AllThingsD » hiring

Former CEO Thompson Might Be Gone, But Internal Investigation Into ResuMess Still a Hot Potato at Yahoo

Kara Swisher — Tue, 22 May 2012 16:03:16 +0000

While former Yahoo CEO Scott Thompson fades from the tech scene — besides getting jacked from the top job at the Silicon Valley Internet giant, he’s also just come off two tech boards he had served on — the investigation over his hiring and how a fake computer science degree got into the company’s regulatory filings continues.

While the quick-fire controversy burned Thompson, as well as now former Yahoo director Patti Hart, the special committee of independent board members is still at work trying to figure out how such a mess was made in the first place.

And, more importantly, who knew what when and told whom.

At the time the committee was announced, Yahoo said it would “conduct a thorough review of CEO Scott Thompson’s academic credentials, as well as the facts and circumstances related to the review and disclosure of those credentials in connection with Thompson’s appointment as CEO.”

The special committee is chaired by Yahoo’s new Chairman Fred Amoroso and includes John Hayes and Thomas McInerney, two independent directors who joined the board in April.

Yahoo also hired independent counsel Terry Bird of the law firm Bird, Marella, Boxer, Wolpert, Nessim, Drooks and Licenberg in Los Angeles to handle the inquiry.

The company also noted at the time that “the special committee and the entire Board appreciate the urgency of the situation and the special committee will therefore conduct the review in an independent, thorough and expeditious manner. The Board intends to make the appropriate disclosures to shareholders promptly upon completion of the review.”

Gripped by urgency myself, I have grown weary waiting by the phone for some official answers, which sources said will not be forthcoming for some time.

But since I am the most curious of cats — uh-oh! — I started dialing around on my own to find out what’s what.

And, according to sources — especially since Thompson has settled with Yahoo and will not get severance due to the academic falsehood — the big focus is now centering on if the company’s staff screwed up the background check of his academic credentials, thus allowing it to get into its official filings with the Securities and Exchange Commission and also on Yahoo’s corporate Web site.

When Thompson was hired from eBay, where he was president of its PayPal payments division, the online commerce company had the correct bio information in its SEC filings, although not on its Web site or in its PR materials.

The question is: Did someone from Yahoo simply rely on Web bios and not check eBay filings and did anyone ever re-check Thompson’s college records? (Note: It took me 15 minutes flat to find out he did not have such a degree at Stonehill College in the Boston area.)

If lazy checking was the case, it spells rank incompetence on the part of staffers, as well as Hart, who headed the search after Yahoo fired its previous CEO Carol Bartz last fall.

A much more troubling line of inquiry taking place is aimed at the possibility that someone at Yahoo did discover the discrepancy in Thompson’s resume and either did not report it up the chain of command or did and it was either lost or ignored or, well, worse.

While this certainly ain’t Watergate, such a situation would be very hard for Yahoo to explain away as easily to shareholders, especially potentially litigious ones. As it is always said, the coverup can often be more damaging than the crime itself.

And, if it is determined by the special committee that certain employees knew of Thompson’s resume inaccuracy, it will most certainly result in dismissals of Yahoo employees.

The focus on the committee — which truly cannot sweep this under the rug, if it occurred in this much more serious scenario — is most obviously the legal department of Yahoo, which is responsible for making certain filings are accurate.

Also under scrutiny is the quickness of the hiring of Thompson.

Among the questions is how much vetting was done and whether adequate questions about him were asked among a variety of possible sources.

When he was picked in January, Thompson was a dark-horse candidate for many, including some Yahoo board members.

In fact, he was not on the initial headhunting lists prepared by outside talent search firm Heidrick & Struggles.

That’s because Heidrick had placed Thompson at eBay in mid-2000 and could not then recommend him to Yahoo. As it turned out, Thompson took it upon himself to cold email Yahoo board member and Intuit CEO Brad Smith about the job, who then passed Thompson’s interest to Hart.

Heidrick had no involvement in the checking of Thompson, although he later blamed the firm in a public meeting with Yahoo employees for putting the error in his bio in the first place from when he was hired at eBay. Heidrick quickly called the accusation “verifiably not true” in a memo to its own employees.

Sources said that meant that the firm had a resume that Thompson had submitted to it that also contained the error.

But the central mystery of how that mistake appeared on his bio will likely remain just that without further explanation from Thompson.

In a radio interview in 2009, he did not correct a specific question about the twin degrees he appeared to have held and seemed to even agree with the show’s host, Moira Gunn, about them.

Later, she told me in a video interview that Thompson had clearly indicated to her in the prep for that interview that he indeed had a computer science degree.

Still, it is still not clear — and may never be — who put the faux computer science credential on his resume in the first place.

So, with all apologies to Winston Churchill: It might remain a riddle wrapped in a mystery inside an enigma.

Yahoo's Parting With Thompson Will Be for "Cause" (aka CSLie)

Kara Swisher — Mon, 14 May 2012 09:00:21 +0000

According to numerous sources, Yahoo is claiming “cause” in its parting with former CEO Scott Thompson, related to the fake computer science degree on his resume.

Such a determination will mean the company is not obligated to pay him the large severance that would have been due to him otherwise.

In his offer letter on January 3, Yahoo spelled out the terms of the employment agreement, noting what would happen if he left the company under more positive “without cause” terms.

“If Mr. Thompson’s employment is terminated by the Company without cause or by Mr. Thompson for good reason, the Company will offer him severance benefits similar to the benefits it provides to other senior executives of the Company at the time of his termination,” reads the document, which was filed with the Securities and Exchange Commission. “In addition, if Mr. Thompson’s employment is terminated by the Company without cause, by Mr. Thompson for good reason, or due to Mr. Thompson’s death or disability, the Make-Whole RSUs that are then outstanding and unvested will fully vest upon his termination.”

The “Make-Whole” RSUs — or restricted stock units, related to his time as president of eBay’s PayPal payments division — were valued at $6.5 million in Yahoo’s SEC filings.

But sources said Yahoo has relied on another clause in Thompson’s offer letter, titled “Code of Ethics and Yahoo! Policies,” to make the case that it would not have to pay out such a large sum to him.

Reads the clause:

“Yahoo! is committed to creating a positive work environment and conducting business ethically. As an employee of Yahoo!, you will be expected to abide by the Company’s policies and procedures including, but not limited to, Yahoo!’s Guide2Working@Y!, Yahoo!’s Code of Ethics and Yahoo!’s Corporate Governance Guidelines,” reads the letter. “Yahoo! requests that you review, sign and bring with you on your Employment Start Date, the enclosed Code of Ethics Acknowledgment Form.”

Under the Silicon Valley Internet giant’s ethical terms, the borked bio and how it got that way — which was still under investigation when Thompson stepped down — was the major issue in his ouster, since he was responsible for making sure it was accurate when submitted for regulatory filings.

In addition, while Thompson publicly blamed a headhunting firm for making the error back in the mid-2000 timeframe, that company — Heidrick & Struggles — hit back, saying his claims were “verifiably not true.” According to sources, Heidrick apparently possesses an inaccurate resume submitted to them by Thompson.

Heidrick, which placed Thompson at eBay many years ago, was not involved in his hiring at Yahoo. It had to recuse itself from his vetting as part of its search for a new Yahoo CEO, because it had placed him previously.

In fact, Thompson had nominated himself for the job via cold emails with Yahoo board members and was examined and hired quickly.

Perhaps too quickly, given the poor background check that was discovered by activist shareholder Daniel Loeb of Third Point.

Sources close to the board said that investor pressure relate to these credibility lapses grew too loud, along with employee rancor at Thompson’s actions — forcing the issue this weekend.

What was definitely not a reason for Thompson’s departure from Yahoo — although it was unfortunate timing — was an unspecified “illness” I referenced in my initial story on the subject.

(Note to readers: I found out this weekend that illness was thyroid cancer. But I declined to name it specifically, since I felt it was Thompson’s right to publicly reveal such a personal health issue and not mine. While I recently suffered a stroke and the experience perhaps influenced this editorial decision, the cancer was only a side issue to the resume drama at Yahoo and not naming it specifically seemed, well, more responsible to me. Argue amongst yourselves about it, but that’s my take. And also, I wish Thompson a successful treatment and speedy recovery)

That said, The Wall Street Journal did an entire piece about the cancer today today, noting that “the decision to step down from Yahoo was in part influenced by Mr. Thompson’s cancer diagnosis.”

That might have been true for Thompson — a source close to him characterized the parting as “mutually agreed” — and perhaps his illness accelerated the resume controversy.

But all that aside, he was given no choice in the matter by the Yahoo board, numerous sources said. The parting was almost entirely due to the mess about the botched bio and all its implications.

In fact, in all its public communications about his leaving, Yahoo and its execs offered no token thanks and barely even mentioned Thompson, such as in its official statement yesterday.

It read, referring to newly chosen interim CEO Ross Levinsohn: “Mr. Levinsohn replaces Scott Thompson, former Chief Executive Officer, who has left the Company.”

And left it he has, without a choice and with what will be a much smaller settlement, sources said. It is not clear when Yahoo has to unveil those terms in public documents.

