Internet advertising rose 20 percent in the second quarter, but a disproportionate amount of those gains went to Google search, which is like a more profitable version of the Yellow Pages — companies have to pay each time customers look them up. Ad networks like AdBrite primarily sell display advertising, which might not seem nearly so crucial during tough economic time — and the text ads they do sell don't have Google's massive data-crunching algorithms behind them. (Photo by Brian Solis/Bub.blicio.us)

Our source speculates that Paul Levine and Jim Benton may be next to go. The tipster suggests that AdBrite CEO Iggy Fanlo is replacing Benton with a yet-to-be-hired SVP of sales.

This strikes us more than the usual amount of startup churn; when there's money to be made, Valley executives make a habit of sticking around for the payday. There's talk of an AdBrite IPO, but the enthusiasm for online ad networks on Madison Avenue and Wall Street is cooling fast.

(Photo by Brian Solis/Bub.blicio.us)

Given that, is it any surprise Levine might be ready to bolt? From what we've heard of his achievements at Yahoo, he would make a fine CEO for an events-listing startup like Zvents — but perhaps the moments not quite right. It makes sense for Levine to keep his career options open while his AdBrite options vest. (Photo by James Duncan Davidson/O'Reilly Media)

From: Iggy Fanlo To: AdBrite Subject: work hours

I hesitated sending this email for quite some time and had hoped that through your direct managers I would see some improvement. Having said that, I continue to see too few folks here at 9 AM; and too few folks here at 6 PM. I don't care if you are a morning person or a night person; if you want to work 10-8 pm or 8-6 pm, but I fully expect each one of you to put in 9-10 hours per working day. This is still a startup and we need more passion, time and energy from each of our employees than a large company would require. If we succeed, the rewards, both psychic and financial, will be great. But for that, we ask you to give more than the typical 9-5 job.

I respect each and every one of you as professionals, and I would be VERY sad if I/we ever had to keep track of working hours for our employees, but I need each of you to think about your commitment and whether it is strong enough. Again, I want to repeat; for the vast majority of you, this is just an FYI and you should be content in the knowledge that I care about you and don't want you struggling alone long into the night. Those that work hard deserve more from their peers. It's my job to make sure that we fight as a team; we are only as strong as our weakest link.

Ignacio "Iggy" Fanlo
AdBrite
CEO
iggy@adbrite.com

AdBrite is keeping the network's current customers, and, yes, moving them to BlackLabelAds. Which means, as of December 1, AdBrite will officially be in the porn business. AdBrite serves 678 million impressions on its regular network and 267 million impressions on AVNads.com, which means porn ads make up roughly 28 percent of AdBrite's business. That may decrease, of course, if AVN is successful at luring away customers. (AdBrite founder Philip Kaplan has not yet responded to a request for comment, but I'll update the item when he does.)

From the tone of AVN's press release about the split, it seems like the squabbling pair has someone else to blame for their troubles: 365 Main, the troubled datacenter in San Francisco whose backup power system failed during a July power outage. AdBrite's ad servers were among those brought down. AVN goes on at length about its plans to host its network in multiple datacenters, with 24/7 monitoring. One wonders: If 365 Main's failures led, ultimately, to the demise of this relationship, would AdBrite and AVN have a claim for lost revenues?

"He would have been welcome," says Conde Nast's Kourosh Karimkhany of Swartz. "But I don't think he could have come to the bar. He just turned 20." What is it with big media and their unseemly interest in barely-legal entrepreneurs?

Of drinking age — and deserving of a pint — is cofounder Chris Slowe. Dr. Slowe, that is. Besides the one-year anniversary of the acquisition, he's also celebrating his recently awarded Ph.D. Before I get to hear about his thesis, Leah Culver shows up. The Pownce engineer is bubbly as ever, but she has some bad news — she and Google engineer Brad Fitzpatrick have broken up. (More on that later.)

The evening is capped off, though, with an appearance by Frank Chu, the famous "12,000 Galaxies" signholder of downtown San Francisco. Now he's up to 725,000 galaxies, whatever that means. On that absurd note, I make my exit. Impressive, perhaps, that Reddit has maintained something of its startup vibe a year after its acquisition. Less impressive that free beer, on Conde Nast's tab, is what it took to spur a big geek turnout.

Rumors reaching Valleywag from adult-industry sources indicate that Lehman Brothers was weighing a large investment in AdBrite — as much as 10 percent of the company — but decided to pass. That's a heavy blow for both AdBrite and its lead VC investor, Sequoia Capital, which frequently partners with Lehman. The reason for Lehman's cold feet? Apparently, AdBrite's involvement in the porn business was larger than bankers there had been led to believe — a fact that may have been uncovered during AdBrite's recent audit.

AdBrite is not keen to let people know it's in the admittedly lucrative business of selling ads for pornographic websites. But for some time, AdBrite has had a partnership with AVN, a powerful trade publication covering the porn industry, to sell ads for AVN's websites and many others, through a site called AVNAds.com. Philip Kaplan characterized the AVNAds relationship as a "technology-licensing agreement," though it's clearly more than that; until this morning, AVNAds listed AdBrite's fax number on its contact information, and ads were served on the adbrite.com domain.

This morning, however, AVN has broken off the relationship and redirected the AVNAds.com domain to a new, hastily built, barely functional website. The ads on the host of porn sites contracting with AVNAds, however, continue to be displayed from AdBrite's servers. From what I've heard, there's a legal tug of war over the relationship. And last month's meltdown at 365 Main, the datacenter hosting AdBrite's servers, doesn't seem to have helped matters. The press release announcing the new AVNAds website stresses that the new venture will serve ads from multiple datacenters. AVN's new online-ad network promises to be up and running by September 30.

In the meantime, though, it seems that Kaplan has a Plan B to keep AdBrite in the porn business under the name "BlackLabel Ads." Until Friday, when I called an AdBrite executive for comment, BlackLabelAds.com displayed a site identical to AVNAds.com except in name. The list of sites on BlackLabelAds.com, and the structure of the site, was identical to AVNAds.com; it even shared the same fax number as AdBrite and AVNAds.com. Today, though the site remains mostly hidden, the logo remains on AdBrite's servers. (The BlackLabel site currently redirects to AVNAds.com, but I believe that's simply because AdBrite execs were hoping to hide the existence of BlackLabelAds.com and were caught offguard by today's move by AVN.)

So here's how the battlefront stands: AdBrite has the actual ads served today on the AVN network; AVN has the AVNAds.com domain itself. The question will be — assuming AdBrite's not going to just give up on the adult-ads business altogether — is whether AdBrite can tell customers about BlackLabelAds faster than AVN can sign them up on the new AVNAds website. Like everything to do with the adult-entertainment business, this battle promises to be messy, dirty, and thoroughly entertaining. And it's all just one more back-and-forth tussle in the war between the two valleys of porn.

• 365 Main's facilities are supposed to be rock-solid, designed to ride out a major event like an earthquake. CEO Chris Dolan personally gave me a tour shortly after his team revamped the datacenter. Unless he was exaggerating to me then — and, one presumes, exaggerating to every customer he's since signed — a power outage shouldn't have taken 365 Main out.
• 365 Main has multiple colocation rooms, or "colos," in the center. Colos 3 and 4 — on the same floor, if memory serves — went down, while Colos 2 and 8 stayed up. Data Center Knowledge says that an additional, unspecified colo lost power. (According to a current customer, not all of 365 Main's colocation rooms are occupied, because the facility is constrained by power supply, not space.)
• Was there a drunk employee? Harris, the ever-so-believable 365 Main flack, is denying "employee misconduct." But that doesn't rule out someone else with access to the building tripping the emergency-power-off switch on the affected floor. Bad timing? Sure. Impossible coincidence? No.
• What caused the long lines outside 365 Main? Apparently 365 Main's customer-authentication system was down, forcing already-angry sysadmins to wait in line while guards checked IDs manually.
• Were customers' contracts breached? Almost certainly, if they negotiated any decent service-level agreements with 365 Main. Heard about any lawsuits filed or payments sought? Send in those tips.

Now, from commenter somafm, a highly detailed account of what he believes happened.

Here's what really went down at 365 Main:

365 Main, like all facilities built by AboveNet back in the day, doesn't have a battery backup UPS. Instead, they have these things called "CPS," or continuous power systems. What they are is very very large flywheels that sit between electric motors and generators. So the power from PG&E never directly touches 365 Main. PG&E power drives the motors which turn the flywheels which then turn the generators (or alternators, I don't remember the exact details) which in turn power the facility. There are 10 of these on their roof.

The flywheels (the CPS system) can run the generator at full load for up to 60 seconds according to the specs.

There are also 10 large diesel engines up on the roof as well, connected to these flywheels. If the power is out for more than 15 seconds, the generators start up, and clutch in and drive the flywheels. There are no generators in the basement. (There is a large fuel storage in the basement, and the fuel is pumped up to the roof. There are smaller fuel tanks on the roof as well. )

Here's what I think happened. Since there were several brief outages in a row before the power went out for good, it seems that the CPS (flywheel) systems weren't fully back up to speed when the next outage occurred. Since several of these grid power interruption happened in a row, and were shorter than the time required to trigger generator startup, the generators were not automatically started, BUT the CPS didn't have time to get back up to full capacity. By the 6th power glitch, there wasn't enough energy stored in the flywheels to keep the system going long enough for the diesel generators to start up and come to speed before switching over.

Why they just didn't manually switch on the generators at that point is beyond me.

So they had a brief power outage. By our logs, it looks like it was at the most 2 minutes, but probably closer to 20 seconds or so.

This afternoon a power outage in San Francisco affected the 365 Main St. data center. In the process of 6 cascading outages, one of the outages was not protected and reset systems in many of the colo facilities of that building. This resulted in the following:

- Some of our routers were momentarily down, causing network issues. These were resolved within minutes. Network issues would have been noticed in our San Francisco, San Jose, and Oakland facilities.

- DNS servers lost power and did not properly come back up. This has been resolved after about an hour of downtime and may have caused issues for many GNi customers that would appear as network issues

- Blades in the BC environment were reset as a result of the power loss. While all boxes seem to be back up we are investigating issues as they come in

- One of our SAN systems may have been affected. This is being checked on right now

If you have been experiencing network or DNS issues, please test your connections again. Note that blades in the DVB environment were not affected.

We apologize for this inconvenience. Once the current issues at hand are resolved, we will be investigating why the redundancy in our colocation power did not work as it should have, and we will be producing a postmortem report.

Some of the affected websites — most of which are back online — played it straight with customers, like Craigslist. Others offered the usual pack of lies websites trot out. AdBrite, for example, tried to claim that the outage was due to "scheduled maintenance," and RedEnvelope, the e-commerce gifts site which just today crowed about moving all of its Web operations to 365 Main, said the outage was a systems upgrade. Busted!

From the same employee, some pornalicious wagging:

They totally changed pud.com by the way, it used to link to mobog.com (his mobile phone porn site) and a few other sketch sites that he runs — they used to all be listed on his LinkedIn profile. You can clearly see the "email pud" link on the nav bar. I wonder if Mark Kvamme from Sequoia checks out those sites!

Oh, those halcyon years of the Internet! When men were real men, women were real women, and for $5.95 an hour they'd prove it to you! It wasn't so long ago, kids, that Philip "Pud" Kaplan of Fucked Company (yeah, the failed AdBrite CEO) was makin' home webcam videos — sexy threesome videos.

And more power to him — you mess around with a couple of hotties, you gotta share your joy with the world, right? After the jump, things get a little NSFW with three more tasty webcam shots.

With 93 captive viewers, why didn't Pud throw some banner ads up in here?

Webcams should come with breathalyzers.

Aaaaaand scene!

"No, I'm not sorry about anything I wrote," Kaplan says of his days as Pud. "Much of what executives at dot-coms did back then was wrong. I'll always think it's wrong to lie to employees. We've never done that here."

One of the classic signs of a liar is an overemphatic repetition of words, especially words of affirmation or denial. But no, no one would accuse Pud of lying, not at all. It's wrong and it's just not done.

Dot-com exec gadfly Philip Kaplan cedes own CEO spot [CNET]
Earlier: Bubblewatch: Folded and fucked [Valleywag]

Now really, there's nothing wrong with cashing in on the porn biz. Or at least, that's what we tell ourselves at Gawker Media when NSFW Fleshbot promos are crawling all over our sites.

Really Fucked Company ["Official" site]

Here's why we are:

• Even Philip "Pud" Kaplan, the man who made his name dancing around the bloated corpses of dot-coms at Fucked Company, couldn't pull his own dot-com (Adbrite) into the black.
• And yet the company won't die.

Here's why we aren't:

• Pud gave up at playing CEO. Now he's just Adbrite's "Chief Product Officer."
• In other words, stick a fork in Mr. Fucked Company — he's done.

AdBrite Names Iggy Fanlo As CEO [PR Newswire]

• In a fit of business brilliance, Microsoft launched a paid PC care service, thus profiting from the shittiness of its own products. [Australian IT]
• Who's the "limited audience" for Google's new spreadsheet program? I hope it's John Hodgman. [Associated Press]
• New York Post gossip Lloyd Grove stalks Oracle CEO Larry Ellison by boat. His yacht, the Rising Sun, was last seen in Nice. [NY Daily News]
• Mr. Fucked Company is...fucked. Former dot-com schadenfreuder Philip Kaplan says his exit as Adbrite CEO was a mutual agreement. [CNET]
• Today in "A Million Tiny Google Screw-ups": journalist Jon Udell gets the runaround from the anal-retentive Google PR team. [InfoWorld]

What's really funny about the Socializr offices to me (I live next door) is that they are in the building just-until-a-couple-of-months-ago occupied by Pud (who now owns AdBrite).

About 6 months ago, I was out walking my dog, and saw that there was all this AdBrite trash out front: old plaques with yellowed Wall Street Journal clippings profiling the genius who started the F*ed Company phenomenon, with little brass titles of the date of the Journal article.

If it weren't for the fact that they were likely already peed on by various dogs and homeless people, I totally would have taken them home.

After the jump, the four honorable mentions.

Makethelogobigger finds his own favorite Steve Jobs edition.

Going with a write-in candidate here: Noah Wyle as Jobs in his Tucker Carlson phase.

Kyle Bunch broke the Internet.

Sorry everybody, my fault. I accidentally tripped over a cord.

Blackjack loves Baidu's martial-arts play but knows revenge is inevitable.

Bad. Ass. But will we see a Google ad that continues this one by turning the swordsman into a pincushion like Jet Li's character in "Hero"?

dljfs wants Marissa Mayer to croak "Koyaanisqatsi."

"Larry used the scanner, and she flipped the pages of a book to the rhythm of a metronome. They managed to get through a 300-page thick book in little over 35 minutes."

Google is starting a band! Sounds sorta Phillip Glass-y. I bet the light show will be AWESOME.

Have a snappy comeback? E-mail it in and win a Valleywag comment account.