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Monday, May 3, 2010

The Latest from TechCrunch

The Latest from TechCrunch

Link to TechCrunch

IBM Acquires Cloud Computing Integration Company Cast Iron Systems

Posted: 03 May 2010 08:26 AM PDT

IBM has acquired cloud computing startup Cast Iron Systems to "broaden the delivery of cloud computing services for clients." Cast Iron Systems provides a SaaS cloud integration software. Financial terms of the deal were not disclosed. Cast Iron Systems' software-as-a-service provides cloud computing integration appliances for large and midsize companies, including Allianz, NEC, Peet's Coffee & Tea, Dow Jones, Schumacher Group, ShoreTel, Sports Authority, Time Warner, Westmont University and others. The startup has capitalized on the growing trend of companies running key business applications through software as a service models and cloud deployments.

Intel Capital Invests $15 Million In Caring.com, SmartZip And Virtustream

Posted: 03 May 2010 07:33 AM PDT

The investment arm of Intel, Intel Capital, has announced three U.S.-based investments totaling approximately $15 million today. The deals include eldercare website Caring.com, real estate investment ratings provider SmartZip Analytics and virtualization infrastructure services provider Virtustream. Intel did not reveal the breakdown of the $15 million between the three startups.

Caring.com is an informational site for family caregivers seeking more information about eldercare. Its content includes articles, advice from experts, a community of caregivers and a comprehensive directory of eldercare services. Caring.com plans to use the funding towards building a local eldercare services directory and new marketing programs.

Real estate analytics focused startup SmartZip Analytics offers independent investment ratings and analysis on over 70 million U.S. residential properties. The site is used to find and compare properties to buy. Virtualization startup Virtustream provides strategy, integration and managed services utilizing virtualization technologies, and xStream, the company’s cloud platform.

The investments were part of Intel’s recently announced $200 million Intel Capital Invest in America Technology Fund, aimed to support investment in U.S.-based startups. Intel Capital has also made investments earlier this year in educational gaming company Tabula Digita, Carrier Ethernet solutions provider Overture Networks and advertising technology company BlackArrow.

Apple: Can We Stop With The “Magical” Already?

Posted: 03 May 2010 07:18 AM PDT

In doing a survey of history, a few things could be called "magical and revolutionary" products. These include, but are not limited to, Pegasus, pasteurized milk, the polio vaccine, Apollo 11, and that blue stuff you put your combs in at the barber. And, as much as I like the iPad, I feel that Apple's dedication to the "magical" party line is a bit disingenuous. According to the Free Dictionary, the word magical is defined as:
mag·i·cal (mj-kl) adj. 1. Of, relating to, or produced by magic. 2. Enchanting; bewitching: a magical performance of the ballet.
By this definition, nothing in the above list except perhaps the actual flight of Apollo 11 (in that it can be set to a lilting classical piece or, barring that, something by Enya) and/or Pegasus would be considered magical. The polio vaccine and Barbicide are useful and, some would argue, absolutely essential but I'm sure, through the use of magic, Dumbledore could easily replace them with a flick of his wand.

Want More Women In Tech? Girls, Step It Up. Everyone Else, Quit The Patronizing

Posted: 03 May 2010 07:15 AM PDT

This is a guest post by Eileen Burbidge (@eileentso) , an early-stage tech angel/investor and advisor. This is part one of a three part series she is writing on her blog. Currently establishing White Bear Yard in London for technology innovation and startups, she is also an advisor to Ambient Sound Investments and has held senior leadership roles at Yahoo!, Skype, PalmSource, Openwave, Sun Microsystems, Apple and Verizon Wireless. There have been recent calls to give more women a chance within tech; there are calls [presumably to men] to take women more seriously and to work harder at recruiting and attracting women into tech in order to overcome systemic bias in the "system". I take issue with these approaches and perspectives firstly because I find them patronizing and secondly because I think the call to action is directed at the wrong place.

Travel Social Network WAYN Hits Profit, Mobile Apps To Come

Posted: 03 May 2010 07:10 AM PDT

It's been a while since we caught up with WAYN, one of the earliest social networks (so early they once charged for access). WAYN is a niche social network which focuses on the younger, aspirational traveling classes. Amazingly, despite the recession, they are still gap-yearing around the world using WAYN to meet fellow travelers, and there are now 15.5 million registered users globally. More interestingly, London-based WAYN has revealed exclusively to TechCrunch Europe that the site is now in profit. And next month it is going mobile with an iPhone and Android application created jointly with UK mobile social startup Rummble. WAYN users will be able to check in to places, and Rummble will get access to the WAYN user base.

How Can Social Media Save the Starving Children?

Posted: 03 May 2010 06:00 AM PDT

Social media has superpowers. Or so goes current tech-wonk opinion on Facebook, Twitter, et. al. From creating a “social Web,” to shaking up e-commerce, to mobilizing people behind a presidential candidate, social media has reached its tentacles into pretty much everything. Except places where there aren’t iThings and high-speed wireless. Ya know, most of the places on earth. Until now.

Facebook co-founder and creator of MyBarackObama.com Chris Hughes aims to make social media matter more with his latest venture, Jumo. He’ll delve into how social media can create offline change at TechCrunch Disrupt, our conference on media and technology, taking place May 24-26, 2010, in New York City. You can get tickets at our early-bird rate if you visit our ticket page. We’re also happy to announce speakers including Meetup Co-founder and CEO, Scott Heiferman –the guy behind 50K weekly meetups — and Gilte Group CEO Susan Lyne. She’s at the helm of a buzzed-about sample-sale startup that’s caused “couture” and “clickthrough” to occur in the same sentence. Some of our latest sponsors include Google, Bing –yes, you read that right — and DataRockIt.

So, back to social media. When I say, “matter more,” I’m paraphrasing a bit. Hughes’ actual wording in an announcement last month was: “leverag[ing] the participatory web to foster long-term engagement with the issues and organizations that are relevant to each individual." If you visit Jumo now, the preview site asks you Hunch-style questions about your preferences such as which do-good cause you’d spend $100 million solving, which language you’d like to learn, and what you’d name your child. (I chose “Grace” over “Crystal.”) At Disrupt, Hughes and Heiferman will discuss how social media can foment positive fallout offline, including in places that aren’t wired and wealthy. (Hughes probably won’t tell us much about Jumo, but we’ll hear some of the inspired thinking behind it, no doubt.) Heiferman’s laudable goal with Meetup is to offer a tool for people anywhere to create communities around any interest. If you want to hear more details on what Hughes and Heiferman are dreaming up with their ventures, you’ll just have to come to Disrupt.

  /></a><b><a href=Chris Hughes
Founder & Executive Director, Jumo

Chris Hughes has spent his career developing technologies to make social communication and political organizing easier and more efficient. After co-founding Facebook in 2004, Chris worked first as the site’s spokesperson and later as a product manager specializing in user experience. In 2007, Chris went to work on President Barack Obama’s presidential campaign as the Director of Online Organizing, where he was charged with developing web technologies to engage and empower supporters. Chris oversaw the development of the on-site network My.BarackObama.com along with the campaign’s distributed presence on all other networks across the web like Facebook and Twitter. After working in 2009 in venture capital for the firm General Catalyst Partners, he is currently embarking on a new initiative called Jumo to use the social web to foster long-term relationships of responsibility between individuals and organizations working to change the world.

Scott Heiferman
Co-founder & CEO, Meetup

Scott Heiferman is Co-Founder & CEO of Meetup, the world’s largest network of local community groups. Over 50,000 Meetups (self-organized community events) happen each week. Millions of people in over more than 100 countries “use the internet to get off the internet” using Meetup, which is built on the idea that every town needs support groups, playgroups, bookclubs, business circles, running groups, community action groups, etc. Previously, Heiferman co-founded Fotolog, a photo sharing network where over 30 million people have uploaded nearly a billion photos. He also founded i-traffic, a top online ad agency in the 90s. He then fled the ad industry and was influenced by 9/11 to start Meetup. Scott graduated from The University of Iowa. He is an angel investor in Betaworks, Founders Collective, Virgance, 20×200, and others. Scott received the Jane Addams Award from the National Conference on Citizenship and was named an MIT Technology Review “Innovator of the Year”. He’s @heif.

Susan Lyne
CEO, Gilt Groupe

Susan Lyne is Chief Executive Officer of Gilt Groupe, an ecommerce company whose event-based sales model is changing consumer behavior and redefining luxury shopping. From November 2004 to July 2008, Ms Lyne was President and CEO of Martha Stewart Living Omnimedia. In that capacity, she steered the company's recovery and return to profitability, led by a three-fold increase in advertising revenue. Before 2008, Susan spent eight years at Disney/ABC, rising to President of ABC Entertainment where she oversaw the development of shows such as Desperate Housewives, Lost, and Grey’s Anatomy. Ms Lyne's early career was spent in the magazine industry, including The Village Voice and Premiere Magazine. Ms. Lyne is a Board of Director for AOL and The New School and lives in New York City.

Mint.com Debuts Android App

Posted: 03 May 2010 06:00 AM PDT

Personal finance site Mint.com has debuted its Android app today, which lets Mint.com users access a complete snapshot of their financial picture and manage their finances on the go. Mint.com, a TechCrunch40 company that was acquired by Intuit for $170 million last fall, initially announced the development of the free app last November.

The app includes many of the key features of Mint.com’s iPhone app, including the ability for users to see real-time account balances, check recent transactions; compare their spending against their monthly budgets, and edit transaction details. The app also includes a few features that are exclusive to the Android app, including easy search for recent transactions, a Mint.com widget that includes snapshot of overall cash flow in real-time, and Android live folders that give users financial updates on the phone's home screen without launching the Mint.com application.

Of course, including all of your financial information in one app can pose a potential security threat if your phone is lost or stolen. But Mint.com says that the the password-protected application allows users to immediately disable access to the app from the Mint.com website.

Lonely Planet Learns A Lesson From Eyjafjallajokull (Video)

Posted: 03 May 2010 06:00 AM PDT

Lonely Planet has revamped its price structure— the travel publisher has significantly dropped prices, by up to 50%, on all of its mobile apps. Its European city guides will now be available at $5.99, other city guides will be $7.99 (a few small cities like Macau and Manchester will be priced at $2.99). That's a major discount when you consider that several of the city guides were originally priced at $15.99. Meanwhile, Lonely Planet's just released iPad app, 1,000 Ultimate Experiences, is getting a third price cut at $7.99 (the app was originally released at $19.99, dropped to $9.99 two days after its debut).

Why the sudden generosity? Well, it could have something to do with the company's recent foray into "free" and the story of that unpronounceable volcano. In the wake of Eyjafjallajokull's eruption, Lonely Planet offered 13 European city guides for free for four days to help stranded travelers. The response was overwhelming: 4 million downloads in 4 days.  Even more unexpected, revenues rose during the period, according to CEO Matt Goldberg who could not disclose specific numbers— he said many new consumers came for the free apps and ended up buying other apps.

Because of the positive reaction, on the expiration of the promotion Lonely Planet offered its entire European city catalogue of 32 cities for the discounted price of $4.99 for about one week.

The company is no stranger to "free," it offers a couple of mobile apps at no charge— namely its San Francisco City Guide and the Mexican Spanish Phrasebook (offered as promotional bonus guides)— but the vast majority of its apps have carried premium price tags of $10 or more on average.

The basket of dramatic price cuts signals a shift in strategy for the travel publisher. The accidental experiment and the unexpected spike in revenues, revealed that cheaper prices could work for Lonely Planet without hurting profits, by lowering the bar to entry and encouraging new users to buy apps. That may hurt profit margins but it's also offset by all the new customers and repeat purchases. Lonely Planet has tried to guard the value of its premium content by maintaining higher price points, but the latest move, seems to be acknowledgment that the gap between the company's prices and its growing number of  competitors on the iPhone was too wide.

The mobile travel app market is a competitive space, new rivals like Nile Guide or Gliider are creating interesting and often cheap solutions to chip away at legacy travel brands. For example, Nile Guide's app (which is a geo-based service that aggregates data from 30 sources to tell you about your surroundings) requires a one-time install fee of $2.99. Meanwhile, Lonely Planet's longstanding competitor, Frommers offers their city guide apps at $4.99. Lonely Planet's apps obviously offer their own premium content, but $2.99 or $4.99 versus $15.99 is a huge differential.  The city guide app was selling well, according to Goldberg—with roughly one out of five guides sold on the mobile platform— but I imagine Lonely Planet took a hard look at the numbers and decided to sacrifice the rich price per app for a bigger user base and a greater share of the travel app marketplace.

