Silicon Valley’s Silver Lake and DST Global of Russia, as well as Chinese private equity firm Yunfeng Capital, are leading a $1.6 billion tender offer for privately held employee and shareholder stock of China’s Alibaba Group, according to sources close to the situation.

Yunfeng, by the way, was co-founded by Alibaba Chairman and CEO Jack Ma, as well as other prominent Chinese entrepreneurs.

Along with DST, Silver Lake and Yunfeng, Singapore-based investment firm Temasek is also participating in the tender offer as an investor, but in a smaller way.

The deal, which has been discussed for some time, was signed earlier today and will be presented to its employees in an internal company blog, which will be in Chinese.

To get around persistent foreign ownership issues in China, sources said, DST and Silver Lake are ceding voting control of their stakes to Alibaba management.

If the tender is fully subscribed, that would mean a stake of just under five percent for the group, sources said, and it gives Alibaba a $32 billion enterprise valuation.

The impetus for the tender offer, which begins today, appears to be trying to address a cash-out, paper-rich issue for Alibaba employees.

There are no active secondary private markets in China, as is the case for tech start-ups in the U.S., and there is also no IPO in the foreseeable future for Alibaba. Thus, management has been looking for a way to give its employees and also other shareholders some liquidity.

This tender offer is not a capital raise by Alibaba and is only aimed at eligible employees and shareholders. The purchase of the Alibaba shares is expected to close before the end of December.

It will be done via a special investment vehicle, specifically aimed at this purchase, that includes a spate of investors. Giant Interactive Group, a Chinese online game developer, for example, said it had committed $50 million to the fund.

It’s not clear what the implications are for Alibaba’s biggest shareholder, Yahoo, which sources said is not selling shares in the tender offer. Yahoo’s fully diluted Alibaba 39 percent stake is now worth $12.5 billion in the deal.

That’s discounted due to tax issues and also the inability of the Silicon Valley Internet giant to sell its Alibaba shares.

In other words, investors will likely welcome this higher valuation, but realize a public offering is farther away than ever.

But it is interesting in that it clearly shows a strong relationship between DST and Silver Lake, which have jointly been mulling a possible bid for Yahoo along with Silicon Valley venture firm Andreessen Horowitz, as I previously reported.

Some will speculate that Silver Lake and DST now have an in with Alibaba, which is important, since a large slug of Yahoo’s market valuation is due to its Alibaba and also Yahoo Japan! assets.

If Yahoo is sold, of course, the disposition of the Alibaba asset is an important part of the deal.

More to come, including the implications for Ma, who has been under siege of late around his spinning out of Alibaba’s Alipay payments service and the noisy battle that later ensued with Yahoo. Yahoo and Alibaba, as well as its other large shareholder, Japan’s SoftBank, settled that dispute earlier this summer.

His involvement in Yunfeng, which is buying the company’s shares in a special fund that Ma is not in, will likely attract some scrutiny, anyway.

Sources said Ma is a minority investor in Yunfeng itself, has no control rights and is not a director. In addition, Yunfeng has no relationship with Alibaba.

In another interesting twist, Alibaba rival Tencent has close ties with DST’s Internet affiliate that used to share the same name, having invested $300 million last year in the affiliate that holds major Russian Internet properties.

Whether or not to sell any of their shares in Twitter is the big decision facing stakeholders of the microblogging service right now, as the second $400 million part of the company’s recent funding by Russia’s DST Global is completed in the next several weeks.

That includes everyone from early angel investors to those who bought it on the secondary markets to Twitter’s 600 employees, all of whom can sell a portion — up to 20 percent, sources said — of their holdings.

It’s all part of a recent $800 million mega-funding by Twitter, valuing the San Francisco company at $8.4 billion.

While $400 million went to Twitter, the second tranche of $400 million of the total was targeted to cash out current investors and also employees of the company.

Current investors include Benchmark Capital, Union Square Ventures, Spark Capital and several other venture firms, as well as a spate of prominent angel investors, such as Ron Conway.

Whether DST — as well as other smaller buyers, including early Twitter investor Chris Sacca and T. Rowe Price, according to the tender offer — gets them and others to sell enough shares is the big question, especially since few want to get caught in what one shareholder called the “Facebook idiot box.”

That would be referring to those who sold their investments in Facebook two years ago, when the social networking giant allowed its employees to sell 20 percent of their stakes to DST.

The financing was part of a $100 million add-on to a $200 million investment in the social networking company by the aggressive Russian investor.

At the time, the tender offer valued Facebook at $6.5 billion for the common stock, or $14.77 a share.

Of course, Facebook is worth upward of more than 10 times that now. Oops!

That’s why high-profile Silicon Valley venture firm Andreessen Horowitz, for example, is not selling out any of the shares it bought earlier this year in an $80 million transaction in private secondary markets.

Reasons to sell, of course, are also compelling.

Some investors might want to lock in upside, especially if they think the latest valuation is too high.

For venture capitalists in the company, some might want to return a win to their limited partners, while Twitter employees might want to put a down payment on a house after years of toiling in the start-up.

Others might also be worried about Twitter’s prospects going forward and might determine that the recent round was the high point of its market value. Twitter has indeed struggled to find a sustainable and lucrative business model, focused on advertising.

In addition, although it has recently stabilized, others might worry about Twitter’s management changes over the last year, as co-founders Biz Stone and Evan Williams have departed. Twitter creator and other co-founder Jack Dorsey is now running the company’s product efforts, with CEO Dick Costolo (who looks a lot like that Woody Allen shot above from the classic movie, “Take the Money and Run”).

Then again, that was exactly the take on Facebook several years ago, so it is now a case on all sides of seller beware.

