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Interestingly, aQuantive (formerly Avenue A Media) was founded by Nick Hanauer, one of the people profiled in GQ's recent article[1] on income inequality. He was also one of the first investors in Jeff Bezos and Amazon.

[1] - http://news.ycombinator.com/item?id=4181382

What truly amazes me is the fact that Ballmer is allowed to keep his job despite one colossal blunder after another.
So, he doubled revenue over the last 10 years. They were already high to begin with, but lets see...

http://ycharts.com/companies/MSFT/revenues#series=type:compa...

Even more impressive:

http://ycharts.com/companies/MSFT/revenues#series=type:compa...

So, basically, Microsoft let its two main rivals close in at a tremendous pace. If I had Microsoft stock, I'd be rather disappointed.

If that is your metric to judge by, then imagine how disappointed google investors are.
??? Using that metric, MSFT: +115% since 2004. GOOG revenues: +3,320%
Please remember the context of this discussion.

They point is that Googles revenue comes form one source and they haven't been able to find another just yet as users are moving to mobile. The growth you see is based on a revenue model made a long time ago not on their current performances which are to say the least as embarrassing as anything MS have done over the years.

This should be concerning investors in google more than anything. Cause what do they do when most people are on mobile?

Google owns mobile advertisement, as well as mobile search. They are in an excellent position for the future.
Really?

Why aren't they making any money with it now then?

Because the entire industry is a shell game?

~Fundamentals, people, fundamentals.

[aka: if you really think that a producer of gadgets is worth more than most countries' GDP, then you're a fucking idiot. Apple et al is a shell game. ~$100 billion for toys. Not how humanity got to the moon]

http://ycombinator.com/newswelcome.html

The level to which the user base has ignored this, and merely uses the down-vote button to incline their personal displeasure is hilarious.

If you don't want to be Digg / Reddit / Metafilter, then don't trust your monkey user base

Hint: I've never used a "down-vote" button, on any site, even in realms of rabid Libertarian Neo-Fascist thought-land.

Why? . . Because I'm not a fucking retard who thinks their personal opinion means that their self image as a 'special snowflake' is valid.

https://www.youtube.com/watch?v=wo-wkv8gW6k

HN is seemingly full of idiots.

Shareholders and long term investors (aka those who care most about management) look for long term stable growth in core businesses. Yes, you can argue that their performance compared to competitors has been dismal but MSFT is still a solid investment and has seen double digit growth rates for over 10 years - this is incredibly hard for a company this size. Most will argue that this good management.

For example, look at their revenue growth quarter-over-quarter:

http://ycharts.com/companies/MSFT/revenue_growth#series=type...

Also, GOOG and AAPL don't pay dividends (yet), which is a very good proxy for shareholder value:

http://ycharts.com/companies/MSFT/dividend_yield#series=type...

I'm not saying MSFT can't do better; OP asked why Ballmer is tolerated and I wanted to point out that there are plenty of reasons why.

Well, my point was that throwing in a revenue chart of one company only is just not a way of explaining things. There are many reasons why you could want Ballmer to stay - as you say, a replacement could even do worse - but that chart alone is not one of them. Especially because in our growing industry, the growth roughly matches the growth of the market. It is certainly not "plenty of reasons". Hewlett Packard has similar revenue development with MSFT and still they are firing CEOs left and right.
Ballmer like most other CEO's up there is playing a completely different game than the one startups play.

Microsoft is so far doing just fine with Ballmer.

Now do it for Skype.
Ok I'll bite. Skype isn't and won't be a bad investment. It is installed on most peoples computing devices(computer,mobile,tablet), it really doesn't have any good competitors(maybe google voice), it's used heavily in business world for conferencing, virtual numbers and internal comms, it has a nice technology stack which a few companies were eyeing (fb,google).

Really it's amuch better investment then spending a billion on a revenue less image sharing site or a corporate social network provider.

I don't think that Google Voice is any kind of competitor to Skype because of its incredibly limited global availability.
Interesting. On the surface this seems like a colossal failure. It could also be an accounting trick too. Write the whole thing off now, and people view it as a non-recurring charge. Then when the unit does something/anything to be profitable, it looks like positive earnings rather than a less-bad loss.
Yup. It also has the nice effect of inflating the P/E ratio for Microsoft, at least temporarily.
now when is zynga going to writedown 180mm for OMGPOP.
"Draw Something" is the #55 paid app on the app store STILL. So clearly it's bringing in and has brought in a ton of revenue since the ac (acquisition was in March). Sure not $180MM but it was also an acqui-hire. I think this could have ended up being a great deal for them, despite the negativity. It's not all about one game.
#55 paid app is not at all impressive given how much they paid for it. For that price Draw Something would have had to stick around the top ten, probably the top five, for quite awhile to make it worthwhile.
I was part of aQuantive on the Avenue A | Razorfish side and was there for about 2 years leading up to the MSFT acquisition and was also part of another MSFT acquisition (Farecast) so I want to provide some context/opinion on where the business was at it when it was purchased.

