Changes at AOL’s local content site, Patch: CEO Jon Brod will step down and is being replaced by COO and President Steve Kalin, according to an internal memo the New York Internet company sent to the division’s employees today.

As part of the move, Brod will be going back to run AOL Ventures, in a job where he began at the company.

In addition, sources said a little less than three percent of the 1,400-employee Patch staff will be laid off. The memo notes that downsizing, without giving the numbers, which includes consolidation of several parts of Patch by streamlining its regional structure from 20 to nine teams.

According to the memo, the layoffs are to “make Patch profitable in 2013 and a commitment to continue to improve our business model.”

AOL confirmed the contents of the memo, saying in a statement, “Patch is streamlining its regional editorial structure across the country by moving from 20 to nine teams. We are implementing this team approach based on the success of our field tests earlier this year. The team approach allows for flexibility based on the unique needs of each community and the strengths of our editors. We are not reducing our number of sites or our coverage area as a result of this change. Making these important changes came with the difficult decision to eliminate some positions. We recognize these changes are painful for individuals and for our organization — and we are committed to handling the people impacted with care and sensitivity.”

Patch is growing, according to comScore. In April, traffic was up 26 percent since last year to 13 million unique monthly visitors, who are consuming about 1.3 million pieces of content that are now being served up per month.

Still, Patch has attracted a level of investor pressure and criticism, even as AOL CEO Tim Armstrong has stuck strongly with the hyperlocal content effort and invested heavily in growing out a network of sites across the country aimed at neighborhood news and events.

But Armstrong signaled changes when he was queried about Patch during AOL’s recent quarterly call: “What you’re going to see as we approach Q4 is us trying to get to the finish line of profitability, and we will use all means possible to get there.”

Apparently, Armstrong means what he says and says what he means.

Here’s the memo:

Patchers,

Since the day Jon, Warren, and I founded Patch, we have had one mission in mind — improve the lives of people in local communities by 25 percent. Patch has become an important brand in the hundreds of towns we serve, and it is a staple of our communities. With the average Patch just over two years old, we are well on the way toward our goal of improving peoples’ lives and building a sustainable business in the process.

Over the past year, Patch has made an enormous impact in our communities. The coverage of the Boston Marathon bombings, the lifeline that Patch provided residents during the Sandy Hook school shootings and Superstorm Sandy, and the exclusive Sanford-Colbert Busch debate in South Carolina stand out as powerful examples. The new Patch platform that is rolling out now will only increase Patch’s ability to instantly improve communities.

As we have made a commitment to improve our Patch towns and communities, we made a similar commitment to make Patch profitable in 2013 and a commitment to continue to improve our business model. Just as we have rolled out new products and services to Patch, we are announcing today the rollout of the recently tested town structures, which will help us serve communities in a more local way and move Patch meaningfully toward profitability.

The changes have two main goals:

1. Improve and increase our hyper-local programming and deepen our user engagement through the Patch 2.0 platform; and
2. Implement a structure that unlocks the path to profitability.

To accomplish these goals we are taking the following steps, effective immediately:

We are combining the East, Central and West editorial zones to create a simpler structure that will enable faster decision-making and a more coordinated editorial effort across Patch. Anthony Duignan-Cabrera has been promoted to VP, Editorial Director, overseeing day-to-day editorial field operations, and will continue to report into Rachel in her role as Chief Content Officer.

We are streamlining our regional editorial structure across the country by moving from 20 to nine teams. We are not reducing our number of sites or our coverage area as a result of this change.

We are promoting Katie O’Connor to Director of Editorial Operations and Content Strategy. In this role, she will work with our editorial teams to help create new content and programming.

We are implementing a “team approach” for our sites, based on the success of our field tests earlier this year. This approach allows for flexibility based on the unique needs of each community and the strengths of editors.

Jon and I have decided to elevate Steve Kalin to the CEO position at Patch. Steve has done a fantastic job since he began at Patch in December as President and COO. Jon and I hired Steve with the thought that his extensive background in scaled, local platforms would eventually allow him to run Patch on a day-to-day basis.

Jon has led Patch since it was just an idea and helped scale it into one of the most significant brands in local communities in the U.S. Under his guidance, Patch has gained tens of millions of users and more than ten thousand advertisers; and it has covered millions of local stories. Going forward, Jon will return to AOL Ventures full-time and lead our push into several areas we have identified as significant future growth opportunities for AOL.

The changes we are making at Patch, however, come with the difficult decision to eliminate some positions. These employees have contributed greatly to Patch’s business with passion and dedication. We sincerely thank them for all they have done to make Patch what it is today. Their impact will always be felt here. We wish all affected employees continued success. They are truly Patchers for life.

This is an important time for Patch. We have many great opportunities in front of us, and we continue to make decisions to ensure Patch’s success. AOL’s Board of Directors and I remain firmly supportive of Patch and our mission. Together we are building a company for the long term, one that can grow and thrive — now and far into the future.

We will be having team calls today and a Patch All-Company call this afternoon at 6pm ET, to discuss these changes in more detail. I encourage you to join these calls. Keep an eye out for invitations to follow.

I want to thank you for your continued commitment to Patch and to serving your communities, and for staying focused on our goals. Patch is one of the fastest growing sites and brands on the Internet. We have the right plan, we have a great team, and I’m confident we can win together.

Keep going — TA

Yahoo has bought Summly, the mobile news reader app founded by a young British entrepreneur.

In a statement, the London-based company said it had bought the tiny outfit, which will close its app. The price was not disclosed (although I will try to find out soon enough). But the company had been seeking additional funding recently at a big valuation, in stark contrast to its small size (less than one million downloads), staff (five) and business model (zero revenue).

(Update: Sources tell me Yahoo paid just about $30 million for Summly, mostly in cash, with 10 percent in stock, for three employees.)

AllThingsD.com reported in December that Yahoo was looking closely at the startup, with CEO Marissa Mayer meeting with its founder Nick D’Aloisio. As we noted then, Yahoo was aiming at trendy mobile “acq-hires” to give the sleepy Silicon Valley Internet giant some sizzle and improve its moribund mobile offerings.

Mayer has been buying up a range of similar small mobile startups, largely for their teams of talented and innovative engineers. And, at a recent employee meeting, its M&A head Jackie Reses said the Silicon Valley company was looking at two significant purchases and a half-dozen smaller ones.

Said Yahoo: “Founder Nick D’Aloisio and the Summly team are joining Yahoo! in the coming weeks. While the Summly app will close, we will acquire the technology and you’ll see it come to life throughout Yahoo!’s mobile experiences soon. We’re not disclosing purchase price or other terms of the deal.”

Yahoo mobile head Adam Cahan wrote a blog post about the deal, as did D’Aloisio, who also tweeted news of it:

@summly has signed an agreement to be acquired by Yahoo!! Excited for the next chapter of Summly! Thanks to all who have supported me.

— Nick D’Aloisio (@nickdaloisio) March 25, 2013

News readers have been getting snapped up of late. CNN acquired Zite for $20 million in 2011, while we reported that LinkedIn was in the midst of buying Pulse for upwards of $50 million.

The 17-year-old D’Aloisio created the high-profile news reading app, which garnered much attention in the last year in the mobile space, which is probably what attracted Yahoo to it.

As I wrote:

D’Aloisio — who looks like he could easily be a member of One Direction if this tech thing did not work out — is perhaps a perfect storm for Yahoo, which is seeking to show that it can attract innovative, young entrepreneurs to the company, while also looking to strengthen its nearly bare mobile cupboard.

Summly is all that and a bag of (fish and) chips, with a very slick app for the Apple iPhone that has become one of the more popular in the App Store since it was re-launched last month. The company has said it has been downloaded 500,000 times.

It deserves the attention, as it is a pleasure to use — think an even hipper version of Flipboard with some more sass. The handsomely designed app summarizes news stories — all using a natural language processing algorithm — in only a few sentences and in under 400 characters. Users can then swipe through topics and stories quickly and click in to be directed to the full story on the original news site.

Summly originally started as a prototype app called Trimit, which soon garnered attention and seed funding from Hong Kong billionaire Li Ka-Shing’s investment firm. In no time, it had a range of other investors, ponying up about $1.5 million, including trendy ones like Ashton Kutcher and tech types like Zynga’s Mark Pincus, Automattic’s Matt Mullenweg and Airbnb’s Brian Chesky.

Since then, it has been striking content deals, including with News Corp. (which owns this site) and others, which seem to be attracted by its investor pedigree, its solid technology and — perhaps most of all — its media-darling founder.

To get an idea of the adorable hip factor involved, here’s a really clever video D’Aloisio did with actor Stephen Fry, who is also an investor in the startup:

Summly Launch from Summly on Vimeo.

At a Morgan Stanley investment conference today, the affable Yahoo CFO Ken Goldman put in an appearance to talk about life at Yahoo since he got there last fall.

Unfortunately, he said almost nothing new in an onstage interview and, more importantly, did not address the hot-button controversy around the work-from-home ban that CEO Marissa Mayer instituted last week.

To be fair, that’s because Goldman was not asked by anyone about the issue, which is perhaps not a surprise at these hand-holding investor events. But he did make a veiled reference when touting its “strong leadership” now.

“What gives people confidence is that we’re making decisions,” he said. “The worst thing to do in a company is to waffle.” But Goldman then added obliquely that some people like those decisions and “some people don’t.”

No, they don’t! Woo-hee, has this one blown up!

The work-from-home debate has certainly exploded across the landscape this week, after an edict to eliminate the long-time employee policy at Yahoo, especially since most other Internet companies tout flexible work arrangements.

But, apparently, Mayer thinks Yahoos have abused the privilege — she noted at an employee meeting last week that VPN logs showed work-at-home staff did not sign on enough — and a Yahoo internal memo said that working “physically together” was the way to reenergize the lagging fortunes at the company.

Opinions inside Yahoo about the topic have been mixed but heated, essentially pitting employees against each other in an awkward way. But the reaction from outside the company has been decidedly negative.

At the Morgan event in San Francisco, Goldman instead focused on the sunnier side of the street at the Silicon Valley Internet giant, noting the Mayer regime was focused on increasing user engagement, international presence and broadening its demographics.

“The thing that just struck me over and over is how much has been done by this company that is really new,” said Goldman, pointing inevitably to the new free food policy — which has long been common across Silicon Valley — as well as a quarterly goal system, employee reviews, weekly FYI meetings and more.

Referring to internal polls showing increased confidence among staff, he added: “What really strikes me is how much has been done to really improve the quality of life at Yahoo.”

