A Yahoo spokesperson just confirmed as accurate allegations from an activist shareholder Dan Loeb of Third Point that its CEO Scott Thompson did not have a computer science degree from Stonehill College as claimed on his bio and also in regulatory filings.

He does not, a mistake that the Silicon Valley Internet giant is calling an “inadvertent error.”

Except this is a mistake that goes back more than a half-dozen years, as it is also on the Web site bio at eBay, where he served as president of its PayPal payments unit and its CTO before that.

(Update: Yahoo just removed the line about Thompson’s college degrees from his Web site bio entirely.)

While Yahoo sought to underplay the controversy, it could become a serious issue for Yahoo, both from a credibility and regulatory compliance issue.

It would also call into question — as Loeb does in the letter — the amount of vetting done by Yahoo on the CEO choice, which was conducted by board member Patti Hart.

It gets worse: Loeb also alleged that Hart changed her degree from Illinois State College from business administration to a loftier economics and marketing. And Yahoo admitted it was so, noting the director had a business administration degree, with a specialty in economics and marketing — whatever that means.

But, incompetent vetting by Hart aside, it is how and why Thompson changed his resume that will be at issue.

Here’s one fact that is true: Thompson only has an accounting degree from Stonehill College, near Boston, which he attended from 1975 to 1979.

(Second Update: Stonehill also confirmed that Thompson’s degree was only a Bachelor’s of Science in Business Administration (Accounting).)

Here is, in fact, a screenshot of an alumni newsletter when Thompson got the job at Yahoo earlier this year:

Despite the mistake, however it was made and which presumably serves to burnish Thompson’s tech cred, Yahoo said in a statement that it does not diminish his qualifications to lead the tech company.

Said the statement in full:

“Scott Thompson’s degree at Stonehill College was in bachelor science in accounting. There was an inadvertent error that stated Mr. Thompson also holds a degree in computer science. This, in no way, alters that fact that Mr. Thompson is a highly qualified executive with a successful track record leading large consumer technology companies. Under Mr. Thompson’s leadership, Yahoo! is moving forward to grow the company and drive shareholder value.”

Here’s the definition of inadvertent, for those who don’t know:

1. failing to act carefully or considerately; inattentive
2. resulting from heedless action; unintentional inadvertently

I’d say it’s going to turn out to be a lot more than that, but we’ll see what the board of Yahoo and, ultimately, shareholders, have to say.

(And, ironically, just yesterday Yahoo wrote a letter to shareholders claiming that Loeb did not have “relevant” expertise to be on its board. Turns out, he’s definitely pretty good at vetting.)

RELATED POSTS:

• Yahoo’s Parting With Thompson Will Be for “Cause” (a.k.a. CSLie)
• Ross Levinsohn’s Yahoo Plan: Back to the Future
• Here’s New Yahoo CEO’s First Note to Troops! (The Leaking-Internal-Memos-to-ATD Policy Remains in Effect As Usual)
• Yahoo Officially Confirms ATD Report on CEO Changes and Proxy Settlement
• Meet the Man I Call “The Hair”: The Video Stylings of Yahoo’s Newest CEO Ross Levinsohn
• Will Thompson’s Ouster Mean a Yahoo-Facebook Patent Settlement Too?
• Exclusive: Yahoo’s Thompson Out; Levinsohn In; Board Settlement With Loeb Nears Completion
• Heidrick & Struggles Slaps Back at Thompson’s Yahoo in Blame Game Over ResuMess
• Is He In or Is He Out? Crunchtime for Scott Thompson at Yahoo.
• Not So Scott Free? Yahoo’s Other Big Shareholder — Cap Re — Leaning Toward Supporting Loeb Over Thompson ResuMess.
• Tech Nation’s Gunn Says She and Yahoo CEO Discussed Their CS Degrees Before 2009 Show (Video and Audio)
• Loeb Calls Again for Thompson Firing From Yahoo, as Former eBay Boss Supports Him
• Place Your Bets: Will Loeb Drop Another Bomb on Yahoo at Vegas Confab Later Today?
• Exclusive: Yahoo Director in Charge of Botched CEO Vetting to Step Down From Board
• CEO Says Sorry to Yahoos for Borked Bio “Distraction” — But Will Mea Culpa Work Without an Apology for Error? (Memo)
• Buffett Comments on Trust Issue in Yahoo CEO BioGate: “You’ve Got a Problem”
• Loeb Lobs Lawsuit, as Expected, at Yahoo’s Borked Bio Mess
• As Yahoo CEO Reaches Out to Top Staff, Board Meets to Weigh “Options” (I.E., Deciding Who Gets to Take the Borked Bio Blame)
• Yahoo Should Expect Incoming Lawsuit Lobbed by Loeb Tomorrow on CEO Hiring
• They Shoot Yahoo CEOs, Don’t They? But Not Without a Really Smoking Gun and a Much Stronger Board.
• Yahoo’s Thompson Asks Employees to “Stay Focused” — Except Not on Him
• In 2009 Interview, Yahoo CEO Does Not Deny He Has a CS Degree, and Calls Himself an “Engineer” (Audio)
• Yahoo’s Board Will “Review” Resume Discrepancy of CEO
• How Did a Phantom CS Degree Get on CEO’s Bio in SEC Filings? Yahoo’s Not Saying.
• Yahoo’s Response on CEO’s Computer Science ResumeGate: “Inadvertent Error”
• Dan Loeb Alleges “Discrepancies” on Yahoo CEO Scott Thompson’s Resume Related to Computer Science Degree

The gloves are now really off in the proxy battle for Yahoo.

In a letter to Yahoo’s board, activist shareholder Dan Loeb of Third Point is alleging that the company’s new CEO Scott Thompson has inaccurately added a computer science degree to his resume.

(Update: Yahoo confirmed that Loeb is correct about Thompson not having such a degree and called it an “inadvertent error.”)

Thompson went to Stonehill College, near Boston, from 1975 to 1979, according to his LinkedIn profile, but it does not specify his degree.

(Second Update: Stonehill College also confirms that Thompson only graduated with a Bachelor’s of Science in Business Administration (Accounting).)

And older bios, such as one from his director bio for F5 and one from Forbes, as well as a Stone Hill College alumni newsletter, note that he graduated only with a Bachelor’s of Science in accounting.

But in official bios from his job at eBay as head of its PayPal payments division, as well as on the current Yahoo one, a degree in computer science also appears, along with the accounting degree.

“Scott received a bachelor’s in accounting and computer science from Stonehill College,” read the Yahoo and eBay bios. It is also in Yahoo’s regulatory filings.

According to Loeb’s letter:

Upon recognizing this discrepancy, Third Point initially assumed that the documents we had reviewed were incorrect and the representations in Yahoo!’s public filings were accurate. However, we were then informed by Stonehill College that Mr. Thompson did indeed graduate with a degree in accounting only. Furthermore, Stonehill College informed us that it did not begin awarding computer science degrees until 1983 — four years after Mr. Thompson graduated. We inquired whether Mr. Thompson had taken a large number of computer science courses, perhaps allowing him to justify to himself that he had “earned” such a degree. Instead, we learned that during Mr. Thompson’s tenure at Stonehill only one such course was even offered — Intro to Computer Science. Presumably, Mr. Thompson took that course.

I am awaiting a call back from Stonehill about Thompson’s degree, which the college is checking now. And I called Yahoo for comment and also am waiting for that, too.

If Loeb’s allegations are true and Thompson burnished his resume to add educational expertise to lend him more tech credibility, it could become a serious issue for Yahoo.

It would also call into question — as Loeb does in the letter — the amount of vetting done by Yahoo on the CEO choice, which was conducted by board member Patti Hart.

It gets worse: Loeb is also alleging that Hart changed her degree from Illinois State College from business administration to a loftier economics and marketing.

(Update: Loeb is correct. Yahoo said Hart has a degree in business administration, with a specialty in economics and marketing — although I am not sure what that means exactly.)

But Thompson’s educational pedigree is the main issue here, of course, and Loeb is calling for his head if explanations are not provided.

“If Mr. Thompson embellished his academic credentials we think that it 1) undermines his credibility as a technology expert and 2) reflects poorly on the character of the CEO who has been tasked with leading Yahoo! at this critical juncture. Now more than ever Yahoo! investors need a trustworthy CEO,” said Loeb in the letter.

But read it for yourself — here is the full letter from Loeb:

Third Point Letter to Board May 3 Release

RELATED POSTS:

• Yahoo’s Parting With Thompson Will Be for “Cause” (a.k.a. CSLie)
• Ross Levinsohn’s Yahoo Plan: Back to the Future
• Here’s New Yahoo CEO’s First Note to Troops! (The Leaking-Internal-Memos-to-ATD Policy Remains in Effect As Usual)
• Yahoo Officially Confirms ATD Report on CEO Changes and Proxy Settlement
• Meet the Man I Call “The Hair”: The Video Stylings of Yahoo’s Newest CEO Ross Levinsohn
• Will Thompson’s Ouster Mean a Yahoo-Facebook Patent Settlement Too?
• Exclusive: Yahoo’s Thompson Out; Levinsohn In; Board Settlement With Loeb Nears Completion
• Heidrick & Struggles Slaps Back at Thompson’s Yahoo in Blame Game Over ResuMess
• Is He In or Is He Out? Crunchtime for Scott Thompson at Yahoo.
• Not So Scott Free? Yahoo’s Other Big Shareholder — Cap Re — Leaning Toward Supporting Loeb Over Thompson ResuMess.
• Tech Nation’s Gunn Says She and Yahoo CEO Discussed Their CS Degrees Before 2009 Show (Video and Audio)
• Loeb Calls Again for Thompson Firing From Yahoo, as Former eBay Boss Supports Him
• Place Your Bets: Will Loeb Drop Another Bomb on Yahoo at Vegas Confab Later Today?
• Exclusive: Yahoo Director in Charge of Botched CEO Vetting to Step Down From Board
• CEO Says Sorry to Yahoos for Borked Bio “Distraction” — But Will Mea Culpa Work Without an Apology for Error? (Memo)
• Buffett Comments on Trust Issue in Yahoo CEO BioGate: “You’ve Got a Problem”
• Loeb Lobs Lawsuit, as Expected, at Yahoo’s Borked Bio Mess
• As Yahoo CEO Reaches Out to Top Staff, Board Meets to Weigh “Options” (I.E., Deciding Who Gets to Take the Borked Bio Blame)
• Yahoo Should Expect Incoming Lawsuit Lobbed by Loeb Tomorrow on CEO Hiring
• They Shoot Yahoo CEOs, Don’t They? But Not Without a Really Smoking Gun and a Much Stronger Board.
• Yahoo’s Thompson Asks Employees to “Stay Focused” — Except Not on Him
• In 2009 Interview, Yahoo CEO Does Not Deny He Has a CS Degree, and Calls Himself an “Engineer” (Audio)
• Yahoo’s Board Will “Review” Resume Discrepancy of CEO
• How Did a Phantom CS Degree Get on CEO’s Bio in SEC Filings? Yahoo’s Not Saying.
• Yahoo’s Response on CEO’s Computer Science ResumeGate: “Inadvertent Error”
• Dan Loeb Alleges “Discrepancies” on Yahoo CEO Scott Thompson’s Resume Related to Computer Science Degree

What’s worse, “we are often confident even when we are wrong,” writes Daniel Kahneman, in his masterful new book on psychology and economics called “Thinking, Fast and Slow.”

An objective observer, he writes, “is more likely to detect our errors than we are.”

Read the rest of this post on the original site »

In an unusual appointment for the longtime public servant, former U.S. Treasury Secretary Larry Summers will join Silicon Valley venture powerhouse Andreessen Horowitz as a part-time “Special Advisor.”

Summers got to know the firm with an assist from Facebook COO Sheryl Sandberg, who was a student of his when he was a professor at Harvard University.

Summers was later president of Harvard, as well as director of the White House National Economic Council in the Obama administration until late last year.

“I am doing this because I feel technology in general and information technology in particular is now having a real pervasive macroeconomic impact in our time,” said Summers in a phone interview this afternoon from his home in Boston. “Long after people have lost their memory of the dramatic financial crisis in recent years, they will remember what technology has done to transform our economy in these same years.”

Summers said he increasingly wanted to become closer to this important trend and thought he could contribute to the innovation in Silicon Valley by helping its portfolio companies better understand the global economy.

He was introduced to Andreessen Horowitz at first by Sandberg, who was also Summers’ chief of staff while at the Treasury Department, and was attracted to its investment philosophy.

“They have distinctive elements of strategy that seemed to be a good fit, such as their emphasis on market disruption,” said Summers. “They also have an audacity of the vision and were really supporting transformation.”

Summers said he would serve as an advisor to Andreessen Horowitz companies, focusing on global opportunities they should take advantage of.

He will not become a VC, though. “My life to date has been as a professor and public servant, so I am not in a position to be a major investor,” said Summers.

That said, Marc Andreessen quickly noted in the interview that “if Larry brings in a company, we are going to take a serious look at it.”

While he was not a partner, Andreessen said Summers’ compensation would be linked to the long-term performance of the firm.

Summers will travel between Massachusetts and the West coast, but will also continue to work on outside projects.

What he will not be doing is giving any long-winded economic lessons to entrepreneurs in Silicon Valley.

“I am not sure there is the attention span for some of my lectures out there,” he joked.

Here is Andreessen’s blog post about the Summers appointment:

Meet Larry Summers, Our New Special Advisor

By Marc Andreessen

Today I’m delighted to announce that economist and former US Treasury Secretary Larry Summers is joining our team as a part-time Special Advisor.

A lot of people already know who Larry is, but here are the highlights of a remarkable career to date:

* Admitted to MIT at age 16, originally to study physics — clearly our kind of nerd.

* Became tenured professor of economics at Harvard at age 28, where he first started mentoring a young undergraduate named Sheryl Sandberg, who ultimately became his chief of staff at the US Treasury.

* Received John Bates Clark Medal for his research at age 38, one of the two most prestigious awards in the field of economics (the other is the Nobel).

* On the staff of President Reagan’s Council of Economic Advisors in 1982-1983. (For those of you too young to remember, Reagan was a noted Republican.)

* Undersecretary for International Affairs and then Deputy Treasury Secretary for President Clinton between 1993 and 1999. Intimately involved in resolving major macroeconomic crises in Mexico, Russia, and elsewhere. Became US Treasury Secretary in 1999.

* President of Harvard from 2001 to 2006.

* Until late 2010, served as President Obama’s director of the White House National Economic Council.

* And, most importantly, a pivotal character in the recent movie “The Social Network”.

Larry will be an advisor to our firm and our entrepreneurs on several topics:

First, as technology continues its relentless colonization of broad swaths of the global economy, Larry will help us understand the scope and nature of the opportunities in front of us and our industry.

Second, many of our companies are seeking to restructure and revolutionize various markets — such as telecommunications, advertising, entertainment, education, health care, and financial services — and Larry will help us and our entrepreneurs analyze and understand the economics and dynamics of those markets.

Third, Larry’s deep insight into global economics and geopolitics will be highly useful to our companies that intend to expand globally — which is to say, all of them.

According to the New York Times, “Years ago, Henry Kissinger suggested that Mr. Summers be given a White House post in which he was charged with shooting down or fixing bad ideas.” We can’t arrange that, but we are excited to have him on our team, both to do that and to contribute lots of new ideas to us and to our companies.

To get the skinny, we caught up with the company’s Interim president, David Wolfe, who was promoted from chief product officer as the company seeks a new leader. Wolfe would not elaborate beyond echoing the company’s statement that the decision for Rosner to leave was mutual.

However, Rosner’s departure hints at how nascent the market for daily deals and social/group buying is, and how there’s still work to be done to figure out the economics.

The year-and-a-half old Groupon competitor is no exception. If you aren’t familiar, BuyWithMe is often considered the third- or fourth-largest outfit in the group-buying space. The company, which recently moved to New York City from Boston, operates in 12 markets, and has raised $21 million in venture capital. It has 93 employees.

Wolfe acknowledges that a hiring spree is necessary to catch up to its nearest rivals, Groupon and LivingSocial, and that it will likely need more capital to continue its aggressive expansion plans. “The intent will be to raise more money; it’s a probable event,” he said.

As it is, BuyWithMe will likely miss this year’s goal of being in 15 markets by at least one. But generally, Wolfe says, that’s not the problem: “We are taking a step back. What is most important is for our emerging markets to grow to maturity, and for us to push them over the hump and increase our market share.”

Right now, he claims, BuyWithMe’s best performing market is its first: Boston. Trailing close behind is New York City and Washington, D.C., but the other nine are struggling to have a deal every day. “They are performing as expected, given the focus level and resource level we’ve given them….It’s less that we stumbled strategically, but we really spread ourselves too thin to get into multiple markets, and now we are focusing on making sure we are providing great service.”

Wolfe acknowledges the competition by saying it’s a hard space to build brand loyalty. Consumers will gravitate to the best deal every time, so they are focusing on creating loyalty with merchants. “Our focus is on making sure we are delivering an amazing service to our merchants and consumers. A lot of people have jumped into the game, and it’s a challenging business. It’s not a small feat to deliver [deals] on a consistent basis.”

Does Wolfe believe there’s room for more growth in the market–beyond the successes of Groupon and LivingSocial?

His answer is yes. “I don’t think even with Groupon’s amazing execution that we are even close. We see a lot of blue ocean and a lot of untapped eyeballs on the consumer side across a lot of locations. The excitement over the past couple of months is not the end stage. We are seeing first innings, where a transformational shift is occurring on how retailers reach consumers. That’s fundamental.”

“We are hearing that Verizon…may be willing to pay for exclusivity to itself and AT&T. For these reasons, Verizon could be more willing to give in to Apple’s terms,” Wu said in a note to clients this morning, adding that the iPhone’s continued success has undoubtedly given Apple the upper hand in its negotiations with the carrier. “Apple is back in the driver’s seat with a record 14.1 million iPhone shipments in the September quarter helping AT&T gain share against Verizon over the last two quarters as Android starts to lose some of its luster (at least at Verizon). In addition, our sources indicate that Verizon does not believe the pending launch of BlackBerry 6 on its network is likely to have a material impact.”

