All Things Digital

Off with the Yahoo CEO’s head!

OK, maybe not so much, at least today.

Indeed, according to many sources, Jerry Yang’s head still sits squarely on his neck.

And, moreover, his job as CEO has not been usurped by Yahoo (YHOO) Chairman Roy Bostock, who was allegedly–as one rumor went–authorized by Yahoo’s board, instead of Yang, to restart negotiations with Microsoft (MSFT).

(Which is kind of obvious when you actually think about it, given that Bostock is mired in this takeover collapse mess up to his own at-risk neck along with Yang. Bostock has been deeply involved all along and will likely continue to be.)

Thus, lots of smoke and little fire, contrary to rumor-based reports, like this one from TechCrunch–most of which seem to hang on the thinnest of threads (Where in the world is Yahoo board member Eric Hippeau?).

More importantly, even though they move share price, these rumors show almost no knowledge of how public company boards actually operate, which is to say with slug-like speed, even when under fire as Yahoo clearly is.

And if Yang were to go, I would guess it would be under his own steam or he’d be run out with Yahoo’s directors on a rail by angry shareholders.

Still, as a post yesterday of BoomTown’s book excerpt on the AOL Time Warner (TWX) debacle illustrates, even shoving aside a much-pilloried exec like former Chairman Steve Case, who presided over the merger disaster of all time, it took months and months and months and months and finally came well after the wheels fell off the bus there in a move made by Case and not his detractors.

And such a move to denude Yang, in the midst of the most trying time for the company, would make Yahoo’s board seem like particularly thickheaded morons–backing Yang strongly one day and throwing him overboard the next.

That is not to say Yang has not lost a mountain of credibility with Wall Street, investors, his own employees and in the industry in general, over the way he has handled the situation with Microsoft. The fallout from the debacle has damaged him badly.

The reviews are in and it is pretty much one million angry thumbs down.

Unfortunately, Yahoo’s leadership team has not exactly distinguished itself in the aftermath with their public statements, whether it be Bostock’s fanciful musings that Yahoo had the support of shareholders or President Sue Decker’s ungracious dissing of disgruntled Yahoo employees or pretty much the bulk of the backpedaling Yang has done.

And I don’t even know what to say about the excuse about the $33 offer not being written down as a problem by Yahoo execs, which makes them all move a little closer to Nearly Headless Nick in “Harry Potter,” in my estimation.

I do get their fervent need to explain themselves, especially in the face of such ferocious criticism.

But it has been so cringe-inducing to watch, that part of me wishes they would slink back into that cave Yang and his team have been living in all year long.

Obviously, Yang cannot and must now take the heat and find a way to clearly articulate a really good vision of what lies ahead for Yahoo.

That does not mean dangling the possibility of another deal with Microsoft to placate critics or pretending Yahoo wanted such a merger.

The very fact that Yang brought the painfully terse Yahoo Co-Founder and tech guru David Filo–who has fervently opposed a lot of Yahoo hookups in the past, like with eBay (EBAY) many years ago–with him to the key meeting last weekend with Microsoft CEO Steve Ballmer was all I needed to know to determine that the company did not want to sell.

So, Yang and the board got what they wanted–for now, at least–which is a very painful dose of independence.

If they want that to mean going back to talk with Microsoft, Yahoo should stop playing games and do so with a minimal amount of jockeying.

If it means making a series of bold moves to focus and define its business, then Yahoo should do that and quickly.

And if Yang can’t lead or is still lonely–he said last year of the CEO job, “It is a lonely job in the sense that you have to make some of the tough calls”–he needs to step aside for a new leader of Yahoo.

Because, even if Yang lives to fight another day, this much is clear: The clock is running down for him and his stewardship of Yahoo.

Yang is, as Dean Vernon Wormer of “Animal House” said so eloquently, on double secret probation.

So, if I were to predict, I would say six months without meaningful change is all he has.