Goldman also touched on the need to increase revenue, spur innovation and also some upgrades of core products such as Yahoo Mail and its famous homepage, although leaving out that this had been in the works before the new leadership team was in place.

He also talked, as Mayer has a lot, about the importance of mobile to the future there, noting that the mobile revenue was still “modest.” (Goldman declined to say just how modest, but I posted that depressing number here.)

“We just got into this is a major way,” he said, asking investors for patience to get up to mobile speed at Yahoo. “I think we have been clear it will take us some time, but we have taken some positive steps.”

According to multiple sources close to the situation, Yahoo Connections SVP Shashi Seth is leaving the company. CEO Marissa Mayer sent an email to staff earlier today saying the last day for one of the top execs of the company would be tomorrow.

[UPDATE: A Yahoo spokesperson confirmed the departure of Seth, as well as that of Chief Information Security Justin Somaini, which I reported yesterday.]

As I reported last night, rumors of the former Google and AOL executive’s departure have been running through Yahoo for months and now it appears to be true.

Sources said Mayer is in the midst of culling top execs, even as some are contemplating departure due to unhappiness under her new regime.

Seth has been in charge of a swath of key products at Yahoo including Yahoo Mail, the Flickr photo-sharing service and many others. Mayer is an experienced product exec from her tenure at Google and has been involving herself deeply in that arena.

Seth also posted a goodbye on the LinkedIn social network, writing:

“After three years I have come to the incredibly hard decision to move on from Yahoo. I truly enjoyed working with an amazing team, that was passionate, hard working, and truly brilliant. I will miss working with them!”

Shakil Khan — the well-known head of special projects for the popular Spotify music service, who took the same kind of job at Path last year — is departing the personal social networking site.

He will remain a special adviser, and is also an investor in the San Francisco-based startup.

The globe-trotting Khan (pictured here), who arrived at the startup only last March, had worked with Path on a number of efforts, especially in expanding its international presence. Path recently hired Shindo Kimihiko to turbocharge the company’s efforts in the fast-growing Asian markets.

A Path spokeswoman confirmed the departure after I inquired, and the London-based Khan also emailed me this statement:

When I joined Path, the company was just 20 people, only available in a handful of languages and the resources were mainly U.S.-focused. During my time there, we launched in 17 languages, established great teams in marketing, localization, growth and international and doubled the number of staff. As more than 50 percent of Path’s usage is now international, I’d say that my original objective of helping Path to think in more international terms and capitalize on global opportunities is done :) Moving to the next stage of Path’s growth, I remain as a Special Advisor to the company, as well as continuing to spend time with my other investment companies, including Spotify, SecondMarket, Summly, Blackjet and a couple of exciting startups at incubation stage.

Path recently announced that the service — which has raised $55 million in funding — had five million users.

Yahoo’s Chief Information Security Officer Justin Somaini (pictured here) has left the company, according to sources.

It’s not clear why the top security risk exec has departed the Silicon Valley Internet giant. But, said sources, it could be partially related to the recent hacking issues around the newly refreshed Yahoo Mail, including its vulnerabilities to cross-site scripting, or XSS, attacks. This has been blamed for a surge in spam emanating from compromised email accounts, a problem that some security experts outside the company said Yahoo has been slow to fix.

Along with a number of execs, including Connections SVP Shashi Seth, addressing such issues were within Somaini’s purview. It’s not clear if Seth — who has also been the subject of persistent departures rumors internally over the last few months — will also be getting some of the blame for the embarrassing security problem in a key Yahoo product.

But sources noted that Somaini’s leaving is also part of a wider look at a range of higher-level execs at Yahoo — top staff status is based on Levels, such as L3, L4, L5 — that is now taking place across the company by CEO Marissa Mayer.

Sources noted that Mayer is moving to replace a number of them as she seeks to remake the top ranks of the company, even as some are contemplating departure in the March time frame when their various and sundry stock options and other payouts are realized.

That said, sources said Somaini has been looking to leave too, unhappy with the new regime, as are some others at his level.

His quest for a new job should not be too hard, since Somaini has a strong resume, coming to Yahoo in April of 2011 from Symantec, where he was also CISO. Before that, he worked as a director of information security at VeriSign. He has a very lively cybersecurity blog, too, which you can look at here.

I reached out to Yahoo for comment, but have not heard back as yet.

The culture-celebrating hijinks continue at Yahoo, it seems.

After free food and smartphones and even dressing up as a Yahoo purple banger, CEO Marissa Mayer now has a high-ranking exec dancing for employee enjoyment.

As part of an effort to improve participation in the annual Yahoo Employee Satisfaction Survey (YESS), Mayer instituted a punishment for the lowest participation rate of any division on her executive staff.

The culprit turned out to be Jackie Reses, EVP of people and development for Yahoo, which includes the unlikely combo of human resources and business development.

Thus, Reses apparently had to dance to the hit K-pop song “Gangnam Style” with her staff at the weekly FYI employee meeting at Yahoo’s Sunnyvale, Calif., HQ on Friday.

Despite having a rep as an intense New Yorker, said one employee, Reses has some “decent moves.” Others agreed.

Also decent was one of the top results of YESS, which showed that employee belief in the future vision of the company was up 32 points year over year.

That’s not a big surprise, given the upward trajectory of Yahoo’s shares of late. But, more to the point, it has a weak comparable in last year’s survey, which painted a picture of a deeply demoralized workplace. That’s because the 2011 YESS questions went out to employees the week that the company fired CEO Carol Bartz, with most of the responses gathered in the ensuing weeks.

Despite the improvement, this year’s YESS also still showed a lot of worry about whether Yahoo leadership can execute, and whether the company can achieve strong results over the long term.

[UPDATE: One reader said the Yahoo survey is now called YEES, the Yahoo Employee Engagement Survey. I could not determine if that name change had been made.]

That’s the question that at least one Wall Street firm was asking, in a downgrade of Yahoo stock today. In dropping Yahoo’s rank to “market-perform,” Sanford C. Bernstein analysts noted worries about its turnaround efficacy, a possibly jarring reorg of its advertising unit, and also whether the future sale of its assets in China’s Alibaba Group can save the day again, as it did for last quarter’s results.

“We think there may be upside from an eventual Alibaba IPO at a valuation much higher than $50B or a Yahoo! core turn-around, but it is hard to have high conviction in either given the facts we currently have,” said the report, in part. “In addition, there is manageable but real downside risk: reorganization (e.g., of the sales force) could be negative for revenues, management could decide to invest in growth now and cut excess later, and MSFT RPS guarantee could expire without a renewal.”

Those are all good questions for investors to ask, of course, although more have been caught up in the hype/hope ahead of actual performance gains.

Still, it’s no sweat to get caught up in digital execs being made to trip the light fantastic for their weak results. So, since I was not there to enjoy Reses’ performance, click here for an also fun-tastic JibJab Gangnam video I made of her.

As I had previously reported, Yahoo’s key business unit — its advertising sales force — is now getting details of a reorganization by its new leader, COO Henrique De Castro.

In making the changes, just weeks ahead of Yahoo’s annual sales conference in Las Vegas on Jan. 21, De Castro is borrowing rather heavily from the set-up of the powerful ad business at Google, from whence he came.

By shifting the sales organization to a “category” model, sales reps at the Silicon Valley Internet giant will sell all of Yahoo’s ad products, as well as its search offerings, across channels in a vertical process organized around advertiser segments, such as automotive, entertainment and packaged goods.

Yahoo has long sold its advertising in a regional and tiered organization against premium and performance inventory in display and search, designed to avoid vertical conflict. Thus, the sales staff have built up advertiser relationships across many areas, which will not work in the new system.

Sources inside the company said regional leaders will now be shifted to running various verticals. There will be support specialists for those areas, too.

Mark Ellis, who was most recently VP of North American sales and global partnerships, will pay a key role in the new org, said sources. It is not clear, though, what role Peter Foster, who has headed audience advertising, will play. Another high-ranking exec, Keith Kaplan, has apparently been shifted to focus on agency relationships.

As I had previously written, there are many different ways to organize sales, but making such major change has potentially large ramifications on Yahoo’s financial performance, at least in the short term, since advertising makes up the bulk of its revenue.

According to numerous sources inside Yahoo, the changes are causing some measure of worry and confusion across the salesforce at the company, since it comes after a lot of wrenching changes over the last year.

That includes the departure of well-regarded Chief Revenue Officer Michael Barrett in mid-October, after De Castro got the COO job. He has left a large gap in sales leadership and in maintaining strong relationships with big advertisers and agencies. De Castro himself is not as well known in the ad marketplace, despite many years at Google in its sales organization.

He will likely have a more high-profile next week at the International CES, the huge annual consumer electronics show taking place in Las Vegas, along with new Yahoo CEO Marissa Mayer, who was a top product exec at Google. The pair is planning on meeting with major ad clients while there, which is their first significant outreach to marketers since taking their new roles at Yahoo.

De Castro had outlined the new ad reorg plan immediately after a multiday offsite with top sales leaders several weeks ago, and said the changes would come at the very beginning of 2013.

The ad staff at Yahoo begin to hear of the changes on Friday, so it looks like De Castro has met his deadline.

Michael Katz, one of Yahoo’s high-ranking online advertising execs, is leaving the company, according to a memo he sent out to staff on Friday.

Considered a savvy online ad player and a well-regarded entrepreneur, Katz came to the Silicon Valley Internet giant a year ago when it bought Interclick, the ad-targeting company he co-founded and headed, for $270 million.

Yahoo later used Interclick’s technology in its audience-buying platform called Genome. In a reorganization announced in January, Katz was placed in charge of sales operations and data and performance optimization for Genome.

The data unit is at the center of efforts by Yahoo’s new CEO Marissa Mayer to turbocharge its ad business.

But the Katz missive, which is below in its entirety, clearly signaled that his departure was not an amicable one, which sources underscored was part of a larger rejiggering of the ad sales staff under new COO Henrique De Castro.

“As some of you are starting to learn, my last day with the company will be today,” wrote Katz on Friday. “Leaving Y! is not the hard part — how it happened and leaving all of you is what makes this difficult.”

How it happened, said several sources, was that Katz was suddenly told by HR head Jackie Reses last week that there was not a place for him, only days before a large 12-month retention bonus was to be paid out to him for the Interclick acquisition.

While it is an unusual thing to part on willfully difficult terms with an entrepreneur, as it sends a bad signal to others considering joining the company, Yahoo’s new leadership has been playing hardball with a lot of top execs it is parting ways with, and is also limiting departure packages.

