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In the wake of the Microsoft-Yahoo merger collapse, there has been a lot of commentary about how Steve Ballmer’s job as CEO of Microbeast is in danger because the deal didn’t go through. Erick Schonfeld has a post up at TechCrunch that quotes an anonymous source at the software behemoth as saying Ballmer is uneasy — hint: he’s yelling even more now! — and the board is considering pitching him overboard. I’m going to side with my friend Kara Swisher on this one; I think much of that is probably wishful thinking by Microsoft insiders. I don’t think Ballmer is going anywhere — or at least not because of this.

So why did I say that Jerry Yang should be fired? Completely different story, IMO. Microsoft made a gamble that it could bag Yahoo, and that there would be enough synergies to justify the deal (adding Yahoo’s media properties, the ad-keyword business, etc.). You can debate whether that’s true or not, but in my opinion it was a fair bet to make. And when it looked like it was going to get too expensive or go needlessly hostile, Ballmer walked. No harm, no foul. Not to mention, of course, that this still isn’t over yet. The fat lady is just warming up.

Yang, on the other hand — either on his own, or aided and abetted by the Yahoo board — waffled and whiffed and came up with lame proposals for boosting the company’s value, and never produced anything that justified either a much higher share value or a dismissal of the Microsoft deal in favour of something better. There is nothing better, and Yang knows it — and most Yahoo shareholders likely know it too. That’s why he deserves to leave, and Ballmer deserves to stay.

So Microsoft has taken its ball and gone home: the company announced late today that it is withdrawing its bid for Yahoo after the company refused its bumped-up $33 a share offer and stuck firm to its demand for $37 a share. The letter from Steve Ballmer, which my friend Paul Kedrosky also has posted, describes how Yahoo not only refused the offer, but made it obvious that it was prepared to effectively commit corporate hari-kiri in order to make itself as unappealing as possible. Among other things, it planned to sign a keyword-ad deal with Google.

I’m all for fiduciary duty, and in particular the duty of senior executives to scour the globe for a competing offer in order to get the best value for their shares. But Yahoo has had three months and has turned up nothing but an unbelievably lame deal with AOL (or so rumour has it). What possible reason could it have for pushing Microsoft to $37? The existing offer was already 70 per cent higher than the stock was trading at prior to the bid. And the Google deal is just a poison pill by another name.

In my view, Yahoo CEO Jerry Yang has gone way beyond fiduciary duty and has been effectively blocking this deal in any way possible. I expect to see the stock tank, and deservedly so. If I were a shareholder, I would be calling for Yang’s head. This deal was by far the best opportunity the company had to achieve some value.

Update:

This post appears at Seeking Alpha as well, and there are some good comments from Yahoo shareholders and supporters there.

Update 2 (05/05/08):

According to an email that Nik Cubrilovic sent Richard MacManus at Read/Write Web, Omnidrive isn’t dead yet — he claims a domain change is in the works, and that a new version of the app is on the way that will use Amazon and Google for storage.

Update:

Clay Cook, an early angel investor in Omnidrive, has posted an open letter to founder Nik Cubrilovic in which he describes some of what happened after he invested $100,000. According to an email exchange with Nik that he has also posted, as recently as February the Omnidrive founder said the company was in the process of being sold and that his investment would be doubled in value.

Was Omnidrive simply too big a swing, as Ben Barren argues? Perhaps. There’s no question that the remote storage game was a pretty crowded space even when the company started, with a number of established providers like Mozy, Carbonite and others — and then along came Amazon’s S3, which reduced the cost of such services by an order of magnitude, and Windows Live Drive not long afterward. At some point, Omnidrive obviously became uneconomic. Maybe some day Nik will emerge to tell the full story of what happened to the company.

Original post:

According to Josh Catone over at Read/Write Web, the “cloud storage” company formerly known as Omnidrive is no more. The domain now goes to a hosting provider’s standard “parked page” message, and users who have commented at RWW say they have been getting error messages for months when trying to access their accounts on the system. The first signs of trouble started showing up about six months ago, when RWW reported that the CTO had left the company.

At the time, CEO and founder Nik Cubrilovic responded that everything was fine at Omnidrive, and that the company was not only profitable but had gotten a new round of financing. The departed CTO told a different story, however — alleging that he was hired to build out a team and told there was financing, but never saw any money, and that he and the entire engineering team quit because they hadn’t been paid. The whole thing had an uncomfortable similarity to the Blognation debacle, involving Sam Sethi and some non-existent financing.

Don’t ask me why, but I like to read Kanye West’s blog. I don’t really like his music all that much (note to Kanye: please don’t hate me) but his blog is hilarious — a totally idiosyncratic mix of thoughts about pretty much anything, from high-tech gadgets and cars to clothing and architecture. I don’t know how much of what he calls KanyeUniverseCity.com is actually produced by him, but the overall effect is a little like Boing Boing, but with a crazy hip-hop mogul running the show.

We all know that Kanye can get a little… well, hot under the collar sometimes. But he totally lost it in one recent post, after an Entertainment Weekly reviewer gave the opening show of his new Glow in the Dark tour a B+. Now, you might think that a B+ is pretty good. It’s almost an A, right? Well that, my friends, is why you are not Kanye West. Here’s what Kanye had to say (I’ve cleaned it up a little):

“Ya’ll rated my album sh***y and now ya’ll come to the show and give it a B+. What’s a B+ mean? I’m an extremist. It’s either pass or fail! A+ or F-! You know what, f*** you and the whole f***ing staff!!!

You don’t know sh** about passion and art. You’ll never gain credibility at this rate. You’re f***ing trash! I make art. You can’t rate this. I’m a real person. I’m not a pop star. I don’t care about anything but making great art. Never come 2 one of my shows ever again.”

Never let it be said that Kanye doesn’t wear his heart on his sleeve. After all, he isn’t a pop star — he’s a real person! And he doesn’t care about anything but making great art. And in the RSS feed version of the above post, he had an additional thought for the Entertainment Weekly writer that I guess he decided to leave out of the final version: “Chris Willman, kill yourself!” the pop star said. Now that’s great art.

With all due respect to my friend Kara Swisher over at All Things D, the news that Facebook apps are mostly designed for fun and games isn’t (I would respectfully submit) going to set the world on fire by any means. I think it’s great that Nathan from Flowing Data produced the chart that he did, and it looks really sharp and everything, but I don’t think it tells us a whole lot. Is it really a surprise that the vast majority of Facebook’s 23,000 applications are designed to be time-wasters or (at most) goofy brain-teasers like Super Pokes and Zombies and whatnot?

I know that this is supposed to show that Facebook is primarily a giant playground for overgrown toddlers, and therefore either a) a big joke, and/or b) not a real business, and/or c) not worth anything even close to $15-billion. I mean, let’s get serious — is anyone going to argue that a real business could be based on playing games, or that such a business could be worth billions of dollars? After all, nothing like that has ever happened before, right? It’s just not possible.

Just because most of the apps are aimed at fun doesn’t mean the platform itself doesn’t have value — potentially lots of value (although maybe not $15-billion). And don’t marketers and businesses use fun in various forms to sell things? I’m pretty sure they do.

Although Craigslist originally said that it couldn’t respond to the allegations made in eBay’s lawsuit against the company, it seems that Craig and/or Jim couldn’t help themselves: the Craigslist blog has a post up entitled “Kettles and Pots” which notes that many of the things eBay is accusing Craigslist of doing are things that eBay has either also done with its own shares, or has previously argued should be done with Craigslist shares. For example, the Craigslist blog argues that eBay has:

• Set up a “shareholder rights agreement” or poison pill.
• Tried to get a “right of first refusal” on Craigslist shares.
• Implemented an indemnification agreement for eBay officers.
• Set up staggered board elections.

Of course, as at least one commenter on the post has noted, eBay is a large public company with freely-tradeable shares and a broad public ownership. Craigslist is the opposite: a private company with only two major shareholders and a board consisting of… wait for it… those same two major shareholders. Even if the things it implemented were identical in every way, those facts would be enough to change the picture, since there are protections for minority shareholders even in private companies. I think Craig and Jim are going to have to do better than that. For more thoughts on the eBay lawsuit, read my previous post.

I know I’m kind of late with this one — a day or two being almost an eternity in the blogosphere — but I wanted to take note of the recent decision by a U.S. District Court judge in one of the RIAA’s high-profile copyright cases. the Atlantic v. Howell case involves a husband and wife and about 4,000 music files. The RIAA’s argument last year — an argument that was initially accepted by the court — was that even though the agency couldn’t prove anyone actually downloaded copies of the music from the Howell’s PC (other than a company working for the RIAA), the simple fact that their files were kept in a “shared” folder available to the Kazaa P2P software was enough to breach the law.

That decision was struck down this week, however: Judge Wake of the District Court of Arizona ruled that while section 106 (3) of the U.S. Copyright Act gives the owner of copyrighted works the exclusive right to “distribute copies” of those works, the law doesn’t define the term “distribute,” and so the courts have had to do so. The general rule, Judge Wake said in his decision, was that “infringement of [the distribution right] requires an actual dissemination of either copies or phonorecords.” The decision (PDF link) goes on to quote copyright experts William Patry (“without actual distribution of copies of the [work], there is no violation of the distribution right”) and William Goldstein (“an actual transfer must take place; a mere offer for sale will not infringe the right”).

The court also rejected the RIAA’s motion on another point: the agency argued that the Howells were guilty of primary copyright infringement for sharing the music through Kazaa — but the court decision said that even if someone had downloaded a copy of the music from them, because of the way that a peer-to-peer network functions, that would still only be a case of secondary copyright infringement, since the downloader would not be taking the Howells’ file, but merely making a copy of their copy.

The decision ends with this statement: “The court is not unsympathetic to the difficulty that Internet file-sharing systems pose to owners of registered copyrights. Even so, it is not the position of this court to respond to new technological innovations by expanding the protections received by copyright holders beyond those found in the Copyright Act.” The decision doesn’t mean the Howell case is over, however — it now proceeds to a regular trial. The RIAA had been pushing for what’s called “summary judgment,” which is a much faster process.

The U.S. decision is very similar to one that Canadian judge Konrad von Finckenstein (now the head of the CRTC, the federal broadcast regulator) delivered in 2004 when he was a judge with the Federal Court, in a case involving the CRIA’s attempt to get the names of file-sharers in Canada. In addition to accepting an earlier Copyright Board opinion that downloading was effectively permitted by Canada’s “private copying levy,” the judge ruled that simply putting files in a shared folder did not constitute evidence of infringement.

I wasn’t at CaseCamp the other night, but I came across a minor storm of Twitter messages (I refuse to call them “tweets”) both during and afterwards, about one of the presenters — namely, an online fiction/marketing experiment called Story2Oh.com. Apparently, some people weren’t too pleased when they found out that the characters involved in Story2Oh were friending people on Facebook without making it clear that they were, well… fictitious creations. At least, that’s what I’ve been able to gather from the dustup in various places.

Eden Spodek, who writes the Bargainista blog, has written about the whole contretemps at the One Degree blog. She was one of the people at CaseCamp who challenged Story2Oh creator Jill Golick about the issue of “transparency” — although she told me and others that she also admired the creativity of the enterprise. She’s the one that Jill refers to as “the woman with dark hair” in her blog post about the event, which appears to have led to Facebook deleting the profiles of her imaginary characters (the site has a policy against fake profiles).

One of the most visceral responses — and I think pretty over the top — came from screenwriter Denis McGrath, who blogs at Dead Things on Sticks. He writes about how he hates people who “don’t get it,” and how they are “uptight idiots” (and worse), who hold up progress for the rest of us. In the comments, he calls the response at CaseCamp “cowardly and hypocritical.” The word “fucktard” appears a lot. Is that really necessary? I don’t think so, but obviously a simple difference of opinion isn’t good enough unless it turns into a holy war.

In a follow-up post, Jill writes about how she doesn’t feel the issue of transparency was as important as others feel it should have been with Story2Oh, because her purpose wasn’t business but art, and blurring the boundaries between the real world and fantasy was part of the point behind the experiment. For my part, I think experiments like that are fascinating — in part because of the strong reactions they produce. I guess Jill found that out the hard way.

My friend Paul Kedrosky over at Infectious Greed loves nothing better than a nice juicy research report or scientific study with lots of juicy data points in it (the way some people are with Tim Horton’s double-double coffees and apple fritters, Paul is with data). So anyway, he’s got a post up about one from the Kauffman Foundation — a private fund he is an advisor to — that looks at the median age of founders of technology companies with at least 20 employees and over $1-million in revenue.

The actual study itself (which is here) is about the level of education that most successful company founders have, but Paul was more interested in the age thing, in part because of a series of posts that Fred Wilson wrote about how most of the entrepreneurs he meets are in their 30s and how that could be because young people have a mindset that makes it easier to be entrepreneurs, and that made a lot of people mad. As someone who is… well, not in their 30s any more, I must confess that I was kind of interested in those posts of Fred’s too.

So the data from the Kaufmann study shows that the median age for founders is 39 — and according to the preamble to the study, twice as many were older than fifty as were younger than 25. The comments on Paul’s post are well worth a read as well (as usual), since they continue the debate. Is it something about the Web startups that Fred meets — the ones without much in the way of revenue or business models — that they attract younger founders? Do older founders not need as much in the way of VC money, so they never see people like Fred?

One of the authors of the study even gets involved in the comment thread, at Paul’s urging, and responds to some of the points. Fascinating stuff. My friend Leigh has some thoughts about it too.

Re-blogging a post by my friend and fellow mesh organizer Mark Evans, over at the mesh blog: In conjunction with CommandN and the wonderful and talented Amber MacArthur, we’re running a contest featuring a free ticket to mesh and meshU. For more details, check out this video:

http://blip.tv/play/qWC0_0YA

 

Congrats to Mike for being named one of Time’s 100 most influential people (although one wag on Twitter wondered whether this wasn’t just the magazine’s attempt at blogosphere “link bait”). For what it’s worth, he appears in the “builders and titans” section of the list, rather than the “leaders and revolutionaries” section or the “heroes and pioneers” section (which raises the question: if you could choose only one, would you rather be a hero, a leader, a pioneer or a titan?) Arianna Huffington says he’s the “quintessential blogger” because he is:

“intense, passionate, consumed with his subject, opinionated, sleep-deprived, forward-thinking, easy to irritate and apt to air his grudges in public.”

By my count, at least four of those descriptive phrases — “intense,” “passionate,” “easy to irritate” and “apt to air his grudges in public” — are euphemisms for having a temper. Arianna also throws in a description of him as being like Tony Soprano: “a large man, always on the verge of losing his cool.” Is that the quintessential blogger?

(On a personal note, when he came to the mesh conference last year, Mike was unfailingly polite to just about everyone, even someone he had a beef with, despite the fact that he was sleep-deprived).

A week or so ago, eBay filed a lawsuit against Craigslist, alleging that the controlling shareholders of the classified site — namely, founder Craig Newmark and CEO Jim Buckmaster — had taken certain steps to dilute the auction provider’s minority stake in the company, and thereby had breached their fiduciary duty and injured eBay as a shareholder. Craigslist has now made the statement of claim public, and it reads like a corporate version of a divorce court filing. These two parties are married, but they really don’t want to be, and each one is trying its hardest to get out of the relationship without losing everything.

According to the statement (which obviously has only one side of the story) eBay says that Craig and Jim got mad when Kijiji — the eBay subsidiary that competes with Craigslist — started up operations in the United States, so they took a number of steps to dilute the company’s stake below 25 per cent (including issuing themselves a bunch of shares), and thereby removed a bunch of rights that eBay had as a shareholder. They also, according to eBay, instituted a “poison pill” that threatened to flood the place with cheap stock.

In other words, they did (or are alleged to have done) pretty much what Valleywag and others, including yours truly, thought they did when the lawsuit first emerged. Of course, what eBay is talking about isn’t really a poison pill — pills are typically designed to prevent hostile takeovers, but no one can take over Craigslist because Jim and Craig control it. This pill isn’t so much designed to prevent someone from buying as it is designed to prevent someone (namely eBay) from selling.

Can Craigslist do that? Obviously eBay is arguing that it can’t. And while you might think that the classified site is a private company and so Craig and Jim can do whatever they like, it’s not quite that simple. Ebay does have rights as a minority shareholder — and it argues that even if it did engage in competitive activity, the clause it triggered did not give Craig and Jim the right to prevent eBay from selling its stock to anyone but them. This could get ugly.

According to a study that is to be published in New Scientist magazine tomorrow, Facebook and Wikipedia are better at getting crucial information out during emergencies than either government agencies, emergency services — or the traditional media. The study, done by researchers at the University of Colorado, looked at how Facebook and Wikipedia were used by students during the Virginia Tech shootings, and how Twitter and other social media were used during the forest fires in California. As the Telegraph story describes it:

“During the Virginia shootings, they found the emergency services were slow to update their reports on the latest situation and the names of those killed. Within just 90 minutes of the first deaths, however, a web page accurately describing the events appeared on Wikipedia.”

The study found that dyring the fires in California in October, web users on various websites and those using Twitter were keeping their friends and neighbours informed of their whereabouts and the location of the fires on a minute by minute basis, and were also posting links to Google Maps with which others could track the progress of the fire and mark areas where schools and businesses were shut down as a result of the threat. The media weren’t so useful, however:

“The mass media were unreliable… as they struggled to access remote areas from which website users with an internet connection could easily report. Media sites also focused on the ‘sensational’, such as fires close to celebrities’ homes, which distorted the overall picture.”

Some interesting lessons there, for both emergency services and the media, about information delivery on the Web.

Just as Radiohead’s “pay what you want” download model is being adopted by more musicians and artists — including Nine Inch Nails, Coldplay, The Charlatans UK and others — the band that launched the model says it doesn’t plan to do it again, calling the release of In Rainbows “a one off.” In an interview with the Hollywood Reporter, frontman Thom Yorke said that the offering last year arose out of a particular set of circumstances. “I think it was a one-off response to a particular situation,” Yorke told the magazine. “It was one of those things where we were in the position of everyone asking us what we were going to do,” he said.

Although the band hasn’t confirmed it, there was speculation at the time that Radiohead chose to release its new album online first because it knew that leaked tracks were going to make their way onto the Internet soon anyway. A number of other artists, including Gnarls Barkley, have been either moving up their release dates or offering free samples for the same reason. Yorke also said that he wasn’t sure such an offer “would have the same significance now anyway, if we chose to give something away again. It was a moment in time.”

The band may also have been underwhelmed by the number of people who chose to actually pay for the album: according to a survey by the Telegraph of 5,000 users, about 25 per cent either paid nothing or only a small amount (as little as one pence). Thousands of fans also downloaded the album for free using the BitTorrent peer-to-peer network, although some said they only did so because the official Radiohead download site was crippled by a flood of requests.

Coldplay experienced a similar phenomenon after the band released a track from its new album Viva La Vida or Death and All His Friends as a free download. According to several reports, the site crashed under the strain on Tuesday. More than 600,000 people downloaded the song in less than 24 hours, according to one report. Other artists have also announced plans to experiment with online delivery in some form or another; even Metallica — the band best known for its vocal criticisms of Napster in the early days of downloading — has said that it may look at offering new music directly to fans instead of using a traditional label.

Despite Radiohead’s statement about not offering “pay what you want” downloads any more, Yorke said the band was going to build on its online connection with fans. “We are about that direct relationship (now) because we are big enough to establish that,” he said. Among other efforts, the band has set up a music ‘mashup’ site where people can upload their own versions of one track from In Rainbows, and also has a social network based on Ning.com called W.a.s.t.e. Central, which has about 12,000 registered users.

Update:

Apparently this was all the result of a misunderstanding involving Oracle, who talked to Marvel and was planning a similar screening, and a lack of communication with Paramount. Too bad — I was hoping to see Mike and Marvel go toe-to-toe on this one 🙂

Original post:

In yet another example of how not to do customer relations or PR of any kind, Mike Arrington has a stunning exhibit from a lawyer representing Marvel, the comic powerhouse whose Iron Man character has become a major motion picture. Mike wanted to put on a social event for TechCrunch fans, so he booked a theatre and planned to show the movie for free — although he asked for $1 per ticket to cut down on the no-shows. Wham! That is apparently verboten, according to Marvel’s lawyer.

“You have not been authorized to exhibit, sell tickets to, nor invite the public to an Iron Man screening.”

As Mike points out, the whole process began with a phone call to the number listed on the official Iron Man movie website for “group sales.” So what is the Marvel guy’s problem? Hard to say. Obviously, movie studios and content companies like Marvel have an interest in holding publicity premieres, etc. and also have relationships with movie-theatre chains, who don’t want to see just anyone rent a theatre and go into competition with them. But still — is that any way to handle such a thing? It just makes Marvel look stupid, and mean.