Category Archives: Web 2.0

Brief Note on Bartz’ Yahoo Ouster

I haven’t had much to say on Yahoo for a while, and I won’t be prolix in discussing the ouster of Carol Bartz as the company’s CEO yesterday. She apparently was relieved of her executive duties on a telephone call from the company’s chairman, Roy Bostock, and she promptly shared that fact with Yahoo staff in a brief, presumably valedictory email message.

As I noted nearly two years ago, Bartz seemed lost at Yahoo. She provided lots of sound and fury, not to mention abundant theatrics, but her reign was more sideshow than focused leadership. Yahoo didn’t need a sideshow. There’s not much money in that.

To be fair, though, Bartz was miscast in her role. Before she came to Yahoo, she made her name and reputation as the chief executive at Autodesk, a company that specializes in the development of 3D-design, engineering, and entertainment software.

As you might imagine, Autodesk’s software was (and still is) sold to and used by design professionals and engineers,  not consumers. On the other hand, Yahoo is a content, media, and communications company that serves a broad-based consumer market. They’re very different companies, and it’s not clear why the Yahoo board thought Bartz’ previous experience made her the ideal candidate to reverse the dimming fortunes of one of the Internet’s brightest lights during the wild 90s.

Anyway, the whole Yahoo saga of the last decade has been an unremittingly sad story.  Yahoo retains some valuable assets, but nobody there seems to know how to get the most from them.

Facebook Croons New Tune, But Song Remains the Same

Bruce Nussbaum, a former assistant managing editor at Business Week who now serves as a professor at Parsons School of Design, makes the argument that some of Facebook’s current privacy-related woes stem from its inability to remain attuned to cultural changes affecting its audience.

I’m not sure whether I buy the argument in its entirety, partly because Facebook long ago left behind its singular focus and dependence on college and high-school kids. Still, two brief sentences in Nussbaum’s blog post at Harvard Business Review are undeniably true:

At the moment, it (Facebook) has an audience that is at war with its advertisers. Not good.

No, it’s not good. But, as I argued early last year, Facebook was destined to be in conflict with its audience. The outcome was inevitable, resulting from Facebook’s inability or unwillingness to be transparent about the specifics of its business model and its exploitative relationship with its audience.

Facebook was neither forthcoming nor honest. Then, as now, Facebook continues to play a cynical game with those who use its service. It continues to lead them to believe they incur no downside for using a nominally free service. Then, as subscribers drop their guards, Facebook exacts a price, furtively dismantling privacy protections and trading on the sorts of sliced and diced demographic data that advertisers crave.

Now, as Facebook goes through another privacy overhaul, promising to make amends for what has become a pattern of deception and dishonesty, subscribers to the service ought to recall a hackneyed admonition about violated trust: Fool me once, shame on you. Fool me twice, shame on me. (George W. Bush emphasized a variation on this theme, you might remember.)

The truth is, Facebook can’t change. It’s too late. It’s caught in the bind I described in that blog post back in early 2009. Still, even though Facebook is ensnared in a trap of its own design, its audience doesn’t have to go along for the ride.

Resisting Facebook’s f8

So, Facebook is opening its f8 developer conference today, and there’s some debate regarding how one should pronounce the event’s title.

Some say the pronunciation should be two syllables, as in the letter F and the number 8. Others, though, suggest that the pronunciation should be “fate,” as in the word denoting ” the development of events beyond a person’s control, regarded as determined by a supernatural power.”

Well, there are some big egos at Facebook, and I would imagine the reality-distortion fields in the company’s boardrooms and hallways have the power to scramble logical thinking and to engender delusions of grandeur. Facebook might actually believe that it is fated to conquer the world, or a least that portion of it that exists online.

Lately much debate has ensued about whether Facebook will render Twitter irrelevant. Like many others, I don’t see a close similarity between the two companies, the online services they offer, their subscriber demographics, or even their current business models. Given Facebook’s prodigious user base, however, there obviously is overlap between its subscribers and Twitter’s.

But the services themselves are very different. From my perspective, Twitter is about communication and information sharing. Facebook, though I haven’t been on it for a long time, seems to be about frivolity, triviality, a veritable online water cooler. It’s designed to be a place where people go for distractions, like television but more interactive.

That’s not surprising because Facebook’s real purposes is to serve as a giant consumer-analytics engine for advertisers. To the extent that it can cover the web, sucking information about what and where its subscribers do in their online existence, Facebook stands to make a lot of money.

