All Things Digital

As inevitable as air, Silicon Valley likes to build them up and then tear them down.

Thus, the bell now tolls for Facebook Founder Mark Zuckerberg.

We at BoomTown have been consistent and persistent in voicing our various worries about the young entrepreneur, from one of our very first posts, questioning (we think fairly) the unproven business underpinnings of the hot social network, the juvenile nature of its much vaunted third-party widgets, the insanity of its $15 billion valuation, its inane legal fights and the problems with its worrisome ad efforts.

We’ve also taken (we think probably unfairly) shots at those flip-flops he wears. And we did call him a toddler CEO, also a low blow, we have to admit.

But now, it seems, a mob is forming, sparked by the issues around Facebook’s controversial Beacon ad program, which can track your purchases on some external sites and send the information back to your Facebook profile’s news feed.

While it made some changes in Beacon last week, Facebook has not given users a global opt-out of the controversial marketing system in which the social network is seeking to link behavior and advertising more tightly for supposedly bigger payoffs.

The mainstream media and blogosphere, which recently were feting him, have now turned and ire has been growing over Beacon, which seems to be focusing everyone on the inexperience of Zuckerberg and the challenges facing Facebook.

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Please see this disclosure related to me and Google.

Poor Facebook VP Owen Van Natta–locked away all day on such a lovely Bay area weekend.

He and other Facebook execs spent Saturday and Sunday blabbing away with potential partners into the night, as Facebook looks to complete a commercial deal with either Yahoo, Google or Microsoft to serve its international ads.

But the execs are also trying to nail down a big funding that will potentially give the hotsy-totsy social network a giant slug of cash, as well as a lofty $15 billion valuation.

No deal as yet, but sources close to Facebook said it was now a horse race between Microsoft, which already serves Facebook’s ads in the U.S., and Google. Yahoo, sources said, is a long-shot dark horse in the bidding.

According to sources, Google is not as keen to make a big investment in Facebook (although it would be willing to make a token one), preferring that most of the funding come from private equity investors. It is also driving a harder bargain related to guaranteed ad revenues.

Microsoft, sources have said, is more interested in a bigger investment, although the company is not as willing to completely redo its current ad deal with Facebook or make an international one that would disadvantage it considerably more.

BoomTown has pretty much been out in front of most of the Facebook coverage of late, questioning the start-up’s still nascent business plan (or lack thereof) and purplish press hype, the ridiculousness of the explosive valuation and, most recently, the juvenile nature of its vaunted third-party apps offering.

I have been a bit tough on Facebook, but for good reason. As much as I think the social network is powerful in its potential, is a terrific product that knits together a truly unique user experience and represents a leap forward in how consumers use the Web on a daily basis, I also believe its underpinnings must be examined more closely.

In other words, the massive hype around Facebook needs some serious de-hyping.

Still, as Valleywag correctly reported here, I have what is a pretty big conflict of interest (Google exec Megan Smith, whom I affectionately like to call “The Useless One”) related to the particular current deal being discussed with Google, I am going to bow out of analyzing this specific deal closely, except to point to my past writings on Facebook, including breaking news of Google’s interest in Facebook.

(Please take time again to read my long disclosure on the issues related to Google and me.)

That does not mean I do not hope to break news of what Facebook finally manages to decide to do, both with regard to partners and its funding, but that I will bow out of parsing this deal in excessive detail.

(In sum, though, my coverage so far: An overhyped IPO might provide cover, but good luck making serious money on Facebook ads, whichever one of you solar-powered brainiacs, you software behemoths, you sacred cow disrespecters wins! At this point, I remain solidly dubious.)

Former Yahoo executive Lloyd Braun and his partner Gail Berman, a former Paramount executive, have struck an online deal with Pepsi, under which the entertainment and marketing arm of the beverage giant will be a “first-look” and have a chance to fund and sponsor original online content the pair produces.

That Hollywood term refers to giving Pepsi Entertainment the first opportunity to be part of any idea the pair develops. Pepsi could then pass on whatever concept it wants to, even though it might still have a financial interest in the content.

Berman, Braun and Pepsi executives would not be specific about the financing agreements between them or other details about the type of content they will be creating, although such material is likely to cost well under a million dollars per project, relatively inexpensive by old-media standards.

But both sides touted the arrangement as a new kind of marketing and entertainment partnership designed to take advantage of trends toward increased interactivity by consumers, especially younger ones.

“We want to create great online content … and also something that is more than a glorified Internet ad at the same time,” said Braun today. “So we’ll work with Pepsi hand-in-hand to bake new kinds of ad solutions right in organically at the earliest possible moment.”

Pepsi officials said the more interactive nature of sites like Facebook and MySpace meant it needed to look for all sorts of different ways to touch consumers, well beyond techniques in place now that still center on click-through banner ads.

“A lot of online content is already developed and ads and marketing are slapped on afterward,” said Russell Weiner, vice president of marketing for colas at Pepsi-Cola North America, whose brands include the flagship Pepsi, as well as Mountain Dew, Aquafina and Sierra Mist. “We want to be part of the DNA of a show from the very beginning.”

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It’s true I have been bugging Facebook–the Internet company of the moment–about showing me the money, that is to say the secret master plan to turn the popular social-networking site into a cash-gushing business.

Thus, I finally got a sit-down with the Money Guy at Facebook, Media Sales Vice President Mike Murphy.

I had known the affable Murphy (pictured here) only a little bit from his many years at Yahoo, which he left for Facebook in March 2006 in what now looks like a particularly prescient move, given the Internet giant’s recent ad troubles and Facebook’s seemingly high-flying trajectory.

I use the word seemingly, because no one really knows what the record or the prospects of Facebook are exactly when it comes to becoming an ad powerhouse, like Google and, yes, Yahoo, which did more than $1 billion in revenue for the current quarter, as weak as results were.

Here’s a video I made of my visit to Facebook HQ in Palo Alto, Calif., seeking answers to this and other questions from Murphy, as well as a drop-in from COO Owen Van Natta (who mimicked founder Mark Zuckerberg and called me “nasty” on this video, even as he chatted away, which questions his credibility related to my true level of meanness), PR head Brandee Barker and others.

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