An interesting bit of speculation. If Apple were to win concessions from Verizon and AT&T to keep the iPhone exclusive to those carriers, it might be able to drastically expand the device’s distribution in the States and keep its margins in line at the same time. As Wu writes, “This is important as many, including ourselves, have been concerned that Verzion iPhone economics could be less favorable given the strength of Android and higher cost of components, particularly those associated with CDMA.”

That said, with Google’s Android OS gaining market share so quickly it might be a better move strategically to sacrifice a bit of margin to bring the iPhone to more carriers and temper its rival’s growth.

“I’m not afraid
To take a stand”
—Eminem

Disclaimer: my business partner, Marc Andreessen, is on the board of directors of Hewlett-Packard (HPQ). I note that I have no inside information, and this blog post is based purely on published material. In 2007, I sold Opsware, the company that I founded and ran to Hewlett-Packard for $1.6B. I worked at Hewlett-Packard from 2007 to 2008 as an executive in the software business.

Recently, my old company Hewlett-Packard has been in the news–and not in a good way. I’ve been watching the coverage from the sidelines up to this point, but felt increasingly compelled to join the conversation and share my point of view. So here goes.

After firing their CEO, Mark Hurd, the HP board has been accused of everything from incompetence to being prudes. The criticism comes from credible, important journalists and bloggers such as Joe Nocera from the New York Times (NYT), prominent economics blogger Felix Salmon, and former GE (GE) CEO Jack Welch. In addition, HP competitor Larry Ellison lambasted the board and even went so far as to hire Mark Hurd to be President of Oracle (ORCL).

So why in the world did the HP board fire such a high performing CEO? Don’t they care about profits and shareholder value? Aren’t those the most important things? Who cares about his personal shenanigans? Did Mark and his marketing contractor even have sex?

While I am pretty sure that there is much more going on behind the scenes than has been broadly reported, as there often is, let’s look at what has been reported:

* Mark Hurd falsified expense reports.

* The false expense reports are related to a contractor named Jodie Fisher, a former softcore porn movie actress and Playboy model with no relevant marketing experience, who HP was paying up to $5,000 per marketing event.

* At the time of his departure from HP, Hurd issued a public statement saying that he’d violated HP’s Standards of Business Conduct:

“As the investigation progressed, I realized there were instances in which I did not live up to the standards and principles of trust, respect and integrity that I have espoused at HP and which have guided me throughout my career. After a number of discussions with members of the board, I will move aside and the board will search for new leadership. This is a painful decision for me to make after five years at HP, but I believe it would be difficult for me to continue as an effective leader at HP and I believe this is the only decision the board and I could make at this time. I want to stress that this in no way reflects on the operating performance or financial integrity of HP.”

Let’s start with the issue of falsifying expense reports. This factor has been largely dismissed in the press with characterizations like this from Joe Nocera of the New York Times:

“When pressed, H.P. said that Mr. Hurd had fudged some expense reports.”

Nocera goes on to argue that there must have been an alternate motivation to dismiss Hurd, because clearly no CEO would be fired simply for “fudging” an expense report.

When I first read of the expense report issue, my reaction was the opposite of Nocera’s. If the Chief Executive Officer of a public company falsifies any official financial statement, he must be fired. In my mind, this is non-negotiable. We are not talking about a low-level employee tossing an extra receipt into his expense report. We are talking about a public company CEO who is paid tens of millions of dollars a year and is responsible for the integrity of the company’s financial statements fraudulently reporting his own expenses. Why is this a problem?

Every person who invests in Hewlett-Packard does so on the basis of HP’s financial statements. Every pension fund, every retiree, every charitable organization, every employee who joins and is compensated via stock options. When they do so, they trust that the statements are true and that the numbers are accurate. The person they trust to ensure accuracy is the CEO.

If the Chief Executive is willing to compromise the integrity of the company’s financials for any reason, then it is impossible to trust any statement. Every day, there are many potential reasons to falsify financial statements. Here are four examples:

* If you miss the quarter, shareholders will lose money.

* If revenues aren’t high enough, you’ll be forced to lay-off hard working, valued employees.

* If you grow slower than a competitor, you may jeopardize your job.

* A shareholder that you’ve been having an illicit affair with doesn’t want the stock price to go down and threatens to tell your wife.

