AllThingsD » independent http://allthingsd.com Sat, 26 May 2012 19:52:25 +0000 en hourly 1 http://wordpress.org/?v=3.3.2 http://allthingsd.com/theme/images/logo-rss.jpg All Things Digital http://allthingsd.com/ 144 22 Former CEO Thompson Might Be Gone, But Internal Investigation Into ResuMess Still a Hot Potato at Yahoo http://allthingsd.com/20120522/former-ceo-thompson-might-be-gone-but-investigation-into-resumess-still-a-hot-potato-at-yahoo/ http://allthingsd.com/20120522/former-ceo-thompson-might-be-gone-but-investigation-into-resumess-still-a-hot-potato-at-yahoo/#comments Tue, 22 May 2012 16:03:16 +0000 Kara Swisher http://allthingsd.com/?p=210917

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.

]]> http://allthingsd.com/20120522/former-ceo-thompson-might-be-gone-but-investigation-into-resumess-still-a-hot-potato-at-yahoo/feed/ 0 Is He In or Is He Out? Crunchtime for Scott Thompson at Yahoo. http://allthingsd.com/20120511/is-he-in-or-is-he-out-crunchtime-for-scott-thompson-at-yahoo/ http://allthingsd.com/20120511/is-he-in-or-is-he-out-crunchtime-for-scott-thompson-at-yahoo/#comments Fri, 11 May 2012 15:15:28 +0000 Kara Swisher http://allthingsd.com/?p=206889

While he has only been CEO of Yahoo for less than five months, in the next several days Yahoo CEO Scott Thompson is facing perhaps the most critical moment of his short tenure.

According to sources with knowledge of the situation, the board of Yahoo is not likely to take long in assessing whether he will stay or if he will be let go, due to a controversy around how a non-existent computer science degree got on his bio and also in Yahoo regulatory filings.

A special committee of independent directors is now investigating the matter, including trying to assess the damage has had on Thompson’s ability to lead the Silicon Valley Internet giant.

How quickly the board moves is likely to be a sign of their intent. If within the next days, it is likely to let the former president of eBay’s PayPal payments unit go and replace him with a current company exec; if it waits longer and shows some public support of him — which the board has not done since the scandal erupted — Thompson’s chances are better that he will only be given some sort of censure.

One important task is also closely considering the impact of possible legal problems related to Thompson and others signing documents with the Securities and Exchange Commission that were not accurate.

One thing is clear from interviews with multiple sources, many members of the board have not been happy with how Thompson has handled the matter since activist shareholder Daniel Loeb of Third Point uncovered the problem a week ago.

While first tossing the borked bio as an “inadvertent error,” Thompson was then largely silent about the issue with staff, despite being in close meetings with them, which caused stress among key execs.

Then, he made a public announcement in which he apologized for only the “distraction” caused by the incident and not the error itself as some had hoped he would.

Yesterday, apparently feeling it was time to try to explain things face-to-face, Thompson made another attempt to explain what happened in two separate meetings with his direct reports and then his senior staff, apparently trying to get through to employees that he did not fake his resume nor did he give an inaccurate bio to Yahoo when he was being hired for the job earlier this year.

Thompson thought it was time — now that the board investigation was underway — to answer questions directly, said a source.

Among other things, Thompson gave a somewhat convoluted explanation that it appeared in his bio due to a misunderstanding during an interview with a headhunting firm. And that he never noticed it once it proliferated And that when an NPR interviewer asked him directly about his CS degree, he did not want to correct her in mid-discussion — although others report he said he did not hear the question fully.

Sources said Thompson — who is on the midst of initiating changes across a large and troubled organization, after laying off 2,000 employees — thought the sessions went well, that he clearly communicated that he was taking blame for the problem and its repercussions. Those sources also noted that he received support for doing so after the talks.

But, more than a dozen others I interviewed who were listening remotely — some of whom I sought out and some who contacted me directly — thought Thompson’s complex explanation was deeply problematic and that he tried to foist the blame on others rather than on himself.

Every one of these people expressed the need for him to step down to allow Yahoo to move forward.

What the board thought about the performance is still not clear, said sources, but things are coming down to two distinct scenarios.

The first is a quick parting of the ways with Thompson, within days, either for cause or via a negotiated settlement. Others at Yahoo involved with perpetuating the mistake in the bio are also at risk.

This option is perhaps the more likely at this moment, unless the scandal dissipates and employees continued rancor over the situation can be assuaged soon.

In this case, sources said, Thompson will be replaced by a current board member or a member of the top staff. When directors fired Carol Bartz last fall, CFO Tim Morse became interim CEO and he is one of the likely candidates for the job again.

The second scenario centers on needing Thompson to complete a number of complex transactions related to the sale of Yahoo’s Chinese assets and its re-negotiations with Microsoft over its troubled search partnership, among other things.

In that case, Thompson will be censured in some manner by the board and will also probably have to endure some punishment for allowing false regulatory documents to be filed by Yahoo. Others at Yahoo will also be subject to the same treatment in such an outcome.

How will it turn out?

Only board member Patti Hart has so far paid for her faulty vetting of Thompson, stepping down from the board earlier this week.

But whether she will be the only shoe to drop in what has turned out to be a bizarre wildfire that as raged across Yahoo’s troubled landscape remains to be seen.

Thus, most definitely watch this space this weekend.

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]]> http://allthingsd.com/20120511/is-he-in-or-is-he-out-crunchtime-for-scott-thompson-at-yahoo/feed/ 0 Not So Scott Free? Yahoo's Other Big Shareholder -- Cap Re -- Leaning Toward Supporting Loeb Over Thompson ResuMess. http://allthingsd.com/20120510/not-so-scott-free-yahoos-other-big-shareholder-cap-re-leaning-toward-supporting-loeb-over-thompson-resumess/ http://allthingsd.com/20120510/not-so-scott-free-yahoos-other-big-shareholder-cap-re-leaning-toward-supporting-loeb-over-thompson-resumess/#comments Thu, 10 May 2012 22:56:57 +0000 Kara Swisher http://allthingsd.com/?p=206788

One of Yahoo’s biggest long-term investors, Capital Research and Management, which owns more than 10 percent of the company in two different funds, is leaning toward voting for the slate proposed by activist shareholder Daniel Loeb of Third Point, in the wake of the controversy around the botched bio of its new CEO Scott Thompson.

“Having a CEO with that hanging over his head is really a problem going forward,” said one person with knowledge of the situation. “It’s hard to pretend this is not a problem.”

While sources said Yahoo’s longtime institutional investor — which currently holds large stakes via its Capital Research Global Investors and Capital World Investors funds — is not likely to go public with their voting choice until close to the annual meeting, which will take place sometime this summer.

But its fund managers have told key Yahoo board members of their grave concerns over the situation.

Ironically, in the last proxy fight showdown with Carl Icahn, Capital removed its support of Yahoo’s slate too and was an important influence to many major changes at the company.

Such a move is problematic for Thompson, since the rejection of another big shareholder at its upcoming annual meeting will keep the unusual issue and right in the middle of a noisy proxy fight.

A special committee of the Yahoo board is investigating the situation — in which a fake computer science degree somehow got on the resume of the former president of eBay’s PayPal payments unit and later into official Yahoo regulatory filings.

The problem was uncovered last week — unfortunately for the Silicon Valley Internet giant — by Loeb, who has been banging away on Yahoo since.

A trio of independent Yahoo directors is looking into the mess, with a focus on how that happened, whether anyone at Yahoo knew of the inaccurate bio and how it got there in the first place.

Also of great concern, is how Thompson could have not seen the error in the many years it was on the Web site of eBay and also how he approved a bio that had the inaccuracy in it when he was hired by Yahoo in January.

Worse still, in a 2009 interview, he clearly did not say he did not have such a degree in with a radio show host when directly asked about it.

“It’s a little hard believe an executive of this level would have missed such a thing, when he had so many opportunities to fix it,” said one source. “And, if he did overlook it that many times, that’s a problem too.”

In fact, according to a report earlier today by Business Insider that I also confirmed, Thompson told employees today in two separate meetings that he did miss the error since it was placed there — inexplicably — in 2004. In the meeting, he blamed a low-level headhunting staffer who added it incorrectly, an error that then proliferated.

Thompson also said he did not provide a resume to the company in his hiring process — say whaaaat, but true — although this still does not absolve him from the original error.

As to the interview: Thompson said he did not want to be rude and correct the host of TechNation, Moira Gunn, after she clearly asserted to him he had a computer science degree as part of a question on his qualifications. Others present at the meetings said he said he did not hear the question.

But, in an video interview with me yesterday, though, Gunn said she and Thompson discussed a computer science education in a way that left the clear impression that he had obtained one.

While Thompson’s excuse may beggar the imagination of some, it’s his story and he’s sticking to it. In all seriousness, his complete lack of willingness to take responsibility for the error — even if it was not his fault — itself is a little startling.

Because what’s not clear is how the bio was miraculously correct in eBay’s official filings and also if it is plausible that he never saw the mistake.

Numerous communications execs at Internet companies told me that it was unusual for a high-level exec not to pay close attention to information that went out about them, especially in legal filings. In addition, just as many execs are made to check and swear on their bios that go into such documents.

In fact, it was Thompson’s job to make sure the things written about him were correct at all times. As CEO, as a major Silicon Valley player pointed out, he is required by federal law to personally certify Yahoo’s Securities and Exchange Commission filings. Violations of these rules carry financial and also potential criminal penalties.

Sources said the board is worried about that credibility issue too and it puts Thompson in an ever-dicier position. Noticeably, the board has yet to make a public statement of support for him on the issue.

Also a major worry for the directors is the mostly negative response to the situation from Yahoo employees, who are deeply upset that Thompson’s error was not caught and that he might not be treated in the same way as anyone else who turned in a false resume, whether it was by accident or not.

A Yahoo spokeswoman told me last week that there was also support internally for Thompson, but in many dozens of interviews I have done with Yahoo employees and a continued monitoring of internal bulletin board, the tone is not in his favor by any means.

Like I said, it’s a dicey time to be Scott Thompson right now.

