 people. You know how to design mobile apps, you know how to build mobile apps. Their app was beautifully designed. And I said, would you mind abandoning your app and coming here and working on something different?

And that was a really hard decision for that team, but they ultimately decided that they would do it. They’re like, we like working together. It is true our application hasn’t really gone where it’s supposed to go in terms of users. We’re happy with where we are, but we know we’re not going to be Facebook, Twitter, foursquare. And so they decided to stop working on what they were doing, and they came to Yahoo! and built the mobile versions of Yahoo! Screen.

PATTIE SELLERS: So that’s a good example of a true acqui-hire.

MARISSA MAYER: Or we call them talent acquisitions. But the idea there is, they came in, they built a beautiful ‑‑ this is our new video platform that we launched in September, and it’s got one of the nicest players in the industry. And it really has Saturday Night Live, Comedy Central, all kinds of great clips, NBC Sports. So really excited about Yahoo! Screen. And that wouldn’t have happened, but we literally took the team and said, okay, all ten of you come over here, recruit your friends, they actually recruited their friends, there are now actually 20 or 25, and build a mobile version of our video app. They’re in New York, and they did a great job. So it was a talent acquisition.

PATTIE SELLERS: And is he still based in England?

MARISSA MAYER: He’s based in England, but he comes to Silicon Valley a lot. And so he was a talent acquisition. It’s funny because he came in, his summarization technology, we looked at it and we were like, is it for real?

PATTIE SELLERS: His what technology?

PATTIE SELLERS: What is that?

MARISSA MAYER: So he takes long-form content and summarizes it down, which is perfect for mobile. So at Yahoo! we have lots of articles, we have lots of content, we need to summarize them and get it on the phone, summarize the articles and get them on phones. Someone came and I was like, really, are we really going to buy, I think at the time he was a 16-year-old, I was like a 16-year-old’s company. And we literally rolled out Yahoo! apps, got our best artificial intelligence engineers and scientists on it. They looked at more than a dozen summarization companies around the world, and they were, like, honestly, it’s legit. His is the best. It’s based on technology from SRI. He had worked with a great ‑‑ he had assembled this group of engineers from all over the world to work on this technology that he had managed to license out of SRI. And he did a great job. But, we brought that in. Within three weeks we had it integrated into the Yahoo! app on phones. So I think it was the fastest integration I’ve ever seen of an acquisition. And now Nick is working on all kinds of interesting projects all over the company, which is just tremendous.

PATTIE SELLERS: And is he in school?

MARISSA MAYER: He’s in school.

PATTIE SELLERS: Is he in high school?

MARISSA MAYER: He’s in high school. So the funny thing is, like people were really upset when we bought it, because they said, well, what is this business about the founder leaving in 18 months. We were like, well, he’s got to go to college and like maybe he’ll still intern and stick around. I think he will. He’s having a good time. But, he’s having a good time. He’s been a great contributor so far. But, we are going to have to take some time to let him go and get his education.

PATTIE SELLERS: So Tumblr, I mean here’s another case of a company that was started by a guy at a really young age, David Carp. How did you come ‑‑ what was the big selling point on Tumblr, why Tumblr, and what have you learned from David Karp?

I mean it was just really amazing in terms of how the companies overall really fit together. They needed great search and great discovery. We had that. What we need is great content. So they really fit together nicely and there were a lot of obvious things that just came together. And David will talk about Tumblr, both as the home of the world’s creators, which is a mission that we really loved, but also as a home for brands. This notion that on Tumblr a lot of people host their websites there, both brands like The Daily Show has their entire blog on Tumblr, as a publishing platform. It was also a place for people to just go and post, for example, their art portfolio, or their blog for the day. And so it’s really interesting there’s new brands, people who are trying to build themselves up as online personalities. There’s also all kinds of interesting brand expression going on there.

PATTIE SELLERS: And he has a certain respect for that community in that he does not want advertising on his site, and yet ‑‑

PATTIE SELLERS: How are you going to monetize Tumblr?

MARISSA MAYER: I think we have a set of ideas and they actually have ‑‑ they are accepting advertisements today. And they’ve been working on monetization now for about three quarters. So they’re just getting it started. But, it’s a great platform and we have a lot of advertiser interest, because the platform is so expressive and does allow such creative ideas. I know, for example, when the movie The Hunger Games came out, they actually published ‑‑ there’s a lot of fashion on Tumblr. They published a fashion blog called Capital Couture, of like what the different people in the movie wore, just to sort of really participate in the community on the subject matter that they care a lot about. So it’s really interesting to see how brands are using it to build interesting offline content that adds to the overall message.

PATTIE SELLERS: Marissa, I want to talk about culture. I want to talk about a couple of the building blocks of your challenge to transform the culture at Yahoo!. You’ve made a number of big changes. And the challenge is not only aligning, what is it, 13,000 people?

PATTIE SELLERS: Twelve thousand people, but aligning 12,000 people who were pretty demoralized when you came in. And aligning 12,000 people who are absorbing people from 24 acquisitions. So what are a couple of those building blocks, those things you’ve changed to transform the culture?

MARISSA MAYER: I think I’ll start off with an overall philosophy and actually two of them. Eric Schmitt from Google is one of my favorite mentors. And Eric would always say this very humbling thing that’s really true, which is he would say good executive confuse themselves when they convince themselves that they actually do things. And he was like, look, it’s your job as leadership to be defense, not offense, right. The team decides we’re running in this direction and it’s your job to clear the path, get things out of the way, get the obstacles out of the way, make it fast to make decisions, and let them run as far and fast as you possibly can.

