In three years, Groupon has grown to 11,000 employees in 48 countries, and in the past year alone has acquired 11 companies and launched 11 new products.

“Although there are risks in moving too fast, companies often don’t survive long enough to apologize for moving too slow,” Mason writes. “Perhaps more importantly, by moving quickly, we reached a scale that has helped us solidify our market leadership, and accumulated data that is enabling our future and helping us continuously improve the experience of our customers.”

Mason writes that now it has that scale, the company’s mission is “to become the operating system for local commerce.” He promises to share new products soon.

The letter follows a particularly tough week, where the daily deal company’s shares slid 3.3 percent, or 34 cents, to settle at $9.97 a share, marking the first time its stock closed in single digits. Today, the stock is trading up 5.5 percent, or 55 cents, to $10.52 a share.

At that price, Groupon’s value still hovers around $6.8 billion, which is uncomfortably close to Google’s $6 billion buyout offer, which the Chicago company turned down in late 2010.

Groupon has been unable to regain investor confidence since revising its fourth-quarter results at the end of March, despite putting out a string of press releases. Over the past couple of weeks, it has hired a new SVP, Kal Raman, and appointed two new directors with accounting expertise.

In the letter, Mason attempts to outline what the company has done to date, and where he believes it is heading. Mason writes: “Groupon’s chief accomplishment to date has been discovering a business model that brings the power of the Internet to local commerce.”

Going forward, the company is building a suite of tools and services that it believes will profoundly change the way everyone shops. Today, it might be a glorified mailing list or daily deals company that is easy to replicate. “Tomorrow, we aim to move upstream and serve as the entry point for local transactions,” Mason explains.

A couple of metrics Mason provides detailing its successes:

• Groupon says emails sent to people using its targeting algorithm have a 50 percent higher purchase rate.
• 30 percent of its North American transactions were completed on mobile devices in April, compared to 25 percent just four months ago.
• According to a research report commissioned by Groupon, its U.S. consumer satisfaction score is 83, placing Groupon 11 points higher than the e-commerce benchmark. Merchants give Groupon a satisfaction score of 79.

Dear Stockholders,

2011 was an exceptional year for Groupon. I will start by listing a few of our achievements:

• By year-end, we sold more than 170 million Groupons to more than 33 million active customers on behalf of more than 250,000 merchants in 48 countries around the world.
• We drove well over $2 billion to the small businesses of Main Street, helping them to overcome challenging global economic conditions.
• We launched 11 new products and services, including Groupon Goods, Getaways, Rewards, Now!, and Scheduler.
• We completed 11 acquisitions, which both expanded our geographic footprint and accelerated our product roadmap. Additionally, these acquisitions brought dozens of talented entrepreneurs to our team.

Along the way, we delivered strong growth and improved our operating leverage. Revenues grew 415% year-over-year to $1.6 billion, and we improved our operating margin from negative 134% to negative 14% for the full year. We improved our GAAP EPS during the year from a loss of $0.48 per share in the first quarter of 2011 to a loss of $0.12 per share in the fourth quarter of 2011. And so, though the six months since our IPO have been rocky to say the least, the fundamentals of our business have continued to improve.

As much as this letter is intended to catalog our achievements in 2011, I would also like to use it as an opportunity to share our vision for Groupon and the tangible progress we are making. We are more excited than ever for our future.

Our Mission: To Become the Operating System for Local Commerce

Entertainment, media, politics, and the way we buy products, connect with each other, and consume information—nearly every aspect of life has been fundamentally changed by the Internet. But there’s a huge exception—the way we shop locally.

Groupon’s chief accomplishment to date has been discovering a business model that brings the power of the Internet to local commerce. During the past three-and-a-half years, that business model has allowed us to connect with millions of consumers and hundreds of thousands of merchants and build a brand that they deeply trust.

Upon the shoulders of this business model, Groupon is setting out to reinvent the multi-trillion-dollar local commerce ecosystem. We are building an integrated suite of tools and services that we believe will profoundly change the way we shop locally. Today, Groupon is a marketing tool that connects consumers and merchants. Tomorrow, we aim to move upstream and serve as the entry point for local transactions.

Why Groupon? Aren’t we a daily deals company? A glorified mailing list? What our competitors have learned is that success in local commerce requires an unusual combination of skills—a proficiency in both technology and people-driven operations. With a world-class engineering team—built quietly over the last several years in Chicago, Silicon Valley, and Berlin—and with thousands of salespeople who have cultivated relationships with hundreds of thousands of small-business owners, we believe that we are uniquely in possession of both sides of the equation. That makeup is why we remain the clear leader in local commerce, despite the efforts of hundreds of competitors—from start-ups to the world’s largest technology companies—who have validated the consumer and merchant value created by our business model through their attempts to replicate it.

