Wealthfront, the Silicon Valley start-up with more than $10 million in its own kitty, finally officially launched its long-planned Online Financial Advisor product today, with a focus on attracting techies interested in more easily managing their money.

The Palo Alto, Calif.-based company, which started off as a social investing site called kaChing, shifted over to the new plan just over a year ago. Its aim now is to try to solve the thorny problem of delivering actionable and easy-to-use tools for making investments online, for those who have some money but little time or expertise.

A lot of companies offer similar tools, of course, including big ones such as Fidelity and Schwab, as well as bigger money-management firms. But Wealthfront’s CEO Andy Rachleff and founder Dan Carroll are promising lower fees and more accurate determination of risk via all kinds of online bells and whistles (see below).

Wealthfront is not charging advisory fees on a customer’s first $25,000 under management, with a fee of 0.25% on assets exceeding that.

Wealthfront is backed by DAG Ventures and well-known investors, including Marc Andreessen and Jeff Jordan.

Here’s a video Wealthfront posted about the service, as well as its official press release:

Wealthfront Unveils Automated Online Financial Advisor Service for Silicon Valley and High-Tech Hubs

Highly Sophisticated Investing Advice Finally Made Available through Simple and Low Cost Web Service

PALO ALTO, Calif., December 1, 2011 – The ability for the savvy tech community to easily access high quality, affordable financial advice is now available with the launch of the Wealthfront Online Financial Advisor. Before Wealthfront, sophisticated investment advice was available only to the wealthy, by expensive financial advisors who often can’t relate to today’s tech-savvy generation who want sound financial advice, made easy and convenient. Wealthfront’s Online Financial Advisor appeals to investors from booming tech communities who favor doing everything online, and are looking for ways to have their new wealth managed for far lower fees.

At the core of Wealthfront’s web service is the industry-standard Modern Portfolio Theory (MPT). Until now, the widely adopted investing model has been kept out of consumers’ reach, and was only accessible via expensive financial advisors. Wealthfront automates the application of this intricate investment model, putting the power of MPT directly into the hands of investors online. Moreover, Wealthfront’s pricing structure trumps all traditional financial advisor models. The online service makes it possible to receive a sophisticated, meticulously managed investment plan at a price that is 75% lower than traditional financial advisors. There are no advisory fees on a customer’s first $25,000 under management, and only a fee of 0.25% on assets exceeding $25,000.

“This is exactly what most people in the technology industry need. It’s the kind of advice you’d get if you had Goldman Sachs manage your money and it does away with the hidden fees we in tech despise,” said Piaw Na, a long time, former employee of Google and popular blogger on the topic of investing. “What’s more, the recommendation on the investment mix is provided with a full explanation of what was picked and why, making the whole experience a massive and much needed shift that is especially appealing now.”

Wealthfront’s high quality investing advice is powered by its Precision-Investing Platform™, the breakthrough software behind the service. The Platform uniquely assesses a customer’s true risk tolerance, recommends an optimized portfolio of carefully selected Exchange Traded Funds (ETFs) spanning six asset classes, and monitors and periodically rebalances the investment mix to maintain a customer’s desired risk tolerance.

Wealthfront is backed by Silicon Valley luminaries including DAG Ventures and individual investors including Marc Andreessen, Jeff Jordan, former OpenTable CEO and President of PayPal now at venture firm Andreessen Horowitz, and partners from Benchmark Capital, Index Ventures and Kleiner Perkins Caufield & Byers.

“The financial advisor world has long recognized that one day the Internet and software would pose a credible threat to their hold on the sub $5 million category of individual investors,” said Paul Pfleiderer, C.O.G. Miller Distinguished Professor of Finance at Stanford Graduate School of Business, and Wealthfront advisor. “Wealthfront has made accessible what historically had been out of reach or prohibitively costly for a large class of investors. By using a simple, yet powerful engine for accurately assessing risk and return in the MPT context, Wealthfront has established a new standard for quality financial advisement on the web.”

“With the biggest names in venture capital and the brightest minds in software development, we’re ushering in a financial advisor service that’s capable of precisely managing a customer’s investments from $5,000 to tens of millions with a pricing approach unheard of in the financial services industry,” said Andy Rachleff, CEO of Wealthfront. “Wealthfront emerges at a time when many tech companies are enjoying record earnings, initial public offerings, and strong acquisitions. This creates masses of people in tech looking to invest for the first time and who want to manage their finances in the same manner they’ve organized every other aspect of their lives, online.”

“The promise of the Internet is to disrupt incumbent providers, enabling new companies to provide high quality services at substantial savings through the innovative use of software,” said Jeff Jordan, Wealthfront board member, former CEO OpenTable and President of PayPal and now General Partner at Andreessen Horowitz. “Wealthfront embodies this promise, democratizing access to high quality financial advice. I believe this will appeal strongly to a generation that has grown up with the Net and use it to manage all facets of their life.”

For more information on Wealthfront Online Financial Advisor, or to create a free account, visit www.wealthfront.com.

Here’s some electric weekend reading for those interested in the push and pull between venture investors and start-ups in the frothy Web 2.0 environment.

In an email to Airbnb CEO and co-founder Brian Chesky (which I obtained, embedded below), former Facebook exec Chamath Palihapitiya, who now runs an investment fund called the Social+Capital Partnership, is passing on participating in the recent $112 million round for the hot online rental site that was announced in July.

The deal — which values the company at $1.2 billion — has not officially closed yet, but includes venture firms such as DST Global, Andreessen Horowitz and others. Previous investors include Sequoia Capital.

Palihapitiya confirmed to me that it was his email and that his possible investment in Airbnb was small.

That said, his concerns center on how much voting control of new investors’ preferred shares the founders have in the latest round and also a $22.5 million cashing out, $21 million of which is going to those founders.

Another $9.6 million is being used to buy secondary stock from current Airbnb shareholders, who have to render parts of their vested stakes for the money.

Such wrangling between investors and entrepreneurs is not uncommon in Silicon Valley these days, as ever-dumber money chases ever-more-powerful geeks. But Palihapitiya’s email is a smart, reasonable and well-written argument to stop the madness.

According to sources close to Airbnb, the numbers that he refers to below are accurate, as is what appears to be an unusual level of voting control by its founders. Presumably, it is to protect the company from possible future sales on the secondary markets and to keep control with its founders as the number of investors grows.

In any case, the Palihapitiya email to Chesky is well worth the read (I have removed email addresses as a courtesy):

From: Chamath Palihapitiya
Date: Sat, 1 Oct 2011 11:16:05 -0700

To: Brian Chesky

Subject: Airbnb financing…

Brian,

Cc Marc, Reid, my deal team

Thanks again for giving me the chance to participate in your latest financing. I had a chance to review the docs at length yesterday and I wanted to follow up as, quite honestly, I’ve never seen a deal like this over ~60 investments I’ve done and I’m pretty concerned.

I’m all for getting the best valuation you can, minimizing dilution and maximizing control. We did this brilliantly at Facebook…all of our financings (except our first $$$ from Peter Thiel) were done not out of necessity but opportunity. As such, our investors had virtually no control and it resulted in a much better outcome. As we’ve discussed, I generally don’t believe investors add much to a success story and so minimizing their impact is a great strategy when you are onto something that is working.

This said, while several of these concepts are reflected in the current deal, there is one big thing that I am fundamentally against and violates my principles and will prevent me from participating in your round. When I saw that you guys were taking $31M out of the company, I didn’t think much of it as I just assumed it would entirely be via a secondary sale.

But as I understand the deal, it seems that you are doing only $9.6M in secondary and $22.5M as a dividend to common (of which $21M goes to you and your co-founders). I am really uncomfortable with this and don’t think its in the spirit of building a good, long term business. Effectively, it is a strategy that allows you guys to take money out of the business and not dilute yourself — I’m not sure why this is such a big deal when you guys are almost 90% vested and the financing is at $1.2B where your dilution is marginal. Further, it excludes many of the employees that probably have helped you and your co–founders get the company to this place as most of these folks probably don’t have any stock but have unexercised stock options and thus won’t get a dividend.

