AllThingsD » scale

FitBit Now Tracks Heart-Rate Data, Through Digifit App

Lauren Goode — Thu, 03 May 2012 19:22:57 +0000

Fitbit, the popular fitness device that clips on to clothing and measures the wearer’s activity levels, is adding heart rate to the list of metrics it will support, through a partnership with the Digifit heart-rate app. When users are wearing the Fitbit and using Digifit’s app, they can now pull their cardio info into Fitbit’s online dashboard, and can merge it with data from Fitbit’s new Aria scale, as well.

FitBit's New (Non-Wearable) Device: The Wi-Fi Smart Scale

Lauren Goode — Mon, 23 Apr 2012 10:00:15 +0000

Fitbit, maker of the popular fitness device that clips onto clothing and tracks activity and sleep patterns, is attempting to set itself apart in the increasingly crowded fitness-tech market with the introduction of a new, Wi-Fi-equipped scale. The Aria Wi-Fi Smart Scale measures weight, body-fat percentage and body-mass index, and wirelessly transfers the data to users’ FitBit accounts; information from the scale is also accessible through FitBit’s iPhone and Android apps. First announced at CES earlier this year, the $129.95 scale goes on sale today on Fitbit’s Web site.

Federated Media Buys Lijit Networks

Kara Swisher — Tue, 04 Oct 2011 12:00:16 +0000

San Francisco-based Federated Media Publishing said it has bought Lijit Networks, a smaller online advertising analytics and tools firm.

The price for the Boulder, Colo., start-up — which was founded in 2006 — was undisclosed, but it has received just under $29 million in venture funding from firms such as Foundry Group. Federated said Lijit would continue to operate independently, “but in conjunction.”

In an interview yesterday, Federated CEO Deanna Brown said the buy was to round out offerings for its clients and to better compete in a world where most of the online ads go to the top five players.

“I am excited we can give both publishers and advertisers more tools for engagement and monetization,” she said.

Federated, which lost big social-media news site Mashable earlier this year, also benefits from increased scale and inventory of sites.

Lijit CEO Todd Vernon, who will become EVP of technology at Federated, said that it was ever more important for ad-focused firms on the Web to “deliver the entire stack.”

“Lijit has a core competency in the media business, and combined with FM’s best-in-class sales force, we can offer everything needed to do effective online campaigns,” he said.

Here’s the official press release:

Federated Media Publishing To Acquire Lijit Networks

Combined Entity Will Power More than 77,000 Independent Publishers Across the Web Via Comprehensive Advertising, Analytics and Reader Engagement Tools

SAN FRANCISCO, October 4, 2011 – Federated Media Publishing, which powers the best of the Independent Web, today announced the acquisition of Lijit Networks, Inc. Lijit is a leading provider of advertising services, audience analytics and reader engagement tools for online publishers of all sizes. The combined entity will reach nearly 300 million global unique visitors according to Quantcast.

Lijit, headquartered in Boulder, Colorado, will continue to operate independently but in conjunction with the rest of Federated Media Publishing. Lijit CEO Todd Vernon and COO Walter Knapp will take on corresponding EVP of Technology and SVP of Platform Revenue responsibilities at Federated Media Publishing and will report directly to Federated Media Publishing’s CEO, Deanna Brown. Additionally, Lijit board member Seth Levine from Foundry Group will join the Federated Media Publishing board of directors, effective immediately.

With the addition of Lijit Networks’ existing publisher relationships, Federated Media Publishing will now reach more than 77,000 online publishers and nearly 15,000 expert communities, making it one of the largest companies to power publishing on the Independent Web. The acquisition vastly expands the combined company’s inventory of sites, offering premium advertisers improved scale and reach.

Publishers Will Profit and Flourish

Lijit helps publishers more thoughtfully interact with and better understand their audience by providing analytics and engagement tools that build deeper relationships, lengthen time on site and increase page views. These robust and actionable audience analytics and reader engagement tools leverage intent, behavior and demographics to help publishers of all sizes increase revenue and better engage their readers.

Additionally, the combined advertising services provided by FM and Lijit will give publishers of all sizes a revenue stream that complements existing sales efforts and helps grow and monetize their website businesses, no matter what the size.

Advertisers Can More Easily Analyze and Engage

The combination of Federated Media Publishing’s premium online advertising and conversational marketing programs and Lijit’s proprietary data collection tools will empower advertisers to better understand user intent, contextual relevance and demographic information. And by leveraging the combined entity’s extensive publisher relationships, advertisers will have unprecedented scale on the Independent Web.

Introducing Programmatic Buying to the Independent Web

Programmatic buying is one of the fastest growing trends in digital media and the introduction of Lijit’s robust RTB exchange will equip media buyers with one of the largest platforms available. Over the next few months, Federated Media Publishing and Lijit will develop a series of private exchanges that will highlight leading independent publishers. These exchanges will allow brands to engage active, passionate consumers found in highly conversational online communities and publications, while delivering premium CPM rates via FM’s conversational marketing programs.

Quote

“The Lijit Networks team is just as passionate and committed to powering publishers as we are at Federated Media Publishing and that was a crucial element to this decision,” said Deanna Brown, chief executive officer, Federated Media Publishing. “Our combined relationships, proprietary tools and conversational marketing services will be invaluable to publishers and advertisers alike.”

“Federated Media invented how to leverage authentic voices and engaged conversations that exist in the Independent Web,” said Todd Vernon, founder and CEO of Lijit Networks. “The combination of the two companies is a game changer in the industry that unlocks new opportunities for both companies and our combined publisher network.”

Exclusive: Former AOLers Steve Case and Ted Leonsis Raising $400 Million Growth Equity Fund

Kara Swisher — Thu, 10 Mar 2011 19:58:38 +0000

Steve Case and Ted Leonsis are bringing their old AOL band back together once again, this time by raising a $400 million growth equity fund.

The pair, the legendary top execs who rocketed AOL to the top of the Internet business in the 1990s, are now making the rounds in New York and elsewhere to pitch their new investment vehicle, sources said.

The money raised will be part of an entity called Revolution Growth, which already exists within Case’s larger Washington, D.C.-based company called Revolution.

While both Leonsis and Case have done a lot of investing in the Web 2.0 space both together (Revolution Money) and apart (the Groupon and LivingSocial social buying sites, respectively), this is the first time they are creating a more formal investment partnership.

Another former AOL exec, Donn Davis is the third partner in Revolution Growth.

Sources said its focus will be on companies just beyond the venture stage to bring them to scale.

Another Yahoo SVP Departs–This Time, Techie Cheryl Ainoa

Kara Swisher — Thu, 10 Mar 2011 19:15:48 +0000

Yahoo is losing another longtime senior exec, this time Cheryl Ainoa (pictured here), who has been SVP of the company’s Global Service Engineering unit.

Ainoa, who was one of Yahoo’s top women executives, announced her resignation to her team earlier this week. She is apparently departing for a job at another Silicon Valley tech company.

As described for a recent “Girl Geek Dinner” at Yahoo, where she spoke on the topic of “Innovation at Scale,” Ainoa’s job was to lead “the teams that manage all Yahoo! applications in production worldwide–ensuring scalable, highly available and high performing experiences for every Y! user.”

Ainoa is a longtime Yahoo veteran and also has worked at other companies such as Broderbund Software, Genealogy.com and Healtheon/WebMD.

Earlier this week, another longtime Yahoo–VP of North American Field Sales Mitch Spolan–left for the top advertising job at social buying site, LivingSocial.

Yahoo declined to comment.

Google's Eric Schmidt Shows Off Movie Studio, a Tablet Video-Editing App

Ina Fried — Tue, 15 Feb 2011 16:58:56 +0000

Google’s Eric Schmidt said that while computers are being criticized for driving humans apart, the opposite is actually taking place as devices are doing work that humans don’t want to.

“Computers are really here to make us happier,” Schmidt said, promising these devices will give people more time with friends and family, not less.

Schmidt, who gave up the CEO role last month, said that nearly all devices will get more interesting when they connect to the Internet. A music player that doesn’t connect to the network isn’t very interesting, he said, perhaps opening the door to the announcement of a long-talked-about, cloud-based Google music service.

The talk is just geting started. Mobilized got a really good seat in the front row, just two seats over from Andy Rubin, and has live updates below.

5:59 pm: Schmidt talking about things phones should be able to do, such as figure out better traffic routes and bridge language barriers. “You really can do magic,” he says, pointing to Google Translate, which lets you speak one language and have a language you don’t speak returned. “That’s done in a twentieth of a second or what have you,” he says.

6:01 pm: Brings out colleague to show an application on “an interesting new device.”

6:03 pm: The device is the Motorola Xoom tablet and the program is “Movie Studio,” an app built from the ground up for creating and editing movies on tablets.

He has a few images and videos from around Barcelona.

He creates a movie onstage and shows how it can easily be shared on YouTube. (This looks like iMovie and Windows Live Movie Maker so far–both of which also let you edit movies and share directly to YouTube.)

6:07 pm: Upload goes slowly, though, as Schmidt notes it is the problem of doing a demo at a mobile network convention where everyone is hammering the networks.

6:09 pm: The goal of many of Google’s products, Schmidt says, is to do tasks quickly so that people can get back to being human. “We ultimately believe that speed matters,” Schmidt says. Google Instant, he says, can save two to five seconds per search.

Search is also becoming more personal. With permission, users can get more information. Next up, he says, is autonomous search as information comes up as one walks or drives, and is driven by location.

“That’s just the beginning of a large number of new apps that use that infrastructure to make a big difference,” Schmidt says.

Schmidt says how much info to share will be up to the user, but those that opt in can get much richer results.

There’s also a trend, he says, to returning more structured data, such as travel.

6:12 pm: Stat time: 120 million people using Chrome, up three times from a year ago.

YouTube revenue doubled in 2010. Now just being able to monetize professional content at a rate that starts to make sense for content partners.

6:18 pm: Computer science can help all kinds of things, Schmidt says. With phones and tablets, “You never forget everything” which is precisely what phones are good at.

If you choose, you can remember the hotels you stayed in and the people you met, etc., “Humans forget,” he says.

Computers are also preventing people from ever getting lost. When I was a boy growing up in Europe “I was always lost,” Schmidt says.

Translation may not prevent war, but should at a minimum increase dialogue, Schmidt says.

6:18 pm: “Even better you are never lonely,” he sats, because computers can point you to nearby friends or connect you to distant ones.

You are never bored, Schmidt says. You are never out of ideas because we can always suggest what you can do next.

Other changes, include the self-driving cars that Google has been working on.

“It’s obvious that cars should drive (themselves),” he says, adding that there will be a “kill switch” in case there are bugs. And it will take time, he says.

“This is coming. It will be decades, I suspect–not a year.”

He also says these innovations will scale to the masses.

“It’s a future for the masses, not the elites,” he says.

6:21 pm: With that, on to Q&A.

6:23 pm: Talking about targeted broadcast quality ads as next frontier.

“Who wants to see an ad that is not relavent to them,” Schmidt says. And that leads to revenue, which Schmidt points out is the whole point of advertising in the first place.

6:24 pm: Question on Android fragmentation saying there is frustration among phone makers and developers.

“We hear some of this,” Schmidt says. “You’ve stated the problem more strongly than I would have, but I will take that as feedback.”

