Monday, May 5, 2008

Jerry Yang, village idiot

Says here that Jerry Yang is facing a shareholder rebellion and possible lawsuits for failing to make a deal with the Borg. Money quote: “Disillusioned shareholders are bound to question whether the rejection of Microsoft’s sweetened offer was driven more by emotion and ego than sound business sense.”

Um, yes they are. And for good reason. FWIW, Jerry called me last night. Crying. He’d been on the phone getting screamed at by Wall Street people. And by Yahoo employees who apparently are being really abusive. In men’s rooms all over the Yahoo campus a nasty new drawing is popping up, depicting Jerry Yang with his tongue hanging out, his legs pulled up and both thumbs firmly positioned in his ass.

Jerry’s like, Steve, dude, I know I can turn this company around. I just need a little more time. I’ve got it all mapped out. First we’ll do another 100-day review period to review our operations and re-review the review we did a few months ago; then we’ll have a 100-day listening period; then a 100-day period to digest what we’ve heard when we’re listening and incorporate that data into the data we gathered during our review; then a 100-day period to develop a new strategy; then a 100-day period to explain the new strategy to employees; then a 100-day period to reorg the company and start rolling out the foundations of the new strategy to maximize shareholder value and pursue ways to better leverage our opportunities in the still very young online advertising market where we continue to believe we are well-positioned with a unique strategy; then a 100-day period to finish the reorg and roll out the second half of the new strategy. I mean it’s pretty simple stuff.”

I’m like, Jerry, dude, I’m not very good at math and to be honest I kind of lost track of what you were saying because I put down the phone at one point so I could check myself out in the mirror, but I think that plan is going to take something like fifteen years, isn’t it?

He said no, it was only two or three years at most, and the Internet is still in its infancy, and blah blah blah …

So I cut him off, and I’m like, Jerry, hold on. Hold on. Stop. Listen to me. Jerry, you know what? It’s been great knowing you. Really it has. And I think you’re going to make a fantastic member of the Ex-Founders Club, alongside Woz and Paul Allen. I’m sure you’ll find ways to keep busy. Maybe you can do some creative investments. Build an electric car. Or a commercial spacecraft. Open a restaurant in Napa. Take up high-altitude ballooning.

He’s like, Steve, I don’t want to go ballooning, I want to keep running Yahoo. I’m like, Dude, I want to turn my house into a polygamous retreat with Gong Li and Scarlett Johansson as my new wives, but that wish ain’t gonna come true. And neither is yours. Sorry.

He was crying again when I hung up.

Much love and namaste to anyone who wants to Photoshop Jerry’s face onto that photo above. Bokay? Peace out.

UPDATE: Much love and a free fake 3G iPhone to Billy R. for the Jerry Yang dunce photo. Much love to all the others who sent in versions as well.

Sunday, May 4, 2008

Ballmer’s brilliant move

Well I’ve said it before and I know I’ll say it again — no matter what you may think about Steve Ballmer, whether you love him or hate him, you have to admit he’s probably the most brilliant CEO in our industry and maybe in any industry today. This fantastic bait-and-switch maneuver on Yahoo just proves it. In one fell swoop Ballmer has upended this entire market space, roiled up everyone, forced all of his competitors into more difficult positions — and none more so than Jerry Yang of Yahoo who looks more foolish than ever right now. How long till Yang comes crawling back looking — nay, begging — for a deal with Microsoft? Three months? His shareholders are already preparing an uprising against him. When the dust clears, Ballmer will scoop Yahoo up on the cheap.

Naturally a lot of the filthy hacks and shitbags on Wall Street are getting it all wrong, saying that if Ballmer didn’t have the stomach for a hostile bid why did he bother launching this in the first place, since it was obvious (or should have been anyway) that Yahoo management was never going to negotiate in good faith. Some idiot in the Financial Times says the failure of the deal is “a black eye for Ballmer.” Excuse me? A black eye? This is a triumph for Microsoft. It is perhaps the company’s finest moment. Certainly it marks the high point in Ballmer’s career.

For better coverage, check out the real experts like Mini Microsoft, who’s cheering his ass off (see here) and Borg expert Mary Jo Foley who says the deal “restores my faith in the future of the company” (see here) and Joe Wilcox who says the Borg comes out looking better than Yahoo.

Here at Apple we’ve started a betting pool here about two data points — Yahoo’s stock price on the first trade of the day tomorrow, and its price by the end of the day.

Namaste, Steve Ballmer. I bow to your genius.

Ballmer now looking for other companies to not buy

So Peter Oppenheimer has been our point man watching the Microhoo deal, and he’s predicted all along that it wouldn’t ever take place, for reasons I first pointed out in my now-classic essay entitled Monkey Boy’s three-legged race.

The truly scary take-away from all this, however, is what this botched attempt says about Ballmer as a CEO and Microsoft as a company. The Borgflacks have spent the better part of the past decade trying to change the image of their monstrous overlord. They’ve worked their asses off to make the Borg appear more friendly, more open, more willing to learn from others. This is straight out of the PR 101 playbook, which says that big companies are scary; big evil companies are even scarier; but big evil clumsy companies are the scariest of all. Nobody wants a big teetering giant stumbling through their market threatening to topple over and wipe out entire neighborhoods by accident. But that’s what Microsoft has become — the big stupid retarded giant lurching into the Valley, like King Kong with a lobotomy and a shotgun and a bottle of tequila, stomping around and beating its chest and then stumbling away, having wiped out most of the city.

And what of Ballmer himself? I’ll try to put this politely. He looks like a fucking idiot. The assault on Yahoo was first and foremost an admission that Microsoft has totally fucked up its attempts to build an Internet business. Everybody knew that, of course, but it’s still usually not a good idea to draw attention to your weaknesses.

Then just last week Ballmer started saying that he’d just figured out that his rank and file didn’t like the deal and were dreading it. Like, dude, shouldn’t you have realized that three months ago, before you gathered your army and made noise of war only to shrink away? It’s like Caesar getting all his dudes lined up on the Rubicon and then going, Um, you know what? Let’s not do this after all. Or to use a polite version of the metaphor that Larry used with me on the phone this morning, Ballmer looks like a guy who’s in need of a little Viagra.

The papers reported this morning that maybe this is all part of some nefarious master plan and Ballmer is just trying to crater Yahoo’s stock and drive them back to the table. I doubt it, but if so, we’re back to problem #1 — the image of the Borg as this big stupid giant that has nothing better to do than to lurch into the Valley and wreak havoc and tamper with the stock prices of other companies and send everyone into a kerfuffle. This is now what passes for the Microsoft business plan?

What seems more likely to me is that Ballmer launched this dumbass takeover offer without thinking it through well enough. This, then, is what Microsoft has become. A pathetic, impotent, washed-up old giant, easily rebuffed. It might almost be funny if it weren’t so sad. I mean come on. Stirring up the shit and wasting everyone’s time and then walking away? Out of all the things you could do as a company, that’s the best idea you have?

Others are reporting (see CNET story here) that Monkey Boy may have other victims in his sights. Top targets are Facebook, MySpace and AOL. Not to acquire them, mind you. Just to make a dumb offer and fuck things up for a few months and then walk away.

Great work, Monkey Boy. You’re the laughingstock of our industry. Turns out this video was a lot more prophetic than we knew:

Friday, April 11, 2008

Steve Ballmer, change agent

Jeez. I take a day off to do some meditating at Green Gulch Farm and come back to find Monkey Boy’s mug glaring out from page one of the Journal and a story that says the Microhoo deal is turning into a full-blown clusterfuck. For a teaser of their story go here. Short version: Yahoo is trying to drag AOL and Google into the mess. Google figures it can skirt antitrust regulators by brokering an ad deal instead of doing an outright merger with Yahoo, which is too bad because wouldn’t it be a great world if the biggest Internet company had a name like GooHoo? Meanwhile Time-Warner just wants someone, anyone, to take AOL off its hands. AOL should have been taken out back and euthanized years ago. It’s a friggin zombie, still roaming the earth and stinking up the joint. Begone, foul site! Meanwhile the Borg wants its analog from the media world — Rupert Murdoch’s News Corp. — to join Team Evil, and Rupe sees a chance to unload MySpace before it gets destroyed by Facebook. That anyway seems to be what’s going on though who knows? I keep getting this mental image of all these bozos rushing around the top floor of a hotel, zipping in one door and out the other, like a skit from the Three Stooges. Or was it the Marx Brothers?

So I called Monkey Boy to find out what he’s doing. It was early but I knew it was okay because he’s totally one of these dudes who wakes up before dawn so he can get a jump on the day and start plotting more ways to cheapen and uglify the world for the rest of us. Sure enough he was on his treadmill in his workout room slopping down a bowl of corned beef hash with fried eggs while watching three television sets and two computer screens and memorizing everything. He’s like, “You want to know the truth? Okay. Here’s the thing. Somebody needed to come into this space and smash some shit together. Understand? I mean there’s too many of these companies all doing the same thing, or variations on the same thing, and there’s way too much overhang, and AOL shouldn’t even fucking exist anymore and MySpace is ridiculous and we’re all fighting for the same dollars and this shit has just got to stop and someone needed to toss a grenade into the pit and guess what, I’d rather be the one tossing the grenade than be the one trying to catch it and toss it to someone else before it explodes.”

So I asked him how he figures the whole thing will play out and he’s like, “Who knows, and who cares? But this shit needs to get shaken up. It’s turning into a cesspool. The way we figure it if we stir up the pot at the very least we’ll force some of these idiots into forming really stupid alliances or even better maybe they’ll actually merge and mess each other up completely. If possible we’d love to push AOL deeper into Google. I’d glue AOL to Eric Schmidt’s head if I could. But whatever happens, if we get stumped on Yahoo we’ll get portrayed as the poor loser, shunned again, thwarted by some big alliance when really what we’ve done is forced our competitors to tie themselves into a big huge fucking knot. See the one thing we still have going for us here at Microsoft is that even though people make fun of us and deride us and call us clods, deep down they also still fear us. I mean they really, really fear us. And that fear is something we can use. I don’t mean that we’re bluffing, because we’re not. We’ll buy Yahoo, and we’ll make the deal work. But if we don’t get Yahoo that’s okay too because the only way they can escape us is to make a deal that not only fucks them up but also fucks up one or more other players in the space. Geddit?”

So then I asked him why Vista sucks so bad and he says, “Who cares? We’ll do another one but the desktop is dead. Office apps are dead. We’ll milk them for another five years and we’ll use Yahoo to generate ad revenue to get us through the next five or ten years but the real game is a decade out when we’ll be running clouds and the Internet will go beyond the browser and beyond the PC and will be embedded into everything. Ambient, persistent connections, with billions of endpoints hooked to the network. You’ll be there. But so will we. Wait and see.”

Tuesday, April 8, 2008

Dear Jerry Yang: Bend over and take it like a man

Well the Microhoo deal has reached the really sad, ugly phase. Just to bring you up to speed: A few days ago Monkey Boy said he’s sick of waiting and gave Yahoo an ultimatum — make a deal in three weeks or we come down there with machine guns blazing and Operation Lebensraum goes into effect. Then Jerry Yang fired back saying the Borg bid undervalues Yahoo. Funny claim, that, since, um, nobody else wants to buy Yahoo at any price and last I knew when you’re selling something, like a car or a house, it’s only worth what someone is willing to pay for it. (This is the argument Larry used in reducing the taxes on his house recently.)

So now poor Jerry is getting weird and desperate. He’s trolling the Valley like a cheap tranny hooker down in the Tenderloin rushing up to cars at red lights and trying to land one last trick before the sun comes up. I mean he’s calling everyone. He’s calling VCs and private equity guys. He’s calling investment bankers. He’s calling Facebook and Google and Intel and AMD and Amazon and HP and IBM and Gateway and Dell. He’s calling Masayoshi Son. He’s calling Chinese government officials (argument being “Hey, we already have such a great working relationship.”)

Of course he’s calling me. Just like he called me when his troops needed a pep talk last year. He’s like, Steve, dude, I’ll do whatever I need to do. You want me to mow your lawn? Wash your car? Steve, I’m sitting here wearing a skirt, okay? You know what I’m saying? You understand me? Don’t make me spell it out, man. Just please please please save me from the Beastmaster.

My feeling is this. First of all, we don’t have enough money to buy Yahoo, and even if we did, I don’t want to own Yahoo. Second of all, there’s this little thing called karma and maybe somehow in some twisted way this is your payback for what you did to those Chinese dissidents. (Also see here.)

Jerry, let me tell you what everyone in the Valley is saying to each other but is too polite to say to you: You mis-managed your way into this mess, so mis-manage your way out of it. You screwed up, and now you’ve been sent to prison, and your cellmate is this big scary crazy dude who wants to mess with you big-time, and nobody is going to get you out of it.

Jerry, I hate to say this, but it’s time to bend over and take it like a man.

(Much love to Art Director Jason for the Photoshop work.)

Monday, February 11, 2008

G’day mate, let’s put some Borg on the barbie

Meet the CFO of Microsoft, Chris Liddell. He comes from New Zealand, which I’m told is very close to Australia, where I’m told they say things like that phrase in the headline of this post. Whatever. If you’re wondering who dreamed up this crazy merger with Yahoo, look no further. It’s not Monkey Boy — it’s this nut. Check out the eyes in that photograph. And the evil little grin. Total madman, right? Story says he’s brought a “philosophy of change” to Microsoft. Well, that’s putting it mildly. Like, let’s change into a big bloated dinosaur wallowing in a tarpit trying to wrestle with another big fat stupid dinosaur. Let’s spend years doing this. Woo-hoo! And yes, as suspected, of course Mr. Liddell is a former investment banker. And at the highly reputable Credit Suisse First Boston no less. (You may remember them from their starring role in the dotcom bubble a few years back.)

Who else but an investment banker ever dreams up impossible mega-mergers like this and then spends months and months in meetings trying to gin up numbers to make the case for why this marriage can work when it’s obvious to everyone that it can never work? Can you imagine the way the tools from Morgan Stanley and Blackstone were drooling when Liddell flew them all into Redmond and told them to run the numbers? Investment bankers love deals like this — just think of the fees! And they never get blamed when the whole thing falls apart years later. Nope. By then they’re long gone and it’s always management’s fault. Put a bunch of these banker sharks in a room and believe me they’ll find a way to make the numbers work. They’re like those two scientists in Utah who twenty years ago convinced themselves that the laws of physics don’t always work the same way and if you just add a little of this and take away a little of that, voila! Cold fusion!

Same with mergers. If this division does this and you do some layoffs over here and you add a few people over there and you play Abbey Road backwards while reciting the Lord’s Prayer in Latin, whattaya know! Synergy! It all works! Lead turns into gold! The monster is brought to life!

Mad props and a free fake MacBook Air to the first person who Photoshops this photo and gives this guy a pair of really crazy crazy Charlie Manson eyes. Bokay? Peace out.

Google is secretly praying for the Microhoo deal to go through

So I saw Squirrel Boy (photo above, shown demonstrating the correct procedure for eating a shit sandwich) this afternoon at a tai chi class and afterward we went out for a smoothie and he was pouring his heart out to me about this Microsoft Yahoo deal. He says Yahoo is stalling for time with this new line about how Microsoft’s offer is too low but in the end he thinks they’ll get rolled up. He says he doesn’t see how anyone can bail them out of this. Google can’t, for obvious reasons. Nobody else has the money or the stomach for it. The place is a friggin mess, way worse than anyone knows. Semel left it a shambles and Yang has just let it keep drifting because he doesn’t have the chops to shape it up.

So then he startles me and says that some of his guys have been thinking about the deal some more and they actually think it could be a good thing and so even though Google will make a big show of opposing the merger, deep down they’re kind of secretly hoping it goes through, because they think it will be a disaster. Then he starts going on again about the cloud. The cloud, the cloud, the cloud. It’s all you ever hear when you hang out with this guy. I was like, Dude, I’m so sick of hearing about the damn cloud. Instead of talking about it why don’t you idiots go build the friggin thing if it’s so magical and all-powerful and important? He says they’re well on their way, farther than anyone knows, and in ten or twenty years there will be only a handful of service providers and if you’re bummed by the kind of vendor lock-in we used to see from IBM in the old days or that we see from Microsoft today, just wait till you see the lock-in that these global compute utilities will be able to get. Eric says this is going to be the golden age of cornholing. It will make the old Bell System crooks look like amateurs. The guys running the cloud will control everything: phone, data, video, television, movies, music.

Eric’s like, Do you have any idea how terrible it will be if Microsoft manages to survive the transition into the cloud and become one of the big global service providers? Look how they’ve behaved in the PC era, and you’ll get some idea. I pointed out that, with all due respect, I don’t tend to believe that Google will behave any better and in fact they’ll probably be worse. Eric said that’s probably true but at least if Google is running the cloud there’ll be a nice piece of action for Apple because we’ll be making all the access devices like skinny notebooks and iPhones and iPods and computers that also act as TV sets, whereas if Microsoft becomes top dog they’ll do everything they can to put Apple out of business.

Eric says his guys have already strategized the entire game plan for the next decade and figured out how the consolidation is going to go and who ends up where. They’ve got it all up on a big whiteboard at the Googleplex. Sun, he says, probably gets sucked into Google at some point. Or into another one of the utilities. Same for EMC and VMWare and NetApp. All the big point product makers. Eric says we’ll see spheres emerging, giant ecosystems around each service provider. The vendors will all try to remain independent so they can sell into all of the ecosystems, but the utilities will try to pull vendors into their orbits and control them. And they’ll have leverage over the hardware and software makers because the service providers will collude with each other to drive the prices of software and components as low as possible. So vendors will get weakened and finally will face a choice of being assimilated into a sphere or just slowly dying. Then there are the vendors who just won’t be needed at all. Example: Red Hat. And possibly Oracle. IBM is simply too big to be ignored but is already being pulled into Google’s ecosystem; they formed a cloud computing pact last fall.

Thing is that everyone was just hoping and praying that somehow they could kill off Microsoft and keep them out of this new era. Nobody likes them and nobody wants to work with them. Eric says they remind him of this kid he knew growing up who would show up every year for Little League try-outs and everyone totally hated him but he always did just well enough to make a team and so they had to put up with him, year after year. He says that everyone was hoping that after Gates left the place would fall apart and the world could move on without them.

Yet now here they are, in desperation, trying to buy their way into the next era. Eric says at first his guys were freaked out but after they thought it through they began to realize that it could be a good thing. For years, he says, Google has believed that the only way Microsoft would die would be if the company made some huge colossal mistake. In other words, nobody was going to kill them; they were going to have to kill themselves. Well, that big huge colossal mistake that everyone has been waiting for Microsoft to make? Maybe this is it.

The Google freaks have played out the scenarios using some monstrous machine they’ve got and they say they cannot envision a single scenario in which the merger actually ends up working. They believe the merger will screw up Microsoft for at least five years, maybe more. By then, Eric says, Google will already be taking down huge corporate accounts for cloud services.

Honestly, he says, the more he thinks about it the happier he gets. He says he almost wants to send Ballmer some flowers but he’s afraid that might seem heavy-handed.

Friday, February 8, 2008

BusinessWeek scolds Monkey Boy

Check out this open letter to Ballmer by my main man Arik Hesseldahl. He says Ballmer needs to stop trying to be everything and learn to focus. Money quote: “So who has focus? That other Steve. You know, the turtle-necked guy in California who keeps annoying you by selling iPods and computers that typically don’t run on Windows. You could learn a lot from him.”

Tuesday, February 5, 2008

Microhoo conspiracy theory

The Economist presents a possible motive for Microsoft’s offer — they’re trying to bait Google into an antitrust crisis. Money quote: “Indeed, even if Microsoft believed that it would be prevented from buying Yahoo! on antitrust grounds, it might make sense to push for the deal, if only to force the antitrust authorities to take a serious look at issues of market power in the online search and advertising market, which would inevitably lead them to Google. By responding on February 4th to Microsoft’s bid by offering whatever support Yahoo! might require, Google may have walked into Microsoft’s sucker punch. For whatever adverse effects on competition might result from Microsoft buying Yahoo!, the impact of a closer relationship between Google and Yahoo! would surely be worse.”

Microhoo merger images keep pouring in

Much love to Iulia and Natasha who are scouring the Interwebs for more and more ways to express our feelings about this Microsoft-Yahoo deal in visually metaphorical ways. This one shows Steve Ballmer on top of Jerry Yang. We think.