And I think that when I came in people were like, well, what’s our strategy now. And I was like, I don’t know, you tell me. I know you’ve been here longer than I have. And they were like, really, like we get to give our ideas? I literally had some employees say no one has ever asked us for our ideas before. And it was really ‑‑ and there was a lot of pent up energy. People were like, is it time to go now? Are we ready to go? I think that was really important. And I think I’ve always thought of culture as DNA. I don’t know a lot about genetics, but I understand some of it and I think that what you really want are the genes that are positive to hyper-express themselves in culture. Take the elements of fun, take the elements that are really motivating and inspiring people, and amplify them and ramp them up. And take some of the negative genes that are getting in the way and shut them off, and figure out what’s causing those and shut them off.

PATTIE SELLERS: So how do you facilitate those good genes to operate better, and how do you clear the path? I mean one of the things that you’ve changed, I know, is goal setting in the company. Explain that?

And we came up with this process called PB&J, process bureaucracy and jams, where you can go and you can write up something that’s just getting in the way in the company. It could be big like my laptop is woefully underpowered for the job that I’m being asked to do, because we end up refreshing everyone’s laptops and getting all new equipment in that way, or it could be small. It could be like why does the gym ask us to have orientation when every hotel in the world just lets you go and stand on a treadmill without a learning session. And so people started doing this and then other people come and vote on it. And if something gets more than 50 yes votes we sit down with a number of E staff, executive staff, that it would be the person who oversees it, and they clean out their PB&J on a quarterly basis that has more than 50 votes.

PATTIE SELLERS: And how are people held accountable for fixing those things that get more than 50 votes?

MARISSA MAYER: Because one is there, so everyone can see, hey, this is on the top of you PB&J list. There’s this real transparency, there’s real public accountability for it. But, the other thing is we have a small team of five or six people that work on PB&J and so they go and meet with the teams. But, those five or six people can’t do 1,000 things. The real testimony and the real learning lesson here is that by empowering people in the company to fix what they knew was broken, they were like, oh, are we fixing things, are we changing things, because I’ve got some stuff I want to fix. I’ve got some stuff I want to change. They really grabbed the opportunity.

PATTIE SELLERS: That’s great. Our time is supposedly up. But, you know what, we hold the power here. And we’re going to take two questions from the audience.

Yes, identify yourself please?

QUESTION: (Off mike.)

PATTIE SELLERS: Can we have another mike? Is that working?

MARISSA MAYER: Sure. So our rationale is this is Yahoo!’s all hands on deck moment. And I fully except a lot of people said, well, wait people are more productive when they work on their own. And I fully accept that. But, what they aren’t is more collaborative. And when you need to innovate you need collaboration. And so when I look at things like Yahoo!’s weather app, which I hope a lot of people have on their phones, I think that what you see there is our weather team met up with the Flickr team and Flickr said, we’ve got all these geo-tagged photos, and the weather team said we need to make weather beautiful. And they brought it together. And now you see these postcards of beautiful photography from all over the world when you look at the weather, of the actual weather pattern that you’re seeing in that city that day. It’s really quite remarkable.

But, the thing that we really wanted to get our hands around was the notion of the official work from homers, and by the way we made a fair number of exceptions for exactly the work-life balance reasons that you note. So we made a fair amount of exceptions. But, I think that the other piece was there were a lot of people who would just choose to stay home on a Tuesday or on a Friday for whatever reasons, good life reasons, but the issue is when you have that happening in mass it does hurt overall productivity. And so I actually think that the person who stays home, like for me, when I stay home to wait for the cable guy, like I’m half as productive as I would have been in the office for that same period of time.

PATTIE SELLERS: Another question for Marissa?

Okay. I’ll ask the last question.

Ursula Burns was just talking about transparency right before us. And you’ve done something interesting. You reported earnings on Tuesday and you are now doing video earnings calls. Why are you doing that and you did something totally new on Tuesday that you had never done before in that you took Twitter questions from anyone out there.

And we tried it for the first time in July, should we try video? And we really liked it. And it’s actually really quite stressful to be on camera and be taking a lot of questions. A lot of people ask us if we tape a beforehand and then just air it, and the answer is no. Whatever happens happens. And so it is quite stressful. But the really amazing thing it allows us to do is show our products, and actually show the progress. So everything from animating charts as we’re talking about those charts, to showing the product refreshes. This past quarter we did 15 major product refreshes and launches. So as I’m talking about them to be able to show them on screen and really bring them to life is something that we think is really powerful. So that part worked well.

I think that we wanted to try and do the Twitter and e-mail questions this past time to get some preservation, but also because we ‑‑ it’s sort of a bit of a funny system right now, because we have a conference call running in the background where we take the questions. And then we’ve got the video webcast. And we’re trying to figure out could we consolidate the two calls into one, so we’re not piping the phone call into the video call. But the real essence of it is that a lot of times you want the real time questions because the analysts are reacting to the content that you talked about earlier in the call. So I think that we’re going to end up having to have that live call in line. It’s just too hard to get the good and the best and most relevant questions beforehand via Twitter.

PATTIE SELLERS: I see, so you think you’re going to drop the Twitter idea?

PATTIE SELLERS: Keep on innovating.

PATTIE SELLERS: Thank you Marissa Mayer.