What Does the VC Sing? Harlem-Shaking, Twerking First Round Capital’s 2013 Holiday Video Is a Wrecking Ball.

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Though I never knew it, Howard Morgan in a muscle costume stranded hanging on a wrecking ball is the Christmas present I have always wanted.

Here’s the annual holiday video extravaganza from First Round Capital, which is a December right of passage in Silicon Valley.

Featuring its many startups and mashing up the year’s most popular songs — in this case, Miley Cyrus’s “Wrecking Ball,” “What Does the Fox Say” from Ylvis, “Harlem Shake,” Macklemore and Ryan Lewis’s “Thrift Shop” and some errant twerking — this is perhaps the clever venture firm’s best ever.

Also, there is a camel and unicorns (an inside joke on a certain kind of hot startup).

Last year, it was Psy’s “Gangnam Style” and “Call Me Maybe” by Carly Rae Jepsen, and the year before, it was Rebecca Black’s “Friday” as the muse.

Enjoy 2013 (really):

What Does the VC Sing? Harlem-Shaking, Twerking First Round Capital’s 2013 Holiday Video Is a Wrecking Ball.

miley_cyrus_wrecking_ball

Though I never knew it, Howard Morgan in a muscle costume stranded hanging on a wrecking ball is the Christmas present I have always wanted.

Here’s the annual holiday video extravaganza from First Round Capital, which is a December right of passage in Silicon Valley.

Featuring its many startups and mashing up the year’s most popular songs — in this case, Miley Cyrus’s “Wrecking Ball,” “What Does the Fox Say” from Ylvis, “Harlem Shake,” Macklemore and Ryan Lewis’s “Thrift Shop” and some errant twerking — this is perhaps the clever venture firm’s best ever.

Also, there is a camel and unicorns (an inside joke on a certain kind of hot startup).

Last year, it was Psy’s “Gangnam Style” and “Call Me Maybe” by Carly Rae Jepsen, and the year before, it was Rebecca Black’s “Friday” as the muse.

Enjoy 2013 (really):

Exclusive: Foursquare Raises a $35 Million Round and Adds DFJ’s Schuler to the Board

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Foursquare, the iconic social location service, has raised $35 million in a Series D round, led by DFJ Growth and the Capital Group’s Smallcap World Fund.

The company confirmed the raise to me and later in a blog post, which has been the subject of intense scrutiny amid many reports that the New York-based company was in big trouble and likely to have to take a down round to garner funding.

Apparently, not so. While not a big leap over its last valuation of $600 million, according to sources, Foursquare’s new investors pegged the worth at just over that. A Foursquare spokesman declined to comment on the valuation (and I could not determine if he was smiling over the phone or not).

As part of the investment, Barry Schuler of DFJ is joining the Foursquare board. The energetic Schuler, a well-known investor and was a key exec at AOL in the 1990s (and later CEO and Chairman) during its go-go-growth years, will definitely make a lively director.

In an interview, Foursquare CEO and co-founder Dennis Crowley and COO Evan Cohen said the company would use the funds to continue to grow sales and engineering and expand further internationally.

“I think this round validates what I have been saying for a while — that these new passive awareness technologies are pointing to how we are going to take this company to a new level,” said Crowley, who noted that Foursquare now offers marketers six monetization options, up from two a year ago. “The steps we have taken over the last year have made us able to show investors the opportunities we have with the product.”

Added Cohen: “I think we are really delivering on the promises we made with the recommendations service and we had a better case when after we were able to get it out there for everyone to see.”

The raise, they said, is a relief after a tough year in the media spotlight and, they assert, proves that a lot of work the company has done around revenue growth — it has launched four monetization tools in 2013 — and product innovation has paid off.

That includes its Ads for Small Business product that it is deploying in over 80 countries and its real-time recommendations feature.

That has rolled out this year, described by Peter Kafka as the “most significant product rollout: A new version of the app that will automatically offer users tips about places they’re visiting, without requiring them to check in with the app itself.” That debut, though, came on the heels of the departure of its longtime product head Alex Rainert.

As Kafka also noted: “It’s a crucial bet for the company, which is fighting perceptions that it missed its shot to sell out to Yahoo or Apple, and that it will struggle to survive on its own.”

