AllThingsD » mainstream

Viral Video: Gimme That Old-Timey Journalism

Kara Swisher — Thu, 15 Sep 2011 07:19:52 +0000

Here is a very funny piece from cable television comedy show, “The Colbert Report,” about a reporter from Georgia.

It’s hard to explain why it’s so funny, but it is a perfect send-up of the reporting process. The story: “Man Says It’s Too Hot to Fish.”

As Colbert intones: “Newspapers are part of America’s past, like buggy-whip makers and the middle class, but they still perform an important function.”

Enjoy:

The Colbert Report

Mon – Thurs 11:30pm / 10:30c

Stephen Reports on an Old-Fashioned Hero

www.colbertnation.com

Colbert Report Full Episodes

Political Humor & Satire Blog

Video Archive

Exclusive: Microsoft Mulls Legally Poking Facebook Over Ad Talent Raid

Kara Swisher — Thu, 03 Mar 2011 00:10:41 +0000

Microsoft–furious over a recent talent grab of its top advertising exec by Facebook–has been considering a wide range of options, including legal action to block the move, according to sources close to the situation.

Lawyer at both companies have been in back-and-forth talks in recent days after the hiring of Microsoft’s global ad sales head Carolyn Everson by the Silicon Valley social networking powerhouse to be its VP of global sales.

Among the more likely solutions being discussed: Barring Everson–a longtime ad sales exec who came to Microsoft from MTV Networks–from using any strategic information she learned at the company and also from contacting certain ad clients on behalf of Facebook for a certain period of time.

While a legal action to stop her from actually taking the position is the most serious option, it is certainly not without precedent for Microsoft. The company recently got a temporary restraining order to block one of its top government relations execs, Matt Miszewski, from working at Salesforce.com, pointing to non-compete and confidentiality contracts.

Whatever happens, it is clear the Everson hiring has infuriated Microsoft execs, especially CEO Steve Ballmer, since the company regards Facebook as a close partner. Microsoft is also a longtime investor in Facebook.

While considering a temporary restraining order against Everson in this kind of situation–since it is essentially the same job–is standard operating procedure for any company, several sources said tensions are higher than usual.

“This is just tone deaf on Facebook’s part not to think this would not be a problem,” said one person.

One particularly irksome aspect–top Facebook execs did not call Ballmer before news of the appointment leaked out to assuage the situation.

Facebook COO Sheryl Sandberg did release a statement when BoomTown broke news of the move in mid-February, in an attempt to make nice.

“Microsoft was one of our earliest partners and is still one of our most valued,” she said, in part. “We look forward to continuing to expand our relationship with them.”

Her dulcet words have apparently not worked.

In fact, the talent raid came as a surprise to many at Microsoft, especially since Everson (pictured here) had been hired in June after a long search and had become a high-profile presence at internal and external Microsoft events.

That included organizing the splashy “Imagine 2011, Microsoft Advertising’s Marketing Leadership Summit.” The event is set to take place at the end of March at the software giant’s Redmond, Wa. HQ and will include an evening concert by the band Train.

Now she will be doing such things for Facebook, where Everson will be replacing longtime and well-regarded ad exec Mike Murphy, who left the Palo Alto, Calif., company last fall. She will report to former Googler David Fischer, VP of Advertising and Global Operations.

Having a top exec who is amenable to and well known by Madison Avenue is key for Facebook as it ramps up its business, in anticipation of an IPO next year.

Despite being private, Facebook has recently been valued at between $50 and $60 billion by investors, who have been eagerly buying up shares of the company on secondary markets.

Under Murphy and Fischer, ad sales have been doing well already. Facebook’s share of online display advertising has more than quadrupled, from about three percent to almost 14 percent of the nearly $9 billion U.S. market, according to a recent survey.

In growing so quickly, Facebook has grabbed ad revenue–reportedly $2 billion last year–from old online powerhouses, especially Yahoo, Microsoft and AOL, and is also in a big fight with Google over premium ad sales.

Facebook’s surging usage and engagement are the reasons for the increased interest from advertisers, as well as its global growth in both market share and mindshare of consumers.

The opportunity at Facebook is clearly a big–and probably irresistible–move for the dynamic Everson, who has mostly worked in the mainstream media for much of her career.

Still, while movement of execs among top tech companies is not uncommon, there has been a lot less from Microsoft to Facebook.

Instead, Facebook has been most aggressive in its efforts to attract talent from Google.

No longer. In fact, the week before Facebook grabbed Everson, it also hired an up-and-coming exec, Chris Daniels, GM of Bing Mobile Product Management, to be its director of business development.

Still, there is some hiring war history between the companies. In late 2008, Microsoft’s Ballmer managed to lure former Yahoo exec Qi Lu to run its Online Services Division, several sources at both companies said, after he had told Facebook he would work there as its engineering lead. Lu had also been heavily recruited by Google.

Eventually, that was water under the bridge, which is what Facebook is hoping will happen with Microsoft over Everson.

Also important in the weighing of options at Microsoft is the obvious importance of keeping up good relations with Facebook. It is an important partnership, especially for its Bing search business, as an advantage over Google.

“Everyone is hoping to resolve this amicably,” said one person close to the situation. “There has been some damage to the relationship for sure, but the question is whether Microsoft wants to do something that would escalate that damage.”

Not surprisingly, both Facebook and Microsoft declined to comment on the fracas.

AOL + Huffington Post Won't Go to 11. But It Does Make Sense.

Peter Kafka — Mon, 07 Feb 2011 11:30:09 +0000

There are lots of Web M&As that don’t make much sense. But after you get past the “OMG!!!!!” novelty of AOL’s $315 million Huffington Post buy, this one has a straightforward logic to it: Old, big, slow company buys new, small fast company, hopes some of the zippy mojo rubs off.

Steve Case is right to point out that AOL CEO Tim Armstrong’s “one plus one equals eleven” logic didn’t pan out during the first boom, when Case was running AOL and engineered the disastrous Time Warner deal.

But here, at least, both companies are trying to do the same thing: Make a lot of Web stuff at a low price, and sell ads against it.

So maybe AOL + HuffPo won’t equal 11. And maybe 10x Huffington Post’s reported 2010 revenue is a very pre-Lehman multiple. But the broad strokes here make sense to me:

AOL is pushing its workers very hard to make more content it can sell. HuffPo is a content-making machine:

Huffington Post still has the reputation as a left-leaning political site written by Arianna Huffington’s celebrity pals. In reality, it is most concerned with attracting eyeballs anyway it can. Sometimes it’s with well-regarded investigative journalism, and much more often it’s via very aggressive, very clever aggregation. And sometimes it’s by simply paying very, very close attention to what Google wants, which leads to stories like “What Time Does The Super Bowl Start?“

However they’ve done it, it’s worked–much more efficiently than AOL, which is headed in that direction as well. AOL reaches about 112 million people in the U.S. every month with a staff of 5,000. The Huffington Post, which employed about 200 people prior to the deal, gets to about 26 million.*

AOL can start selling this stuff immediately:

HuffPo reportedly generated around $30 million in revenue last year, but that was done using a relatively small staff that sales chief Greg Coleman had just started building. AOL’s much bigger sales group, which has just about finished its lengthy reorg, should be able to boost that performance immediately.

AOL can afford it:

Tim Armstrong’s company ended 2010 with $725 million in cash, much of which it generated by selling off old assets. This seems like a relatively easy check to write and one that shouldn’t involve a lot of overlapping staff–AOL figures it will save $20 million annually in cost overlaps, but that it will spend about $20 million this year on restructuring charges. HuffPo is about four percent of AOL’s size, and several of its top executives are already stepping aside. (This is the second time in two years that sales boss Greg Coleman has been moved out of a job by Tim Armstrong.) The biggest risk here will be in the way that Huffington, who is now editor in chief for all of AOL’s edit staff, gets along with her new employees. On the other hand, morale is low enough at many AOL sites that it will be hard to make things worse.

AOL Gets a Really Big Brand:

There’s some downside risk to attaching Arianna Huffington’s name to a big, mainstream media brand, as her politics and/or persona might scare off some readers and/or advertisers. But two years after Armstrong arrived from Google, AOL still doesn’t have a definable identity, other than “the Web site your parents might still pay for even though there’s no reason to do so.” Being known as “the guys who own Huffington Post” is infinitely better than that.

HuffPo’s “pro” list is much shorter, but only because there’s not much to think about for them: Huffington, co-founder Kenneth Lerer and their backers get a nice return on the five years and $37 million they put into the company. And those who stay on get to leverage the benefits of a much larger acquirer–access to more eyballs and more advertisers. Easy enough to understand.

Spinal-tap-ampli
Uploaded by TZA. – Click for more funny videos.

*(Something about these numbers, culled from AOL’s and Huffington Post’s own releases, doesn’t add up, as AOL now says the combined company will have 117 million uniques. But it’s close enough for now.)

You've Got Arianna: AOL Buys Huffington Post for $315 Million in Cash and Stock, Appoints Huffington Editor in Chief

Kara Swisher — Mon, 07 Feb 2011 05:01:47 +0000

In a bold and definitive move, AOL is paying $315 million, mostly in cash, to buy the Huffington Post, one of the Web’s most prominent news and opinion sites.

As part of the deal, Huffington Post co-founder Arianna Huffington (pictured here)–who was derided by some when she co-founded the left-leaning site in 2005 with investor and well-known communications exec Kenneth Lerer–will become president and editor in chief of the Huffington Post Media Group within AOL.

The deal was signed late this afternoon, and the board of directors of each company and shareholders of the privately held Huffington Post have approved the transaction.

In an exclusive video interview BoomTown conducted earlier today in Dallas, just before Super Bowl XLV, both Armstrong and Huffington were jovial that the whirlwind deal, begun in November, actually worked out so quickly.

Perhaps giddy, they hit upon a common motto:

“One plus one equals 11.”

Get it? One and one next to each other is the number 11!

Let’s move on, shall we?

AOL said it is expected to close in the late-first or early-second quarter of 2011.

Once culminated, it will put Huffington in charge of all AOL content and other properties, including well-known names such as Engadget, Moviefone, MapQuest and TechCrunch.

She said she plans to move to New York from Los Angeles, although she will also maintain her longtime Brentwood home there.

And content for all these sites will be integrated deeply into the Huffington Post, giving it a huge new infusion of editorial material.

More to the point, the flashy acquisition–which essentially came together in less than two weeks in January–will become the linchpin of AOL CEO Tim Armstrong’s aggressive, if risky, strategy to focus the long-troubled company as a content and advertising powerhouse.

For AOL, the deal gives it a popular branded site that is very good at generating lots of page views and impressions very efficiently–which is the company’s whole thrust these days.