But there’s not much to Facebook beyond that. It’s trying to transform its subscribers into an enormous database of likes and dislikes that can be segmented and sold to corporate marketers and advertisers. That’s always been Facebook’s game — as I’ve said here for a long time — and that’s why consumer and customer privacy just isn’t a priority for Facebook.

I’ve always enjoyed the delicious irony that Facebook originated at Harvard University. An institution renowned for erudition and scholarly achievement has produced a commercial entity that does its utmost to culturally impoverish the Internet, and to turn its subscribers into nothing more than data points for advertising campaigns.

Facebook is so malevolently vacuous that it reminds me of the corporate fascism depicted in RoboCop. Facebook is the online manifestation of Omni Consumer Products (OCP), the movie’s fictional, omnipresent megacorporation. Facebook probably would like nothing more than to have its subscribers function solely as consumers, focused only on their likes of dislikes of products and services that advertisers want them to buy.

Like the lecherous huckster in RoboCop who kept repeating the phrase” Ill buy that for a dollar!,” Facebook will try continually to dumb down and commercially condition online communication and interaction.

But I’m not buying what it’s selling, not for a dollar or for any other amount.

Murdoch’s Howler

You never can tell what strange verbal formulations will emanate from the mouths of babes or wizened, septuagenarian media magnates.

Rupert Murdoch, chairman and CEO of media empire News Corp., today told a Federal Trade Commission (FTC) workshop on the state of journalism that media organizations, if they are to thrive in the digital age, must persuade consumers to pay for news content online.

In of itself, that pronouncement might not rate as particularly newsworthy. We know that news-media organizations must adapt their business models to endure in an age of digital distribution, though there’s some debate as to whether that should be done primarily through online advertising or through subscription-based, reader-pay models. In my view, tapped-out consumers already pay to get on the Internet, and they will be passionately disinclined to cough up content tolls to every online publisher with an outstretched hand.

Murdoch’s howler, though, came in his justification for seeking money directly from his readers rather than from advertisers. The Australian media baron said online publishers must charge for their content because “good journalism is an expensive commodity.”

I consider myself a tolerant soul, but I must call bullshit when I see it. Good journalism? From News Corp? This coming from the philistines who bring us the UK’s Sun and News of the World, not to mention the New York Post? From the man whose publishing empire cheapened the UK’s Times and has rubbished the quality of the Wall Street Journal?

To paraphrase Martin Amis from his novel “Money”: Are Rupert’s publications, online or otherwise, any way to interpret the world?

Cripes, Rupert, why not just admit you’re a greedy sod who wants more money? That would at least have the virtue of honesty, and a certain twisted integrity. Don’t justify your grasping for our coin on the basis of “quality journalism.” You wouldn’t know good journalism if it hit you in the head in the form of a rolled-up newspaper — maybe a copy of the Wall Street Journal before you desecrated it.

Depressing Thought of the Day: Facebook as Web’s Main River

At TechCrunch, MG Siegler makes the following observation:

Facebook wants every site on the web to be a tributary. And it wants to be the main river.

Really, has the web come to this? What a crushingly depressing thought. If all roads lead to Facebook, it’s time to get off the roads, build new ones, or explore some other frontier.

With Redoubled Consumer Focus and Microsoft Deal, Yahoo Seeks Zimbra Sale

As Yahoo gears up for a major brand-marketing blitz directed at its core consumer market, it is aggressively seeking to divest properties that don’t comfortably fit within that mandate.

One of those properties is Zimbra, an open-source, web-based collaboration company that Yahoo acquired in 2007 for $350 million. To the extent that Yahoo could be said to have been promoting Zimbra, it had been pushing it as a white-label email service.

Interestingly ,that’s not necessarily how Yahoo and the rest of the world saw Zimbra when the acquisition occurred. Back then, Zimbra was perceived as a nascent productivity suite that had the potential to evolve into competition for Google Web Apps and Microsoft’s Office, which is spinning off its own web-based sibling in Microsoft Office Web Apps.

There also were imaginings that Yahoo, returned to the control of then-CEO Jerry Yang, might entertain a revivified emphasis on technological innovation.

Now, though, Yahoo has its eyes firmly fixed on consumers. It has no need for white-label collaborative-messaging offerings directed at SMB and enterprise customers. That’s especially true in light of its chummy search-and-advertising relationship with Microsoft.

