John Batelle has fairly representative coverage on his blog.  His post cites coverage from Adam Lashinsky at Fortune (a personal favorite as a journalist) with a fairly typical dig on the issue.  Here’s the actual quote:

One last item of note. Google is offering employees the opportunity to exchange underwater stock options for newly priced options due to the stock price having been hammered. (The only catch in the exchange is that employees will have to wait an additional 12 months before selling re-priced options.) The stock price is  currently around $300, compared with $700 in late 2007. The number of shares eligible for exchange is about 3% of the shares outstanding, and the exchange will result in a charge to earnings of $460 million over a five-year period.

One must re-phrase this last bit in English: Google is transferring almost half a billion dollars in wealth from shareholders to employees, and for what ….? Motivation and retention, says Google. This a well known farce, as old as the Valley, which tells itself first that it offers generous stock options as a form of incentive and then, when share prices plummet, moves the ball so its employees, whose incentives apparently didn’t work (as if the stock price were under their control) can be re-incentivized. Retention? Would someone please tell me where the average Google employee is going to go right now?

To be clear, there have always been people who have a significant problem with employee stock option repricing, and with good reason.  Theoretically, options are supposed to align employee interests with shareholders.  In an ideal world, the employee wins if the shareholders win.   Repricing, therefore, breaks this model, because, after all, no one reprices the shares purchased by outside shareholders when the stock tanks.

Somewhere in the post-2000 bubble hangover, this criticism went from being a common argument to conventional wisdom.  Accounting standards were changed to require the expensing of employee stock options, and stock option repricing became largely verboten.

I rarely see anyone in the financial press explaining anymore why, in fact, there are very good arguments for stock option repricing.  So, I’m going to take a quick crack at it here.  Even if you disagree, it does a disservice to not reflect both sides of the argument fairly.

First, and foremost, it’s important to note that, while options are intended to help align employee interests with shareholders, stock options, in fact, do not do this in all situations.  The problem is the inflection point in the curve.

This is a simple chart that shows the intrinsic value to an employee of a stock option with a strike price of 50 at different stock prices.  Notice the blue line, which is stock, actually reflects a 1:1 ratio of value.  If the stock is worth $10, the employee gets $10, etc.  For the stock option, however, there is a “break” in the line.  Below $50, the employee gets $0.  Above $50, the employee gets $1 for every $1 of stock price increase.

In general, employee stock options are granted at the strike price of the stock roughly on the date that they join.  So, the assumption is, this aligns the employee with gains after they join.  In theory, it’s even better than stock, because if the stock drops, they get no value for gains made before the date of their join.

This sounds good in theory, but we know that it has real problems, on both the upside and the downside.

On the upside, most stocks go up every year.  (Yes, I know.  In 2009, it’s hard to remember that.)  If the stock market itself goes up 7% every year, then an employee will see real returns on their stock options for just “matching the average”.  In fact, they can actually see real material gains over long periods even by underperforming their benchmark index.

However, since shareholders also enjoy that benefit, it tends to only get complaints when you see incredible gains by executives with huge option packages.   No one likes to see an outsized pay package for undersized performance.

On the downside, however, the problem is much more severe.  Let’s say our stock example from above drops to $25, a price that the company hasn’t been at for 3 years.  The good news is that shareholder alignment works, to a point, as advertised.  Not only are shareholder gains for the last 3 years wiped out, but so are the option grants for employees who joined in the last 3 years, and even any other employees who received grants in the past 3 years.

That part seems fine… at first.

Where does the company go from here?  Now we need to talk about the principle of sunk cost.  Sunk costs are costs that cannot be recovered, and therefore should be ignored when making future investment decisions.  (More rigorous explanation on Wikipedia).  For stocks, it’s important to remember the stock market does not care what you paid for a stock.  It has no memory.  The question for a shareholder (barring external effects like taxes, etc) is purely where you think the stock will go from here.

But now we see that the employee is no longer aligned with the shareholder!  From $25, most shareholders would love to see a gain of 20%, which would take the stock to $30.  But for employees, a $30 share price and a $25 share price mean the same thing:  $0.

