Saturday, May 28, 2011

The Latest from TechCrunch

The Latest from TechCrunch

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What It Was Like To Launch At Disrupt NYC

Posted: 28 May 2011 06:37 AM PDT

Editor’s note: The following guest post is by David Chase (@chasedave), the CEO of Avado, a healthcare startup that was one of the 30 Battlefield Finalists at Disrupt NYC last week.  Chase was going to publish this on his blog, but we asked him if we could post it here instead to share with everyone.  We didn’t attempt to correct any misconceptions in the post to keep it true to how Chase experienced the event. You can watch his presentation in the video at the bottom of this post

There are many local, regional and global startup competitions that startups can compete in. I'm a big believer in the value of these startup competitions for two big reasons—they are a great forcing function to ship your product and refine your ability to pitch your business. Even if you have no plans to raise money, you will have to pitch your business to achieve your goals.

My startup (Avado) is a Patient Relationship Management platform for health and wellness providers such as doctors, physical therapists, nurse practitioners, health coaches, physician assistants and personal trainers. We decided to pursue the opportunity to compete in the TechCrunch Disrupt startup competition. To my knowledge, it is the most competitive and well-attended startup competition even though I perceived it to be more oriented towards "fun" technology.  Though there's a consumer aspect to Avado, the primary initial focus is on the B2B aspect (the consumer side has a Connected Health Record that is akin to a Mint/Quicken for healthcare) whereas a large percentage of the Disrupt competitors are only consumer-focused.

Each startup competition has its own selection process. In the case of TechCrunch Disrupt, a triumvirate of Erick Schonfeld (Co-editor of TechCrunch), Heather Harde (CEO) and Michael Arrington (Founder) evaluates the companies after they have winnowed down the first list of companies. My understanding is that two out of the three of them need to greenlight a company to be a finalist. During the course of the TechCrunch Disrupt event, Michael referred a couple times to Erick Schonfeld veto'ing a company. It wasn't clear whether that was a joke or not, but he appeared to be serious.

We were fortunate to be one of the startups that made the first cuts. The next step was to schedule a demo with Erick. We scrambled to pull together what we thought was a coherent flow. Following the demo, Erick asked some questions regarding our business model and the product. At the end, I asked him for his frank feedback as this was one of our first demos so I knew it was pretty rough. He gave me some very useful feedback. At the end of the call, he said we would hear from someone to schedule a demo with Mike or Heather.

With the benefit of hindsight, my hunch is that the fact that we were very coachable and significantly improved our demo and story-telling was a factor in making us a finalist. The next demo was with Heather (also via the phone/screenshare). I took her through the updated demo and it followed a similar process as my call with Erick. At that point, we were told that we'd hear in a couple days if we'd made it to the finals. As it turned out, it took almost a week.

We received the news we'd been selected via email which, of course, we were elated to receive. The next step was to schedule a visit where we'd receive more formal, face-to-face coaching on our presentation and we'd also incorporate more about our business model and go-to-market plans. My impression is the focus that Erick, Heather and Mike have at this point shifts from a weed-out mentality to a coaching mentality as they want to have as high quality an event as possible. When I took Heather through our presentation/demo, it went ten and a half minutes (vs. the 6 minute target). Since we had a relatively complex product and a dual customer (healthcare provider and consumer), she actually suggested we flip the order around in our scenario to lead with the doctor and then review the patient side of the equation. Her feedback was invaluable to tightening up our presentation. We subsequently took her through a revised presentation/demo that fit well within the 6-minute limit.

From there, it was time for the final preparations and travel to New York. They suggest that one person "drive" the demo while the other person speaks. At that point, I needed to coordinate with my co-founder, Bassam Saliba, so that we were in sync for the demo. We did several practices before we felt satisfied with our synchronization. We also took the precautionary measure of doing screen captures of all of our demo in the event of connectivity issues.

Once we arrived in New York, we went through the scheduled technical run-through on stage. We also found out we were in the second day of "Battlefield" presentations. They grouped the startups into groups of similar companies (e.g., search, location, etc.). We were in the "Disrupting the Real World" group. From reading the program, I was able to review who our judges would be but it turned out two of the four couldn't make it—I think it had something to do with the Icelandic volcano. One who didn't make it was Beth Comstock who is GE's CMO which was unfortunate since GE has a big medical division. I was hoping for someone with domain knowledge since it's challenging for judges without any domain knowledge to judge whether a B2B startup in an unfamiliar vertical market is taking a sound approach or not.

Finally our time to present came. As fate would have it, our DNS provider decided to play mind games with us. Literally while the company before us was presenting, our site became unavailable which we learned when one of the guys back at the office texted us that there were issues. I had mentally prepared for something like that to happen so I wasn't too worried. Bassam's PC was already on stage so he couldn't test it. Fortunately, I had mine and quickly fired it up. To our pleasant surprise, I was able to get to the site so we rushed from backstage with a minute or two to spare.

You can be the judge of how well we did (see Avado is the Mint for your Personal Health Records. or the video below) but we were generally pleased with how things went. After our presentation, the judges had 6 minutes to ask me questions. I thought all of the questions were reasonable. The main thread of questions were around the dual customer (i.e., patients and providers) approach since that adds complexity and generally startups should focus as much as possible.

The final comment and question came from Bijan Sabet of Spark Capital. He made the point that he didn't understand why a problem as big as the issue in healthcare we were addressing hadn't been resolved yet. Bijan followed that with a suggestion/critique that he thought we should just start with the consumer and that would drive the change. While I thought I had a decent response (we are focusing on partnerships with health-related non-profits that span both patient and provider), I kicked myself later for not having the better response. That is, the response to his comment that he was surprised it hasn't been solved is the very fact that parties have tried to solve either the doctor side or the patient/consumer side but no one had tackled the bridge between the two. The takeaway for other startups is that you can't anticipate every question so the sooner you start putting yourself out for critique and feedback, the better. Thanks to Bijan's comment, I believe we can turn what may have been viewed as a weakness into one of our key points of differentiation and strength.

As it turned out, we were part of the group that had the eventual winner (Getaround). They generally picked one company from each of the groups to present on the final day of the event. I predicted from the moment I saw Getaround that they'd be the winner. They had the perfect mix of a tight presentation/demo, they were very well resourced (they'd already received significant funding—enough to ship a Tesla from San Francisco to New York!) and were very similar to a deal that got away from some of the judges (AirBnB). It was fun to see their excitement winning. We felt like we won the minute we found out we were a finalist. While hardly a guarantee of success, winning or being a finalist in any startup competition is a nice seal of approval that can help the business. The coverage we got from the tech and venture capital publications such as TechCrunchVentureBeat and GeekWire were terrific, since we'll be fundraising in the future. The VentureBeat coverage was a total surprise.

Would I do it again? No question.