Twitter declined to comment and I have not heard back yet from DST about the status of the transaction.

In case you haven’t heard, the tech and media moguls have jetted their private planes to Sun Valley, Idaho, for the exclusive annual Allen & Company confab and are probably easing into the cocktail hour just about now.

Break out the Kistler Chardonnay and name tags!

(I secretly love that the 300 moguls all wear name tags, even though they are all so fabulously famous.)

Among the highlights for the weeklong confab beginning today will be an interview of Facebook CEO and co-founder Mark Zuckerberg by Microsoft CEO Bill Gates, in which I assume they will fall all over themselves in a race of mutual admiration.

To be fair, it seems genuine and Sun Valley is not for unpleasantries anyway.

While Allen & Company — in its investment banker mode — likes to keep the schedule a state secret, it never is, so I am here to tell those planning their time in Sun Valley that the chit-chat will be Saturday.

Also sure to get a lot of ink, since all the owners and possible marks, um, potential buyers, will be there: Whither Hulu?

The premium online video service is famously for sale, and the moneybags at Google, Microsoft, Amazon and Yahoo (smaller bags!) are all taking a gander.

It will not be sold by week’s end, of course, although there will be all kinds of breathy media coverage as the powerful players shuttle to and fro from their gratis luxe condos in noisy hush-hushery.

Who will then come over to the bar to tell the gathered and increasingly drunken reporters — press is not invited in, but they’re there like kudzu all week — all about it.

Of course, there will be some cute anecdotes about the rich and famous — one year, it was News Corp. head Rupert Murdoch losing some item of his wife’s in said bar with everyone scurrying around to find it.

If Us Weekly were covering Sun Valley, that section would be called “Moguls Are Just Like Us!”

Actually, they’re not at all — mostly, they are meaner and more aggressive and greedier, although endlessly riveting.

That’s why the most awkward part of the event will be all the Sun Valley photos that appear without fail of these powermongers in shorts and fleece.

(Note to newcomers: Very few look good in shorts and fleece.)

Lastly, it would not be a modern Allen & Company Sun Valley gathering without continued fretting and fixating on the digital onslaught, even though there are scads of those invited techies competitively mountain biking the pretty mountains there.

This year’s focus will be the IPO gang from Zynga, Groupon and, of course, Facebook, whose insane market valuations are the envy of the media gang, who are mostly older and continually grumpy about it all.

But, the kids love this Internet thing and so the moguls will cope with the change, even as what happens in Sun Valley — power playing, but with a better view — never ever changes.

Google+ fills a void between public and private, it serves what is likely to be an older demo less interested in hooking up or hipstering out and more interested in the social utility it provides.

A VC Fred Wilson, in a later part of the same post on social networking companies.

Today and tomorrow, Yahoo’s directors are gathering here in Silicon Valley for one of their regular meetings that take place over the course of the year.

While board meetings in general are usually pretty dull affairs–and Yahoo’s, in particular, are typically glacial ones–there is a lot on the plates of those with purview over the machinations of the long-struggling Silicon Valley Internet giant.

Here’s a primer of what might (and might not) be happening, according to sources, of course, as Yahoo continues on its quest to reinvigorate itself–a journey that is beginning to make Siddhartha’s transformation into Buddha enlightenment look speedy.

A Yahoo spokeswoman declined to comment on anything below, although I did run it all by them.

The U-Shaped Turnaround

At Yahoo’s recent sales meeting in San Antonio, CEO Carol Bartz went all Sesame Street on the troops, using the letter “U” as an illustration to indicate where in the cycle the company was in its turnaround.

Apparently, just on the other side of the very bottom of the letter, heading inevitably upward.

Her argument was that the company has finally cleaned up its platform mess and its confusing corporate structure, and that its display and search advertising business is now recovering nicely.

All true, except there are some other key issues, such as the slowness of the search and online advertising partnership with Microsoft to make some serious hay.

In fact, although its display business will show a definite strong recovery in Yahoo’s quarterly results next week, its search business–both in market share and revenue per search (RPS)–has, as one person close to the situation put it succintly, “fallen off the cliff.”

That’s due, in part, to getting the new system with Microsoft delivering better results, which is not happening yet (if ever!).

In this quarter, Microsoft has honored its contractual guarantees and will make up the difference–which will result in masking the magnitude of the RPS loss. It’s a worrisome trend to watch.

The Asia Situation

Yahoo and its Asian partners are still mulling over various options regarding the company’s large ownership stakes there.

What is happening with its share in China’s Alibaba Group, according to sources, is precisely nothing right now, as has been made clear in recent comments by its CEO and co-founder Jack Ma.

“If you cannot make the business cool, you have no right to be angry with me,” said Ma in an article in Forbes published this week, referring to Yahoo. “I just don’t trust them…I’ve been working with them for years, and I’m disappointed.”

Relations between Ma and Bartz, sources said, remain as bad as ever, and even the normally close one between Ma and Yahoo co-founder Jerry Yang is strained.

Plus, Ma told Forbes, as he has said before, Alibaba is not taking its auction site, Taobao, public–leaving Yahoo in possession of an appreciating but decidedly private asset.

Japan is a different story, with the disposition of Yahoo’s stake in Yahoo! Japan the subject of long and continuing negotiations for a while now.

While the earthquake and tsunami crisis there did slow discussions down, there is still active recent movement about a variety of cashing-out scenarios, all of which have massive tax and regulatory issues.

Without boring you with the specifics, one option is to create a tracking stock, another a spin-off of the asset and still another some sort of stock trade.

But no matter what happens, Yahoo will have to pay some sort of taxes on its 35 percent stake in Yahoo! Japan, now worth $8 billion.

But if its CFO Tim Morse–the key figure working on the deal–can pull it off, what will Yahoo do with all that money?