Former marketing head Mollie Spillman, for example, was suddenly let go after she was replaced by former Lockerz CEO Kathy Savitt. And, though he had wanted to leave, former CFO Tim Morse was also told of his replacement in a swift exec house-cleaning move, as was former HR head David Windley.

Of course, such moves are not unusual when a new set of leaders enters the corporate picture. That’s why many at Yahoo expect even more changes to come soon in the ad unit, with most assuming that Mayer and De Castro will bring in new staff they had previously worked with at Google.

Currently, top Yahoo ad execs include Peter Foster, GM of audience advertising at Yahoo; and Mark Ellis, VP of North American sales and global partnerships.

It will be interesting to see what happens to them and others as part of a large ad reorg at Yahoo now taking place, which will definitely include a variety of departures and arrivals. One recent notable Yahoo ad exec departure, for example, was Debbie Menin, who headed entertainment and travel sales strategy, and is now a top sales exec at hot video entertainment network Machinima.

More will come in the new year, given that De Castro has recently briefed employees on a plan to move its sales organization to a “category” model. Simply put, that means its sales reps will sell all of Yahoo’s ad products, as well as its search offerings, in a vertical process organized around advertiser segments.

That massive shift is not Katz’s to worry about anymore, it seems. Here’s his entire email to staff, which is a pretty eloquent one, as goodbye letters go:

Friends and Colleagues,

6 years ago if someone would have told me that the hardest part about building a business would be to one day say goodbye, I would not have believed them. As some of you are starting to learn, my last day with the company will be today. Leaving Y! is not the hard part — how it happened and leaving all of you is what makes this difficult. I will miss the daily interactions and will take with me the many memories. This has honestly been so much fun.

I have learned a lot along the way:

Sometimes winning looks like losing. If you don’t fail, you can’t progress and the stakes only get bigger as you go further down your path.

Be genuinely happy for those that are successful at reaching their goals. If you spend anytime wishing it were you, it will never be.

Stay humble, and never declare victory.

Approximately correct is better than definitely wrong. Do not let perfection be the enemy of excellence.

We are all human — we may make mistakes, we must forgive, forget, and move on together.

Treating people right is not an option.

Treat adults like adults and they will behave like adults. Rules are for children.

People and culture are everything. It’s about so much more than free food and parties, it cannot be forced and without it a business cannot succeed.

I consider myself so very lucky to have known a handful of loyal friends that took a chance, quit their jobs and risked a lot to build this business with me. Their loyalty and hard work helped interclick get off the ground and for that I will forever be grateful. The team they helped to build has truly made this the greatest place to work. Each and every one of you made interclick the very best company to work for.

I would like to leave you all with a reminder of what together we built:

– A company that started with $27,000 and sold for $270,000,000

– A company that redefined the way that marketers think about audience targeting and data

– A company that went public in 2009 on NASDAQ defying all odds

– A company that spit in the face of adversity early in 2011 and came out victorious

– A company whose people are the future of this organization.

So be proud of what together we achieved, look back and know you were part of something big. Then look ahead and know that this is just the beginning, we will all one day build again. For those of you that continue your career at Y!, I ask that you don’t lose sight of greatness. Remember what you are capable of and continue to make me proud.

Thank you for your loyalty, passion, dedication, and collaboration. The finish line is only the beginning of a new race.

-MK

In what will be a major shift in how the Silicon Valley Internet giant sells online advertising, Yahoo’s new COO Henrique De Castro has briefed employees on a plan to move its sales organization to a “category” model, according to numerous sources close to the situation.

Simply put, that means its sales reps will sell all of Yahoo’s ad products, as well as its search offerings, in a vertical process organized around advertiser segments, such as automotive, entertainment and packaged goods.

This is how Google, where both De Castro and CEO Marissa Mayer recently worked, conducts its ad sales efforts. (After copying free food and smartphones, staff evaluation efforts and more, What Would Google Do seems to be strategery at Yahoo these days.)

In contrast, Yahoo has long sold its advertising in a regional and tiered organization against premium and performance inventory in display and search.

The move from regional to vertical is a “seismic shift,” said one source quite accurately. That’s because Yahoo’s go-to-market efforts have been designed to avoid vertical conflict and its sales staff have built up advertiser relations across many areas. In a vertical organization, those reps will be forced to give up these long-term relationships with marketers, some of which have been built over years.

There are, of course, many different ways to organize sales — and each has its fans and detractors. But one thing is clear: Making such a major change has potentially large ramifications on Yahoo’s financial performance, at least in the short term, since advertising makes up the bulk of its revenue.

The change might also result in some attrition among the sales staff, said sources, although many at Yahoo are expecting that De Castro will bring in his own execs from outside to help with the transition. (One interesting name I heard floated was former Googler Penry Price, who was close to De Castro when they both worked there. He is currently president of Media6Degrees, an ad targeting start-up.)

De Castro (pictured here) will need all the help he can get as he overhauls Yahoo’s sales efforts. Well-regarded Chief Revenue Officer Michael Barrett left Yahoo in mid-October after De Castro got the COO job.

His departure has left a large gap in sales leadership and in maintaining strong relationships with big advertisers and agencies. De Castro himself is not as well known in the ad marketplace, despite many years at Google in sales (more on that to come).

Currently, the key ad execs at Yahoo under De Castro are Peter Foster, who heads audience advertising, and Mark Ellis, VP of North American sales and global partnerships.

De Castro outlined the new ad org plan to staff immediately after a multi-day offsite with top sales leaders last week, at which Yahoo’s acquisition options in the ad tech market were also discussed.

Sources said De Castro noted that the changes could take place as early as January 1.

De Castro is also planning to have Yahoo’s annual global sales meeting for the end of January in Las Vegas. Last March, the gathering — then set for about 1,300 advertising staffers in Florida — was cancelled due to a restructuring under ousted CEO Scott Thompson.

In addition, sources said, Yahoo is planning on having a much more prominent presence at the upcoming Consumer Electronics Show — also taking place in Las Vegas in January — in order to solidify its relationships with advertisers.

Its big weapon at the giant annual confab will apparently be Mayer, who has not yet interfaced significantly with the company’s big ad clients since taking the top job in July. At CES, sources said, Yahoo is hoping the “Marissa Halo” — i.e. excitement around the telegenic exec — will help boost its business.

The staff of AllThingsD is taking the day off today to test postprandial somnolence with the turkey-and-tryptophan thing, but we leave you with this very funny video from Funny Or Die by the grumptastic Larry David, about his Thanksgiving in Brooklyn.

Enjoy, and see you Friday:

Yahoo CEO Marissa Mayer is now starting to unveil the flip side of free lunches and smartphones, with two employee-focused moves that are a little more tough love in nature.

According to several sources close to the situation, she has officially ended a longtime practice at the Silicon Valley Internet giant of giving most of the company the week off between Christmas and New Year’s.

While many Internet companies slow down in that holiday period and many are much looser about employees taking time off, Yahoo is one of the few that closes down the company, except for essential staff. (LinkedIn also currently offers a rest week to employees.)

Eliminating the rest week is probably a long time in coming and many at the company have long thought it should be eliminated, since it has been paid time off for Yahoo’s 12,000 employees.

“Yahoo has a lot of work to do, so there’s no time to rest,” said one staffer in a common sentiment.

That said, from a financial point of view, the rest week practice does have positive implications for Yahoo. Besides compelling staff to burn off a week of vacation in the current quarter and not carrying over those costs into the new year, there are also cost savings in terms of keeping its facilities going.

No rest week aside, employees are also about to experience an even bigger change soon, as Yahoo’s HR department prepares a new plan to evaluate the efficacy of its staff.

Under Mayer’s plan, sources said, there will be new measurements of performance instituted, based on a variety of benchmarks and evaluations, in order to better understand who the best employees at Yahoo are.

Once that is complete, the company is likely to begin cutbacks on compensation for the bottom 20 percent, including moving them out of Yahoo entirely. The company has suffered many rounds of layoffs over the years, which hurt morale badly due to the often haphazard nature of the cuts.

Mayer is aiming to make the process more organized; she talked about this performance-based system in a company meeting in September. At the time, she noted that employees would be judged on four “Cs” — culture, company goals, calibration and compensation.

In a follow-up memo and meeting, Mayer told staff about this process:

“Moving forward, we will have both annual goals and quarterly goals that we will all commit to, track, and grade ourselves based on … We will then cascade the goals down through the company at the department, team, and individual level …”

What she was talking about is similar to an employee evaluation method used at Google — where Mayer spent her entire career before becoming Yahoo’s latest leader — using an elaborate series of data points to judge how individual employees are doing.

In other words, Yahoos are about to get graded on a very clear curve.

According to an internal memo, Yahoo CEO Marissa Mayer has brought back Jay Rossiter, who left the company under the regime of Scott Thompson, to lead its platforms effort “focusing on the tools and technology supporting our externally facing products.”

The move also take back a huge swath of engineering responsibilities at the Silicon Valley Internet giant from David Dibble, who was given a wide purview over all technology in June under interim CEO Ross Levinsohn.

Mayer smoothed over the change — Dibble will now be back in charge of internal infrastructure — in the memo to staff about the change, noting: “I want to call out that Dibble has been an incredible technical leader and tremendous member of my staff, and I’m confident this realignment will help us bring clear focus and faster execution within each organization.”

Rossiter was at Yahoo for five years, before leaving for a short time, having led its cloud efforts and other tech projects.

The hiring back of Yahoo is interesting, given that Mayer was widely touted as someone who would attract big-time new talent to gird its tech efforts.

In any case, here’s the memo:

From: Marissa Mayer
Date: November 13, 2012, 4:42:53 PM EST
To: “all-worldwide@yahoo-inc.com”
Subject: Welcome back Jay Rossiter!
Reply-To: Marissa Mayer

YAHOO! PROPRIETARY AND CONFIDENTIAL INFORMATION — DO NOT FORWARD

Hi All –

Today, I’m excited to welcome back a long-time Yahoo, colleague and friend. Jay Rossiter is returning to Yahoo! reporting to me as EVP of Platforms, focusing on the tools and technology supporting our externally facing products. As many of you know, this is an area of in which Jay has spent much of his career, including his five years here at Yahoo!. As a true engineering leader, Jay fully understands the intricacies of platform excellence — especially how important it is for us as we build great products for our users and advertisers.

Jay will lead our efforts in creating a world-class platform technology stack for the company. The technologies created by Jay’s team will include Cloud Services, Hadoop, Personalization & Targeting, Mobile/Presentation platform technologies, Consumer Platforms, Membership and supporting Development Tools. As part of this alignment, Elissa Murphy, Bruno Fernandez-Ruiz, James Carroll, Charles Marker, Rammohan Kordale, and Ty Lee will now join Jay’s team.