Many of the seeds we’ve planted in pursuit of our mission are beginning to bear fruit:

• Site and Email Personalization In the past year, we doubled the efficacy of SmartDeals, our deal personalization algorithm. For example, in markets with high deal density such as Chicago, emails sent using SmartDeals have a 50% higher purchase rate. It has taken time to get deal relevance right, but progress has begun to accelerate, and we believe that we’re still in the early stages. We’re excited to finally have begun rolling out SmartDeals outside of the U.S., and we are targeting a broad international rollout by the end of 2012.
• Mobile Adoption The rapid adoption of Groupon on mobile devices demonstrates the importance of smart phones to local e-commerce. Our average North American mobile customer, for example, spends well over 50% more than customers who have never purchased on a mobile device. In April 2012, nearly 30% of our North American transactions were completed on mobile devices, compared to 25% just four months ago. This growth has created momentum for Groupon Now!, our real-time deals service offering deals for whenever you’re hungry or bored, which recently surpassed 1.5 million purchases. Our Now! customers buy approximately twice as many Groupons as customers who only buy daily deals.
• Groupon Rewards: Making Groupon Customers a Merchant’s Best Customers Groupon Rewards allows customers to effortlessly earn rewards at their favorite merchants, simply by paying with a normal credit card. Thousands of merchants are already participating in our pilot cities, and we expect many more to join. During the past two months, about 30% of eligible daily deal merchants in those cities have signed up for the program. As part of Rewards, we are also providing merchants with deep payment analytics to assess the profitability of their Groupon campaigns. Though the preliminary dataset is small, pilot results show that Groupon Rewards customers are more loyal than other customers.
• Groupon Scheduler: The Foundation for Automated Yield Management Groupon Scheduler is a bookings management system that addresses a fundamental need of many of our merchant partners—but that’s only half the story. As we begin to feed merchant inventory to our demand-generation services such as Groupon Now!, we plan to offer a fully automated yield management system for every local business. Scheduler embodies our intent to provide every mom and pop store with powerful technology solutions that were once reserved for sophisticated corporations with multimillion-dollar budgets.

Though our transformation from daily deal provider to local commerce platform will not happen overnight, in the coming quarters, we will release the products that we believe complete the foundation for our ecosystem. We look forward to sharing them soon.

—

In my letter to potential stockholders that accompanied Groupon’s S-1, I warned investors of a bumpy road—an unfortunate side effect of our unprecedented growth. Groupon has scaled to more than 11,000 employees and 48 countries in only three-and-a-half years. Why move so fast? We believe that Groupon is standing before an enormous opportunity, one that hundreds of competitors large and small have seen. Although there are risks in moving too fast, companies often don’t survive long enough to apologize for moving too slow. Perhaps more importantly, by moving quickly, we reached a scale that has helped us solidify our market leadership, and accumulated data that is enabling our future and helping us continuously improve the experience of our customers.

Bumpiness aside, there are three things I come back to again and again that give me confidence in our ability to execute against our mission:

1. Consumers and merchants love Groupon.
Making merchants and consumers happy is core to the Groupon culture and at the center of everything we do. It’s not surprising, then, that we like to talk about how much consumers and merchants love Groupon, and why we go to great lengths to measure their satisfaction. You don’t have to take our word for it—we commissioned ForeSee, a leading third-party research firm and a standard in e-commerce for measuring customer satisfaction, to use their internal methodology to evaluate our relative positioning versus other top Internet retailers, and their results validate our internal research.

Looking at previous ForeSee online retail satisfaction reports, our U.S. consumer satisfaction score of 83 places Groupon among the highest—11 points higher than the e-commerce benchmark, 6 points above the ForeSee Internet Retailer 100 benchmark, and within approximately 2 points of the average #1 satisfaction score for online retailers during the past five years. We believe the #1 spot is within our reach.

What about merchants? The B2B satisfaction benchmark in the United States is a score of 64, and our merchant satisfaction score is a very strong 79. This is a significant number: not only is it 15 points higher than the B2B benchmark, it is a full 10 points higher than the Fortune 500 benchmark.

2. We have an enormous, untapped opportunity in our core business.
Through smarter deal targeting, there is significant growth waiting to be unlocked in our core daily deal business. In the United States alone, we have more than 10 million geo-located subscribers engaging with Groupon every month who have yet to make a purchase. We are kicking off a campaign to activate these customers, primarily by featuring deals that are closer to them; as you might imagine, deal proximity is a major driver of purchase behavior.

3. We are most excited about our long-term potential.
We are focused on what is arguably the last great white space in the consumer landscape that has yet to be disrupted by the Internet. We are deploying significant capital and talent toward the opportunity to bridge the large but fragmented local commerce ecosystem. The opportunity before us is substantial: merchants need customers, and customers crave simple tools to discover and buy locally at a great price, tools we believe we are best positioned to provide.

Armed with our mission, strong execution, and courage, Groupon has the opportunity to become one of the world’s great companies. We believe it is our duty to you, our stockholders, to pursue our mission with unyielding perseverance. Thank you for joining us as we continue on this journey.

Sincerely,

Andrew D. Mason

Chief Executive Officer

Groupon, Inc.

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

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

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

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

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

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

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

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

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

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

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

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

Said the statement in full:

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

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

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

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

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

RELATED POSTS:

• Yahoo’s Parting With Thompson Will Be for “Cause” (a.k.a. CSLie)
• Ross Levinsohn’s Yahoo Plan: Back to the Future
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• Buffett Comments on Trust Issue in Yahoo CEO BioGate: “You’ve Got a Problem”
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The gloves are now really off in the proxy battle for Yahoo.

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

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

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

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

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

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

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

According to Loeb’s letter:

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

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

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

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

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

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

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

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

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

Third Point Letter to Board May 3 Release

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

But some advertisers with big spending accounts are wondering whether they’re getting their money’s worth.

The doubt lingers as bankers and prospective investors decide how to value Facebook for an initial public offering planned for May 18, said people familiar with the matter. Facebook executives will be pitching the company to big investors in an IPO roadshow starting Monday, these people said.

Read the rest of this post on the original site »

According to sources close to the situation, Facebook is anticipating getting approval from government regulators to officially distribute its S-1 public offering prospectus to investors within days, which would mean its road show could begin as early as next week.

As I reported back in January, the social networking giant is expected to go public in the second or third week of May, a timeline (get it?) which currently appears to be on track.

In addition — although some have speculated that its famous CEO and co-founder Mark Zuckerberg might not take a “hands-on” role in the high-profile process, having missed one pre-IPO meeting with Wall Street analysts and bankers (can you blame him?) — sources said he would be appearing before potential shareholders, and would be present at key meetings to help sell the company to them.

Of course, he will — although there was much speculation that the Silicon Valley superstar would bow out of any of the hubbub around the huge IPO, and that bankers were practically begging him to appear, sources said Zuckerberg is too key to all aspects of its business not to appear.

(No word as yet on whether he will don a tie, as he sometimes does, or if his usual hoodie will be Zuckerberg’s outfit of choice — although his sartorial choices on the road show are sure to get excessive media scrutiny.)

“Facebook is Mark Zuckerberg and Mark Zuckerberg is Facebook,” said one person with knowledge of the situation. “He’ll do his job as CEO, as he always does.”

Indeed, although he is often portrayed as shy and not a fan of the limelight, Zuckerberg has always stepped up — and rather enthusiastically — when a public appearance is needed, whether in times of trouble or touting for the eight-year-old company.

This is a touting-Facebook moment, of course, as it seeks to raise up to $10 billion in a blockbuster offering that could value the company at $75 billion or more. Filed in February, that will make it the biggest Internet IPO ever.

Also expected to play key roles in the road show are CFO David Ebersman and COO Sheryl Sandberg, as well as other top Facebook execs.

Whether they all can rev up the jets and get going on the road show depends on the Securities and Exchange Commission finally declaring Facebook’s preliminary prospectus of its business and finances “effective” or in legal compliance.

Facebook has updated the initial filing several times, with new financials as well as information about its purchase of photo-sharing site Instagram and its ever-nasty patent battle with Yahoo.

But, overall, the SEC process has been rather smooth for the company, and sources said it appears it will continue that way.

After the road show: A sales process in which investors ask their questions of management and then officially begin to place orders for Facebook stock.

Among the areas of likely concern are that Yahoo patent lawsuit and, most importantly, how Zuckerberg and others characterize the slowing of its explosive revenue growth in its most recent filing update.

Last week, Facebook said its revenue was $1.058 billion, up 46 percent for the year, but down 6 percent from the previous quarter. In the first quarter of 2012, its net income was $205 million, which was down from $233 million a year ago. The company attributed the decline to rising costs, including in marketing and in research.

After the road show, Facebook’s bankers will price the offering — which is widely expected to be massively oversubscribed — and then it will go public on the Nasdaq market, under the “FB” ticker.

The rest, as they say, will presumably be history — or, in fact, the future for Facebook in the public eye.

Spencer Platt | Getty Images News

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

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

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

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

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

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

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

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

As Tricia Duryee wrote recently about the fall:

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

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

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

That’s perhaps no surprise.

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

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

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

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

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

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

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

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

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

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

At least the wild part was accurate.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Flying under the radar — and away from the eyes of the tech press that might have otherwise paid it attention — was sort of the plan, Demandforce chief marketing officer Patrick Barry told me in an interview a few minutes ago. “We built this company the old-fashioned way. That meant putting our customers first. PR and other things were not a priority. Our customers don’t read tech sites. We focused our efforts on reaching out to our customers.”

Whatever it was, it worked. Demandforce, launched in 2003, had attracted $11.8 million in venture capital investments, primarily from Benchmark Capital. By the time of the acquisition announced today, the San Francisco-based outfit had 300 employees, a profitable business with a run rate of $60 million in annual sales and — get this — $12 million in the bank.

So what does Demandforce do? Marketing for small businesses: Dentist’s offices and hair salons and auto-repair shops and scores of other types of small businesses that make up the majority of the U.S. economy and need help reaching out to their customers.

Demandforce, Barry told me, built bridges to the data stored in old-school marketing software programs — and there are dozens of them — that would typically run on desktop machines, freeing up the data and moving it into the cloud.

From there, it would apply its own marketing algorithms to the business: managing appointment reminders, asking customers for feedback and publishing customer reviews. So far, Demandforce has syndicated 1.5 million reviews to Google and CitySearch and other sites like them that accept Demandforce content.

Intuit said in a statement that it will make Demandforce into a new division in its Small Business Group; it will continue to be led by Rick Berry, Demandforce’s president and founder. He will report to Kiran Patel, the executive vice president and general manager of that group.

After the deal closes, Intuit said, it expects Demandforce to add one to two points to its revenue growth in fiscal 2013, and to be neutral or slightly dilutive this year. Intuit shares rose 44 cents, or less than 1 percent, to $58.04.

Facebook filed an updated version of its S-1 public offering document today, which included somewhat disappointing first-quarter financials.

In the new filing with the Securities and Exchange Commission, its fourth update for its upcoming public offering, the social networking giant’s revenue was $1.058 billion, up 46 percent for the year, but down six percent from the previous quarter.

In the first quarter of 2012, Facebook’s net income was $205 million, which was down from $233 million a year ago. The company attributed the decline to rising costs, including in marketing and in research.

Facebook also said its current share price was $30.89 each, which values the entire company at about $77 billion.

Some investors might worry about the latest results, which show a slowing in Facebook’s torrid growth. But Facebook said the quarterly decline was due to seasonality — it was flat in the same period a year ago.

As it noted in the document:

“We believe that our rates of user and revenue growth will decline over time. For example, our revenue grew 154% from 2009 to 2010, 88% from 2010 to 2011, and 45% from the first quarter of 2011 to the same period in 2012. Historically, our user growth has been a primary driver of growth in our revenue. We expect that our user growth and revenue growth rates will decline as the size of our active user base increases and as we achieve higher market penetration rates.”

