Saturday, July 2, 2011

The Latest from TechCrunch

The Latest from TechCrunch

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Weekend Giveaway: Toshiba 47-inch TL515 Series 3D LED TV

Posted: 02 Jul 2011 08:47 AM PDT

Choose Life. Choose a job. Choose a career. Choose a family. Choose a Toshiba 47-inch TL515 Series 3D LED TV with natural, passive 3D display, choose TriVector 2D to 3D Conversion, 3D Resolution+, 3D Cross Talk Cancellers and electrical tin openers. Choose good health, low cholesterol, and Toshiba's first Natural 3D LED TV as it creates stunning 3D images using affordable polarized glasses. Choose fixed interest mortgage repayments. Choose a starter home. Choose your friends. Choose leisurewear and Wi-Fi and Net TV with Yahoo! Widgets.

Choose life.

Find out how to win below.

Read more…

E-Commerce: Beyond The Metrics

Posted: 02 Jul 2011 08:44 AM PDT

Gautum Gupta is an associate at General Catalyst Partners, where he focuses on financial services, enterprise IT, consumer services, and new media. You follow him @gRamblings.

For all the excitement around commerce these days, there have been only a few really big changes in the last 100 years. Sears pioneered the mail-order catalog, chains like Walmart consolidated big box retail, and Amazon brought inventory online. After more than 10 years of growth, e-commerce only accounts for about 8% of total commerce in the US. Clearly, we have a long way to go in moving more commerce online. I believe the next evolution in e-commerce—what some refer to as "social commerce"—will use customer identity and data to better personalize and serve customers well beyond what Amazon has done to date.

Commerce, both offline and online, has historically been largely anonymous and impersonal. Offline, customers walk into stores, see the exact same merchandise, are greeted by employees who don't recognize them, and are all bound to the same terms and conditions on the back of every purchase receipt. Online, the pen and paper of the old mail-order catalog were replaced with drop-down menus and search boxes. Amazon and other sites emerged to provide customers with anything they were looking for at low prices. As disruptive as the online catalog has been, the success of these online stores is measured by three and four letter acronyms: LTV "lifetime value" and COCA "cost of customer acquisition."

However, a shopping experience cannot be summarized entirely by metrics. When a customer enters a department store to try on new shoes, she may feel the hesitation of not knowing whether it will match with her wardrobe. Or, she might serendipitously spot a pair of heels out of the corner of her eye, but feels frustrated to learn that the pair is not what she expected, not in her exact size, or the deal is just not good enough. These types of shopping roadblocks—psychic swings from purchasing intent to hesitation or frustration—matter more than metrics can describe. The next evolution in e-commerce will evade these roadblocks by knowing this particular customer's identity and leveraging the data she has made public (explicit & implicit preferences) to create a more personal shopping experience for her.

Knowing her identity isn't restricted to the customer's name or basic demographic information, but could also include his or her family and friends' purchasing history, the customer's likes, style, brand preferences, and influences. In the retail context, her identity allows the retailer to build a relationship with the consumer. When Sears first sold watches through the mail, to build trust with consumers they promised customers that every watch sold would be accurate for at least six years after purchase or else they would fix it free of charge. Just as Sears did in the late 19th Century, the best online retailers today make promises to us: they promise to show and help us discover merchandise we'll love (personalization), they promise to help us decide what to buy (tools), and they promise that we'll be delighted by the entire experience, even after we buy (service).

Physical retailers operate under the constraint of finite shelf space and must hope to catch the busy consumer's eye. In the digital world, with endless choices, truly successful companies will excel at helping consumers find and discover great products. Some companies will even enable consumers to create or customize what they want. Gemvara, a custom jewelry seller, starts by funneling consumers into a specific boutique and then immerses the consumer in customizing a design that catches her eye.

One interesting trend is companies blatantly asking customers to fill out quizzes and surveys that eventually inform their merchandise selection. ShoeDazzle has built a large business around style quizzes that engage women in a fun experience to define their personal style. They use the results of these quizzes and their team of curators like Kim Kardashian to build a showroom specific to each customer. Going forward, by using the customer's past purchase history, likes, and friend's purchases, retailers will be able to create a completely personalized experience from the very first visit to their homepage.

Beyond personalization, J. Hilburn, an e-commerce company providing men's custom clothing, employs a network of Style Advisors who can take their customer's measurements to help deliver on the company's promise of a perfect fit. Given that J. Hilburn's shirts are fully customizable, knowing your measurements is critical in producing a superior product experience. Not every category requires a stylist to help consumers decide what to buy. BirchBox, built to help consumers discover new beauty products, creates content around products and categories they sell to educate consumers on what products to use for various skin / hair types.

In addition to offering the tools to help customers pick the right products, social commerce leaders will excel at providing a better service experience. Proving that customer service extends beyond the checkout process, Modcloth has enabled quick exchanges for its customers whereby customers don't need to wait for their return to be processed before receiving an exchanged item; instead Modcloth instantly sends a replacement. While it may seem minor, this builds an amazing amount of trust with the consumer.

The future of e-commerce will not solely be defined by how to drive down your cost of acquisition or push up the customer's lifetime value; it will be defined by the personal relationships retailers have built with customers. Efforts to try to optimize lifetime value without understanding the customer will only generate short term success. The next phase of retailing will not succeed by selling the same goods in the same way to different people. Consumers are willing to share data with retailers in exchange for a radically better shopping experience. The internet has enabled us to move beyond the constraints of the mail-order catalog and physical store while making it easier to acquire data on customers. By understanding these two factors, online retailers will greatly increase the portion of online spend from 8% of total commerce.

Is Groupon Bad For Small Businesses?

Posted: 02 Jul 2011 07:18 AM PDT

Editor’s note: The following post is a response to our guest series taking a critical look at the daily deals industry. It is written by Vinicius Vacanti, CEO of Yipit, a daily deal aggregator that collects deals from more than 300 daily deal sites.

If you watch the nightly news, you would assume there's a murder on every block, and if you've been reading TechCrunch recently, you would assume Groupon is murdering a small business in every city.

Given the hundreds of thousands of merchants who have run daily deals in the past year, it is inevitable that a few will have had bad experiences.  However, to assume that a handful of these anecdotes fully represent merchants' experiences with daily deals is insufficient and irresponsible.

A series of guest blog posts by Rocky Agrawal criticize daily deals, advising small businesses to stay away based on examples of where the deals fail to turn a profit for the businesses. While Rocky's posts are surely well-intentioned, his evidence is largely based on a few anecdotes and a basic misunderstanding of daily deal economics.

As we detail in Yipit’s Daily Deal Industry Report based on more than 100,000 past deals, 43% of offers in May involved merchants running a deal for at least their second time. Can so many merchants be delusional? Clearly some merchants have figured it out.

While I understand and applaud Rocky's motivation to protect small businesses, can those businesses really afford to ignore a marketing channel that can deliver hundreds, if not thousands of new customers in a cost per acquisition model? Not only are most small businesses struggling, their standard marketing channels of yellow pages and newspapers are becoming less and less effective.

Instead of telling small businesses to avoid daily deals, how about trying to understand why some small businesses are having success?

With that understanding, we could then educate other small businesses on how they might be able to replicate that success themselves.

It's a Numbers Game

Like most marketing options, daily deals comes down to the numbers. The good news is that most of the key variables that affect the success of a daily deal experience can be optimized by small businesses via daily deal structure and execution.

My co-founder, Jim Moran, wrote a post on the economics of a daily deal including a calculator. While this calculator bakes in a lot of assumptions, it's the start of a handy tool for small businesses.