And after that, I would imagine, is when the blade really starts really falling.

Yesterday, the powerful portfolio manager at Yahoo’s largest investor, Gordon Crawford (pictured here) of Capital Research Global Investors, a division of Capital Research & Management Co., made some very public and very harsh remarks directed at Yahoo (YHOO) CEO Jerry Yang for blowing the Microsoft (MSFT) deal.

All told, between two funds, Capital Research owns 16% of Yahoo. The fund run by Crawford, a legendary money manager and media power broker, holds 6% of that total. No surprise, then, that those funds took a big hit yesterday after the Microsoft takeover bid for Yahoo collapsed.

So a lot of people paid attention yesterday when Crawford, in a high-profile interview with The Wall Street Journal, laid into Yang (pictured here) in such an in-your-face manner.

Said Crawford: “I’m extremely disappointed in Jerry Yang. I think he overplayed a weak hand.”

Crawford was fuming even more to the New York Times yesterday:

“I am extremely angry at Jerry Yang and at the so-called independent board. … I’m hoping that there is such an outpouring of outrage that the board is embarrassed into revisiting this thing, but I’m not optimistic about that.”

Uh-oh, because BoomTown has seen this story before.

It was back in 2002 and the exec under Crawford’s withering gaze then was former AOL Time Warner (TWX) Chairman Steve Case (pictured here).

Jerry Yang might want to take notes, as the situations are a little too familiar to ignore.

Thus, here is a longish excerpt from my book, “There Must Be a Pony In Here Somewhere,” which shows just how active and relentless Crawford can be as an investor when he gets irked by execs who disappoint him:

Gordon Crawford was still very, very angry.

“He did not do it to embarrass Steve,” said this person. “Steve was just a festering boil at AOL that needed to be cauterized and removed.”

Note: Case resigned on Jan. 12, 2003.

OK, I like Twitter a lot, but what is up with all this tech news coverage of its outages?

With the Twitter service being glitchy all weekend, for example, the jump-to-the-next-big-thing champ Robert Scoble wrote another piece yesterday smacking his old amour and praising his new love: FriendFeed.

You know, the new pretty young thing in Silicon Valley (ex-Googlers involved make it hotter still!).

You don’t know?

Neither does most of the human race, in truth, which is just getting around to noticing Facebook and maybe, just maybe, figuring out how to properly use a SuperPoke (my advice: never ever!).

And, while Twitter is amazing in many ways, its tech glitches don’t deserve this level of emergency alarms.

But that has not stopped the echo chamber of Silicon Valley from making a lot of really noisy noise about the indignity of it all.

Isn’t there a recent Sarah Lacy interview with some random Web 2.0 player they could egregiously overreact to instead?

In a weird way, though, this reminds me of the outrage when AOL (TWX) went down for 19 hours in August of 1996. (To date myself, I was actually at AOL HQ in Virginia at that very time with CEO Steve Case, working on my first book.)

At the time, AOL’s 6.3 million users had their first collective digital nervous breakdown and the outage resulted in national headlines–as well as later governmental investigations–across the nation.

“If this (outage) is a sign that AOL can’t handle its growth, that’s a very bad message for the professionals that use it,” Gary Arlen, president of Arlen Communications, said ominously to CNN at the time.

Now, 6.3 million users over a decade ago in today’s terms is a lot more in comparison to Twitter’s current users.

But the difference: Today, one single person like Scoble can tweet louder than millions can complain and it sounds like it is exactly the same thing.

While we are waiting for the season finale of the Microsoft-AOL-Yahoo takeover–too bad we can’t blame the writers’ strike for the lugubrious pace of this deal–BoomTown will take you back in time to equally edge-of-your-seat times in Internet history in a series of surprisingly familiar stories.

Eerily familiar, in fact!

As you might imagine, while everyone is caught up in the current merger mania, there were a lot of previous hot-and-bothered moments now lost in the mists of time.