Exclusive: Yahoo's Thompson Out; Levinsohn In; Board Settlement With Loeb Nears Completion

Kara Swisher — Sun, 13 May 2012 15:59:24 +0000

Yahoo’s embattled CEO Scott Thompson (pictured here) is set to step down from his job at the Silicon Valley Internet giant, in what will be dramatic end to a controversy over a fake computer science degree that he had on his bio, according to multiple sources close to the situation.

The pair will apparently say he is departing for “personal reasons.” Sources said that Thompson will be claiming to be leaving due to a serious illness that he recently discovered he had.

But the evolving crisis — which is just over a week old — centered on his botched resume and how he handled the thorny issue is the key reason for the abrupt end to his tenure as a CEO.

Thompson’s likely replacement on an interim basis will be Yahoo’s global media head Ross Levinsohn, who most recently also ran its Americas unit, including its advertising sales.

In addition to the management upheaval, Yahoo’s board is closing in on a settlement with the man who discovered Thompson’s misstep, activist shareholder Daniel Loeb of Third Point, said sources.

The situation could change, since Yahoo’s full board still has to meet this morning to officially approve the sweeping changes at the long-troubled company.

But, if it is, this development goes a long way toward fixing some of what has been ailing Yahoo recently.

And it’ll also be a stunning victory for Loeb (pictured here), since the pugnacious hedge fund investor is set to get three board seats from a slate proposed by him as part of a proxy fight aimed at Yahoo. The new Yahoo directors will be media exec Michael Wolf and turnaround specialist Harry Wilson. Loeb’s fourth selection — former NBC head Jeff Zucker — will withdraw.

The five current Yahoo directors — who were to step down at the company’s annual meeting this summer — will leave the board effective immediately, sources said, to make way for the Third Point selections.

Finally, Yahoo’s recently added director Fred Amoroso will be named chairman of the board.

Amoroso is the director who has been conducting the investigation into the issues raised by Loeb about how the fake academic credentials got in Thompson’s public bios, as well as in Yahoo’s regulatory filings, and also the hurried circumstances around his hiring in January.

Those mysteries — read, screw-ups — might never be solved now, although Thompson made a convoluted attempt to explain it all in two awkward employee meetings at the end of last week. In those gatherings, according to numerous sources, he blamed a headhunting firm for introducing the mistake when he was being hired for a job at eBay in the mid-2000 timeframe.

That company, Heidrick and Struggles, slapped back last week with an internal memo, noting that Thompson’s claim was “verifiably not true.” Sources said that Heidrick told Yahoo’s board that it was in possession of a resume that Thompson had apparently submitted showing the inaccurate CS degree on it.

That memo, impugning Thompson’s credibility, was one of many that piled on to create an impossible situation for the Yahoo board, related to his leadership ability going forward.

Thompson had also previously issued a Yahoo statement, in which he apologized for the “distraction” caused by the problematic resume, but not for the mistake itself.

And, initially, Yahoo — under his direction — had called the borked resume an “inadvertent error.”

Such fumbling to fix the situation was among the many other issues that the board has been considering relating the ability of Thompson to remain in his job. Also of importance was the sinking morale of Yahoo employees, who had largely rejected Thompson’s excuses in the ResuMess scandal.

Internal message boards at Yahoo lit up all last week, with staffers largely rejecting his explanations. In addition, a number of top execs and engineers approached the board calling for Thompson’s firing.

While that’s not precisely what happened here, it’s close enough to describe Thompson’s departure as inevitable.

All this change comes in the wake of a massive restructuring he was in the midst of at Yahoo, after 2,000 employee layoffs.

Thompson was pushing forward a vision of adding a much more significant data and commerce element to Yahoo’s largely ad-based business.

That is likely to be less stressed under media-focused Levinsohn, who will be essentially trying out to be the permanent CEO.

Well known in the media and advertising communities, he has worked at a number of big online efforts over many years.

According to his bio at Yahoo, where he arrived in 2010:

So far in my checking, Levinsohn’s resume is accurate.

More to come, obviously.

I have emails and texts and calls into everyone for comment, but apparently they are all out at a Mother’s Day brunch (except me).

Heidrick & Struggles Slaps Back at Thompson's Yahoo in Blame Game Over ResuMess

Kara Swisher — Sat, 12 May 2012 01:39:30 +0000

And it just gets worse in the controversy over Yahoo CEO Scott Thompson and the circumstances around how a fake computer science degree could get onto his bio.

Heidrick & Struggles is smacking back at him for insinuating that the well-known headhunting firm had messed up his resume.

In meetings with employees to attempt to explain the situation yesterday, multiple sources said that Thompson claimed that a mistake made by a headhunting firm in mid-2000, when he was moving to a job at eBay, was the way the inaccuracy got into his bio.

Thompson did not name the firm, but he was clearly referring to Heidrick & Struggles, which handled that placement. It was also working on the Yahoo CEO search, after the Silicon Valley Internet giant fired its former CEO Carol Bartz last fall.

But, because it had originally placed Thompson at eBay, the firm did not work on his hiring at Yahoo.

So, Heidrick was not going to take Thompson’s blame for the botched bio.

“While we were not involved in this placement, there have been both direct and indirect mentions of this relationship in several news articles. Furthermore, if recent media reports are accurate, the CEO of Yahoo! has made potentially damaging allegations about our firm that are simply not true and cannot be allowed to stand in the public record,” wrote CEO Kevin Kelly to staff. “The media articles in question have indicated that the Yahoo! CEO told members of his senior staff that, many years ago, a junior member of our firm invented an academic credential for him in the course of preparing standard profile materials. Based on information in our possession, this allegation is verifiably not true and we have notified Yahoo! to that effect.”

This letter is just another brick in what is looking like an insurmountable wall for Thompson to keep his job at Yahoo. Sources said that the board of Yahoo had been sent a letter from Heidrick on the matter earlier today.

And, let me just say, this latest eruption is simply not good for Thompson’s chances to remain CEO for much longer.

Yahoo declined to comment, but here is the full letter from Kelly to its staff:

Loeb Calls Again for Thompson Firing From Yahoo, as Former eBay Boss Supports Him

Kara Swisher — Wed, 09 May 2012 14:33:40 +0000

As expected, activist shareholder Daniel Loeb of Third Point released a new letter on the bio controversy he set off at Yahoo, again calling for the firing of its CEO, Scott Thompson.

“It seems farcical to us that the Board will most likely spend more time deliberating over whether Mr. Thompson should be fired than it did properly vetting whether he should have been hired,” read the letter in part. “The necessary investigation into whether certain senior executives and Board Members knew of Mr. Thompson’s deceptions before hiring him should not delay decisive action over his ethical breaches.”

Loeb, who is waging a proxy fight with Yahoo over board seats he wants, also offered to work with the Yahoo board to find a new CEO if it accepted his slate of directors. In the interim, he suggested Yahoo put either CFO Tim Morse or media head Ross Levinsohn in the job. Morse had taken that position temporarily after Yahoo fired its last CEO Carol Bartz last fall.

Confused yet?

Loeb set off a management crisis there last week with the revelation that Thompson had added a fake computer science degree to his bio.

The first casualty came yesterday with the stepping down of Yahoo director Patti Hart, who was charged with vetting Thompson for the job.

The Yahoo board also announced yesterday that it would be conducting a probe of the circumstances around the hiring, as well as how the faux academic credentials got in Thompson’s bio and also the company’s regulatory filings.

The new letter was a reaction to Thompson’s apology on Monday for the borked bio becoming a “distraction” (but not, oddly, for the mistake itself). Loeb had previously called for Thompson’s firing over the bio fibbing.

Loeb will be appearing at an investor conference in Las Vegas later today, where he will surely be asked about the situation.

In related news, eBay CEO John Donahoe, Thompson’s former boss, lent words of support, but also underscored that the online commerce company’s legal filings of his bio were always correct, even if its Web site and other PR documents handed out were not. Thompson came to Yahoo from a stint as president of eBay’s PayPal payments unit.

As reported by Bloomberg, Donahoe said:

“When Scott was hired at EBay Inc., all of EBay’s filings had the accurate information. Some of EBay’s PR materials had that bio. Our legal filings were taken care of by our legal department. Some of the PR materials had that info,” he said while in Tokyo of the correct bio versus the incorrect one.

Donahoe added: “I think Scott Thompson did a great job at PayPal. I think he’s a very talented leader and I believe he can help Yahoo. I hope they get through this and he can continue to do the very challenging job he’s got of helping to turn Yahoo around. I’m Scott’s biggest fan.”

This has been the first public support of Thompson by a prominent Internet figure, which might help lagging morale at the company.

Here’s the full version of the latest Loeb letter:

Third Point May 9 Letter Release

Exclusive: Yahoo Director in Charge of Botched CEO Vetting to Step Down From Board

Kara Swisher — Tue, 08 May 2012 15:50:13 +0000

CSLie has claimed its first victim, although the mystery is still unsolved.