Worse, if employees leave the company, and get a job at a new company, they will get option prices at today’s stock price.  In fact, if the employee quits the company, and then is rehired back, they would actually get their options priced at today’s stock price.

In a world of at-will employment, this is a big problem.  True, as Adam Lashinsky pokes at, most employees won’t be able to find a new job so fast.  But many of the good ones can.  And they will.  Because your competitor can actually come in with in a simple, fair market offer for the employee, and beat your implicit offer of zero.  Even if they don’t do it today, these problems tend to persist for long periods of time, and employees have long memories.  You may find that your best talent starts leaving, and then you get snowball effects because great talent is hyper-aware when other talent leaves.

So what is a company to do?

In a perfect world, the company would have a very tight and accurate evaluation of their best talent, and would target “retention compensation” proportionally to their people based on their value.  This would both minimize the risk of flight, and would also help “re-align incentives” for the gains going forward.

Unfortunately, the mechanics and accounting of repricing makes this fairly prohibitive.   As a result, it tends to be an all-or-nothing option.

The truth is, repricing stock options can be one of the best things to realign employee incentives going forward.  It resets the vesting period, basically treating employees like new employees.  The employees do not get to go back in time and recover their equity compensation for the past three years.  The new vesting period basically wipes out the history.  They literally no longer own the rights to the shares – they have to re-earn them.  In fact, if the employee quits the next day, they will take no stock with them, even if they worked for the company for three years.

As a result, stock option repricing actually re-aligns employees more closely with shareholders than nay-sayers give credit for.

Last thoughts

While I am explaining the reasons why repricing stock options makes sense, there is still the significant problem of “repeat abuse”.  If employees believe all options will be repriced for all drops, then you end up with a moral hazard, where you might actually want to drive down the price, get your options repriced, and then recover easy gains.  True, the market is fairly hostile to repricing due to the accounting charge, so it’s unlikely this would happen, but it’s still a real concern.

As a result, my recommendation would actually be that companies faced with this situation actually use the opportunity to not reprice stock options, but move to actual stock-based compensation.  Both have an accounting charge, but actual stock-based compensation serves three purposes:

• The new stock grants can be better targeted to employees based on performance and value
• The new stock grants have immediate value, serving as a kind of retention bonus
• The new stock grants align the employee with shareholders going forward in both up and down markets

So while I do believe that repricing stock options gets a “bum wrap” in the financial media, I also believe that there may be potentially better compensation alternatives, particularly for public companies.

From Finance Geek:

A Google (GOOG) rock star defects: Dipchand “Deep” Nishar, who helped kickstart Google’s mobile business, is moving to LinkedIn.

WSJ: Mr. Nishar, 40, in January will become vice president of product strategy for the social-network that is focused on professionals. He will lead LinkedIn’s efforts to develop new products and services on top of its social-networking site. LinkedIn chairman Reid Hoffman, who had previously filled the senior product role, will remain at the company and shift his focus on broader strategy issues…

Mr. Nishar held a range of jobs at Google, including building the back-end infrastructure for Google’s monetization systems, starting its mobile initiatives and, more recently, overseeing product development for the Asia-Pacific region. He worked closely with Jonathan Rosenberg, Google’s senior vice president of product management, and was the recipient of a rare and lucrative accolade given to employees who have made extraordinary contributions to the company, known as the Google Founders Award.

The original Wall Street Journal article is here.  My favorite quote from Deep:

His departure comes as the recession has made a move from a mature company to a start-up more risky. But LinkedIn, which has 32 million registered users, is better positioned than many… “I don’t view LinkedIn as risky by any means,” said Mr. Nishar.

Very excited to have Deep join the team in 2009.  His LinkedIn profile is here for more detail on his professional achievements.

It’s neck-and-neck for the domination of the “Adam Nash” top 10 search results on Google.  It used to be just a two-way battle between me, and some child born in Colorado for the express purpose of donating stem cells to his sibling.  Now, there are a three contenders, and it’s getting tight.

Right now, the score is:

• Yours truly, with links 1, 2, 5, and 6.
• Adam Nash (aka Adam Ramona) from Melbourne, Australia has links 3 & 4 & 7  He’s using Blogspot and Ning for pagerank.  Has his own domain, YamanakaNash.net.
• Adam Nash, the baby born from Lisa & Jack Nash in Colorado, rounds out the bottom 10 with 8, 9, 10.  Old news links.

Part of this is my fault.  I left adamnash.blogspot.com open, and Adam Ramona took it.  I’m usually quite good about locking up the name space.  He also took nashadam at Ning, but he couldn’t get adamnash because I had that locked up.

In any case, I’m lucky right now because I have the holy trinity of personal page rank working for me:

• A personal blog that links to my LinkedIn profile and my personal domain
• A personal domain that links to my LinkedIn profile and my blog
• A LinkedIn profile that links to my personal domain and my blog

Plus, for whatever reason, Stanford continues to have amazing page rank for my old Computer Science department page which has been pointing to adamnash.com for the last 10 years.

Still, I’m worried I’m going to lose the top spot if the pace of news coverage on my doppelganger in Australia is any indication.  One thing he’s doing, which is smart, is creating a web page that indexes every article about him, tied to his domain.  Maybe I should do the same thing with the heavy news coverage of LinkedIn product launches with my name in it.

Hmmmm.

I caught this post on the Google Docs blog last week, and thought I’d comment here about it, since it’s such a useful feature enhancement.

The enhancement?  The ability to create short web-forms that you can email out to people, without requiring login.  As users enter the data, it auto-populates the spreadsheet on the back-end.   Check out this explanation from the blog post:

We’re really excited to bring you forms! Create a form in a Google Docs spreadsheet and send it out to anyone with an email address. They won’t need to sign in, and they can respond directly from the email message or from an automatically generated web page. Creating the form is easy: start with a spreadsheet to get the form, or start by creating the form and you’ll get the spreadsheet automatically.

Responses are automatically added to your spreadsheet. You can even keep a closer eye on them by adding the Google Docs forms gadget to your iGoogle homepage, created by software engineers Valerie Blechar and Sarah Beth Eisinger (in her first month at Google!).

I’m not a big iGoogle user, but I could easily see embedding this type of gadget on my LinkedIn homepage.  There are so many simple workplace applications that still come down to the need for a very simple database (not even relational!) and a form-based front-end for users.  In the 1990s, Filemaker Pro was my weapon of choice for that type of problem.  I’ve looked into Quickbase a bit, but the pay-per-seat model through me off a bit.

Check it out, and let me know what you think.

Also, if you know of a good “Filemaker Pro meets Web 2.0″ free web service that you like,  let me know.  I’ve got to believe there are dozens of them, since every other great desktop application class has made it to the web.

The demo that Elliot & I give for LinkedIn is about 38:30 into the video (or 18:55 from the end, if you have the timer set up to run backwards). It’s a good thing there was a rehearsal – I’m pretty sure my demos are always better the second time.

The event was fun to do – it was really a campfire set up in the middle of Google campus. Yes, there were real fires. In fact, the smoke was a real hazard to the speakers – if the wind went the wrong way, all of sudden you’d be blinded and unable to speak. I think Marc Andreessen got the worst of it in rehearsal.

The Google site for the OpenSocial APIs is live now. The LinkedIn blog post on the topic is here.

My previous blog post on Open Social is here.

This week has been extremely busy… a lot of press attention already to the LinkedIn partnership with Google on the new Open Social APIs.

Since this is my personal blog, I thought I’d just flag a few articles and posts around the web in case you are interested. The big demo is tomorrow night, and it looks like I will actually get a chance to take the stage with Elliot Shmukler to give it. Let’s hope the demo gods are kind.

It’s really wonderful to be able to talk to our community about Open Social, and about the LinkedIn platform. There are absolutely amazing people at LinkedIn working on making all of this possible, and it’s a joy to get out there and help people understand and appreciate their great work.

So, before the big event, here are a few interesting posts:

• LinkedIn Blog: LinkedIn & Open Social
• Marc Andreessen: Open Social: A New Universe of Social Applications All Over the Web
• Wired: Salesforce & LinkedIn: Open Social Means Better Business-Centric Apps & Services (featuring the largest image of me imaginable)

More to come on this topic, I’m sure.