6:26 pm: Question about role of Google in financial services.

Schmidt quips that Larry Page and Sergey Brin periodically suggest that Google issue Google Bucks as its own currency, but Schmidt says he always points out the regulatory issues.

On a serious front, he talks about the power of near-field communications as a means to turn real-world transactions into electronic ones.

“In that are very large businesses,” he says.

(Google built NFC into its Nexus S device.)

6:29 pm: Are you interested in Twitter?

“We love Twitter and I like to tweet,” Schmidt says, eliciting laughter from the crowd.

6:31 pm: Why so many operating systems?

Sometimes these things occur because the teams move so quickly, Schmidt says.

People have been asking when Gingerbread and Honeycomb will come together. Schmidt: You can imagine the follow-on release will start with an “I” and be named after a desert and will combine the best of both, Schmidt says.

These releases occur on roughly a six-month cycle, Schmidt says.

6:33 pm: On Chrome OS, Schmidt says there will be an opportunity to merge that with Android over time, but better to wait for the operating systems to mature and a natural time than to push them together too soon.

6:34 pm: On HTML5, Schmidt imagines that some number of years from now, most apps–mobile and desktop–will be running on HTML5.

6:39 pm: Question on Google’s role in health care.

Phone should be able to, at a minimum, carry medical info. Several percent of queries on Google are health-related.

6:42 pm: Is Facebook with its “Like” button a main competitor?

Today our main competitor is Microsoft. Microsoft has a good product in Bing, he says.

“There’s a couple cases where it might be too good. We discussed that in a blog post.”

They have the cash, the scale and the reach to do good and amazing things.

6:44 pm: On Nokia-Microsoft partnership:

“We would have loved it had they chosen Android,” Schmidt says. “That offer remains open.”

Android would have been a good choice for Nokia, he says.

‘We certainly tried” to get them, he says.

6:46 pm: How do you approach the fact that Android going higher and lower in the market?

Schmidt says that the company tries to show the best in its Nexus line, while putting minimum specifications out there to set the bar for what developers can expect.

6:47 pm: Question on why Google is not more broadly used in the education market?

Schmidt says the company has funded a number of YouTube professors. “We’ve not yet come up with the killer [education] app,” he says.

6:49 pm: Asked about Google’s interest in the PC operating system market, Schmidt says that Google’s answer is Chrome OS. Sometime in the spring you will see a series of PC makers come out with Chrome OS devices. However, he adds they won’t run current PC apps, such as Windows apps.

“It does not run any of your current PC applications so you might think about it,” Schmidt said. That said, he adds there are, in most cases, cloud-based options that are roughly equivalent.

6:52 pm: With that, Schmidt wraps up.

Finding the Scale of the Rest of the World Lacking, Early Designer Rejoins Facebook

Liz Gannes — Mon, 14 Feb 2011 13:00:23 +0000

Aaron Sittig put in five years on the Facebook team, joining in the very early days of the company and designing many of the service’s icons as well as conceptualizing key experiences like tagging friends in photos. Last year, he was part of a stream of longtime Facebook folks who left the company to see what the world outside the walled garden had to offer.

But Sittig is now back at the mother ship, having rejoined in January with the title “product architect,” as Kim-Mai Cutler at Inside Facebook reported Friday.

This comes at a time when Facebook has more than 2,000 employees, plans to move to a corporate campus within the next year and says an IPO is likely in 2012. It’s a lot different from when Sittig first joined in 2005.

Sittig had been away from the company only six months before accepting an offer to return. He told NetworkEffect that he felt the outside world lacked the “scale and ambition” of Facebook. Plus, he was lured by some of Facebook’s recent hires: Sam Lessin and Justin Shaffer, brought in through the acquisitions of their companies Drop.io and Hot Potato, respectively (both of which occurred while Sittig was away).

Here’s Sittig’s explanation:

I left Facebook last June because I’d been there for five years and wanted to see what else I could apply myself to. I didn’t expect at the time that I’d head back.

I spent my time off advising companies and looking for new ideas. But for each idea I wanted to build myself, I kept realizing that Facebook was the only place with the scale and ambition where I could build my ideas successfully.

So that, combined with the steady influx of talented people like Sam Lessin and Justin Shaffer, convinced me to say yes when I was approached with an offer to rejoin.

Prior to Facebook, Sittig worked at Napster, after it bought the Mac client Macster that he had helped develop. He studied philosophy at UC Berkeley. Sittig has made angel investments in companies such as Hearsay, which makes corporate social media management tools.

Please see the disclosure about Facebook in my ethics statement.

Arianna Huffington on Her New AOL Job: "I Want to Stay Here Forever"

Peter Kafka — Mon, 07 Feb 2011 13:55:58 +0000

Tim Armstrong and company spent yesterday explaining their $315 million Huffington Post purchase to the press. Now they’re doing the same for Wall Street, via a conference call.

AOL CFO Artie Minson prepped investors for the call with a memo laying out expectations. Short version: AOL thinks HuffPo will earn about $10 million on revenue of $50 million this year (as long as you’re okay with using “adjusted OIBDA” as a proxy for “profit”). It also thinks the purchase will save it $20 million a year, but it’s going to spend around $20 million on restructuring charges when the deal goes through.

I’ll liveblog the call below:

8:02 am: Greetings! About to start now.

8:03 am: On the call: Tim Armstrong, Arianna Huffington, Artie Minson.

8:03 am: Armstrong makes a Super Bowl joke that I can’t quite follow, and I like football. But now praising Arianna, co-founder Kenny Lerer and outgoing AOL CEO Eric Hippeau.

“The Huffington Post is one of the best properties on the Internet.” Armstrong, Huffington and Minson are all BlackBerry users.

8:06 am: On revenue: This gives an opportunity to serve more brand marketers, who are “very interested” in the scale this gives us.

8:07 am: Spending next 30 days on integration. “Really synergies to be had.”

Next steps: Next 72 hours communicating with employees, talking to partners. 1,500 AOL workers on the phone this morning explaining deal to others.

“This may be the smallest disruption” internally of any deal I’ve worked on. Majority of integration done within 35 to 40 days.

8:09 am: We’ve looked at a bunch of companies, though we’re mainly going to concentrate on organic growth. But Arianna is great [many superlatives] and she “also happens to be a woman.”

8:10 am: Here’s Arianna.

8:11 am: “Amazing” how aligned two orgs are.

8:11 am: HuffPo was profitable last year. We were thinking about bringing in additional investors last year, and an IPO down the line. But this made perfect sense.

8:12 am: This deal provides a “dramatic acceleration” for the plans we already had.

8:13 am: Some praise for Patch, AOL’s local strategy.

8:14 am: Can’t wait to start!

8:14 am: Alrighty, then. Here’s Artie Minson with some nuts and bolts.

Actually, it’s some color on the deal. But a lot of it is in the prepared remarks he put out earlier this morning.

8:15 am: Again, $20 million in cost savings here. And again, we’ll have to pay up for restructuring: $20 million for cuts, and $10 million for purchase price.

8:17 am: Still basically reading from prepared remarks. Some bookkeeping talk re: compensation accounting.

8:18 am: Remember, display ad growth coming will finally start showing up second half of this year.

8:19 am: Q&A:

Q: Talk about content strategy. Does HuffPo become hub for content going forward? Does it replace Seed? And how long is Arianna’s contract?

A: “The press” has been talking about our content strategy, so let me be clear–we’re focusing on premium content. Things like Seed and StudioNow are platforms–you can do whatever you want with them, different quality levels, at different types of scale.

And then the other thing that is important about those platforms is the ability they give us to work with advertisers.

One of our main interests in HuffPo is their technology and publishing system. So now we have multiple systems [which he is saying is a good thing]. “Our content strategy hasn’t changed.” The “stuff that was out in the press about the AOL Way” was just one way of doing things. [This is not very convincing]

Arianna, tell us how long you’re going to stay.

8:24 am: Arianna: “I’ve told Tim I want to stay here forever. I want this to be the last act of my life.” Anything I want to do I can do here.

[Sorry, missed next part but it was a defense/explanation of content strategy.]

8:26 am: Armstrong: Arianna has a multiyear contract, but it’s open-ended.

8:27 am: Arianna: By the way, we’re going to bring back commenting to AOL stories, and socialize them.

8:28 am: Q: Why buy instead of partnering? Were there other bidders? Also, how will HuffPo politics affect AOL?

8:28 am: Armstrong: We do partnerships where there is “limited upside to those arrangements” so ” we can really spend time on the areas we want to win”–i.e., we don’t care about sports, we do care about women.

“Arianna is somebody we’d rather have inside our building than outside our building.”

“If there were or weren’t bidders on the other side,” I think we got the right price.

8:30 am: Arianna. “As we’ve said, again and again, Huffington Post was not for sale….Nobody was in a hurry to cash out, everybody believed that we could do an IPO down the road.” It’s just that Tim gave us a great offer. [hrrrm.]

On politics–we used to be all about politics, now we’re not. Just 15 percent of our traffic. We have a divorce section now.

Talking up AOL’s “college” section.

8:33 am: Q: For Arianna: More on Patch, please. What do think about what AOL’s done with it, and what you can do with it?

8:33 am: [Every time Arianna says "local level" I think she's saying "locker level." It's happened at least twice, maybe more, on this call.]

There’s a “greatest person of the day” feature we have, and I think Patch should use that. [Or maybe vice-versa, sorry.] I also like their five percent “giving back” rule, cause marketing, etc.

8:35 am: Armstrong: Again, we can do national and local. That’s important. NFL rights are important, and so are local news stories.

8:36 am: Q: Who’s going to sell what? And can you talk about pricing disparity between AOL and HuffPo?

8:37 am: Armstrong: “We would like to maintain all the people from both sales forces [except for Greg Coleman!]. I think we will end up with a large-scale, large-property organization–I don’t know exactly what that’s going to look like, though.

On sell-through rate: Slightly lower at HuffPo, because they’ve been ramping up traffic, and sales force. On CPM, same story. So we can bring up sell-through rate and CPM, and have a larger sales force. [This is pretty much the best argument for the deal that Armstrong can make.]

[BTW: Good back-channel discussion on Twitter right now about AOL's SEO skills, and the people behind it. None of that coming up during this call right now.]

[Sorry, I meant HuffPo's SEO skills, much of which stem from blueprint BuzzFeed CEO Jonah Peretti set out.]

Q: Why not use equity for this deal?

A: Because our equity is priced too low, essentially. But HuffPo employees did roll over 25 percent of deal consideration into AOL options. So as that equity gets more valuable, they’ll get upside.

8:45 am: Q: In your statement, you talked about OIBDA growth in 2013. More on that please.

Minson–probably going to stick to my prepared remarks on that one.

8:46 am: Last Q: Your acqusitions have been about toolsets or content. As you think about others going forward, what else do you want?

Armstrong: We have long-term vision. On plumbing: We’ve wanted to get platforms and plumbing straightened out, and we’re doing that now. Think about the bones or foundation of a very large property. That’s why we’ve been doing infrastructure, like with video–5Min and GoViral and StudioNow.

Going forward, we’ll be doing infrastructure. And we’ll continue to look at “media properties and media brands” that fit our strategy. [Remember, Web site owners: HuffPo just got 10x revenue.