- The Atlas ad serving platform and related ad exchange platform was one of the top ad systems alongside DART, Valueclick, and others. There was also a steady stream of new leads to Atlas as the agency side acquired new clients. I think the opportunity that was missed was to tie the MSN search business with the banner/rich media ad serving business and create a single platform to reach and remarket based on search intent. A lot of this is done today but this deal was 5 years ago and would have been more groundbreaking.

- The agency side of the business wasn't interesting to Microsoft but at that time, Avenue A | Razorfish was the top digital agency in the US with clients from Expedia to Nike to Best Buy. The team at AA|RF had a direct line to the CMOs and worked in most cases as an extension of the marketing teams for these Fortune 500 companies and MS could have leveraged this team as a focus group and to enroll these clients to test innovative ways to market across a publishing network like MSN (still a top portal property). I don't think this was done and again another opportunity missed.

Overall, I just felt that there was the potential for aQuantive to help Microsoft close the ad revenue/platform gap with Google and they missed the boat.

Just for an interesting comparison:

Top 100 mining companies in the world:

You'll note that even BHP only hits ~$200bil.

http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=95...

These are companies that fundamentally provide the materials for our societies.

Shall we change into energy?

ExxonMobil is top, at roughly ~ $300bil

http://www.platts.com/Top250Home

This is a company that powers the modern world.

~ $6 bil for this, $8 bil for Skype, $100 bil for FB is nothing more than Peter-Pan land.

aQuant was MS attempting to get Google to move on some issues, and an attempt to monetise chewing the cud. Skype was MS attempting to control P-2-P interfacing - which will probably succeed (and wasn't ever designed to be monetised) FaceBook was attempting to give the proles the same inherent networking architecture that the elites always enjoyed, and the $100bil is a pay-off for reshaping the world

Hint: mining & energy deal in reality. Tech stocks deal in 'societal value' [where said value is not value to the consumer, it is value to the code controllers; "if you're not paying for it, you're the product"] and are largely to do with the cost of control.

$6 bil in this case means nothing, because MS made billions from nothing.

"It's worth a punt". Translation: if you spend $100 bil on liquidity per day, $6 bil is a joke. Remember: Gates has spent $18 billion on "African circumcision to prevent AIDS" already, and the US government spends that in a month on foreign military adventures (both aggressive and passive).

~

It was worth a punt. Google turned out to be aggressively competitive, however (and let's not mention the top three AI specialists who committed suicide in the year Google launched their algos... ok?)

Be seeing you.

> and let's not mention the top three AI specialists who committed suicide in the year Google launched their algos... ok?

What?

I'd look into AI specialists who all decided to kill themselves in that "very common" way of putting a bag over their head, wrapping duct tape around their necks and then 'doing an oven' to finish the deal. You know, like those pretty wives of CEOs who commit suicide when their hands & feet are bound? Or ex-Dictators have heart attacks all of a sudden? [And yes, I can cite those ones too for bonus points].

It was very common for a short period of time. And yes: at least one was a kook of huge bullshit; the other two were not. And with tenure, the other two really had no reason to go all in. Especially with their family ties. Additionally, there was a car crash and so on, but these are mere accidents.

The hidden history of success is paving the road with the bones of your competitors.

This isn't to say Google themselves had anything to do with this evil: it merely... widened the broad spaces for saplings to grow, as the forest does when mature trees fall. In broader terms, one might call it: protecting ones investment.

And yes: I can post this with 100% immunity, because the conspiracy police meme will eat this for breakfast (see my above being junked), and nothing I say matters. It was just a sad time in AI research, when a few of the top theorists (and a bullshit artist) off'd themselves. Nice search algos though... nothing ever to do with anyone else's research.

Do you your own due diligence: if you want to be a player, know the game (and the real costs).

[citation needed]
HN doesn't disappoint! Down-votes, and no-one can do due diligence.

<CTRL+F>Push Singh

He was named one of the "IEEE Intelligent Systems 10 to Watch," an award that honors young researchers in artificial intelligence. He planned to take a faculty position at the Media Lab this fall...There has been some public note of the similarity between the suicide of Push and that of another more renegade AI Researcher a couple months earlier, Chris McKinstry

http://web.mit.edu/~sdavies/www/mit-suicides/

Bhuwan Singh G

The Boston Herald reported that Singh suffocated himself with a yard-waste trash bag.

And so on.

As I said ~ that whole "killing yourself by applying common garden bags in what in most countries would suggest torture / outside interference" is... rather common in some circles. Blinkers. Wear them! Fear the wider world! Down vote everything outside of your cubicle!

(Hilarious ~ no wonder the Angels love this site, so easy)

Bonus round:

The death of Shacknai’s girlfriend, Rebecca Zahau, was determined to be a suicide, Gore told reporters today...

Zahau, 32, was found nude, with a rope around her neck and her hands and feet bound, a sheriff’s department official said at the time

http://www.bloomberg.com/news/2011-09-02/medicis-ceo-shackna...

You're all so cute! Committed to the Homo Sapiens 2.0 meme, with nary an eye at the real world. Delightful! Oh, and I rate the ~15+ downvotes as your votes for blindness & wilful ignorance over enlightenment and ability to do even an iota of original research. Not a single one who did an even cursory search / knew enough about the field to give a "yes-coincidence-but-not-conspiracy" post.

:Case proven ~ HN is, indeed, for Useful Idiots. . . . . . Now I've provided a citation or two, does this mean all the Aspies in the room will actually do a bit of research? Doubtful, but there we go. [Citation needed if anyone on HN actually is intelligent enough to do basic research]

“"If I had a world of my own, everything would be nonsense. Nothing would be what it is, because everything would be what it isn't. And contrary wise, what is, it wouldn't be. And what it wouldn't be, it would. You see?

~ How very true, and how easily you're put into hutches here. . Hint: I mentioned three, and only linked to two! Not to mention that whole accident thing. How dangerous AI research can be, when algos rule the world ~ remind me how many young PHD students go into Finance these days? That would be a good place to start one's ruminations! So many random and pointless deaths in the Big Apple.

What are you getting at? Just spell it out.
http://www.wired.com/techbiz/people/magazine/16-02/ff_aimyst...

Interesting Story with weird personalities, but Google has nothing to do with it. They didn't even remotely work on something interesting for Google.

He Probably watched Antitrust too many times.

Thank you.

This isn't to say Google themselves had anything to do with this evil

I then quoted from Alice in Wonderland...

https://www.youtube.com/watch?v=WANNqr-vcx0

~Chalk it up to an odd sense of humour: I'd bet this link was on HN when it was current ~ http://technosailor.com/2008/10/22/monetize-or-die/

(The derail was to do with how pontificating about speculative asset acquirements in hind-sight allows 20-20 vision, or rather, allows one to see through a glass darkly. Fact is that MS can eat $8 billion for breakfast, and should continue to do so.)

Oh, and I'd disagree that their work had nothing to do with what Google has done. Disagree strongly, but there we go. cough Cleverbot cough

(comment deleted)
Razorfish pitched to our marketing department (I was the token tec on the panel).

Being a Microsoft appendage was a big negative from my point of view... as was the giant Silverlight logo in their pitch docs.

> MS could have leveraged this team as a focus group and to enroll these clients to test innovative ways

Don't do that! If we hire you to do work for us and you sucker someone in our org in to some shit like this, we will very quickly question your motives and ultimately the value of our relationship.

In the end the the marketing wonks went with the agency with the best creative (again).

I didn't mean you get your clients to try things without telling them. I meant get them into pilot programs to find more incremental places to acquire new customers.

In regards to creative, Avenue A | Razorfish was a combination of two distinct skillsets. Avenue A handled media buying which in most cases is more important to the success of a campaign than the creative and the Razorfish part was the "creative" side of the agency that worked on all of the campaign assets, etc. Both sides worked together to ensure that the creative was right for the audience (media).

> you sucker someone in our org in to some shit like this

Didn't think they would secretly do that.

Ulterior motives of corporate overlords, be they pushing Silverlight or pulling us into a msn search strategy are a recipe for friction.

That said i'm not in marketing, not in the US, and we are a small org with limited resources that is perpetually screwed around by agencies, so my views are probably of limited value.

But wasn't having you guys around at MSFT been a conflict of interest? Would have muddied the waters with other agencies, even if there was a Chinese wall between Razorfish and AdCenter.
Microsoft bought aQuantive as a knee-jerk reaction to Google's acquisition of Doubleclick. It was comical at the time because

- aQuantive's Atlas was a distant number 2 to Doubleclick's DART in terms of ad server market share

- aQuantive had no plans to create an ad exchange, nor did their market share make that a credible possibility, and

- Microsoft somehow paid twice as much for aQuantive as Google paid for Doubleclick.

All told it was a bewildering acquisition. Either Microsoft didn't understand why Google bought Doubleclick, or Google corpdev did a masterful behind the scenes headfake with regards to the value of aQuantive.

Yahoo at least understood what the DCLK acquisition was about and bought Right Media. Of course, an open ad exchange is basically at odds with Yahoo's premium inventory direct sales strategy, so it has been difficult for Yahoo to really make it successful.

In the end the whole episode was a giant win for Google, and an embarassment for MSFT and YHOO.

But, had msft executed, there definitely is room for competitors for both dfp and dfa. Many pubs seem to want something, anything besides dfp. Plus the rise of ssps is (maybe?) a reaction to the pub adservers not innovating. For god's sake, openx (written in php!) is being used by pubs.

also, hi (earl from qc)

Could you maybe explain some of those acronyms you used?
Sorry dude.

When a publisher (pub) sells ad space to an advertiser, there are at least two sets of servers involved. There is a publisher / sell side ad server (pub adserver) which picks which ad to show in an inventory slot on a page view and generally tries to optimize for the publishers income, plus does publisher side reporting. There is a advertiser / buy side ad server which does cross publisher reporting; allows the advertiser to control, change, and update creative; tries to do frequency capping; tries to do cross channel reporting; and tries to optimize on the advertisers' behalf. These are generally not the same server. Google's ad server were basically purchased from doubleclick. DFA is doubleclick for advertisers and DFP is doubleclick for publishers. Openx is a competing publisher ad server. Atlas is microsofts advertiser ad server; it competes with dfa.

An SSP is a supply side platform. It's a service that basically replaces a pub ad server and attempts to get as much money for the pub as possible by switching between ad networks and possibly trading off between guaranteed, network, and rtb. It basically is a saas stack that replaces a publisher ad server. An SSP will often also attempt to prevent first party data leakage.

a DSP is a similar beast for the demand side and can start to replace an advertiser ad server.

From my perspective (and I think many pubs) there hasn't been much innovation between dfp and openx. Hence the movement to SSPs.

First party data is, in a nutshell, the fact that a user visited a site or a page. From this you can derive all sorts of things such as the purchasing interests of the user.

guaranteed is presold ads, the most lucrative for a publisher

Thanks for the explanation! Having never dealt with internet advertisers I didn't realize there was as much to it as there is :)
dfp = DoubleClick for Publisher (helps publishers run the ads that advertisers buy)

dfa = DoubleClick for Advertisers (helps advertisers buy ads)

OpenX was an open source ad serving platform you could install on your own server, but AFAIK the company behind it has more-or-less killed the open source product and is instead pushing a closed-source hosted ad serving solution.

OpenX Enterprise is definitely being pushed hard. They also continue to work on OpenX Market, their exchange.

OpenX is not good, but yeah a good number of people are using them.

I'm not surprised that many people use OpenX -- I'm surprised at how little competition there is for ad servers.

Last year I wanted to build an ad server that could integrate with legacy backend systems and add some custom targeting logic, but I couldn't figure out a good way to do it. All the popular ad servers are either crappy, too limited, too expensive, or some combinaton of the three.

My view is that the ad server business itself isnt a great business. The strategic value in Google buying Doubleclick was the market share of publishers firmly locked into Doubleclick as a platform, with all their ads flowing through that platform, and the corresponding opportunity to lock all of that inventory into a big ad exchange.

The strategic value of market share is huge when establishing an exchange. Exchanges are the purest network effects businesses that exist.

I agree that DFP and DFA aren't well loved by anyone. Im not even sure if the folks at Doubleclick love the product. But switching ad servers is as difficult for a publisher as changing keyboard layouts would be for you and me. Your whole process, and training of all your ad ops people just gets locked into the system you're using. This lock in is probably what makes it so hard to improve the product. But this lock in is what made Doubleclick so valuable to Google.

Google isn't the only smart operator in this space. Brian O'Kelley at AppNexus simply out hustled all of them to build an platform as important as Google's by linking all the exchanges together. Funny since he was of course CTO at Right Media.

(hey Earl!)

> Microsoft bought aQuantive as a knee-jerk reaction to Google's acquisition of Doubleclick.

Sometimes blindly copying your competitor isn't the best idea.

Accounting question: Is this write off writing off the goodwill that was created by the merger?
Goodwill is the premium paid above the book value. It occurs because most corporate purchases occur above the value the acquired company has on the books. An example: My company has a book (accounting) value if $10 million. I sell it to you for $30 million. $20 million of that becomes an asset on your books of "Goodwill" - a catch-all for the brand value above and beyond my tangible assets. If at some point you don't think you can generate earnings to justify the premium, you write it down. This is what Microsoft did.

For a longer explanation: http://en.wikipedia.org/wiki/Goodwill_(accounting)