Last night a source of mine sent me a text message about spotting Jerry Yang and David Filo (in a suit) at Palo Alto’s Four Seasons Hotel in company of some serious looking men, who spend a lot of time (and money) appearing to be self-important, a skill they perhaps learn in business school. His pithy message to sum it all up — looks like it is all going down.
The “it” is Yahoo’s very public auction of itself to the highest private equity bidder. In case you were hiding under a rock, here is a recap of rumors around Yahoo’s possible sale:
- Silver Lake Partners wants to buy a minority stake in Yahoo for about $16.60 a share (valuing Yahoo at $20.6 billion or about 6 percent higher than yesterday’s closing price.) Silver Lake is working with Microsoft and Andreessen Horowitz.
- The transaction is going to use PIPEs, private investment in public equity — a type of transaction long reserved for somewhat dubious companies.
- Jerry Yang will stay on the board, but the investors will get three seats on the board, reports say.
- Some folks believe that Jeff Jordan, former CEO of OpenTable, will become the chief executive of Yahoo and VC Marc Andreessen will become the chairman.
- TPG Capital is considering offering a $1 per share more — aka $17.60/share.
- Others are also eyeing the company including KKR and Blackstone Group.
- Thomas H. Lee Partners is thinking about a bid.
- Alibaba Group wants to buy Yahoo. Yahoo owns 40 percent of the Chinese company. Kara Swisher says they are thinking about teaming up with Softbank and Blackstone for their own bid.
600 million
Last time I wrote about Yahoo and its dismal and disastrous board of directors, I pointed out that 600 million users make up Yahoo’s biggest asset (and biggest stumbling block) and that company needed to clean house and then go shopping. Most of the people in comments disagreed and said that no self-respecting startup would want to be part of Yahoo.
Instead, most felt that the company should clean house and focus on a few pockets of growth inside the company — communications and shopping for example. I am betting buyers will be thinking along those lines, but will that be enough?
Whatever comes of these moves, the question is, can Yahoo be saved, and if yes, what is the value that can be retrieved? More importantly, will these private equity investors meet their own tech Waterloo in the fallen Internet star?
Dead Fish
As far as I am concerned, Yahoo is pretty far gone and is essentially a hollow shell of its former self. Its board – probably the single worst group in business – has managed to drip every last drop out of its body. There are few bright spots — Flickr, Yahoo Mail and Yahoo Shopping — but they cannot make up for the singular reality that the Internet that helped Yahoo thrive is no longer the Internet most people use.
Behavioral shifts in the Internet are so strong that Yahoo has no chance. The average U.S. Facebook user is spending over six hours a month day on the social network, Twitter is becoming the new news network and photos are thriving on mobile platforms.
The Internet of today is one of many screens. Yahoo, despite its mobile products and wonderful experiments with Yahoo TV, is still a one trick pony — online advertising. More accurately, the classic CPM-style advertising depends on large audiences, lots of page views and well, you get it, an old-fashioned way of thinking. When I think of Yahoo, I am reminded of a salmon farmed on carcinogens that is trying to move upstream in order to find growth.
Smart guys, but…
The consortium that is making a push for Yahoo is the same group that went out and bought Skype from eBay and turned around and flipped it to Microsoft, and in the process they made a lot of money.
However, this is not the same case. Skype was and still is on the right side of history. Usage behavior favors Skype, which continues to grow despite the company having ruined a great user experience. Skype is thriving despite all the meddling from the previous owners. Microsoft can’t do anything because Skype provides value.
What does Yahoo do that you and I can’t live without?
That’s right … nothing!
I have a lot of respect for Jeff Jordan (who would actually be one of my choices to run Yahoo), but I am sorry even he cannot do the impossible. Yahoo’s brain drain is legendary and it continues. There are more resumes going out of Yahoo than there are folks lining up to work for Yahoo. Unless there is a tech/broad economy collapse, that situation isn’t going to change.
Frankly, if you were a smart engineer or a product guy, why would you go work for a company, which is going to be owned by buyout guys who essentially nickel-and-dime your creativity to death? Why not go and work for a startup, where the chances of an upside, however remote they might be, are still there.
Or better yet, take a flyer and start your own company. Hell, if you need a job, these days even Google is pretty lax about hiring. The fact is that the buyout philosophy might work on old industrial-age companies, but I am not sure it would translate to Internet companies.
Related research and analysis from GigaOM Pro:
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- Connected world: the consumer technology revolution
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I’m on the road with the StartupBus Europe trip to LeWeb. When you left us yesterday, the ‘buspreneurs’ were busy forming teams around the ideas they had pitched.
As we sped down the autobahns of north Germany, the product ideas were honed and many ideas were sketched out on paper, and even on the bus’ windows.
Following a short ferry trip to Denmark, we rolled into Copenhagen – one of Europe’s most exciting startup cities. Our host for the evening was Startup Bootcamp, where the 2011 group of startups left last week but things are far from quiet as the accelerator franchise plans for a busy 2012 around Europe.
The StartupBus Europe teams pitched their initial concepts:
LocaFoo: For iPhone and Android, this location-based game will see you picking up virtual items around you to attack and defend against your friends. Brands will be encouraged to get involved. Perhaps you could throw a Starbucks coffee or a McDonalds hamburger at your opponents.The app will have Foursquare and Facebook integration.
BUT: Will brands want their products used as weapons?
Buybone (working title): Imagine a version of eBay where you list your needs and customers bid to sell your their products. Whether the seller is down the road or on the other side of the world, this will be a safe way of buying without being ripped off, with Buybone acting as an escrow service.
BUT: Will the team have their wireframes ready by the time we get to Berlin in a few hours time?
YoBro: – This is instant mobile group audio chat for shared interests. The service links people with shared interests. Type in an interest and the app will link you with others who have entered the same text. A natural link here is to gather around Twitter trending topics. To prevent rooms getting too noisy, each will be limited in size before a new room is automatically generated.
BUT: Do people want to group audio chat with strangers? And where’s the money?
Wander: – Trips and travel are fun, and planning should be too – that’s the premise behind Wander. It will allow you to create a personal travel guide. It will be available when mobile, with timeline and map for exploring. It will emphasise spontaneity – as you explore a location, it will tell you when a point of interest you want to visit is nearby. There will be an offline mode for when you don’t have access to mobile data.
BUT: Who is the specific target market?
Invoi: – The aim here is to disrupt voicemail, by making it interactive. The team is building a service that uses voice recognition, translating voicemail to tasks and events. The user will be able to set conditions – so, for example, when certain words are said in voicemail messages, you can get the service to call someone else, make a to-do list and more.
BUT: Can the team get a working demo completed in time?
After a short sleep in a Copenhagen hostel, we’re on the road again, bound for Berlin. After a brief stop there we’ll be moving again as we head for today’s final destination of Zurich. We’ll keep you posted on the teams’ progress as we make our way towards our ultimate destination in Paris tomorrow evening.
In the meantime, you can invest virtual cash in your favourite idea on the StartupBus Stock Exchange game. You can also join us in Berlin at an event this afternoon. Click here for more details.
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