8:50 am: Minson: But we're very price sensitive and we've walked away from deals.

8:50 am: Arianna: And we like women!

8:51 am: Armstrong sums up: Success "in the Internet space" requires vision and execution. That's this deal. And remember, content and brands become more valuable as tech gets faster, more advanced. And "expect us to stay on strategy and on point" going forward. "We're going to overcommunicate" with both sets of employees as we integrate. [You've been warned!]

And we’re done. Thanks for reading.

[Photo credit: Arianna Huffington]

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

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

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

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

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

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

Perhaps giddy, they hit upon a common motto:

“One plus one equals 11.”

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

Let’s move on, shall we?

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

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

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

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

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

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

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

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

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

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

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

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

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

But, as MediaMemo’s Peter Kafka wrote:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And Twitter co-founder Biz Stone said:

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

Inter-Internet harmony: How sweet!

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

AOL AGREES TO ACQUIRE THE HUFFINGTON POST

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

AOLers,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

–TA

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

Is Microsoft's Windows Phone 7 the Bing of Smartphones?

Kara Swisher — Tue, 12 Oct 2010 16:00:37 +0000

When Microsoft introduced its refurbished search service called Bing two years ago–at the seventh D: All Things Digital conference, in fact–there were a lot of raised eyebrows about whether it could make any headway into a market in which it was a mere pip-squeak.

And, while it has been a costly effort, few can dispute the fact that the innovative, interesting and cleverly marketed Bing is a perceptual and perhaps even actual hit for the software giant.

Now, can Microsoft (MSFT) do the same with Windows Phone 7, which was launched yesterday?

It will be an interesting effort to watch, given how indisputably late Microsoft has been to the smartphone party now dominated by offerings from Google’s (GOOG) Android and Apple’s (AAPL) iPhone.

BoomTown is no reviewer, nor have I spent a lot of time using the Windows Phone 7.

That said, it seems to have been born in the same green-field spirit of Bing and looks like a welcome entrant into the arena.

And I love the whole cool font thing.

That’s the same way I felt about Bing when it was released, especially since the idea of Google dominating search so completely and dictating change is a prospect I relish about as much I do the idea of living in a small South American banana republic.

Which is to say, not at all.

So, bring on the much-needed competition, even it comes from a company that invented, patented and was sued silly due to the concept of monopolistic domination in tech.

And, for all the daily slog of it, Microsoft’s Bing has been a bright spot in tech and for the company.

The service, which was built from scratch, has improved market share, added a plethora of worthy features and has even made Google sweat a little bit and work a little harder.

And now, due to a search technology and online advertising partnership with Yahoo (YHOO), Microsoft is poised to make some significant headway in its efforts to get into a strong No. 2 spot that could eventually give it the scale and size needed to make some bank.

Of course, the battle in the market for smartphones is even more uphill and difficult to pull off.

Microsoft needs developers to make apps, has to keep innovating on features and cannot acquiesce to wireless carriers, even as it must also get their cooperation for distribution.

And, of course, it has to convince consumers to switch, which is no easy task, and to feel the need for new phones to replace their recently new phones.

It’s a good thing then that Windows Phone 7 looks like Microsoft has at least anted up table stakes to play, delivering a phone that looks pretty good at first glance, much the same way I felt when I saw Bing for the first time.

“Microsoft did that? It’s so pretty,” I said to a long-suffering company exec when I got a demo. “It’s actually good good and not just Microsoft good.”

That was actually a compliment–one I hope to be able to pay again soon.

Until the reviews are all in and consumers have voted, here is a video of Microsoft CEO Steve Ballmer announcing Bing at D7 in an interview with Walt Mossberg:

[ See post to watch video ]

Taking the Mystery Out of Scaling a Company

Ben Horowitz — Mon, 02 Aug 2010 19:23:32 +0000

“What you got a dollar in your pocket
A twenty in your wallet?
See me I’m stacking money
Matter of fact, I’ll let you watch it
Get big
Get big
Get big
Get big”
—Dorrough

If you want to build an important company, then at some point you have to scale. People in startup land often talk about the magic of how few people built the original Google (GOOG) or the original Facebook, but today’s Google employs 20,000 people and today’s Facebook employs over 1,500 people. So, if you want to do something that matters, then you are going to have to learn the black art of scaling a human organization.

Often board members give entrepreneurs two bits of advice regarding scale:

Get a mentor
Find some “been there, done that” executives who already know how to scale

These answers, while fine as far as they go have some important limitations. First, if you don’t know anything about scaling an organization, then it will be very difficult for you to evaluate people for that job. Imagine trying to find a killer engineer if you’d never written a single program. Second, many investor-board members don’t know anything about scaling a company either and can be suckers for people who have the experience but not the skills. If you’ve ever worked in a large organization, you know that there are plenty of people with experience running them, but posses none of the requisite skills to run them well.

The above advice is still good, but the right way to pick both the best mentors and best employees is by first learning the basics.

In this post, I will discuss the basics of scaling an organization. In doing so, I will lay out the fundamentals, but not go as far as writing a how-to guide. Hopefully, this will give you the context to apply the myriad of scaling techniques in the management literature appropriately. I will save for later posts more advanced topics such as:

Managing senior people
Corporate politics and how to limit them
Systemic incentives
Incentive alignment
Hiring function heads for functions that you’ve never done
Re-organizing
Software system implementation and adoption

The Basic Idea—Give Ground Grudgingly

When an organization grows in size, things that were previously easy become difficult. Specifically, the following things that cause no trouble when you are small become big challenges as you grow:

Communication
Common knowledge
Decision making

In order to get a clear understanding of the problem, let’s start with the boundary condition. Imagine a company of one employee. That employee writes and tests all the code, does all the marketing and sales, and manages herself. She has complete knowledge of everything in the company, makes all the decisions, needn’t communicate with anyone and is totally aligned with herself. As the company grows, things will only get worse from here in each dimension.

Still, if the company doesn’t expand, then it will never be much of a company, so the challenge is to grow and degrade as slowly as possible.

There is a great analog to this concept in American Football. An offensive lineman’s job is to protect the quarterback from onrushing defensive linemen. If the offensive lineman attempts to do this by holding his ground, the defensive lineman will easily run around him and crush the quarterback. As a result, offensive linemen are taught to lose the battle slowly or to give ground grudgingly. They are taught to back up and allow the defensive lineman to advance, but just a little at a time.

When you scale an organization, you will also need to give ground grudgingly. Specialization, organizational structure, and process all complicate things quite a bit and implementing them will feel like you are moving away from common knowledge and quality communication. It is very much like the offensive lineman taking a step backwards. You will lose ground, but you will prevent your company from descending into chaos.

How to Do It

At the point when adding people into the company feels like more work than the work that you can offload to the new employees, the defensive lineman has run around you and you probably need to start giving ground grudgingly. The first scale technique to implement is specialization.

Specialization

In startups, everybody starts out as a jack-of-all-trades. For example, engineers write code, manage the build system, test the product, and, increasingly, deploy it and operate it. This works great in the beginning, because everybody knows everything and the need to communicate is minimized; there are no complicated hand-offs, because there is nobody to hand anything to. As the company grows, it becomes increasingly difficult to add new engineers, because the learning curve starts to get super steep. Getting a new engineer up-to-speed starts to become more difficult than doing the work yourself. At this point, you need to specialize.

By dedicating people and teams to such tasks as the build environment, the test environment, and operations, you will create some complexity—hand offs across groups, potentially conflicting agendas, and specialized rather than common knowledge. In order to mitigate these issues, you will need to consider other scale techniques like organizational design and process.

Organizational Design

The first rule of organizational design is that all organizational designs are bad. With any design, you will optimize communication among some parts of the organization at the expense of other parts. For example, if you put product management in the engineering organization, you will optimize communication between product management and engineering at the expense of communication between product management and marketing. As a result, as soon as you roll out the new organization, people will find fault with it and they will be right.

Still, at some point, the monolithic design of one huge organization runs out of gas and you will need to split things into smaller sub-groups. At the most basic level, you’ll want to consider giving groups that you’ve specialized their own managers as they grow. You may want a QA manager for example. After that, things become more complex. Do client engineering and server engineering have their own groups or do you organize by use cases and include all technical components? When you get really big, you’ll need to decide whether to organize the entire company around functions (e.g. sales, marketing, product management, engineering) or around missions—self-contained business units that contain multiple functions.

Your goal is to choose the least of all evils. Think of the organizational design as the communications architecture for your company. If you want people to communicate, the best way to accomplish that is to make them report to the same manager. By contrast, the further away people are in the organizational chart, the less they will communicate. The organizational design is also the architecture for how the company communicates with the outside world. For example, you might want to organize your sales force by product to maximize communication with the relevant product groups and maximize the product competency of the sales force. If you do that, then you will do so at the expense of simplicity for customers who buy multiple products and will now have to deal with multiple sales people.

With this in mind, here are the basic steps to organizational design:

Figure out what needs to be communicated – Start by listing the most important knowledge and who needs to have it. For example, knowledge of the product architecture must be understood by engineering, QA, product management, marketing and sales.
Figure out what needs to be decided – Consider the types of decisions that must get made on a frequent basis: feature selection, architectural decisions, how to resolve support issues, etc. How can you design the organization to put the maximum number of decisions under the domain of a designated manger?
Prioritize the most important communication and decision paths – Is it more important for product managers to understand the product architecture or the market? Is it more important for engineers to understand the customer or the architecture? Keep in mind that these priorities will be based on today’s situation. If the situation changes, then you can re-organize.
Decide who’s going to run each group – Notice that this is the fourth step not the first step. You want to optimize the organization for the people—for the people doing the work—not for the managers. Most large mistakes in organizational design come from putting the individual ambitions of the people at the top of the organization ahead of the communication paths for the people at the bottom of the organization. Making this step four will upset your managers, but they will get over it.
Identify the paths that you did not optimize – As important as picking the communication paths that you will optimize is identifying the ones that you will not. Just because you de-prioritized them doesn’t mean that they are unimportant. If you ignore them entirely, they will surely come back to bite you.
Build a plan for mitigating the issues identified in step 5 – Once you’ve identified the likely issues, you will know the processes that you will need to build to patch the impending cross-organizational challenges.

These six steps should get you pretty far. When we examine advanced organizational design, we’ll also need to consider trade-offs such as speed vs. cost, how to roll out organizational changes, and how often one should re-organize.

Process

The purpose of process is communication. If there are five people in your company, you don’t need process, because you can just talk to each other. You can hand off tasks with a perfect understanding of what’s expected, you pass important information from one person to another, and you can maintain high quality transactions with no bureaucratic overhead. With 4,000 people, communication becomes more difficult. Ad hoc, point-to-point communication no longer works. You need something more robust—a communication bus or, the conventional term for human communication buses, a process.

A process is a formal, well-structured communication vehicle. It can be a heavily engineered six-sigma process or it can be a well-structured regular meeting. The size of the process should be scaled up or down to meet the needs of the communication challenge that it facilitates.

When communication in an organization needs to cross-organizational boundaries, processes will help ensure that a) the communication happens and b) that it happens with quality. If you are looking for the first process to implement in your company, consider the interview process. It usually runs across organizational boundaries (the hiring group, human resources—or wherever the recruiter lives, and supporting groups), involves people from outside the company (the candidate), and is critically important to the success of the company.