When I was growing up, I used to always hear about the patents filed by my grandfather (in the food business).  They were always a symbol of success, intelligence and pride in my family.

What patent is this, you might ask?  Well, with great thanks to Google for their new, searchable patent database, I have now for the first time had a chance to read it for myself.   It is patent #3108882, dated January 29, 1963, and is titled “Method of Preparing an Edible Fish Product“.  To translate from the legalese: it is the method of preparing & packing gefilte fish in glass jars with jelly.  Yes, you now know where that came from.

I know there are significant problems with the patent system as it stands today, particularly around software.  However, I can’t help feeling proud of the patents that I worked on at eBay, and grateful for their support shepherding them through the legal hurdles.

Patent applications only display on the US Patent Office website 18 months after the application is filed, so right now only two of the applications are showing up.  The rest will likely become visible over the next year or so.

Here is the link to my patent applications on the USPTO website.    Note the most recent one to show up, for “seller and item filters”, the backbone of the eBay Express website.

Here is one of my favorites, a description of Google Tech Stops:

Google has the concept of “Tech Stops.” Each floor of each building has one. They handle all of the IT stuff for employees in the building including troubleshooting networks, machines, etc. If you’re having a problem you just walk into a Tech Stop and someone will fix it. They also have a variety of keyboards, mice, cables, etc. They’re the ones who order equipment, etc. In many ways the Tech Stop does some of what our admins do. If your laptop breaks you bring it to a Tech Stop and they fix it or give you another one (they move your data for you). If one of your test machines is old and crusty you bring it to the Tech Stop and they give you a new one. They track everything by swiping your ID when you “check out” an item. If you need more equipment than your job description allows, your manager just needs to approve the action. The Tech Stop idea is genius because:

1. You establish a relationship with your IT guy so technical problems stop being a big deal – you don’t waste a couple of hours trying to fix something before calling IT to find out it wasn’t your fault. You just drop in and say, “My network is down.”

2. Most IT problems are trivial when you’re in a room together (“oh that Ethernet cable is in the wrong port”)

3. The model of repair or replace within an hour is incredible for productivity.

4. It encourages a more flexible model for employees to define their OWN equipment needs. E.g. a “Developer” gets a workstation, a second workstation or a laptop, and a test machine. You’re free to visit the Tech Stop to swap any of the machines for any of the others in those categories. For example, I could stop by and swap my second workstation for a laptop because I’m working remotely a lot more now. In the Tech Stop system, this takes 5 minutes to walk down and tell the Tech Stop guy. If a machine is available, I get it right away. Otherwise they order it and drop it off when it arrives. In our current set up, I have to go convince my manager that I need a laptop, he needs to budget for it because it’s an additional machine, an admin has to order it, and in the end developers always end up with a growing collection of mostly useless “old” machines instead of a steady state of about 3 mostly up-to-date machines.

This struck a chord with me, particularly as I reflect on time working at two large companies (Apple, eBay), a startup (Preview Systems), and a venture capital firm (Atlas Venture). In every environment, IT was optimized not around the convenience or efficiency of the employees, but around minimizing overhead & cost, and occasionally security.

You have to wonder how expensive the overhead is for the Google Tech Stops, and how much benefit they reap from it in productivity and employee morale. I can tell you one thing, having to fuss with IT about updating hardware is one thing that can really sap the energy of an employee in seconds.

A couple months ago, I realized that I was accumulating far too many blogs to read through the My Yahoo interface.  Over 100 at last count.  I needed a blog reader, and based on popularity of the blog readers hitting this site, I went with Google Reader.

Google Reader has been fun, especially with the Firefox modification to make it look and feel more like Mac OS X.

Well, on Randy’s blog I saw that he had a widget that showed the blog articles that he was reading.  I have seen this type of “clipping feed” on several other blogs, but WordPress doesn’t seem to have that feature.

Then I noticed it was generated by Google Reader, and I thought, “Maybe there is a way to get Google Reader to spit out an RSS feed, and then I could put it into a sidebar widget on WordPress.com”

Turns out, it just works.  I figured out how to flag a blog post as “Shared” on Google Reader, and now, on the left-hand column of this blog, you’ll see the last 10 blog articles that I have flagged.  Should be fun, since it saves me from just posting “read this” type of articles.  I can focus just on areas where I have more significant commentary.