Patti Hart — the Yahoo director in charge of the search that resulted in the hiring of Scott Thompson as its CEO, making her directly responsible for a clearly botched vetting of his academic record — will not stand for re-election to the board at the next annual meeting, according to sources close to the situation.

Hart — who is CEO of International Game Technology, which makes electronic gaming equipment and systems products — is resigning. Apparently, said sources, her own board asked her to remove herself from the Yahoo mess to better focus on the company she actually runs.

But she is perhaps just a few steps ahead of being pushed, given her key role in the hiring of Thompson, who was president of eBay’s PayPal payments unit when he cold-emailed Yahoo director and Intuit CEO Brad Smith seeking the job.

A Yahoo spokesman declined to comment.

[UPDATE: Yahoo confirmed the inevitable departure later in the day and said the Yahoo board would have nine members going forward. Hart also released a statement, confirming the move.]
Hart, who came to the Yahoo board in 2010, has been head of its corporate governance and nominating committee.

The departure makes her the first casualty — but definitely not the last — of the controversy over how a fake college degree managed to get in Yahoo’s regulatory filings via Thompson’s inaccurate bio.

The issues around how Thompson was hired — including how background checks on him failed to discover that he never got a CS degree from the Boston area’s Stonehill College, as his longtime bio on eBay had claimed — are part of a new investigation by the board.

That will be officially announced later today, along with the hiring of an outside law firm to conduct the probe, which will be headed by independent director Fred Amoroso.

[UPDATE: Yahoo officially said it was forming a special committee to look at Thompson's bio snafu and the circumstances around his hiring. Along with Amoroso, the other members are John Hayes and Thomas McInerney, independent directors who joined the board in April.

"The special committee and the entire Board appreciate the urgency of the situation and the special committee will therefore conduct the review in an independent, thorough and expeditious manner," a statement from Yahoo said.

Interestingly, the statement did not include a show of support for Thompson, which often happens in such circumstances.]

They will have a lot to investigate. Such as this mystery: Thompson’s correct bio appeared in filings eBay made with the Securities and Exchange Commission, while Yahoo’s similar documents were inaccurate about his educational credentials.

Also under scrutiny: How the falsehood was added to Thompson’s public resume, and who put it there; why Thompson never noticed the error, there since at least 2004; why he declined to correct it when asked directly about it; and who at Yahoo might have known about the problem before the hiring.

It’s a basic case of who, what, where, when and how. And, most of all, why anyone would make such a dumb mistake.

Hart would seem to have all the answers to that, along with a forensic firm that worked on the vetting. Key Yahoo staffers were also involved, said sources, although its headhunting firm on the CEO search, Heidrick & Struggles, was not used in relation to Thompson.

Presumably, there is a paper trail of some sort, which was the subject of a legal demand by activist shareholder Daniel Loeb of Third Point yesterday. He uncovered the bio error last week, in the middle of pressing a proxy fight to garner board seats.

Loeb’s allegations also nailed Hart in much-less-egregious padding of her own college record, making it appear as if she had economics and marketing degrees. She has one in business administration, with “specialties” (Yahoo’s ridonkulous word, not mine) in economics and marketing.

While Hart’s leaving might assuage some, providing a convenient scapegoat to the bizarre situation, this is by no means over for Yahoo or Thompson.

Another increasingly potent issue is the ever-declining morale at the Silicon Valley Internet giant over the company’s odd response — it initially called the bio problem an “inadvertent error,” without further explanation — and also Thompson’s lack of transparency on the issue.

He released an email to employees last night, apologizing for the “distraction” of the resume issue, but not for the error itself.

That, and other of Thompson’s actions — he has been described to me, by many close to the situation, as defiant over the issue, and as blaming Loeb for conducting a personal vendetta — did not sit well with many, both inside and outside Yahoo.

A Yahoo spokeswoman told me earlier this week that there is much support for Thompson internally and externally, but declined to provide specifics.

But message boards I read were mostly negative about him, as are a plethora of direct emails to me on the situation. One clever commenter on this site bemoaned that Thompson might get off “Scott-free.”

Ouch! Nonetheless, the atmosphere at Yahoo is indeed unsettled.

“Sentiment from employees is unanimous that he must go,” said a Yahoo employee, who has no personal agenda that I can grok, in a common refrain. “He clearly knew and lied for years; and his handling since exposed has been unacceptable.”

Unacceptable or not, though, Hart is the only one going for now. But stay tuned.

Until then, here’s an appearance I made today on WSJ.com to talk about Hart’s departure:

[ See post to watch video ]

CEO Says Sorry to Yahoos for Borked Bio "Distraction" -- But Will Mea Culpa Work Without an Apology for Error? (Memo)

Kara Swisher — Mon, 07 May 2012 23:59:45 +0000

He’s sorry. Deeply regrets. Apologizes. Takes full responsibility for the unfortunate distraction to the people.

No, it’s not a scandal-ridden politician caught in some compromising position, but Yahoo CEO Scott Thompson talking about the hubbub created by the addition of a fake computer science degree on his bio.

This kind of move is, of course, PR 101, but it still took Yahoo several days after activist shareholder Daniel Loeb uncovered the resume problem, which the Silicon Valley Internet giant said was an “inadvertent error.”

In his new memo, which comes after a terse one on Friday, Thompson said he was upset by how the controversy has impacted the company.

“As I told you on Friday, the board is reviewing the issue and I will provide whatever they need from me. In the meantime, I want you to know how deeply I regret how this issue has affected the company and all of you,” he wrote. “We have all been working very hard to move the company forward, and this has had the opposite effect. For that, I take full responsibility, and I want to apologize to you.”

It is interesting to note that he said nothing in the new email about being actually sorry for the still-mysterious inaccuracy in his bio.

It was present since 2004 when he worked at eBay and also somehow got into the Yahoo regulatory filings after he was hired earlier this year.

Presumably, that information is to come after an investigation by Yahoo’s board, headed by independent director Fred Amoroso, which is proceeding now.

It will be announced officially tomorrow, but it is already in the works, as Thompson noted.

Earlier today, Loeb demanded all books and records about the circumstances of Thompson’s hiring and has made hay out of the issue.

To calm the story, said Thompson to his new troops: “I am hopeful that this matter will be concluded promptly.”

Unfortunately for him, that hope is probably also going to turn out to be inaccurate.

But read it for yourself. Here’s the internal memo that just went out to all Yahoo employees from beleaguered Thompson, which I obtained from the company.

Buffett Comments on Trust Issue in Yahoo CEO BioGate: "You've Got a Problem"

Kara Swisher — Mon, 07 May 2012 16:44:06 +0000

Activist shareholder Daniel Loeb of Third Point just got an unlikely and powerful ally in his proxy fight against Yahoo: Berkshire Hathaway’s famed Warren Buffett.

In a wide-ranging interview on CNBC this morning, when asked about the controversy, Buffett said about the Silicon Valley Internet giant’s excuse that the addition of a false computer science degree to Yahoo CEO Scott Thompson’s bio was an “inadvertent error”:

“It doesn’t sound like an inadvertent error … If I thought as a director, if I thought that an officer had consistently misstated some fact to me, I think I’d probably do something about it,” said the legendary investor, in part, who also noted he did not know all the facts.

Still, said Buffett: “If you can’t trust the people you’re working with, you’ve got a problem.”

Ziiiiing, because if the sage of Omaha thinks it’s bad, it has moved to worse.

And, indeed it has — earlier today, Loeb lobbed a legal demand for information about Thompson’s hiring and more.

Yahoo’s board is conducting an investigation into the matter, led by independent director Fred Amoroso.

Loeb Lobs Lawsuit, as Expected, at Yahoo's Borked Bio Mess

Kara Swisher — Mon, 07 May 2012 16:23:59 +0000

Botched CEO bio. Activist shareholder. Screwy board of directors. Mix it all together and what do you get?

More legal filings, natch!

This — as I reported this weekend would happen today — from Dan Loeb of Third Point, which is waging a proxy fight against Yahoo.

The aggressive hedge-fund investor — who owns close to 6 percent of Yahoo — recently scored a direct hit by revealing that new CEO Scott Thompson had added a faux degree in computer science to his bio, which somehow made its way into regulatory filings of the Silicon Valley Internet giant.

This, despite a supposed thorough vetting by Yahoo’s board of the former president of eBay’s PayPal payments unit.

Not so much, as it turns out — which is why Loeb is asking for all the information about Thompson’s hiring process and more.

Third Point said it was making a demand “under Section 220(b) of the Delaware General Corporation Law to inspect books and records relating to the hiring of CEO Scott Thompson, the appointment of Patti Hart to the Yahoo! Board, and the selection of Board Members Peter Liguori, John Hayes, Thomas McInerney, Maynard Webb, Jr., and Fred Amoroso.”

And its press release added:

“Third Point believes that Yahoo! shareholders and employees will be best served if the Board accepts responsibility quickly for this latest debacle … We believe that this internal investigation by this Board must not be conducted behind a veil of secrecy and shareholders deserve total transparency.”

Well, it looks like it will eventually be all out in the open, what with all the legal motions flying.