That means lots more ad inventory to sell and an injection of content talent, giving AOL the scale it desperately needs.

The move also obviously gives AOL a much-needed editorial identity and cohesion, which it doesn’t really have.

In fact, many think AOL needs a rallying point to bring clarity to its hodgepodge of recent acquisitions that all center on the notion that a strong company has yet to emerge in the premium content space.

Here is a mock-up of the front page of AOL tonight (click on it to make it larger):

While it all makes for a riveting narrative by the charming Armstrong, AOL still has not delivered the business turnaround promised after its spinoff from Time Warner in 2009.

Wall Street, which has given Armstrong a lot of rope, has become more impatient of late to see results–especially more robust increases in its display advertising business, as its access business dies off–after AOL spun off from Time Warner in 2009.

In its quarterly report last week, AOL reported earnings of 61 cents a share on revenue of $596 million.

But, as MediaMemo’s Peter Kafka wrote:

The bigger picture is that Armstrong’s turnaround is still in progress. Ad revenue was down 29 percent in the last quarter, although that number is worse than it looks. A big chunk of the decline comes from moves AOL has intentionally made that will cut revenue in the short run in return for more profitable sales down the road.

A more representative data set for Armstrong are his display ad sales, which are down 14 percent overall and eight percent in the U.S..

The bad news is that the rest of the Web ad industry is well into rebound mode; the good news is that AOL has trained Wall Street to expect numbers like these. If you’re waiting to see positive sales numbers, Armstrong said during AOL’s earnings call this morning, wait until the second half of this year.

In any case, the move is a good one for the Huffington Post since it will vault it to the next level of growth.

Other companies, such as Yahoo and NBC Universal, had looked at the company as a purchase target, and many expected it to eventually sell out to a larger company.

Sources close to the Huffington Post said that that outcome seemed the most likely, and the recent expansion of the site and its audience made it a good time to do a deal now.

Talks with Yahoo last year went nowhere, sources said, but Armstrong was not as slow to act.

Indeed, the actual deal happened quickly, said Armstrong and Huffington in a video interview with BoomTown earlier today (which you can see here).

The pair started talking in early November of last year at the Quadrangle Conference in New York and continued their discussions through the holidays.

Armstrong made the official offer to Huffington by phone in January, while she was at the World Economic Forum in Davos, Switzerland, and he was snowed in in New York.

Five time multiple to the Huffington Post’s upward of $60 million in expected revenue for the coming year, and nearly 10 times the $31 million for 2010, the offer was accepted quickly.

AOL used cash for $300 million of the purchase and $15 million in stock for the rest.

“The idea of turning a fire hose of traffic onto our content made enormous sense,” said one person close to the situation. “Everything is changing so fast, it seemed like the time was right.”

An IPO was also considered for the Huffington Post, sources said. But since the site only recently moved into profitability–although barely–such an event would have been farther out.

That’s despite the fact that the Huffington Post has seen fast-growing traffic and influence, spurred in part by Huffington’s larger-than-life persona in both the mainstream media and blogosphere.

The wide-ranging site–which has added a number of content areas in recent years beyond its flagship political offering–currently has almost 26 million unique monthly visitors, according to recent stats, moving in close range to established news organizations such as the New York Times.

That kind of success seemed unlikely when the Huffington Post launched on May 9, 2005, positioning itself as as a liberal counterweight to the popular right-leaning Drudge Report.

But the Huffington Post’s heady mix of celebrity bloggers, personality and voice, as well as aggressive curation of links from other sites, quickly caught on.

To fund its efforts, the New York-based online media company has raised $37 million from angel investors such as Lerer–the largest individual shareholder, followed closely by Huffington–and venture firms such as Greycroft Partners, Softbank Capital and Oak Investment Partners.

The growth has not been without controversy around issues such as lack of payments to bloggers who contribute and accusations that the site uses too much content from other Web sources when linking.

And Huffington herself has also been a lightning rod, which has been both positive and negative for the site.

But, there is no question she is one of the Web’s most prominent players, along with writing books, appearing on television frequently and being a fixture at high-profile events in New York, Los Angeles and Washington, D.C.

That includes a never-ending panoply of parties that feature a potent mix of movie stars, corporate poo-bahs, glad-handing politicians and lots of journalists from all over the media.

In fact, full disclosure, I was at one of those parties this past weekend for actor Colin Firth and others involved in the making of the Oscar-nominated film “The King’s Speech.” (Apropos of nothing, actor Helena Bonham Carter is as smart as you would expect, but much more delicate.)

As part of the AOL deal, CEO Eric Hippeau–who has been integral to professionalizing the business and will be joining Lerer Ventures–and Chief Revenue Officer Greg Coleman will leave the Huffington Post.

Ironically, Coleman was replaced by Armstrong as head of ad sales at AOL after he took over as CEO. Coleman got a big payout and will now apparently get another.

But the rest of the 200 Huffington Post employees are moving over to AOL with Huffington, who Armstrong hopes will be the company’s ace in the content hole going forward.

There are likely to be changes to come too at AOL, within weeks, especially in its content-side management and site staffs.

AOL provided some quotes in support of the deal from prominent Internet figures who know Huffington well.

“Arianna is one of the preeminent authors and editors of our time, and Tim has a remarkable track record of business success,” said Facebook COO Sheryl Sandberg. “Bringing them together creates tremendous potential for AOL.”

And Twitter co-founder Biz Stone said:

“Editorial vision and leadership are essential in order to transmute our shared cacophony of voices into a valuable dialogue. Arianna’s expertise, empathy, and entrepreneurial enthusiasm forms a kind of alchemy turning mere words and phrases into powerful expressions of humanity.”

Inter-Internet harmony: How sweet!

Here is the official press release, with all the details, but there is also an 8 am ET AOL conference call tomorrow:

AOL AGREES TO ACQUIRE THE HUFFINGTON POST

Acquisition Will Solidify AOL’s Strategy of Creating a Premier Content Network With Local, National and International Reach

Arianna Huffington To Lead Newly Formed The Huffington Post Media Group Which Will Integrate All Huffington Post and AOL Content, Including News, Tech, Women, Local, Multicultural, Entertainment, Video, Community, and More

The New Combined Media Group Will Reach 117 Million Americans and 270 Million Globally

Group Uniquely Positioned To Redefine the Future of Brand Advertising and Marketing For an Engaged and Influential Audience

New York, NY–February 7, 2011–AOL Inc. [NYSE:AOL] announced today that it has entered into a definitive agreement to acquire The Huffington Post, the influential and rapidly growing news, analysis, and lifestyle website founded in 2005, which now counts nearly 25 million unique monthly visitors*.

The transaction will create a premier global, national, local, and hyper-local content group for the digital age–leveraged across online, mobile, tablet, and video platforms. The combination of AOL’s infrastructure and scale with The Huffington Post’s pioneering approach to news and innovative community building among a broad and sophisticated audience will mark a seminal moment in the evolution of digital journalism and online engagement.

The new group will have a combined base of 117 million unique visitors a month in the United States and 270 million around the world**. Following the close of this transaction, AOL will accelerate its strategy to deliver a scaled and differentiated array of premium news, analysis, and entertainment produced by thousands of writers, editors, reporters, and videographers around the globe.

As part of the transaction, Arianna Huffington, The Huffington Post’s co-founder and editor-in-chief, will be named president and editor-in-chief of The Huffington Post Media Group, which will include all Huffington Post and AOL content, including Engadget, TechCrunch, Moviefone, MapQuest, Black Voices, PopEater, AOL Music, AOL Latino, AutoBlog, Patch, StyleList, and more.

“The acquisition of The Huffington Post will create a next-generation American media company with global reach that combines content, community, and social experiences for consumers,” said Tim Armstrong, Chairman and CEO of AOL. “Together, our companies will embrace the digital future and become a digital destination that delivers unmatched experiences for both consumers and advertisers.”

Armstrong continued, “Arianna is a singularly passionate and dedicated champion of innovative journalistic engagement, and a master of the art of using new media to illuminate, entertain and enhance the national conversation. Arianna is a remarkable person and she will continue to create remarkable outcomes for the combined company.”

“This is truly a merger of visions and a perfect fit for us,” said Huffington. “The Huffington Post will continue on the same path we have been on for the last six years–though now at light speed–by combining with AOL. Our readers will still be able to come to the Huffington Post at the same URL, and find all the same content they’ve grown to love, plus a lot more–more local, more tech, more entertainment, more finance, and lots more video. We are fusing a legendary and powerful new media brand with a vibrant, innovative news organization, known for its distinctive voice, a highly engaged audience, an expertise in community-building, and a track record for demystifying the news and putting flesh and blood on the data while drawing our audience into the conversation.”

Huffington continued, “By uniting AOL and The Huffington Post, we are creating one of the largest destinations for smart content and community on the Internet. And we intend to keep making it better and better.”

Kenneth Lerer, The Huffington Post’s Co-Founder and Chairman, said, “The Huffington Post team has created a potent brand with the proven track record of knowing how to grow traffic, inform and entertain its readers and build a one-of-a-kind online community. Add that to the powerful scale and resources of AOL and you have the perfect combination for today and the future. Together these two companies will be a premier online content provider. From local citizen reporting through AOL’s Patch, to The Huffington Post’s national reporting on politics, business and culture, consumers will have access to everything they want whenever they want it.”

AOL has agreed to purchase The Huffington Post for $315 million, approximately $300 million of which will be paid in cash funded from cash on hand. The Huffington Post is privately owned by its two cofounders, as well as a group of investors. The proposed transaction is subject to customary closing conditions, including receipt of government approvals. The boards of directors of each company and shareholders of The Huffington Post have approved the transaction. The transaction is expected to close in the late first- or early second-quarter 2011.

The Huffington Post over-indexes on educated, affluent users, reaching the key decision makers in C-suites around the globe. The Huffington Post speaks to this influential audience via a host of prominent voices on its group blog. Among those who have blogged on The Huffington Post are: President Barack Obama, Secretary of State Hillary Clinton, Mayor Michael Bloomberg, Larry Page, Diane Sawyer, Buzz Aldrin, Nora Ephron, Bill Maher, Madeleine Albright, Robert Redford, Katie Couric, Neil Young, Rahm Emanuel, Mia Farrow, Senator Russ Feingold, Senator Al Franken, Ari Emanuel, Harry Shearer, Senator John Kerry, Representative Nancy Pelosi, Madonna, Lawrence Summers, Jamie Lee Curtis, Ryan Reynolds, Craig Newmark, Alec Baldwin, Aaron Sorkin, Natalie Portman, Scarlett Johansson, Russell Simmons, Sean Penn, Bill Gates, Norman Lear, Charlie Rose, Elizabeth Warren, Tavis Smiley, Sheryl Sandberg, George Clooney, and former President Bill Clinton. And the audience speaks back, generating four million comments a month***.

