All Things Digital

Oh, there had to be much, much gnashing of teeth in the corporate offices of the Time Warner Center in New York yesterday with news of the sale of DailyCandy to Comcast for $125 million.

Why?

Maybe because that tasty payment is going right into the hands of Bob Pittman’s Pilot Group Ventures, which bought the fashion and shopping newsletter business for $3 million in 2003.

Longtime media exec Pittman was the former star AOLer, whose nickname was Bob “Pitchman” for his smooth-as-silk selling and even more marked spinning skills.

But the Web 1.0 supernova fell quickly to earth, after the online service merged with Time Warner (TWX) in early 2001, in what is now considered one of the more significant world-class corporate disasters.

After being tossed out of AOL Time Warner in mid-2002, Pittman (pictured here), along with AOL head Steve Case, was blamed for the stock decline and other woes at the media giant by the Time Warner side, whose deep bitterness toward him has never really faded away.

Now, with Time Warner trying to make a deal to sell the AOL unit for up to $10 billion to Yahoo or Microsoft–despite it being valued at $20 billion only a few years ago–Pittman’s small but impressive score has got to grate.

“I have been associated with the start-up, turnaround or acceleration of many companies and major brands, and rarely have I seen the kind of creativity, commitment and passion I’ve seen day in and day out at DailyCandy,” said Pittman in a letter to DailyCandy staff yesterday about the sale. “And the results speak for themselves: Since we made our investment in 2003, subscriptions have grown from just over 200,000 to over 2.5 million.”

In the letter, Pittman said the company’s EBITDA was over $10 million this year on revenues of $25 million.

This is certainly different from the situation almost exactly six years ago when Pittman was driven out of the then-named AOL Time Warner on the proverbial rail.

If you want a taste of those once-grim times for Pittman, here is an excerpt from my book, “There Must Be a Pony in Here Somewhere: The AOL Time Warner Debacle and the Quest for a Digital Future,” which was published in 2003.

The section comes from Chapter Six, “Way, Way After the Goldrush,” as the deal imploded:

Read more »

In BoomTown’s ongoing quest to overdose on tech conferences, I traveled south of San Francisco last night for Fortune magazine’s Brainstorm: TECH conference.

Run by David Kirkpatrick, it’s well done and a great place to run into a range of techies from Silicon Valley, as well as talk to more creative thinkers on where tech is going.

I was there to be on a dinner panel with fellow bloggers Om Malik of GigaOm and my favorite geek to tease, Robert Scoble, of Scobleizer. Fortune’s Adam Lashinsky moderated.

It was an interesting panel about a range of topics, from Yahoo (YHOO)–Kevin Kelly was bored, bored, bored with that topic–to the looming economic pressure that the digital industry is about to experience (a bummer, but entirely true).

Here’s the video:

While there have been not-so-nice insider books about Facebook, the first major deal to chronicle the rise of the social-networking phenom has been signed by Fortune magazine’s David Kirkpatrick (pictured here).

Titled “The Facebook Effect,” the tome will be (glacially) published in September of 2009 by Simon & Schuster, which noted in a statement that it “will chronicle the amazingly rapid rise of this company as well as the impact it is having on social life, politics, business and even international relations.”

Ah yes, peace in our time via The Wall!

Facebook and its CEO, Mark Zuckerberg, have agreed to cooperate, said Kirkpatrick, who has written several pieces in Fortune on the much-hyped start-up that have been largely laudatory.

The book, said Kirkpatrick in a phone chitty-chat with BoomTown (while I froze at Little League practice in the-coldest-winter-I-ever-spent-was-a-summer-in-San Francisco) will also not necessarily be tough, but look at the ways Facebook has been the latest to profoundly impact the online industry.

“This is a company that is changing the way we use the Web, and I want to look at where it is going and what it could become,” said Kirkpatrick.

I like a positive attitude, although my book on Facebook–which I have dinged for a lot of stuff over the last year, from its kooky $15 billion valuation to its still-nascent ad business–would have been titled: “There Must Be a Pony in Here Somewhere.”

Oops! That was actually the title of my second book on AOL, the Facebook of Web 1.0, which chronicled the near-collapse of the company after its disastrous merger with Time Warner (TWX).

That, of course, came like winter follows fall after the first I did, “aol.com,” which told the story of the stunning rise of the online pioneer.

Actually, now that I think about it, it still might work for Facebook!

I kid, David, I kid! Good luck!

So Fortune writer David Kirkpatrick, in his weigh-in on Facebook’s potential shakedown of Bill Gates’s wallet–as reported, Microsoft is apparently thinking of investing in the hot social-networking site at a ridiculous $10 billion valuation–called my analysis of the company and its possible shortcomings “glib.”