The new funds come eight months after Foursquare raised $41 million in debt financing.

“We had to not been able to demo what we were talking about until it was out there,” said Crowley about the ability to close funding now. “But once it was in place, it was easier to see where we are going.”

Crowley said the company now has 45 million registered users for the Foursquare app, although it unfortunately — and, really, purposefully — declines to give out its monthly active users stats. It should as it would be a useful and informative indicator of consumer success. Still, it is a nice jump from 33 million earlier this year.

Moving along, he also said Foursquare is also aiming to monetize its growing international user base in places like Turkey, Russia and Brazil via deals with a variety of resellers.

Cohen said some of the new funds will be directed at expanding its staff in those places. While Foursquare has a small office in London, most of the 170-person company is currently located in New York and San Francisco.

“We think mobile technology and user engagement have caught up to Dennis and the Foursquare team’s vision,” said DFJ’s Schuler. “Highly-targeted geo delivery of useful content and promotions will be a huge part of the next phase of the Internet’s evolution and Foursquare is the leader.”

In his blog post, Crowley crowed a bit too, perhaps in relief.

“This investment means that we can build our vision even faster,” he wrote. “And that you guys are going to see a lot more from our team.”

Exclusive: Foursquare Raises a $35 Million Round and Adds DFJ’s Schuler to the Board

icon-512x512

Foursquare, the iconic social location service, has raised $35 million in a Series D round, led by DFJ Growth and the Capital Group’s Smallcap World Fund.

The company confirmed the raise to me and later in a blog post, which has been the subject of intense scrutiny amid many reports that the New York-based company was in big trouble and likely to have to take a down round to garner funding.

Apparently, not so. While not a big leap over its last valuation of $600 million, according to sources, Foursquare’s new investors pegged the worth at just over that. A Foursquare spokesman declined to comment on the valuation (and I could not determine if he was smiling over the phone or not).

As part of the investment, Barry Schuler of DFJ is joining the Foursquare board. The energetic Schuler, a well-known investor and was a key exec at AOL in the 1990s (and later CEO and Chairman) during its go-go-growth years, will definitely make a lively director.

In an interview, Foursquare CEO and co-founder Dennis Crowley and COO Evan Cohen said the company would use the funds to continue to grow sales and engineering and expand further internationally.

“I think this round validates what I have been saying for a while — that these new passive awareness technologies are pointing to how we are going to take this company to a new level,” said Crowley, who noted that Foursquare now offers marketers six monetization options, up from two a year ago. “The steps we have taken over the last year have made us able to show investors the opportunities we have with the product.”

Added Cohen: “I think we are really delivering on the promises we made with the recommendations service and we had a better case when after we were able to get it out there for everyone to see.”

The raise, they said, is a relief after a tough year in the media spotlight and, they assert, proves that a lot of work the company has done around revenue growth — it has launched four monetization tools in 2013 — and product innovation has paid off.

That includes its Ads for Small Business product that it is deploying in over 80 countries and its real-time recommendations feature.

That has rolled out this year, described by Peter Kafka as the “most significant product rollout: A new version of the app that will automatically offer users tips about places they’re visiting, without requiring them to check in with the app itself.” That debut, though, came on the heels of the departure of its longtime product head Alex Rainert.

As Kafka also noted: “It’s a crucial bet for the company, which is fighting perceptions that it missed its shot to sell out to Yahoo or Apple, and that it will struggle to survive on its own.”

The new funds come eight months after Foursquare raised $41 million in debt financing.

“We had to not been able to demo what we were talking about until it was out there,” said Crowley about the ability to close funding now. “But once it was in place, it was easier to see where we are going.”

Crowley said the company now has 45 million registered users for the Foursquare app, although it unfortunately — and, really, purposefully — declines to give out its monthly active users stats. It should as it would be a useful and informative indicator of consumer success. Still, it is a nice jump from 33 million earlier this year.

Moving along, he also said Foursquare is also aiming to monetize its growing international user base in places like Turkey, Russia and Brazil via deals with a variety of resellers.

Cohen said some of the new funds will be directed at expanding its staff in those places. While Foursquare has a small office in London, most of the 170-person company is currently located in New York and San Francisco.