Its audience, though, was still growing strongly: Facebook also said it had 532 million daily active users, up from 372 million a year ago and 483 million in December. Its monthly active users were up from 680 million last year to just over 900 million and up from 845 million from December.

Facebook also added an explicit figure for average revenue per user, which was $1.21, up six percent year over year. It also said the number of full-time employees grew 46 percent from last year to 3,539 at the end of March.

The last update to Facebook’s regulatory filing for its mid-May IPO was in late March. That one gave investors more information about a patent infringement lawsuit waged by Yahoo — Facebook noted its counter claim in the newest filing — and also its motion to dismiss Paul Ceglia’s legal attempt to garner half of the company. It then included more information about growing engagement by users of the social networking site.

Along with some other minor changes in the new document, Facebook noted, in news that was already known, that it would trade its stock on the Nasdaq market under the ticker symbol “FB.” It also said it had bought photo-sharing start-up Instagram, another piece of old news, and noted its just-struck patent deal with Microsoft.

One new detail about Instagram: Facebook forked over “approximately 23 million shares of our common stock and $300 million in cash” to buy it.

Also, said Facebook, in an interesting new section on its global business:

“In the first quarter of 2012, 50% of our revenue was generated by users in the United States and Canada, a decrease from 54% of our revenue for the first quarter of 2011, and in 2011, 52% of our revenue was generated by users in the United States and Canada, as compared to 58% in 2010, as we experienced more rapid revenue growth in markets such as Germany, Brazil, Australia, and India.”

Here is the whole updated file, if you want to peruse yourself:

4thfbs1update

In a move that AllThingsD had previously reported was coming, Yahoo said it had laid off 2,000 employees, or 14 percent of the workforce.

“Today’s actions are an important next step toward a bold, new Yahoo! — smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require,” said Yahoo CEO Scott Thompson in a statement. “Unfortunately, reaching that goal requires the tough decision to eliminate positions.”

While Yahoo has had periodic layoffs over the years, this one is its most significant in its history, and will also result in another large-scale restructuring of the management organization. More cuts are also likely to follow in the months ahead, due to the reshaping of Yahoo.

The latest employee action is being pushed by Thompson, who joined the Silicon Valley Internet giant in January from eBay’s PayPal unit.

“Change is never easy,” he wrote in an internal email to Yahoo employees (it is below in its entirety), in a well-worn cliché I am dead certain few appreciated hearing today from the top leader.

At an internal meeting with top staff last night, Thompson — who has gotten what seems to be a well-deserved reputation for chewing folks out at Yahoo — was more direct with the execs gathered, berating them extensively for not delivering and getting the company to this sorry point.

Ouch, Scott! It’s Easter, so it might be time for some forgiveness. (And no more ranting about my reporting to those inside Yahoo, since I have been 100 percent accurate so far. FYI, will aim for 110 percent next week!)

Yahoo said it will save about $375 million with the cuts, incurring a $125 to $145 million pretax cash charge for employee severance in its second quarter. Before the cuts, Yahoo had 14,000 staffers and has many thousands more hired as contractors.

The layoffs touch all units of the company, but the hardest hit is the product division, which is headed by Blake Irving, as well as its marketing, research and international units. Yahoo gave no details on the layoffs other than the number.

But the fate of two key parts of the soon-to-be-blown-apart unit — Yahoo’s advertising technology businesses, Right Media and APT, and its search business — is still being contemplated, as I have previously reported. Possible scenarios include a sale or a joint venture transaction for both, which employ thousands of Yahoo staffers.

The layoffs tomorrow are not the end of the road in cutting costs. Along with the likely shedding of its ad tech and search businesses, Yahoo leadership is also looking at future cuts as it evaluates current businesses, which could lop even more employees off its roster.

That said, Yahoo will be doubling down in some older and new arenas, so there would also be simultaneous hiring in the months ahead.

As wrenching as they will be today at Yahoo, the layoffs come as no surprise. Thompson had told employees in memos and also in recent meetings that “real change” was coming to the company.

Along with the trauma of the layoffs, Yahoo is also facing two other tense face-offs externally. In one, activist shareholder Third Point is waging a proxy fight for board seats and stepped up the public pressure this week; and Facebook struck back hard at Yahoo’s patent lawsuit with a counterclaim of its own.

After the layoffs tomorrow, sources say Yahoo will be announcing a new organization by next week. Thompson, along with outside consultants he has hired from the Boston Consulting Group, are making what appear to be profound changes.

Sources said that Yahoo will most likely be comprised of a global media division, one that encompasses Yahoo’s consumer products businesses and one focused on global and regional sales. There could also be a small organization of about 50 employees aimed at future innovation.

Americas head Ross Levinsohn is pegged to run the media arm, which will also include its leads/commerce businesses, such as autos; Shashi Seth — who now heads search and marketplaces — is likely to run consumer products, which will include Yahoo’s communications and search businesses.

Yahoo has already been conducting a search for a new worldwide sales head, who will also be boss of the U.S., Asia and Europe, Middle East and Africa sales regions. Rich Riley, who was recently running EMEA, is reportedly the pick for U.S. sales; Rose Tsou, who is running Asia, would presumably stay put; Yahoo is looking for an EMEA sales lead.

Some current operational execs — such as service engineering and ops head David Dibble, CFO Tim Morse, and top lawyer Mike Callahan — are likely to continue to operate as before.

