By AMIR EFRATI
Yahoo Inc.'s newly named chief executive, Scott Thompson, Thursday told employees that Yahoo needed to be "world class" and to "fund innovation" in addition to its core business, said a person familiar with the matter.
Mr. Thompson, who takes command Monday, said at his first all-hands staff meeting that Yahoo needed to have a plan to spend a significant portion of its resources on new services that wouldn't immediately affect financial results but could lead to big gains in the future, this person said. Otherwise, Mr. Thompson said, Yahoo will spend all of its resources on existing business and not bring anything new to the market, this person said.
Some employees viewed the statements as a commentary on the company's current path, in which the vast majority of resources are spent on improving the Yahoo.com home page, top sports, news and entertainment content sites, and also Yahoo Mail, Yahoo Search and online-advertising services.
The 54-year-old Mr. Thompson told employees that eBay Inc.'s PayPal electronic payments unit, where he has served as president for several years, devoted 60% of resources to its core business, 30% toward new innovative services that might take a year to pan out, and another 10% on more speculative projects that might take even longer to succeed, this person said.
Mr. Thompson said that he didn't know yet what the specific split of resources might be at Yahoo.
Some of Yahoo's newer efforts that would fit into the second category include two apps that run on Apple Inc.'s iPad?a news-reading service called Livestand, and IntoNow, which is meant to be used while someone is watching television.
Yahoo's directors hired Mr. Thompson to try to turn around the company's struggling online-advertising business. The board fired his predecessor, Carol Bartz, in September and launched a strategic review that included potentially selling a stake in Yahoo to private-equity investors. Mr. Thompson, who will also join Yahoo's board, is expected to play a big role in shaping Yahoo's broader strategic moves.
In his remarks to employees Thursday, Mr. Thompson repeated comments from Wednesday's conference call with Wall Street analysts in which he said he was a loyal user of Yahoo's websites, this person said.
Mr. Thompson also mentioned Alibaba Group Holding Ltd., the China-based company in which Yahoo owns a roughly 40% stake and with which it is negotiating to potentially shed some of its assets, this person said.
Mr. Thompson said it was difficult to compete with Alibaba, which owns a service similar to PayPal in China, this person said.
The new chief executive also said that he had a lot of respect for Alibaba CEO Jack Ma and the company he built, this person said.
In an interview after Wednesday's announcement, Mr. Thompson declined to describe the vision for Yahoo that he laid out to directors when he was interviewed for the position. But he said his focus at Yahoo would be to "generate the opportunity for network effects," or creating new Web services that become more valuable the more people use it, as with the Facebook Inc. social network or PayPal. He said his aim was to build a "really big, high-growth business" in a "relatively short period of time."
He also said Wednesday that he expects to hire executives as well as use Yahoo's "arsenal" of resources, including its balance sheet, and to making acquisitions. He said Yahoo would build new Web services and "if we don't have it, we will find it in the market ? and we'll do it fast."
Write to Amir Efrati at amir.efrati@wsj.com
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