As is well known, Microsoft’s Office and its web-based complement represent a powerful entry in the web-based personal-productivity sweepstakes. Notwithstanding Yahoo’s sharpened strategic focus on consumers, Microsoft could not have been thrilled about the ongoing existence of Zimbra within Yahoo. As soon as the Yahoo-Microsoft deal was struck, Zimbra’s days as a Yahoo possession were numbered.

Commentators are wondering about Zimbra’s next destination. Among the potential buyers are Google, Comcast (an early Zimbra customer), and Zimbra’s original venture-capital investors. One of those investors is Redpoint Ventures, the current professional home of Satish Dharmaraj, Zimbra’s founder and CEO.

Whoever buys Zimbra, they are not likely to pay nearly enough to allow Yahoo to realize a financial return on its investment. Like so many of Yahoo’s acquisitions, Yahoo’s purchase of Zimbra was poorly conceived and ineptly executed.

Valley Not the Place for America’s Young and Wealthy?

More than a few denizens of Silicon Valley think they reside in the center of American wealth creation, if not the center of the universe.

According a study from market-researcher Nielsen Claritas, though, America’s young and wealthy are voting with their well-heeled feet and congregating in the environs of Washington, D.C.

First the data-center investments went east, and now the young and wealthy appear to be making the same pilgrimage.

San Francisco held the top spot in Nielsen’s young-and-wealthy rankings back in 2000, but it has slipped to third spot, falling along with dot-com fortunes. No other county in the Bay Area cracked the top ten.

Google Fast Flip Represents Experiment Rather than Watershed Breakthrough

Internet bloggers are atwitter today over the unveiling of Google Fast Flip, a news-browsing service that tries to bring to the web the serendipity and intuitiveness of browsing and reading printed media.

Some observers are portraying Google Fast Flip as a significant development, if only because Google is sharing revenue with the limited number of newspaper publishers and other content providers participating in the initiative.

In actuality, Google Fast Flip is an experiment, for the participating newspapers and magazines as much as it is for Google. Everybody is trying to figure out what sorts of content-delivery services will be attractive to readers while providing a business model that satisfies both Google — which already runs the popular Google News service — and the publishers that provide news content.

While Google says Google News is meant to provide a constantly changing array of breaking news, it is positioning Google Fast Flip as an online recreation of the offline experience of leafing through articles in newspapers and magazines.

I like some of the usability aspects of Google Fast Flip, especially for publications I read thoroughly. Nonetheless, I see it as a complement rather than as a replacement for Google News and other comprehensive search-related news sites. What stands as both a strength and weakness of Google Fast Flip is that is presents material from only a limited number of publications.

It’s also available on the Google’s Android handsets and the Apple iPhone. As much as Google would like Android to prosper in the marketplace, it realizes it cannot ignore Apple’s market clout — and growing market share — on mobile devices.

Obama’s Facebook Warning Didn’t Go Far Enough

President Obama gave students a warning about Facebook yesterday. It was wise counsel, but he should have provided a stronger admonition.

Let’s put aside for a moment whether what one posts on Facebook as a youth might come back to haunt him or her in later years. For the record, if your earlier Facebook post relates to an action that was criminal, egregious, or patently unethical, you can be sure it will come back to haunt you like Banquo’s ghost. People, and the times in which they live, won’t change so much that what’s glaringly wrongheaded will become socially acceptable within the span of a few short years.

In the big picture, that’s a secondary concern. A bigger worry — one that should trouble Facebook users more than whether what they post publicly on the site will eventually result in personal or professional grief — is whether Facebook can be trusted with anything that is stored on its servers.

Facebook is a business. Its investors have piled prodigious amounts of money into it in expectation of an obscenely profitable exit. Facebook, because of the way it is constructed as a business, can only achieve that result if it trades comprehensively on the personal, private information that its subscribers have entrusted to it.

Some will counter that privacy no longer exists in the Internet era. Regardless of whether that’s true, Facebook is a new type of Internet beast, designed expressly to make private information a public commodity.

Unlike instant messaging, email, even web search, Facebook’s sole business value turns on its capacity to trade on the personal, private data of its subscribers. I would go so far as to suggest that the full realization of its business model ultimately depends on how thoroughly it mines every last scrap of personal data that its subscribers supply.

The loss of privacy was an unintended consequence of preceding Internet technologies. In the particular social-networking sphere that Facebook inhabits, the stripping away of personal privacy is its raison d’etre.

Conjecture on Private-Company Valuations Just Doesn’t Matter

Venture capitalist Fred Wilson isn’t enamored of all the speculative writing on blogs about the estimated market valuations of private companies.

One problem, which Wilson cites, is that private companies don’t have valuations. They’re not public, their shares don’t trade on markets, they frequently don’t have business models or even revenues, and they’re often still growing into their corporate exoskeletons.

That means ascribing valuations to such companies is nothing more than a fantasy parlor game. There’s no way to be right or wrong in one’s opinion. Only the market, comprising buyers and sellers, can decide the valuation, and the market hasn’t been given the opportunity to deliver its verdict. That won’t stop pundits from engaging in hypothetical discussions and debates about whether Facebook is worth $10 billion or Twitter $1 billion.

Obviously these arguments have no practical utility. Until one of these companies goes public or is acquired, no known value can be attributed to any of them.

The whole hypothetical exercise seems to drive Wilson up the wall. As an investor in Twitter, he’s concerned that all the external conjecture about the company’s putative value might distract the firm’s employees from what they ought to be doing: building a business.

Says Wilson:

But I think all the focus on what a company is worth can be bad. These companies are private for a reason. Most of them aren’t mature enough to be public companies. They often don’t have full management teams and some don’t even have revenues. The focus inside these companies needs to be on building the company, the product, and the business. And endless discussions about what their company is worth can be terribly distracting.

I saw this in action back in the late 90s when a bunch of our portfolio companies went public before they were ready. The employees spent too much time focused on the stock price and too little time focused on the business. Many employees starting counting their net worth in stock that was not liquid and eventually was worth pennies on the dollar of what they thought it was worth.

I understand his concern. I can appreciate why he thinks all the idle talk about private-company valuations might be deleterious to his investment in Twitter.

At the end of the day, though, he and Twitter need to focus on what they can control. They shouldn’t worry about things they can’t control — and they can’t control what others will say about them. People will speculate on lots of things, including the imagined valuations of private companies. They’re going to do it, and Wilson needs to get over it.

What he and the folks who run Twitter can do is ensure that the company’s executives, managers, and other employees remain disciplined and focused. If they fail to maintain their focus and execute their plans, they’ll have only themselves to blame for any failure that results.

Protecting Yourself from Scams on Facebook

If you must use Facebook — and I personally advise against it every chance I get — you ought to be extremely careful about how much personal information you share with the social-networking site’s burgeoning masses of subscribers.

Depending on how much information you choose to disclose about yourself on Facebook, you could become the victim of fraud. As Facebook continues to grow, the scams will proliferate and get worse.

It is possible to use Facebook while limiting your exposure to extortion, fraud, and identity theft, but you cannot and should not rely on the site to take those precautions on your behalf.

The first step, as CNET News’ Dennis O’Reilly explains, is to edit your personal profile. You’ll want to eliminate any personal information that could be exploited for criminal purposes. You are wise to err on the side of caution, so if you’re unsure about a particular detail or revelation, delete it.

When that’s done, you’ll want to follow O’Reilly’s example and modify your Facebook account’s default privacy settings, which are intentionally lax to facilitate information sharing.

It isn’t Facebook’s fault that online criminals are gravitating to it as a venue for exploitation of the trusting and unwary.

Still, Facebook should give serious consideration to devising and implementing more stringent privacy settings for the patrons who have made it an increasingly attractive target for prospective advertisers and crooks alike.

Russian Investor Wants More of Facebook

Digital Sky Technologies (DST), Facebook’s Russian investor, wants to own more of the social-networking sensation.

From the Digits blog in the Wall Street Journal:

The firm (DST) just finished spending $100 million to purchase current and former Facebook employees’ shares of the company, on top of a $200 million direct investment into the social-networking site earlier this year. Now DST, known for its investments in social-networking sites in Russia, Poland and the Baltics, has approached a number of Facebook shareholders seeking to buy more shares, according to several people familiar with the conversations.

After wrapping up its official tender offer, which was closed this week, DST held about a 3.5% stake in Facebook. Two people familiar with the matter said DST has suggested it wants to spend at least $100 million more on Facebook shares.

The Russian investor seems to want to own more equity, and presumably more influence, in Facebook. We don’t know what long-term strategy DST has in mind, but it’s clear that it would like to possess more than a token interest in its American social-networking investment vehicle.