Did you know, for example, that AOL’s Ted Leonsis once made a $2 million bid for Yahoo (YHOO), early on? “Since there were two of them,” said Leonis to me once, referring to Yahoo Co-Founders Jerry Yang and David Filo, “I thought each should get $1 million.”

While that was kind of kooky, this excerpt from my second book on AOL, titled “There Must Be a Pony in Here Somewhere: The AOL-Time Warner Debacle and the Quest for the Digital Future,” was much more serious.

At the time, late in 1999, Time Warner’s former CEO Jerry Levin was locked in difficult negotiations with AOL’s CEO Steve Case. When they reached a standstill, AOL seriously pondered acquiring eBay, while Time Warner (TWX) went looking for a link-up with Yahoo:

Here’s the excerpt from a section in the fourth chapter:

IF YOU CAN’T BE WITH THE ONE YOU LOVE

AOL and Time Warner wasted no time in trying to find alternatives to each other, scouring for as big a blockbuster as they could find across the interactive landscape.

Both were serious, but each also needed a stalking horse that might shake the other up enough to get back to the bargaining table.

Time Warner quickly turned to Yahoo.

Levin had met and been deeply impressed with a very young Jerry Yang, one of the co-founders of Yahoo, the spectacularly successful Internet directory and portal.

With the biggest Web audience, Yahoo had become a powerhouse, and it had done so with little of the rough behavior AOL was so well known for.

Its valuation had headed skyward too, making Yang a multi-billionaire in his first job after leaving college.

Yahoo was also, unlike most Internet companies, admirably profitable.

I had called Yang as soon as I got to California in 1997.

Aside from Amazon’s Jeff Bezos, eBay’s Meg Whitman and Real Network’s Rob Glaser, Yang was the Web icon most central to the whole boom.

He was also a pretty nice person—well spoken, courteous and with a reputation for being very easy to deal with.

He wasn’t always, though, and I often found myself engaged in little debates with him on whatever trend was sweeping across the landscape.

We almost always disagreed, and he liked to make little digs: “Kara, The Wall Street Journal’s circulation hasn’t grown in, like, a million years.”

But his were the kind of low-level obnoxious comments you’d hear from a brother. I hate to admit it, mostly because he would mock me, but I liked him a lot.

So did Levin. So he sent [CFO Rich] Bressler to meet with Yang and the Yahoo leadership, which included CEO Tim Koogle and his No. 2, Jeff Mallett.

The two sides had several meetings in late November and early December, according to those familiar with the talks, about what the companies could do together and how both sides saw the world evolving.

But Bressler was coy, and if he had a bigger idea the Yahoo team was hard pressed to figure it out.

“He was not specific at all,” one Yahoo executive told me. “We huddled and asked ourselves, ‘Are they serious, or are they just fishing?’”

The Yahoo team was torn, since they too were worried about the valuations and wondered if they could survive without a big media partner.

They also wanted to stay independent if possible, and didn’t want to venture so quickly outside the company’s core competency or outside the Net.

Doing a deal, even if meant that Yahoo would grab a major stake, meant selling the company and ending their mission.

Unlike AOL executives, the Yahoo team thought they would surely get lost in the shuffle, and that they were ill-suited to try to run a complex media company.

They were also dubious that old and new media were really natural partners.

“We were less grand in our approach,” said another executive. “And we were a fast-growing company, so we weren’t so sure we wanted to go slower.”

Time Warner was also reticent, because of the high valuation and also because Yahoo didn’t have a huge base of paying subscribers like AOL.

Being totally ad-supported, Yahoo was a much riskier proposition for Time Warner.

And soon enough, Levin would be put off by the same whiff of arrogance from the Yahoos that he’d picked up from Case.

At a dinner with Yang and Mallett at the elegant Upper East Side French bistro Le Refuge in Manhattan, Levin started lecturing the pair on Yahoo’s inflated currency, asking how its business was sustainable.