The Huffington Post’s affluent, influential audience, that is growing at a rate of 22 percent (December 2009 vs. December 2010)****, when combined with AOL’s massive scale, video offerings and local expertise, will represent an incredibly desirable demographic for a broad range of advertising partners across the board.

And here is Armstrong’s internal memo to the AOL staff:

AOLers,

We are taking another major step in the comeback of AOL. Today we are announcing that we have agreed to acquire The Huffington Post, one of the most exciting, influential, and fastest growing properties on the Internet. We believe in brands, quality journalism, and the positive role of communities in the world–The Huffington Post shares our values and the combination of the two companies will create the premier global and local media company on the Internet.

Co-founded six years ago by Arianna Huffington and Ken Lerer, The Huffington Post has grown to become an industry leader–one of the Web’s most popular and innovative sources of online news, commentary, and information. Arianna and team have created a brand and a destination that focuses on the consumer experience. By combining The Huffington Post with AOL’s network of sites, thriving video offerings, local expertise and enormous reach, we will create a company that is laser-focused on serving our audiences across every platform imaginable–social, local, video, mobile and tablet.

The Huffington Post is core to our strategy and our 80:80:80 focus–80% of domestic spending is done by women, 80% of commerce happens locally and 80% of considered purchases are driven by influencers. The influencer part of the strategy is important and will be potent.

The Huffington Post is a strong influencer brand and it attracts a valuable audience, including a great focus on women’s content. In addition, Arianna Huffington is a world-renowned expert on women’s topics and issues, and has enabled The Huffington Post to grow rapidly by continually developing new audiences.

In the local area, the combination of the two companies will create a scaled connection between global and local communities on one platform. This will create a new way for people to get local and global information in a timely and entertaining way.

The Huffington Post will join the family of AOL Brands that are destinations for an influencer audience, brands like TechCrunch, Engadget, AutoBlog, and Moviefone. Uniquely, The Huffington Post is the platform for influential people–the people that drive trends, commerce, politics, entertainment, news, and information. Adding this strategic platform to our already strong network of sites, including the AOL homepage, has the potential to make AOL the most influential company in the content space.

Arianna Huffington is one of the most successful entrepreneurs in the Internet space and someone that is even more successful in building communities and relationships in every corner of the globe. The Huffington Post and Arianna have created a company that has partnered with the most successful and well-known leaders in all aspects of society that touch important topics to give consumers direct access to the most influential decision makers and community leaders.

This acquisition will create a high-quality and diverse digital ecosystem encompassing local, national and international news, politics, entertainment, technology, fashion, sports, health, personal finance, green, lifestyle, the arts and more. This deal will combine the amazing talent at AOL with the innovative and talented staff of The Huffington Post. Here are just a few high-level points around what this deal brings to market:

* Together, AOL and The Huffington Post will have 117MM unduplicated domestic monthly UVs, and ~270MM monthly UVs worldwide (according to comScore Dec 2010).

* The Huffington Post is one of the fastest growing web properties on the Internet. It grew 22% last year–that’s faster than Twitter, which grew 18% – and 15x as quickly as the Internet grew last year (comScore Dec ’09-’10).

* Both AOL and The Huffington Post count powerful, affluent users among their top loyal visitors, significantly over-indexing in $100K+ income users.

* AOL passed Hulu in unique viewers on video in the fourth quarter of 2010; video views on AOL are up 400 percent year-over-year.

* Between AOL’s innovative Project Devil ad unit, engaging users for 27 seconds longer than traditional display ads, and The Huffington Post’s highly-vocal community, with 4MM+ comments per month, we will marry attention-grabbing content and brand experiences for both advertisers and consumers.

In the local area, the combination of the two companies will create a premier global/local syndication network at scale. This will create a new way for people to get local and global information in a timely, informative and entertaining way.

To maximize the strategic advantage of this great deal, we will be creating a new group at AOL called The Huffington Post Media Group. Within this group will be AOL Media, AOL Local & Mapping, AOL Search and our new friends at The Huffington Post. We will continue operating the towns structure, AOL.com and HuffingtonPost.com.

I’m thrilled to announce that Arianna Huffington will join AOL’s executive team as President and Editor in Chief of The Huffington Post Media Group. We have asked Jon Brod to lead the overall operational integration on the AOL side of the combined entities. Jon will lead the local group integration and work closely with David Eun and the teams in AOL Media. We will work quickly with The Huffington Post to create a combined organizational design to coincide with the deal closing. While we wait for the required regulatory reviews to be completed and the transaction to close before implementing the design, we will move very quickly to plan the details of the integration of the two companies. To this end, we will announce the new organizational structure as soon as possible.

In the meantime, we will continue creating great content and products for our consumers within the town structure and stay laser-focused on the aggressive goals we have set for our winter luge. We are on the right track and will continue our weekly operating cadence and town structure to drive successful results against our company goals.

Here’s a special message for all of you we taped to welcome The Huffington Post and Arianna to our AOL Family:

http://today.office.aol.com/company-news/2011/02/aol-agrees-buy-huffington-post

And of course we wanted to welcome Arianna to our “You’ve Got” video of the day–check her out on AOL.com.

We will be holding a company all hands meeting to address your questions related to today’s exciting news. We will video conference from our New York office on the 6th Floor at 9:30 AM ET and will be joined by Arianna Huffington and key executives from her organization. We will also be holding a call for our west coast offices at 2:00 PM ET and for our Patch offices at 2:45 PM ET. See below for meeting info (conference rooms will be sent out shortly).

AOL is playing to win…and The Huffington Post and AOL will occupy a unique place in the future of the Internet. Let’s go get it done.

–TA

(More full disclosure: As has been previously reported by MediaMemo, All Things Digital had the briefest and most preliminary of discussions with Armstrong about moving to AOL last year, while exploring several other options. All’s well that ended well: We stayed at Dow Jones, which is owned by News Corp.)

A New Social Network Where Inquiring Minds Run Wild

Katherine Boehret — Tue, 18 Jan 2011 23:38:35 +0000

If brief communications like Twitter’s 140-character messages, Facebook status updates and text messaging leave you longing for more substantial discourse, you may be in luck. This week, I took a look at Quora, a question-and-answer site that encourages thoughtful—even long-winded—discussions.

[ See post to watch video ]

Quora (Quora.com) was launched about six months ago by two former Facebook employees who wanted to create a forum where in-depth questions could be posed and answered. Users vote answers up or down according to how good they are, the idea being that the best answers get pushed to the top of the queue by the community of users. Few of these questions can be answered with a simple yes or no. For example, one question asks, “What role did social media play with regards to the revolution in Tunisia?” (See here for the answer with the most votes: http://3.ly/8Gqf.)

One thing to be wary of: There’s nothing that qualifies the most popular answers as accurate, nor do people who write the most popular answers necessarily qualify as experts. This could lead to confusion or even danger, like medical questions that are answered incorrectly. Quora users are required to register their real email addresses, and some answers are more believable than others according to who answers, like the CEO of Netflix answering a question this past fall about how much the company spends on postage per year (answer: between $500 million and $600 million).

As soon I signed up for Quora by submitting an email and password, I walked through steps to “follow” certain topics that interest me—like technology, journalism, media and news—so whenever those topics are discussed, the related questions and answers appear on my Quora home page. I also linked my Twitter and Facebook accounts to my Quora account, which clued Quora in on some topics or people that might interest me according to the information in those accounts. Once these accounts are linked, it’s a lot easier to share Quora questions or answers with people on Twitter and Facebook.

People, like topics, can be followed. If someone I follow posts a question, answers a question or votes an answer up or down, this activity appears on my Quora home page.

Though Quora may sound simple, I found it uninviting, geeky and poorly explained. The site lacks instructions on how to use it; people just have to figure it out as they go. For example, a newcomer might not know that Quora answers can be voted up or down by seeing two tiny triangles that appear beside each answer. If I select the up triangle, this indicates I voted for that answer, and news of this vote is shared on the Quora home page of anyone who follows me. A number beside each answer indicates how many votes it has received so far. But unless you’ve used the site for a while, you wouldn’t know any of this.

After a few weeks of use, I found I preferred using Quora less for asking my own questions and more for reading other people’s questions and answers about topics I liked. I occasionally voted on answers to show whether I supported them or not. One user asked me a direct question, which I answered. I asked a question of the Quora community, but no one replied.

I found Quora’s questions and answers to be rather smart and entertaining. Its Silicon Valley roots are evident in its numerous technology-related questions and answers. I typed “tennis” into a box at the top of the screen and one of the first questions that surfaced was “Is tennis popular in Silicon Valley?” Instead of that question, I selected “What is the history of tennis’s strange scoring system?” and read the answer with the most votes, which seemed right to the best of my knowledge. Interestingly enough, this answer also included a link to a related article on Wikipedia.

But compared with the rest of the Web, where images, videos, animations and sound entertain website visitors, Quora’s text-filled pages can come off feeling a bit like textbook reading assignments. This is because all but a handful of questions are answered with just text. Video isn’t enabled on the site, though founder Charlie Cheever told me that this might be possible in the future.

Another problem with Quora is that most people who use the Internet are conditioned to rely on search engines like Google, Bing or Wikipedia for queries, typing the right key words to get the intended results. And people are often searching for quick answers that take just a couple seconds to read.

Plenty of other question-and-answer forums exist, like Yahoo Answers, which has been around since 2005, ChaCha.com and Ask.com. Facebook introduced Facebook Questions to a small number of its users over the summer, but when asked, a company spokeswoman wouldn’t say whether or not this offering would be available to all users anytime soon, if at all.

Quora’s combination of social networking (following topics and people) and in-depth answers helps differentiate it from those services.

Private messages can be sent from one user to another through Quora, and new messages are indicated with a red number that appears over your personal “Inbox” at the top of the Quora site. Likewise, when new notifications appear on the home page, a red number is shown above Home at the top of the page. This home page can be viewed in one of three views: Your Feed, All Changes or Followed Questions; users can toggle between these views.

Only people who have created accounts can browse the Quora.com site, though links to content can be opened by anyone. This differs from Twitter.com, which can be visited and searched by anyone regardless of whether or not they have a Twitter account. Quora also lacks one central home page where everyone can go to see every Quora question and answer, or which answer received the most votes on the entire site. Mr. Cheever told me that the site deliberately tries to keep your world small so you can focus on the topics or people you follow.

Quora relies on its community members to police one another, like Wikipedia, and less than 100 users are also granted administrator privileges to do more serious operations like deleting answers that use hate speech or other offensive remarks, which aren’t permitted according to the site’s policies. Every edit made to an answer is logged in the Quora system for everyone to see. This helps users understand an entry’s history on Quora.

This site doesn’t put much emphasis on interaction with others, though you are notified whenever someone follows you and you may be prompted to suggest topics for someone who starts following you. Like Facebook and Twitter, a list of users who you might want to follow is suggested in Quora.

For now, Quora feels like a website designed for techie insiders without instructions for mainstream users. But its smart community, intriguing questions and way of showing users just the content they want to follow will keep people coming back to the site. With a lot of polishing, Quora could be a social network people use every day.

Twitter CEO Dick Costolo on Platforms, Reliability and Independence at D@CES

Peter Kafka — Fri, 07 Jan 2011 23:49:28 +0000

Twitter has crossed the threshold from Web novelty into something substantial. Now Dick Costolo’s job is to turn it into a business–one big enough to justify the sky-high valuation investors have given the messaging company.

He’ll talk to Kara Swisher about the company’s efforts to sell advertising on the service, and if we’re lucky, he’ll give us a glimpse of his improv comedy roots, too. Don’t be shy, Dick!

Dick starts off by insulting Kara’s vest. “Matador casual,” he calls it. Good one! Kara responds by asking him why he’s hanging out at CES.

[ See post to watch video ]

The same reason everyone else is, Dick says: To talk to industry people. For example, he’d like to get device makers to preload some features like “Fast Follow.”

Kara wants to know if Dick would like a “Twitter button” installed on phones. No, says Dick. But he’d like Twitter to work the same way on different platforms.

So how do you make that happen?

Dick: We’re assigning a product team to make sure that this happens.

Kara: And you’re talking to TV people, too? What’s that about?

Dick: Yep. Because mainstream TV viewing, more and more, they have a device in their hand when they’re watching TV. Like on “Glee.” The characters tweet while the show is on. [This baffles Kara.] When “Glee” starts, tweets per second for “Glee” shoot up, and stay up 100 times that level until the show ends, and then they drop.

That has interesting implications. Like, it takes the DVR out of the mix, because you have to watch in real time to make it worthwhile.

But we don’t know if all of this means Twitter while you watch TV, or Twitter actually on your TV screen.

Kara: Is it important for you to be on the screen?

Dick: We’re already on the screen. But we don’t know if that will be the mainstream experience.

Kara: We had Steve Levitan from “Modern Family” talking about how the Web doesn’t help him, but that he and his team like Twitter.

Dick: Sure! “I was having a conversation with Conan O’Brien, as one does” and he was talking about the importance of Twitter to him, and how the 140 character limit is the right length for a joke. It’s definitely the case that network TV people like Twitter, because it gives them feedback, like they’re in the theater, watching how the shows play out.

Kara: Keep talking about celebrities! I love celebrities.

Dick: Sure! The folks that we’ve hired to work with talent and agencies, etc., we think of those people has high-value publishers. They have a huge following. A lot of people are on Twitter just to hear what those folks have to say.

The interesting thing about the top 200 to 300 tweeters–a lot of them are musicians, actors, etc. LeBron James, etc. I think Lady Gaga is number one. But! They’re not all celebrities. There’s CNN Breaking News. And the New York Times. And other brands like Gary Vaynerchuk, who aren’t really that known outside that world.

And Twitter is disaggregating some of those businesses. Like a third of all the players in the NFL playoffs are using Twitter actively. And many players have more followers than their teams. [Here Dick explains football to Kara.] That’s fascinating.

Kara: Let’s go back to phones. Whats the most important device? Tablet? PC? Phone?

Dick: Mobile is a more and more and more common use of Twitter–40 percent of all tweets created on mobile devices. That might seem low, but it was 25 percent a year ago. 50 percent of active users are also active on mobile.

But Twitter ought to work platform to platform. We want to be agnostic.

Kara: What about what’s coming out from Palm? Working with them?

Dick: Not yet.

Kara: What about games? Talking to those guys?

Dick: Yep. Like with Microsoft on their Xbox, you can see integrating tweets into people who have discussions on Xbox.

Dick: You lost interest in the answer to your question. [True!]

Kara: You’re so annoying.

[Some laughter. Not a lot, though!]

Dick: Anyway, the important thing for us is consistency across device to device to device.

Kara: Speaking of working consistently, how’s that going for Twitter?

Dick: Right. So, we raised a bunch of money. We’re hiring “tons of engineers and operations engineers” in the last year. We hired 100 people in Q4, out of about 350 total. And we’re working very hard on erasing our “technical debt.”

Kara: “That’s a great word for fuck-ups”

Dick: Anyway, we’ve got a guy assigned to this pretty much exclusively. And there used to be a tolerance for this, and now there isn’t. If someone fires a pistol next to your ear every hour, after a while you stop flinching when you hear it. It’s crucial that we do this, both for our users and our engineers, who shouldn’t have to get up at 3 am all the time.

Kara: Time for a vision question, which stumps Yahoo. What is Twitter? What is your vision?

Dick: “We want to instantly connect people everywhere to what’s most important to them.”

See, that’s a good statement. We’re not just a social network that’s connecting people. It’s connecting for a purpose.

So some people meet girlfriends on Twitter. And other people get tickets to shows they like on Twitter. Etc.

And you don’t have to tweet to get a lot of value out of it.

Kara: What’s the percentage of people who just read Twitter, and don’t tweet themselves?

Dick: Rising. And we have to make that easier to do. “We’re going to spend a lot of time making that consumption experience much better.”

Kara: What’s your business plan?

Dick: To continue to raise money!

[hohoho]

Dick: I’m going to steal Jeff Weiner’s line. We’re a technology company that’s in the media business. Our business model is an advertising model [cough, cough, that's familiar! You're welcome!] So we’re selling ads, and we’re letting people promote their accounts, etc. And we really don’t have to do anything else. Our engagement rates on these ads are ridiculously high. When we saw our stats this last spring when we launched, the numbers were so big we thought we were measuring it incorrectly.

Kara: Is that a big enough business to be a standalone company and/or IPO?

Dick: It’s enough to be a standalone company.

Kara: Sell or IPO?

Dick: We want to be a standalone company. It’s my sincere hope. We’ve accomplished 1 percent of what we want to do.

Kara: You like to sell companies, though.

Dick. Yes, I had two companies that I sold. But that doesn’t mean we’ll sell this one. I’ve had two kids too. But I shouldn’t get a reputation for having kids.

Kara: What’s up with people buying and selling secondary shares of Twitter. It’s an issue for Facebook. What about you?

Dick: We keep an eye on it, and talk to employees about it. But I just think that there are other people that are focusing on it and paying attention, and I’ll let them talk about it. But I just don’t think about that stuff on a day-to-day basis.

Questions and Answers

Q: [sorry missed it].

But answer seems to be about whether Twitter is a platform company or not. Dick quotes Ev Williams by saying they’re not a platform company–they’ve had an API. They want people to be able build off Twitter and build into Twitter. Which requires a more robust API.

Kara has more questions. How do you look at yourself as a leader?

Dick: As a very bald leader.

Kara: But you’re very different than Evan.

Dick: Right. Two components. Three founders at company: Ev, Jack, Biz. They all come at it from a different angle. Jack thinks about simplicity and elegance and the mobile experience. Ev thinks about the user. Biz is “the protector of the brand and the guardian of the culture.”

Kara: He’e the guy who goes on Colbert.

Dick: And he’s great at it. Anyway, those guys are great. My focus is on operational greatness. I try to emulate operators like Ben Horowitz (Opsware) and Susan Wojcicki (Google).

Q: What’s up with that internal page rank for each user? asks Ben Parr from Mashable.

Dick: Your’re not exactly right. We play around with stuff like that. But there’s nothing robust that we would think of productizing anytime soon, and we don’t use it for things like resonance, which we use in ads.

Q: [Sorry, couldnt quite understand.]

Dick is talking about WikiLeaks in general, says there was something specific about WikiLeaks today that he can’t talk about. In general, he hates government mandates to keep things quiet. And he hates that a woman in China was punished for retweeting something. He reiterates Twitter’s desire to connect people with useful information. “We’re going to lash out at things that prevent us from doing that, as aggressively as we can.” The proof is that we’re banned in China. “We’re not going to sacrifice what we’re trying to do to, you know, get into this country over here.”

Q: How will you work with brands in the future, vs. advertising?

Dick: Our promoted suite of stuff doesn’t simply let advertisers use a giant bullhorn. This stuff has to be organic. “It almost is like a quality-assurance program.”

[Some context for what Dick wouldn't talk about: Feds Subpoena Twitter Seeking Information on Ex-WikiLeaks Volunteer].

Dick is now talking about Twitter and international growth and language. Twitter is growing fast in the U.K. but not in Germany. Why is that? Because German has really, really long words. “There’s a bunch of stuff we want to do, and have to do” just to make things usable in those languages.

Last question, from Kara: What’s the most interesting thing you’ve seen at CES?

Dick won’t give a one-word answer. CES is a “quantum conference.” Some years are transformational, some are incremental. “This seems like it was an incremental year.”

And we’re done! Thanks all for your patience. We’ll have video up over the next few days, which should help fill in the gaps left by my lousy note-taking.

A CES Long Shot: Meet the Beamz, Guitar Hero's Odd Cousin

Peter Kafka — Fri, 07 Jan 2011 12:00:52 +0000

Las Vegas is full of vaporware this week. Also, some mainstream gadgetry that’s almost certain to end up in real peoples’ hands.

But one of the little pleasures of the Consumer Electronics Show is checking out the quirky, weird stuff produced by small-time companies working off of a gut feeling. It’s possible that one of them might break through, but the odds are against them. Which makes you want to root for them that much more.

See, for instance, the Beamz: It’s a $199.95 cross between Guitar Hero and the theremin, the weird electronic instrument you play by waving your hands in the air. (It’s the thing that makes the “woo-ee-oo-woo-oo” sound in the Beach Boys’ “Good Vibrations.”)

The gadget/game is produced by Beamz Interactive, a Scottsdale, Ariz., company that’s been at this for a couple of years and a couple of iterations. The first one sold a few thousand copies, but product management VP Al Ingallinera thinks the company has figured it out with this version, which it’s selling online via Amazon and in retail stores like Brookstone.

I’m not sure. But I did like monkeying about with the thing, and Ingallinera was kind enough to demo it for me while I shot some shakeycam footage.

[ See post to watch video ]

Meanwhile, if you’re at all interested in learning more about the theremin, you’re in luck. There’s a great 1994 documentary about the instrument. And YouTube is full of eccentric theremin clips. Like this one:

And this one, too!

Mac App Store Lacks Social Apps, Save for Twitter

Liz Gannes — Thu, 06 Jan 2011 19:43:41 +0000

Social apps are few and far between for the grand opening today of Apple’s Mac App Store, meant to be a desktop app marketplace equivalent to the highly successful app stores for Apple devices.

The only big-name social app joining the “social networking” category at launch is Twitter, which contributed an app that it says is designed for the “mainstream” user and is three times faster than the previous version of Tweetie for Mac, the independent app that Twitter acquired. The new Twitter app is quite elegant, with the rounded corners and UI accents of an iOS app rather than something from the desktop world. Digital Daily’s John Paczkowski says that based on his positive experience with it this morning he’s already deleted the two other Twitter clients on his desktop.

Other than that, the category contains an app for Mashable, the blog about social networking. There are some independent Twitter apps such as Tweetings for Twitter and Itsy. There’s an app for MarsEdit, the desktop blogging software.

That’s slim pickings compared to the social networking category for iPhone apps, where the top free apps are Skype, Facebook and Textfree. Meanwhile, the free iPad social networking app category is led by a couple of off-brand Facebook apps and the official Twitter app.

Facebook has neglected development of its own apps on the iPad and other platforms, so it’s not a surprise that the company hasn’t built something for the Mac app launch. And Skype, as you can understand, already has its own desktop app. Various texting and voice services perhaps make more sense in a phone situation. But you’d think there would at least be a LinkedIn, Tumblr or Myspace Mac app.

Maybe they’ll come later–today’s launch included just 1,000 apps. Or maybe the desktop just isn’t a very social place.

(Unfortunately, it doesn’t look like I can link to the Mac apps themselves, as accessing the store requires a software update available only to users of the latest Mac operating system.)

Even If It Had 500 Shareholders Today, Facebook Doesn't Have to Disclose Financials Until Spring of 2012

Kara Swisher — Thu, 06 Jan 2011 10:15:48 +0000

For all those in a tizzy–including BoomTown–about Facebook’s deal with Goldman Sachs, which some think is designed to circumvent securities rules related to shareholder numbers and financial disclosure, meet Section 12(g)(1) of the Securities Exchange Act of 1934.

Because if anyone cared to read the actual text of the law in question (as I did, after it was pointed out to me), even if it was determined that Facebook had 500 shareholders at this very moment, it is technically not required to disclose any of its financial details until May of 2012.

As in next spring, which is exactly when its execs have told many sources it will finally have its much anticipated IPO. Thus, look Facebook to finally go public in the second quarter of 2012.

As far as government literature goes, 12(g)(1) is pretty clear, noting that any company of Facebook’s size, after it reaches 500 shareholders, must make financial and other disclosures “within one hundred and twenty days after the last day of its…fiscal year.”

For Facebook, its current fiscal year ends December 31, 2011, making its disclosure deadline April 29, 2012.

As the New York Times noted today:

“Section 12 (g) of the Securities Exchange Act of 1934 came about in the 1960s as over-the-counter trading in shares of privately held companies began to heat up and regulators worried that investors were not getting enough information.”

The huge amount of time Facebook has to adhere to the private company disclosure law has not been noted in copious coverage of the deal, in which Goldman Sachs clients would be able to invest up to $1.5 billion in the Silicon Valley company, as part of a single entity “special purpose vehicle.”

But it brings into focus–given its long lead time–whether Facebook would go to such lengths to keep its shareholder size small at this point.

Nonetheless, from a perceptual viewpoint, the Goldman investment has brought unneeded scrutiny to Facebook, from both the public and also government regulators.

It has also painted the company–which has an everyman, mainstream image, in general–as elitist and consorting with rich Wall Street bankers.

In any case, with the Goldman deal, a lot of financial information about Facebook is now seeping out anyway, as part of the investment bank’s offering documents to the clients it is presenting the Facebook opportunity to.

As The Wall Street Journal reported yesterday:

“According to people familiar with the document, Facebook had net income of $200 million in 2009 on revenue of $777 million. Figures for 2010 weren’t disclosed, but analysts have said the company’s revenue last year could be as much as $2 billion, fueled by advertising growth.”

Whether that smallish net income and revenue deserves a $50 billion valuation or not will be up to investors to decide. But, as the Journal also pointed out, the Facebook offering is oversubscribed already, even without any significant information about the company’s finances.

Which Facebook can keep from us all for a while–although I urge CEO Mark Zuckerberg, Google-style, to FREE THE DATA!

And if you don’t believe me, please enjoy the 12(g)(1) below:

Every issuer which is engaged in interstate commerce, or in a business affecting interstate commerce, or whose securities are traded by use of the mails or any means or instrumentality of interstate commerce shall—(a) within one hundred and twenty days after the last day of its first fiscal year ended after July 1, 1964, on which the issuer has total assets exceeding $10,000,000 and a class of equity security (other than an exempted security) held of record by seven hundred and fifty or more persons; and (b) within one hundred and twenty days after the last day of its first fiscal year ended after two years from July 1, 1964, on which the issuer has total assets exceeding $10,000,000 and a class of equity security (other than an exempted security) held of record by five hundred or more but less than seven hundred and fifty persons, register such security by filing with the Commission a registration statement (and such copies thereof as the Commission may require) with respect to such security containing such information and documents as the Commission may specify comparable to that which is required in an application to register a security pursuant to subsection (b) of this section. Each such registration statement shall become effective sixty days after filing with the Commission or within such shorter period as the Commission may direct. Until such registration statement becomes effective it shall not be deemed filed for the purposes of section 18. Any issuer may register any class of equity security not required to be registered by filing a registration statement pursuant to the provisions of this paragraph. The Commission is authorized to extend the date upon which any issuer or class of issuers is required to register a security pursuant to the provisions of this paragraph.

Web Commerce Isn't Really Social…Yet

Liz Gannes — Thu, 30 Dec 2010 05:24:20 +0000

My colleague Tricia Duryee has an excellent post up on eMoney about the big trends in e-commerce: Mobile, local and social. But when you think about massive new Web commerce businesses like Groupon and Gilt Groupe, they’re barely social at all.

Sites like Gilt are supposedly exclusive discount fashion communities, but the reality is they will take anyone who will pay. Groupon, which just got Google to say it was worth as much as $6 billion and is on the verge of an investor valuation of $4.75 billion, is a glorified email list. Sure, users must swarm a deal to activate it, but that always happens. And users can share deals with their friends on Facebook and Twitter, earning referral rewards if they buy a deal.

Hitwise researcher Bill Tancer told me via email that only 8.3 percent of Groupon traffic comes from social media referrals. That’s compared to 24 percent of Groupon traffic coming from shopping and classifieds Web pages (as in, ads) and 13 percent from email sites.

Upstream traffic from social networks as a portion of total Groupon traffic declined 83 percent from Nov. 9 to Nov. 10. Tancer said the move from social networks to email reflects the shift of Groupon visitors from early adopters to mainstream users.

The thing is, as seen particularly in the gaming business, social may have the capacity to be an incredible multiplier for any industry. Facebook CEO Mark Zuckerberg has said more than once that he thinks e-commerce will be one of the next big sectors to be disrupted by companies that are built to be social from the ground up.

Linking social with commerce is tricky. Besides user reviews and accounts, which have been around forever, much of social commerce is very basic.

For example, Amazon recently launched the most minimal of minimal Facebook integrations, recommending products based on opted-in users’ public “Likes” and giving gift suggestions for friends with upcoming birthdays. The Web retailer could have gone much deeper, by, for instance, automatically connecting Amazon users to their Facebook accounts or helping users tell friends about new items they have bought.

But that would have raised privacy hackles, as with previous Facebook initiatives, such as the discontinued Facebook Beacon effort or the current Instant Personalization program.

Some retailers are trying to sell things directly on Facebook, such as Delta Air Lines tickets and JCPenney apparel. I see the point of trying to capture users on the sites where they spend all their time, but it seems a little awkward.

Not to say Facebook isn’t already developing a burgeoning business in virtual e-commerce through its gaming partners that could eventually extend to real-world goods (although the margins would be much worse).

And, yes, there are all sorts of real-world deals you can access by playing the “mayor game” on a local social service like Foursquare.

Also on the start-up front, the collage community Polyvore arranges deals and creates tools to help its two million users influence fashion designers, and indie retailer Moxsie asks its Twitter followers to help it choose what items to sell.

There are also start-ups, like Payvment and Milyoni, that provide tools for Facebook storefronts. And the purchase-sharing platforms Blippy and Swipely are social commerce taken to the extreme.

While none of those are Groupon-scale businesses, there are many playing around with the potentially explosive combination of social and commerce.

One cool example of social commerce I just saw today was in a post by E.B. Boyd at Fast Company.

Tea Collection, a boutique children’s clothing maker, used the Facebook Like button to decide which of its selection of discontinued girls’ dresses to deeply discount. When a $59 dress was chosen by user Likes, it was discounted to $10. It quickly sold out at a loss, but additional purchases by customers brought in by the sale gave the company one of its biggest overall sales days ever.

Google Goes To the Cloud For New Idea In PC System

Walter S. Mossberg — Thu, 16 Dec 2010 02:03:25 +0000

In the personal-computer industry, where things change fast, one fact has been a constant for years: There are two major, mainstream operating systems for consumers. One, Microsoft Windows, runs on many brands of hardware and dominates sales. The other, Apple’s Mac OS X, runs only on its maker’s Macintosh computers, and has had a resurgence in popularity in recent years. Other contenders, such as various versions of Linux, have remained on the fringes.

[ See post to watch video ]

Next summer, however, Google hopes to add a third broad-based computer-operating system to challenge the duopoly. It’s called Chrome OS, and is based on Google’s Chrome Web browser. With Chrome, Google isn’t just aiming to elbow its way into the OS business. It’s hoping to change the entire paradigm. Instead of storing most programs and files on your computer itself, the Chrome OS will mainly run programs from, and require you to keep your data in, the cloud—remote servers located on the Internet. In effect, it turns your entire computer into a giant Web browser, instead of treating the browser as just one among many local programs.

The Chrome OS isn’t finished, and isn’t ready for broad public testing. Google readily concedes it has lots of bugs and rough edges. But the company has designed a small test laptop with the new operating system installed and distributed “a few thousand” of them to outsiders to try.

A Cr-48 test machine, with Chrome OS installed. Chrome will be licensed to select manufacturers.

I have been using this machine, called the Cr-48, for about a week, and have some explanations and first impressions to share. This isn’t a formal review; that will have to wait till the product is finished and is on commercial computers.

I focused mainly on the software, which is built on a Linux underpinning. That’s because Google doesn’t ever intend to sell the Cr-48 hardware, an all-black, unbranded laptop with a 12-inch screen, a rubbery surface and a large, buttonless touchpad that resembles those pioneered on the Mac.

In my tests, I found this early Chrome OS machine to be fast, with decent battery life and almost instant resumption from sleep. It handled most Web sites fine, and worked almost exactly like the very nice Chrome browser on Windows and Mac.

I also liked the one hardware feature worth mentioning: a radically redesigned keyboard. Instead of function keys, or various legacy keys such as Caps Lock, Chrome OS keyboards feature dedicated browser-oriented keys, like ones for moving back and forth among Web pages and windows, refreshing a page, entering full-screen mode, or quickly opening a new tab and beginning a search.

The Chrome OS will have a big advantage. Because it is mainly a front-end-to-cloud service, if you lose your laptop, you can get another one and just sign into your cloud accounts. You should be able to find all your stuff waiting for you.

However, users of the Chrome OS will have a huge adjustment to make. They will have to give up the rich, local programs they have spent years learning to use and tweaking to their liking. You can’t install local programs on a Chrome OS computer. Instead, Google provides a Web Store inside the browser that allows you to download icons for “Web apps”—mostly websites designed to look and work like standard programs.

Some of these, like Gmail, are familiar and popular. Others are newer. For instance, the New York Times and AOL already designed Web-based news apps for Chrome OS, and there is a Web-based version of the TweetDeck program for Twitter. These apps, and the store’s own icon, appear on the new Tab screen of Chrome OS (and also are available in the current Chrome browser.)

In my tests, I found these apps generally worked fine. But most aren’t as rich and versatile as local Windows and Mac programs. For example, there was no way to play my local, personalized iTunes music collection, unless I spent many hours uploading it to some Web-based service.

I also had to settle for Web-based productivity programs—like word processors and spreadsheets—with many fewer features than standard local ones, such as Microsoft Office.

And I ran into plenty of frustrations. At this stage, Chrome OS can’t do anything with USB flash drives or SD memory cards, and can’t synchronize phones. And it has a very limited ability to store, or allow you to do anything with, email attachments or other files you might download and prefer to keep locally rather than on a server controlled by somebody else.

Printing was a chore, requiring a complicated setup on a Windows computer that Chrome used as a conduit to a printer.

Plus, Chrome OS is hardly stable yet. I suffered numerous crashes of Adobe’s Flash player, and even Google’s own Google Talk instant-messaging service, which appears in a little pop-up window on top of the browser. The company says it hopes to fix these problems by next summer.

Finally, the biggest downside: Because it’s a cloud-oriented system, Chrome OS is almost useless if you lack an Internet connection. Google says it plans to offer some limited offline functionality, and to encourage makers of Web apps to do the same. It will also eventually be able to make some use of some files stored on external hard disks. But the basic operating mode will require you to be connected to the Internet.

To help with this, the Cr-48 has a Verizon cellular modem built in, to supplement its Wi-Fi connectivity. Verizon is offering 100 megabytes of data free, but that is a small amount, and you have to pay for more.

Like the Mac OS, but unlike Windows or Google’s own smartphone operating system, Android, the Chrome OS will be deeply integrated with hardware. So, Google doesn’t plan to distribute or license the new operating system to every hardware maker—at least not at first. You won’t be able to install it on an existing computer. It will be available in 2011 on a limited number of computer models from selected manufacturers.

Google says this is because security is a high priority and requires special hardware designs that tightly bond with the software.

Also, Chrome OS computers will, in some respects, be more like iPads than laptops. They won’t have hard disks, just a limited amount of flash-memory storage, and they won’t have DVD drives.

They are an attempt to realize the old idea of a “network computer,” or one which is mostly a front end for network services.

Of course, many people already spend most of their time with their PCs and Macs connected to the Net. Many use Web-based email programs or streaming music programs instead of local software.

So the time may be right for a cloud computer, a change in the paradigm. Google certainly hopes so.

Find all of Walt Mossberg’s columns and videos online, free, at the All Things Digital Web site, walt.allthingsd.com. Email him at mossberg@wsj.com.

How Do You Solve a Problem Like a GeekPhone? Sprint's Android Makeover

Ina Fried — Wed, 15 Dec 2010 15:00:35 +0000

Cellphone carriers have had a relatively easy time marketing Android phones to the early adopters who were looking for a powerful smartphone they could customize to their liking.

That, after all, is what it was built for.

But a looming challenge is how to tailor both the phones and their marketing to make them more appealing to all those mainstream users who are buying their first smartphone.

For Sprint, one step in this process has been the creation of Sprint ID–a system that lets phone buyers customize their device with one or more themed “packs,” which install a series of themes, widgets and applications with a single click.

Sprint launched the effort back at the CTIA show in October, but is now getting up to speed by both adding more devices compatible with Sprint ID and by lining up some brand-name content. This week, Sprint announced a new MTV-themed pack that combines news from MTV, music from Pandora and an app that helps highlight new artists based on social networking trends.

There’s clearly some room here for device makers and carriers. Even Google’s Andy Rubin, the father of Android, concedes that thus far Android has been best suited for techies.

“I would probably characterize Android as it is today as an early adopters’ platform,” Rubin said at last week’s D: Dive Into Mobile. “It’s for the tech enthusiast and people who are married to the tech enthusiast.”

That is quickly changing, though, with Android making up a greater and greater percentage of phone sales at Sprint and elsewhere.

“You are moving to the mass majority,” said David Owens, Sprint’s vice president of consumer marketing. “That’s not a group of people that are going to go in and customize their device.”

Sprint ID allows them to pick an interest and get all kinds of related content. From there, users can uninstall components or add other applications, but Owens said it gives users a starting point and Sprint a way to stand out from the competition.

Initially, Sprint ID packs were offered as options on two Android models, and more recently Sprint added the lower-end Optimus S to the mix. Owens said those who have one of the three phones have downloaded, on average, two of the themed packs. Sprint plans to eventually offer Sprint ID on all its Android devices.

Sprint ID opens the door to some alternative revenue possibilities for advertising or sales of premium content, but currently all the packs are free, and Sprint is not banking on much in the way of additional bucks for now.

So far, it has about 15 of the different packs, each geared to specific topics and identities, ranging from the MTV pack, to one for golf enthusiasts to several targeted specifically to Latinos. (Latino MTV watchers who love to play 18 holes needn’t worry–users can install up to six different packs and switch among them.)

What has been lacking until now is much in the way of brand power, though Owens said Sprint hopes to change this with MTV and other packs in the pipeline. He wouldn’t give any hints, but said there should be more announcements by CES.

"The Social Network" Sweeps National Board of Review Awards

Beth Callaghan — Thu, 02 Dec 2010 23:24:48 +0000

The National Board of Review has dubbed “The Social Network” the Best Picture of 2010, and has also awarded director David Fincher, star Jesse Eisenberg and screenwriter Aaron Sorkin top honors in their respective categories. Though the NBR’s mainstream makeup often means its picks don’t match those of other groups, notably the Academy of Motion Picture Arts and Sciences, many expect this to be the film’s first step toward an Oscar.

Apple TV: Streaming and Renting From Devices

Walter S. Mossberg — Thu, 02 Dec 2010 02:02:15 +0000

Of all the set-top boxes designed to bring online and computer content to your TV, perhaps the best known is Apple TV. But, unlike its maker’s other products, Apple TV hasn’t caught on in a big way. In fact, Apple CEO Steve Jobs calls it a “hobby.”

[ See post to watch video ]

Still, the company isn’t giving up. This fall it brought out a radically revamped Apple TV at a much lower price—$99, down from $229—and with a different philosophy. While earlier versions contained a hard disk and allowed you to purchase and store movies, music and TV shows, the new Apple TV is all about streaming and renting. It can’t store content, although, like its predecessors, it can transmit to your TV screen content stored on your networked home computers.

Perhaps the coolest feature of the new Apple TV is that it allows you to wirelessly beam video and audio from an iPhone, iPad or iPod Touch to the TV screen. A new feature called AirPlay in the latest software on these portable devices makes this possible. So, if you have a video or photos on, say, an iPad, you can just tap an icon on its screen to view them on a TV via Apple TV instead of on the device’s smaller screen. (AirPlay also works wirelessly from the free iTunes software on PCs and Macs.)

Apple’s Steve Jobs announcing the new release of Apple TV earlier this fall.

I’ve been testing the new Apple TV, including trying out AirPlay using various devices, and found that it performs as advertised. It has a clean, easy interface, does a great job of streaming content from your own computers, and it allows you to rent TV shows at just 99 cents an episode. It’s even almost invisible next to your TV—a 4-inch-square black box less than an inch tall. And setup is easy.

But it has some significant downsides. The most important of these is a very limited selection of Internet video sources. If you want a set-top box that allows you to watch a wide range of video from the Web, Apple TV isn’t it.

Apple TV is now essentially a modestly priced adapter that streams video, audio and photos to your HDTV from three main sources: your own computers, Apple’s iTunes service plus a few other online sources, and content on your portable Apple devices using AirPlay.

It’s the polar opposite of the new Google TV, which tries to encompass the entire Internet but is too complicated for mainstream users and costs hundreds of dollars. Apple is offering much less variety in content sources, but with a much simpler interface and a tiny remote with just seven buttons, versus the keyboard or minikeyboard used with Google TV.

Apple TV is still tied heavily to the company’s own iTunes service. The new model now also offers Netflix, which is nicely integrated into Apple’s user interface, but is very common on other set-top boxes, including the less expensive Roku models. YouTube is accessible from the new device, though it was present on the older model as well. The device can’t deliver other video services, nor is it designed to bring up Web pages on your TV.

And, even within Apple’s own iTunes service, which is Apple TV’s source for a la carte rental of TV shows and movies, the content is limited. For its 99-cent TV show rentals, the device mainly offers programs from ABC, Disney, Fox, PBS and the BBC. If your favorite show is on NBC, CBS or many other networks, you can’t rent it on Apple TV, nor can you get to the Web to view it. Alas, even within those networks, some of the programs are old and I couldn’t find some popular shows, like “Modern Family” on ABC or “American Idol” on Fox. (Fox, like The Wall Street Journal, is owned by News Corp.)

You can still buy TV shows from the excluded networks, or shows unavailable for rental, on your computers and stream them to the TV via Apple TV, but that is a more complicated process.

The Apple TV set-top box with TV showing 99-cent TV show rentals from iTunes.