If a CEO is prone to compromise for any reason, he will have every reason. This time it was his expense report. Next time will it be a marginal accrued liability? A deal that came in at 12:01 am on the last day of the quarter? This is a slippery slope that a public board simply cannot tolerate.

What reason was so powerful that it caused Mark Hurd to break his ethical standard, falsify an official financial statement, mislead the board, and ultimately be fired? It seems that this was done to cover up a “close personal relationship” with a woman named Jodie Fisher, who later accused him of sexual harassment, then subsequently withdrew her claim after Hurd personally paid Fisher a large sum of money.

Who is Jodie Fisher? According to press reports, Fisher is a former Playboy model, reality show contestant, and softcore porn movie actress with no work history relevant to her job with HP. She was hired by Hewlett-Packard and paid up to $5,000 per meeting to meet with Fortune 50 CEOs.

The mainstream press has reported these facts as mundane, ordinary, and hardly worth concern. I disagree. HP employs over 300,000 people. Every single one of HP’s employees is keenly interested in the qualities, skill sets, and behaviors that HP values most. Financial compensation and access to the CEO are the most important ways that HP communicates what it values to its employees. Jodie Fisher had more access to the CEO and was paid more than 99.9% of HP’s workforce, despite having no traditional qualifications.

It’s important to note that this was not Hurd paying for his personal extracurricular activity out of his own pocket. This was the Hewlett-Packard Corporation paying a softcore porn movie star with no relevant work experience more than it pays Harvard graduates with 20 years of industry experience. This was the company spitting in the face of the people who worked hard and sacrificed every day to help the company win in the market. It was completely and categorically unacceptable.

Finally, Hurd admitted in a press release to violating the company’s standards of ethics and integrity. So what? Why do companies have standards and ethics anyway? Shouldn’t they just be concerned with profits? Do we want choir boys or shareholder value?

There are many who take the view that business is singular in purpose–to increase shareholder value. They further take the position that constraining that purpose in any way is inefficient and counterproductive. The mainstream press seems to have broadly adopted this position in its attacks on HP. The Wall Street Journal Op Ed page even complained that businesses were being held to an unfair standard when compared to politicians.

I do not subscribe to this view. Running our companies with no moral or ethical standards is bad for society, bad for the country, and ultimately leads to criminal behavior.

Companies should not merely be thought of as money generating machines. Business can represent human society at its best. A business is a group of people working together to deliver value to the world and improve people’s lives. When done ethically, business quite literally changes the world for the better. However, if the dark side of human motivation is not mitigated with standards and ethics, business can destroy.

We saw this unfold at Enron, a company that was, in its time, celebrated for its impressive profits. Underneath the profits was a culture designed from the ground up to completely ignore any ethical standard including a dazzling display of ethically questionable sexual activity among its executives. These activities, such as promoting secretaries to executive positions in exchange for sexual favors, parallel Hurd’s behavior with Jodie Fisher. In Enron’s case, the bad behavior bled over into first line employees who conspired to create blackouts in California in the name of profits and in the absence of ethics. Ultimately, Enron imploded in a swirl of criminal behavior that bankrupted the company, but not before destroying tens of thousands of peoples’ life savings and damaging millions of innocent victims. After the fact, the press bemoaned the culture that lead to the destruction. However, the same reporters instantly forgot the cause as they cavalierly dismissed Hurd’s ethical breach.

In closing, I point out the impressive courage of the HP board of directors to ignore popular opinion and do the right thing. It is not an easy thing to fire a popular, highly successful CEO. It’s even more difficult when you know that you will be roundly criticized for tolerating that same CEO’s failure to develop internal successors. Despite those factors, Hewlett-Packard’s board of directors stood tall and protected the company, its shareholders and all of us from a dark and destructive journey. As a member of the business community and as a citizen, I am extremely proud of and grateful for their actions.

Ben Horowitz is co-founder and general partner of Andreessen Horowitz. He co-founded Loudcloud, later renamed Opsware Inc., in 1999 and served as CEO of the company before it was acquired in 2007 by Hewlett-Packard. He was most recently vice president and general manager of Hewlett-Packard’s Business Technology Organization Unit.

“We think the rest of the studios will see the light and get on board pretty fast,” Steve Jobs said earlier this month of the TV studios wary of its new 99-cent iTunes TV rentals initiative. And while it’s never wise to bet against the Apple CEO, it’s beginning to look like “pretty fast” was an optimistic choice of words. Because in a flurry of public comments recently, a growing number of TV execs have decried the 99-cent rental model, which they say undervalues their content.

At the Goldman Sachs Communacopia conference last week, Viacom (VIA.B) CEO Philippe Dauman said of it, “The 99-cent rental is not a good price point. It doesn’t work for us. We value our content a lot. We don’t think Apple has it quite right yet.”