Expect a Yahoo response soon, which sources said will focus on a board investigation — using an outside law firm, and headed by independent director Amoroso.

Here you go on Loeb’s shot today:

Third Point May 7 Demand Letter Release

As Yahoo CEO Reaches Out to Top Staff, Board Meets to Weigh "Options" (I.E., Deciding Who Gets to Take the Borked Bio Blame)

Kara Swisher — Mon, 07 May 2012 03:27:43 +0000

Even as Yahoo’s board was kibitzing all weekend about how to handle the continuing resume-padding controversy around its recently hired CEO Scott Thompson — including hiring its own outside crisis communications firm to represent it — he was working the phones to keep top staff apprised of the evolving situation.

While Thompson told those he spoke to that he was limited in what he could say and blamed a “personal vendetta” by an activist shareholder for his troubles, being proactive in this regard is probably a good idea.

That’s because multiple sources said he said exactly nothing in various strategy meetings with top employees last week about allegations leveled by Dan Loeb of Third Point, which proved correct, that Thompson had not gotten a computer science degree in college, as his longtime bio had claimed.

“It was the gorilla in the room and it was awkward in the extreme,” said one exec present at the meetings. “He never brought it up, which was even worse.”

At this point, it seems unlikely that Thompson can regain the confidence of many at Yahoo — even though a company spokeswoman said he received a lot of incoming support too, both externally and internally — until he can render some cogent explanation about how the borked bio got into both Yahoo’s public site and also its more critical regulatory filings.

Even more mysteriously, how the error was never present in filings with the Securities and Exchange Commission made by eBay, where Thompson led its PayPal payments unit, although his public eBay bio has also been wrong for close to a decade.

And, most of all, how was it that Thompson never caught the mistake himself — even when directly asked about it — despite the likelihood of reviewing it multiple times over those many years and ultimately certifying it for Yahoo’s own SEC filings.

Calling Encyclopedia Brown to solve the Case of the Computer Science Degree That Wasn’t!

Thompson has given no explanation about the debacle to the bulk of the Yahoo staff at all levels, save for an information-free and terse note to employees on Friday afternoon that essentially asked them to focus on their work instead of his bizarre crisis.

Unfortunately for him, many Yahoos are focusing a lot on Thompson, with message boards at the Silicon Valley Internet chastising their CEO and giving him support that is tepid at best. From interviews I have had with two dozen employees this weekend, to say morale is at an all-time low is perhaps understating the situation.

Here is a short selection of comments that were read to me, for example:

What appears to trouble employees the most in the threads I was read was the nonchalance of the initial Yahoo statement about the issue, which called the addition of a fake degree on Thompson’s bio an “inadvertent error.”

“From a pure employee perspective, it feels like it is a violation of their principles,” said one person, reflecting a dozen or more conversations I had this weekend up and down the organization. “And anyone else would probably be immediately fired for this, even with an explanation.”

Said another: “He clearly knew and lied for years; and his handling since exposed has been unacceptable.”

As I noted above, a company spokeswoman said there was also much support for Thompson (pictured here) within the company, but declined to provide any quotes or details.

Presumably, some answers will be coming from a board investigation aimed at getting to the bottom of the situation, including trying to grok who put the error in the bio in the first place.

My bet: They’ll try to pin it on a lower-level minion, although that will not fly with a lot of people.

Including me, because whoever typed in the faux degree, its presence there has been too long for Thompson not to be responsible for it.

Flunky error or not, there are important questions about whether Thompson himself provided a bio that contained the inaccuracy to the board when he put himself forth for the job via direct emails to Yahoo director and Intuit CEO Brad Smith.

That line of thought basically boils down to: Can Thompson not read?

More problematic is the fact that the placement did not come via Yahoo’s headhunter on the CEO search, Heidrick & Struggles, which apparently was not charged with doing a background check on Thompson.

Instead, the director in charge of the search, Patti Hart, sources said, hired another forensic firm, which appears to have missed Thompson’s erroneous academic record.

The only thing completely clear amidst all the confusion: Hart screwed up by botching an extremely simple part of a vetting she was charged with. That makes her vulnerable, of course, along with other Yahoo board members or staffers closely involved in the talent search.

While Hart (pictured here) is in a much dicier position, Thompson still appears to have initial board backing — at least for today — as it’d be a very tough call to fire yet another CEO so quickly in the middle of several key deals for Yahoo, as well as a proxy fight.

Said one person close to the situation, the board is still considering its “options,” in an effort that is being led by independent board member Fred Amoroso.

So, it will be instructive to see how the board will proceed tomorrow — especially since it is likely that Loeb will lob a lawsuit to try to get more information on the Thompson hiring process.

But it’s started by hiring its own outside communications firm, Sard Verbinnen, which has handled other crises for Yahoo in the past.

Sard’s Charles Sipkins — welcome back, Charlie! — had no comment about the board’s next move, except to reiterate its statement from last week that it is looking into the Thompson bio mess and will make appropriate disclosures at some point.

We can’t hardly wait.

Yahoo Should Expect Incoming Lawsuit Lobbed by Loeb Tomorrow on CEO Hiring

Kara Swisher — Sun, 06 May 2012 16:01:48 +0000

On Friday, Third Point’s Dan Loeb — the activist shareholder who is waging an ever-nastier proxy battle against Yahoo — said in a letter regarding the inexplicable errors in the resume of its CEO Scott Thompson that he would take “further action” if he did not get answers.

Let me translate that for Yahoo and any other interested observers: Come Monday, the Silicon Valley Internet giant is likely to be on the receiving end of an official lawsuit demanding all the notes and records related to the hiring of Thompson.

Presumably, Loeb hopes that if he gets ahold of the material on the quick hiring of the former president of eBay’s PayPal payments unit that it will show a sloppy vetting by the board, which led to it not catching inaccurate educational information about Thompson.

Last week, Loeb discredited Yahoo CEO Scott Thompson’s academic credentials and credibility by showing that his bio listed a computer science degree, even though he never obtained one while at Stonehill College.

Perhaps most problematically, that data got into official regulatory filings Yahoo made.

After proven correct, Loeb than quickly lobbed in another letter, making an explicit legal threat to get the resume information:

How such a legal demand will be greeted by Yahoo will be interesting, especially given the tension internally. While Yahoo initially reacted to Loeb’s allegations about the inaccurate bio by saying the insertion of a computer science degree was an “inadvertent error,” the board quickly backpedaled and said it would conduct an investigation into the matter.

But that will not be speedy enough for the aggressive Loeb — so, I expect his lawyers have been working all this weekend to prep for his next attack.

They Shoot Yahoo CEOs, Don't They? But Not Without a Really Smoking Gun and a Much Stronger Board.

Kara Swisher — Sat, 05 May 2012 16:33:02 +0000

Earlier today, Yahoo’s persistent thorn, activist shareholder Dan Loeb of Third Point poison-penned another letter to the board of the Silicon Valley Internet company, demanding that Yahoo fire its new CEO Scott Thompson, as well as director Patti Hart, over bizarre inaccuracies related to their academic achievements.

“Permitting Mr. Thompson and Ms. Hart to stay with the Company after apparently violating the Code of Ethics sends a message to all Yahoo! employees that a different set of rules applies at the top,” Loeb wrote.”[Yahoo must] terminate Mr. Thompson for cause immediately given his demonstrable unsuitability to remain Chief Executive Officer and a director of Yahoo! and accept the resignation of Ms. Hart for similar reasons.”

And while many across the blogosphere — including some very clever tweets — called for his head tout de suite, that’s just not going to happen.

At least for now, at this early point in a controversy over Yahoo filing legal documents that misrepresented Thompson’s long-ago degree from Stonehill College.

In a nutshell: Thompson does not have a computer science degree, as he had maintained he did in public bios for almost a decade, a falsehood that mysteriously seeped into documents Yahoo filed with the Securities and Exchange Commission.

That’s bad news for Yahoo, for sure, on many levels, but moving against Thompson at this moment is not likely to be the answer — for the short term, at least.

That’s due to many reasons, that I like to think of it as three hopelessly complex puzzles that need solving pronto.

The What-Did-Yahoo-Know-and-When-Did-It-Know-It Question

There is no question the first thing Yahoo’s board needs to do is a thorough investigation to determine how a borked bio could proliferate so widely and for so long.

Most importantly, Yahoo will have to reveal if Thompson actually gave them this incorrect information, as he aggressively lobbied for the then-open CEO job.

As I had previously reported several times, Thompson cold-emailed a Yahoo director — Intuit CEO Brad Smith, as it turns out — despite not being on the list of potential candidates. Thompson was then shuttled over to Hart, who was running the vetting process with the help of headhunting firm Heidrick & Struggles, and hired within weeks.

Oddly, sources said Thompson never filled out the required informational papers for the job, nor did Heidrick conduct the normal background check on him. Instead, another forensic firm Yahoo hired did the work.

If it turns out Thompson gave any of them the bad bio info, it would be quick curtains for him.