Apple claims the largest selection of high-definition movies online, and says many are available the same day they appear on DVD. Movie rentals start at $2.99 for standard-definition versions and $3.99 for high definition, though many are $4.99. Both movies and TV shows can be kept for 30 days, but, once you start playing them, the clock starts on a short window before they expire. In the case of movies, the window is 24 hours; for TV shows, it’s 48 hours. You can pause and resume, or watch them repeatedly, within those windows.

In my tests, video and audio quality were excellent. Programs started rapidly, and I never saw any stuttering or buffering delays. Like the older Apple TV models, the new one did a very good job of streaming to the TV content from both PCs and Macs running iTunes on my home network. In fact, the process of setting this up has been made simpler. Watching slideshows of family photos was simple and rewarding.

Searching for a TV show or movie was tedious, because it requires you to peck out letters from an onscreen keyboard with the little remote. (This is why Google uses a keyboard, but that isn’t a welcome device in many living rooms.) However, there’s an alternative. Apple offers a free iPhone and iPad app that can control the Apple TV, and it has a built in virtual keyboard for much faster searching.

AirPlay worked well in my tests. I tried it on both an iPad and an iPhone, and was easily able to switch a video or song from the device itself to the Apple TV, and thus, to the TV screen and speakers. This requires merely clicking on an icon that looks like a wide-screen TV with an arrow beneath it, and then selecting “Apple TV” as a destination.

I also tried AirPlay on both a Mac and Windows laptop using the latest version of iTunes, and it worked fine. On all the AirPlay-equipped devices, you can also multitask. Once you’ve started beaming a video to the Apple TV, you can do other things on the originating device without interrupting the video. For instance, as I write this paragraph in Microsoft Word, I am watching a video beamed to my TV via AirPlay from iTunes on my laptop.

But AirPlay has some limitations. On the iPhone, iPad and iPod Touch it will only beam video to the Apple TV from Apple’s own Video, iPod and Photos apps, plus the YouTube app. On computers, it only works with iTunes. Some third-party apps on the hand-held devices can use it with audio, though not video.

Also, switching the video stream to the Apple TV can take a few seconds, during which the video keeps playing, so you often have to rewind.

Overall, Apple TV is a reasonably priced, well-designed device. It is especially attractive for viewing videos and photos from your computers, and Apple devices, on your TV. But it doesn’t deliver most Internet video sources, or even all online network programs.

Find all of Walt Mossberg’s columns and videos at the All Things Digital Web site, walt.allthingsd.com. Email him at mossberg@wsj.com.

Google TV: No Need to Tune In Just Yet

Walter S. Mossberg — Thu, 18 Nov 2010 02:07:11 +0000

The quest to bring the full range of Internet video to your TV in a simple way continues, but it isn’t going well. The latest team to try—Google, Logitech and Sony—has made an admirably bold effort, but, like others before, it has missed the mark, at least in its first effort.

[ See post to watch video ]

Google TV—software built into hardware made by Logitech and Sony—is very different from competing products, such as Apple TV and Roku. Unlike the others, it aims to merge Web video and regular TV in one simple interface, via one box, with one easily usable controller. Also, unlike the others, it isn’t limited to just customized channels that bring specific Web-video services to the screen. It lets you browse to almost any website with video, and play it on the TV.

But, for now, I’d relegate Google TV to the category of a geek product, not a mainstream, easy solution ready for average users. It’s too complicated, in my view, and some of its functions fall short.

You can get Google TV in three ways. One is through a small, black $300 set-top box called the Logitech Revue. The second is through a special Sony Blu-ray player that costs $400. The third is through a Sony TV with built-in Internet that starts at $600. All are much costlier than the $99 Apple TV or the $60 Roku, but they offer more of the Internet’s video and make the effort to integrate it with cable or satellite programming.

Logitech Revue for Google TV

Google TV cleverly piggybacks onto your existing cable or satellite box and can control it, at least to some extent. So there is no switching of inputs or remotes required, at least theoretically, to go between Internet video and regular TV—something that has plagued competing systems. But if you try to watch an Internet version of a show from a big network site or from Hulu on your Google TV device, it’s blocked, because the studios want to channel those shows through your cable or satellite box.

I tested Google TV using the Logitech Revue product, though I also met with Sony and had a briefing on their version, which looks and works pretty much the same. Setup took 12 steps and about 40 minutes and went pretty smoothly. It might have been worse if, as Logitech warns, your cable or satellite box requires you to install special cables to allow the Revue’s controller to operate it, or if you use a separate audio system. You need an HDTV with HDMI jacks on your TV and cable or satellite box to use the Logitech Revue.

The controller on the Revue is a wireless keyboard. Yes, that’s right, a keyboard, something you might find unattractive in the living room and no better than what you might use if you just plugged a PC into the TV.

Logitech does offer an optional “mini” controller for $130, but it is essentially a tinier keyboard with minuscule buttons and track pad crammed into a smaller space. It is more complex to operate than the big keyboard and much more complicated than a typical TV remote. Sony’s box comes with a similar, complex-looking mini-controller.

The key to Google TV, however, is the software, not the hardware. There is a home screen with a list of core functions, but, Google being Google, the principle activity is meant to be search. You just start typing what you want to see and Google TV brings up a list of hits from both regular TV and the Internet.

Unfortunately, in my tests, this search-and-viewing process was frustrating. For one thing, you only get a few results, and in my experience, they usually weren’t the right ones. When I was looking for the telecast of the Mark Twain Award ceremony for Tina Fey, all Google pointed me to were short clips on YouTube. I had to do a full Web search (a standard option in the brief list Google gives you) and then navigate through a standard Google results screen, which was unreadable at 10 feet without zooming in, to find the full show on the PBS website.

When I finally got to the PBS page, we watched the show, but it was noticeably pixelated on our large TV screen, even though my Internet connection is very fast.

In another case, I wanted to see the new Beatles-themed ads from Apple, but Google’s first results didn’t include them. The closest they came was an old fictional ad on the topic produced by a fan years ago. I manually navigated to Apple’s website, where the ads were prominent, but found that Google TV doesn’t support QuickTime, Apple’s video format. (The company says it plans to do so in a future release.) I knew the ads were also on YouTube, so I went there and eventually found them, with some effort, but they stuttered on playback.

To use the Logitech Revue for Google TV, you need an HDTV with HDMI jacks on your TV and cable or satellite box.

I was similarly frustrated by finding and using regular TV shows from my cable box. Unless you have a box from Dish network, Google TV can’t search in your recorded shows, or allow you, when it finds a show coming up, to set it to record. You’ll likely switch to your regular remote to do those things, which defeats Google’s aim of integration.

Also confusing is Google TV’s home screen, which has overlapping categories. For instance, there is a Queue, for some of your favorite podcasts and sites, and a Bookmarks for others. There is an Applications menu that takes you to specially designed apps that spare you from navigating the regular Web, such as the Netflix video service or Pandora Radio. But there is also a Spotlight category that has customized, simplified websites that, to an average user, amount to the same thing. And, so far, you can only search for the names of most applications, not any content they contain.

Google plans to add the Android Market of third-party apps to Google TV. That could be good, adding more functionality. But it also risks adding more complexity, unless Google redesigns the interface.

Google TV has its strong points. The integration of Web video and regular TV, while flawed, is a smart move. There is even a picture-in-picture feature that lets you keep watching TV while, say, using Twitter or any other Web function. And the Logitech box has an optional $150 camera that allows you to make free video calls. It worked well in my one test. Logitech also allows you to control the Revue from an iPhone or Android app.

But this is a 1.0 product. For now, I’d suggest average users dying to watch Internet video on a TV, either plug in a PC or use one of the wireless systems, like Intel’s Wi-Di, that wirelessly beam video from a PC to a TV. Or, you could wait for Google TV to improve.

Find all his columns and videos at walt.allthingsd.com Email him at mossberg@wsj.com.

VC Ben Horowitz Takes Aim at HP Critics (Are You Listening, Larry and Jack?)

Kara Swisher — Fri, 08 Oct 2010 23:32:43 +0000

Today, in a sharply worded post titled “In Defense of Standards, Ethics, and Honest Financial Reporting at Hewlett-Packard,” prominent venture capitalist Ben Horowitz took to his blog to shoot back at the plethora of critics of the Hewlett-Packard board for their conduct related to the controversial jettisoning of CEO Mark Hurd.

That came after Hurd admitted to filing inaccurate expense reports related to an outside contractor who worked closely with him, and who later alleged sexual harassment on his part. Those charges were dropped after Hurd settled with the woman, named Jodie Fisher, but before HP could complete an investigation.

Since then, the board has been under fire from Oracle (ORCL) CEO Larry Ellison, who hired Hurd as the database giant’s president, and former GE head Jack Welch, who laid into the HP board this week.

Now Horowitz has fired back and here’s a taste of his ire, which is aimed at execs, the media and more:

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

And:

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

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

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

And:

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

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

So, what do you really think, Ben?

Horowitz does have an interest in the situation, which he discloses clearly at the top of his piece: His longtime business and now venture partner is HP (HPQ) board member Marc Andreessen.

And the Silicon Valley soap opera continues….

In Defense of Standards, Ethics, and Honest Financial Reporting at Hewlett-Packard

Ben Horowitz — Fri, 08 Oct 2010 23:22:29 +0000

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

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

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

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

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

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

* Mark Hurd falsified expense reports.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Winklevii Vs. Zuck: Who'd You Rather?

Kara Swisher — Tue, 05 Oct 2010 18:18:14 +0000

The Facebook movie might have performed slightly below box office expectations last weekend for Sony (SNE) movie unit Columbia Pictures, but it certainly has invaded the mainstream zeitgeist.

That’s not much of a surprise, given the relentless marketing campaign by the makers of “The Social Network,” which opened wide last Friday. It has garnered terrific critical acclaim.

Still, BoomTown was quite surprised to see a mention of the film on one of my favorite celebrity sites, TMZ.com.

Of course, because it is gossip-saturated, TMZ featured it as one of its naughty regular features called “Who’d You Rather?”

As in…well, you get the point.

This time they pitted Facebook CEO and co-founder Mark Zuckerberg against the Winklevoss twins in a “Facebook Fight.”

“As part of the movie ‘The Social Network,’ twin brothers Tyler and Cameron Winklevoss claim their Harvard [University] classmate Mark Zuckerberg stole their idea and created what is now this little website called Facebook,” TMZ wrote.

Also surprising, as you can see from the screenshot above, given what hunks of dudeness the Winklevii clearly are, is that Zuckerberg seems to be attracting one-third of the votes compared with their two-thirds.

And since there are two of them, the billionaire social networking wunderkind could be considered tied with the brothers!