Who should design a process? The people who are already doing the work in an ad hoc manner. They know what needs to be communicated and to whom. Naturally, they will be the right group to formalize the existing process and make it scalable.

When should you start implementing processes? While that varies depending on your situation, keep in mind that it’s much easier to add new people to old processes than new processes to old people. Formalize what you are doing to make it easy to onboard new people.

There is much written about process design, so I won’t repeat that here. I have found Chapter 1: The Basics of Production from Andy Grove’s High Output Management to be particularly helpful. For new companies, here are a few things to keep in mind:

Focus on the output first – What should the process produce? In the case of the interview process, an outstanding employee. If that’s the goal, what’s the process to get there?
Figure out how you’ll know if you are getting what you want at each step – Are you getting enough candidates? Are you getting the right candidates? Will your interview process find the right person for the job? Once you select the person, will they accept the job? Once they accept the job, will they become productive? Once they become productive, will they stay with your company? How will you measure each step?
Engineer accountability into the system – Which organization and which individual is responsible for each step? What can you do to increase the visibility of their performance?

Final Thought

The process of scaling a company is not unlike the process of scaling a product. Different sizes of company impose different requirements on the company’s architecture. If you address those requirements too early, your company will seem heavy and sluggish. If you address those requirements too late, your company may melt down under the pressure. Be mindful of your company’s true growth rate as you add architectural components. It’s good to anticipate growth, but it’s bad to over-anticipate growth.

Liveblogging Yahoo's Second-Quarter Earnings Call: How Do You Solve a Problem Like Flat Revenue?

Kara Swisher — Tue, 20 Jul 2010 21:22:03 +0000

After announcing its second-quarter earnings this afternoon after the markets closed, Yahoo (YHOO) CEO Carol Bartz and CFO Tim Morse held the usual conference call.

The results: Net income and margins were up at the Silicon Valley Internet giant, while revenue was meh. Display advertising growth was up, while search ad revenue was down.

Revenue and worries about future direction turned out to be the questions of the day.

2:03 pm PT: While she touted the improved margins with a confident tone, a nice accomplishment, Bartz quickly pointed out the obvious on revenue weakness.

She blamed a combo of issues, such as not monetizing search-share improvements.

“How do we measure our business?” asked Bartz, in her financial soliloquy. Another laundry list of stuff, such as engagement, editorial expertise and scale.

Then it was off to the races with updates on Yahoo’s social, local, video and mobile improvements.

That would be things such as integration with social networking powerhouse Facebook and online gaming phenom Zynga, more video all over the site and other initiatives to spur consumer engagement.

Bartz’s faves are the “Bikini 101″ videos, she said, which apparently get you ready for the summer season.

BoomTown last wore a bikini in 1974.

2:12 pm PT: Morse came on and started going over the numbers.

Yay on costs and margins. Not-so-yay on revenue growth.

You get the picture. Morse had some excuses, all of which seemed reasonable, including a pullback of advertisers in July.

More numbers on the savings from the Microsoft (MSFT) search and advertising alliance, tax issues, guidance, cash status and more.

I like listening to Morse, who always sounds super-competent. But he completely bores my assistant, Ed, just like other CFOs he is subjected to in earnings season, since I blast these calls on my computer’s speakers.

Sorry, Tim!

2:27 pm PT: Bartz was back and talking about display advertising and how Yahoo is working on all kinds of new schemes to improve advertiser experience, as well as to engage consumers more.

Onto search, which has long been Yahoo’s Achilles heel, no matter how Bartz spins it. Revenue per search is down and has been, which is a problem.

“As for search, we remain focused on growing our search business,” she said firmly. We’ll see about that after a year into the deal with Microsoft.

She touched on the controversy around contextual search being counted on comScore (SCOR) and dismissed it–although we will see how that turns out!

Then Bartz gave an update on the Microsoft alliance transition. Nothing new here, and the hope is that it will begin to take place by the end of the year, but only if it can be done with “quality.”

Bartz then touted Yahoo’s performance related to delivering information on the World Cup soccer, which she should as the company’s media arm did a bang-up job.

More on improvements in development and innovation, although it was a little light on deep examples.

Bartz summed up by again mentioning margin improvements, which was a good idea, and then moved onto Q&A.

2:38 pm PT: First question is about revenue lag, natch.

Bartz noted that customers’ marketing budgets are “easy to turn on and off.” The perils of the ad market! But, she said, she felt it was more of an overall market issues, rather than Yahoo-specific.

The next question was about page-view decline. Are these Wall Street analysts actually doing their job?

Morse answered that page views might not be all that anymore, since consumer use of Web technologies has changed.

“What we are trying to do is move toward a more holistic view,” he said.

But he admitted, “It is honestly a bit of a surprise.” Say what?!?

The next question was more on display advertising revenue drop-off and inquired about whether it impacted search.

Bartz said she thought it was because of those nagging on-off switches marketers can use!

The next question was about revenue pick-up on bucket tests of new system with Microsoft and, again, more on where the weakness in revenue is located.

“I will tell you we are pleased with it,” said Bartz coyly about the Microsoft test results.

As to revenue slowdown: No specific category and it was those big knob-turning customers.

More on cost-cutting and advertising revenue, which were essentially the same question over and over.

It is the right question, too.

At one point, Bartz talked about redefining advertiser expectations and how targeting was a better way to get to consumers.

Actually, it is pretty much about that old sales mantra of ABC: Always Be Closing!

More shuffling the papers about what was going on and what was coming next. Bartz noted that consumer confidence is “really weird now.”

Then there was a question about this “science, art and scale” motto that Yahoo has been using and calling SAS for short (internally, many move the letters around to make a naughty word).

The larger point, said Bartz, was that Yahoo is one of the new places that can deliver big results to advertisers in an unusual and engaging way.

True enough, which begs the question again: So what’s with these weak revenues? And, of course, what is Bartz going to do about it?

Former Forbes.com Publisher Jim Spanfeller Has VC Money; New Sites on the Way

Peter Kafka — Tue, 29 Jun 2010 10:00:35 +0000

Former Forbes.com publisher Jim Spanfeller has a new gig: A venture-backed Web publishing start-up.

Spanfeller Media Group, which plans to launch a series of new sites, is close to finishing a funding round that I’m told will total around $2 million. Backers include RRE Ventures, Greenhill SAVP, SoftBank and Lerer Media Ventures.

Once the deal is done, sources say, Spanfeller’s plan is to roll out a series of industry-specific “verticals.” First up: Food.

Aren’t there plenty of food sites out there already? You’d think so, but Spanfeller and his backers figure there’s room for more. After that, they have a list of categories to tackle, with the exception of five they think are overpopulated: News, business/finance, entertainment, traditional sports and technology. Spanfeller declined to comment.

When Spanfeller left Forbes last summer after eight-plus years at the site, his initial plan was to create a sort of repair shop for established publishers’ Web properties. That made sense, given that that’s essentially what he did for the Forbes family when he took over their Web site in 2001. But the new plan is to create stuff from scratch.

Within the Web publishing industry, Spanfeller gets lots of credit for moving Forbes.com from also-ran status into one of the biggest finance sites on the Web. And he gets a fair amount of derision as well, for both a blustery style and a lusty embrace of page views. His most infamous gambit, used more than once: A slideshow detailing the world’s “Top Topless Beaches.”

But the collapse of the last tech bubble and the realization the Web publishing economics require lots and lots and lots of scale have brought many other Web publishers much closer to Spanfeller’s tactics than they’d like to admit. His new challenge: Re-creating that scale with brand new properties.

Facebook Moving to Answer the Quora Question

Drake Martinet — Mon, 31 May 2010 20:42:55 +0000

Facebook is beta-testing a product in the same space that so many giants have attacked and fallen short–a curated question-answer, which has stumped the biggest of bigs. Has it been about social scale all along?

I just clicked on an innocent-looking Facebook ad asking for beta testers. What followed was a page explaining how Facebook is launching a new product that involves getting users to ask and answer questions that will be published to Facebook as a whole.

Note: I’ve copied and pasted the beta user offer from Facebook at the bottom of this post. Decide for yourself if I’m reading this right.

For those with only a moderate level of tech obsession, the service I’m talking about is one in which users interact with one other, posing and answering questions that are available to all users. Sort of what user forums are for software.

Google has tried it, Yahoo has tried it, and Quora, a tech darling of the moment–which just happens to be run by former Facebook CTO Adam D’Angelo, with guidance from original Facebooker Matt Cohler–is trying it. I’m a beta tester for Quora, and have used several ask-answer type services online. A weakness has always been the scale of the user community.

We’ve all heard the “if Facebook were a country” statistics–or, if you haven’t, here’s a handy infographic, which is already two months old (click to enlarge).

I include the table above only to illustrate that if Facebook has anything, it has scale. Even considering the recent privacy hullabaloo, 80 percent of Facebook users who couldn’t care less still add up to a ferociously huge user population for an ask-answer service.

Okay, okay. Yes. Google (GOOG) has scale. Yahoo (YHOO)–well, it once had scale. But both sites boast core services based on moving freely in and out of their pages. Nothing keeps users in like a walled garden.

Additionally, there is something inherently social about asking questions that early ask-answer crowd seems to have missed.

Yes, I want an expert to answer my question about how a catalytic converter works (or Wikipedia), but if I want to know how to throw the best dinner party, I am just as likely to take notes on an answer from a friend of mine who throws great parties as I am from Paula Dean. Maybe more so.

Quora realizes this. It has built out a whole social networking component to its service, and encourages you to connect the other networks you are already a part of.

But what’s harder? Getting people to know one another or getting wannabe pundits to pontificate about something they are interested in–on the Internet? I know I’m an easy sell on the latter. Just ask me

Below is the copy and pasted text from Facebook’s “so you wanna be a beta tester” questionnaire. Decide for yourself what it’s up to.

Help us build the future of Facebook.

We at Facebook are preparing to launch a brand new product to the world. We think it will be as exciting as Facebook Photos and Facebook Events, but we need your help to make it great.

As a beta tester, your job will be to ask great questions and provide great answers about your favorite topics. Economics? Skydiving? Relationships? Mexican Restaurants? It’s up to you. You’ll be the first person outside of Facebook to use this product. Your expert writing will be seen by tens of millions of people–including job recruiters. And we’ll bring our best beta testers out to California to tour Facebook headquarters and meet the team.

Ready to get started?
Before we can give you exclusive beta access, we’d like you to submit three great sample questions and answers. We’re looking for evidence that you can write clearly and authoritatively on familiar subject matter.

Here are some guidelines to follow when submitting your questions and answers:

Choose provocative questions. Write about things you know. Some examples:
How can I get over my fear of flying?
What are some fun family activities to do with two small children on the weekend?
What caused the U.S. stock market to crash in 2009?
What’s the secret to throwing a great housewarming party?
What are the main differences between Google Chrome and Internet Explorer?
What are women looking for in a relationship?
What methods has BP tried to clean up the oil spill?
What should I do to prepare for the Bar exam?
How did The Beatles find success?
Write detailed, articulate answers.
Where relevant, cite and link to third-party sources such as Wikipedia.
Your answer must be original. Plagiarism is unacceptable.

