Just months after his Microsoft farewell, Bill Gates is quietly creating a new company — complete with high-tech office space, a cryptic name and even its own trademark.

Public documents describe the new Gates entity — bgC3 LLC — as a “think tank.” It’s housed within a Kirkland office that the Microsoft co-founder established on his own after leaving his day-to-day executive role at the company this summer.

Is this Bill Gates’ next big business? A Gates insider gives an emphatic no  — saying it’s not a commercial venture but rather a vehicle to coordinate the software mogul’s work on his business and philanthropic endeavors.

However, bgC3 will also oversee Gates’ personal pursuit of breakthrough ideas in science and technology. The insider said the goal isn’t necessarily to create new companies, although ideas could be passed along to Microsoft, the Bill & Melinda Gates Foundation — or others – as it makes sense.

Whatever the ultimate role of the company, the circumstances surrounding its creation provide a behind-the-scenes glimpse into the new era of Gates’ life.

State records show that the company, originally called Carillon Holdings, was established in March 2008. It formally changed its name to bgC3 in early July, 10 days after Gates left his full-time job at the company he built into an industry giant. He remains Microsoft’s chairman and continues to work part-time on projects.

The records describe bgC3 as a “holding company” headquartered in Kirkland –a relatively short, picturesque drive from Gates’ home on Lake Washington.

Federal trademark filings provide more clues – describing bgC3 as a think tank, under a generic trademark classification that corresponds broadly to areas including “scientific and technological services,” “industrial analysis and research,” and “design and development of computer hardware and software.”

But what does bgC3 mean? The logical assumption might be “Bill Gates Company Three” – his third enterprise after Microsoft and the Bill & Melinda Gates Foundation. But that’s only partially right, according to the Gates insider.

The “bg” is Bill Gates, the insider says, but the “C” stands for “catalyst.” The idea is that Gates will play that role as he brings together new people and ideas. The “three” reflects the notion of a third place, apart from Microsoft and the foundation.

Before beginning his transition this summer, Gates told reporters that he would focus full-time on the foundation, and part-time on selected Microsoft assignments.

He acknowledged plans for his own office in Kirkland, apart from Microsoft and the foundation, but didn’t discuss specifically any plans to organize that office under a new company. At the same time, he said he would be open to personally supporting breakthrough ideas where he sees a chance to advance the state of mankind.

It’s not clear exactly where those interests will lead, or precisely what role bgC3 will play in the long run. But Gates, who turns 53 next week, has increasingly expanded his focus beyond Microsoft to problems of technology, science and society.

Much of that broader focus has come through the Gates Foundation, which deals in issues of education and global health. People associated with Gates say he is still expected to focus primarily on the foundation in this new era of his life.

But particularly at a time of economic turmoil, Gates’ status and wealth could put him in a position to bring in top scientists and other notable people to work with bgC3. Gates has historically surrounded himself with smart people, and he’s famously thirsty for knowledge. His interests go well beyond computer science into fields as disparate as energy, biotechnology, and global economics.

The concept of a technological think tank wouldn’t be new to Gates. He has taken part in high-powered brainstorming sessions organized by his friend, Nathan Myhrvold, Microsoft’s former chief technology officer, who now heads a company called Intellectual Ventures LLC, based in Bellevue. Projects that Gates is backing through Myhrvold include an effort to create an alternative nuclear reactor that produces clean power without waste or proliferation.

Whatever its aims, the new Gates organization doesn’t appear to have ambitions of becoming another behemoth. In a letter last year to a Kirkland city official, a Gates representative wrote that total occupancy would be limited to between 40 and 60 people, including employees and visitors, in the space that bgC3 now occupies.

At the same time, it’s no ordinary office space. Visitors say it’s fully stocked with Microsoft technologies, including a Surface tabletop computer with a virtual guestbook application.

Some of bgC3’s activity has been recent. According to the U.S. Patent and Trademark database, the company filed Sept. 29 for federal trademarks on “BGC3″ and the “C3″ logo. The latter (pictured above) is an intertwined “C” and “3″ in block letters.

The Microsoft chairman has established companies before to serve specific purposes, primarily behind the scenes. Watermark Estate Management Services LLC oversees many of Gates’ personal and family matters, and Cascade Investments LLC oversees his stock and other financial holdings.

Several of Gates’ associates are named in the documents tied to bgC3, although Gates himself isn’t identified by name in public records associated with the company – a main reason its existence hasn’t received media attention until now.

[via TechFlash] by Todd Bishop and Eric Engleman

At 37, Andreessen is a legend in Silicon Valley. He created, with Eric Bina, the first graphical browser while at the University of Illinois, then co-founded Netscape Communications with überentrepreneur Jim Clark in the early 1990s. Netscape’s browser brought the internet to the masses, set off the dotcom boom, and so angered Microsoft at the time that Steve Ballmer, now the software giant’s C.E.O., led employees in “Kill Netscape!” chants. By bundling its Internet Explorer browser into Windows, Microsoft eventually drove Netscape into the arms of a suitor: AOL bought Netscape in 1999 for $4.2 billion.

Andreessen hasn’t had a success of that magnitude since. But he did create another billion-dollar company, Loudcloud, a tech-services outfit that later changed its name to Opsware and was sold to Hewlett-Packard for $1.6 billion. More recently, Andreessen started Ning, a website that lets anyone create a mini social network. Its most prominent customer: 50 Cent.

Andreessen joined Face­book’s board this year, invested in Twitter, and generally manages to show up on the front end of new technology trends. His blog, Blog.pmarca.com, has been a tech-industry must-read, in part because he’s willing to be brutally outspoken. In February, Andreessen ignited emotions when he blogged that he was starting a “New York Times Deathwatch.” ( Watch an exclusive video of Andreessen talking about the future of newspapers.)

Condé Nast Portfolio’s Kevin Maney interviewed Andreessen at a gathering of Silicon Valley’s Churchill Club in Palo Alto, California. The following is an edited transcript.

How’s your relationship with Steve Ballmer now?
He’s my Facebook [makes air quotes with his fingers] friend. I’m going to stop there while I’m still ahead.

Do you carry around any bitterness?
I’m a big believer that it’s like in The Godfather—it’s business, not personal. Netscape was an unbelievable experience for me. We sold the company for a lot of money. After that, I’m on to the next one.

I have to ask the guy who created the browser: What do you think of Google’s Chrome browser, introduced in September?
It’s very meaningful. It’s going to force Firefox and Internet Explorer to accelerate their performance. Basically, the barriers to doing everything in the browser are falling fast. And that includes a whole range of things, like Google Docs, spreadsheets, presentation packages. The Chrome browser is going to really push forward the wave.

Does this open up possibilities for companies you’re working with?
I’ll give you one example: I just announced this company called Qik. It will turn every phone that contains a camera into a source of streaming video and audio [which works better in a faster browser like Chrome]. Anybody can watch live, and then it can all get recorded. It’s almost the reverse of George Orwell. In 1984, the government had cameras mounted everywhere. In a Qik-based world, it’s the exact opposite. Literally, everybody on the planet is going to be streaming video. Excellent reason to stay at home.

And blog in your underwear.
Exactly.

Qik raises some issues, like what if 10,000 people at a concert all broadcast the show live?
About a year ago, we went to see one of the major sports leagues—I won’t mention which one. We presented how they can have social networks and users can post videos shot at games and photos and all this stuff. And the main topic of conversation was how they could prevent people from recording video with their mobile phones and posting it online.

You won’t tell us which league?
I won’t. But, you know, it’s a whole new world. The presumption is that there’s going to be live video all the time.

You seem to have your fingers in a lot of Valley companies. Walk us through Marc Andreessen’s daily life now.
My third company, Ning, is my day job. The only corporate board I’m on is Facebook, which I think is a very important company. I’m doing angel investing with Ben Horowitz, my business partner from my previous company. We’ve invested in 15 companies or so in the past year and a half. Maybe one a month, give or take.

What’s your approach to investing in startups?
Have it be a small enough amount of money that if it fails, we can still talk to the founder without getting mad.

How much is that?
I usually put in $25,000 to $100,000 per company. So far, so good—which is to say, I haven’t gotten really mad at anybody.

You said Facebook is a very important company. That’s not always the opinion you get, right?
I’m on Facebook’s board because Face­book is a true, old-fashioned Silicon Valley company in the best sense of that term: super-technology-focused, super-product-focused, very innovative—much more than it gets credit for—and very determined to build out a service that’s going to reach a very large number of people.

Qik, Twitter, Facebook, and other social networks—who has time for all of it?
Consumers are freeing up an enormous amount of time that they were spending with stereotypical old media, and clearly, that time is going primarily two places: videogames and online.

If you were running the New York Times, what would you do?
Shut off the print edition right now. You’ve got to play offense. You’ve got to do what Intel did in ’85 when it was getting killed by the Japanese in memory chips, which was its dominant business. And it famously killed the business—shut it off and focused on its much smaller business, microprocessors, because that was going to be the market of the future. And the minute Intel got out of playing defense and into playing offense, its future was secure. The newspaper companies have to do exactly the same thing.

The financial markets have discounted forward to the terminal conclusion for newspapers, which is basically bankruptcy. So at this point, if you’re one of these major newspapers and you shut off the printing press, your stock price would probably go up, despite the fact that you would lose 90 percent of your revenue. Then you play offense. And guess what? You’re an internet company.

What’s your relationship like with Jim Clark after all these years?
I’ve had two critical mentors in my career. One was Clark. Another was Jim Barksdale, who was Netscape’s C.E.O. And it’s funny because they worked extremely well together, but they have almost polar opposite personalities.

Clark is intensely entrepreneurial, extremely passionate, extremely emotional, completely fearless, absolutely delighted to create a new business, loves if it causes a lot of controversy. Barksdale is a builder and an operator and a manager. Clark is off in Florida. He has largely opted out of the tech industry.

Yeah, we haven’t seen him in a long time. He is having a lot of fun. He is dating an Australian swimsuit model. Seriously. He’s been in the real estate business in Miami doing a bunch of different business things. He sails a tremendous amount. I’m pretty much the exact opposite. I don’t like to leave Palo Alto.

So you’re 37, and you’ve taken on this mentoring role to people like Facebook’s Mark Zuckerberg and other entrepreneurs.
There’s a new generation of entrepreneurs in the Valley who have arrived since 2000, after the dotcom bust. They’re completely fearless.

Does that create the danger of a new tech bubble?
If there’s been a crisis in a market, you don’t tend to have a new crisis in that market until the people who went through the last crisis aren’t in the system anymore. It was only eight years ago. So here we are in 2008, and there’s still no sign of a bubble in technology, which I can encapsulate in two words: no I.P.O.’s.

No tech I.P.O.’s—is that a good thing or a bad thing?
Well, a very important thing. Through the 1980s and ’90s, tech companies would basically get into their expansion stage and then go public. In part, it was to have access to capital, in part to have an M&A currency, in part as a branding and a credibility event, and in part because there was a base of investors who wanted to invest in high-growth technology companies. Those days are just over. It’s just frozen. Is it a crisis in terms of company formation? Not yet.

We haven’t talked at all about mobile internet.
There was mobile before this thing [holds up an iPhone], and then there’s mobile after. If you were trying to build software for mobile phones last year, you were in a world of pain, of incompatibility—you had probably seven different operating-system platforms you had to deal with. You didn’t have any way to do over-the-air distribution of software or content. The carriers, especially in the U.S., had a choke hold on distribution and would put up huge barriers. It was an absolute nightmare.

As of now, that hasn’t changed.
That hasn’t changed, unless you’re on an iPhone. The iPhone is going to be at 100 million units before you know it. This is going to force everybody else to raise their game.

Is Google the new Microsoft—the new big, scary, monster company in tech?
It is true that Google is doing a lot of different things, and some will compete with other Valley companies. But the pros outweigh any future competitive threat. Google does so much to make other startups possible. Google makes new internet efforts easy to find. Google runs a large advertising network that distributes money to people who run ads. It is training and educating a very large base of really sharp people, many straight out of college, many of whom are not going to spend their entire careers at Google. Google is fertilizing the base. So I think it’s been very, very positive.

How about all the fears that Google is too powerful?
I don’t see it yet—and a big part of why is Google C.E.O. Eric Schmidt. Eric literally does not want to run a company whose M.O. is to just gratuitously go around and stomp on people.

You’ve probably got a good 30 to 40 years left in the business. What do you ultimately want to accomplish?
I love what the Valley does. I love company building. I love startups. I love technology companies. I love new technology. I love this process of invention. Being able to participate in that as a founder and a product creator, or as an investor or a board member, I just find that hugely satisfying. And I think the outcome can be big and important and profound.

I hear you’re getting deeper into philanthropy—Stanford Hospital, Room to Read.
That is increasingly important to me, for a couple different reasons. Partly, it’s wanting to give back. And partly, my wife of almost two years teaches philanthropy at Stanford. So I am completely committed to philanthropy because if I’m not, I’m in a great deal of trouble. I can’t even tell you.

[via Conde Nast Portfolio] by Kevin Maney

Crispin+Porter completely changed the image of Apple, and returned a brand thought to have been gone in the dump. Partner Alex Bogusky now joins Microsoft to see if he can reinstill the magic that once was the Seattle superpower.

“He looked like Jesus,” confesses a blushing 27-year-old hipster in gray New Balance sneakers and a zip-up hoodie. She is talking about her boss, Alex Bogusky, the man who has built arguably the hottest ad agency in the country, Crispin Porter + Bogusky. And she is trying to make herself heard over the din of conversation at the New Denver Ad Club, where

500 locals have gathered to hear him speak. Bogusky had only recently moved to town after hauling half of his now 700-person operation from Miami to nearby Boulder. “Just the other day, I was walking by the kitchen in the office,” says the young art director, two years into working for Bogusky. “There was, like, this halo over him.”

On this breezy evening in April 2007, six-packs of Molson and the greasy scent of Burger King burgers — two brands revived by Crispin — give the chandeliered concert hall a calculated shot of the lowbrow. In a few moments, the khaki-and-blazer crowd will see the legend live, on stage, where he will share such intimacies as “I once farted on production for a Gap spot” and “Life is a pyramid scheme.” Until then, the anticipation is thick. “It’s kind of like having a major stage production coming to your small town,” says one adman with Frank Sinatra hair. “Like the circus.” Another whispers, “I can’t wait to hear this guy from Crispin Glover!”

For nearly a decade, the unhip have flocked to Bogusky in the hope that a little of his mystique might rub off. There is no more adept a mechanic of cool, and Bogusky can give it — and take it away. In 1998, he helped strip the sexy gloss from cigarette smoking with his raw, award-winning “Truth” campaign. In 2001, he subverted the SUV and Hummer fad by getting consumers to embrace “tiny” with his media-bending stunts for the Mini Cooper. More recently, he resurrected Burger King’s 1960′s-era “King” character, turning it into an unlikely icon, which has since done everything from date reality-TV pinup Brooke Burke to appear in his own Xbox video game that has sold 3.5 million copies.

Bogusky is famous for pushing clients to the edge. His TV work for Volkswagen included a close-up of a horrific, fatal-seeming car crash; for Orville Redenbacher, he called the deceased popcorn pitchman back from the dead; for Virgin Atlantic’s business travelers, Bogusky offered up mock porn on a hotel TV network. “What Crispin has been able to do consistently is not just produce breakthrough work, but actually create new audiences for brands,” says Mary Warlick, who runs the One Club, which awards creative excellence in advertising.

Now Crispin has been handed perhaps its biggest challenge to date: Microsoft. The tech giant stunned the ad world in March when it passed over safer choices like Fallon, JWT, and its agency of record, McCann Worldgroup, and awarded its new $300 million consumer-branding campaign to Crispin. It was an act of courage or desperation, depending on whom you ask. Over the past couple of years, Microsoft’s already problematic reputation in some circles — as the soulless, power-hungry purveyor of lackluster products — has suffered a series of self-inflicted wounds. It spent two years and $500 million on the media blitz around the long-delayed Windows Vista launch, only to see the January 2007 “Wow” campaign, which likened Microsoft’s new operating system to Woodstock and the fall of the Berlin Wall, derided as arrogant and creatively void. Vista itself sold poorly, leading to price cuts of up to 40%. Worst of all, the flop bred a new generation of Microsoft haters. “Microsoft has really lost control of its image,” says Rob Enderle, an influential advisory analyst for tech companies including Dell, HP, and Microsoft. And with its two most formidable competitors — Apple and Google — boasting their own consumer cults, that’s the last thing Microsoft can afford to do.

Nothing is doing more to carve away at Microsoft’s reputation — and contribute to its loss of market share — than the assault launched by Apple two years ago in the form of the “Mac vs. PC” spots featuring The Daily Show satirist John Hodgman. The ads became immediate pop-culture fixtures, spawning more than 1,000 video spoofs on YouTube and taking home last year’s Grand Effie, the ad industry’s highest honor for effectiveness. “Nobody messes with anyone in the tech industry the way Apple has messed with Microsoft,” says Enderle. “It’s the first time I’ve ever seen a major national campaign that disparages a competitor, and the competitor just sits back and takes it. If somebody tried to do that to Oracle, you wouldn’t be able to find the body.” Gartner media research analyst Andrew Frank credits Apple — whose annual media spend is less than half of Microsoft’s nearly $1 billion budget — with single-handedly rebranding Microsoft “as a kind of self-conscious and self-absorbed nerd that is out of touch with the normal lives and needs of its users.”

Countering that nebbishy, pocket-protected image now falls to Crispin. And Bogusky’s team is revved up at the prospect. “There was a time,” says Jeff Hicks, Crispin’s CEO, “when it was Avis against Hertz, Coke against Pepsi, Visa against American Express. I think Microsoft is at the epicenter of the great brand challenge of the next decade — or millennium.”

It’s a month after Bogusky’s team landed the Microsoft account in March, and the Boulder office is splattered with Gatesian fingerprints, including quotes tacked to the stainless-steel fridges in the kitchen that read like awkward, off-key motivational nuggets: There are over 1 billion Windows Live ID authentifications per day, says one. Bogusky works on a raised platform in Crispin’s 70,000-square-foot space, which once housed an indoor soccer field. His desk seems almost to levitate above the vast openness. A shiny new silver MacBook Air sits in front of him, next to his aviator sunglasses.

This is the third Bogusky office I’ve visited over the past year. His workspace in the firm’s Coconut Grove, Florida, office felt like the bedroom of a “departed” teenager: frozen in time, down to the framed photo of Bogusky’s hero, Evel Knievel, in midair on the back of a motorcycle. When I went to the new Boulder digs in the spring of 2007, his office had more mature decor — clean lines, raw wood, and metal. But the polished backdrop didn’t stop him from, at one point, grabbing a No. 2 pencil off his desk to stir his café mocha. “I want to get all the chocolate at the bottom,” he explained. “I’ll probably get lead poisoning.”

His latest office is different. It feels for the first time that I’m talking to an executive. “Life conspires to beat the rebel out of you,” Bogusky says, dropping one of those lines that could be either authentic on-the-fly wisdom or something he once saw on a T-shirt. “I was at a meeting at Nike recently with a bunch of senior people, and that’s just the thought that went through my head. For everyone at the table, I could see how life was trying to beat it out of us.”

There’s a subtext to his new existentialism. Five months ago, Bogusky, 44, decided to abandon his chief creative officer title for a more corporate one: co-chairman of Crispin, along with partner Chuck Porter. Now, instead of grinding out his famously obsessive late-night edits on the agency’s 15 accounts, Bogusky says he’ll focus on “flying out to clients and talking about strategy,” building out a new industrial-design department, and growing the business, which potentially includes international offices in Europe and Asia. That ostensibly puts the creative burden of the Microsoft account on the shoulders of his protégés, Andrew Keller and Rob Reilly, new co-executive creative directors, who have collectively worked at Crispin for 16 years (Keller for 10, Reilly for 6). “It’s up to those guys how they want to run it now,” says Bogusky, who has been with Crispin since he was 26. “For sure, I’m passing the torch.”

Keller, a blond, floppy-haired 37-year-old, and Reilly, a joke-jousting 39-year-old, are well versed in the dark art of cool peddling. They don’t look the part as much as Bogusky (or even Justin Long, the Mac character in the “Mac vs. PC” campaign). But the duo was the creative force behind work for Mini, Virgin Atlantic, Volkswagen, and Burger King. “Subservient Chicken, Chickenfight, Coq Roq,” says Reilly, rattling off a few of the BK campaigns. “I don’t enjoy doing advertising for things that already have tons of cultural momentum, that people love,” says Keller, adding that he’d be less interested in working on a brand like Apple.

The two understand just how delicate the Microsoft project will be. “To try to be cool is to not be cool,” Keller pronounces. “To chase cool, you’re chasing something that already exists, which means you’re always going to be on the wrong side of it, you’ll always be following.”

In April 2007, long before the Microsoft account came Crispin’s way, Bogusky had told me that “Crispin sort of exists because of the revolution in desktop publishing that the Mac brought about. You could be a small shop and compete against Madison Avenue for the first time because all the tools were in your computer.” That may explain why Keller and Reilly are today using their team as an early focus group for learning how to persuade Mac lovers to embrace Windows. “You’ve got a lot of passionate Mac people in here, and they’ve got to get their head around this thing — why Windows is genius,” says Keller. He and Reilly have outfitted their shared office (inherited from Bogusky) with an Xbox 360, which they’ve been using as a wireless hub. But their joint desk also holds two ultrathin MacBook Airs. When I ask if they’re making their team get rid of their iPods and PowerBooks, Reilly responds, “It’s not a matter of forcing people. It’s getting them to want to use it. If you can’t, you’re not going to do great advertising.”

Jeff Steinhour, a Crispin partner who helped reel in the Microsoft business, describes visiting the Microsoft campus in Redmond, Washington. With the “flags and buildings and graphics,” he says, “there’s no mistaking where you are. The vibe is, We know what we’re doing, and we’re pretty good at it.” Of course, that vibe is also part of Microsoft’s problem, a perceived arrogance that has worked against its efforts to become connected with real people, let alone beloved by them. “They need a little bit of a shake-up,” Steinhour asserts. “I think they’re watching the tech world very closely and how brands become popular. They’re saying, ‘How do we get in that conversation?’ ”

“I think Microsoft is the great brand challenge of the next decade — or millenium,” says Hicks. Adds Steinhour: “They need a bit of a shake-up.”

It’s not as though Microsoft hasn’t tried before. In late 2006, as part of its $500 million Vista launch blitz, it enlisted comedian and Daily Show contributor Demetri Martin to do a series of Webisodes; after a national comedy tour, and a special on Comedy Central, the campaign failed to penetrate pop culture and even drove Apple fans to rail on the blogs that Microsoft had ripped off Apple’s Hodgman campaign. The irony is that Microsoft had actually worked with Daily Show cast members Rob Corddry and Samantha Bee before Hodgman was on board with Apple. But to Apple zealots, it didn’t matter. And to everyone else, hipster irony from Microsoft just felt wrong. Whereas Apple helped launch Hodgman into the stratosphere, Microsoft sent Martin back to Comedy Central.

If Bogusky’s creative exit seems untimely, Microsoft sounds unconcerned. “They understand our company and where we want to take it,” Microsoft explained in a prepared statement (the only comment the company would make for this story). Bogusky represented Crispin at the Microsoft pitch and is unlikely to hang back once the creative is developed; his control-freak tendencies are widely known — and desired — by clients. Says one industry person who competed against Crispin for the Microsoft business: “It’s like when George Clooney walks into a room. It doesn’t matter if Hugh Jackman walks in — everyone wants George.”

Bogusky plays down his star power. “When people meet me, they almost always say, ‘You’re shorter than I thought,’ ” he tells me. “That’s the difference right there. The public self is taller.” But his public stature unquestionably makes Bogusky a target, and the industry has been waiting for years — with equal parts admiration and envy — for Crispin to stumble. When the agency won Burger King in 2004, critics said that the shop’s style could only mesh with small, indie brands. When Crispin expanded to Boulder in 2006, competitors said the divided house would implode. Last year, when Volkswagen’s head of marketing abruptly left, insiders predicted Crispin would lose the $350 million account, one of its largest. None of that came to pass. Instead, in the last year the agency has lured blue-chip brands including American Express, Best Buy, Domino’s, Nike, and now Microsoft.

As Crispin draws bigger, more-traditional clients, the risks grow proportionately. Edginess and risk taking mean nothing without results. When I visited Miami and Boulder last year, I sat in on creative meetings for Haggar, a low-end menswear manufacturer, and Ask.com, Barry Diller’s search Web site. Both were being touted by Crispin as the agency’s next big turnaround candidates. But both resulting campaigns — “Making Things Right” for Haggar and “The Algorithm” for Ask.com — met with mixed reviews when they appeared, then fizzled out completely. “You get into these relationships that are like an arranged marriage,” Bogusky says. “Barry [Diller] really wanted us to do the [Ask.com] work. But I think some of his guys were like, ‘We like what we’re doing and don’t want to.’ ”

Crispin also lost Miller Brewing as a client, a $150 million account. (Crispin resigned, but the move was widely reported to have been preemptive.) And while Hicks, Crispin’s CEO, talks about client VW as if it has achieved turnaround status, the work has been inconsistent, and VW’s sales are off 6% this year. Similarly, last year, Crispin pulled off a coup by winning away Nike’s Running and Nike+ business from the sportswear company’s longtime agency, Wieden+Kennedy. Yet when Crispin’s first Nike TV spot came out in December — a testosterone-fueled footrace through time, from the Wild West to the modern day — the reviews were underwhelming. “I think everyone wants to see the work get better than it is,” concedes Bogusky.

Compounding these challenges is the agency’s financial structure. Back in 2001, Chuck Porter, who owned the firm, then a little-known regional shop, decided to sell 49% of it to a small Canadian public company, now known as MDC Partners. “Chuck wanted to cash out a bit, at least to know that he’s not going to die alone in a retirement home,” says Bogusky, who has known Porter, a family friend, since Bogusky was 8 years old.

MDC paid a mere $6.5 million for the stake, plus $9.2 million over time. MDC also secured options to buy additional stakes every few years at a fixed price. Last November, even as hot new digital shops were getting snapped up for hundreds of millions, MDC exercised an option to increase its stake in Crispin by 28% — for just $28 million. Ouch.

“Crispin is 12 times the size it was six years ago,” gloated MDC CEO and chairman Miles Nadal, when I met him last summer at the exclusive Core Club in Manhattan. MDC owns stakes in 40 agencies, but Crispin is its biggest source of profit. In fact, RBC Capital Markets estimates that MDC’s 77% stake in Crispin is worth more than $300 million, far more than MDC’s market value. “The problem,” says Jeff Tkachuk, a media analyst at BMO Capital Markets who covers MDC, “is that Crispin’s value is being dragged down by the other operations, corporate costs, and all the other stuff that’s associated with MDC.”

Even when Crispin wins a client like Microsoft, shares of MDC — now under $7.50 — barely twitch. “In my opinion, MDC should not be a public company,” admits Porter, who despite a lofty MDC title of chief strategist appears to have little operational influence there. “Not that my opinion means that much. Philosophically, MDC is not designed at this point to deliver ongoing quarter-to-quarter growth. That’s just not the way it thinks.”

I asked Porter how Crispin could have locked itself into such an arrangement. “Other people have said, ‘You did a really sucky deal,’ and I’m like, you know, I think the only people who feel good about the deal are me and Alex [Bogusky] — and Miles [Nadal].” Porter argues that selling to MDC gave Crispin the security to take the risks that have made them successful. “It’s impossible to say we would have performed the same way if we hadn’t done it,” he says. “One of the good things about us being such a big fish in the MDC pond is that we do get our way. We would always trade money for freedom. Always. Always.”

Porter does concede one point. “Any analyst would say: a) MDC’s stock is in the tank, and they’re not performing as well as they should, and b) Crispin has performed really, really well,” he says. “So there’s a disconnect here. You can’t deny that.” He pauses. “If you’ve got someone who wants to come and buy the whole thing right now, we can talk — the whole ball of wax, the whole MDC.”

One thousand miles away from Boulder, in a biometrically sealed, Frank Gehry — designed compound outside Los Angeles, sits TBWA\Chiat\Day’s Media Arts Lab. It is in this vaultlike building — created at the behest of Steve Jobs — that the “Mac vs. PC” spots are conceived. Chiat\Day has been making Apple’s ads for nearly 25 years — going back to its iconic “1984″ spot — and the lab’s isolation ensures not only that the creatives do their best work but also that nothing leaks out. “I hear they have some kind of eyeball scanner,” says one Chiat\Day art director I spoke with who, despite having worked at the agency for five years, has never set foot inside the place.

Jobs’s unerring ability to locate and amplify what’s cool in the culture is among the big challenges in Crispin’s quest to give Microsoft new street cred. But Microsoft’s degree of patience and tolerance for risk — even embarrassment — remain major variables too.

“Crispin probably has one chance to do something big with Microsoft, and if it fails, I think all bets are off for the agency,” says Gartner analyst Frank. Crispin certainly knows the stakes are high. “From the outside, this looks like a strange marriage,” says Crispin partner Steinhour. Particularly since Crispin has been the Apple of ad agencies. Add up its knack for creating cultural phenomena instead of piggybacking on them, breaking industry rules only to have others follow, orchestrating mass PR stunts, and even turning brands into bullies without customers realizing they’re being bullied — you could equally be talking about Apple. The folks at Crispin like to give the impression that the Microsoft assignment is less about the money than about the thrill. “I think we’ve learned,” says Steinhour, “that when you take on these kinds of odd relationships with big companies that need a kick start, the motivation to overcome those suspicions is a lot of the fun.” But Crispin knows better than anyone that “fun” isn’t the metric for its clients. Noting that Burger King has had 16 straight quarters of growth since Crispin took on the account, Hicks says, “Your work is only as good as the performance of the brand and the business.”

Crispin has been restricted from revealing Microsoft’s strategy or creative ideas for the campaign, which is slated to break in July (and they’re even being cagey about that date). Whatever is done, though, will clearly involve an attempt at a major personality overhaul. “It’s kind of like 3M,” says Bogusky, who calls Microsoft “smart as fuck.” 3M is “a very cool company, but I don’t think if you see a roll of Scotch tape, anyone’s going, ‘I’ve gotta party with these people.’ ” Bogusky explains that with previous clients, instead of hiding qualities that may seem negative — such as Mini’s tiny proportions or Burger King’s fat content — Crispin exploits them. “It’s part of your job as a marketer to find the truths in a company, and you let them shine through in whatever weird way it might be,” he says.

Naturally, that risks pissing someone off. “I think really good brands have to have something of a thick skin these days,” Bogusky says. Last year for Coke Zero, the Crispin team designed a campaign in which one division of Coke sues another for “taste infringement.” Bogusky says Coca-Cola’s ability to be self-effacing was a disarming way to make the brand likable. “I think it works so well for Coke because it’s the most corporate of corporate,” he says. “It wouldn’t work for Jones Soda.” Then, once Crispin finds a through line that works, adds Bogusky’s disciple Keller, “we pour gas on it.”

For Microsoft, some of those combustibles may lie in the edgier parts of its empire — Xbox, Zune, Halo, even the company’s stake in Facebook. Bogusky hopes Microsoft will give his team the same kind of access Apple has granted Chiat\Day. “A big part of positioning those products is being there in those early stages, knowing what the engineers think the story is, so the story doesn’t get lost,” he says, noting how deep inside his agency has gotten with partners like Burger King. “Apple is probably sharing stuff that maybe it’s afraid to share, but that allows the agency to get in at a level where it can produce work like that.”

Not everyone is convinced that Microsoft’s problem is simply about ad messaging. “Microsoft seems like a company whose executive staff is isolated and unable to move and take corrective action,” says tech analyst Enderle, explaining the obstacles for Crispin. “I worry more on the client side than the agency side.” And while other PC makers like HP have been able to gin up new zeitgeisty appeal — using, for instance, Gwen Stefani and Jay-Z — Gartner’s Frank isn’t so quick to assume that hiring Crispin means Microsoft is ready to really let its hair down. “I suspect what Microsoft would most like to instill in people’s minds is they are innovators and leaders, and that’s what they think of as being cool,” he says.

Historically, that may have been good enough, given that for 30 years most of Microsoft’s customers have been enterprise geeks, not film students and graphic designers. But Microsoft’s increasing desire to be all things to all people — tech titan, advertising company, music hawker, video-game platform — means it may have to do more than just make consumers aware that it is the massive force behind so much of their lives. It may need to make people willing, even eager, to cede that much control to a single company. If Crispin can pull off that stunt, it will be not only the Steve Jobs of advertising but also its Evel Knievel.

[via Fast Company] by Danielle Sacks

Microsoft and Google are competing on a new level: outer space. With the development of Microsoft’s Worldwide Telescope and Google Sky, the two technology giants find a new platform for dominancy. It’s truely out of this world.

It’s not every day that a demo is so good it brings a tear to my eye. But then how often do you get a view of the universe that’s as inspiring as what Microsoft’s WorldWide Telescope provides? “We can scroll in to look at this blob,” says Curtis Wong, who developed WWT (worldwidetelescope.org) with his team at Microsoft Research. Using just his mouse’s wheel, he then whizzes past planets, through stars, galaxies, dwarfs, black holes, and into deep space. The site was an immediate hit this spring; it attracted more than 10 million unique visitors in its first week, according to Microsoft Research honcho Rick Rashid.

Google also has a service that lets you see the stars: Google Sky (google.com/sky). Although on the surface it’s similar to WWT, there are major differences in how these free virtual telescopes have been built, how they work with the Web and on mobile devices, their depth of features — and their ability to make money for the two tech titans. By looking to the heavens, we can learn more about Microsoft and Google and the future of our business galaxy.

How you use these two telescopes immediately points to the fundamental differences between the companies. Microsoft, not surprisingly, has tied WWT to the Windows desktop, and users who want it have to download and install it. Google Sky is browser-based and works anywhere you have an Internet connection, even on mobile phones, a vista where the resource-intensive WWT can’t dare to go. Microsoft’s desktop-based model gives WWT far more feature goodies than Sky. For example, WWT has more than 50 different views from tons of telescopes and Sky has a measly 8.

WWT reveals how Microsoft plans to balance its need to keep Windows relevant with its need to show that it “gets” the Internet. Your hard drive can’t store all the data WWT needs to render the sky, so the astronomical info sits on a series of servers at Microsoft and is downloaded to the WWT as you reach the part of the universe you’re exploring. You can use WWT offline, which is great for taking your laptop to a star party in a field in the middle of nowhere, but you’ll get more from it when connected. That’s the new Microsoft way. Its Live Mesh platform, announced last spring, uses the Internet to deliver data wherever you need it, but it needs the software downloaded to your desktop and mobile devices to do it.

But being tethered to its Windows cash cow limits Microsoft from competing effectively against Google in online advertising. Sky is just one of dozens of Google services — social networking, docs and spreadsheets, maps, and video, to name a few — that can be linked to and embedded in your own Web site. Google collects demographic data from the millions of sites that are running one or more of its services, and that’s the big prize. Google Sky opens up yet another universe of potential customers for it to learn more about and then make smarter contextual advertising offers.

Microsoft’s telescope software? You can’t embed it anywhere, so what’s the advertising opportunity with it? There isn’t one.

That is why Microsoft is going to have a tough time competing with Google’s ever-expanding cosmos. Microsoft’s telescope really did make me cry because it’s a beautiful piece of software. Too bad it isn’t a harbinger of a beautiful business model for the future.

[via Fast Company] by Robert Scoble