Mallett, unfamiliar with the subtleties of the media world dance and frustrated by Levin’s cryptic nature, shot back quickly and arrogantly.

“Why are you peppering us about our business when you’re the ones without any growth?” he snapped, then uttered the most annoying Web mantra of the era: “You just don’t get it.”

The remark, more confrontational than it needed to be, made Levin cringe. A few more meetings did take place, but the Yahoo option was pretty much off the table.

BoomTown recently had lunch in Silicon Valley with Ted Leonsis, one of the most colorful, interesting and early of the modern Web’s entrepreneurs.

Leonsis is best known as the man who put the oomph into AOL during its glory days in the last century, when he joined CEO Steve Case in 1993 to grow the company into a behemoth that was able to essentially take over media giant Time Warner (TWX) in 2000.

That pairing did not go so well, as time did end up telling, and most of AOL’s senior ranks were gone from the company quickly.

That is, except for Leonsis, who stayed around AOL until the end of 2006 when he left the company to focus on his sports investments (See an interview with him about his Washington Capitals hockey team in The Wall Street Journal over the weekend here).

Leonsis has also recently teamed up with Case again to take on PayPal and the credit card industry–that shouldn’t be that hard at all!–with RevolutionMoney.

He talks about that venture and more, including the end of portals, the rise of distributed networks, the need for a new online ad paradigm and how techies need to focus more on “happiness and the quality of life.”

Yeah, that.

Here’s the video, in which Leonsis did not talk about the Yahoo (YHOO) deal, as this video was shot before talks between Yahoo and AOL heated up:

Yesterday, you could feel the testiness jump right over the phone from several people close to Microsoft whom I spoke to about Yahoo’s latest gambit to sell its blue-sky growth plan to Wall Street.

Like a lot of Yahoo’s various moves of late–dating promiscuously with other suitors, handing out pricey severance plans to all employees and continuing to spurn the advances of the software giant without a raise in its $31-a-share bid–the projections by Yahoo (YHOO) that its sunny future warranted at least $40 a share were not taken well in Redmond.

In fact, the company–although it may ultimately have to–is quite adamant about not raising the price. “Sooner or later, they’ll run out of things to do,” said one Microsoft (MSFT) exec.

Sooner would be better, as paying $40 a share would add about $12 billion more the the $41 billion price tag, which would make it one of the biggest tech mergers in history if consummated.

But for the same high, high price, why not take all that money and buy AOL and the giant media conglomerate attached to it?

Yes, I mean Time Warner! Home of AOL and Harry Potter!

This thought occurred to me as I watched the stock of Time Warner (TWX) drift further downward over the last weeks, even though it has tried to give itself a shot in the digital arm by paying $850 million in cash to buy the Bebo social network.

Current price tag for the whole ball of TWX: $51.5 billion. (Of course, debt brings the price up to about $85 billion to $87 billion, but this is just a fantasy, so indulge me.)

And for that you not only get the relatively decent AOL online ad network, you also get a social network in Bebo (No. 3, but Microsoft has only a tiny piece of Facebook), the powerful AIM instant messaging service, a just-as-famous brand name in need of some TLC, some nice Web properties and, best of all, a chance to shove out Google (GOOG) from its search-ad relationship with AOL (Google owns 5% of the unit, which it bought for $1 billion).

Plus, all kinds of stuff you can either keep or spin off: powerful cable assets, top-notch television and movie studios (those cool “Entourage” guys on HBO!), the biggest magazine company (People, Sports Illustrated!), cable networks (Anderson Cooper and Larry King on CNN) and much, much more.

Frankly, compared to Yahoo, Time Warner kind of feels like a bargain, and they know from getting taken over by digital types.

Years ago, as I reported in my book, “aol.com,” Microsoft Co-Founder and longtime leader Bill Gates once said to AOL Founder and then-CEO Steve Case in 1993: “I can buy 20% of you or I can buy all of you. Or I can go into this business myself and bury you.”