Acquisition Guns Blazing? Or Sputtering?

In a recent forum in Silicon Valley, one of its M&A minions said Yahoo had its “guns blazing” with regard to acquisition activity in 2011, as deliciously reported in The Wall Street Journal, despite the company’s lackluster acquisition record.

Sources said the exec had his ears soundly boxed by his managers for the dopey remarks, since Yahoo has had such a lackluster record in the arena–especially compared to others.

And, oh yes, Yahoo’s M&A head just decamped to gaming phenom Zynga.

That aside, Yahoo should be deep in the market for hot start-ups to help revive its innovative spirit, but it remains hindered by a continued reluctance by new start-ups to join it and by its reputation for being a place where entrepreneurs go to die.

That certainly could change at any time with the right execs in place, but Yahoo is competing with a plethora of more exciting companies and also a seemingly endless venture capital gusher of cash of late.

While it is the board’s job to approve acquisitions and not source them, perhaps it is its job to pressure Bartz and other execs to get off the stick and hit at least one of the targets Yahoo aims at.

Targets are plentiful in advertising, content and even social, with many start-ups playing right into a lot of arenas Yahoo needs some help.

And help it does need as talent keeps walking out the door daily, mostly to hotter prospects such as Zynga and social buying sites Groupon and LivingSocial.

There is no question it is hard for any large company to hold onto top staff when there are so many enticing bonbons out there as options, but it can be done.

One good thing: Its newish head of product Blake Irving and head of U.S. media and advertising Ross Levinsohn seem to be playing well together and are setting a tone of stability that is much needed.

Enter the Kenny

That said, there remains endless swirl, especially with key investors, about the performance of its CEO.

While she started off as a publicly in-your-face exec, Bartz has definitely stepped out of the limelight of late, as her pugnacious manner started to irritate Wall Street and others.

It was a good idea, since it has taken the focus off the lack of stock and revenue progress she had loudly promised.

Still, Yahoo shares have continued to stay locked in the mid-teens, as investors wait for some sign that Bartz’s turnaround has worked.

The entrance of its spanking new director, Akamai President David Kenny, has further increased speculation about management and board changes at Yahoo.

This is Kenny’s first board meeting, but this well-connected newbie is someone who is clearly going to rise quickly to the top of decision-making at Yahoo.

That’s because the smooth and well-liked Kenny, who also has deep advertising experience as founder of the Digitas agency, has a long relationship with Yahoo and also with Yang.

He also now has much more tech cred as a leader of one of the Internet’s most important infrastructure companies, with a ton of regular contacts with media giants, ad networks and video providers that are Akamai’s clients.

In other words, Kenny (pictured here) is the full package of ad and tech experience that would make him an obvious Yahoo CEO candidate when Bartz’s contract is up in early 2013, if not before.

He’s also the person most likely to take over for longtime BoomTown punching bag Roy Bostock as chairman of the board at some point.

None of this is happening soon, but it is clearly an interesting development.

There are other machinations, of course, from continued interest from private equity players in Yahoo, as well as a variety of takeover scenarios, each more complex than the next.

While often derided as yesterday’s news by the elite of Silicon Valley as on an inevitable downward path, those plots are there because Yahoo remains a stellar brand with consumers worldwide and an Internet property with huge traffic and a big ad business.

In other words, it’s a U that someday maybe could be a V.

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

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

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

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

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

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

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

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

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

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

Her dulcet words have apparently not worked.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

At the president’s right hand, Facebook CEO Mark Zuckerberg; at his left, Apple CEO Steve Jobs. And when Obama looked across the centerpiece, there were the piercing eyes of Oracle CEO Larry Ellison. Note that Jobs and Google CEO Eric Schmidt are safely separated, in keeping with the first rule of dinner-party seating–avoid fistfights.

The theme of the evening’s conversation? Said White House Press Secretary Jay Carney, “The president specifically discussed his proposals to invest in research and development and expand incentives for companies to grow and hire.”

[Image credit: Flickr/WhiteHouse]

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

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

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

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

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

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

President Obama will dine with Apple CEO Steve Jobs, Google CEO Eric Schmidt and a handful of other top Silicon Valley executives at a private dinner at the home of venture capitalist John Doerr. The conversation topics of the evening: American innovation, education and clean energy, and quite a few others, I’m sure, given the guest list.

According to a White House official, other attendees include Facebook CEO Mark Zuckerberg, Yahoo CEO Carol Bartz, Cisco CEO John Chambers, Twitter CEO Dick Costolo, Oracle CEO Larry Ellison, Netflix CEO Reed Hastings, Stanford president John Hennessy, chairman and former CEO of Genentech Art Levinson, and Westley Group’s managing partner and founder Steve Westly. Oddly absent: HP CEO Léo Apotheker. Perhaps, Ellison’s attendance canceled his out….

The tutorial, which runs 40 minutes, is up on YouTube, but it’s unlisted and is only accessible via a private link. Thanks to a helpful reader, I’ve been able to watch it myself, and I’ve uploaded it at the bottom of this post so you can see it, too.

But it is 40 minutes long–and most of you don’t need to watch all of it. Here’s what you need to know if you’re interested in advertising, technology and Twitter’s first attempts at making real money:

Promoted Tweets, Twitter’s first big ad product, hasn’t taken off.
Instead, at least for now, Twitter is pushing customers to spend most of their money on Promoted Accounts, its pay-per-follower product it rolled out at the end of last year. Twitter tells advertisers they ought to spend $4 on Promoted Accounts for every $1 they spend on Promoted Tweets–the original Google-style ad concept CEO Dick Costolo introduced last year. Twitter says that’s because it’s a lot easier to buy the former than the latter, because there’s a lot more inventory available. (And because Promoted Accounts will “turbocharge” Promoted Tweets.)

Promoted Tweets should get a big push in the next month or so.
Until now, the only way you’re going to see a Promoted Tweet is if you click on a search term that someone has purchased, or if you’re using Twitter app HootSuite. But Twitter says the ads will start running in users’ regular “timelines”–the primary Twitterstream they see–on its own Twitter.com site, by the end of Q1. That’s going to make them much more visible, and should hopefully help with the inventory problem noted above.

Twitter is telling customers to expect an “engagement rate” of 1 percent to 3 percent.
Ad buyers are usually trying to measure success by figuring out how many people looked at or clicked on an ad. Click-through rates for most Web ads are very tiny, and according to an ad buyer who has seen Twitter’s presentation, the company says a realistic click-through rate is 0.3 percent. But “engagement” rates–which measure when a user retweets an ad, or likes it, etc.–are supposed to be much higher. My tipster, by the way, says Twitter is requiring new ad buyers to make a purchase of at least $5,000 worth of inventory in order to participate in the company’s beta tests.

Twitter is warning buyers that some users will have a problem with their ads.
At the end of the presentation (around the 35-minute mark), the company takes time out to coach buyers about “dealing with negative user feedback,” which it more or less assumes they’ll be getting. “People are averse to change, especially when it comes to advertising, and this type of feedback is to be expected,” Twitter’s off-screen instructor explains. The company’s suggested coping strategy: Don’t worry! The complainers are an “extremely marginal percentage of the total.”

[UPDATE: So how do the ads actually work? A Twitter ads tester would like to share their experiences with the rest of the world, but can't.]

]]> http://allthingsd.com/20110216/inside-twitters-sales-machine-a-secret-guide-for-advertisers-video/feed/ 9 http://allthingsd.com/20110216/slideshare-adds-live-web-conferencing-with-video/ http://allthingsd.com/20110216/slideshare-adds-live-web-conferencing-with-video/#comments Wed, 16 Feb 2011 16:00:01 +0000 Liz Gannes http://networkeffect.allthingsd.com/?p=3654 Today SlideShare, the presentation-sharing site with 45 million monthly uniques, is launching its take on improving Web conferencing.

In general, this arena has been prone to complicated setups and frequent glitches for users.

The two possible highlights of SlideShare’s offering, called Zipcasts: They happen within a browser without additional software, and there are no limits on the number of meetings or the number of participants in meetings.

There are also some tweaks like allowing watchers to flip through slides at their own pace.

While users will still need to call each other on the phone to have a two-way conversation about the slides, presenters can also include live Flash video–powered by TokBox–of themselves to give a more personal connection.

Users who want to create something like a public Webinar can use Zipcast for free with advertising, but those who want to make their meetings private need to pay $19 or more per month. premium users can also get two-way audio through a partnership with FreeConferenceCall.com.

In other SlideShare news, Ross Mayfield, the co-founder of Socialtext, recently joined the company as VP of business development.

]]> http://allthingsd.com/20110216/slideshare-adds-live-web-conferencing-with-video/feed/ 0 http://allthingsd.com/20110210/exclusive-facebook-exploring-tender-offer-for-1-billion-of-employee-shares-at-60-billion-valuation/ http://allthingsd.com/20110210/exclusive-facebook-exploring-tender-offer-for-1-billion-of-employee-shares-at-60-billion-valuation/#comments Thu, 10 Feb 2011 18:34:03 +0000 Kara Swisher http://kara.allthingsd.com/?p=40681

Facebook is exploring permitting a tender offer up to $1 billion of its employee shares, after being approached by a number of big institutional investors about investing in the company, according to sources close to the situation.

The new approximate valuation? An eye-popping $60 billion, sources said, which is a significant increase to a recent $1.5 billion investment round by Goldman Sachs and its international clients that had pegged the social networking behemoth at a $50 billion valuation.

And the reason? Liquidity, allowing Facebook employees to monetize their privately held shares, since the company is not likely to have an IPO for at least a year.

That’s been a big issue for Facebook as it seeks to walk the ever dicier line between being a private company and becoming a public company.

And managing how its shares are dispersed is critical, especially with regulatory concerns about these private secondary markets increasing.

All the machinating is because Facebook has tried hard–via ever bigger funding rounds and ever larger valuations–to delay its IPO, in order to grow its massive 600-million user base away from scrutiny.

The move is not dissimilar to one that the Palo Alto, Calif.-based company did in mid-2009, when one of its major investors, DST, forked over $100 million for employee shares in a transaction that was in addition to a $200 million investment.

At that time, current and former employees of Facebook were able to sell up to 20 percent of their common shares at $14.77 per share at a $6.5 billion valuation.

If completed, the new tender offer would be at a share price almost 10 times that. But sources said interest is high among big institutional investors who want a piece of Facebook before its inevitable initial public offering.

It’s likely the deal will be split between two or more investors, sources added.

A Facebook spokesman declined to comment.

The latest wrinkle is part of a massive race to invest in the winners of Web 2.0, often via secondary market sales.

Silicon Valley venture firm Andreessen Horowitz, for example, confirmed it had bought $80 million in shares of Twitter, in a story first reported here.

]]> http://allthingsd.com/20110210/exclusive-facebook-exploring-tender-offer-for-1-billion-of-employee-shares-at-60-billion-valuation/feed/ 3 http://allthingsd.com/20110209/exclusive-andreessen-horowitz-invests-80-million-in-twitter/ http://allthingsd.com/20110209/exclusive-andreessen-horowitz-invests-80-million-in-twitter/#comments Wed, 09 Feb 2011 19:13:24 +0000 Kara Swisher http://kara.allthingsd.com/?p=40605

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

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

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

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

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

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

Apparently, Twitter makes it a full basketball team.

