Facebook’s passive-aggressive friendship
We are witnessing a fascinating changing-of-the-guard moment in tech. The old Internet, represented this week by once-mighty Yahoo, is fumbling with another leadership crisis it must solve before it can even think about restoring some semblance of relevance. The new Internet, Facebook, is ruled by a young man in a hoodie who is on the verge of creating a massive public company that, as was the nascent Yahoo back in the early ’90s, will be an Internet darling longer on potential than track record, but running hard on an open field.
The common thread might seem to be the “If it’s big, it’s gotta be BIG” illusion that got us all in trouble at the turn of the millennium, when Internet investment hysteria equated today’s eyeballs with tomorrow’s profits. But it’s always about the profits, and the people who promise them. This time that person is Mark Zuckerberg, who as the books on the Facebook IPO closed Tuesday, well in advance of Friday’s first trade, seems to have convinced Wall Street that his seven-year-old company could be worth more than $100 billion — the richest-ever launch in Silicon Valley.
When you value your company at 100 times revenues, investors are banking on the belief that Zuckerberg has perfected the unstable compound that is social abandon and advertiser hunger.
Search remains pretty much the top use of the Web (as opposed to the Internet) – the gateway to everything else. The other big use is now social, which was invented on the Web but whose chops will be tested in the app schoolyard that is the mobile Internet.
But thus far, advertising works better on search than social. Google makes about $40 billion a year, almost 100 percent on ads. Facebook is reporting last year’s revenues at just north of $1 billion $3.7 billion. Google has a market cap of roughly $200 billion – so it’s twice as big as Facebook’s IPO valution and makes 40 times the money more than 10 times the money.
While Facebook is very successful, the question is: at what? It’s great at creating a community of time-wasting freeloaders, but it needs to be good as an advertising medium to be worth anything to the institutions falling all over themselves to get in on the ground floor of its stock.
To compare the new and the old way of tech, let’s just say, for the sake of argument, that there are two kinds of Internet companies – Googles and Facebooks.
Yahoo CEO Scott Thompson’s forgivable sin
We’ve all had a little time to breathe after the disclosure last week that Yahoo CEO Scott Thompson embellished his resume. Despite saying he received an undergraduate computer science degree, he in fact did not. And while rising through several positions of increasing responsibility for years, he allowed those vetting his suitability to believe otherwise.
So far Yahoo has said Thompson was guilty of an “inadvertent error” and that it was reviewing the matter. Third Point, the activist shareholder who revealed what had apparently been hiding in plain sight and is trying to grab spots on Yahoo’s board, is now demanding that Yahoo fire Thompson.
Is this what’s best for Yahoo? I doubt it. Is Scott Thompson what’s best for Yahoo? I don’t know. It’s too early to say. And that’s the point.
The company is on its third CEO in as many years, and he’s been on the job one day short of four months. You don’t get from here to there overnight, no matter who’s in charge, and you don’t get from here to there at all if you are constantly taking detours.
Yahoo can afford to have a guy at the helm who didn’t get a CS degree but said he did, but it can’t afford to aimlessly cast about, as it has now for nearly a decade. Unlike some CEOs, Thompson isn’t accused of sexual harassment or running a secret hedge fund within the company. There is something to be said for a bit of calm and a period of continuity.
Thompson was hired for whatever talents and abilities he’s displayed since college, not for ostensibly logging computer lab time in his teens. Sure, lying on your resume is not a good thing, and it shouldn’t be rewarded. But in the grand scheme of things it doesn’t rate.
Psssttt, Hey you, at Yahoo – You wanna make 25 grand?
Here’s one good thing about being a Yahoo employee: if you quit and join Yammer, a social networking service for businesses, in the next 60 days you’ll pocket a $25,000 signing bonus.
That’s the offer that was tweeted on Thursday by Yammer CEO David Sacks.
“They’ve got a lot of great engineers there,” Sacks said in an interview with Reuters. “The talent has been misused by senior management which has made a lot of bad decisions.”
Of course, when Sacks (whose credits include producing and financing the 2005 film Thank You For Smoking) isn’t whispering sweet come-ons to Yahoo employees, he’s holding a gun to their heads. Infuriated by Yahoo’s controversial decision to sue Facebook for patent infringement, he vowed a day earlier that he would never hire another Yahoo employee that doesn’t leave the company in the next 60 days.
Sacks later revised his ultimatum, so that the blacklist applies only to Yahoo senior managers and not rank-and-file employees. But he noted on Thursday that people who continue to work at Yahoo do so at their own peril.
“There will be a growing stigma attached to working at Yahoo as long as it continues to pursue this type of patent troll strategy,” Sacks said.
