Why founders win

Owen Thomas · 11/18/08 02:20PM

Silicon Valley entrepreneurs like to talk about their hopes of "changing the world." Yes, of course: Changing the world from one in which they are poor to one in which they are fabulously wealthy. The question in the air is whether the founders of companies do a better job at creating wealth, for themselves and their investors, than professional managers. With Yahoo announcing Jerry Yang's plans to step down as CEO, it would seem like a losing time for founders. But Yang is an exceptional case; he took his hands off the steering wheel when Yahoo had a mere five employees, and never really ran anything until he stepped in as CEO last June. Most founders of successful startups eagerly seize power, and have to be forcibly dislodged from the driver's seat. The best never let go. Just take a long-term look at the stock market, and you'll see why.

How A Relative Unknown Scored Amazon's Book of the Year

Alex Carnevale · 11/09/08 03:25PM

By naming British novelist Philip Hensher's seventh novel, The Northern Clemency, the Amazon Book of the Year, the mega-store is about to foist an entirely new level of scrutiny on the Exeter English professor. Although The Northern Clemency was short-listed for the Man Booker Prize (nabbed by Aravind Adiga's The White Tiger), Hensher is now a couple months of publicity from becoming a real name in literary households. We break down Hensher's chronicle of the Thatcher years in his hometown of Sheffield and his mixed feelings toward his rising fame, along with the rest of Amazon's year-end list:Sure, Philip Hensher was #82 on a British Gay Power list, but now he's notching comparisons to John Updike, Jonathan Franzen, and Anne Tyler. The book concerns a Sheffield family experiencing "the last phase of its industrial greatness" in 1974 , and goes on to revisit the Thatcher legacy in glorious prose. Amazon editors targeted the book as soon as they saw the galleys, and they probably take extra-special pleasure in popularizing the remarkable novel on this side of the Atlantic, where it's considerably less well known since coming out last month.

Why isn't talking about its $150 million windfall?

Owen Thomas · 10/23/08 11:00AM got a big payday when eBay bought Bill Me Later, the payment service, for $945 million earlier this month. So why isn't it admitting it? In an SEC filing, didn't name Bill Me Later as the source of a $150 million cash payment it will receive in return for an investment. But it's obviously Bill Me Later, which invested in last December. Here's the curiously vague wording of Amazon's disclosure to shareholders, and three possible reasons for it. predicts bleak Christmas

Owen Thomas · 10/22/08 07:00PM

In its third-quarter earnings call, executives say they expect sales between $6 billion and $7 billion for the December quarter. A consensus of Wall Street analysts had predicted $7.05 billion. The stock is down 14 percent. [Silicon Alley Insider]

Rackspace gobbles tiny competition to take on

Alaska Miller · 10/22/08 03:00PM

Web hosting? So 1990s. Rackspace is now into "cloud computing." The company has acquired Slicehost, a small but popular virtual private server host, and JungleDisk, an online-storage startup. The deals comes as Rackspace is pushing its Mosso service as an alternative to's computing-power rental offerings. The question is now this, will Rackspace bring their world-class downtime to both services?

Wikia lays off 10 percent of staff

Owen Thomas · 10/20/08 12:00PM

Bid goodnight to Jimmy Wales's dream of cashing out on Wikipedia, the world's largest collection of infrequently asked questions. The vehicle for his scheme, a derivative for-profit startup called Wikia, is imploding. A tipster tells us that the 43-person company has laid off 30 percent of its staff. (Update: The company now says it has only laid off 10 percent of its employees.) Wikia lets users build their own anyone-can-edit wiki pages. Unlike Wikipedia, Wikia sometimes runs advertising on the wikis; its most popular sites have to do with videogames. So why the layoffs?A source who has seen Wikia's numbers says the company is experiencing "a hemorrhaging of cash circa 1999" — losses, in other words, like the first generation of dotcoms. No surprise there, since it has offices in San Francisco, New York, and Poland, and many of its products, like Wikia Search, are staggeringly unpopular. Wikia raised $14 million in venture capital from Bessemer Venture Partners and, the last of which came in December 2006; without a new infusion, it must surely be running low on cash. sales bogged by Wall Street's black hole

Paul Boutin · 09/26/08 03:20PM

"Nearly half of consumers are delaying purchases due to uncertainty in the economy, while 42 percent are planning to decrease their usage of credit cards," Lazard Capital analyst Colin Sebastian wrote this morning. Don't make too much of it yet: Lazard's lowered earnings estimates only a sliver, from $1.58 to $1.55 per share for 2008. Annual revenue for 2009, likewise, is lowered only a quarter-billion from $24.75 billion to $24.50 billion. That's 250 million bucks to you and me, but not much to Bezos and company. (Photo by AP/Ted S. Warren)

MySpace Music — like Muxtape, except people who wear deodorant will use it

Nicholas Carlson · 09/12/08 04:00PM

MySpace Music, a joint venture between the News Corp. social network and music labels Universal, Sony and Warner,finally launches next week, says Fortune, though it still won't have a CEO. MySpace users will be able to listen to and organize playlists full of songs from all three music labels for free. (EMI is the lone holdout, which means no coldplay.) Playlists will include affiliate links to's MP3 store. MySpace CEO Chris DeWolfe says ad revenues and song kickbacks are going to save the music industry, replacing lost CD sales.Imeem CEO Dalton Caldwell, whose company already offers a similar product, follows Google, Microsoft, and Yahoo to Madison Avenue

Nicholas Carlson · 09/12/08 11:00AM

Google's the undisputed king of Silicon Valley — but it's been wooing New York ad agencies nonstop, trying to break into the traditional part of the business, with mixed success. It's almost cute how all of its online rivals are following it. has hired a Microsoft ad sales exec, Lisa Utzschneider, as SVP of national ad sales. What, you thought Amazon sold books, not ads? Exactly the problem Utzschneider's being asked to solve: Amazon has been trying to sell ads for a long time, but they remain a small fraction of the retailer's revenue. A Madison Avenue agency executive tells us her hire is just the latest part in a methodical campaign by Jeff Bezos & Co. to beef up of its New York ad sales staff over the last four months.At Microsoft, Utzschneider managed search sales. The Peace Corps veteran also did a lot of charity work — a description which seems to fit Amazon's advertising efforts at present. Amazon already has products to sell: Clickriver, a self-service sales system like Google's AdWords, and Amazon Product Ads, an ad network like Google's AdSense. It's also trying to sell more ads directly on and "Amazon has a huge audience that is undermonetized," Greg Smith, COO of interactive agency NeoAtOgilvy, tells us. A second source says, "This move isn't surprising, based on those efforts, because they have a long way to go if they want to evolve into a media company." Memo to Utzschneider: Bring more than just candy.

Gurbaksh Chahal's ego-book "The Dream" available for pre-order now

Nicholas Carlson · 09/11/08 11:40AM

Gurbaksh Chahal, the guy who sold ad network Blue Lithium to Yahoo for $300 million and will pretend to be poor on Fox's The Secret Millionaire this fall, has written — more likely, paid somebody to write — a book which you can preorder on right now. This very minute. We're very much interested in a review copy, but a skeptical reporter friend of mine tells me he isn't. How come? to let you pretend you understand wine from your own home

Nicholas Carlson · 09/11/08 10:40AM

By the end of September, will begin selling wine, the director of Napa Valley Vintners told the Wall Street Journal. Online wine stores are possible now in part because of a 2005 Supreme Court ruling that knocked down New York and Michigan laws prohibiting it. Hooray legislating from the bench!Now those of us who wear sweaters and wish we could read only by candlelight will be able to annoy our friends even more trying to pretend we know something about the red grape juice we're drinking and that's making me talk too damn much again and somebody just kicked me under the table. In related dinner party fodder news, Amazon plans to sell the biographies of first ladies-in-waiting Cindy McCain and Michelle Obama on the its e-reader the Kindle before they're sold in hard-copy anywhere else. Which makes sense, if only because there's not enough time to rush out these opportunistic political potboilers in paper form. (Photo by paul goyette)'s video on demand more "piddling" than "streaming"

Jackson West · 09/05/08 09:00AM

While makes no claims as to the quality of video from its new "video on demand" online streaming service being comparable to DVD quality, a measly 1.2 megabit-per-second data rate is still laughable. To put it in perspective, standard-definition DVDs typically run well over 6Mbps (Apple, also risibly, calls the 5Mbps offerings from iTunes "HD," purely based on pixel dimensions and not data depth). And based on your connection speed, Amazon might deliver even less digital resolution. All of this for up to $14.99 to "own" a movie stored wrapped in Adobe's Flash copy protection. Granted, Amazon is hindered by the slow broadband connections typical in American households, but keeping the bitrate low also keeps bandwidth costs down — and margins high.

Jimmy Wales and the art of the modern breakup

Owen Thomas · 09/04/08 05:40PM

Another failed relationship, another awkward online parting of ways for Jimmy Wales, the cofounder of Wikipedia. Just a few months ago, he was squiring new-agey PR impresario Andrea Weckerle, a self-described "global nomad," around the world. Now, insiders say, Weckerle has dumped Wales — you can tell, because she no longer follows his Twitter updates. The puzzle here: How does he put so much energy into chasing women when he's supposedly leading the world's largest collection of unfactchecked assertions backed up by hyperlinks, and taking on Google with Wikia, his for-profit offshoot?Oh, right — because he's not doing any of his jobs well. Sue Gardner, the executive director of Wikipedia's nonprofit parent, the Wikimedia Foundation, has made it clear she's running the show there. And Wikia? Its search engine, the project on which Wales has said he's focusing his energies, has 0.000079 percent of the market. The common thread: Wales is incapable of sustained attention on anything, or anyone. He once signaled his coupledom by tweeting thanks to an admirer from "Andrea and I." Weckerle has left a coded retort for Wales with this quote from Roy Disney: "It's not hard to make decisions when you know what your values are." Not as rough a farewell as Rachel Marsden, the conservative Canadian pundit. She auctioned Wales's clothes on eBay after he posted a note on Wikipedia stating that they were no longer an item. Too much trouble, too much effort, for Wales to repeat that kind of drama with Weckerle, we guess. Breaking up on Twitter? Far more suited to Jimmy's attention span. The only question: When are Wales's backers at Wikia — Bessemer Venture Partners and among them — going to lose interest in him, too? puts Unbox away

Nicholas Carlson · 09/04/08 11:00AM

We suspect the name "Unbox" only ever made sense to CEO Jeff Bezos. The online retailer has rebranded its video-download store as "Video on Demand." The only other big change: The videos will now play on Macs. They'll continue to be downloadable to viewers' TiVos, Windows Media Centers, and Xbox consoles. Flicks cost $2.99 to $3.99 to rent and $7.99 to $14.99 to buy. Another draw: Unlike Apple's iTunes store, you can get NBC Universal content from (NBC vanished from Apple's store after a tiff over pricing last year.) launches database for bands

Alaska Miller · 09/02/08 02:00PM

Amazon is releasing a site called SoundUnwound — a version of IMDB for musicians, editable by anyone like Wikipedia. Few know that IMDB, the movies database, is owned by But the universal vendor seems to value the data therein — knowing which obscure movies a now-famous actor starred in helps cross-sell DVDs. Most of SoundUnwound's information comes from YouTube, Wikipedia, and MusicBrainz — another open-content music database. You can find out who the sound engineer for Amy Winehouse's studio debut was, if you're so inclined — okay, it's Jimmy Hogarth. With free data, Amazon gets what it pays for, in the form of broken track listings and unknown playtimes on songs, but it's still good enough to help upsell you more MP3s from its struggling music store.

No new Kindle from Amazon this year

Paul Boutin · 08/28/08 12:40PM

"There will be no new version of the Kindle this year," spokesman Craig Berman told The New York Times. Berman seems intent on stomping rumors of a new Kindle for Christmas. His message? Stop saving up. Buy some more e-books instead.(Photo by AP/Mark Lennihan)

The spam-happy history of's new social network Shelfari

Nicholas Carlson · 08/26/08 11:40AM's newly acquired book-readers social network, Shelfari, has a bad reputation. The main charges lodged: It has grown its userbase through a shady techniques such as automatically sending site invites to everyone in a new user's email address book. It's also believed to engage in "astroturfing" —- specifically, pretending to be users in blog comments to buff up its image. Gawker last year described the site as "basically social networking rapists" — a perhaps inelegant phrasing, but one that gets the point across.Shelfari CEO Josh Hug — how can you dislike a man whose last name is "Hug"? —blamed the whole mess on "an unexperienced but well-meaning intern." Ironically, the company that exposed Shelfari's tactics was rival books social network LibraryThing. AbeBooks, a recently acquired subsidiary, owns 40 percent of LibraryThing. Who will be motivated to report on Shelfari's user-gathering tactics now? Oh, right — that would be you, gentle reader!'s purchase of Shelfari locks up competition

Jackson West · 08/26/08 07:00AM

The most powerful player in the book business besides Oprah,, just got a little more powerful with the acquisition of Shelfari, a social network for bookworms. Not yet formally announced, the deal would give Amazon total control over a competitor to a similar site, LibraryThing, in which the company has already taken a stake through an earlier acquisition, according to Seattle Post-Intelligencer reporter John Cook.It makes sense: Why pay to develop your own social software when you can buy up existing technology and communities of potential customers as well? Never mind the apparent conflict of interest, or Shelfari's spammy history. Those concerns are for companies who aren't trying to corner nascent markets through vertical integration. (Photo by Tim Mansfield) execs: Kindle not quite the huge hit everyone says it is

Nicholas Carlson · 08/25/08 09:40AM

After a TechCrunch report said that had already sold 240,000 Kindles this year, Wall Street analyst Mark Mahaney called the Kindle "the iPod of the book world." Now says both Mahaney and TechCrunch spoke too soon and without talking to the right people. The right people, according to analysts from McAdams Wright Ragen, being analysts from McAdams Wright Ragen.They say Amazon executives told them "high-end estimates on Kindle sales reported by TechCrunch and a Citigroup analyst are not reasonable." Writes one of the McAdams Wright Ragen analysts: " told us that the Kindle is definitely selling very well, but they also said the analysts and reporters giving out these extremely high estimates 'did not run them by company. Since we've never seen a Kindle in person, we're inclined to believe the Amazon executives when they say the Kindle isn't quite such a huge hit. But the suits might also be trying to keep expectations low enough to be easily surpassed.

Pardon me, do you have any grey poupon?

Nicholas Carlson · 08/14/08 06:00PM's electronic-book reader, the Kindle, is a rare find in the wild. The only place we've ever spotted one was in New York's subway system. And that's where a Valleywag reader found this specimen yesterday. Unfortunately, in his excitement, our volunteer paparazzo may have startled the rare creature, perhaps disturbing its mating cycle. You can tell by looking at its eyes. Can you come up with a better caption? Do so in the comments and we'll rename the post with the best one. Yesterday's winner is Sample32 with "This picture would be 10x better if it was accompanied by Australian accents."