AllThingsD » Kara Swisher

Interview: The Summer of Larry (Ellison) Is About to Sail Into Port Via America's Cup

Kara Swisher — Sat, 25 May 2013 00:25:21 +0000

Larry and David Ellison at “The Wind Gods” premiere

A few weeks ago, Larry Ellison threw a party in San Francisco for the premiere of “The Wind Gods: 33rd America’s Cup,” a documentary that also called attention to a whole lot of high-tech sailing set to take place starting in July in the San Francisco Bay.

But that 34th America’s Cup has been under some level of scrutiny of late, ever since an accident the day after the screening that resulted in the drowning death of a member of the Artemis Racing team, after its boat dramatically capsized in the San Francisco Bay.

That possibility of danger is abundantly clear in “The Wind Gods,” which was produced by Ellison’s son and successful movie producer, David Ellison. (His production company — Skydance — is also behind the new “Star Trek Into Darkness” blockbuster.)

This documentary certainly isn’t a 3-D spectacular, but it is a pretty dramatic paean to how the tech mogul’s sailing team, BMW-Oracle, after a decade of failed attempts, finally snatched America’s Cup in 2010 in Valencia, Spain, back from the Swiss team Alinghi and its leader Ernesto Bertarelli, a former Ellison friend.

Emphasis on former, according to “The Wind Gods,” narrated in basso-profondo tones by actor Jeremy Irons and in the construct of the underdog — in this unlikely case, Ellison — against the villainous snob from Europe.

This despite the huge advantage BMW-Oracle had via its USA-17 trimaran, with its breathtakingly massive, fabulously computerized rigid-wing sail, for which price was apparently no object.

“Someone once asked me if it’s worth $100 million to win the America’s Cup,” said Ellison in the documentary. “It’s certainly not worth $100 million to lose the America’s Cup.”

Ellison was full of bon mots like this in “The Wind Gods” and also at the event, held at the new America’s Cup pavilion on the Bay and chock full of the Oracle team members — such as skipper James Spithill — as well as the enormous silver cup itself that now has a new carbon-fiber base similar to the materials the boats are made of.

“The biggest lie told in professional sports is, ‘We’re just going out there to have fun,’” he said in a panel discussion after the film was shown. “There’s one team that wins the championship — all the rest don’t.”

And Ellison later noted about being on the fast-moving boats in cold weather: “It’s very much like driving a car from Chicago to New York with the top down in January.”

After the panel, I did an interview with Ellison about the upcoming defense by Oracle Team USA, an effort that has been seen quite a bit of controversy over the dangers of the new boats in the upcoming race, called AC72s, which are 131 feet high, 46 feet across and 72 feet long.

Even before the accidents — there was a first capsizing by Oracle before the Artemis’ — the cutting-edge design has led to a series of worries about the success of this 162-year-old race and if a major lessening of the size and scope is needed now. Even Russell Coutts, the legendary sailing champion who is CEO of Oracle’s effort, said as much in an article in Wired magazine titled, “The Boat That Could Sink America’s Cup.”

“No matter who wins,” Coutts said to Wired, “they are definitely going to make changes: make the boat smaller, bring the team budgets down, stuff like that.”

Due to the high costs, though, there will only be the three teams that will compete in the Louis Vuitton Cup — also known as the America’s Cup Defender Series — that starts July 4, rather than more than a dozen that are more typical. Oracle Team USA does not compete in this part of the series. It will face the winner in the finals, which will take place from September 7 to 21.

Ellison is certainly not sanguine about the issues raised by the hyped-up boats and the extreme pushing of the edge, which in truth have been a reality since America’s Cup’s very beginnings.

But the unusual, perhaps never-to-be-seen-again, nature of the boat design is part of the reason for the film about the 2010 race, he said.

“It was important to document it, because that trimaran, that thing, 23 stories high, we knew it was never likely to sail again,” he said about the USA-17, which is now in a shed in San Francisco. “Not very many people would see it sail and it was such a spectacular piece of technology.”

In fact, its very existence was in question, due to the legal wrangling over the boat that Ellison had with Bertarelli, which is chronicled not in the Alinghi leader’s favor in “The Wind Gods.”

“You don’t think he’s going to like it?,” asked Ellison, with a sly smile, about Bertarelli’s arrogant portrayal in “The Wind Gods.” “He tore up America’s Cup rules and he did it because he thought he could get away with it and he was desperately afraid of losing.”

Since the documentary needed to be only 56 minutes for television, a lot about the boat’s technology was left on the cutting room floor.

“The engineering is phenomenal, there are 2,000 sensors on the mast,” said Ellison, who noted the new one for the upcoming race will also be outfitted from back to front with cameras and microphones.

“It’s primarily for the television audience,” he said, due to the efforts to make this America’s Cup, which will take place in perhaps the most picturesque setting under the Golden Gate Bridge, more interesting to viewers (races will be shown on NBC and elsewhere).

Ellison said he hoped that people not particularly interested in sailing will find the races gripping, although perhaps not in the same way he did when he first learned to sail taking lessons at the University of California at Berkeley when he first arrived in Silicon Valley. He was instantly entranced.

Why the attraction?

“I was always in love with the idea of sailing and the freedom it represents, the fact you can go anywhere with just the power of the wind,” he recalled, saying a series of National Geographic articles by Robin L. Graham about his solo 1965 sail around the world as a teenager was inspiring to him.

“It was an idealized version of it, but it was that combination of freedom and self-reliance that impacted me,” said Ellison. “What’s the right word? Independence. If you are a control freak [like me], you think that’s pretty great.”

Ellison has not decided if he will be on the AC72 — as he was at the last America’s Cup — as part of the crew in the finals.

“I am not sure, but I am getting into shape in case, although it’s a chore,” said Ellison, who is working out by running and playing tennis, but still makes fun of all the various athletes — including some on his sailing team — who are on a gluten-free diet.

Having already competed professionally, he said he might be satisfied to not compete himself, which does not seem very much like Larry Ellison.

“Whoever is best should be driving the boat,” he said. “In this case, that’s not me.”

America’s Cup practices on the San Francisco Bay resumed this week by Oracle, as well as Luna Rossa and Emirates Team New Zealand, for the first time since the accident — but with a drop in maximum wind limits and a list of new safety requirements. Artemis, which has had a new replacement boat brought in, has not decided if it is going to compete as yet in sailing’s premier regatta.

Until we know more and the next race begins, here’s the trailer for “The Wind Gods” to look back on the last one:

Viral Video: More Google Glass Photographer Spoofing (The Gift That Keeps on Giving)

Kara Swisher — Fri, 24 May 2013 16:14:24 +0000

No need to preface this, except to say there will apparently be no letting up on the meme that Google Glass presents some interesting challenges for its users.

Enjoy:

Draw Something From This: Yahoo's Design Chief Tim Parsey to Depart

Kara Swisher — Thu, 23 May 2013 20:43:28 +0000

Yahoo’s design chief, the effervescent Tim Parsey, will be leaving his job at the Silicon Valley Internet giant, sources said.

As SVP of User Experience Design at Yahoo, which centralized the task under Parsey, he has been part of a range of redesigns of its major properties, including its homepage, Flickr photo-sharing site, email and more.