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

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

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

]]> http://allthingsd.com/20110209/exclusive-andreessen-horowitz-invests-80-million-in-twitter/feed/ 3 http://allthingsd.com/20110124/seven-questions-for-ric-telford-ibm%e2%80%99s-vp-of-cloud-services/ http://allthingsd.com/20110124/seven-questions-for-ric-telford-ibm%e2%80%99s-vp-of-cloud-services/#comments Mon, 24 Jan 2011 16:45:15 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=2177 It wasn’t so long ago that the primary appeal of cloud computing was cost-savings. Companies struggling to slash their operational costs moved their data and applications out of their own back offices and handed them off to cloud providers. Now the question about the cloud is turning in a new direction. CIOs who last year asked, “How much can I save?” are now asking, “What more can I do with it?”

Often they’ll turn to public cloud providers like Amazon or Google or Microsoft. Those are the three names that usually get mentioned in the same breath whenever enterprise cloud services come up. But what about IT giant IBM? It turns out it’s a significant player in the cloud game, offering both public and private cloud services. Last week I sat down with Ric Telford, IBM’s VP of Cloud Services to talk about how Big Blue’s cloud business is going and what its priorities are in the year just started.

NewEnterprise: Ric, let’s start at the top. Tell me how IBM sees the cloud business right now?

Telford: Initially the cloud is all about doing more with less. Suddenly you could deliver the same IT services for less. Fast-forward to today, and it’s not all about saving money. People are realizing they can do things they never could before with the cloud. I was recently met with a small aircraft engineering company, and the guy running it described how he competes with much larger companies for defense contracts. It used to be that doing all the modeling and simulations he needed required buying hardware and software and running it all on premise. Now he can go out to the cloud, pay for what he uses and be done with it. He can now compete for contracts he wouldn’t have been able to go after before. And we’re seeing a lot of examples like that in industry after industry.

Someone said to me the other day that the cloud is going to have to have all the parts of the mainframe. Do you agree with that?

There’s a lot of parallels between the cloud and the mainframe. IBM’s view is that we have a single-reference architecture. It’s the same whether we’re delivering the service or if we build it for you. We did a deal recently with France Telecom where they are going to be a cloud services provider to their clients. They already have the network connections. But they’re not a cloud company. So they’re using IBM’s cloud architecture to give them all the pieces in one easy-to-consume bite. So we have that architecture and we use the same blueprint in all the various permutations of the cloud. For some people it’s confusing, but for us it’s all the same whether you want to have it inside your firewall or outside.

Which do your customers tend to prefer–a private cloud or a public cloud?

We do surveys every year and right now we’re seeing about a two-to-one preference for private versus public. About 60 to 70 percent of respondents say they’re working on a private cloud, and about 30 to 40 say they’re working on the public cloud. To us it’s all the same. We offer a core set of services from the IBM cloud–development, test, compute, storage, collaborations, desktop. But we can also build the same thing inside your firewall.

How big is your public cloud business?

I can’t give you a revenue figure because different business units take advantage of it to deliver different things. We just opened up a delivery center in Research Triangle Park. It’s probably one of the most advanced data centers in the world. And now we’re rolling out a model that we are cloning around the world. We just opened one in Germany and another in Canada. And then we’ll just keep adding them. We manage about eight million square feet of data centers around the world.

How does a company typically get started with the cloud?

Usually I suggest they start with their develop-and-test operations. It’s usually not mission-critical, and there’s usually a lot of hardware that’s not being used. Usually that’s the group that buys hardware long before it’s needed and it ends up sitting idle 90 percent of the time. At IBM we put our whole research division on the cloud because they were the worst hardware hoarders, putting servers under desks and whatnot. They knew that if they needed a new server it would take weeks to get it. Now they go out to the research and compute cloud, and the services they need are usually ready to use in minutes or at most an hour. It just makes a huge difference in people’s ability to get going.

So what you are your priorities for this year?

One of the big things we started seeing last year was an uptake of cloud delivery in industry-specific ways. We’re working not just on the generic things like email and collaboration, but on the specific applications that are used in various industries. Health care, banking and government are a few that have complicated regulatory needs that vary state by state and country by country, and we have the deep understanding required to work with them. We also built a private cloud to help the 29 countries involved in NATO share data on logistics and troop deployments. We also have an initiative with the consumer electronics industry. Utilities is another, and it gets tied in with our Smarter Planet initiatives.

Will IBM be making deals in the cloud this year?

IBM will make a few billion in acquisitions. Cloud is one of the four key growth areas we’re focused on. The others are Smarter Planet, analytics and the growth markets. We’ve said that in those four growth initiatives we’re going for $20 billion in additional revenue by 2014. Four initiatives, five years and $20 billion dollars. That’s certainly not all going to happen organically.

]]> http://allthingsd.com/20110124/seven-questions-for-ric-telford-ibm%e2%80%99s-vp-of-cloud-services/feed/ 9 http://allthingsd.com/20110118/quora-question-and-answer-social-network-review/ http://allthingsd.com/20110118/quora-question-and-answer-social-network-review/#comments Tue, 18 Jan 2011 23:38:35 +0000 Katherine Boehret http://solution.allthingsd.com/?p=1602 If brief communications like Twitter’s 140-character messages, Facebook status updates and text messaging leave you longing for more substantial discourse, you may be in luck. This week, I took a look at Quora, a question-and-answer site that encourages thoughtful—even long-winded—discussions.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

]]> http://allthingsd.com/20110118/quora-question-and-answer-social-network-review/feed/ 0 http://allthingsd.com/20110118/warning-oversharing-ahead-as-wall-street-bankers-start-to-talk-up-web-2-0-ipos/ http://allthingsd.com/20110118/warning-oversharing-ahead-as-wall-street-bankers-start-to-talk-up-web-2-0-ipos/#comments Tue, 18 Jan 2011 22:50:15 +0000 Kara Swisher http://kara.allthingsd.com/?p=39682

Here’s the tastiest part of an article in the New York Times yesterday about how Goldman Sachs essentially borked a deal to offer its rich clients in the U.S. private Facebook shares:

“However, over the last two weeks, the companies’ [Goldman and Facebook] relationship has grown increasingly tense, people involved in the offering said. Accusations about the news leak have flown back and forth, these people said.”

You can say that again, but –as leaky as the social networking giant has been over these many years in Silicon Valley–it seemed obvious that most of the intricate financial details about the offering were hand-delivered right from some of Wall Street’s hired guns to the DealBook scribes at the Times.

(Memo to myself: Start kissing up to those bankers, however appalling!)

Unfortunately for Facebook, it was those massive news leaks that drew the attention of government regulators to the deal. And with worries that it veered too close to the edge of violating securities regulations, the U.S. part of the offering had to be pulled.

Despite this particular mess, this kind of mishegas is only going to increase now that the banker bloviating is getting fired up a notch in 2011, as a spate of Web 2.0 Internet companies moves to public offerings.

Along with Facebook, that includes Zynga, LinkedIn and Groupon, as well as several others, all of which are just starting the banker bake-offs that used to be common in the Web space.

And that’s going to mean plenty of information to be found as some of those bankers inevitably drop a dime on the companies they are hired by.

Translated into more modern social terminology that these companies better understand: Bankers are really good at oversharing.

How do I know this? Because that is exactly what happened when the Web 1.0 bubble was in full froth.

Like Christmas in July, as bankers arrived to compete to win IPOs, the information flow suddenly became huge for reporters like me–I was at The Wall Street Journal at the time–covering it all.

It looks like more of the same for this round of stock sales likely to come. Already we know more about Facebook’s financials than we ever did.

And to that, I say: Loose lips may sink ships, but it will make for an awesome amount of news to come in 2011 about the Internet’s starring players.

]]> http://allthingsd.com/20110118/warning-oversharing-ahead-as-wall-street-bankers-start-to-talk-up-web-2-0-ipos/feed/ 0 http://allthingsd.com/20110112/andrew-masons-goat-rodeo-of-groupon-investors-will-be-fun-to-watch/ http://allthingsd.com/20110112/andrew-masons-goat-rodeo-of-groupon-investors-will-be-fun-to-watch/#comments Wed, 12 Jan 2011 14:01:22 +0000 Kara Swisher http://kara.allthingsd.com/?p=39446

Next week, at the DLD conference in Munich, Germany, BoomTown will be interviewing one of my favorite start-up CEOs: Andrew Mason of Groupon.

And what’s my very first question for the adorkable toast of the digital town, who has just collected a billion dollars in funding, giving his hot social buying site a $4.75 billion valuation?

No, it’s not about what Mason is going to do with all that moolah.

Not, it’s not about why Groupon spurned the $6 billion acquisition offer from Google (and the Yahoo one before that).

No, it’s not about what hair care products Mason uses to get his hair looking so much like Justin Bieber’s coif.

Most of all, what I want to know is how he’s going to manage his ridiculously large–and, let’s be honest, very opinionated–investor group, which is made up of a big chunk of the digital arena’s most prominent VC firms, institutional investors and angels.

Consider the list, which is much more diverse than Facebook’s at a similar time in its gestation (and, in fact, it feels a lot like the social networking site’s current investor stampede):

Andreessen Horowitz, Battery Ventures, Greylock Partners, Kleiner Perkins Caufield & Byers, Mail.ru Group (formerly DST Global), Maverick Capital, Silver Lake, and Technology Crossover Ventures, New Enterprise Associates, Accel Partners, T. Rowe Price, Fidelity, Capital Group, Morgan Stanley, former AOL exec Ted Leonsis and others.

(How in the world is the ubiquitous Ron Conway not shoved in this pig pile? Or is he?)

And, of course, the inevitable Allen & Company acted as financial advisor for this massive funding, which also feels like a bit of a private pre-IPO.

It will be interesting to see exactly whom among this shareholder group that Mason and the other top Groupon execs will listen to and who will have the most influence over the next year.

None of the new moneybags got a board seat, which is probably a good thing. As most entrepreneurs know all too well, investors can be a tricky thing–at once helpful and then not so much.

Mason, a clearly gifted exec, certainly has his hands full now, managing expectations for the fast-growing company, as well as the business itself.

Let’s hope that now that this surreal investor sideshow circus is over, that Groupon’s precious time can be focused on just that.

]]> http://allthingsd.com/20110112/andrew-masons-goat-rodeo-of-groupon-investors-will-be-fun-to-watch/feed/ 0 http://allthingsd.com/20110106/even-if-it-had-500-shareholders-today-facebook-doesnt-have-to-disclose-financials-until-spring-of-2012/ http://allthingsd.com/20110106/even-if-it-had-500-shareholders-today-facebook-doesnt-have-to-disclose-financials-until-spring-of-2012/#comments Thu, 06 Jan 2011 10:15:48 +0000 Kara Swisher http://kara.allthingsd.com/?p=39210

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

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

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

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

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

As the New York Times noted today:

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

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

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

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

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

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

As The Wall Street Journal reported yesterday:

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

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

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

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

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

]]> http://allthingsd.com/20110106/even-if-it-had-500-shareholders-today-facebook-doesnt-have-to-disclose-financials-until-spring-of-2012/feed/ 3 http://allthingsd.com/20110105/goldman-facebook-investment-vehicle-already-full-sec-eyes-disclosure-rules/ http://allthingsd.com/20110105/goldman-facebook-investment-vehicle-already-full-sec-eyes-disclosure-rules/#comments Wed, 05 Jan 2011 23:09:46 +0000 Liz Gannes http://networkeffect.allthingsd.com/?p=1988 Goldman Sachs has already received “several billion dollars” worth of commitments to its “special-purpose vehicle” for investing in $1.5 billion worth of Facebook stock, according to The Wall Street Journal.

Goldman is asking Facebook to expand the number of shares available through the deal, which may depend on the amount of interest among Facebook employees in selling their personal stock at this time. (Before the Goldman deal, employees were prohibited from selling shares, though they were able to do so for a short time last year as part of a deal with Digital Sky Technologies.)

Goldman plans to stop soliciting interest in the project on Thursday, according to the Journal. Only wealthy individuals and a few hedge funds and private-equity firms have been asked to participate, with a minimum investment of $2 million for people who do not work at Goldman.

Meanwhile, the interest of the Securities and Exchange Commission has been piqued by the Goldman deal, which was structured to avoid adding shareholders to Facebook’s fastidiously maintained count. The company has carefully avoided having more than 500 shareholders to avoid SEC disclosure rules.

It had already been reported that the SEC was looking at the recent growth of secondary market trading of shares in private companies, with some assuming that such an inquiry could lead to the practice being shut down.

However, The Wall Street Journal now reports that the agency is studying whether the 1960s-era disclosure regulations for private companies need a rewrite. That has some on Wall Street wondering whether the SEC inquiry could “open the floodgates” for similar deals, where “hybrid” companies are private yet have their shares traded in a limited way.

The idea that wealthy Goldman clients are the only ones able to invest in Facebook, a company with some 600 million users, doesn’t sit well with many people. BoomTown’s Kara Swisher yesterday described the Goldman-Facebook deal as “sneaky,” “elite” and “opaque.”

Some Goldman clients complained that they were given too little time and information to evaluate the Facebook opportunity, which only emerged this past weekend. Apparently enough of their cohorts did not feel that was the case.

Please see the disclosure about Facebook in my ethics statement.

]]> http://allthingsd.com/20110105/goldman-facebook-investment-vehicle-already-full-sec-eyes-disclosure-rules/feed/ 0 http://allthingsd.com/20110104/facebooks-questionable-stock-hijinks-feels-like-winklevii-2-0/ http://allthingsd.com/20110104/facebooks-questionable-stock-hijinks-feels-like-winklevii-2-0/#comments Tue, 04 Jan 2011 19:00:38 +0000 Kara Swisher http://kara.allthingsd.com/?p=29772

Many years ago, before Google went public, I had an unusual late-night conversation in the lobby of the TED conference with its co-founder Larry Page about the prospect, about which–despite its inevitability–he had more than a little nervousness.

That would be: Taking the search company public.

After much ruminating, Page concluded that one of the more important reasons he felt compelled to have an IPO was to finally reward Google’s employees for all the work they had done to build the company.

While I have never had a similar chat with Facebook CEO Mark Zuckerberg about the powerful social networking company and an initial public offering, I suspect that he would not express any such sentiment.

And it’s not because Zuckerberg does not value his staffers any less than Page did–instead, it’s because he seems to value his privacy most of all.

I know–ironic!–given how many perceive the company to be cavalier about important issues related to disclosures of personal information uploaded to Facebook by the mountain-load daily by its hundreds of millions of users.

That aside, Zuckerberg’s clear intent to keep the lid on Facebook tight–with no information about the details of financial performance and other pertinent information a public offering would require be disclosed–is clearly about to become a nettlesome issue for the company.

While that effort at preserving secrecy by staying private has resulted in little more than cute Silicon Valley media guessing games about a possible IPO, its most recent machinations are too clever by a half.

That would be the new and giant investment from Goldman Sachs, as well as a deal to get $1.5 billion of pre-IPO shares in the hands of the investment bank’s rich customers.

Aside from the appalling image that only the very wealthy can get an early shot at Facebook shares, which instantly became a press meme yesterday after the Goldman deal was announced, pretending this single investment entity–called a “special purpose vehicle”–simply feels like a Wall Street trick.

Plus, a special purpose vehicle sounds like a car that bankers use to take people for a ride.

Thus, a gaggle of rich doctors in New Jersey are treated like one blob, instead of what is plainly true to all. As the old Latin legal phrase goes: Res ipsa loquitur (the thing speaks for itself).

Of course, this strategic move is designed to keep the number of primary stockholders under 500, which is the IPO tipping point for the Securities and Exchange Commission.

Therefore, by all means, let’s do it!

Or not, because I had an intense déjà vu about all this, and an unease that it felt vaguely familiar as a negative characteristic of Zuckerberg’s leadership that seems to cling to him.

That would be the dicey origins of Facebook, which remain a controversy to this day, including garnering an entire Hollywood movie on the subject.

Anyone with a passing knowledge of Facebook’s history knows the basic question: Did Mark Zuckerberg “steal” the idea for Facebook from the Winklevoss twins, as well as sandbag their efforts, while they were all students at Harvard University?

And, more to the point, was it illegal?

The Winklevii certainly think so, continuing in their Don Quixote quest to take Zuckerberg down in a series of ever-more-comical lawsuits.

For me, the answer is a lot more complex–I think Zuckerberg most definitely screwed with the Olympic rowing twins and it was very creepy that he did.

But, in terms of breaking the law, not so much.

Of course, if you are endeavoring to always act with ethics in your career, this should not be the bar set. But in practical terms, it was most definitely an aggressive knee-capping that is not uncommon in business.

Zuckerberg has shown similar tendencies many times since then, especially around the thorny issues of privacy, where fast-and-loose behaviors are quickly followed by the I’m-sorry-I-didn’t-mean-it excuses.

Okay, fine, I get it. Business is war.

But, as it moves into a more mature place, the question now is whether Facebook should keep stressing this kind of wink-wink-nudge-nudge propensity, because it feels–how can I say this in the nicest way–icky.

Plus it will surely attract unneeded attention from the SEC, which is already looking into the opaque market for trading shares of closely held companies and where Facebook is the star attraction.

And this is to say nothing of other issues–for example, could there be insider trading problems around the buying and selling of these private shares, as one person close to the situation has noted to me?

Facebook, of course, will defend what it is doing as above board, say it’s not unfair to give special access to its bounty to the very rich in what is essentially a private IPO and wag a finger at critics like me and tell us we don’t understand sophisticated financial issues.

But here’s what I grok without a Harvard Business School degree: It feels sneaky, it feels elite, it feels opaque, and this kind of fancy financing footwork could end in tears.

Because these legitimate questions on how Facebook handles its stock will continue to dog the company until–when he is good and ready (and finances at Facebook look prettier)–Zuckerberg eventually pulls the trigger on an IPO.

It would be nice, even if Wall Street applauds his cleverness, if he didn’t keep shooting himself in the foot along the way.

]]> http://allthingsd.com/20110104/facebooks-questionable-stock-hijinks-feels-like-winklevii-2-0/feed/ 11 http://allthingsd.com/20110101/the-social-webs-big-new-theme-for-2011-multiple-identities-for-everyone/ http://allthingsd.com/20110101/the-social-webs-big-new-theme-for-2011-multiple-identities-for-everyone/#comments Sat, 01 Jan 2011 17:47:24 +0000 Liz Gannes http://networkeffect.allthingsd.com/?p=1697 Mark Zuckerberg famously said: “Having two identities for yourself is an example of a lack of integrity.”

Although he later clarified, “I wasn’t making a value judgment,” maintaining multiple identities, whether it’s as simple as publishing some photos to Picasa and others to Facebook, is becoming a big trend in online life.

Even as Zuckerberg’s Facebook extended its dominance in 2010 to the point where it seems to have a social Web monopoly, it was still a landmark year for social network competition.

Where in the past, tech industry watchers derided new start-ups for launching “yet another social network,” ever more users seem to be constructing multiple online presences that utilize the strengths of various platforms and networks.

And this splintered approach is only going to increase.

Internet users now have plenty of outlets for self-expression. They can prioritize individuality and choose to post on the highly customizable Tumblr, or instead value the comprehensiveness of a network and post on the blander Facebook.

A big part of this shift toward understanding the private online self versus the public online self has been the rise of Twitter. On Twitter, regular users make the sort of decisions celebrities do: What to share about their private lives with their public audience of followers.

Another shift has been the rise of smartphones, along with their quality broadband connections, good cameras and mobile apps.

As an early adopter of various social apps, I’ve recently been confronted with the choice of whether to post a picture taken with my Apple iPhone on-the-go to Facebook, Twitter, Instagram, Path or Picplz.

Each of them has different audiences, different associations with my personal or professional identities, and different expectations for how people will view and interact with my snapshot. (And I suppose there’s also the option of keeping the pictures to myself on my phone storage.)

Although the people noisiest about privacy on Facebook have at times been the media, publicity of the company’s highly confusing privacy settings seems to have led to many more people being aware of them and perhaps even changing them.

Perhaps that’s why I see an increasing–but still quite small–portion of my Facebook friends using pseudonyms on the service. And when I asked them why, I heard a variety of reasons.

One is a teacher, another prefers to go by the moniker he uses artistically. Yet another is a college student who is applying for jobs and who wants to be more anonymous for a while. Like many of today’s young people, she has become highly conscious of balancing the freedom to be herself online with the way she is perceived by professional contacts.

(A representative for Facebook declined to comment on whether the company has recently been more permissive about allowing pseudonyms, something it has traditionally frowned on.)

Of course, very little of what’s posted online can be trusted to never get out or never be linked to its originator. If you really want to keep your thoughts private and impermanent, of course, keep them in your head.

But there are now many more options for more private communication, many of them having first come out in 2010. They include small-group coordination tools like GroupMe, Fast Society and Beluga. There’s also Path, a start-up from a former Facebooker that is perhaps too limited by design, but is exploring the world of more intimate and personal communications.

For many people, their Facebook network is far from a direct match with their real-world friends, so it will be increasingly important to use these tools to dice circles up and make them more accessible. (Facebook is also trying to address that need with its own Groups tool.)

To be sure, that Facebook map of connections is a highly valuable asset, one the company has fiercely protected, as Google reformulates its approach to the social Web.

Splitting your users into an entirely new social graph will certainly hamper growth. For instance, another early Facebooker launched Jumo, a social network for people connecting with nonprofits that seems to risk being redundant with, and isolated from, similar efforts on other platforms.

And Foursquare, despite its zeitgeisty innovation for sharing real-time location updates, has accumulated only about five million users in the last two years.

However, the speedy growth of new social networks like the addictive Instagram–which is like Twitter for pictures and got one million users in its first two months–shows that there’s still an opportunity to take an independent path.

What seems particularly notable about the current moment is that many people are evolving their approach to expressing themselves online, and they now have many tools and contexts to do so. And it’s up to them if these multiple identities will be unified anywhere except in their heads.

(Image collage at top of post courtesy Flickr user shannonkringen.)

Please see the disclosure about Facebook in my ethics statement.

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