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]]> http://allthingsd.com/20120510/not-so-scott-free-yahoos-other-big-shareholder-cap-re-leaning-toward-supporting-loeb-over-thompson-resumess/feed/ 0 Exclusive: Yahoo Director in Charge of Botched CEO Vetting to Step Down From Board http://allthingsd.com/20120508/exclusive-yahoo-director-in-charge-of-botched-ceo-vetting-to-step-down-from-board/ http://allthingsd.com/20120508/exclusive-yahoo-director-in-charge-of-botched-ceo-vetting-to-step-down-from-board/#comments Tue, 08 May 2012 15:50:13 +0000 Kara Swisher http://allthingsd.com/?p=205076

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 ]

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]]> http://allthingsd.com/20120508/exclusive-yahoo-director-in-charge-of-botched-ceo-vetting-to-step-down-from-board/feed/ 0 CEO Says Sorry to Yahoos for Borked Bio "Distraction" -- But Will Mea Culpa Work Without an Apology for Error? (Memo) http://allthingsd.com/20120507/ceo-apologizes-to-yahoos-but-will-the-mea-culpa-work-without-an-explanation-for-the-borked-bio-memo/ http://allthingsd.com/20120507/ceo-apologizes-to-yahoos-but-will-the-mea-culpa-work-without-an-explanation-for-the-borked-bio-memo/#comments Mon, 07 May 2012 23:59:45 +0000 Kara Swisher http://allthingsd.com/?p=204971

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.

Yahoos:

I wanted to share some additional thoughts with you related to the disclosure of my academic credentials.

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. 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.

In my note Friday, I said I would be focused on continuing to do what needs to get done. That’s because I feel I owe it to all of you to make sure that nothing disrupts the progress we’ve made in just a few short months due to all of your focus, commitment, and hard work. As you’ve heard me say many times, we have a tremendous business with incredible assets, and we can win by putting our customers first. The progress I shared with you in the first quarter should make clear that we intend to move fast and deliver on the potential of the business for our customers, shareholders, and all of you.

I know the board plans to conduct the review thoroughly and independently, and I respect that process. I am hopeful that this matter will be concluded promptly. But, in the meantime, we have a lot of work to do. We need to continue to act as one team to fulfill the potential of this great company and keep moving forward. You have my word that all my energy and attention will be on that mission.

Scott

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]]> http://allthingsd.com/20120507/ceo-apologizes-to-yahoos-but-will-the-mea-culpa-work-without-an-explanation-for-the-borked-bio-memo/feed/ 0 Buffett Comments on Trust Issue in Yahoo CEO BioGate: "You've Got a Problem" http://allthingsd.com/20120507/buffett-comments-on-yahoo-ceo-biogate-calling-trust-issue-a-problem/ http://allthingsd.com/20120507/buffett-comments-on-yahoo-ceo-biogate-calling-trust-issue-a-problem/#comments Mon, 07 May 2012 16:44:06 +0000 Kara Swisher http://allthingsd.com/?p=204521

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.

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]]> http://allthingsd.com/20120507/buffett-comments-on-yahoo-ceo-biogate-calling-trust-issue-a-problem/feed/ 0 Loeb Lobs Lawsuit, as Expected, at Yahoo's Borked Bio Mess http://allthingsd.com/20120507/loeb-lobs-lawsuit-as-expected-at-yahoos-borked-bio-mess/ http://allthingsd.com/20120507/loeb-lobs-lawsuit-as-expected-at-yahoos-borked-bio-mess/#comments Mon, 07 May 2012 16:23:59 +0000 Kara Swisher http://allthingsd.com/?p=204506

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

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]]> http://allthingsd.com/20120507/loeb-lobs-lawsuit-as-expected-at-yahoos-borked-bio-mess/feed/ 0 As Yahoo CEO Reaches Out to Top Staff, Board Meets to Weigh "Options" (I.E., Deciding Who Gets to Take the Borked Bio Blame) http://allthingsd.com/20120506/as-yahoo-ceo-reaches-out-to-top-staff-board-meets-to-weigh-options-i-e-figuring-out-who-gets-to-take-the-borked-bio-blame/ http://allthingsd.com/20120506/as-yahoo-ceo-reaches-out-to-top-staff-board-meets-to-weigh-options-i-e-figuring-out-who-gets-to-take-the-borked-bio-blame/#comments Mon, 07 May 2012 03:27:43 +0000 Kara Swisher http://allthingsd.com/?p=204185

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:

“Resume padding is one thing, but lying about something that is so easy to check is puzzling.”

“There is no reason to let it slide by … This isn’t some guy who’s trying to impress a date … It’s sad that we just accept this kind of stuff from corporate heads and politicians.”

“Having some document to prove you can do a job is not all that important, lying about it is.”

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.

RELATED POSTS:

]]> http://allthingsd.com/20120506/as-yahoo-ceo-reaches-out-to-top-staff-board-meets-to-weigh-options-i-e-figuring-out-who-gets-to-take-the-borked-bio-blame/feed/ 0 Confirmed: Schultz and Efrusy to Leave Groupon Board; "Accounting Types" Joining http://allthingsd.com/20120430/exclusive-schultz-and-efrusy-to-leave-groupon-board-accounting-types-joining/ http://allthingsd.com/20120430/exclusive-schultz-and-efrusy-to-leave-groupon-board-accounting-types-joining/#comments Mon, 30 Apr 2012 19:40:37 +0000 Kara Swisher http://allthingsd.com/?p=201483
Spencer Platt | Getty Images News

According to sources close to the situation, Starbucks Chairman and CEO Howard Schultz and Accel Partners’ Kevin Efrusy will be stepping down from the board of Groupon.

Schultz’s departure will be effective today, but Efrusy — who was critical to the initial funding around the Chicago-based daily deals site — will not be standing for re-election at the company’s annual meeting in June.

The departures are voluntary, but sources said the pair will be replaced by two new directors with significantly more fiscal oversight experience, whom one source characterized as “accounting types.”

(Update: Groupon just posted a press release noting the board departures, with the names of the new board pencil pushers: Daniel Henry, CFO of American Express, and Deloitte Vice Chairman Robert Bass. Henry joins immediately in Schultz’s place. Full press release below.)

It is a move that is critical, given Groupon’s recent series of missteps around its financial reporting that have hurt both its reputation and, more importantly, its stock.

Interestingly, several sources noted that Schultz almost left the board right before Groupon’s public offering last fall, after several ongoing disputes with its management, but stayed on so as not to scuttle its IPO.

The board of the company has not involved itself as prominently in the accounting messes at the company, but it appears as if they will begin to now.

It must, given Groupon shares have been trading at a low of $11. Its stock has dipped to $10.98 today.

As Tricia Duryee wrote recently about the fall:

At that price, it is now worth just over $7 billion, down 57 percent since the company went public last November and well off the more than $10 billion it was valued at as tech’s hottest start-up of 2011.

Ironically, Groupon’s current market valuation is actually not much more than the $6 billion offered for it by search giant Google in late 2010.

The fall of Groupon has been swift, from the honorific of being the fastest-growing company ever to one that cannot keep control of that runaway growth.

That’s perhaps no surprise.

Perhaps most significantly, Groupon went public in just four years, delivering the biggest tech IPO since Google.

The quicksilver move was typical for it. In just two years’ time, the company ballooned from 37 employees to 9,625 and from serving five markets in the U.S. to 175 in North America alone. And that’s leaving out massive expansion abroad. In the past year, Groupon has acquired roughly 17 companies, including many international copycats.

The company also has entered many new segments, expanding from selling lower-priced and simpler deals on restaurants and spas to more complex and pricey arenas, including travel, physical goods and luxury items.

But Groupon is now learning that its original business does not work across just any segment, especially to more discerning customers of its higher-level and more expensive offerings.

In fact, it was those newer and potentially more lucrative markets that forced the company recently to revise the company’s fourth-quarter report after returns skyrocketed on luxury items, such as Lasik eye surgery.

The problems forced Groupon to lower revenue in the period by $14.3 million and net income by $22.6 million. It is now reporting a wider net loss of $64.9 million on revenue of $492 million, pushing it further away from its goal of profitability.

The company also disclosed at the time that independent auditors had noted “material weakness” in its financial controls. In addition, The Wall Street Journal reported that the Securities and Exchange Commission was examining Groupon’s revision. 

With many companies, investors might have shrugged off such accounting issues, but the impact on the stock has been greater since they are only the latest in a string of similar mistakes at Groupon.

In its pre-IPO period, for example, Groupon was forced to restate revenues after counting both its portion of the revenue and the revenue that goes to the merchant together. It also had to dump a controversial accounting metric that made the company look more profitable than it was, because it did not include important costs, such as critical online marketing expenses to attract new customers.

Those came after the company retracted a statement by Eric Lefkofsky, Groupon’s co-founder and executive chairman, who told Bloomberg in an interview that Groupon would be “wildly profitable.”

At least the wild part was accurate.

Much of the blame for these missteps by Wall Street is being aimed at CEO and co-founder Andrew Mason, the iconoclastic 31-year-old entrepreneur who is largely responsible for defining the company’s culture, as well as Jason Child and Joe Del Preto, the chief financial and accounting officers, respectively.

Child joined the company in December 2010, coming from Amazon, where he held several roles over a 10-year period — including VP of finance, international, and director of investors relations. Prior to joining Amazon, he worked at Arthur Andersen as a certified public accountant.

Del Preto has been Groupon’s chief accounting officer for the past year and, before that, he was the company’s global controller for three months. Before Groupon, he was controller and VP of finance at Echo Global Logistics and also served as controller at InnerWorkings, the same company where Mason was a computer programmer in his early career.

Mason, of course, is the best known and the person most responsible for establishing the company’s whimsical culture and managing — or mismanaging, depending on how you look at it — Groupon’s hard-charging growth.

It will also be up to him to turn it all around, as the company sinks in both value and investor regard. Since the restatement, Mason has said little about how he intends to do that. In February, when Mason concluded Groupon’s first-ever earnings call, he said: “Thanks, guys, this was a lot of fun, and I look forward to many more of these.”

It’s not clear fun will be on the agenda at his next outing on Groupon’s first-quarter call in mid-May.