I chatted with the CEO on Friday— at the time he was not aware of the price drop and still defending the $15 rate—- but he did discuss the growing importance of mobile and said it was the largest contributor to revenues after the core publishing segment (print and e-books). The company which is 75% owned by the BBC, is still undergoing an interesting transformation, from travel book publisher to multimedia platform. Beyond mobile, the company has expanded television production, released an app on the iPad and yes, even launched a magazine in the past year. A magazine!

"Books Are A 500-year-plus Technology"
And that's what's amusing about this company and the CEO, a former SVP of Dow Jones. As Lonely Planet transitions into a more multidimensional and digital brand, it's comfortable straddling areas that are typically defined as new media and areas of old media. The seemingly slow death march of print publications has given rise to a binary language to describe media, books are old, blogs are new, newspapers and magazines are old, mobile apps are new. And while that logically makes sense, we now also associate "old" with bad, archaic, regressive and “new” with exciting, progressive…correct. Lonely Planet is out to prove that all "new" is not correct and that perhaps the most progressive mind will borrow solutions or elements from old and new media and find ways to synthesize disparate parts.

Goldberg is confident that the print book will still be a major money maker in a few years, in fact he lauds it as a "500-year-plus technology" that still works really well: "We do believe in the future of the book." You can call him naive, and chalk it up to the same naivete that introduced $15.99 city guide apps,  but he's got at least one good reason: the company’s “traditional” book segment continues to grow in revenues. Here is part one of our interview:

Littlehint Tries To Mashup 23andme With Old Fashioned Matchmaking

Posted: 03 May 2010 05:59 AM PDT

Littlehint is a new startup which aims to take your Facebook friends and bring in the ones who actually want to potentially go on a date, along with the ones who might help you find one. It sucks in your network via Facebook Connect and asks you to fill out your profile. The difference however is that in they plan to offer the ability to submit your DNA as well. Think 23andme for dating. The founders are Anju Rupal, CEO, who has been involved in various startups as an investor at board level, and Bill Liao, co-founder of XING, Germany's LinkedIn. Littlehint is similar to Thread.com which pulls your friends into your dating network (at least those who are already on Thread). LinkedIN founder Reid Hoffman has invested in Thread to the tune of $1.2m. Littlehint is similar also to friend.ly, minus the DNA matching.

Apple Sold 1 Million Total iPads, Estimated 300K 3G Models Just This Weekend

Posted: 03 May 2010 05:50 AM PDT

How many things did you and I sell this weekend? Three cookies, maybe? Something at a yard sale? Well, according to estimates by Gene Munster, chief Apple prognosticator at Piper Jaffray, Apple sold 300,000 iPads 3G this weekend. Estimates is based on calls to 48 stores. This means the iPad 3G as well if not better than the Wi-Fi version on its launch day. To top off that number, as of May 3, Apple states that they sold 1 million iPads since launch in April.

Hi, Seattle

Posted: 03 May 2010 01:06 AM PDT

On June 11, 2005 TechCrunch was born. Over the last five years the blog has grown from a simple hobby to a fast growing small business with twenty or so employees and one heck of a team of writers, engineers, sales people, event specialists and a burgeoning video team. All led by our fearless CEO Heather Harde.

The last five years have been the best of times, and the worst of times. Mostly it’s been a wonderful experience to watch companies grow from nothing but an idea scratched on a cocktail napkin to something more substantial. And in a very few cases, something that has changed our culture permanently. Entrepreneurs are such interesting animals.

Very early on TechCrunch expanded beyond Silicon Valley. Today we have properties in Europe and Asia, content is published in three languages (plus lots more via spam blogs), and we have writers all over the world – including Silicon Valley, New York, London, Brussels, Paris, Tel Aviv, Tokyo and, absurdly, Chicago. Roving editor Sarah Lacy fills in the gaps by constantly traveling to any place that has even a hint of entrepreneurism. Ten million people a month visit our properties from around the world.

And now we have someone in Seattle. Me.

This last weekend I moved my primary residence from Silicon Valley to Seattle. My plan is to roughly split my time between Seattle and Silicon Valley, and spend a lot more time on the road meeting entrepreneurs around the world.

Why Seattle? I’ve written before that the best of the best come to Silicon Valley to compete. Seattle is sort of like the minor leagues of the startup world, I’ve argued from the safety of Silicon Valley. A few stars here and there, but the vast majority of the winners come from northern California, where fierce competition quickly separates the winners from the losers, and the losers can try something new.

But that doesn’t mean Seattle isn’t a hotbed of entrepreneurism. There are scores and scores of startups here that are doing innovative and disruptive things, and I want to get right in the middle of things. Be an insider instead of just an occasional visitor.

But to be honest the biggest reason I’ve moved is to simply mix things up in my life. Like many people I tend to get bored if I stay in one place too long – five years is the longest I’ve lived anywhere since high school. It was time for a change.

And yes, the easy access to awesome skiing wasn’t a factor I ignored, either.

My friends (and sources) in Silicon Valley will hardly notice the difference – I travel so often that I’ve only been there about half the time anyway. But startups in Seattle will start seeing a lot more of me starting right now. I look forward to seeing what they are up to.

How Funny Are You? Microsoft Explains 4 Levels Of Humor Proficiency

Posted: 02 May 2010 11:38 PM PDT

Everybody knows that the shortest joke in the world is “French Resistance.” I always thought that joke was pretty funny, because most jokes become funnier when you add “French” or “France” to them – “Going to war without France is like going deer hunting without an accordion. All you do is leave behind a lot of noisy baggage,” etc.

“Military Intelligence” is certainly a funny shortest joke, but “French Resistance” is just so much more complicated and nuanced. And therefore funnier.

But it turns out that “French Resistance” probably isn’t that funny. When I look at Microsoft’s description of the four proficiency levels of humor, jokes about the French military are clearly a problem. My joke uses humor to “criticize others and veil an attack,” “delivers sarcasm or cynicism” and “may be perceived as immature or lacking in appropriate seriousness.”

In fact, “French Resistance” pretty much violates all the “overdoing humor” guidelines. Which sucks.

But what is undeniably fucking hilarious is Microsoft trying to break down humor into a handy table with four levels of proficiency so that people can learn to be funny and use that skill in the workplace.

I found all of this pretty entertaining. And, yes, humorous.

Knowing that some people are more easily offended than I, could my use of humor put people off? Is there a chance I'm offending people but I'm unaware of it?

And if you read the humor page first, it kind of puts the rest of the competencies into perspective. What is it exactly? It’s a competency skills list for schools, based on Microsoft’s actual management techniques.

Most of this stuff can’t be taught or learned, but it is the kind of thing that big companies spend endless amounts of time teaching to mid level managers. If you want to be a mid level manager, try your best to get to a level four competency in at least half of these. That should keep you occupied and docile while your “ready, fire, aim” colleagues shoot up the corporate ladder.

This is the stuff of Dilbert.

A Security Check At Square Ahead Of This Week’s Launch

Posted: 02 May 2010 10:44 PM PDT

Earlier today, testers of the new mobile payment service, Square, got a scare.

Emails were sent out suggesting that users had changed their bank account information, and Square was emailing to let them know that the new account was verified. The only problem? These users didn’t actually change a thing. Obviously, this caused some concern, as did the note at the bottom of the email, “If you have not requested this change, please contact support@squareup.com.” After Square started receiving emails wondering what was going on, they sent out a second email letting users know that nothing was wrong, they were just tweaking the backend of the system, and forgot to turn off email notifications for current testers. “Your bank account has not been affected. Square, and your data, have not be compromised in any way,” the email read.

I spoke to co-founder Jack Dorsey tonight about the mix-up, and he assures me that this was in no way a breach of security. Obviously, people are on high-alert for these types of things given the news last week that some credit card information ended up on Google compliments of the startup Blippy. But today’s Square incident was just a poorly-timed email, nothing more.

Still, with Dorsey on the phone, and given the Blippy incident, I thought it would be a good time to talk a little bit security at Square. After all, the service is launching this week, Dorsey confirms.

I asked what information Square stores in its system. “The only numbers we store are bank account numbers, and those are never shown once you input them into our system,” Dorsey says. He goes on to note that these numbers are encrypted, and the only way to decrypt them (manually) is by way of a key they keep in a safety deposit box. Credit card information is never stored, Dorsey says. It’s not stored on the mobile device or on Square’s system, it’s simply passed through, he says.

Dorsey also notes that Square is PCI Level 1 compliant (PCI is a data security standard), and that the company must go through an audit with an independent auditor ever six months to ensure its security is perfect. All companies that handle credit card processing must do this, Dorsey says — and obviously, Square is no different. These audits not only check your system, but look at past transaction data to ensure that everything is in order.

In other words, Square has to have a level of security higher than most start-ups. Though, competitor VeriFone, of course, would still say that they’re more secure thanks to their merchant account system.

The reason Square accidentally sent out these emails today is because they are tweaking the backend of their system as they near the general public launch this week. Dorsey wasn’t sure exactly what day it would be, as it depends on when Apple approves the app in the App Store. There is already a version of Square live that works on the iPad, but this new version will be Universal — meaning it will work on the iPad, iPhone, and iPod touch.

These last two are the keys for the service. Square is all about empowering anyone to be able to take credit cards as a method of payment using only their mobile device. This works by way of a tiny card reader that plugs into the headphone jack on the device. These readers readers are now white, I’m told (the tester version we’ve been using at some TechCrunch events has been black), and they have a new spring that makes card readings much easier (you used to have to swipe a few times with the old black reader).

These readers will begin shipping out this week when the app is live in the App Store. Square is sending them out for free to anyone who signs up for an account — you’ll be prompted to visit Square’s site to do this once you download the app.

Look for Square in the App Store later this week. It will be a free download.

Village of the Dam

Posted: 02 May 2010 10:36 PM PDT

It wasn’t until after I’d left Rio and flown for half-a-day to Porto Velho and then driven for an hour or so into the jungle that I thought, “You know? I really should have gotten anti-malarials before this trip.”

The thought dawned on me as I was reading a poster in Portuguese warning me against mosquitoes carrying the disease, complete with blown-up pictures of them as if they were tiny wanted felons. I looked at my arm full of bites and asked the foreman, “Do people really get malaria here?”

He replied: “Oh yeah, one guy had it three times. I told him he should get some kind of award for that. Dengue too. Dengue really bums people out.” Let’s see: Fever, rashes, vomiting and convulsions? Yes, a “bummer” to say the least. And I thought construction workers in America were tough.

I’ve done about a dozen trips to emerging markets and met with about fifty companies per trip, and BS Construtora–the company that can build a house in one day– is one of the coolest I've met anywhere in the world. As I mentioned during my last trip to Brazil, the company comes as close to having the whole package as a risky startup can. It sells an innovative solution that solves a huge need both in Brazil and around the world. Started by a humble bricklayer and his wife, it has a great back-story. It has even hired a Stanford-trained CEO. And, oh yeah, it also has upwards of $100 million in annual revenues.

Last time, I just met with the CEO, Marcelo Miranda, in a conference room in Sao Paulo. This time I wanted to see what the company actually does. Fast-forward a few weeks, and I’m in the Amazon basin worrying about mosquitoes and gawking at the 1,600-house village BS Construtora is building, complete with schools, a hotel, a city hall, a fire station, a mall, a cemetery and a golf course—and of course all the infrastructure a city that size requires like water and electricity.

This is part of a multi-billion-dollar project to build a hydroelectric dam, and BS Construtora is building the place where the workers will live, along with the people who are being displaced by the flooding. It's a dicey job from a human and environmental perspective, and it's being closely scrutinized by several watch-groups and the government.

The village—which has about 500 completed houses now—is one of the most surreal places I've ever been. It's as if the opening of Edward Scissorhands was dropped into the middle of the jungle. Recently, I saw the location the TV show “Lost” used for "The Others' Village" in Hawaii and I assure you, this place looked more Others’ Village than the actual Others’ Village.

But, going inside the houses, I was struck by how nice they are. A lot of engineering has gone into keeping air flowing inside, tempering the area's intense heat. The layout, standard stucco walls and linoleum flooring actually reminded me of my first apartment. BS Construtora has built a manufacturing facility on-site to cut down on transportation costs, and a lab tests every batch of cement to make sure the houses will come out of the room-by-room molds in one piece. The facility can produce ten houses a day.

Anyone who has traveled in the emerging world can see the immediate promise of something like this. Moving people from their homes in the name of progress is a harsh reality with which most emerging markets are grappling. But at least it's being done with dignity in this case. Jungle inhabitants are essentially leapfrogging straight to modernization with plumbing, sewer systems, air conditioning and yes, Internet access. It's one of the most staggering examples of the benefits of a – literal— greenfield opportunity I've seen on the road.

Here are some photos that barely capture it. (The last is of the mall under construction.)

Cloud Sherpas Raises $1 Million To Help Migrate Companies To Google Apps

Posted: 02 May 2010 09:55 PM PDT

Cloud Sherpas, a Google Apps reseller that also helps enterprises migrate to and manage the productivity suite, has raised $1 million in funding from Hallett Capital and other investors. The startup has also brought on a new CEO, Jon Hallet (who was the lead investor in the round) to lead the company. Cloud Sherpas' founder, Michael Cohn, will become Vice President of Marketing and Product Management. Cloud Sherpas not only helps companies migrate and transition over to Google Apps but also provides additional tools to make the productivity suite more useful. Currently, over 1,800 organizations use Cloud Sherpas' products and services.

NSFW: #Ebony and #Ivory – The Brave New World of Online Self-Segregation

Posted: 02 May 2010 04:57 PM PDT

Waking up in my San Francisco hotel room yesterday, I immediately knew something was wrong. It was a mess.

In fact, the whole hotel was a mess. Carpets un-vacuumed, brassware unpolished, rooms unserviced, newspapers undelivered. It was a story writ large across the whole city – leaves piled up knee-deep on the sidewalk, restaurant tables uncleared and water glasses un-refilled. It was as if every essential – but mundane – service had ground to a halt, instantly and without warning.

Only when I reached the Civic Center did I realise what was going on: all the Mexicans were gathered there, protesting Arizona’s new senate bill, SB1070.

“Stop!” I cried, “stop this nonsense! Put down your bi-lingual protest signs and your American flags and get back to work!” My hotel room was not going to clean itself, and I was hungry for enchiladas. But the Mexicans ignored me – perhaps because I don’t speak a word of Spanish or perhaps because they couldn’t hear me over the chanting; but probably because I’m white. Racists.

Indeed, this week, the subject of racism is on everyone’s lips. First Arizona turned the concept of innocent until proven guilty on its head, passing a law that forces people who look Mexican to carry documentation that proves they’re not in the US illegally or face six months in prison. (British readers may be forgiven for feeling a sense of deja vu.) Meanwhile, across the Atlantic, we Brits were having our own race-related scandal, when Prime Minister Gordon Brown was caught on a live microphone calling 66-year old voter, Gillian Duffy, “bigoted” after she harangued him over the number of Polish immigrants “flocking” to the UK.

To his eternal shame, Mr Brown apologised profusely for his comments the next day, claiming he had misunderstood Mrs Duffy’s words despite the fact that, like many older white voters, her blaming polish immigrants for many of the UK’s problems plainly is a form of bigotry (Poles are Britain’s equivalent of Mexicans in the US, except Poles are allowed to immigrate to the UK freely and without a visa).

I’d like to say that I’m shocked at Arizona’s new law, or at an old white lady living in the north of England being fearful of foreigners – but of course I’m not. Arizona is a state with an increasingly large population of white people above retirement age and study after study has shown this group to be the most likely to hold anti-immigrant, or even out-and-out racist views. But equally, I’m heartened – and I mean this in no way callously – that these people are literally a dying demographic. Growing up in their place is a generation which, thanks to the Internet, is exposed daily to people of different races, colours and creeds.

Thanks to the proliferation of social networks, which recognise no national or social boundaries, it’s now just as easy to make friends with someone in Africa as it is to connect with someone in Arkansas. At Munich’s DLD conference two years ago, Randi Zuckerberg spoke inspiringly about how Facebook was bringing together young people from both sides of the Israeli/Palestinian conflict through their shared membership of Facebook groups. Just last week, Slate cited a paper from the University of Chicago which showed that people who get their news from online sources are more likely to have a balanced news diet (ideologically speaking) than those who get their news offline. As an avid Internet user, so the study claims, I’m likely to visit both the new York Times and Fox News in order to get a balanced picture of events than someone who relies on a single newspaper.

The trend, according to champions of Internet diversity, is clear: the Internet makes us less fearful of people with different ideologies, backgrounds or skin colours to our own. And this, of course, is A Good Thing. In just a generation, laws like that passed in Arizona or opinions like that expressed to Prime Minister Brown in Rochdale will be a thing of the past and, thanks to social media, we’ll all live together in perfect harmony. Ebony and Ivory, etc etc etc. In fact, as far as I can tell, there’s just one problem with that vision of Christmas yet to come…

It’s total horseshit.

Let’s start with the Chicago study. Certainly the results paint a positive picture of online diversity: the numbers clearly indicate that online news ‘consumers’ visit a ideologically-balanced range of sources every day, especially compared to their offline counterparts. But what the study doesn’t, and can’t, show is why they visit those sources.

A quick look at my browser history shows that in the past 24 hours I’ve visited BBC News Online, the New York Times and the Guardian. Liberal news organisations all. But in that same time period, I’ve also checked in to the Murdoch-owned Sun newspaper, the Drudge Report and even Fox News (several times). According to the study, then, I’m an open minded person with a balanced news diet. But of course I’m nothing of the sort. In reality, my reasons for visiting FoxNews.com are the same as those of most of my cheese-eating, US-hating, Osama-hugging, socialist liberal friends – I’m checking in on the enemy, hoping to find something outrageous to back up my pre-existing biases against the American right. And before any Proud Hannity-waving Patriots reading this get too outraged by that confession, admit it: you visit the Guardian and the New York Times for precisely the same, if polar opposite, reasons.

The truth is, if we’re not careful, the Internet is going to make us more, not less, distant from people who don’t share our views or heritage. In the real world – in the workplace, in bars or just walking down the street – it’s almost impossible to avoid interacting with people who are different from ourselves. Of course some people still try to avoid that inevitability – think apartheid in South Africa, or the more recent story of a British holidaymaker who demanded that a hotel in Florida keep all “people of color” (or those with “foreign accents”) away from him and his family. But thankfully in 2010, the majority of people consider such examples to be (in the former case) grounds for regime change or (as with the latter), bizarre front page news.

And yet in the online world such filtering and sorting happens every day without being in the least bit remarkable. Just consider the news that – according to a study by Edison Research (reported by Business Insider) – “black people represent 25% of Twitter users, roughly twice their share of the population in general”. As a white person this number surprised me somewhat – and if you’re white, I’ll bet it surprised you too. Twitter feels like one of the whitest sites in the world to me: full as it is with self-important middle-class hipster kids retweeting New York Times stories and the fact that they’re having sushi for lunch.

On Facebook or other social networks that better reflect my real-world relationships, I see a far more representative number of non-white faces in my friend lists and on the pages of friends-of-friends, while Twitter – by contrast – is hideously white. In fact, the only time I see a high concentration of faces that are different to my own is when I venture into the curious world of trending topics, and specifically hashtag memes. There I can guarantee that at least one of the daily trending memes will have been started by (vast majority) African American teenagers, exchanging #jokes on subjects like #funeralrules and #iWantMyMoneyBack (both grabbed from Twitter’s front page just now). Like the confused 30-year-old white person I am, I spend a couple of minutes browsing the jokes, get confused and scamper back to the safety of my own feed and its talk of trendy Japanese food and how terribly racist Arizona is.

Without really meaning to, I’ve created my own little Twitter bubble of People Like Me: racially, politically, linguistically and socially. And every day across the Internet a new tool or service is launched that makes it easier for people to do exactly the same: to filter the vast amounts of information available online, according to their personal beliefs or interests. Hashtags, follower lists, RSS feeds, personalised news sites – all the better to surround ourselves with people and views like ourselves and our own.

There are two basic types of dystopian future: the 1984 future and the Brave New World future. In the 1984 future, the government forces us to think and act in a certain way, driving undesirables into ghettos and threatening with physical harm those who think or act differently. In the Brave New World future (or possibly the Neil Postman future), the government doesn’t have to do anything to force our behaviour. Instead we’re given the tools to do whatever we want, creating an illusion of total freedom which no-one fights or questions until its too late and we realise we’ve lost the capacity for critical thought.

If apartheid or the new laws in Arizona represent the 1984 future, then there’s a real possibility that the Internet – and social media specifically – will eventually lead us into an even more terrifying Brave New World future. A future where the tools that once promised to help us meet people with different backgrounds and ideologies from our own actually end up being used, quite unintentionally, to segregate us from those same people.

And given the increasing influence that online behaviour has on how we act  in the real world, perhaps a generation from now – rather than laughing at Arizona’s long-overturned SB1070 and the years-dead concept of racial or ideological segregation – we’ll find ourselves sitting in our electronically filtered and hashtag-segregated ghettos, looking back at the good old days. The days, way back in 2010, when it was only the very old or the very stupid who thought that finding ways to filter and separate ourselves from those who are different was a good idea.

Inside Brazil’s Advertising Startup Boom

Posted: 02 May 2010 01:41 PM PDT

I just got back from a few weeks in Brazil. It was one of my last research trips for my upcoming book on entrepreneurship in emerging markets. During my last trip to the country, I wrote about the preponderance of finance multinationals and innovation percolating in Sao Paulo and suggested it could be a hub for future financial innovation. Another big category that jumped out at me on this trip: Advertising.

Most big advertising companies have a creative bureau in Brazil for a reason: Brazilians are just good at advertising. They are creative: I went on a graffiti tour of Sao Paulo and saw some of the most amazing, detailed, expressive, wacky stuff I've ever seen, building-sized and most of it will be painted over and replaced by my next trip. (Photo above one of hundreds snapped on that tour.) They are emotional: One entrepreneur told me when he went to soccer games, he didn't care if his team won or lost, he just wanted the emotional release either way. They are expressive: Have you seen footage from Carnival? Brazilians spend a year erecting massive floats that are used once, then destroyed.

As the younger generation of Brazilians are increasingly enthralled with starting companies, some of that talent is peeling off and starting new advertising businesses. Some of these are aimed at technology and tools, some have more of an agency or services model that may not scale. But the interesting thing is the companies are being started from the point of view of advertising professionals, not technologists or content creators like you see in much of the rest of the start-up world.

That sentence is likely to make any Web 2.0 companies reading this groan. Over the last few years, as Web 2.0 companies have gotten to critical mass and shifted an eye towards making money, the Valley and Madison Avenue have been trapped in a monetization dance where the "25-year-old-media-buyer" is public enemy number one. He's the bottleneck between big clients who want to expand their reach with novel campaigns and the sites that have the eyeballs.

Might this new startup generation of advertising kids in Brazil find an answer? Way too early to tell. But two things are certain. First, we’re trapped between an advertising world that tech has wrecked and a yet-unrealized world where tech offers the new advertising answer. (Paid search alone isn’t it.) And second, there's a bunch of raw talent in Brazil and that talent is starting advertising companies that are good at exploiting holes in the market. Even a few modest exits could ignite an explosion of advertising innovation.

I met about a dozen companies that fit this trend, but here are two that are worth watching, one on the non-Web front and the other following the more traditional Web 2.0 ad network path. Plenty more are bubbling up where these two came from.

Biruta: Sheer Creative Crazy. I did not expect to like this company. But when I showed up to the three-story, house-like office building in the hills of Rio and most of the company was practicing a flash mob out by the pool, it felt very Silicon Valley 2007. You remember: That period when offices did group lip-dubs and everyone was excited and hopeful, creating new stuff.

Not that Biruta hasn't created a real company—it gets paid by agencies to produce what they call "crackpot marketing" campaigns for a lot of big companies like Claro, Nike and Petrobras. Things like organizing huge singles marches through major cities and projecting videos on water. When Sao Paulo banned outdoor media, Biruta cleverly got around it by projecting billboards on walls, growing its business while an overall market shrank.

They remind me of an Ideo for marketing: It's not just on one odd-ball campaign, they have a track-record and system for coming up with these things over-and-over again. And with the World Cup and the Olympics both coming to Rio, these guys will have a lot of opportunity to market domestic and international brands to tourists in creative ways.

The company was started by Alan James, who grew up in one of the poorest areas of Rio and dropped out of high school working odd jobs to survive. He started his advertising career in 1997 by stringing banners to the back of a plane. How's that for old school banner ads? He grabbed attention by creating more outrageous banners like three-dimensional Coke cans that would inflate as he flew.

James moved the company into a Shell-sponsored incubator started to help develop entrepreneurship in poorer areas of Rio, but because the rooms were all taken he started it in a bathroom. (They've since taken over the building and formally turned that bathroom into more office space.)

There is something about James and about this company. Despite a preference for product companies, Biruta was overwhelmingly approved at Endeavor's International Selection Panel in Rio last week. In a sign of good marketing, the founders—who only speak Portuguese—wowed the international group of judges with a video about their history and work. "This isn't a services company, this is an innovation company," declared one judge, Diego Piacentini of Amazon. (Watch the video below.)

Boo-box: Brazil's Web 2.0 Ad Network. When Boo-box was first covered on TechCrunch it was called easy acquisition fodder for its novel ecommerce ad unit that allowed you to easily buy, say, shoes mentioned in a blog post. That acquisition didn't happen, but the company did raise funding after that post and has continued to grow since.

Boo-box's founder Marco Gomes lead the interactive team at AgenciaClick before starting the company in 2007. His simple belief is that everyone producing content online should be able to make money from it. Boo-box still sells that original ecommerce ad unit, traditional IAB ad units and experiments with other social media ad units too. A lot of them—like advertising to your Twitter followers— aren't particularly unique from US companies, but Boo-box focuses on treating its publishers better than other ad networks, as such it has a network of hundreds of sites and 500 million page views a month in a huge country most ad networks have ignored. And the 20-something Gomes—who also came from a slum— has emerged as sort of a role-model for Web kids in Brazil.

Boo-box is it's one of those rare companies in an emerging market that seems to have a lot of the right elements in place: The timing is right with an established global market and no local player. They've got funding from the guy many call the best local Web investor Eric Acher of Monashees Capital. Gomes is the visionary techy and his partner, Marcos Tanaka, is a bare-bones, get-things-done execution guy who previously worked for big consulting firms organizing Brazilian campaigns for huge multinationals like Coca Cola. Maybe the company is still just acquisition fodder, but it's more than just an innovative ad unit now.

Something Is Brewing At BumpTop, Possible Google Acquisition (Update: Confirmed)

Posted: 02 May 2010 10:42 AM PDT

Update: BumpTop now confirms it was acquired by Google, terms were not disclosed. The company raised $1.65 million in seed funding from Canadian angels and VCs, and the purchase price is rumored to be between $25 million and $35 million.

Rumors are swirling that 3D desktop interface Canadian startup BumpTop has been acquired by Google. We started getting tips yesterday pointing to a now-deleted Tweet from a Canadian VC saying Google had acquired them.  When I called CEO Anand Agarawala on Friday to ask if BumpTop was acquired, he responded, “Not that I know of.”  But today, there is a notice on BumpTop’s homepage  saying that it will discontinue its current products and has a big announcement coming:

Today, we have a big announcement to make: we’re going to be taking BumpTop in an exciting new direction, which means that BumpTop (for both Windows and Mac) will no longer be available for sale. Additionally, no updates to the products are planned.

Also, there is now a post by Canadian venture debt firm Wellington Financial speculating that Google did indeed buy them.  When I reached out again to Agarawala today, asking whether or not Google acquired his company, his response changed from his previous outright denial to, “Sorry man, no comment.” Something is definitely up.

BumpTop has a 3D desktop interface, and recently added multi-touch capabilities (see video demo below). It would look great on a future Android or Chrome OS tablet, just sayin’. I’ve reached out to Google for confirmation. Update 2: Google also confirms.

A TC Teardown: What Makes Groupon Tick

Posted: 02 May 2010 09:54 AM PDT

Editor’s note: Group buying sites are growing like mushrooms. In this teardown, guest author Steven Carpenter goes through a detailed teardown of the largest social commerce site, Groupon, and its competitors to see what exactly is going on here. Carpenter was the founder and CEO of Cake Financial, a TechCrunch40 Finalist that developed a service for mainstream investors to manage their investments, which was sold to E*Trade earlier this year. Before Cake, Steve worked in digital music managing strategy and the day-to-day operations for Rhapsody. He was also the director of business development at financial services startup myCFO, founded by Jim Clark and backed by Kleiner Perkins, and online photo site, Snapfish.

Much has been written about the rapid growth and success of Chicago-based local daily deal company, Groupon. And it is for good reason. No other startup has gone more quickly from launch to $1 billion+ in valuation except YouTube (12 months), which Groupon achieved in 16 months with its latest $135 million infusion two weeks ago. Just as unprecedented, the popularizer of the "group coupon" increased its valuation 4X in the span of just 3 months. What is going on here? Is Groupon yet another example of frothy venture capital valuations or is the company one of the next, enduring consumer Internet brands?

The Teardown

To find out, I did a teardown of Groupon's business with data available on its website over the most recent quarter, compared my findings to what I calculated for the final three months of 2009, and then looked at how all of this compares to the top competitors. I conducted two analyses: 1) I looked at every deal across the Groupon network for a single day last November and a day this past April to see how revenue is scaling and how the company is benefiting from rapidly opening support for new cities. I then analyzed every deal listed on the Groupon website across 5 cities (San Francisco, Boston, St. Louis, San Diego, and Denver ) for all of Q4 2009 and Q1 2010 to determine how the company is growing once it enters a market and to see how the product mix is changing. The key finding is that Groupon is achieving considerable revenue growth across all measures: more customers, higher deal prices, and rapidly expanding markets.

How Groupon Makes Money

Groupon takes the old Entertainment Coupon Books that your mom used to buy and brings it to the social web. Groupon sells a "Deal of the Day" in each of it's now 52 supported cities offering significant savings for local restaurants, service providers, activities and memberships, and takes a commission. The trick is that the deal is only "triggered" once enough people buy in. This creates the incentive to share the deal with friends and family, until "the deal is on." It's great for local businesses because they can set the parameters for the offer and they know a minimum for how many offers they will have sold in advance. By combining the social web and virality with hard-to-replicate deals, Groupon has created a network-effects business for commerce that makes its model highly attractive (hence, every week seems to bring new copycats).


Groupon had nearly 3 million unique visitors in March, up from 900,000 in September. It is now bigger than Woot, in terms of traffic, and quickly approaching Zappos (5 million). According to Compete, Groupon gets more of its traffic from Facebook than any other site, including Google, and when people are searching they are typing "groupon"- meaning it is already enjoying the benefits of its brand equity as the company becomes synonymous with the category. As a result, Groupon is spending very little money on search engine marketing (as opposed to say Netflix or Amazon), which is a significant cost advantage. Leading direct competitor, LivingSocial, by contrast, flattened out at 900,000 but now appears to be ramping up again.

What Are People Buying?

Coupons for restaurants, massages, discounted memberships to fitness clubs and museums, local activities, tourist attractions, and merchandise continue to make up the bulk of what is being sold. You can tell a lot about a city by what is being bought on Groupon. To wit:

  • Boston residents love laser hair removal (655 purchases), gliding around town on Segways (4,311), and learning how to fly a helicopter (2,575). Hopefully not all on the same day.
  • St. Louis residents love their plants and garden supplies (6,106) and, of course, Llwelyn's Pub (5,832)
  • San Diegans are into Pole Dancing and unlimited carnival rides (3,875)
  • Denver loves them some Cold Stone Creamery (7,110) and Speed Raceway (1,938)
  • Atlanta is into NASCAR (1,063)
  • Chicagoans enjoy the Tall Ships (7,119)

If you look at the top 10 deals by number of purchases, local merchants appear to be getting more comfortable with the Groupon marketing channel. Restaurant coupons will also be popular but offers like discounted clothing, flowers, house cleaning, and local events like boat shows are increasingly appearing on the site. As you can see below, between the fourth quarter of 2009 to first quarter of 2010, "Activities" replaced "Dining" as the #1 category and "Merchandise" took a big jump. My guess is that this will become more prevalent as Groupon increases its salesforce and these more local merchants begin to experiment with unique offers.  Consumers will benefit as they have the opportunity to grab more of their favorite things at deep discounts.

How Big Is Groupon's Business and How Fast Is It Growing?

On April 16, 2010, Groupon had 31 deals, 45,910 paying customers and sold nearly $1.3 million worth of coupons. This was a significant increase from the 17 deals, 10,018 customers and $240,000 in gross sales it had on November 6, 2009. Along every measurement I looked at—the number of deals /day, average customers/deal, average deal price, average gross revenue/deal—Groupon is seeing tremendous growth. Of particular importance is that its average deal price is increasing (from $24.65 to $44.94) and it is rapidly opening up new markets.

All of this is what is causing Groupon’s revenues to scale quickly. Assuming a 30% revenue share, Groupon netted $72,000, last November for a monthly run rate of close to $1.5 million, assuming 20 deal days each month. In April this had jumped 5X to $380,000, implying a monthly run rate of $7.6 million. As you can see from the chart below, not only is the number of deals increasing, but the number of customers per deal more than doubled and Groupon was able to elevate the price per deal. That formula of (more deals + more customers) X (higher ticket items) seems to be working.

Based on these numbers and the company's growth rate, Groupon should easily surpass $150 million in revenues in 2010. And as revenue ramps, most of this will be pure profit since the company does not hold any physical inventory and its customer acquisition costs are so low.

How Is Groupon Doing Once It Gets Into A Market?

(Note: For some reason, there are not deals listed for every day but this seemed to be the case for both time periods, so we are looking at an apples-to-apples comparison. )

While there were nearly the identical number of deals during the two time periods (106 vs. 107), Groupon more than doubled its average gross revenues per sale from $23,000 to $47,000. The company doubled the average number of customers per deal from 874 to over 1,800 and increased the deal price from an overage of $27.20 in Q4 to $38.36 in Q1. I also thought it was interesting that the most purchased deal in Q1 was 7,119 (for a $16 ticket to ride the Tall Ships in Chicago), more than double the most popular sale in Q4 (2,918 for a $15 Vegetarian Dinner in Denver).

How Is The Rampant Competition Affecting Groupon?

Obviously I am not the only one running these numbers. Because of this dramatic growth and the wild profit potential of the emerging daily deals category, a number of companies are trying to become fast followers. You can see a comparison below of Groupon with its two most well-funded followers, LivingSocial and BuyWithMe (which recently brought on an experienced CEO in Cheryl Rosner, formerly CEO of TicketsNow and Hotels.com). Groupon has raised a total of $171 million to-date, employs more than 200 people, and serves 52 markets. Its next biggest competitor, LivingSocial, has raised $49 million, employs about 50 people, and serves 14 markets.

Of the companies the press likes to mention as competitors, the reality is that only LivingSocial has established enough traction to provide sufficient data to draw a comparison. LivingSocial is now in 14 markets compared to Groupon's 52. I compared the daily deals for Groupon and LivingSocial for the same day as above, April 16.

As you can see below, LivingSocial looks a lot like Groupon did 6 months ago. LivingSocial had 10 deals compared to Groupon's 31. On every measurement, total customers (45,910 vs. 5,976), average customers/deal (1,481 vs. 598), average deal price ($44.94 vs. $29.00), and average gross revenue per deal ($40,753 vs. $18,276), Groupon is far ahead. The data suggests that Groupon is not yet feeling the impact of all the new entrants.

The $1 Billion Question: Is This a Winner-Take All Market?

I think the potential for these kinds of offers on the web is a $5B+ opportunity. There is no reason to believe that this concept couldn't be extended to virtually any category or service provider.

But I do not think this is a winner-take-all market like auctions were when eBay took that market.

There are no real technology advantages, there is nothing preventing a local vendor from using multiple platforms, and buyers don't care where they buy so long as the deals are good.

That said, my take is that this is a winner-take-most market and looks more like search, where the bulk of the revenues will fall to the leader. There are definitely network effects in play and they appear to be stronger than I initially assumed. When Groupon enters a new market it is starting from scratch but it can leverage its significant investment in its platform. This is the reason it has raised so much capital and it is racing to get into new cities before the competition. The question remains whether fast followers like LivingSocial and BuyWithMe will be able to grow into mini-Groupons with Groupon already firmly entrenched in a city.

Bugatti teardown photo credit: Flickr/David Villarreal Fernández


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