How Andreessen Horowitz Evaluates CEOs

Ben Horowitz — Sun, 30 May 2010 20:22:45 +0000

“I mean damn, did you even see the test
You got D’s, motherf*$@%&, D’s! Rosie Perez”
– Kanye West

No position in a company is more important than the CEO, and as a result, no job gets more scrutiny. Sadly, little of this analysis benefits CEOs, as most of the discussions happen behind their backs. This post is a step in the opposite direction. By describing how Andreessen Horowitz evaluates CEOs, I am at the same time describing what I think the job of the CEO is. Here are the key questions we ask:

Does the CEO know what to do?

Can the CEO get the company to do what she knows?

Did the CEO achieve the desired results against an appropriate set of objectives?

1. Does the CEO know what to do?

One should interpret this question as broadly as possible. Does the CEO know what to do in all matters all of the time? This includes matters of personnel, matters of financing, matters of product strategy, matters of goal sizing, matters of marketing. At a macro level, does the CEO set the right strategy for the company and know its implications in every detail of the company?

I evaluate two distinct facets of knowing what to do:

Strategy–At Andreessen Horowitz, we like to say that in good companies, the story and the strategy are the same thing. As a result, the proper output of all the strategic work is the story.

Decision-making–At the detailed level, the output of knowing what to do is the speed and quality of the CEO’s decisions.

The Strategy and the Story

The CEO must set the context that every employee operates within. This context gives meaning to the specific work that people do, aligns interests, enables decision-making and provides motivation. Well-structured goals and objectives contribute to the context, but they do not provide the whole story. More to the point, goals and objectives are not the story. The story of the company goes beyond quarterly or annual goals and gets to the hardcore question of why? Why should I join this company? Why should I be excited to work here? Why should I buy your product? Why should I invest in the company? Why is the world better off as a result of this company’s existence?

When a company clearly articulates its story, the context for everyone–employees, partners, customers, investors, and the press–becomes clear: When a company fails to tell its story, you hear phrases like:

“These reporters don’t get it.”

“Who is responsible for the strategy in this company?”

“We have great technology, but need marketing help.”

The CEO doesn’t have to be the creator of the vision. Nor does she have to be the creator of the story. But she must be the keeper of the vision and the story. As such, the CEO ensures that the company story is clear and compelling.

The story is not the mission statement; the story does not have to be succinct. It is the story. Companies can take as long as they need to tell it, but they must tell it and it must be compelling. A company without a story is a usually a company without a strategy.

Want to see a great company story? Read Jeff Bezos’s three-page letter he wrote to shareholders in 1997. In telling Amazon’s story in this extended from–not as mission statement, not as a tagline–Jeff got all the people who mattered on the same page about what Amazon (AMZN) was about.

Decision-making

Some employees make products, some make sales; the CEO makes decisions. Therefore, a CEO can most accurately be measured by the speed and quality of those decisions. Great decisions come from CEOs who display an elite combination of intelligence, logic, and courage.

Courage is particularly important, because every decision a CEO makes is based on incomplete information. In fact, at the time of the decision, the CEO will generally have less than 10 percent of the information typically present in the ensuing Harvard Business School case study. As a result, the CEO must have the courage to bet the company on a direction even though she does not know if the direction is right. The most difficult decisions (and often the most important) are difficult precisely because they will be deeply unpopular with the CEO’s most important constituencies (employees, investors, and customers).

In my personal experience, the best decision that I made in my career–the decision to sell the Loudcloud business to EDS and become Opsware the software company–would have lost by landslide had I put it to a vote with my employees, my investors or my customers.

As CEO, there is never enough time to gather all information needed to make a decision. The CEO must make hundreds of decisions big and small in the course of a typical week. The CEO cannot simply stop all other activities to gather comprehensive data and do exhaustive analysis to make that single decision. Knowing this, CEOs must be continuously and systematically gathering knowledge in their day-to-day activities so that they will have as much information as possible when the decision point presents itself.

In order to prepare to make any decision, the CEO must systematically acquire the knowledge of everything that might impact any decision that she might make. Questions such as:

What are the competitors likely to do?

What’s possible technically and in what timeframe?

What are the true capabilities of the organization and how can you maximize them?

How much financial risk does this imply?

What will the issues be, given your current product architecture?

Will the employees be energized or despondent about this promotion?

Great CEOs build exceptional strategies for gathering the required information continuously. They embed their quest for intelligence into all of their daily actions from staff meetings to customer meetings to 1:1s. Winning strategies are built on comprehensive knowledge gathered in every interaction the CEO has with an employee, a customer, a partner, an investor, and so on.

2. Can the CEO get the company to do what she knows?

If the CEO paints a compelling vision and makes fast, high-quality decisions, can she then get the company to execute on her vision and decisions? The first ingredient in being able to do this is leadership, as I outlined in a previous post, Notes on Leadership.

In addition, executing well requires a broad set of operational skills. The larger the organization, the more elaborate the requisite skill set.

In order for a company to execute a broad set of decisions and initiatives, it must:

Have the capacity to do so–in other words, the company must contain the necessary talent in the right positions to execute the strategy.

Be a place where every employees can get things accomplished–the employees must be motivated, communication must be strong, the amount of common knowledge must be vast, and the context must be clear.

Is the CEO building a world-class team?

The CEO is responsible for the executive team plus the fundamental interview and hiring processes for all employees. She must make sure that the company sources the best candidates and that the screening processes yield the candidates with the right combination of talent and skills. Ensuring the quality of the team is a core part of running the company. Great CEOs constantly assess whether or not they are building the best team.

The output of this capability is the quality of the team. It’s important to note that team quality is tightly tied to the specific needs of the company in the challenges that it faces at the point in time that it faces them. As a result, it’s quite possible that the executive team changes several times, but the team a) is high-quality the entire way and b) there is no attrition problem.

Is it is easy for employees to contribute to the mission?

The second part of the evaluation determines whether or not the CEO can effectively run the company. To test this, I like to ask this question: “How easy is it for any given individual contributor to get his or her job done?”

In well-run organizations, people can focus on their work (as opposed to politics and bureaucratic procedures) and have confidence that if they get their work done, good things will happen for both the company and them personally. By contrast, in a poor organization, people spend much of their time fighting organizational boundaries and broken processes.

While quite easy to describe, building a well-run organization requires a high level of skill. The skills required range from organizational design to performance management. They involve the incentive structure and the communication architecture that drives and enables every individual employee. When a CEO “fails to scale,” it’s usually along this dimension. In practice, very few CEOs get an “A” on this particular test.

Netflix’s CEO Reed Hastings put great effort into designing a system that enables employees to be maximally effective. His presentation on this design is called Reference Guide on our Freedom and Responsibility Culture. It walks through what Netflix (NFLX) values in its employees, how they screen for those values during the interview process, how they reinforce those values, and how they scale this system as the number of employees grows.

3. Results against objectives

When measuring results against objectives, start by making sure the objectives are correct. CEOs who excel at board management can “succeed” by setting objectives artificially low. Great CEOs who fail to pay attention to board management can “fail” by setting objectives too high. Early in a company’s development, objectives can be particularly misleading as nobody really knows the true size of the opportunity. Therefore, the first task in accurately measuring results is setting objectives correctly.

We also try to keep in mind that the size and nature of the opportunity varies quite a bit across companies. Hoping that VMware (VMW) can be as capital-light as SolarWinds (SWI) or trying to get Yelp to grow as fast as Twitter doesn’t make sense and can be quite destructive. CEOs should be evaluated against their company’s opportunity–not somebody else’s company. Let me share a funny story, which illustrates a CEO really owning delivering against results. This story is from Robin Li, CEO of Baidu (BIDU). He shares that on the day of Baidu’s IPO–usually one of an entrepreneur’s most exhilarating days of his entire life–he sat at his desk terrified. Why? Listen to how Robin owned delivering results:

In 2004, we raised our last round of VC money led by Draper Fisher Jurvetson…and Google, one of our great colleagues. Then a year later, in 2005, the company went public. The ideal price was $27 [the stock's initial offer price] and it closed on the first day at $122. It was great with us for many of the Baidu employees and for all of the Baidu investors. It was a very miserable thing for me because when I decided to take the company public, I was only prepared to deliver financial results that match the price of $27 or maybe a little higher, $30, $40. But I was really shocked to see that the price went to $122 on the first day. So that meant I needed to deliver real results that matches an expectation much, much higher than what I had prepared to do. But in any case, I thought I had no choice. So I put my head down and focused on operation, focused on technology, focused on the user’s experience, and I delivered.

Once we’ve taken all of this into account, we see that black-box results are a lagging indicator. And as they say in the mutual fund prospectuses, “past performance is no guarantee of future performance.” The white box CEO evaluation criteria–“does the CEO know what to do?” and “can the CEO get the company to do it?”–will do a much better job of predicting the future.

Closing Thought

CEO evaluation need not be a byzantine, unstated art. All people, including CEOs, will perform better on a test if they know the questions ahead of time.

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.

The Scale Anticipation Fallacy

Ben Horowitz — Fri, 07 May 2010 21:55:10 +0000

The other day, I was talking to a couple friends of mine, one a VC and the other a CEO. During the meeting, we were discussing one of the executives at the CEO’s company. The executive in question performs exceptionally, but lacks experience managing at larger scale. My friend the VC innocently advised the CEO to carefully consider whether the executive would scale to meet the company’s needs in the future. I responded swiftly, aggressively, and loudly saying, “That’s a horrible idea and makes no sense at all.” Both of my friends startled at my outburst. Normally, I am disciplined enough to refrain from letting my feelings pass straight through my mouth without stopping at my brain for review. Why the outburst? Here is my answer.

As CEO, you must constantly evaluate all of the members of your team. However, evaluating people against the future needs of the company based on a theoretical view of how they will perform is counterproductive for the following reasons:

Managing at scale is a learned skill rather than a natural ability–Nobody comes out of the womb knowing how to manage a thousand people. Everybody learns at some point.

It’s nearly impossible to make the judgment in advance–How do you tell in advance if an executive can scale? Was it obvious that Bill Gates would learn how to scale when he was a Harvard dropout? How do you go about making that decision?

The act of judging people in advance will retard their development–If you make a judgment that someone is incapable of doing something such as running a larger organization, then will it make sense to teach those skills or even point out the anticipated deficiencies? Probably not. You’ve already decided that the person in question can’t do it.

Hiring scalable execs too early is a horrible mistake–There is no such thing as a great executive. There is only a great executive for a specific company at a specific point in time. Mark Zuckerberg is a phenomenal CEO for Facebook. He would not be a good CEO for HP (HPQ). Similarly, Mark Hurd does a terrific job at HP, but he would not be the right person to manage Facebook. If you judge your team in advance and have a high sense of urgency, you will bring in executives that can manage at high scale in advance of needing them. Unfortunately, you will probably ignore their ability to do the job for the next 12 months, which is the only relevant measure. As a result, you will swap out good executives for worse ones.

You still have to make the judgment at the actual point in time when you hit the higher level of scale–Even if you avoid the trap of hiring a scalable executive too early or retarding the new executive’s development, you still haven’t actually bought yourself anything by making the prejudgment. Regardless of what you decided at point-in-time A, you still have to evaluate the situation with far better data at point-in-time B.