The two most important variables that small businesses can optimize are:

Overage: This metric represents how much more revenue the customer generates for the business than the value of the coupon. The larger the overage, the better for the small business. There are many things small businesses can do to increase overage including:

  • Strategically Price the Offer. If you are running a restaurant and the average per person bill is $30, provide a $15 for $30 certificate. The person is likely to bring someone else turning the meal into a $45 for $60 deal.
  • Up-sell the user. In a Hacker News post, this skydiving business does a great job of explaining how they up-sell sky divers into getting videos of their jump (60% of customers) and even a second jump that same day (40% of customers).

Return Rate: This metric represents what percentage of customers come back as a regular customer after using a daily deal. Improving this metric has the potential to deliver the most value for small businesses as indicated by the calculator referenced above. In a report authored by Rice University, often cited as a reason daily deals are challenging, small businesses reported that 20% of customers came back. That's actually huge! If a company runs a deal that sells 1,000 vouchers, 200 customers will come back. As the calculator above implies, that's a high enough return rate to make the deals very successful for most small businesses. To improve return rates even further, small businesses can:

  • Surprise and delight daily deal customers. Daily deal customers can be a bit embarrassed to be using a deal. Instead of acting disappointed, small businesses should do the opposite and make them feel welcome. They should thank the customers for coming, tell them the story of the business. It's actually an easy opportunity to surprise the customer.
  • Offer an incentive for them to come back. With their bill, offer them a 20% discount or, if you're a restaurant, a free appetizer to come back and try the business again.
  • Collect their contact information. Tell them you often send out notifications for special events and promotions
  • Discount just the first session. If you have a business that involves several sessions like class-based businesses, offer a discount on just the first session. If users like the session, they'll come back for the rest of the sessions paying full price.

Other factors that improve the economics of a daily deal:

  • Breakage: Anywhere between 10% and 30% of deals aren't redeemed. North American businesses get to keep the profits associated with those vouchers without incurring the cost.
  • Exposure: Small businesses gets emailed to tens of thousands and, sometimes, hundreds of thousands of users. This exposure is often the entirety of the value provided by most other marketing channels for small businesses.

If small businesses focus on creating the right structure for their daily deal to increase overage and execute on the daily deal experience to increase return rates, daily deals can become a very attractive marketing option.

Not right for everyone

That being said, daily deals in their current form are not right for every business. The vast majority of deals are for spas, salons, restaurants, events, activities and other services. These merchants all have a large fixed cost base, perishable inventory and considerably lower variable costs. Accordingly, their marginal cost on an additional customer is low enough allowing them to discount aggressively. That's why businesses have been offering discounts for hundreds of years.

On the other hand, traditional retail categories appear the least frequently across the Yipit database, representing less than 10% of all offers.

A powerful tool that shouldn't be ignored

Daily deals represent a powerful, scalable new cost-per-acquisition marketing channel that small businesses can optimize via strategic pricing and good execution.

If we really want to help small businesses, we should stop telling them to avoid daily deals. Instead, let's focus our energy on educating small businesses on how they might be able to effectively take advantage of this new marketing channel. Or, I guess we can just keep directing them to yellow pages advertising.

New Wifi Tech Could Double Your Phone’s Battery Life

Posted: 02 Jul 2011 05:43 AM PDT

If you ever get the sense that someone on the wifi network you’re using is hogging all the juice, you may be right. Not only does sharing wifi with others downloading large files interfere with your enjoyment of the latest viral video, but it can majorly drain your battery as well.

A new solution from a Duke University computer science graduate student could alleviate your frustrations and potentially double your battery life by allowing your wifi device to “nap” until more bandwidth is available. This means you might have to wait a couple minutes to watch your video, but that could be a productivity boon anyway.

Justin Manwelier‘s SleepWell is a piece of software that helps maximize download efficiency by alerting the wifi device in your phone when a download is finished on a neighboring device. Most wifi devices have to “stay awake” while waiting for their turn to download, draining a good deal of battery in the process.

“The SleepWell-enabled wifi access points can stagger their activity cycles to minimally overlap with others, ultimately resulting in promising energy gains with negligible loss of performance,” Manwelier said in a statement.

The proximity of wireless devices affects their performance as well, with longer download times in more crowded areas, like cities. And, as cloud computing continues to grow, the reasons for connecting to wifi will increase. Putting a wifi-connected device on standby until a download from another device is complete increases both devices’ battery life.

No word yet on when SleepWell will be released, but once it is, we can all look forward to having more time to surf before seeking out an outlet.

Photo by Florian Boyd

Facebook Engineers Build Google+ Inspired Facebook Hack

Posted: 01 Jul 2011 09:19 PM PDT

With many asserting that Google+ is heavily Facebook influenced, Facebook engineers Vladimir KolesnikovPeng FanZahan MalkaniBrian Rosenthal have flipped the switch and taken inspiration from the novel Google Circles design with Circlehack, a much simpler tool to build Facebook Friend lists.

Right now the only way you can create lists on Facebook is by going to the Friends page, clicking on the Account drop down menu, then clicking on “Edit Friends” and then again on “Create a List” and a bunch of other cumbersome stuff.

It’s a mess, but crucial if you want to achieve the same granular sharing features as Google+ on Facebook (which you can do by going to “Privacy Settings,” clicking “Customize,” then under “Make this open to” click oh hell just Google it).

While Circlehack doesn’t have all the design features of Google+ e.g. the circles your friends are members of don’t glow upon hover and you can’t automatically set Groups or privacy settings within the app, it’s a start, at least for Facebook.

Well played guys, well played.

Carpooling Startup Zimride Hits 100 Million Miles Served [Infographic]

Posted: 01 Jul 2011 08:37 PM PDT

Though The American Automobile Association (AAA) is only expecting a relatively marginal 2.5 percent decrease in travel over the holiday weekend compared to last year, gas prices are currently averaging $3.57 across the U.S. — an 82-cent increase from the same time last year.

In a timely piece of news for all those weekend riders out there, the social ride-sharing startup Zimride announced today that it has passed the 100 million miles-traveled mark. Since the FbFund recipient launched three years ago, travelers in the Zimride network have logged over 100 million miles and have saved over $50 million in vehicle operating expenses.

Zimride, co-founded by Logan Green and John Zimmer, focuses on college, university and corporate communities, allowing its users to join networks based on these communities in order to facilitate and coordinate carpooling. The startup allows the first 50 users within a network to sign up for free, at which point the community of users then has the option of singing up for a subscription.

The company then works with transportation departments and student governments at universities and large companies, charging universities, for example, $9500 a year for the service. While that may sound like a tough sell, so far participating organizations and institutions have been enthusiastic.

To this point, Zimride is also announcing its 100th client network today, which means that Zimride networks now include each of the 10 schools in the University of California system, as well as others including Stanford, Harvard, Cornell, Facebook, and Intuit.

As the startup aims to build a nationwide marketplace for drivers looking to make a few extra bucks on those empty car seats during commutes and road trips by selling them to other passengers, the announcements today show the company is making progress in that direction. With gas prices remaining high, there is plenty of interest in carpooling as an effective means of cutting transportation costs.

To date, Zimride has raised $1.5 million from FLOODGATE, K9 Ventures, Keith Rabois, and more. For more stats, check out Zimride’s infographic below:

Paul Adams: Seeing Google+ In Public Is Like Bumping Into An Ex-Girlfriend.

Posted: 01 Jul 2011 08:28 PM PDT

Ex-Google UX guy Paul Adams is perhaps most known for his slideshow “The Real Life Social Network,” which highlighted the perils of having one default group for sharing and emphasized that the ideal social networking service would be designed for multiple groups. The slideshow illustrated the flaws in Facebook’s lump sum friend model and called for a social network where users could set sharing levels to correspond to the 4-6 separate relationship groups that people tend to have.

Sound familiar? Well, if this reminds you a little of Google+ Social Circles, its because Adams was a User Experience Researcher on Google social/Google+ until he left Google in December 2010. The first version of his famous “The Real Life Social Network” deck was published in April 2010, at least two months before the project started (with an even earlier version published two years ago).

While designer Andy Hertzfeld and team have been lauded for the (granted) amazing design, it’s less discussed that Hertzfeld inherited the Circles model from Adams, and simply designed the front-end user experience for it.

Poetically enough, Adams, who is now at Facebook, was asked by current Googler Chris Messina on Google+ what he thought about the service. He responded by elaborating on a tweet where he likened the experience of the Google+ launch to seeing an ex-girlfriend in public.

Adams wrote, “It was like when you first see her you have a moment where you have a niggle of regret and wonder for a split second, but that quickly passes when you remember why you broke up with her.”

Adams directed me to Facebook PR when asked for further comment on his opinion and involvement on Social Circles. I’m sure their response will be fascinating. While we wait, you can flip through the slideshow that started it all, below.

WikiLeaks Intends To Sue Visa And MasterCard For Blocking Payment

Posted: 01 Jul 2011 05:55 PM PDT

WikiLeaks and its credit card processing partner Datacell have just announced their intent to file suit in the EU against credit card companies Visa and Mastercard for blocking donations to the service last year.

In early December the two payments companies cut off all payments to the relatively quiet as of late organization, with Mastercard citing that its "rules prohibit customers from directly or indirectly engaging in or facilitating any action that is illegal." The legality of WikiLeaks itself is still a matter of debate.

However, Visa and Mastercard were not alone in withdrawing their support, as both PayPal and Amazon also pulled their services from WikiLeaks, which facilitates anonymous leaks of sensitive information including hundreds of thousands of diplomatic cables. WikiLeaks does not mention Amazon or PayPal in the suit.

WikiLeaks is holding that the PayPal and Visa blocks count as “anti-competitive” and violate Article 101 (1) and 102 of the EU competition laws, seeking to file a complaint in the Danish Maritime and Commercial Court. As of yet, according to the release, that complaint has not been filed.

The US Group Buying Universe [Infographic]

Posted: 01 Jul 2011 05:04 PM PDT

While the debate as to whether group buying as whole is a viable business model rages on post-Groupon S-1, there’s no doubt that these social deal things keep sprouting up — Yesterday someone introduced themselves to me as the CEO of a Groupon for moms (and yes I thought it was a good idea).

We’ve got Groupons for techies, a Groupon for Jews, what will there be a Groupon for next!? Wait, please don’t answer that.

Still it makes sense that people would want a piece of the action, as the size of the market in the US is estimated at $2.7 billion in 2012 (up from $1.1 billion last year).  And to give you a sense of some of the players and their relative size, the folks at Flowtown have revised their original infographic to reflect the social buying boom.

What can we tell from the above? Well first of all that space is nascent and so are its physics; First movers aren’t necessarily rewarded. Woot, which was founded in 2004, currently has over 1.4 million unique monthly visits versus dominant player Groupon’s (which was founded in 2008 and pivoted to the model) 29.1 million. Mercata, which isn’t even on the graph, was shut down in 2001.

Current second runner up LivingSocial is around half the size of Groupon, at 14.3 million unique monthly visits, with 301 US cities to Groupon’s 182. Yeah that’s about 5% of the US population visiting the site monthly; Enjoy your teeth whitening guys!

Why Is Zynga Rushing Towards Its IPO?

Posted: 01 Jul 2011 04:09 PM PDT

The IPO window is now wide open, with everyone from Zynga to Groupon rushing towards it. Nobody knows how long that window will stay open (rule of thumb is 18 months), so better go public while you can. But today’s IPO filing from Zynga came particularly fast. According to one source, the actual writing of the 150+ page S-1 document was one of the fastest documentation processes for an IPO of this size, only taking two to three weeks.

CEO Mark Pincus abruptly cancelled a planned appearance at the D9 conference at the beginning of June, adding to speculation that was when Zynga decided internally to go ahead with the IPO. The three-week period referenced above was the time between what is known as the first “org meeting” with bankers and the final document filed today.

Zynga’s financials are strong, so they could really get the IPO process anytime they want. But there is definitely a sense that the urgency level picked up all of a sudden.