Here is the official press release from Groupon on the board changes:

Groupon Appoints Two Directors to Board Daniel Henry, CFO of American Express, and Robert Bass, Vice Chair of Deloitte

CHICAGO — (BUSINESS WIRE) — Groupon, Inc (http://www.groupon.com) (NASDAQ:GRPN) today announced that Daniel Henry, the chief financial officer of American Express Company and Robert Bass, a vice chairman of Deloitte LLP will join its Board of Directors. Both will serve on the Audit Committee with Audit Chair, Ted Leonsis. Daniel Henry was appointed to the Board on April 26, replacing Howard Schultz, who has stepped down from the Board. Robert Bass will stand for election at the annual stockholder meeting to be held on June 19 following his retirement from Deloitte, replacing Kevin Efrusy, who will not stand for reelection at that time. “With their deep financial, accounting and operational experience, Dan and Bob will provide invaluable expertise to the Board going forward,” said Eric Lefkofsky, Groupon Chairman.

Daniel Henry, 62, has been the Chief Financial Officer of American Express Company since October 2007. Henry is responsible for leading American Express Company’s finance organization and representing American Express to investors, lenders and rating agencies. He has also served as Executive Vice President and Chief Financial Officer of U.S. Consumer, Small Business and Merchant Services and joined American Express as Comptroller in 1990. Prior to joining American Express, Henry was a partner with Ernst & Young.

Robert Bass, 62, has been a vice chairman of Deloitte LLP since 2006, and a partner in Deloitte since 1982. He will retire from Deloitte on June 2, 2012. Bass has specialized in e-commerce, mergers and acquisitions and SEC filings. At Deloitte, Bass is responsible for all services provided to Forstmann Little and its portfolio companies and is the advisory partner for Blackstone, DIRECTV, McKesson, IMG and CSC. He has also previously been the advisory partner for priceline.com, RR Donnelley, Automatic Data Processing, Community Health Systems and Avis Budget. He is a member of the American Institute of Certified Public Accountants and the New York and Connecticut State Societies of Certified Public Accountants.

“I’m thrilled to have been a part of Groupon’s development,” said Kevin Efrusy. “The Company is well on its way to becoming the operating system for all local commerce.”

“Howard and Kevin helped guide us on our journey to becoming a public company and I want to thank them and acknowledge their contributions,” said Groupon CEO Andrew Mason.

“During my tenure on the Board, I was impressed by the game-changing opportunities that Groupon has delivered for both merchants and customers on a global scale,” said Howard Schultz. “Groupon has a strong sense of mission and purpose, and as I move on to focus on my other time commitments, I wish them the very best.”

]]> http://allthingsd.com/20120430/exclusive-schultz-and-efrusy-to-leave-groupon-board-accounting-types-joining/feed/ 0 Three Months After Bartz's Firing, It's Hurry Up and Wait at Yahoo (A Big Honking Update) http://allthingsd.com/20111207/three-months-after-bartzs-firing-its-hurry-up-and-wait-at-yahoo-a-big-honking-update/ http://allthingsd.com/20111207/three-months-after-bartzs-firing-its-hurry-up-and-wait-at-yahoo-a-big-honking-update/#comments Wed, 07 Dec 2011 17:43:12 +0000 Kara Swisher http://allthingsd.com/?p=150675

“Let’s go. Yes, let’s go.” [They do not move.]

– Samuel Beckett, “Waiting for Godot”

In Internet terms, the removal of Yahoo CEO Carol Bartz happened a dog’s age ago.

In fact, it was September 6.

Since then, it has felt like a slow slog, especially contrasting the situation with that of another troubled Silicon Valley giant, Hewlett-Packard, which fired its CEO Léo Apotheker and appointed a new one, Meg Whitman on September 22.

Since then, in comparison, the former eBay CEO has been like the Energizer Bunny, making a series of major and often difficult decisions, including: Holding onto its PC unit; reaffirming its controversial deal to buy Autonomy; promising a decision on the fate of its webOS unit within the next two weeks; appointing new execs; and even buying a company.

To be fair, Yahoo did acquire advertising start-up Interclick.

Otherwise, still no sale or investment deal. No new CEO. No Asia resolution. And, perhaps most importantly, no clearly articulated strategy going forward.

It’s not that Yahoo’s leadership isn’t working at it.

Some fervently insist to me that there is a “plan,” as if there is some clever game of Internet Stratego going on that I cannot possibly grok.

Mebbe — but of this I have no doubt: The Yahoo board has indeed been huffing and puffing away, weighing and measuring, considering and debating.

A lot.

Maybe I’m just too impatient. I am (ask my kids).

Or maybe Yahoo’s beleaguered employees are, one of whom just wrote me plaintively, “unreal how they can drag this out,” in what has become a common refrain up and down the ranks.

Or maybe it’s the Asian partners, Alibaba Group and SoftBank, who are antsy and have considered a variety of nuclear options in order to get back stakes Yahoo holds in them. Said one: “The strategy seems to be to frustrate and exhaust us into submission.”

Or, finally, maybe it’s the newly frustrated recent bidders for a partial stake in Yahoo, Silver Lake and TPG Capital. Declared one to me after I warned that Yahoo might, in fact, drag the proceedings out longer than you might expect: “I thought you were kidding.”

Nope, welcome to the Yahoo waiting game, PE guys!

So, to help us all get through it, here’s a quick update primer on what’s what on the various fronts:

Who’s in Charge Here?

Technically, it is the Yahoo board, which is aided by interim CEO Tim Morse.

First, a word about Morse: By all accounts, he is doing a very good job as temporary head honcho — calming the troubled company, making swift decisions about daily operating issues and being a generally nice dude to deal with.

“He’s Yahoo’s no-drama Obama, in comparison to what was happening before,” said one exec, in reference to the more volatile regime under Bartz.

Still, despite his very pleasant all-hands meetings, such as one earlier this week, Morse had previously been Yahoo’s CFO and not an Internet-savvy visionary to give the company inspiration. No insult intended, but he’s the accountant guy.

To be fair, he is not meant to be the visionary, but many at the company are yearning for exactly that.

A role that is now being taken up again by co-founder, former CEO and director Jerry Yang, who dozens of employees tell me is unusually involved in operational details these days for a board member.

I get reports of sightings of him all the livelong day: Jerry in demand-side advertising confab! Jerry chitchatting with entrepreneurs from a possible start-up acquisition! Jerry weighing in on a variety of products. Look, over in the cubicle, it’s Jerry!

This is seen by Yahoo employees as a good thing and also a bad thing, since it’s hard to be running your little divisional show at Yahoo with the dude who invented it all looking over your shoulder, even if he means well. People naturally defer to Yang, the 800-pound Web icon in the room.

But, given the overwhelming state of stasis at Yahoo now — “No one can do anything until we find out how the story ends,” said one staffer — and employees eying the exits, no power at Yahoo really matters but the board.

You know, the board that has gotten the company to this moment of crisis and profound ennui, which is its own particularly ironic irony.

To better understand the power dynamics on the board, above is a little chart for you to peruse to give you an idea of which independent board member is running what key committee.

The only truly important one is the Transactions and Strategic Planning committee, which is headed by Intuit President and CEO Brad Smith and includes former Akamai President (and former Yahoo CEO candidate) David Kenny, top HP exec Vyomesh Joshi and other guy Gary Wilson.

And, in completely visible shadow form, Yang. Multiple sources close to the situation said he has been a key force in the strategery around a possible sale or investment.

This has caused not more than a little tension among board members, but everyone seems to like the much described nicest-man-in-the-room, Smith, and hopes his cool head will prevail.

Another important part of the board is the Nominating and Corporate Governance committee run by Patti Hart, who is energetically and simultaneously — if pointlessly — in search of a capable new Yahoo CEO.

Or, as I like to call this mythical person: The Unicorn.

The Deal

As I and many others have previously reported, there are bids on the table for partial investments in Yahoo by two very powerful private equity firms, Silver Lake and TPG Capital.

It’s a PE rumble, with a side of Microsoft financial backing! (I think Silver Lake’s Egon Durban makes a very nice Riff, while Microsoft’s Steve Ballmer is the perfect Officer Krupke.)

My fervent wishes for some figurative and dance-accompanied knife-play aside, the bids are essentially the same in general and different in particular. Silver Lake is offering about $16.50 a share, while TPG is dangling a tiny bit more. Silver Lake has power entrepreneur and VC Marc Andreessen on its side, while TPG is trying to get Silicon Valley fave investor and start-up whisperer Reid Hoffman of Greylock Partners and LinkedIn on its team. Both have ideas on CEOs, strategy and what to do about the Asian assets.

This type of deal could happen suddenly and you’ll hear about it quick, since the losing side will immediately trash it to the media.

As you might expect, each director has their favorite PE firm, with some not liking Andreessen, some thinking the TPG bid is a little light, some for a whole-company deal and some wanting Yahoo to hire its own CEO and run the place itself.

Of course, the last one shows a disturbing level of denial and should be a nonstarter, given the board’s abysmal record on CEO choice and its riding of Yahoo to this sad point in its storied history.

Here’s what to expect on the PE front: A lot of wrangling behind the scenes with frequent leaks to the media about what each side wants and will not yield on.

CEO choice or no CEO choice, that is the question!

Also a big factor are Yahoo’s major shareholders, few of whom like the partial investment deal, which is known as a PIPE (Private Investment in Public Equity), because of the insiderness of it all and because they prefer a whole-company sale at a higher price.

There is also pressure from activist shareholders like Daniel Loeb of Third Point, who has attacked Yang and others on the board and is ready to pounce with a proxy fight if Yahoo tries to override shareholders too egregiously. And, of course, the inevitable lawsuits over any arrangement that seems to block a whole-company bid.

That said, such a mega-deal seems unlikely, since it is too pricey and despite a lot of noise that Yahoo’s Asian partners were ready to strike with a takeover in order to get back Yahoo’s big stakes in their companies.

That’s kind of like buying a store to get back the cool pair of shoes you sold, but bankers love to scheme up this stuff. While it certainly could happen, it would be a bear of a deal.