One big question mark is how Chief Product Officer Irving fits in the possible new org, in which the new units get control of their product development. Irving has reportedly had several incoming job offers, although it is not clear if he has responded to that interest.

But today, the focus is on the layoffs and letting go all those employees, many of whom have worked at Yahoo for years. Even if it will result in a stronger Yahoo, as Thompson promises, it is still a very sad day in Sunnyvale.

Here is a video on the topic that I did with the WSJ.com “Digits” show today, after the cuts were announced early this morning:

Here’s the entire terse statement from Yahoo:

Yahoo! Statement

SUNNYVALE, Calif. — (BUSINESS WIRE) — Yahoo! today confirmed that it is taking important next steps to reshape the company for the future.

“Today’s actions are an important next step toward a bold, new Yahoo! — smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require. We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities. Our goal is to get back to our core purpose — putting our users and advertisers first — and we are moving aggressively to achieve that goal,” said Scott Thompson, CEO of Yahoo!. “Unfortunately, reaching that goal requires the tough decision to eliminate positions. We deeply value our people and all they’ve contributed to Yahoo!.”

Yahoo! has a solid foundation — nearly 700 million users and thousands of advertisers that engage with Yahoo! properties regularly and trust the company with their data and their business. Through its restructuring efforts, Yahoo! intends to grow by responding more quickly to customer needs and competing more effectively in areas where it can win. Yahoo! has identified key parts of the business — a select group of core businesses, the platforms that support those core businesses, and the data that drives deep personalization for users and ROI for advertisers — where the company will intensify efforts and redeploy resources globally, all focused on increasing shareholder value. With a clear focus on profitability and growth, the company will be disciplined in its investments and radically simplify how it builds, launches and maintains many of its properties and products.

Today, the company will begin the process of informing employees about these changes. As part of that effort, approximately 2,000 people will be notified of job elimination or phased transition.

Yahoo! expects to realize approximately $375 million of annualized savings upon completion of all employee transitions. The company currently expects to recognize the majority of an estimated $125 to $145 million pretax cash charge relating to employee severance in its second quarter financial results. The company may incur additional charges in connection with this action. More information will be provided about Yahoo!’s future direction in conjunction with the release of its first quarter financial results on April 17, 2012.

And here is Thompson’s memo to employees, stating the obvious and with nothing new from previous statements and internal memos:

Yahoos –-

Today we are restructuring Yahoo! to give ourselves the opportunity to compete and win in our core business. The changes we’re announcing today will put our customers first, allow us to move fast, and to get stuff done. The outcome of these changes will be a smaller, nimbler, more profitable Yahoo! better equipped to innovate as fast as our customers and our industry require.

Over the last 60 days, we’ve fundamentally re-thought every part of our business and we will continue to actively consider all options that allow Yahoo! to put maximum effort where we can succeed. As part of this process, I believe we have to focus to win in a select group of core businesses globally:

Core Media and Communications: Our content, media, and communications experiences must be best in class. That includes getting today’s core properties right and innovating on a next generation of great product experiences across all screens.∙

Platforms: We must make our core platforms and systems a genuine strength for Yahoo! — platforms that we can really leverage to support our massive scale, drive the deepest personalization, and boost speed to market.∙

Data: Our massive data sets must become a genuine competitive advantage for Yahoo!. We have to unlock the value in our data to allow us to really understand our 700 million users, encourage and win their engagement and trust, leverage everything they do with us to more fully personalize their experiences, and to give our advertisers the immediate insights they are rightfully demanding.

We are intensifying our efforts on our core businesses and redeploying resources to our most urgent priorities. Our goal is to get back to our core purpose — putting our users and advertisers first -– and we are moving aggressively to achieve that goal.

Unfortunately, reaching that goal requires the tough decision to eliminate jobs, which means losing colleagues and parting with friends. Today, we will begin the process of informing employees about these changes. As part of that effort, approximately 2,000 people will be notified of job elimination or a phased transition. We value our people and for those who will be leaving, we thank you for all you have contributed to Yahoo!. We will treat all of our people with dignity and respect, providing resources to help manage through their transition.

Change is never easy. But the time has come to move Yahoo! forward aggressively with increased focus and accountability. Our values have always been about treating all Yahoos with dignity and respect, and today is a day to embrace those values. This is an amazing company with exceptionally talented people and I know we will all do our best to encourage each other through this difficult period of transition.

Scott

According to sources close to the situation, Yahoo’s massive round of layoffs — which is likely to impact up to 2,000 employees — is just the tip of the proverbial iceberg that will hit the storied Silicon Valley Internet giant in the months to come.

Sources said Yahoo is currently planning to announce the cuts in staff in the early morning, just as the markets open. That could change, of course, but the cuts will definitely occur within the next two days.

The layoffs, which will touch all units of the company, are expected to hit hardest in the product division, which is headed by Blake Irving.

But the fate of two key parts of the soon-to-be-blown-apart unit — Yahoo’s advertising technology businesses, Right Media and APT, and its search business — is still being contemplated, as I have previously reported. Possible scenarios include a sale or a joint venture transaction for both, which employ thousands of Yahoo staffers.

Also set to be hard hit are Yahoo’s local businesses, as well as its marketing and research divisions. While still sustaining losses, its media units will not be as badly impacted. And it’s not clear how many employee terminations will be aimed at the company’s general and administrative staff.

The layoffs tomorrow are not the end of the road in cutting costs. Along with the likely shedding of its ad tech and search businesses, Yahoo leadership is also looking at future cuts as it evaluates current businesses, which could lop even more employees off its roster.