And during his appearance at the conference, NBC Universal CEO Jeff Zucker said pretty much the same thing. “We do not think 99 cents is the right price point for our content,” he argued. “We thought it would devalue our content.”

Then there was Warner Bros. Entertainment Chairman Barry Meyer, who trashed Apple’s (AAPL) effort at the
Bank of America/Merrill Lynch 2010 Media, Communications & Entertainment Conference. “We just don’t think the value proposition is a good one for us,” Meyer said, adding that he’d rather sell season passes to the studio’s TV series and $1.99 and $2.99 per-episode downloads than “open up a rental business in television at a low price.”

And now Time Warner (TWX) CEO Jeff Bewkes has come out against 99-cent iTunes TV rentals. Speaking at the Royal Television Conference in London, Bewkes echoed the comments of his colleagues, warning that the new model Apple’s pushing will threaten sales of TV shows to network television. “How can you justify renting your first-run TV shows individually for 99 cents an episode and thereby jeopardize the sale of the same shows as a series to branded networks that pay hundreds of millions of dollars and make those shows available to loyal viewers for free?” he asked. “These new entrants must meet a few criteria: They must provide consumers with a superior TV experience, and they must either support or improve the overall economics that funds and creates the programming in the first place.”

Early reviews suggest that Apple has met Bewkes’s first criteria, but given the statements above it’s looking like it may take a bit longer than expected to meet the second, or convince the studios that it has.

That’s a lot of videos! As usual, no word on financials, profitability, etc. But there is plenty of congratulatory back-slapping here and here.

Best part, by far: A brief anniversary message from Conan O’Brien, in which the comedian connects YouTube’s rise with America’s decline: “Nobody actually makes anything anymore. We’re all watching monkeys in propeller hats flush themselves down a toilet. And that’s why India is kicking our ass. And China, and pretty much everyone else. Switzerland, kicking our ass. Guam, way ahead of us.”

And he effectively sums up Web economics, or lack thereof:
“That’s not the point of the internet. It’s not to make money. It’s for someone you’ve never met, who’s a nerd, in Palo Alto, to make money.”

O’Brien also offers up his five favorite YouTube clips. Here are four of them. To see the fifth (something inscrutable and German) you’ll have to visit the site. If you’re time-pressed, definitely go with the cat.

If you don’t believe me, see for yourself: Head over to any major Web publisher and try to watch more than 15 seconds of its clips. Tough odds.

So I have a lot of admiration for people who are figuring out how to do interesting stuff with Web video.

And I kept that in mind last month when I spent the day judging video entries for the “digital Ellies,” the online awards handed out by the American Society of Magazine Editors every year.

The new list of finalists is out now, and you can see some of them below.

The ASME folks have asked me not to talk about the specifics of our discussions (or to identify fellow judges), but I did want to make one note: All of those I worked with have to deal with the reality of Web economics in their day jobs. So we’re not oblivious to the fact that some of this stuff may not be a practical option for some Web publishers.

You’ll have a hard time selling ads against a 20-minute documentary on environmental destruction in West Virginia, for instance. But we also wanted people to see just how many options Web video offers if you think broadly about this stuff. And we also made a point of including some stuff that a publisher could conceivably use to generate dollars, like interviews with movie stars.

One big bummer: The majority of our finalists don’t allow embedding. So I can’t actually show you their stuff, and will have to settle for directing you to their sites. Apologies. The list of all the digital ASME finalists is here, and winners will be announced March 18.

Reason.tv: UPS vs. Fedex: Ultimate Whiteboard Remix

Oxford American: “SoLost” series

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The above is an article of faith among a certain kind of Web publisher. And some of them are even paying for studies to prove that display ads–basically all the ads you see that aren’t part of search results–really do work on the Web.

Except when they don’t. That’s the unsettling conclusion that some research funded by Yahoo (YHOO) recently reached, the San Francisco Chronicle reports.

The study was produced by the Web giant’s Yahoo Labs, which has been getting new attention in the Carol Bartz regime and beefing up its staff of social scientists by “adding highly credentialed cognitive psychologists, economists and ethnographers from top universities around the world.”

One of the new hires, economics professor David Reiley, tried to track the benefits of a Yahoo ad campaign on behalf of a retail chain. He found that the ads did work, but only for people born before Woodstock:

The research, conducted in partnership with an undisclosed national retailer, sought to accurately measure the impact of Internet display advertising across online and offline sales, by tracking people who had registered with both Yahoo and the store. The research found an approximately 5 percent increase in spending among those who had seen the ads–with 93 percent of those sales occurring in stores.