Perhaps more like Yogi Bear, hopelessly angling for a tasty pic-a-nik basket — but grrrr anyway.

But perhaps the biggest factor in all of this mishegas is time. There is none on a lot of levels, most especially the increasing level of brain drain and drift at Yahoo. After the New Year dawns, this is going to spin right out of control and amount to the biggest internal challenge Yahoo faces.

An Asian Solution

As I and others have reported, Yahoo is entertaining yet another proposal to sell all or part of its Asian assets back to the companies, which make up a bulk of its market valuation.

The relationship between Yahoo and its Asian partners has long been fraught, and today the difficulty of reaching an agreement remains a vexing issue. That’s because it is hard and complex and because no one wants to do what the other side wants.

I am no tax attorney, but it seems as if Yahoo will ultimately come to some deal with China’s Alibaba and Japan’s SoftBank, which could include big investors like Russia’s DST Global.

And, as I reported last week, the Asian partners want to strike a deal with the current board rather than lose leverage with a much cannier new owner.

It’s a tough decision in all aspects to strike, but would remove the focus on the fact that Yahoo’s most valuable asset is something it is not running and simply holds due to a good stock trade in years past.

Years past should be the operative thought here, since the Asian assets have nothing to do with what Yahoo needs to do with its core U.S. and global brand.

You know, the thing that allowed them to buy those lucrative Asian assets in the first place?

Strategery

And that’s the crux of all this, isn’t it? Yahoo needs a new strategy and fast.

Or it needs to clarify and hone its current strategies around advertising and media and define itself once and for all. While it often touts itself as a premier digital media company, it’s still not clear exactly what Yahoo is saying by that.

In fact, incredibly, sources told me that the board was still wrangling over the tired issue of what Yahoo is at its most recent meeting — essentially, is it a products company or a media company?

If I had to listen to that who-am-I-anyway debate again, I think I would scream, given how many important Web trends that Yahoo has whiffed in recent years, many of which were right in its own wheelhouse.

How much damage this has caused to Yahoo’s core business is a critical one to determine, with many feeling the situation is too far gone to revive it and others confident that this is simply an issue of poor execution.

I am in the middle on this one, but all the indicators of Yahoo’s business have long been heading in the wrong direction, and results in the next quarter are expected to underline this even more.

Thus, the board’s navel-gazing at this point is untoward, considering that it is presiding over the possibility of a sale that should not have had to happen in the first place. While it is not quite a fire sale, it’s no cause for celebration at all the attention, either.

In fact, it’s also pointless, since — if this all resolves as it should — the current Yahoo board will not be the one determining the company’s future any longer. Remember that: This group should and will be gone for the most part.

Yahoo shareholders and employees can hope, at least.

Then, it will be up to the next group of leaders to make the very hard choices — including what are likely to be massive layoffs and radical surgery on its offerings — for what’s to come next.

In the end, that is all that will matter. Until then, as usual, you’ll have to sit tight.

]]> http://allthingsd.com/20111207/three-months-after-bartzs-firing-its-hurry-up-and-wait-at-yahoo-a-big-honking-update/feed/ 0 With No-Yahoo-CEO Pledge, David Kenny Back in the Strategic Fray http://allthingsd.com/20111108/with-no-yahoo-ceo-pledge-david-kenny-back-in-the-strategic-fray/ http://allthingsd.com/20111108/with-no-yahoo-ceo-pledge-david-kenny-back-in-the-strategic-fray/#comments Tue, 08 Nov 2011 20:42:44 +0000 Kara Swisher http://allthingsd.com/?p=139031 What will David Kenny do?

Maybe get something cooking in the whole what-will-Yahoo-do stakes, now that one of Yahoo’s more active board members is back.

And by “back,” I mean that Kenny — no longer a candidate for CEO — has no further need to recuse himself from the strategic process in which the Silicon Valley Internet company finds itself.

In an interview with Advertising Age last week, Kenny — the well-regarded online ad exec who recently stepped down as president of network infrastructure giant Akamai — released an unusual statement:

As a matter of policy, I do not comment on matters related to Yahoo as a Yahoo director. However, as a personal matter, I want to clarify that I believe Yahoo is a great company with enormous potential, but I am not — and will not be — a candidate for the CEO position. I look forward to my continued service on the Yahoo Board of Directors.”

By removing himself from the fray, that means, according to several sources, that Kenny will be diving back into sleeve-rolling duties at Yahoo, as one of its — how can I put this? — less comatose board members.

In fact — until he was sidelined by the obvious conflict of interest inherent in wanting to be CEO, while also directing the fate of Yahoo for shareholder value — Kenny had been deeply involved in a lot of the changes that had taken place of late, after a long period of board inaction.

That included the ouster of CEO Carol Bartz, who was fired for a number of reasons, including lack of strategic vision. It was relatively new board member Kenny — he became a director in February — who led the strategy committee that had asked Bartz for her road map, which she did not deliver to their liking. Obviously.

Because of the swirl around his possible CEO candidacy — Kenny was a noticeable inside candidate, since he is well known in the Internet advertising world for running and then selling Digitas to the Publicis Groupe for $1.3 billion in 2006 — he gave up leadership of the committee to Intuit President Brad Smith.

Sources said it is unlikely Kenny will get that top job back, but he remains a member of the transactions committee, which is leading the strategic review of the company.

That’s the key slot for the independent board members of Yahoo, who must ultimately be the ones to determine what path or offer the company will take.

One plus: Kenny has close relationships with most of the bidders — largely private equity firms — looking at Yahoo, and also is well known among the media and tech companies poking around, too. He also has advertising — and now tech — experience, which will be much needed as Yahoo explores its options.

Most importantly, Kenny is an independent director, which will be very important to the process going forward, especially since a lot of the spotlight has fallen on Yahoo co-founder and director Jerry Yang.

Yang — who has been a bit of a Yahoo lightning rod at times — has been involved in some of the meetings with those interested, along with interim CEO Tim Morse. The company recently noted that this was at the behest of the board.

While these were only informational meetings so far — and not negotiations, as some reports have surmised — Yang’s involvement will likely have to be more curtailed, at least publicly, especially if any of the deals include using his own large stake in Yahoo.

“This process has to be above board, since it is so easy for those wanting a better deal to try to cause all kinds of trouble,” said one source. “The company is already under attack in that regard.”

That’s a reference to a recent salvo by hedge fund activist Dan Loeb, a major Yahoo shareholder who has taken aim at the board and, last week, at Yang. Loeb essentially accused Yang of double-dealing in the process.

Enter Kenny, along with Smith and — to an increasingly lesser extent, of late — Yahoo Chairman Roy Bostock. While there are other independent board members involved, these are the three to watch most closely now.

While some think Kenny still would like to be CEO of Yahoo — he was also on the short list several years ago when Bartz was hired — sources said he is more likely to take a job at another consumer Internet company.

While he certainly could slot into a large advertising firm or into the digital division of a big media concern, sources said Kenny is looking to be a CEO.

Just not at Yahoo.

At least for now, since down the road it is unclear what will become of Yahoo and who will run it in years to come.

In fact, it might even be Kenny in the end.

]]> http://allthingsd.com/20111108/with-no-yahoo-ceo-pledge-david-kenny-back-in-the-strategic-fray/feed/ 0 With HP's Raising of the World's Biggest White Flag, Will Jon Rubinstein and Todd Bradley Surrender Too? http://allthingsd.com/20110819/with-hps-raising-of-the-worlds-biggest-white-flag-will-jon-rubinstein-and-todd-bradley-surrender-too/ http://allthingsd.com/20110819/with-hps-raising-of-the-worlds-biggest-white-flag-will-jon-rubinstein-and-todd-bradley-surrender-too/#comments Fri, 19 Aug 2011 16:08:13 +0000 Kara Swisher http://allthingsd.com/?p=112015

It wasn’t until dinner this past Sunday night that CEO Léo Apotheker told Todd Bradley, the head of its Personal Systems Group, that he was about to push key parts of Bradley’s huge unit off the cliff.

That included stopping selling hardware — smartphones and TouchPad tablets — based on the webOS it acquired from Palm last year, a $1.2 billion deal that Bradley played a big part in.

In addition, HP said it was considering spinning out its PC business and would “explore options to optimize the value of webOS software going forward.”

But, until a few days ago, several sources close to the situation said, Bradley knew nothing of these plans and neither did webOS’s key driver of late, former Palm CEO Jon Rubinstein.

This surprising lack of disclosure by HP to two of its key execs begs the question: Will they stay or will they go now?

According to sources, staying put is the plan for both for now, although it depends on what such a spinoff will look like.

It’s clear at this point that Bradley — who was once the CEO of Palm himself and was once considered the most likely successor to former CEO Mark Hurd, before Hurd’s sudden resignation last year — is the leading CEO candidate of its spun-out independent PC company if that’s what HP decides to do.

But it’s not a lock, either. And, apparently, Bradley has not been locked in with regards to a spinoff either and would likely have a lot of offers from tech companies in Silicon Valley to choose from if he wanted.

“Who will they get if Bradley goes at this point, if they want to spin it off?” said one person at the company.

But, added another: “Bradley is in the catbird seat if he wants to be and it’s his to lose.”

That depends, of course, on what his is.

Questions include:

Will that new company include any of the consumer part of the printer business — a huge cash cow — if HP is indeed leaving the arena?

Will webOS go with the new set-up, so that it can take advantage of the patents and licensing income?

Will HP continue to be the brand name on the devices this computer company spinoff would make?

These are just a few of the issues in a deal of untold complexity. But perhaps the most obvious one is who would get custody of Rubinstein?

To begin: Bradley is a big fan and would certainly want him around if there were a spinoff, said several sources.

But to do what?

Rubinstein, a well-known tech exec, had been leading the webOS efforts for HP, but was recently moved upstairs to a larger but fuzzy role, to run product development and innovation for the PSG unit. He has been reporting to Bradley.

At the time, the move was seen by many as the first step out the door by Rubinstein, with one person joking that “he’d much rather be at his Mexican beach house than HP.”

Among the disgruntlements: Several sources said Rubinstein felt that TouchPad wasn’t ready to ship and that Apotheker has reneged on a public promise not to until the tablet was “perfect.”