“We think mobile technology and user engagement have caught up to Dennis and the Foursquare team’s vision,” said DFJ’s Schuler. “Highly-targeted geo delivery of useful content and promotions will be a huge part of the next phase of the Internet’s evolution and Foursquare is the leader.”

In his blog post, Crowley crowed a bit too, perhaps in relief.

“This investment means that we can build our vision even faster,” he wrote. “And that you guys are going to see a lot more from our team.”

Viki Strikes Deal With Baidu to Bring Crowd-Translated Programming to China

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Viki, the innovative global video service that has been described as “Hulu for the rest of the world,” will partner with Chinese search giant Baidu for its first foray into that country.

The Singapore-based company, which was bought by Japan’s e-commerce giant Rakuten in September for $200 million, offers premium TV shows, movies and content, but with a twist. The programming is translated and subtitled into more than 160 languages by its users.

Viki will launch its effort with Baidu with Turner and Cartoon Network shows including “Falling Skies,” which is apparently a very popular show in China. (It’s a small post-apocalyptic world after all, especially when aliens are attacking.)

In picking Baidu, Viki gets access to its 237 million users in China for streaming content that will be translated into Chinese and English — including full-length movies, dramas, comedies, anime and more from the United States, U.K., Taiwan, Korea, Japan and 10 other countries — on many devices. Viki said it currently has over 26 million viewers watching two billion videos monthly.

Viki, which has already done several partnership deals in China, will be Baidu’s first streaming partner from outside the country, which is important given that big players like Netflix and Google’s YouTube are not represented there.

As part of the increased presence, Viki — which has offices in San Francisco, Singapore, Seoul and Tokyo — will be opening an office in Shanghai in early 2014.

“We are really building a content graph across the globe, available in all languages,” said Razmig Hovaghimian, CEO and co-founder of Viki, in an interview about the multi-year partnership. “Our goal in China is to break down barriers to that entertainment.”

Viki’s name is a combination of “video” and “wiki” — but mostly it is a very cool service that I really enjoy (I am a huge fan of Indian shows, like “Love Marriage Ya Arranged Marriage”).

It makes its money in much the same way Hulu does, with in-stream advertising revenue that it shares with content producers. There is a subscription and data play there, too, but a non-paid content model powers its business for now.

Before the Rakuten acquisition, investors had poured only about $25 million into Viki, including Andreessen Horowitz, SK Telecom, Greylock Partners, Omidyar Network, Charles River Ventures and Neoteny Labs.

The most recent additions to that Silicon Valley power group were Microsoft exec and Sling Media founder Blake Krikorian and Survey Monkey CEO Dave Goldberg — both of whom have much digital entertainment experience — who put an undisclosed amount into Viki in late July.

Sweden’s Klarna Buys Germany’s Sofort for $150 Million to Solidify Pan-European Payments Network

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Klarna, the Stockholm-based online payments company, has bought Germany’s Sofort, at a price that sources peg at $150 million.

With the acquisition, Klarna becomes one of the largest independent payments services in Europe, the company said, with about 10 percent market share of the $100 billion European e-commerce market.

“The reason for the acquisition is to do two things: Accelerate the push into Germany, and also to accommodate different needs in different markets,” said Mike Moritz of Sequoia Capital, which is an investor, in an interview.

Klarna offers payment solutions — such as a one-click purchase option and pay after delivery via anti-fraud technology — for a wide range of online storefronts across Europe; it did $200 million in revenue last year. It has 15 million users and 15,000 merchants in Sweden, Norway, Denmark, Finland, Germany, the Netherlands and Austria.

The purchase of Sofort, which is the major player in Germany, gives Klarna a definitive dominance there. Sofort has 25,000 online shops in Germany, as well as in Austria, Switzerland, the Netherlands, Italy, Belgium, Poland and the U.K.

Klarna, which means “clear” in Swedish, has raised $250 million in funding from Sequoia, as well as from DST and General Atlantic.

It will operate the Klarna and Sofort products separately, and the company noted that the deal still needs approval from Sweden’s Financial Supervisory Authority. The combined company will have about 1,000 employees — 850 at Klarna and 130 at Sofort.

Klarna has yet to enter the more competitive U.S. market, though sources said it is likely to, eventually.

“There will be a variety of large payments-related companies that develop over the next 10 years and ride around the globe,” said Moritz, who is on Klarna’s board. “So it’s a fruitful place to invest, since the two big trends are towards online commerce and the amount of online commerce being done from mobile device.”

Microsoft Director Says CEO Choice Will Not Be Made Until Early 2014

Microsoft director John Thompson, who leads CEO search

Microsoft director John Thompson, who leads CEO search

John Thompson, the Microsoft director who is leading the search for a CEO to replace outgoing leader Steve Ballmer, said today in a blog post that the board will not make its choice until early next year.

Wrote Thompson: “We identified over 100 possible candidates, talked with several dozen and then focused our energy intensely on a group of about 20 individuals, all extremely impressive in their own right. As you would expect, as this group has narrowed, we’ve done deeper research and investigation, including with the full Board. We’re moving ahead well, and I expect we’ll complete our work in the early part of 2014.”

While the timing is still within the time frame laid out by the company after Ballmer announced in August that he would be leaving, many inside the company — especially weary employees — had hoped that the new CEO would be named by the end of the year.

So did I — but nope! According to sources close to the situation, the board is taking its time to “find the right person for the job,” and believe the crush of the holiday season and the debate on who would make the best leader is still ongoing.

Sources with knowledge of the situation said that the directors are still mulling whether the company needs a more experienced leader — in the mode of Ford CEO Alan Mulally — or a more technical executive, such as Microsoft enterprise head Satya Nadella.

It’s all a bit Hamlet, but the intense press scrutiny also has not been helping and has made the situation appear more than a little chaotic. Thus, I guess, time to just breathe.

Interestingly, Thompson reiterated the need for a technical CEO, talking about the search update by Microsoft chairman Bill Gates at its recent shareholders meeting.

“He noted that this is a complex role to fill, involving a complex business model and the ability to lead a highly technical organization and work with top technical talent,” wrote Thompson.

Technical, people! Got it?

That might seem to rule out no one now in the mix, though, which also has included Microsoft strategy head Tony Bates. There are also various and sundry dark horses being considered, said sources.

In any case, I am also still in the running, very closely trailing Gates, Mulally and Nadella, according to this poll I created and designed and authored and am manipulating egregiously via Twitter begging and a lot of Mama Pope attitude. Now we have time to really stuff the ballot box, so vote early and often!

View This Poll

And here’s the full post by Thompson:

On Aug. 23, we announced that Steve Ballmer would be retiring from Microsoft within 12 months, and the Board of Directors was launching a search for a replacement, looking both externally and internally. Since then, we’ve been focused on finding the best possible person to lead the company. As we approach the end of the calendar year, there has been natural interest in getting an update on where we are in the process. I’m writing to share this with you here.

As the chair of the Board’s search committee, I’m pleased with our progress. The Board has taken the thoughtful approach that our shareholders, customers, partners and employees expect and deserve. After defining our criteria, we initially cast a wide net across a number of different industries and skill sets. We identified over 100 possible candidates, talked with several dozen and then focused our energy intensely on a group of about 20 individuals, all extremely impressive in their own right. As you would expect, as this group has narrowed, we’ve done deeper research and investigation, including with the full Board. We’re moving ahead well, and I expect we’ll complete our work in the early part of 2014.

At the same time, Microsoft has continued to drive hard. Our employees produced strong quarterly results, announced in October. They released new versions of Windows, our Surface products and many other offerings. And the launch of Xbox One was experienced around the world. All of us on the Board appreciate their continued focus and commitment.

At our shareholder meeting in November, Microsoft Chairman Bill Gates provided an update on our search process. He noted that this is a complex role to fill, involving a complex business model and the ability to lead a highly technical organization and work with top technical talent.

Microsoft has had only two CEOs in its 38-year history. As a Board, we are determined and confident that the company’s third CEO will lead Microsoft to renewed and continued success. We’re looking forward to 2014 and the opportunities and decisions that lie ahead.

John Thompson

CloudFlare Reveals $50 Million “Secret” Funding — From One Year Ago

CloudFlare co-founders, left to right, Michelle Zatlyn, Lee Holloway and Matthew Prince

CloudFlare co-founders, left to right, Michelle Zatlyn, Lee Holloway and Matthew Prince

CloudFlare, the Web security and performance company, said yesterday that it had raised $50 million in a Series C round, with new investors Union Square Ventures and Greenspring. Existing investors — NEA, Pelion Venture Partners and Venrock – also participated.

But here’s the catch: Although the San Francisco-based firm got the money a full year ago, it kept the investment a “secret,” using the funding to quadruple its network capacity across 23 global data centers and to open an engineering office in London.

CloudFlare’s total funding to date is $77 million, and sources said the new round values the company at just under $1 billion.

So why the secrecy? “We’ve been on a mission to build a better Internet, and we did not feel we needed to make a big deal of the funding to do that,” said co-founder Michelle Zatlyn.

(Anti-hype in tech? It’s unnatural!)

It was via Zatlyn’s service on a Federal Communications Committee advisory panel about the open Internet that she met USV partner Brad Burnham.

“What we were talking about on the panel was what CloudFlare was about, a kind of outsourcing of the sysadmin role, but in an open format,” said Burham. “A lot of the big players like Google and Amazon are getting to this space, but I felt there was a need for there to be a big independent player.”

CloudFlare offers a wide range of services for its customers, including protecting sites from malware, denial of service and other forms of attack, and also helping speed up site performance.

The company said it sees five percent of all Web requests, and “sits in front of one in every 20 sites that you visit on the Web today.” It added that it now has 1.5 million customers, from several governments around the world to e-commerce sites to popular online photo services like Imgur.

CloudFlare also said its revenue increased 450 percent, although it did not specify sales numbers. It will become profitable in January, co-founder and CEO Matthew Prince said in an interview.

“The Web is about to turn 25 years old, and it’s beginning to show its age,” he said. “It will be very important, as it becomes more complex and it rebuilds itself, that there is someone who can maximize trust in the ecosystem.”

Prince said that much of the money CloudFlare raised was still in the bank, but that it plans to use some to continue its network expansion in 2014 with dozens of new data centers across the globe.

Noogler Poach — Google Nabs Top Maps and AR Engineer From Microsoft (Video)

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TED/www.leslieimage.com

Microsoft has lost one of its most well-regarded and creative engineers to Google. According to the software giant and the search leader, Blaise Agüera y Arcas will now be a Noogler — that is, a new Google staffer.

It is a decidedly big loss for Microsoft, which sources said tried mightily to keep him. Agüera y Arcas has worked on a number of key projects at Microsoft, including augmented reality, wearable computing, interaction design, natural user interfaces and, perhaps most significantly, on Bing Maps.

Google declined to comment, but the New York Times reported earlier today that he would be working on machine learning. Microsoft confirmed the move.

One source close to Microsoft said Agüera y Arcas had wanted to work on devices, but had not been moved there. Another noted that he had become frustrated by the confusion around the recent restructuring and search for a new CEO.

Agüera y Arcas was the co-creator of Photosynth, an innovative software that gathers photos into 3-D environments. He came to Microsoft in 2006 after its Live Labs unit acquired his Seadragon Software startup.

In a talk he did at the TED conference in 2007, a speech that got him a lot of notice in which he showed off Photosynth, he joked: “I never thought I would work at Microsoft.”

No longer, it seems, and now Agüera y Arcas has the vast and well-funded playground at Google to work in. He certainly can keep up.

According to his bio, he “authored patents on both video compression and 3D visualization techniques, and in 2001, he made an influential computational discovery that cast doubt on Gutenberg’s role as the father of movable type.”

Another fun fact: “According to the author, Blaise is the inspiration for the character Elgin in the 2012 best-selling novel ‘Where’d You Go, Bernadette?’”

Here are his two TED appearances in 2007 (about Photosynth) and Bing Maps (2010), in which it will be abundantly clear that this is a big steal by Google from Microsoft:

(Photo courtesy of TED.)

Not the Singles Lady — Apple Says Beyoncé Album Breaks Record

Apple said the new self-titled album from music superstar Beyoncé had sold 828,773 copies since it was released exclusively by the iTunes Store three days ago. The company said that made it the fastest-selling album ever on the music-selling site. U.S. album sales totaled 617,213 for a work that included 14 new songs and 17 videos.

Will Microsoft Name Its CEO Before the New Year? Weary Employees Hope for Even Sooner. (Poll)

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Here’s the only thing that’s completely clear: The search for a Microsoft CEO has become a bit of a circus over the last few weeks.

First, Ford CEO Alan Mulally seemed to be a shoo-in, issuing a series of cunning non-denial denials about his intent. But that was blown up when the chairman of the car company said the high-profile executive was there to stay — at least through 2014 — while Mulally did his fantastic Cheshire Cat routine. Then, at the end of last week, Ford said that it would hold a last-minute analyst meeting this week, without specifying what the topic was.

Did that mean the candidacy of Mulally was going to be officially ended? Or would the meeting be about the Mustang and not Mulally? Or perhaps that the frontrunner who was fading had gained some wind in the final stages and would race across the finish line for the Microsoft win?

Most certainly, it would not be Qualcomm’s Steve Mollenkopf to win, place or show. Contrary to a report that he would be the dark-horse candidate for Microsoft CEO, he was named CEO of the chipmaker a day later. Oops!

Next dark horse, please trot forward! (At this point, I vote for Bill Gates’s triumphant return, complete with trumpets and flourishes.)

And what of the internal trio of candidates — enterprise chief Satya Nadella, strategy head Tony Bates and Nokia’s Stephen Elop? Nadella has seemingly been all over the place this week, perhaps perfect timing to test out how good his charm can be. His public appearances were obviously planned months in advance, but my verdict is it works and he comes across as still a geek, but a super nice one. Bates and Elop were, in comparison, not in the spotlight.

But not completely, creating a deep uncertainty inside Microsoft, and causing a great deal of consternation among its employees. In dozens of interviews last week, staffers talked about a system that is essentially stopped up, despite increasingly active outgoing CEO Steve Ballmer moving across the organization in a series of ever-louder meetings.

At a meeting of 500 directors and above, he talked about Windows 8 and its failures. In another, he spoke of creating gamer-focused PCs, as if he had years to go in his tenure. In another, he apparently cried at the prospect that there would be no more years.

Employees, though, seem ready for a change — and soon.

“Everyone is just waiting for the decision,” said one high-ranking exec, in what was a common refrain. “Even though we are supposed to be carrying out the new One Microsoft plan that Ballmer created, it’s pretty much a wait-and-see for everyone.”

Said another engineer: “It’s not clear if the company and the new management that was just put into place will stay there with a new CEO, so it’s just easier to look busy without actually being busy.”

And another product manager: “We can’t really wait, since things are moving so fast at other companies, so everyone is hoping for a resolution before the new year … it would be a symbol that change is finally going to come here.”

It goes on and on like that, with everyone I spoke to not really knowing what will happen, up to near the top of the company.

So they await the machinations of the Microsoft board — which seems to have been unable to do one of its key jobs: Having a solid, easy-to-follow succession plan in place before Ballmer announced his pending departure.

Those familiar with the board’s thinking make the excuse that Ballmer was not supposed to leave quite this soon, so such a plan was not properly put in place. Perhaps, although that leaves out the pertinent fact that the directors played a key role in that particular drama.

And, of course, there are those who point the finger at Ballmer himself for quashing all potential CEOs-in-training over the years. Gone, Kevin Johnson. Gone, Bob Muglia. Gone, Robbie Bach. Gone, Ray Ozzie. Gone, Steve Sinofsky.

That last one was perhaps more dramatic than others, but they all pointed in one direction.

And that is: This big decision — perhaps the most significant in Microsoft’s long history — was destined to be a circus or a crazy horse race, or whatever you want to call it.

The funny thing is that calling it — making a CEO choice — would be the best holiday present Microsoft employees could possibly receive. But it might be a gift that will have to wait until next year.

Until we know who this fretting board picks, please take this survey to pick whom you would favor:

With Microsoft CEO Race in Home Stretch and Mulally Fading, Here’s My Dark-Horse Pick: VMware’s Gelsinger

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A few weeks ago, I wrote a piece about the possibility of an outsider dark-horse candidate emerging in the race to become CEO of Microsoft.

Now it might be more of a possibility than ever before, tracking on sources inside the company that have consistently said that there is a male tech executive in the running who has not been named publicly as yet.

Said one person about this candidate: He is “in tech, someone folks are excited about, but not a done deal.”

By definition, the term “dark horse” is meant to describe a come-out-of-nowhere winner, or, as Wikipedia notes, “a race horse that is not known to gamblers and thus is difficult to place betting odds on.”

And make no mistake, this CEO search has turned into a race, with the variety of candidates pulling ahead and then falling behind, with all of them jockeying for position, as the crowd of investors and insiders have also tried to put their own fix in.

At the time of my post in mid-November, Ford CEO Alan Mulally was the clear front runner of the process to replace outgoing CEO Steve Ballmer. Also in that mix: Enterprise chief Satya Nadella; COO Kevin Turner; strategy exec Tony Bates (whom I have dubbed the Silicon Valley choice); and Nokia exec Stephen Elop.

Elop was considered the top contender (by me, at least), after Microsoft bought the mobile phone division of Nokia. But — for a variety of reasons — he soon fell behind two other internal candidates, Bates and Nadella. And further back still, Turner.

Among the outsiders, Mulally — who has done a lot of deft lobbying for the job, after helping Ballmer in his efforts to restructure Microsoft — has always been in the forefront of the choice.

As I noted:

The plus for Mulally? An obvious ability to manage a complex organization, with many moving parts and masses of employees. The minus: He’s not enough of a visionary geek who can grok the massive changes moving through the digital landscape and also understand the complexity of the tech itself.

In other words: He can’t program. He doesn’t Snapchat. But he sure can give a corker of a speech.

But over the last week, Mulally’s star has fallen quickly, which sources said is due to some shift in opinion among Microsoft’s directors that perhaps a more tech-experienced exec is needed, with major chops in either the enterprise or consumer arenas.

Not helping Mulally was what appeared to be an off-the-cuff statement by Ford Chairman Edsel Ford II, who told Bloomberg News that Mulally “has told us that his plan is to stay with Ford through the end of 2014.” Although Mulally still gave a non-denial denial of his interest, Ford’s remarks sent Microsoft stock tumbling.

This perceived jockeying was not well received by many inside Microsoft, and some felt it was Mulally trying to hedge the situation on both sides a little too much. Sources inside Microsoft also note that Mulally’s candidacy has languished on other issues, including how long he would remain CEO, and also control over board dynamics.

Still, well-known analyst Rick Sherlund insisted that Mulally remained the leading candidate. In a research note last week, Sherlund wrote that the comments of Ford and Mulally were “non-answers to the question, and appear to us to be consistent with our view that he is in discussions with Microsoft’s board for the CEO slot at Microsoft.”

But, at least according to my sources, the temperature I am picking up inside Microsoft is decidedly cooler toward Mulally than ever before.

That’s why I have been focusing on sussing out this mysterious dark horse, who could be any number of telecom, Web or tech execs.

This past week, for example, rumors raced around the company that Facebook COO Sheryl Sandberg was of great interest to the board. But, said sources, Sandberg has had no talks with Microsoft about the job, even if she might have been on a list of top choices.

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Also of great interest, although previously mentioned, was former Microsoft exec and VMware CEO Paul Maritz, who did meet with Microsoft co-founder and former CEO Bill Gates to discuss the situation. But multiple sources said that Maritz has shown no interest in returning to his company.

But the idea of an exec with deep experience in the enterprise and cloud is still, I think, the most compelling solution for Microsoft, which is why I zeroed in on another VMware exec: CEO Patrick Gelsinger.

Let’s be clear: This is my choice. But it’s not so far-fetched, either.

Before joining VMware in late 2012, Gelsinger was at EMC’s Information Infrastructure Products business as president and COO, “overseeing engineering and operations for information storage, data computing, backup and recovery, RSA security and enterprise solutions as well as the office of the CTO.”

More importantly, he spent three decades in a variety of top roles at Intel, Microsoft’s longtime partner, where he began his career. And here’s the most interesting part, according to his bio: “He was also the architect of the original 80486 processor and a design engineer on the 80386 and 80286 processor design teams,” chips that powered a generation of Windows PCs.

Gelsinger is well-regarded in Silicon Valley, too. Said one top player about him: “He’d certainly be top of any candidate list inside the industry if he were gettable. Surprised he’d leave VMware this fast, but maybe I shouldn’t be.”

Maybe not.

VMware and Microsoft had no comment about my long-shot bet.

Kick the Can — Yahoo Mail Is a Consumer Disaster, but Company’s Response Is Even Worse

rustycan

On Friday, November 8, Jeff Bonforte, the well-regarded techie who is now in charge of Yahoo Mail and all its communications products after the Silicon Valley Internet giant bought his startup Xobni, took to the stage at its weekly FYI employee meeting.

As described by dozens of Yahoos, Bonforte explained how things were going with the new Yahoo Mail product, which was enduring loud protests from users for a wide variety of reasons, including the removal of a popular tabs feature.

As has been widely reported, a relentless and vocal group of Yahoo Mail users have been complaining vociferously after Yahoo drastically revamped its popular service in October.

According to those in attendance, he said the metrics of use were flat, although there were signs of minor improvement.

Then Bonforte, who has one of the more colorful and sarcastic personalities at Yahoo (see his epic email about Yahoos not using its mail product here), made a joke that many in attendance did not find funny at all.

While acknowledging customer complaints and dissatisfaction, he added that Yahoo would need to “kick the users hard” in a certain body part to get them to leave Yahoo Mail, according to numerous people there.

Hard indeed, as the initial Yahoo Mail issues have turned into a full-scale disaster, with various outages that seem to be taking place across the network, impacting countless individuals and the many small businesses that rely on the service.

Some reports and downtime sites show multi-day outages over the course of many days, while others show shorter times. The complaints have most certainly been mounting for weeks.

What is consistent are two things: Outages have been occurring regularly and Yahoo has been woefully negligent in informing its users about the problems.

They have also declined to return emails inquiring about the issue and others related to Yahoo Mail from this site for weeks, in perhaps the most astonishing display of PR incompetence I have experienced in a very long time. Heretofore excellent communications staffers I have worked with in the past have seemingly been rendered mute.

To be clear, other Internet sites have done this kind of thing in the past — not responding quickly or in detail to various consumer issues. And, to be fair, sources inside the company said the delay was due to trying to find out exactly what was going wrong before talking about it.

But that was a week ago. Since then, the silence has been deafening.

How many people have been or are currently impacted and for how long? Yahoo will not respond.

Where are the outages taking place? Yahoo will not respond.

What exactly is being done to fix the problem? Yahoo will not respond.

Instead, Yahoo has relied on a series of news-free tweets on the issue, which only began appearing yesterday and today, as well as promises it was fixed when it was not:

But, just now, in the first significant communication about the problem in weeks, Bonforte posted to Yahoo’s Mail blog a short note acknowledging the issues, but with few concrete details:

We are very sorry for recent difficulties with Yahoo Mail.

Some of our users have not been able to access their mail since 10:27 PM PT on Monday night, due to a hardware problem in one of our mail data centers. The issue has been harder to fix than we originally expected.

We have dozens of people working around the clock to bring it to a resolution. We believe our current efforts will restore our users’ access to their inboxes by 3 pm PT today. We’ll post again then on our @YahooMail Twitter handle.

While I am certain Bonforte — for whom I have had great respect for a long time — and his team are trying their best to fix the problem, the contrast to Yahoo CEO Marissa Mayer’s insistence on engineering excellence and innovation and the inability of the company to provide a cogent explanation about what is happening to one of its most important daily interfaces with its customers could not be any more stark.

In other words: What could be bigger than a Fail Whale? This.

Gravity’s Amit Kapur Talks About the State of the “Interest Graph” (Video)

Gravity-Logo

A few weeks ago, I had a nice chitchat with Amit Kapur, the co-founder and CEO of Los Angeles-based Gravity, the startup that is aimed at creating a digital concept known as an “interest graph.”

The company has been integrating its personalization technology across a range of content sites, including NBC, Disney and several AOL properties, with more to come. Essentially, its products aim to tailor consumers’ Web experience as they surf and then surface the content most relevant to them.

It’s not just people but also brands, such as Sony, Intel and others, because these, too, have interest attributes that presumably will help them figure out how to advertise and target customers better.

See a Taco Bell interest graph, for example:

TacoBell_interestgraph

Recently, Gravity — which has raised $20.6 million since it was launched in 2009 — released Highlighter, a Google Chrome extension that highlights a “personalized newsfeed of what you might want to read on any content site you visit.”

Here’s Kapur talking about the latest trends in the area — which many Web players are trying to decode — in a video interview with me: