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Microsoft + Yahoo ≠ Google

ATLANTA, GA - Anyone who has followed this blog knows that I am a huge fan of Warren Buffett.  The clarity of thought.  The common sensibility.  The ability to see both the big and the small picture.  He's the man, and everyone knows it.

It follows, then, that I'd be a fan of Roger Lowenstein, who wrote the ultimate book on Mr. Buffett, Buffett: The Making of an American Capitalist.  My copy is dogeared and highlighted and post-it noted to death.  Like Mr. Buffett, Mr. Lowenstein is an excellent student of value investing -- and he shares with Mr. Buffett a clear-headed way of sizing up mergers and acquisitions so that anyone can understand them.  Even me.

Microsoft + Yahoo ≠ Google

So without further ado, here are a few choice nuggets from Mr. Lowenstein's article entitled Microsoft + Yahoo ≠ Google in the April 2008 issue of Smart Money magazine:

Assuming that [the deal gets past the antitrust regulators], it does not need emphasizing that $45 billion is a lot of money.  It is a sixth of Microsoft's market value, and it is 68 times what Yahoo earned in the most recent four quarters.

If Microsoft is buying Yahoo's earnings, it is overpaying for them.  If, on the other hand, Microsoft is buying the latent potential of the 14,300 web engineers and others who work for Yahoo, the takeover price is enough to hire an equal number of even more talented people, pay them $200,000 for each of the next 15 years, and have a few billion left over to seed their retirement and pay for a fancy health club and other perks that the twentysomethings in Silicon Valley seem to require.

In other words, if a rich company like Microsoft wanted to recreate the assets, the potential, and even the brand of a Yahoo -- it could do so for a lot less than $45 billion.

As usual, I appreciate Mr. Lowenstein's perspective -- but from a staffing standpoint, I'm not so sure that Microsoft has the option of actually hiring 14,300 "even more talented" people and paying them $200K, etc.

I mean, seriously.  I'm a recruiter.  Do you have any idea how hard it would be to just "conjure" up a company, as Mr. Lowenstein suggests?  The sourcing, interviewing, testing, relocation, and on-boarding logistics would be nearly impossible -- not to mention outrageously expensive.  I can envision the run-up in salaries as the new company tried to acquire wave after wave of the internet industry's best and brightest people.  Not gonna happen.

Which means that Mr. Lowenstein's comparison is an academic one.  IE, bullshit.  And Mr. Lowenstein knows it, which is why he goes on to say that "The only alternative rationale for the merger is that Microsoft is betting on that often-difficult to realize ideal: synergy."

Mr. Lowenstein is being kind when he says that synergy is "often-difficult to realize" in M&A.  Back in the 1990's, I read a book called The Synergy Trap by Mark Sirower of Columbia Business School.  Without being overly dry here, Dr. Sirower studied the impact of M&A activity on the stock prices of publicly traded companies and found the "synergy premium" to be a total waste of the acquiring company's cash.  With very few exceptions.  And there was lots of evidence to substantiate his claim.

Bottom line:  If I'm Eric Schmidt of Google, I'm hoping and praying that the deal goes through.  If you thought Microsoft was a monopoly five years ago, wait until you see Google five years from now.
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Google Diverts Wikipedia Traffic?

LEEDS, UK - Today I discovered a great new band called The New Mastersounds.  Their stuff is of the MGs and Meters instrumental variety.  Funky.  Supa fuhnkee.  I'd love to hear Amy Winehouse backed by these guys...

Anyway, the band is currently touring the east coast, and as I perused their site, I was struck by their use of maps, downloads, copyright permissions, and DIY club posters.  They make it so E-Z for their fans, vendors (i.e. club owners), and mainstream media to support them.  Especially for club owners who need to promote the band's upcoming gigs at their venues, it's like "insta-marketing."  Lots of ideas to swipe on this site.

PS - When I went to include links to this post, I Googled "wikipedia" and I got a SEARCH BOX in the Google SERP!  Watch what happens when you enter a string into the box.  Gee.  Somehow, I think this diversion of traffic goes beyond having "just another SERP" on which Adwords can appear.  Don't you?  I mean, it's not as if we are talking about a ton of traffic that Google is siphoning off.  Are they making a statement with this tactic?  Seriously, I'd like to know your thoughts.
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SEO Careers: "How to Quit Your Job"

BOSTON, MA - Last week I closed a search for a Boston-based ecommerce company.  As usual, the client was wonderful, and the candidate is a very talented individual who had accomplished a great deal in his most recent job.  He had been there for five years.

But here's the rub:  While my candidate has a long track record of success, his last six months on the job were somewhat tension-filled, largely because he was assigned to a new boss who does not understand the internet.  My father used to tell me that "people tend to fear what they don't understand and kill what they fear."

Such was the case here.

My candidate's Luddite boss clung to some antiquated ideas about marketing and was determined to minimize the internet's influence on the company's marketing initiatives.  Right.  Long story short, I helped my candidate find a more future-oriented employer, and on Monday he will resign.  [Notice that the job change was not about the money.  It was about a better opportunity.]

How to resign your job:

Imagine that within the last year, you and your spouse have been having serious, irreconcilable problems.  Over the years you have both changed, and a while back you met someone with whom you are infinitely more compatible.  You have decided that as painful as it seems, it's time to make a change.

In a love relationship, you'd simply sit down with your spouse and say "Honey, it's over."  If you're a merciful person, you're a strong dumper:  You'd state your case in a way that's gentle yet firm, and hard on the issues and soft on the people.  No finger pointing.

Resigning a job is similar, but it differs in two ways:

1.)  You need your old employer to act as a reference. You want to leave the people in your professional life with a good taste in their mouths about you.  What a crazy world it would be if your new spouse asked to speak with your old spouse about you before accepting your marriage proposal!

Well, that's the way it works in the real world, folks.  And you can expect the reference checking questions to be a regular kiss and tell.  Therefore, it's absolutely essential that you maintain the highest level of professionalism before, during, and after your resignation -- because you will ALWAYS be expected to use your current employer as a reference.

2.)  Your departure can create the appearance of trouble in your current company.  While this is less of an issue for line level employees, I have worked with several senior executives whose departure from a company was construed within the professional community as a sign that something was seriously wrong with their employer.  Customers, bankers, and vendors might well ask "How on earth could they let him go?  What's wrong with them??"  Such chatter is bad for everyone, including you.

If you are leaving your company, here's a list of things to do -- and NOT to do:

DO tell your boss first that you are leaving -- and do it face to face.

DO plan what you are going to say ahead of time.

DO volunteer to train your replacement.  If you're a responsible, owner-mined executive, then you will already have some idea of who your replacement should be.  Ideally, you would have groomed this person to take over for you -- regardless of whether your company decides to bring in an outsider to replace you.  A train wreck after your departure might make you feel vindicated that your company should have loved you more while you were there -- but it won't do anything for your reputation.

DO be the first person to tell your coworkers, unless your employer insists on doing that for you.  They have the right of way.

DO finish up all of your pending assignments.  It's very important to stay productive during your final weeks on the job, because a strong finish will keep your references strong when you need them again.

DON'T take a counter offer.  Statistically speaking, most people who take a counter offer are gone within twelve months.  Much more on this later.

DON'T resign in the middle of a major crisis.  It creates the impression that when the going gets tough, you're a wimp.  Nobody wants to hire a wimp.

DON'T air your grievances to anyone other than the relevant company leaders.  And even then, do it privately and off line (no email trails!).  There's a great scene in Saving Private Ryan where Capt. Miller (Tom Hanks) is speaking with one of his troops, who's complaining to his squad about the mission they're on ...

• Private Jackson:   From my way of thinkin', sir, this entire mission is a serious misallocation of valuable military resources.
• Captain Miller:  Yeah? Go on.
• Private Jackson:  Well, it seems to me, sir, that God gave me a special gift, made me a fine instrument of warfare.
• Captain Miller:  Reiben, pay attention: now, this is the way to gripe. Continue, Jackson.
• Private Jackson:  Well, what I mean by that, sir, is... if you was to put me and this here sniper rifle anywhere up to and includin' one mile of Adolf Hitler with a clear line of sight, sir... pack your bags, fellas, war's over. Amen.
• Private Reiben:  Oh, that's brilliant, bumpkin. Hey, so, Captain, what about you? I mean, you don't gripe at all?
• Captain Miller:  I don't gripe to *you*, Reiben. I'm a captain. There's a chain of command. Gripes go up, not down. Always up. You gripe to me, I gripe to my superior officer, so on, so on, and so on. I don't gripe to you. I don't gripe in front of you. You should know that as a Ranger.
• Private Reiben:  I'm sorry, sir, but uh... let's say you weren't a captain, or maybe I was a major. What would you say then?
• Captain Miller:  Well, in that case... I'd say, "This is an excellent mission, sir, with an extremely valuable objective, sir, worthy of my best efforts, sir. Moreover... I feel heartfelt sorrow for the mother of Private James Ryan and am willing to lay down my life and the lives of my men - especially you, Reiben - to ease her suffering."
• Mellish: [chuckles]  He's good.
• Private Caparzo:  I love 'im.

Obviously, Capt. Miller's the kind of guy I would advise my clients to hire.  My search fee would be lost in the rounding of the value that guy would create!  And you know that if he hadn't gotten killed at the end of the movie, his references would have been stellar.
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