That ire is no surprise, since the device was then subject to tough criticism, including by AllThingsD’s Walt Mossberg, who noted in his review:

“… In my view, despite its attractive and different user interface, this first version is simply no match for the iPad. It suffers from poor battery life, a paucity of apps and other deficits.”

In addition, unlike others there, Rubinstein has been more of a product guy and not an HP lifer. That begs the question of whether he’d like to sign up to another big company stint, even if he had more control.

“He’s been to that party before, and the reality is that he is not a career big company person,” said one person.

One important note: Rubinstein was unable to make webOS work when Palm was already a standalone independent company. And, although a new HP spinoff would be huge and better funded, it is still very much an uphill and competitive battle on the computer, smartphone and tablet fronts.

In addition, keeping a competitive operating system going is also a costly bear of an issue.

“It’s a cyclical, high-velocity business and there are other huge players from Apple and Google in smartphones and tablets to Lenovo and Dell in PCs,” said another source. “There might be a lot of great products in the pipeline for webOS, but it will not be easy to make them a success.”

That said, noted another person who knows Rubinstein well, “he really cares about webOS and does not want to see it go away.”

That might be true, although that is just what might happen if HP decides to sell it off to someone else or makes the spinoff a difficult endeavor.

In that case, it’s an offer Bradley and Rubinstein can refuse.

Related posts

]]> http://allthingsd.com/20110819/with-hps-raising-of-the-worlds-biggest-white-flag-will-jon-rubinstein-and-todd-bradley-surrender-too/feed/ 0 Silicon Valley's Tom Perkins -- Who Quit HP Board Over Phone Hacking -- Backs News Corp. Execs in New Scandal http://allthingsd.com/20110719/silicon-valleys-tom-perkins-who-quit-hp-board-over-phone-hacking-backs-news-corp-execs-in-new-scandal/ http://allthingsd.com/20110719/silicon-valleys-tom-perkins-who-quit-hp-board-over-phone-hacking-backs-news-corp-execs-in-new-scandal/#comments Tue, 19 Jul 2011 07:02:42 +0000 Kara Swisher http://allthingsd.com/?p=99534

Back in 2006, one of the most dramatic moments of the “pretexting” scandal at Hewlett-Packard was when a very high-profile board member — legendary Silicon Valley venture capitalist Tom Perkins — quit in indignation over the company’s efforts to obtain the phone records of reporters.

“I resigned solely to protest the questionable ethics and the dubious legality of the chairman’s methods,” he said at the time about HP’s sneaky indiscretions, which included spying on a journalist from The Wall Street Journal.

But yesterday, in an interview with the New York Times, Perkins sounded a very different tone as a current independent board member of News Corp., which owns the Journal (and this site too) and, more importantly, is knee-deep in its own phone-hacking disaster.

Noting that the directors are “fully supportive of the top management,” Perkins added: “There’s no reason to believe top management was lying. That’s my very strong belief.”

Ironic? You bet, but apparently not to Perkins.

“This is not like the HP situation,” he told the Times. “The board supports top management.”

]]> http://allthingsd.com/20110719/silicon-valleys-tom-perkins-who-quit-hp-board-over-phone-hacking-backs-news-corp-execs-in-new-scandal/feed/ 0 SB Nation Sacks AOL in Raid of Former Engadget Team for Competing New Tech Site, As AOL Zeroes in on New EiC http://allthingsd.com/20110403/sb-nation-sacks-aol-in-raid-of-former-engadget-team-for-competing-new-tech-site/ http://allthingsd.com/20110403/sb-nation-sacks-aol-in-raid-of-former-engadget-team-for-competing-new-tech-site/#comments Mon, 04 Apr 2011 02:34:40 +0000 Kara Swisher http://kara.allthingsd.com/?p=42274

Jim Bankoff, the fomer AOL exec responsible for buying Engadget for the Internet portal, has grabbed eight staffers who had recently left the huge tech site amid tensions, in order to start a new gadget property.

The site–which is still unnamed and will be run by outgoing Engadget Editor-in-Chief Josh Topolsky–will debut sometime in the fall. It is the first content expansion at the Washington, D.C. sports news site SB Nation, which is helmed by Bankoff.

“The technology we built is applicable beyond sports,” said Bankoff, in an interview with BoomTown tonight. “It was an opportunity to apply our model…into another content category where there was an overlap in demographics.”

That would be fanboys and, well, boys-who-will-be-boys.

UPDATE: In related news, sources said that AOL has zeroed in on Tim Stevens, Engadget’s automotive editor to replace the outgoing Topolsky. The New York-based company had already named Darren Murph as its new managing editor.

Now Stevens will be competing with Topolsky, as well as managing editor Nilay Patel, who will also lead the Engadget tech-exodus (techxodus?). The others include former Engadget staffers Paul Miller, Joanna Stern, Ross Miller, Chris Ziegler, Justin Glow and Dan Chilton.

Stern and Ziegler are still on Engadget’s editors site as current employees.

All of the above had left Engadget in a series of departures of late, all due to increasing unhappiness with AOL’s management and content strategy.

Paul Miller and Ross Miller, who are not related, both stated publicly that they did not like the editorial direction AOL was going in, especially a controversial content strategy document titled “The AOL Way.”

In his blog post, Topolsky threw another smackadoo at AOL, noting “SB Nation believes in real, independent journalism and the potential for new media to serve as an answer and antidote to big publishing houses and SEO spam–a point we couldn’t be more aligned on.”

New AOL content head Arianna Huffington has shifted toward a more journalistic path, but the talent bleed began before AOL’s $315 million purchase of the Huffington Post.

In a blog post, which is embedded below, Topolsky said the new SB Nation gadget site will be similar in pace and topic, but it will be broader than Engadget.

The move is an interesting one for SB Nation, which completed a $10.5 million Series C round, led by Khosla Ventures, in the fall.

It had already raised about $13 million in total venture funding from Accel Partners, Allen & Company and Comcast Interactive Capital, as well as from angel investors such as Ted Leonsis and others in Silicon Valley.

In related news, also restarting tomorrow will be a popular gadget podcast that Topolsky, Patel and Paul Miller had done for Engadget.

The New York Times’ David Carr mentioned the new site in the middle of a column earlier tonight.

Here is Topolsky’s blog post on the move, titled “This Is My Next Project”:

As you may have already heard (or read), there’s some activity going on in the world of Joshua Topolsky. Earlier this evening, David Carr published a piece in the New York Times about a new project that I’m embarking on…and I want to just say a few things about it.

Firstly: yes, this is happening. I’ve decided to join the team at SB Nation to build something brand new in the tech space. Now I know it might seem odd to some that I would be partnering with a sports publisher to build a technology news site, but that’s only half the story. This isn’t just about sports, or tech, or lone silos. What we will build together at SB Nation is a new media company–buoyed by the absolutely incredible work SB Nation has already done in publishing–and part of that new media company will be the as-yet-unnamed gadget and technology site that I’ll be working over the next few months to create. When we launch (hopefully in the fall), I will be editor-in-chief of a property that I hope will inform, entertain, and engage fans of technology in whole new ways.

I should say that I wouldn’t want to build something like this alone, and thankfully, I won’t have to. I’ll be joined by some very good friends at this new venture–people like Nilay Patel, for instance.

Of course, the natural question I’m sure a lot of people have is: why SB Nation? The easy answer is that the people at SB Nation share my vision of what publishing looks like in the year 2011. They think that the technology used to create and distribute news on the web (and mobile) is as important as the people who are responsible for the content itself. And that’s not just pillow talk–SB Nation is actively evolving its tools and processes to meet the growing and changing needs of its vast editorial teams and their audience communities. They’re building for the web as it is now. From the perspective of a journalist who also happens to be a huge nerd, that’s a match made in heaven. SBN isn’t just another media company pushing news out–it’s a testbed and lab for some of the newest and most interesting publishing tools I’ve ever seen. In short, I was blown away when I saw what kind of technology they’re using to get news on their front page and engage audiences, and even more blown away when I started talking to them about what could come next.

But beyond the technology (and possibly more important than the technology), there’s another factor here that’s driving my decision. It’s that SB Nation believes in real, independent journalism and the potential for new media to serve as an answer and antidote to big publishing houses and SEO spam–a point we couldn’t be more aligned on. This is a group of people that not only think independent media works, but are reaping the rewards of new publishing done right. As the fastest growing online sports publisher, they’re seen as a source for credible and honest journalism, which is why industry stalwarts like Rob Neyer have recently joined their ranks (ranks which include hundreds of talented sports experts). This isn’t tabloid page grabbing or content farming–it’s news and insight by and for a passionate and informed group of people. And that’s exactly where I want to be.

So, what happens next? We get to work.

In the coming months I’m going to be laser focused on one thing: building the best tech site in the world–and I would love to hear what you guys think the next phase in technology and gadget news should look like. Ping me with ideas, gripes, or even better–come and work here! SB Nation is looking for new developers as we speak, and as we ramp up to launch, we’ll be bringing on lots of talent to work both on the front page and behind the scenes.

I couldn’t be more excited and enthusiastic about what we can build right now, and I can’t wait to share what we’re going to make with the rest of the world. The months ahead are going to be filled with lots of early mornings and sleepless nights, intense debates, triumphs, and trials–and I can’t wait.

]]> http://allthingsd.com/20110403/sb-nation-sacks-aol-in-raid-of-former-engadget-team-for-competing-new-tech-site/feed/ 32 Nordstrom Acquires Flash Sales Site HauteLook for Up to $270 Million http://allthingsd.com/20110217/nordstrom-acquires-flash-sales-site-hautelook-for-up-to-270-million/ http://allthingsd.com/20110217/nordstrom-acquires-flash-sales-site-hautelook-for-up-to-270-million/#comments Thu, 17 Feb 2011 22:11:23 +0000 Tricia Duryee http://emoney.allthingsd.com/?p=2979 Nordstrom has agreed to acquire four-year-old HauteLook, marking the department store’s first foray into online private sales.

Nordstrom will acquire the company for $180 million in stock. However, the transaction size could jump to as much as $270 million over time if the company meets certain performance goals and vesting requirements for the existing management team.