How ironic would it be if that promise finally came true?

OK, we Photoshopped it, but only because we could not get our head around what the official Yahoo/Microsoft post-merger picture might look like.

With news that the pair were in informal talks, first broken by CNET, Boomtown still could not conceive of Yahoo (YHOO) CEO and Co-Founder Jerry Yang trading high-fives with Microsoft (MSFT) CEO Steve Ballmer, given Yang has thus far behaved as if the unsolicited bid from the software giant was akin to eating a bowl of worms.

But, in the words of the immortal John Lennon, “Imagine all the people/Living life in peace.” Thus we took that famous picture of AOL’s Steve Case and Time Warner’s (TWX) Jerry Levin (they seemed so happy at the time–who knew?) at the dawn of that dog of a merger and went to town.

BoomTown has always been an avid student of those always curious post-acquisition/merger shots that get taken as the first public visual expression of a deal.

For example, the genuine one, pictured below, of the Bebo/AOL union announced yesterday, with Bebo president Joanna Shields shaking hands with AOL CEO Randy Falco, while AOL President Ron Grant stands nearby, seems unusually awkward and uncomfortable to me, for example.

Is a picture worth a thousand words or are looks deceiving? You decide.

OK, you might attribute it to being super-bored in the holiday doldrums. But, for some reason I cannot explain, I find myself strangely drawn to the videos being made about the start-up of Seesmic, the new video-sharing service that is being created by European entrepreneur Loïc Le Meur.

Up on his own loic.tv channel on YouTube, everything from checking out the company digs to working on a logo to hiring are on display, and Le Meur encourages community comments about the company’s direction. The videos are currently up to Day 57.

It’s a shameless gimmick, to be sure, but Le Meur’s French accent grows on you, and it is an interesting way to market your company, for certain (AllThingsD.com and D: All Things Digital only did one staff BBQ and Rodeo video, which is seen below).

While Seesmic is described in a lot of ways–video Twitter, video social network, video sharing tool are some examples–Seesmic’s obviously practicing what it preaches here: video blabbing that is often compelling.

(Here is a screen shot of what Seesmic looks like, which you can click on to make bigger.)

To get it all going, Le Meur (who also organizes the Le Web conference in Paris, which just took place) got a bunch of high-profile angels like former AOL head Steve Case, investor Ron Conway, FON founder Martin Varsavsky and Skype founders Niklas Zennström and Janus Friis, as well as many others, to pony up millions for Seesmic’s funding.

He and his family moved to San Francisco this past summer, and he has been ferreting away ever since on the service, which will officially debut in early spring of 2008.

Here’s Seesmic’s latest, a what-are-you-doing-for-the-holidays video of its employees:

Then again, I also kind of like the flip side–the mostly hysterical, sometimes line-crossing attack review of Seesmic by Loren Feldman of 1938 Media. Actually, although Feldman trashes Le Meur’s effort, it is just the kind of thing that would probably make Seesmic the very lively place it needs to be.

Here’s Feldman:

And here’s the video of our ATD/D BBQ and Rodeo, which focuses a lot on the marinated lamb:

Well, we meet again, Steve Case and I!

You might think after two books about the rise (book one) and fall (book two) of AOL, the iconic company Case helmed, that we’d both be flat out sick of each other.

Actually, not so and, in fact, illness was a big topic for this discussion onstage–many of Case’s new ventures center around health.

By way of background, D: All Things Digital, the annual tech and media conference Walt Mossberg and I host, has been sold out with a long wait list every year we have put it on.

That has meant only a few hundred people can see the interviews and also demos we do live onstage with some of the tech and media industry’s most interesting and important players and products.

The lineups have included Microsoft’s Bill Gates and Apple’s Steve Jobs, as well as Eric Schmidt of Google, IAC’s Barry Diller, Meg Whitman of eBay, Cisco’s John Chambers and many others.

And we’ve demoed stuff like the Treo when it first came out, as well as digital toilets, Wi-Fi phones and much more.