So check it out… it’s on the left side, under the header “What I’m Reading”

Let me know what you think.

Let’s start with web search!  Google doesn’t really focus on people as a first-class entity, so it basically just aggregates web pages based on its algorithms for content relevance.

When I search for Adam Nash on Google, I get the following:

The results are pretty good… for me, at least.  4 of the top 5 links are actually my pages.  The top two are this blog.  The fourth is my old homepage at Stanford, and the fifth is my current personal home page.

Of course, none of these pages would give you excellent data about me, really, but they all contain pointers to good, deep information.

Next up, ZoomInfo, and the magic of web scraping & aggregation.  I did the search and was surprised to find 52 reconds for Adam Nash.  Even more surprising, 6 of them look like they are pieces of my history, but in a mish-mash that combine strange pieces of data.  In some cases, my data is mixed with someone elses.

Here are the 6 versions of Adam Nash in ZoomInfo that I can verify should really be one version: me.

• ZoomInfo Adam Nash #1 (Gel Software, the name under which I published shareware in college)
• ZoomInfo Adam Nash #2 (Macintouch Comment, “Panther”)
• ZoomInfo Adam Nash #3 (HBS, Product Manager, my picture, other person’s data!)
• ZoomInfo Adam Nash #4 (Altas Venture, but tied to German office.  Official Atlas Bio for me)
• ZoomInfo Adam Nash #5 (Atlas Venture, VC Panel at Stanford)
• ZoomInfo Adam Nash #6 (Product Manager, eBay Stores)

What a mess.  It’s not that the information there isn’t partially correct, it is (or was), and it’s interesting to see some of the articles scraped together.  But the fragmentation is terrible, and I’m almost offended to see my picture on top of information for someone else.  Certainly, anyone looking for me on ZoomInfo would have a very hard time figuring out who I was, or what I was doing with any accuracy.

Now, of course, our user-generated content site, LinkedIn.  Here is the search I get back when I’m logged onto the site:

Ok, Ok, that’s cheating   But that’s close to what anyone in my broad network would see (over 1.4M members).  The data is correct and up-to-date.

How about a public search on LinkedIn, with no LinkedIn account at all?  Also good:

The first link there is mine.  Clean results, correct information.  You can’t beat my public profile for accurate and relevant professional information.

Not surprisingly, I think this indicates the strengths of the different mechanisms for finding people online today.  Google, representing natural search, does a decent job focusing on existing content.  LinkedIn, representing user-generated content, does a fantastic job of accuracy and relevancy.  ZoomInfo, representing aggregated web scraping, seems to have a ways to go before it will a trustworthy directory.

As always, your mileage may vary.

I moved my blog reading from My Yahoo to Google Reader about 6 weeks ago.  It has been tough to adjust to the new habit – my instinct is to always go to My Yahoo.  But My Yahoo just wasn’t scaling for the number of blogs I like to keep tabs on (now over 100),  and I noticed that a majority of the people reading my blog were now using Google.

Thankfully, Firefox has made this easier.  The ability to quickly change the behavior of “adding a feed” to Google from My Yahoo made the transition simple for new feeds.

For exporting my old feeds from My Yahoo to Google, I found a nifty tip online on how to export an OPML file from My Yahoo and import into Google Reader.  Just spent a few minutes categorizing all my feeds, and I was ready to go.

Well, today I discovered a new trick.

This post shows you how to skin Google Reader using CSS to look like Mac OS X.  It’s really neat, although it’s a little weird that the author’s name is Adam Pash.

On Firefox, you basically want to go here and download Stylish.  Stylish is an add-on that lets you customize the CSS for any website.

Then, go here to download the Mac OS X theme for Google Reader.

Once you unzip, open the CSS in a text editor, and copy & paste it into Stylish.  On Mac OS X, I had to do this manually by opening the Add-Ons dialog, and open the Stylish preferences, but I got it to work.

It’s pretty neat, and I like the new look & feel of Google Reader.  It’s also pretty neat to see CSS as a form of “lightweight plug-in” for websites.  I’ve got to show this to some of the front-end folks on eBay Express – we use CSS heavily, and I bet you could come up with some pretty neat skins for the site using Stylish.

“Let a thousand flowers bloom,” I guess… (one of the most misunderstood quotations used around innovation, by the way.  Check out the source!)

In any case, I received my regular TidBITS digest email today, and it featured web-backup services for the Mac.  What was interesting was that the article featured primarily applications that use Amazon S3 as their backbone!  At $0.15 per GB, and $0.20 per GB/transfer, Amazon is a fairly cheap way to backup & store large libraries, like music & photos.

Several small software shops have built applications to help users do just that…

Here is the original TidBITS article.  The applications covered include:

• Jungle Disk.   This application is the most polished of the bunch.  It does not handle incremental backups, yet, but it does support scheduled backups.  It will cost $20 when it reaches 1.0, but it’s free right now in beta.  Jungle Disk is available for Mac OS X, Windows & Linux.
• S3 Backup.  This application, by Maluke, offers different named backups, as well as the ability to exclude files based on pattern matching.  However, it doesn’t offer scheduling or incremental backups, yet.  Still in beta.
• Bandwagon.  This application is tailored for music lovers who want to backup and maintain a large music library online, to be available to multiple machines or for safe keeping.  Very interesting because it offers menu-bar controls, and support for multiple “storage clouds”, including Amazon S3.

I remember a few years ago looking into online backup solutions, and being totally disillusioned with the low storage volumes and costs offered.  I have about 300GB of content to backup, with daily increments that vary from 10MB all the way up to 2-3GB on days I upload a new set of photos from my camera.

These solutions aren’t there yet, but they are closer.  And the pricing is closer too.

Anyone out there actually try one of these?  Or are you using Amazon S3 for anything else interesting?

If you want an example, here’s one:

How Google Hits $1000 a Share (2006)

[Cisco's] Market Cap Climbing to $1 Trillion (2000)

At least I’m not the only one who thinks so.

Marissa Mayer, at Web 2.0 today, shared insights into some lessons Google has learned in trying to serve users. The take-away is that Speed is just about the most important concern of users—more than the ability to get a longer list of results, and more valuable than highly interactive ajax features.

What was most interesting to me, however, was the comments below about how the most effective results from testing were the opposite of what users believed they preferred:

…they didn’t learn that from asking users, just the opposite. The ideal number of results on the first page was an area where self-reported user interests were at odds with their ultimate desires. Though they did want more results, they weren’t willing to pay the price for the trade, the extra time in receiving and reviewing the data. In experiments, each run for about 8 weeks, results pages with 30 (rather than 10) results lowered search traffic (and proportionally ad revenues) by 20 percent.

The reason I wanted to highlight this insight here is that it offers up perhaps one of the greatest challenges across any design practice that tries to focus on the customer experience: what people say they want, and what actually performs best are not necessarily the same. In fact, I would argue that they are different in most cases.

This challenge is not a surprise for professionals in marketing, politics or finance. These fields have long recognized that there is a large difference in what people say they will support vs. what they actually do support. However, it’s a particular challenge in product design because so many people want to “provide the best possible user experience”.

At every company I have worked for, there has always been a large debate about how to do the best product design. Do you reach out, through focus groups and customer visits, and ask your best customers what new improvements they would like to see? Or do you quietly observe, through testing and product metrics, and then use inspired design professionals to produce the great advance in usability?

As a product professional, I truly believe that the answer is to do both. There is no doubt that listening to your customers directly can give you great insight into their experience and their prioritization of problems. This insight is the key to customer empathy, which I believe is the key to customer-centric design in any field.

At the same time, it is extremely important to recognize that the rationalization that many people give when making choices may not be fully informed. They likely do not realize all of the options available to them, or the options that are available technically. They are likely not experts trained in design, finance, marketing, technology, or psychology. Observation, whether direct or indirect, is they key for more informed experts to help produce solutions that the customer may not understand are possible. Customers will ask you for a candle, when what they really want is portable light. They will ask you for a VCR with fast rewind, instead of a DVD player.

So, in this case, to borrow the corporate-speak, you need to embrace the AND. Listen to your customers, empathize with them, know them as they know themselves. But measure and observe, review the data, and leverage the professional expertise of the product team to delight your customer with solutions that they didn’t even realize were possible. Once you have those designs, you have to test and tune them. You’ll know when you are on the right track when you find yourself surprised and delighted by your customer insights and design results.

Giant Bug Terrorizing Germany 

I can only hope that my friends in the eBay Germany office are safe.

http://www.appleinsider.com/article.php?id=2003

Everyone is a buzz with implications of what happens if these hot hot hot companies join forces against Microsoft. As you can tell from my sarcasm, as usual, I think the press is sensationalizing a fairly mundane corporate event here, just because putting Google & Apple in the title of articles gets readers these days.

Don Dodge potentially gives this idea more credit than it deserves, but provides a really thorough explanation on why we shouldn’t count our merger chickens before they have hatched.

Of course, if you look closely at any two big internet players these days, you can find synergies:

• Apple.com has a lot of traffic
• The Safari browser has 3% marketshare and growing
• iTunes is the winner in the online distribution of music
• Google is the winner in market share for natural search
• Google paid search economics are currently the best available
• Google Video is a player in the nascent digital video market

However, this announcement has a lot more to do with the fact that Steve & Eric run in the same circles, have a lot of common friends and beliefs, and of course, Google & Apple are both great consumer internet brands. It looks good for Eric & Google to be on the board of Apple, and it looks good for Apple to have Google & Eric on board. Simple.

What is interesting to me, however, is how much better Google is doing handling the mantle of “Leader of the EBM Club” (EBM = Everyone But Microsoft). This has been a dangerous baton to hold, and many formerly strong companies have been destroyed this way. But Google has learned a thing or two about how to proceed here, and it is interesting to watch the next round of the “let’s try to topple Microsoft” game.

It’s different this time, of course. Google & Yahoo both are giving Microsoft fits, so the three-way dynamic is immediately more interesting. Success by new entrants (MySpace, Facebook, YouTube) keep changing the game. The resurrection of Apple continues to astound veterans. And as eBay has shown recently, the other internet powers will weigh in and influence this game. This is a very exciting time to be in the Internet space.

I remember in the late 1990s when Netscape had this mantle, and completely failed to appreciate the responsibility. They largely shunned Apple. Their arrogance got in the way of a deal with AOL (ironic, given the later merger).

There was a time when Netscape had all the market share you could want, but Microsoft clawed their way into a significant minority (25-30%). Then with one deal (the infamous AOL deal to use Internet Explorer), they flipped to majority marketshare and never looked back.

I bring up this story because shunning Apple was not about marketshare, although at the time Macs were still disproportionately strong in Internet market share because they come with networking out of the box, and because Macs were strong in the university & high income demographics (early adopters of the web).

Apple is the Grandpa of Microsoft battles of yesteryear. It is still a thought leader on imagining a world where you DON’T need a DOS/Windows PC. Their audience, though small, are thought leaders – disproportionately represented by the creatives, the journalists, and the executive ranks. They are also cooler than most.

By linking their name with Apple, Google in some ways gains a small, but powerful ally. Like a chapter out of The Lord of the Rings, it makes people think maybe this new champion will succeed against Microsoft where others have failed. The prophecy fulfilled.

The baton is passed.

I’ll post another time about why I think the question of Google vs. Microsoft is likely the wrong one. The Google ethos isn’t about killing Microsoft. In the end, this is much more about future growth opportunities for Microsoft than any type of defeat. But in our market-based economy, growth is power, so it’s worth talking about… another day.

Don Dodge on The Next Big Thing: Google Announces New 24X0 Support Service for Business Users

I find Don’s blog particularly interesting because he:

• Posts regularly
• Provides insight from his unique experiences at AltaVista, Napster, and now Microsoft
• Provides a rare intersection of the “modern” Microsoft point-of-view on Web 2.0 and related technologies and products, with an outsider flavor
• Seems to genuinely understand the professional Venture Capital viewpoint on key technology trends (based on my experience as an Associate Partner in a multi-billion dollar early stage firm)

A worthy addition to anyone’s RSS feed…