That said, Yahoo will be “doubling down” in some older and new arenas, so there would also be simultaneous hiring in the months ahead.

But not tomorrow, which will be one of the tougher days in Yahoo’s long history of periodic layoffs. Newly installed CEO Scott Thompson had told employees in memos and also in recent meetings that “real change” was coming to the company.

That is indeed the case, which is causing massive strain throughout the company, which now employs over 14,000 and has many thousands more hired as contractors.

Along with the trauma of the layoffs, Yahoo is also facing two other tense face-offs externally. In one, activist shareholder Third Point is waging a proxy fight for board seats and stepped up the public pressure this week; and Facebook struck back hard at Yahoo’s patent lawsuit with a counter-claim of its own.

After the layoffs tomorrow, sources say Yahoo will be announcing a new organization by next week, which will create several major, soup-to-nuts units at the company. Thompson, along with consultants he has hired from the Boston Consulting Group, are making what appear to be profound changes.

Sources said Yahoo will most likely be comprised of a global media division, one that encompasses Yahoo’s consumer products businesses and one focused on global and regional sales. There could also be a small organization of about 50 employees aimed at future innovation.

Americas head Ross Levinsohn is pegged to run the media arm, which will also include its leads/commerce businesses, such as autos; Shashi Seth — who now heads search and marketplaces — is likely to run consumer products, which will include Yahoo’s communications and search businesses.

Yahoo has already been conducting a search for a new worldwide sales head, who will also be boss of the U.S., Asia and Europe, Middle East and Africa sales regions. Rich Riley, who was recently running EMEA, is reportedly the pick for U.S. sales; Rose Tsou, who is running Asia, would presumably stay put; Yahoo is looking for an EMEA sales lead.

Some current operational execs — such as service engineering and ops head David Dibble, CFO Tim Morse, and top lawyer Mike Callahan — are likely to continue to operate as before.

One big question mark is how Chief Product Officer Irving fits in the possible new org, in which the new units get control of their product development. Irving has reportedly had several incoming job offers, although it is not clear if he has responded to that interest.

Let’s hope that Yahoos who will be let go tomorrow find themselves with many new employment choices after the ax falls.

Yahoo is preparing to begin layoffs of what could be thousands of employees starting next week, according to multiple sources, and is then expected to announce a new restructuring of the company the week after.

The swirl at the Silicon Valley Internet giant has grown more intense this week, as new CEO Scott Thompson has brought in top management for a series of meetings both Tuesday and Wednesday to outline the plans.

What has emerged — although sources noted that Thompson and others communicating the pending changes said nothing was yet set in stone — is the picture of a drastically slimmed-down organization with a focus on media, advertising and new but unclear “future” initiatives.

First the layoffs: Sources said the cuts will be deep and mostly aimed at the product, research and marketing units of Yahoo, which are likely to take place Wednesday. The ultimate goal, said multiple sources, is to cut many thousands from Yahoo’s staff of close to 14,000 employees, which is actually much larger, due to contract workers not officially in its roster.

The entire cut will not take place at once, said sources, since Thompson and others are still trying to figure out how to dispense with its ad technology org and, potentially, its search business. He has been in discussions with both Microsoft and Google about this, although there are other possibilities, too.

Both these parts of Yahoo together have about 2,500 staffers, whose fate is not yet sorted out.

Also still baking is the new structure, although sources said it is most likely to be comprised of a global media division, one that encompasses Yahoo’s communications and search businesses, and ones focused on global and also regional sales. There could also be a small organization of about 50 aimed at future innovation.

Americas head Ross Levinsohn is the likeliest exec to run the media arm, while Shashi Seth — who now heads search and marketplaces — would be the obvious candidate for the the communications/search one.

Thompson has already been conducting a search for a new worldwide sales head, although one possible internal exec for the job could be Rich Riley, who was recently running Yahoo’s Europe, Africa and Middle East region.

It is not clear how Chief Product Officer Blake Irving fits in the possible new org, since much of the development could now move to the decentralized units.

Some current operational execs — such as service engineering and ops head David Dibble, CFO Tim Morse, and top lawyer Mike Callahan — are likely to continue to operate as before.

Thompson, along with consultants he has hired from the Boston Consulting Group, presented the possible plan in front of Yahoo’s senior execs on Tuesday. That was followed by more meetings with a wider range of top management yesterday, although Thompson was not as highly specific in these meetings.

In fact, according to a half-dozen sources, Thompson apparently grew somewhat testy in one of the gatherings, when asked if there was a strategy he was going to announce in more detail to the group.

(Dear Scott, these are very talented employees who love the company and who have been through the wringer and it’s not their fault that leadership has failed them, so it might be a good idea to treat them with as much respect as possible right now.)

More to come, obviously.

What is Yahoo?

While that has been the perennially unanswered question at the Silicon Valley Internet giant for many years, according to dozens of sources inside and outside the company, Yahoo’s leadership is now deeply embroiled in an intense — and sometimes very tense and fast-changing — debate over a number of critical issues about what is expected to be the most sweeping restructuring in its history.

Top executives at the company are conducting what is likely to be a lively all-day “offsite” meeting today (which is actually taking place on Yahoo’s Sunnyvale campus) to continue to discuss, among other things: How and where the company will make large-scale cuts in staff, which I have previously reported were coming and will perhaps be numbering in the thousands; which businesses to sell off and which to keep, including its ad tech unit; the correct structure for the reconfigured entity; and who will be left to run it all when it is all settled.

Also up for debate is the best course of a two-pronged effort — being led primarily by CFO Tim Morse and members of his corporate strategy team — to renegotiate its search and advertising partnership deal with Microsoft, while also engaging in active discussions with Google about it taking over Yahoo’s search business.

“Everything is on the table,” said one person. “And anything could be blown up by Scott.”

The Scott being referenced is new CEO Scott Thompson, who has become something of a whirling dervish since he arrived at Yahoo only three months ago from the top job at eBay’s PayPal unit.

If shaking up the place — as he has promised in public and internal statements, including a recent memo in which he wrote that “real change is coming” — was his aim, Thompson is certainly doing just that and more.

Along with immediately initiating a massive effort to figure out the best way to restructure the long-troubled and ever-meandering company and all that entails, Thompson has also been meeting players all over Silicon Valley for advice; stopping and then restarting negotiating discussions with Yahoo’s Asian partners, visiting major advertising clients; and engaging in talks with activist shareholder Dan Loeb about settling a looming proxy fight, while also packing the board with allies to help fend off said battle.

And, oh yes, he also took a little time out from his busy schedule to sue Yahoo partner Facebook for patent violations.

But the real action is the remaking of Yahoo in his image. To do so, Thompson has been furiously evaluating the entire company, with the help of Boston Consulting Group and a small group of execs, especially Morse.

While it is all still undecided, he seems to be leaning toward Yahoo as a drastically slimmed-down entity without a central product group and with a simplified structure that includes global units — such as media, commerce and sales organizations — which will again be in charge of the entire development of their offerings.

(I will note, since I have been covering Yahoo since near its founding, this is a structure that has been in place before. In other words, at least for dinosaurs like me, there is nothing new under the sun here.)

The changes being contemplated include, as I have written previously, the possible sale or drastic reconfiguration of its ad technology business, which will effect at least 1,000 employees. Another 1,500 involved in Yahoo’s search business will also be impacted, depending on talks the company has been having with Microsoft, as well as Google, about better monetization.

Such a structure brings up a lot of questions about how, and by whom, it will be run. To figure it out, Thompson has been evaluating — sometimes rather brusquely — his own top managers, as well as looking for new ones outside the company, such as a search for a chief marketing officer and other key positions.

Confused? Perhaps, but not for much longer, said multiple sources, as Thompson moves closer to delivering his answer to the what-Yahoo-is question.

Yahoo PR — by the way, it will not escape Thompson’s change machine, either! — declined comment.

Now it’s real estate’s turn.

Or at least that seems to be the case in what could be a developing feud between real estate agents and online listing services such as Zillow, Trulia and Realtor.com.

As these sites have risen in prominence, real estate agents are starting to push back, especially as they find it difficult to live without them.

In protest, a small number of agents have started to pull their listings from the sites. (In one case, an agent rambled on about the issue in a seven-and-a-half minute video on YouTube.)

A new white paper issued this week suggests that the topic is gaining momentum.

The report, written by VHT, which sells photography and video services to agents, concluded that agents are no longer competing against each other. The competition, rather, is “the fast-growing, third-party ecosystem of listing aggregators, online publishers, virtual tour providers, advertising networks and media companies that are dominating search engine results in order to capture online leads.”

It goes on to suggest that the remedy is for real estate agents to become savvy online marketers, and to drive sales leads through their own Web sites, rather than advertising on Zillow or Trulia.

A Zillow spokeswoman says only one brokerage so far has pulled its listings — the same one that produced the YouTube video — and a Trulia spokesman said they’ve “only seen a couple” of agents remove listings.

Seattle-based Zillow went public in July, raising $70 million; San Francisco-based Trulia is expected to seek an IPO sometime this year. Realtor.com which is operated by the National Association of Realtors, is owned by Move, Inc., a publicly traded company.

“We are not their competition,” said Trulia’s spokesman Ken Shuman. “We are a marketing outlet with 20 million unique people coming ever month who are looking to buy or to rent a home.”

So, while the practice does not seem to be widespread, agents are increasingly vocal about the shift in power that has occurred over the past decade from real estate agents to online Internet providers.

Indeed, Zillow, Trulia and Realtor.com do get the majority of online traffic.

In January, Zillow controlled 37 percent of online visits; Trulia controlled 27 percent; and Realtor.com controlled 25 percent, according to the report. The remaining 11 percent was split among dozens of brokerage firms, such as Century 21, Coldwell Banker, Keller Williams, Prudential and many others combined.

“As an industry, brokerages have done a poor job of making themselves and their Web content visible to search engines,” wrote VHT’s CEO Alex Zoghlin, who authored the report.

But to understand what’s going on, it requires some basic knowledge of how the industry works, so let’s step back for a moment for a brief overview.

The Multiple Listing Service (MLS) is a list of most homes for sale in the U.S.

Real estate brokers receive the list and can post it on their Web sites. But other sites, like Zillow and Trulia, are not brokers and therefore don’t have access (unless they strike agreements with the different MLS divisions across the country).

Up until now, Zillow and Trulia have used a mix of sources, including agents, who volunteer to post their listings on their Web site for free.

Zillow and Trulia then make money, in part, by selling advertising to agents, who want leads for home buyers and sellers.

But it’s not exactly clear what has some agents so upset, and more importantly, it’s difficult to separate fact from fiction.

ARG Abbott Realty Group broker and president Jim Abbott, who recorded that YouTube video, lists a number of reasons for pulling his listings from the sites. He says the information is often display incorrectly, or is out-of-date; other claims he makes include theft of intellectual property and poor customer service.

What Abbott didn’t come right out and say is that he is not happy with the shift in power, or that the sites are profiting off the information that agents give them.

But late last year, Edina Realty of Edina, Minn., was willing to say it: The company said it pulled its listings because it was unfair that the agents are giving up their listings for free to the sites, which were then profiting off those same agents.

But according to Zillow’s spokeswoman Cynthia Nowak, that is not entirely true.

“What many agents don’t understand is that it is completely free to receive prominent placement on their listings,” Nowak said. “All they have to do is sign up for a free Zillow profile and verify their contact information, and their name, picture, contact info, etc. appears at the top of their listings.”

Still, to pull a listing off Zillow or Trulia at this point is somewhat anti-homeowner. The home’s seller is usually looking to reach the largest possible audience in order to sell their home — and is not interested in the politics of placing listings online.

An agent in Phoenix Jay Thompson, who goes by the handle “The Phoenix Real Estate Guy,” sided with Zillow. In a long blog post, Thompson broke down each one of Abbott’s points and explained why he disagreed.

On one point, Abbott said that syndication sites use peer pressure to sell advertising to agents.

Thompson’s response: “If you don’t like the fact that syndication sites sell advertising, that’s fine. Don’t buy it. Peer pressure? Put on your big girl panties and stand up to the peer pressure and do what YOU think is right.”

But who knows if his statements were entirely unbiased? Two months later, Zillow hired The Phoenix Real Estate Guy as its director of industry outreach and social media.

But at least one part of his blog post is true, no matter where he works.

He asked, “Is there an ‘anti-syndication movement’ afoot in the real estate vertical? Maybe. Maybe not. Only time will tell where this is headed.”

Indeed, it is not clear. After all, this might be another example of an industry playing catch-up with the Internet.

I think Amazon made me the person I am today. Aside from making me very wary of corporate situations, I try to apply the marketing savvy I learned from Jeff Bezos. [laughs] I really pattern the marketing of this show and other shows after the way I saw Amazon talk about itself.

– Mike Daisey, from a 2005 interview about a show based on his three years as an Amazon.com worker

ParkMe is an app that AllThingsD writer Ina Fried wrote was “the best (and worst) marketing gimmick in Austin” at the SXSW Interactive festival last week.

Simply put, the Los Angeles-area start-up used fake tickets and boots to get the word out about their app, which recommends the “cheapest and closest parking around you.”

Yes, boots in Texas. Heh.

Here is a video ParkMe did about the effort:

Last year, the nation’s top 100 retailers by e-commerce revenue sent recipients an average of 177 emails apiece, up 87% from 2007, according to research by marketing-technology company Responsys Inc. Some of the most aggressive emailers — including Neiman Marcus Group Inc. — sent each recipient more than 500 emails apiece in 2011, Responsys said.

Read the rest of this post on the original site »

And that’s what Beyond Oblivion pulled off. The would-be service closed down at the end of last year, before it ever started up.

My hunch is that the company was doomed from the get-go, but Evolver.fm’s Eliot Van Buskirk diligently digs in behind the scenes to find out exactly what happened, and where the money went. It’s a great, gruesome read.

What’s particularly notable about Beyond Oblivion’s collapse is that you can’t accuse the big music labels of killing it with extortionate fees. They planned to get extortionate fees, and Beyond Oblivion’s strategy apparently involved complying — the company had planned to hand over $150 million in upfront licensing payments.

But they never got a chance. Instead, the money went into to all sorts of other stuff that didn’t involve delivering music to consumers. Like expensive marketing consultants. And a promotional video, featuring a vocal-fried narrator, that you can see at the bottom of this post.

Oh. And there was also a fake Steve Jobs:

At CES 2011, [CEO Adam Kidron] already hired a Steve Jobs impersonator to interrupt business meetings between himself and would-be partners “as a joke.” The Steve Jobs look-alike also apparently “roamed the show floor to fool attendees, while an employee filmed the whole thing” — a film that may have been meant for promotional purposes somehow, but which was only seen by employees.

At least Beyond Oblivion’s investors (who include News Corp., which also owns this Web site), didn’t lose any money on this year’s CES show.

Kidron planned to hire models to walk the CES show floor with the words “wanna boinc” on their panties and T-shirts, in the case of the females, or on their chests in the case of Speedo-wearing males. All of the models would have offered demonstrations to CES attendees, giving them a button with the words “I boinced at CES” printed on them. The buttons would also have functioned as the invitation to a private party at a Las Vegas strip club. These plans were scrapped in November as the company unraveled.

iStockphoto

But if you were paying attention to Twitter’s ad news yesterday, then you already know about Facebook’s ad news today. Because they’re both doing the same thing: They’re selling brands access to the primary stream of content that both companies serve up to their users. And they’ll let them do it on mobile phones, too.

Facebook’s big idea, as it laid out in marketing documents that leaked last week, is that marketers should create “content” that will double as an ad. And it will let them distribute that content/ad in between the rest of the stuff in users’ “newsfeed” — both on PCs and on phones.

Simple straightforward idea. And perhaps the only one that really works: There’s so little real estate available on phones that it would be hard for Facebook to sell any other kind of ad unit without really uglifying the experience.

And that appears to be the same conclusion that Twitter reached some time ago, because Twitter’s ads function exactly like Twitter’s content, too.

Mobile is key for both companies. Facebook has already pointed out that more than half of its users access the service via phones many times a month. And for many people, Twitter is almost entirely a mobile service, period.

But until this week phones didn’t make a dime for Facebook, and only made pennies for Twitter. Google could IPO back in 2004 without a mobile plan, but that’s not an option now.

(Image courtesy of iStockphoto | ymgerman)