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Thursday, May 13, 2010

The Latest from TechCrunch

The Latest from TechCrunch

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TC Teardown: Zynga’s Profit Machine At Risk

Posted: 13 May 2010 09:18 AM PDT

Editor’s noteSocial gaming site Zynga is making money hand over fist, but it also is facing new challenges in its relationship with Facebook. In this guest post, entrepreneur Steven Carpenter does a teardown of Zynga’s business model and calculates an estimate of its profits. Carpenter was the founder and CEO of Cake Financial, which was sold to E*Trade earlier this year. His last guest post was a teardown of group buying site Groupon.

Like YouTube, Twitter, and Groupon, social gaming pioneer, Zynga is a member of the "fastest from founding to $1B valuation" club, having earned its membership in just 19 months.

There are two significant traits that distinguish Zynga from its comparables, however. One, Zynga has generated the highest revenue and profitability numbers of any startup ever in such a scant amount of time (more so than even Facebook itself to date). Based on my estimates, Zynga is likely making a 30% net margin on $50 million in revenue a month, or close to $15 million in profit a month. Two, Zynga's complicated relationship with Facebook means the company has less control of its own destiny. Zynga is under significant pressure to make a series of strategic moves to ensure its continued success. If it cannot do so, its attractive revenue and profitability metrics are certain to be impacted.

In this teardown, I will detail how Zynga achieved its rapid success and dive into the key challenges facing the company.

What is Zynga?

Zynga is the leading producer of online casual social games that can be played with friends and family across the leading social networks, on mobile phones, and now on the web. Indeed, playing games is one of the most popular activities on Facebook, up there with looking at profiles, sharing photos, and "liking." As you can see from information I pulled from AppData, Zynga's 246 million unique users per month means that over half of Facebook users are playing Zynga's games. Zynga has almost 5 times more players than Electronic Arts, its closest competitor.

While Zynga got its start with social versions of already-proven gaming titles such as Risk, Battleship, Boggle, Blackjack, and Texas HoldEm Poker, it quickly applied what it learned about these new gaming experiences to create its own franchises. In a short amount of time, Zynga has developed worldwide hits such as Farmville, Café World, Mafia Wars, Petville, and Fishville. Farmville alone now attracts over 100 million unique users per month, just 10 months after it launched.  While the company has been accused of borrowing heavily from predecessor games, there is no denying the fact that Zynga is an expert at applying social gaming mechanics at a scale unlike any other company.

How Profitable Is Zynga?

There already has been a fair amount of work done to try and estimate Zynga's revenues. Rather than focus on the top line, I took a stab at coming up with an estimate of the company's profitability. Assuming an annualized revenue rate of $600 million, or $50 million a month, I arrive at a snapshot of what the financials might look like for April, 2010. (Note that $600 million estimate is on the high end, it could be half that amount).

According to BusinessWeek, Zynga now has 775 employees, which at a $10,000 fully-loaded cost per month (including health care and taxes), would put its monthly obligations at $7.75 million. It also is estimated that the company spends between $5 million and $8 million a month on Facebook advertising. I believe this will be higher—$10 million per month—as a result of the rule changes to Facebook's feed and increasing awareness for new platforms such as ZLive and the Zynga toolbar. I assume a significant infrastructure is required to serve 250 million players so that is likely running about $10 million per month. Transaction processing is difficult to estimate since PayPal usually charges a flat rate (say $0.30) in addition to a small percentage of the transaction, typically totaling 2% – 3%. PayPal said last week that Zynga is now its 2nd largest customer by volume, however, Zynga deals in micro-transactions so a typical fee structure does not make sense. In the BusinessWeek article the company stated that they are paying "under 10%" for each transaction, so let's use 10% to be conservative.

Based on these assumptions, I estimate that Zynga is earning at least $15 million per month, or 30% net margin.

This is a significant number because of Facebook's plan to force its application developers to use its proprietary currency, Facebook Credits, so it can take rent from all of the transactions happening on the site. A 30% transaction fee, which is what Facebook will demand, along with shrinking revenues and increased marketing to raise awareness of Zynga games on the web, could wipe out Zynga's profit.

How Fast Did Zynga Grow?

According to the company, Zynga had 269 million active players in April, 2010. With that many people, it would be more accurate to talk about "Zynga Nation" considering that number of players would make the company the 4th largest country in the world—ahead of Indonesia and right behind the U.S. Last April the Company reported 30 million monthly players, thus Zynga has grown its monthly users by eightfold in just 12 months! Facebook, in contrast, grew almost 2.5X from 200 million to 484 million over the same time frame. I put together the following chart from user numbers released by the company over the past 18 months and you get a sense for the scale of its rapid adoption.

How Did Zynga Grow So Quickly?

There are six main drivers of Zynga's growth.

1.  It Was The Beneficiary of Facebook's Growth:

There is no denying the fact that Zynga benefitted greatly from the astronomical growth of Facebook itself. To test this, I looked at both companies' announced monthly usage milestones since November, 2008. As you can see in the chart, the trend line suggests that as Facebook added new accounts, those new users in turn discovered Zynga games.

So, on the one hand you could say that Zynga happened to be the right company at the right time and is the beneficiary of a once-in-a-decade tectonic shift in the Internet landscape.

2.  It Pioneered And Perfected Social Game Mechanics In Games People Love:

If only reason No. 1 was true then other early Facebook applications, such as Slide and iLike, would have taken off in the same way; and they did not. And, as I mentioned earlier, Zynga has grown faster than Facebook over the past year. Zynga created addicting games with core functionality that incorporated social elements and public interaction. Rather than trying to "win" games in the traditional sense, game play is an ongoing "experience" that does not end, where people play with one another, and others outside of the game play can follow along. As you can see, Zynga accounts for 31% of all active applications on Facebook, more than 2 times Facebook’s own apps. Clearly, Zynga has given people something to do on social networks. You even could make the argument that Facebook grew because of the value Zynga brought to the experience.

3.  It Took Advantage of The Facebook Feed

Zynga was aggressive in promoting game updates in user news feeds. This allowed Zynga to get in front of millions of potential players without having to pay for customer acquisition. With Facebook removing this functionality, you can see how it could directly impact the company's profitability by requiring it to increase marketing for the same level of promotion .

4. It Used Its Installed Base to Cross Promote Other Properties

In addition to expertly using the Facebook feed, Zynga was smart at using its in-game inventory to raise awareness of its other games. I looked at the company's top 13 games, which account for 98% of all Zynga monthly players on Facebook. You can see in the "Months Live" column how Zynga leverages the traffic from its big franchises, such as Farmville, Texas Holdem, and Mafia Wars to introduce its new games. Notice that its newest title, Treasure Isle, which launched just last month is already the 4th largest game, having attracted its user numbers without the benefit of the Facebook feed. Preserving engagement of those long-standing hits is a critical component of its getting players to become aware of new games.

5. It Used It's Capital Resources Wisely

Because of Nos. 1 and 4 above, Zynga generated higher revenues and returns on its games, giving it access to advertising dollars that its competitors could not match. In addition, Zynga was able to acquire fast growing properties, such as Yoville and Friends For Sale, with its valuable stock and then leverage its distribution system to acquire new users. The company also continues to sit on a warchest of its largely unspent $219 million in venture capital that it was able to raise because of its rapid success.

6. It Figured Out How To Get People To Pay For Virtual Goods

Despite years of hype and numerous failed attempts at building a business based on virtual goods, Zynga was the first U.S. company to make it a reality. Who would have thought that millions of people would spend real money on a special octopus for their aquarium or a prized pig for their farm? Zynga deserves a lot of credit for effectively converting 1%-2% of its significant audience into paying customers.

What Are Its Competitive Advantages?

Zynga creates, launches, and manages games better than any other company. Games are a hit-driven business and have become more like Hollywood blockbusters in their heavy development costs and large marketing budgets. It is not inconceivable for EA to spend many years and $100 million to create and market a new game.

Zynga does this at a fraction of the time and cost. For example, the company took just 5 months and 25 people to launch Café World, which now boasts close to 30 million players. The company did this for likely under $10 million in development and $20 million – $30 million in marketing. So it has both a development and marketing cost advantage over EA and other traditional gaming companies.

Zynga has also perfected "in-game evolution"—meaning the company is continually making enhancements to game play after it has shipped the product. By methodically monitoring how players are using the games, it can make continuous improvements to increase engagement, and therefore, revenue opportunities.

Zynga is expert at building social mechanics into gameplay to boost its user base. Innovative tasks such as getting friends to clean your aquarium or needing “neighbors” to assist you reinforces the proposition, but also helps Zynga scale much more quickly and efficiently. Zynga seems to do this much better than others

Lastly, Zynga has raised more money than any other company in the space. The company was smart to build capital resources when it could because it allows them to outspend smaller competitors and to compete with larger companies such as Facebook and Apple.

Zynga's Moment

At this time, Zynga faces three significant challenges to its business. And it is playing itself out in realtime.

  1. Maintain Revenues/Profitability Amid "Mortal" User Growth: Zynga's incredible hockey stick growth of the past 2 years appears to have come to an end. Comparing its growth from July – September, 2009 where it doubled its monthly players, last month was completely flat. Zynga needs to launch new hit franchises to continue high levels of engagement and convert a higher percentage of its players to pay for premium services and virtual goods.
  2. Strong Growth July, 2009-September, 2009

    Growth Flattening April, 2010-May, 2010

  3. Become Less Reliant On Facebook: As TC reported last week, Zynga is moving quickly to launch ZLive, as well as individual destination sites for all of its games. This is critical to prevent the company from being held hostage to Facebook revenue share demands. A 30% revenue share could virtually eliminate Zynga's bottom line. As you can see below, it has done a great job of getting a portion of its players to the first of these sites for Farmville. But, after a rapid ramp up, usage has been stable for the last quarter. It will similarly launch standalone websites for its other properties. Will its users embrace them?
  4. Prepare for Battle With Apple in Mobile: With over 60 million iPhones, iTouches, and iPads sold to date, Games are the No. 1 application in the Apple App Store. Collectively mobile games are a $3B+ a year business, according to Electronic Arts. Steve Jobs has stated that the company is going to be aggressive in social gaming across the iPhone and iPad with its next OS 4.0. Additionally, if Apple also controls advertising across apps, Zynga will lose another of its competitive advantages in cross promotion. It is unclear how Zynga will fare in this increasingly competitive mobile ecosystem. I suspect the company will combine the social mechanics that have worked so effectively online to a world where location is key, along with a continuous string of compelling premium Apps.

Bugatti teardown photo credit: Flickr/David Villarreal Fernández

Slots.com Changes Hands For $5.5 Million

Posted: 13 May 2010 09:05 AM PDT

Big domain name sales are something we’ve reported on before, and this one belongs in the list of biggest ones ever: Slots.com has just been sold for $5.5 million, industry blog Domain Name Wire has been able to confirm.

Think about it: that’s more than $1 million per character.

According to DNW, the domain name was listed for sale in a Snapnames auction. The auction concluded without a bid reaching the reserve, but Moniker (another Oversee company) worked with both parties to close the deal.

The domain name was originally registered back in 1995 and is currently used for an online gambling portal.

It’s unclear who the buyer is and how they plan to recuperate the purchase sum exactly, and the seller’s identity has been shielded from public eyes.

Rest assured he or she has enough pocket money to play the slots for a long time now, though.

PlaySpan Partners With Snoop Dogg To Sell Celebrity Branded Virtual Goods

Posted: 13 May 2010 08:58 AM PDT

Micropayments startup PlaySpan is partnering with rapper and producer Snoop Dogg, and branded virtual goods agency Virtual Greats to sell a premium line of licensed Snoop Dogg digital items for sale. PlaySpan powers micro-payments across over 1,000 video games and virtual worlds and has virtual goods storefronts on Facebook, MySpace, within games and on its standalone site.

The Snoop Dogg goods will first appear in PlaySpan’s marketplace on virtual world IMVU and will include Snoop hats, sunglasses, bikinis, assorted clothing items, branded dance floors, signature moves, musical instruments, and complete DJ sets. The price will range rice from $2 and up.

Celebrity branded virtual goods is becoming more popular as the virtual goods market heats up. Britney Spears got into the virtual goods market last year, as did Justin Timberlake. PlaySpan plans to partner with other celebs and brands in the near future to launch a full fledged celebrity focused virtual goods marketplace.

PlaySpan has been steadily growing the reach of it marketplace through licensing deals with social networks, game developers, media companies and gaming platforms. Last year, PlaySpan acquired micro-transaction app developer Spare Change, which powered micropayments across 700 social networking apps on Facebook, MySpace, and Bebo.

Sprout Social Raises Funding, Offers Business Tools For The Social Web

Posted: 13 May 2010 07:54 AM PDT

Sprout Social, a provider of social relationship management services not be confused with Sprout Inc, Sprout or Sprout, has received a Series A round of funding from Lightbank, the recently launched investment vehicle created by Groupon founders Eric Lefkofsky and Brad Keywell.

The terms of the investment deal were not disclosed, but Lightbank typically invests less than $1 million.

Sprout Social, which is currently in closed beta, says it will use the capital infusion for its formal launch later this Spring, as well as to expand its service offering.

The startup markets a platform that allows businesses to connect to customers and monitor key metrics and the overall competitive landscape using social media tools. The Sprout Social platform, featuring the Social Dashboard, integrates with social networks such as Facebook, Twitter, Yelp, LinkedIn and Foursquare and includes lead generation, business intelligence, offer and promotion distribution services, as well as brand monitoring and analytics.

For Lightbank, this is the third investment after Where I’ve Been and Poggled.

OnLive Strikes Deal With BT In The UK, Brings Streaming Video Game Service Across The Pond

Posted: 13 May 2010 07:40 AM PDT

OnLive, the streaming video game service that threatens to change the way people perceive gaming, has signed a deal with with British Telecommunications. The deal means that Britons will be able to play games like Mass Effect 2 and Assassin's Creed II over their broadband connection (and it also means that BT will buy a small stake in the company). No UK launch date has been announced. The U.S. launch is still on schedule for June 17.

Adobe Thinking Different, Countering Apple’s Hate With Love

Posted: 13 May 2010 07:39 AM PDT

In the court of public opinion, I doubt Adobe has much to worry about. They make products that are synonymous with image editing – after all nobody ever “MS Paints” Emma Watson’s head onto a nude body, they Photoshop it – and for the vast majority of users Flash or no Flash on a mobile device is immaterial. However, companies must fight and fight they must. Adobe’s latest salvo? A reminder to the world that they love openness and Apple through a new ad campaign and essays by Adobe founders Chuck Geschke and John Warnock. Click here or the thumbnail below to see the ad.

Read more…

Media Meets Commerce, As Thrillist Buys JackThreads (Plus, 1,000 Invites)

Posted: 13 May 2010 07:00 AM PDT

It was only this past weekend that Dave Chase argued in a guest post here on TechCrunch that online media companies should get into e-commerce through group buying and flash sale sites. Ben Lerer, the founder of men’s site Thrillist (and New York City seed investor along with his father Ken) agrees wholeheartedly. He just bought JackThreads, a members-only commerce site that focusses on flash sales for men’s fashion (you know, hoodies, fitted hats, sunglasses, and retro sneakers) . It’s like a grungy Gilte Groupe for guys. If you want to check it out, we have a 1,000 invites for JackThreads here.

Terms of the deal were not disclosed, but JackThreads is a 10-person shop in Columbus, Ohio that is already profitable and doing millions of dollars in revenue. “It is not a huge transaction,” says Lerer. “I think the potential is massive though.”

JackThreads founder Jason Ross will continue to run the business, which will add an e-commerce revenue stream to Thrillist’s existing advertising revenue. The group buying industry is taking off because it brings together volume purchases in return for significant discounts. JackThreads is honing in on the young male shopper who wants to look good but not spend a lot of time in a store.

Thrillist, of course, already appeals to the exact same audience of young men. “Our guys love this kind of stuff,” says Lerer. Thrillist has a loyal following of 1.8 million subscribers who still get Thrillist’s shopping and nightlife tips primarily through email. It is such a desirable demographic, however, that Lerer expects to reach $10 million in advertising revenue alone this year. JackThreads will continue to operate as a separate site, with cross-promotion from Thrillist.

Something tells me we are going to be seeing more of these media-commerce deals in the near future.

The Hotlist Raises $800,000 For Geo-Aware “What’s Going On” Service

Posted: 13 May 2010 06:22 AM PDT

The Hotlist, a social aggregator that enables you to find out what's going on amongst your friends, within your neighborhood, and around the world, this morning announced that the company closed $800,000 in angel financing led by Centurion Holdings, the advisory firm of former UBS Chairman Joe Grano.

Funds from the angel round will be used to to launch full mobile integration of its service to consumers (iPhone, BlackBerry and Android apps are on the way) and to support The Hotlist's platform development.

The Hotlist aims to filter information from several online resources based on a user's preferences and social graph of friends (based on Facebook). It gives users a personalized and instant view of things to do, places to go and people to see within the area. The company’s platform aggregates geo-social data to calculate the popularity of specific events based on their network of friends, enabling users to view detailed venue analytics and ratings so they can manage their social calendar on the spot.

The service combs through user-generated data from Facebook and Twitter and combines it with local reviews and listings in Yelp – among other third-party content streams – in an effort to automatically shows what's going on today, tomorrow and throughout the week among the user's network of friends. Presented data includes a map of venues and list of friends who will be there and when, past and future event and attendance activity plus real-time venue information and reviews pulled from Twitter feeds. Also handy: guy-to-girl ratio at venues!

The Hotlist was founded in September 2009 and launched its geo-social aggregator in public beta last March, and currently welcomes around 100,000 unique visitors per month.

Already, the company has managed to collect data from over 400,000 venues and 1.2 million upcoming events.

The Hotlist was the first undergraduate team in history to win a grant from the NYU Stern Business Plan Competition, giving the company $25,000 in seed funding. The Hotlist is located in the New York City-sponsored 160 Varick Street Incubator as part of Mayor Michael Bloomberg's business incubator for promising start-ups.

(Full disclosure: I’m a shareholder of a company called Oxynade, which has developed technology that automatically aggregates event listings and venue information as well.)

Crazy Powerful And Magical? Where Do I Sign? Here’s The New iPad Commercial

Posted: 13 May 2010 05:58 AM PDT

As I said before, I like me my iPad but the magical language has to go. This is the latest iPad commercial and it sounds more like a soliloquy from Easy Rider than a CE commercial, which I guess is Apples modus operandi. It also sounds like they’re using Gold Lion from the Yeah Yeah Yeahs, without Karen O’s howls, a decidedly dark song for something so magical.

Read more…

OneSocialWeb: We’re Ahead Of Diaspora In The Creation Of An ‘Open Facebook’

Posted: 13 May 2010 05:51 AM PDT

For all the attention the Diaspora project has been getting, largely thanks to the New York Times, another alternative called OneSocialWeb has been desperately trying to raise even just a couple of eyebrows.

Which is frustrating to them, they say, because the goals of both projects are perfectly aligned, while OneSocialWeb is self-reportedly much further ahead of Diaspora in many ways.

So what gives?

Here’s how OneSocialWeb bills itself:

The purpose of onesocialweb is to enable free, open, and decentralized social applications on the web. Its protocol can be used to turn any XMPP server into a full fledged social network, participating in the onesocialweb federation. The suite of extensions covers all the usual social networking use cases such as user profiles, relationships, activity streams and third party applications. In addition, it provides support for fine grained access control, realtime notification and collaboration.

The project was built based on other standardization initiatives aiming to open up the web: activitystrea.ms, portablecontacts, OAuth, OpenSocial, FOAF, OpenID … you name it.

Sounds like a dream if you’re into the whole ‘open’ thing and not happy with how Facebook and other social networks are evolving, right? So why has it been flying under the radar so much?

Maybe their timing just wasn’t right – Diaspora got introduced to the masses by the NYT at a time when a lot of spotlights are turned to Facebook and its privacy policies – or maybe it’s the fact that OneSocialWeb isn’t an initiative of four geeky college students but the Vodafone Group Research and Development (which acts as a double-edged sword).

Either way, the people behind OneSocialWeb (Laurent Eschenauer, Alard Weisscher, Lorena Alvarez and Diana Cheng) have a dream of building exactly what their name suggests, one social Web, and they realize it’s not going to be a walk in the park.

And that something isn’t going to be attractive to the masses simply because it’s open source, based on XMPP or decentralized – there needs to be added value.

The OpenSocialWeb team is also impressed with the energy the team behind Diaspora is displaying – they even invited them to come work at Maastricht for the Summer – so it’s not like there’s any bad blood between them.

Which is good, because I happen to think that building multiple open social networking alternatives in a lot of different ways will only make things more complicated, and probably assure that none of them grow into anything meaningful.

OneSocialWeb’s Eschenauer isn’t concerned about that, but he hopes that there can be some common language for social networks in the future, like SMTP for email. He adds that he has high hopes for Google Buzz, and expects the Mountain View company to announce a couple of interesting things next week at Google I/O. Eschenauer will be travelling to Silicon Valley next week, too, in order to meet with people from the industry who can help him make his ‘one social web’ dream a reality.

OpenSocialWeb is currently developing beta versions of a Web client, an Android application, and more. We’ll see how far they can take this – the service and protocol is expected to be ‘consumer ready’ by late Summer.

Buzznet Channels Facebook And Twitter; Adds News Feeds And The Ability To Follow

Posted: 13 May 2010 03:55 AM PDT

Buzznet, a social network based around people’s interests (i.e. music, art, fashion, photography, movies, television, celebrities), is relaunching today with a more social layer on the platform. Buzznet, which is a property of pop culture media conglomerate BuzzMedia, allows users to share, curate and socialize content based on their personal interests.

On the site now, users will be able create a custom content feed when they follow other users or follow communities around topics that appear on other contributors' blogs. The ability to follow a user means tapping into their own content and sharing channel on Buzznet. Users will then see updates in a news feeds from the people they follow on their homepage and in the footer that follows them around the site. Users with the most followers will be trending under "most followed" on the Buzznet homepage.

Buzznet has also included a trending topics section to their homepage that features the most popular features and topics on the network. The new reblog feature allows users to create a channel that reflects their personality and taste without having to post any original content.

Users can also now add multimedia to comments and the site includes Facebook Connect. To oversee this new version of the site, Buzznet has named magazine exec Aviva Yael as editor.

Clearly, Buzznet is remodeling its site with inspiration from Facebook and Twitter. According to Compete, Buzznet got around 2.3 million unique visitors in March, which isn’t too shabby for a niche social network. It still remains a question, however, if Buzznet will be able to replicate the engagement on Twitter or see any more substantial growth as Facebook takes over the world with its 400 million plus userbase.

How Facebook And Twitter Are Changing Business Models, Shaping Brand Identity [Video]

Posted: 13 May 2010 03:44 AM PDT

Now that many corporations have mastered the tricky art of signing up for a Twitter or Facebook account, the next step is leveraging social media tools in a meaningful way that impacts your brand and your bottom line. While some have found varying degrees of success, the vast majority could use a crash course stat.

That deficiency has given rise to conferences like Smash Summit, held on Wednesday at the InterContinental Hotel in San Francisco, where representatives of Twitter, Facebook, Salesforce, Google and others offered social media tactics for businesses (Techcrunch was a media partner). The keynote speaker, Jeremiah Owyang, a Partner of the Altimeter Group, offered four laws of social business: don’t fondle the hammer (don’t focus on the specific tools, think about your broader marketing agenda), live the 80% rule (get your company ready for social media, that’s “80% of success”), customers don’t care what department you’re in, and real time is not fast enough. You can access Owyang’s presentation, along with all the other Smash presentations, here.

Although far from perfect in their social media efforts, Virgin America, Comcast and Cisco have all employed parts of Owyang’s rules. They were also (relatively speaking) early movers on blogs, Twitter and Facebook. For example, Comcast’s Senior Director of National Customer Operations, Frank Eliason started using his Twitter account in early 2008 to find customer complaints and interact with disgruntled users.  We spoke with Eliason, Virgin America’s Bowen Payson (Manager of Online & Digital Marketing), and Cisco’s LaSandra Brill (Senior Manager, Global Social Media), after their panel on “The Brand & Enterprise Story: ‘Who’s Changing The Channel.’” Each of course represents a very different sector, but there were several shared threads (see video above):

1. Expansion

These companies are increasing the number of employees dedicated to social media. Cisco’s Brill currently manages a team of 7, she predicts that will rise to 20 to 30 by 2011. Comcast’s Eliason says he’s adding two more to his ten-person staff this year. The rising headcount naturally reflects the companies’ growing online initiatives— Cisco already has 25 blogs and more than 100 Twitter accounts (sometimes there is such a thing as too much of a good thing).

2. Identity

Within corporations, social media is also breaking out of its silo. Companies may be building out specialized teams for social media, but many are also encouraging other employees to use social CRM tools and to become active external agents. For the last few years we’ve been focused on how companies should push out their content and interact with the market, the less apparent power of social media is how it will disrupt the mechanics of business. Eliason says that it has the potential to completely restructure companies, flatten organizations, and democratize the workplace: “We’re going to see a real big shift with employees, whether it be employees talking externally or even talking internally…it’s going to be a new way of having a little bit more power than they did before. And so companies are going to have to figure out a whole new game plan and change their culture…Companies are going to be a smaller place.” Eliason’s boss, Comcast CEO Brian Roberts has also acknowledged the power of Twitter, saying in late 2009 that it has “changed the culture of our company.”

The expansion of social media also has the power to reshape the very guts of a company: its brand identity. According to Brill, Cisco’s social media initiative has softened the company’s image, making it less formal and more human (a nice complement to the company’s “human network” campaign). “We basically have to relearn how we do things, how we communicate, and it’s no longer the polished marketing brochure, the polished website— conversations are happening,” she says. Of course with that power comes risk— the increase in dialogue and brand ambassadors reduces the control a company has over its message. Cisco’s solution was to accept that risk and try to minimize it by education and offering a “social media certification program” to all employees.

3. Stay Focused On Your Business Objectives

This is related to Owyang’s first (oddly phrased) rule, “don’t fondle the hammer.” The executives warned that companies shouldn’t be caught up in specific platforms or rough metrics. Everything should be done in the context of your businesses’ objectives and broader strategy. For example, when it comes to return on investment, Eliason says “The real approach to ROI in this space, is to get all these groups together, PR, marketing, HR IT, and talk through what’s important to you. So we get huge return on investment when we listen to these things and then we act or fix things because we’re listening. The dollars are huge. You could have a 30 minute event that pays for my team for well over a year.”  Meanwhile, Virgin America’s Payson says a flexible model will help you meet your objectives and stay responsive, he balances flexibility with structure by working in three-month cycles. The team plans for developments and initiatives on a three-month time line, but will constantly readjust according to buzz activity and user feedback.

4. Facebook, It’s Complicated

I couldn’t let them go without a parting question on Facebook. Conclusion (not a big surprise): it’s complicated. The companies were all grateful for the platform, but they also highlighted some serious concerns. Brill was upset by the company’s recent launch of Community Pages, which are pseudo-Wiki pages regulated by the Facebook community. She says a page on Cisco was frequently confused with the company’s official profile: “I’m surprised that they would even do something like this without consulting the brands…It looked a lot like our corporate fan page and I think it’s hard for the users to determine what’s official and what Facebook created.”  Virgin’s Payson was more upset by what he described as a lack of transparency, calling on Facebook to follow Twitter’s lead and give companies more access to analytical tools/data.

Wikipedia Gets A Revamp, Better Search And Navigation – And An Updated Logo

Posted: 13 May 2010 03:37 AM PDT

Wikipedia is easily one of the most visited sites in the world, and it doesn’t look like that’s going to change anytime soon. This morning, the Wikimedia Foundation announced a number of changes it has made to make the experience for visitors and contributors better.

Most apparent is the new look and feel, which includes a refreshed puzzle globe logo, which was originally created in 2003. The Foundation goes into more detail about the logo update in a separate post, if you’re interested in its history and all that.

Here’s what else has changed:


Improved for reading and editing pages. The tabs at the top of each page now more clearly define whether you are viewing the page or discussion page, and whether you are reading or editing a page.

Editing improvements

Formatting pages is now simpler and more intuitive, with a reorganized editing toolbar. The Foundation has also introduced a table wizard to make creating tables easier and find and a replace feature to simplify page editing.

Link wizard

A new tool that allows people to easily add links to other wiki pages as well as links to external sites.

Search improvements

Better search suggestions. Much needed imho.

Pediapress book creator

Create a book by selecting Wikipedia articles and adding them to the Book Creator (we talked about that here). Your articles will be turned into a PDF (or OpenDocument) file so you can easily take Wikipedia wherever you go.

If you don’t like the changes, all these new features can be easily turned off. All you need to do is revert back to the so-called MonoBook skin, although we should note you need to log in or create an account before you can do so.

Chances are you’ll like it, says Wikimedia, because they’ve beta tested it on a group of 635,000 people and saw a 83% user retention rate.

You tell us: do you think it’s an improvement, overall?

Facebook And Twitter Are On A Collision Course. And We’re In The Middle.

Posted: 13 May 2010 01:58 AM PDT

In Jim Sheridan’s 2009 film Brothers, Jake Gyllenhaal and Tobey Maguire play two siblings that are opposites. Maguire’s Sam is an Army captain, a straight-laced hard worker, and a family man. Gyllenhaal’s Tommy is a fresh-out-of-jail convict, a general screw-up, and someone who doesn’t seem to care anyone but himself. But then everything changes (and I’m not giving anything away that isn’t in the trailer). Sam goes off the deep-end and becomes the erratic one, while Tommy morphs into the hard-working family man. The only commonality the two share is Natalie Portman’s Grace, Sam’s wife who Tommy falls in love with.

In the tech world, Facebook is Sam, Twitter is Tommy, and Grace is all of us, the Internet users. Facebook and Twitter both want us, and we’re watching them morph before our eyes.

Convoluted metaphor aside, what I’m trying to say is that Twitter and Facebook are becoming more like one another. I think this obvious fact is getting lost in the latest Facebook privacy debacle. Just imagine if Facebook had been more like Twitter from the start — which is to say, open (with your data). We wouldn’t be having this privacy debate right now. Sure, you could argue that Facebook would never have grown to a network of nearly 500 million users. But Twitter is already at 100 million (and counting) built on top of its public sharing model.

I think I’ve read just about every post about Facebook and privacy over the past couple of weeks. They seem to range from Scoble’s manic “let’s end privacy” to Calacanis’ equally off-the-rails “let’s end Zuckerberg.” In between we have our own Paul Carr saying Facebook privacy isn’t dead because it never existed. Wired’s Ryan Singel saying Facebook privacy is dead because Zuckerberg is now a rogee agent. And GigaOm’s Mathew Ingram saying Facebook privacy is only half dead, or half alive, or… it’s complicated. For my money, Inside Facebook’s Eric Eldon has the best detailed analysis of what’s actually going on. And yes, it is complicated.


It’s complicated because Facebook is trying to become Twitter. Everyone has joked about this for a while — ever since the Status Update became the focus of the profile, and the News Feed became a stream of faces — but it’s actually happening. The difference is that Facebook has a lot — a lot — more data than Twitter. Forget 140 character limits, we’re talking gigabytes upon gigabytes of photos, videos, games, etc. And, of course, a lot of this data started out as private — by which I don’t actually mean “private,” but rather “protected.”

Facebook believes, for better or worse, that moving from a model where much of the data is protected to one where it’s public is the future of the Internet. Twitter has had that vision from the start. By default, everything is public, but you can choose to protect your account (which only a small percentage of users actually do).

For the record, I think Facebook is right. I think their execution of this transition has been pretty poor. And I think their privacy settings are a tangled disgrace (can’t we just do this?). But I think they have the right idea.

I also don’t believe that Facebook or Mark Zuckerberg are inherently evil beings setting out to rip away our privacy and ruin us. Is some of what they do motivated by the need to make money? Of course. Is most of it? Maybe. But I also believe that a lot of people at that company do want to put out the best product imaginable.

Facebook has a unique opportunity to fundamentally change the web over the next several years. Some people hate this idea, some are more open to it. But it’s going to happen. We’re in a time period where users are more open to using closed systems (see what I did there?). That will shift eventually, and I think Facebook knows that. And that’s why they’re opening up, and sinking their talons (their data) into the very fabric of the web, to try to hang on for the long haul.

If you actually do believe Facebook and/or Zuckerberg are evil, close your Facebook account right now. Seriously. Don’t write a blog post about wanting to do it. Don’t tweet about it. Don’t (humorously) leave a Facebook status update about it. Just do it. Immediately. There, see how easy that was? And if you really believe that, why didn’t you do that before?

Of course, most people won’t be deleting their Facebook accounts (even the ones who say they will). History (and by that, I mean the past few years) has shown us time and time again that users love to complain loudly about Facebook changes. Boycotts are threatened, moves to competitors are suggested, plenty of lawsuits are thrown around. And yet, Facebook endures. No, it thrives.

Is this a particularly heated debate? Yes. But it too will blow over.

Facebook, as they tend to do, only seem to make matters harder on themselves. Right now, they’re scrambling around trying to come up with a way to calm everyone down. Elliot Schrage’s overly long, overly vanilla, overly everything, New York Time’s Q&A didn’t do the job. It may have made things worse. Sometimes I wonder if Facebook acted more like Apple — that is, simply not respond to pretty much anything — if controversies would go away even quicker. Instead, they have to have an all-hands meeting tomorrow to group-think their way out of this fiasco.

Good luck with that.

My answer would be the simplest one: stay the course. You’ve already ripped off the Band-Aid, don’t try to put it back on again to rip it off slowly. That will just be more painful.

The key stat that Facebook should be watching is also simple: users. While everyone on the web may seem to be bitching, unless user growth stalls, does it really matter? The company has clearly already made its decision to morph into Twitter. (But a bigger Twitter on steroids.) Delaying that transition now only seems to suggest they may think it’s not the right one.

At this point, that may be the biggest mistake of all. Social networks don’t lose because they cause controversy. They lose because they fail to innovate. Because they fail to stay ahead of the curve.


Twitter is ahead of the curve. Sure, it may not seem like it as a simplistic social network in which you share 140-character blurbs. But they have the right foundation (whereas Facebook does not — yet).

At its root, Twitter is pretty much the opposite of Facebook. When it started out, I find it hard to believe that anyone (even creator Jack Dorsey) believed it would one day morph into the future of social networking. At the time, it was simply a way to share status messages. It was a bit like sending a post card, or a text message. It was simple, short, and sweet.

And then it caught on.

And that’s why Twitter is faced with the opposite problem that Facebook has. They have the open foundation down, but now they have to build the house above it with all of the valuable data. Whereas at first you could only do a few things on Twitter: send a public message, send a direct message, reply to someone, etc. Now you can do a bunch of things. Retweet a message, add users to lists, search, etc. And Twitter is about to get more robust.

With Annotations, Twitter will all of a sudden have several more layers of information. If you think about it, this isn’t all that different from some of what Facebook has. Say you tweet about liking a movie — with Annotations enabled, Twitter will easily be able to tell that you’re talking about a movie, and which movie. This is essentially the same as you hitting the Facebook Like button on an IMDb movie page. Or adding the movie to your list of favorites manually.

While I’m not sure that Twitter even realizes how it will use this new information yet, the point is that they will be gathering it. And it’s similar to the information Facebook has long held. It’s the kind of information marketers dream about. It’s the kind of information you build businesses around.

But even with Annotations, Facebook will be far ahead of Twitter in things such as pictures and movies. But is it really? Twitter has supported pictures and movies from early on, they just support it through their ecosystem. This saves them the burden of having to open massive datacenters for content that isn’t easily monetizable at this time.

And yet, if they want to add the ability to store pictures on their own and bake it into Twitter itself, they can easily do that at any point. And you better believe they will if they think it’s worth it. Right now, the main reason it seems to be worth it is social graph lock-in. But as I noted earlier, Twitter isn’t having any problem gaining users without that.

Games are another area where Facebook has Twitter beat. But as we’re seeing now, with Zynga, there’s also downsides to this model. Instead, Twitter again relies on the ecosystem for this type of thing. This gives Facebook a huge advantage in time spent on the service, but Facebook’s key to monetizing this, Facebook Credits, has yet to roll out. Still, with games on the site, it will be a lot easier for them to roll out a payment platform than it would be for Twitter to. I suspect we may see some movement from Twitter in that regard in the next year or two.

With geo, Twitter beat Facebook to the market by several months. While Twitter has no formal check-in functionality, and it looks like Facebook will, both are likely to compete as a key way to federate out other services’ location data.

Twitter’s new @anywhere platform is their answer to Facebook Connect, but Facebook is already moving beyond that with the new Open Graph elements. Twitter is going to need to iterate this quickly to catch up.

So while it may not appear so on the surface, Twitter actually stacks up fairly well against the much-larger Facebook going forward. Again, this is largely thanks to their inadvertently correct foundation. And yet, Twitter has another kind of problem.

While Facebook is on the receiving end of a huge amount of blacklash with regard to privacy, Twitter runs the risk of backlash with regard to complexity.

Facebook is a horribly complex service. It’s much more complex than it should be. Most of this is due to an awful jumble of confusing settings (like the privacy ones). But users put up with this because they always have. While Facebook has gotten more complex over time, it has been a gradual build-up.

Twitter, by comparison, is still very simple. But because of this simplicity, it’s addition of complexity is also much more noticeable. There has already been backlash about the new-style Retweets. Just as with backlash against Facebook, the Retweet backlash appears to have blown over at Twitter, and many people seem to be using the feature. But there will be more backlash as more features come.

Twitter also features intense backlash when they release things that compete with their ecosystem. Because Twitter has relied so much on the ecosystem during their growth, now that Twitter is actually adding features, the ecosystem is understandably wary. Twitter bought its own iPhone app. Twitter made its own Android app. Twitter is hinting at new features that will rival third-party clients. If you’ve been a developer in the Twitter ecosystem for a while, this is scary stuff.

In a perfect world, I’d prefer to see Twitter keep things as simple as possible. But I know that’s not reality. Because they too are a business. And they too want to be the main place where people share on the web. They want 500 million users, and they want more data. They want to be Facebook — but more public. And Facebook wants to be Twitter — but with more data.


The other day, Twitter’s Top Tweets feature shared a tweet, “Facebook is the people you went to school with. Twitter is the people you wished you went to school with.” That’s funny, but it’s not really true anymore. Both are now working towards a middle ground where they’re the school itself.

It’s the Facebook-ification of Twitter. And the Twitter-ification of Facebook. And it’s happening before our eyes. Expect a lot of bitching to continue in the future.

For fans of ABC’s show Lost, it reminds me of two other brothers.

Exclusive: Google To Add Tethering, Wifi Hotspot To Android 2.2 Froyo

Posted: 13 May 2010 01:46 AM PDT

Google added a plastic desert sculpture of a frozen yogurt outside of their Android building today (here’s Eclair, the last version), indicating the imminent arrival of the next version of the Android operating system, Android 2.2, AKA Froyo.

In addition to full Flash support and a whopper of a speed improvement, we’ve just confirmed something that’s even more stunning. Froyo will have built in USB tethering so you can share your data connection with your laptop, something Apple and AT&T still haven’t managed to allow in the U.S. And even better: you can turn your Android phone into a portable wifi hotspot as well.

You can see the tethering and wifi hotspot features in the screenshots above. One thing that isn’t clear from the information we’ve received is whether carriers can turn this feature off, or even charge for it, unless they break away from the standard Android build.

This is, of course, terrific news for Android users. I still believe Android phones, paired with Google Voice, are the closest thing to mobile nirvana to date. With tethering and wifi hotspot features, Apple and others have some serious catching up to do.

Expect Froyo to officially launch no later that the Google I/O event next week. And we’ll have Vic Gundotra, Google’s VP responsible for product management and marketing for mobile products, on stage at TechCrunch Disrupt the week after next.

Google-Backed SCVNGR Takes On Foursquare, Looks To Boost Fun With ‘Challenges’

Posted: 12 May 2010 09:00 PM PDT

It was only a matter of time. Since last summer, we’ve been tracking the progress of SCVNGR, a location-based gaming platform that allows users to build engaging, real-world scavenger hunts that use their mobile devices to both receive clues and solve riddles. Until now the service has primarily catered to museums, universities, and businesses, who use it for things like tours, orientations, and team-building exercises (they’re up to over 600 paying customers). Now SCVNGR, which recently raised $4 million from Google Ventures,  is getting a bit more ambitious: it’s looking to turn the world into one big scavenger hunt, and it’s going to be taking on the likes of Foursquare and Gowalla in the process.

To mark the launch of this new consumer-facing side of SCVNGR, the startup has launched new applications for iPhone and Android (you can grab the iPhone app here, and a QR code for the Android app is here) (it’s US-only for now). If you’ve used Foursquare or Gowalla before, the applications should look pretty familiar at first — you can ‘check-in’ to any of the 20 million venues in the SCVNGR database and see what your friends are up to. But there’s a key difference: SCVNGR revolves around interactive ‘challenges’, which users are prompted to complete when they visit a venue. These can range from simple things, like the act of checking-in at a venue or taking a goofy photo with a store mannequin, to much richer experiences, depending on how creative the business gets.

SCVNGR CEO Seth Priebatsch acknowledges that this is already a crowded space with some very well-funded competitors, but he believes that this ‘challenge’ angle will be enough to differentiate SCVNGR from the rest of the pack. He explains that the value of a check-in on a service like Foursquare tends to be very transient in nature — if you see that check-in an hour or two after it was created, there’s a good chance it is no longer relevant, as the user may well have moved on to their next destination. Challenges, Priebatsch believes, have a much longer shelf life.

As an example, Priebatsch described what might happen if you walked into a local burrito shop that had set up a few challenges on SCVNGR. After pulling out your phone and checking in, the app could prompt you to build an origami figure out of the tin foil your burrito came in, and to upload a picture of your creation to the service.  Doing so would reward you with some SCVNGR points (which are currently valueless but will likely be part of a reward system in the future). So while your friends may not see your check-in by hours or days, they would probably still enjoy the photo of your burrito’s tin foil swan. Another challenge could charge users with using clues scattered around a store to solve a riddle, for example.

Challenges can be created by anyone, including both business owners and their customers (you could also create challenges at a non-business venue like a park if you wanted to). Screening and flagging systems are in place to ensure that there aren’t any inappropriate challenges. And while most challenges will be created from phones, businesses that want to create challenges at multiple locations at once (like a restaurant chain), will be able to do so using SCVNGR’s enterprise tools.

In some ways SCVNGR is late to the game — aside from Foursquare, there are plenty of other competitors, including Loopt, Gowalla, Brightkite, and probably Facebook in the near future, and all of them are going to be vying for attention from local businesses. Every venue in SCVNGR’s database will come with three basic challenges (one of which is a basic check-in), but it will only be fun if users and businesses start putting the time in to make engaging, creative challenges. In this sense, there’s a bit of a chicken-and-egg problem.

All of that said, I like that SCVNGR is setting out to offer a more engaging experience than Foursquare and Gowalla, which I got bored of pretty quickly (yes, I know plenty of people are totally addicted to them — I just find the gaming elements of these services to be superficial). I suspect the popularity of SCVNGR will be tied to how widespread challenges are, and, more important, how fun they are. Likewise, SCVNGR is going to have to incent users to play the game by getting businesses to offer rewards and coupons for completing their challenges (show them the money). Some gamers will keep jumping on to SCVNGR because it’s fun, but the service needs a carrot to dangle in front of users to get them hooked.

Diaspora, The Open Facebook Alternative, Soars Past $50,000 In Micro-Funding

Posted: 12 May 2010 07:04 PM PDT

Whenever a service rises to popularity, an “open” alternative is usually close behind. The problem is that most of these alternatives never go anywhere, let along get close to the service they’re trying to supplant. But the rate at which Diaspora*, the open project hoping to be the new Facebook, is gaining funding is getting too big to ignore.

The New York Times profiled the NY-based project yesterday, noting that the team of four NYU students gave themselves 39 days to raise $10,000 through the online fundrasing site, Kickstarter. As NYT notes, they shot past that goal in a mere 12 days. As of yesterday afternoon, they were at $23,676 in funding. Today, just one day later, that total stands at an amazing $58,315. And they still have 20 days of fundraising to go.

Anytime anything doubles in one day, it’s impressive, but even more impressive about Diaspora’s fundraising is that it’s all being done through micro-funding on Kickstarter. So far, some 1,625 people have donated the $58,000. The minimum pledge is $1, but so far, the most amount of people have pledged $25 (638 pledges), with $5 coming in second place (334 pledges). Over 100 people have given over $50, and 5 people have even given over $1,000 (with 2 of those giving over $2,000).

And they’re drawing some big names to the fundraising drive. VC Fred Wilson just donated an undisclosed amount. And yesterday, TWiT’s Leo Laporte donated as well. The movement is gaining steam quickly. In fact, in just the time I’ve taken to write this post, the funding has surged another $3,000.

Whether Diaspora succeeds or not, of course, is an entirely different story. The coding for the project (which aims to have everyone control their own social network on their own machines, though there will be a WordPress.com-like solution as well) won’t begin until this summer. But with controversy around Facebook at a fever pitch, these kids sure picked the right time to start the project. Again, they have 20 more days of fund raising to go. $100,000 seems a lock (probably even in the next few days), and don’t be shocked if they get close to a million dollars through this micro-funding when all is said and done.

And if they need more than that — I’m sure investors like Fred Wilson will be happy to talk.

[thanks Tim]

Coming Up From The Favelas: Brazil’s Slumdog Entrepreneurs

Posted: 12 May 2010 03:15 PM PDT

On the eve of my last trip to Brazil, I was watching an episode of CSI: Miami where David Caruso was tracking a violent drug kingpin in Rio. Every time they mentioned the favelas—the infamous slums that crowd Rio's hills—his partner said breathlessly, "The most dangerous part of the city."

Sadly—unlike nearly everything else on the over-the-top CSI franchise—the depiction of the favelas wasn't an exaggeration. It's essentially a war zone between drug kingpins and often-corrupt police officers, and many life-long Rio residents have never entered one. One in five people living in Rio's slums have lost a family member to the drug war—and nearly as many blame the police as they do the drug dealers, according to Janice Perlman's research in the excellent book "Democratic Brazil Revisited."

It was a staggering lesson in the different types of poverty in the emerging world. While it's hard to match the lack of infrastructure like water and sewage systems in an Indian slum, there's little that can compare to the violence of a Rio favela. So it was understandable, as I entered a Rio favela a few weeks ago that my guides kept impressing on me that a year ago I couldn't under any circumstances have come here. One year ago, a cab wouldn't have taken me here. One year ago, no one would even deliver pizza here.

What's changed in a year? Specifically, the city is doing something about the problem, embarking on a project of "pacification." As it was explained to me, newly-trained, SWAT-style cops take each favela back, driving out the drug dealers, by any means necessary, in a recognition that the situation isn't just a bad neighborhood, it's an urban war-zone. Being new to the force, these police officers have a clean slate with the residents of the favela, and so are able to continue to protect it, keeping the peace. So far, eight favelas have been pacified. Residents I spoke with talked about the relief of being out from under the daily violence: Suddenly they can be a part of the city. But many are still wary. "This is the best I've seen the community in a long time, but I'm still scared," said Nivea Mendes of the pacified favela Babilonia. "Very few people trust the government. They are just out for an election. I'm still skeptical." Put another way, even though they're physically gone, the drug dealers still have power in these neighborhoods—for now.

There's another tactical problem with pacification that never would have occurred to me: Violence aside, the move basically shoved the richest people – the criminals -  out of the favela, creating a need for a new livelihood for merchants and survival-level entrepreneurs (like the boy to your right and his family) in these neighborhoods. This is where technology is coming in.

For more than ten years a non-profit organization called CDI has been giving favela residents a different kind of freedom, setting up computer labs and offering training in everything from basic computer services to IT skills. CDI has built more than 800 community centers in thirteen countries giving more than 1.3 million people access to the Web, the bulk in Brazil and many for the first time. There's an emphasis on sustainability—each community center charges for Web access and courses, but the rates are affordable for even the poorest Brazilians, as little as a couple of dollars per course. There's also an emphasis on personal sustainability, with most people using the labs to learn marketable skills, write resumes and hunt for jobs. (Mendes runs the computer center in Babilonia; her picture is at the top of the post.)

The labs are run by someone in the community, and each class is required to take on a civic project using technology and the Web. One favela had a problem with rats, so some teens taking the class video-taped the infestation, edited the footage together and showed it to the city government, who would normally never venture into the slum to check things out. The trash was cleaned up, the rats went away, and babies stopped getting sick from the bites and scratches. We talk about the Internet changing the world a lot in Silicon Valley, but it has changed life for a lot of these people.

The exciting thing is the correlation with entrepreneurship and these labs. It's not just the skills they learn, it's a sense of empowerment that comes from technology. When I first started traveling for this book, I expected to find tons of entrepreneurs who'd grown up in slums, but in most countries that hasn't been the case. Sure, there are plenty of examples of "entrepreneurship" in the purest subsistence-level form—traders, hustlers, drivers, tire shops and the like. But residents have told me the day-to-day struggle of life is so overwhelming, that the idea of starting a high-growth company is tantamount to colonizing the moon.

In Brazil, though, I've met several entrepreneurs who came from slums, two of which I wrote about in this post and another in this one. Like great entrepreneurs anywhere, these guys are the exceptions. But clearly, there is something about even the hardest life in Brazil that still allows people to dream big. And, increasingly, technology and companies like CDI play a big role in this. Each of these entrepreneurs trace back the early days of his company to tinkering and, essentially, hacking; one with computers, one with planes and advertising and one with bureaucracy. Computers, mobile and the Internet are the best canvases to hack and allow that hacking to have a bigger impact.

I've written about this kind of computer outreach into slums in India as well with NIIT's Hole-in-the-Wall program and the proliferation of mobile phones and services , and I've also written about the serious investment Rwanda is making in bringing technology to its poorest citizens. But a lot of people are dubious about how much good this does people who, on the surface, have bigger problems. I recently finished reading a book called "In Spite of the Gods: The Rise of Modern India," that rather sarcastically mocked the idea that emerging markets should invest in technology in poor areas when there are more immediate needs like food, water and employment.

The author, Edward Luce, has lived in India and admittedly spent far more time there than I have. But we've clearly seen different countries. The last time I was in India I traveled to several villages and slums with SMSOne, a mobile news company I wrote about back in November 2009. In a half-urban slum outside of Pune, I met a woman who sold vegetables on a darkened street near a dirty river. (Pictured at her home to your left.) On the eve of SMSOne's launch in that neighborhood, she was so depressed about her economic situation she poisoned herself. SMSOne's mobile reporter heard about it and rushed her near-lifeless body to the hospital—not that either of them could afford any care.

His first 140-character story was about her situation and the community—usually mired in their own day-to-day struggle—rallied around her, paying her medical bills, convincing her that her life mattered. She said, through a translator with babies crying in the background of her one-room home, that things are better now.

The community has dozens of stories like this: The woman who had blood cancer and needed donors, the little girl born with a hole in her heart and her parents couldn't afford surgery (pictured to the right), and the community that all pitched in once the read these stories in 140-character SMS bursts. I went from the tire shop to the local temple to the winding streets of the neighborhood with the SMSOne reporter hearing these stories over-and-over again from the people who live there. The people who before SMSOne didn't feel like a true community despite sharing the same crowded patch of India. It was striking how similar each story started to become, given how dramatic each was on its own.

Frankly, Luce's attitude is why rich people shouldn't be the ones making the decisions about what poor people need. It's haughty to assume technology is the domain of only the privileged or that it is even used the same way by people living in dramatically different circumstances. The Internet gives people a voice and when you're rich maybe you take that for granted. But in the slums of Brazil and India, I've literally seen it save lives.

TechCrunch Disrupt: The Facebook And iPad Panels

Posted: 12 May 2010 03:07 PM PDT

We’re announcing two more exciting discussion panels at TechCrunch Disrupt in New York on May 24 – 26. Love them or hate them, two of the most interesting companies in the world right now are Apple and Facebook. In fact, the disruption caused by these two companies is an underlying theme of the entire event.

First, Fortune Magazine senior editor David Kirkpatrick will join us to talk about his new book, The Facebook Effect (see excerpts here). He’ll be interviewed by Founders Fund partner and former Facebook President Sean Parker. There will be lots to talk about with the recent (and developing) privacy uproar and social gaming revolts.

Second, New York Times columnist David Carr will be on stage to talk about the disruptive potential of the iPad in media. Carr has been on the Charlie Rose show twice recently to discuss the iPad and is an unabashed fan of the device. Joining him will be Norm Pearlstine, the Chief Content Officer of Bloomberg, and Eric Hippeau, the CEO of Huffington Post.

See all of the amazing TechCrunch Disrupt speakers and experts here.

We also plan to add an audience member to each panel, so you can be a part of the discussion, too. And yes, we’ll add your picture and bio to the speakers page after the event, too.

If you want to attend Disrupt, now is the time to buy your ticket. The event will likely be sold out shortly. Get a ticket here.

And a few more of our sponsor-flavored updates: we're happy to announce .CO is on board as a partner, and giving us our very own .CO URL to show off the Startup Battlefield Companies. Also, Intuit will be showing off its App Center for small businesses at Disrupt, which we wrote about on the Disrupt blog.

The HTC Complaint Against Apple Has Nothing To Do With How You Use Your Fingers

Posted: 12 May 2010 02:32 PM PDT

When HTC announced earlier today that it is countersuing Apple for patent infringement in response to Apple’s earlier patent lawsuit, it failed to mention which patents it is using to fight back. Well, now we have the official complaint (embedded below)> And despite a propaganda video claiming that HTC changed the way we use our fingers in 2007, its complaint has nothing to do with multitouch gestures.

The five patents it dug up to strike back at Apple are much more boring than that. They cover ways to access the phone directory on a mobile phone and power management. The five patents in question are:

Patent No. 6,999,800, “Method for power management of a smart phone”
Patent No. 5,541,988, “Telephone dialler with a personalized page organization of telephone directory memory”
Patent No. 6,058,183 “”Telephone dialler with a personalized page organization of telephone directory memory”" (same title and inventor as above, oddly)
Patent No. 6,320,957, “Telephone dialletr with easy access memory”
Patent No. 7,716,505, “Power control methods for a portable electronic device “

The last patent, No. 7,716,505, was just issued yesterday.

HTC Patent Complaint Against Apple

SAP To Acquire Sybase For $5.8 Billion To Compete With Oracle

Posted: 12 May 2010 02:30 PM PDT

Enterprise software giant SAP is acquiring fellow business software company Sybase for $5.8 billion in an all-cash offer. SAP is reportedly buying Sybase in an effort to compete with Oracle, which grew its business when it bought Sun Microsystems last year for $7.4 billion. The transaction is expected to close during the third quarter of 2010. Sybase competes with Oracle in providing data software to businesses. Last year, Sybase and SAP announced a partnership to connect SAP's enterprise software with Sybase's mobile platform.

With 500 Apps Out There, Foursquare Unveils App Gallery, Talks Nabisco Rumors

Posted: 12 May 2010 02:24 PM PDT

Like Twitter before it, and Facebook before that, Foursquare is gaining some momentum as a platform. There are now some 500 apps out there, co-founder Dennis Crowley tells us. Or at least, he thinks there are that many based on the number of registered tokens out there. Truth be told, even Foursquare only knows of about 100 or so of them first-hand. And that’s why they’re launching a new App Gallery today to help surface all of them.

The new gallery, found here, is a bit sparse at the moment. Foursquare is only highlight 10 apps to show a proof of concept for how the gallery will work. They’re asking all developers to submit their app through this page (or use this link) so they can showcase all the various apps built on top of Foursquare.

Along the top of this page, Foursquare will feature four apps in a nice, auto-rotating big box. Below that, they’ll have a box showing sets of six apps that you can page through. Or you can select different app categories such as “Mobile,” “Websites,” “Games,” and others. Along the right-hand side there is also a list of the most recently added apps. Users of Apple’s App Store will find the layout fairly familiar.

Apps themselves also have their own pages in the App Gallery. For example, here’s the page for Mob Zombies, an iPhone games that is built on top of Foursquare. Apps get descriptions and screenshots. The pagers also feature Facebook’s new Like button to easily share. And, of course, there’s a big button to “Try this application.”

Foursquare has some good timing. Their app gallery launches just as some developers are starting to get annoyed with rival Gowalla’s limited API. As for Foursquare’s API, the work continues. “We’re actively working with developers to define v2 of our API,” Crowley tells us.

Naturally, I also asked Crowley about the acquisition rumors. He notes that just in time for TechCrunch Disrupt (where he’ll be speaking), they’ll be “ready to annouce that we got acquired… by Nabisco!,” Crowley jokes. “We’re rebranding as TriscuitSquare. It’s gonna be SICK.”

Funny guy.

Rumor: Pegatron Tapped For CDMA IPhone Manufacture

Posted: 12 May 2010 01:57 PM PDT

The rumor mill is churning a bit more today with a brief piece on Digitimes about Pegatron, a Chinese electronics manufacturer, grabbing the contract for the manufacture of a CDMA iPhone compatible with, presumably, Verizon, Sprint, and international CDMA technologies.

Again, this is complete conjecture and Digitimes is often use to seed and power pump and dump scams, so we need to take things with a grain of salt. Generally, however, there is a grave confluence of “rumors” pointing to a potential Verizon iPhone but, as Sascha Segan, noted Verizon iPhone bear, tweeted yesterday, “Tomorrow you could be hit by a bus. And you’d have a lame phone. BC you were waiting for that Verizon IPhone.”

Read more…

Google Loses Senior Android Product Manager Erick Tseng To Facebook

Posted: 12 May 2010 01:45 PM PDT

Surprising industry move of the day (or maybe not): Google’s Senior Product Manager, Android, Erick Tseng, has departed the company and will start working at that other game-changing Internet company as of next week: Facebook.

The move hasn’t been announced yet by either company, but Tseng has confirmed the news unequivocally with the following tweet:

“About to begin a new, exciting chapter in my life. Heading to #Facebook on Monday to help innovate at the intersect of mobile and social”

According to his LinkedIn profile, Tseng has been a product manager for most of the big Internet players out there, bar AOL and Twitter: he’s had stints at Microsoft, Yahoo (albeit both very briefly) and spent nearly 4 years working for Google, and is now apparently heading to Facebook.

Tseng was a very senior product manager working on Android – he was also involved with the inception of the Nexus One. In fact, he was one of the people who took the stage at the Google phone’s launch event earlier this year.

He has a B.S. in Computer Science & Electrical Engineering from MIT and an MBA in General Management, Entrepreneurship from Stanford.

Engadget did a couple of good interviews with Tseng back in January that you might be interested in checking out.

We’re still trying to figure out what Tseng will be doing at Facebook exactly, but presumably he will be leading works on the social networking company’s Android app and possibly other mobile products as well. Undoubtedly, he’ll be working closely with Facebook’s executive team on executing on their hugely important mobile strategy.

We’ll update this post when we learn more.

Update: Facebook confirms that Tseng will be taking up a leading role at the company:

We can confirm that Erick Tseng is joining Facebook as the head of mobile products. Erick has a long track record of building engaging experiences for people on mobile devices. We are thrilled to have Erick join us as Facebook continues to help build products and features that enable people to share and connect at anytime, from anywhere.

(Thanks to IW for the tip)

HTC’s Defense Against Apple: “In 2007, We Changed The Way You Use Your Fingers”

Posted: 12 May 2010 01:28 PM PDT

HTC is facing a serious patent infringement lawsuit from Apple covering 20 of its patents for touchscreen devices. Today, it finally responded with a vague press release announcing that it is countersuing Apple for infringing on five patents of its own. Yup, it took more than two months to find those patents, which it doesn’t even disclose in its release. And the company won’t tell us what patents are in question. I guess we’ll just have to wait until the complaint turns up.

In the meantime, HTC did decide to release a propaganda video titled, “The Quietly Brilliant Story of HTC.” It goes through HTC’s history and all of the mobile technologies it supposedly pioneered, but you never heard of because they don’t like to brag (until they are getting sued, I guess). There is a lot of emphasis on touch technologies. In fact, the video claims, “In 2007, we changed the way you use your fingers.”

I don’t even want to know what that means. But if that’s the best argument HTC can muster against Apple, it better keep looking for more patents. (Didn’t the iPhone launch in 2007?)

Anyway, here’s the video. Let’s call it Exhibit A.


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