Jeffrey McManus

People have been talking over the weekend about the failed Microsoft/Yahoo takeover talks. As a Yahoo shareholder and former employee I’m disappointed that it’s going to be quite some time before we get our money out of that stock (note to self: in the future, always sell ESPP shares the day you leave). I empathize with my many pals who work for both companies — however you feel about the takeover, it sucks having to go to work every day under a cloud of uncertainty.

But as someone who has also made his living on the Microsoft platform for years, I feel like I’m in a position to think about what Microsoft — the company that has been desperately casting about for a cogent internet strategy since 1995 — might do next.

When I was at the Web 2.0 Expo week before last, I was talking to a guy who asked me what I thought of the show. I told him I was disappointed — there were a lot of companies who were working on “me-too” social networking products, and a lot of old school companies that really had no business being there (Disney, Oracle). But I didn’t see anything really exciting or disruptive. I told the guy that I had yet to see the next company that was going to put 100,000 people out of work. What I meant was that I didn’t see anything industry-changing.

The ultimate type of business disruption — and the one that is ultimately the most difficult to achieve — is to disrupt yourself. I’ve said for a while that one of the reasons why Microsoft has failed to build a compelling network of web properties is because they are afraid of disrupting themselves. If you want to make a great leap, you can’t serve two masters — and in Microsoft’s case, they’re serving both the Windows master and the Office master. It’s pretty obvious that this is the case when you pay attention to Microsoft’s words and deeds — calling your maps product “Windows Live Local” probably isn’t the most egregious example, but to me it’s a clear sign that whoever named this thing isn’t really thinking about kicking ass, they’re worried about not upending the status quo.

Well, sorry guys. The web will continue to be about upending the status quo for some time to come. You can either play it safe and be upended, or be the one doing the upending. For companies like Microsoft and Yahoo!, there’s really no middle ground.

At the same time, many people in the past few years have said that the “nuclear winter” atmosphere for technology IPOs can’t last forever, that there should be some alternative for web startups short of an IPO. Some people have referred to this as the “rollup” — one well-heeled company that would go around developing products, or acquiring companies as needed, much in the way that Cisco used to do.

Microsoft should create a company to do this. A new company — an independent subsidiary — not beholden to anyone in Redmond. This company would have the mandate to acquire and create great web properties that people actually want to use and that will make money. No one inside Microsoft would have day-to-day control or authority over this company (aside from the sort of high-level oversight that you’d expect from a board of directors).

The new company would have to be based in Silicon Valley. It would have to reward its employees with equity that actually means something. The company must have the freedom to use the best technology to create the best solutions — and if that means Linux, or whatever, so be it. The new company should be permitted to do whatever it takes to attract talented workers from wherever it needs to — including poaching employees from Microsoft itself, if that made sense.

The new company would have an opportunity to throw off all kinds of bad habits, not only those practiced by Microsoft, but by large and small internet companies everywhere. Experiment with new ways of selling software online (not just licensing, and not necessarily advertising-driven). Put in the effort to make everything you do accessible from any mobile phone on the day it’s launched. Support stuff like OpenID and give users the freedom to add and move their data around freely. Dare to release a new product each month (as my team did when we were at Yahoo) and let the marketing and PR people catch up with you if they can. Reinvent web email in a way that makes Gmail look like a childish joke. Dare to sell products that will sell 1 million copies at $20 each instead of products that will sell 1,000 copies at $2,000 each. Provide standard APIs and interoperate with competitors’ products — not just as a way to kill them, but in a way that serves the ultimate interests of users.

Because that’s really what this is about — realizing that your customer is not the IT manager of a medium-sized midwestern insurance company, but the 120 employees of that company. Forgetting the user in favor of the IT manager (or your competitors) is why most users hate most enterprise software; I assert that it’s also why a lot of people have been frustrated by Microsoft today.

A big part of this would also be staffing the right people into the right roles. Microsoft’s geographical location (i.e., far away) and its historic resistance to hiring senior people from the outside (i.e., people with experience running large internet properties) act like a giant anti-talent force field; the new company would not have that problem. People would want to work for this company for the same reasons they wanted to work for Microsoft in the 80s and 90s — to get amazing things done and to have an impact.

My intuition has always been that Microsoft should have created this company ten years ago, and that they might have actually done so if they weren’t in the middle of some fairly profound legal problems. But Microsoft should not let its antitrust problems of the past prevent it from doing this. Just because the federal government tried to break up Microsoft in the past does not mean that spinning out an independent web subsidiary is a bad idea today.

Creating a new and independent web product organization could finally put Microsoft on the map with respect to the internet. It would take a few years, but it sure as heck wouldn’t cost them $45 billion.

Update: In an interview yesterday, Bill Gates said that Microsoft won’t be pursuing any new acquisitions to make up for not closing the Yahoo deal. He also said “now at this point, Microsoft is focused on its independent strategy.” Wait a minute: Microsoft has a strategy? When did this happen?

Link: Announcing the OpenSocial Foundation

Banding together to make a half-dozen social networks interoperable is not the same as having critical mass. It is the equivalent of having fifteen women band together to give birth to a child.

Also, creating a nonprofit foundation to manage your endeavor does not automatically make you equivalent to Firefox.

Cheers. I’m always here if you need anything.

Jeffrey

To hear the New York Times’ John Markoff and Matt Richtel describe it in their largely fact-free story on the technical integration that Yahoo! and Microsoft will need to do if the merger goes through, you’d think that a Yahoo-Microsoft integration will amount to a cleaning of the Aegean stables.

The writers did take the time to interview someone who did a Unix-to-Microsoft port of a web site after it was purchased by Microsoft, but that port was done eight years ago. And this wasn’t Microsoft’s 1998 Hotmail acquisition (which some people consider to be the gold standard for Microsoft cocking up an acquisition of a *nix-based web property).

So the question is, from a technical integration perspective, could things have possibly changed in the past eight to ten years?

Well, of course they have. The one guy with direct knowledge that Markoff and Richtel interviewed (who now works for O’Reilly and should really know better) was probably migrating from Solaris to some version of Windows NT. One could imagine that LAMP as we know it today was not in the picture. And there are a broad spectrum of software engineering best practices that were not in place back then which go unmentioned in the article.

So ultimately, the piece leaves out several key facts that almost completely scuttle their thesis:

1. Microsoft has worked with Zend to make PHP run well on Windows Server. In my February 1 post on the merger, I theorized that Microsoft did the Zend deal specifically to make it easier for them to digest companies (like Yahoo!) that extensively utilize PHP. The Markoff/Richtel piece does not mention the Microsoft/Zend deal at all. It does mention that PHP’s inventor works for Yahoo, but it’s a fact that Zend contributes far more to the language today and this has been the case for many years. At any rate, a reader of the Markoff piece could come away with the impression that PHP doesn’t run on windows at all, which is totally bogus.
2. The hellacious Unix-to-Windows migrations of the late 1990s often hinged on the ability to get Oracle running on Windows, which was a big challenge then and remains a challenge today. But Yahoo uses very little Oracle in its customer-facing properties; the big database in use there is MySQL, which runs quite well on Windows today. I wouldn’t guess that Microsoft would migrate MySQL-on-FreeBSD to MySQL-on-Windows, but they could do it as an intermediate step if they wanted to get a merged Yahoo! running on Windows. But there is no mention of databases at all in the Markoff piece.
3. FreeBSD, while prevalent at Yahoo!, is not actually the operating system that most companies in Silicon Valley (or anywhere) use. I’ve heard more than one Yahoo! engineer state that the company’s choice of that operating system is a hindrance for a number of reasons. Migrating to Anything But FreeBSD (whether it’s Linux, Windows Server, or Solaris) will have several key benefits — not the least of which being the fact that very few recent college grads are learning FreeBSD today. Another implication for this is that when Yahoo! acquires a company, they acquire that company’s operating system choice as well (all the company’s recent acquisitions, including Flickr, run on Linux, not FreeBSD).
4. Both Yahoo! and Microsoft have made extensive investments in XML web services, both inside and outside the firewall, which should ease technical integration somewhat. You may recall that XML web services were considered cutting-edge and exotic in 1999. There is no mention of web services in the Markoff piece.
5. The Windows Server that Microsoft sells today is not the piece o’ crap that Windows NT circa 1999 was. Period. The fact that Microsoft’s server technologies no longer suck is key, but it’s not mentioned in the Markoff piece.
6. Probably the most ill-informed assertion is that Yahoo! is totally open source or that Microsoft is totally proprietary — or that either of these things would matter on a technical integration level even if they were completely true. But let’s imagine for a moment that someone needed to hack at the kernel of Windows Server to perform some Yahoo!/Microsoft integration task (which seems far-fetched, but let’s just imagine). Are we really to think that getting access to that code would be a deal-killing problem?

1. Zend and Microsoft have done a lot of work in the last year to make PHP run well on Windows. I never understood why Microsoft devoted resources to that, but now it is clear: it’s going to make technical integration between the two organizations go much more smoothly.
2. This will hopefully be the death knell of the awful “Windows Live” branding for consumer web stuff.
3. Maybe now somebody will release a .NET OpenID 2.0 library that actually works.
4. Big losers here from a tech supplier perspective: FreeBSD and MySQL.
5. Another potential big loser is Adobe; having a gigantic global audience will help with adoption of Microsoft’s various Adobe-killing initiatives like Silverlight, which would never otherwise have penetrated the consumer web without a large built-in audience like Yahoo’s.

My wife (who, like me, used to work for Yahoo!) rolled her eyes this morning when I told her about the Microsoft offer. We used to excitedly hear rumors of this kind of thing every three to six months but they were only rumors. Now it’s the real deal, and I have to say, I’m excited (and not just because of the 48% bump in YHOO this morning on the news).

I think this is a good thing for both companies. It will be a good thing for most of the people within Yahoo! who are left after the two businesses combine, although one would be naive to think that a lot of people aren’t going to lose their jobs because of this. But we knew that there was going to be a big restructuring anyway; my sense is that the Microsoft-led post-acquisition restructuring may cut deeper but may wind up with a better, more focused organization in the long term. My guess is that the Jerry Yang restructuring was going to nip and tuck at underperforming sales and marketing people; I assume that the Steve Ballmer reorganization will take aim at underperforming managers, too.

I think there are things in each companies’ DNA that the other company lacks. Microsoft was always skittish about having a meaningful physical presence in Silicon Valley and they are utterly clueless about how to do consumer Internet; that could end here with the stroke of a pen. For its part, Yahoo always paid lip service to transforming itself into a platform but could never devote the resources to making it happen.

Anytime the Microsoft rumor started up around Yahoo!, you’d hear embittered griping by people (mostly engineers who had been with the company for more than a few years) who’d say they’d never in a million years go to work for the evil Microsoft. They now have the chance to put their money where their mouth is, but I suspect that the people who haven’t left already will stick around for a while. It’s really not worth quitting your job because someone is trying to separate you from your beloved FreeBSD.

Update: Over breakfast we were wondering whether another prospective suitor might step in to bid against Microsoft. Google probably wouldn’t for a couple reasons, not the least of which being that they may have just sunk $4.6 billion into wireless spectrum. On his blog, Fred Wilson theorizes maybe News Corp. but probably not, and since there’s a credit crunch on, he doesn’t see anyone else stepping up.

While browsing one of the Yahoo! developer groups for information on something else, I noticed that somebody accidentally published a spec for an upcoming Calendar API.

I tried to move this forward way back in 2005, so it’s exciting to finally see this coming, although since I left Yahoo! I’ve started using 30Boxes (which has its own API) and I’m pretty happy with it.

Link: Yahoo Reported to Plan Hundreds of Layoffs

"Over the weekend, some blogs reported that Yahoo was considering layoffs of 10 to 20 percent of its work force. But the people close to the company, who discussed Yahoo’s layoff plans on condition that they not be identified, said the cuts would likely be in the ‘hundreds.’"

Link: Yahoos Quest to Open Up

"For months, Yahoo chief executive Jerry Yang has been talking about swinging open the doors to the Yahoo portal. A key goal, he has said again and again, is to turn Yahoo into a set of platforms for third-party publishers and developers."

Link: Yahoo, EBay to Team Up in Japan

"Yahoo Japan Corp. and eBay Inc. said Tuesday they have agreed to team up in online auctions, planning services for next year that will make it easier for consumers to buy things via the Internet from the U.S. and Japan.

The deal will facilitate ‘cross-border trading’ and invigorate the online auction market, Yahoo said in a statement."

It is exciting that people in Japan will finally be able to trade outside of their borders, because they seemed to have such problems with that in the past.

Yahoo! Search’s "Open Shortcuts" feature is the thing that keeps me using Yahoo! Search. It’s sort of a geek/power user feature, but it’s incredibly useful if you do lots of searches on specific sites. I find search shortcuts particularly useful for media sites such as Netflix and eMusic — because so many web sites talk about media, it’s better to use a site-specific search to cut through all the noise and go straight to the download.

I have shortcuts for Netflix and eMusic already, but it occurred to me this morning that it might be handy to have a search for the Amazon MP3 store as well. So here’s how to use the Yahoo! Open Shortcuts feature with Amazon’s MP3 store:

1. Go to search.yahoo.com
2. Log in to Yahoo! if you aren’t logged in already
3. In the search box, type:
   http://www.amazon.com/gp/search?ie=UTF8&keywords=%s&tag=howtoprogramvisu&index=digital-music&linkCode=ur2&camp=1789&creative=9325<br />
   (copy and paste the contents of this text box)
4. Click on the Search button

You’ll see a confirmation page. Once you’ve confirmed, you can use your shortcut. To do this, from any Yahoo! search box, type:

!mp3 feist

(Replace "Feist" with the name of the artist or song you’re searching for, and don’t forget to precede the whole thing with an exclamation point.) You’ll be taken straight to Amazon.com’s search results for the search term you specified.

Now somebody needs to create a search engine that searches only for downloads from eMusic and Amazon.

Link: Small Steps at Yahoo Bear Fruit

"…[Yahoo! CEO Jerry] Yang’s plan appears to be more a fine tuning of Yahoo’s existing strategy than a change in course. He said Yahoo had begun to de-emphasize some businesses, like its music subscription service, while sharpening its focus on areas where it is strong, like news, finance and sports, as well as the Yahoo home page and e-mail. The goal, he said, was to make Yahoo the ’starting point’ for most consumers on the Web.

Perhaps the newest element in Yahoo’s strategy came in the form of a promise, long hinted at by Yahoo executives, to open the company’s site to outside developers. It is a strategy that has proved successful for Web sites like Facebook."

Link: Yahoo’s Open Invitation

"This year, openness is the buzzword ringing through Yahoo’s Sunnyvale (Calif.) campus, and executives hope it translates into a strategy that helps set fortunes right. In the months since Yahoo co-founder Jerry Yang replaced Terry Semel as chief executive officer, company leaders say they’re newly focused on opening Yahoo’s real estate to outside developers, who in turn can create tools that make Yahoo’s pages more attractive to users."

Hey, that sounds neat!

Link: How to Fix Yahoo!: Building a Yahoo! Platform.

"Certainly the Yahoo! platform won’t fix Yahoo! by itself, but I think it should be a major part of their plans going forward. Turning My Yahoo! into an open platform for rich internet applications does two things: 1. it can unify Yahoo!’s services under one umbrella — something they have long struggled to do, and 2. it adds utility for users and gives them less reason to leave Yahoo!, and the longer people stay on the page, the more likely they are to start using Yahoo! for search."

We woke this morning to an radio news report that Microsoft and Yahoo are in merger talks. This kind of thing popped up several times during the time I was there. I recall that in 2006 the hot rumor was that Yahoo and eBay would get together, which would have been interesting for me. The Microsoft rumor has come up a few times in the last few years, too, but this time they sound more serious.

As always there is a lot of armchair quarterbacking about what a combination would look like which is humorous because we don’t have any information about what a combined Microsoft/Yahoo would look like at this stage.

Erick Schonfeld of Business 2.0 posts comments that are typical. He says "any move would smack of desperation" but I think that assigns an emotional quality that doesn’t (or shouldn’t) exist in deals like this, casting Yahoo as the homely prom date and Microsoft as the nerdy (and wealthy) boy next door who can’t get a date no matter how much money he spends on the limousine.

The truth is that Wall Street looks for synergies in any kind of merger/acquisition and there are plenty here. Yes, there are cultural differences between the two companies, but my sense is that they’re not unmanageable, and a healthy cultural cross-pollination could be just what the doctor ordered for both companies. From an engineering/developer standpoint, there’s a
lot to love — Microsoft engages in tons of projects that Yahoo wouldn’t touch today. If Microsoft can attract an engineer like Jim Hugunin to their side, they can certainly find something to keep Yahoo’s senior engineers interested.

If you saw my presentation at O’Reilly Emerging Tech way back in March you might remember that I pre-announced a few products, including a Yahoo! Photos API and some others. At that time we also started discussing a new authentication product for developers that would enable users to access their Yahoo! data through through third party applications, starting with Photos and then hopefully extending to others in time.

We’d originally expected to see this product shortly after I made the announcement, but for one reason or another the release got delayed, and I left Yahoo before we were able to make it generally available. So I was happy to see this morning Dan announced that Browser-Based Auth for Yahoo! Web Services has been released. Good job, guys.

An authentication system for a web services platform is a decidedly un-sexy piece of plumbing, but it’s vital if you want to have a read-write platform that keeps the user in control of their authentication credentials. (One advantage of this scheme is that the user doesn’t have to share their password with a third party developer. Another advantage is that the user can shut off the third party application’s access to their data at any time.) This will enable all kinds of fun new applications, particularly if other Yahoo! properties adopt it for their read/write APIs.

Browser-Based Authentication was one of the most challenging product initiatives I drove when I ran the developer network team at Yahoo! — there were an unbelievable number of moving parts, people to coordinate and risks to consider, not a lot of fortune and glory for the many people who worked on it, and lots of questions as to whether it should even get done in the first place (even though eBay, Flickr and others have had similar authentication schemes for their third party developers for years). So it’s terrific that this is seeing the light of day.

The work I’ve done with platform authentication systems at eBay, Yahoo and elsewhere is factoring into my consulting work today. It’s also touching Approver.com; as I’ve discussed on the Approver product blog, we’re working on an Approver.com API which is coming along nicely. Because everything that Approver does requires authentication, we’re having to do our authentication scheme for third-party developers before we do anything else. We will hopefully be able to share more about this in the next few weeks.

This is so awesome, a Tetris game using dynamic HTML that runs in the browser.

He used the Yahoo! User Interface Library in this as well.

The new Yahoo home page went live for most users today. It makes extensive use of the Yahoo! User Interface Library, a free, open source library that developers can incorporate into their own Web sites to easily enable dynamic HTML and AJAX goodness. Nate posts more details on what’s under the hood over on the Y!UI blog.

I’m sitting in a conference room at XTech right this minute watching Simon give his talk on the library. It’s amazing how much is in this library — a lot of useful abstractions for DOM plumbing that’s difficult to do in a cross-browser way, but also a lot of higher level stuff like drag/drop support, asynchronous posts, and tons more.

Lots of news today about Panama, Yahoo’s new advertising system that will make ads on Yahoo more relevant. This is a gigantic project that will provide a better and more transparent experience for users, advertisers and developers.

Laura of my team poured her heart into the documentation for this. I’m very stoked to see that people are now starting to get excited about this.

Interesting piece on today’s Marketwatch on Google Finance, not because Bambi Francisco completely eviscerated the product, but because it mentioned a lack of integration and APIs as a key shortcoming. Seeing "API" in paragraph #7 of a story like this completely blew me away — I feel like we’ve been hammering the mainstream media about this for years and it looks like people are finally beginning to catch on.

I should mention that our "Big List of RSS Feeds" is here. This includes links to company news feeds as well as industry news feeds that developers can use to customize their Y! Finance content and bake Y! Finance news into their applications.

I’m trying to put together a kickass demo for Mix06 next week. I spent the whole day today at home, fighting off a cold and trying to put together something demo-able.

My objective is to demonstrate how our stuff (specifically our XML services, but ideally also our slick new open-source UI libraries and JSON-serialized services) can work with Microsoft’s stuff (which in this case means the Atlas Ajax library for ASP.NET).

Putting together an example that shows how to proxy one of our REST services behind a .ASMX SOAP wrapper would work (because Atlas is set up to consume SOAP services and doesn’t know from REST). But in a certain respect that demo would also be "dumb" because one should not need to proxy anything with our services, ’cause our services can send serialized JavaScript directly to the browser, which can theoretically be consumed by Atlas classes. I say "theoretically" because nearly every presentation I’ve seen on Atlas says that it uses JSON for its own serialization, but there isn’t any documentation on how that works or how a civilian would access it (or if that even makes sense to do).

Kudos to Microsoft for breaking out of the "ship every 18 months whether we need to or not" mindset, but if today reminded me of anything, it’s that your stuff needs to be well-documented, even if it’s not ready for prime time yet. I am pretty sure they’re dropping a new build of Atlas at Mix06 next week, but that doesn’t help me tonight. Grumble.

Update: The day after I posted this, I got a big wet kiss via email from many many members of the Atlas team. Thanks, guys — because of your timely help I will have at least a basic Atlas demo for my Mix06 talk on Wednesday.