The potentially worrisome thing, however, was that among those under 40, the percentage was nearly zero. That could reflect the unpopularity of the particular retailer among that demographic. Or it could underscore a growing immunity to display advertising among the Web-savvy younger generation.

Yikes. I asked Yahoo for its take on the study and the company sent me a (not surprisingly) sunnier summary of the research. Some of its highlights:

Major Findings:
By combining a controlled experiment with panel data on purchases, we find statistically and economically significant impacts of advertising on sales.

We estimate the total effect on revenues to be more than eleven times the retailer’s expenditure on advertising during the study.
93% of the effect was on offline (in store) sales.

Persistence: The effects of the campaigns were persistent over time, meaning that the sales impact could be tracked for a period of time after the campaign ended.

Demographics: there was no significant correlation or differences w/r/t location (by state) or gender.

But there was a significant difference w/r/t to age: customers over the age of 40 were significantly more responsive to the ads in terms of sales. The largest effect came from senior citizens (65+).

Clicks versus non-Clicks: Though clicks are a standard measure of performance in online-advertising, we find that online advertising has substantial effects on those who merely view but do not click the ads.

We find that 78% of the effect in sales comes from those who view ads but do not click them, while only 22% can be attributed to those who click.

Count me among the group disposed to think that brand ads on the Web do work, by the way. But then again, I have a vested interest in this being true since it’s what’s supposed to keep me clothed and fed. I’d hate to see scientific proof that it’s all a pipe dream.

For a contrary perspective, funded by people whose interests align with mine, check out this study funded by the Online Publishers Association.

[Image credit: pedrosimoes7]

Quirk’s tale revolves around his quest to find out how much his band earned from three albums’ worth of digital music over a five-year stretch. Warner Music Group (WMG) initially tells him that his band, which enjoyed very modest success through the 80s and 90s, has earned a grand total of…$62.47.

After some prodding, Quirk eventually gets Warner to concede that the band generated more than that paltry sum. But it’s still not likely to be that much.

Again, you’ll want to read it yourself, but there are two points here:

• It is much more difficult than it ought to be for digital content creators and owners to figure out how much money they’ve made online. Quirk, who works for a digital music distributor himself, lays much of the blame on the labels. But in their defense, I’ve heard many label types complain that they’re at the mercy of the likes of Rhapsody and Apple (AAPL). Remember that iTunes has been selling music since 2003. If digital music is still this knotty to navigate, think of how difficult, say, figuring out an actor’s residual for a video download is going to be.
• At least under conventional contracts, digital really isn’t going to amount to much for most performers. Maybe Lady Gaga really did make more than $167 after generating more than one million plays on Spotify, but she’s not going to make a ton, because streaming music royalties are really, really tiny. And given that streaming music start-ups are struggling to pay even that much, this is not going to change for quite some time.

(Thanks to Professor Derek Nystrom for flagging this one for me.)

That’s the takeaway from a Congressional hearing yesterday, where some industry executives pleaded their case–specifically, that they need a change in antitrust law to survive.

But if they were thinking that the Obama administration would be receptive to that sort of thing, they got a swift rebuke. Associated Press:

“Newspapers, however rare and financially weak, can adapt and ultimately conquer the threat posed by the Internet, the Justice Department’s Carl Shapiro told a House panel.

‘We do not believe any new exemptions for newspapers are necessary,’ said Shapiro, an assistant attorney general for economics.”

And Congress itself wasn’t any more sympathetic. Yet.

I do wonder, however, how this will change over time. Even in a best-case scenario, we’re going to see lots of newspapers shuttering over the next few years. Professional bomb-thrower Michael Wolff’s prediction that 80 percent of papers will fold within 18 months is too high, but I’ve talked to much more sober folks who think we could still lose a third of our daily papers within a few years.

Those papers are increasingly irrelevant to many of their readers, but they retain an awful lot of political clout. So the issue may be more resonant in 12 months once we’ve seen more papers actually shutter. That still won’t get the papers a Wall Street-sized bailout, but a change in antitrust law won’t seem unthinkable then.

Topics that were delved into via interviews were wide-ranging: “Sales Job: Will Consumers Spend to Go Green?” with Wal-Mart (WMT) President and CEO H. Lee Scott Jr.; “Living With Ed: The View From Hollywood” with Ed Begley Jr.; and “Green Deals: The Environmental Factor in Corporate Investments” with VC John Doerr.

I interviewed Doerr, as well The Journal’s Alan Murray, who was one of ECO:nomics’ hosts, and others for this video: