Carnoustie

I am really looking forward to this weekend's British Open Golf Championship at Carnoustie. I read a hole-to-hole description of the course in last Sunday's Barron's. Looks really tough. I suggest checking out Sportsline's golf coverage if you have interest - it's pretty good. I'd like to hear from others if there is a better place to get up to date information on the tournament (even a video feed would be cool). Prediction? I'd like to see Adam Scott come through. He's due for a win. However, Tiger is always in the hunt as we well know.

SIRI/XMSR Merger (cont'd)

Well, there seems to be more and more people endorsing the SIRI/XMSR merger. Again, I never understood how they could get it passed, but my bet is on Mel Karmazin. I figured Mel must have known something we didn't. Long 5,000 shares of SIRI, so I hope it pays off.

NewsGroper

I love the whole fake Steve Jobs blog, and this company Newsgroper may have legs. The whole blogging/comedy thing could be interesting. There's some funny stuff on Newsgroper, and I suggest checking it out. Enjoy!

YHOO Quarterly results

Looks like Yahoo! put up some pretty weak profits, as well as a weak forecast. Wall Street hates weak forecasts. The stock will probably take a hit. if it gets oversold, I may think about buying some. They just are getting crushed by Google. But, then again, who isn't? I hope they Jerry Yang can turn it around and make a run at Google - would be great for the industry.

Radio Silence

Sorry to my readers for my silence. I have been traveling and working non-stop. Will be writing a lot now to catch up.

Oracle

Congratulations to Oracle on putting up some great numbers. They have been on a massive acquisition binge the last few years, and have obviously decided that their growth will come through acquisition.

I should have known they would put up great numbers. I've talked to several CFOs in the last six to twelve months that have had their businesses acquired by Oracle. I am not kidding, every single one of them has commented on how impressed they have been with Oracle's process after they have been bought. They have all commented on how impressed they have been with their integration process. It has exceeded all of their expectations.

Looks like it is paying off for Oracle, and while I am not a huge fan of companies that grow through acquisition, they seem to be doing it the right way.

Google is very recruitable now

I have been meaning to write about this for the last few days and, sure enough, the Wall Street Journal came out with an article today talking about the fact that executives at Google are now picking their heads up to look at other opportunities. I have been finding this more and more as we are talking to executives daily. I think a lot of the executives at Google who joined it several years ago, find it to be a very different place than what it is today. That's very natural for a company with that kind of growth, but it doesn't mean that some of the entrepreneurial talent is going to stick around.

It's interesting though, because whenever Google comes up in a search I am doing as a place to look, people just laugh and basically say "why would anyone want to leave there?". In fact, they are almost looking at a candidate in a funny way if they are looking outside of Google.

In any regard, my point being that companies grow and change and the reasons someone may have joined a company four years ago may be very different than what the company has actually become today. You should never rule out why an executive may be interested in doing something else, especially when it is a CEO search.

iPhone Launch

Well, tomorrow is the big day. I can't recall ever seeing more hype about a new product release than the iPhone. I have originally been thinking that there is no way that the iPhone could live up to the hype. After all, since announcing that they were releasing, Apple has added something like $34 billion in market cap to their stock. However, from some initial reviews, it sounds as if it may live up to its hype. It sounds incredible, in particular every review has mentioned that the web browser capability is by far the best of any Smart Phone. The consistent downside seems to be that you can only get one network, AT&T, for your service. I have also read that you cannot search by name in your contacts - you actually have to scroll through to find it. That sounds like a bummer to me. However, all other aspects sound incredible. Unfortunately, I have to be on Verizon so I won't be getting one for a long time. According to Walt Mossberg, it sounds like the contract with AT&T will be a long term one. Check out Walt's video review!

Business Week article

This week's business week features an article on the web/youth culture. It's a great read and I suggest you take a look at it.

The most interesting thing I found about the article was this Chicago-based company, SkinnyCorp. These guys have a T-Shirt design business that asks its community to design the best t-shirts and then they vote on it as to which are the best. They then produce these shirts and sell them. It's brilliant! They outsource their entire R&D to their potential customers, have them vote on the best T-Shirt design, and then sell them to them! No R&D costs, and they design and build exactly what their customers want (or, what the majority has voted on that they want).

Talk about leveraging Web 2.0 for a profitable business model! Id like to see those profit margins!

Yahoo!/Google

I got to tell you, I think I spend more time on Yahoo! that I do on Google. I love Yahoo!'s finance page, I use their Yellow pages service all the time, and I use Yahoo! IM. With that being said, I would one would imagine that Yahoo! would be able to demand a large premium for the loyalty of its customers. There are a lot of people out there rooting for Yahoo! to take it to the next level and build a premium service and compete head to head with Google (I think MSN and AOL are a lost cause at this point). I think it would be good for competition, and the industry.

Yahoo! needs to buy Facebook to make this leap. It would be a tremendous move for them. They almost had it several months ago, but valuations got expensive. I think those valuations would be looking pretty cheap by now. Who knows what they'd have to pay for it now??

Ad Networks being bought

There has been a ton of consolidation with Ad networks in the last few months. Google bought DoubleClick for $3.1 billion, Yahoo! bought the rest of RightMedia for $680 million, WPP bought 24/7 Media for $649 million, and then Microsoft bought aQuantive for $6 billion in cash! Wow, who would have thought that these ad networks would become such hot properties. Obviously, Hellman & Friedman had the foresight to see this coming. I don't know anyone at that firm, but they made a great return taking DoubleClick private and then selling to Google (sidenote: Congratulations to David Rosenblatt who joined DoubleClick in 1997, went through all the ups and downs, including this last "up" with taking private and selling to Google - also, congrats to Charlie Dickson who joined DoubleClick about a month before they were acquired by Google - they say timing is everything!).

Which brings me to the point of this post. AOL, who seems to always be getting beaten on, started this trend by buying Advertising.com for $435 million in June of 2004! That must now be seen as a great deal driven by Jon Miller and Steve Swad over at AOL (they were the CEO and CFO at the time). In any regards, congrats to AOL for leading the way and seeing this trend before the rest of the market. Smart move, and Jon Miller deserves a lot more credit that he has gotten for his job at AOL!

Great piece from Marc Andreesen's Blog

This is a great piece on start-ups and what makes them successful, from Marc Andressen's blog. Enjoy!

NY Times article on Search Engines

Randall Stross wrote a great article on search engines in last Sunday's New York Times. However, I was blown away by this statement:

"Don Dodge, a Microsoft manager who works outside of the company’s search group, made this argument in a post on his personal blog last month: “Why 1% of Search Market Share Is Worth Over $1 Billion.” Mr. Dodge reasoned that 1 percent of the 7.3 billion searches performed in the United States in March, multiplied by 12 cents in advertising revenue per search, would yield annualized revenue of $105 million. Assuming a market cap that is 10 times revenue, his arithmetic leads to a billion-dollar company."

These numbers are pretty unbelievable, right? However, I began to think, if Google has 55% market share in search, wouldn't that value their search business at $55 billion? Where is the other $110 billion in value (assuming their market cap is $165 billion, which I just checked on Yahoo!)?

Just a thought. Don't know if the statement from Don Dodge is 100% accurate, and I don't have the time to do the due diligence. But, some investors must think 1% market share is worth more than $1 billion.

President Bloomberg?

I am with Fred Wilson on this one, I'd love to see Michael Bloomberg run for President. He could self-finance the entire campaign and then run the country in terms of what is the right thing to do for the country, not who he owes this or that for campaign financing. I also read a recent article on him in Time Magazine and they talked a lot about this exact reason being responsible for his success as mayor of New York City. He's hired the best possible people for the job, with no ties to political maneuvering. I think he can bring some strong business sense to a Federal position that is in need of some straight-shooting management.

I also like the fact that he has registered as an independent - I am about to go do that myself. I don't know who crazier, the far right or the far left.

In any regard, it will be very interesting to see if he makes a move. The bigger question is, can he win?

Due diligence on executive hires

I met with Nancy Peretsman from Allen & Co. about a year ago. Some associates thought that it would be good for us to know each other, and I was very interested in meeting her given the business I am in. She's very impressive, personable, and I have a ton of respect for the way in which Allen & Co. has built their business, and continues to conduct business. We spent about a half an hour together talking about the technology business, banking, private equity, and executive search. I asked her about her experiences working with search firms and her only comment was the following: "I am amazed by some of the hires that are made out there. Are people just not checking out the executives they are hiring? I can't believe some of the hires that are made - people that just shouldn't be in the role."

Of course, as I always say, any executive who has risen the corporate ladder is going to have people who say good things about them, and people who say bad things about them. It's typical of corporate politics and I have seen it happen at Time Warner. However, what Nancy is saying is very true in a lot of ways. I think some investors/Boards/Management teams/Search Firms don't do the necessary due diligence when making a hire, and shame on them. It's your obligation to do the right due diligence before making a hire, and you need to be accountable for it.

Make sure that you not only talk to their references, but ask the candidate to talk to other people from their past that they don't list as a reference. Between the investors, management and the search firm involved, you should be able to find a lot of common executives that you can speak with in regards to that candidate. Everyone lists references that will say good things about them, so be sure to do your own due diligence - it's incredibly important and you will be a lot more successful at making the right hires.

SIRI/XMSR Merger (cont'd)

I read an interesting piece on Forbes.com this morning, "Karmazin finds the right Wavelenghth". It seems as if more and more people are starting to thing he may get this merger done. Again, I don't quite understand how they could approve the deal, but as I have said all along, I would not bet against Mel Karmazin. He must have known he could get this approved before he announced it - he must have.

Blackberry vs. Palm

I have read a lot of Fred Wilson's blog, and he has gone on and on as to why he loves his Blackberry so much, and that he is so happy to be back to it after years away (I think he was with Palm, and even a brief affair with a SideKick).

I spent years on a Blackberry with Ramsey Beirne and at Time Warner. Since starting my own firm and with everything on a Microsoft Small business Server, I tried to use a Blackberry and it was a disaster. It's not Microsoft friendly and it just seemed to never be able to synch properly. I next tried the Motorola Q and got caught up in that hype. The Q is the worst PDA device I have ever had, period. I don't have enough time to even list everything that makes it so bad. A friend of mine convinced me to try the Palm. I love it! It is very Microsoft friendly, a great interface, and is exactly what I want in a PDA - it makes me feel like I am sitting at my desktop and incorporates all the functionality, when I actually am not at my desktop! I can understand why Roger McNamee and Elevation Partners have taken a stake in Palm. I have been waiting for the right time to buy the stock myself.

The only problem I have found with the Palm is that it will freeze up on me. It happens maybe once a week. I just take the battery out and recharge it. It's a pain, but I don't mind because everything else about it is great.

I recommend Palm over Blackberry, hands down. However, I'd make sure you have a MSFT Small Business Server. My gut says that Blackberry may be a better corporate PDA, and Palm a better PDA for the small business owner.

Hiring Search firms based on most recent experience

The most common question I seem to get when talking to a potential business partner about an executive search they need to conduct is, "What have you done recently in this space?". In other words, if they are contemplating a Chief Marketing Officer search for an internet company, they want to know that I have recently completed several similar searches. It's a logical conclusion, but quite honestly, it doesn't matter.

My advice to companies looking for the right executive search partner is to hire the firm based on their ability to passionately represent your company in the marketplace. Hire firms with the right process and service model that makes sure that you are getting the maximum amount of attention. Hire firms that are smart and knowledgeable about your industry and, most importantly, have integrity and good business sense.

Some of the most successful executive searches I have completed were searches where we hadn't recently done any kind of similar search. We drove a disciplined process, broke down the markets and key executives, sourced the best executives in the industry. I think sometimes if a company hires a firm on their recent experience, that firm gets lazy. They go back to the same executives they talked to in the last 3 to 18 months. They don't do the work. They don't do this because they become complacent and, quite frankly, are probably just not that good.

In short, hire the firm that will be the best extension of your business in the marketplace, and that you trust their judgment the most. It's very logical to ask about recent similar work they have done, but if they are really good at what they do, it just won't matter.

Private Equity/VC Thought of the week

If I was a Private Equity investor, I'd try to buy MapQuest from AOL. When I was at Time Warner (AOL), I was continually frustrated that management their hadn't built on the brand and success of Mapquest. People use mapquest all the time now - anytime they need to get somewhere (OK, they are also now starting to use their nav systems, but one of the first things I'd do is to find a way to integrate or do a deal with the likes of Navteq, etc.).

I also think there is a huge opportunity to do deals with the fast food chains, gas stations, hotel/motel chains, etc., to give them sponsorship along the way.

I think MapQuest is a great brand, and AOL has failed miserably to monetize the hell out of it. They are too bureaucratic and slow to take advantage of it - ripe for a PE firm to buy it and extract value.

Blackstone going public

I don't get it. How do you take a company public who's entire purpose is to leverage private companies to extract value, etc.? It just doesn't make sense. My intuition says that this is purely greed and ego. I spoke with a friend of mine who is a Partner at Blackstone a month or two ago, and he gave me the whole song & dance that going public would give them a lot more leverage, and an ability to buy up other asset management firms, but I don't buy it. I think it's greed and ego. These guys are drawing way too much attention to themselves and I have seen this movie - I know how it turns out. Congress is already made them a priority to now tax them as ordinary income rather than long term capital gains. The scrutiny is only going to increase.

Disclosure: My broker from Merrill Lynch called me last night to offer me 500 shares of the stock. I took it. I doubt I will be a long term shareholder. However, I guess this makes me greedy as well, but I might as well make some money here.

SIRI/XMSR Merger (cont'd)

I got some feedback from Nolan who reiterated that the SIRI/XMSR merger poses a lot of anti-competitive threats, etc. I just want to say that I agree with a lot of this. My only point being that I think that Karmazin must have thought this through before going through with the merger, and I wouldn't bet against Karmazin. The stock trades as if there is little to no chance of the merger going through, and I think that there is too much of a discount, given Karmazin's history. Just a gut feel, but we will see what happens.

Great Recent hires around Technology and Media

I would expect a blog about these kinds of things quite often. After all, it is what I do for a living. Below are some hires that I think really help drive value for the companies and shareholders that have hired them:

Gil Penchina, former VP & GM at eBay, as CEO of Wikia. Gil has a great reputation in the industry.

Jeff Jordan, former President of PayPal (eBay), as CEO of OpenTable. OpenTable sounds like an interesting business. I am sure that Bill Gurley from Benchmark Capital had a lot to do with this. I think he and Jordan have known each other for a long time. Great hire.

Michael Volpi, former Head of Corporate Development & GM at Cisco, as CEO of Joost. What a hire. Michael Volpi has been on everyone's short list for years. Just imagine his ability to evaluate deals and his knowledge and relationships around technology and media. I believe he is moving to London for this as well - good luck to Mike.

Expect more on these in the future. Thinking about a once a week piece - could be very valuable to my subscribers.

Yahoo! new/former CEO Jerry Yang

It is interesting that Jerry Yang has taken back the reigns at Yahoo! A Michael Dell/Steve Jobsesque kind of move. I always thought that Terry Semel was not the right executive in the CEO role there (mostly because of his Hollywood background), but I have to say he did a very good job getting the business turned around when it was depressed in the early 2000's. However, he has taken a lot of heat lately in regards to expanding the business moving forward. I think he's missed on a lot of user generated content businesses that wo0uld really expand Yahoo!'s multiple. Also, in all fairness, he's being compared to Google every day. Google is knocking the cover off the ball, so of course he pales in comparison.

Having Jerry Yang back as CEO and Sue Decker as President doesn't seem to me to really do anything different for the company to get them to the next level. Why aren't they doing a search for a new CEO? Sue Decker is a very strong finance and operating executive, but this doesn't do anything for them moving forward - nothing has changed! It does sound a bit like they might sell the company.

I do think a strategic deal with MySpace or YouTube would be very interesting. Also, Yahoo! should buy Facebook. User generated content is proving to be a tremendous business model a Yahoo! needs to leverage their subscriber base to start doing more of the work for them, and keep their costs down. I'd be interested to hear everyone's opinion here.

The Clintanos

I am not a fan of the Clintons, but I have to say, the video they put out is a great political move. It takes a very stern, cardboard politician like Hillary and makes her feel real. Also, they are very smart to put out something like this. The 2008 election will incorporate a huge viral internet strategy, and the Clinton campaign seems to get it with this recent video. The Republicans better wake up to this very fast or they will get pummeled in 2008. Or, better yet, and independent run from Bloomberg?

SIRI/XMSR potential merger

Sirius announced a few months ago that they were purchasing XM Satellite Radio. To me, it does sound like there would be some DOJ issues with getting this approved. This would mean one satellite radio provider - what kind of choice does that give me as a consumer? However, I can also speculate that other consumer devices, like the iPod, will get into satellite radio, in which case the competition is there to approve this merger.

However, my gut tells me that this merger will get approved. This is more of a bet on Mel Karmazin than anything else. My point being, wouldn't Mel have anticipated this kind of scrutiny? Wouldn't he have already known that he could get this approved before announcing it? If he didn't do this due diligence, then shame on him. He will have lost a lot of credibility with me.

My last point to this is if the radio companies are putting up a fuss over the merger and claiming it to be anti-competitive, doesn't this action validate that terrestrial radio feels as if they are competitors to satellite? Wouldn't this hurt their cause? You would think so.

I am long 5,000 shares of SIRI. Maybe I am wrong, but I've got to figure Mel knows what he is doing here. Only time will tell.

Neil Smit is a stud

I started Savage Partners two years ago. Prior to starting my own executive search firm, I was the Director of Worldwide Executive Search at Time Warner in NYC. I handled all the VP and above executive search work at AOL, Time Inc., and Time Warner Cable. It was a great experience at a time when Time Warner was going through a lot of turmoil. I learned a tremendous amount from this experience, in particular how large media companies operate and make decisions.

I did a lot of work with AOL at the time and, specifically, with Neil Smit. Neil was running the worldwide call center business for AOL, and had previously run some content businesses for them. He had a CPG background prior to AOL. I loved working with Neil at AOL, and I was always really impressed with his ability to make decisions quickly, and always follow up on everything. He was also a former Navy Seal, so this says a lot about his discipline and mental toughness.

In any regard, Neil went to become the CEO of Charter Communications two years ago. The stock was at .90 cents and the company in very serious risk of going out of business. I think everyone thought Neil was crazy. Sure enough, the stock is now at $4.15, representing a 4.6Xreturn in two years. I know he has also made tremendous progress paying down their debt, and refinancing the debt, as well as build their VOIP subscriber base.

I remember when I was having my exit interview at Time Warner with Pat Fili-Krushel, the EVP of Administration. I told her that Neil Smit was the best executive at AOL. Sure enough, he shortly got recruited away.

When they made the announcement that Neil had joined Charter as CEO, I was tempted to buy 10,000 shares based on my knowledge of Neil. Of course, I looked at the balance sheet and the company and wimped out. I'd be a lot wealthier had I gone with my instinct on Neil. In any regard, congratulations to Neil and Charter stockholders! Neil is world-class, and kudos to the Charter Board for recognizing this and making the hire.

TEST

Working on publishing my first blig, and just testing. Thanks.