But if Yahoo’s board members obtained his info on their own, the next key query would be how no one at Yahoo — especially its legal and compliance staffers, as well as outside help — managed to catch the problem during the vetting of Thompson.

Here are some good questions to start with:

Who put a faux computer science degree on Thompson’s bio in the first place, why and when did it happen?

Where did Yahoo get the inaccurate information?

Who was in charge of checking Thompson’s academic record for Yahoo?

And, who checked the work of the checkers?

The problem is made more complicated, because correct information was easily available in the SEC filings of eBay for years, since Thompson was head of its PayPal payments unit.

While the resume information was indeed wrong on eBay’s Web site and on numerous bios of Thompson for years, how did eBay legally get it right while Yahoo did not?

That calls into question the expertise of the company, its directors and those they hired to make sure execs were completely on the up and up, a task they clearly failed at.

If rank incompetence is the reason, which it looks like it might be, expect certain board members and other Yahoo staffers to go, along with anyone who helped in the Thompson vetting, or lack thereof.

Unless, of course, the gang-that-couldn’t-shoot-straight actually did shoot straight and some one at Yahoo found out about the educational discrepancy before the new CEO was announced, but declined to fix it.

While sinister, such a scenario is not entirely implausible, given how much pressure Yahoo was under at the time to hire a CEO quickly, due to Loeb and his looming proxy fight.

If any evidence were to surface that this was so, it is curtains all around, which would rain the kind of disaster down on Yahoo’s Sunnyvale HQ that would make Loeb’s attacks look like a Nerf battle. Instead, it would be “The Hunger Games” — except that no one survives.

The Chaos-in-Sunnyvale Conundrum

Which brings us to the profound implications of Yahoo jacking its second CEO within six months.

While it’s easy to yell “Fire the CEO” on a crowded Twitter, it’s simply not so easy in practice.

How long did it take Yahoo’s lugubrious board to figure out Carol Bartz needed to go? A … long … time. (And, she had a CS degree!)

More to the point, Thompson — and his not-so-merry band of consultants from Boston Consulting Group and, this week, McKinsey & Company — has only just completed a massive layoff of 2,000 employees and a jarring restructuring of management.

He’s also in the early stages of rolling out a new and decidedly still-squishy strategic plan to top execs (also just this week), along with working on some other key initiatives.

That includes renegotiating its search partnership with Microsoft; noodling around on a possible deal with Google; contemplating the sale of a variety of assets; and — oh, yes — trying to take on social networking Godzilla Facebook over patent infringement.

Busy much?

But, most importantly, Thompson is now the umpteenth Yahoo CEO to be working on the never-ending talks with its Asian partners over selling back a piece of the company’s lucrative stake to them.

While Yahoo CFO Tim Morse and head lawyer Mike Callahan are the point men on the deal, the lack of CEO would be an issue in the now-proceeding again talks.

This is a sale that must — and I underscore must — get done and soon, giving Yahoo much-needed breathing room and a whole lot of cash to fork over to increasingly disgruntled shareholders.

So, expect Yahoo to try to milk that deal for all it’s worth in the coming week, in order to give the appearance, at least, of positive forward momentum.

And, like it or not, Thompson has to play a key role in it getting done.

Thus, the likelihood of wait-and-see over point-and-shoot on Thompson is higher than you might think.

That’s especially true given four members of the board are leaving within six weeks and have either or are in the process of being replaced by new members.

Then, Thompson will be their problem to solve.

Again, no small thing, since the old crew — led by feckless Chairman Roy Bostock — is not likely to want to end its appalling tenure with yet another disaster.

Such a move would further tarnish the legacy of its outgoing directors, although I am not sure how it could be any more sullied, given their consistent record of one bad decision after the next.

What do I really think? I think this cursed board will maintain its 100 percent score of doing the wrong thing at the right time.

It could be a different case with the new directors, of course, who all seem pretty sharp and not as easily impressed by a record of failure.

They will surely be monitoring Thompson carefully, as will employees, who have taken to internal message boards with a rage not seen in a while over the resume debacle.

Their morale might be one uncertainty impacting Thompson’s fate. If a lot of key employees continue to bolt Yahoo or those remaining more loudly express their disdain for the bio antics, the new directors might listen.

The Whatever-Loeb-Says-We-Won’t-Do-Till-Later Head-Scratcher

Which brings us back to Loeb, whose noisy campaign to grab seats on the Yahoo board has certainly hit home this week.

And, though Yahoo likes to ding him a lot, since he started his campaign of terribly entertaining investor terror, a lot of what he’s been calling for has happened.

That includes a major flushing of the board — with five longtime members, including co-founder Jerry Yang, going, going and gone.

In addition, Loeb brought pressure to slow down some questionable deals, from Yahoo’s PIPE dream to a tax-free spinoff in Asia in a deal only an accountant could love.

He’s also — though they try to deny it — got the Yahoo directors in the dangerous habit of reacting to him, rather than playing their own game.

While the Yahoo board has resisted any deal with Loeb (pictured here), blaming him for rejecting their kind offers of settlement, it is he who is setting the tone more than Yahoo.

And that tone is of alarm and trouble and chaos at Yahoo.

That’s not going to work to convince other Yahoo investors to back his cause — in fact, Loeb has a decidedly uphill battle to win his proxy challenge — he has still scored a direct win with the bio relevations.

So far, though, Loeb has not sunk Yahoo’s battleship, so it is unlikely the board will acquiesce to his latest demand of Thompson being fired by noon on Monday.

Maybe it will eventually, or maybe it will just scold Thompson or maybe it will do nothing at all.

All that is an unknown — a riddle, wrapped in a mystery, inside an enigma, with a lot of managerial incompetence thrown in. And that, most of all, is the sad definition of today’s Yahoo.

All of Yahoo's Top Execs Gather Today to Talk Strategery About What Stays and What Goes

Kara Swisher — Wed, 02 May 2012 17:33:14 +0000

All day today, the top 120 execs at Yahoo are meeting at an offsite at the Marriott in San Jose, Calif., the first such gathering of the new world order at the Silicon Valley Internet giant in the wake of 2,000 layoffs last month.

It’ll be the first time that new CEO Scott Thompson starts to more specifically explain his vision of how he’s going to drag Yahoo out of its perpetual turnaround and into a brighter future.

The main message: Focus on where Yahoo is winning and dumping everything else — and actually doing it this time.

(For those just tuning in, previous Yahoo management has talked this talk before and, well, not walked this walk very much at all.)

Thompson thinks he’s the clean-up guy, though. And, since the layoffs, he has been one busy dude, flying to and fro, working on a variety of things.

That includes everything from figuring out how to sell a part of Yahoo’s lucrative Asian assets to working on the company’s fraught search advertising partnership with Microsoft, to chatting with Google about a new one, to planning more patent attacks against Facebook and others, to — perhaps most important of all — deciding what needs to stay and what needs to go in terms of products and properties at the company.

In Yahoo’s recent earnings call, Thompson noted that he would be “consolidating technology platforms and shutting down or transitioning roughly 50 properties that don’t contribute meaningfully to engagement or revenue.”

What precisely he was talking about has been the buzz inside the company since, because Yahoo has collected a lot of stuff over the years that is has shoved into its corporate closet and forgotten about, but that keeps on chugging away with little promise.

Ever heard of Korea Kids? It’s a site in Asia that attracts decent traffic and millions of dollars in revenue, but which many sources said costs much more to operate. Or another site called Sex Tips in the U.K. or Moments on Motherhood on its U.S. Shine women’s site.

There are lots of micro-sites like this all over Yahoo, which have been created over the years for a variety of reasons that seemed sensible at the time. In addition, there is much more — from scads of useless mobile apps to much bigger but troubled projects such as Connected TV and Livestand — all of which suck up staff, resources, attention, ad impressions and more.

It’s like a never-ending episode of “Hoarders,” but grosser in many way for Yahoo shareholders.

So, presumably, if you are not in the top three in any category, that means a spring cleaning all over the company to either toss these properties out or move them to one of Yahoo’s big publishing platforms, such as sports, finance or news.

This is not an easy task, as you might imagine, since each and every property on the potential chopping block has staunch defenders inside the company and ferreting them out and killing them is, as one person inside Yahoo noted, “like hunting gophers in the dark.”

The benefit to doing so? Cost savings, focus on many fewer things that Yahoo does best and a deployment of talent to where it will pay off.

That’s the idea anyway, but it is more complex than that, since simply having massive properties to sell to advertisers is not the game anymore, as both Google and Facebook sell a range of other attributes to advertisers from better engagement to direct sales conversions to social hooks.

Thus, it’s not simply enough to kill properties — Yahoo has to transform the ones it keeps, too, to meet a vastly different consumer mentality.

That is one of the main reasons that Thompson is also stressing new business arenas, most especially commerce, an area he knows well as the former president of eBay’s PayPal unit. Thompson has told his staff that by 2014, one-third of Yahoo’s revenues should come from e-commerce.

Besides hiring away some of his staff from PayPal, sources said he has also been eying payments technology to buy and even leveraging current Yahoo properties to grow the nascent business.