OK, so I looked up the word in the dictionary, and it turns out it means: “readily fluent, often thoughtlessly, superficially, or insincerely.”

Thanks, Dave! Given my long history as someone who has been pretty bullish on the Web, it’s unusual for me to be the irksome tsk-tsk voice of reason about the bubble being blown up here, so I am glad to be thought of as superficial!

Writes Kirkpatrick:

How can you put a price tag on the future? That’s what any investor in Facebook would be doing.

“There’s no way the company is worth that kind of money today, despite the 43 million active users it claims. (The Journal reports that private Facebook this year expects to make $30 million profit on $150 million in revenues.) But that is not the same thing as saying that somebody would be insane to buy a small chunk at such a valuation. (For a glib and contrasting view from Kara Swisher, see AllThingsD.)”

After that, he goes on to call the service the Internet equivalent of the second coming of Google, except with its people-centric, six-degrees-of-separation vision called a “social graph” by Facebook founder Mark Zuckerberg.

(Calling AOL! Some kid hijacked your old vision and is about to make bank with it!)

More importantly with all this relevant interconnectedness, posits Kirkpatrick, Facebook is apparently the promised land of advertising of the future, which is all about giving the consumers ads they actually want!

Ads as a service! Ads as a benefit! Ads not as an intrusion!

I don’t mean to be glib, but this kind of ad cheerleading has been trotted out by AOL, by Yahoo, by every dot-com start-up I ever met and its promise has always been more, shall we say, bloated than its delivery.

And even now, with all the advances in online behavior-targeting–which I like to call “consumer-stalking”–it’s mostly still just a lot of marketing blabbery that is good for flimflamming the media buyers at Procter & Gamble and little else.

Other new buzzy phrases in this genre include: claiming consumers want to be “brand ambassadors” for a wide range of products (I suspect that list is quite short); declaring all advertising as needing to be “viral,” which should be enough to make buyers ill; and even claiming that ads are content (so far, only Apple’s Mac/PC commercials seem to rate in this department).

While Facebook is certainly a very good place to test all these theories, perhaps even the best place at the moment, a smarter investor might want to use such money to play all over the Web, testing out all sorts of new ad formats.

And spending hundreds of millions to get a small stake in this game in just one company–which is still No. 2 in the market, lest we forget about rival MySpace–seems like a recipe for disappointment.

That is especially true if what GigaOm’s Om Malik writes about government pressures to make the service safer for young people comes to pass–which could land Facebook into a miasma of controversy.

To Kirkpatrick’s credit, he is quite right when he writes about the drive of Zuckerberg, pictured below, who appears to be very confident, thoughtful and hard-charging, although I am not so sure his comparison of Zuckerberg to Microsoft’s Bill Gates is a good one to make.

Zuckerberg shouldn’t be a wannabe of him, given that company’s history of bullying domination, any more than he should try to pattern himself after the arrogant brainiac style of Google.

If I were him, if he has to be like anyone, I would act more like Steve Jobs, whose iconoclastic style has left a lot of possible market power on the table in the past, but whose single-minded devotion to product excellence has made Apple a brand for the ages.

Steve Jobs even took money from Microsoft, but it was only when he had no other choice. Zuckerberg does have a choice, a lot of them, which is often harder than having none.

So, by all means, dream big. By all means, run as fast as you can to grow what we can all agree is a great platform. By all means, take the money if it means it will help you get there.

But I don’t mean to be insincere when I say too: For all your promise, think hard about what you can actually deliver.

I stopped into the iMeme: The Thinkers of Tech conference, put on by Fortune magazine yesterday and today in San Francisco, and ran into a passel of the Internet regulars, talking about–you guessed it–the Internet.

You got your John Chambers of Cisco, you got your Sheryl Sandberg of Google, you got your Marc Benioff of Salesforce.com, you got your Jeff Weiner of Yahoo–and you’ve got yourself a digital partay.

A lot of people were blabbing about the latest bubble rumor that Microsoft was considering offering $6 billion to purchase Facebook. Yes, the No. 2 (by far) social-networking company that could, making the definitive leader MySpace worth, like, a kabillion.

Here is my little video of the event, as I chat with conference organizer David Kirkpatrick and Fortune magazine editor Andy Serwer (with whom I went to the Columbia University Graduate School of Journalism, where we both did precisely nothing).

I also play a little word association–$6 billion, being the key one–with Microsoft’s Yusuf Mehdi and the obviously-weary-of-me Facebook PR maven Brandee Barker.