My basic principle on this stuff is that if you want liquidity, that’s fine, but you should make it available to everyone. Otherwise, no one should get it. Your current deal is the farthest away from this principle that I’ve seen in a while…this strategy has been done once before — at Groupon. We can see how “well” they are doing and how short term the investor community is now viewing their motives. I really think you can do better than this…and that you are better than this.

Separately, when you look at successful tech companies, it seems that dividends are an approach used by cash rich operations to distribute excess earnings — in fact, the most successful, cash rich tech company in the world, Apple, hasn’t issued a dividend and they have more than $75B in cash! Again, while I think Airbnb will be a good company, this is nowhere near the truth now — you guys still need to scale and build this thing for the future.

I really think you are onto something but I would implore you to not take the easy way out. Treat your employees the same as you’d treat yourself. Do things that you will be proud of and can defend to anyone including your Board, employees, prospective hires etc. In such a competitive hiring market, you are competing with not just your obvious competitors, but also any successful tech company who is also looking for great talent. A principle that treats your employees as well as you’d treat yourself is a huge strategy for differentiation, retention and long term happiness of the exact types of people you will need to be successful. In contrast, if you are viewed as self-dealing and shady, it will only hurt your long term prospects…

In summary, I’m passing on this financing because I strongly disagree with what’s going on. I’m not sure who advocated this approach but I did mention this to Reid [Hoffman, another Airbnb investor via Greylock Partners] last night and he was of a similar mind to myself and surprised this was the approach being taken. If you want some good advice — I would ask that you consider pinging him about different ways to think about going about the liquidity portion.

If you change your mind on how to close this financing, let me know and I’d love to reconsider. Otherwise, good luck and lets keep in touch.

Take care,

Chamath

Does life become a 90s rap video? Cham’ bustin’ 24/7?

I basically had no money in my twenties.

I was luckier than most, my parents helped with the rent and I had spending cash via the Web design firm I started in 1995, Mischief New Media. My clients were “major” record labels and I designed Web sites for their artists. I wasn’t that great and as soon as the Web started taking off they brought those things in-house. But I had a knack for product development and saw an opening for better uber-music destinations in a landscape that had few good ones. So on the side, I started building music sites I would use. RockOnTV, MusicNewsWire and MusicStation, just to name a few.

I got lucky and five years later sold my company to MTV Networks. All those sites were rolled into SonicNet.com, the biggest music site around at the time. Now all defunct!

All of a sudden, I had some money.

What did I do first?

While in my lawyer’s office I made a copy of the check. Then I found what I thought to be the mailing address of the principal that kicked me out of school before my senior year. I wrote “F*CK YOU” on the check and mailed it. I don’t know if she ever got it. But 11 years after high school graduation, I finally had some closure. Yes, I held a grudge, but now I was over it. It’s a long story of trust, betrayal, power gone mad, evils of authority and not for this post. :-) She represented all the people that didn’t believe in me. Deep breath and now back to the story …

The money. What did I do with the money?

Two things I remember vividly.

First, I called my mom up and said something like this:

Me: It’s done. I just sold the company to MTV.

Mom: Oh, my god! Oh, my god! I’m so proud of you!

Me: Bring every bill, everything you owe over to my place tonight. We’re gonna write some checks.

Mom: Are you serious? (SCREAMING)

Me: Yes, see you later.

So, Mom did just that. And for about an hour that night we wrote checks for credit card bills, rent, school, personal loans … you name it.

Buying things is certainly a lot of fun. Travel, cars, all that big pimpin’ stuff. But at the end of the day, if you can help or give back to those that did the same for you … well, that rocks. It’s a great feeling. More importantly, my mom was directly responsible for my product chops. When I was about 3 years old, she bought me a huge box of building blocks. Simple, made of wood, lots of shapes. There is no doubt in my mind that playing with those blocks shaped my creativity. They made me think about structure, balance, systems and more. She always made sure we had what we needed; she went without and worked hard to provide for us.

To this day, it’s the proudest moment of my life.

The second thing? Well, let me step back here …

When you’re an entrepreneur putting it all on the line, as least with me, I worked constantly. For five years. Eighteen-hour days. Getting out very little. Always thinking about work. Work, work, work. When you have one of these events, like selling, you can go a little crazy for a second. It’s not over, there is more to do to realize the dream. But it’s a moment where you get dizzy for a second. And I sort of reverted back to childhood for a few weeks. How so? I went on eBay and bought what I remember to be thousands of Matchbox cars. Why? Who the f*ck knows. I liked them when I was five years old. My mom used to buy me one a week. It was a good memory from simpler times. Now? I was a man-child with cash and clearly no idea what to do with it.

So, I’m sitting in my apartment and these boxes start coming in. I mean tons of them. Unopened collections of f*cking Matchbox cars. I opened one, took a deep breath and just started laughing. What the hell was I thinking? There was no way I was able to return these. My small apartment was filled with toy cars. What now?

I went out to get something to eat a few days later and I noticed the lobby of my building had these huge bins for a children’s toy drive. I turned around, got the wheely pushcart in the lobby and went back to my apartment. I loaded the boxes of cars up and within a few trips had given all of them away. Mostly unopened. In these digital times, needy kids probably thought … what moron is giving me a miniature car? I want Nintendo DS!

And so goes my few weeks of reverting to childhood nuttiness.

Yes, I ended up getting the car and the home. I’ve bought hundreds of pairs of sneakers that put Quincy Smith’s collection to shame. I’ve traveled to all sorts of great places. I love buying stuff for my nieces and nephew. I’ve pretended to be an angel investor. … And yes, of course, I’ve donated to causes (I’m not totally selfish), mostly having to do with education (see www.cfy.org). But these are the two things I remember most.

So what did you do? Tell your stories …

-JH

Jason Hirschhorn is an entrepreneur most comfortable at the intersection between entertainment and technology. He was formerly CEO of his first venture, Mischief New Media, Chief Digital Officer of MTV Networks, President of Sling Media and most recently Co-President of Myspace. Jason is also an investor in Howcast, Buzz Media, 5 to 1 and other startups. You can follow him on Twitter @JasonHirschhorn or via his widely read Media ReDEFined newsletter (@MediaReDEF or http://feedburner.google.com/fb/a/mailverify?uri=mediaredef)

EMoney was given the task of moderating a panel called “Leveraging New Markets” in front of a packed room with two other competing panels.

The participants were Ted Sorom, the CEO of Rixty, Bruce Bower, the CEO of Plastic Jungle and Jeff Thomas, SVP of SecondMarket.

There’s no video, so you’ll have to endure a written recap from my perspective as chief interrogator.

First, if you aren’t familiar with these companies, the four of us can attest there’s only one thread in common: Liquidity, and creating marketplaces to make assets more fluid.

The discussion is well-timed as we push beyond e-commerce and Web 2.0 to a new reality, where reducing friction to payments is turning into a large opportunity.

One solution popping up everywhere is to create virtual currencies, which solves the problem of paying for many items at small price points because it doesn’t make economic sense to charge 50 cents to your credit card on a regular basis.

Meanwhile, there’s lots of clogs in the system, ranging from gift cards that are never redeemed, to a large population of people who don’t have credit cards, to the more extreme, like what will eventually happen to all of those unused Groupon and LivingSocial vouchers?

Here’s a look at how all three are trying to add liquidity to the system:

Rixty: The San Francisco company allows consumers to buy prepaid cards with cash to be redeemed for game credits online, such as Facebook Credits and Zynga’s CityVille.