It’s no way to live your life or run an organization–Deciding (with woefully incomplete data) that someone who works his or her butt off, does a terrific job, and loyally contributes to your mission won’t be with you three years from now takes you to a dark place. It’s a place of information hiding, dishonesty, and stilted communication. It’s a place where prejudice substitutes for judgment. It’s a place where judgment replaces teaching. It’s a place where teamwork becomes internal warfare. Don’t go there.

So, if you don’t prejudge people’s ability to scale, how do you make the judgment? You should evaluate your team at least once a quarter on all dimensions. Two keys can help you avoid the scale anticipation trap:

Don’t separate scale from the rest of the evaluation–The relevant question isn’t whether an executive can scale; it’s whether the executive can do the job at the current scale. You should evaluate holistically and this will prevent you from separating scale, which often leads to a prediction of future performance.
Make the judgment on a relative rather than an absolute scale–Asking yourself whether or not an executive is great can be extremely difficult to answer. A better question is: For this company at this exact point in time, does there exist an executive I can hire who will be better? If my biggest competitor hires that person, how will that impact our ability to win?

In summary, predicting whether or not an executive can scale corrupts your ability to manage, is unfair, and doesn’t work.

Palm CEO Jon "Ruby" Rubinstein Talks About the HP Deal–He's Staying, Will Always Love the Pre Mirror and Still Will Not Be Touching Any iPhones

Kara Swisher — Wed, 28 Apr 2010 23:03:11 +0000

After an All Things Digital report last week on Hewlett-Packard (HPQ) being the most likely suitor for Palm (PALM)–despite multiple reports of intense interest from HTC and Lenovo from China–CEO Jon Rubinstein jokingly asked how we knew about the deal.

We didn’t! It was a complete guess, Ruby!

Actually it was a very informed one by Digital Daily’s John Paczkowski, but his cogent analysis of the synergies between Palm and HP is pretty much what Rubinstein said drove the action.

“We’ve got great intellectual property with webOS and a great team assembled,” he said, in an interview with BoomTown this afternoon after the $1.2 billion acquisition was announced. “HP is the largest tech company in the world and they are now going to invest in driving it to scale, which we could not do at Palm.”

Getting its innovative webOS mobile operating system software to scale–or, more precisely not being able to at its size–was one of the major issues that Rubinstein pointed to in doing the deal (and, it goes without saying, Palm’s struggles).

“This industry became much more competitive very quickly than we had hoped or could have predicted,” he said, referring to the giant investments in the space by Google (GOOG) with Android, Apple (AAPL) with the iPhone and even Microsoft (MSFT) with its new Windows Phone 7. “We did predict the right marketplace and thought the smartphone market was going to explode, so it was the right direction.”

Now it will be up to HP to drive Web OS, although Rubinstein said he expects most of the team at Palm–including himself–to move over intact.

Rubinstein, who once worked at HP, said more details over who the rivals to nab Palm were will be revealed when regulatory documents are released, although he declined to comment specifically now. Now, it is up to him and HP to sell it to Wall Street.

He said he expected the deal “should not attract significant” government scrutiny, given the high amount of competition in the space.

Which he predicted would be heightened now that HP is backing Palm as its new owner, rather than struggling on its own, as it has been.

“Certainly from a tech point of view, the ability to compete is now profound,” he said. “I think this is a logical and natural match and the synergies are obvious.”

As to missteps, such as its creepy lady advertising and questionable marketing, Rubinstein said no CEO likes to focus on those.

Which is why when I asked him about the silly exchange I had with Silicon Valley VC and Palm backer Roger McNamee about last year’s D: All Things Digital conference about the mirror on the back of the Palm Pre that the “ladies” would love, he joked that—even though McNamee was now out–the overly loquacious Elevation Partners investor would be brought back from time to time to liven things up.

As to Rubinstein’s own controversial quote to me in an onstage interview at a D event at the Consumer Electronics Show in Las Vegas in January, where the former Apple exec said he had never used an iPhone, he quipped: “I still haven’t touched one.”

In truth, Palm never really did.

Here is that video, as well as highlights of the appearance by Rubinstein and McNamee at last year’s D7:

[ See post to watch video ]

Video clip: Jon Rubinstein says he’s never used an iPhone.

[ See post to watch video ]

Video clip: Mirror, mirror, on the smartphone…

Can NewsLabs Give Laid-Off Journalists Another Chance?

Peter Kafka — Fri, 26 Mar 2010 13:55:01 +0000

So you used to write stories for a newspaper and now you’re out of work? Odds are, you are going to have to find something else to do.

But some of you may be able to transform yourselves into one-person news factories, says Paul Biggar, who wants to make money while helping you do that.

Biggar is a co-founder of NewsLabs, a start-up that promises to create a business around the work of individual journalists. The idea is that the writer writes and NewsLabs does everything else: Ad sales, “community management,” promoting the work on Google, Facebook, Twitter et al, and so forth. In exchange, the company wants a 20 percent cut of all revenue.

In other words, Biggar and co-founder Nathan Chong want to become publishers with an all-freelance workforce.

NewsLabs just graduated from Y Combinator’s three-month bootcamp and has been working with a starter group of journalists for a couple months. So it’s still mostly theoretical at this point. My concern is that the help NewsLabs says it can offer doesn’t solve the real problem: The economics of Web publishing are brutal, and in most cases they only work on a Google- (GOOG) or Yahoo (YHOO)-size scale.

Biggar tells me that NewsLabs won’t solely be dependent on ad revenue, so that’s good. But all of the ancillary businesses that can support a Web-based journalist–conferences, job boards, and the like–also require either great scale or a very, very specialized niche. So Biggar and co-founder Nathan Chong have their work cut out for them.

Here’s Biggar’s extended pitch, via an interview I taped with him this week at Y Combinator’s Demo Day presentations:

[ See post to watch video ]

Tim Armstrong Makes One Last Pitch for AOL: "No More Hail Marys"

Peter Kafka — Wed, 09 Dec 2009 18:15:56 +0000

AOL is about to cut ties to Time Warner (TWX), and CEO Tim Armstrong has been making his case to current and potential investors. Here’s one last pitch, delivered to the crowd at the annual UBS (UBS AG) Media and Communications Conference in New York.

Note to readers and/or Engadget editors: This liveblog is not an official transcript. Rather, it is a compilation of quotes, paraphrased statements and ad-lib observations written and posted to the Web as quickly as possible. It is not intended as a transcript and should not be interpreted as one. Cool? Cool.

Q: Why leave Google, which is awesome, for AOL, which is not?

A: The Internet is still at an early stage. AOL is a global brand, and that’s hard to build. We have a unique set of assets. AOL can be core and central to where the next $50, $100 billion are going. And we have unique talent to make a run at it.

Q: Please explain your strategy.

A: “Content, ads and communication.”

Q: Why is this turnaround different than other AOL turnarounds?

A: I can tell you whatever, but you need to see metrics move to believe me. But we have a good strategy. “You have to maniacal about the piping,” and in the past AOL wasn’t. We had terrible integration of acquisitions, systems. You want to be able to take $25, $40 million ad deals and run them through the piping and we haven’t been able to do that.

Q: Please explain AOL’s content strategy.

A: We launched our content platform last night. A single platform. It uses data, helps scale to content producers and will work with thousands of partners. It differs from Demand Media et al in that we already have scale for production and scale for advertising. We can snap those two platforms together. [Note: No mention of robots yet.]

Q: Is AOL interested in video or other self-produced stuff?

A: Sure. Video’s important to us. We’re also interested in what we would call “niche at scale.” As a collective whole, we have 70 or 80 properties and will go up to 100. We want to aggregate uniques that will be attractive to advertisers. We want to own the equivalent of the top 80 or 90 cable channels on the Internet. We’re also very interested in local, via Patch [which Armstrong invested in before AOL bought it].

Q: How do you market all this content?

A: By the way, everyone thinks our traffic comes from the access business. That’s not true. It’s a minority of our traffic. Also, when you produce your own content, you can distribute it and get traffic back. You also need to make this stuff shareable on the Web. We’re getting mass scale distribution from platforms like Twitter and, of course, search.

Q: There’s a big gap between your monetization and Yahoo’s (YHOO). How do you change that?

A: I can’t tell you! It’s how I got my job. Ho ho ho. Okay: AOL went to a network-based strategy a couple of years ago, which cut into the pricing yield, and that is now changing. We addressed this in the summer and fall. Also, AOL, shockingly, had under 1,000 customers on ad platforms when I showed up–700, actually. At Google (GOOG), we had millions. So we had a clear dialogue about what had happened. Also, the salesforce needed to be restructured, different tiers of the salesforce. And we also needed a self-service option you can use with a credit card. “Look, this is why they hired me….If we can’t make that business work, I think we have big issues.”

Q: What’s up with search?

A: We like Google and are still talking to them. We’re also talking to “other partners.” Last time, the deal was done “purely for money,” and that had benefits and some downside. This time, the pricing may be different, but it’s not the only thing that determines value.

Q: Please be more specific.

A: Okay. We’re really big on music. But if you go to AOL search for music, you get a subpar version of Google’s search for music. There are too many ads on the page. So why don’t we set up a onebox-like search box and send people to AOL music? For example, let’s think about trading search dollars for display dollars. We want to make money on ads in a much more natural and healthy way.

Q: What about investments in content?

A: Sure. We’re making nominal investments in content and a putting a lot of money in technology and infrastructure. In terms of M&A, we will sell off stuff that doesn’t make sense and do tuck-in buys.

Q: How does your local strategy differ from others?

A: We do real local, not quasi-local. We put editors in communities to actually get the stuff and monitor and update platforms. “It’s a risk, it’s a bet,” but early results are promising.

Q: Your ad business is much less profitable than that of your peers. What up?

A: Our hamburger stand says “really cheap burgers at really cheap prices,” but we’re actually serving sea bass, and we should be charging for that. We told customers, via Platform A, etc., that they could buy us really cheap. Also, cost structure: We’re taking out a third of the business. Access was making money, and things “kind of got loose” at the rest of company. But advertising can be nicely profitable with content and we can do that.

Q: Okay, but when do ad biz profits become self-sustaining?

A: Not in 2010, but sooner than five years. I own two percent of the company, and I want it to work. Morale is already better than when I got here.

Q: Are you removing all premium inventory from Ad.com?

A: Don’t believe what you read! Internet! Bad! An analyst said we might do it. What we’re going to do is “sell Superbowl product at Superbowl pricing.” [i.e., a nonanswer]

Q: What’s up with the access business and the traffic it generates?

A: We have 100 million users. Five million people get “paid services” from us. Half of those are dial-up users. But people think that 70, 80, 90 percent of traffic comes from access. That’s not the case.

Q: What’s up with mobile?

A: We want to increase consumer mobile traffic. We have lots of Apple Store downloads. We’ll do more consumer downloads/traffic. And we’ll build our mobile ad business after that, probably in 2011.

Q: What do Federal broadband access plans mean for your business?

A: All of us believe that there will be some “tail” of dial-up access for some time. But it’s not going away, and the decline is actually moderating [which makes sense--if you're still on dial-up now, what are you waiting for?]

Q: Please reiterate profitability plans for display/content/ads.

A: In reality, we’re “marginally” profitable now, but that’s not good enough.

Q: If you reprice ad business profitability, what does that mean for you?

A: I don’t want to set goals, but we’re not off by single digits. It’s significant.

Q: Talk about your communications business, please.

A: We have AIM, ICQ, email–all big opportunities. We need to clean up current products and services. Communications products “were recipient of problems” in the past. AOL tried to jam Bebo and AIM together, which didn’t work. We also slammed our stuff with way too many emails. I tried AOL email when I started and got 15 to 20 ads. Not a great user experience. It’s “project hygiene.” We also believe people want a unified platform across devices and we’re working on that.

Q: Talk about compensation.

A: I had the money options at Google, which got moved into AOL options at market value. Plus salary blah blah. I didn’t take a bonus this year “because I don’t think I should have gotten paid for laying off a third of our employees.” [All of this is discussed in the proxy, no?]

Q: Here’s a softball about your management team. How awesome is it?

A: Totally awesome. We’ll add more over time. On the engineering side, I was surprised that we weren’t chasing good engineers when we got here. “We have spent a lot of time and energy on the subject matter.” Culturally, our “internal mojo turned around,” and now the engineering community gets that we “have a big-hair problem” but that we have tons of use so things they do here have a big impact.

Q: Brand strategy: How do you extract brands people don’t know about while promoting the main site and vice versa?

A: We think about this like Disney (DIS), I think. By the way, there are two brands. The financial media brand is battered–worst merger in history, etc. But consumers like the AOL brand. Tomorrow, we’re giving AOL users a a 50 percent promotion via Target (TGT) on “very good toys.” So in the Disney way, there’s the brand people like, and we have other brands people like, just as Disney has ESPN. So we’ll have non-AOL brands launching, and we’ll refurbish the AOL brand itself.

Q: Whither MapQuest?

A: MapQuest is still Top 20 search term. It has a large market share. The technology has not been focused on in a number of years. We’re changing that. Partners are inquiring about MapQuest, and I think what we’ll do is an operational partnership with them. We feel like its a “very, very valuable property.”

Q: What are best metrics to evaluate AOL’s turnaround/growth?

A: Unique visitors [which is what everyone says now]. We need a turnaround in domestic display, which you should see in 2010. And then we need to generate cash, because that’s what healthy companies do. In terms of that cash: No more “hail Marys” where we take cash from access and make big bets on things that we don’t know about [i.e., Bebo]. We will want to fund the Web services business with cash from the Web services business.

Investors Bet on Another Real-Time Start-Up. Next Up for Hot Potato: Product, Users.

Peter Kafka — Fri, 23 Oct 2009 19:16:34 +0000

Here’s a good way to get your hands on scarce venture capital money: Create a start-up geared around “real-time” sharing and conversations.

That’s the core of Twitter’s pitch, of course, and it has helped the microblogging service raise $155 million, a $1 billion valuation, and forge partnerships with Google (GOOG) and Microsoft (MSFT). Not surprisingly, investors are looking to place money on related bets, from search engines that parse real-time data to location-based social networks with real-time updates, and even real-time photo-sharing sites.

The newest entrant: Hot Potato, a buzzy start-up that’s supposed to let users converse about a particular event, whether they’re attending it in person or watching from afar. When it’s up and running, that is. The five-man crew doesn’t have users or a product just yet.

But that hasn’t prevented the Brooklyn, N.Y-based company from raising about $1 million, sources say, in a round led by First Round Capital and RRE Ventures. A group of smaller investors, including Betaworks, the incubator that specializes in real-time companies, and Ron Conway, the angel investor best known for his Google bet, are also backing the company.

Hot Potato is led by Justin Shaffer, an eight-year veteran of Major League Baseball Advanced Media, pro baseball’s well-regarded Web unit. Shaffer has recruited three other MLB.com employees (one of whom subsequently left to get an MBA at MIT) to join him.

Shaffer wouldn’t comment about his funding round, but was willing to discuss his start-up’s general plans. They are finishing an iPhone app and plan to submit it to Apple (AAPL) in the next few weeks, he said, and will open their doors once that’s approved.

The big idea is an interesting one. People are already using Facebook and Twitter to converse about events in real time–think about Barack Obama’s inauguration, or Balloon Boy, or last night’s Yankees-Angels game.

Shaffer’s critique of those platforms, though is that “they break at scale–there’s no good way to filter the chatter so that you, your friends, and a group of strangers with something relevant to say can all connect. Hot Potato, he says, will offer a “curated stream” in real time of all the data coming out of the event in real time. What we’re really focused on doing is bringing together the entire audience of an event, whether they’re at the event or watching at home.”

Business model? TBD, of course. But there are a couple of obvious ways to go. For instance, Shaffer thinks people who opt-in to a particular conversation–say, about an NFL game or a U2 concert–would be okay with seeing “in-stream” ads, as long as they were relevant.

But that’s a problem that’s best tackled once the service is up and running. We’ll check back then.

Microsoft-Yahoo Deal Regulatory Update: "Eh"

Kara Swisher — Wed, 07 Oct 2009 14:31:36 +0000

Unlike the gripping back and forth of the fight over Yahoogle last year, the approval process for the search and online advertising partnership of Microsoft and Yahoo is chugging along slowly but surely as the Justice Department has deepened its investigation by reaching out to a broad range of publishers, advertisers, public interest groups and rivals for comment recently.

A month ago, the government agency lobbed in a “second request” for information about the deal the pair struck earlier this summer.

This kind of regulatory review is typical in deals of this magnitude.

But so far, there is no significant external challenge to the MicroHoo deal, even–according to many sources BoomTown has interviewed over the last week–from Google, the likeliest company to try to scuttle or, at the very least, slow down the deal.

“Is it worth fighting a big fight over?” asked one person close to the thinking of Google (GOOG). “Not really.”

Said another source, surveying the state of play: “It’s eh, kind of inevitable and not that interesting on a lot of levels.”

While none of the key constituencies wanted to comment or make predictions about the outcome of the regulatory scrutiny, most seem to agree that MicroHoo is more likely to be approved than not.

At the time the partnership was announced in July, execs at both Microsoft (MSFT) and Yahoo (YHOO) said a lot of investigation was likely from Justice, although they said they were also confident that it would be allowed go through by year’s end.

So far, several sources said, the key issue raised by the Justice Department has been whether the argument Microsoft and Yahoo are making–that they need scale to compete with Google–is valid or not.

Currently, Google has just under 70 percent of the search market in the U.S., while Microsoft and Yahoo together have about 28 percent.

Google has been arguing that huge scale is not necessary to be successful in the search ad market, although its execs have often said bigger is better when it comes to natural search and in spurring more clicks on ads.

Meanwhile, Microsoft and Yahoo have said they need all the firepower they can muster together to battle Google’s hegemony.

In a related concern, some regulators are worried–as they were when Google and Yahoo were trying to get approval for a similar deal last year–that any hookup of big players in the market will effectively take Yahoo out of the search business.

“With only three big players, going to two is not desirable to the government,” said one source. “Yahoo has to reassure everyone that it is focused on a sustainable business model beyond search.”

In a blog post yesterday, in fact, Yahoo said it was committed to search innovation.

In any case, most expect another month of investigation at least, although the lack of any loud voice in opposition could shorten that time frame.

And, added some sources, unlike with Yahoogle, there is not likely to be any kind of Congressional hearing on the deal.

Nonetheless, Microsoft, Yahoo and Google remain concerned that deals like this will lead to more focus on privacy issues, specifically around behavioral targeting.

That would be more a matter for legislators or the Federal Trade Commission and would probably come well after the deal is cleared and as part of a bigger topic.

Rep. Rick Boucher (D., Va.), who chairs the Subcommittee on Communications, Technology and the Internet, said he will consider consumer privacy legislation this fall.

Boucher led hearings on the subject this summer, and there might be more, especially as Web companies garner a lot of personal information from consumers with little oversight of what they do with those data.

If Boucher does call for hearings, he might want to replay this particularly boneheaded (but funny!) video from Yahoo’s U.K. ad staff, which classifies various Yahoo customer types–such as “disco-dancing heart surgeons from Nantwich”–as farm animals:

Please see this disclosure related to me and Google.

Exclusive: Yahoo Set to Unveil Massive New Marketing Campaign at Advertising Week, Declaring Size Does Matter

Kara Swisher — Sun, 13 Sep 2009 17:32:49 +0000

Yahoo is set to unveil a major marketing campaign to reset advertiser and consumer perception of the long-troubled company during Advertising Week in New York, which starts a week from tomorrow.

According to numerous sources BoomTown has spoken to about the campaign, Yahoo (YHOO) is–at least with advertisers–going to focus on stressing the size and scale of the Internet giant.

The details of the plan will be made public Tuesday, Sept. 22, at a press conference.

It will take place immediately after a keynote speech–titled “Yahoo’s Consumer Revolution…Round II”–that the company’s new CMO, Elisa Steele, is set to deliver on the second day of the Interactive Advertising Bureau’s MIXX conference.

MIXX is a two-day event, run by IAB, focused specifically on online advertising.

Yahoo CEO Carol Bartz is also going to be attending Advertising Week–during which all the major players in the advertising business gather in Manhattan for a series of events–for a plethora of meetings with big Yahoo clients.

It is likely she and several other senior Yahoo execs will be at the press conference, sources said.

That press event will also include Penny Baldwin, a well-known industry exec Yahoo hired as its SVP of global integrated marketing and brand management in July.

The main message Bartz is set to deliver is that Yahoo is a powerhouse unlike any others on the Web when it comes to online display advertising.

And, in fact, Yahoo–despite all the internal and external turmoil it has undergone in recent years–remains one of the largest sites on the Internet, and is the top player in what is also called graphical advertising, as well as online media and communications.

“The whole push seems to be to remind people of vibrancy of the brand and exactly how huge its reach is,” said one person who has seen parts of the presentation. “It is less Yahoo is back than Yahoo has never left.”

Sources also noted that Yahoo is likely to stick to its plan to push the idea of “your home on the Web” to consumers, which I had previously posted about earlier this summer.

The idea of the Silicon Valley icon being the key hub destination for Internet users does dovetail with pushing its size to advertisers–major marketing messages that will also likely cost a pretty penny.

They will have to–Microsoft (MSFT) has been in the midst of a $100 million campaign for its new Bing search site and will likely spend more when it unveils updates to the service, dubbed Bing 2.0–within the next few weeks.

The company showed the changes it showed to its own employees last week, which was the subject of much tweeting on Twitter.

Yahoo will apparently give more specifics as to the spend for the marketing push at the press conference.

But, many sources said, the company is already out in the advertising market now, buying tens of millions of dollars in advertising online and offline to hawk Yahoo in print, on television and elsewhere.

(Full disclosure: Sources said that campaign will include The Wall Street Journal network, which includes this site.)

“It’s dramatic,” said one source about the marketing outlay.

Since she got to Yahoo, Bartz has continually stressed the need to promote Yahoo products and services more, including in an interview last week on CNBC (you can see that longish video here).

And, in the July earnings call for Yahoo, Bartz said: “In addition, we’re hard at work on plans to reposition our most valuable asset: Yahoo’s brand. Our Q3 plans include an initial wave of incremental marketing spend which will increase substantially into Q4 and next year.”