At that price, the transaction gives a lot of weight to a burgeoning new area of e-commerce, fueled by private/flash sales and other group-buying trends.

Los Angeles-based HauteLook offers discounts of 50 to 75 percent off home, beauty, travel and local services for women, men and kids. In the last two years, HauteLook says it has conducted 2,500 private sales events for 1,000 high-profile brands.

Seattle-based Nordstrom said HauteLook will operate as an independent, wholly owned subsidiary, to be managed by its current leadership. The HauteLook brand and Web site will remain separate from Nordstrom, and there are plenty of incentives to keep the management team in place.

While Nordstrom is primarily a physical department store, it has a fairly sizable online presence and recently has spent time integrating its online and store presence, so customers can see what inventory is online and what’s available in the store.

The transaction is expected to close in the first quarter of 2011 and is subject to customary closing conditions, including regulatory and HauteLook shareholder approval.

]]> http://allthingsd.com/20110217/nordstrom-acquires-flash-sales-site-hautelook-for-up-to-270-million/feed/ 1 Exclusive: Andreessen Horowitz Invests $80 Million in Twitter http://allthingsd.com/20110209/exclusive-andreessen-horowitz-invests-80-million-in-twitter/ http://allthingsd.com/20110209/exclusive-andreessen-horowitz-invests-80-million-in-twitter/#comments Wed, 09 Feb 2011 19:13:24 +0000 Kara Swisher http://kara.allthingsd.com/?p=40605

Andreessen Horowitz has invested more than $80 million in Twitter via purchasing stock in private secondary markets.

When called about it by BoomTown, a spokeswoman at the high-profile Silicon Valley venture firm confirmed the purchase.

To be clear, Twitter does not get this money–early investors and employees able to sell their privately held Twitter shares do.

Buying into the secondary markets–which have recently attracted some controversy and regulatory scruntiny–has become a common way for VCs to invest in a hot start-up without a complex and competitive funding bake-off.

The move is an interesting one, since Andreessen Horowitz was not part of the recent $200 million round of venture funding at the San Francisco microblogging company, led by Kleiner Perkins at a $3.75 billion valuation.

Sources said that the firm made the move because it is already deeply invested in other key companies in the social space, including gaming giant Zynga, location-focused Foursquare, local discounting phenom Groupon and general social networking behemoth Facebook.

Apparently, Twitter makes it a full basketball team.

The investment by the firm gives more perceptual boost to Twitter, which is still trying to create a lucrative business model for itself, focused on advertising.

It needs to, if it want to stay independent for the long haul.

While an IPO is a possibility, so is an acquisition. Several months ago, while it was doing its funding round, Twitter had incoming interest from Facebook, which lobbed in a $5 billion soft offer, as well from Google.

]]> http://allthingsd.com/20110209/exclusive-andreessen-horowitz-invests-80-million-in-twitter/feed/ 3 HP Plans Another Probe Into Hurd Departure http://allthingsd.com/20110119/hp-plans-another-probe-into-hurd-departure/ http://allthingsd.com/20110119/hp-plans-another-probe-into-hurd-departure/#comments Thu, 20 Jan 2011 01:10:07 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=1968 Hewlett-Packard will hire outside lawyers to run a new, independent investigation into the circumstances that led to the resignation of former CEO Mark Hurd, Bloomberg is reporting, citing court filings.

Word of a new probe comes in response to a shareholder lawsuit in federal court in California claiming that HP paid Hurd too much in severance when he left. In the meantime, both HP and the shareholders suing have asked the judge to put the case on hold until the investigation is complete.

Hurd says he wants to see a copy of the shareholder demand that led to the lawsuit, and will oppose the delay in the case until that happens. HP says that as a subject of the inquiry, Hurd isn’t entitled to see any of the documents in question.

In the Delaware case, Hurd’s lawyers argued that the original letters from Jodie Fisher, a onetime actress and a former HP contractor who accused Hurd of sexual harassment, shouldn’t be made public.

Hurd, you’ll recall, went on to become co-president of Oracle, after Oracle CEO Larry Ellison raked HP’s board over the coals for its handling of the incident. Ellison wasn’t alone, as former General Electric CEO Jack Welch later piled on.

]]> http://allthingsd.com/20110119/hp-plans-another-probe-into-hurd-departure/feed/ 1 Exclusive: SnagFilms Snags $10 Million in Funding at $50 Million Valuation http://allthingsd.com/20110116/snagfilms-snags-10-million-in-funding-at-50-million-valuation/ http://allthingsd.com/20110116/snagfilms-snags-10-million-in-funding-at-50-million-valuation/#comments Mon, 17 Jan 2011 00:15:38 +0000 Kara Swisher http://kara.allthingsd.com/?p=39577

SnagFilms, the online video distribution site for professional documentaries, has nabbed $10 million in funding from Comcast’s investment arm and New Enterprise Associates, and will also now be distributing fictional independent film releases.

That and the new investment giving SnagFilms a valuation of $50 million should be big news at the 11th Sundance Film Festival, the famous independent film gathering opening in Park City, Utah, on Thursday.

And SnagFilms also announced that well-known industry exec Bingham Ray is joining the start-up to spearhead its distribution of fictional narrative and foreign-produced independent films.

The service, unlike the subscription-based video giant Netflix, currently distributes free non-fiction documentary films with advertising, as well as offers rental streaming and purchase options.

And it is profitable, said Ted Leonsis, the former AOL exec who is the founder and has been the driving investor in SnagFilms.

“It was always my personal frustration as a backer of documentaries that you could not get distribution far and wide,” he said in an interview earlier today.

He noted that while Netflix is really now focused on big studio fare, “what we’ve discovered is a big supply of independent video that has never seen light of day, but that has a big audience.”

SnagFilms’ strategy is to give broader reach to these films, which often don’t even have a theatrical opening–or, if they do, are very small.

Along with its site, which digitizes the films and adds advertising to them, SnagFilms also encourages Web sites and others to grab films and create a “virtual movie theater.” (You can see my effort below.)

It also has video-on-demand deals with Comcast, Verizon and more, as well as purchase options with Apple’s iTunes and others.

Earlier this month, SnagFilms also launched an impressive and free iPad full-movie-watching app.

SnagFilms also owns a popular news site called indieWIRE, which covers the independent film market, and the new funding will also be used to expand it.

That market has been in need of a boost of some kind, since it has been struggling as financing has dried up for the production of quality documentaries and outside-the-Hollywood-machine movies.

It has long been hoped that the Internet would perhaps save and strengthen the genre, with its supposed long-tail magic.

But the going has been slow. Currently, SnagFilms has 2,000 films in its online library, although Leonsis said the aim is to use the new funds to get 10,000 films on the service as soon as possible.

“We’re trying to build a beachhead in the independent film world,” he said of SnagFilms, which currently has about 40 employees in Washington, D.C., and New York. “We think we have a niche and video is the killer app on Web now.”

Leonsis, who has backed such notable documentaries as “The Rape of Nanking,” said NEA’s Peter Barris will join the board, along with existing investor Steve Case.

Case and Leonsis, of course, were the dynamic duo of AOL’s glory days.

So, I am rooting for another win in an arena that needs it.

Thus, here’s my own movie palace online and also the official press release from SnagFilms:

Watch more free documentaries

Industry Powerhouses NEA and Comcast Invest in SnagFilms

$10 million in new funding to distribute documentaries and fictional independent films on all digital platforms and devices, globally

Washington D.C.–January 17, 2011 – SnagFilms announced today it has received $10 million in growth capital from new investors New Enterprise Associates (NEA) and Comcast Interactive Capital (CIC). Existing investors, including Ted Leonsis (SnagFilms’ Founder) and Steve Case, also participated. The financing will be used to expand its distribution of independent films–including, for the first time, fictional independent releases–across all digital platforms and devices, and on a global basis.

SnagFilms is a leader in distributing free, ad-supported titles from a library of over 2,000 non-fiction films. Last year, SnagFilms entered the transactional world with launches of video on demand channels on Comcast and Verizon FiOS, as well as titles for sale through the Apple’s iTunes store. Earlier this month, SnagFilms debuted its iPad application with the largest collection of award-winning U.S. films offered free to iPad users.

“As a profitable company with substantial private investors, SnagFilms didn’t need to raise outside capital,” said company founder Ted Leonsis. “However, we saw overwhelming strategic value in involving NEA, a pioneer and leading venture capital firm, and CIC, the investment arm of Comcast. SnagFilms is very well-financed and uniquely positioned now to bring the full array of independent films–fiction and non-fiction, U.S. and foreign–to global audiences on all platforms and devices. We’ve amassed a library of 2,000 documentaries since our launch, and we’re now building distribution opportunities for tens of thousands of independent films in both categories. That’s great news for film fans and for filmmakers.”

“SnagFilms is perfectly positioned to fuse technology and content in a manner that has marked many of the transformational industry leaders we have helped build in the past,” said NEA Managing General Partner Peter Barris, who joins the Company’s Board of Directors. “New devices and digital platforms will allow consumers unprecedented access to quality content, and SnagFilms will be there to delight them. We are pleased to be able to invest in SnagFilms at this time, and to help them add fictional indie films to their expertise with documentaries–and to take both genres to the full swath of digital platforms and devices.” Among many other investments, Barris serves on the board of Groupon as its first VC investor.

“We are excited about the new opportunities SnagFilms creates, especially for independent filmmakers who historically could not get distribution,” said David Horowitz, Managing Director of Comcast Interactive Capital. “This investment reflects our view that consumers are demanding a diverse selection of high-quality content that can be watched on any platform or device.”

SnagFilms also announced that industry veteran Bingham Ray will join the Company to help guide its entry into distribution of fictional narrative and foreign-produced independent films. Ray, former President of United Artists, October Films and Kimmel Entertainment, and honored for Lifetime Achievement by the Gotham Awards, has deep experience in the acquisition, marketing and distribution of motion pictures, including “Hotel Rwanda,” “Bowling for Columbine,” “Secrets & Lies,” “War Room,” “High Art,” “Last Days” and “Breaking the Waves.”

