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ON THE TECHNOLOGY INDUSTRY, EXPERIENCED DIRECTORS, AND CONFLICTS:

Carl Icahn 2014: “Marc Andreessen and Scott Cook… are two of the most respected, accomplished and value-driven leaders in Silicon Valley. And I sort of agree. I think they’re respected. I think they’re accomplished. And I agree mostly they’re value-driven leaders. The trouble is they’re value-driver leaders for themselves, not for eBay and not for the shareholders they have a fiduciary obligation to.” (e)

Carl Icahn 2011: “Potential conflicts of interest are by no means rare, though, and seem to be especially frequent among technology and biotech companies.  Each of those fields tends to be intensely technical by nature, and corporations involved in those areas often find that it is useful to have a board of directors with significant experience in those areas, which means that at least minor conflicts of interest often arise. (1)

ON VENTURE CAPITALISTS AND CONFLICTS:

Carl Icahn 2014: “eBay states the conflicts regarding Mr. Andreessen’s investments are acceptable. Mr. Andreessen has funded… and advises no less than five competitors, four of which directly compete with PayPal – all the while potentially having access to nonpublic information regarding PayPal’s operating performance… We do not consider [Andreessen’s actions] even close to satisfying the ‘world-class’ standards that eBay claims to have established for its board.” (c)

Carl Icahn 2011: “These [technology] firms are frequently funded by venture capital; the venture capital firms invariably put their own directors on the boards; and those directors or their firms often have direct and material conflicts of interest because they usually fund/control potentially competitive corporations as well.” (1)

ON CONFLICTS, DISCLOSURE, AND RECUSAL:

Carl Icahn 2014: “However, Mr. Andreessen attempted to defend himself, telling the Wall Street Journal that ‘he recuses himself from boardroom discussions that could involve companies his firm is backing.” Seriously? Mr. Andreessen expects eBay stockholders to be comforted by the fact that he self-polices himself? Excuse me if I do not find that nearly sufficient.” (a)

Carl Icahn 2011: “The first, and perhaps most important measure is that the existence of the potential conflict needs to be disclosed by the director to the board.” (1)

Carl Icahn 2011: “The biopharma industry has standard practices on how to deal with potential director conflicts regarding business development opportunities.  Directors simply recuse themselves in the event of a vote or decision that may present a conflict.” (2)

ON SERVICE ON MULTIPLE BOARDS AND RECUSAL:

Carl Icahn 2014: “eBay has previously stated that Mr. Cook’s company, Intuit, and PayPal are not competitors. However, to state they are not competitors is absurd…. In our opinion, having Mr. Cook on the board while planning PayPal’s future is akin to having Pete Carroll, coach of the Seattle Seahawks, sitting in when the Denver Broncos were constructing their game plan for the Super Bowl.” (c)

Carl Icahn 2011: “The benefit of drawing upon knowledge and experience from shared, collective service on multiple biopharma boards heavily outweighs the potential conflict in these rare situations which are easily managed through recusal.” (2)

Carl Icahn 2011: “The directors should determine, on a case by case basis, whether they should wall themselves off from conflicted directors when making a decision with respect to a conflicted transaction.” (1)

ON BEST PRACTICES FOR DEALING WITH CONFLICTS:

Carl Icahn 2014: “The point is not whether processes may have been put in place or whether directors may have recused themselves from portions of meetings… The point is that because of the multiple hats they wear and a number of their actions, we believe that eBay directors Andreessen and Cook have clear conflicts which call into question whether they can adequately fulfill the duty of loyalty that every director owes to ALL eBay stockholders.” (b)

Carl Icahn 2011: “A general set of ‘best practices’ has evolved for dealing with [conflicts of interest],” and can “be dealt with by the methods used by thousands of other public and private corporations” and handled “with professionalism and very little fuss and bother…” (1)

ON THE UBIQUITY OF SUCH CONFLICTS:

Carl Icahn 2014: “And – and they say that – and they go and then they – and they say that Mr. Andreessen, Scott Cook, extraordinary insight, expertise, leadership, which is scrupulous in its governance practices. And eBay’s board – eBay’s board – hey, I don’t even blame Andreessen and Cook… Scrupulous in governance practices and fully transparent with regard to its directors. Hey, if they’re fully transparent, I guess these guys are sort of blind. I just don’t understand how – how people – how – how they get away with it.” (e)

Carl Icahn 2011: “Given the ubiquity of such conflicts, as well as similar situations in which directors or senior management might have conflicting interests, a general set of ‘best practices’ has evolved for dealing with them.” (1)

ON THE ROUTINE NATURE OF SUCH CONFLICTS:

Carl Icahn 2014: “During Mr. Andreessen’s time on the eBay Board – a time when he has been privy to nonpublic eBay Board information – he has made investments in and actively advised, no less than five direct competitors of eBay… How can Mr. Donahoe and the eBay Board allow Mr. Andreessen to advise these competitors while he simultaneously possesses not only nonpublic eBay Board information but also intimate proprietary information about PayPal’s operations?” (d)

Carl Icahn 2011: “To the extent these potential conflicts of interest actually exist, they are routine matters with which corporate boards of directors normally deal and pose no significant issues.” (1)

ON THE ROUTINE NATURE OF INFORMATION-SHARING CONCERNS:

Carl Icahn 2014: “Does eBay director Marc Andreessen understand that if he entered into a confidentiality agreement with a third party that prevented him from fully discharging the duties he owed to eBay – that the mere act of entering into such an agreement may have been a breach of duty in and of itself?” (a)

Carl Icahn 2011: “An appropriate conflicts and recusal policy similarly could ameliorate any information-sharing concerns that might theoretically arise from interlocking board members.” (1)

SOURCES:
(a) http://www.shareholderssquaretable.com/ebay_letter_5/
(b) http://www.shareholderssquaretable.com/ebay_letter_4/
(c) http://www.shareholderssquaretable.com/ebay_letter_3/
(d) http://www.shareholderssquaretable.com/open-letter-to-ebay-stockholders/
(e) Bloomberg Feb 24 television interview with Carl Icahn

(1) Mr. Icahn and his affiliates filed two opinions of legal counsel as supporting proxy materials in his proxy fight for Forest Laboratories:

Letter from Ashby & Geddes, Counsel to Icahn Capital LP, 8/7/2011
http://www.sec.gov/Archives/edgar/data/38074/000092847511000188/frxdfan14a081111.txt

Letter from Arnold & Porter LLP, Antitrust Counsel to Icahn Capital LP, 8/7/2011
http://www.sec.gov/Archives/edgar/data/38074/000092847511000179/frxdfan14a080811ap.txt

(2) Open Letter from the Icahn Group to Forest Laboratories Shareholders, 4/7/ 2011
http://www.sec.gov/Archives/edgar/data/38074/000092847511000174/frxdfan14a080811.txt

Important Additional Information

eBay Inc., its directors and certain of its executive officers are participants in the solicitation of proxies from stockholders in connection with eBay’s 2014 Annual Meeting of Stockholders.  eBay intends to file a proxy statement and WHITE proxy card with the U.S. Securities and Exchange Commission (the “SEC”) in connection with such solicitation.  EBAY STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ ANY SUCH PROXY STATEMENT (INCLUDING ANY AMENDMENTS AND SUPPLEMENTS) AND ACCOMPANYING WHITE PROXY CARD WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION.

Information regarding the names of eBay’s directors and executive officers and their respective interests in eBay by security holdings or otherwise is set forth in eBay’s proxy statement for the 2013 Annual Meeting of Stockholders, filed with the SEC on March 18, 2013.  To the extent holdings of such participants in eBay’s securities have changed since the amounts described in the 2013 proxy statement, such changes have been reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC. Additional information can also be found in eBay’s Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on January 31, 2014.  

These documents, including any proxy statement (and amendments or supplements thereto) and other documents filed by eBay with the SEC, are available for no charge at the SEC’s website at http://www.sec.gov and at eBay’s investor relations website at http://investor.ebayinc.com.  Copies may also be obtained by contacting eBay Investor Relations by mail at 2065 Hamilton Avenue, San Jose, California 95125 or by telephone at 866-696-3229.

According to Carl Icahn, venture capital board members are fine for Carl Icahn in 2011 but not fine for eBay in 2014.

When Carl Icahn’s board nominees’ business activities created conflicts, Mr. Icahn has argued forcefully that a board should and could manage those conflicts if his nominees were elected by shareholders.

Contrary to Mr. Icahn’s theory today – that a venture capital director cannot be “trusted to objectively advise” a board if he or she has potential conflicts – Mr. Icahn, in 2011, provided the following information to shareholders of another company, Forest Laboratories, in response to questions raised about whether his director nominees were conflicted:

In defense of his own nominees: “Potential conflicts of interest are by no means rare, though, and seem to be especially frequent among technology and biotech companies.  Each of those fields tends to be intensely technical by nature, and corporations involved in those areas often find that it is useful to have a board of directors with significant experience in those areas, which means that at least minor conflicts of interest often arise.  In addition, these firms are frequently funded by venture capital; the venture capital firms invariably put their own directors on the boards; and those directors or their firms often have direct and material conflicts of interest because they usually fund/control potentially competitive corporations as well.” (1)

On his own nominees’ potential conflicts: “The biopharma industry has standard practices on how to deal with potential director conflicts regarding business development opportunities.  Directors simply recuse themselves in the event of a vote or decision that may present a conflict.  The benefit of drawing upon knowledge and experience from shared, collective service on multiple biopharma boards heavily outweighs the potential conflict in these rare situations which are easily managed through recusal.” (2)

Mr. Icahn also approved walling off directors as a sufficient way to address a conflict: “A general set of ‘best practices’ has evolved for dealing with [conflicts of interest],” and can “be dealt with by the methods used by thousands of other public and private corporations” and handled “with professionalism and very little fuss and bother… Given the ubiquity of such conflicts, as well as similar situations in which directors or senior management might have conflicting interests, a general set of ‘best practices’ has evolved for dealing with them. The first, and perhaps most important measure is that the existence of the potential conflict needs to be disclosed by the director to the board.  Here, of course, that has already been done. Second, the directors should determine, on a case by case basis, whether they should wall themselves off from conflicted directors when making a decision with respect to a conflicted transaction.” (1)

“To the extent these potential conflicts of interest actually exist, they are routine matters with which corporate boards of directors normally deal and pose no significant issues.” (1)

“An appropriate conflicts and recusal policy similarly could ameliorate any information-sharing concerns that might theoretically arise from interlocking board members.” (1)

Why does Carl Icahn in 2014 think that Carl Icahn in 2011 was so obviously and blatantly engaged in terrible corporate governance?

Sources:

(1) Mr. Icahn and his affiliates filed two opinions of legal counsel as supporting proxy materials in his proxy fight for Forest Laboratories:

Letter from Ashby & Geddes, Counsel to Icahn Capital LP, 8/7/2011
http://www.sec.gov/Archives/edgar/data/38074/000092847511000188/frxdfan14a081111.txt

Letter from Arnold & Porter LLP, Antitrust Counsel to Icahn Capital LP, 8/7/2011
http://www.sec.gov/Archives/edgar/data/38074/000092847511000179/frxdfan14a080811ap.txt

2) Open Letter from the Icahn Group to Forest Laboratories Shareholders, 4/7/ 2011
http://www.sec.gov/Archives/edgar/data/38074/000092847511000174/frxdfan14a080811.txt

Important Additional Information
eBay Inc., its directors and certain of its executive officers are participants in the solicitation of proxies from stockholders in connection with eBay’s 2014 Annual Meeting of Stockholders.  eBay intends to file a proxy statement and WHITE proxy card with the U.S. Securities and Exchange Commission (the “SEC”) in connection with such solicitation.  EBAY STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ ANY SUCH PROXY STATEMENT (INCLUDING ANY AMENDMENTS AND SUPPLEMENTS) AND ACCOMPANYING WHITE PROXY CARD WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION.

Information regarding the names of eBay’s directors and executive officers and their respective interests in eBay by security holdings or otherwise is set forth in eBay’s proxy statement for the 2013 Annual Meeting of Stockholders, filed with the SEC on March 18, 2013.  To the extent holdings of such participants in eBay’s securities have changed since the amounts described in the 2013 proxy statement, such changes have been reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC. Additional information can also be found in eBay’s Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on January 31, 2014.  

These documents, including any proxy statement (and amendments or supplements thereto) and other documents filed by eBay with the SEC, are available for no charge at the SEC’s website at http://www.sec.gov and at eBay’s investor relations website at http://investor.ebayinc.com.  Copies may also be obtained by contacting eBay Investor Relations by mail at 2065 Hamilton Avenue, San Jose, California 95125 or by telephone at 866-696-3229.

False and misleading accusations have been made against eBay and against me in my role as an eBay director. This post provides my perspective on those accusations and their surrounding context.

On the accusations:

I dispute all accusations that I have violated any of my duties to eBay shareholders.

Specifically:

* Throughout the eBay board’s process of divesting Skype, I fully disclosed my potential interest and recused myself from all deliberations on the transaction, including all discussions, negotiations, and decisions. I was uninvolved in eBay’s decision to spin off Skype and in eBay’s decision to choose to partner with the Silver Lake syndicate.

* eBay’s retained ownership in the Skype spinoff was 30% vs. Andreessen Horowitz’s approximately 3%. That much larger ownership gave eBay a far bigger role in decision making on Skype after the spinoff than Andreessen Horowitz, as well as a far bigger economic payoff on the sale to Microsoft.

* Subsequent to the Skype transaction, I was re-elected to the eBay board in 2012 with virtually unanimous support — 99.7% of votes — of eBay shareholders. The Skype transaction received a high degree of public scrutiny when it happened; all of the facts around my role in the Skype transaction were fully public at that time; eBay has a very sophisticated body of shareholders; and if any of them saw any problem with my conduct around the Skype transaction, I am confident that they would have brought it up by 2012.

* Andreessen Horowitz’s minority investment in Fanatics was made over a year after eBay divested that business as a part of eBay’s acquisition of GSI Commerce; there was no possible conflict at that point. Further, there was no contemplation of Andreessen Horowitz investing in Fanatics at any time during eBay’s negotiation and purchase of GSI Commerce or eBay’s divestiture of Fanatics.

* I do not serve on the board of any company with any significant competitive overlap with eBay.

* I disclose any situation where I believe I may have a potential conflict and recuse myself from any eBay board deliberation when I believe I may have a potential conflict due to an investment in another company.

On the context:

Directors of all companies owe shareholders several duties, including the duty of loyalty. This duty focuses on avoidance or appropriate handling of conflicts of interest, and requires fair dealing by directors involved in transactions that could result in personal gain or financial conflicts with the company. To strengthen this duty and to further protect public company shareholders from potential conflicts of interest, directors are restricted in several different ways. These restrictions include:

(1) Prohibitions on one director serving on multiple company boards when those companies have any significant competitive overlap.

(2) Requirements that a director of a company disclose potential conflicts and recuse him/herself from board discussions and decisions when that director has potential conflicts, such as but not limited to an investment stake in another company.

(3) Restrictions on use of company confidential information by any director for any purpose other than that company’s benefit.

These protections are enforced by several layers of oversight and accountability, including:

(a) Each company’s legal counsel and broader board of directors.

(b) Regulatory agencies such as the SEC, as well as stock exchange rules.

(c) Shareholder votes, in which shareholders can vote directors in whom they lose confidence off the board.

(d) Shareholder litigation, which is very common and which is omnipresent on directors’ minds during board meetings.

All of these protections apply to directors of public companies in every industry and every field, including directors who are venture capitalists, hedge fund activists, private equity investors, operating executives, and independent board members.

Some people have floated a theory that today’s technology industry is more prone to potential conflicts because of the rapidly shifting nature of software. I don’t think that’s true. For example, in prior decades the conglomerate business model, in which companies would choose to acquire and operate in many unrelated industries, was more common — a dynamic that would easily lead to unpredictable potential conflicts among boards and directors.

Some people have also floated a theory that venture capitalists are more prone to potential conflicts than other kinds of directors due to their investments in multiple companies at once. I also don’t think that’s true. For example, activist hedge fund managers also tend to hold equity stakes in many companies at the same time, creating the exact same kind of potential conflict.

Important Additional Information

eBay Inc., its directors and certain of its executive officers are participants in the solicitation of proxies from stockholders in connection with eBay’s 2014 Annual Meeting of Stockholders. eBay intends to file a proxy statement and WHITE proxy card with the U.S. Securities and Exchange Commission (the “SEC”) in connection with such solicitation. EBAY STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ ANY SUCH PROXY STATEMENT (INCLUDING ANY AMENDMENTS AND SUPPLEMENTS) AND ACCOMPANYING WHITE PROXY CARD WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION.

Information regarding the names of eBay’s directors and executive officers and their respective interests in eBay by security holdings or otherwise is set forth in eBay’s proxy statement for the 2013 Annual Meeting of Stockholders, filed with the SEC on March 18, 2013. To the extent holdings of such participants in eBay’s securities have changed since the amounts described in the 2013 proxy statement, such changes have been reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC. Additional information can also be found in eBay’s Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on January 31, 2014.

These documents, including any proxy statement (and amendments or supplements thereto) and other documents filed by eBay with the SEC, are available for no charge at the SEC’s website at http://www.sec.gov and at eBay’s investor relations website at http://investor.ebayinc.com. Copies may also be obtained by contacting eBay Investor Relations by mail at 2065 Hamilton Avenue, San Jose, California 95125 or by telephone at 866-696-3229.

I am more bullish about the future of the news industry over the next 20 years than almost anyone I know. You are going to see it grow 10X to 100X from where it is today. That is my starting point for any discussion about the future of journalism. Here’s why I believe it, and how we will get there.

Journalism has changed

There has been a fascinating change in the traditional journalistic press over the last several years. Take corrections as an example. It used to be that corrections to printed news stories were a really big deal. There was a high bar to get a correction accepted in a newspaper or magazine. The story as printed was the permanent record.

That was then.

Now, even top print newspapers and magazines frequently revise stories online, sometimes dozens of times, often without tracking changes or acknowledging a change has been made. There are two ways to view this. The glass-half-full-view is that stories get better and better over time, vectoring ever closer to the truth. As a result, overall accuracy goes up over time. That is good for publications and journalists, and also good for their subjects.

The glass-half-empty-view is that the quality bar for an initial post can be lower. Sloppy stories get published since they can always be corrected later, as much or as often as needed. This gets us into deterministic “truth” versus probabilistic “truth” territory. In other words, from: Here it is, take it or leave it, to: Here it is, subject to arbitrary ongoing revision.

For better or worse (and maybe both), print journalism is converging in technique and quality towards blogs and Wikipedia. Ed Bott fully decoded this with his original NSA PRISM news stories. Given that change, and the easy slide into probabilistic “truth,” I am very interested to see how Journalism with a capital J can maintain its reputation for truth and accuracy versus upstart blogs and Wikipedia. For Journalism  – big J – the stakes  are very high if that reputation is lost.

But it may be that all journalism wins. Maybe we are entering into a new golden age of journalism, and we just haven’t recognized it yet.  We can have the best of all worlds, with both accuracy rising, and stories that hew closer to truth.

The news business should be run like a business

The news business is a business like any business. It can and should be analyzed and run like a business. Thinking of news as a business is not only NOT bad for quality, objective journalism, but is PRO quality, objective journalism. A healthy business is the foundation for being able to build high quality products, and to do so sustainably. That includes journalism. Analyzed as a business, the news industry is going through a fundamental restructuring and transformation, for worse and for better.

The main change is that news businesses from 1946-2005 were mostly monopolies and oligopolies. Now they aren’t. The monopoly/oligopoly structure of newspapers, magazines, and broadcast TV news pre-‘05 meant restricted choice and overly high prices. In other words, the key to the old businesses was control of distribution, way more than anyone ever wanted to admit. That’s wonderful while it lasts, but wrenching when that control goes away.

The end of monopolistic control doesn’t mean that great news businesses can’t get built in highly competitive markets. They just get built differently than before.

Now, with everyone on Internet, three things are happening simultaneously:

1. Distribution is going from locked down to completely open, anyone can create and distribute. There is no monetary premium for control of distribution.

2. Formerly separate industries are colliding on the Internet. It’s newspaper vs. magazine vs. broadcast TV vs. cable TV vs. wire service. Now they all compete.

Both No. 1 and No. 2 drive prices down.

3. At the same time, the market size is dramatically expanding—many more people consume news now vs. 10 or 20 years ago. Many more still will consume news in the next 10 to 20 years. Volume is being driven up, and that is a big, big deal.

Right now everyone is obsessed with slumping prices, but ultimately, the most important dynamic is No. 3 – increasing volume. Here’s why: Market size equals destiny. The big opportunity for the news industry in the next five to 10 years is to increase its market size 100x AND drop prices 10X. Become larger and much more important in the process.

How to make money

Some of the best news about the news business is the gigantic expansion of the addressable market, a function of the rise of the developing world plus the Internet. So how big is it? If you extrapolate from the number of smartphones globally, the total addressable market for news by 2020 is around 5 billion people worldwide. However, we all have to get more sophisticated about defining and segmenting markets. It is critical to really understand the who, where, when, and why to serve that massive market effectively.

For example, many evolving markets are seeing the “death of the middle.” The winners in these markets either offer the broadest breadth or the deepest depth. In evolving markets neither the broadest nor deepest is in trouble, but the middle market is withering. So it is logical to expect the big winners in the news business to either be the broadest or the deepest: To go maximum mass, or maximum specific.

With that as a backdrop, here are eight obvious business models for news now, and in the future. This isn’t a pick one model and stick with it prospect, news businesses should mix and match as relevant.

Advertising: Advertising is still central for many news businesses. But they need to get out of the “race to bottom” dynamic of bad content, bad advertisers, and bad ads. Quality journalism businesses need to either take responsibility for their own high-quality advertisers and ads, or work with partners who do. There is no excuse for crappy network-served teeth whitening come-ons and one weird trick ads served against high quality content. Disastrous.

Subscriptions: Many consumers pay money for things they value much of the time. If they’re unwilling to pay for a news product, it begs the question, are they really valuing it?

Premium content: A paid tier on top of free, ad-supported content. This goes after the high-end news junkies reading the likes of Bloomberg & Reuters. It will work for more and more new outlets. Again, value equals people paying money for something.

Conferences and events: Bits are increasingly abundant, and human presence is becoming scarce. So charge for that scarcity, and use bits to drive demand for human presence.

Cross-media: Tina Brown was right but too early with Talk. News is a key source of material for books, TV, and film—which happen also to be growth businesses.

Crowdfunding: This is a GIGANTIC opportunity especially for investigative journalism. Match people with interest in a topic to the reporters on the ground telling the stories. Click = vote = $. (Helpful hint: Start today with Crowdtilt. Easy-as-pie.)

Bitcoin for micropayments: Easy to get started now (checkout Coinbase). As the consumer use of Bitcoin scales up for transactions, it becomes easy to ask for small amounts of money on a per-story or per-view basis with low or no fees. (A lot more of my thinking on the subject of Bitcoin here.)

Philanthropy: Today the examples are Pro Publica and First Look Media, tomorrow the could be many more examples. There is around $300 billion per year in philanthropic activity in the U.S. alone. It’s WAY underutilized in the news business.

If we look at the specific example of investigative journalism, believed to be least commercially viable type or news, you start to see how these models can play together. The so-called “investigative journalism problem” is straightforward: How does it get funded in this new world? I have two responses.

The first is that the total global expense budget of all investigative journalism is tiny —  in the neighborhood of tens of millions of dollars annually. That’s the good news, small money problems are easier to solve than big money nightmares.

How we might solve this small money problem is via a combination of crowdfunding, philanthropy and subsidization by otherwise healthy news businesses. The combination should easily cover the global tab of investigative journalism, and even increase the money available.  The same solution can address the “Baghdad bureau problem.” Conflict-zone reporting of all kinds is super-important, and relative to other kinds of reporting, expensive, but again, it’s not much money in total.

A last thought on business models. As my friend Jim Barksdale says, “There are two ways to make money in business: You can unbundle, or you can bundle.” Or, rebundle. We already see the rise of new kinds of news aggregators in the wake of the great unbundling of newspapers and magazines. This is another thread to pull on.

As business models get re-engineered and this brave new world of news comes to pass, there is this fear that oceans of crap will drive out quality content. I don’t think that happens. In fact, I believe the opposite will occur.

On the Internet, there is no limitation to the number of outlets or voices in the news chorus. Therefore, quality can easily coexist with crap. All can thrive in their respective markets. And, the more noise, confusion, and crap — the more there is an increase of, and corresponding need for, trusted guides, respected experts, and quality brands. Remember: Most great businesses are not big businesses. This market is plenty big enough for thousands of high-margin, small to medium-sized businesses.

Growing fast with quality. People and companies that are doing it right.

The following are some examples (in alphabetical order). There are many others, and I would encourage additions. Not every experiment will work, and maybe even some of these won’t work. That’s not the point. Experiments are needed for creation, and ultimately success – especially in the news business.

AnandTech: Monstrously competent technical coverage of the computing industry. Anand’s team provides unprecedented depth and detail. As a result, it wields big influence in industry.

The Atlantic: Bob Cohn is taking a long-lived and respected brand, and blowing it out worldwide. The Atlantic is a daily presence now, and has a growing audience thanks to digital distribution.

Buzzfeed: Jonah Peretti built the Buzzfeed fire hose with listicles. He’s leveraging that to do amazing in-depth long-form journalism. And growing like a banshee.

The Guardian: The Guardian is a  particularly great example of print crossing into online. Thanks to digital the Guardian brand is more global and reaches more readers than ever before.

Politico: The political junkie’s favorite place on the Internet. Politico has taken over as the first thing D.C. reads every morning. It demonstrates the virtues of aggressive focus online.

Search Engine Land: Danny Sullivan has created a place for all the search news, all the time. He’s leveraged all those interesting bits into live events and even lead generation. It’s  a new model for a digital news business.

The Verge: Josh Topolsky and his crew provide full coverage of tech industry news. It’s become a daily must-read for both in-the weeds tech folks and consumer audiences. Expect Verge and its parent Vox to be 10X larger in the next five years.

Vice: From online Do’s and Don’ts, and now to the Vice media empire. Vice shifted from print to rapid growth and increasing presence via online stories and especially video.

Wirecutter: A mini gadget news empire skippered by Brian Lam from various beachside locales. Lam is pioneering a new style of tech journalism, a side effect of which is great data.

Wired: Scott Dadich and the Wired gang are blending print and digital with amazing breadth and depth. More than half of revenue comes from digital, and it’s growing.

I’ll also highlight three personal investments of mine, all growing fast with quality:

Talking Points Memo led by Josh Marshall. Henry Blodget and Business Insider. Sarah Lacy and PandoDaily.

A hat tip to the new entrants from tech and their massive investment in the future of news.

Jeff Bezos and his $250 million purchase of The Washington Post. Pierre Omidyar and his $250 million commitment First Look Media, and their first digital magazine The Intercept.

And finally, The New York Times.

It’s great to great to see The Times has evidently cracked code on the transition from print to digital after extremely hard effort.

What’s holding the future of news back

There are some artifacts and ideas in the journalism business that arguably are  counterproductive to the growth of both quality journalism and quality businesses. It’s why some organizations are finding it so hard to move forward.

An obvious one is the bloated cost structure left over from the news industry’s monopoly/oligopoly days. Nobody promised every news outfit a shiny headquarters tower, big expense accounts, and lots of secretaries!

Unions and pensions are another holdover. Both were useful once, but now impose a structural rigidity in a rapidly changing environment. They make it hard to respond to a changing financial environment and to nimbler competition. The better model for incentivizing employees is sharing equity in the company.

Those are the key structural issues holding some news businesses back, but there is an approach to how the news is created that also prevents progress. It’s the notion that “objectivity” is the only model worth pursuing.

The practice of  gathering all sides of an issue, and keeping an editorial voice out of it is still relevant for some, but the broad journalism opportunity includes many variations of subjectivity. Pre-World War II, subjectivity was the dominant model in the news business – lots of points of view battling it out in marketplace of ideas. As with people and opinions, there were many approaches to writing or broadcasting  on the same topic.

My take is that the rise of objectivity journalism post-World War II was an artifact of the new monopoly/oligopoly structures news organizations had constructed for themselves. Introducing so-called objective news coverage was necessary to ward off antitrust allegations, and ultimately, reporters embraced it. So it stuck.

But the objective approach is only one way to tell stories and get at truth. Many stories don’t have “two sides.” Indeed, presenting an event or an issue with a point of view can have even more impact, and reach an audience otherwise left out of the conversation.

The good news

The opportunity for leadership in the journalism business, just happens to be same leadership opportunity as in all businesses. Leaders just need to start leading.

One start would be to tear down, or at least modify the “Chinese wall” between content and the business side. No other non-monopoly industry lets product creators off the hook on how the business works.

Before the journalistic purists burst a fountain pen, consider that there are intermediate points between “holier than holy” and “hopelessly corrupt” when it comes to editorial content. Paying attention to the business doesn’t equal warped coverage. It does equal a growing business. There are many businesses that balance incentives and conflicts all day long. Those businesses are able to hold the line on quality, and make great products. The point is, there isn’t just one way, but ought to be many ways to skin the cat in news.

All of this requires abandoning the past, something that admittedly is very hard but necessary to move forward. Today’s news organizations are spending 90% of their effort and resources on playing defense. They are protecting the old artifacts and business model, rather than going on the offense and making the future. Even newspapers and other media outlets that are just now making it across the digital chasm would be much better off today if leadership had shifted resources and focus harder and sooner. Without a strong offense, and a view forward rather than back, a bad result is inevitable in the long run.

The best approach is to think like a 100% owner of your company with long-term time horizon. Then you work backward to the present and see what makes sense and what remains. Versus, here is what we have now, how do we carry it forward?

That is a tough exercise, and an even tougher mind shift. As we have already seen in the demise of scads of newspapers and other periodicals, not every news organization will make it. And that is OK. Further consolidation will be required. The U.S. alone has 15 full-scale national news organizations, plus more from international markets and all the online news organizations cropping up, That’s too many general news outfits.

The good news is those that would survive and thrive are in control of their own destiny. The challenges and opportunities that these news businesses face can be rethought, addressed, and fixed. It’s similar to what any successful business goes through. The guidelines and the characteristics for winning are the same.

It requires the following.

Vision: The difference between vision and hallucination is others can see vision. It is critical to articulate a bright future with clarity that everyone can see.

Scrappiness: Tough challenges call for resourcefulness and pragmatism. You need to stay close to the ground, wallowing in every detail and all over any opportunity that arises.

Experimentation: You may not have all the right answers up front, but running many experiments changes the battle for the right way forward from arguments to tests. You get data, which leads to correctness and ultimately finding the right answers.

Adaptability: Ask yourself, would you rather be right or successful? That needs to be top of mind at all times because times change and we change. You want strong views weakly held.

Focus: Once you gain clarity from experiments and adaptation, then it’s time to focus on a small number of ultra-clear goals. When those are defined then it’s all-hands-on-deck.

Deferral of gratification: You need the stomach (and resources!) to reject near-term rewards for enduring success. In journalism this means refusing to participate in the race to the bottom.

An entrepreneurial mindset: This is true both for new companies and existing companies. It’s a bit of a mantra. We own the company. We make the business. We control our future. It’s on us.

Remember, I am very bullish on the future of the news business. But as Tommy Lasorda said:  “Nobody said this fucking job would be all that fucking easy.” But while hard, it can be done, and it is worth doing.

I’m very excited to announce that Balaji S. Srinivasan is joining Andreessen Horowitz as our newest General Partner.

Balaji is both an entrepreneur and an academic. He was the cofounder and CTO of Counsyl, where he developed a new pre-pregnancy genomic test for a variety of heritable diseases.

Counsyl’s test won the Wall Street Journal’s Innovation Award for Medicine, was named one of Scientific American’s Top 10 World Changing Ideas, and was the basis for Balaji’s recent MIT TR35 award. Needless to say, genomics is a very technically challenging area; his acceptance speech discusses some of the many issues they needed to tackle, from DNA sequencing to robotics to insurance claims processing. Counsyl has quickly become one of the largest clinical genome centers in the world, with their technology now used in ~4% of American pregnancies. Widely adopted by women’s health groups, their assay has made it much more affordable for minorities to do preventive screening for diseases like Sickle-Cell Anemia and Beta Thalassemia.

Prior to Counsyl, Balaji obtained BS, MS and PhD degrees in Electrical Engineering and an MS in Chemical Engineering, all from Stanford. He then taught data mining, statistics, and computational biology in the Department of Statistics at Stanford before founding Counsyl. Recently, he taught an online Stanford course on the theory and practice of startups that reached over 125,000 students. He also runs the Stanford Bitcoin Group and advises a number of early stage companies.

Balaji is a big thinker. He recently penned an editorial piece titled Software is Reorganizing the World that discusses how social network relationships formed in the cloud are beginning to catalyze physical migrations and gatherings of increasing scale, thereby reorganizing the world.

As a General Partner, Balaji will be leading investments and joining boards on behalf of a16z. While broadly interested in technology in general, he’s particularly enthusiastic about “real world” applications where digital bits interface with physical atoms and substantive problems, such as quantified self (healthcare), MOOCs/edtech (education), Bitcoin (finance), drones, and 3D printing.