Recently, for example, he has been pushing an effort to get the accidental visitors to Yahoo’s still powerful home page — those that sign in an out of its email, for example — to engage in an e-commerce transaction.

Whether moves like this will work is still an open question, but I guess you have to start cleaning up the mess somewhere.

DataSift Raises $7.2 Million in Venture Funding

Mike Isaac — Wed, 02 May 2012 11:20:52 +0000

Social analytics company DataSift announced another round of venture capital funding Wednesday, adding $7.2 million in a follow-on Series A round. The company — which aggregates data from social networks such as Facebook, Twitter and YouTube to package and sell to corporate customers — raised $6 million from IA Ventures and GRP Partners last year; the additional funds came from the same firms.

Apple to Build New Austin Campus

Arik Hesseldahl — Tue, 01 May 2012 21:33:35 +0000

Apple will soon be staffing up and building in Texas. The company just completed a deal with commissioners in Travis County, Texas, under which it will build a $16.5 million, 200,000-square foot building in North Austin by 2015, plus a second, $226 million, 800,000-square-foot office by 2025. The deal, which gives Apple a series of tax breaks and incentives from the county and state worth a combined maximum of $35 million over 15 years also requires Apple to hire a minimum of 3,655 workers by 2025. It employs 3,100 at its current campus in Austin now.

Twitter Expands European Business

Peter Kafka — Tue, 03 Apr 2012 15:29:04 +0000

Twitter is signaling its intentions to ramp up its European business by posting 17 new job openings for its new office in Dublin, Ireland. Most of the positions are sales-related, and include jobs that cover Spain and the Netherlands, two new territories for the company’s ad products. Twitter has around 900 employees worldwide.

Talent Management Start-Up PeopleMatter Raises $14M, Led by Morgenthaler

Kara Swisher — Mon, 27 Feb 2012 03:00:46 +0000

PeopleMatter said it has raised $14 million in a Series C funding, which was led by Morgenthaler Ventures.

The Charleston, S.C.-based software company, which focuses on hourly workers, said the new investment will be used for product innovation and customer-acquisition strategies.

Existing investors Noro-Moseley Partners, C&B Capital, Intersouth Partners and Harbert Ventures also participated in the round. PeopleMatter had previously raised $14.4 million, which brings its total funding to just over $28 million.

PeopleMatter competes with other online talent management firms, such as SuccessFactors, Taleo and Rypple, although those focus on career professionals. In contrast, PeopleMatter is aimed at service-industry workers, including food service, convenience store, hospitality and retail verticals.

The company’s offering allows organizations to manage applicant tracking, hiring, onboarding, training and scheduling processes. It is also launching a smartphone app this week that workers can use.

Gree's New San Francisco Office to Accommodate Hiring Spree

Tricia Duryee — Fri, 10 Feb 2012 18:36:28 +0000

Gree, the Tokyo-based company that bought OpenFeint for $100 million earlier this year and is trying to build a global mobile social network, has aggressive hiring plans in San Francisco. The company said it plans to move into a new 41,000-square-foot office this spring, which will enable it to double its headcount to about 300 employees. The game development studio will focus on developing free-to-play games aimed at the international market.

What Now? Hiring.

Peter Levine — Fri, 20 Jan 2012 01:40:31 +0000

Last month, as CEO of SpiderNet, you were faced with the issue of firing your newly hired VP of Engineering, who initially seemed like a rock star but was ultimately ineffective. Your board unanimously agreed that you should terminate him immediately.

It is now the new year, and you are faced with the rather undesirable task of hiring a new VP. Upon reflection, you realize that the SpiderNet hiring process failed. Given the issues (laziness, lack of leadership ability) surrounding the VP you just fired, you realize that your process (or lack thereof) did not properly vet prospective job candidates.

So before you move on to hiring again, you take an inventory of the current process in order to better understand how to correct things in the future. Here’s what you find:

You identified the requirements of the position and developed a comprehensive job specification on your own. Since the position reported to you, you did not see the need to ask for other input.
You hired a search firm and saw a number of good candidates. You felt that the candidate pool was adequate, but not exceptional.
The interview meetings were always with you, your co-founder and one or two other people from the executive team. Everyone exchanged emails on the candidates after their meetings.
The search firm did the bulk of the reference checks, which significantly helped your schedule and time.

What mistakes do you think you made and how can you better go about interviewing future candidates?

I have often considered the ability to hire great people as being analogous to a batting average in baseball. A player who hits .300 is near the top of their game. While I have certainly had a much better than 30 percent success rate in my hiring overall, I’m not sure that I’ve topped 30 percent for truly exceptional hires. Hiring phenomenal employees, like hitting in baseball, is difficult. I must admit that only recently did I come to realize that there is a set of steps that a company can follow that will significantly increase the hit rate.

With respect to the SpiderNet situation, there were several mistakes made with the current process. First, there was no input from either the board or the other executives on the job specifications. It is particularly important to gain agreement on the position and have the interviewing team help develop the requirements. Second, there wasn’t a defined interview team and the results of the interviews felt a bit ad hoc. Having a defined interview team should be part of the process. Finally, the CEO left reference checking to the search firm, which was a huge error in judgment, and probably the biggest mistake of the entire process.

I took the liberty of asking Jeff Stump, our partner responsible for Executive Talent at Andreessen Horowitz, and he outlined the following steps that should be taken when hiring an executive:

Develop the candidate profile and expected qualifications
Lay out the compensation framework
Craft a set of questions to be used in the interview process
Identify your interview and recruiting methodology
Perform reference checks

Let’s look at each of these in more detail.

Candidate Profile and Qualifications: There should be a universal understanding of what the profile is and why the company is looking for this new hire. What is the charter of this hire over the next six months to one year? What does the company/hiring manager expect this person to deliver during this timeframe and what does success look like for this hire one year out?

The focus in this phase should be on developing a set of non-negotiable attributes as input to the interview process. Make sure to include input from anyone who is going to have a say in the interview process, including the Board and the management team. There does not need to be universal alignment, but this process will help identify any differences of opinion that can be addressed up front. This first step will drive consistency in the interview process and candidates will take notice.

Compensation and Reporting Framework: Determine the title, reporting structure and compensation of the position. Not doing this up front can often lead to misalignment late in the recruiting process.

Interview Questions: Once the profile and qualifications have been identified and agreed upon, develop a set of questions that are going to be used in the interview process. These can also be used by the search firm to screen candidates. Questions should be crafted to gauge motivation, fit and expectation.

During this phase, the hiring manager also should identify the interviewing team and start the selection of a search firm. In most cases, the company’s internal network will not be sufficient to identify the absolute best candidate and a search firm is recommended. There are exceptions to this, but in most cases, thinking that the company has enough contacts often results in a substantial delay.

Interview and Recruiting Methodology: High-level items to consider:

Decide on the appropriate team members to be involved in the search process.
Determine who is running point on the management team. Tasks may include interview coordination, candidate follow-up, feedback collection, reference coordination, compensation, negotiation, etc.
Who from the board of directors will be involved?
Define the sequence of interviews and meetings. Who needs to meet when and what is the strategy/objective during a first round vs. a second round of interviews? I also recommend spending a great deal of the first meeting on determining “fit.” Can you work with this person? Nothing else matters if you can’t check this box.
Have the team interview for different attributes to create a better experience for the candidate and to avoid overlapping questions in the interview process.
Define the feedback loop: What info gets captured and recorded and how/when is it shared?

Reference Checking: One of the most important — and overlooked — parts of the recruiting process is reference checking. When you make an offer to a candidate, you should feel as though you really know the person, warts and all. Reference checking is the best way to really understand what a candidate is like to work with.

Often your search firm will offer to do reference checks. While it is fine for them to do some investigation, do not leave all of it to them. You need to do a large part of the reference checking yourself. Compare notes with the search firm but handing it off to someone else is a huge mistake.

In general, you should do between 10 to 15 reference checks and they should have a 360-degree approach (i.e., 1/3 bosses, 1/3 peers, 1/3 subordinates). At least one-third of these queries should be backchannel references.

Finally, when you have settled on the final two candidates, you should have the finalists come in to present a 100-day plan with your executive team at your staff meeting. This will give you a very good sense of how the person responds to an assignment and the nature of their work.

Hiring takes planning and time, and the process is often ad hoc or simply non-existent. Don’t make hiring a batting average. Take the time, develop a clear process, and you will see much better results in your overall hit rate.

Peter Levine has been a lecturer at both MIT and Stanford business schools and CEO of Xensource. Prior to Xensource, Peter was EVP of Strategic and Platform Operations at Veritas Software where he helped grow the organization from no revenue to more than $1.5 billion, and from 20 employees to over 6,000.

As Weak Q4 Earnings Loom, Yahoo Freezes Hiring and Also Contemplates Layoffs

Kara Swisher — Thu, 19 Jan 2012 13:10:51 +0000

According to sources close to the situation, Yahoo has instituted a hiring freeze across the company and is considering a reduction in force in support units of the company.

While the details of any layoffs — which are expected to be small and selective for now — are still being worked out, sources said that the stricture not to fill hundreds of open positions is the first step toward significant cost-cutting initiatives across the Silicon Valley Internet giant, in the wake of what it expects to be another weak quarterly report next week and a looming proxy fight.

Yahoo reports its fourth quarter earnings Tuesday. While the company has managed to improve the results in the last part of the quarter, sources said they will still show continued weakness in its key businesses and consumer usage.

That’s as competitors such as Google and Facebook have been showing significant growth, especially in the display advertising market.

Thus, new Yahoo CEO Scott Thompson appears to be zeroing in on costs and managing for margins, said multiple sources, much as his predecessor Carol Bartz did at the start of her tenure.

But many think Yahoo needs even more drastic changes, including massive cuts in staff and also product arenas, to give the company new life.

That includes shifts in leadership at the top levels too. In a major move this week, co-founder Jerry Yang stepped down from the company’s board and all roles there. More directors are expected to leave soon, too.

That will likely come after negotiations to sell part of its lucrative stakes in both the Alibaba Group and Yahoo Japan are successfully completed.

While not a certainty, Yahoo’s board hopes that will happen sometime before activist shareholder Daniel Loeb initiates a proxy battle against the company in the coming month.

Sound complex?

It is, and also troubling to Yahoo’s long beleaguered rank and file, who have been worried about more layoffs.

The Yahoo troops have been under intense pressure and have suffered from ongoing attrition. Just yesterday, for example, Yahoo lost one of its top advertising execs, Seth Dallaire, to Amazon.

The company can ill afford such departures of key talent, even as it seeks to pare employee numbers in other parts of its business.

At the end of its last quarter, Yahoo reported that it had 13,700 staffers, down from 14,100 in the previous year.

Yahoo, of course, declined comment.

Liveblogging the New Yahoo CEO Call: You Might Want to Refrain From Cussing, Scott!

Kara Swisher — Wed, 04 Jan 2012 15:01:23 +0000

This morning, Yahoo said it had hired PayPal President Scott Thompson as its newest victim, oops, CEO.

(You can read my interview with him too, here.)

AllThingsD.com had reported the pending development last night — which is how we roll here.

Now we will roll into the conference call on the matter, and are hoping that the head of the lucrative eBay payments unit will make an appearance, given that he does not start until next week.

One piece of advice I will extend Thompson: I would refrain from cursing, as previous Yahoo CEO Carol Bartz did on her first outing. (She was fired in September, although not precisely for the cussing she so enjoyed partaking in.)

Here we go!

7:02 am: It’s on, with Thompson present.

Yahoo Chairman Roy Bostock begins, and he is “very excited, very excited.”

I’d be very excited if Thompson talked and not Roy, who has been to this particular Yahoo CEO rodeo a few too many times before.

Bostock is making promises that this time it’s going to be different. Really!

He also notes that the company will continue its “strategic review” — but who knows what that means now.

And he thanks Tim Morse, the interim CEO who is moving back to the CFO job. (Agreed — nice work, Tim!)

7:06 am: Scott Thompson is on and is “just thrilled” to be the new Yahoo CEO.

I like his accent, which seems like he might be from Boston. He does look and sound like Cliff Clavin, the mailman guy at the Beantown bar from the television classic “Cheers.”

Except, given he has been the darkest of dark horses in this CEO race, nobody knew Thompson’s name.

Thompson is saying all the right stuff, about wanting to increase shareholder value and such.

He sounds so hopeful! Urgency! Thoughtfulness! A bright new morning at Yahoo!

I have been to this rodeo before too, but I am still hoping this time it’ll work.

Scott, if you let me down, I might cry, because you sound so nice.

7:09 am Q&A time already.

Congrats from the Wall Street analyst peanut gallery.

Then, it’s right into a question for Bostock, about the progress of the Asian assets deal.

Also, is Thompson too much of a technologist and not a media dude?

Bostock wants to talk about only Scott, but notes that there will be “no slowdown and no delay” in the Asian process. And Thompson will be all onboard when he comes on board, folks.

Bostock sounds tired, but starts to talk about how a “great customer experience” is the key to the advertising business. He notes that Thompson knows how to do this, hence he’ll be fantastic.

“I have every expectation he’ll be out there calling on advertisers,” says Bostock. I would hope so, given that is where Yahoo makes most of its lettuce.

Bostock is saying Yahoo has been “treading water” and now needs to swim fast. Treading water? I wonder who the top honcho at Yahoo has been while the company has been listlessly dangling its legs in the drink?

Roy — that’s who!

7:15 am: Another analyst asks about margins.

Thompson is not having any of it! He is polite when asking for time to get on the job to make proper statements.

But he does focus on the need to build “great, innovative” products. True, but Yahoo has been incredibly unable to do this of late.

Thompson gives no specifics, though. My big idea: I would steal the self-driving car from Google.

7:17 am: A question about what the core of Yahoo is, and about what lessons Thompson is bringing from his experience at PayPal.

Well, he has not met the team — literally. Yahoo’s board consulted almost no one in the top ranks of execs on this appointment.

But Thompson “suspects” there is talent there. Given the recent attrition, he’ll need a big Inspector Clouseau magnifying glass to find it!

From eBay’s PayPal, he says that the key was balancing the customer experience with network effect and, well, blah, blah, blah Internet-speak.

I am still thinking shoplifting the self-driving car is the bestest idea.

7:20 am: A question about Yahoo’s display business versus Google.

Thompson notes it is too early for him to say — though he had better say soon! — but notes that data is key. He is a well-known by-the-numbers guy, and that is clearly where we are going at Yahoo, now that he is the big dog.

Thus:

“The data these Internet businesses create, the ability to use analytical technology to build a better businesses for your customers … I feel certain that wealth of data is going to be exploitable for next generation products, next generation experiences … My instinct says down in that data we’re going to be able to find ways to compete and innovate that the world hasn’t seen yet.”

I am really liking this accent, which is almost lulling. And so polite! Sources tell me that being “collaborative” was a big goal in this hiring.

7:22 am: A question about the identity of Yahoo, and whether it should be public or private.

Thompson harps on the need for innovation, and hopes it will be the future.

“I would not be here if I didn’t think it was possible,” says Thompson.

Bostock takes the public/private question. Yahoo will be public, he declares! Mostly, because it would be too pricey to take private.

“It’s a moot point,” he says.

7:25 am: More questions about what Yahoo is.

Thompson declines to run off the rails on this dicey one, but he says he believes that Yahoo has great assets.

It does. It’s just that it has been crashed many times — by the people who just hired him — right into a wall.

Just sayin’ — a self-driving car would have done a better job.

7:27 am: A brain-drain question, and more on Asia and on mobile.

Bostock butts in again. He said that Thompson will not be distracted by that, and will concentrate on the core business. Hush up, Roy.

Thompson says that he looks forward to meeting the peeps of Yahoo. (’Cuz he has not, as yet!)

He also loves mobile — which Yahoo has largely borked.

7:32 am: A content strategy question. Early days, so Thompson is still keeping his yap shut.

In this, he’s like the anti-Bartz. Is this good? It’s certainly different.

He says again that, “I can’t wait to meet” everyone at Yahoo. Vice versa, because this dude came from left field.

Thompson promises that he will be a “sponge.”

He closes by noting that he is “genuinely excited,” and says he believes in Yahoo.

Indeed, when it comes to Yahoo, you definitely gotta have faith.

LinkedIn: Have a Creative, Dynamic, Problem-Solving New Year

Lauren Goode — Wed, 14 Dec 2011 16:15:58 +0000

Ah, corporate buzzwords. They’re enough to kill the forward-looking momentum in any strategic, synergistic meeting.

And yet we use them all the time — in our LinkedIn profiles, at least.

The social-networking-for-job-searching company analyzed 135 million professional profiles on its Web site and came up with a list of the Top 10 buzzwords used in LinkedIn profiles across the U.S.

The No. 1 word used: “creative” (which sort of reminds me of this smartphone video ad).

Other words on the LinkedIn list, which can be found here, include “effective,” “motivated” and “dynamic.”

Outside of the U.S., those located north of the equator were likely to use (or overuse) “creative”; people in the Southern Hemisphere were “multinational” and focused on “problem-solving” and their “track record.”

Many of the same buzzwords appeared on last year’s list, which LinkedIn says was one of its most popular analyses of the year. 2010 was the year we were all touting our “extensive experience,” which came in at No. 1.

Oh, and we’ve all gotten a little slower, too, or maybe our work environments have: “Fast-paced,” which ranked No. 8 in last year’s most-overused list, doesn’t appear on the 2011 list.

Let’s dial it back a little bit on buzzwords, though, as they’re not all fun and semantics: Some recruiters and consultants say buzzwords in resumes are too vague, or worse yet, just plain annoying, while others suggest they could actually lose companies money.

But if you’re still looking to facilitate or ramp up your buzzword usage in the new year, you may want to try this buzzword generator, courtesy of Robie the Robot.

Image via of Roman Schvets/Flickr

What Now? Firing a Key Executive: Possible Outcomes.

