Googled

Chapter 5

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Silicon Valley companies, accustomed to thinking of Microsoft as a foe, were now becoming uneasy about Google. When Yahoo executives read Google"s financial reports, they were punched in the nose with the realization of how much more successful and efficient Google was in selling search advertising. Google"s search business was growing twice as fast as Yahoo"s, and was attracting more text ads. Yahoo poured engineering resources into a new automated ad-sales system, code-named "Panama," vowing that it would help them catch up. Microsoft and Yahoo conducted talks to see if there was a way to slow the Google juggernaut. And eBay, which had long sold advertising on Google, grew alarmed that Google had started a cla.s.sified-advertising service that competed with its listings, and had inaugurated Google Checkout, which competed with its PayPal online payment service. So fearful of Google was eBay that the Wall Street Journal Wall Street Journal reported on its front page in 2006 that eBay was holding secret talks with Microsoft and Yahoo about allying against Google. Bill Gates further stoked the fever of fear when he told reported on its front page in 2006 that eBay was holding secret talks with Microsoft and Yahoo about allying against Google. Bill Gates further stoked the fever of fear when he told Fortune Fortune magazine that Google was "more like us than anyone else we have ever competed with." magazine that Google was "more like us than anyone else we have ever competed with."

GOOGLE"S MANEUVERINGS AND DEALS may have made it unpopular with various media companies, but these did not tarnish Google"s image with the public. What happened in China did. In 2002, a Chinese-language version of Google search was launched, and then Google News in 2004. As user traffic mushroomed, the Chinese government found some of the news politically objectionable. China didn"t want users to be able to search for news about "free Tibet" or for photos of Tiananmen Square protests. At first, Google refused to engage in any self-censorship. Often, the Chinese government banned Google searches. Senior Google executives believed they had to make a choice between denying Chinese citizens some some political searches and denying them political searches and denying them all all searches. Google decided to comply with Chinese laws, stripped its news results of offending material and eventually, in 2006, created a separate search Web site, searches. Google decided to comply with Chinese laws, stripped its news results of offending material and eventually, in 2006, created a separate search Web site, Google.cn, on which it would offer politically sanitized searches in China. If a user searched for a picture of Tiananmen Square on Google in London, The Guardian The Guardian reported, the iconic picture of one man blocking a tank"s path appeared; if the same search was conducted on reported, the iconic picture of one man blocking a tank"s path appeared; if the same search was conducted on Google.cn, a picture "of happy smiley tourists" appeared.

Having escaped as a child from an oppressive government, Brin was anguished by the decision. Four years later, at Google"s annual shareholder meeting, two resolutions were introduced calling on Google to support human rights and oppose all forms of censorship in China; the resolutions implicitly rebuked Google. Page and Schmidt and Google management had the votes and defeated the resolution. Instead of vigorously opposing Google"s decision, Brin meekly abstained. When a shareholder rose to ask for an explanation, Brin gave a long tortured reply that vacillated between "I agreed with the spirit of the resolutions," and "I am pretty proud of what we"ve been able to accomplish in China."

Google rationalized its decision. Executives said they were complying with Chinese law, as they complied with German law to screen n.a.z.i materials or would later comply with the government of Thailand by blocking YouTube videos that "defamed" the king. It said it was serving Chinese users, who still received more information from even a bowdlerized Google search than from any available alternative. It said that the Internet would, over time, help democratize China. And it said it would be transparent and notify users when search requests were blocked.

Google could also justifiably claim that it did not cross the line Yahoo had when, perhaps inadvertently, it shared with the Chinese government the e-mail accounts of prodemocracy journalists, resulting in long jail sentences for two journalists. But there was another reality Google confronted, and it was acknowledged in testimony made to Congress in February 2006 by Elliot Schrage, Google"s vice president, global communications and public affairs. Baidu, a Chinese search engine, had seen its market share jump from just below 3 percent in 2003 to 46 percent in 2005, he testified, while Google"s plunged to below 30 percent, and was falling. China was steering its citizens away from Google. "There is no question that, as a matter of business, we want to be active in China," Schrage said, adding, "It would be disingenuous to say that we don"t care about that because, of course, we do." What Schrage and Google were less transparent about was that Google had invested in Baidu, and presumably had to win the concurrence of the Chinese government in order to do so. The next year Google sold its 3 percent stake.

Perhaps for the first time, Google executives were feeling defensive, troubled that folks thought they had violated their "Don"t be evil" pledge. In the wake of China and the Google IPO, Eric Schmidt said he expanded his own job description. "It took me a while to figure out that we had to reach out to traditional media," he said. "It"s part of acknowledging they are inc.u.mbents." But he, like Google, was just making nice. "I"m happy to be diplomatic," he added. "But I"m about winning!" What wasn"t clear was: Winning what? And at whose expense?

Schmidt was not diplomatic with Elinor Mills, a reporter for CNET News, a Web site that contains various online networks, including business news, technology, video games, and television programs. Mills in 2005 was working on a story about how much private information Google collected. As part of her research, she used Google search and Google Maps to run a quick search on Eric Schmidt. She located his Atherton home and address on Google Maps, his approximate net worth, political contributions, and a fair amount of other personal information. Then she published what she found, writing, "That such detailed personal information is so readily available on public Web sites makes most people uncomfortable." It certainly made Schmidt uncomfortable.

"CNET was informed," wrote Randall Stross, "that Google was unhappy with the use of Schmidt"s "private information" in its story, and as punishment, Google as a matter of company policy would not respond to any questions or requests submitted by CNET reporters for one year." Schmidt"s and Google"s reactions invited derision; Schmidt was accused of a "hissy fit." Google executives tried to reason with Schmidt, to coax him to apologize, to end the ban. Months later, without offering an apology, Stross wrote that Google "quietly restored a normal working relationship with CNET."

Google was becoming more defensive but also began to slowly worry about a potential threat far more powerful than any compet.i.tor: government. Google was alienating media companies, and when these companies speak, Washington listens. These companies are a major source of campaign funds and jobs; they provide the stage and microphone for elected officials. By 2005, broadcasters and telephone companies and others were raising questions about Google. Google may have been a multibillion dollar company, but it was unprepared to fight back. It had no political action committee; for a long time its only Washington presence was a one-man office located in suburban Maryland. This office reported to both David Drummond and Elliot Schrage in Mountain View. Drummond was supposed to oversee policy, and Schrage communications, which led to some confusion as the two often go hand in hand.

Although Google was not yet alarmed, it was on notice. At the weekly executive committee meetings, they talked about beefing up their presence in the nation"s capital. Brin volunteered to stop off in Washington to say h.e.l.lo to various government officials the next time he was back east visiting his parents in Maryland. But the the trip was hastily planned, as Brin admits: "Because it was the last minute, we didn"t schedule everything we wanted to." Among the key people he didn"t get to see was Senator Ted Stevens of Alaska, then the chairman of the commerce committee, with jurisdiction over the Internet. (Senator Stevens"s knowledge of the Web appeared limited. He once referred to an e-mail by saying that "an Internet was sent by my staff.") The Washington Post Washington Post depicted the poor reception as a snub of Google; it probably didn"t help matters that Brin"s outfit that day included a dark T-shirt, jeans, and silver mesh sneakers. depicted the poor reception as a snub of Google; it probably didn"t help matters that Brin"s outfit that day included a dark T-shirt, jeans, and silver mesh sneakers.

Brin did manage to meet with senators John McCain and Barack Obama, and the topic was "network neutrality," an effort by Google and others to ensure that the telephone and cable companies who provide high-speed access to the Internet didn"t charge higher fees to Web sites with heavy traffic. Around the time of Brin"s visit, an organization called Hands Off the Internet, financed by telecommunications companies, ran full-page newspaper advertis.e.m.e.nts accusing Google of wanting to create a monopoly and block "new innovation"; one ad featured a grainy photograph of a Google facility housing a sinister-looking "ma.s.sive server farm." Brin saw it for the warning it was. "I certainly realized we had to think about these things, and that people were going to misrepresent us," he said. "We should be ent.i.tled to our representation in government."

Like Microsoft in the late nineties, the Google leadership, "composed of ideological technologists," as Schrage put it in 2007, was slow to appreciate the political and the human dimensions of the technical decisions it made. Schrage"s resume spans a law degree, years of teaching, a senior executive position at The Gap, and work as an international consultant on corporate social responsibility. He acknowledged that Google engineers were new to the ways of Washington. "Some call that naivete. Some might criticize this; others might applaud it. No question that people here regularly discuss Microsoft"s experience and use that as a cautionary tale."

Later, meaning to explain rather than criticize, Schrage told me, "One can make the argument that the genes of technological innovation are frequently in conflict with emotional intelligence. Successful technological innovation is all about disruption. Effective emotional intelligence is all about collaboration, how you get talented people to work together and enjoy it."

Collaboration was central to the thinking of Lawrence Lessig, who was widely hailed as an Internet oracle and was then teaching at Stanford Law School. Lessig had just been treated as such at Facebook, where he"d been invited to speak to its employees and expounded on the virtues of an open Web. Afterward, we had dinner at Il Fornaio in Palo Alto, which is a favorite Valley canteen, and there he asked, and answered, a central question people increasingly posed about Google: Is Google becoming what Microsoft was in 1998?

"The argument is that in an important way, they are the same," he said. "In fact, whether now or soon, Google will have more power than Microsoft did at the time. Google"s power will extend to more than one layer of the network." Microsoft"s power was its ability to leverage its potent operating system to control the various applications that use the operating system. So Microsoft offered a free browser to knock out the Netscape browser and attacked Java software that might "facilitate compet.i.tion with the underlying operating system."

Google"s power flows from a different source, he said. "They have produced this amazing machine for building data, and that data has its own "network effect""-the more people who use it, the more data generated, the more advertisers flock to it. "Everything sits on top of that layer, starting with search. Every time you search, you give Google some value because you pick a certain result. And every time you pick a result, Google learns something from that. So each time you do a search, you"re adding value to Google"s data base. The data base becomes so rich that the advertising model that sits on top of it can out-compete other advertising models because it has better data.... The potential here is actually that the data layer is more dangerous from a policy perspective because it cuts across layers of human life. So privacy and compet.i.tion and access to commerce, and access to content-everything is driven by this underlying layer. Unlike the operating system, which couldn"t necessarily control the content that you got.

"The way they are different is that I don"t think there is any evidence that Google has misbehaved in the way Microsoft misbehaved when they tried to leverage the operating system to protect themselves against compet.i.tion. So far, they"ve been good guys. But that leads to a question: Why do we expect them to be good guys from now till the end of time?"

Lessig, who benefits from the broad education and reading many Googlers lack, was nevertheless alert to how Google, like Microsoft, might become intoxicated by power and succ.u.mb to the same human failures. Of Google, he said, "I fear theirs is an old story about how good people deceive themselves. As Microsoft did in the nineties, you become so convinced that you are good that you become oblivious. I sense that is true at Google today. They"ve drunk the Kool-Aid."

PART THREE.

Google Versus the Bears

CHAPTER EIGHT.

Chasing the Fox (2005-2006).

Rupert Murdoch, the audacious and sometimes outrageous media mogul, made another move in July 2005 that unnerved his peers. He was in the habit of doing so. For four decades Murdoch"s News Corporation had been playing bold offense, forcing other media companies to defensively respond. Starting with a single newspaper in Australia, and then England, he build a newspaper empire in both countries, and forced the modernization of newspaper work rules in England. At a time when the audience for the three broadcast networks was aging, he had pioneered the Fox broadcast network, with its youth-oriented programming. He established satellite broadcasting that blanketed much of the globe. He eclipsed the once-dominant CNN in ratings with the Fox cable news network. Journalistically, his impact could be pernicious-spurring tabloid television with his syndicated A Current Affair, Current Affair, fomenting shrill, nineteenth-century press partisanship with Fox News, fomenting shrill, nineteenth-century press partisanship with Fox News, The Sun The Sun in London, and the in London, and the New York Post. New York Post. But even as he was disdained in certain quarters, he was always carefully watched. Media companies chase Rupert Murdoch as hounds do a fox. But even as he was disdained in certain quarters, he was always carefully watched. Media companies chase Rupert Murdoch as hounds do a fox.

Murdoch again shocked his peers when he acquired Mys.p.a.ce.com in July 2005 for $580 million. After just two years of existence, the youth-oriented social network and music site had sixteen million monthly visitors ; that number would quadruple over the next fourteen months. in July 2005 for $580 million. After just two years of existence, the youth-oriented social network and music site had sixteen million monthly visitors ; that number would quadruple over the next fourteen months.

Before Murdoch"s announcement, it was expected that Sumner Redstone"s Viacom would lay claim to Mys.p.a.ce. It was a natural fit with Viacom"s MTV, with its own youthful audience of more than eighty million monthly viewers. And it was widely believed that Viacom CEO Tom Freston was close to making the acquisition. But before he could, Murdoch swooped in with a higher offer, which Redstone refused to match. Within months, Redstone had replaced Freston, grousing to a.s.sociates that had he been more aggressive he could have sealed the Mys.p.a.ce deal. Actually, what happened, according to a Viacom official involved in the negotiations and confirmed by others, was this: "Rupert made a preemptive bid. Sumner told Tom he did not want to get into a bidding war." The parsimonious Redstone had flashed a red light to Freston.

By acquiring Mys.p.a.ce, Murdoch intended to instill in News Corporation a fresh Web-centric sensibility. By contrast, when Viacom tried to instill its MTV television sensibility online with a music site called MTV Overdrive, it stumbled. In early 2007, Mys.p.a.ce cofounder Tom Anderson announced to the German magazine Der Spiegel, "I think we have replaced MTV Mys.p.a.ce is more convenient. You can search for things, while MTV is just delivering things to you. On Mys.p.a.ce, you can pick your own channel and go where you want. That"s why TV viewership is dropping among the Mys.p.a.ce generation." Mys.p.a.ce had the traffic and the buzz. MTV had the profits, of course, which Mys.p.a.ce did not have. But Murdoch was nonetheless perceived as once again having set the pace for media companies.

IN THE YEARS SURROUNDING the Mys.p.a.ce deal, Internet visionaries began to dominate discourse in the media, and the prospect of new online challenges attracted some of old media"s most creative minds. New media was invading the entertainment business, becoming a magnet for talent, for those wanting to stretch their muscles or pad their wallets. Believing that new media would define the future, more than a few executives fled old media. Viacom lost one such prominent executive, a man named Albie Hecht. After successfully creating music videos earlier in his career, Hecht oversaw the creation of MTV Network"s Spike TV, which pitches its programming to young adult males, and then was president of Nickelodean Entertainment. But in 2005 Hecht, then fifty-two, suddenly stepped down, saying he wanted to get back to creating products rather than managing them. It was seen as a blow to Viacom. "I left because one of the lessons right now is that the small, fast-moving company with a specific mission can strike. The Viacoms and the rest of them are having a hard time. They take entrepreneurs and make them executives. They take authentic brands and turn them into their brands. And they put bureaucracy into place and reduce the risk taking and speed to market. That"s a killer combination." Big companies, he said, are too impatient because they can"t explain to public shareholders how they will quickly get a return on start-up investments. He wanted, again, to be a fox.

Hecht, a full-throated enthusiast partial to T-shirts, khakis, and white sneakers, set out on a "vision quest" similar to the one Barry Diller took when he left as CEO of 20th Century Fox in 1991, purchased a PowerBook laptop to explore the new online world, and embarked on a ten-month odyssey to decide where to stake his future. Diller decided that cable would dominate the media"s future. Hecht came to a different conclusion. He had visited studios, directors, writers, producers, digital animation studios, anyone who set out to create programming for the Web. "What kept coming back to me," he said, "was that the most exciting people, the most exciting work I saw, was all on the Web." One night as he watched his seventeen-year-old son, his thinking congealed. "He was up in his room," Hecht said. "He"s on the phone. He"s watching TV He"s playing a video game. He"s IMing. He"s reading-thank G.o.d he reads! All at the same time! You look at that and you go, "This is a new world with new media and new audience behavior. You have to capture that audience by capturing the way they are engaged."" His son was not just receiving information or entertainment. He was interacting. This audience wanted different modes of storytelling.

Hecht"s son was typical, according to a 2005 study of media usage among eight- to eighteen-year-olds by the Kaiser Family Foundation. The study reported that young people nationwide spent a daily average of six hours and twenty-one minutes with media; when mult.i.tasked activities like reading or listening to music were included, the daily total is eight hours and thirty-three minutes, more than "the equivalent of a full-time job." Nearly four hours per day was expended watching TV, videos, DVDs, or prerecorded shows, and 40 percent of this time youngsters were mult.i.tasking, usually by simultaneously going online. Outside of schoolwork, sixty-two minutes were spent on the computer, forty-nine minutes playing video games, and only forty-three minutes reading. School homework consumed an average of fifty minutes per day. A later study by the market-data firm, Forrester Research, found that Americans between the ages of eighteen and twenty-seven spent nearly thirteen hours per week on the Internet, nearly two and one half more hours than they spent watching TV When he left Viacom, Hecht established a company, Worldwide Biggies, in a brownstone office not far from Times Square. With venture capital funding of nine million dollars, and a staff of twenty-two, they create interactive Web shows and video games and other multiplatform activities. "I use the word engagement engagement as the new metric, as opposed to viewing," he said. "Some people call it leaning forward as opposed to leaning back." In the products they produce, they look for "six levels of engagement." The audience must be able to (1) watch (on any device); (2) learn (by searching for information about it on the Web); (3) play (games); (4) connect (social networks, IM); (5) collect (microtransactions involving money on the Web); and (6) create (user-generated content). "If we have four of the six, we put it into development. If we get six out of six, we think we have a hit." He has since created successful Internet games and a popular mock.u.mentary series on Nickelodeon called The Naked Brothers Band. as the new metric, as opposed to viewing," he said. "Some people call it leaning forward as opposed to leaning back." In the products they produce, they look for "six levels of engagement." The audience must be able to (1) watch (on any device); (2) learn (by searching for information about it on the Web); (3) play (games); (4) connect (social networks, IM); (5) collect (microtransactions involving money on the Web); and (6) create (user-generated content). "If we have four of the six, we put it into development. If we get six out of six, we think we have a hit." He has since created successful Internet games and a popular mock.u.mentary series on Nickelodeon called The Naked Brothers Band.

The new hits will differ from the old ones, he said. Storytelling will have to change. "We"re learning that now. Some of it is that a story isn"t necessarily a story. Facebook is a story. What"s the story? "I"m going to look at what Albie is doing now. I"m going to go on my Facebook page and it said that Albie is now doing an interview. And just yesterday Albie posted seven pictures." That"s a story." Hecht, like many a high-concept Hollywood executive, thinks in formulas, but his are broader (in a business sense). He said games are about "experience," TV about "character," and movies about "stories." In the stories Worldwide Biggies is working on, he said, "If we can move someone so they love this character, and they"re moved through a story, and they"re playing a game, and they"re connecting with their friends about that game, and they"re collecting objects in that, and at the end of this experience they have created their own video of this experience, we"ll have moved them into a different type of storytelling."

He believes the Web is not just a distribution platform. Rather, because of its interactive nature, he believes, "The platform itself is content." Hecht feels like an entrepreneur again. "It"s all about the new Wild West for me," he said.

JASON HIRSCHHORN WAS ANOTHER Viacom refugee. He grew up in Manhattan wanting to be a music entrepreneur. When he was fifteen, in 1986, New York City bars were lax about checking the IDs of teenagers, until the "preppy" murder case. A teenager, Jennifer Levin, left an East Side bar with Robert Chambers late one night in 1986. Her body was found that morning in Central Park. Bars cracked down on minors, and kids could not easily congregate.