As I noted when Parsey arrived in early 2011, “in the 67-ring circus that has been Yahoo’s product organization, design was widely dispersed.”

Translation: It was not pretty, unless you enjoyed the Web stylings of 1997.

Parsey certainly had the cred in the design industry, with stints at Apple, Microsoft’s entertainment and devices unit, Mattel and Motorola. Just before Yahoo, he was a principal at a Seattle-based design firm called shiftalliance.

The British native ran Apple’s design studio for five years in the early 1990s and was the main dude behind Motorola’s freaky V70 switchblade mobile phone in 2001.

It’s not clear why he is leaving now, or where the crackerjack designer is headed. But, amid a lot of Yahoo turmoil since he arrived, Parsey certainly stabilized the design culture at the company.

Also in play, according to numerous sources: New Yahoo CEO Marissa Mayer has a very “hands-on” style with regard to design — she pretty much considers herself the last and only stop on that train, among others, based on her experience at Google running a number of products including its pristine and much acclaimed front page search box. No surprise, then, she has involved herself strongly in the design process.

On his LinkedIn profile, which still lists him as working at Yahoo, Parsey talked about his ethos of design there:

“This is about weaving a global UX and UER organization from the existing 200+ designers and researchers that today support an array of different businesses. It’s part of a rather cool broader corporate transition project. It’s also very much about establishing design as a potent, world-class entity that’s fun to be part of.”

He also notes: “These days I’m very excited about the correlation between internal cultures that are truly ‘meaningful’ to designers ( and other functions ), and world-class design innovation.”

Hearst Taps Demand Media's Bradford and Yucaipa's Johnson to "Redefine" the San Francisco Chronicle

Kara Swisher — Thu, 23 May 2013 19:49:46 +0000

Media giant Hearst has hired two senior execs — Demand Media’s Joanne Bradford and former Los Angeles Times CEO Jeffrey Johnson — in a significant move to digitally turbocharge and jumpstart its flagship but long-suffering newspaper, the San Francisco Chronicle and its SFGate.com website.

“They have deep publishing and new media experience and believe in the power of great content with a valued brand,” said Heart CEO Frank Bennack in a statement. “We are excited to work with them to redefine the choices for how and where readers can experience the trusted Chronicle content they depend on.”

In the new leadership, Johnson will be the publisher of the Chronicle, while Bradford will be its president. Both will report to Hearst Newspapers President Mark Aldam. Current publisher Frank Vega — an old-style publisher who has had a controversial tenure at the Chronicle — will retire, though Hearst said he will continue as chairman through the transition.

“The San Francisco Chronicle should be a shining star and use case of how to build a community and cover local news,” said Bradford in a text to me today.

Indeed. While the Chronicle and its website is the largest for local news in the Bay area, it has lagged a lot in aggressively covering key trends — such as tech — and the fast growth of the region. While the area has blossomed, the Chronicle, like many big-city newspapers, has suffered, as digital businesses of all kinds have made incursions on its business.

Its daily print circulation is now 265,000, and combined with its website it reaches close to two million people.

Getting all that a whole lot higher — and, perhaps more importantly, a lot more relevant — will be a tough job and will likely require a major reinvention of the Chronicle brand.

That is especially true since the San Francisco area, including Silicon Valley, is the world’s key digital hub, as well as a leader in a number of areas — from top-notch sports teams to having one of the most innovative food and indie cultures. After a few years of rough economic times, the city is on a bit of a roll, including being the location of some upcoming major events such as the Super Bowl and America’s Cup.

Bradford has a lot of experience in both old and new media and is well known in the online media advertising space, having had top sales and media jobs at BusinessWeek magazine, Microsoft, Yahoo and, now, Demand.

She has been at that content site, where she has been its chief revenue and marketing officer, since 2010. At Yahoo, previous to Demand, she was an SVP in charge of North American revenue and also worked on branded entertainment partnerships. At Microsoft, she was a corporate VP and chief media officer of MSN Media Network.

And, although I have known her well over many years — full disclosure: We are very good friends — I had no idea she had an undergraduate degree in journalism from San Diego State University.

Johnson is also a longtime media exec. He has recently been an operating partner at the Yucaipa Companies — owned by kingpin Ron Burkle — focusing on media investments since 2007. Previous to that, he was president, publisher and CEO of the Los Angeles Times for just a year, but had been its SVP and GM since 2000. At the Times, he was responsible for the newspaper’s digital and print operations including editorial, advertising, circulation, consumer sales and marketing, finance and technology. Johnson has also worked at the Chicago Tribune and Orlando Sentinel and has an undergraduate degree in accounting from the University of Illinois and an MBA from the University of Chicago.

The Chronicle is the largest newspaper in Northern California, founded in 1865 by Charles and Michael de Young. Its owner, the privately-held Hearst, is one of the nation’s largest media companies, with dozens of daily and weekly newspapers; has a huge group of television stations and cable network stakes, such as Lifetime, A&E and ESPN; hundreds of magazines, such as Good Housekeeping, Cosmopolitan and Elle; and many other varied holdings.

Bradford will be replaced at Demand Media by Jeff Dossett.

Another VC Is Born: Well-Known Internet Exec Ben Ling Joins Khosla Ventures

Kara Swisher — Thu, 23 May 2013 18:00:21 +0000

Ben Ling, a longtime Silicon Valley angel investor and Internet exec, has joined Khosla Ventures as a venture partner.

Ling is the second hire of high-profile operating execs by Khosla. Former Square, Slide and PayPal exec Keith Rabois — who is a close friend of Ling’s — joined the firm in February.

In an interview today, Ling said he has been contemplating his next move, and the idea of becoming a VC after years of operations was appealing.

“I thought a lot about the ability to have impact across a broad set of companies, and was attracted to Khosla’s model of venture assistance,” said Ling, who added that he will focus a lot on the mobile ecosystem. “When I was younger, I thought it would be fascinating to be an investor, and here I can help a lot of companies grow and scale.”

Ling is a former Google and Facebook product exec, as well as an active investor in 80 startups, including such high-profile ones as Fab.com, Square and Quora. He was most recently COO at Badoo, but left the company last fall.

At Google, he worked on search, YouTube and local products, and was closely linked with former Googler Marissa Mayer, whom he followed internally when her responsibilities shifted there. Many thought he might next pop up at Yahoo, where she is now CEO.

Not so, but also not a surprise; Mayer provided Khosla with a lovely statement about Ling: “Ben is an amazing entrepreneurial leader and has a great eye as an investor for both talent and ideas. I’m excited to see him join Khosla Ventures to find and foster the next set of entrepreneurs who will define the technology world.”

Jawbone Hires Microsoft's Mindy Mount as President to Turbocharge Ops

Kara Swisher — Thu, 23 May 2013 17:00:50 +0000

In a key hire, Jawbone said today that it had hired Mindy Mount, a top corporate VP at Microsoft, as its president.

The move by the San Francisco-based maker of wireless, music and wearable devices is part of what has been a major upgrading of its management and board. Recently, Jawbone added Yahoo CEO Marissa Mayer and Rob Wiesenthal of Warner Music as directors.