Additionally as we continue to ensure we are architecting our products with excellence, Amotz Maimon will join Jay’s leadership team. This new structure, focus at the E-Staff level coupled with Jay’s track record at Bell Labs, 3COM, Oracle and at Yahoo!, position us well for some big wins in the platform space.

David Dibble will continue to lead many of our critical technology functions as EVP of Central Technology — focused on the internal infrastructure that is so critical to our success. Dibble will lead our data centers, service engineering, CIO, IT, and internal security functions with Mark Morrissey, Randy Roumillat, Randall Gannaway, and Justin Somaini on his team. Scott Burke and RonBrachman will also continue to report to Dibble. I want to call out that Dibble has been an incredible technical leader and tremendous member of my staff, and I’m confident this realignment will help us bring clear focus and faster execution within each organization.

In Jay’s words: “I am absolutely thrilled to rejoin the ‘new Yahoo!’ with the increased momentum and focus on building great products leveraging world-class technology. I’ve been watching the changes from afar, having spent the last few months fulfilling a lifelong dream of traveling across Africa, Asia, and Europe with my family. I am ready to re-engage.”

Please join me in welcoming him back!

Marissa

Yahoo could announce in the coming week what it plans to do with the billions of dollars it recently garnered after closing the sale of a portion of its stake in China’s Alibaba, according to sources close to the situation.

As AllThingsD has previously reported, the company is most likely to do a share buyback with the $3.65 billion, a move that could boost its still-lackluster stock.

That’s what happened when AOL did one in late June after it got a pile of cash from hawking its patent assets. Its shares are up more than 25 percent for those last three months, while Yahoo’s have gone up less than one percent in the same time frame.

When it announced the completion of the deal in mid-September, Yahoo said that it would hand over 85 percent of the after-tax proceeds to shareholders. (The Silicon Valley Internet giant will keep about $650 million for its own use.)

At the time of the transaction, a Yahoo spokeswoman said that the company declined to give any specifics around the form of return. The company could also, for example, decide to give investors a dividend, too, although Yahoo has long explicitly favored stock buybacks.

“The form and timing of returning proceeds will be determined by the board and management, taking into consideration the best interests of the company and its shareholders,” said the Yahoo flack.

Speaking of flak, new CEO Marissa Mayer tried to give some to tech journalists, some of whom have been giving her a bit of a hard time of late for showing signs of potentially being too spendy.

In a memo to staff announcing the date of its employee holiday party — it’ll be on December 1 on Pier 48 in San Francisco — Mayer took issue with a particular report from Business Insider about how she tussled over costs with departing CFO Tim Morse, whom she ousted last week.

Business Insider claimed that included her taking the price of the holiday shindig from $100,000 to $3 million, due in part to a change in venue location.

Mayer begged to differ, noting in the internal memo that the event would not bust the bank and still be tons of fun:

“Building on the theme of tech reporters not being great with math or numbers, rumors of this year’s party budget have been greatly exaggerated.”

(Is there actual time for tech reporters being math-impaired to become a theme that’s being built upon at Yahoo? I thought Mayer said the company would be building innovative products.)

But since we in the media are apparently dunces, I suppose we’ll just have to rely on Yahoo’s own numbers from its last quarter — which I embedded below — to tell the tale of continuous troubling declines in search queries and page views, declines in minutes spent on its media properties, declines in growth of unique visitors and flat-as-a-sugar-cookie growth in revenue.

Or, as Mae West famously said in the most delightful math quote ever: “A man has one hundred dollars and you leave him with two dollars. That’s subtraction.”

So is this Q2 financial performance at Yahoo — which is certainly not Mayer’s fault since she just arrived, but will be her responsibility to fix going forward:

YHOO_Q212EarningsPresentation

It’s been nice to see all the euphoria at Yahoo about free food and Apple iPhones kicking it up a notch.

But, purple people, guess what? Them’s just your basic table stakes in Silicon Valley these days and pretty much everyone else has had such perks for a long while now.

Thus, as nice as it is to drink your coconut water gratis, after two months in charge, it’s long past time to focus on what new Yahoo CEO Marissa Mayer is up to besides making much-needed but obvious cultural changes at the troubled Internet giant.

She’s been busy with the expected listening tour of employees and also outside tech players — such as former Yahoo CEO Terry Semel — which is a textbook stop in the turnaround playbook.

Now comes the hard part: Actually beginning to make the significant decisions about how she’s going to turn around Yahoo and what the key issues of strategic focus need to be.

In a series of recent meetings, according to numerous sources inside the company, Mayer has begun to outline what those are to top staff.

Not surprisingly, they are many of the same thorny issues that Yahoo has been facing for a long time and which center primarily on making the company relevant again in a wide number of ways.

I’ll get to many of them over the next week in a series of What Will Marissa Do? posts — including looking closely at her new hires, when and how Mayer will deal with inevitable layoff decisions facing the company, where the sale of Yahoo! Japan stands and, finally, what she’s cooking up for key Yahoo products.

But the focus has to fall first of all on search and advertising, the two arenas that Mayer has been studying most closely, according to numerous sources close to the situation.

That has included a recent meeting and numerous discussions with Microsoft CEO Steve Ballmer about improving Yahoo’s search advertising partnership, said sources at both companies.

That deal has been largely disappointing since it was struck under the regime of ousted CEO Carol Bartz several years ago.

Many reasons are given for the poor performance of the entire arrangement, including lack of improvement of cost per click and share growth for both parties. That means bid density and numbers of advertisers remain too low, especially compared to Google’s offering of access to a larger, more active and lucrative market.

Simply put, despite massive spending by Microsoft on search, users and advertisers get significantly better results overall with the search leader Google.

(You can read a great piece by Search Engine Land’s Danny Sullivan from last year, which exhaustively looked at the issues until then.)

The irony abounds that it’s up to Mayer to fix this problem of improving revenue per search with Ballmer, since she has been among the executives who have made Google the search behemoth it has become.

Her particular expertise has been on search experience for consumers, which is just the area that Yahoo desperately needs to improve after handing over technology duties to Microsoft.

That move was controversial at the time and some feel it was a big mistake. But, most also think there is no going back at this point, given the enormous cost of running a serious search enterprise.

Such an idea is still being raised inside Yahoo, although it seems more nostalgic than a realistic possibility, given the enormous price and, more importantly, the departure of the company’s core search engineers in recent years.

That doesn’t mean Yahoo under Mayer can’t be key to helping solve Microsoft’s search tech problems. She certainly knows the entire arena, which has already given Yahoo increased credibility among Microsoft’s search engineers.

“None of Yahoo’s many CEOs knew anything about search technology and that’s certainly not the case here with Mayer,” said one person close to the situation at Microsoft. “When she walks in, she instantly has status among the geeks as someone who knows what she’s talking about.”

It still may be a losing battle, due to Google’s overwhelming dominance, but if anyone at Yahoo can spot areas of even small improvement — which can yield big returns — it could be Mayer.

In addition, she can spearhead Yahoo’s own efforts to reverse — or perhaps simply stop — search market share declines via delivering a better consumer offering.

That’s still heavy lifting, no matter the exec, since both Microsoft’s Bing and Google are better equipped to win here, too.

“It hard to imagine we are going to slow down in any way,” said one former colleague of Mayer’s at Google to me recently in a rather ominous tone. “We’re only going to get more competitive.”

Pressure much?

And more: Mayer is under a time limit, since guaranteed payments Microsoft agreed to pay Yahoo for the shortfalls on what was promised will be running out next year. The pair has renegotiated that deal before, and it will likely have to do so again.

Of course, Mayer could try to walk and threaten to take Yahoo’s search business elsewhere, a move that former CEO Scott Thompson was mulling before his ouster.

That’s not a surprising ploy, except it is probably impossible to pull off, a fact acknowledged by top Yahoo execs.

“It might feel good to say we have options in search,” said one person close to the situation. “But that ship sailed years ago.”

Indeed, especially since Google is the only choice of possible alternate partners and such a move is rife with major obstacles.

There is the issue of the contract with Microsoft, which could lead to a potentially explosive legal struggle Yahoo can ill afford.

“They can try to get out of the deal,” said one high-ranking person at the software giant. “But that’s a lot easier threatened than done.”

And, there is the clear regulatory hairball any search hook-up between Google and Yahoo would lead to.

That’s happened before, which Mayer knows well since she was a top exec in Google’s business when it tried to partner with Yahoo as a way to prevent Microsoft’s hostile takeover bid for the company.

While times might have changed, Google is currently facing a likely battle with the Federal Trade Commission over its powerful search business, and trying to get Yahoo’s business now is a non-starter.

Thus, finally fixing the Microsoft partnership is key to Mayer’s success since it represents a little over one-third of revenue of Yahoo (see the chart below).

The bigger part of Yahoo’s business, as you can also see from the chart, has been display revenues. And that, too, has been a sorry tale of declines and ever more disappointing results.

A report by eMarketer on display market share had this depressing chart for Yahoo:

As is clear, the march downward for one-time leader Yahoo has been swift, and the prospects for the future are worse as Google and Facebook vie for leadership.

The reasons for this have been myriad, but Mayer has apparently decided that it’s been due in large part to the broken Yahoo ad tech platforms and their ever weaker performance.

As we have previously reported, she has determined that it’s now time to invest in improving them, both by funding internally and external acquisitions.

For that, she has formed a tight group of execs to scan the landscape for tasty and innovative treats for Yahoo to gobble up.

That includes: Scott Burke, SVP of Yahoo’s advertising and data platforms; Brian Silver, who runs the company’s Right Media Exchange; Xuhui Shao, a key engineering VP under Burke; and Mark Morrissey, the longtime tech exec who previously ran the company’s search business and was key to integrating the Microsoft search deal into place.

The cerebral Burke especially has been pushing ad platform improvement for a while and finally seems to have won the battle against detractors of the big and possibly grandiose plan by appealing to Mayer’s interest in not giving up.

Thus, the tabling of plans by Thompson, as well as interim CEO Ross Levinsohn, to outsource some of the automated parts of the display business to Google.

Those talks were very serious, as well as others to sell off Right Media, but they are done for now.

One major issue — the people in charge of the ad platform turnaround could also be seen (and most definitely are) as mired in Yahoo’s legacy of lackluster results and poor performance.

“It is kind of funny that the guys responsible for the decline now have the responsibility for fixing it,” said one source at Yahoo.

It’s a fair point to be made.

But that’s water under the bridge, apparently, since the group has been making the rounds, helped by Yahoo’s M&A execs, with a wide range of companies in many different ad tech area being considered (and some dismissed), including: Mediaocean, Turn, Criteo, PubMatic and Millennial Media.

Millennial is the most interesting, because it is a mobile ad play, where Yahoo is exactly nowhere (to be fair, less than nowhere) after years of botched efforts.

As with other companies, this is a critical arena for Yahoo, and yet one more that Mayer needs to focus on.

Lastly, Mayer has to make sure Yahoo’s premium display business remains strong. This is much more based on relationships with large advertisers than on major sponsorship and branding offerings, as well as creating consumer products and content that is appealing to marketers.

This area is now headed up by former Google exec Michael Barrett, who has publicly said he was staying put for now at Yahoo as its chief of revenue.

In fact, because he is in charge of all sales, he occupies the second slot under Mayer on Yahoo’s now strangely configured, punctuation-impaired and information-free management page.

But numerous sources inside and outside Yahoo said Barrett has also told many people that he is still not fully committed to staying in the role for the long haul.

If he eventually gets a lucrative exit package — something the new boss is not being very generous with overall, said sources — that will mean Mayer will need a high-profile and well-regarded ad exec to replace him; sources said Mayer has already begun reaching out to some candidates.

The pickings are slim, with only a few names on the list of those capable of taking on such a job. That includes: Demand Media’s Joanne Bradford, who was also a former top Yahoo exec; Microsoft’s Yusuf Mehdi; OWN’s Kathleen Kayse; MLB.com’s Bob Bowman; and any number of Google execs.

In that regard, as with all the other search and advertising overhaul efforts at Yahoo, it is a matter of attracting serious talent into the company going forward.

More on that — and more — to come.

Remember the infamous “Peanut Manifesto,” in which former Yahoo exec Brad Garlinghouse likened the company’s innovation process to peanut butter?

In it, he wrote:

“I’ve heard our strategy described as spreading peanut butter across the myriad opportunities that continue to evolve in the online world. The result: A thin layer of investment spread across everything we do and thus we focus on nothing in particular. I hate peanut butter. We all should.”

Not new Yahoo CEO Marissa Mayer, who has cooked up a new recipe for the longtime company albatross by sweetening it up.

Thus, yesterday, she sent out a new memo announcing a new sandwich topping to get the Silicon Valley Internet giant moving again: PB&J.

That stands for “Process, Bureaucracy & Jams,” and it is kind of like a city’s pothole alert line, except with more geeky pep.

Wrote Mayer and Patricia Moll Kriese — the ex-Googler who is now senior director of corporate projects at Yahoo — in a memo to employees, in part:

“Do you see a problem and know how to solve it? Want to brainstorm with colleagues about what to fix and how to fix it? Give us your ideas. Or be heard loud and clear by simply voting.”

In the missive, the pair also noted that besides the free food and new Friday FYI staff meetings, both of which I have previously reported on, the new leadership of Yahoo has been busy with some other stuff.

That apparently now includes: Turning off the turnstiles in building D at its Sunnyvale HQ, removing parking lot barriers, eliminating mandatory orientation at the gym.

(Yahoo really has been hopelessly bureaucratic, if it is requiring engineers to get schooled on how to work an exercise bike.)

In any case, it’s another interesting idea from Mayer to instill more ease and transparency to logistical aspects of running Yahoo (except when it comes to talking to media, of course — in that case, it’s awfully dark in here!).

These are important culture changes, of course, but the real rubber hitting the road will be what major execs Mayer brings in from elsewhere to really foment managerial change and innovation.

Sources say that at least one big hire is happening soon, with Mayer looking at candidates from “outside the box” from the regular suspects in the industry.

She has certainly been active in buttonholing important tech players on the subject over the last month, said sources, and asking for their input — from Facebook COO Sheryl Sandberg to former Yahoo CEO Terry Semel to a variety of others.

So far, her outside hires have been from Google, including Kriese (pictured here). While she had been listed as a project manager at Google, several sources said her last contracted job there was primarily to organize the annual trip to the World Economic Forum in Davos, Switzerland, for top execs at the search behemoth. Apparently, Kriese is a whiz with a spreadsheet in marshaling the tetchy potentates of Google, so PB&J seems right up her alley.

Here’s the full memo:

From: Marissa Mayer
Sent: Friday, August 24, 2012 10:00 PM
To: [All Yahoo]
Cc: Patricia Moll Kriese
Subject: Announcing PB&J — Process, Bureaucracy, & Jams!

YAHOO! PROPRIETARY AND CONFIDENTIAL INFORMATION — DO NOT FORWARD

Process blocking your success?

Bureaucracy getting you down?

Jammed by problems and see a solution? We are looking at how to streamline process, reduce bureaucracy, and remove jams — PB&J!

We’re launching PB&J today to gather your feedback on how to make Yahoo! the absolute best place to work. Share your ideas on what would make your job easier, boost your productivity and help solve problems.

What’s on your wish list for our corporate culture and work environment?

For example:

* GitHub for Code Review

* Dogfooding Yahoo! Mail & Calendar

* SSD’s (Solid State Drives) for faster machines

* Mi-Fi’s (mobile wi-fi cards)

We have done a few things already — free food, FYI, turning off the turnstiles in building D, removing parking lot barriers, eliminating mandatory orientation at the gym, etc. However, we know there’s more we can do!

Do you see a problem and know how to solve it? Want to brainstorm with colleagues about what to fix and how to fix it? Give us your ideas. Or be heard loud and clear by simply voting.

PB&J is available globally on Backyard: http://allhands.corp.yahoo.com/qna/pbj/latest

We will review your ideas and votes, reporting back in FYI each month on
actions taken. August PB&J starts now — and look forward to an update at
the next FYI in early September!

Questions/concerns/suggestions around PB&J, please contact Patricia Moll
Kriese, who’s our lead on PB&J.

Marissa & Patricia

And here is my fave depiction of PB&J, in the fantastically addictive “It’s Peanut Butter Jelly Time” dance:

Here’s a press release I just got sent by OnLive, about its sale to its mysterious new investor.

Which is actually an old one — Lauder Partners, which invested in the innovative cloud-gaming service in 2009. Under the new arrangement, the start-up will still be called OnLive, operate in the same manner, but with only about half its old staff hired back to work for the Lauder “affiliate.”

Whatever that is!

In other words: OnLive is dead! Long live OnLive!

Such confusion is par for the course in this most bizarre of Silicon Valley restructurings.

On Friday, the Palo Alto, Calif., company abruptly laid off its staff and went dark about what was going on, making a series of ever more opaque statements.

Along with the new press release, designed to clear up the mess, OnLive included an FAQ about the transaction. But it still leaves many questions unanswered.

Such as the price paid by Lauder for the assets, as well as whether founder and CEO Steve Perlman was still running the joint.

Here’s one thing that was made clear: The employee’s equity in OnLive the First, as well as that of investors, has gone poof in the new configuration of OnLive the Second.

That would be at least $56 million from investors, as well as tens of millions more in funding from earlier.

Said the company: “OnLive, Inc.’s board of directors, faced with difficult financial decisions for OnLive, Inc., determined that the best course of action was a restructuring under an ‘Assignment for the Benefit of Creditors.’ The assignee of the company’s assets then sold all of OnLive, Inc.’s assets (including its technology, intellectual property, etc.) to the new company.”

Incredibly, in its statement, OnLive had the audacity to say that it was a “heartbreaking transition for everyone involved with OnLive.”

For the other half of the staff — inexplicably called “non-hired” in the press release — laid off in such a manner, it certainly was.

Apparently, they might be able to consult “in return for options in the new company,” and could perhaps even be hired later.

Gee, thanks!

Oh, go read it for yourself:

OnLive Assets Acquired by New Company

All OnLive Services, Devices, Apps and Partnerships Continue Uninterrupted
Lauder Partners Backs New Company as First Investor

Palo Alto, Calif. August 19, 2012 – OnLive, the pioneer of instant-action cloud computing, announced today that on August 17th all of its assets were acquired by a newly formed company that will continue to operate under the OnLive name. The OnLive® Game and Desktop Services, all OnLive Devices and Apps, as well as all OnLive partnerships, are expected to continue without interruption and all customer purchases will remain intact; users are not expected to notice any change whatsoever. OnLive’s current initiatives will
continue as well, with major announcements of new products and services planned in the coming weeks and months. An affiliate of
Lauder Partners was the first investor in the newly-structured company, holding the view that OnLive is the future of computing and
entertainment, and a passion to see OnLive’s breakthrough technology continue to grow and evolve. The new company structure enables OnLive to do so.

OnLive, Inc.’s board of directors, faced with difficult financial decisions for OnLive, Inc., determined that the best course of action
was a restructuring under an “Assignment for the Benefit of Creditors.” The assignee of the company’s assets then sold all of OnLive, Inc.’s assets (including its technology, intellectual
property, etc.) to the new company.

Unfortunately, neither OnLive, Inc. shares nor OnLive staff could transfer under this type of transaction, but almost half of OnLive’s staff were given employment offers by the new company at their current salaries immediately upon the transfer, and the non-hired staff will be given offers to do consulting in return for options in the new company. Upon closing additional funding, the company plans to hire more staff, both former OnLive employees as well as new employees.

The OnLive Service has been in operation 24/7 without interruption since its launch over two years ago, and is expected to continue to
operate smoothly under the new company. All games, products and services remain available, and the company has new product and partnership announcements on the way.

OnLive’s breakthrough instant-action cloud computing technology has been in development for over a decade and, despite immense skepticism, OnLive successfully deployed this highly disruptive technology as a polished consumer offering with commercial-grade reliability across a vast range of devices, including TVs, tablets, phones, PCs and Macs,
connected over almost any Internet connection, including wireless and cellular. Only a few major corporations have ever developed and deployed products and services across such a broad spectrum. OnLive is rare among startups in both the depth and scope of its offerings.

The asset acquisition, although a heartbreaking transition for everyone involved with OnLive, allows the company’s core innovation and ongoing offerings — the product of over a decade of hard work transforming the OnLive vision into reality — to survive and continue to
evolve.

Given the widespread speculation about OnLive and the new company, a FAQ is below that addresses a number of questions both for the public and former employees.

FAQs

Q. Will users see any change in the OnLive Game or Desktop Services? What about their purchases?

A. Users should see no change in the OnLive Game or Desktop Services. All of their purchases remain intact and available. OnLive has been up 24/7 since launch over two years ago and expects to remain so. OnLive has over 2.5 million subscribers, with an active base of over 1.5 million subscribers, connecting from a vast range of devices and networks, with many sessions running for hours. The user base is
growing rapidly with OnLive’s addition into recently announced devices and TVs from major manufacturers. We expect this growth to continue under the new company.

Q. Is there any cash or stock in the new company provided for any OnLive, Inc. shares?

A. Unfortunately not. The nature of the transaction is such that only assets, not shares, were purchased. This is true for all shares of
OnLive, Inc., whether held by investors, employees or executives.

Q. Did Steve Perlman receive stock or compensation in this transaction?

A. Like all shareholders, neither Steve nor any of his companies received any stock in the new company or compensation in this transaction at all. Steve is receiving no compensation whatsoever and most execs are receiving reduced compensation to allow the company to
hire as many employees as possible within the current budget.

Q. Did all OnLive, Inc. assets transfer into the new company? Are any assets held by any other party?

A. All of OnLive, Inc.’s assets (e.g. technology, patents, trademarks, etc.) were transferred to an assignee, which then sold the assets to
the new company. There was no transfer to any other party.

Q. Have OnLive, Inc. employees been offered positions in the new company?

A. Almost half of OnLive’s staff were offered employment at their current salaries in the new company immediately upon the transfer, and
the non-hired staff will be given offers to do consulting in return for options in the new company. Upon closing additional funding, the
company plans to hire more staff, both former OnLive employees as well as new employees.

At our D: All Things Digital conferences, we’ve taken an interest in the cloud, including showing off two of the leading game streaming services — Otoy and OnLive.

(That’s OnLive founder and CEO Steve Perlman in the photo, demoing the service at D: Dive Into Mobile in 2010.)

Earlier today, in an epic fail of communication by Perlman, the Palo Alto, Calif.-based OnLive drastically reformed itself — mysteriously laying off its staff and then saying a new company had bought the pioneering start-up’s assets and could be hiring an unknown number of employees who had just been dinged.

Said OnLive, in perhaps one of the most ridonkulous statements I have ever seen:

“We can now confirm that the assets of OnLive, Inc. have been acquired into a newly formed company and is backed by substantial funding, and which will continue to operate the OnLive Game and Desktop services, as well as support all of OnLive’s apps and devices, as well as game, productivity and enterprise partnerships. The new company is hiring a large percentage of OnLive, Inc.’s staff across all departments and plans to continue to hire substantially more people, including additional OnLive employees. All previously announced products and services, including those in the works, will continue and there is no expected interruption of any OnLive services. We apologize that we were unable to comment on this transaction until it completed and were limited to reporting on news related to OnLive’s businesses. Now that the transaction is complete, we are able to make this statement.”

Forgive us if we can’t begin to understand the pointless machinations that went on.

On the other side of the coin is Otoy, an innovative Los Angeles-based software provider, which demoed its cloud-based 3-D rendering service called Octane Reader at D10 this summer, along with its game-streaming offering.

Otoy was founded in 2008 by Jules Urbach, Alissa Grainger and Malcolm Taylor — and they seem to be doing just fine as an independent start-up in the space.

Here’s the Otoy demo, as well as the two times OnLive came to D:

Otoy at D10 in 2012:

OnLive at D8 in summer of 2010:

OnLive at D: Dive Into Mobile in late 2010

]]> http://allthingsd.com/20120818/gaming-the-clouds-heres-the-d-demos-of-otoy-still-standing-and-onlive-who-knows/feed/ 0 http://allthingsd.com/20120813/not-all-yahoos-headed-out-door-mayer-makes-filo-a-direct-report-and-bell-permanent-gc/ http://allthingsd.com/20120813/not-all-yahoos-headed-out-door-mayer-makes-filo-a-direct-report-and-bell-permanent-gc/#comments Mon, 13 Aug 2012 12:52:56 +0000 Kara Swisher http://allthingsd.com/?p=240520 While new Yahoo CEO Marissa Mayer has ushered some longtime employees out the door of late — most recently, HR head David Windley last week, with more to come — that does not mean she is not keeping some longtime Yahoos around.

At the the Silicon Valley Internet giant’s weekly Friday FYI staff meeting, Mayer told the crowd that Yahoo co-founder David Filo (pictured here) would be reporting directly to her — which I previously suggested would happen — and also that longtime legal exec Ron Bell would become permanent general counsel.

Filo has been an important part of Mayer’s arrival at Yahoo, and was a critical ally in her first days, emerging as a vocal supporter of her appointment from the start.

The typically retiring and taciturn product guru actually gave a quote in a press release, and did interviews when Mayer was hired.

Moving Filo close to her is an important morale booster, because while the founders of Yahoo have their definite ups and downs, as I have previously noted, the heart of the company is still with both Filo and also co-founder Jerry Yang.

Interestingly, he’s actually been reporting for years to a variety of product and tech execs, despite owning more than 6 percent of Yahoo.

The elevation of Bell (pictured here), who was No. 2 to former GC Mike Callahan, is an interesting move. Having been at Yahoo since 1999, after working at Apple, the veteran lawyer played an important role in waging the Facebook patent litigation.

He was named interim GC after Callahan left in late June, by then-interim CEO Ross Levinsohn.

Levinsohn left at the end of July.

We’ll see who else will leave Yahoo this week and next — the fates of a wide range of top execs are in the mix, from CFO Tim Morse to media head Mickie Rosen to sales chief Michael Barrett.

Mayer has been trying to recruit her former Google staffer Katie Jacobs Stanton from Twitter for a big media job. And she has reportedly been making strong efforts to get Barrett — another former advertising exec at the search giant — to stay.

We’ll see about it all soon enough, and also what will happen to Yahoo shares this week.

The stock got pummeled last week, down more than 5 percent on Friday to close at $15.15, after the company revealed in a regulatory filing that there might be a change of plans for the more than $4 billion from the sale of its Alibaba Group stake.

Both Yahoo and one of its biggest shareholders and a director, Dan Loeb of Third Point, had previously said the money would likely be used for a stock buyback, or even a dividend.

Even though Loeb let it leak that he was A-okay with it all, to assuage other angry investors, Mayer will now need to come up with a solid plan for the dough, which could include some acquisitions.

And it might help if she could also perhaps finally land the long-troubled deal to get many more billions from its stake in Yahoo Japan.

While those negotiations have had their ups and downs, it was close to being struck in the summer. But sources said there are still apparently valuation differences.

(I would add comment or no comment from Yahoo, as I do with every other company I cover. But after numerous emails, I am still waiting to hear back from the company’s PR spokeswoman, whom I am sure has just been super busy.)

]]> http://allthingsd.com/20120813/not-all-yahoos-headed-out-door-mayer-makes-filo-a-direct-report-and-bell-permanent-gc/feed/ 0 http://allthingsd.com/20120807/mayer-will-extend-free-food-to-nyc-too-while-what-is-yahoo-question-is-hereby-banishd/ http://allthingsd.com/20120807/mayer-will-extend-free-food-to-nyc-too-while-what-is-yahoo-question-is-hereby-banishd/#comments Tue, 07 Aug 2012 22:22:54 +0000 Kara Swisher http://allthingsd.com/?p=238754

New Yahoo CEO Marissa Mayer descended on two of its New York offices today, declaring that she would summarily be granting free food to all there as she had recently done to much acclaim at its Silicon Valley HQ.

After firmly establishing herself as the munificent provider of free Odwalla juices for all, the former Google exec plunged into much more serious topics with the group of Manhattan-based employees. The New York staff is mostly focused on advertising — Yahoo’s most important business.

A number of Yahoo senior execs, as well as its several hundred others, were there to hear Mayer for the first time since she got the job about a month ago in a surprise and very high-profile hire, beating out media-focused candidate Ross Levinsohn.

In any case, Mayer seemed to be talking the language of the crowd, noting that Yahoo was an advertising company first and foremost.

A key area of focus is obviously display, she noted, as well as improving its ad network efforts. Mayer also told those gathered that the mobile strategy for Yahoo has moved around way too much, which is a nice way of saying there has been pretty much no direction under past CEOs.

Indeed, mobile efforts have been a longtime weakness of Yahoo.

Mostly, though, it was the same kind of things the energetic former Google exec has been saying to the Yahoos at its Sunnyvale HQ: Faster decisions, more accountability for top execs, hipper culture, all-hands meetings, question-rich involvement for employees.

In other words, in a performance coming soon to a Broadway theater: Google Clone — The Yahoo Edition.

One notable new aside Mayer made, several sources noted, was that she was not going to be answering the perennial query that has tripped up its leaders for years now: What is Yahoo?

She apparently does not like this line of inquiry one little bit and told the crowd it was not the right way to look at the long-troubled company or how to define it.

Now I am intrigued, since she is essentially correct in the concept that Yahoo is about what it does well more than anything else.

Not being able to execute has been a long-time issue for Yahoo, which has stumbled from one thing to the next in a much less disciplined manner than all of its competitors.

That said, every one of them still clearly communicates a basic core promise via strong execution, even as each has added on new businesses, for example:

Google = fab search, Amazon = top-notch retail, Apple = elegant devices, Microsoft = dominant Windows, Facebook = best social networking.

Yahoo — which ousted CEO Scott Thompson dubbed a technology-enabled media company (and he was right on that score) — has, of course, been about too many things, from a directory to an advertising service to a content provider and distributor.

Mucking up the works, though, have been a thousand other lesser efforts not done well and most of which have petered out.

In any case, the simple question of what Yahoo is has been banish’d for now, and Mayer will presumably not be answering that nettlesome query, even if it bubbles up on her nifty new interactive employee Q&A system.

But, if you really want to know, I can tell you exactly what it is at this moment in time and going forward: Yahoo is whatever Marissa Mayer says it will be.

More to come on exactly what that means.

Until then, here is my favorite quote from Shakespeare’s “Romeo and Juliet” about being banish’d:

Hence-banished is banish’d from the world, And world’s exile is death: then banished, Is death mis-term’d: calling death banishment, Thou cutt’st my head off with a golden axe, And smilest upon the stroke that murders me.

]]> http://allthingsd.com/20120807/mayer-will-extend-free-food-to-nyc-too-while-what-is-yahoo-question-is-hereby-banishd/feed/ 0 http://allthingsd.com/20120806/yahoo-gets-googley-qa-tool-at-friday-fyi-and-uses-it-to-ask-about-exec-accountability-and-leaks/ http://allthingsd.com/20120806/yahoo-gets-googley-qa-tool-at-friday-fyi-and-uses-it-to-ask-about-exec-accountability-and-leaks/#comments Mon, 06 Aug 2012 12:55:34 +0000 Kara Swisher http://allthingsd.com/?p=238089

Well, it wasn’t as tasty as free food this week at Yahoo, but in her second official all-hands meeting with employees — now reportedly called “Friday FYI” — new CEO Marissa Mayer rolled out another new Google-inspired Q&A tool to get the company talking about what matters.