Also, in a Q&A in the same call, she added more about the long-term nature of the spending on branding:

“The branding and our whole campaign of advertising is just starting; however you have to understand that this is an ongoing campaign so it’s not transient at least for the next year or so. We’re really going to move to reposition the Yahoo brand and Yahoo Company, so right now, consider that as cost that’s in the system.”

What Bartz and other Yahoo execs will likely stress less is search, due to the search deal Yahoo struck in July with Microsoft in which the software giant will take over the back-end technology and Yahoo will sell search ads for both companies.

The company will compete with both Microsoft and Google (GOOG) in garnering the search market still, once the partnership is approved by regulators, with Yahoo focusing on differentiating itself via innovative user interface, design, features and functionality.

Liveblogging the Yahoo Second Quarter 2009 Earnings Call: We Are the Kingmaker!

Kara Swisher — Tue, 21 Jul 2009 21:21:03 +0000

If there’s an earnings call at Yahoo, you know BoomTown is going to liveblog it!

Will Yahoo (YHOO) CEO Carol Bartz say something naughty? (Nope!) What is new CFO Tim Morse like? (Nice!) Will they say anything about the talks with Microsoft (MSFT) about a search and online advertising partnership? (No!)

Oh, it might be a corker!

The earnings results for the second quarter certainly were not.

As I wrote in a previous post:

Yahoo reported so-so second-quarter earnings results today, with a decline in revenues, but with a slightly stronger-than-expected improvement in net income.

For the three months ended June 30, the Internet giant said it had revenues of $1.14 billion, excluding traffic acquisition costs, down from $1.35 billion in the same period a year ago.

That profit was up eight percent, due to cost-cutting. Yahoo said it earned $141.4 million, or 10 cents a share, in the quarter, compared to $131.2 million, or nine cents.

That’s not really saying much, since Wall Street analysts had such low expectations, estimating Yahoo would earn eight cents. But, with a weak advertising market, it is also not that bad.”

Here’s the conference call, updated as it happened:

2:02 pm PST: Music followed by investor relations lady, who had a very nice voice.

She was quick and to the point, and soon enough Bartz was on.

First, she welcomed Morse as CFO, noting he was strong in “efficiency and process.”

Then she pointed out that the new home page for Yahoo–pictured here and you can read about it here–was “available…starting…today.”

Bartz dragged out the words, with a small dramatic flourish.

Then, it was right to the results, which Bartz was bullish on: “Considering the economy, I am pleased with the results.”

Bartz noted that “overall, we are seeing less fear in the marketplace,” although she added that she had no idea when the econalypse would be over.

“It’s easy to see it bumping along the bottom, but it’s too early to call…so, we’ll leave economic predictions to others,” she said.

She moved onto her being happy about all the new execs she had hired, noting that Yahoo was “closing in” on picking an international head (note to myself, get a Yahoo to leak the news to me asap).

2:07 PST: Morse (pictured here) came on and introduced himself. He looks like a CFO and also sounded like one too–calm, cool and collected, as it should be.

After a short talk about his background, he moved onto all the particulars of the quarter–results that had already been released, but Morse repeated them with verve.

I try to listen carefully in these explanations, but I confess that I actually don’t, unless something new happens. It didn’t.

Then Morse was looking forward, including talking some more about marketing spend coming up, as well as explaining what kind of CFO he was going to be.

2:18 PST: Back to Bartz, who started talking about well the long-troubled Silicon Valley icon was doing, even in the weak economy.

She kept calling Yahoo the “world’s biggest Internet media company,” and then said that Yahoo was an “Internet kingmaker” for other Web sites.

Well, it’s kind of true on both counts, so we’ll overlook the bragging.

Bartz then quickly moved through all the various arenas at Yahoo–from advertising to the home page to mobile–where Yahoo was trying to improve and increase its business.

She apparently is aiming to make online ads less annoying–if successful, I propose that Bartz should be awarded some medal of honor.

“We have a clear simple vision to be the center of people lives online,” said Bartz in conclusion, throwing in “kingmaker” again. “At the end of the day, we know who we are and know what we need to do to win.”

2:33 pm PST: Question time!

The first was about what Bartz thinks about Bing, the new Microsoft search engine, because it might take a while for these Wall Street analysts–reporters don’t get to ask questions–to screw up the courage to ask her outright about any Microsoft deal.

Bartz was unusually cordial, which is how someone about to be hitched needs to be.

“I think Bing is a good product…I think Microsoft should be given kudos for Bing,” she said. Hmmmm….

The next question was about the intent of Yahoo to invest in search, as opposed to display advertising. Another veiled Microsoft search deal question.

Bartz noted that Yahoo was investing in the user. Nice way not to answer the question!

2:38 pm PST: A question about spending and if there was going to be more.

Bartz noted that Yahoo was restructuring costs, rather than cutting and burning. She noted, for example, that more marketing spend was part of the plan.

Morse used a bucket analogy, and talked about draining costs back and forth, which was apt.

The next question was about advertising revenues, and whether they would grow. Also, more questions about costs.

Morse noted good strength in a lot of areas in the premium sector. As to cost structure: “We’re repositioning the business.”

2:48 pm PST:

Another cost question. I am officially ignoring it.

The next question was about how Yahoo was going to keep fixing APT, its newest advertising platform, which some think is too hard to use.

Bartz, who has insulted it in the past, was now kind of nice about it, noting that they were working on making it better.

A question about owned-and-operated search and its relationship with Yahoo’s affiliate search, which had been stronger. Not a trend, said Bartz flatly.

More about search and whether scale matters in search (another sneaky way to ask about Microsoft). “Of course scale matters,” said Bartz, who joked she would be happy to switch share positions with Google (GOOG).

A question about the new home page and its monetization and why it was announced today, as opposed to the fall, as planned.

Bartz did not really explain why or about revenue, but she sounded good.

The last question was about improvements in search share and monetization (translation: I want to ask about Microsoft, but I am too much of a wimp).

Bartz talked about better targeting, improved experience, driving relevancy and the prominent position of search on the front page. That will lead to more money, she noted.

Again, it’s not exactly an answer, but it sounded good.

Then it was over, although Bartz ended by urging everyone to “go look at the new home page.”

Yahoo Product Head and CTO Ari Balogh Speaks!

Kara Swisher — Thu, 02 Jul 2009 21:05:01 +0000

In BoomTown’s bold quest to annoyingly stick a Flip digital video camera in the face of every Yahoo senior exec, this week I worked the last nerve of its CTO and EVP of Products, Aristotle “Ari” Balogh.

Actually, the 45-year-old Balogh is a very calm and pleasant man, especially considering the huge responsibility that has been foisted on him by CEO Carol Bartz to rejigger how Yahoo (YHOO) makes its products and services and deploy its technology in a more efficient, centralized and most of all, innovative manner.

It is actually a process that was started under the previous leadership, especially President Sue Decker.

But now, after a number of reorgs, a wide swath of Yahoo is under Balogh’s purview–from search to open initiatives to product development to trying to fix Yahoo’s big problem of never quite getting its innovations out the door.

To explain all this, Balogh sat down with me twice–he is clearly a glutton for punishment–to talk about where Yahoo stood as it sought to dig itself out of its long slump and reemerge as the potent Internet force it once was.

While he successfully avoided the questions about Yahoo’s talks to do a search and advertising partnership with Microsoft (MSFT), he did talk about his view of its new Bing search service (well done, but can it scale?–which is an engineer’s favorite schoolyard taunt).

He also addressed the bigger question of how Yahoo can stay relevant in the fast-changing Web 2.0 world.

To Balogh, copying trendsetters like Facebook is not the answer. For example, he noted that Yahoo is more a place where consumers do “one-way” follows of things important in their lives rather than wanting another social-network service (which Yahoo has tried and failed at, actually).

“We’re not going to be another social network,” said Balogh flatly, agreeing that that boat has already long sailed without Yahoo on it with a significant product–Yahoo famously failed to buy Facebook, well before Balogh arrived in early 2008 from VeriSign (VRSN). “But we can be a place where people make and manage the important connections they have.”

How this will all play out is one of the most interesting questions in Silicon Valley because–even after all the turmoil–Yahoo remains one of the largest sites on the Web.

About 500 million monthly unique visitors enter its homepage and course through its vast site constantly, from its search pages to its massive email and instant-messaging services and its popular suite of content sites.

No one says Yahoo is not big–what everyone says is that it has missed many major and critical Internet trends as it has become mired in a management morass and external battles.

Now, with new leadership in place, observers are waiting to see what’s next.

In this regard, it is important what Balogh thinks since he is perhaps Yahoo’s only person who even closely resembles a Web product visionary now that former CEO and co-founder Jerry Yang has stepped aside and Bartz has taken up command.

While he typically shies away from the spotlight, he is not bashful about talking about Yahoo’s infamous lugubrious development process.

“We have pockets of great technology that we have to really put back together into a coherent infrastructure,” said Balogh. “We have to get the basics right and focus on those core daily experiences that make Yahoo extraordinary.”

That is easier said than done, especially when changes impact so many consumers and, of course, the bottom line. Choosing what key trends to attack is harder for a large public company like Yahoo, which has a lot to protect in its current businesses.

“There will always be a battle between new ideas and monetization,” said Balogh. “The question is how much do you push that line back and forth?”

That fine line will surely be tested with the rollout of its new homepage in the fall, a long project that has been codenamed “Metro.”

“It is not a radical departure, but we have given users more power to do what they want and also serve as the best of Web versus that is already inside of Yahoo,” said Balogh of the new homepage. “With technology, it is always a push-pull.”

Here’s my video interview with him, talking about all this and more:

[ See post to watch video ]

Are Those Anti-Apple Microsoft Ads Actually Working?

Peter Kafka — Tue, 19 May 2009 10:45:12 +0000

The Web is full of armchair ad critics, particularly when it comes to spots from Apple and Microsoft. And the usual consensus from the chattering classes: Apple ads goooood. Microsoft ads baaaaaad.

But Microsoft’s (MSFT) latest campaign, which features documentary-like tales of youngish people priced out by Apple (AAPL), may actually be working. At least when it comes to youngish people’s perceptions of the two brands. So says tracking service BrandIndex. More from AdAge:

The perceptions of value the two brands offer has shifted dramatically in the eyes of 18- to 34-years-olds since Microsoft began running its “Laptop Hunters” campaign in late March. Apple’s “value perception” has fallen considerably, while Microsoft’s has risen…

Based on daily interviews of 5,000 people, BrandIndex found the age group gave Apple its highest rating in late winter, when it notched a value score of 70 on a scale of -100 to 100 (a score of zero means that people are giving equal amounts of positive and negative feedback about a brand). But its score began to fall shortly after and, despite brief rallies, hovers around 12.4 today.

Microsoft, on the other hand, has risen from near zero in early February to a value-perception score of 46.2.

The real test, of course will be actual sales data, and we won’t see anything resembling official numbers for this period until several months from now. But for the record, tracking service NPD says that overall PC sales dropped seven percent in the first three months of this year, while Apple’s Mac shipments dropped 1.8 percent.

Here’s the Microsoft ad starring “Lauren,” which kicked off the latest campaign:

And here’s Apple’s sort-of response: