Silicon Valley Technology Blog – John Furrier – Page 2

Entire Offer Letter For Carol Bartz New CEO of Yahoo

I would have taken the job for $500k and 2.5 million shares. Well their email must have hit my spam folder. 🙂

Here is her offer: I wish her the best of success. I’ve been a big Yahoo fan and hope they can turn that ship around toward calmer waters.

January 13, 2009

Carol Bartz
701 First Avenue
Sunnyvale, CA 94089

Dear Carol:

On behalf of Yahoo! Inc. (the “Company”), I am pleased to offer you the position of Chief Executive Officer of the Company, reporting to the Company’s Board of Directors (the “Board”), with the authority and duties set forth in the Company’s By-laws. You will be appointed to the Board upon your commencement of employment and, subject to legal limitations, the Board will nominate you for reelection to the Board on an ongoing basis during the Term (as defined below) when your then term as a director expires. For purposes of this letter agreement (this “Agreement”), your first day of work at the Company, which shall be January 13, 2009, will be considered your “Employment Start Date”. Your employment with the Company will be subject to the terms of this Agreement for the period ending December 31, 2012 (the period commencing on your Employment Start Date and ending December 31, 2012, the “Term”) unless extended by the mutual written agreement of the Company and you or terminated earlier as provided herein. Notwithstanding the foregoing, certain provisions of this Agreement, as provided herein or implied by their terms (including but not limited to the Proprietary Agreement (as defined below)), will survive any termination of the Term or your employment. Certain terms used herein are defined in Appendix A hereto.

1. Compensation. Your starting annual base salary will be at the rate of one million dollars ($1,000,000) per annum, less applicable taxes and withholdings, paid in accordance with the Company’s normal payroll practices and subject to annual review for increase (“Base Salary”). You will also be eligible to receive an annual target bonus of two hundred percent (200%) of your annual Base Salary (“Target Bonus”) to be determined by the Compensation Committee of the Board (the “Compensation Committee”) in its discretion based on your performance and the Company’s performance for the relevant year. The bonus program will have a maximum bonus of two (2) times the annual Target Bonus. To the extent that the Company adopts a bonus program subject to Code Section 162(m), your bonus will be part of that program. Any bonus payment will be subject to applicable taxes and withholdings. To qualify for the bonus, you must remain continuously employed with the Company through the date that any bonus is approved by the Compensation Committee, subject to the provisions of this Agreement and the program. Bonuses, except as otherwise provided in any bonus or other plan adopted by the Compensation Committee, will be paid in the calendar year next following the fiscal year for which it is earned.

2. Inducement Stock Option Grant. As a part of the Company team, we strongly believe that ownership of the Company by our employees is an important factor to our success. Therefore, as part of your compensation, the Compensation Committee will grant you at its next scheduled meeting at which equity grants are to be made (currently scheduled for January 30, 2009) (the “Grant Meeting”) an option to purchase five million (5,000,000) shares of the Company’s common stock (the “Inducement Option”). The per share exercise price for the

Inducement Option will be the fair market value of a share of the Company’s common stock on the date of grant as determined by the Compensation Committee. The Inducement Option will be issued under, and be subject to, the terms and conditions of the Company’s 1995 Stock Plan, as amended (the “Plan”), and, to the extent not inconsistent herewith, the applicable notice of stock option grant and stock option agreement (including the price and share number adjustments therein). Vesting of the Inducement Option is contingent on your continued employment with the Company through each vesting date. The Inducement Option shall be exercisable for seven (7) years from the date of grant, subject to earlier termination as provided herein, in the Plan and the applicable notice of stock option grant and stock option agreement.

Except as otherwise provided herein, the shares subject to the Inducement Option will vest based on the attainment of average closing prices for the Company’s common stock as reported on the NASDAQ Global Select Market, or, if the Company’s common stock is no longer traded on the NASDAQ Global Select Market, the principal market on which the Company’s common stock is traded (the “Market”) for twenty (20) consecutive trading days after the Grant Meeting and prior to January 1, 2013 (or, if a Change in Control occurs prior to January 1, 2013, the price of the Company’s common stock on the Market immediately preceding the closing of the Change in Control (the “Change In Control Price”), even if such price is not maintained for twenty (20) consecutive trading days) (in either case, the “Average Price”) as follows: (i) one third (1/3) (equal to 1,666,667 shares) if the Average Price is equal to or greater than one hundred and fifty percent (150%) of the exercise price; (ii) an additional one sixth (1/6) (equal to 833,333 shares) if the Average Price is equal to or greater than one hundred and seventy-five percent (175%) of the exercise price; (iii) an additional one sixth (1/6) (equal to 833,334 shares) if the Average Price is equal to or greater than two hundred percent (200%) of the exercise price; (iv) an additional one twelfth (1/12) (equal to 416,666 shares) if the Average Price is equal to or greater than two hundred and twenty-five percent (225%) of the exercise price; (v) an additional one twelfth (1/12) (equal to 416,666 shares) if the Average Price is equal to or greater than two hundred and fifty percent (250%) of the exercise price; and (vi) an additional one sixth (1/6) (equal to 833,334 shares) if the Average Price is equal to or greater than three hundred percent (300%) of the exercise price (each such target price level shall be referred to as a “Vesting Level”). Furthermore, if: (i) an Open In Contemplation Event exists on December 31, 2012 as a result of a CIC Agreement entered into while you were employed by the Company; (ii) the related Change in Control contemplated by the CIC Agreement closes on or after January 1, 2013; and (iii) you are employed by the Company on the date of such closing or you were terminated by the Company without Cause or for Disability, you terminate for Good Reason or your employment is terminated as a result of your death between the signing of the CIC Agreement and closing of such related Change in Control, a special measurement of the Average Price shall be made based on the price of the Company’s common stock on the Market immediately preceding the closing of the Change in Control contemplated by the CIC Agreement, and, if an additional Vesting Level is attained, an additional portion of the Inducement Option shall vest at such time. If your employment terminates for any reason other than as specified above before the closing of the related Change in Control, or, if the obligation to close the Change in Control under the CIC Agreement terminates, the special measurement will not apply. Furthermore, the special measurement will be the only vesting measurement of the Inducement Option on or after January 1, 2013. Each Vesting Level will be equitably adjusted by the Compensation Committee at the same time as adjustments are made in

accordance with Section 16 of the Plan with regard to “Adjustments Upon Change in Capitalization, Corporate Transactions” in a manner similar to and subject to the same requirements as the exercise price under Section 16 of the Plan. Vesting shall occur only one time at each applicable Vesting Level.

The stock option grant agreement and notice of stock option grant will be substantially in the forms currently used under the Plan and filed with the Securities and Exchange Commission, as modified for the provisions hereof. Shares received upon the exercise of the Inducement Option must be held until January 1, 2013, except in the event of your earlier death or at or after a Change in Control.

3. Make-Up Grant. As a result of the forfeiture of equity grants and post-employment medical coverage at your current employer, the Compensation Committee will grant you at the Grant Meeting makeup equity (the “Make-Up Equity Grant”) and cash (“Make-Up Cash”) with an aggregate grant date value equal to ten million dollars ($10 million), payable twenty-five percent (25%) in cash and seventy-five percent (75%) in restricted stock measured based on the closing price of the Company’s common stock as of the grant date. The Make-Up Equity Grant will vest, and the Make-Up Cash will vest and be settled, in equal and proportionate quarterly installments during 2009 (with the final vesting on December 26, 2009) with payment of the cash within three (3) days of vesting.

The Make-Up Equity Grant and Make-Up Cash shall be subject to clawback (based on the closing price of the Company’s common stock at the time of vesting with respect to the Make-Up Equity Grant) if you are terminated by the Company for Cause or you terminate without Good Reason as follows: (i) one hundred percent (100%) if such termination occurs during 2009; (ii) seventy-five percent (75%) if such termination occurs during 2010; (iii) fifty percent (50%) if such termination occurs during 2011; and (iv) twenty-five percent (25%) if such termination occurs during 2012. Notwithstanding the foregoing, the clawback will only apply to the net after tax amount received by you (based on the full amount received by you, reduced by the shares and cash utilized to cover withholding or otherwise used by you to pay federal, state and local income tax obligations), except that in the first year of employment it shall include all amounts. In all other cases, there shall be no clawback.

The Make-Up Equity Grant restricted stock will be entitled to any dividends paid, provided that any cash dividends and any dividends of property payable with regard to unvested restricted stock shall remain forfeitable on the same basis as the restricted stock, and cash dividends will be paid out immediately following vesting. The Make-Up Equity Grant will be adjusted by the Compensation Committee at the same time as adjustments are made in accordance with Section 16 of the Plan with regard to “Adjustments Upon Change in Capitalization, Corporate Transactions” in a manner similar to and subject to the same requirements under Section 16 of the Plan. The Make-Up Equity Grant will be substantially in the form currently used by the Company and filed with the Securities and Exchange Commission for restricted stock grants, as modified for the provisions hereof.

4. Annual Grants. You shall be granted annual equity grants, with due regard for your position, at such time as grants are generally made to other senior executives of the Company, the amount and term of such grants being in the sole discretion of the Compensation Committee.

It is currently contemplated that the 2009 grants will be made in February 2009 and the Company will recommend a grant to you at that time of a grant date value of approximately eight million dollars ($8 million) based on the methodology utilized by the Company to value grants. Such annual grants shall be subject to the same terms and conditions as the standard awards generally granted to other senior executives, except as otherwise provided herein, and made when awards are generally made to other senior executives.

5. Benefits.

(a) Benefits. You will be eligible to participate in the benefit package available to senior Company executives upon satisfying eligibility conditions, including health insurance benefits (medical, dental and vision), life insurance, short term and long term disability, the Employee Stock Purchase Plan, 401(k) Plan, and Flexible Spending Plan (Healthcare Reimbursement Account and/or Dependent Care Reimbursement Account). Please refer to benefit plan documents for eligibility. Of course, the Company may change its benefits at any time. You will also be entitled to Post-Employment Health Coverage.

The Company will reimburse you for reasonable business expenses incurred in connection with your employment, upon presentation of appropriate documentation, in accordance with the Company’s expense reimbursement policies and you will be eligible to participate in the travel policy established by the Company generally for its senior management. The Company will also pay your legal, financial and other advisory fees incurred in connection with negotiating this Agreement up to a maximum of one hundred and fifty thousand dollars ($150,000) (based on your attorneys’ and advisors’ normal time charges).

(b) Paid Time Off. You will be entitled to four (4) weeks of vacation per year in accordance with the Company’s vacation policy, including as to usage, carryover and payment for unused vacation. In addition, the Company currently provides eligible employees with ten (10) paid holidays and two (2) personal floating holidays each year.

6. Termination of Employment. If your employment under this Agreement terminates, the provisions below will apply.

The Company may terminate your employment with or without Cause or for Disability. You may terminate your employment with or without Good Reason. Your employment will terminate upon your death, and your employment under the terms of this Agreement will terminate on December 31, 2012 (“Expiration”), unless you and the Company agree otherwise in writing or a Limited Automatic Extension occurs (in which case your employment under the terms of this Agreement will automatically terminate on the Extended Expiration Date, unless you and the Company agree otherwise in writing). Any continuation of employment after Expiration shall not be subject to the terms of this Agreement other than the provisions for Post-Employment Health Coverage, Section 6 (as specifically provided herein) and Sections 8 through 16 hereof, except to the extent otherwise agreed in writing. You shall, on a termination of employment, have the right to receive the termination benefits set forth below and continuation of your rights to indemnification and director’s and officer’s liability insurance with regard to your prior service with the Company, but no other rights to receive any amounts from

the Company or its affiliates. Termination of employment at or after Expiration shall not be treated as a termination without Cause or a termination for Good Reason, except to the extent specifically provided in this Section 6. Any equity grants made after Expiration shall not be subject to the provisions of this Agreement, provided that equity grants made prior to Expiration shall continue to be subject to the terms hereof.

Receipt on termination of employment (whether before or after Expiration) of any amounts, benefits or additional vesting or extended exercise periods (other than under equity awards granted after Expiration) beyond the Accrued Amounts and amounts, benefits, additional vesting or extended exercise periods which otherwise would be received on a termination by you without Good Reason (the “Standard Benefits”) shall require you to execute and deliver to the Company (with the period to revoke expiring without your revocation) within sixty (60) days of such termination a release in the form annexed hereto as Exhibit A (with such changes therein as reasonably requested by the Company to protect the enforceability of the release and the intent thereof) (the “Release”) and compliance with the last sentence of this paragraph. No amounts other than the Accrued Amounts and the Standard Benefits shall be paid prior to the effectiveness of the Release and no amounts that are “nonqualified deferred compensation” within the meaning of Section 409A shall be paid prior to the sixtieth (60^th) day following termination of employment, except as provided below. To the extent due on or prior to such sixtieth (60^th) day, such amounts shall be paid on the sixtieth (60^th) day, provided that the Make-Up Cash shall be paid, to the extent not previously vested and paid, on the first business day after the effectiveness of the Release. Upon any termination of employment, you shall promptly resign from the Board and all officerships, directorships or fiduciary positions with the Company and its affiliates.

Notwithstanding anything else herein, the timing of distributions of any “nonqualified deferred compensation” (within the meaning of Section 409A) that is part of the annual grants shall be set by the Compensation Committee at the time of the annual grants as part of the grant, and the provisions herein with regard to having the benefit of more favorable provisions of similar standard grants generally made to other senior executives or under the Change of Control Severance Plan or similar plan generally for senior executives shall not apply to equity awards that constitute “nonqualified deferred compensation” (within the meaning of Section 409A) to the extent necessary to avoid adverse taxation under Section 409A.

You shall receive the following amounts on a termination of employment prior to Expiration or, if applicable, at or prior to the Extended Expiration Date:

(a) Death, Disability, Termination Without Cause or Good Reason Termination.

(i) Accrued Amounts.

(ii) Pro Rata Bonus.

(iii) The Make-Up Equity Grant and Make-Up Cash shall fully vest and cease to be subject to clawback and the Make-Up Cash shall be paid, to the extent not previously vested and paid on the first business day after the effectiveness of a Release.

(iv) Pro Rata Treatment of the Inducement Option.

(v) Any equity grants made during the Term (other than the Make-Up Equity Grant and the Inducement Option) will be treated in accordance with their terms and as follows: (A) any vested options shall be exercisable during the applicable Exercise Period; and (B) any grants with time-based vesting criteria shall vest as provided in the applicable grant but at a minimum, pro rata (based on the relative number of months you were employed by the Company during the vesting measurement period to the number of months in the vesting measurement period) with any applicable performance-based vesting criteria for any open periods being established in the equity grant by the Compensation Committee as either remaining open until actual results are determined or paid at target, provided that with regard to the 2009 annual grant you shall be treated as having an additional twelve (12) months of employment in calculating the pro rata amount. Other than with regard to the Inducement Option and the Make-Up Equity Grant, if the standard grants generally made to other senior executives issued at the same time and of the same type as grants made to you during the Term contain terms that are more favorable to you, you will also have the benefit of any such more favorable terms for the related grant. If an award generally requires employment through a period to be received, the vesting measurement period shall be that employment period even if all or a portion of the award is measured over a shorter performance period.

(vi) Post-Employment Health Coverage.

(b) Additional Severance on Termination Without Cause or Good Reason Termination.

(i) If your employment is terminated by the Company without Cause or by you for Good Reason during the Term and (ii) and (iii) below do not apply, then in addition to the payment, benefits and treatment under Section 6(a) above, you shall receive an amount equal to your Base Salary and your Target Bonus, which amounts shall be paid in a lump sum on the sixtieth (60^th) day after termination of employment.

(ii) If your employment is terminated by the Company without Cause or by you for Good Reason upon or within two (2) years after a Change in Control that occurs during the Term (whether such termination occurs before or after Expiration) and (iii) below does not apply, then in addition to the payment, benefits and treatment under Section 6(a) above, you shall receive: (A) an amount equal to two (2) times the sum of your then Base Salary and Target Bonus, which shall be paid in a lump sum on the sixtieth (60^th) day following termination; and (B) in lieu of Section 6(a)(v) above with regard to vesting treatment of the 2009 grants, full vesting of the 2009 annual grants with, for any 2009 annual grant with performance vesting, performance vesting based on actual performance vesting for any closed periods and target levels for any open periods.

(iii) If after the execution of a CIC Agreement and prior to the earlier of termination of the obligations to close under such CIC Agreement or the two (2) year period after consummation of the related Change in Control contemplated by the CIC Agreement, your employment is terminated by the Company without Cause or by you for Good Reason, whether during the Term or thereafter, you shall receive: (A) if the Change in Control has occurred prior

to termination, the payment, benefits and treatment under Sections 6(a) and 6(b)(ii) above; and (B) if the Change in Control has not occurred prior to termination, the payment, benefits and treatment under Sections 6(a) and 6(b)(i) above upon termination of employment, and, if the related Change in Control contemplated by the CIC Agreement is consummated prior to termination of the obligations to close under the related CIC Agreement, you shall, in addition, receive the payment, benefits and treatment pursuant to Section 6(b)(ii) above, less the payment, benefits and treatment, as the case may be, under Section 6(b)(i) upon such Change in Control.

(iv) Other than with regard to the Inducement Option and the Make-Up Equity Grant, if the standard grants generally made to other senior executives issued at the same time and of the same type as grants made to you during the Term contain terms that are more favorable to you, you will also have the benefit of any such more favorable terms for the related grant.

(v) The right to exercise any vested options granted during the Term, including the Inducement Option, during the applicable Exercise Period.

(c) Termination for Cause or Without Good Reason.

(i) Accrued Amounts.

(ii) Post-Employment Health Coverage.

(d) Termination of Employment At or After Expiration Other Than By the Company for Cause.

(i) Accrued Amounts.

(ii) For any equity grants made during the Term (other than the Inducement Option and the Make-Up Equity Grant), vesting as provided in the applicable grant but at a minimum, pro rata vesting (based on the relative number of months you were employed by the Company during the vesting measurement period to the number of months in the vesting measurement period) of all equity awards, with any applicable performance-based vesting criteria for any open periods being established in the equity grant by the Compensation Committee as either remaining open until actual results are determined or paid at target, provided that with regard to the 2009 annual grant, you shall be treated as having an additional twelve (12) months of employment in calculating the pro rata amount. Other than with regard to the Inducement Option and the Make-Up Equity Grant, if the standard grants generally made to other senior executives issued at the same time and of the same type as grants made to you during the Term contain terms that are more favorable to you, you will also have the benefit of any such more favorable terms for the related grant. If an award generally requires employment through a period to be received, the vesting measurement period shall be that employment period even if all or a portion of the award is measured over a shorter performance period,

(iii) The right to exercise any vested options granted during the Term, including the Inducement Option, during the applicable Exercise Period.

(iv) Post-Employment Health Coverage.

(v) If Section 6(b)(ii) or (iii) applies, you shall receive any amounts due thereunder.

(e) Change in Control.

(i) If a Change in Control occurs during the Term or thereafter and the Company’s outstanding equity awards granted during the Term are continued, assumed or substituted, such grants shall be treated as provided in the applicable grant, but at a minimum, (A) performance targets that have not expired will continue (subject to adjustment of exercise prices and share numbers in accordance with the applicable plan and grant adjustment provisions consistent with Sections 2 and 3 hereof); and (B) equity awards granted during the Term (other than the Inducement Option and the Make-Up Equity Grant), will be treated in the same manner as other grants under the applicable plan generally made to other senior executives issued at the same time and in the same form, including, in such case, any better treatment under the Company’s Change in Control Employee Severance Plan or similar plan (to the extent such a plan exists and applies) applicable at the time of the Change in Control with regard to such grants, provided that for clarity, in no event shall the vesting of the Inducement Option be accelerated even if other grants are so treated or so covered under the Change in Control Employee Severance Plan or similar plan, and provided further that such treatment shall not provide for any treatment that would prevent the equity provisions set forth in Section 6(b)(ii)(B) above from applying if your employment was immediately terminated thereafter by the Company without Cause or by you for Good Reason.

(ii) If a Change in Control occurs during the Term or thereafter and (i) above is not applicable, then (A) the Inducement Option will vest or be forfeited, as the case may be, at the time of the Change in Control, to the extent not previously or thereupon vested, based on whether the Change In Control Price is at or in excess of the applicable Vesting Level; (B) the Make-Up Equity Grant and Make-Up Cash shall fully vest and cease to be subject to clawback and the Make-Up Cash shall be paid, to the extent not previously vested and paid, on the first business day after the effectiveness of a Release; and (C) equity awards granted during the Term (other than the Inducement Option and the Make-Up Equity Grant) will be treated in the same manner as other grants under the applicable plan generally made to other senior executives issued at the same time and in the same form, including in such case, any better treatment under the Company’s Change in Control Employee Severance Plan or similar plan (to the extent such a plan exists and applies) applicable at the time of the Change in Control with regard to such grants, provided that 2009 annual grants shall fully vest (based on actual performance vesting for closed periods and at target for open periods).

7. Parachute Payments. In the event that the payments and benefits provided to you herein or otherwise by the Company constitute “parachute payments” within the meaning of Code Section 280G and would, but for this provision, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then your payments and benefits shall be either (i) delivered in full or (ii) delivered as to such lesser extent, as you may elect, as would result in no portion of such amounts being subject to the Excise Tax, whichever of the foregoing results in the receipt by you on an after-tax basis of the greatest amount, notwithstanding that all of some

of the amounts may be taxable under Section 4999 of the Code. If a reduction is to occur pursuant to the prior sentence, unless an alternative election is permitted by, and does not result in taxation under, Section 409A and timely elected by you, the payments and benefits shall be cutback in the following order: any cash severance you are entitled to (starting with the last payment due), then other cash amounts that are parachute payments (starting with the last payment due), then any stock options that have exercise prices higher than the then fair market value price of the stock (based on the latest vesting tranches), then restricted stock and restricted stock units based on the last ones scheduled to be distributed and then other stock options based on the latest vesting tranches.

8. Proprietary Agreement. As an employee of the Company, it is likely that you will become knowledgeable about confidential and/or proprietary information related to the operations, products and services of the Company and its clients. To protect the interests of both the Company and its clients, all employees are required to read and sign an Employee Confidentiality and Assignment of Inventions Agreement (“Proprietary Agreement”) prior to beginning employment. A copy of this agreement is attached hereto as Exhibit B and is deemed to be part of this Agreement. An additional copy of the Proprietary Agreement is also enclosed with this Agreement. Upon signing this Agreement, you shall be deemed to sign such Proprietary Agreement. For our records, please also sign the copy attached hereto and return it along with your signed copy of this Agreement.

9. Proprietary Information Obligations Checklist. Similarly, you may have confidential or proprietary information from a prior employer that should not be used or disclosed to anyone at the Company. Therefore, the Company requests that you read, complete, and bring with you on your first day of employment, the enclosed Proprietary Information Obligations Checklist to this effect. In addition, the Company requests that you comply with any existing and/or continuing contractual obligations that you may have with your former employers. You represent to the Company that you are not subject to any agreement or other limitation that you would be in violation of by executing this Agreement, commencing work with the Company or performing your duties with the Company (recognizing that you are subject to confidentiality obligations with regard to your prior employer and the various boards you serve on).

10. Obligations.

(a) During your employment, you shall devote your full business efforts and time to the Company. The Company and you recognize that you are currently on several boards of directors of publicly traded companies and you agree that you shall reduce the number of boards of publicly traded companies on which you serve to one (1) board other than the Company, as soon as feasible in your good faith judgment and with recognition of your fiduciary duties to the Company and such companies. You shall not be precluded from engaging in appropriate civic, charitable or religious activities, from serving on the board of directors of other companies that are not competitors to the Company and that are approved by the Board, subject to Section 11 below, or from managing your and your family’s personal passive investments, as long as, in each case, the activities do not materially interfere or conflict with your responsibilities to, or your ability to perform your duties of employment by, the Company. Any outside activities must be in compliance with the Company’s Code of Ethics, including approval procedures.

(b) In the event of a restatement of financial results, the Compensation Committee will review all incentive awards for performance periods during the restated period (whether in cash or equity), and all equity grants vesting or paid based on achievement of performance goals or stock price related in whole or part to the restated financial period. If any such award would have been lower had the level of achievement of applicable financial goals been calculated based on such restated financial results or a grant not have vested or not been paid in the sole discretion of the Compensation Committee, the Compensation Committee may, if it determines appropriate in its sole discretion, to the extent permitted by applicable law, require the reimbursement by you of the incremental portion of the bonus in excess of that which would have been paid to you based on the restated financial results, unvest equity grants and require repayment of profits on equity that was vested or paid on such results and realized upon by you. You shall promptly comply with any such request of the Compensation Committee. This provision is in addition to, and not in lieu of, any requirements under the Sarbanes-Oxley Act or any plan or grant and shall apply notwithstanding anything to the contrary in the Plan, any applicable award agreement or any other provision of this Agreement.

11. Noncompetition During Employment. You agree that, during your employment with the Company you will not engage in, or have any direct or indirect interest in any person, firm, corporation or business (whether as an employee, officer, director, agent, security holder, creditor, consultant, partner or otherwise) that is competitive with the business of the Company, including, without limitation, any then-current activities relating to providing Internet navigational products or services and any then-current activities providing search, advertising services, e-mail, chat, e-commerce, instant messaging, content (e.g., music, video), ISP (e.g., connectivity, bandwidth or storage) or other Internet-based delivery or functionality. Notwithstanding the preceding sentence: (i) you may own not more than 1% of the securities of any company whose securities are publicly traded; and (ii) you shall not be prohibited from serving on the Board of Directors of Cisco Systems, Inc., subject to the above limits regarding the number of public board memberships, except in the event that Cisco Systems, Inc. is a direct competitor of the Company or otherwise a material fiduciary issue involving a fiduciary duty occurs; the parties acknowledging and agreeing that as of the date hereof, Cisco Systems, Inc. is not a direct competitor of the Company.

12. Cooperation. During the Term and thereafter, whether or not then employed by the Company, you agree to reasonably cooperate with and make yourself available on a continuing basis to the Company and its representatives and legal advisors in connection with any matters in which you are or were involved or any existing or future claims, investigations, administrative proceedings, lawsuits and other legal and business matters, as reasonably requested by the Company. You also agree that within five (5) business days of receipt (or more promptly if reasonably required by the circumstances) you shall send the Company copies of all correspondence (for example, but not limited to, subpoenas) received by you in connection with any legal proceedings involving or relating to the Company, unless you are expressly prohibited by law from so doing. You agree that you will not voluntarily cooperate with any third party in any actual or threatened claim, charge, or cause of action of any nature whatsoever against the Company and/or any of the Company’s subsidiaries and/or affiliates. You understand that nothing in this Agreement prevents you from cooperating with any government investigation.

13. Employment At-Will. Please understand that this Agreement does not constitute a contract of employment for any specific period of time, but will create an employment at-will relationship that may be terminated at any time by you or the Company, with or without Cause and with or without advance notice, provided that you shall give the Company at least thirty (30) days’ written notice of any voluntary resignation. The at-will nature of the employment relationship may not be modified or amended except by written agreement by the Board Chairman and you.

14. Code of Conduct and The Company Policies. The Company is committed to creating a positive work environment and conducting business ethically. As an employee of the Company, you will be expected to abide by the Company’s policies and procedures including, but not limited to, the Company’s Guide2Working@Yahoo! and the Company’s Code of Ethics. The Company requests that you review, sign and bring with you on your Employment Start Date, the enclosed Code of Ethics@Yahoo! and At Will Employment, Guide2Working@Yahoo! and Privacy Policy Acknowledgment Forms. For purposes of the Inducement Grant, the Make-Up Equity Grant and the annual grants made during the Term, the term “stock dividend” under Section 16 of the Plan shall include dividends or other distributions of the stock of the subsidiaries of the Company.

15. Indemnification. The Company and you shall enter into the Company’s standard form of indemnification agreement for executive officers. You shall be provided with director’s and officer’s liability insurance coverage to the same extent as other executive officers and as provided in such policies for executive officers serving as directors. Such coverage shall continue after your service with the Company ceases while you have continuing liability with regard to your actions or inactions on behalf of the Company on the same basis as coverage for other former officers and directors.

16. Non-Disparagement. You agree, other than with regard to employees in the good faith performance of your duties with the Company while employed by the Company, both during and for five (5) years after your employment with the Company terminates, not to knowingly disparage the Company or its officers, directors, employees or agents in any manner likely to be harmful to it or them or its or their business, business reputation or personal reputation. The Company will direct its Chairman, the Chief Yahoos and the named executive officers of the Company, other than in the good faith performance of their duties to the Company or in connection with their fiduciary duties to the Company and applicable law, both during and for five (5) years after your employment with the Company terminates, not to knowingly disparage you in any manner likely to be harmful to you or your business reputation or personal reputation. The foregoing shall not be violated by statements which are truthful, complete and made in good faith in response to any question, inquiry or request for information required by legal process or governmental inquiry.

17. Entire Agreement; Notice.

(a) This Agreement, including the exhibits hereto, constitute the entire agreement between you and the Company with respect to the subject matter hereof and supersede any and all prior or contemporaneous oral or written representations, understandings, agreements or communications between you and the Company concerning those subject matters. It may not be

terminated or modified orally but only by a writing executed by you and an authorized representative of the Board. This Agreement shall be interpreted under, and governed by, the laws of California without regard to its conflict of law provisions.

(b) Notices shall be delivered in writing either personally or by overnight delivery service and shall be deemed given on the date delivered if delivered personally or the day after the day sent if sent by overnight delivery service. Notices shall be delivered as follows (or such other address as the party shall notify the other by notice sent as aforesaid): (a) if to the Company, at the Company’s executive offices (attn: Chairman) with a copy to the General Counsel; and (b) if to you, at the last home address on file with the Company (with a copy to Gordon Davidson, Esq., Fenwick & West LLP, 801 California Street, Mountain View, California 94041).

18. General 409A Compliance; Income Tax Withholding.

(a) The intent of the parties is that payments and benefits under this Agreement comply with or be exempt from Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. If you notify the Company (with specificity as to the reason therefor) that you believe that any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause you to incur any additional tax or interest under Section 409A and the Company concurs with such belief or the Company (without any obligation whatsoever to do so) independently makes such determination, the Company shall, after consulting with you, to the extent legally permitted and to the extent it is possible to timely reform the provision to avoid taxation under Section 409A, reform such provision to try to comply with Section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Section 409A. To the extent that any provision hereof is modified in order to comply with or be exempt from Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to you and the Company of the applicable provision without violating the provisions of Section 409A. The Company shall have no liability to you with regard to any additional tax, penalties or interest you are required to pay pursuant to Section 409A.

(b) A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits which is nonqualified deferred compensation under Section 409A upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” If you are deemed on the date of termination to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B), then with regard to any payment that is considered deferred compensation under Section 409A payable on account of a “separation from service,” such payment or benefit shall be made or provided at the date which is the earlier of (i) the expiration of the six (6)-month period measured from the date of such “separation from service” of you, and (ii) the date of your death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this section (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be

paid or reimbursed to you in a lump sum without interest, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

(c) With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, of in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided that the foregoing clause (ii) shall not be violated without regard to expenses reimbursed under any arrangement covered by Code Section 105(b) solely because such expenses are subject to a limit related to the period the arrangement is in effect and (iii) such payments shall be made on or before the last day of your taxable year following the taxable year in which the expense occurred. Tax gross-up payments, if any, shall be made in any event no later than the end of the calendar year immediately following the calendar year in which you remit the related taxes, and reimbursement of expenses, if any, incurred due to a tax audit or litigation shall be made no later than the end of the calendar year immediately following the calendar year in which the taxes that are the subject of the audit or litigation are remitted to the taxing authority, or, if no taxes are to be remitted, the end of the calendar year following the calendar year in which the audit or litigation is completed.

(d) For purposes of Section 409A, your right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company.

(e) All payments hereunder shall be subject to applicable federal, state and local income tax withholding; provided that all equity grants shall provide for net share withholding at this minimum applicable statutory withholding rates upon exercise or settlement, as the case may be, unless otherwise agreed in writing by the parties.

19. Eligibility to Work in the United States. In order for the Company to comply with United States law, we ask that on your Employment Start Date you bring to the Company appropriate documentation to verify your authorization to work in the United States. The Company may not employ anyone who cannot provide documentation showing that they are legally authorized to work in the United States.

20. Accepting this Offer. This offer is contingent on you starting employment at the Company on or before the Employment Start Date specified above. To accept this offer, please sign this letter in the space provided below and return it, the signed Proprietary Agreement, and the signed Proprietary Information Obligations Checklist to the Executive Vice President, General Counsel and Secretary of the Company.

We look forward to your joining us and hope that you find your employment with the Company enjoyable and professionally rewarding.

Very truly yours,

/s/ Roy Bostock

Roy Bostock

Chairman of the Board

I accept this offer of employment with the Company and agree to the terms and conditions outlined in this Agreement.

/s/ Carol Bartz

Signature

January 13, 2009

Date

Enclosures:
Employee Confidentiality And Assignment Of Inventions Agreement
Proprietary Information Obligations Checklist
Code of Ethics Acknowledgement
At-Will Employment, Guide2Working@Yahoo! and Privacy Policy Acknowledgment Form

APPENDIX A

DEFINITIONS

(1) “Accrued Amounts” shall mean: (i) any accrued but unpaid Base Salary through date of termination paid in accordance with normal payroll practices, unreimbursed business expenses incurred prior to the date of termination paid in accordance with Company policies and accrued but unused vacation time through the date of termination due in accordance with Company plan and policies paid within sixty (60) days following termination, unless earlier as required by law, (ii) other than a termination for Cause during the Term or resignation without Good Reason (except if otherwise provided in a Company plan), any unpaid Prior Year Bonus, and (iii) any other amounts and benefits you are entitled to receive under any employee benefit plan and programs paid in accordance with the terms and provisions of such plans and programs (the “Accrued Amounts”).

(2) “Cause” shall mean (i) repeated failure to attempt in good faith to perform your material duties and responsibilities after written notice of such failure; (ii) willful misconduct of a material nature (without regard to the size of the Company) with respect to the Company or in the performance of your duties; (iii) willful and material violation of the Company’s written policies regarding harassment or discrimination, or of any other material provision of the Company’s Code of Ethics or other similar policy; (iv) a willful and material breach of any restrictive covenant provision contained in any agreement between the Company and you; (v) indictment, conviction or plea of nolo contendere or guilty to a felony or crime of serious moral turpitude; or (vi) willful misconduct having or likely to have, in the good faith opinion of the Board, a material adverse impact on the Company, either economically or by reputation.

(3) “Change in Control” shall be deemed to have occurred if:

	(a)		any person or group of persons (as defined in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) together with its affiliates, but excluding (i) the Company or any of its subsidiaries, (ii) any employee benefit plans of the Company or (iii) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company (individually a “Person” and collectively, “Persons”), is or becomes, directly or indirectly, the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of securities of the Company representing forty percent (40%) or more of the combined voting power of the Company’s then outstanding securities;

	(b)		the consummation of a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation or entity regardless of which entity is the survivor, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity) more than fifty percent (50%) of the combined voting power of the voting securities of the Company,

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			such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or

	(c)		consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets, provided, however, that a sale of the Company’s search business shall not constitute a Change in Control.

(4) “CIC Agreement” shall mean an agreement that would result in a Change in Control if such agreement were consummated.

(5) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(6) “Disability” shall mean the inability of you to have performed your material duties to the Company due to a physical or mental injury, infirmity or incapacity for either a continuous period of ninety (90) days or one hundred eighty (180) days (including weekends and holidays) in any 365-day period. Notwithstanding the foregoing, in the event that as a result of earlier absence because of mental or physical incapacity you incur a “separation from service” within the meaning of such term under Section 409A, you shall on such date automatically be terminated from employment as a Disability termination.

(7) “Exercise Period” shall mean one (1) year after termination of employment or, with respect to any option vesting within ninety (90) days prior to the end of such one (1) year period, ninety (90) days from the applicable vesting date, but in no event beyond the end of the regular term of an award or termination of the grant’s exercisability as a result of an event other than termination of employment.

(8) “Extended Expiration Date” shall mean if a Limited Automatic Extension existed on Expiration, the earliest of (i) termination of your employment with the Company; (ii) if a Change in Control occurs prior to Expiration, two (2) years after the date thereof; or (iii) if an Open In Contemplation Event exists on Expiration, the earlier of the two (2) year period after the related Change in Control or termination of the obligations to close under the CIC Agreement creating the Open In Contemplation Event.

(9) “Good Reason” shall mean: (i) any material breach by the Company of the Agreement or the exhibits hereto; (ii) any material reduction of your authority, duties or responsibilities, provided that not being elected to the Board by the shareholders shall not be a Good Reason event so long as the Board nominates you for the Board if such nomination is permitted by applicable law; (iii) a material reduction by the Company in your Base Salary or Target Bonus target percentage; (iv) the relocation of the principal executive offices of the Company to a location more than fifty (50) miles from its location immediately prior to such relocation and such relocation increases the distance from your residence at the time of relocation to the executive office by a material amount; (v) a change of your position to something other than Chief Executive Officer of the Company (or its ultimate parent operating company in the event of a Change in Control); or (vi) a requirement that you report to a corporate officer or an employee instead of reporting directly to the Board (or its ultimate parent operating company board in the event of a Change in Control); provided, that the foregoing events shall not be deemed to constitute Good Reason unless you shall have notified the Board (or the ultimate

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board, as the case may be) in writing of the occurrence of such event(s) within sixty (60) days of such occurrence (or if on or following a Change in Control, within ninety (90) days) and the Board (or the ultimate board, as the case may be) shall have failed to have cured or remedied such event(s) within thirty (30) business days of its receipt of such written notice and termination occurs within one hundred (100) days of the event (or if on or following a Change in Control, within one hundred and eighty (180) days).

(10) “Limited Automatic Extension” shall mean that either (i) a Change in Control has occurred on or after January 1, 2011 or (ii) an Open In Contemplation Event exists on December 31, 2012.

(11) “Open In Contemplation Event” shall mean a CIC Agreement has been entered into but neither the related Change in Control event has occurred nor the obligations to close the Change in Control under the CIC Agreement have been terminated.

(12) “Post-Employment Health Coverage” shall mean you (including on behalf of your current spouse and any current children that would be eligible dependents if you were an active employee) are entitled to continue to participate in the Company’s health plans for your life following a termination of your employment, subject to the following terms and conditions:

	(a)		you pay the “full cost” of coverage for you and any eligible dependents, which is expected to be the COBRA premium (as adjusted for secondary status to Medicare after you attain age sixty-five (65));

	(b)		you shall no longer be eligible for the coverage hereunder if you commence employment with another employer that has a medical plan for which you are eligible under the general terms of the plan;

	(c)		upon your attainment of age sixty-five (65), this coverage shall only be available if you are unable to obtain a Medicare Gap policy (or to the extent necessary to cover your current spouse while you are married to him and he is unable to obtain a Medicare Gap policy and your current children who would be eligible for coverage under the plan if you were an active employee if they do not have other coverage); and

	(d)		upon your death, either prior to or after your coverage under this arrangement commences, your current spouse if you are married to him at the time of your death (if he does not then have other coverage or the ability to obtain a Medicare Gap policy) and your children who are eligible dependents at the time of your death (if they do not then have other coverage) shall have the right to this coverage respectively, for life in the case of your spouse and while they are eligible dependents in the case of your children, subject to the same conditions as above, but no coverage shall be provided for any future spouse or children of your spouse or any children or spouse of your children.

(13) “Pro Rata Treatment of the Inducement Option” shall mean vesting of a portion of the Inducement Option based on the actual stock prices in the period through December 31, 2012,

with each tranche not vested as of the date of termination of employment multiplied by a fraction, the numerator of which is the sum of the number of full months of employment under this Agreement (with January 2009 considered a full month) plus twelve (12), but in no event greater than forty-eight (48), and the denominator of which is forty-eight (48) months. Each vested tranche (whether vested before or after termination) shall remain exercisable during the applicable Exercise Period.

(14) “Pro Rata Bonus” shall mean your annual bonus for the year of termination, if any, awarded by the Compensation Committee based on such year’s performance and the applicable criteria, if any, multiplied by a fraction, the numerator of which is the number of days you were employed during the year and the denominator of which is 365. The Pro Rata Bonus will be paid in the following calendar year when you would have received it if you had continued employment (subject to any bonus or other plan adopted by the Compensation Committee).

(15) “Prior Year Bonus” shall mean your actual bonus for the year prior to the year of termination, if any, awarded by the Compensation Committee based on such year’s performance and the applicable criteria, if any. Notwithstanding the foregoing, if your employment is terminated on December 31 of any year, such year shall be deemed completed and to be the year prior to the year of termination for purposes of this definition. The Prior Year Bonus will be paid in the calendar year of termination when you would have received it if you had continued employment (subject to any bonus or other plan adopted by the Compensation Committee).

(16) “Section 409A” shall mean Section 409A of the Code and the regulations and guidance promulgated thereunder.

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Look At This Social Media Advertising Done Right – Vertical Advertising Is The Model

For those who follow my blog know that I’ve been a big proponent of social media, but the problem is results and measurement. Airforce is doing something innovative with their agency and Volomedia. I really like this announcement from G4 and Volomedia. Volomedia has signed up a big publisher and a big advertiser to insert ads in portable media and video. The best part is that it work on ITunes and the Iphone. I’ve talked about this before around how iTunes (and IPhone) now has a business (revenue) model.

Comcast’s G4 cable television network and Web site G4tv.com have begun working with VoloMedia to insert ads into the 300 podcast videos distributed monthly through about 23 feeds. The ad network began placing ads for the media giant last month, targeting young gamers.The U.S. Air Force placed the first ads in G4’s podcasts: Attack of the Show, X-Play, and Game Trailers. Sunnyvale, Calif.-based VoloMedia’s new vertical business, Video Game Podcast, supported the ad campaign created by GSD&M Idea City, the advertising agency for the Air Force.

What Does This Mean? Why is this important?

Vertical media works. The trend is away from individual sites or blogs but instead to ‘blanket the vertical’ with brand messaging. In turn effective reach in a vertical hits enough critical mass that brand equity translates. Said another way the most effective way to leverage things like blogs and podcasts is to ‘buy’ the vertical. The dynamics of social networking and social media create an opportunity to hit alot of people in the affinity group. What’s even cooler about this announcement is not only reach but measurement. This is a good move by the Airforce to get a vertical – here it’s gaming as the ‘contextual’ proxy for audience affinity. It’s a no brainer that gamers are their target audience, but instead of going for silo’d conversion, Airforce is going for blanket coverage in the vertical or affinity group.

I predict this is the way the world will go very quickly. Vertical media advertising. This is a great program for brand advertising, and it has measurement. I am sure it will be a success.

Sad Day For Seagate and Plantronics- Seagate CEO Ousted & 3,000 Jobs Cut – Plantronics Slashing Close to 1,000 People

What a sad week for Seagate. CEO Bill Watkins (whom I like and have interviewed many times) was ousted and now they are cutting almost 3,000 jobs. Folks we are seeing the beginning of the massive recession or depression. Ok we are knee deep in the financial depression. This is only going to get worse.

Seagate said in an 8-K filing with the SEC that the restructuring moves will result in pre-tax charges of about $90 million, with most of that to be taken in the December 2008 quarter. The company expects the stafff reductions to save $130 million a year.

The company also said it will cut the salaries of its senior staff, with a 25% cut for new CEO Stephen Luczo, “named executive officers” and executive vice presidents, a 20% cut for senior VPs, a 15% reduction for VPs and a 10% reduction for other management, sales, supervisors and professional employees. The savings cuts should save about $80 million annually.

In related cuts in Silicon Valley and Santa Cruz Plantronics is cutting almost 1,000 jobs. Ken Kannapan (a neighbor of mine) is trying to keep the company cash flow positive. Plantronics needs to move the “ball down the field” big time if they want to compete in Unified Communications.

Company officials said revenue and earnings per share for the third quarter of fiscal 2009 will be lower than originally expected. They had projected net revenues of $205 million to $220 million but now are expecting revenues to be $184 million for the third quarter. Final third-quarter earnings will be announced Jan. 27.

The revised revenue estimate is mostly the result of lower-than-expected sales of Bluetooth headsets, but also reflects the impact of broad economic weakness across different product categories, officials said.

As a result of the workforce reduction and other restructuring, officials expect savings of approximately $7.7 million to $8.2 million in the fourth quarter of fiscal 2009. Yearly savings are expected to be more than $50 million. The company also plans a 50 percent reduction in capital expenditures in fiscal 2010.

“As global economic weakness persists, our key objectives are to remain profitable and cash-flow positive, continue to invest in strategic initiatives such as unified communications, and to improve our profitability in our consumer businesses,” said President and Chief Executive Officer Ken Kannappan. “We believe that our strong financial position combined with ongoing strategic investments will allow us to emerge from this downturn in a significantly stronger competitive position.”

Google Aims At Microsoft – Google Apps In the Enterprise – Google Sets Up Channel Partners

In an big move Google is taking the classic enterprise sales move – set up a channel. Indirect channel marketing is great leverage and if pulled off is very disruptive. I’ve spend many years in the channel business with Hewlett-Packard and the channel model is based upon a simple formula – get thousands of people selling your product everywhere. However, the key to success is money which Google has plenty of. If Google can incent channel partners with good products and great margin, they will put a dent in the Microsoft dominance.

Here is more detail. Web search leader Google Inc took another step on Wednesday toward direct competition with Microsoft Corp by recruiting IT resellers to market its Web-based applications to business clients.

From the end of March, authorized resellers will be able to sell, customize and support premium versions of Google Apps, which includes word processing, spreadsheets, calendars and email.

Google Apps is broadly similar to Microsoft‘s top-selling Office package except that Apps is completely Web-based and is part of Google‘s push into so called ‘cloud computing‘ or software-as-a-service. Microsoft said in October it is also looking at adding Web-based features for its Office applications.

Since it launched Google Apps in February 2007, Google has only sold directly to business users over the Web. Analysts said the move to work with third parties is necessary if Google hopes to compete seriously with Microsoft or IBM.

Microsoft, which is the world’s largest software company, sells more than 95 percent of its software through more than 440,000 third party resellers, according to Gartner Research, and intends to spend around $3 billion on managing those sales channels in 2009.

Steve Jobs Apple Computer CEO Steps Down Takes Leave of Absence For Health Reasons

This email went out to Apple employees. Steve will take some time off to focus on his health. I would like to wish Steve a speedy recovery. Meanwhile, COO Tim Cook will take over day to day operations.

Here is Steve Job’s memo to employees:
Team,

I am sure all of you saw my letter last week sharing something very personal with the Apple community. Unfortunately, the curiosity over my personal health continues to be a distraction not only for me and my family, but everyone else at Apple as well. In addition, during the past week I have learned that my health-related issues are more complex than I originally thought.

In order to take myself out of the limelight and focus on my health, and to allow everyone at Apple to focus on delivering extraordinary products, I have decided to take a medical leave of absence until the end of June.

I have asked Tim Cook to be responsible for Apple’s day to day operations, and I know he and the rest of the executive management team will do a great job. As CEO, I plan to remain involved in major strategic decisions while I am out. Our board of directors fully supports this plan.

I look forward to seeing all of you this summer.

Steve

Update: For more information on Steve Jobs health that has been reported check out this playlist put together by DJ

Playlist of Steve Jobs Videos

Yahoo Will Get New CEO – Carol Bartz – Good Choice – Lets See Some Bold Moves

Yahoo Inc. is expected to announce that Carol Bartz, former chief executive of software company Autodesk Inc., has accepted an offer to become the Internet company’s next CEO, according to people familiar with the situation. Boomtown’s Kara Swisher was the first to break this and now it looks like Kara had her ear to the ground in the right spots.

Hiring an operational Silicon Valley insider is a good move for Yahoo. What Carol needs to do is filter the signal from the noise internally at Yahoo. I’m sure everyone there is jockying for position. Carol needs to hire from the outside and bring in some ‘mavericks’ to get Yahoo relevant again in both the product side and the corporate side. She has a big job ahead of her. I think the thing that no one is talking about is that she makes a great partner to Jerry Yang who obviously has the desire to make Yahoo great again.

From WSJ today. Ms. Bartz, 60 years old, will face a number of challenges as she tries to turn around Yahoo’s flagging performance and stock price. Some investors have been lobbying for a break-up of the Internet giant, for instance. Yahoo faces tough competition from Internet rivals such as Google Inc.

Ms. Bartz still serves as executive chairman of Autodesk, of San Rafael, Calif., which she ran as chief executive from 1992 to 2006. Autodesk is around half the size of Yahoo, with approximately 7,000 employees world-wide.

Ms. Bartz was also an executive at Sun Microsystems Inc. and she sits on the board of Cisco Systems Inc., with Mr Yang. She is also a member of the Intel Corp. board with Yahoo President Susan Decker, who was also interviewing for the CEO job.

In afternoon trading, Yahoo’s stock fell 2% to $11.96 on the Nasdaq Stock Market. The stock remains well below its 52-week high of $30.25.

Ms. Bartz’s appointment will likely reopen questions of Yahoo’s strategic direction, potentially clearing the path for the company to restart negotiations with Microsoft over a sale of its search business. Microsoft CEO Steve Ballmer, who tried and failed to buy Yahoo last year, has publicly said in the past few weeks that a search deal with Yahoo should be made when there is a management transition at both companies. Microsoft late last year hired a Yahoo search executive Qi Lu to lead its Internet business.

Ms. Bartz and Yahoo’s board will also have to turn to other ways to right the business, which is being hurt further by the down economy. That could include striking a deal with another partner like Time Warner Inc.’s AOL or divesting of smaller business units.

With these major strategic questions in mind, Yahoo’s board focused its CEO search on experienced executives with deal and operating experience, according to people familiar with the search. Yahoo Chairman Roy Bostock led an informal committee of directors in the search; the group also included Frank Biondi, the former chief executive of Viacom Inc. Directors quickly zeroed in on a short-list of external candidates, such as former Vodafone Group PLC Chief Executive Arun Sarin, among others.

The Quiet Tech War: Google vs Cisco – DNS Is The Internet Oxygen – Cisco Does Deal With Infoblox on DNS At The Edge Speaks Volumes

Network World is reporting that Cisco has done deal with Infoblox for managing DNS at the edge. In enterprise speak this is about the branch office – in tech speak this is about intelligent addressing and control of the edge. Infoblox vNIOS™ software for Cisco Integrated Services Routers (ISRs) empowers branch offices by automating core network services, providing the performance benefits of local service delivery with unparalleled resiliency and centralized visibility while reducing branch network capital and operating expenses.

Here is Yankee group perspective worth noting on this Cisco Infoblox announcement…“Remember the ‘Trapper Keeper?’ That’s what Cisco’s routers are becoming for enterprise branch office: a single place to keep all critical network applications and services,” says Phil Hochmuth, senior analyst at Yankee Group. “This is being enabled largely by the AXP, which allows organizations to cram as many services — even ones beyond Cisco’s own scope, such as Infoblox IP address management — onto a single platform.” …hmmm DNS in core and edge routers.. hmmm policy at the edge… interesting.

There is a bigger picture here. DNS is the small little Internet feature that will be the focal point for the upcoming Internet war between Google and networking vendors including Cisco. Why? DNS is the Internet Oxygen. DNS made Google – no DNS – no URLs; no URLs – no Web; no Web and URLs -no search. Here we go again except instead of web pages and search, we have web services up for grabs – that includes enterprise and cloud services.

Having a technology that is automated and programmable (i.e. policy) will gives the winner the viable solution to deliver the next generation search and application paradigm from advertising to brokering transactions.

Over the past 8 years insiders at Cisco have been debating the future of Cisco. Many back in 2000 were arguing internally at Cisco that they have to “move up the stack”. Well they never did it. In fact Cisco has been spending a ton of time rewriting IOS and figuring out what to do. Meanwhile back in 2000 a little growing company named Google was scaling their DNS offering (aka URL search) to take over the online advertising market. Now it’s apparent that Google has a mission in the cloud and networking space – they have been moving down the stack – right into Ciscoland.

This middle ground (Cisco moving up and Google moving down the stack) will be where the battle of the titans will take place. This feature from Cisco is an indicator of what the battle will be for.

Update: I just found out that this has not been officially announced yet. I believe it will be discussed here at this event in San Jose this week.

Yahoo Keyword: Arbitrage – A Yahoo BiD Coming From Investment Group ? It’s About Damn Time

Mike Arrington has a report that a group of investors are circling Microsoft for money to take over Yahoo. Finally, someone is making a run at Yahoo. The wounded beast is begging for a takeover and what a bargain that would be. I would love to have the cash to take over Yahoo. Yahoo has amazing assets.

This is the easiest arbitrage and the best investment if the group can get the company at the right price. Also a huge win for Microsoft. I am happy to see some life in the technology financial markets. This would be a fun deal to work. Can’t wait to see the debate – obviously I have an opinion with a ‘capital O”.

A group of well known Silicon Valley executives and top investment bankers are putting together a Yahoo takeover deal that would be financed largely from debt supplied by Microsoft, we’ve learned from sources with knowledge of the proposed transaction.

Under the terms of the proposed deal, the investment group would make a takeover bid for Yahoo at a relatively low premium of around 20% to its current price of around $13 per share, valuing the company at just over $20 billion.

Simultaneous to the transaction Yahoo’s search and search marketing business would be sold to Microsoft. Following the transaction the new executive team would take over the top ranks of Yahoo. A key goal of the new team would be to attempt to attract back much of the executive talent that has fled Yahoo in the last year.

New Venture Capital Model Is Coming? Limited Partner Investors Seeking New Avenues

NOTE: Visit the siliconANGLE blog for a community of bloggers on Social Web and Technology Opinion and Analysis. THANKS

Is this financial market mess going to put the nail in the venture community? Today’s Venture capital has been struggling for sometime with ony a few small hits and very handful of big returns. The problem is that entrepreneurship is stuck because of venture capital. We need to modernize the venture capital business so entrepreneurs can get busy. I am seeing more early stage creative development then in years past. The entrepreneurial process will never die but it will evolve. These are the pains that we are seeing now with startups. The capital markets are a mess and with no liquidity market today’s venture capital firms are spinning their wheels. The good news is that capital markets are efficient and will work around the bottleneck we are seeing. This NYTimes story is an early indicator that big money will find new homes.

NYTimes has a very interesting story…

Investors in venture capital and private equity funds who want out are discovering that their stakes are worth less than they paid for them.

As returns on venture capital investments sour and investors’ wealth deteriorates, some of these investors — the universities, foundations and pension funds known as limited partners — have been unloading their stakes in the funds. When they decide they can no longer supply the money they had previously committed, they sell their stakes at a discount to what is known as a secondary firm.

In the second half of 2008, as more limited partners tried to sell their stakes, the price they could get for those stakes fell to 61 cents for every dollar of face value, according to a report from Cogent Partners, an investment bank for institutions looking to sell their holdings on the secondary market. That is down from 84.7 cents on the dollar in the first half of the year and a 4 percent premium in 2007.

A stake in an early stage venture capital fund that has already been fully invested, for example, would be worth 10 to 30 cents on the dollar, Mr. Gull said. “It would have relatively young portfolio companies, some number of them will need additional capital so the fund will get diluted and there are not going to be any exits for some number of years.

A 40 percent loss is no different than investments in the public markets, Mr. Gull noted, and investors would prefer to have the cash. They think, “It’s a sure thing that I can redeploy in some other activity I think has a larger chance for return,” he said.

Mr. Gull said he could not predict when pricing would improve, but his firm is betting that it will not see any meaningful returns from private equity and venture funds until late 2010.

Discovery, Navigation, and Collaboration – Hello Holy Grail – Facebook Is Soaring – They Will Be Huge – Trust Me

I am a big believer that Facebook’s massive growth is bigger than most people think. They are pushing a utility that delivers big time value. Over the past year I have been studying the utility of Facebook and can tell you that it’s not about just sharing and throwing sheep – It’s about people in a new paradigm. Facebook has the opportunity to take a very strong value proposition and evolve how users discover and navigate (the core principles of search) BUT more importantly they are in the exchange position of real value – actionable value transfer. Simply put: they broker transactions from finding lost friends, staying in touch with existing friends, making new friends, to finding and buying products and services. They can be a hub of collaboration of all sorts. All of those elements make them poised to make it big time. If they continue to keep their eye on the user experience (utility) ball then they can get there. Their numbers are just too big to be dethroned. The only way Facebook will miss the opportunity is if they screw it up on their own. Facebook as they say is ‘gold plated’.

Here is a post from Facebook’s CEO Founder Mark Zuckerberg.

Today, we reached another milestone: 150 million people around the world are now actively using Facebook and almost half of them are using Facebook every day. This includes people in every continent—even Antarctica. If Facebook were a country, it would be the eighth most populated in the world, just ahead of Japan, Russia and Nigeria.

When we first started Facebook almost five years ago, most of the people using it were college students in the United States. Today, people of all ages—grandparents, parents and children—use Facebook in more than 35 different languages and 170 countries and territories.

The full potential of the web is to make the world more open, so everyone has a voice and can share what is important to them. With 150 million voices and counting, we can’t wait for the rest of 2009, and we look forward to offering even more ways for you to connect with the people who matter most.

Clay Shirky Media Business Market – His Forecast for 2009 – Look For The Deeper Meaning Within His Words

I’m a big fan of Clay Shirky and his research. His latest book “Here Comes Everyone” is awesome. He makes some great points that it’s worth posting his forecast here as well from the Guardian. Many of my opinions and analysis of media and social media align with Clay’s. I suggest if you’re interested in Social Media or “media 2.0” that you follow Clay’s work.

Clay Shirky predicts further gloom for traditional media: “2009 is going to be a bloodbath.” Yet he foresees that a recession may produce greater industry clarity by forcing radical action, which he explains as a boss saying to staff: “‘Bonfire, this is Hail Mary time!’, instead of: ‘This year we made as much money as last year but we’re still restructuring dramatically.'”

Much of the success of Shirky’s recent book, Here Comes Everybody, about internet technologies and the effects of mass democratisation of the web, came from its simplicity and the absence of jargon. “As with the printing press, the loss of professional control will be bad for many of society’s core institutions,” he writes. In conversation he is just as plain-speaking, saying, for example, that “Management has a hard time destroying parts of its business unless the alternative, obvious to everyone, is that there is no choice.” Based in the unlikely environs of NYU’s Interactive Telecommunications Program, a stone’s throw from a fusty independent bookstore in downtown Manhattan, rather than Silicon Valley, Shirky, 44, is unburdened by traditional media ties. After Yale, he worked as a painter and theatre director before becoming ensnared by the web in the early 90s thanks to his mother, a research librarian. He has consulted at News International and lists the BBC as a current client. “The advantage I had over people in the traditional media industry is precisely what I didn’t know,” he says. “I was a pretty unlikely early adopter.”

No one, of course, can know what a future media landscape will look like. But, given that Shirky was among the few to have forecast 15 years ago that classified advertising would be sold online rather than via a newspaper ad, his crystal ball is more estimable than most others. This is his forecast:

Newspapers

The great misfortune of newspapers in this era is that they were such a good idea for such a long time that people felt the newspaper business model was part of a deep truth about the world, rather than just the way things happened to be. It’s like the fall of communism, where a lot of the eastern European satellite states had an easier time because there were still people alive who remembered life before the Soviet Union – nobody in Russia remembered it. Newspaper people are like Russians, in a way.

Jeff Jarvis said it beautifully: “If you can’t imagine anyone linking to what you’re about to write, don’t write it.” The things that the Huffington Post or the Daily Beast have are good storytelling and low costs. Newspapers are going to get more elitist and less elitist. The elitist argument is: “Be the Economist or New Yorker, a small, niche publication that says: ‘We’re only opening our mouths when what we say is demonstrably superior to anything else on the subject.'” The populist model is: “We’re going to take all the news pieces we get and have an enormous amount of commentary. It’s whatever readers want to talk about.” Finding the working business model between them in that expanded range is the new challenge.

Why pay for it at all? The steady loss of advertising revenue, accelerated by the recession, has normalised the idea that it’s acceptable to move to the web. Even if we have the shallowest recession and advertising comes back as it inevitably does, more of it will go to the web. I think that’s it for newspapers. What we saw happen to the Christian Science Monitor [the international paper shifted its daily news operation online] is going to happen three or four dozen times (globally) in the next year. The 500-year-old accident of economics occasioned by the printing press – high upfront cost and filtering happening at the source of publication – is over. But will the New York Times still exist on paper? Of course, because people will hit the print button.

Books and magazines

If you pick a magazine at random, it will not interest you. For people who care about quality, it’s easier to find it online. If it’s a highly qualified niche magazine, something aimed at surgeons or firefighters, it’s going online. There’s no reason those things should exist.

The great advantage magazines have is glossy pictures. It’s better to read on paper than on the web but it’s much better to look at pictures on paper than on the net. Brides magazine is going to be the last one standing.

The book world is more secure. I think the big revolution is going to be print on demand. Imagine only having one browsing copy of every book in a bookstore. You could say “Malcolm Gladwell’s Outliers looks good”, and out pops a brand new copy. Why does a bookstore or a publisher have to be in the shipping and warehousing business?

The big fight will be between passion and mass appeal but I don’t think it’s a question of who will win. It’s not a transition from A to B, it’s one to many. The question is who figures out the business model that says it’s better to have 6 million passionate fans than 7 million bored ones? That is going to be the transformation because what you see with these user groups, whether it’s for reality TV or science fiction, is that people love the conversation around the shows. The renaissance of quality television is an indicator of what an increased number of distribution channels can do. It is no accident that this started with cable.

And the BBC iPlayer? That’s a debacle. The digital rights management thing …let’s just pretend that it was a dream like on Dallas and start from scratch. The iPlayer is a back-to-the-future business model. It’s a total subversion of Reithian values in favour of trying to create what had been an accidental monopoly as a kind of robust business model. The idea that the old geographical segmenting of terrestrial broadcasts is recreatable is a fantasy and a waste of time.

What does the next decade hold? Mobile tools will certainly change the landscape, open spectrum will unleash the kind of creativity we’ve seen on the wired internet, and of course there will be many more YouTube/Facebook-class applications. But the underlying change was the basic tools of the internet. The job of the next decade is mostly going to be taking the raw revolutionary capability that’s now apparent and really seeing what we can do with it.

Is Intel Crashing and Burning? Q4 Expectations Fell 20%; Well Below Previous Guidance

I love Intel as a company and have been using their products for all of my digital life, but I have to say that I noticed a big change in the company over the past few years – it’s got this sinking feeling. Now Erik Savitz is reporting that Q4 Earnings are not great and below guidance (translation Intel missed their numbers). 2008 has been a bad year for business all around and Intel is no exception.

Intel has been slowly laying off employees and cutting back on almost all expenses especially marketing. We’ll see how much impact Intel has at CES. It would be a shame if Intel continues to sputter because it certainly will leave a crack in the door for AMD and others to get back into the leadership position.

I miss the old Intel. Maybe Andy Grove can come back and give a pep talk to management.

New York Times – A Failed Ad Strategy

New York Times is now selling ads on their front page. I have to say that I didn’t even notice. This is the reason why it’s a failed strategy. Trend is away from print to online and that is where the NYTimes should be focused. Not only are web users not clicking on display ads, a new crop of software led by Adblocker Plus is blocking all the ads. Adblocker Plus used on about 10% of all web users is quietly gaining ground as a tool for end users. I wonder if the New York Times will see the impact of the fact that display ads are being blocked.

From Adage.

The New York Times unveiled a display ad on its front page, despite decades of fear that advertising there could contaminate the journalistic product or brand.

Today’s ad, which promotes CBS, occupies a strip of real estate two and a half inches high at the very bottom of page A1.

Today’s ad, which promotes CBS, occupies a strip of real estate two and a half inches high at the very bottom of page A1. That makes the unit less noticeable than the boxes available on the front of Rupert Murdoch’s Wall Street Journal, but it’s still a big departure for the Times.

In a statement this morning, the Times pitched the turnabout as win for marketers. “In 2006 we began testing ads on some section fronts and received a very positive response from the advertising community,” said Denise Warren, senior VP-chief advertising officer for the New York Times Media Group.

Taking its situation seriously
But it’s also a clear reflection that the Times is taking its situation seriously, something that was questioned after a recent presentation to investors and analysts. The New York Times Co. finally cut its costly dividend payments last November but drew fire for failing to suspend them altogether. “It just seems the reality is it’s a very, very difficult business right now, newspapers,” a questioner told executives. “And the notion that cash is flowing out of the company to the equity seems — it seems like you may not understand the gravity of the situation.”

In a funny way, the awful business environment may have actually freed the business side to sell the ads without worrying about an outcry from the newsroom.

“While three years ago the notion of the august New York Times serving up front-page ads would have stirred emotions far and wide, today it’s a one-day story,” said Ken Doctor, a newspaper vet turned media analyst for Outsell, a research and advisory firm. “When someone doesn’t have enough to eat, he doesn’t quibble about the source of the food.”

Made their peace
Many other papers have already made their peace with front-page advertising. The Journal began selling front-page units in 2006, carefully milking their potential to get big commitments from the five marketers allowed to buy them each year.

“Every single purchase has with it an annual commitment, an online commitment,” said Michael Rooney, chief revenue officer at Journal parent Dow Jones. “Some are multiyear, and some are global as well.”

With such prominent ad units, of course, it’s easy to wonder how the big articles next to them hurt or enhance their effectiveness. General Motors and Hewlett-Packard ads have bumped up against negative coverage of their own companies.

The front of the Journal’s Marketplace section today, on the other hand, shows an Oracle ad next to an article pegged to the Consumer Electronics Show. That’s an adjacency Oracle might have liked to arrange — which in turn is a possible suspicion that bothers opponents of these ads. Mr. Rooney said the paper never talks about news articles with advertisers. “It’s just not a conversation we would ever have,” he said. “Whether it’s the B section, the A section or anywhere in the paper, we sell our audience.”

Off the table
Last June The Washington Post’s new publisher, Katharine Weymouth, told Ad Age that front-page ads remained off the table. “I’ve had advertisers beg me to put ads on the front page, and we’re not ready to do that,” she said. The same goes for ads on Post-it notes affixed to the paper. “We declined to do that because we thought it cheapened the front page.”

Since then, of course, the economy has worsened dramatically. The Washington Post Co. saw print-ad revenue at its newspapers fall 14% in the third quarter.

This morning Ms. Weymouth confirmed, however, that the Post still doesn’t sell front-page ads. “No,” she e-mailed Ad Age. “The Washington Post does not currently accept front-page ads in our print edition.”

Steve Jobs Health Memo – Apple MacWorld 2009 – Hormone Imbalance Has Caused Him to Chill A Bit

Update January 14, 2009: Steve Jobs Steps Down Til June for Health Reasons

I just read at AllThingsD that Steve Jobs has publicly announced that he has a hormone imbalance and that will be preventing him from doing the Keynote at Apple MacWorld 2009. Steve, in rare form, announced that he is “Chilling Out” with his family rather than preparing for MacWorld 2009. Good for Steve. He has poured his heart and soul into Apple and turned that puppy around from the dismal state it was in when he took over over a decade ago. All the recent health speculation comes to an end now. Steve will be around for a while. Being the CEO of any company never mind Apple can be a like a “meat grinder” so it’s great to hear that Steve is taking some time to “chill”.

I got to know Steve’s family over the past few years here in Palo Alto and I’m glad to see that he is focusing on his family while maintaining his CEO post at Apple.

Letter From Apple CEO Steve Jobs

Dear Apple Community,

For the first time in a decade, I’m getting to spend the holiday season with my family, rather than intensely preparing for a Macworld keynote.

Unfortunately, my decision to have Phil deliver the Macworld keynote set off another flurry of rumors about my health, with some even publishing stories of me on my deathbed.

I’ve decided to share something very personal with the Apple community so that we can all relax and enjoy the show tomorrow.

As many of you know, I have been losing weight throughout 2008. The reason has been a mystery to me and my doctors. A few weeks ago, I decided that getting to the root cause of this and reversing it needed to become my #1 priority.

Fortunately, after further testing, my doctors think they have found the cause — a hormone imbalance that has been “robbing” me of the proteins my body needs to be healthy. Sophisticated blood tests have confirmed this diagnosis.

The remedy for this nutritional problem is relatively simple and straightforward, and I’ve already begun treatment. But, just like I didn’t lose this much weight and body mass in a week or a month, my doctors expect it will take me until late this Spring to regain it. I will continue as Apple’s CEO during my recovery.

I have given more than my all to Apple for the past 11 years now. I will be the first one to step up and tell our Board of Directors if I can no longer continue to fulfill my duties as Apple’s CEO. I hope the Apple community will support me in my recovery and know that I will always put what is best for Apple first.

So now I’ve said more than I wanted to say, and all that I am going to say, about this.

Steve

Update: Apple just posted the announcement on Steve Jobs’ health status on their Apple.com.

Here Are My Traffic Numbers for 2008 – Direct Traffic Not the Same as Total Reach or “GraphRank” – Furrier.org Direct Traffic for Blog in 2008

During 2008 I spent most of the time rebooting my energy and working on research & development of a few ideas that I’ve been kicking around. I blogged a bit more and saw traffic to the blog increase hence the addition of sponsors. Thanks Infoblox and Volomedia.

I am working on a research piece on ‘Total Reach of a Blog” – specifically ones like mine. Often the best blogs don’t have to have huge direct traffic numbers to reach millions of people. If a blog or blogger has a high “GraphRank” (term I’m trademarking can’t find the symbol to insert) they have a huge reach. Anyway more on that later in another post (people who follow my research might know where I’m going with that).

Here is my blog FURRIER.ORG – DIRECT TRAFFIC FOR 2008 (site and rss reads in unique visitors): Thanks for all the 297k people who read my blog.

JAN          15,325
FEB          10,254
MAR           7,493
APR          26,426
MAY         26,648
JUN          20,285
JUL         22,853
AUG        18,967
SEPT         33,987

OCT         38,649
NOV        50,632
DEC         26,263

TOTAL DIRECT TRAFFIC 297,783

New Reality: Silicon Valley Wealth Machine – The Rebooting Meritocracy

Businessweek has a post about Silicon Valley wealth machine. Silicon Valley is going through another downturn. It’s the second major downturn in less than 10yrs. I’ve been on the ground for all of those years. It’s down, but not completely ‘out’.

Silicon Valley is a special place for entrepreneurship, and it continues to be. The issue is not that there is a wrench in the machine, but that the machine is broken. It’s rebooting.

One thing I love about Silicon Valley is that there are no handouts. It’s the ultimate entrepreneurial meritocracy. Change happens and it happens both from the bottom up (entrepreneurs) and the top down (capital market). The question is which force is driving the change.

Redistribution of wealth is upon us. The entrepreneurs and investors that move on this current market opportunity will capture the proverbial “chips on the table”. As an entrepreneur, I love this market. Opportunities are everywhere. Unlike the dot com bust, this tech (entrepreneurial) market never really crashed. Everywhere I look I see discounts and new opportunities. Smart money will move around, but in select places. Is the market scary? If you’re an incumbent it sure is scary.

Silicon Valley Web 2.0 is hurting, but not for the obvious reasons. A bigger force is at play here – massive redistribution of wealth is taking place. Some are scared, and some are welcoming the opportunity of possibly acquiring the wealth “on the table”. I think that Facebook and Twitter are great examples of what might be possible. Facebook will become the next Google. The only thing holding them up is that the ‘new revenue’ model that is soon to arrive at the “station”. When that “train” arrives (and it will) Facebook will say Goodbye to all the naysayers.

Research & Development Void?

The bigger picture is more long term and that’s all about research and development. Judy Estrin recently came out to talk about something really important – the innovation gap. Let me translate her thesis – we are screwed if we don’t have steady research unencumbered by short term agendas. Think how important institutions like Stanford, MIT, and SRI have been to Silicon Valley and entrepreneurship. Without these deep research institutions we would not have many innovations that created wealth – hello Ethernet; hello Apple; hello Cisco; hello Google, ..etc.

The lack of institutional research leaves a void in the Silicon Valley ecosystem. John Markoff postulates in his book “What the Dormouse Said” that the culture and research of the 60s drove the PC revolution. The question now is what revolution are we developing and where is the research? Will we miss the next important energy, medical, or tech breakthrough? Where is our modern day moonshot mandate?

How will it play out? The future is unwritten.

Update: The Wall Street Journal has a great perspective on how regulation is hurting entrepreneurship. Add the lack of research mentioned above and the opinion is complete.

Ultimate Recession Company – Virtual Events – ON24 – Conversation with CEO Sharat Sharan

Last month during the Web 2.0 conference I stopped by the office of ON24 to meet with their CEO Sharat Sharan. I was interested in meeting with Sharat for three reasons: 1) he was funded by USVP, 2) his company is doing extremely well, and 3) he’s lived through two bust cycles.

ON24, a venture backed company, has built up a business that is now global. Initially they were focused on “Live” events and now have focused on servicing the enterprise via webcasting, demand generation, and rich media offerings. I was very impressed with Sharat in that he is very geeky and is deep technically. More importantly, he kept his company alive through two up and down cycles. ON24 has built an infrastructure platform that handles corporate casting, conf call, demand and lead gen. However, what got me excited is the new direction of virtual conferences.

As Second Life struggles with it’s virtual business approach, ON24 is kicking butt. Trade shows and conference are the areas that companies cut during a recession and having a viable platform like ON24 makes sense. To me the big upshot is the trend in social networks where trust and communications are now being established. This will lead to a viable model for virtual collaboration or better yet virtual events. Although the product isn’t what I had hoped, it delivers the basics and it is state of the art.

ON24 isn’t going out of business anytime soon. In fact they are doing great even in this market. They have the ultimate recession product – it increases revenues for companies while reducing costs. Now that’s a business model.

ON24’s challenge is to make the user experience truely social instead of some vendor speak “spam party”. I know that they are working on that but that is not their job. Corporate customers need to adjust the ON24 product to fit the market rather then just fit their marketing message.

A couple of sound bite comments from Sharat worth noting:
– Second Life is inappropriate for business
– Brands want control over their virtual environment
– demand generation and lead generation is key to the ROI for corporate customers
– users enjoy exciting new apps but it complicated things – the latest and greatest don’t necessarily translate to success
– the social web is becoming more cluttered (noisy) and we need new filters and look to expert systems or guides to lead in this area
– in 3-5 yrs rich media will be the standard not the exception with interaction capabilities being front and center
– patience is what allowed him to survive and keep his business on track for the 2 down cycles (including this one)
– reinventing and serving customers that drive revenue help companies survive – eliminate the heavy cost structures if revenues aren’t in sight
– revenue is the ultimate success story for this current market condition; revenue equals product/platform validation
– Erwin Federman was the key to the success of ON24 with Erwin Federman ON24 never would have made it

I have to say that I really liked Sharat and his team. Sharat is a true entrepreneur, tech guru, and great executive. We shared some great entrepreneurial stories including some about USVP which will remain off the record. PodTech and ON24 where both funded by USVP. USVP shut down PodTech, but supported ON24 (Erwin Federman wasn’t on the board of PodTech).

Sharat success as he puts it comes down to patience and support of his team (including Erwin Federman of USVP).

My prediction is that we will see a massive rise in social “virtual” collaboration very quickly or more short term – “virtual” events. The question is can ON24 platform enable and accelerate that trend. The key to success will be user experience.