On the panel, Sorom announced that Rixty’s distribution was increasing from 20,000 physical locations to 70,000 with the addition of Green Dot MoneyPak prepaid cards, which are sold at Walmart and 7-11. Greendot charges a $4.95 service fee, which Rixty will redeem as soon as soon as the card is spent online.

Plastic Jungle: The San Jose, Calif.-based company is a secondary market for unwanted and unused gift cards.

The company buys them for up to 92 percent of face value, and sells them at a discount. Bower says some of the highest value gift cards are for Target and Walmart because they are the closest to cash. The lowest value cards are from local retailers or seasonal items, like See’s Candy, which only sell well on Valentine’s Day and Christmas.

SecondMarket: The New York-based company is a secondary market for private stock in companies, such as Facebook and Twitter. It deals in getting liquidity to employees or shareholders, who can’t yet sell their stock on the public market.

The summary is that while cash may still be king, the trend is to enable liquidity.

Some of the high-level takeaways:

– Thomas of SecondMarket: The company is constantly in headlines for being associated with Facebook’s $70 billion-plus or minus-private valuation. He said private company stock sales have become the fastest growing part of its business with transactions increasing to $400 million in 2010, up from only $100 million in 2009.

He said an essential part to keeping the assets liquid is to keep the information flowing, which is inherently difficult with companies that aren’t required to disclose any financial information. The company will soon be partnering with researchers to produce independent reports that will be purchased by potential investors.

Sorom of Rixty: One of the big questions was how dominate Facebook will be able to become as a virtual currency platform.

Most panelists agreed that it was inevitable that it will become a powerhouse, but that it will face hurdles on two fronts. In order for it to win, it will have to appeal both to consumers and merchants. And, currently it charges a 30 percent fee, which is much too high for most physical and even some digital goods.

Sorom said regulations will also limit its activities. Just like at Rixty, they have avoided allowing users too much liquidity. The credits can only be used for pre-approved merchants and can not be swapped or traded among friends. Similarly, Sorom believes that Facebook would not have that have that ability, given current federal regulations.

Bower at Plastic Jungle: Bower saved the best for last. Whenever trying to come up for a good description of liquidity think back to your college days, especially if they were pre-Internet.

As a crafty collegiate, he learned to live off one square meal, turning in his other meal plan points for cash. He purchased brand new textbooks on his parent’s dime and then returned them for used books a day later. All of the cash allowed him to gain the most important liquid asset of all — beer.

Photo Credit: Rick Scully.

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

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

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

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

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

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

Apparently, Twitter makes it a full basketball team.

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

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

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

A really addictive experience.

Or at least that’s the hope of YooMee Games, which is unveiling a new gaming platform today (yes, another one!) that allows developers to add features to their games, like tournament play and one-on-one challenges.

The San Francisco-based company’s founder, Prita Uppal, jokes it is the Chuck E. Cheese of the Internet because of the tickets.

It starts with players placing wagers or buying tokens for a chance to win money and tickets that can be turned in for prizes. “It’s an arcade. You buy coins and then compete with others in tournaments and get tickets based on the outcome, which can be turned into cash or prizes, based on how many tickets you have.”

Think skee ball, but with better prizes than Tootsie Rolls.

At the start, YooMee will have more than 30 games to choose from, including popular puzzle games, like Bubble Town and Cube Crasher, and word games like WordStone. Prizes include Amazon gift cards, digital cameras and other gadgets.

Uppal said the company is not a casino and people are not gambling on the site, because the games are skill-based and not based on chance. “It’s completely skill-based competition. It’s legal. All the casual games you see and play on the Web are skill games–so you can wager and compete and earn money.”

Still, the business model is complex, having to optimize winnings for the player while also distributing money back to the developer and keeping some for itself.

Users don’t have to pay to play–instead they can play for free and view ads, such as a video pre-roll. That business is doing well, and allowed the 22-employee company to reach profitability in October.

Uppal says YouMee isn’t competing against other companies that are providing developers other services, such as leaderboards, comments or rankings. Rather, it can be used in addition to those services. It also uses Facebook Connect, so friends can easily find one another from their regular social network.

Commonly, a player will be introduced to the “arcade concept,” which Uppal is also “calling social competition,” after playing one of the games. A message will appear that says something like, “If you had paid 50 cents, you would have made $10 with this score. Do you want to enter this competition?”

In founding the company, Uppal placed a few good bets of her own.

She met her first VCs on the ski-lift chair in Park City, Utah. Directly from the ski slopes, U.S. Venture Partners flew her to Silicon Valley–she was without a computer and practically still wearing her ski boots–to give a 45-minute presentation. She had a term sheet two days later.

And she found her second VC after seeing a psychic, who predicted that the letter “A” and foreign money were going to be really important. That led her to take meetings with Altos Ventures, which has roots in Asia. “I wouldn’t have ever spoken to them if it weren’t for the psychic.”

Read the rest of this post on the original site

Which is why this qualifies as news: Financial commentary site Seeking Alpha is going to start paying some of its writers.

The seven-year-old site, which relies on a pool of several thousand contributors to stock it with chatter about stocks and anything else you can trade, will now offer them a chance to get paid for their work. It’s a one-size-fits-all rate: $10 for every 1,000 page views a story generates, as long as the story doesn’t appear anywhere else on the free Web.

That’s not going to make any of the site’s writers rich. Seeking Alpha CEO David Jackson says “it’s possible” that his most popular writers could generate a couple of thousand dollars per month, but most are going to make much less.

Jackson, on the other hand, is potentially on the hook for a decent-size bill.

Quantcast pegs his site’s daily page views at around two million. Not all of those views come from contributors–Seeking Alpha’s free transcript service, for instance, is popular and useful, and I assume the site gets a decent chunk of direct traffic. But if, say, half its page views were from volunteers who now want to get paid, that’s an outlay of $1,000 a day.

But why pay anything at all? Jackson’s longtime strategy has been to get people like newsletter publishers and money managers to give him free stuff, and offer them exposure/leads in return. Why change now?

You can read Jackson’s explanation of the move, along with some other details, in a letter he’s distributing to his writers today. But maybe he’s just following this sound advice from the Joker:

Dear Seeking Alpha contributor,

I wanted to let you know personally about three new initiatives that have rolled out on SeekingAlpha.com this morning:

1. Sharing revenue with contributors

I’ve always viewed Seeking Alpha as a partnership with our contributors: you provide us with outstanding articles, and we invest heavily (we now have over 70 employees) in technology, web design, editors and traffic partnerships to get your ideas in front of a large and valuable audience and drive customer leads to your business. But we’ve always known that some of our contributors don’t have businesses we can drive leads to, and that many contributors would appreciate additional direct income from their articles.

We’ve spent over a year building a direct sales team, and our readership has hit an all-time high and continues to grow (see: http://www.quantcast.com/seekingalpha.com). As a result, we can now share meaningful revenue with contributors: you’ll earn $10 for every thousand page views to articles which are published by Seeking Alpha and given to us exclusively (i.e. they don’t appear for free elsewhere on the Web). We call payment for exclusive articles our “Premium Partnership Program”. It’s on an article by article basis, so there are no contracts or forward commitments, and if for any reason you don’t want to receive payment yourself, you can pick a charity to receive your earnings instead. And if you don’t want to give us exclusivity for articles, nothing will change from the way we publish your articles now.

2. Upgrade to our leaderboards and reputation system

We’ve introduced a new reputation system and set of leaderboards, called “SA Opinion Leaders”. You’re now ranked by page views (trailing 90 days) to your articles according to the themes you write about. For example, if some of your articles are tagged “Media”, you automatically appear in the Media Sector leaderboard and are ranked by the number of page views you received to those articles. You can appear in multiple leaderboards, determined by the themes your articles are tagged with. Additionally, if you’re ranked in the top 5 for any theme, that information is displayed on your articles and also on your profile page.

We think this new reputation system has strong advantages. First, we’ve discovered that the number of followers a person has on Seeking Alpha (and, parenthetically, Twitter also,) doesn’t necessarily equate to reader engagement or influence. In contrast, the number of people who read your articles is a direct measure of reader engagement and thus your influence. Second, reputation is far more meaningful when measured in specific areas of expertise. So if you focus on media stocks, it’s far more valuable to know (and tell people) that you’re the number one on Seeking Alpha in the Media Sector than that you’re number 33 in some general ranking. We think that measuring real engagement and ranking contributors in categories will be valuable for contributors and — critically — valuable for readers.

3. Access to stats

You can now view detailed stats on Seeking Alpha, including total page views, page views by article, and page views by category. Additionally, you can track your page views and earnings for exclusive articles.

The future

Any major change carries risk, so why are we doing this? After all, churn in our contributor base is remarkably low, we’re about to add our 4,000th contributor, traffic is at an all time high, we recently crossed our 600,000th registered user, we have over 40,000 comments on the site per month, and our audience is of outstandingly high quality.

The answer is: this is about a vision. Investment research has been dominated by the sell side, but there’s a world out there of other people who have considerable knowledge and insight about stocks, options, bonds, ETFs and investment strategy. Whether you’re a fund manager, financial advisor, industry expert or a smart individual investor, we want to be the partner that brings that insight to light and unlocks value for contributors by offering exposure, reputation, customer leads and direct income. If this is successful, it should transform the investment research industry.

Thank you for your partnership with us, and wishing you a happy and prosperous 2011,
David

Groupon has officially completed the raising of half of a $950 million funding, getting $500 million from a range of top-drawer investors, said sources close to the situation.

Those investors include Russia’s DST Global, T. Rowe Price, Fidelity, Capital Group and Morgan Stanley.

It’s unclear how much each investor has put in and who will make up the next tranche of funding, which will also close imminently.

The New York Times previously reported on the regulatory filing related to the funding, as well as investments from T. Rowe Price, Fidelity and Morgan Stanley.

Now completed, the investments value the Chicago-based social buying service at $4.75 billion, which is less than the $6 billion Google offered to buy Groupon.

Those acquisition talks failed. But Groupon is still attracting interest from other possible buyers.

For now, though, it’s just talking a pile of money–probably the right strategy–to keep growing its explosive business. A big chunk will also go to some Groupon execs and early investors.

Groupon has competitors, of course, such as LivingSocial, but has established itself as the leader in the local online discounting space.

Allen & Co. is advising Groupon on the fundraising.

A Groupon spokeswoman declined to comment.

Phew! EMI says that as part of the agreement, “all legal disputes between the band and the company have been settled.” Which means that if you were worried about the band’s music disappearing from Apple’s iTunes, you can breathe easy.

Of course, it was unlikely that Pink Floyd’s music really was going to leave the world’s biggest music store, even though part of the dispute between the band and the label had to do with online sales: Supposedly, the band was upset that its music was being sold as individual tracks on iTunes, instead of in album-only form.

But that argument never really rang true to me: Sure, it’s great fun to space out to all of “Dark Side of the Moon” in one sitting, but it’s an awful lot to insist that people have to listen to or buy the whole thing. Especially since no one else does that anymore. Not even Radiohead!

In any case, a check seems to have resolved the band’s misgivings, and you can still buy “Money” as a standalone track at iTunes.

The latest batch of disclosure reports for lobbying expenditures during the third quarter have been released, and the Associated Press has been doing the yeoman’s work of moving a batch of short stories summarizing the facts contained in these disclosures. I noticed several focused on tech companies, and I thought I’d summarize the summaries, with a few highlights.

Verizon spent $3.83 million lobbying on several issues, including taxes and texting while driving, at numerous branches of the federal government, including the White House, Congress, the Internal Revenue Service and the Federal Trade Commission. It spent $2.96 million in the same period a year ago.

AT&T spent $3.47 million, up from $3.18 million a year ago. Its agenda items included legislation on calling cards, broadband buildouts and distracted driving.

Hewlett-Packard spent $1.6 million–nearly double the $970,000 it spent in the third quarter of last year–chatting with members of Congress and officials at the Department of Justice and the Commerce Department about taxes, immigration and how government agencies use technology in the areas of health care and law enforcement.

Microsoft spent $1.63 million, an increase from $1.49 million a year ago. It visited Congress, the Pentagon and the Departments of Commerce and Homeland Security to talk about computer security, how the government buys software and the competitive state of online advertising. It also lobbied the Federal Communications Commission on net neutrality.

Oracle spent $1.6 million, up from $1.3 million, lobbying Congress, the Pentagon and the Department of Homeland Security on patent litigation and the government’s technology spending plans.

Google spent $1.2 million in the third quarter (which TechCrunch noted in October following a press release by Consumer Watchdog), an increase from $1.08 million in the same period a year ago.

IBM spent $1 million, up from $850,000 a year ago, talking about transportation, the power grid, funding for research and the military, on visits to Congress and the Departments of Transportation, Defense, and Health and Human Services.

Intel spent $830,000, which is notable because the amount decreased from $1.1 million a year ago. Intel was the target of both a private antitrust lawsuit from rival Advanced Micro Devices and a government antitrust investigation by the Federal Trade Commission, both of which were intensifying in the fall. Both cases have since been settled. Its efforts were in immigration, government research funding and issues related to trademarks and education.

Yahoo spent $540,000, up from $510,000 a year ago.

Apple, easily the most influential company in consumer technology today, spent relatively little on lobbying efforts: Only $340,000.

Facebook spent $120,000.

For a little more on what companies spend on lobbying efforts in Washington, it’s always enlightening to peruse the database maintained by the Center for Responsive Politics, which tracks not only lobbying expenditures but campaign contributions.

As you can see, the CRP shows that, among computer and Internet companies, Microsoft was the leading lobbying spender for the first nine months of the year. The wireless industry’s trade association, the CTIA, led the pack in the telephone equipment and services category, spending more than $6 million. Meanwhile, Verizon and AT&T each spent more than $12 million.

CityVille is the perfect hospital waiting-room activity. You click to create buildings and plant crops, click to harvest them and collect money from your shops, click to visit your friends’ cities and help them do the same things.

Unlike in a real city, everything you can possibly accomplish in the game is good. You receive money, goods, reputation points, energy and random bonus prizes constantly.

Most of these are useful, but some of them are not. For instance, I currently have a stock of 22 virtual danishes received as bonuses from my in-game coffee shop, and no way to spend them.

Among the early adopter types I know in the tech industry, there’s a sense that casual gaming on Facebook serves an entirely different demographic from their own. The thinking is that games from Zynga and the like replace relatively mindless activities like watching soap operas.

But as someone who has just reorganized her virtual retail shops to be surrounded by virtual trees, so as to accumulate more virtual bonus points, I can see how social gaming–especially as it gets more social–might appeal to the desire for mindless diversions in all of us.

And, I began to get an answer to a question I am asked a lot: Why are so many people playing these seemingly meaningless games?

CityVille is Zynga’s latest attempt to extend the dominance of its breakout social game FarmVille, which has long been the most popular such diversion on Facebook.

Of all of Zynga’s games, CityVille has been heralded as the most social to date, with new features such as a franchise system that allows users to actually participate in the building of their friends’ cities. Personally, I’ve never gotten into FarmVille, although it’s obviously quite addictive as well and hugely popular.

Chalk it up to the new social features, the slightly less awkward and cutesy 3-D graphics, or a momentary openness to mindless diversion on my part, but CityVille is the only Facebook game that’s truly sucked me in so far.

Zynga says CityVille is its fastest-growing game ever. According to AppData, CityVille has 54 million monthly active users, for second place overall (and only two million behind FarmVille).

There are no consequences in CityVille and there is no strategy. There’s also no winning (rather, as in FarmVille, an endlessly extending horizon of tasks to complete).

The worst thing that can happen is a crop can wither or you can allocate your “energy” to collecting rent and not have enough to empty the cash registers at your stores.

But, not to worry–come back in five minutes and there’s another unit of energy waiting for you.

CityVille is satisfying on a superficial level that I hadn’t thought possible. It’s not even like Angry Birds, my former casual game of choice, which breaks all sorts of age and language barriers in its simplicity, but still requires you to position the slingshot correctly and think through the physics of the various projectiles.

In CityVille, all you do is click, click, click.

Zynga seems to want three things from users: Their time, their money and their recruitment of their friends. As for time, I’ve given plenty of it, although you usually run out of stuff to do about 15 minutes into any one session (Zynga wouldn’t want game play to be a burden or feel too complicated).

But I’m not sure my obsession is paying off for Zynga. I’ve spent a grand total of 50 cents on the game. That’s because I wanted to spend the 15 Facebook credits I’d gotten as part of a launch promotion, but Zynga had a minimum purchase of 20 credits. Coughing up two quarters got me the difference–and it also hooked up my Facebook account to my PayPal account for the first time.

I currently have 20 CityVille “neighbors.” They are Facebook connections from all different parts of my life, including high school friends, tech industry people and fellow reporters. We get credits for heading over to each other’s cities and helping out, accepting roles at each other’s city halls and other municipal buildings and setting up franchises in each other’s cities and resupplying them.

And Zynga constantly harasses us to post on our own or other people’s Facebook walls to ask them for in-game gifts and brag about in-game achievements.

Conscious of polluting other people’s walls and admitting to people how much CityVille I play, I usually decline all the offers to broadcast my CityVille needs and accomplishments. But it’s clear Zynga could stand to add even more communication channels if it wanted to; a friend recently emailed me off-game to ask if I could hurry up and send him a CityVille zoning permit.

I get the sense most of my particular set of neighbors haven’t given Zynga a lot of cash for virtual goods, considering our cities are growing at about the same rate and I see them on there at least once a day helping tend to my crops and resupplying their franchises. There are no in-game advertisements.

A few of my neighbors, however, have accumulated premium goodies galore. A certain Facebook exec’s city is decorated with paid-for doodads like a basketball court, tennis court and bronze statue–but I imagine it’s not too hard for him, of all people, to stock up on Facebook credits.

A particular start-up CEO who’s my virtual neighbor seems to play on an hourly basis. He has already hit level 35. You know that somewhere a Zynga engineer is scurrying to create more tasks and content to add more levels to keep up with him and other addicts.

And only one of my neighbors appears to have never returned to the game after setting up her initial city.

Meanwhile, my own city keeps on growing. I’m currently at level 26. I’m now the mayor of my city and considering a run for governor.

But, now that I’m back from the hospital, I’d honestly really like to stop playing this game and let the healing begin.

Update: Since I first wrote a draft of this post on Sunday CityVille added 10 million users. I’ve updated the stats as of Wednesday morning.

There is a precedent for social buying site Groupon walking away from a $6 billion offer from Google, if that’s exactly what happened.

Let’s call it: The Zuckerberg Gambit.

That would be in reference to the famous series of no’s that the then flip-flopped co-founder and CEO of Facebook, Mark Zuckerberg, gave to a series of suitors who came calling with big bags of dough to buy the social networking site.

There were media suits from Viacom ($750 million). And Internet suits from Yahoo ($1.1 billion). And software suits from Microsoft ($3 billion).

And, often over the objections of his much older and more experienced investors, Zuckerberg declined to be acquired.

Instead, he got massive funding by Microsoft and others.

Presumably, he had a dream of much more and, as it turned out, he was right.

Facebook is now valued at upward of $45 billion, although it has yet to test out that lofty figure in the public markets.

And Zuckerberg is the king of all he surveys, from a social networking point of view, at least.

Perhaps most ironic of all: Facebook’s success is scaring Google on a daily basis, so much so that it turned its local eyes to Groupon.

Interestingly, both Facebook and Groupon share common investors–Silicon Valley’s Accel Partners and Russia’s DST Global.

Those investors have often spoken of not selling out, and their start-ups seem to have that proclivity too.

Chicago-based Groupon and its CEO Andrew Mason, for example, have turned down two big money exits so far this year–$3 billion from Yahoo and presumably the one from Google.

Talk about no exit.

While there are sure to be conflicting stories over the next few days–Did Google get cold feet first? Was there a tussle over a breakup fee, in case of too much regulatory scrutiny? Were the cultural differences too much?–one thing is certain:

Now, Groupon is going to have to go for it, as they say in sports, and try to turn itself into a real-live business.

One would assume they worried about the difficulties of being absorbed into the Borg at Google and about the definite regulatory hurdles that might have been impossible to leap.

And, perhaps, they just thought they could do better on their own.

In many ways, it’s an admirable choice–whether it is a wise one remains to be seen.

Please see this disclosure related to me and Google.

According to multiple sources close to the situation, Google is in discussions with local deals powerhouse Groupon about buying it.

Without making the requisite joke about the deal of the day, sources said the price being considered is certainly no discount–well above the $2 billion to $3 billion that Yahoo offered Groupon in acquisition talks that took place earlier this year.

But sources cautioned that the talks are not complete, and could also end up without any result, as the Yahoo discussions did.

In an email, a Google spokesperson said with some style: “Per usual, we don’t comment on rumor or speculation. If we did we’d be busy 24/7!”

A Groupon spokesperson was also sassy, noting: “Thanks for the heads-up!”

Still, the company appears to be engaged in a pattern of shopping itself around, via its bankers Allen & Co., even though Groupon investors have expressed a desire to stay independent many times.

But could there be other interested parties poking around, given the explosive revenue growth of Groupon–whose revenues are reportedly upward of $50 million a month–in the huge local retail market?

Sources said only three could pay such a high price: Microsoft, Amazon and, perhaps the most logical buyer, eBay.

Facebook is another company that could be interested, of course, although this would be a sizable purchase in both cost and also staff for the social networking giant, which has fewer employees than Groupon.

As does Google, all–except perhaps Facebook, which is not public yet–have more than enough cash reserves, as well as stock, to pay up for one of the more promising start-ups in a lucrative arena.

That would be local commerce. Currently, despite a plethora of clones, Groupon dominates socially fueled couponing across cities globally.

Owning the hot space around local purchasing and consumer information, combined with the social element, would be a tasty treat for Google.

The Silicon Valley search giant has struggled to deliver social tools to users, even as Facebook has morphed into a potent rival.

Google had looked at social reviews site Yelp for purchase previously, but that deal fell apart.

It has been introducing various local advertising and commerce efforts, efforts that would be turbocharged given Groupon’s quick progress.

In April, Groupon garnered a valuation of well above $1 billion in a massive venture funding.

It has used that money to buy up companies in the U.S. and internationally, trying to solidify itself as the major player in the marketplace.

If Google were to complete a deal to buy Groupon, it would have echoes of its purchase of YouTube in 2006 for $1.6 billion.

Many felt it a high price at the time, but it looks cheap today given how the site almost completely dominates Web video.

A purchase this size would also likely require bankers. Google’s favored one is Morgan Stanley.

But there is one major issue in a possible Google purchase of Groupon: Even more regulatory scrutiny by the federal government over its power online.

Google narrowly missed getting approval for its $750 million purchase of mobile advertising start-up AdMob.

And it is currently under fire from numerous critics for its proposed purchase of huge flight data firm ITA Software for $700 million.

Those opposed to the acquisition, on antitrust grounds, contend that Google would control travel search in a way that would invite abuse.

Having Groupon would garner Google even more powerful pricing information from both customers and merchants across the globe.

Stay tuned, but check out this video interview I did with Groupon founder and CEO Andrew Mason this summer in Vancouver, where I asked him specifically about Google’s interest (actually, I suggested he mug Google co-founder Larry Page):

Please see this disclosure related to me and Google.

]]> http://allthingsd.com/20101119/google-turns-its-local-eyes-to-groupon-but-who-else-could-enter-bidding/feed/ 16 http://allthingsd.com/20101102/who-might-be-twitters-new-investors-the-usual-suspects-of-course/ http://allthingsd.com/20101102/who-might-be-twitters-new-investors-the-usual-suspects-of-course/#comments Tue, 02 Nov 2010 17:12:34 +0000 Kara Swisher http://kara.allthingsd.com/?p=36606

Last week, MediaMemo’s Peter Kafka reported on a new funding effort by Twitter.

Sources said the San Francisco microblogging phenom, which has seen huge growth of late, is considering a round of upward of $200 million.

That would more than double the $160 million Twitter has garnered so far.

And who are the moneybags who might be the ones to keep Twitter CEO Dick Costolo in diamonds and furs–and away, for now, from the enticing clutches of a socially awkward and, thus, acquisition-minded Google?

Actually, those at the top of the list will be familiar to those following big funding rounds in the social space: Russia’s DST Global, Silicon Valley venture powerhouse Andreessen Horowitz–which is raising its own giant new fund–and a spate of more recently interested private equity players.

DST seems the likeliest investor, given it likes to play big in the space and has handed over gobs of money to social networking giant Facebook, social gaming upstart Zynga and social deals start-up Groupon.

DST Global is also pretty hands-off as an investor, such as not demanding board seats for its dough.

Alexander Tamas of DST Global, which is an affiliated international investment unit of Digital Sky Technologies (which recently filed to go public itself), said in an email to BoomTown that he “can’t comment on any deal rumors.”

But here’s an excerpt from an interview he did with me in July:

“As to its future investments, Tamas said the company will likely fund start-ups that ‘check the boxes,’ including exponential growth and social virality.”

That would be…drum roll, please…Twitter.

A Twitter spokesman told Kafka last week that the company did not need the cashola (there is apparently plenty of the old stuff left in the kitty) and no decisions had been made about additional financings.

Nonetheless, many sources close to the situation said Twitter was deep into the consideration of potential investors.

Of course it is, as it needs to expands its staff and infrastructure and more aggressively seek ways to monetize its growing audience via advertising.

In Twitter’s last funding of $100 million, it did so at a billion-dollar valuation.

It’s not clear what a new valuation would be, but if completed it would obviously be a lot more.

And, if Twitter takes this path, it could stave off the persistent speculation that Google would make an offer Twitter could not refuse, in an attempt by the search giant to jumpstart its own lackluster social efforts and assuage its deep insecurities about Facebook.

In addition, more money would also give Twitter breathing room to figure out its business model, before pressure starts to perhaps also reward investors and employees via a public offering.

]]> http://allthingsd.com/20101102/who-might-be-twitters-new-investors-the-usual-suspects-of-course/feed/ 1 http://allthingsd.com/20101027/kno-hires-fancy-cfo-as-it-preps-tablet-launch-and-possible-new-funding-search/ http://allthingsd.com/20101027/kno-hires-fancy-cfo-as-it-preps-tablet-launch-and-possible-new-funding-search/#comments Wed, 27 Oct 2010 18:00:51 +0000 Kara Swisher http://kara.allthingsd.com/?p=36347

Kno, the start-up attempting to make and market a student-aimed tablet and learning platform, has hired Stuart West as its new CFO.

West (pictured here) has worked at Yahoo, InfoSpace, TiVo and J.P. Morgan.

Kno is continuing to make key hires as it prepares to ship the product by the end of the year, after recently raising another $46 million in funding to add to a $10 million round.

Sources said that the Santa Clara, Calif., company could be back out raising even more money early next year.

Its current backers include prominent venture players like Andreessen Horowitz and First Round Capital, along with investors Mike Maples and Ron Conway.

]]> http://allthingsd.com/20101027/kno-hires-fancy-cfo-as-it-preps-tablet-launch-and-possible-new-funding-search/feed/ 1 http://allthingsd.com/20101025/tricia-duryee-hired-at-allthingsd/ http://allthingsd.com/20101025/tricia-duryee-hired-at-allthingsd/#comments Mon, 25 Oct 2010 13:42:49 +0000 Kara Swisher http://allthingsd.com/20101025/tricia-duryee-hired-at-allthingsd/

And the hit reporters/bloggers keep on coming at All Things Digital.

Today, we are honored to add Tricia Duryee to the staff of our site, where she will be covering commerce, online payments, gaming and more.

In other words: She’ll show us the money.

Or not, in some cases.

The broad commerce beat is important to ATD, as we focus on what we think is another key space on the Web–a topic that straddles retail, mobile, social and virtual, as companies old and new try to come up with sustainable business models online.

While Amazon and eBay, as well as new upstarts such as Groupon and Square, are the obvious candidates for Tricia’s coverage, how commerce is innovating on the Internet is a wider-ranging story we aim to cover closely.

And Tricia is just the kind of superb beat reporter we were looking for to pioneer the coverage for us.

She comes to ATD from her recent job as Editor of mocoNews.net, an online site dedicated to covering the wireless industry. MocoNews is a sister publication of paidContent.org, and both are owned by the Guardian News & Media.

Tricia joined mocoNews in February 2008 and has written about how the Apple iPhone has changed the cell phone industry, how ringtones are giving way to mobile TV and how the carriers are building out the next-generation of networks.

Prior to mocoNews, Tricia spent eight years at the Seattle Times. In her first five years, she covered venture capital and Seattle’s start-up scene.

And, in her final three years, she wrote about the regional wireless industry, which included stories such as Cingular’s $41 billion acquisition of AT&T and how T-Mobile’s Sidekick was a must-have among celebrities, including NBA All-Stars such as Ray Allen.

The Seattle native attended the University of Oregon, where she received a degree in journalism and a minor in business.

Tricia is located in Seattle still, in a 102-year-old house, with a 10-year-old dog and a more recent husband.

We’re also thrilled Tricia is reporting from there and hope she’ll give our readers a flavor of what’s going on in tech in the Pacific Northwest, which is one of the key digital hubs in the U.S.

]]> http://allthingsd.com/20101025/tricia-duryee-hired-at-allthingsd/feed/ 0 http://allthingsd.com/20101025/atd-adds-tricia-duryee-who-will-add-it-all-up-for-our-readers/ http://allthingsd.com/20101025/atd-adds-tricia-duryee-who-will-add-it-all-up-for-our-readers/#comments Mon, 25 Oct 2010 12:42:48 +0000 Kara Swisher http://kara.allthingsd.com/?p=36108

And the hit reporters/bloggers keep on coming at All Things Digital.

Today, we are honored to add Tricia Duryee to the staff of our site, where she will be covering commerce, online payments, gaming and more.

In other words: She’ll show us the money.

Or not, in some cases.

The broad commerce beat is important to ATD, as we focus on what we think is another key space on the Web–a topic that straddles retail, mobile, social and virtual, as companies old and new try to come up with sustainable business models online.

While Amazon and eBay, as well as new upstarts such as Groupon and Square, are the obvious candidates for Tricia’s coverage, how commerce is innovating on the Internet is a wider-ranging story we aim to cover closely.

And Tricia is just the kind of superb beat reporter we were looking for to pioneer the coverage for us.

She comes to ATD from her recent job as Editor of mocoNews.net, an online site dedicated to covering the wireless industry. MocoNews is a sister publication of paidContent.org, and both are owned by the Guardian News & Media.

Tricia joined mocoNews in February 2008 and has written about how the Apple iPhone has changed the cell phone industry, how ringtones are giving way to mobile TV and how the carriers are building out the next-generation of networks.

Prior to mocoNews, Tricia spent eight years at the Seattle Times. In her first five years, she covered venture capital and Seattle’s start-up scene.

And, in her final three years, she wrote about the regional wireless industry, which included stories such as Cingular’s $41 billion acquisition of AT&T and how T-Mobile’s Sidekick was a must-have among celebrities, including NBA All-Stars such as Ray Allen.

The Seattle native attended the University of Oregon, where she received a degree in journalism and a minor in business.

Tricia is located in Seattle still, in a 102-year-old house, with a 10-year-old dog and a more recent husband.

We’re also thrilled Tricia is reporting from there and hope she’ll give our readers a flavor of what’s going on in tech in the Pacific Northwest, which is one of the key digital hubs in the U.S.

]]> http://allthingsd.com/20101025/atd-adds-tricia-duryee-who-will-add-it-all-up-for-our-readers/feed/ 2 http://allthingsd.com/20101014/department-of-deja-vu-little-aols-quixotic-quest-to-land-giant-yahoo/ http://allthingsd.com/20101014/department-of-deja-vu-little-aols-quixotic-quest-to-land-giant-yahoo/#comments Thu, 14 Oct 2010 19:54:40 +0000 Kara Swisher http://kara.allthingsd.com/?p=35597

The last time AOL gobbled up a big company–that would be its audacious grab of Time Warner in the 2000 merger of the century–it ended in tears.

Now, it will take all of CEO Tim Armstrong’s considerable sales skills and impressive cheekbones to pull off a definite longshot the struggling Internet icon is attempting.

That would be trying to convince someone with piles of money–a private equity firm or a cash-rich tech giant such as Microsoft–to help it snatch control of Yahoo and fold AOL into it.

The effort also includes a lot of other moving parts, such as an ability to convince Yahoo’s Asian affiliates to get on board, as well as competing with other predators, including powerful media giant News Corp.

But you have to give the moxie award to Armstrong for trying to take the ragged assets of AOL, which only add up to $2.65 billion in valuation and trade them for Yahoo’s powerful and impressive array of content and communications units. Yahoo’s valuation is $21.5 billion.

The former Google advertising sales head, who arrived at AOL in March of 2009, certainly has been trying to convince Wall Street–and anyone who will listen, in fact–on the idea that AOL is cool once again.

That included a splashy spin-off into a public company, compete with hiring Diddy to be at the party on the floor of the New York Stock Exchange, an aggressive marketing campaign and rebranding of AOL, copious and extravagant industry sponsorships (including one with our D: All Things Digital conference last year, which included an appearance by singer Natasha Bedingfield).

And did I mention the AOL break-dancers out in force during the recent Advertising Week in New York?

As I told Armstrong during a recent conversation: If he puts any more lipstick on the AOL pig, it will have to come live with me in San Francisco.

All joking aside, he has to because, for all of Armstrong’s Don Draper-like smoothness, he is contending with a very serious turnaround in AOL.

Its core money-making business, the access part, is drying up fast, while the advertising part is still weak. A string of results in recent quarters bear out the rocky road.

Armstrong does point out–selling, always selling!–that since he took over, he has cut the employee base in half, has added $500 million to the balance sheet, struck a good search deal with Google, has launched new content sites and ad products and has hired a top-flight management team.

All true, but AOL is still huffing and puffing as a tiny player in world of giants.

But that has not stopped Armstrong from aggressively making the rounds to try to take advantage of the distress at Yahoo and the increasing pressure on CEO Carol Bartz.

According to many sources, he has deftly painted himself as the sensible and friendly alternative to her more abrasive style.

It is certainly working–big Yahoo investors love Armstrong and frequently tout him as the long sought after answer to Yahoo’s longtime woes.

Maybe so, but News Corp. also has a strong narrative of uniting Yahoo with a media giant. Frankly, it also has to somehow parlay its weak asset, MySpace, into another format.

Sources said CEO Rupert Murdoch and his digital head Jon Miller have been in touch with the Yahoo board in recent weeks, including former CEO and Co-founder Jerry Yang.

Whatever happens, it will certainly be entertaining to watch Armstrong go up against the wily Murdoch and many others.

The question is: Will the investors of AOL and Yahoo laugh or cry in the end?

]]> http://allthingsd.com/20101014/department-of-deja-vu-little-aols-quixotic-quest-to-land-giant-yahoo/feed/ 5 http://allthingsd.com/20101008/in-defense-of-standards-ethic-and-honest-financial-reporting-at-hewlett-packard/ http://allthingsd.com/20101008/in-defense-of-standards-ethic-and-honest-financial-reporting-at-hewlett-packard/#comments Fri, 08 Oct 2010 23:22:29 +0000 Ben Horowitz http://voices.allthingsd.com/?p=30872

“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.

]]> http://allthingsd.com/20101008/in-defense-of-standards-ethic-and-honest-financial-reporting-at-hewlett-packard/feed/ 0 http://allthingsd.com/20100719/dsts-alexander-tamas-talks-about-new-investors-new-investments-and-dealing-with-troubling-russian-stereotypes/ http://allthingsd.com/20100719/dsts-alexander-tamas-talks-about-new-investors-new-investments-and-dealing-with-troubling-russian-stereotypes/#comments Mon, 19 Jul 2010 18:15:07 +0000 Kara Swisher http://kara.allthingsd.com/?p=30699

After Russia-based Internet investor Digital Sky Technologies got $388 million in a stock-swapping deal with South Africa media giant Naspers–coming after an earlier $300 million investment from China’s Internet behemoth Tencent–BoomTown dialed up DST partner Alexander Tamas in London to interview him about the implications.

This developing international spiderweb of digital and media companies begged the question of what DST might do with all this new dough, especially since it has created quite a splash over the last year investing massive gobs of money in high-profile, social-focused U.S. Internet companies.

That has included, most prominently, social networking powerhouse Facebook, as well as Groupon and Zynga.

Actually, said Tamas, the money is for expansion of DST’s core businesses in Russia, Poland and the Baltics–in email, social networking, gaming and entertainment–at units such as Mail.ru, which was co-owned by Naspers and DST.

In essence, said many analysts, it will simplify its ownership structure, and could eventually lead to an IPO for DST.

For a 30 percent stake in DST and the $388 million, Naspers forked over its 39.3 percent stake in Mail.ru into DST.

“The idea was for us to be able to completely control our Russian portfolio,” said Tamas, part of a series of moves which included its recent purchase of AOL (AOL) instant messaging unit ICQ for $187.5 million in cash. “We wanted 100 percent at one company.”

Also a goal: To better link its services with those in China, owned by Tencent, which invested $300 million in DST in April, giving it just over a 10 percent stake.

Naspers, by the way, owns 35 percent of Tencent.

“It’s a pretty good dialog all around,” said Tamas (pictured here), linking companies with both global and local aspirations.

But it’s the global ambitions that have attracted the most attention to DST of late, which, Tamas noted, created some confusion and unfair maligning of the company.

Interestingly, although it is all mashed up on its Web site, DST itself is not technically the entity that maintains its investments in companies such as Facebook.

That would be DST Global, its international arm which directly hold the stakes. It is not part of the Naspers or Tencent deals.

Of course, both are run by the same people, especially DST CEO Yuri Milner, and DST has a stake in DST Global.

“Initially, DST did fund those transactions,” said Tamas. “But we wanted to separate these investments from the Internet company to give investors the clearer differentiation.”

As to its future investments, Tamas said the company will likely fund start-ups that “check the boxes,” including exponential growth and social virality.

That means only two investments annually, as opposed to 10.

He also said DST would continue to fork over large sums–its invested well over $100 million in each of its U.S. deals.

“There is a perception that we pay high prices,” admitted Tamas, who noted its Facebook investment is now valued at much more. “But we have a global outlook on what we are investing in.”

DST is also a believer in getting some of that financing in the hands of founders and early investors, since it relieves financial pressure to sell or go public before a start-up’s time.

“We want to give the companies we invest in a year or two run,” said Tamas. “That is the sweet spot.”

He said, after its U.S. flirtation, that DST is now looking more in Asia and Europe.

But, even with its expansion and getting investments from well-known media giant such as Naspers, Tamas said he is not sure DST can shake the continued questions about the sources of its funding, especially given some of its initial investors are clearly part of the much-maligned Russian business oligarchy.

“We always have to explain and justify all of Russia,” said Tamas defensively. “Obviously, Naspers did its due diligence, as have others, and they feel comfortable with DST.”

Still, Russian issues will remain a concern for the long term. As noted in a recent report by Bank of America (BAC) investment unit Merrill Lynch, for example, on the Naspers-DST deal:

“We are also concerned that DST’s dominance in the Russian internet space (close to 70% market/mind share) may attract the scrutiny of the Russian government. The precedent with the other leading Russian internet company Yandex, when the government got a veto on sale or a golden share, signals that the government may not welcome a full takeover of DST by Naspers or Tencent.”

“We know the issues,” said Tamas. “But the best digital companies going forward are going to have to understand and operate in different parts of the world that are not just in Silicon Valley.”

]]> http://allthingsd.com/20100719/dsts-alexander-tamas-talks-about-new-investors-new-investments-and-dealing-with-troubling-russian-stereotypes/feed/ 0 http://allthingsd.com/20100511/swipely-nabs-7-5-million-in-series-a-funding-for-social-spending-and-to-attack-blippy/ http://allthingsd.com/20100511/swipely-nabs-7-5-million-in-series-a-funding-for-social-spending-and-to-attack-blippy/#comments Tue, 11 May 2010 08:59:50 +0000 Kara Swisher http://kara.allthingsd.com/?p=28281

Oh, joy: More venture bucks for more socializing of credit card information.

Today, it is Swipely’s turn to grab the spotlight in the ever-crowded space to, as the start-up’s press release so aptly says, “turn purchases into conversations.”

Yes, it says that.

BoomTown excitedly awaits the next big thing to be intrusively socialized, such as these start-ups: Wipely (it records and shares every time you clean your bathroom), Diaply (don’t let your friends miss every diaper change!), and, of course, Hypely (every time a social category is overfunded by VCs, you get a poke).

In any case, Swipely–now in private beta, founded by Tellme co-founder Angus Davis and backed by some top venture firms and Silicon Valley angel investors–got $7.5 million in funding to try to take on sites such as Blippy.

Index Ventures is leading the latest Swipely round, which includes Greylock Partners and First Round Capital, as well as investors such as Ron Conway and Chris Sacca.

Swipely said Danny Rimer of Index Ventures will join its board of directors, and Reid Hoffman of Greylock Partners will serve as an observer.

Swipely had previously raised $1 million.

Blippy, its presumable rival, has raised close to $13 million from its own fancy-pants group of moneybags: August Capital, Sequoia Capital, Charles River Ventures, Conway (again!), Twitter CEO and co-founder Evan Williams and other well-known investors.

To differentiate itself, the Providence, Rhode Island-based Swipely is trying to go for a more circumspect approach to what is essentially a service that encourages digital blabbery about purchases.

Swipely’s take on making shopping social will involve sorting out credit info and giving you, your friends and retailers a lot of options to share, and the service is stressing opt-in over automated sharing–as well as better security, taking aim after a recent Blippy breach–via a “swipe.”

Get it?

Unlike Blippy, Swipely does not show the amount of money spent–for now–and lards in data, such as catalogs, on some purchases to encourage others to buy too.

Swipely seems, most of all, to be aiming for the high-minded version of social spending. But, please let us not forget: All these attempts are trying to get people to spend more, no matter how pretty you dress it up.

Here is another screenshot (click on it to make it larger):

And here’s the official press release:

Swipely to Reinvent How People Shop, Share and Save

Index Ventures, Greylock Partners, First Round Capital and Industry Luminaries Unite to Back New Start-up with $7.5 Million in Series A Funding

PROVIDENCE, R.I.–May 11, 2010 – Swipely (swipely.com), an online service that gives users an easy way to turn their purchases into conversations, announced it has completed its Series A round of financing, and a new preview version of its service is now available by invitation. Index Ventures led the Series A round, with participation from Greylock Partners, First Round Capital, and a number of well-known angel investors.

“Our mission is to fundamentally change the way consumers shop and share by adding value to every swipe,” said Angus Davis, Founder and CEO of Swipely. “Our service will transform everyday purchases at restaurants, movies or online retailers into conversations with friends, personalized recommendations and opportunities to save money.”

Founded and backed by veterans of Tellme, Microsoft, Netscape, eBay, LinkedIn and PayPal, Swipely provides a secure platform for consumers to recommend purchase experiences, discover new places and products through trusted friends, save money, and have more fun shopping.

Enter Swipely

On Swipely, every purchase is a “swipe.” Users start swiping by following an easy and secure sign-up process to import purchases from their credit or debit card accounts. Users can also import purchases from email for purchases made at any online store.

Users can rate their swipes and add comments or photos. Many swipes are geo-located automatically to specific store locations. Swipely also supports product details by integrating catalogs and menus from more than 250,000 retail and restaurant locations, allowing users to start conversations around specific outfits, meals, songs, movies, gadgets and millions of other products.

Discovering a new restaurant, movie or pair of shoes is easy on Swipely when users follow their friends. Upon seeing a great swipe for a new restaurant, users can click to see it on the map, and add it to their wishlist. Discovering music, movies and apps is easy, too–users can just press play on select swipes to hear a song preview, see a video trailer or browse app screen shots.

Swipely places a strong emphasis on protecting consumer privacy and security, and has passed reviews and audits from leading third party security and privacy organizations. Users have complete control over swipes get posted, and the specific amount spent remains private.

Industry Leaders Across Coasts and Continents Unite to Back Swipely

Swipley’s Series A funding was led by Index Ventures, with Greylock Partners and previous investor First Round Capital also participating. Danny Rimer of Index Ventures will join Swipely’s board of directors, and Reid Hoffman of Greylock Partners will serve as an observer on Swipely’s board. To date, Swipely has raised $8.5 million in funding.

Swipely will use the funding to continue to grow the team and explore other benefits for consumers and businesses, including new ways for users to shop, share and save, and new tools to help businesses, understand and reward customers.

“We believe that the convergence of payments and social media is the natural next step in the evolution of the web. The notion of being able to use day-to-day transactions as a conversation element makes a great deal of sense and we expect it to be extremely popular,” said Danny Rimer, General Partner at Index Ventures. “Angus and the team have created the most compelling approach to enable this behavior and we’re very excited to be investors in Swipely.”

“We have been working with Angus since day one, when it was clear he had identified a huge opportunity with Swipely to change the way we shop and save on the Web,” said Josh Kopelman, Managing Partner at First Round Capital. “I’m excited to continue my support of Angus and his team as they take what started out as a visionary idea and turn it into a reality that will reinvent the way we talk our shopping experiences.”

“Swipely gets it right. Swipely offers a great service that helps consumers benefit from their card swipes,” said Reid Hoffman, Partner at Greylock, and Co-Founder and Executive Chairman at LinkedIn.

“Furthermore, the company has a great team: Angus is a seasoned tech entrepreneur with an impressive track record and it is great to work with Danny and Josh.”

Other Swipely investors include Lowercase Capital led by Chris Sacca, former head of special initiatives for Google; Keith Rabois, EVP of Slide, and former PayPal and LinkedIn executive; SV Angel led by Ron Conway; Anton Commissaris, previously SVP of revenue and business development at Mint.com and now director at Intuit; Lee Hower, venture capitalist and angel investor; Charles Moldow, former Tellme executive; and Emil Michael, White House Fellow and former Tellme executive. Davis is also a significant investor in the company.

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