Regardless of how Yahoo workers feel about their employer’s litigation strategy, it’s not hard to imagine that many in Sunnyvale are brushing up their resumes. The struggling Internet company is said to be preparing for a massive reorganization that could slash thousands of jobs.
Boohoo for Yahoo
Yahoo is taking on Facebook — but it’s not vying for the hearts and minds of the Internet cool kids. It’s for licensing fees over some patents. This is not how it was supposed to be.
No, I’m not naive. But I am a bit of a romantic. Thing is, I remember when Yahoo was an upstart with two crazy awkward college kids who came up with something that the search giants of the time — Lycos and Alta Vista — could not withstand. Yahoo’s scrappiness was part of a long tradition of Silicon Valley startups that came before (and would come after). Like Bill Hewlett and Dave Packard, the elder statesmen of Silicon Valley who began their iconic company in a now iconic garage, Jerry Yang and David Filo started with nothing but an idea in a dorm room and changed everything. Yahoo’s blazing success in search and (the now-quaint notion of) cataloging the Web begs comparison to two other crazy awkward college kids who started a search engine. That search engine, of course, killed Yahoo. It had an equally kooky name — Google.
Now Yahoo, as part of its effort remake itself after a decade of decline, is said to be wielding a new weapon: a patent trove. The stellar DealBook blog of the New York Times, which first reported this story, couldn’t get anyone to disclose the particulars, but it quotes “people briefed on the matter” as saying Yahoo is threatening lawsuits and is in the midst of negotiations with a pretty big fish. “Yahoo is seeking to force Facebook into licensing 10 to 20 patents over technologies that include advertising, the personalization of Web sites, social networking and messaging,” DealBook reports.
Oh, how the mighty have… matured, to be charitable. Yahoo was crazy disruptive before “disruptive” was even digerati shorthand for “cool.” It was so popular that Reuters — yes, this Reuters — took a sizable stake in the young company. The American executive who made this happen, Andy Nibley, delighted in telling the story of how the very British Reuters board received the news he was investing millions in a company named “Yahoo!”
For years the two companies closely partnered to create wicked revolutionary news services. I know this because I was the lead guy on the Reuters editorial side in those heady days, collaborating with some daring executives and talented engineers at Yahoo’s Mountain View mecca.
Hey, we all grow up. We get married, get car loans, take on a mortgage. We become, as my closest comrade from those days (still a dear friend) never tires of reminding me, “not the demographic they care about.”
Love your title here, Reuters! I just set up a ranting account and website with the name of http://www.boohoosoo.com.
I chose yahoo for this, and am migrating my gamil slowly to yahoo as an alternative.
May Yahoo make wiser decisions about privacy concerns than Google, and remember that people are behind those screen names! Respect! (something learned with maturity.)
http://about.me/boohoosoo.com
Trolling for a tech showdown
The scene: A federal courtroom in Tyler, Texas.
The drama: A lawsuit by a patent troll who said he owned the rights to the “interactive web.” The troll says he’s owed some back rent for owning the Web we all use every day.
Dramatis persona: Tim Berners-Lee. Perhaps you’ve heard of him. He invented the World Wide Web.
Oh, to have been in Tyler. It was the stage for a showdown in one of the most bizarre patent troll cases ever, pitting (metaphorically if not in fact) expert witness Berners-Lee against some punk who wanted to make his name by taking out a very, very big gun in a shootout. The plaintiff, Eolas, claimed it owned patents that entitled it to royalties from anyone whose website used “interactive” features, like pictures that the visitor can manipulate, or streaming video. The claim, by Eolas’s owner, Chicago biologist Michael Doyle, was that his was the first computer program enabling an “interactive web.”
If Texas was still the Wild West this might have been settled at High Noon at some dusty, just O.K. Corral, with single-action Colt .45 revolvers. There was no gunplay, but for geekdom the calm morning testimony in an air-conditioned courtroom was just as exciting.
On Wednesday, Jennifer Doan, a Texarkana lawyer representing defendants Yahoo and Amazon, examined Berners-Lee for the plaintiffs, which include Google, Amazon and Yahoo. An excerpt from Wired‘s report:
When Berners-Lee invented the web, did he apply for a patent on it, Doan asked.
“No,” said Berners-Lee.
“Why not?” asked Doan.
“The internet was already around. I was taking hypertext, and it was around a long time too. I was taking stuff we knew how to do…. All I was doing was putting together bits that had been around for years in a particular combination to meet the needs that I have.”
Doan: “And who owns the web?”
Berners-Lee: “We do.”
Doan: “The web we all own, is it ‘interactive’?”
“It is pretty interactive, yeah,” said Berners-Lee, smiling.
@danbri Quite right! That last reference was a bad boo boo.
Tech wrap: Apple earnings lay waste to expectations
Apple’s fiscal first-quarter results blew past Wall Street expectations, fueled by robust holiday sales of its iPhones and iPads. Apple sold 37.04 million iPhones and 15.43 million iPad tablets, outpacing already heightened expectations for a strong holiday season. Sales of iPhones and iPads more than doubled from a year ago. Revenue leapt 73 percent to $46.33 billion, handily beating the average Wall Street analyst estimate of $38.91 billion, according to Thomson Reuters I/B/E/S. Apple reported a net profit of $13.06 billion, or $13.87 a share. Analysts had expected Apple to earn $10.16 per share.
“This is all about innovation, you have to out-innovate and delight the customer. Apple is the only company that knows how to do that. The guidance is phenomenal,” said Trip Chowdry at Global Equities Research.
Yahoo’s net revenue and profit fell slightly in the fourth quarter, the struggling Internet company’s last quarter before new Chief Executive Scott Thompson took the reins. Yahoo said it earned $296 million in net income in the three months ended Dec. 31, or 24 cents a share, compared with $312 million, or 24 cents a share, in the year-ago period. Yahoo, which fired former CEO Carol Bartz in September and appointed Thompson in January, projected that its net revenue in the first quarter would range between $1.025 billion and $1.105 billion.
A Dutch appeals court dismissed Apple’s appeal to have Samsung tablets banned in the Netherlands, confirming a Dutch lower court’s ruling. Apple and Samsung have been suing one another as the two technology giants jostle for the top spot in the booming smartphone and tablet markets.
Verizon may miss analyst expectations for 2012 earnings after posting disappointing fourth quarter results as it was hurt by hefty subsidies for the Apple’s iPhone. The company reported a fourth-quarter net loss of $2.02 billion, or 71 cents per share, compared with a profit of $2.64 billion, or 93 cents a share, a year earlier.
About one in five workers around the globe, particularly employees in the Middle East, Latin America and Asia, telecommute frequently and nearly 10 percent work from home every day, according to a new Ipsos/Reuters poll. Telecommuting is particularly popular in India where more than half of workers were most likely to be toiling from home, followed by 34 percent in Indonesia, 30 percent in Mexico and slightly less in Argentina, South Africa and Turkey. But the job option is the least popular in Hungary, Germany, Sweden, France, Italy and Canada, where less than 10 percent of people work from home. Despite the obvious benefits of telecommuting, 62 percent of people said they found it socially isolating and half thought that the daily lack of face-to-face contact could harm their chances of a promotion.
Google customizes search results with a smattering of your own content
Google rolled out a big change to its search engine on Tuesday that will allow people to find private items, such as online family photos, in their search results.
The new search feature, dubbed “Google Search, plus Your World,” essentially creates customized search results for different users, displaying publicly available Web content alongside any relevant personal online content.
Right now that means search results can feature private photos stored within Google’s Picasa service, as well as photos and posts from Google+, the company’s social network.
If you’re logged in to Google, and you search for Hawaii, you might see photos that your friends or family have shared with you about Hawaii, or musings related to Hawaii from friends on Google+, alongside the standard Web fare about the Pacific islands.
The new search feature also means that a search on an individuals’ name will suggest the one that’s most relevant to you, such as a Ben Smith that you’re personally connected with on Google+ instead of a generic list of results for all Ben Smiths.
“We want one window to answer each and every question that you have” said Google Fellow Amit Singhal in an interview.
Is Scott Thompson the ‘back to basics’ guy Yahoo’s needed all along?
Yahoo has once again gone outside the company to breathe new life into the once-mighty Internet titan: Scott Thompson, most recently the president of eBay’s PayPal division, takes the helm on Monday, January 9th.
The four-month search ends the latest period of uncertainty for Yahoo, which has been struggling to regain its rightful place in the hearts and minds of the digerati — to say nothing of an indifferent Wall Street.
Investors have been sour on Yahoo for a while. The news of Thompson’s hiring was met with boos on NASDAQ, where Yahoo closed Wednesday at $15.78, down 51 cents. With a “fool me twice” attitude, potential will be no substitute for results. And given the spectacular flame out of former CEO Carol Bartz, investor patience must be wearing thin (if, that is, it still exists at all).
Thompson seems to be arriving with a clean slate and marching orders that give him a fairly free hand — “he will work closely with the Board as we continue the strategic review process to identify the best approaches for the Company and its shareholders.” Indeed, Thompson hadn’t even met with the top Yahoo executives, which I would take as a sign that his allegiance is entirely to the board.
That’s a good thing, because Thompson has his work cut out for him. Consider this reaction from Lawrence Haverty, a fund manager with GAMCO investors, which owns Yahoo shares.
“It’s a positive outcome,” Haverty told Reuters, “but not as positive as a sale of the company.”
Ouch.
Tech wrap: PayPal darling takes Yahoo reigns
Yahoo named PayPal President Scott Thompson CEO as the company plows ahead with a strategic review in which discussions have included the possibility of being sold, taken private or broken up. Thompson, a former Visa payments software platform designer, joins the company five months after the firing of previous CEO Carol Bartz.
Thompson has been credited with driving growth at eBay’s online payments division. After the Yahoo appointment, some questioned if he could replicate his success as CEO of Yahoo. ”The risk element is that his background was in payments. And this is not a payment company, it’s a marketing, technology company,” said Lawrence Haverty, a fund manager with GAMCO investors, which owns Yahoo shares.
Eastman Kodak is working on a Chapter 11 bankruptcy protection filing that could be filed as soon as this month if it cannot sell its digital patents, The Wall Street Journal reported, citing unnamed sources. The newspaper said Kodak is in talks with lenders to secure about $1 billion in debtor-in possession financing to sustain it through any bankruptcy proceedings.
Microsoft said it is suing Britain’s second-largest electronics retailer Comet for allegedly creating and selling more than 94,000 sets of ”counterfeit” recovery CDs of its Windows operating system to customers buying Windows-loaded PCs and laptops. A spokesman for Kesa, which owns Comet, told Reuters that Comet provided the disks as a service to its customers between March 2008 and December 2009, but stopped the practice when Microsoft objected. He said Comet sold the disks as many buyers of PCs and laptops did not create their own recovery CDs and faced problems when their computers failed.
Securities regulators charged an investment adviser with using LinkedIn and other social media networking websites to lure investors by offering more than $500 billion in fake securities. The SEC alleged that Anthony Fields, 54, of Lyons, Illinois, made the fraudulent offers to sell securities through two sole proprietorships. The agency said Fields provided false and misleading information about clients, assets under management and even the history of his firm’s business.
Twitter apologized for incorrectly verifying a false account for Wendi Deng, the wife of News Corp CEO Rupert Murdoch. The fake account with the handle @Wendi_Deng popped up on Sunday soon after a real Twitter account was started by the media mogul on New Year’s eve. The Wendi account was initially verified by Twitter, featuring the well-known blue tick which shows Twitter has confirmed the account belongs to the named person. But by early Tuesday, Twitter was forced to remove its famous blue tick from the Wendi account after it said it confirmed the account did not belong to her. AllThingsD’s Kara Swisher said it was a case of mistaken punctuation.
Tech wrap: RIM’s “BBM” trademark target of new legal challenge
Research In Motion, still smarting over having to change the name of its yet-to-come operating system, faces a similar trademark challenge to its popular instant-messaging service BlackBerry Messenger. The service, which allows BlackBerry users to send each other text and multimedia files and see when they are delivered and read, is widely known and even promoted by RIM via the shorthand BBM. That has proven an encumbrance to BBM Canada, which measures radio and television audience data and expects its day in a Federal Court against RIM by February.
RIM seems determined to keep using the BBM name and not to pay BBM anything. “We believe that BBM Canada is attempting to obtain trademark protection for the BBM acronym that is well beyond the narrow range of the services it provides and well beyond the scope of rights afforded by Canadian trademark law,” it said in an emailed statement.
Facebook, Google and Yahoo, and other internet firms, have been ordered by two Indian courts to remove material considered religiously offensive, the latest skirmish in a growing battle over website content in the world’s largest democracy. One court in the capital Delhi on Friday issued summons to 19 companies to stand trial for offences relating to distributing obscene material to minors, after being shown images it said were offensive to Hindus, Muslims and Christians, the PTI news agency said.
Digital goods are the fastest-growing category online this holiday, led by e-books, suggesting Amazon.com Inc’s strategy of blanketing the world with cheap e-readers and tablet computers may be producing some early gains. Sales of digital goods, which also include music and videos, are up about 30 percent this holiday season, compared to the same period last year, according to comScore data.
AT&T Inc said late on Thursday that it won regulatory approval to buy wireless spectrum from U.S. chipmaker Qualcomm Inc, a move that would boost the company’s 4G network. AT&T is buying 700 megahertz (MHz) airwaves for about $1.93 billion, with the aim of countering criticism over iPhone service quality and competitive threats from rivals like Verizon Wireless.
The backlash against twenty-four-hour connectivity has started. Carmaker Volkswagen has agreed to deactivate e-mails on German staff Blackberry devices out of office hours to give them a break. Under an agreement with labor representatives, staff at Europe’s biggest automaker will receive e-mails via Blackberry from half an hour before they start work until half an hour after they finish, and will be in blackout-mode the rest of the time, a spokesman for VW said.
@WeWereWallSt: Correct! And fixed.