“Bingham has been an advocate for filmmakers throughout his career,” noted Rick Allen, SnagFilms CEO. “His record of successful distribution on traditional platforms provides a strategic sense and depth of relationships that will be invaluable as we extend our model into a broader array of films. Bingham will be a key member of our large presence at the Sundance Film Festival this week and beyond.”

“I’ve been a big fan of SnagFilms from their earliest days, and am truly thrilled to be part of the team as they expand the service, bringing more filmmakers to bigger audiences on a wider array of platforms,” said Ray. “This is the future of our business.”

“SnagFilms plus Bingham Ray is a great combination,” said Tom Bernard, co-president and co-founder of Sony Pictures Classics. “Bingham knows the indie world as well as anyone alive and is admired for his experience and for always delivering for filmmakers. He’ll be a big asset to SnagFilms’ expansion.”

In addition, SnagFilms intends to use its new growth capital to expand its indieWIRE unit, now in its 15th year as the leading web source of news, reviews and analysis of independent film.

“indieWIRE’s traffic is now ten times what it was when we purchased it two and a half years ago,” Allen said. “Before the Academy Awards are announced later this month, you’ll see new editor-in-chief Dana Harris add ongoing features to our coverage of the indie world, and exciting new blogs to our Network, like the recently-added blog The Playlist.”

About SnagFilms

SnagFilms features free ad-supported viewing of more than 2,000 award-winning titles from some of the greatest names in documentary film. All films are shareable across the web. Since its launch in July 2008, SnagFilms’ library has been featured on over 2 billion web pageviews, with more than 325 million minutes of SnagFilms titles streamed across over more than 100,000 affiliated sites and webpages, including through partners such as Aol, Comcast, Hulu, the Starbucks Digital Network, IMDb, the Miami Herald, hundreds of non-profits, special interest sites and blogs. SnagFilms also offers selected titles via VOD (with Comcast and FiOS), on iTunes and through a new free application for the iPad.

OVGuide has twice named SnagFilms a Top Site and MovieMaker Magazine named SnagFilms to its annual list of “50 Best Websites for Moviemakers.”

]]> http://allthingsd.com/20110116/snagfilms-snags-10-million-in-funding-at-50-million-valuation/feed/ 2 Q: Why No Twitter Board Seat for Kleiner's John Doerr? A: His Google Board Seat (Plus, Is the Star VC Looking at Spotify and Groupon Next?) http://allthingsd.com/20101216/q-why-no-twitter-board-seat-for-kleiners-john-doerr-a-his-google-board-seat-plus-is-the-star-vc-looking-at-spotify-and-groupon-next/ http://allthingsd.com/20101216/q-why-no-twitter-board-seat-for-kleiners-john-doerr-a-his-google-board-seat-plus-is-the-star-vc-looking-at-spotify-and-groupon-next/#comments Thu, 16 Dec 2010 13:14:41 +0000 Kara Swisher http://kara.allthingsd.com/?p=38683

Yesterday, star venture capitalist John Doerr of Kleiner Perkins forked over $150 million in funding to Twitter.

At at $3.7 billion valuation, that got him a big chunk of the San Francisco microblogging site.

But what it didn’t get him was a seat on the board of Twitter, which many figured he would be given for after handing over so much moolah.

According to sources familiar with the situation, that’s due to Doerr’s being a director on another board: Google.

Several sources who BoomTown spoke to, after breaking news of the massive funding, said that his being on the board of the search giant was seen as too much of a conflict of interest.

A conflict because Google has plans to wade deeply into the social space. And also, of course, because it is the No. 1 potential acquirer of Twitter, as the Silicon Valley company seeks to gather more tools to fight its latest rival, Facebook.

Doerr has very deep ties at Google, having been on its board since mid-1999.

He got that seat, along with Sequoia Capital’s Mike Moritz, after he ponied up a critical $25 million equity round for Google in June of that year.

Interestingly, no other Kleiner partner was named to a Twitter board seat either.

But, some speculate, it might make sense for Mary Meeker–who just joined Kleiner to head up digital investing efforts, after a long-time stint as a Wall Street analyst for Morgan Stanley–to eventually become a Twitter director.

Meeker has, of course, deep IPO and M&A experience.

And, frankly, after adding Flipboard’s Mike McCue and former DoubleClick exec David Rosenblatt yesterday and former Netscape exec Peter Currie recently to its all-boy board band, a woman director might be a good idea to consider.

Other directors at Twitter include Benchmark Capital’s Peter Fenton, Union Square Venture’s Fred Wilson, Bijan Sabet of Spark Capital, Co-founders Evan Williams and Jack Dorsey and CEO Dick Costolo.

I reached out to Doerr for a comment, but he has not yet replied; Twitter declined to comment.

Even more interesting to consider is what Kleiner will invest in next after this mega-funding, given how aggressively many sources said Doerr had pushed to lead the Twitter round.

And, in fact, sources said that Kleiner is looking closely at new funding rounds for both the Spotify music streaming service and Groupon, the social buying start-up that recently decided to turn down a $6 billion acquisition offer from Google and an earlier $3 billion one from Yahoo.

Groupon is now seeking more funds to remain independent and hold onto its lead in the fast-growing local discounting market, sources said.

(Bloomberg also reported on Groupon’s new fundraising efforts, although it was written about after it turned down the Google offer.)

And Spotify, which is hugely popular outside the U.S., is trying to enter this market, but needs more funding to expand and perhaps strike better deals with music labels.

Both are the just the kind of companies Doerr has targeted in what looks like a serious effort to compete with other firms–especially Andreessen Horowitz and Russia’s DST Global.

They have garnered the heat Kleiner used to have, largely by backing more of the top entrepreneurs recently.

Doerr has already put money into social gaming phenom Zynga and also started an sFund for social-focused investments.

Add Twitter to the pile and you can see where this is headed: Except for the board seat, John Doerr will no longer be denied.

]]> http://allthingsd.com/20101216/q-why-no-twitter-board-seat-for-kleiners-john-doerr-a-his-google-board-seat-plus-is-the-star-vc-looking-at-spotify-and-groupon-next/feed/ 1 Another eBook Store? Yep! But This One's From Google. http://allthingsd.com/20101206/another-ebook-store-yep-but-this-ones-from-google/ http://allthingsd.com/20101206/another-ebook-store-yep-but-this-ones-from-google/#comments Mon, 06 Dec 2010 15:00:25 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=26638 Don’t want to buy your ebooks from Amazon, Apple, Barnes & Noble or Borders? Google is happy to help: The search giant has launched its own e-book store, along with its own ebook reader software.

Lots of today’s Google eBook launch has already been covered in the past (this Wall Street Journal piece from last week got a lot of it). And since I haven’t been able to actually take the store and software out for a run, I can’t vouch for any of it so far.

But here’s what you need to know at the start:

  • Google is opening its own store, but the big goal is to set up an ecosystem and e-commerce channel that works across the Web.
  • That means you can buy ebooks directly from Google, and you can also buy books from the sites of independent book shops, like Powell’s Books.
  • That also means you can read the books on multiple platforms: There’s an Android app, of course. But there’s also an Apple-approved app in the iTunes store. And since the system is Web-based, you can read the books you buy on PCs and tablets, too. As well as e-readers from Sony, Barnes & Noble and Borders. The only place you can’t read Google-purchased titles–Amazon’s Kindle.
  • Google says its catalog will be competitive with everyone else’s, though it’s hard to assess that without really digging in. It says it will have some three million books available in the store, “hundreds of thousands” of which which are commercial titles. Amazon, by comparison, boasts of 750,000 titles, but it’s including periodicals in that total.
  • One distinct advantage Google has over a particular rival: Unlike Apple, it has access to Random House titles, which aren’t available on the iBooks platform due to a dispute about pricing.
  • Speaking of pricing: Google says it supports both the traditional wholesale/retail model, as well as the new “agency” model that Apple has been pushing.
  • Where’s all this going? Good question! Google executives argue that this is just a natural extension of its ongoing books project, which is supposed to make as many books available to as many people, period–it’s just that they happen to be selling some of them now. But view it from a different lens, and it looks like yet another attempt by Google to move from pointing to stuff, and selling ads along the way, to selling stuff, period. It hasn’t worked yet, but the company seems dead set on making a go of it.
]]> http://allthingsd.com/20101206/another-ebook-store-yep-but-this-ones-from-google/feed/ 4 Google Talks With Groupon Are Ended Without Deal http://allthingsd.com/20101203/google-talks-with-groupon-are-ended-without-deal/ http://allthingsd.com/20101203/google-talks-with-groupon-are-ended-without-deal/#comments Sat, 04 Dec 2010 02:12:11 +0000 Amir Efrati, Gina Chon and Geoffrey A. Fowler http://voices.allthingsd.com/?p=33546 Google Inc.’s multibillion-dollar bid to acquire local deals site Groupon Inc. ended Friday as the two sides broke off talks, according to a person familiar with the matter.

Negotiations between the two companies heated up over the past week but Groupon’s board, many of whom are investors, was divided on whether to accept Google’s offer.

The company continued to consider remaining independent and pursuing an IPO in the future, people familiar with the matter have said.

Read the rest of this post on the original site »

]]> http://allthingsd.com/20101203/google-talks-with-groupon-are-ended-without-deal/feed/ 0 Daily Deal Deflated: Groupon-Google Talks End http://allthingsd.com/20101203/breaking-groupongoogle-talks-end/ http://allthingsd.com/20101203/breaking-groupongoogle-talks-end/#comments Sat, 04 Dec 2010 00:50:06 +0000 Kara Swisher http://kara.allthingsd.com/?p=38079

The acquisition talks between Google and Groupon have ended.

“It’s as over as these things get,” said one person close to the situation.

The reasons for the collapse of the discussions are not clear at this moment, but it seems to center on the decision by the social buying site to remain independent and perhaps go for an IPO.

There are sure to be conflicting stories over the next few days. Did Google get cold feet first? Was there a tussle over a breakup fee, in case of too much regulatory scrutiny? Were the cultural differences too much?

As BoomTown reported earlier today, the annual revenue run rate for Groupon is $2 billion.