Peter Levine — Fri, 09 Dec 2011 23:00:29 +0000

Andreessen Horowitz General Partner Peter Levine is writing a series of tech leadership case studies called “What Now?” presented in two-part question/answer blog posts that will appear first here on AllThingsD. This is his second post. The problem appeared here on Wednesday.

I was fired from my first job as a programmer after college, and I’ve agonized over terminations ever since. The day I was fired was one of the worst days of my life, and no matter how it was presented, I felt like my world had collapsed. The event had a profound impact on my career and on my actions as a manager. For me, there’s nothing easy about firing someone.

That said, I’ve had to fire many people in my years as a manager and CEO. My worst days were when I knew I had to have “the conversation.” While firing anyone is hard enough, the most difficult terminations were people whom I had recruited and hired as direct reports. I find it disappointing to see my “rock star” fail — and having a vested interest in the person makes the decision quite difficult. There is usually a long period during which the decision process loops: fire, coach, keep, fire, coach, keep, (repeat). As a result, termination day often happens long after I’ve internally decided that the person needs to go.

Industry wisdom suggests that you fire someone immediately after recognizing that a person must be let go. I agree with this — I’ve never looked back on a termination thinking, “I should have waited longer to do something” — but it is way easier said than done.

Earlier in my career, I always wanted to spend the time to work things out for my employees, especially the folks I hired and managed directly. Unfortunately, I was rarely able to change the outcome of the situation, and I would often waste precious time not moving forward with the termination and subsequent re-hire. As I tried to work things out (and inevitably put off making a decision), the impact on the organization and the reflection on me as a manager all took its toll. I’ve since learned that moving forward quickly is the best overall approach. Still, firing someone sucks.

Let’s look at the SpiderNet case and break down some of the pros and cons of each choice.

Find him a different job in the company. It is very rare in a start-up that you will actually have a job opening for another role that can be filled by a person with a different skill set whom you also want to terminate. This may be easier in larger companies, but not at a start-up. You need to be brutally honest with yourself before making a lateral move and ask, “Is the new position needed and is this person best for that job?” If yes, then move the person. Otherwise, terminate.

In the SpiderNet case, you are also dealing with a person who is lazy. In my experience, character flaws cannot be corrected, regardless of where you put the person. Once lazy, always lazy. There are additional downsides to creating a new position: how does the rest of the team feel when you “protect” a non-performer? Are you seen as wasting money creating a “non-job”? Are you not stepping up to deal with the problem?
Put him on a performance plan. Performance plans are generally useless for executives. These plans are nothing more than negotiated action items that are a problem to manage and never get at the core of the issue. My philosophy is that a senior executive is expected to bring a level of expertise and job performance to where you don’t need to hand-hold them with a list of negotiated action items. Do the job or leave. At the end of the three-month plan, the executive usually makes the most of the pre-negotiated goals, but you’ve not made the person less lazy or any more competent. They’ve simply made it through a set of hoops and you still want to get rid of them. Human Resource directors in larger companies always want to put people on plans but I have never seen a three-month plan change the long-term outcome for an executive. Plans only prevent you from making an important change today.
Fire him and re-hire. As you might imagine, this is my preferred outcome. Do it and move on. Get the new hire process going and don’t screw around. Always treat the person you are terminating with dignity, put together a respectable termination package, and never make the termination personal. In the SpiderNet case, I might ask the co-founder to step back in to run engineering on an interim basis while I searched for a new VP.

When running a software company, hiring is one of the most leveraged activities we can do. The higher the position is, the more impact and importance that hire has on the success of the company. At an executive level, hiring the wrong person can result in months or years of delay, and hiring the right person can help to accelerate the business to entirely new levels.

When a critical hire needs to be made, I have often made the mistake of focusing on managing the department that has the opening, rather than focusing on making the right hire. I have since learned that prioritizing hiring first and managing the department second yields a much more successful hire.

Finally, I’ll say it again: Firing someone sucks, so take the time to hire correctly and you’ll never have to be in a position to have “the conversation.” Let me know the secret when you achieve 100 percent success.

What Now? Firing a Key Executive.

Peter Levine — Wed, 07 Dec 2011 18:45:40 +0000

In the previous vignette, you (as the CEO of SpiderNet) were trying to decide on how to organize the engineering unit. Your decision was to hire a new VP of engineering. Your co-founder, who previously oversaw engineering, agreed to become the CTO and chief architect. Everything seemed to have worked out with the transition and your new VP is on the job. You were certain you had a rock star on the team — references from the recruiter came back great, and he had exactly the right profile against your hiring objectives.

A few weeks later, though, at a dinner meeting with a close business associate and CEO of another company, you mention that you’ve hired an incredible new engineering VP. Your dinner friend tells you that he knows your new hire, and you’ve made a big mistake. “He’s really lazy. He has little real domain knowledge, despite the pedigree. You should have called me.” Crap.

Several months later, the laziness starts to show. Your “rock star” now becomes a “project,” and you have to manage his weekly performance and deliverables. He is just not working very hard and does not have the strategic insight into the nuances of your business. He also does not have the team’s respect. They don’t think he is a total lost cause, but they also don’t pay much attention to him. That said, he’s certainly okay — and he’s better than nobody. He puts together decent schedules, brings much-needed process to the team and always says the right things when you have your one on ones. But you don’t feel good about him, and the engineering team is not delivering at the level you’d like. You talk with your board and put together a few options: find a different job for this person and reinstate your co-founder as VP; put him on a plan and reassess in three months; or fire and re-hire.

What now?

Chime in on the comments below, and tune in Friday for Peter’s answer.

"Great" is Tough To Pick Out of the "Good" Crowd

Bryan Roberts — Thu, 01 Dec 2011 18:46:17 +0000

One of the oldest adages in start-ups, for entrepreneurs and VCs alike, is that “the key to success is the quality of the people.” My experience supports this notion unequivocally. That said, it’s truly hard to find the people who can make that success happen. In a world filled with people who are good enough, how do you identify the “great” ones?

Whether explicitly or not, everyone has their own answer to this question, and based on the success rates of start-ups, those answers by and large stink. I don’t have a Magic 8 Ball on the topic, but two things make this the issue I wrestle with most:

The often-unpredicted success or failure of “nobodies” or “sure things” respectively
The outsized rewards for locating great people, juxtaposed with the probability of abject failure when settling for good ones

There is no central casting for these players — many of the A+ entrepreneurs with whom I have partnered have come in unusual packages: a biology post-doc who thought about opening a microbrewery B&B; a large-animal veterinarian who went to business school in his late 30s; and an ex-EMT who was also a nephew of the President. The best VCs seem to show the same diversity of background.

I now focus on these attributes:

Great talents find a way to win, and are relentlessly driven to do so. They follow through and complete the task at hand — after all, starting is easy, it’s finishing that takes real will. It is not that they think outside of the box, there simply is no box for them. They view ambiguity as opportunity, not risk. When things get uncertain is when they really perk up and start to pay attention, because that is when real change is possible. Most of all, they exceed expectations. They bend the space-time continuum in some fashion, and their accomplishments are extraordinary.
Experience is overrated. By and large, the world is changed by the young and the hungry. Experience can be enabling or constraining, but it is not even close to the dealbreaker that many believe it to be. If you are seeking a VP marketing or head of sales at a 100+ person company, absolutely, look at a resume. But to find someone with the passion and uniqueness to actually create an early-stage venture, you have to take time: Watch them and see what they do, talk to them and see what they think, ask around and see how well respected they are.
Balance exploring/driving with learning/listening. Great people have a very clear grasp of their vision, while understanding that the world has a lot to teach them. They are humble students of the game, but are very confident in their abilities, and never “do what they are told.” They don’t avoid conflict and will always bet on themselves rather than shy away from risk. They ask questions and argue on facts, balancing innumerable data streams with a gut feeling to get to what they believe is the right answer.
Great people are magnetic. They are not only smart and driven, they attract resources when all the data suggests they should not — whether capital, people or partners — and thereby become larger than just their singular efforts.

While it’s a potentially controversial idea today, I have come to believe that great entrepreneurs and great VCs are two sides of the same coin. Both embody these attributes. They are maniacally focused on changing the way we live with innovations that others thought were not possible. They are passionate about building a great company, and put the company before themselves. Their roles are complementary, like looking down opposite ends of a telescope, but those different perspectives on a problem can be extraordinarily synergistic. Great future entrepreneurs can look like great young VCs, and vice versa — in fact, three of my recent investments are stellar companies started by folks who have crossed from one role to the other.

All venture firms are simultaneously never, and always, looking for team additions. I believe this is a direct result of how difficult it is to identify those who will be not only smart, passionate, personable and high integrity, but also successful in this ever-changing, ambiguous entrepreneurial world, in which a strategy that worked the last time is not a recipe for a future win, but more likely charts a path to mediocrity. In fact, my own difficulty in finding great new additions for our firm is what spurred putting these thoughts on paper.

Bryan Roberts is a partner at Venrock and has been the highest-ranking healthcare investor on Forbes Midas List since 2008. You can follow him on Twitter at @brobertsvc and learn more about him at Venrock.com.