Borrowing his father"s empty briefcase, Jason approached the owner of the old Fillmore East, where he had been bar mitzvahed, and made this offer: on nights the place was closed he would fill the hall with teenagers, in return for half the gross. No alcohol would be served. The owner agreed to the experiment. Jason called all his private school friends and asked them to call their friends; this extemporaneous network became viral. Seven thousand teenagers showed up. "We grossed seventy thousand dollars the first night," he said.

When Jason was a senior at New York University, he discovered the wonders of the Internet. "You could ask questions and find things," he marveled. He started building a music-trading site. From his East Ninety-sixth Street apartment, and with an a.s.sist from his sister, he built a site, the CD Club Web Server, that offered users advice on how to work the CD clubs and catalogues to get the most for their money. Consumer Reports described it as a great resource, prompting Columbia House, a music catalogue, to phone to tell him to take down their trademarks.

"Why don"t you just advertise?" he asked, half joking.

Instead, they proposed to pay ten dollars for everyone he signed up. "All of a sudden," Hirschhorn said, "I"m making thirty thousand dollars a month!" With this money he built Musicstation.com, which linked to other music sites. He created a music search engine that scanned the Web and television to find music, place it in categories, and fashion a music index. Not long after, five media companies got into a bidding war to buy his company. A lifelong MTV fan, he chose Viacom in early 2000. He was twenty-eight and "I was the lone digital guy." Over the next six years, he was promoted six times, becoming the youngest senior executive at Viacom, the chief digital officer of the MTV Networks. Soon after Viacom pulled back from its bid to buy Mys.p.a.ce, a bid he had instigated, he resigned. While he won"t criticize the failure to acquire Mys.p.a.ce, he was frustrated. "I was an entrepreneur who came into a big company and tried to treat it as a start-up," he said. "Big companies don"t innovate. They operate. Frankly, I think MTV should have owned the Internet."

He was thirty-five and opted to take what he said was a 90 percent pay cut and accept equity to become president of the Sling Media Entertainment Group. Sling Media sells a product, the Slingbox, which allows users to watch their home television and DVR on their PC, MAC, or mobile devices. His editors selected what they think of as "the best stuff, putting it on the front page" of a Sling media guide. They plan to make money by selling ads and sharing revenues with their content providers. One day, he hopes, Sling Media will also create its own content. Sling Media aims to become another distribution platform, letting users watch what they want when they want it on various devices, and letting Sling gather data on user preferences which they would share with content partners. Once again, Hirshhorn struck gold. Soon after he joined, Sling Media was sold for $380 million to EchoStar Technologies, the satellite television company. "We"ve built a virtual cable distributor online," he said. He knew that the Slingbox, like Apple TV, could prove to be a dud, or that he could feel restrained operating under a new corporate owner. But Jason Hirschhorn was very rich and had a sandbox to play in.

For a while at least. Chafing under the constraints he felt working within a traditional media company that he said "did not move fast enough into the digital age," in late 2008 Hirshhorn did what he had done at Viacom and left in search of another sandbox. He found it in the spring of 2009, when the company he wanted Viacom to buy-Mys.p.a.ce-had slumped and Murdoch brought in new management, including Jason Hirshhorn as chief digital officer.

MARC ANDREESSEN HAS SPENT much of his life working in the digital sandbox, achieving the fame and financial success others seek. A large man with an immense, shaved, egg-shaped head, his restless leg hammers the floor, and he speaks rapidly in a booming voice. His professed motto is, "Often wrong, never in doubt." A self-made multimillionaire at age thirty-eight, Andreessen has often been right. As a computer science major at the University of Illinois at Urbana-Champaign, he worked at the university"s National Center for Supercomputing Applications. Inspired by Tim Berners-Lee"s vision of open standards for the Internet, in 1992 he and a coworker, Eric Bina, created an easy to use browser called Mosaic. The browser worked on a variety of computers, facilitating the hypertext links that allow Web surfing and Google search, helping users to effortlessly hop from site to site. After graduating in 1993, he moved to California, where he met Jim Clark.

The former founder of Silicon Graphics, Clark shared Andreessen"s conviction that the browser could be a transformative technology, and he had the money to advance that dream. Not long after, Andreessen became cofounder and vice president of technology for the company that would become Netscape Communications.

With Netscape"s IPO in 1995, Andreessen became very prominent in new media circles. He also became very rich, and even richer when Netscape was sold to AOL for $4.2 billion in 1999. After a brief stay as chief technology officer for AOL, Andreessen started Loudcloud, a Web-hosting company that sold software and consulting services. After its own IPO in 2001, Loudcloud was sold to EDS and changed its name to Opsware, with Andreessen remaining for a time as chairman.

He had no interest in being a CEO, though. "I"m a well-trained introvert," he told me. "Being with people drains me of energy." He had a wide range of interests, though, and deep pockets, and he wanted to marry both. He chose to become an angel investor. He put money into Digg, a social news site, and Twitter, among others. He joined the board of eBay. He wrote a blog that displayed his eclectic and wide range of interests-in books, TV shows, movies, politics, press criticism, Wall Street, debt to capital ratios.

The investment about which Andreessen is most pa.s.sionate is Ning, a social network that enables those who join-artists, musicians, students, educators, a fan club for the Jonas Brothers, a s...o...b..ard community, etcetera-to create their own communities of interests. The idea came out of his a.s.sociation with Gina Bianchini, who met Andreessen soon after she received a master"s degree from the Stanford Business School and started a company in 2000. When her company was sold in 2004, Bianchini and Andreessen brainstormed her idea of forming a social network among those who seek like-minded communities and his idea of providing a platform on which to build them. They named the site Ning because that was the best name they could agree on that cost no more than $10,000, he said. The site would have two revenue sources: Google"s AdSense to reach advertisers wishing to communicate with each community and those niche channels willing to pay a monthly fee to Ning for a range of services, including $19.95 per month for s.p.a.ce to sell their own ads with Google or to forgo ads entirely. By the summer of 2008, Bianchini said, there were 465,000 social networks on Ning, with 10 million registered users, 40 million unique users each month, 5 billion monthly page views, and 116 employees working from a building in Palo Alto. As chairman, Andreessen has an office there, but appeared only a couple of days each week, and rarely in the morning. "I wouldn"t be sitting here without him," said Bianchini. "He funded Ning and made me CEO. He put up the money, and he took only 50 percent of the equity."

His closest friend, Ben Horowitz, who worked with him at Netscape and in early 2009 became his partner in starting a $300 million venture capital fund, describes Andreessen as a Renaissance man. "You can talk about the economy, fashion, military strategy, whatever, with Marc. I don"t know anybody else like that who goes across so many domains."

Andreessen likes to be alone, to stay up most of the night surfing the Web and reading, and rising late and avoiding meetings. He found a kindred spirit in Laura Arrillaga, who teaches at Stanford"s Business School and is the daughter of Silicon Valley"s wealthiest real estate tyc.o.o.n and Stanford benefactor, John Arrillaga. "Laura reinforces my hermitlike tendencies," he said. "We love to be home." They are, he said, "dream customers" for old and new media. "We have more DVDs. We have Blue-ray Discs. We do downloads. We"re a huge iTunes customer. We"ve got, between the two of us-she still uses her old house as her office-eight or nine Direct TV dishes. We"re about to add Comcast"s Video on Demand, because I want to try that. We"re about to add a Windows" Media Center PC." They have a Vudu box, Apple TV, two Tivos, several PVRs and DVRs, and numerous high-speed Internet connections. In all, their monthly subscription bill comes to about $2,500, he said.

Although he consumes old media, Andreessen delights in tossing grenades at it. As late as 2005 and 2006, he said, traditional media was "totally putting their head in the sand. They were in complete denial." He cited YouTube, the burgeoning video Web site, as exhibit A: "YouTube ends up being this hub for tens of millions of people to watch video. In two years, it"s going to be a direct compet.i.tor to TV networks and cable networks. A direct compet.i.tor with more users and viewers.... All of a sudden, that"s a new hub. It"s like the old joke: "Where are they going? I"m their leader and I must find them!""

He sees the Internet as a medium that will soon have 2.5 billion users worldwide, an audience far larger than any reached by traditional media. And the audience will be composed of those who "want whatever they want when they want it." They will want to skip commercials and watch movies or TV programs on multiple devices and be able to get DVDs of movies the day they are released in theaters. "When has the music industry and the movie industry and the TV industry ever had a market that big to deal with before?" Andreessen said. "And when has distribution ever been this cheap?" The costs that burden traditional media, from paper to printing and manufacturing to trucks to sharing revenues with movie theaters, could be drastically reduced, he said. "An entrepreneur looks at that and says, "Oh, my G.o.d, it"s a monster opportunity!" Somebody who is protecting an existing business says, "Oh, my G.o.d, I"m going to go out of business!" Now they"re both right. It depends on whether they radically make the changes they need to make."

GOOGLE WAS BOLDLY MAKING CHANGES. It outmaneuvered Murdoch, Viacom, and Yahoo and stunned the media world when in October 2006 it purchased YouTube for $1.65 billion. The deal eclipsed any that Google had done before, and the potential impact of YouTube was vast. Since its start in February 2005, YouTube by the fall of 2006 was attracting thirty-four million monthly viewers, or four out of every ten video Web site visitors. And this number was soaring. What visitors viewed on YouTube was mostly "user-generated content," or short homemade video clips: a pet trick, an artfully told joke, firsthand footage of the devastation from Hurricane Ka trina, Janet Jackson"s "wardrobe malfunction" at the Super Bowl-that users uploaded and sent to YouTube. Increasingly, though, YouTube was expanding its audience with clips from Sat.u.r.day Night Live Sat.u.r.day Night Live and and The Daily Show with Jon Stewart, The Daily Show with Jon Stewart, with sports highlights and music videos; these, too, were recorded and shared by users, arousing piracy concerns. with sports highlights and music videos; these, too, were recorded and shared by users, arousing piracy concerns.

The reason YouTube was persuaded to sell, said cofounder Chad Hurley, then twenty-nine, was simple: They feared the site lacked the resources to cope with its explosive growth. "When we started, we thought one million daily uploads would be great." Instead, they were getting a hundred times that many. "We thought we"d burn up our bandwidth. We worried our servers would go down." The marriage to Google, he said, meant more investment capital, more servers and computers, more brainpower, more help finding partners and figuring out how to place advertising on their site. "We needed resources to scale the company. We only had a staff of sixty people dealing with the weight of the world. An option was to raise more money and hire more people and take a long time. But we were visible, unlike the early Google. We had compet.i.tion. We were challenged by the old media." He and his cofounder, Steve Chen, were enamored of Google"s focus on users and its emphasis on the long term. "They wanted to give us the freedom not to have to maximize revenues right away."

YouTube and Google"s ambitions were immense. Hurley described the site as "a democratic platform" for user-generated and "independently produced content." He vowed that the "creative people who produced content would have more opportunities in the future without answering to a network." Had network executives heard those words, their paranoia would, no doubt, have been stoked. They would have been even more perturbed to hear Eric Schmidt say that YouTube"s real challenge was to figure out how to sell advertising. "If that works," he told me, "it will seem like the birth of the CBS network in 1927."

Because YouTube was making no money, there was a fair amount of sneering from media executives. Like Napster, they said YouTube would be hobbled by copyright lawsuits and would be unable to monetize its enormous traffic. "Right now," Microsoft CEO Steve Ballmer declared, "there"s no business model for YouTube that would justify $1.6 billion. And what about the rights holders? At the end of the day, a lot of the content that"s up there is owned by somebody else." That "somebody else," the broadcast and cable networks believed, was them. YouTube, they a.s.serted, built its success on their backs; thirteen of the twenty most popular videos on the site, the Wall Street Journal Wall Street Journal reported in early 2007, were professionally made, not user generated. Sumner Redstone, whose Viacom owned reported in early 2007, were professionally made, not user generated. Sumner Redstone, whose Viacom owned The Daily Show With Jon Stewart, The Daily Show With Jon Stewart, told Charlie Rose, "There are some issues with YouTube. They use other people"s products. The only way they avoid litigation now is they stop doing it if you call them." told Charlie Rose, "There are some issues with YouTube. They use other people"s products. The only way they avoid litigation now is they stop doing it if you call them."

To acquire YouTube, Google tapped its enormous market capitalization. The company"s stock value at the time the deal was announced was $132 billion, giving it a compet.i.tive advantage over the largest media companies on earth, none of which was worth more than one-third this amount. Those still oblivious to the challenge posed by Google were awakened by the YouTube acquisition. "They can buy anything they want, or lose money on anything they choose to," said Irwin Gotlieb. "I can only do things that are rational to do for my business."

Media companies were chasing a new fox. It did not go unnoticed by Gotlieb-or other savvy executives-that Google was expanding its online advertising portfolio to include video. Or that YouTube users would only swell Google"s unmatched database. More ominous for traditional media, Google, despite its denials, was now in the content business. Like the television networks, YouTube publishes content produced by others and sells advertising. The more consumers linger on YouTube, the more pages they view, and the more page views, the more YouTube"s ad rates rise. In search, Google sped users off its site without any particular interest in their destination; with YouTube, it had a stake. The purchase of YouTube represented something else as well. Their Google Video store, announced by Larry Page nine months earlier at the Consumer Electronics Show, was a flop. "YouTube was an admission by Google that they couldn"t just build things," said Danny Sullivan, longtime editor of Search Engine Land. Search Engine Land.

WHAT FOLLOWED was a protracted round of negotiations between the broadcast and cable television companies and Google. The discussions revolved around three issues: money, copyright, and trust.

Money was a stumbling block. Traditional media companies sought a version of the system they had long relied upon: an up-front license fee from distributors to air their content. Google agreed to pay something but argued that with a new distribution platform they should not be locked into old and expensive formulas. YouTube, Google argued, was a terrific promotional platform that would expand traditional media"s audience. The networks countered: Show me the money! me the money! Cable networks also claimed that if they licensed their content to YouTube for a lower price than they charged distributors, cable systems owners would demand the same discount. Cable networks also claimed that if they licensed their content to YouTube for a lower price than they charged distributors, cable systems owners would demand the same discount.

After months of negotiations, traditional media walked away. "They didn"t value our content at a price point we thought was worthwhile," said NBC/Universal CEO Jeff Zucker. "They built YouTube on the back of our content, and wouldn"t pay us." NBC, like other television and cable networks, refused to allow their programs to appear on You Tube, though the network has not loudly protested as YouTube clips boosted the ratings of, for example, Sat.u.r.day Night Live. Sat.u.r.day Night Live. Philippe Daumann, the CEO of Viacom and Sumner Redstone"s longtime legal adviser, complained that it was frustrating to negotiate with Google. "Every time we thought we came down to a certain point, they changed their mind," he said. "And they changed the people in the negotiations. I learned that Google had an interesting management structure. I talked to their CEO, and then when Eric went down a certain path he had to have a discussion back in Mountain View with his two a.s.sociates. Often there would be a total change in direction." Philippe Daumann, the CEO of Viacom and Sumner Redstone"s longtime legal adviser, complained that it was frustrating to negotiate with Google. "Every time we thought we came down to a certain point, they changed their mind," he said. "And they changed the people in the negotiations. I learned that Google had an interesting management structure. I talked to their CEO, and then when Eric went down a certain path he had to have a discussion back in Mountain View with his two a.s.sociates. Often there would be a total change in direction."

Schmidt countered that Viacom made demands Google could not meet, including an insistence on large up-front license fees. Because YouTube had "no revenue at the time," he said Google proposed to share advertising revenues rather than pay an up-front fee. We would "give the majority of revenue to them," said Larry Page, "as long as it"s real revenue." Viacom and others declined. Asked how he justified locking into an agreement with, say, AOL, to guarantee payments when AOL chose Google as its search engine, Schmidt said, "We had compet.i.tion at the time." This suggests that with YouTube, Google was not looking over its shoulder at Microsoft. Google"s position was at least partly shaped by a belief that it had leverage in this negotiation.

The more consequential issue, said Daumann, was not money but copyright protection-protection against what he referred to as "theft." YouTube was taking Viacom"s content, he continued, "not as an experiment, not con-sensually, but rather they just take it and say, "Why don"t you watch what happens!"" Google said it was the legal responsibility of old media to tell them what should be yanked from YouTube and said it would immediately comply. Old media disputed this interpretation of the law, insisting that the responsibility, and the expense, of policing belonged to YouTube. Jeff Bewkes, the CEO of Time Warner, echoed Daumann"s concern. The problem is that once Time Warner"s content appears on YouTube, he said, "it gets redistributed to five other places-Mys.p.a.ce, Gorilla, whatever. Those people are now the new sources of the thing." He added that Google maintained they were not responsible if another site lifted Time Warner"s content from YouTube, giving them "deniability in the event of theft."

The third issue, trust, was in some ways the most vexing. Daumann was insulted when Google tried to a.s.sure him of the promotional value of YouTube. "I don"t need somebody else to say, "It"s good for you!" Let me decide what"s good for me. Maybe I"m totally wrong. Maybe I"m totally stupid, and maybe it would be better for me to put all of my shows on YouTube immediately. Maybe I"m just an idiot. But it"s my right to be the idiot. I think YouTube is an effective promotional tool. We put trailers all over the Internet. We don"t run a walled garden here. We have deals with just about everyone-except YouTube." He held a hardening conviction that Google was a pirate. Google held a hardening conviction that traditional media wanted to halt progress and slip their paws into Google"s pocket.

Bewkes, unlike Daumann, was willing to believe that Google "was well intentioned," blaming engineers who are thinking not of his copyright concerns but of solving the "engineering problem of getting it out there." Asked what a company like Time Warner wanted from YouTube, he conceded, "It"s difficult to figure out." Like his peers, he wants "what we have wanted for seventy-five years, for our copyrights not to be stolen and used by other commercial enterprises who get paid and we don"t, and they choose the time it is exhibited without ever contacting us." But in this new world where every media company gropes for a way out of the tunnel, he said, "There is a question of the best way to do that." Web programmers like Albie Hecht thought old media was stuck in denial. "You either find a way to make your product available to the public in the right way, or they"re going to get it anyway," he said. "So you can either create another generation of video as opposed to audio pirates, or you can do the smart thing and give it to them," and figure out a way to monetize it.

The chasm between new and old was as wide as the gap between Mel Karmazin"s view of how to sell advertising and Google"s view. They each spoke of piracy, but old media thinks it is preventable and new media says it wants to try but is dubious that absolute prevention is possible. They each spoke of content, but by content they meant different things. For traditional media companies, it is usually defined as full-length, professionally produced TV programs or movies. For YouTube, it is shorter-form clips, mostly user generated. In many ways, the debate is pointless since both user-generated and slickly produced content commands attention. "Content is where people spend their time," said Herbert Allen III, the forty-one-year-old investment banker who is president of Allen & Company. "Content is not just what"s on Comedy Central. Content is Facebook too. Content is how the consumer chooses to spend time."

What is really at stake, Allen suggested, is control of the thriving distribution platform that is the Internet, a platform "of endless choice and immediate fulfillment. Media companies are used to the exact opposite. They have thrived on the pricing power that comes from complete control of distribution. Since the consumer has already voted in favor of the Internet, media companies will have to find a new economic proposition for their content. Media companies have to embrace the fact that the consumer is now firmly in control."

IRATE AND ANXIOUS as they may have been, as 2006 drew to a close, the TV companies were scrambling to find Internet platforms. Some, like the local broadcast stations that formed the backbone of the networks, were largely bereft of an Internet strategy. Other media companies made a genuine effort not to resign themselves to their fate. Among the most active suitors of the new media was Robert Iger, who became CEO of the Walt Disney Company in 2005. He purchased Pixar, the groundbreaking digital animation studio, from Steve Jobs in early 2006. Iger"s predecessor at Disney, Michael Eisner, was mistrustful of Jobs, and Iger was warned to keep him at arm"s length. Instead, he invited Jobs, now his largest shareholder, to serve on the Disney board. "I figured that if things go well for Disney, they"d go well for him," Iger said. "If things didn"t go well for Disney, I"d have more than Steve Jobs to worry about. And to have someone like that in the boardroom when we"re discussing technology was great. I love working with him." Iger felt he was building into the company"s DNA a digital, user-first perspective. He remembered asking Jobs how often he visited Apple"s design lab or technology center, thinking he"d say once a week. Jobs told him he visited three or four times a day. Iger said that now "I try to spend one hour a day surfing the Internet. I just surf and look."

But at least one inspiration came from old media. "The first thing I did after becoming CEO was read Elisabeth Kubler-Ross," said Iger, referring to the five stages of grief described in her book On Death and Dying. On Death and Dying. "First came the denial phase. Then the anger phase. Then the bargaining phase. Then depression. Then acceptance. That"s what the music industry did. They listened to a cacophony of voices and let those voices drown out the most critical audience, which was its customers." Determined not to repeat the mistake of the music companies, he became the first network and studio owner to license his shows and movies on Apple"s iTunes. ABC station managers and movie theaters protested. He was not swayed, insisting that ABC and Disney were in the content business, not the network or movie theater business, and reminding critics that the average age of those who streamed shows on computers or handheld devices was only twenty-nine. To be relevant to young people, he said Disney had to break old habits. In the first year on iTunes, he said, Disney streamed a hundred million shows and movies. Although iTunes represented just 1 percent of Disney"s revenues, it generated $44 million in revenues in 2006, a figure a.n.a.lysts projected would mushroom to over $320 million in 2008. "First came the denial phase. Then the anger phase. Then the bargaining phase. Then depression. Then acceptance. That"s what the music industry did. They listened to a cacophony of voices and let those voices drown out the most critical audience, which was its customers." Determined not to repeat the mistake of the music companies, he became the first network and studio owner to license his shows and movies on Apple"s iTunes. ABC station managers and movie theaters protested. He was not swayed, insisting that ABC and Disney were in the content business, not the network or movie theater business, and reminding critics that the average age of those who streamed shows on computers or handheld devices was only twenty-nine. To be relevant to young people, he said Disney had to break old habits. In the first year on iTunes, he said, Disney streamed a hundred million shows and movies. Although iTunes represented just 1 percent of Disney"s revenues, it generated $44 million in revenues in 2006, a figure a.n.a.lysts projected would mushroom to over $320 million in 2008.

Murdoch and others made moves. Seeking to bring fresh storytelling to the Web, Murdoch signed seasoned Hollywood producers Marshall Herskovitz and Edward Zwick to create a slickly produced series called Quarterlife, for Mys.p.a.ce. NBC Universal"s corporate parent, General Electric, announced that it was placing $250 million in an equity fund to invest in digital companies with robust growth prospects, including Albie Hecht"s Worldwide Biggies. Comcast, which has more subscribers than any cable company, would launch Fancast.com, an ad-supported cable Web site that hoped to attract full-length content from all suppliers. Viacom and CBS joined others in investing $45 million in Joost.com, a YouTube rival that chose not to display user-generated content but instead to offer full-length programs from MTV, Comedy Central, and CBS, sharing ad revenues in exchange. The TV giants discussed forming their own Internet platform to compete with YouTube. Although many partic.i.p.ated in the discussions, only two initially joined: News Corporation, which as the new owner of Mys.p.a.ce saw YouTube as a direct compet.i.tor, and NBC Universal. The new platform was named Hulu, and it would look very much like television on the Internet, with full-length programs from the two networks interrupted by commercials in the old-fashioned way.

Sumner Redstone declined to join Hulu; Viacom"s content, he believed, appealed to younger viewers than Fox"s or NBC"s, and in any case, he and Daumann wanted control over where their content appeared. CBS, which was split off from Viacom but which did not lose Redstone as its controlling shareholder, came close to a licensing agreement with YouTube, but pulled back. Redstone didn"t want CBS to make such a deal; nor did its network peers. Like Redstone, CEO Les Moonves said CBS would not agree to display its programs exclusively on Hulu. "The issue of the moment is whether Google is going to dominate advertising," observed private equity investor Steven Rattner, then managing princ.i.p.al of the Quadrangle Group, which invests in media companies. "The airlines always kept McDonnell Douglas in business because they did not want to depend on just Boeing. Everybody wants at least two suppliers."

Still, CBS established a more cooperative relationship with YouTube and Google. This reflected, at least in part, the different nature of the two businesses. As a cable program and movie supplier, Viacom got the bulk of its revenues not from advertising but from the license fees cable distributors like Comcast and Time Warner paid them. Unless YouTube offered a reasonable license fee, Viacom risked blowing up its cable business model. CBS, a broadcaster reliant on advertising as its sole source of revenue, saw YouTube as a worthwhile experiment to tap into new revenues that might replenish the revenue CBS lost as its audience shrank.

CBS also had a more a.s.sertive digital strategy. Les Moonves decided that he would not treat the Internet as a single distribution channel that his network could control; instead he would spread CBS content on over two hundred Web sites. He had to overcome resistance from the traditionalists in CBS. Jeff f.a.ger remembers the contentious 2005 meeting he attended. f.a.ger is the executive producer of 60 Minutes, Minutes, the longest running program in evening television history, and he wanted to expand his audience. He had worked out a proposed agreement with Yahoo that would give the Internet site a total of sixteen clips, up to two minutes long, from the CBS show each week. Yahoo would sell advertising against these clips. f.a.ger pitched the deal to a roomful of CBS executives. He a.s.sured them CBS News would retain control of the editing process, that he would have a staff of seven to edit these pieces, that Yahoo had agreed to pay half this staff cost and to split the advertising revenues. "I argued that we needed to reach a larger and a younger audience and to find new revenue sources," he recalled. The average age of his Sunday evening audience was approaching sixty. "The resistance was: "Why do we want to give one of our best brands to the compet.i.tion?"" They would be diluting the exclusivity of a venerable CBS program found nowhere else. CBS executives wrongly thought of the Internet as just another distribution platform, and anyone airing 60 the longest running program in evening television history, and he wanted to expand his audience. He had worked out a proposed agreement with Yahoo that would give the Internet site a total of sixteen clips, up to two minutes long, from the CBS show each week. Yahoo would sell advertising against these clips. f.a.ger pitched the deal to a roomful of CBS executives. He a.s.sured them CBS News would retain control of the editing process, that he would have a staff of seven to edit these pieces, that Yahoo had agreed to pay half this staff cost and to split the advertising revenues. "I argued that we needed to reach a larger and a younger audience and to find new revenue sources," he recalled. The average age of his Sunday evening audience was approaching sixty. "The resistance was: "Why do we want to give one of our best brands to the compet.i.tion?"" They would be diluting the exclusivity of a venerable CBS program found nowhere else. CBS executives wrongly thought of the Internet as just another distribution platform, and anyone airing 60 Minutes Minutes should pay big bucks. They did not see the Internet as a transformative medium, a medium with thousands of Web sites that could serve as CBS platforms, an interactive platform, a promotional platform that would lure younger viewers to CBS. "The sentiment in the room was not to do it," said f.a.ger. should pay big bucks. They did not see the Internet as a transformative medium, a medium with thousands of Web sites that could serve as CBS platforms, an interactive platform, a promotional platform that would lure younger viewers to CBS. "The sentiment in the room was not to do it," said f.a.ger.

But Les Moonves intervened. "Look at all the new people we can introduce to 60 Minutes," Minutes," Moonves remembers saying. "And since we don"t syndicate 60 Moonves remembers saying. "And since we don"t syndicate 60 Minutes, Minutes, we are not cannibalizing it. There is no downside for us." That was the decision, and soon 150 million Yahoo visitors would view 60 we are not cannibalizing it. There is no downside for us." That was the decision, and soon 150 million Yahoo visitors would view 60 Minutes Minutes clips each year on Yahoo, far more than the 10 million streamed on clips each year on Yahoo, far more than the 10 million streamed on CBS.com. (Of course, one day 60 Minutes Minutes video streams might produce big bucks, but not yet; the experiment was cancelled in 2008, after producing only one million dollars, to be split annually with Yahoo!) video streams might produce big bucks, but not yet; the experiment was cancelled in 2008, after producing only one million dollars, to be split annually with Yahoo!) Moonves also announced another partnership, with YouTube, in the fall of 2006. CBS would allow the video service to air short-form clips, usually none longer than three minutes, from its entertainment, news, and sports divisions, with CBS and YouTube sharing any advertising revenues. CBS would also become the first network to agree to test a new YouTube technology that would identify its pirated content on YouTube. "We"re pleased to be the first network to strike a major content deal with what is clearly one of the fastest growing new media platforms out there," Moonves declared in the joint press release. Redstone blessed the deal, said a CBS executive, because showing clips of CBS long-form shows was a promotional platform to enhance their value, while showing clips of short riffs from such Viacom programs as The Daily Show With Jon Stewart The Daily Show With Jon Stewart would rob them of value. In the not too distant future, CBS would follow Murdoch"s lead with a major digital acquisition, CNET. would rob them of value. In the not too distant future, CBS would follow Murdoch"s lead with a major digital acquisition, CNET.

CBS"s switch to playing offense coincided with the appointment in 2006 of Quincy Smith as president of CBS Interactive. "I think Quincy is one of the most advanced thinkers in this s.p.a.ce," said David Eun, who was a Time Warner executive before becoming Google"s vice president for strategic partnerships; he now works out of Google"s New York office as their princ.i.p.al negotiator with traditional media companies. Smith"s task, in part, he continued, "is to go back and educate his very smart colleagues that this will not kill their business," because YouTube is not "a destination" that competes with CBS, but rather another platform. The challenge to media companies is to get "their content to where the audience is." Eun credits Moonves: "What he"s decided is that he has to change. He needed someone and he empowered him." Of the geekspeak that gushes from Smith"s mouth, Moonves said, "I understand half of what he"s saying, on a good day! But the important thing is, he understands everything."

SMITH IS PROUD to be called a geek, though this was not what was expected of him when he entered the world. He was born in December 1970 on Manhattan"s Upper East Side. His father, Jonathan Leslie Smith, became the youngest partner at Lehman Brothers; his mother, Elinor Doolit tle Johnston, was a Bennington College graduate and the editor of Art + Auction Magazine. Auction Magazine. A computer was Quincy"s childhood pet. A computer was Quincy"s childhood pet.

He enjoyed a privileged childhood-Collegiate, Phillips Exeter, Yale philosophy major-that suggested a life on Wall Street, or the CIA. His ponytail did not. He cut it, though, for his first job as an a.n.a.lyst for Morgan Stanley"s Capital Markets group, in 1994. But computers and technology were what really inspired him. He moved the next year to the technology group in Menlo Park, under Frank Quattrone. He worked on the 1995 Netscape IPO, going on the road with cofounders Marc Andreessen and Jim Clark, and with CEO James Barksdale. In October 1995, he joined Netscape as their chief deal maker and Wall Street liaison. He helplessly watched as Microsoft bundled the free Internet Explorer browser in with its dominant operating system, weakening Netscape.

Andreessen"s company was profitable, but Netscape was sold to AOL for $4.2 billion in 1999, where the browser lives as the open-source Firefox. Smith left and joined the Barksdale Group to invest in Internet start-ups.

It took just part of his time, and Omid Kordestani, whom he had worked with at Netscape, tried to lure Smith to Google in 1999. He had several interviews, including one with Page and Brin, but was rejected. "I didn"t graduate with a Ph.D.! I didn"t even go to business school," he said. "The coach"-Bill Campbell-"wanted me to join a couple" of the companies he was advising, but Smith stayed with the Barksdale Group until early 2003, when he joined Allen & Company. "The day I joined," remembers Smith, "the coach stopped talking to me. He said, "I have no respect for investment bankers.""

For the next three and a half years Smith labored on a number of big deals, including the Google IPO. He was introduced by Andreessen to his future wife, Kat Hantas, who coowned a small Hollywood production company with the woman who was then dating Andreessen. In the summer of 2006, Les Moonves called and Smith began to do advisory work for CBS. Moonves said he wanted to hire a new digital executive to move more au daciously into the digital s.p.a.ce. Smith funneled people in to see Moonves. After each interview, he said, "I felt the harpoon." Moonves wasn"t satisfied with the candidates. He entreated Smith to take the job. The clinching argument came, Smith said, when Moonves told him: "You know, I used to be an actor. One night I was going to a premiere and my

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