Facebook redesigns have always attracted an almost ludicrous amount of controversy, going back to its roots on protest-happy college campuses. But the outcry this time is different.

Rather than introduce new, unfamiliar features — as Facebook did in 2006 when it first introduced a "News Feed" to the site — in this latest revision, Facebook has removed or hidden functions users had grown used to. Useful features, like a calendar of events, are difficult to find. Many have noted that the new emphasis on status updates makes Facebook look more like Twitter, a service for broadcasting short text messages to friends on the Web and on cell phones. Facebook's redesign, however, managed to copy the worst aspect of Twitter — the unmanageable flood of incomprehensible trivia — without matching the virtue of its simplicity.

Here's the statement the Facebook flack issued to the BBC:

The new Facebook home page is one step in the continued evolution of the site, designed to give people more ways to share and filter all types of content, such as status updates, photos, videos, notes and more.

We are grateful to have 175 million people worldwide using Facebook to connect with the people and things they care about most, and we take their feedback very seriously.

We are listening carefully to what people are saying about the new home page through a variety of channels - including through a popular application, built by outside developers on our platform, that allows users to vote and express their opinion.

Also helpful have been the many comments we're reading on industry blogs, the Facebook company blog, Mark Zuckerberg's public profile, Facebook user groups, and through the link on the Facebook new home page tutorial.

We encourage people to send us constructive, detailed feedback and are committed to using it to inform how we build and improve the site for everyone.

Could it be any more obvious that Facebook is not listening to its customers? It's not a surprise that a flack would lie, but it is a surprise that one would contradict the boss so blatantly.

Last week, Valleywag revealed that Facebook CEO Mark Zuckerberg had sent an email to his staff dismissing the negative feedback and praising companies which don't listen to their customers as "smart." Listening to one's customers would lead to Facebook getting "disrupted" — that's Valleyspeak for "rendered irrelevant" — by an upstart like, say, Twitter.

So let's be clear: Zuckerberg is telling his PR people to issue statements that Facebook is attentively listening to user feedback, at the same time that he is instructing his employees to ignore it. Facebook is getting disrupted, alright. But it's getting disrupted by its CEO, whom we hear is ignoring feedback not only from customers but from his own employees as well.

Instead, he's apparently relying on advisors like former Facebook executive Matt Cohler, who left the company last year to join Benchmark Capital, a venture-capital firm which invested in Twitter last month. Or, who knows — perhaps he's following the advice of a guru he met in India last May? Or some fellow CEOs he met at Davos?

Whoever Zuckerberg's listening to, he's doing so at Facebook's peril. Compete.com, a Web-traffic research firm, shows a steady downward trend in time spent on Facebook since the rollout of the redesign a week ago:

It's early yet, and Compete's statistics are far from conclusive. But numbers on actual usage are by far the most important feedback users are giving — the silent majority who are merely clicking away, rather than posting their gripes. It's telling that nowhere in the company's statement are actual figures on how the redesign has boosted Facebook's traffic. If they were anything to brag about, don't you think Facebook would be sharing them?

(Photo by World Economic Forum)

A tipster tells us that Zuckerberg sent an email to Facebook staff reacting to criticism of the changes: "He said something like 'the most disruptive companies don't listen to their customers.'" Another tipster who has seen the email says Zuckerberg implied that companies were "stupid" for "listening to their customers." The anti-customer diktat has many Facebook employees up in arms, we hear. (Anyone care to send us the full memo?)

"Disruptive" is a good description for the changes Facebook made. Unlike past changes, like the controversial introduction of Facebook's News Feed — a summary of friends' activities on the site, including status updates — or the tweaks Facebook made last fall, Facebook's new "Stream" takes away far more than it adds. No wonder even Silicon Valley insiders, normally the biggest champions of anything and everything brand new, hate it.

Damn the critics, full speed ahead! That's what Zuckerberg seems to be saying. if our tipster is right, Zuckerberg would rather Facebook be "disruptive" than, say, popular, useful, or successful.

What's a good example of a disruptive company? Why, Twitter, which Zuckerberg tried to buy for $500 million in cash and stock. Having failed to grab Twitter, Zuckerberg has redesigned his website in its image — a steady stream of real-time updates which are impossible to follow unless you stay on the website all day long. Which sounds great, unless you have a job, a family, or a life.

The notion that Facebook should not listen to its customers contradicts what Zuckerberg was saying just a month ago when he was reacting to a groundswell of criticism over Facebook's new terms of service, which seemed to imply Facebook could keep publishing users' text and photos even after they deleted their accounts. At the time, Zuckerberg took listening to feedback to a loopy extreme, promising the online equivalent of a constitutional convention for Facebook users to decide how the site's legalese should read.

There's no such user convention promised over Facebook's design, however. But who would expect a 24-year-old to be anything but fickle and inconsistent?

Here's the question: If Zuckerberg is no longer listening to Facebook's users, who is he listening to? We hear that Facebook's top executives are furious over Zuckerberg's close personal ties to former Facebook executive Matt Cohler (pictured to Zuckerberg's left, above).

Cohler, an early Facebook employee who helped direct the company's strategy, left last fall to join Benchmark Capital, a prominent Silicon Valley venture-capital firm best known for backing eBay. But he has remained, to this day, on Facebook's payroll as a special advisor to Zuckerberg.

Last June, that seemed untroubling. But last month, Benchmark invested in Twitter at an eye-popping $230 million valuation. And Zuckerberg's conscious, obvious mimicking of Twitter is the best endorsement he could have given the startup.

(Photo via SiliconBeat)

How fitting, since Second Life, a piece of software which allows users to move "avatars" representing themselves around in a three-dimensional space and decorate themselves and their virtual land, resembles nothing so much as a failed academic experiment.

Linden Lab, the maker of Second Life, has raised $19 million in venture capital from a star-studded list of backers, including Benchmark Capital, the backers of eBay; eBay founder Pierre Omidyar; Mitch Kapor, the founder of Lotus; and Amazon.com CEO Jeff Bezos. But the last infusion came nearly three years ago. The company charges fees on people and companies who own virtual land in Second Life, and also issues a currency, Linden dollars, used to trade goods in-world. Kapor, the company's chairman, told the Financial Times last year that it was "absolutely in the ballpark of profitability."

Second Life may well be on the verge of profitability. But it is firmly headed into irrelevance. It is impossible to imagine another BusinessWeek cover story like the one it garnered in 2006. Reuters closed its Second Life bureau last year. The former bureau chief, Adam Pasick, told PBS's Mark Glaser that there was no longer a there there:

We were primarily interested in Second Life as a business/commerce/finance phenomenon, covering it like we would any small but fast-growing economy in the real world. The bureau is now closed. Essentially the story we were there to cover has moved on.

His reporter, Eric Krangel, who now writes for Silicon Alley Insider, was more trenchant:

The very things that most appeal to Second Life's hardcore enthusiasts are either boring or creepy for most people: Spending hundreds of hours of effort to make insignificant amounts of money selling virtual clothes, experimenting with changing your gender or species, getting into random conversations with strangers from around the world, or having pseudo-nonymous sex (and let's not kid ourselves, sex is a huge draw into Second Life). As part of walking my 'beat,' I'd get invited by sources to virtual nightclubs, where I'd right-click the dancefloor to send my avatar gyrating as I sat at home at my computer. It was about as fun as watching paint dry.

What's left for Second Life? Community meetings, underattended cultural events, and education. CNN uses its Second Life "island" to hold meetings with volunteer reporters. WGBH threw a virtual concert with a grand total of 70 attendees. And the Modern Language Association, that bastion of English-department wonkery, is pursuing the idea of using it to hold meetings.

Imagine a dry academic conference enlivened with a few space-alien avatars. Deans with mohawks and tight leather pants! Only compared to the life of a university professor might Second Life actually seem exciting. We look forward to the news that Linden Lab has sold itself to an academic consortium. It's where the virtual world belongs.

It is an unprecedented amount for a company unburdened by the messy reality of taking money from paying customers. Twitter has raised more than $20 million in two previous rounds of financing. And its new investors, which include Benchmark Capital, an early backer of eBay, and IVP, a less distinguished Silicon Valley financier, are only getting 15 percent of the company for their $35 million, a much larger amount than rumor had Twitter raising. Here are bullet points from an email that Twitter CEO Ev Williams (above) sent to investors:

* Twitter has raised a new round of funding from Benchmark and IVP
* Yes, the round was $35M
* Major existing investors include USV and Spark
* Existing investors also includes CRV, Digital Garage (from Japan), and an impressive stable of angels
* Benchmark's Peter Fenton will be joining Twitter's board of directors
* Twitter is committed to building a strong, independent company

Cofounder Biz Stone claimed in a blog post that the company had "significant capital" from last year's $15 million round with Spark and USV. Translation: Twitter has spent a large part of that sum in the past nine months — but it's not completely broke.

A strong, independent company is a longshot, considering that Twitter must pay cell-phone companies to deliver its short text updates to users' cell phones, while not pulling in compensatory revenues. Twitter's best hope is a buyout — and what its investors have just done is give it a better hand to bluff with, until it suckers some larger Web company into figuring out how to turn Twitter's 140-character-long updates into cash.

InStranet went through its third round of funding way back in 2001, when it raised $14.7 million at a $50 million valuation in a round joined by Benchmark Capital. So it's not a huge exit. Then again, at least it's an exit. Salesforce.com will also report its second quarter earnings today. Analysts expect $260.56 million in revenues for a 47.6 percent year over year growth.

The NVCA survey reveals why the problem will not self-correct over time. Most VCs are hired from outside the industry, rather than rising up through the ranks. Underlings, by and large, remain underlings, while VCs hire their buddies out of tech startups. A good example: The all-male, all-white team of Benchmark Capital, which recently added white male Facebook executive Matt Cohler as a general partner. That's not to say that Cohler's hire was undeserved — but it is utterly typical.

Cronyism is alive and well in the venture-capital industry, accounting for the active discrimination evidenced in its demographics. There's no doubt that women and minorities could make venture capitalists. The question is whether the dominant firms of Sand Hill Road will afford them the chance to prove themselves, by taking a shot on hiring someone who doesn't look like the rest of the team — or if those excluded from the industry will have to make the point the hard way, by making more money than the old guard. The latter would be very satisfying to watch happen.

Update: Michael Chang writes:

This was indeed a firm sanctioned event to express our appreciation to the top intermediaries who had been kind enough to send us investment opportunities at the start of our new fund. In fact, we just had our annual meeting to our LPs today and discussed the biathlon with them. They found it a creative way to drive increased deal flow to the firm.

Benchmark has said publicly that they will never fund a woman-founded company. They've never had a woman partner. And the mood seems to be like a frat party (a real turnoff to women).

We're wondering, when and where did any Benchmark partner really make such a claim? (Seriously, can anyone help me find it? I've been looking all day with no luck.) Secondly, well, i'ts not really true, right? Benchmark-backed E-Loan was cofounded by Janina Pawlowski. And Sarah Leary, pictured here, just joined Benchmark, along with Nirav Tolia, as an entrpreneur-in-residence — the surest way for a startup founder to get backing for a new venture.

Update A spokesperson for Benchmark writes in:

What follows are 4 more examples of Benchmark funding/recruiting women CEOs of public companies.

* Meg Whitman/eBay
* Donna Dubinsky/Handspring
* Lorrie Norrington/Shopping.com
* Maggie Wilderotter/Wink Communications

Call me if you need clarification. My cell is [REDACTED]. And no, I have no idea where that ridiculous quote came from. Certainly not one of the Benchmark partners!

Of his past transgressions, which included doctoring his resume to say he worked at McKinsey (he hadn't) and completed his Stanford degree (he later finished it), he had this to say: "I did it, it was wrong, it was dumb, I won't do it again." And he had news of interest to Valley oldtimers: He's thinking of restarting Round Zero, the '90s boom-era networking group famed for its lavish dinners and raucous arguments.

Some gentle value-building seems fine, but a nine-item "Why we're better" chart? If you kids don't stop fighting, Benchmark will turn this fund right around...

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