From paidContent.org, Sept. 1, 2009:

Not only was OpenTable a rare venture-backed IPO, it was a modest sized IPO with a $665 million market cap. Those are just the sort of deals that are supposedly impossible in a day of Sarbanes Oxley expenses and thin analyst coverage on smaller deals.

So what made OpenTable brave the markets and what made it the exception? We ask CEO Jeff Jordan that in the third segment of our post-earnings sit down interview.

Unlike a lot of people in the Valley, Jordan doesn’t think the issue is a structural problem between Wall Street and the Valley. He just thinks most private company CEOs don’t want to file.

And, we couldn’t let Jordan go without weighing in on two issues: His thoughts about the state of his former employer eBay and his rebuttal to users like me who hate OpenTable’s dining points system.

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OpenTable was a rare dot com survivor and as such it went through a period of hunkered-down survival mode. One example: The so-called Internet company only had one developer devoted to the diner-facing site for the first nine years of its life, while all the others toiled away on the back-end reservation engine that generates OpenTable’s actual revenues.

When eBay veteran Jeff Jordan took over OpenTable’s CEO reigns two years ago, he set out to change that. Under Jordan’s tenure OpenTable has invested more in the look and feel of the site and invested heavily in international expansion.

What’s next for the company now that it has a stock currency and some $25 million in cash in the bank? We put that question to Jordan in his first interview since the company’s quiet period ended. I started by asking why international expansion was such a priority when so many restaurants in the US don’t yet use the software.

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The official details of the Microsoft-Yahoo deal aren't much different than the leaks I reported last night.

The companies will combine forces in search, with Yahoo taking responsibility for sales and Microsoft taking responsibility for technology. The deal will require complex integration and regulatory review, which will take at least two years to complete.

In the attached video, Colin Gillis of Brigantine Advisors and I discuss the deal and its impact on the industry. Here's a quick summary:

• Conceptually, the idea of Microsoft and Yahoo combining forces is smart. The structure of the deal, however, will make smooth execution very challenging.

• The deal seems significantly worse than expected for Yahoo, as the company will get no money upfront.
• The deal is positive for Microsoft, but largely because Microsoft was nowhere in search without it. Saving the upfront payment is also a help.
• Ironically, the deal will likely be positive for Google, which will now likely benefit from months of purgatory as Microsoft and Yahoo work to clear regulatory scrutiny and then go through the massive challenge of trying to integrate their sales forces and technology. Google itself will also now be able to argue persuasively that there is a big, viable (if discombobulated) competitor in the market.

Again, conceptually, the idea of Microsoft and Yahoo combining forces is smart. Neither alone has enough share of the search market to be a "must buy," and search relevance and pricing improves with scale. Both companies would likely just continue to lose share ad infinitum without a deal, so they have little to lose by working together. And Yahoo will gain some cost savings, at least for a while.

That said, the structure of the deal will make execution very challenging.

See also from The Business Insider:

Microsoft-Yahoo Deal A Logistical And Regulatory Nightmare

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From The Business Insider, July 28, 2009:

Last February, Microsoft offered to buy all of Yahoo for $40 billion.  Last summer, Microsoft offered to buy Yahoo's search business for $1 billion. 

A couple of months ago, Yahoo CEO Carol Bartz said it would take "a boatload" of money to get her to sell Yahoo's search business to Microsoft.  Two weeks ago, a report suggested that the finally-impending deal price tag would be "several billion."

And now the deal is done, says Kara Swisher.  And we know the actual price:

Zero.

As Michael Learmonth reported two days ago, the years-in-the-making Microsoft-Yahoo search deal will just be a revenue-share.

From Yahoo's perspective, it had better be one whopping huge revenue-share.  Or Jerry Yang won't be the only Yahoo who will have lost face and credibility over this thing.

Details to be announced within 24 hours, says Kara.  We're on the edge of our seats.

UPDATE:  AdAge's Michael Learmonth has a lot more interesting details.  The more we learn, the worse it sounds.

Bing will become the default search engine on Yahoo, creating a search player with close to 30% market share of search queries, compared with Google's 65%, according to ComScore data.

One of the most interesting wrinkles involves who takes ownership of search sales: Yahoo is likely to take on exclusive representation of Bing inventory to eliminate channel conflict and complexity for advertisers, but not before both sides unwind the thousands of advertiser relationships and proprietary systems through which many large advertisers buy search ads. Microsoft's AdCenter is expected to be the sales-technology platform. ...

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More coverage from The Business Insider:

• First take on Microsoft-Yahoo deal: awful

From The Business Insider, July 27, 2009:

NEW YORK (AdAge.com) -- Yahoo is close to making Microsoft's Bing its search provider.

The deal, which would make Yahoo a more credible competitor to Google, is likely to be announced this week, and seems likely to be based on a revenue share, not on a big fat check upfront, as some at Yahoo had hoped.

Yahoo's request for an upfront payment (it is said to have asked for several hundred million), in addition to revenue guarantees that would amount to billions over the course of the deal, caused a breakdown last week in the on-again-off-again talks. But they were revived late on Thursday, according to executives with knowledge of the situation.

Execs in Redmond never conceived of the deal as an upfront purchase of Yahoo's search traffic but as a deal in which Yahoo would be compensated from a share of revenue from the sale of search ads. Yahoo would be allowed to sell search ads on Bing.com as well as its own site, giving it more search inventory to sell and making it a bigger player in the search sales front. It would also immediately be able to save millions by not having to maintain its own search infrastructure.

The latest terms of the deal underscore Microsoft's devotion to developing and owning technology vs. selling media. The deal won't make it a bigger seller of online advertising but it would allow it to eliminate a search-technology competitor in Yahoo and consolidate roughly 30% of the search marketplace on its own platform -- a large enough share, CEO Steve Ballmer seems to believe, to dent Google's dominance.

Splitting revenue
In addition to the upfront payment, negotiations grew tense last week over the amount of revenue each side would derive from search-ad clicks...

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Also from The Business Insider:

Venture capitalists along Sand Hill Road, bankers on Wall Street and lobbyists in Congress will tell you that what ails the venture business is a disturbing lack of IPOs throughout most of the last decade. Sure, there were three in the second quarter, ending a nine-month dry spell. But three deals won’t go very far in resurrecting returns. No IPOs hurts the rate of acquisitions too, since big companies don’t have pressure to pay up before a would-be competitor goes public. M&As hit their lowest level in ten years in the second quarter, and the median price dropped 46%, according to numbers released last week by DowJones VentueSource.

The predicament is so bad that the National Venture Capital Association has proposed a four-point plan to encourage banks to start taking small-to-midsized ventures public once again and support a secondary exchange, where founders and investors could sell normally illiquid-stakes without having to become a public company.

Did famed Web entrepreneur Marc Andreessen enter the venture business at the wrong time? Ever the optimist, he actually sees a silver lining: The later companies have to wait to go public, the more chances he gets to invest in hot deals at better valuations. With a new $300 million fund, he certainly has the wherewithal.

That doesn’t mean he’s denying the challenges...

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It’s common for groundbreaking innovations to change dramatically in the first decade or so, then settle into an innovation rut. Not so with the Web, says Marc Andreessen, co-founder of Netscape, Opsware, Ning and, now, new venture firm Andreessen Horowitz Venture Capital.

In this segment of our sit-down interview with the Web visionary, Andreessen explains why the Web is different. For one thing, it’s made of software, and software is malleable. That means the Web has a unique ability to morph into new things the way, say, railroads or PCs or fax machines couldn’t.

In fact, Andreessen argues the nature of the Web is change. If anything is big enough to have the potential to become the next Web giant, it’ll probably look insane when it starts. Just take the Web browser—once upon a time the most powerful executives in media told Andreessen it would never catch on. If people missed that, how can we expect them to predict what’s next online?

Plus, check out our earlier discussion about Twitter and Facebook.

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Marc Andreessen is a Web optimist. Not only does he believe in the medium’s innate ability to constantly reinvent itself – making entrepreneurs and investors all the more billions in the process—but he doesn’t worry about Web hot shots like Twitter and Facebook’s ability to turn their outsized audiences into big businesses either.

And Andressen and his investing partner Ben Horowitz should know. They have stakes in Twitter, LinkedIn, Digg and other hot names; Andreessen is the sole outside board member of Facebook and co-founded his own Web 2.0 startup called Ning, which was valued at $500 million at its last funding round.

In this clip, Andressen dishes details on each of these high-profile companies and explains why Twitter and Facebook are still no-brainer investments, why LinkedIn and Facebook could go public any time they want, and why Digg’s best days are in front of it—not behind it.