The system allows anyone at the Silicon Valley Internet giant to post questions, ideas or suggestions on a variety of topics, which can then be voted up and down.

Actually, it’s been in use internally at — you guessed it — Google for some time, and is even available to the general public in a product called Google Moderator. Mayer has been importing a lot of corporate practices from the search giant where she worked for her entire career — from free food to better swag to these weekly confabs to, now, its method of hearing from the staff.

While Yahoo previously used its Messenger product to garner questions for its less-regular all-hands meetings, this is apparently a new interactive tool built by the company’s engineers (and not using Google’s free APIs, as far as I can tell).

It seems to be working fine, and there were a number of questions that bubbled up.

That included one about Mayer’s thoughts on her current executive team — which is still largely inherited from a series of previous administrations, despite some departures recently — and also how her regime will hold them accountable.

Algorithmic accountability among Yahoo execs? Things have changed!

Even better, declared the questioner of that particular query, to whoops from the audience: “I want an honest answer!”

But Mayer was diplomatic, only saying she was “pleasantly surprised” by the top execs. She also noted that the management would have quarterly goals that are transparent to the whole company. (I won’t say they do that at Google, but — ahem — they do that at Google.)

Mayer went through a number of questions in a precise and cut-the-mustard manner that employees seem to be enjoying, overall.

One very voted-up question was about leaks to the media, in particular to this Web site, and whether a board mole hunt has been successful (obviously not). Also, of course, what she was going to do about the situation.

Apparently, Mayer said she won’t be tracking down leakers, and that this new openness will solve the problem.

Good idea, but all that lovely transparency also needs some pretty good products if it’s going to work.

And product focus most definitely appears to be the path now. Mayer also showed off the new Yahoo Mail — which has been under revamp for a while, and was started under former Chief Product Officer Blake Irving — with some good response from Yahoos (last week, it was a look-see at its recent iteration of its IntoNow video offering).

There are other interface changes that have been in the works too, likely under the direction of Tim Parsey, Yahoo’s head designer, who also came on under Irving.

In fact, a lot of what Irving had pushed, including keeping advertising technology in-house and also maintaining control of key monetization engines, is the likeliest path going forward. The ad tech outsourcing deals, pushed by the interim CEO and his strategy head Jim Heckman, are apparently gone (and so are Levinsohn and now Heckman).

Also of interest to many at the company is the increased involvement of co-founder David Filo, who has become much less quiet under Mayer. I’d expect him to report directly to her — he’s actually been reporting for years to a variety of product and tech execs, despite owning more than six percent of Yahoo.

Thus, here’s my question for the new Q&A system for next week: So, when’s Jerry Yang showing back up?

]]> http://allthingsd.com/20120806/yahoo-gets-googley-qa-tool-at-friday-fyi-and-uses-it-to-ask-about-exec-accountability-and-leaks/feed/ 0 http://allthingsd.com/20120511/heidrick-struggles-slaps-back-at-thompsons-yahoo-in-blame-game/ http://allthingsd.com/20120511/heidrick-struggles-slaps-back-at-thompsons-yahoo-in-blame-game/#comments Sat, 12 May 2012 01:39:30 +0000 Kara Swisher http://allthingsd.com/?p=207190

And it just gets worse in the controversy over Yahoo CEO Scott Thompson and the circumstances around how a fake computer science degree could get onto his bio.

Heidrick & Struggles is smacking back at him for insinuating that the well-known headhunting firm had messed up his resume.

In meetings with employees to attempt to explain the situation yesterday, multiple sources said that Thompson claimed that a mistake made by a headhunting firm in mid-2000, when he was moving to a job at eBay, was the way the inaccuracy got into his bio.

Thompson did not name the firm, but he was clearly referring to Heidrick & Struggles, which handled that placement. It was also working on the Yahoo CEO search, after the Silicon Valley Internet giant fired its former CEO Carol Bartz last fall.

But, because it had originally placed Thompson at eBay, the firm did not work on his hiring at Yahoo.

So, Heidrick was not going to take Thompson’s blame for the botched bio.

“While we were not involved in this placement, there have been both direct and indirect mentions of this relationship in several news articles. Furthermore, if recent media reports are accurate, the CEO of Yahoo! has made potentially damaging allegations about our firm that are simply not true and cannot be allowed to stand in the public record,” wrote CEO Kevin Kelly to staff. “The media articles in question have indicated that the Yahoo! CEO told members of his senior staff that, many years ago, a junior member of our firm invented an academic credential for him in the course of preparing standard profile materials. Based on information in our possession, this allegation is verifiably not true and we have notified Yahoo! to that effect.”

This letter is just another brick in what is looking like an insurmountable wall for Thompson to keep his job at Yahoo. Sources said that the board of Yahoo had been sent a letter from Heidrick on the matter earlier today.

And, let me just say, this latest eruption is simply not good for Thompson’s chances to remain CEO for much longer.

Yahoo declined to comment, but here is the full letter from Kelly to its staff:

Colleagues,

Heidrick & Struggles’ clients across the globe place their trust in our professionalism and discretion, as we assist them in their most significant leadership decisions. We regard that trust as one of our most valuable corporate assets. As such, we do not often comment on internal matters involving our clients. However, recent press accounts have reported statements that contain misstatements of fact and criticisms of our professional services that require a response from us.

As many of you have seen, there has been recent focus on the CEO appointment at one of our long-term clients, Yahoo!. While we were not involved in this placement, there have been both direct and indirect mentions of this relationship in several news articles. Furthermore, if recent media reports are accurate, the CEO of Yahoo! has made potentially damaging allegations about our firm that are simply not true and cannot be allowed to stand in the public record. The media articles in question have indicated that the Yahoo! CEO told members of his senior staff that, many years ago, a junior member of our firm invented an academic credential for him in the course of preparing standard profile materials. Based on information in our possession, this allegation is verifiably not true and we have notified Yahoo! to that effect.

This is why I am writing to you today. All of us at Heidrick & Struggles take our responsibility to our clients very seriously, and it is important for us to set the record straight when our good work and reputation are called into question.

The issue surrounding Yahoo! underscores the importance and impact of the work we do for all of our clients — helping them build the best leadership teams possible. Our clients place their trust in us each day, and we have developed strong policies and procedures over our nearly 60-year history to serve them.

On behalf of the management team and Board of Directors, thank you for your continued support and dedication to Heidrick & Struggles.

Best,
Kevin
L. Kevin Kelly
Chief Executive Officer
Heidrick & Struggles

RELATED POSTS:

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

]]> http://allthingsd.com/20120511/heidrick-struggles-slaps-back-at-thompsons-yahoo-in-blame-game/feed/ 0 http://allthingsd.com/20120506/as-yahoo-ceo-reaches-out-to-top-staff-board-meets-to-weigh-options-i-e-figuring-out-who-gets-to-take-the-borked-bio-blame/ http://allthingsd.com/20120506/as-yahoo-ceo-reaches-out-to-top-staff-board-meets-to-weigh-options-i-e-figuring-out-who-gets-to-take-the-borked-bio-blame/#comments Mon, 07 May 2012 03:27:43 +0000 Kara Swisher http://allthingsd.com/?p=204185

Even as Yahoo’s board was kibitzing all weekend about how to handle the continuing resume-padding controversy around its recently hired CEO Scott Thompson — including hiring its own outside crisis communications firm to represent it — he was working the phones to keep top staff apprised of the evolving situation.

While Thompson told those he spoke to that he was limited in what he could say and blamed a “personal vendetta” by an activist shareholder for his troubles, being proactive in this regard is probably a good idea.

That’s because multiple sources said he said exactly nothing in various strategy meetings with top employees last week about allegations leveled by Dan Loeb of Third Point, which proved correct, that Thompson had not gotten a computer science degree in college, as his longtime bio had claimed.

“It was the gorilla in the room and it was awkward in the extreme,” said one exec present at the meetings. “He never brought it up, which was even worse.”

At this point, it seems unlikely that Thompson can regain the confidence of many at Yahoo — even though a company spokeswoman said he received a lot of incoming support too, both externally and internally — until he can render some cogent explanation about how the borked bio got into both Yahoo’s public site and also its more critical regulatory filings.

Even more mysteriously, how the error was never present in filings with the Securities and Exchange Commission made by eBay, where Thompson led its PayPal payments unit, although his public eBay bio has also been wrong for close to a decade.

And, most of all, how was it that Thompson never caught the mistake himself — even when directly asked about it — despite the likelihood of reviewing it multiple times over those many years and ultimately certifying it for Yahoo’s own SEC filings.

Calling Encyclopedia Brown to solve the Case of the Computer Science Degree That Wasn’t!

Thompson has given no explanation about the debacle to the bulk of the Yahoo staff at all levels, save for an information-free and terse note to employees on Friday afternoon that essentially asked them to focus on their work instead of his bizarre crisis.

Unfortunately for him, many Yahoos are focusing a lot on Thompson, with message boards at the Silicon Valley Internet chastising their CEO and giving him support that is tepid at best. From interviews I have had with two dozen employees this weekend, to say morale is at an all-time low is perhaps understating the situation.

Here is a short selection of comments that were read to me, for example:

“Resume padding is one thing, but lying about something that is so easy to check is puzzling.”

“There is no reason to let it slide by … This isn’t some guy who’s trying to impress a date … It’s sad that we just accept this kind of stuff from corporate heads and politicians.”

“Having some document to prove you can do a job is not all that important, lying about it is.”

What appears to trouble employees the most in the threads I was read was the nonchalance of the initial Yahoo statement about the issue, which called the addition of a fake degree on Thompson’s bio an “inadvertent error.”

“From a pure employee perspective, it feels like it is a violation of their principles,” said one person, reflecting a dozen or more conversations I had this weekend up and down the organization. “And anyone else would probably be immediately fired for this, even with an explanation.”

Said another: “He clearly knew and lied for years; and his handling since exposed has been unacceptable.”

As I noted above, a company spokeswoman said there was also much support for Thompson (pictured here) within the company, but declined to provide any quotes or details.

Presumably, some answers will be coming from a board investigation aimed at getting to the bottom of the situation, including trying to grok who put the error in the bio in the first place.

My bet: They’ll try to pin it on a lower-level minion, although that will not fly with a lot of people.

Including me, because whoever typed in the faux degree, its presence there has been too long for Thompson not to be responsible for it.

Flunky error or not, there are important questions about whether Thompson himself provided a bio that contained the inaccuracy to the board when he put himself forth for the job via direct emails to Yahoo director and Intuit CEO Brad Smith.

That line of thought basically boils down to: Can Thompson not read?

More problematic is the fact that the placement did not come via Yahoo’s headhunter on the CEO search, Heidrick & Struggles, which apparently was not charged with doing a background check on Thompson.

Instead, the director in charge of the search, Patti Hart, sources said, hired another forensic firm, which appears to have missed Thompson’s erroneous academic record.

The only thing completely clear amidst all the confusion: Hart screwed up by botching an extremely simple part of a vetting she was charged with. That makes her vulnerable, of course, along with other Yahoo board members or staffers closely involved in the talent search.

While Hart (pictured here) is in a much dicier position, Thompson still appears to have initial board backing — at least for today — as it’d be a very tough call to fire yet another CEO so quickly in the middle of several key deals for Yahoo, as well as a proxy fight.

Said one person close to the situation, the board is still considering its “options,” in an effort that is being led by independent board member Fred Amoroso.

So, it will be instructive to see how the board will proceed tomorrow — especially since it is likely that Loeb will lob a lawsuit to try to get more information on the Thompson hiring process.

But it’s started by hiring its own outside communications firm, Sard Verbinnen, which has handled other crises for Yahoo in the past.

Sard’s Charles Sipkins — welcome back, Charlie! — had no comment about the board’s next move, except to reiterate its statement from last week that it is looking into the Thompson bio mess and will make appropriate disclosures at some point.

We can’t hardly wait.

RELATED POSTS:

• Yahoo’s Parting With Thompson Will Be for “Cause” (a.k.a. CSLie)
• Ross Levinsohn’s Yahoo Plan: Back to the Future
• Here’s New Yahoo CEO’s First Note to Troops! (The Leaking-Internal-Memos-to-ATD Policy Remains in Effect As Usual)
• Yahoo Officially Confirms ATD Report on CEO Changes and Proxy Settlement
• Meet the Man I Call “The Hair”: The Video Stylings of Yahoo’s Newest CEO Ross Levinsohn
• Will Thompson’s Ouster Mean a Yahoo-Facebook Patent Settlement Too?
• Exclusive: Yahoo’s Thompson Out; Levinsohn In; Board Settlement With Loeb Nears Completion
• Heidrick & Struggles Slaps Back at Thompson’s Yahoo in Blame Game Over ResuMess
• Is He In or Is He Out? Crunchtime for Scott Thompson at Yahoo.
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• Tech Nation’s Gunn Says She and Yahoo CEO Discussed Their CS Degrees Before 2009 Show (Video and Audio)
• Loeb Calls Again for Thompson Firing From Yahoo, as Former eBay Boss Supports Him
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• Buffett Comments on Trust Issue in Yahoo CEO BioGate: “You’ve Got a Problem”
• Loeb Lobs Lawsuit, as Expected, at Yahoo’s Borked Bio Mess
• As Yahoo CEO Reaches Out to Top Staff, Board Meets to Weigh “Options” (I.E., Deciding Who Gets to Take the Borked Bio Blame)
• Yahoo Should Expect Incoming Lawsuit Lobbed by Loeb Tomorrow on CEO Hiring
• They Shoot Yahoo CEOs, Don’t They? But Not Without a Really Smoking Gun and a Much Stronger Board.
• Yahoo’s Thompson Asks Employees to “Stay Focused” — Except Not on Him
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• Yahoo’s Board Will “Review” Resume Discrepancy of CEO
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• Yahoo’s Response on CEO’s Computer Science ResumeGate: “Inadvertent Error”
• Dan Loeb Alleges “Discrepancies” on Yahoo CEO Scott Thompson’s Resume Related to Computer Science Degree

]]> http://allthingsd.com/20120506/as-yahoo-ceo-reaches-out-to-top-staff-board-meets-to-weigh-options-i-e-figuring-out-who-gets-to-take-the-borked-bio-blame/feed/ 0 http://allthingsd.com/20120503/how-did-phantom-cs-degree-get-on-ceos-bio-in-sec-filings-yahoos-not-saying/ http://allthingsd.com/20120503/how-did-phantom-cs-degree-get-on-ceos-bio-in-sec-filings-yahoos-not-saying/#comments Thu, 03 May 2012 23:08:24 +0000 Kara Swisher http://allthingsd.com/?p=203523

Back in early 2008 when Scott Thompson got the job as president of eBay’s PayPal, the regulatory filing accurately listed his educational pedigree:

“Mr. Thompson holds a B.S. degree in Accounting from Stonehill College.”

The eBay filings over the next several years — until he left the online commerce giant for a much bigger job as CEO of Yahoo in January of this year — remained consistent.

But, curiously, Thompson’s bio on eBay’s Web site added an additional degree to his curriculum vitae for more than a half-dozen years, different from its Securities and Exchange Commission documents:

“Scott received a bachelor’s in accounting and computer science from Stonehill College.”

As it turned out, according to the Boston-area school, he had not gotten a computer science degree at all and graduated with the Bachelor’s of Science in Business Administration (Accounting).

An eBay spokesman I called today had no explanation for the discrepancy, except to note that its legal filings were correct and that it was an error due to the lack of cross-checking the Web bio, which was apparently posted by Thompson’s staff at the time.

Also without explanation — and perhaps more seriously — is that the false computer science degree claim somehow then made it into Yahoo’s SEC filings, as well as his Web site bio, when Thompson took the helm. (The inaccurate line about his schooling is in its latest filing and all others.)

Without providing further explanation of how it got there, Yahoo today called the mistake an “inadvertent error” and said it had no bearing on his ability to lead the Silicon Valley Internet giant.

But the long troubled company might be speaking too soon, given that the revelation was uncovered this morning by activist shareholder Dan Loeb of Third Point. Loeb has called into question the vetting process that Yahoo’s directors did to hire Thompson, as part of a proxy fight he is waging to gain several board seats.

And, while such an allegation is normal for an increasingly nasty battle, Loeb has hit his mark with deadly accuracy this time, putting into question both Thompson’s credibility and Yahoo’s obvious botching in its vetting of him.

“If there is a good explanation for the apparent discrepancies regarding the academic records of Mr. Thompson and Ms. Hart, we are confident that it will be provided promptly,” wrote Loeb in a letter to Yahoo’s board today. “However, in the event that there is no good explanation, we expect the Board to take immediate action.”

The Ms. Hart that Loeb was referring to is Patti Hart, the board member who ran Yahoo’s process for hiring a new CEO after it fired Carol Bartz — who does have a CS degree — last year. (In his letter today, Loeb also correctly called into question how she portrayed her own college degree in a more impressive fashion than was accurate.)

The search for a new Yahoo CEO was conducted by headhunter Heidrick & Struggles, which did not have Thompson on its list of candidates, since it had placed him at eBay many years before.

In fact, according to numerous sources, without involvement by Heidrick, it was Thompson who cold-emailed key Yahoo board members, nominating himself for the CEO job. He was quickly brought in for interviews and, presumably, a thorough vetting.

Despite that and despite the fact that eBay’s SEC filings did not list a computer science degree, Hart or others seem to have totally missed the discrepancies and it was added to Thompson’s official Yahoo bio and legal filings.

It’s not clear what happens next or if there are any legal implications, beyond a needed correction by Yahoo with the SEC — which already took the entire line about Thompson’s education off his Web bio today.

Yahoo’s not talking either, with its spokesperson declining to provide any explanation for its lapse or who had maintained that Thompson had that degree when he did not.

It’s essentially a mistakes-were-made-let’s-move-on defense.

I think not, for my part, and a number of prominent Silicon Valley people I spoke to today agreed that these issues tend to spin out of control.

“This is going to get very messy, very quickly,” said one person in a common sentiment I heard.

Maybe, and it’s not clear if the company has to release any details of how this occurred or if its board needs to investigate the situation.

In addition, Thompson himself is probably not at risk unless it can be definitely proved he was the one who misrepresented having the degree in the first place. He can simply say he had no idea who added it to the eBay Web site and that he did not notice it there on on the Yahoo Web site and SEC filings.

While that makes him look careless, how big a deal it becomes with shareholders, as well as Yahoo employees, is also an unknown. While a computer science degree is not a requirement for a CEO of a tech company — both Facebook’s Mark Zuckerberg and Microsoft’s Bill Gates dropped out of college and did pretty well in computer science anyway — tech resume padding, even inadvertent, is not a characteristic that is going endear Thompson to anyone.

Plus, it just handed Loeb a very potent weapon in his fight against Yahoo, the very day after the company said the hedge fund manager’s expertise was not “relevant” to gaining a board seat.

One thing’s for sure: Loeb is most certainly very good at vetting.

RELATED POSTS:

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

]]> http://allthingsd.com/20120503/how-did-phantom-cs-degree-get-on-ceos-bio-in-sec-filings-yahoos-not-saying/feed/ 0 http://allthingsd.com/20120426/high-five-to-allthingsd-com-happy-birthday-to-us/ http://allthingsd.com/20120426/high-five-to-allthingsd-com-happy-birthday-to-us/#comments Fri, 27 Apr 2012 06:39:31 +0000 Kara Swisher http://allthingsd.com/?p=200590

Five years ago, AllThingsD.com was launched with just a few staffers, a few stories and a whole lot of hope. Also, as it turned out, with a panoply of LOLcat photos.

The site had soft-launched a little earlier, but — officially — we opened our doors in the late evening of April 26, 2007. Walt Mossberg wrote about a Kodak printer; John Paczkowski wrote about, wait for it, Apple; and I opined on how then-Yahoo-CEO Terry Semel might save the troubled company.

The more things change …

Actually, despite the fact that we have grown hugely in both traffic and staff, and have logged almost 26,000 posts, little has changed in how ATD looks at its role in covering tech, using stringent standards of fairness, accuracy, ethics and reporting.

As I wrote back then: “That is what we will be trying to do most of the time here, attempting to figure out what is happening in the digital space and explaining it in a way that is clear and cogent.”

And, of course, have some fun doing it.

Thus, mission accomplished, and mission never accomplished, too.

Walt and I want to thank everyone, from our outstanding staff to our Dow Jones colleagues to the many companies we cover to — most of all — our readers.

There is a lot more to come going forward, and we hope to never disappoint and always delight.

And, as I also wrote back then at the dawn of AllThingsD:

“But enough looking back: On to the next thing.”

And to my amazing partner, Walt, you knew I could not resist:

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