We usually post the photos and videos of the interviews and demos six or more months after they take place on a separate conference site. This year, our Digital Daily’s John Paczkowski liveblogged D5 and also posted video highlights from all of the sessions immediately on our newly launched site here.

Now, we are posting videos of every session of the 2007 conference here, in full, and we have made all our photo galleries, hosted by SmugMug and mostly shot by our fabulous Asa Mathat, public too. You can also access our videos via the site’s master player here.

Every day, I am going to highlight a different interview or demo from the conference.

Here is Case:

While it did not get a lot of play last week when Time Warner COO Jeffrey Bewkes dangled the idea of a stock offering for its AOL unit, the suggestion made my head hurt all over again thinking about the myriad opportunities that the online unit had missed over the last few years being held prisoner this long inside the media giant.

“We could create such a currency,” said Bewkes at an investment conference, noting that AOL did not have the heft that other players like Yahoo and Google did, because it did not stand alone as a pure-play Web firm. “We certainly contemplated doing that.”

Besides Bewkes’s stating of the obviously obvious, it is a contemplation that is, as the Johnny Mathis and Deniece Williams song goes, too much, too little, too late. Here’s why:

TOO MUCH: Face it, Time Warner’s Hamlet act over what to do with AOL is of the most peculiar variety, given that it has been going on since the forces of Time Warner seized back the company from the interlopers from AOL more than four years ago, after what was billed as the deal of the new century turned out to be more like a steal.

Read more »

We hope you’ve enjoyed our show. Walt and I certainly did, and I think we both felt it was our best D thus far.

And that’s without what was clearly the blockbuster joint interview with Microsoft’s Bill Gates and Steve Jobs of Apple, which got a mountain of attention, as it deserves for both its historic implications (the two icons of tech in a rare analog appearance together) and its sheer drama (PC guy meets Mac guy, except in real life!).

While it was not the WrestleMania some would have preferred, I thought it was riveting to see two people with very little left to prove about anything in their professional careers and who will be in the history books willing to go out on a bit of a limb and talk from a more personal place.

In addition, watching these longtime rivals and also collaborators kibitz about their tech-war stories, each correcting the other’s memories, was really interesting. Here is a great comic strip from the Joy of Tech Web site about the interview that says it all.

But outside of the glare of the pairing, there were a lot of highlights and insights I gleaned from the other onstage interviews.

Read more »

We’re all in Carlsbad, Calif., now, getting ready for our fifth D: All Things Digital conference, which will begin tomorrow night.

So here’s one of my movies to show you how we prepare for the annual conference, which is highlighted this year by a joint interview with Microsoft’s Bill Gates and Apple’s Steve Jobs, the twin icons of the tech industry.

We’ll kick off the conference tomorrow night with an interview with Sen. John McCain, who is in the race to become the Republican nominee for president of the United States. We will talk to him about that, as well as the war in Iraq, but also hope to discuss a plethora of digital issues with him. McCain is one of the few politicians who knows a thing or two about the media, telecom and Web sectors.

Other interviewees on Wednesday and Thursday include: Microsoft CEO Steve Ballmer; CBS CEO Les Moonves; News Corp. President Peter Chernin; Cisco CEO John Chambers; former AOL CEO Steve Case, who will talk about his new company, Revolution; famed director and producer George Lucas; Time Inc. CEO Ann Moore; Google CEO Eric Schmidt; YouTube founders Steve Chen and Chad Hurley; Philippe Dauman, CEO of Viacom; and space tourist (and former Microsoft exec) Charles Simonyi.

We’ll also have demos from tech players like Palm legend Jeff Hawkins and others. And we are also excited to have singer/songwriter Jill Sobule, who will perform several times throughout.

We’ll have full coverage of D5 on our site, starting tomorrow night, including liveblogging by Digital Daily’s John Paczkowski, pictures, video excerpts and more.