Sweet justice after the slamming the Winklevii have been giving Zuckerberg in the media of late, even though they had signed a confidentiality agreement after their first $65 million settlement with him?

The Winklevii are trying to have that overturned and are inexplicably going for more, of course, which should keep the themes of the movie resonating for a while.

That will also be true if “The Social Network” garners some award nominations, especially the Oscar.

Also interesting will be to see if the movie will perform well this weekend or will drop off. It’s so far proved popular in the big cities on the coasts and in Silicon Valley, but now it has to go wide to make some real dough.

But, for sure, it will be on television eventually. Today, the FX cable network said it had bought the broadcast premiere rights to the movie.

Happy 25th Birthday AOL–Love, Snarky BoomTown

Kara Swisher — Tue, 25 May 2010 16:15:16 +0000

Here’s a video BoomTown did in honor of the 25th anniversary of the founding of AOL.

I had to miss the party back East yesterday, as I am prepping for the eighth D: All Things Digital conference–where, in fact, both AOL’s first CEO, Steve Case, and its current one, Tim Armstrong, will be interviewed onstage.

Instead, I did this video, which is inspired from an email Case sent to me recently calling me “Miss Snarky.”

While that’s completely accurate, I decided to have a little fun, all with the goal of feting AOL–which really does deserve much praise for its pioneering and innovative efforts to introduce the Internet to mainstream consumers without the snobbery so typical of Silicon Valley techies toward regular people.

The video aired yesterday during the events on the Dulles, Va., campus of AOL. Original execs Steve Case, Jim Kimsey and Ted Leonsis were there, along with about 500 AOL alumni.

AOL also dedicated three campus buildings: Dulles Main is now known as the Steve Case Center; CC2 is now known as the James Kimsey Center; and CC1 is now known as the Ted Leonsis Center.

Birthday events for AOL continue this week in New York.

So, here’s my video, as well as another video of an odd gathering of musical artists wishing AOL (AOL) happy birthday:

[ See post to watch video ]

Prankster Jason Calacanis Talks About His Apple iPad Hoax (Warning: Cute Baby Alert!)

Kara Swisher — Mon, 01 Feb 2010 13:05:30 +0000

While in Los Angeles for a brief second on Friday, BoomTown motored over to the Brentwood home of puckish entrepreneur Jason Calacanis to talk to him about his prank tweets the night before the introduction of the iPad last week.

On Tuesday night before the much hyped launch of the newest device from Apple (AAPL), Calacanis let loose with a series of over-the-top posts to Twitter, claiming he had been a beta tester for the iPad tablet computer for 10 days.

Unfortunately, these were assertions that some in the mostly mainstream media took too seriously.

So was it a jump-the-shark moment for journalism?

It was certainly sloppy, given that Calacanis is well known for slapping Apple around and that the secretive computer giant does not even give its own employees access to new products.

All this might have sent off alarm bells.

But he followed up with a series of tweets on a myriad of features of the new iPad–one nuttier, pricier and heavier than the next, such as a built-in HDTV tuner, a solar recharging pad and more.

For example: “Yes, there are 2cameras: one in front and one in back (or it may be one with some double lens) so you record yourself and in front of u.”

The problem was that a few big media outfits, including CNNMoney.com and WSJ.com, posted reports on the tweets without much of a raised eyebrow or first checking on their veracity with Apple or with Calacanis.

While anyone can get caught in a prank–and this was a pretty elaborate one pulled by Calacanis, who claims he was just trying to point out how ridiculous Apple hype had become–it’s still an instructive moment for journalism.

Here’s my interview with Calacanis, explaining it all (with a little shot of his new baby girl at the end), as well as images of his faux iPad tweets below:

[ See post to watch video ]

Good News for Twitter (I Think): It Has Scaled the "Peak of Inflated Expectations"!

Peter Kafka — Tue, 11 Aug 2009 13:53:12 +0000

Can the hype surrounding buzzy tech like Twitter, the Kindle and cloud computing get any louder? No, pronounces tech consultancy Gartner Inc., which has a very official-looking chart to make its case.

It’s part of Gartner’s annual “Hype Cycle for Emerging Technologies” report, which is basically a fancy version of one of those “What’s Hot in 2009″ issues that magazines like Entertainment Weekly put out (EW is still around, right?). Gartner has been pumping these out since 2005, and if nothing else, they’re fun to look at. Click the chart to enlarge:

The gist, as I understand it, is pretty straightforward: The promise of new technology moves much faster than the technology itself, which means that expectations get inflated, then deflated, before the technology eventually becomes mainstream (if it ever does). Can’t tell you what methodology Gartner uses to assemble the chart, but I have a hunch that you could figure out the top of the expectations peak with a simple Google (GOOG) search.

Of course, even though the chart looks cool, there’s more art than science here. As Reuters points out, Gartner’s 2006 report told us that Web 2.0 would would go mainstream by 2008. Today, Gartner tells us that Web 2.0 is still another two-to-five years away from breaking big. Meanwhile, be advised that we still have more than a decade before “human augmentation” plays in Peoria.

And I’m still not sure what it is, exactly, that you’re supposed to do with this knowledge. Should Amazon (AMZN) be psyched or worried that e-book readers have reached the top of the hype cycle? If the tablet computer is already climbing up the “Slope of Enlightenment,” does that mean Apple’s (AAPL) presumed-to-be iWant is already late to the party?

But who cares? I love the terminology. I always imagine that the “Trough of Disillusionment” can be found somewhere near the horse latitudes, or perhaps the Fortress of Solitude.

Linden Bets on the Desire for Virtual Things

Don Clark — Wed, 21 Jan 2009 17:14:49 +0000

Virtual worlds have had some real problems. Google (GOOG), for instance, recently shut down an animated environment called Lively only five months after it was announced. And Linden Lab, whose Second Life online community was once front-page news, has neither reached many mainstream consumers nor created an important meeting place for corporate users.

But the San Francisco company is far from backing away. The latest bet: that users will pay real money for things that only exist “in world,” as Second Life fans call it.

Linden Tuesday night announced that it has purchased two small companies–Xstreet SL and OnRez–that act a bit like Amazon.com (AMZN) in providing one-stop shopping for virtual goods from other merchants. One component of their strategy has been to make it easier to buy goods through the Web, not requiring users to enter Second Life to acquire the items they may use there. Financial terms are not being disclosed.

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Consider Your Needs, Then Use This Guide to Buying a Laptop

Walter S. Mossberg — Thu, 10 Apr 2008 00:01:00 +0000

For years, I have focused my twice-a-year computer buyer’s guides on desktop PCs, with less-frequent columns focusing on laptops. Now that the latter are outselling the former, though, I am going to center my main buying guides on laptops. Many of the specs I recommend will also apply to desktops.

As always, this is a general guide aimed at mainstream, nontechnical consumers who dwell on common tasks such as email, instant messaging and surfing the Web; managing and lightly editing photos, videos and music; and using basic office applications. It is not intended for heavy gamers, video producers or corporate buyers.

[ See post to watch video ]

There’s a vast variety of laptop models, but this guide is meant to cover the most common types of laptops, those with screens from about 12 inches to 17 inches, and weights ranging from around 2.5 pounds to 7 pounds.

For this column, I’m not including the category of tiny machines now called netbooks, with screens under 10 inches. I am also ignoring the huge, heavy laptops with screens larger than 17 inches that are primarily aimed at gamers.

Even the remaining mainstream machines range wildly in price, from bargain-basement models at $350 to high-end ones that can top $3,000. In my experience, the top brands for technology and reliability are Apple and Lenovo‘s ThinkPad line, but various models from Sony, Hewlett-Packard, Toshiba and Dell are also worth investigating.

So, here is a quick guide to the key factors you should consider when buying a laptop.

Size: If you are a constant traveler, think about the subnotebook models, which generally weigh 3 pounds or less. There are two types of these. The classic subnotebook has a small screen, 12 inches or less, and a cramped keyboard. This year, a new type emerged, with a full keyboard and a normal 13.3-inch screen packed into a thin, light body. There are two of these: the MacBook Air from Apple and the Lenovo ThinkPad X300. All subnotebooks are relatively costly, typically ranging from $1,500 to over $3,000.

If your laptop will mostly stay at home, the office, or in class, a 5-7 pound machine with a screen of either 13.3 inches or 15.4 inches is the best bet. A well-equipped model in this class is likely to run you between $800 and $1,200. Typical models in this class are the Dell Inspiron 1525, the HP dv6700 and the Apple MacBook.

Windows vs. Mac: This is the eternal question. In my view, Apple’s Leopard operating system is faster, better and far less prone to malicious software than Microsoft’s Vista operating system. And the Mac laptops also come with better built-in software. The $1,099 MacBook is a solid, fairly priced machine, and the $1,999 MacBook Pro is even better. Both also can run Windows.

But Windows laptops are often less expensive, tend to have a greater variety of ports and slots, and come in more styles and sizes.

Apple’s MacBook

Operating system: If you are buying a Windows laptop, be aware that Vista is slower than Windows XP, in my experience, and still has compatibility issues with add-on hardware and software. If you’d prefer to stick with XP, you will find that many fewer models are available with it. And Microsoft has decreed that after June 30, mainstream, name-brand laptops will no longer come pre-equipped with XP.

Video: I recommend getting an LED-powered screen, which is brighter and saves power. Also, if you are choosing Vista, or if you do a lot of converting video for use on portable devices, consider getting a laptop with a separate video card inside that has its own memory.

Memory: If you’re buying an Apple laptop, two gigabytes of memory is plenty. If you’re using Vista Home Premium, I’d consider three gigabytes for best performance.

Processor: Any dual-core processor will be fine. Don’t pay a penny extra for faster processor speed.

Storage: In a mainstream laptop that will be your main computer, look for a 160-gigabyte hard disk or larger. A new kind of storage, called SSD, or solid state disk, is now available. But it is still way too costly for most users, and at the moment is available only in smaller capacities.

Battery life: Many laptops today rarely spend time away from an electrical outlet. But if yours will, look for a battery life of at least three hours between charges.

Wireless: Make sure your new laptop has the new, faster “N” version of Wi-Fi built in. Many cheaper laptops don’t. You can also get a cellphone modem built in, but they are costly and carry a monthly fee. You can always add an external cellphone modem later.

Other features: A built-in camera and microphone can be quite useful, and so can a feature on some Windows machines that allows you to play music and videos without fully booting up the computer.

Don’t let yourself be swayed by sales pitches, or by fanaticism for or against Windows or the Mac. Think hard about how you use your computer and what your budget will allow, and stick to those priorities.

Email me at mossberg@wsj.com. Find all my columns and videos online, free, at the new All Things Digital Web site, http://walt.allthingsd.com.