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Saturday, April 24, 2010

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Ditch the Biz Plan, Buy a Lottery Ticket

Posted: 24 Apr 2010 07:30 AM PDT

Hardly a day goes by when I don't have a rookie entrepreneur ask for advice on raising money from VCs. They usually have a fancy-looking business plan with detailed spreadsheets showing how their company will be worth billions by capturing just 1% of a market. All they need is some financing, and they'll take the world by storm. My advice is always the same: ditch the business plan, and buy a lottery ticket. Your odds are better, and you'll suffer less stress.

Most of the young entrepreneurs I meet have grown up reading stories about how, during the dot-com days, all you needed was a PowerPoint and a geeky smile to get a venture capitalist to throw millions your way. True, some really dumb companies were funded during those days, but nearly all of these companies (and their investors) went down in flames. It was just the few, random, successes that reaped the fortunes. Investors have grown much wiser since then (and will probably stay this way until the next bubble).

The reality is that the vast majority of startups don't receive any VC or angel funding. Ask any VC about how many business plans they receive every month; it is in the thousands. And how many of those companies do they fund? Maybe one or two. Not great odds, are they? My research team did a study of successful companies in a variety of high-growth industries (in which VCs like to invest): those that made it out of the garage and had real products and revenue. We found that only 10.8% of them raised venture capital at any stage of their growth. In other words, nine out of ten didn't get venture financing. Similarly, only 9.2% received angel financing.  Here is another interesting statistic: according to the Venture Economics database, only 4.6% of venture capital went, over the last decade, to startup/seed-stage companies. So even the one in ten that received venture financing likely got this in later stages of its growth, not at the seed stage.

Where did successful companies’ founders get their financing from? Seventy percent used personal savings, 15% took bank loans (probably on their credit cards), and 14% relied on friends and family. (Note: they typically use more than one source for financing.)

The way the system works is that if you build something of value, the money will find you. Yes, there is a catch-22: you need seed financing, but no one will give you a cent until you have a marketable product and your company is producing revenue—which means that you don't really need the money. But that's the way it goes. Ironically, raising millions of dollars is usually easier than raising thousands.

I've founded two tech companies, and we raised close to $100 million in private and public financing over the years. I bootstrapped my second startup up to the point that I had VCs tripping over each other to fund it. My advice for entrepreneurs in industries with relatively low capital costs (like internet/software) is to bootstrap. Of course, you can start by trying raising venture or angel capital when you have just an idea (you never know, you might get lucky); but don't waste too much time on it. And don't get discouraged if they turn you down; you are in the majority. Instead, focus on validating your idea, building it, and selling for survival. You'll have to raise the money to get started by begging and borrowing from family and friends. Be prepared to dip into your savings and credit cards, obtain second mortgages, and perhaps look for consulting work or customer advances.

There is no single recipe for bootstrapping a company, but there are some essential ingredients. Here are some pointers:

  • Share your ideas with those who have done it before. You can learn a lot from the experiences of seasoned entrepreneurs, and they are much more approachable than you would think.. If you can’t find anyone who is excited about your idea, the chances are it isn’t worth being excited about. It may be time to reflect deeply and come up with another.
  • Find a way to connect with your market. Speak to potential customers, analysts, business partners—anyone who can help you understand your target market. If you can sell customers on your concept, maybe they’ll help you fund it or agree to be a test site or a valuable reference. Customers don’t usually know what they want, but they always know what they don’t need. Make sure that there is a real market for your product.
  • Start small. Your idea may be grand and have the potential to change the world, but you are only going to do that one step at a time. Look for simple solutions, test them, and learn from the feedback. If you’re starting a restaurant, work for someone else first. If you’re creating a software product, learn by doing some consulting assignments or create some utilities. You don’t have to start with the ultimate product.
  • Focus on revenue and profitability from the start. Watch every penny. Find creative ways to earn cash by selling tactical products, prepaid licenses, or royalties. Pay employees partially in stock. And sweep the floors yourself. Look for free or leased hardware and lab facilities—from universities, government subsidized incubators, friends—any which way to avoid capital costs.
  • Remember the importance of cash flow. This means setting aside the big opportunities while you complete small deals with a short sales cycle and recurring revenue.
  • Think outside the box. There is always a better way to solve a problem. There is no point in following the path of others; you’ll find yourself battling established competitors on their turf.
  • Learn to sell. To succeed in life, you have to persuade people to give you what you want, and you achieve this by convincing them you’re offering something good for them. As an entrepreneur, you’re always selling—whether you are marketing your product, recruiting talent, or raising capital (read this).
  • Prepare for the worst. It’s going to take longer than you think. There will likely be product problems, unhappy customers, employee turnover, and lots of financial challenges. You may even fail a number of times before you achieve your goals. By learning from each success and failure alike, you increase the odds that you eventually make it.
  • Never forget the importance of ethics and integrity. Ethics need to be carefully sown into the fabric of any startup (read this). Once you sell your soul for short-term gain, you never get it back. Also, focus on customer success. The only way to reach long-term success is by achieving outstanding customer satisfaction.

You'll find that it is much easier to raise capital after you've had success. In our research, the percentage of company founders who raised venture capital increased from 10.8% to 26.3% after they had started a few companies. This isn't surprising: by this time, you have experience and, with luck, some savings; you're street-savvy and have good industry contacts; and you don't need venture capital—that's when you become most attractive to VCs and they come knocking on your door.

Editor's note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. Follow him on Twitter at @vwadhwa.

How The iPad Will Change The iPhone Game Industry

Posted: 24 Apr 2010 07:00 AM PDT

This guest post was written by Alex Ahlund, the CEO of AppVee and AndroidApps, which was recently acquired by mobile app directory Appolicious. He is currently an advisor to Appolicious.

Apple is hailing the iPad as a “magical” and “revolutionary” device. Perhaps, but the feature set accompanying the first version leaves many of us skeptical of that claim. We’ve all seen tablets before and we’re already seeing similar ones coming out soon with better specs. What we need to consider more than the device itself are the effects its release will have on the market.

The iPad could potentially usher in a new set of casual users who may not already be iPhone or iPod Touch owners. This is good for business across the board, but the area that may be impacted the greatest is the iPhone gaming industry.

The current iPhone and iPod touch gaming landscape consists of pick-up-and-play micro games, watered down console ports, and some in-between titles. It’s hard to consider the iPhone a true gaming platform. The lack of physical buttons, coupled with the scarcity of deep, quality titles, may prevent the iPhone from ever becoming a true competitor to the Nintendo DS or Sony PSP. Unfortunately, there are even more issues that further intensify this problem.

The first is price point. Given the average game is sold for $.99 and the most expensive are $9.99, App Store prices differ wildly from other game markets. Even the downloadable casual games industry spans $10 – $20 on average. Think about this. Many of these are the same games that get ported to the iPhone. Not only are the games the same, but the target demographics as well. So how did this happen? The fault lies with developers and consumers alike.

Price is extremely psychological and both sides equally contribute to setting that standard. Prior to being involved in the iPhone industry, I worked for years in the casual games space. I saw the evolution of downloadable gaming go from the traditional core download.com-style shareware model to a full-blown casual gaming industry that catered primarily to 40-something women. To say the least, it was a stark contrast. Now, the most interesting component was seeing how price was affected when it moved from the underground to the mainstream. In the old shareware days, pricing was not uniform. It was the Wild West. But when the big guys (AOL, Yahoo, EA, PopCap, Big Fish, etc.) started to catapult the casual space, pricing had to be regulated for the psychological comfort of mainstream audiences. At the time, the sweet spot was $19.99. Some of those portals would sometimes try to undercut one another, but in the consumer’s mind, it felt suspect to pay significantly less. Alternatively, these portals went another route – subscription services, which offered deeply discounted pricing models.

I bring this up to provide a better understanding of pricing psychology. It first starts with what the industry as a whole unofficially agrees the average price of a similar product should be. This is determined with some guesswork and tweaking, while waiting to see what the market will bear. As time goes by, competitors start to undercut each other and the industry either follows suit or holds steady to that original average. Unfortunately, the iPhone game industry chose the former. I say ‘unfortunately’ because it is severely crippling the gaming space.

When the 3G was first launched, $9.99 was the average price of a decent, quality game. At the time, it was a fantastic price when we considered what DS games, downloadable titles and even those budget CDs at Walmart cost. This was not a lasting trend, though. As more developers flooded the market, prices continued to be pushed lower and lower. What drove this price drop was mainly gimmick apps and cheap games. The problem was that even though these products were clearly of lesser value and depth, the damage had already been done. In the minds of the consumers, paying $10 for an iPhone app, let alone more, had become a huge stretch. Instead of buying a new title at $9.99, most consumers simply waited for “the drop” – the inevitable price slash that developers enacted shortly after a game’s release. It was no longer a value proposition; it was a somewhat illogical psychological standard that had been created.

Most developers had to learn to flow with this changing market, embracing the fact that shear volume could often make up for their development costs. Typically though, these development efforts were focused on low-priced impulse apps. This is where the damage to the industry comes in. Since expected pricing is so low, it discourages quality game contenders from entering the space. The cost investment is still high to produce a quality product, especially considering the average sale prices are so low. To address this problem, one rumor we heard a number of months ago was the possibility of Apple opening a premium game space on the App Store. The intention would be to feature higher priced, higher quality games. So far, nothing has come of this.

In effect, this is keeping the iPhone gaming industry as still just typical mobile fare, with the occasional big game. As much as Apple wants this to be a serious competitor to the DS/PSP, it will never make it unless there is a shift. Indirectly, this is where the iPad comes in.

The iPad is not a pocket product

One of the biggest reasons that gimmicky apps and quick pick-up-and-play games have done so well is because the iPhone and iPod Touch are products that fit in your pocket. Typically, you take them everywhere and they are always within reach. This allows for the majority of use to occur within short periods of time (i.e. waiting in line, on the bus, during a boring meeting, etc.). To fill the needs of those sorts of time constraints, short-use applications fit the bill. This limits the desire for a deep experience or time consuming game.

The iPad changes this. As a device that works as an in-between for your mobile device and your desktop, the time use allowance goes up dramatically. In most situations, you won’t pull out your iPad while waiting in line at the post office. It won’t be carried everywhere you go. While some will treat it as a netbook substitute, I anticipate a lot of its use will occur casually at home.

Since the iPad is not a pocket-sized device like the iPhone and iPod Touch, time constraints become less of an issue. This means that bite-sized games or gimmicks will feel less at home here. Something like Doodle Jump will most likely not do so well on this platform. This is likely to cause the market to desire more fulfilling experiences, especially in the games space. In effect, developers will respond accordingly to meet this new market need. This acts as one phase of the changing landscape.

Price sensitivity will go down

There is an additional psychological component that hasn’t yet been addressed in regards to pricing: size does matter. Whether it makes sense or not in terms of value proposition, the actual size of a product can have some bearing on how we perceive its value. The small screen size of the iPhone and iPod touch causes us to perceive, whether consciously or unconsciously, that the applications are worth less than something you can interact with on a big monitor. Diner Dash on the iPhone is identical to Diner Dash on the PC. Yet, the price points are dramatically different. One aspect is market-determined pricing averages and the other is perceived value. Many consumers perceive a higher value from their larger screened PC experiences.

The additional screen real estate of the iPad makes apps feel more like “real” applications. Visual interaction with the iPad screen feels closer to that of a monitor or TV. It removes the notion of the “pocket-sized time waster” and seems to provide a more substantial experience. Take a game like Civilization Revolution. Which experience feels more enriching: playing it on the small screened iPhone or playing it on a full sized device with many times the screen real estate? Despite being the same game, more breathing room provides for a deeper and more enjoyable experience.

This will start a new cycle for the App Store. Reduced price sensitivity will create opportunities for deeper games and apps, which will then help set a new pricing standard. $.99 gimmicks will always exist, but now alongside a new wave of higher quality products.

Shallow apps will decrease across the board

The goal of developers is to increase revenue at every possible avenue. This means creating a product that can span multiple platforms. Unless highly specialized, apps work just as well on the iPod Touch as they do on the iPhone. The same should hold true for the iPad. By reducing focus on one of the platforms, you start losing a whole market segment – and additional revenue source.

However, simply upscaling current applications is a very short-sighted solution. It is a way for Apple to capitalize on the 150k+ apps out there for their new device, but this isn’t going to work for the longterm. Using an application unoptimized for a larger device, and not tailored for the iPad’s greater screen real estate, will feel like a tacked on experience. Because of this, more users will want to download iPad-specific applications to take advantage of their shiny new device. For some products, such as 3D games like N.O.V.A, upscaling may not be an issue. These games can scale with ease, with only slight modification to interface images. But for the rest of the app work, doubling the pixels is going to be a complete mess.

Now what effect does this have on gimmicky apps and games? It forces these developers to rethink their model. As we discussed, when you develop an app, you want to capitalize on all revenue streams possible. If you produce a product that only makes sense on the iPhone, you will miss out on new opportunities provided by the iPad. Short lived gimmicks and micro-gaming experiences are unlikely to fare well on the iPad. The effect of this realization may likely cause a decline in small sized, $.99 apps as a whole. There will always be a place for these, but to really maximize profit potential, focusing on them solely is a short-sighted plan.

The iPad is a device that may be misunderstood for a while. It’s certainly not revolutionary in the typical sense, but its subtle influences may eventually justify that characterization. We can surely expect to see even more casual users jumping on the band wagon and certainly a spike in casual game development for the device. As the product evolves, becoming more powerful feature-rich, it may become even more ubiquitous than we expect. This will be an extremely interesting space to watch within the coming months and years.

IMVU Hits $40 Million Annual Revenue Run Rate

Posted: 24 Apr 2010 03:57 AM PDT

Yesterday at the Startup Lessons Learned conference in San Francisco, Brett Durrett, James Birchler and Timothy Fitz from avatar-based social network and 3D virtual world IMVU took the stage and talked about scaling startups (worth your time).

IMVU CEO Cary Rosenzweig didn’t come speak at the event, but was featured in a video preview on the event website (third video on that page).

In this video – I’m not sure how long it has been online already – Rosenzweig boasts about the company’s profitability and cites its annual revenue run rate, which he says is now at $40 million.

This means that if you multiplied the company’s current monthly revenue times 12, you’d get $40 million. Notably, that’s up from a $25 million annual revenue run rate back in October 2009. That’s a lot of growth in income in roughly half a year.

So how did revenue increase? Simple: more users buying and earning credits in the 3D world and buying virtual goods, such as clothing for their avatars to furniture for their virtual rooms.

On a sidenote: in charge of revenue generation at IMVU is Lee Clancy, formerly Senior Director for Community Products at Yahoo.

IMVU was founded in 2004 and is backed by $29 million in venture capital, raised over 4 rounds. The company employs 60 people in Palo Alto, California, according to its website.

In October, the company claimed more than 40 million registered users and 6 million unique visitors per month (numbers they also use on their about page), but I’ve been unable to retrieve more recent numbers.

(Thanks to Kyle Mulka for the heads up)

How Not To Handle A Resignation Gracefully

Posted: 24 Apr 2010 12:08 AM PDT

There are two sides to every story, but this email exchange between Mahalo founder and CEO Jason Calacanis and one of his (now former) employees is a lesson in how not to handle a resignation.

Jason says this was a private exchange and that he was just being honest with Evan. Evan says Jason can’t control his emotions.

If you’re going to trash your employee, do it verbally so that there isn’t a record of it on the Internet later. Or, don’t trash them at all and organize drinks with the team to see them off so that the rest of your employees know you care. Read from the bottom up.

April 20, 2010


Jason Calacanis at his finest.

I should note, that instead of responding, he instead removed my email account. Real pro of him. Good thing I forwarded it to myself first :P

Begin forwarded message:

———- Forwarded message ———-
From: Evan Culver
Date: Tue, Apr 20, 2010 at 10:53 PM
Subject: Re: Resignation
To: jason@calacanis.com


What is your deal? I will ultimately *have* to come back to Mahalo to pick up my things. Why so rash, what is your rationale? This seems really unprofessional and when other developers and employees see this, it just makes them want to leave ASAP. Is it really that big of a deal that people find better things for them than Mahalo?

On Tue, Apr 20, 2010 at 10:19 PM, wrote:


Don’t come back to the office, do not email the team list.

Elliot will send you paperwork tomorrow. Today was your last day.

Good luck being employee 4,367 at a dying company.

Horribly disappointed in you.


Sent via BlackBerry from T-Mobile

From: Evan Culver
Date: Tue, 20 Apr 2010 21:48:37 -0700
To: Jason Calacanis; Jacob Burch; Jeff Ammons
Subject: Resignation

Hey guys,

This isn’t an easy email to write, but as the subject suggests, this email is to inform you of my resignation from Mahalo effective in 2 weeks. An amazing opportunity came out of nowhere that I just couldn’t say no to. I’ll be writing code as a UI engineer at and contributing to the open-source project on a full-time basis.

I’ve never worked with such a great team and learned so much in such a short period of time. I owe all of it to the opportunity you’ve given me, Jason and I thank you immensely for that. Jeff and Jacob, you guys are amazingly brave for tackling such a great undertaking. I’m impressed you do it with seemingly such ease. Many people would fail quickly in your shoes and I applaud you for your leadership in such a fast-paced environment and against such great odds.

I certainly won’t be going far (), so I hope to continue a lasting relationship and hope that we all can work together sometime in the future.

Thanks again,

Apple TV Will Remain A Hobby Until Someone Shows Apple The Money (Or Apps)

Posted: 23 Apr 2010 09:38 PM PDT

During the Q&A session of their earnings call this week, Apple COO Tim Cook fielded a question that he gets seemingly every earnings call: what’s the deal with Apple TV?

The question is a good one. While Apple is spending plenty of time and money on new products such as the iPad, which at least in part aims to change the way we consume media, Apple has largely neglected the Apple TV (a device, which it seems, would have a similar role). This time, Cook gave a little more insight as to why that is.

It’s still a hobby,” Cook said, repeating the line him and CEO Steve Jobs have used time and time again to describe the device. But he continued on with a bit more. He said that if you look at the markets Apple is in, computers are a 300 million unit a year business (industry-wide), cell phones are a 1.2 billion unit per year business, and even MP3 players are a 100 million unit per year business. “These are enormous markets,” Cook noted. “The market for Apple TV is not, in our view, nearly that large yet. That’s why we classify it as a hobby,” Cook went on.

In other words, Apple isn’t taking it too seriously because they haven’t yet figured out a way to make a lot of money off of the device. And as we all should know by now, Apple loves to make money. It doesn’t make products just to make them. That’s why the Apple TV’s position remains a weird one. For now.

Cook also said that the “hobby” wording was mainly because Apple didn’t want to trick people (presumably investors and analysts), into thinking they were taking the product seriously at this time. You might think that’s just a way to deflect criticism that it hasn’t been a hit product (on the scale of say, the iPhone), but Cook also noted that sales of the device are up 34% year over year.

Further, he went on to say that, “a number of us love the product, and use the product. We continue to think there’s something interesting there.” That can be read as, “we’re not giving up on the product, we’re just waiting for the market to mature.”

Perhaps Cook took this opportunity to expand his thoughts a bit about the Apple TV because he hears this questions over and over again. There are also no shortage of blog posts from Apple TV owners out there (like me) who enjoy the device, but wish Apple would take it more seriously. But what Cook says is undoubtedly true. Just look at Apple’s other businesses. They make billions on the iPhone, billions on Macs, and billions off of iPods. With both Macs and iPods, they make that money off of high margins on the hardware. With the iPhone, it’s largely from the huge subsidy AT&T pays Apple for each device sold.

The Apple TV, at $229, likely has a pretty good margin for Apple, but the problem is that thing is entirely dependent on video content, which Apple simply doesn’t have enough of at a compelling enough price. This is, of course, Hollywood’s fault. When Apple unveiled the Apple TV in 2007, the company probably thought Hollywood would fall inline with its video distribution plans (for both television shows and movies) the same way the music industry had. But Hollywood wasn’t in nearly the position of weakness that the music industry was in (but with those plummeting DVD sales, could be soon), and as such, has been playing hardball with Apple.

For example, it took Apple a while to get the rights to be able to rent movies over iTunes (and the Apple TV) rather than making users buy them outright. Then it took more time to get HD content (which there still isn’t a ton of). And the latest rumors have Hollywood balking at Apple’s attempts to offer television subscription services, rather than making users buy each show. And they’re probably not too keen on the idea of Apple storing content in the cloud and streaming it to users either (at least, not without the ridiculous windowing deals like they have with Netflix).

Just as with music in iTunes, Apple doesn’t care about making money off of the content, but it needs to content to sell the hardware, where it does make the money. (Though, the subscription idea may be different, and may make Apple a nice chunk of change, that’s not clear.) With Hollywood holding back the content, or restricting it to the point where it’s less desirable to the consumer, it’s holding Apple’s plan for living room domination, captive.

But you can bet that Apple is thinking about ways around this. For example, while there isn’t much indication that it will happen yet beyond some vague patents, I would bet (as I have for a while) that Apple will eventually release an App Store for the Apple TV, just as they have for the iPhone and now iPad. It just makes sense. People love playing games on the iPhone and iPad, and they’ll love playing them on their big screen TVs too. The resolution issue (televisions have many different sizes and ratios) may be a bit of an problem to work around, but I still bet it will happen sooner or later.

And when it does, you can probaly expect a Netflix app, an ABC streaming app, and maybe even a Hulu app — three things that will make Apple TV much more attractive to a number of buyers. Those pipelines of content, on top of YouTube (which is already on Apple TV), and iTunes will make people take the Apple TV seriously. And hundreds of thousands of apps that you can use on your TV (perhaps interacting with them from an iPhone or iPad) could very well make the Apple TV a must-own device. You know, the type of device that makes billions of dollars in profit for Apple. In other words, no longer a “hobby.”

Gilt Launches Groupon Competitor ‘Gilt City’ In NYC

Posted: 23 Apr 2010 05:03 PM PDT

Gilt, the well-funded company that sells high-end luxury goods online at steep discounts in short-term “flash sales”, has its eyes set on a new target: Groupon. At least, it’s launching a new service that has a very similar model. In the last two days, Gilt has been sending some members invitations to ‘Gilt City‘, where they can get “exclusive local deals and offers up to 70% off.” The service is only available in New York City for now, but it’s clear that Gilt intends to expand it elsewhere. As with Gilt’s normal flash-sales, you’ll have to request an account to take part (it looks like existing accounts already work).

Like Groupon, Gilt City offers deals from local businesses (restaurants, beauty salons, etc.) and events. Deals are available in limited quantities and for a limited time. But the site differs in a few ways from Groupon: there doesn’t seem to be a minimum number of participants needed for a deal to become “activated”, and some stores are offering multiple deals. And unlike Groupon’s one-deal-per-day, Gilt only updates once a week for now.

Gilt is only the latest in a long, long string of Groupon-like sites to launch recently, but it’s in a better position than most. Gilt already has a strong brand presence, and it’s raised $48 million. But it’s typically focused on luxury goods whereas Groupon has a broader focus, so there’s likely room for the two to coexist.

Among the deals currently being offered are specials at a local salon, a trendy restaurant, and a show, all of which are high-end. However, there’s also a deal for the 16 Handles yogurt chain, which has a pretty broad appeal.

Thanks to Josh Goldman for the heads up.

Santa Clara County Police Now Looking Into the Lost iPhone Prototype

Posted: 23 Apr 2010 05:00 PM PDT

About eighteen seconds after word got out that a prototype of Apple's next iPhone had been lost, found, and then subsequently sold to Gizmodo (for somewhere around $5,000), commenters and pundits everywhere started asking: is all this legal? There are a bunch of complicated laws involving the ownership and selling of lost goods -- not to mention lost top-secret intellectual property -- and this iPhone seemed to be sitting in a pretty nasty gray area. Turns out, the people of the Internets aren't the only ones interested -- the Santa Clara County police are curious, as well.

Mopho.to Blends Location Based Check-Ins With Photo Sharing

Posted: 23 Apr 2010 03:24 PM PDT

Location based apps and services are all the rage now, with Foursquare, Gowalla, Loopt, and Twitter leading the space. Startup ChoiceVendor has launched a location based iPhone app and service called MoPho.to that has a different twist. Instead of an emphasis on check-ins, MoPhoto is designed around the idea of capturing a photo. It’s “social photography” with geotagged photos enriched with metadata, comments, and likes. You can download the free app here.

Similar to Foursquare, Gowalla and others, MoPhoto is built around a free app and website. And the service currently allows you to tap into your social graph on Facebook. Here’s how it works. The app is essentially built around the camera, requiring you to first take a photo at an event or place (bar, restaurant, business, work etc). Once you take a photo, you can add a caption and you must pin the photo to a geographic place or event. Places are sources from GeoAPI (which was acquired by Twitter last year) and events are sourced from your Facebook events (although the app will eventually pull events from Last.fm and possibly Plancast). When you take a picture, you’ll be given a list of possible place or events near you according to your geolocation.

Once you publish your photo, the image, along with your location according to place or event, will be pushed to your friends who are also using the app, to Mophoto’s site and your Facebook friends, via Facebook Connect. Mophoto will soon add the ability to push to Twitter as well. On the app and site, you’re notified when your friend posts a photo and can easily see photos your friends are posting from places and events around you, giving you an opportunity to follow them in pictures. You can also comment on and “favorite” their photos.

While Gowalla allows you to publish photos with your location, Mophoto aims to differentiate itself by emphasizing the photo first, with the check-in as an afterthought. ChoiceVendor founder, Yan-David Erlich adds that eventually on the site, you’ll be able to search for a particular venue, business, or event, and see all the photos taken by Mophoto users at that events space.

The eventual aim is to create a visual timeline of events and local establishments. There are not current aims to monetize, but Erlich says that there is the possibility of monetizing data about venues.

The app essentially blends Foursquare with Facebook with TwitPic, creating a photo based social network of sorts. Of course, we still don’t know Facebook’s detailed plans for location, so that could become a competitor in addition to Twitter, Gowalla, Foursquare, Loopt and a plethora of others. Erlich, who is an entrepreneur-in-residence at Battery Ventures, and his co-founder are also soon launching ChoiceVendor’s other project, which is essentially a Yelp for the the B2B space.

YouTube’s IPL Cricket Streams Near 50 Million Views, Blow Away Internal Expectations

Posted: 23 Apr 2010 02:44 PM PDT

Last January, news broke that YouTube had signed its first international sports streaming deal, gaining multi-year rights to broadcast the Indian Premiere League’s 45-day cricket tournament worldwide. We’re now closing in on the conclusion of the tournament — the finals begin on Sunday morning — and YouTube has shared some initial stats.

Right now, YouTube’s IPL channel has over 49.5 million views. That far exceeds the company’s internal expectations: we’re told that their stretch goal was to get 10 million views over the course of the tournament. Viewers from 200 countries have watched the streams. Unsurprisingly, India has the most views overall; coming in second is the United States — YouTube had expected that spot to go to the UK or Australia, where cricket gets far more attention.

When the IPL deal was first signed it granted YouTube live streaming rights for every country except for the United States, where matches have been posted fifteen minutes after they ended. However, YouTube is streaming both the semi-finals and finals live (we’re told YouTube’s biz dev people worked “around the clock” to make that happen). All of which means the final view tally is going to be way more than 10 million.

Palm Shake-Up Imminent, Rubinstein May Be Out

Posted: 23 Apr 2010 02:00 PM PDT

Palm right now is a disaster. Its sales are going nowhere, its market share is plummeting, and try as it might, it can’t even find a buyer. Industry sources tell us that a major restructuring and management shakeup is imminent and CEO Jon Rubinstein may be replaced.

This is still a rumor at this point, but it makes sense. Palm is suffering from a ton of unsold inventory, and it cannot keep up with Apple, Android, or Blackberry in the smartphone wars. Palm clearly needs to be bought at this point if it is going to survive, and Rubinstein may not be the right person to make that sale. Rubinstein came from Apple, where he was head of hardware. He was recruited by Palm’s biggest investor Elevation Partners. Rubinstein is great engineer, but not a great marketer. It appears he is having trouble selling Palm, even as a distressed asset.

The writing is on the wall. Palm’s executive talent is already beginning to walk out the door. Palm still has some valuable assets in terms of products, patents, intellectual property, and a recognizable brand. But Rubinstein may not be the best person to make a sale happen. He was brought in to take on Apple, after all. Not to sell damaged goods.

I’ve reached out to Palm for comment.

Palm Post: Another Exec Set To Take Off

Posted: 23 Apr 2010 01:45 PM PDT

Palm has seen better days. Following the departure of senior vice president of software, Michael Abbott (who landed at Twitter), the company has been offering packages to try and keep other executives around. That may not be working so well. Caitlin Spaan, Palm’s vice president of carrier marketing will be leaving the company shortly as well, we’ve learned.

This was likely not an easy decision to make for Spaan, she’s been with the company for 14 years. In fact, she may have been the last of the old school team in place before Jeff Hawkins (Palm founder), Donna Dubinsky (former Palm CEO), and Ed Colligan (also former Palm CEO) left to form Handspring (which merged with Palm in 2003).

Following a very bad earnings report in March, word started circulating that Palm was looking for a buyer. Yesterday, Financial Times reported that CEO Jon Rubenstein is committed to Palm surviving as an independent company but admitted that they’re open to other ideas. Ideas, including, letting other manufacturers make phones with Palm’s webOS software, and yes, looking at takeover bids.

Earlier today, Reuters reported that Lenovo is now the leading candidate to take over Palm. But the bad news continues, the same report had HTC dropping out of the acquisition race after reviewing Palm’s numbers.

Update: And as we’ve just heard, the latest rumors have Rubenstein possibly being out as well.

Facebook’s Open Graph: It Depends On What The Meaning Of The Word “Open” Is

Posted: 23 Apr 2010 01:05 PM PDT

Grab the popcorn. There is a serious nerd fight brewing.

Following Facebook’s big Open Graph announcements at f8 a couple days ago, many of the leaders of the so-called “open web” are taking exception to Facebook’s use of the term “open” for its grandiose plans. While the Open Graph may be a lot of things, it is not open, is the feeling many of them have, as Erick laid out earlier.

Specifically, most of them are targeting the new Like button that is appearing everywhere on the web (including on TechCrunch). It’s an obvious target as it’s the most visible part (at least so far) of the Open Graph protocol. Investor/Hunch co-founder Chris Dixon is leading the effort for a new OpenLike button (though he wants someone else to be in charge). And Google’s Open Web Advocate, Chris Messina, has already ripped apart Facebook’s Like button in a blog post.

Anyone could have predicted these reactions immediately after Facebook’s announcements — in fact, I did (last paragraph). The fact of the matter is that Facebook is one of the most powerful forces on the web and they’re now using that position to introduce a new platform that will yes, help them. Shocking, really. A company that wants to do something that will benefit itself. But I do believe that Facebook, at least in part, believes this will also make the larger web better too. But that’s not going to be good enough for some, because it’s not fully open. Nevermind that plenty of these fully open solutions always being advocated never make it off the ground for one reason or another.

But what may be most interesting to me in all of this is that Facebook actually has one of these open web guys working there. In August of last year, Facebook hired Dave Recordon as a “Senior Open Programs Manager.” Recordon has long been a central figure in the open web discussion. For example, back in 2005 he helped create OpenID. So I asked Recordon what he thought about this latest melee, and specifically, Messina’s post.

In response, Recordon pointed me to this Google Group thread. Here, Recordon has a long response directly to a question Messina asked. I’ll paste both below.

Two days ago, Messina wrote:

In all seriousness — not trying to snark — just trying to understand what’s intended by “open” in the open graph protocol?  Thanks! Congrats on the launch.


Yesterday, Recordon answered:

I think open means a few things in this context:

First of all it is designed to increase openness between people based
on being able to connect with things all around the web. Within
Facebook this means that people can like any web page anywhere, not
just those on facebook.com.

Second, the Open Graph protocol increases the amount of semantic data
on the web in a manner that isn’t specific to Facebook or any single
social network. While we can all disagree about where the quotes and
angle-brackets should go, at the end of the day I think we all can
agree that this sort of metadata is good for the web.

Third, it was created and implemented by more than one company. We’re
now broadening that group of people (right here) and are interested in
evolving the spec in a meritocratic fashion.

Finally, it’s licensed from day one under the Open Web Foundation
Agreement (http://bit.ly/6zaAYh). As Jesse Stay wrote (http://bit.ly/
c0ROCw), this means that it, “is under a completely open license
agreement that other platform creators can adopt, use, and freely

That help?


To that, Messina responded:

What other companies were involved in the creation of the OGP?

Where is the signed agreement? While I think it’s awesome that you’re using
the OWF agreement here, it seems like there actually needs to be a signed
agreement stored someone online by ALL the parties that affected by the
terms of the agreement.

Thanks. Eager to see the signed agreement!

At this point, Recordon noted that they should probably move the discussion to the Open Web Foundation mailing list. I assume anyone can sign up for that (wouldn’t be very “open,” if not), so look there for more juicy open web in-fighting.

Recordon has some good points there, but the one he doesn’t make (of course), is that Facebook has the right to do things beneficial for Facebook. The best argument you can make against this is that what’s beneficial to Facebook may not be most beneficial to us all. In a thorough breakdown of Open Graph at ReadWriteWeb, Alex Iskold (who is also active in the OpenLike community) makes a good case for this:

Technically speaking, what Facebook has done is elegant and correct. From markup, to plugins, to API, all of it is modern and awesome. The missing bit is that Facebook appears to be the only repository of data in this equation – and that makes the whole offering seriously closed. Publishers and users don’t have a choice as to where to store the data. It is going to Facebook and Facebook alone. Perhaps there is a way to rework the system in a way that fixes that.

Of course, then publishers don’t have to use Facebook’s Like button. But they will — I can think of nearly 500 million reasons why. Love it or hate it, that’s the way it is. It’s not good versus evil. It’s not black versus white. It’s a million shades of gray, as always.

SupersonicAds Sets Out To Help European Publishers Monetize Virtual Currency

Posted: 23 Apr 2010 11:55 AM PDT

Arik Czerniak, founder and former CEO of social video sharing site Metacafe, has co-founded a new company with a couple of people he used to work with at Metacafe, namely former VP of Sales Gil Shoham and lead developer Nissim Romano. The company is called SupersonicAds, is based in London and is referred to as a virtual currency monetization startup by its three founders.

SEC Ogled Porn As The Financial Crisis Unfolded! So Did You

Posted: 23 Apr 2010 11:49 AM PDT

One SEC accountant tried to access porn 1,800 times in two weeks, another tried 16,000 times in one month. In another case, an SEC attorney spent eight hours a day looking at and downloading porn— as reported by the Associated Press and ABC News— when his disk drive was full he resorted to CDs and DVDs. Gross.

Over the last five years, the SEC has launched “33 probes of employees looking at explicit images,” according to an SEC memo obtained by the Associated Press. The bulk of those cases occurred in the last three years (with 16! in 2008—Bernie Madoff was arrested in Dec. 08), as the financial industry teetered on the brink of collapse. More than half, seventeen of the cases, included senior employees. The memo has led to a gaggle of giggle-worthy headlines like: “Did Porn Cause the Financial Crisis?,” “SEC Staffers Watched Porn, Not Wall Street,” “SEC Was Wanking Off While The Economy Crumbled,” etc.— conjuring images of rows upon rows of SEC computers tuned into porn while homeowners received foreclosure notices and Madoff victims wept. It’s certainly disturbing to hear of senior SEC officials perusing porn websites when they had a crisis on their hands, but lets be honest here, are we really that surprised? 70% of all porn access occurs during the 9am to 5pm work day (according to a Messagelabs report), and I’m not just talking about the SEC. The numbers are ugly.

Another statistic cited by Michael Leahy the author of “Porn @ Work” is a 2006 report from Comscore Media Matrix: one out of every five unique visitors to porn websites in March 2006 were logging on from a work computer. If the SEC was watching porn while the financial crisis engulfed the country, so was the rest of America, or at least a good portion of it. In fact, when you put it in perspective, 33 cases over the course of 5 years is strangely a small amount for a workplace with 4,000 workers. I’m disgusted, but I’m not raising an eyebrow.

To the SEC’s credit, it is cracking down on their employees, the SEC uses Blue Coat Secure Web Gateway (the software) and McAfee SmartFilter (the subscription) to automatically patrol their employees internet usage and spokesperson John Nestor said the spike between 2007 and 2008 (2 cases versus 16) could have more to do with the inspector general’s more aggressive posture than a rise in impropriety. Several of the offenders have been suspended or dismissed. Here is the regulatory agency’s official statement:

“As we said when this story was first reported in the media in February, every instance of inappropriate use of the Internet investigated by the Inspector General was detected by the SEC’s own surveillance and referred to the Inspector General for investigation. Each of the offending employees has been disciplined or is in the process of being disciplined. Some have already been suspended or dismissed. While any misuse of government resources is always a concern, since February we have further increased penalties. We will not tolerate the transgressions of the very few who bring discredit to their thousands of hardworking colleagues.”

(Image Source: Random Pixels And Loose Talk)

Finally A Green Story I Can’t Mock: The Sun Chips Biodegradable Bag

Posted: 23 Apr 2010 10:58 AM PDT

I love our planet as much as the next person, but I despise efforts by companies and people to get credit for caring about the earth with empty gestures.

Like Pepsi’s ridiculous Aquafina press stunt. Or all this black screen Earth Day nonsense. Or bringing in goats to eat your lawn. Or banning black cars.

But I can’t find anything wrong with Frito Lay’s creation of a 100% biodegradable bag for SunChips. It will completely compost in 14 weeks under ideal conditions. I can imagine a day when most of our trash goes into our own back yard, simply to melt away into the ground.

Sure, it uses a corn based product, and there are all kinds of environmental issues with our corn production. But when you see the huge amount of trash accumulating around the world, including in our oceans, it’s hard not to argue that this is a very, very good thing.

Watch the video of a bag biodegrading here. More detailed information on the process here.

Blippy’s Response To Credit Card Data Breach: “It’s A Lot Less Bad Than It Looks”

Posted: 23 Apr 2010 10:55 AM PDT

Earlier today, VentureBeat detailed a major Blippy privacy breach that exposed user credit card information to search engines. The breach appears to have occurred on a small scale — Blippy believes that only four users had their credit cards compromised — but the fact that it happened at all is unsettling. After all, Blippy’s service asks users to entrust it with their credit card information (and in some cases, their credentials for online services) — it is of paramount importance that Blippy keep that data secure.

In an official response, the company says it isn’t as bad as it looks and doesn’t affect current users, explaining that it affected four early beta users, specifically those whose credit cards include their credit card numbers as part of a transaction’s “Raw Data”.

Here’s Blippy’s Offical statement:

Today someone discovered a Google search that displays the credit card numbers of 4 Blippy users.

We take security seriously and want to assure Blippy users that this was an isolated incident from many months ago in our beta test, and doesn’t affect current users.

While it looks super-scary and certainly sucks for those few people who were affected, and is embarrassing to us, it’s a lot less bad than it looks.

Here are the details:

  • Say you buy lunch at Quiznos. Your credit card statement shows a complex entry like “Quiznos Inc Store #1234 San Francisco.” But Blippy cleans this up to only show “Quiznos.” We refer to these as the “raw data” vs the “cleaned up data.”
  • Raw data is typically harmless. But it turns out that some credit cards (4 out of thousands in this case) show the credit card number in the raw data. For example, “Quiznos Inc Store #1234 from card 4444….”
  • Many months ago when we were first building Blippy, some raw (not cleaned up, but typically harmless) data could be viewed in the HTML source of a Blippy web page. The average user would see nothing, but a determined person could see “raw” line items. Still, this was mostly harmless — stuff like store numbers and such. And it was all removed and fixed quickly.
  • Enter Google’s cache. Turns out Google indexed some of this HTML, even though it wasn’t visible on the Blippy website. And exposed 4 credit card numbers (but a scary 196 search results).
  • We’re working with Google now to remove Blippy from their cache, and they inform us it will be completed within a couple of hours.

While we take this very seriously and it is a headache for those involved, it’s important to remember that you’re never responsible if someone uses your credit card without your permission. That’s why it’s okay to hand your credit card over to waiters, store clerks, and hundreds of other people who all have access to your credit card numbers.

We’re making efforts to bolster our security to ensure that nothing like this ever happens again. That includes third-party security audits, and in general being a lot more careful before new features are released, even if it’s during a small, limited beta test period.

Thank you for reading.

Blippy has always been controversial because of its potential privacy issues — this will only give its opponents more ammunition and may cause some current users to question the security of the service. It also comes just after Blippy closed a new $11.2 million funding round.

Remaining Assets of SeeqPod To Be Acquired By Social Charity Site Bloson

Posted: 23 Apr 2010 10:55 AM PDT

The story of music search engine SeeqPod may be finally nearing an end. It appears the remaining assets of the troubled startup have been purchased by Bloson, a recently launched social network to raise money for charitable causes. Bloson has specifically acquired SeeqPod’s domain and the contact information of its user base, which equals around 4 million users. Specific terms of the transaction have not been disclosed and the sale is still pending with the bankruptcy court in San Jose, Calif.

Seeqpod has had a tumultuous history over the past year. In February SeeqPod was slapped by lawsuits from EMI and Warner Music, as the record companies looked for billions of dollars in damages. In March, Seeqpod filed for bankruptcy protection and put itself up for sale. Last June, we wrote that the company was looking to sell off its domain name, with reports that it would be acquired by Microsoft (which didn’t happen). Last December, we heard that the technology assets of SeeqPod, which are owned by Lawrence Berkeley National Labs, were being sold to a “large Japanese media company” and the founders of the startup were building another company: the Mikojo music search engine.

Bloson.com allows users to raise money for causes by engaging in social activities on the site. Users receive point from sharing music and other content, making purchases and more. Music is all free to play and licensed; the site currently has 12 million songs. Whenever they share music or videos with their friends, or buy products at partner retailers they receive points. The points are then put towards a particular cause or philanthropic organization and Bloson makes a donation to these causes based on the number of points a user accumulates. Bloson makes money through display advertising and through affiliate fees from retail partners.

Bloson will be directing any traffic from SeeqPod to its site and Bloson will be inviting all 4 millions of SeeqPod’s former users via email to start using Bloson’s site. And with that, the sad story of SeeqPod draws to an end.

Time is Money: a review of the Meeting Cost Calculator and Clock

Posted: 23 Apr 2010 10:30 AM PDT

Many people lament about how unproductive the traditional "business meeting" is. One or more participants feel the need to assert their opinion at great length, or simply regurgitate the same information multiple times. Most of us sit passively through these time-wasting meetings because ... well ... I don't know! But now you can have the facts on your side when you want to remind people that any particular meeting is wasting time. Just Bring TIM, the "Time is Money" meeting cost calculator and clock! Read on for more, and a chance to get one for free.

Twitter Buys Cloudhopper To Bolster Its SMS Service

Posted: 23 Apr 2010 10:12 AM PDT

In a blog post published just minutes ago, Twitter has announced another snack-sized acquisition.

This time, it has purchased a small wireless technology company called Cloudhopper, based in Seattle, for an undisclosed sum.

Here’s Twitter’s reasoning for making the buy:

Over the last eight months we have been working with a startup called Cloudhopper to become one of the highest volume SMS programs in the world—Twitter processes close to a billion SMS tweets per month and that number is growing around the world from Indonesia to Australia, the UK, the US, and beyond.

To help us further grow and scale our SMS service, we are happy to announce the acquisition of Cloudhopper, a messaging infrastructure company that enables Twitter to connect directly to mobile carrier networks in countries all over the planet.

This is fairly vague – we’ve contacted the company for more detailed information.

Update: a Twitter spokesperson tells us that Cloudhopper has been helping the company with carrier integrations in the past 8 months. He didn’t share much about plans for the future (yet) but says to expect “deeper, more innovative SMS integration around the world”.

Here’s how Cloudhopper pitches website visitors on its homepage:

Cloudhopper provides mobile messaging technology and expertise to businesses in the wireless space. Currently, Cloudhopper powers some of the largest and most successful mobile messaging (SMS and MMS) campaigns in North America, Europe, and Africa.

Based on its patent pending intellectual property, Cloudhopper supplies the underlying software and infrastructure to reliably scale and geographically disperse some of the world’s highest volume messaging programs — all with zero downtime.

Cloudhopper’s Joe Lauer and Kristin Kanaar will be added to Twitter’s mobile team.

Lauer founded Cloudhopper in late 2008, according to the website. Previously, he was the Founder and VP of Simplewire, one of the first SMS aggregators in North America. Simplewire was acquired by Qpass in 2006 and is now known as OpenMarket, a division of Amdocs.

Here’s his tweet about the acquisition, which he says kicks off the next chapter in his life.

This acquisition marks Twitter’s fifth, after picking up smaller startups like Summize, Values of n and more recently Mixer Labs and Tweetie maker Atebits.

The purchase was announced by Kevin Thau, who joined Twitter in early 2009 and is responsible for Twitter's mobile strategy, products, and partnerships.

At least this time, you can’t really say it’s filling any holes.

Arctic Explorer Eric Larson Becomes First Person To Tweet From The North Pole

Posted: 23 Apr 2010 10:09 AM PDT

Earlier today, arctic explorer Eric Larson became the first person to Tweet from the North Pole. After a 51-day trek over ice flows and open water, he finally made it to his destination with two companions as part of his year-long project to Save The Poles and raise awareness about global warming. What’s really amazing is that less than four months ago he was at the South Pole, and his next expedition will be to the peak of Mount Everest. Here is his Tweet:

Day 51. Standing on top of the world. Getting to the North Pole is the same as stopping Global Warming. Begin with one step.

Larson has been keeping a blog, and wrote a longer entry about reaching the pole. He also has a Facebook page. Bing is one of his sponsors.

Larson’s Tweet comes only a couple weeks after a 15-year-old became the first person to check into Foursquare from the North Pole. But due to inclement weather the checkin was from a helicopter. So Larson is the first person to send out a status update from the ground at the North Pole. Unfortunately, Larson failed to check into Foursquare while he was up there and thus did not collect a Last Degree badge. Maybe he’ll remember to check in on Mount Everest.

Fabulis Launches Social Network For Gay Men – Built On Top Of Facebook

Posted: 23 Apr 2010 10:00 AM PDT

Today sees the public beta launch of Fabulis, a fresh community and lifestyle (and explicitly not dating) website for homosexual men.

We’ve covered the company before – and not its product, unfortunately – when Citibank got itself in a PR firestorm after abruptly freezing the startup’s bank account over allegedly posting – inexistent – “objectionable content” on its blog (the institution later changed its Internet Business Policy because of the incident).

Starting today, the website is free to sign up for everyone, so we took a look.

First thing you’ll notice is that the site is very Facebook-centric; upon first visit there’s little else you can do but use Facebook Connect to identify yourself and set up a profile – which you can do both as a gay or heterosexual man or woman.

Fabulis users who are already your friends on Facebook will automatically be added to your list of friends there, so that it taps into your existing social graph instead of making you start from scratch. The Plans page is filled with events from Facebook user accounts and algorithmically filtered down to a list of happenings that gay men in particular should enjoy attending.

You can RSVP to these events (either on Fabulis only or synced to Facebook) – indicating that you’re planning to attend an event is in many ways similar to what Plancast is all about.

Finally, users can vote for other users based on their profiles, and Fabulis has even invented its own virtual currency that lets members use so-called Fabulis Bits to vote for people and engage in other activities on the site.

Fabulis founder and CEO Jason Goldberg tells me Facebook, the dominant social networking service, is a great service for everyone including gay men, but that he identified an apparent need for a separate community and lifestyle website where homosexual men can aggregate, engage in conversations, meet new people and make plans together.

Up until today, the site was open on a user invitation base only, and already counts some 14,000 registered members. The list includes gay celebrities like director Dustin Lance Black, actors Alan Cumming and Chris Colfer.

Goldberg had stints at the White House, AOL and T-Mobile under his belt before founding Jobster back in 2005 (and raising more than $50 million for the startup) and after that socialmedian (which he sold to Xing in December 2008).

Fabulis has raised $625k in seed funding from the likes of Washington Post and Venture Partner at Mayfield Fund Allen Morgan.

Curious to see how far this one can travel.

SkyGrid Streamlines Realtime News Consumption With iPad App

Posted: 23 Apr 2010 10:00 AM PDT

SkyGrid, which offers a powerful business news aggregator, has developed a compelling iPad app that makes accessing realtime news content simple. You can download the free app here.

SkyGrid’s app aims to filter the news, with the aim of giving you the most important news right as it's happening. SkyGrid’s app knows what's the most important because it looks at the people, topics, and events, that are spreading the fastest around the whole world. The startup’s patented algorithm, Information Velocity, measures what news is spreading the fastest across the world, and brings that content directly to you. The app streams information from mainstream news, social sites, and blogs and allows you to share news articles and streams on the app via email, Twitter and Facebook.

And SkyGrid allows you to filter news by type, with news centralized around politics, tech, sports, entertainment, healthcare and more. The app also lets you create custom streams that combine different types of news. Of course, the nature of the iPad as a media consumption device makes the app particularly useful for catching up on relevant news, that’s updated in realtime. And while SkyGrid originated aggregating news about public companies only, the app has opened up its content to include all companies and startups.


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