Jawbone has also recently done a big acquisition — purchasing BodyMedia, a wearable health and fitness company, for $100 million. The move comes just a couple months after it bought data and digital-design companies Massive Health and Visere.

All this expansion requires tight organizational efforts and Mount has a lot of financial and operational experience, having held several key jobs at the software giant. She was most recently corporate VP and CFO at Microsoft’s Online Services Division, which includes Bing, MSN and Microsoft Advertising. Before that she held a similar job at the Entertainment and Devices Division, which has the Xbox, Zune and Windows Phone units.

Previous to that, Mount ran AOL’s U.K. unit, worked in strategy at Time Warner and also was an exec at Morgan Stanley. She has an MBA from the Harvard Graduate School of Business and an undergraduate degree from the University of Wisconsin-Madison.

In an interview today, Mount said that what attracted her to Jawbone was the challenge of scaling the fast-growth company, which is helmed by CEO and co-founder Hosain Rahman.

“Right out of the block, I’ll be spending time on business operations, since the scale and scope and complexity of Jawbone has really increased,” she said. “What really attracted me to the role is that it is a really meaty one … It’s a company with great products, where I can come in and have real impact, because consumer electronics companies really have to execute.”

Jawbone products include Jawbone wireless headsets, Jambox speakers and the Up personal fitness wristbands. The company has raised a lot of funding, totaling about $210 million from such venture firms as Andreessen Horowitz, Khosla Ventures, Kleiner Perkins and Sequoia Capital, as well as Deutsche Telekom, investor Yuri Milner and others.

Yahoo Hires Longtime McKinsey Exec DeVine to Head Global Ops

Kara Swisher — Thu, 23 May 2013 16:18:26 +0000

According to an internal memo and now on his LinkedIn profile, Yahoo has just hired longtime McKinsey exec John DeVine as SVP of global operations. He has worked in the marketing and sales practice at the consulting firm since 1999 and has been an advocate there of “how companies need to embrace the customer experience.”

Devine will report to COO Henrique De Castro — who also worked at McKinsey — and will be helming a wide swath of operations, such as advertising solutions. DeCastro has also been searching recently for a head of the key U.S. ad unit and has tried to hire former AOL sales chief Ned Brody. That hire is limbo now, due to Brody’s 14-month non-compete contract with AOL; CEO Tim Armstrong shows no signs of letting him leave sooner.

But DeVine is on board at Yahoo, so to speak. The former submarine officer in the U.S. Navy also has a masters degree in nuclear engineering — batten down the hatches for incoming at ATD HQ! — from the University of California Berkeley and did his undergraduate work at the U.S. Naval Academy.

Yahoo Scoops Up Another Small Startup: Gaming Platform PlayerScale

Kara Swisher — Thu, 23 May 2013 14:58:19 +0000

Yahoo said it had bought PlayerScale, a small gaming infrastructure startup for cross-platform gaming. Yahoo has been on a bit of a tear in buying up small companies for low prices, to strengthen its talent and expertise in a wide variety of arenas, including mobile, productivity and gaming. Terms of the deal were not disclosed, but PlayerScale said on its blog that it would “continue to support our existing product,” which is Player.IO.

Former Yahoo Shashi Seth to Join Tribune as President of New Digital Ventures Unit

Kara Swisher — Tue, 21 May 2013 20:39:33 +0000

Shashi Seth, former top product exec at Yahoo, has joined the Tribune Company as president of Tribune Digital Ventures, according to sources.

He will be reporting to CEO Peter Liguori and based in Silicon Valley, apparently to set up a brand new digital arm of the Chicago-based media company.

Sources said TDV would seek to invest in, buy and partner with innovative startups, not unlike the Comcast Ventures unit of the cable giant, which is run by Amy Banse.

Seth ran a wide variety of product groups for Yahoo — the last as SVP of its Connections division — and left in January, some months after new CEO Marissa Mayer took over.

Seth had been in charge of a swath of key products at Yahoo including Yahoo Mail, the Flickr photo-sharing service and many others.

Previous to Yahoo, Seth also worked at Google and AOL.

Vote on New Brangelina-Style Name for Tumblr and Yahoo: Yahumblr … TumHoo … Ham.Yum! … Swishr?

Kara Swisher — Tue, 21 May 2013 19:20:07 +0000

Because we know how much Yahoo’s top execs value our input, the crack AllThingsD team spent at least seven or eight minutes yesterday coming up with some new names for the marriage of Yahoo and Tumblr.

As you must know by now, the staid Silicon Valley Internet giant scooped up the sassy New York blogging site for $1.1 billion this week, with Yahoo CEO Marissa Mayer continuing in her busy quest to inject some don’t-look-at-the-growth-numbers, jazz-hands excitement into the moribund company’s DNA.

Which is where ATD steps in by suggesting some new monikers for the latest effort — kind of like giving the deal a little Brangelina nicknaming glamor.

And, by the way, if this purchase ends badly — as many other Yahoo acquisitions have, such as that of photo-sharing site Flickr — perhaps the best name might be: Fumblr. (Thanks, Arnie Gullov-Singh!)

Until then, take the poll below and enjoy:

View This Poll

Yahoo Back on to List of Top 100 Brands at No. 92, Though Apple Remains No. 1

Kara Swisher — Tue, 21 May 2013 00:29:20 +0000

Yahoo, which had dropped off the important BrandZ Top 100 list several years ago, scratched its way on again this year at No. 92.

The Silicon Valley Internet giant had last been on the key list of brands in 2009, when it had a brand value of $7.9 billion. It now has a brand value of $9.8 billion, which is still down from its $11.4 billion in 2008.

And that’s tiny in comparison to Apple, which remains No. 1 on the list with a brand value of $185.1 billion. Google ranked as No. 2 with a brand value of $113.7 billion.

Apple rival Samsung’s brand value rose by by 51 percent to $21.4 billion, clocking in to the No. 30 spot.

In tech, Amazon’s brand value was $45.7 billion, rising 34 percent to No. 14. IBM is No. 3 with a brand value of $112 billion.

And more: Microsoft (No. 7, $69.8 billion, down nine percent); Facebook (No. 31, $21.3 billion, down 36 percent); and eBay (No. 47, $17.7 billion, up 40 percent).

The eight-year-old BrandZ list, which is much watched by marketers, is commissioned by WPP and conducted by Millward Brown Optimor.

Here’s the full chart of the list and report:

Top100BrandZ2013

BrandZ Top 100 Media Deck 2013 U S

And here is a super-cool infographic too:

2013_BrandZ_Top100_Infographic

Start Spreading the News: Yahoo Gets New Times Square Office, Offers Free Terabyte on Flickr and Updates Design to Look Like 2013

Kara Swisher — Mon, 20 May 2013 21:10:46 +0000

At a media event in New York today, Yahoo CEO Marissa Mayer announced a new office in Times Square for the Silicon Valley Internet giant.

“From one Mayor to another,” said Mayor Michael Bloomberg to Mayer (get it?) about locating in Manhattan’s iconic location, which will house 500 Yahoo employees.

But not Tumblr, which will remain blissfully downtown, even after its $1.1 billion all-cash acquisition by Yahoo announced today.

“We’re very happy that Tumblr is a home-grown company,” said Bloomberg,

Irony alert: Yahoo’s new digs in the Big Apple is actually the old HQ of the New York Times.

“Twenty years ago there were a lot of Yahoos in New York,” said the Bloomberg, channeling Jackie Mason and then touting the local tech industry and reeling off the stats.

Boiled down: Geeks rule.

Mayer also talked briefly about the acquisition of Tumblr and repeated the trying-really-hard-to-be-wacky, “we’re going to try not to screw it up” promise.

Mayer then introduced another promise — a commitment to fix Yahoo’s last major acquisition screw-up, Flickr.

Yahoo exec Adam Cahan, who is in charge of the photo-sharing service and who uses the term “awesome” quite a lot, came on next to show the changes.

He introduced a new design, which looks kinda like Instagram and kinda like Flipboard and kinda like Apple and kinda like Facebook’s homepage. It does bring Yahoo up to speed with others in the key photo-sharing space, which is good.

(Sorry, I cannot be more detailed, since I could only see it via Internet, because AllThingsD.com was not invited to the event by Yahoo.)

From what I can tell, it’s very image-centric with big photos and little text.

Cahan also introed a new Google Android mobile version and said that Flickr will offer a terabyte of space for free to users, which is about 537,731 photos.

Then he talked about a terabyte a lot, claiming that “no other Internet company has offered you a terabyte” of space. (Well, I would imagine Google and Facebook will now do so in a New York minute.)

Some very nice man with a German accent demoed it. (Again, I am not there and did not see a name going by on screen, and I can’t ask Yahoo PR his name.)

It’s purty, for sure, and nice to be able to upload photos in their full fidelity without worrying about space constraints.

Mayer called it “spectacular,” “bigger” and, of course, “awesome.”

It is certainly much more striking than how the antiquated Flickr homepage used to look like — which was circa 1969. But, like I said, kinda like what others have already done, although these updates are certainly a welcome change for Flickr.

Mayer then ran a very cute video for the changes, which, well, was kinda like an Apple video.

“Flickr was awesome once and then it languished,” said Mayer, declaring victory already. “And now it’s awesome again.”

In a Q&A after, Mayer, Cahan and the nice German guy answered questions about integration of Tumblr and Flickr (not yet!); how it was like or not like Instagram (no cropping apparently — which is exactly what is fantastic about Instagram); the terabyte (it’s awesome!); and more Tumblr deets (you know them already); monetization; and a bizarre one about redundancy so you don’t lose photos.

Mayer also said that Yahoo had bought 11 billboards in Times Square to show off Flickr and noted there was a party after for the media. (Except the unchosen, so I am enjoying a nice glass of Cabernet all by my lonesome. Frankly, it’s awesome!)

(Photo credit: Kevin Tachman for Times Square Alliance.)

GE Ventures Officially Opens for Business in Silicon Valley (Video)

Kara Swisher — Mon, 20 May 2013 19:08:23 +0000

Like a lot of big corporations have of late, such as Comcast and Ford, GE is now making its Silicon Valley presence official, with a new office and formal name for its longtime investment efforts.

That would be GE Ventures on Sand Hill Road, which will bring together a number of its investment execs and focus them on areas that are important to the huge manufacturing company. That includes scaling and commercializing software, hardware and healthcare tech, as well as an interest in the industrial Internet.

As in how to link jet engines GE makes to the Internet. (Really.)

While focused for a long time on later rounds, GE Ventures will now also invest in accelerators and do seed and earlier investments.

GE Ventures — which has a financial commitment of $150 million annually from GE — is part of the company’s larger tech presence in the Silicon Valley area, which also includes its new software and analytics center in nearby San Ramon, which has hired hundreds of engineers since late 2011.

GE is throwing a party tonight at its new offices, and has posted a blog on GEV by Beth Comstock — who oversees the GEV effort, as well as its growth and innovation initiatives.

Here she is talking about it all in a video interview, including the need for old giants to try some new tricks:

[ See post to watch video ]

Yahoo to Announce $1.1B Tumblr Buy This Morning, as Shares Rise Ahead of Official News (That You Already Knew)

Kara Swisher — Mon, 20 May 2013 11:30:32 +0000

Yahoo will announce its $1.1 billion all-cash acquisition of the Tumblr blogging service this morning, said sources, likely just before the markets open.

That means: Very, very soon.

(Update: Looks like sooner than very soon — Yahoo officially said it promised not to screw up Tumblr at 5 am PT.)

But Wall Street likes the deal so far. Yahoo shares were up in pre-market trading this morning, close to 2 percent, to reach $27. The stock of the Silicon Valley Internet giant closed Friday at $26.52.

After the announcement of the news AllThingsD already told you about several times over the past few days, let the opinions begin over a range of the entirely unknowable right now, including:

Whether it is a good deal, or whether Yahoo has just bought themselves GeoCities 2.0; whether Tumblr’s tetchy young audience would bolt at the Yahoo ownership.

Whether Tumblr CEO David Karp — he of the sad-puppy-dog eyes and fantastically floppy hair — would wither or bloom under the leadership of Yahoo CEO Marissa Mayer.

And, of course, who got rich in the whole shebang.

Karp, for sure, garnering $250 million in cash.

So sit tight to get the final word and all the quotes praising the deal as the best thing since, well, Instagram got picked up by Facebook for a mere $1 billion. Apparently, $1.1 billion is the new $1 billion.

We will cover the news, of course, despite not being invited to Yahoo parties (and somehow we’ll survive).

WordPress' Mullenweg Claims 72,000 Blogs Imported From Tumblr in Just One Hour on Sunday

Kara Swisher — Mon, 20 May 2013 10:27:59 +0000

Despite largely anecdotal media speculation, it’s not clear how the acquisition of Tumblr by Yahoo for $1.1 billion will be greeted by users of the New York blogging service.

But rival blogging service WordPress’s founder Matt Mullenweg posted on his blog last night that WordPress imports from Tumblr on Sunday — after news of the deal had been broken by AllThingsD.com — had risen from a typical 400 to 600 blog posts an hour to more than 72,000.

Whoa!

That said, this is not an uncommon occurrence. Some users of Posterous fled the blogging service when Twitter bought it, and some Instagrammers huffed off when Facebook nabbed the photo-sharing site.

And, by comparison, Tumblr says it get 75 million blog posts per day — so 72,000 are just a drop in the ironic blogging ocean.

Plus, Mullenweg thinks the high price paid by the Silicon Valley Internet giant was low.

“I think we’re at the cusp of understanding the ultimate value of web publishing platforms, particularly ones that work cross-domain, and while Yahoo’s all-cash deal by some metrics, like revenue, is very generous, I think it’s a tenth of the value that will be created in these platforms over the coming years,” wrote Mullenweg.

Here’s his post:

It now looks pretty certain that Yahoo has pulled off a deal to buy Tumblr for 1.1B. The relationship between WordPress and Tumblr has always been pretty friendly: Tumblr’s own blog used to be on WP, WordPress.com supports Tumblr as a Publicize option alongside Twitter and Facebook, our Akismet team sends them daily emails of splogs on the service, and there’s healthy import and export traffic both ways. (Imports have actually spiked on the rumors even though it’s Sunday: normally we import 400-600 posts an hour from Tumblr, last hour it was over 72,000.)

News like this, whether from a friend or a competitor, is always bittersweet: I’m curious to see what the creative folks behind Tumblr do with their new resources, both personal and corporate, but I’m more interested to know what they would have done over the next 5-10 years as an independent company. I think we’re at the cusp of understanding the ultimate value of web publishing platforms, particularly ones that work cross-domain, and while Yahoo’s all-cash deal by some metrics, like revenue, is very generous, I think it’s a tenth of the value that will be created in these platforms over the coming years.

Tumblr Brand Will Remain -- With Mostly "Hands-Off" Product Approach by Yahoo's Mayer

Kara Swisher — Sun, 19 May 2013 23:12:51 +0000

According to numerous sources close to the situation, the Tumblr brand will continue on in the wake of its $1.1 billion acquisition by Yahoo.

That includes definitive promises by Yahoo CEO Marissa Mayer to once-sale-shy Tumblr CEO David Karp to allow him to shepherd the fast-growing blogging product, with no forced integration with Yahoo’s many other content properties.

That said, sources added, there will be more back-end changes to marry infrastructure, such as undergirding Tumblr’s nascent advertising business and giving it more distribution opportunities.

“At the beginning, at least, it’ll be hands-off,” said one person close to the situation. “It has to be.”

While that is probably no surprise, it’s still good news for Tumblr employees as well as its very opinionated user base, which is not likely to greet a takeover by a corporate giant of the social, iconoclastic user-generated content service.

That said, Yahoo execs discussed and are aware of issues around porn published on the site, although they believe it to be fixable over time.

As Peter Kafka noted:

To spell that out: Tumblr’s advertisers don’t have to worry about their stuff showing up on blogs like We Want Porn. At worst, it’s possible that they’ll end up advertising to a user whose dashboard includes posts from We Want Porn. But in general, they ought to be pretty well insulated from that stuff.

By the same token, if Yahoo wanted to, it could end up scrubbing Tumblr of porn, and losing a lot of users and views — but it probably wouldn’t lose much in the way of monetizable users. Unless it turns out that the majority of Tumblr’s core users have signed on exclusively to use porn.

Or, as a Tumblr investor also told Kafka: “Non-story. Tumblr is the Internet. It’s a dashboard-follower model, opt-in.”

Moving on from porn, sources close to the situation — okay, pretty much everyone is chit-chatting away now — said that Mayer spent a lot of time with Karp (who was in Silicon Valley last week, in fact, visiting her) about the transition, and about how the new ownership would impact him and the service.

One source called them “kindred spirits” on the issue, and that Mayer has been given great purview by the Yahoo board to foster Tumblr to prevent it from turning out like Flickr, Delicious and many other big acquisitions dating back to GeoCities. (I was there covering that deal way back when, and what a mess that was!)

Mayer is well-liked by product and engineering entrepreneurs, and has often focused on them at Yahoo, over the perhaps more important demands of business and advertising execs.

That would appeal to Karp, who once famously said that online advertising made him physically sick. Still, he has recently begun to embrace ad sales at Tumblr.

Within the last year or so, Tumblr has started selling modestly sized “native ads” promoting brands’ Tumblr pages on users’ dashboards, which has shown promise. Tumblr has said it had $13 million in revenue last year, and sources said it could get to up to $100 million this year.

“We’re going to be very careful here,” said a source with knowledge of the acquisition.

A source at Tumblr agreed: “This will be a very delicate dance, since so much could go wrong if done without care.”

Still, some at Yahoo are worried that the company might be chasing the youthful demographic at Tumblr too assiduously. “This is a very fickle audience,” said another high-ranking Yahoo exec. “Chasing a young one is a very tricky thing.”

Yes, indeed, but Mayer thinks she is the one to be able to pull it off and make Yahoo relevant with an even wider consumer base.

AllThingsD broke news of the deal in the offing last week, which has since been approved by Yahoo’s board.

Yahoo Tumblrs for Cool: Board Approves $1.1 Billion Deal as Expected

Kara Swisher — Sun, 19 May 2013 16:34:09 +0000

The Yahoo board has approved a massive $1.1 billion all-cash deal to buy Tumblr.

It’s not clear when the official vote was taken, but sources close to the board said the acquisition was a foregone conclusion and was unanimously approved by the directors of Silicon Valley Internet giant.

The deal will likely be announced Monday morning, said numerous sources.

AllThingsD.com initially broke the story of the acquisition efforts and later followed up with details of the exact price and the board meeting to approve the transaction.

There were no other competing bids, despite reports, to snap up the New York-based social blogging service. That said, Tumblr had held some very preliminary discussions about various deals with Facebook, Google, Microsoft and also Twitter earlier this year.

As part of the Yahoo deal, Tumblr CEO David Karp — who will get a windfall of cash from the acquisition — will stay at Yahoo for four years at least and retain a lot of control over the service, much in the same way Instagram CEO Kevin Systrom does at Facebook. But, as there, Yahoo will undergird Tumblr’s nascent advertising business with its large and established infrastructure, said sources.

Yahoo had been mulling some kind of deal with Tumblr, from a strategic investment to an outright acquisition, for about six weeks. Sources said that Yahoo CEO Marissa Mayer had decided that buying the company was going to be “the stake in the ground of what her strategy is going forward for Yahoo.”

And that is to attract younger audiences with just the kind of user-generated content Tumblr has pioneered to impressive growth.

According to numerous sources, Mayer determined quickly in her research that the site was just the kind of property that Yahoo needed to make it both “cool” and relevant to new consumers.

Yahoo is looking to bolster its strong set of existing media offerings to appeal to a different demographic and also get into the social space via consumer-based software solutions that are both elegant and easy to use.

Tumblr’s mobile usage has also been strong, which also interested Mayer. While Tumblr started as a desktop-based service, its mobile offering has ramped up quickly in the last few years. ComScore says that a quarter of the service’s U.S. visitors now come from mobile devices.

At this price, it will be Mayer’s biggest acquisition so far. Since she became CEO last summer, Mayer has made only a series of small acquisitions of mobile startups at a low cost.

According to sources, the Tumblr brand will continue.

The deal, if consummated, will be a big win for investors. In a series of fundings since 2007, Tumblr has raised $125 million so far and is now at a reported valuation of $800 million. Investors include Spark Capital, Union Square Ventures, Sequoia Capital, Greylock Partners, Insight Venture Partners and the Chernin Group.

While Tumblr’s Karp has resisted various offers for the company over the years, Mayer spent a lot of time with him reassuring him that Yahoo could turbocharge his business. He has also been searching for a COO to help him build out the infrastructure of its business, especially its advertising one.

And as Peter Kafka and I previously wrote, Tumblr could certainly bring Yahoo a big, young audience. Its worldwide traffic was at 117 million visitors in April, according to comScore. On its home page, Tumblr claims it has 107.8 million blogs and 50.6 billion posts. U.S. desktop traffic to Tumblr was 37 million in April, close to LinkedIn and Twitter, although Twitter obviously has much more via mobile.

But figuring out how to make money from that is a task that the company has only recently started to tackle.

Like other recent Web startups that have seen rocketship growth — see: Twitter, Facebook — Tumblr resisted advertising for its formative years, and its user base seems particularly unwilling to accept standard banner ads. In addition, many industry observers think that Tumblr’s pages are packed with porn or other questionable content that would scare off advertisers.

But within the last year or so, Tumblr has started selling modestly sized “native ads” promoting brands’ Tumblr pages, on users’ “dashboards,” which has shown promise. Tumblr has said it had $13 million in revenue last year and sources said it could get up to $100 million this year.

Tumblr has been represented by Qatalyst Partners’ Frank Quattrone, while Yahoo’s Mayer, as well as M&A head Jackie Reses and CFO Ken Goldman, have been on the company’s side.

Interestingly, what got me first focused on Tumblr last week were Goldman’s comments at JP Morgan’s Global Technology conference last week, where he underscored the need for the aging Yahoo to attract more users from the coveted 18-to-24-years-old age bracket. Along with more marketing, he explicitly said Yahoo needed to be “cool again.”

“One of our challenges is we have had an aging demographic,” said Goldman at the Boston event. “Part of it is going to be just visibility again in making ourselves cool, which we got away from for a couple of years.”

Tumblr, apparently, fits the very expensive bill.

Yahoo Board to Meet Sunday to Consider $1.1 Billion, All-Cash Deal to Acquire Tumblr

Kara Swisher and Peter Kafka — Fri, 17 May 2013 23:55:17 +0000

According to sources close to the situation, the Yahoo board plans to meet Sunday to decide whether to approve a $1.1 billion all-cash offer for New York-based blogging site Tumblr.

As AllThingsD.com first reported yesterday, Yahoo has been mulling some kind of deal with the hip New York-based blogging site, from a strategic investment to an outright acquisition. Sources said that the Silicon Valley Internet giant’s CEO Marissa Mayer has decided that buying Tumblr was going to be “the stake in the ground of what her strategy is going forward for Yahoo.”

And that is to attract younger audiences with just the kind of user-generated content Tumblr has pioneered to huge growth.

As with all big-time acquisition deals, this one could certainly fall apart at the last minute, but source said the agreement was still in place as of today. If approved by Yahoo’s board, it will be announced Monday. Yahoo has already said it has news to announce then.

According to numerous sources, Mayer started an intense focus on Tumblr about six weeks ago and determined quickly that the fast-growing content site, turbocharged by mountains of user-generated content, was just the kind of property that Yahoo needed to make it both “cool” and relevant to new audiences.

Yahoo is looking to undergird its strong set of existing media offerings to appeal to a different audience and also get into the social space via consumer-based software solutions that are both elegant and easy to use.

Tumblr’s mobile usage has also been strong, which also interested Mayer. While Tumblr started as a desktop-based service, its mobile usage has ramped up quickly in the last few years. ComScore says that a quarter of the service’s U.S. visitors now come from mobile devices.

At this price, it will be Mayer’s biggest acquisition so far. Since she became CEO last summer, Mayer has made only a series of small acquisitions of mobile startups.

Sources said that as part of the deal, founder and CEO David Karp would continue to operate the business, with Mayer promising him a level of autonomy, despite the need to integrate closely with Yahoo too. He will be locked in, sources said, via a four-year deal that will reward him for performance of the business.

Presumably, the Tumblr brand will continue.

The deal, if consummated will be a big win for investors. In a series of fundings since 2007, Tumblr has raised $125 million so far and is now at a reported valuation of $800 million. Investors include Spark Capital, Union Square Ventures, Sequoia Capital, Greylock Partners, Insight Venture Partners and the Chernin Group.

While Tumblr’s Karp has resisted various offers for the company over the years, Mayer spent a lot of time with him reassuring him of how Yahoo could turbocharge his business. He has also been searching for a COO to help him build out the infrastructure of its business, especially its advertising one.

But figuring out how to make money from that audience is a task that the company has only recently started to tackle.

Like other recent Web startups that have seen rocket ship growth — see: Twitter, Facebook — Tumblr resisted advertising for its formative years, and its user base seems particularly unwilling to accept standard banner ads. In addition, many industry observers think that Tumblr’s pages are packed with porn and/or other questionable content that would scare off advertisers.

Tumblr has been represented by Qatalyst Partners’ Frank Quattrone, while Yahoo’s Mayer, as well as M&A head Jackie Reses and CFO Ken Goldman has been on the company’s side.

More to come, obviously.

AOL's Patch Gets New CEO, as Just Under Three Percent of Staff Is Laid Off in Consolidation (Memo)

Kara Swisher — Fri, 17 May 2013 17:46:46 +0000

Changes at AOL’s local content site, Patch: CEO Jon Brod will step down and is being replaced by COO and President Steve Kalin, according to an internal memo the New York Internet company sent to the division’s employees today.

As part of the move, Brod will be going back to run AOL Ventures, in a job where he began at the company.

In addition, sources said a little less than three percent of the 1,400-employee Patch staff will be laid off. The memo notes that downsizing, without giving the numbers, which includes consolidation of several parts of Patch by streamlining its regional structure from 20 to nine teams.

According to the memo, the layoffs are to “make Patch profitable in 2013 and a commitment to continue to improve our business model.”

AOL confirmed the contents of the memo, saying in a statement, “Patch is streamlining its regional editorial structure across the country by moving from 20 to nine teams. We are implementing this team approach based on the success of our field tests earlier this year. The team approach allows for flexibility based on the unique needs of each community and the strengths of our editors. We are not reducing our number of sites or our coverage area as a result of this change. Making these important changes came with the difficult decision to eliminate some positions. We recognize these changes are painful for individuals and for our organization — and we are committed to handling the people impacted with care and sensitivity.”

Patch is growing, according to comScore. In April, traffic was up 26 percent since last year to 13 million unique monthly visitors, who are consuming about 1.3 million pieces of content that are now being served up per month.

Still, Patch has attracted a level of investor pressure and criticism, even as AOL CEO Tim Armstrong has stuck strongly with the hyperlocal content effort and invested heavily in growing out a network of sites across the country aimed at neighborhood news and events.

But Armstrong signaled changes when he was queried about Patch during AOL’s recent quarterly call: “What you’re going to see as we approach Q4 is us trying to get to the finish line of profitability, and we will use all means possible to get there.”

Apparently, Armstrong means what he says and says what he means.

Here’s the memo:

Patchers,

Since the day Jon, Warren, and I founded Patch, we have had one mission in mind — improve the lives of people in local communities by 25 percent. Patch has become an important brand in the hundreds of towns we serve, and it is a staple of our communities. With the average Patch just over two years old, we are well on the way toward our goal of improving peoples’ lives and building a sustainable business in the process.

Over the past year, Patch has made an enormous impact in our communities. The coverage of the Boston Marathon bombings, the lifeline that Patch provided residents during the Sandy Hook school shootings and Superstorm Sandy, and the exclusive Sanford-Colbert Busch debate in South Carolina stand out as powerful examples. The new Patch platform that is rolling out now will only increase Patch’s ability to instantly improve communities.

As we have made a commitment to improve our Patch towns and communities, we made a similar commitment to make Patch profitable in 2013 and a commitment to continue to improve our business model. Just as we have rolled out new products and services to Patch, we are announcing today the rollout of the recently tested town structures, which will help us serve communities in a more local way and move Patch meaningfully toward profitability.

The changes have two main goals:

1. Improve and increase our hyper-local programming and deepen our user engagement through the Patch 2.0 platform; and
2. Implement a structure that unlocks the path to profitability.

To accomplish these goals we are taking the following steps, effective immediately:

We are combining the East, Central and West editorial zones to create a simpler structure that will enable faster decision-making and a more coordinated editorial effort across Patch. Anthony Duignan-Cabrera has been promoted to VP, Editorial Director, overseeing day-to-day editorial field operations, and will continue to report into Rachel in her role as Chief Content Officer.

We are streamlining our regional editorial structure across the country by moving from 20 to nine teams. We are not reducing our number of sites or our coverage area as a result of this change.

We are promoting Katie O’Connor to Director of Editorial Operations and Content Strategy. In this role, she will work with our editorial teams to help create new content and programming.

We are implementing a “team approach” for our sites, based on the success of our field tests earlier this year. This approach allows for flexibility based on the unique needs of each community and the strengths of editors.

Jon and I have decided to elevate Steve Kalin to the CEO position at Patch. Steve has done a fantastic job since he began at Patch in December as President and COO. Jon and I hired Steve with the thought that his extensive background in scaled, local platforms would eventually allow him to run Patch on a day-to-day basis.

Jon has led Patch since it was just an idea and helped scale it into one of the most significant brands in local communities in the U.S. Under his guidance, Patch has gained tens of millions of users and more than ten thousand advertisers; and it has covered millions of local stories. Going forward, Jon will return to AOL Ventures full-time and lead our push into several areas we have identified as significant future growth opportunities for AOL.

The changes we are making at Patch, however, come with the difficult decision to eliminate some positions. These employees have contributed greatly to Patch’s business with passion and dedication. We sincerely thank them for all they have done to make Patch what it is today. Their impact will always be felt here. We wish all affected employees continued success. They are truly Patchers for life.

This is an important time for Patch. We have many great opportunities in front of us, and we continue to make decisions to ensure Patch’s success. AOL’s Board of Directors and I remain firmly supportive of Patch and our mission. Together we are building a company for the long term, one that can grow and thrive — now and far into the future.

We will be having team calls today and a Patch All-Company call this afternoon at 6pm ET, to discuss these changes in more detail. I encourage you to join these calls. Keep an eye out for invitations to follow.

I want to thank you for your continued commitment to Patch and to serving your communities, and for staying focused on our goals. Patch is one of the fastest growing sites and brands on the Internet. We have the right plan, we have a great team, and I’m confident we can win together.

Keep going — TA

Will Yahoo Try to Get Its "Cool Again" by Doing a Deal for Tumblr?

Peter Kafka and Kara Swisher — Thu, 16 May 2013 23:35:32 +0000

Earlier this week, Yahoo CFO Ken Goldman spoke at JP Morgan’s Global Technology conference and underscored the need for the aging Silicon Valley Internet giant to attract more users from the coveted 18-to-24-years-old age bracket. Along with more marketing, he explicitly said Yahoo needed to be “cool again.”

According to sources close to the situation, that could mean a strategic alliance and investment in or outright buy of perhaps the coolest Internet company of late: Tumblr.

Sources said the talks were serious, but any kind of deal — of course — could come to naught.

But it’s not the first time Yahoo CEO Marissa Mayer has been interested in the New York-based hipster blogging service. As an executive at Google, she had closely watched its fast growth, along with that of Foursquare. Since she took over at Yahoo, several sources said that she has met with its top execs, including founder and CEO David Karp.

But sources said that interest has gotten stronger more recently, coming at the same time as Tumblr has been stepping up its efforts to raise a large funding round that could value the New York company at $1 billion. In a series of fundings since 2007, Tumblr has raised $125 million so far, at a reported valuation of $800 million.

In the latest round, one source close to the situation said Tumblr was considering “strategic” investments, which would presumably be of the kind that Yahoo had tried and failed to do recently with France’s Dailymotion video service. Since then, Mayer and her team have looked at the ongoing deal to purchase Hulu that has many possible other bidders.

Tumblr is different from Dailymotion or Hulu, of course, in that it focuses heavily on user-generated content, largely text and photos, although there is an increasing use of video on the site.

But this puts it directly in Yahoo’s main wheelhouse, especially recent efforts to undergird its strong set of existing media offerings to appeal to a different audience and also get into the social space via consumer-based software solutions that are both elegant and easy to use.

“If you could pick a company that fits in with what Marissa Mayer has demonstrated in her career — aesthetics software technology and fast-growing — you could not land on a better choice,” said another source.

That said, Yahoo has been sticking to smaller acquisitions under Mayer’s regime, spending very little on a clutch of small mobile startups to up its game in the important sector. And at the same investment conference, Goldman also said additional M&A would continue to be smaller for Yahoo.

Still, any kind of deal with Tumblr could certainly bring Yahoo a big, young audience. Its worldwide traffic was at 117 million visitors in April, according to comScore. On its home page, Tumblr claims it has 107.8 million blogs and 50.6 billion posts. U.S. desktop traffic to Tumblr was 37 million in April, close to LinkedIn and Twitter, although Twitter obviously has much more via mobile.

But figuring out how to make money from that audience is a task that the company has only recently started to tackle.

Like other recent Web startups that have seen rocket ship growth — see: Twitter, Facebook — Tumblr resisted advertising for its formative years, and its user base seems particularly unwilling to accept standard banner ads. In addition, many industry observers think that Tumblr’s pages are packed with porn and/or other questionable content that would scare off advertisers.

But within the last year or so, Tumblr has started selling modestly sized “native ads” promoting brands’ Tumblr pages, on users’ “dashboards.” That’s the equivalent of running ads in a Facebook user’s News Feed or a Twitter user’s main feed.

Initial signs are promising. Tumblr told Forbes that it generated $13 million in revenue last year, and suggested it could do as much as $100 million this year; people close to the company say its momentum has continued this year.

In addition to figuring out its top-line business, Tumblr and its backers have also been spending a long time trying to figure out a managment structure. Even Karp’s strongest backers say that the 26-year-old needs help running the company, and for months they have been looking for a “Sheryl Sandberg”-style COO candidate.

“David is very charming, and clearly very very bright, and understands the product,” said an executive who talked to Tumblr about the role. But, “he’s incredibly confrontation averse, and there’s almost a ‘Game of Thrones’ palace feeling to the management team.”

Possibility of death by wildfire aside, sources said that the search has yielded two or three candidates that Tumblr is considering. It is a key hire since the company needs to build out an extensive infrastructure quickly, given its sharp consumer growth, including fielding a more robust advertising team. Tumblr hired an experienced exec, Lee Brown, from Groupon last fall, who has been busy hiring more sales execs. Interesting aside: Brown was a longtime Yahoo ad exec.

But building out the needed structure at the company is a long slog, and Tumblr might be seeking more help one way or another.

Yahoo declined comment and Tumblr has not gotten back to us as yet.

Viral Video: Diddy Goes Downtown (Abbey, That Is)

Kara Swisher — Thu, 16 May 2013 13:48:06 +0000

There have been a ton of videos on the Web spoofing the Masterpiece Theatre hit “Downton Abbey.” But this one from Funny or Die is perhaps one of the funniest — featuring an unlikely new cast member (who is an actual fan of the show).

Enjoy:

Downton Diddy from Sean Combs

Commercial Drone Platform Company Gets $10.7 Million From Andreessen Horowitz and Google Ventures

Kara Swisher — Wed, 15 May 2013 11:30:39 +0000

Airware, a startup that is creating a software platform for commercial drones, said it had raised $10.7 million in a Series A funding round led by Andreessen Horowitz. Google Ventures also participated. As part of the deal, Andreessen Horowitz partner Chris Dixon will join Airware’s board.

The Newport Beach, Calif., company said it would use the money to expand staff for its universal development platform as the market for non-military drones expands.

Airware founder and CEO Jonathan Downey said that uses of drones will be increasing for a wide range of purposes, from checking infrastructure to monitoring mining operations to preventing poaching.

In an interview, Downey said that he expects to compete with a range of ex-military efforts, but that the most successful companies will be those that provide a platform to allow for the widest range of innovations.

“This is going to be about a lot more than we know or can guess,” he said. “The industry is at its very beginnings.”

Dixon agrees. “Hardware is the new software,” he said about the investment in Airware, which he said he discovered after attending conferences about the fast-moving drones business, noting that the overall field of robotics has “overpromised and underdelivered.”

Airware came out of both the Lemnos Labs and Y Combinator incubators and had raised seed financing from First Round Capital, Firelake Capital, RRE Ventures, Shasta Ventures, Promus Ventures and several Y Combinator partners.

Japan's Rakuten Ups Its Stake in the Rebranded Grommet

Kara Swisher — Tue, 14 May 2013 13:00:02 +0000

Rakuten, the Japanese e-commerce giant that is also a major investor in Pinterest, is upping its bet on the Grommet.

The Grommet, which rebranded from the Daily Grommet, declined to say how much the investment is this time, but Rakuten will become the majority stakeholder in the Lexington, Mass.-based online marketplace. Before the two Rakuten investments, the startup had raised about $6 million since its launch in 2008.

Last year, Rakuten was the lead investor in a Series B round for the Grommet, whose motto is “fresh finds, true stories.” The site highlights an unusual new daily product by featuring it with a story about its origin, using video and creative text, calling its effort “Citizen Commerce.”

Both the Grommet and Rakuten have focused on linking small- and medium-sized retailers directly with consumers, using discovery and social tools and large marketplaces.

“If I had to pick one element of the Grommet which best represents our platform, it’s our investment in ‘Citizen Commerce,’ a term we created in order to describe a new level of responsibility and ingenuity both for product development and purchasing power,” said Jules Pieri, co-founder and CEO of the Grommet, which she has often compared to a Kickstarter for products, in a statement. “We are proud of what this philosophy stands for and we know it will impact and restructure the consumer landscape in the coming years.”

“I’ve often spoken about omotenashi, the Japanese term that refers to the Japanese service mindset — something that’s rare to find outside Japan and hard to attain online anywhere,” added Rakuten CEO and founder Hiroshi Mikitani. “The Grommet brings a similar spirit to their business by discovering and launching products that delight the consumer in a warm and friendly online environment that promotes communication, creativity and purpose.”

Five Startups for $16 Million: Yahoo's Mayer Is Buying Up Most Mobile App Companies on the Cheap

Kara Swisher — Mon, 13 May 2013 13:16:35 +0000

Because I get bored on Sunday nights, I opened up Yahoo’s recent regulatory filings for some light reading and, as usual, found some tasty information that the company had kindly dropped in for my erudition, but declined to call my attention to.

Namely, that the Silicon Valley Internet giant is paying not so very much for its mobile acquisitions, according to several documents the company has filed.

In fact, Yahoo’s average price paid for each of five of the 10 startups it has purchased since last fall is a tiny $3.2 million in cash.

For example, here’s last week’s 10-Q referring to three of CEO Marissa Mayer’s first acquisitions — content curation app Snip.it, which Yahoo bought in January (funding amount unknown, but the $10 million acquisition price reported by some sites is clearly wrong, as you will see from the filing); recommendation app Alike (funding amount unknown), which was on February’s menu; and recommendation app Jybe (funding amount unknown), which the company picked up in mid-March:

The Company did not make any acquisitions during the three months ended March 31, 2012. However, during the three months ended March 31, 2013, the Company acquired three companies, all of which were accounted for as business combinations. The total purchase price for these acquisitions was $10 million and consisted entirely of cash consideration, primarily allocated to goodwill. Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and is not deductible for tax purposes.

The Company’s business combinations completed during the three months ended March 31, 2013 did not have a material impact on the Company’s condensed consolidated financial statements.

Going back further, Yahoo’s purchase of recommendation app Stamped last October (it had $3 million in funding) and video-chat app OnTheAir ($880,000 in funding) in December were also on the cheap — a bargain at $6 million total — according to its 10-K filed a few months ago:

During the year ended December 31, 2012, the Company acquired two companies, which were accounted for as business combinations. The total purchase price for these acquisitions was $7 million. The total cash consideration of $7 million less cash acquired of $1 million resulted in a net cash outlay of $6 million. Of the total purchase price, $6 million was allocated to goodwill and $1 million to cash acquired. Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and is not deductible for tax purposes.

The Company’s business combinations completed in 2012 did not have a material impact on the Company’s consolidated financial statements, and therefore pro forma disclosures have not been presented.

It will be interesting to see what Yahoo reveals as to the price, and how it will account for the late March acquisition of Britain’s news reader Summly, which AllThingsD reported was a loftier $30 million.

The Summly deal did not appear to have closed by the end of the quarter, so no purchase information has been released, although it will be soon enough, along with that of the more recent string of mobile buys by Yahoo: To-do app Astrid, social polling app GoPollGo, travel rewards app MileWise and mobile gaming studio Loki.

For those four tiny companies, which were doubtlessly also bought for very little, Yahoo did tout what it’s really after in a festive tweet on Friday.

Warm entrepreneurial bodies:

We recently added 22 entrepreneurs to our growing mobile team. Welcome to Yahoo! @astrid @gopollgo @milewise @lokistudios!

— Yahoo! Inc.(@YahooInc) May 10, 2013

Bill Gates on Steve Jobs on "60 Minutes"

Kara Swisher — Mon, 13 May 2013 07:57:51 +0000

This week, CBS news program “60 Minutes” had an interview with Microsoft co-founder and now major philanthropist Bill Gates, called “Bill Gates 2.0.”

It also included some discussion of his longtime relationship with the late Apple legend Steve Jobs.

Here’s the interview in full, in which he talks mostly about eradicating diseases like polio by improving vaccine delivery and his other efforts to alleviate suffering worldwide.

And here’s a special report by “60 Minutes,” in which CBS’s Charlie Rose talks about the Gates-Jobs part, which includes parts of the joint interview the pair did at our fifth D: All Things Digital conference in 2007: