Vallewag: What would you think of Jon Miller going to Yahoo?

Calacanis:

Jon Miller would be amazing for Yahoo because he is extremely good at building display advertising businesses and buying young startups. Remember, when they let him go he was coming off back to back 40%+ gain quarters in advertising revenue—second only to Google (and well ahead of Yahoo). His biggest strength at AOL—in my mind—was buying promising startups and giving them tons of support, no red tape, and breathing room. Yahoo needs new blood and a focus on display advertising, with Ross [Levinsohn, former CEO of Fox Interactive and Miller's partner at VC firm Velocity Interactive] at his side you would have a very potent operator and M&A team.

Yahoo's best strategy right now is probably to build display advertising while buying and growing promising startups. Yahoo needs growth, Jon and Ross are growth guys (i.e. MySpace, Advertising.com, Weblogs, Inc, etc). As a bonus you have hundreds of VP/SVP/EVP level executives out there who are loyal to Jon and Ross, so you might see a talent influx with them at the helm, and talent wins.

Valleywag: You think he'd take the job?

Calacanis:

• Pro: It is the most challenging job in the space second to AOL
• Pro: Having reinvented AOL this would be cake walk/much more pleasant.
• Push: It would require a move from East to West coast—which is both a + and -
• Pro: It would be a great way to show the folks at [Time Warner] who's the man

I'd say if he gets the call he would most likely take it... big opps like this come along once every 5-10 years.

• Former Fox Interactive boss Ross Levinsohn and AOL CEO Jon Miller, now partners at Velocity Interactive, seem to come as a pair. Levinsohn is best known for acquiring MySpace for Fox Interactive and quitting the company after it wouldn't buy Digg. But Levinsohn is also known for bullying entrepreneurs — once, so badly that renowned angel investor Ron Conway reportedly "flew off the handle" at him. In some quarters and in Jason Calacanis's heart, Miller gets credit turning around AOL. But like any exec, Miller has his detractors at AOL and they came out of the woodwork when he was fired last year. One described him as
  

  An executive over 4 years that put more incompetent people in high-places (e.g., McKinley) while firing (Govern) and letting reams of talented folks (e.g., Kotay, list-o-long) leave that were passionate and—at least—somewhat competent, and were actually trying to foster some core innovation and synergy.

• OpenTable’s CEO Jeff Jordan is on Yahoo shareholders and board members' wishlist, just like he was on Facebook founder Mark Zuckerberg's list to become COO of that company before it settled on Sheryl Sandberg. An eBay veteran, Jordan was thought to be in line for Meg Whitman's job until he took over as OpenTable's CEO in 2007. His reputation as a "product Nazi" led Valleywag to endorse him for Yahoo's top job way back in November 2006.
• Tim Armstrong heads up Google's ad sales force and the unit is perhaps respectably profitable enough for Yahoo shareholders and board members to include him on their list. We wonder, however, if the board knows about Armstrong's involvement with sketchy search engine spam company Associated Content.
• Why wouldn't Yahoo's board and shareholders want Microsoft’s Kevin Johnson for the company's top job? Ever since Microsoft CEO Steve Ballmer announced a bid to acquire the company on February 1, no one's given more thought to running Yahoo. Johnson's even written several memos on the topic — showing great ability to include exclamation marks after the company's name while still respecting the need for capital letters.

Basically, you've got a lot of guys in their 30s and older who are not really contributing that much in terms of innovation. They should clear out and let the 25 year-olds get going again. If you look back at AOL, it had many purges in the post-bubble period, but by and large, it flushed out the people who had been occupying senior management posts for a long time and they didn't make much of a difference to the business.

AOL has its challenges, but no other available Internet asset possess its breadth or scale. An acquisition of AOL would modestly increase MSFT’s search share, boost its page views and give it the dominant third-party ad network in Platform A.

Marangi recommends Microsoft pay $12 billion. We do not. BoomTown's Kara Swisher says if Microsoft is serious about search, it needs to buy more market share. But AOL's corner of the search market is not the corner Microsoft wants to own.

"Sometimes I tell my clients, if they're looking to target the over-65 crowd on the Web, not to worry about demographics — just go buy AOL," one agency exec tells us.

Microsoft's money would be much better put toward making an offer for a company that at least kind of, sort of owns a platform that maybe somebody could be as powerful as Google — Facebook. Microsoft should make Mark Zuckerberg a $12 billion-plus offer he can't refuse — even if his investors' lawyers have to prove it to him. (Photo by Michi W...)

the success of campaigns on our popular products, such as SuperPoke!, Top Friends and FunWall, has attracted the attention of not only top brands, but also top talent like Jason.

If only attention were as good as cash. Then Slide might be more than the online version of the musicians in every corner of New York's subway system — amusing, nice to have around while waiting for a train or a page to load, but hardly worth $550 million. U.S. marketers spent a paltry $600 million on social media advertising in 2007 — the same amount Procter & Gamble will spend over two months on its entire marketing budget and a tiny fraction of the $18 billion spent on interactive advertising last year. Somehow, we don't think a bunch more SuperPoke inventory flooding the market is going to fix the problem.(Photo by bk . ninja)

Hot air balloon rides and circus performers. But then it would be difficult to fit either into 1015 Folsom, where the party is being held tomorrow night. As for the rest of Bebo's original employees? They've all left already.

Bewkes has been trying, on and off, to swap AOL and a fistful of cash for a 20 percent stake in Yahoo, which would help CEO Jerry Yang fend off both Microsoft and Carl Icahn. Yahoo executives aren't particularly interested in having AOL's aging Internet assets dumped on them to manage — but they were eager to buy Bebo, particularly Yahoo Europe head Toby Coppel. Yahoo has a deal to sell ads on Bebo in Europe, a deal that most expect AOL to do away with after it expires. Buying Bebo serves to makes AOL more attractive to Yahoo — and if that gets AOL off Time Warner's back, then it may be $850 million well spent.

AOL subscribers continue to visit its websites in droves; the placement of a link on its welcome page drives highly profitable traffic. Why shouldn't the Internet-access business get a cut?

There's a simple answer: AOL should put its traffic up for bid. If online ads can be sold at auction, why not pageviews, too? AOL's infrastructure, too, can charge a market rate; Amazon.com's storage and computing rental operations offer an easy proxy for these costs.

One suspects the reason why there's a holdup in splitting up costs and revenues between the businesses is not that AOL's number-crunchers haven't come up with figures similar to what market mechanisms would dictate. Rather, it's that the numbers aren't to Time Warner management's liking. Dial-up is still quite profitable; Web publishing, not to the same degree. For Time Warner, which wants to shed the former and keep the latter, that result is quite awkward.

(Screenshot by Dave Taylor)

With its takeover of Time Warner Inc. imminent, AOL sought to maintain its breakneck growth in advertising and commerce revenue. AOL converted legal disputes into ad deals. It negotiated a shift in revenue from one division to another, bolstering its online business. It sold ads on behalf of online auction giant eBay Inc., booking the sale of eBay's ads as AOL's own revenue. AOL bartered ads for computer equipment in a deal with Sun Microsystems Inc. AOL counted stock rights as ad and commerce revenue in a deal with a Las Vegas firm called PurchasePro.com Inc.

None of the eight of the executives charged today remain with the company, now named Time Warner. Two of Colburn's most diligent henchmen, however, still do. Ron Grant, as AOL's COO, is reassembling a central dealmaking group akin to Colburn's business-affairs unit. Grant and Lynda Clarizio, the new head of AOL's advertising-sales group, Platform A, were recently praised by former executive Myer Berlow for having been "trained in Business Affairs." Some remember Berlow as being part of the problem.

Slapping a preachy message on hookup sites warning users they could come home from their dates with more than a nasty hangover isn't a successful prevention strategy, Klausner explained to Valleywag: "Good public health is value-neutral. We don't blame and we don't judge, and we meet people where they're at." Most users already know sexually transmitted diseases are out there, but in order to actually practice safe sex, they need a solution that speaks to why they're on the site in the first place — to get laid without a lot of interference from outsiders, and preferably in three clicks or less.

So when San Francisco City Clinic patients began reporting more Craigslist casual connections, Klausner and his staff approached the site to address the increase in infections. Clinicians and Craigslist users now share a message board. "Users can post questions, and staff can post answers — users can post their own answers, as well, and make referrals to other sites. And over the years, new diagnoses of HIV and syphilis from Craiglist have gone down." What's worked in the case of Craigslist is to take advantage of the most sexually networked users already being there.

(Photo: HealthyPenis.org, SF Dept. of Public Health)

Compete reports visits to AOL are down 21 percent in the last year. It's "people count" dropped from 74 million to 60 million in the same time. Face it: AOL remains popular because old people in middle America are too lazy to change their default home page. If Microsoft really wants a decrepit 1990s Internet brand name cheap, it could probably get Prodigy from AT&T for a lot less than $10 billion.

Big mergers and acquisitions, particularly among public companies, particularly among public companies that have large shares of their respective markets, can take a year or more between the day the deal is signed and announced, to the day the deal is actually executed and closed. During that year plus, all kinds of things can happen that could cause the deal to fall apart.

Isn't Andreessen obviously thinking of AOL-Time Warner, a deal which faced intense opposition from competitors and regulatory scrutiny, and which Andreessen has called a "rolling catastrophe"? Come on, Marc, look on your keyboard. There's an "a" key on the left. An "o" on the right. And just below it, an "l." It can't be that hard to type.

Andreessen's conclusion is worth quoting in full:

We are learning that hostile takeovers have arrived in our industry. This is the second major hostile takeover so far — the other was Oracle's takeover of Peoplesoft — but there will be more.

This is significant because historically hostile takeovers practically never happened in technology. Potential hostile acquirors assumed that hostile takeovers wouldn't work because the target company's employees would bail and the target company's business would collapse.

It turns out that as technology companies become larger and more mature, acquirors are becoming increasingly convinced that neither of these assumptions hold. Perhaps employees of large tech companies aren't that bonded to current management, and perhaps many of them would actually prefer to work for a larger, more dominant combined company. And maybe as a consequence, the target's business would do just fine in the wake of a hostile takeover — in fact, maybe it would do better, due to advantages of combined size and scale.

My bet is that hostile takeovers, particularly of larger and more mature companies, are going to become increasingly common in our industry.

The excitement may be just beginning.

What has changed in the near-decade since then? Yahoo, which grew up alongside Netscape — at one point, Netscape hosted Yahoo's servers — is that much farther from being a startup. Working there offers less risk, and less reward. Andreessen doesn't come out and say it, but he strongly suggests the place has become infested with careerists who would be just as happy working at Microsoft.

After the Netscape acquisition, Andreessen worked briefly and unhappily as AOL's CTO. For Yahoos, wheeling and dealing may be fine; but for him, it's the startup life or nothing. Andreessen may feign nonchalance at the prospect of more hostile takeovers in tech. But that doesn't mean he personally wants any part in them.

Seriously, Beboers, If you're going to start sucking up to your new overseers, you should brush up on your corporate culture clashes. The "overlords" line had its start on a Simpsons episode. The Simpsons is produced by an arm of News Corp. AOL is a unit of Time Warner, whose top executives despise News Corp. For maximum obsequiousness, try picking up lines from Friends instead. That TV series was produced by Warner Bros.

Digg Dubb: Groove Is In The Heart from Trammell on Vimeo.

The problem with running a network is that you don't own the pageviews, and websites can always bolt, or be sold. It's hard to imagine AOL won't switch that inventory over to its Platform-A ad network as soon as it can. Not all pageviews are created equal. Sphere's blog-search inventory likely garnered less revenue than some of the high-prestige tech blogs Battelle represents. Still, this is the kind of thing one is happier to have investors learn about after they've committed their money, not before.

Probably not. For one thing, brokering ads, while trendy right now, is a lower-margin business than selling ads on a website a publisher owns. AOL will have to split any profit with Verizon. And Verizon's inventory, like AOL's, is likely heavy on pageviews from Web-based email and other low-value traffic.

Tacoda, the company whose acquisition brought Viebranz to AOL, had promised to boost significantly the value of ads on those pages. Executives at AOL's Advertising.com unit, including Clarizio, were skeptical of Tacoda's claims, and opposed the acquisition. After Viebranz's ouster, Clarizio now has to prove what insiders at Advertising.com argued: They could do a better job than Tacoda at making money from those ads.

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It's clear that the industry is in a state of extreme flux. Each day brings new rumored combinations of companies. But what's not surprising is AOL's appeal in this rapidly changing environment. The market is recognizing the value of what we've built together over the past year and a half.

Dear AOL colleagues,

I'm sure you've read some of the recent news speculating about potential AOL partnerships. While the company can't comment on any discussions at this time, I'd like to provide some perspective on the industry and AOL's position in the market.

It's clear that the industry is in a state of extreme flux. Each day brings new rumored combinations of companies. But what's not surprising is AOL's appeal in this rapidly changing environment. The market is recognizing the value of what we've built together over the past year and a half, as we've shifted from a subscription model to an advertising-supported business. It's a remarkable transition that is gaining momentum with each passing week. Our focus on capturing growth in three key areas - publishing, advertising and social media - is beginning to pay off.

In publishing - which includes Programming, Products and Platforms - our focus has been on growing audience size and engagement. The results have been very encouraging. In February, AOL had its fifth consecutive month of growth, with page views up 16% over the same period in 2007. Thirteen of AOL's content sites - such as Music, Television, News, Money & Finance and Celebrity - rank in the top 5 in their respective areas. Our rejuvenated Programming and Products appeal to people who now roam widely for what they want on the Web and align more closely with the kinds of passionate audiences marketers need to reach. The result is that AOL is now attracting a younger, more engaged and more valuable audience than ever before.

In advertising, we're focused on building the most effective and efficient marketplace for buying and selling digital advertising. Platform-A combines some of the strongest assets in the digital advertising business into a unified solution for marketers to build their brands and publishers to monetize their content. By integrating the reach of Advertising.com with the relevance of our industry-leading targeting technologies and the richness of AOL's content network, Platform-A will connect marketers to their audiences with engagement, efficiency and ease. Delivering on this means we need to move even more quickly to integrate the Platform-A companies into a seamless organization. In the three weeks since her appointment, Lynda Clarizio has moved quickly to announce the formation of one aligned sales organization that will have the ability to sell advertising solutions across Platform-A, supported by vertical teams focused on our content areas and product teams focused on selling individual products. To make it easier for advertisers and agencies to work with us, we now will be offering the ability to buy media across Platform-A with one contact and through one sales force.

In the social media area, we're focused on empowering a truly social Web with programming and tools that help connect people, cultures and lifestyles around the world. Bebo, together with AIM and ICQ, will create a social media network reaching 80 million people worldwide. This is a young and fast-growing market with huge potential. But despite drawing large, engaged audiences, other social networks have not been able to make the experiences relevant to users and marketers alike. Our opportunity involves integrating social media with our publishing and advertising networks to create more relevant content for the Web audience and more relevant marketing for advertisers. While the Bebo deal hasn't closed yet, I'm looking forward to sharing more about the many opportunities I believe exist for Bebo in combination with some of AOL's most exciting assets.

Our collective rebuild of AOL over the past year and a half has positioned the company to prosper in this dynamic market. We know that strong, profitable companies have more control over their own fate. We still have more work to do toward this end. So I want to ask you today to stay focused on the work at hand: continuing our transformation of AOL into a global advertising-supported Web business.

Randy

Depressing, because Yahoo was supposed to be a bridge between the Valley, Hollywood, and Madison Avenue — not a battlefield. And once Yahoo is swallowed up, as it surely will be, those power centers will resume warring, to the benefit of their egos but at the expense of their customers.

Each suitor views Yahoo as something different. Microsoft wants to gain relevance in advertising and search. News Corp. wants to flip MySpace for a profit before its star fades further. Time Warner simply wants to rid itself of AOL, and all the bad memories of a failed merger. Google simply wants more pages to feed into its monetization machine.

No one wants Yahoo for Yahoo, save for embattled founder Jerry Yang. And he has not so much a vote in the matter as the threat that he'll have a nervous breakdown if the board sells his baby out from under him.

It is likely too late to save Yahoo. Indeed, it's not even clear if its suitors understand why they're pursuing it. News Corp. and Time Warner see it as a dumping ground for their online properties — but both would be shackled by a large stake in the enlarged business. Microsoft wants to apply its technology expertise to Yahoo's websites, but it surely underestimates the ruinous culture clash that would entail. Google doesn't really want to help Yahoo; it just doesn't want anyone else to run off with it. The result of any deal would be the status quo.

It's hard to see how Yahoo can escape the snare, and if it did, how it might once again pursue its ambitions of bridging the old world of media and the new. Cozying up to Madison Avenue's agencies meant that Yahoo missed the power of Google's automated ad-selling machine. Playing at being Hollywood studio made Yahoo's embrace of user-generated content too slow and to tentative. Someone will have to step into Yahoo's role. But its cautionary experience will scare away peacemakers. What once was middle ground is now scorched earth.