DryerBro iPhone App Notifies You When Your Laundry’s Done

Posted: 27 May 2011 10:59 PM PDT


The folks that brought you It’sthisforthat have created another way to make your life just a little bit easier and funnier. Meet DryerBro, an app that uses an accelerometer to let you know when your laundry’s done.

With DryerBro you put your iPhone or iTouch on your laundry machine and it texts you and the remaining members of your laundry party when your laundry’s done. I’m thinking this is going to be HUGE. I mean Facebook took off at colleges right?

Once set up, DryerBro uses an accelerometer and Twilio to send a SMS, email or call to multiple phones when your unmentionables are ready to be picked up.

Says creator Eric Kerr, “We live in a house with 11 dudes, and we’re seriously unorganized about laundry. We all want to use the machine on the weekends, but no one ever knows when the last load was done. It bothered me as hackers that we had the tools (accelerometer, Twilio) to solve the problem, but didn’t do anything about it.”

So they built DryerBro. “We originally looked to see if an app already used the accelerometer to detect when your laundry is done but we couldn’t find anything – it’s a blue ocean strategy,” he says.

Kerr and company are completely ridiculous, but their thing apparently works. When asked about future plans for DryerBro he told TechCrunch:

“Ultimately we want to build out a hyper-local group buying ad platform for laundry detergents. Rough back of the napkin calculations indicate that we’d need roughly $41 million in financing, so we’re asking friends and family to help pony up the dough. We also want to build out the map of every active dryer in the world to hang on the wall of our office.”

Both the DryerBro FAQ and Promo video are awesome. You can download the iPhone app here. Promo video below.



Facebook Still Has No iPad App But They’re Building A Desktop Software Team?!

Posted: 27 May 2011 10:25 PM PDT

Facebook has no iPad app. It’s ridiculous. Their iPhone app is the most downloaded app in the history of apps. And third-party iPad apps (many of which aim to trick users) constantly dominate the top 10 lists for both free and paid apps. And yet, Facebook doesn’t seem to care at all about the device. Because they’re all about HTML5, right?

Well, someone might want to tell the Seattle office that.

On the jobs page for the relatively new Seattle Facebook office, one of the openings is for “Software Engineer, Desktop Software”. Desktop software. Desktop. Before the damn iPad. Hey Facebook, 1986 called, they want their strategic vision back.

Seriously though, this isn’t just one engineer they’re looking for to work on fun products (like the nifty, but experimental Mac Desktop Notifications app), this is an entire team they’re building. Again, to work on desktop apps. The job description:

The desktop software team is a new team at Facebook based out of Seattle, WA. We will be working on new products that we expect to deliver to millions of users’ computers to help make their entire computing experience more social. Facebook is seeking experienced Software Engineers in Seattle to join this team.

The job asks for expertise in creating desktop applications for Mac and/or Windows (Linux fans can now revolt as well).

Other responsibilities include:

  • Work closely with our product and design teams to define feature specifications
  • Work closely with our Platform team to build server-side APIs and interfaces in support of these applications
  • Conduct design and code reviews

Is Facebook actually building a full-fledged desktop app? If so, that’s awesome. But again, it doesn’t seem to make a lot of sense given their stated (over and over again) commitment to HTML5 and that being the key driver for why they don’t have an iPad app.

Of course, I also don’t believe that they’re not actually building an iPad app. I think they just thought they could get away with not building one (remember “the iPad isn’t mobile” — but the desktop is?) and only more recently realized they should probably be on the fastest growing new computing platform in history.

And then there’s the Facebook Phone project. Which totally doesn’t exist. Double pinkie swear (with fingers crossed behind the back).

Or might this be about the Facebook Browser that I’ve been thinking about for a while? That might actually make a lot of sense.

Interesting times for the social network. I just better see that damn iPad app before I see a desktop client.



Disrupt Hack Baitr Skewers Viral Launch Pages

Posted: 27 May 2011 08:48 PM PDT

While Baitr didn’t win the TC Disrupt Hackathon, it did win the minds and hearts of those in attendance who have a tendency towards black humor. Baitr, a Launchrock-type viral launch page that does nothing but visualize your email falling into the abyss, isn’t at all useful. But it is funny.

Says creator Peter Watts, “Launchrock is good for entrepreneurialism but it’s also bad [for users] because you sign up for these services, and then you never hear back from them.” Watts hopes that his hack will encourage startups to do something more productive with their beta sign up page.

“All these people are driving to a page, willing to give their email,” says Watts. “Once you have their email, maybe ask them some questions or engage with them? There’s so much more you can do.”

Ironically enough, Watts said that he too would use a Launchrock page if he were launching a startup. I guess parody, not imitation, is the sincerest form of flattery.

Watch the interview with Peter Watts below and read more about TechCrunch Disrupt NYC here.



LinkedIn Halo Effect? Facebook Shares Surge To New High In SharesPost

Posted: 27 May 2011 07:54 PM PDT

Facebook shares on private secondary markets like SecondMarket and SharesPost spiked briefly in March to $34 – an $85 billion valuation. But they settled down to around $31.50 after that and have mostly stayed around that level since then. But something caused the shares to surge past that old record to a solid $35 per share in this week’s auction. Our guess is that newly public LinkedIn’s somewhat impressive P/E ratio of 2,500 may have something to do with it.

$35 per share values Facebook at roughly $87.5 billion. Which is a steal compared to the way the public markets are valuing LinkedIn.

We are writing SharesPost members like you who indicated they would like to occasionally receive news from SharesPost.

We would like to inform you that SharesPost’s affiliated broker-dealer completed its auction of 100,000 shares of the Class B Common Stock of Facebook, Inc. yesterday, May 26th. A clearing price of $35.00 was established at the auction. Members submitting Qualifying Bids at or above the clearing price will be contacted shortly with instructions on next steps for completing this transaction.



The Ultimate Guide To Disrupt NYC 2011

Posted: 27 May 2011 06:08 PM PDT


The latest Disrupt has wrapped, but given the volume of news it created and the rate at which posts were pushing each other off the front page, you could be forgiven for missing a few items or videos here and there. Don’t worry, though: we’ve got the highlights of the show collected right here.

Actually, that’s not entirely true. We still have a ton of backstage talks and other footage we’re editing and processing, so expect more Disrupt content over the next week as we post these candid interviews with CEOs and Battlefield competitors. In the meantime, enjoy this central repository of all things Disrupt NYC 2011.


Hacks:

  • NerdNearby: finds tweeters and people checking in near you
  • Gilt-ii: a second layer for shopping site Gilt that lets you auction off your reserved items
  • Joinable: a cloud-based tool for providing email and voice mail to the homeless
  • JoystiCC: lets you control other human beings like chess pieces?
  • Dispatch.io: for easily sharing local documents to cloud services like Google Apps
  • Docracy: allows for collaboration and version tracking on legal documents

Interviews, panels, and Fireside Chats (with video and transcript):

Battlefield session one: disrupting search and discovery:

Do@: a slick search engine that searches using apps instead of the web
Rexly: a media recommendation engine based on trusted social graph connections
Weotta: plans an outing for you based on mood and intention
Skylines: a personalized photo stream based on topics and keywords, instead of people
Deja: a flashy interface for video discovery and consumption

Battlefield session two: disrupting location, location, location

SpotOn: recommends places to go nearby, based on your own social network information
Karizma: a video chatting app that connects you with people nearby
Sonar: find people by you who you don’t know but should know, based on mutual connections
Arrived: a location-aware social planning app that tells you what to do now that you’ve arrived
Gnonstop Gnome: an experimental gnome-sharing application with a clever transfer method

Battlefield session three: disrupting commerce

SneakPeeq: a social shopping site that counts down prices until someone buys an item
StyleSeat: a powerful job management system for stylists and other independent operators
Spenz: deep spending tracking app with a reward system for usage
BillGuard: “Antivirus for bills” that identifies fraudulent charges on your bank account
Happy Toy Machine: a plush toy customization engine, “Build-a-Bear on steroids”

Bonus link:

The TechCrunch Disrupt Official Drinking Game


Interviews, panels, and fireside chats:

Battlefield session four: disrupting the real world

Desmos: a platform for rich educational content
Smartheart: world’s smallest hospital-grade ECG and an iPhone app to go along with it
Avado: a tracking and communication platform for doctors and patients
MotherKnows: an app for keeping track of all your kids’ important medical data from shots to height

Battlefield session five, disrupting enterprise

Getaround: rent nearby cars or put yours up for rent, with a special keyfob and app
Thinkfuse: richer, shareable status reports for your business
ccLoop: collects emails into subscribable “loops,” reducing email clutter
ThriftDB: a powerful database tool that’s difficult to describe but very impressive to watch
Foretuit: a platform for collaborating on and tracking projects and sales

Battlefield session six, disrupting something else

Lumier: no one is quite sure what Lumier is – possibly a skin for Windows
InvoiceASAP: a mobile invoicing app with cloud backup and media integration
Meporter: a citizen journalism platform aimed at hyper-local news
Everything Butt Art: an iPad app for teaching kids to draw, relying on butt-based drawings (yes, really)
CatchFree: a platform for finding, rating, and recommending free services
Kohort: a unified service for managing groups and events
Tracks: “Color for normal people,” creates collaborative picture timelines for events
Codeguard: an enterprise-level website backup system for consumers

Bonus link:

Lark launches in Apple stores (plus an onstage proposal)


Interviews, panels, and fireside chats:

The final Battlefield session

The ultimate liveblog of the final battlefield session

And the winner is … Getaround!

From 30 awesome demos came six extra-awesome finalists. We were impressed by every startup that made the stage, but those final six really blew our socks off. Congratulations to all the companies, with special mention to Billguard, ccLoop, Do@, InvoiceASAP, and Sonar — and, of course, the Disrupt NYC 2011 Winner (and Audience Choice Winner), Getaround, which captured the Disrupt Cup with its killer car rental marketplace. Not to mention that they brought a Tesla, which always helps.

And of course, thanks to all our attendees, sponsors, and team members, who all help make Disrupt possible. This was the biggest yet, and we think it was also the best. See you next time.



After Surging Past Angry Birds, The Heist Now Selling An App A Second

Posted: 27 May 2011 05:10 PM PDT

For as long as I can remember, there has been one app that has constantly held the top paid app spot in Apple’s App Store: Angry Birds. Sure, other apps surge to the top briefly. But Angry Birds always comes flying right back. But a new app appears to be bucking that trend. Today is day 3 of The Heist‘s reign, and sales are quickening.

As The Loop noted after a partial day 1, The Heist saw download numbers just over 25,000. This was already enough to overtake Angry Birds. But what’s really remarkable are the day two numbers. There were 89,798 downloads of The Heist on day two. Again, that’s for a paid app ($0.99).

There are 86,400 seconds in a day so… yeah, the app is selling at a pace better than one a second. Crazy.

In total, that puts downloads now well north of 100,000, and revenues are nearing $100,000 already. In fact, they’re likely well past that number as I write this seeing as the app is also still the top-grossing app in the App Store.

So what is fueling the surge? Well first of all, they had a good launch strategy. The team behind The Heist is the same team behind MacHeist, the popular OS X software bundle. They began hinting about The Heist game earlier this year, and actually hid clues in the initial version of Twitter for Mac (which they had a deal with).

That proved to be enough to push it to number one, past Angry Birds, Tiny Wings, and other insanely popular apps. And getting to number one has its own perks. Because everyone sees you’re number one, they get curious and want to download your app as well, which led to the day two surge.

Well that and the fact that the puzzle game is getting excellent reviews across the board.

The tap tap tap team behind the app is also behind the truly great Camera+ app, which happens to be the number seven paid app in the store. In other words, these guys know how to make good apps — and money.

You can find The Heist here in the App Store.



Munch On Me Is A Groupon For Food, Done Right

Posted: 27 May 2011 01:54 PM PDT

Munch On Me is a daily deals site for food. But wait, before you click away to a slideshow about hot coders, Munch On Me (Y Combinator Summer class of 2011) has got some features that might just reroute you from relying on the big G for your munchies back to its sweet sweet embrace.

First of all, Munch On Me focuses on giving discounts on specific dishes, instead of on anything in the entire restaurant. Any business who’s been a victim of the Groupon effect knows why this is important, namely because restaurants can prepare for the demand in advance, overloading on the inventory they expect will sell out.

The Munch On Me discount focuses only on one item, and restaurants can upsell after the initial sale (“Would you like fries with that free milkshake?) and can keep offering up deals. Customers can redeem their deals immediately, a food industry-specific convenience that Groupon seems to have caught onto with its Groupon Now concept.

Because it takes less of a cut than Groupon, Munch On Me can get merchants to give out larger discounts as well as items for free in hopes of bringing more people into the store.

Says co-founder Jason Wang, “We were surprised in the beginning too, but merchants are willing to give out ‘freebies’ since we focus on dishes and not the entire menu. It drives a significant amount of traffic to the establishment. For example, when we ran King Pin Donuts in Berkeley, CA for a week, 1,573 people claimed a free donut when it was limit 1 per person.”

But the startup also makes money, “We don’t always offer 100% off. We sell individual dishes as well. For example, when you visit the Featured Dishes page in Berkeley right now (http://munchonme.com/index.php?l=berkeleyeastbay), [and] these cost money for users.”

Munch On Me also has another, more unique competitive advantage to Groupon. Banking on the fact that restaurants can’t take stellar pictures of their own food (food pics are a big deal), it sends out a professional photographer to get the job done.

You can currently peruse 2-4 Munch On Me deals a week in San Francisco and in Berkeley.



Accoya Uses Chemistry Trick To Detoxify Exterior Wood Treatment Process

Posted: 27 May 2011 01:12 PM PDT

Most options for wood used in decks, outdoor furniture and siding are rarely entirely earth friendly, since they are often treated with heavy metals or toxic chemicals, or logged from unsustainable forests. One company is innovating in the space by altering the chemistry of the wood itself to make it weather and decay resistant.

After several years of research and development, Accsys Technologies began producing Accoya, a treated wood designed for outdoor exposure. The process uses acetylization, a chemical reaction that bonds together the hydroxyl group of molecules in the wood and replaces them with an acetyl group of molecules. The hydroxyl group is what microorganisms feed on, a cause of rot and decay, says Lisa Ayala, who represents Accsys’ North American branch. It is also what causes wood to shrink and swell.

To perform the molecular swap, wood goes through a vessel where heat, time and the addition of acetic anhydride creates a byproduct called acetic acid. In its simplest form, acetic acid dilutes to vinegar.

“When people smell the wood, they say it smells like pickles,” Ayala said. Less than 1% of the acetic acid remains in the wood after treatment, though even this small amount can cause zinc-plated or galvanized steel fasteners to corrode. The company offers recommendations on what kinds of fasteners and glues have been successfully tested with the treated wood.

Accoya could be used in place of pressure-treated wood, although Ayala said the company sees itself as more competitive with tropical hardwoods such as teak and ipe. According to the company, Accoya wood requires less maintenance than its tropical counterparts, and comes with a 50-year warranty for wood used above ground.

Currently, the company only sells products made from Radiata Pine, though it is exploring other species. The Netherlands-based factory hopes to expand production into other countries, where it can offer wood made from trees native to each area.

Accoya sells its products through distributors in 25 countries. The wood is generally more expensive than something like red oak, but is as much as half the price of teak or ipe, said Royal Plywood Company Materials Consultant Bruce Halvarson.

“No natural moisture can penetrate that wood,” Halvarson said. “If you try and put a water based stain on it, it won’t take at all, but an oil based stain will wick all the way through the wood from one side to the other.” Since the wood is treated from the inside out, it can be cut and modified in a variety of ways without compromising protection.

Accys was awarded a Cradle to Cradle Gold Certification by MBDC for its sustainable products and manufacturing processes.

Photos by Accoya



Welcome To The Future: Polymer Vision Demos SVGA Rollable Screen

Posted: 27 May 2011 12:26 PM PDT

This 6-inch screen displays black and white e-ink text and images at 800×600 pixels and can roll around a tube the circumference of a dime. If this isn’t the future of print, I don’t know what is.

Designed and manufactured by Polymer Vision, the screen can be rolled and unrolled 25,000 times. The question, obviously, is why would you need a rollable display? Well, as ereaders become ubiquitous the need for them to be almost indestructible. I could see a day when kids get their own ereaders for the nursery a la the Diamond Age. Interestingly, Polymer Vision isn’t the company of note when you think of e-ink displays so either they will license this technology or they could start taking more and more market shares from leaders like Eink.

Read more…



Data Tracking Startup Mixpanel Raises $1.25 Million From Sequoia, Rabois, Levchin, And Birch

Posted: 27 May 2011 12:02 PM PDT

When it comes to building a web startup, the devil’s often in the details. And keeping track of those details — be it how far users get in your signup process, or how often they’re clicking a certain button — can be a real pain.

Mixpanel is a startup that’s looking to solve that problem by giving sites an easy-to-integrate analytics solution. And today it’s announcing that it’s raised another $1.25 million from an all star roster of investors, with new investors including Sequoia Capital (Jim Goetz and Roelof Botha) and Keith Rabois. That’s in addition to existing investors Max Levchin and Michael Birch, who are themselves experts at tracking viral data. The company previously participated in Y Combinator and raised $500k from Birch and Levchin in Feburary 2010.

Unlike traditional analytics services that focus on page views and uniques, Mixpanel is all about on-page actions: how many times users are activating a feature, how far in a flow they’re getting, and so on. All of this is tracked in real-time.

The startup’s customers include Quora, Bebo, and Slide (which has continued to use the service even after the Google acquisition). Cofounder Suhail Doshi says that they now are tracking data for 2000 sites, many of which are mobile. Not all of these are paid though — Mixpanel also offers a free plan that tracks 25,000 data points per month. Paid plans begin at $150 per month, which includes 500,000 events.

Doshi says that the company is already generating a significant amount of revenue, with double-digit revenue growth each month. The funding, he says, will be used toward expanding the engineering team and to make their work environment “the best place for engineers” (sidenote: I’m hearing this mantra more often as the hunt for engineers becomes ever more competitive).

Aside from the funding news, Mixpanel hasn’t had much news in the last several months, but Doshi hints that we’ll be hearing some major product announcements over the next six weeks.



Charlie Cheever Explains The Difference Between Quora And Wikipedia

Posted: 27 May 2011 11:24 AM PDT

Hi Charlie. Charlie Cheever from Quora.

Hey .

Look excited, your supposed to smile you've got a vast audience out there.

Okay.

Do you have a lot to smile about, Charlie?

Yeah, I think so.

Well you're the founder and the CEO.

No, I'm not the CEO.

You 're just the founder.

Adam D'Angelo, the other founder is CEO.

So do you have a lot to smile about with Quora at the moment?

Yeah, I think things are going really well. I mentioned on stage we had our highest traffic day ever recently.

How many people was that?

We don't talk about numbers right now.

More than a hundred?

We don't talk about numbers right now. No? Why?

Why? I don't know. We just decided not to.

I am curious though, a lot of people talk about this website they say it's a big deal, if it is a big deal why don't you tell people how many people come to the site?

I think he main reason we decided to do that is that we're really focused on quality and we think that if stuff gets too focused on other numbers that are too orthogonal to that, then we might lose our focus on like the.

But why did you mention that you had the highest traffic number then?

Because, I was just trying to, like.

Make some conversation.


Yeah.

So, I've been to Quora a couple of times, and not probably as sophisticated a tech user as some of our audience. What's the difference between Quora and Wikipedia?

Well, I think some of the things that make Cora distinctive from most other sites are, where a lot of primary source knowledge. So we're really focused on getting the stuff that's in people's heads that isn't on the Internet, onto the Internet, and so a lot of times, people who are like the authorities or experts will come write sort of a definitive answer on Quora that just wasn't there before.

and so.

What do you mean definitive?

Well so, Chris Dixon tweeted out this question about the Patterson cycle, which is this thing in technology where like there's sort of a boom bust cycle that lasts 14 years. And then a bunch of people sort of responded, sort of explaining why they thought it was that way and why this thing lasted about 14 years, and then Arthur Patterson, who was named after it, came and answered the question.

So that sort of is like pretty definitive.

But aren't networks like CORA un-pattersoning Patterson in the sense that nothing is all don't think so because I think one thing that we do is emphasis real identity so everyone has to use their real name on the site. Beyond just, like your real name and your picture, we also emphasize like your bios and also your bios on individual topics and so you know, if you're A journalist by day, but then you're also an expert chef then if you're answering some question about cooking spinach, then your expertise in food would be highlighted.

Well, I consider myself an expert in cooking, but my children strongly disagree. Who decides there?

I think the answer to that is basically like crowd sourcing, for the most part.

But with me, how would you crowd source my knowledge of cooking when there's only three people in the world who can comment on it?

I think that it, you know, probably those three people would have some input and other people wouldn't, and then there wouldn't be very much data, but it would show.

Well back to the distinction between Wikipedia, I think one of the things that I like about Quora versus Wikipedia is the difficulty in being anonymous, which I think that one of the problems with Wikipedia is one never knows who's doing the writing, which lends itself to spamming and lends itself to people who have particular biases.

Do you think that's fair?

Well, you can actually be anonymous on Quora, but you sort of have to explicitly choose too be anonymous. And I think, I do think it's nice on Quora that it can handle questions of opinion. And you can sort of take the answers that you see there with a grain of salt, because you know where the answers are coming from.

And so, if there's a question about politics and someone who's a democrat answers, but sort of says who they are and, you know, proclaims that they are liberal, then you know that that piece of writing is going to have that slant and you just sort of accept that and understand that that's their position.

But it's not, sort of, neutral in the same way that other things are.

The other big difference between Quora and Wikipedia is that you're a full profit company, right? You're in the business of making money.

Yeah, we like to be a sustainable business.

What would happen with Quora if you sold yourself, like what Huffington Post did, for large amounts of money, or TechCrunch for that matter, given that your core content is user-generated? Would you ever give any of the money back to the people who contribute to the site?

Well we have, I just said on stage, we have an explicit non-goal of selling the company. So I don't think that will happen.

But if it did?

But also people, it's their content and they're free to post it on their blogs or post it somewhere else and other people are also free to take the content right now.

So no profit share, for example, if you were selling advertising off the back of people's content, you wouldn't give them a percentage? Because I like what you're doing as profit and I think that if Wikipedia gave some money back to its contributors, it would be a better website.

Yeah, well we don't have any advertising right now, and so you 're probably aware of that right?

Probably Chuck. I think that's something I'll look into, but right now it's to early that you've been comment on that kind of stuff.

Well, thank you so much for being so cheerful and I will look forward to ...

Cool.

...catching up with Quora in the future.

Thanks.

And good luck with the rest of the conference.

Thank you, Chuck.

Quora co-founder Charlie Cheever not only doesn't want to sell his hot start-up but – as he told me backstage earlier this week at Disrupt – he even has an explicit non-goal of not selling the company.

Non-goals or not, Cheever has a lot to smile about. Traffic is up to record levels at Quora and the site continues to be a paragon of innovation in the social space. In this interview he explains the difference between Quora and Wikipedia, and we get into many other orthogonal discussions as well. But I wonder if Cheever is tempting fate by having such an explicit non-goal. After all, he'll look ‘a right Charlie’ if Quora gets snapped up in the frenzy of acquisitions that will probably mark the post LinkedIn-IPO social marketplace.



A Bit More On WWDC, The Mythical iPhone “4S”, and iOS 5

Posted: 27 May 2011 10:52 AM PDT

With WWDC quickly approaching, the rumor mills are heating up with what we should expect at Apple’s annual conference known for big announcements. We’ve learned a little bit more that speaks to what to expect — including a couple of big, widely-requested things.

First of all, a lot of sites seem to be working themselves into a tizzy about the so-called “iPhone 4S”. While it has already been widely reported that there will not be any major hardware announcements at WWDC this year, people seem to be letting their imaginations get the best of them anyway. This site, for example, notes that Apple is pushing for British journalists to fly out for WWDC. And today, there’s a report about Australian journalists getting the same message. Both conclude this must be for the “iPhone 4S”.

As Electricpig writes:

A source tells us that Apple's UK iPhone PR team is approaching journalists from major publications to fly out to the event in San Francisco next month. The obvious conclusion would be that Apple is announcing a new iPhone. Or rather, an updated model. The iPhone 4S is slated as a stop-gap before the appearance of a true, '&%!*, they've done it again!' game-changer next year.

In no way is that an obvious conclusion. I’m not disputing the fact that Apple’s iPhone PR team wants people at this event. But guess what else that PR team is in charge of? iOS.

Apple is Apple — they may always have a “one more thing” up their sleeve. And at least one of our sources still thinks that Apple will surprise with some new iPhone hardware. But right now, we’re not buying it. All other (solid) indications are that there will still be no hardware announcements at WWDC. None. And the extension of invitations to journalists in no way indicates anything different.

Instead, we’re hearing that Apple is pushing for journalists to come to WWDC because the software announcements will be huge (and they likely know that journalists hearing there will be no iPhone 5 announcement may choose to stay home instead this year). And the changes will be vital for all developers in the Apple ecosystem(s) to know about.

And remember, this isn’t just about iOS 5. This is about Apple’s entire software backbone. iOS and OS X are both about to receive massive upgrades at the same time. And both will likely be extensively previewed at WWDC. Add to this Apple’s cloud announcements (which may or may not include the “iCloud” music stuff) and you suddenly have a WWDC that looks anything but boring, new iPhone or not.

The second bit of information we have heard is about iOS 5 itself. First of all, while we’ve been leading the reports of Nuance technology being fully baked into iOS 5, one place we’ve heard it won’t be used (at least not yet) is Voice Control. That’s odd since it’s perhaps the most obvious usage. But apparently, in the builds of iOS 5 currently being tested, the little-used feature hasn’t changed at all, we hear.

That could obviously change before the release (which is still likely months away, even though it will be previewed at WWDC), but apparently the Nuance technology is meant for bigger things more core to the OS than that one feature.

The other big news for iOS5 — and yes, I’ve completely buried the lede here, thanks for reading! — two things: completely revamped notifications and widgets.

Expect a lot more in a couple weeks. Obviously, we’ll be there live covering the event.



In Front Of Its IPO, Kayak Reports Growth In Revenue But Income Down

Posted: 27 May 2011 09:35 AM PDT

Late last year, travel search engine Kayak filed for an IPO, aiming to raise $50 million. The company just released a new version of its S-1 today, with updated financials. The company plans to list its stock on the NASDAQ under the symbol "KYAK."

For the three months ending March 31 of this year, Kayak generated $53 million in revenue, which is up 43 percent from the same period in 2010. The company actually lost money in the quarter in terms of income, with a loss of $6.9 million. Adjusted EBITDA was $8.2 million.

In the filing, the company said it took a loss of $15 million in January 2011, when Kayak migrating traffic from www.sidestep.com to www.kayak.com. Kayak bought rival SideStep for $196 million in 2007. Because Kayak shut down SideStep’s site and URL, the company incurred a write-down of $15 million in the first three months of 2011.

From January to March, Expedia and its affiliates, including Hotels.com and Hotwire, accounted for 26 percent of Kayak’s revenues, followed by Orbitz, which accounted for 14 percent of Kayak’s revenues for the time period.

For the time period ending March 31, Kayak processed more than 214 million user queries for travel information, representing growth of 48 percent from 2010 and Kayak mobile applications have been downloaded over seven million times since March 2009. From January to March, Kayak saw one million downloads of its mobile apps, which include iPhone and Android apps.

While Kayak isn’t minting money, it’s probably a good sign for investors that the company is at least growing revenue.

One the risks Kayak identifies in the fling relates to Google’s acquisition of flight search software ITA Software. Kayak says that one of its risks is that it depends on a third-party (ITA) to query airfare results. Kayak licenses faring engine software from ITA under an agreement which expires on December 31, 2013.

ITA provides a large chunk (56 percent) of Kayak’s airfare query results and 29 percent of its airfare query results from January to March were obtained from other sources that used ITA. Basically, if Kayak somehow couldn’t use ITA’s software, it would be a big negative for the company. But Google cannot prevent licensing access to ITA’s software from third-parties, according to the DOJ mandate that pushed the $700 million deal through.

Kayak also acknowledged that with ITA’s technology, Google may also create other flight search tools and services that directly compete Kayak. Kayak is afraid that Google will include a better version of ITA’s software, that Kayak won’t have access to. From the filing: These services offered by Google could include enhancements or improvements in performance of the ITA software which may not be made available to us, such as improved performance that significantly increases the speed at which their software returns search results. Although the consent decree requires Google to renew our existing ITA agreement on the same terms, if ITA or Google limit our access to the ITA software or any improvements to the software, separately develop replacement software to which they claim we are not entitled or increase the price we pay for any improvements of replacement software and we are unable to replace ITA's software with a comparable technology, we may be unable to operate our business effectively and our financial performance may suffer.



Google Responds To PayPal Lawsuit: People Have The Right To Seek Better Jobs

Posted: 27 May 2011 09:14 AM PDT

Yesterday, PayPal filed a lawsuit against Google and two of its executives for stealing trade secrets. The lawsuit came on the same day that Google announced its mobile wallet plans involving Android phones with NFC chips. The two executives, Osama Bedier and Stephanie Tilenius, previously worked at PayPal. In fact, Bedier was in charge of negotiating a deal with Google on behalf of PayPal for inclusion of PayPal as a payment mechanism in Android phones. The deal fell through and Google hired away Bedier instead, who then helped build Google’s own mobile wallet product.

At least that is PayPal’s side of the story. Last night, I asked Google for a comment. It took them a while, but a spokesperson just emailed me the following statement:

“Silicon Valley was built on the ability of individuals to use their knowledge and expertise to seek better employment opportunities, an idea recognized by both California law and public policy. We respect trade secrets, and will defend ourselves against these claims.”

Let’s parse this statement a bit. Google is saying that talented employees should be able to take their knowledge with them as they “seek better employment opportunities.” In other words, people can work wherever they want, and Google is a much better place to work than PayPal, so if Bedier wanted to switch jobs, who can blame him?

Sure, they can take their knowledge, but they can’t take trade secrets. Google says they “respect trade secrets,” so you can imagine they will be arguing that what Bedier brought along in his brain was just general industry knowledge and not any trade secrets specific to PayPal.

High-profile employment disputes are nothing new in Silicon Valley. When Apple poached IBM’s Mark Papermaster to head up its chip development, IBM sued. The two companies eventually settled out of court. In many ways, this is a PR move on PayPal’s part more than anything else. It is not like they are going to get an injunction to stop Google from going into mobile payments. But it’s a bad PR move because it shows exactly how scared they are that Google is going to succeed.

For some more background on what’s at stake, watch the video below from earlier this week at Disrupt when Stephanie Tilenius was on a panel at Disrupt that I moderated about the future of online-to-offline commerce.

Photo credit: Flickr/Henk-Jan Winkeldermaat

in New York City with a focus on this area. Thank you so much for coming and being with us today.

So the reason I put this panel together, and Alex helped me, is there seems to be a lot of experiments with, especially with mobile, turning mobile ads essentially into something that is more, something you can track better, and one way to track the loop from impression to action is, what better action than a payment, right?

And I just wanted to talk a little bit about, you know, what are the different ways that companies are thinking about linking those two things: the ad or the offer, and the payment, and how does mobile change that? So maybe we can start with you Stephanie. Google has a lot of experiments in this area.

you've got an offer determined in Portland.

Right.

And then there is also an offers product that is linked to Latitude. Just give us a frame of what they're doing at Google.

So, we believe that you're going to see a real transformation in the mobile local space and how consumers interact with merchants, with service providers. You know, I think that we call it the age of molo - mobile local. And, we envision that consumers will be able to walk around and get offers nearby, and so we have several different offers products.

We have check-in offers that you can get. We have lots of big brands doing that today like McDonalds, quick-serve kind of restaurants. We also have a trial we're doing for prepaid offers similar to what Groupon and LivingSocial do today. We're testing that in Portland and other cities and ramping a sales team to go out and apply our SMB deals, large merchandisedeals and at the end of the day, you know, we believe that consumers are going to have a platter choice around them, and they're going to want to be entertained, helped.

There's a push-pull aspect to it, some things we push to them, some things we pull and it will be very easy for them to find things in their way local area.

Do you mix the inventory or will you mix inventory of prepaid offers like the Groupon-style offers with the mobile offers which. You're already seeing, you know, with some a lot of mobile applications are taking advantage of, but there is Groupon or Livingsocial you check in and then it tells you things nearby.

We have lots of different properties. So you are going to see us embed offers throughout our experience and consumers do not distinguish between different types of offers.

Right, so Louis, even for speaking about this recently in the batsman team of yours right. How do you see this whole space, what do you think is a big opportunity?

Yes we look at it from a venture perspective. We look at Online ads are projected to go from 26 to 50 billion. That's about the same course that Amazon was on from the commerce, and it takes all of e-commerce at $180 billion. It's about half of what Wal-Mart does, one company that's on predominantly offline with some online.

And you look at the size of now what may be influenced by online activity to offline. Forester and others are estimating up to 50 percent, 1.2 Trillion of consumer spending is happening by influence of online to offline. So when we talk about connecting the two with or without mobile.,there are a lot of different subsegments, and we are taking a venture perspective, as opposed to be one of the big leaders in the industry like Google.

The startup companies are looking at ways to enable that activity. It could be retargeting a consumer who went in a retail store, leveraging LBS. Retargeting them on their mobile device to get them back into that offline store. It could be driving somebody from a pure online experience to go pick something up offline, like Groupon.

A lot of different ways to do it, the the trick, I think, from the venture perspective of the start-ups that are here today is you want to, it's definitely go to where the puck is going to be. It has been for about a year. The problem is are you going to be facing an empty matter or are you going to be facing a 6'7" Russian who's going to clean your clock, right?

Is that - are you calling Stephanie a 6 foot Russian?

It could be.

Alex, in your mind is sort of figuring this out the Holy Grail of, you know, not only mobile advertising, but sort of, advertising in general?

Yeah, I mean, if you look at the local advertising, I mean, Google is a tremendous company. And local advertising; it's very hard to make that work in an online context, because the local bar doesn't want to pay per click. The local tennis instructor doesn't want to pay per click. He wants to pay per customer and the best way of closing the loop is actually not sending a click, but sending a check or sending a payment.

And I think eventually advertising and payments really become one and the same. And it's kind of interesting, if you look at any merchant they hate paying Visa, Mastercard, American Express the two, three percent. They love somebody thirty percent. I mean programs have been pull that off, and it's not just about the deal of the day concept.

That worked very well. It's more about you merge these two so that you're not sending an offline merchant click. We are actually sending them a customer and you can close the loop. So, I think that there are two or three reasons to be a payment company. One is to just markup interchange and I think that is going to go the way of the Dinosaur, Two is data.

Look at what Amazon does; people that bought this also bought that. American Express can do that better than anybody because they have all of your payment history the third is vertical integration or closing the loop. And I think that is where payments are headed. That is also we are off on advertising side.

So just to give an example so people would understand what you do, you told me this backstage that you know, some body might have bought a movie ticket on Pandanggo and then the gap wants to target certain subset of those people to go to the gap. So they give him an offer for the gap.

Right.

That was a real offer that you did was very successful.

Right.

Can you talk about that a little bit?

Yeah. A lot of what we do is transaction level targeting. So there are different ways of targeting an offer. One is purely Push which is what initially goggle office product is giving it's also what Groupon has done very successfully another way is pull so I see what near by me another way is check in based so this is force and others are giving what we do is a little bit of more trans cation base ;we know you just brought two movie tickets ;your email and the movie theater that you are going is right to next to a Gap; here's forty percent off at The Gap.

And doing stuff like that its actually, its very relevant to the consumer. But it's also sending somebody like Gap A very high quality customer because they know there's no adverse selection problem there. This is a person that just spent a requisite amount of money somewhere else. It's not somebody who is looking for a deal is that best people that you can find are not ones that are motivated by coupons or discounts.

Right.

And that generated a million dollar for sales one day?

Yeah.

That 's amazing.

So, and you can do that, but it's a million dollars of sales from good customers. And it's not to say that very good customers, where you have some percentage.

Is any sale from a customer a good customer?

It depends on how you discount your product, so I know a guy who's a dentist and did a group on i said buy large, the vast majority of groupon merchants are very happy. Because I would say there is no such thing as a bad lead. It is usually a badly priced lead.


Right.

You discount your product below your cost and you do it because you think the LTV is going to be very high. The lifetime value is going to be very high. And it does not pan out because you have very promiscuous customers that will go to this dentist this time, the next dentist, the next time no loyalty there.

It's not gonna work out for you. So, different customers have different lifetime values and different qualities, the best type of customer is one that isn't motivated by a discount but where a discount can change their behavior.

Well, Stephen, what is your thinking on this, I mean, weren't you on the team that tried to buy Groupon?

I can't comment on any activity at Google. I agree, I agree with Alex that it.

It's just in terms of, there's a model here right, the Groupon model which kind of took of, right, and that may or may not be the The only models we're discussing.

I agree, I think Groupon was, is a great company and congratulations to them for getting a foothold on the local space and starting this whole wave a long line to offline, or lower, however you want to term it. I definitely think that there's gonna be a ton of innovations in space. But Groupon is tapped into One alumina and it ultimately is going to be about customer management, so big brands, small brands they want to manage the lifetime value of the customer.

And they want to know who that customer is when you walk in the door, they have geolocation technology and they can figure out who it is. And I think it's very similar to what Alex said in the sense that if you know that customer is, you can target the promotion at them that actually gets them to do a certain thing that valuable to them and the merchant.

So it's symbiotic. And what you are seeing today is, you know, retailers spend so much money on promotions that they have no way of targeting that, and they don't actually know how to target the customer that comes in the door.

And, and What are the different ways that you are experimenting with targeting customers?

Especially, in a mobile context, what do you You know, what do you know about potential consumers that you can offer to merchants or brands?

Right. I think if you look at the statistics, Forrester basically says that 50% of commerce is going to be affected by the mobile phone. Everyone, you know 50% of the phones in the US are smart phones. People carry them, they use them for shopping today. You're going to see them look for inventory.

For example, today we have 70 of the top 100 retailers integrated in our Google shopper app. We have over five million downloads and people use it to actually find local inventory. You're also going to see consumers going to a store and if the inventory's not there, they going to be able to tap, you know, scan a bar code or tap on an SE tag and just order the item online and have it shipped to them.

So you are going to see the integration of online and offline inventory. And these merchants will actually be able to target promotions and inventory to consumers.

Let's take it one step further, Google is making a big bet on NFC, NFC payments right and android or just NFC chips, which we use for lots of things like the payment. sort of that's the one of the biggest potential apps there. Can you paint a picture for, you know how an NFC-enabled phone might work as a payment vehicle as well as how it might tie into some of what we were talking about in terms of offers?

Yeah, there's a lot of applications for NFC which is why we believe it's a really important opportunity for Android and we are making a bet on it as a company. You can tap on a poster in New York City and find information about a movie. You could get an offer from an NFC tag. You could walk into the Gap and if they don't have your size jeans, you could tap on an NFC tag and have it shipped, have those jeans shipped to you the next day.

So there's a lot of potential and the ease of use of tapping, and tapping it's literally seconds and it's so easy. We do believe in NFC. We also believe in bar code, you know QR codes. I mean there's a ton of things going on right now in the space.


Right.

Not just NFC.

In fact you're making an announcement tomorrow, right?

We do havethe partner announcement tomorrow. It's gonna be an NFC payment announcement.

I can't confirm what we are doing tomorrow.

My understanding is that you're going to make an announcement with Citibank, to enable NFC payments on Android phones.

We have a partner event and they'll be around local commerce.

Ok, you heard it here first. Lewis, do you think that this whole idea of The NFC payments is going to work?

Yeah, first I'd like to ask Stephanie if she can confirm she has either a We see, it's coming. It's a wave. It's going to be here. There are a lot of hitches within use cases and comes to play, Stephanie's rattling up a number that, are much, there's some that are very easy on the spectrum. A consumer standing by their own at a podium or add an ad get information, and get a discount of their mobile device much more simple, right?

When they're in a retail environment And a low average ticket, high volume environment.

POS being the cash register.

Correct, point of sale. Where 2 seconds make or break a product in speed of the transaction at the merchant level. There are still certain issues that need to be overcome, which is why we've been following mobile payments in these applications for years. We did a study about four years ago, five years ago.

Most of the companies stabling around mobile payments aren't actually processing the payment concentrating transactions, like a Groupon, right? What happened, the trip up points in some of the use cases are what if the consumer wants to integrate awards or royalty program? What if they have a gift card program and it's not integrated with that?

What if there's a line that they're on, and they're using their smart device for other activities like email or playing a game, and they don't want to stop at the second they have to pay and enable it? All of that will get worked out but what we have seen.all the excitement around it is there from a consumer perspective.

I think the excitement is from the technology companies perspective. Now that's picking up, absolutely would imagine for Google it's a lot more of the data than it is trying to be in a payments processing center.

Right and maybe a little bit from early adopted consumers but I guess my question is, to what extend is there a hurdle that you have to get local merchants to adopt these technologies, you know, local merchants are not, when they have to do something new that 's a barrier to adoption it seems to me.

How are you addressing the investment.

And they generally only care about two things, cost is number one and fore-number one, and number two is speed of transactions, if they are of the high-volume store like a coffee shop. And if NFC can conquer both of those for them, they will be much more receptive if there's no additional cost, either in hardware or in transaction fees, and you can expedite that line, that's what they first and foremost love the idea, and there's been lots of attempts about creating data-driven royalty programs for awards for local merchants, very very difficult to do, although now, we're with the adoption of smart phones, and the scale of the players, like MasterCard, like Google and others going in to promote NFC, It has I think it's first real chance of getting there.

Since floating an answer to some of the questions.

I think look these things always technology transformations always think in some ways longer than you think, but in some ways shorter than you think. I think, 10 years from now we'll all accept this as a reality I don't know how long it'll take to get there. If you look at Starbucks, I mean Starbucks launched a noble loyalty program and it's just based on barcode scanning and they just have over 3 million users like that, and then they just launched NFC in the UK, NFC payments.

With barcodes in orange you're seeing sort of momentum in this space. The stats actually speak for themselves. Look, I don't know if the analysts are right, but here is what the analysts are saying so there was 4.9 billion of local commerce in 2010, and the projections are that gets to 163 billion in 2015.

That's mobile commerce. Mobile payment, there was a 170 billion dollars of volume in 2010, and that's going to 630 hundred billion. So you look at digital, you look at, there's a ton of there's already a ton of activity in this space.

A lot of this is overseas though.

A lot of it is overseas but there's a lot of proof of overseas and Japan, Singapore contractors, you know.

Do they already have NFC in Japan like they have ?

Yes, Singapore, Japan, they have NFC everywhere, everybody uses it. You know, T points has 45 million wealthy customers using NFC .

How would, if NFC became widespread, how would that help sorta the whole, what you've been talking about tying offers to, to ads What I go back even one step to Louises comment of,there is a cost issue to a lot of merchants so why would merchants ditch their legacy hardware if everybody has a credit card anyway.

And this is actually one of the areas where offers can be helpful. So if you go to the local coffee shop and say "I will guarantee you a thousand new customers" into the next month but you have to add this device to your store we'll probably do it if it say if we tell them alright each customer is going to save 1.5 seconds paying and you have to pay five hundred dollars for this new device they probably won't do it so it's another area where offers not really offers in general but just getting people into the story, sending customers can be a very, very powerful motivator.

If you think about the mobile phone, one of my favorite companies in the world is called Catalina Marketing and and they dominate the space for, primarily supermarkets and loyalty programs in supermarkets and pharmacies. So you pay and at the end you have some offers on your receipt. That's very twentieth century.

What can you do on the phone? Alright, I pay with NFC, and then I might see a couple offers right there. I can save those offers offers to my online phone.

If I just got those offers. I mean, every time I go grocery shopping I see those offers and maybe I'm not the target audience but you know there usuallyat something I want to buy, and if you just replace those same offers on my phone, it just turns into digital spam instead of

It's better though,I mean, the key thing is that defective feedback so Catalina typically has over a ten percent redemption rate for one of the coupons that they give out because in many cases they're very there like they know that the supermarket has too much milk they know that you buy milk once a week and they'll say here's two dollars off milk.

So you know they have massive redemption rates for the offers that their giving away, but they don't know if you use it till another two weeks or another week at least on the phone I can say, I want this offer I'm going to save this to my phone and then I'm going to use it next week so there's a lot of neat stuff you can do now that you have a smart device as opposed to a piece of plastic .

Alright so Square just had an interesting announcement yesterday where they're turning their iPad app into more of a cash register in a sense and they also have this idea of square cards where its kinda like a wealthy card type of offer what do you guys think about that approach?

Yes, I will go first. I think they've definitely started moving toward some good pivots, right, where initially when it started out going after higher risk higher fraud merchants as volume and then they had their underwriting problem which was pretty clearly going to hit them and so they're very successfully to me evolving the model, going from what in smaller divots that would've been a huge, would've been a big divot instead they're going into pivots.

It's going well that's a good way to go. They're also talking apparently a lot about community driven aspects for the merchants of sharing the data across them to help drive more volume. And between them which really hasn't been done by a payments processor or POS system that's grabbing the data. So as long as they have the capital to support, which they clearly do, these ongoing activities, and now the partnership with Visa, there's probably some really cool stuff that will evolve out of it.

yet to be seen.

Were they having underwriting problems?

Well, they paused it for a while because of sponsorship and underwriting about a year ago.

I think that's another area where you can take a smartphone that can do pretty much anything and you can disrupt an old industry. And you put, like, square is really competing with cash and the best way to compete is not to display something that works pretty well but cash doesn't work. If you wanna make a five hundred dollar purchase at a flea market and all you have is a credit card.

Now you enable the flea market seller and the artist to actually accept credit cards, and I think what square is doing is pretty amazing. And I think they have a lot of success ahead of them. And plus with GPS coordinates and everything else, I think they can manage the fraud problem very effectively.

Paypal did it a long time ago. They've a different set of fraud parameters to look out for, but they've got a very smart team.

But it also opens up and once people are starting... merchants are starting to take payments via these, via their mobile phone and once consumers are paying, well that opens up the possibility for a peer to peer payments, right? I mean, for instance, for Google, Google has Google Check Out, right?

You already have the infrastructure to become you own payments...processor . To what extent does it make sense to tie that with some of these other which are more advertising and offer driven programs. I mean, is it better for the consumer or the merchant in the end if you can be the payments processor and lower the payments fees?

Yeah, I think there's a misnomer that Squares are actually trying to compete with Mastercard and Visa. I mean, you swipe your card, use your credit card. I think what they're competing with is cash. They're going into the small guys, and frankly Paypal did this very early on, and they're servicing really small merchants and displacing cash, which is actually good for Visa and Mastercard.

I think it's good to actually tie loyalty and offers to those things. And what really merchants care about is traffic. They want traffic and they want new customers into their store. The payment processing is a small cost on a relative scale. It's important, for big merchants it adds up. But the real important thing is driving traffic into Is Google doing anything on the loyalty side?

We don't have anything to announce at this time.

OK. Well, we're out of time. Please give a round of applause to our panelists. And thank you so much. I hope you learned something, I certainly did.

You guys can walk down the stage and we'll have our next presentation. I think we'll to do a stage


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