Groupon gets to keep about half of that and the rest goes to the myriad merchants it strikes deals with worldwide.

That’s still tremendous growth since its founding in 2008.

And that’s why Silicon Valley search giant Google and Chicago-based start-up Groupon have been in talks in recent weeks about a mammoth acquisition at a $6 billion price tag.

Groupon had turned down a bid of $3 billion from Yahoo earlier this year.

Now, it’s likely that the company will begin a new funding process.

Its closest competitor–LivingSocial–just got $175 million in a strategic investment from Amazon.

Chicago Breaking Business first posted a report of the talks ending, also citing a desire to be independent on the part of Groupon.

Please see this disclosure related to me and Google.

]]> http://allthingsd.com/20101203/breaking-groupongoogle-talks-end/feed/ 0 Groupon Annual Revenues Actually $2 Billion http://allthingsd.com/20101203/exclusive-groupon-annual-revenues-actually-2-billion/ http://allthingsd.com/20101203/exclusive-groupon-annual-revenues-actually-2-billion/#comments Sat, 04 Dec 2010 00:46:32 +0000 Kara Swisher http://kara.allthingsd.com/?p=38067

According to sources close to the situation, Groupon’s actual run rate for this year is clocking in at $2 billion in revenue, rather than the widely quoted $500 million.

Who knew hawking spas treatments and stripper pole lessons could be so lucrative?

About 50 percent ofhat revenue is paid out to the myriad of local merchants–called a pass-through–that the social buying phenom does discount deals with, those kind of numbers give some insight into why Google has been willing to entertain paying up to $6 billion to acquire Groupon.

The pair have been in discussions about an acquisition by the search giant, which was first reported here.

Over the last several weeks, a much lower $500 million to $600 million annual revenue figure has been used for Groupon–including here.

Apparently, that’s only in one quarter of the year.

The Chicago-based start-up is privately held and does not have to release its financial information.

As in all acquisition talks, there is a chance they will not result in a purchase. Google and reviews site Yelp, for example, held serious discussions that resulted in no purchase by the search giant.

[UPDATE: The Google-Groupon talks are over, as Chicago-based start-up decided to go it alone.]

One thing not true: A split between CEO Andrew Mason and his two original partners–Brad Keywell and Eric Lefkofsky over the possible sale.

That tension has been rumored by some, with Mason more interested in keeping Groupon independent and focused on an IPO and the others wanting to sell.

Sources said the trio are not at odds over the future of Groupon.

]]> http://allthingsd.com/20101203/exclusive-groupon-annual-revenues-actually-2-billion/feed/ 18 LivingSocial Gets $175 Million Amazon Investment (Like BoomTown Said) http://allthingsd.com/20101202/livingsocial-gets-175-million-amazon-investment-like-boomtown-said/ http://allthingsd.com/20101202/livingsocial-gets-175-million-amazon-investment-like-boomtown-said/#comments Thu, 02 Dec 2010 22:59:09 +0000 Kara Swisher http://kara.allthingsd.com/?p=38037

Amazon will invest $175 million in LivingSocial, the No. 2 player in the fast-growing social buying space.

(The press release is below.)

BoomTown reported yesterday that the massive investment was in the works.

The online retail giant’s big bet on the Washington, D.C.-based start-up comes in the wake of ongoing acquisition talks between Google and Groupon, the category leader in the local deals business.

While it appears to be a reaction to those discussions, sources said Amazon and LivingSocial have been talking for some time about a variety of deals between them.

Sources said the Amazon investment put a very hefty valuation of over one billion dollars on LivingSocial.

Interest in LivingSocial has heightened of late, given the $6 billion in cash, stock and earnouts that BoomTown has reported Google is considering ponying up to purchase Chicago-based Groupon, and grab ahold of its 12 million users across the globe and $500 million in annual revenue.

But LivingSocial–which has been thriving even in Groupon’s flashier shadow–has 10 million subscribers worldwide in more than 120 markets and five countries, including the U.S., Canada, the U.K., Ireland and Australia.

And, as LivingSocial noted when it announced its acquisition of Australia’s Jump On It recently, it is currently booking an average of more than $1 million a day and is projected to book well more than $500 million in revenue in 2011.

And that is what has attracted Amazon, which has almost no profile in this lucrative local space, despite some attempts at its own solution. It bought a small and quirky daily deals site, Woot, for $110 million in June.

But sources said that, rather than sell, LivingSocial management wanted to keep the company independent, and thinks a sale of Groupon will give it a huge opportunity for growth.

Why? Well, even though Groupoogle or Goopon are fun to say, the inevitable regulatory review could drag on, resulting in a slowing down of innovation in the bigger Google culture and the distinct possibility of newly rich Groupon execs flying the coop (in private planes).

More investment money should help LivingSocial move ahead faster. Sources also said there is likely to be deep integration between its and Amazon’s services.

LivingSocial announced in April that it had raised $14 million in a Series C round, after grabbing $25 million in a Series B venture funding only a month before. And it has raised $10 million on top of that since 2008.

Sources estimated at the time that the valuation for LivingSocial was several hundred million dollars.

The newest round was led by Lightspeed Venture Partners; earlier investors include U.S. Venture Partners, Grotech Ventures and former AOL head Steve Case.

Lightspeed also invested $8 million more on top of Amazon’s funding.

Here is the official press release:

LivingSocial Announces $175 Million Investment by Amazon.com

WASHINGTON, Dec. 2, 2010 /PRNewswire/–LivingSocial (www.livingsocial.com) has secured a $175 million investment from Amazon (Nasdaq: AMZN). LivingSocial has also secured an additional $8 million investment from Lightspeed Venture Partners. LivingSocial will use this investment to maintain a steady drumbeat of worldwide launches and overall business growth while continuing to serve more than 10 million subscribers across the U.S., Canada, UK, Ireland and Australia in more than 120 locations. Because of LivingSocial’s rapid expansion, the company is currently booking revenues of more than $1 million a day on average and is projected to book well over $500 million in revenue in 2011.

“To be the biggest player in the local commerce space there is no one better to work with than Amazon,” said Tim O’Shaughnessy, CEO of LivingSocial. “As the social shopping space continues to heat up, LivingSocial is committed to staying focused on providing the high level of quality that consumers and merchants have come to expect when working with us.”

As the online source to find amazing experiences at an unbeatable value, LivingSocial lets anyone experience the hottest restaurants, shops, activities and services in their area. The company has dedicated area experts on the ground in every location working directly with business owners, and constantly researching the best in local adventures to bring a savings of 50% to 70% for consumers.

Recently, LivingSocial expanded its business by acquiring adventure company Urban Escapes, and launching three new verticals including LivingSocial Family Edition, Campus Deals and LivingSocial Escapes, a travel site that offers unbeatable savings on curated adventures. In addition, the company continues a regular flow of launches–on average one per day–and has expanded its reach in Australia with a controlling stake in Jump On It, making it live in five countries.

]]> http://allthingsd.com/20101202/livingsocial-gets-175-million-amazon-investment-like-boomtown-said/feed/ 2 Amazon Poised to Make a Major Strategic Investment in LivingSocial to Counter Groupoogle (or Goopon?) Threat http://allthingsd.com/20101201/amazon-poised-to-make-a-major-strategic-investment-in-livingsocial-to-counter-groupoogle-threat/ http://allthingsd.com/20101201/amazon-poised-to-make-a-major-strategic-investment-in-livingsocial-to-counter-groupoogle-threat/#comments Wed, 01 Dec 2010 21:15:57 +0000 Kara Swisher http://kara.allthingsd.com/?p=37889

With the red-hot acquisition dance between Google and Groupon sucking up all the attention, it’s easy once again to ignore the No. 2 player in the fast-growing social buying space–LivingSocial.

But not everyone is–according to sources close to the situation, the Washington, D.C.-based company that also focuses on local deals is in advanced talks for a major strategic investment–as high as $150 million–by online retail giant Amazon, at a very hefty valuation of over one billion dollars.

Sources said there will also be a deep operating partnership between the pair, as part of the deal.

Sources said the investment negotiations with Amazon is not complete yet, of course, and could fall apart.

But interest in LivingSocial has heightened of late, given the $6 billion in cash, stock and earnouts that BoomTown has reported that Google is considering ponying up to purchase the category leader, Chicago-based Groupon, and grab ahold of its 12 million users across the globe and $500 million in annual revenue.

But LivingSocial–which has been thriving even in Groupon’s flashier shadow–has 10 million subscribers worldwide in more than 120 markets and five countries, including the U.S., Canada, the U.K., Ireland and Australia.

And, as the start-up noted when LivingSocial announced its acquisition of Jump On It recently, it is currently booking an average of more than $1 million a day and is projected to book well more than $500 million in revenue in 2011.

That is what is apparently attracting Amazon, which has almost no profile in this lucrative local space, despite some attempts at its own solution. It bought a small and quirky daily deals site Woot, for $110 million in June.

But, rather than sell, sources said LivingSocial management wants to keep the company independent, and thinks a sale of Groupon will give it a huge opportunity for growth.

Why? Well, even though Groupoogle or Goopon are fun to say, the inevitable regulatory review could drag on, resulting in a slowing down of innovation in the bigger Google culture and the distinct possibility of newly rich Groupon execs flying the coop (in private planes).

More investment money should help.

LivingSocial announced in April that it had raised $14 million in a Series C round, after grabbing $25 million in a Series B venture financing only a month before. And it raised $10 million on top of that since 2008.

Sources estimated at the time that the valuation for LivingSocial was several hundred million dollars.

The newest round was led by Lightspeed Venture Partners; Earlier investors U.S. Venture Partners, Grotech Ventures and former AOL head Steve Case.

A report of the Amazon interest in LivingSocial was first posted several weeks ago in a in VentureBeat, a day before BoomTown first broke the news of the Groupon and Google discussions.

Both Amazon and LivingSocial declined to comment.

But here is an October video interview I did with LivingSocial CEO Tim O’Shaughnessy on a recent visit to Silicon Valley.

The entrepreneur has worked at AOL, as well as at Case’s Revolution Health in Washington, before moving on to the local deals start-up.

Enjoy:


[ See post to watch video ]

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