One theory—and it is only a theory at this point—is that Facebook may be moving up its own internal IPO schedule. It just added Reed Hastings to its board, and there is speculation that it may have already kicked off its internal process to get ready for an IPO. This would still be very early stages, but it would include getting its financial reporting in order if it hasn’t done so already and starting the board process to get it to sign off on looking for investment bankers.

If Zynga caught whiff that Facebook was starting to take actual steps towards an IPO, it might want to get out ahead for several reasons. One is that it has a good chance at becoming the most sought-after new Internet stock. (It’s financials are much cleaner than Groupon’s). But that position will be short-lived and will last only until Facebook itself IPOs. In the interim, Zynga’s stock will suck up a lot of the demand for publicly-traded Internet growth stories.

Another reason is that if the Facebook IPO is as well-received as everyone thinks it will be, Zynga could benefit from an expansion of its PE multiple (and stock price) just as a halo effect. All Internet stocks could do well when Facebook goes public, but you have to be public in order to benefit from that.

Or maybe Facebook has nothing to do with it, and CEO Mark Pincus just wanted to get the filing out before the 4th of July holiday. What do you think?

Photo credit: Flickr/Garry

With 17M Registered Users, Tango Is Growing Twice As Fast As Skype Did Its First Year

Posted: 01 Jul 2011 02:55 PM PDT

Back in Skype’s early days, it was adding users so fast that it liked to boast that it was “the fastest growing, globally available communications tool in history.” Well, by at least one measure (registered users 9 months after launch), mobile video chat service Tango is outpacing Skype. Tango now has 17 million registered users across both Apple and Android devices, only 9 months after it launched. By comparison, Skype celebrated 9 million users on its first birthday back in 2004.

Today, Skype has more than 600 million registered users, so Tango still has a long way to go. But the company wants to reach 100 million users over the next year. (Don’t we all?). If it does that, it will certainly earn the title of fastest growing communications tool.

But even getting to 17 million registered users in less than a year is quite an accomplishment. Tango took four months to get to 8 million, and another five months to add another 9 million. And all on mobile too. Tango is adding 2.5 million registered users per month.

The number of active users is 5.5 million in the last 30 days. Tango’s peer-to-peer service is handling 2.5 million minutes worth of calls every day, and the average call is 4 minutes.

Tango came out just as Apple was spending millions of marketing dollars promoting its own mobile video chat feature, FaceTime. Whereas FaceTime only works between Apple devices, Tango works across platforms on both iOS and Android. That cross-platform compatibility really helped drive growth. Downloads are split 50/50 between the two, and Tango is the No. 6 most popular free social networking app for the iPhone.

Tango already has 56 employees, and is building an engineering team in China, where it is also growing among users. The service is still free, but Tango will introduce premium paid features at some point in the future.

What is incredible about Tango’s growth is that it doesn’t even offer any desktop or Web software yet. Although, this seems like an obvious direction for new products, going mobile first certainly hasn’t hurt the company.

Google’s Nexus Contraptions Bring A Rube Goldberg Diversion To YouTube

Posted: 01 Jul 2011 01:40 PM PDT

Here’s a good way to spend the last few hours of your work week as we head into the long holiday weekend: Google has just launched a new game called Nexus Contraptions. It’s full of slick graphics, physics, and gadgetry, and while I’m not entirely sure what it has to do with Android, it’s fun.

The game is similar to a handful of games you’ll find on Android and iOS (or, for your old-school gamers out there, The Incredible Machine). You’re tasked with getting a ball to a special funnel by constructing a Rube Goldberg-esque machine filled with bouncy things, fans, and magnets.

The balls are supposed to represent some of the Nexus S’s features, including Maps and Search —  as you complete each level, the ball gets pushed into the phone by a giant robotic arm. I haven’t finished the game yet, but I’m sure a stirring conclusion awaits those who do. Or maybe you’ll get to watch a Nexus S ad. Charge forth!

Google Flirts With Hulu As It Searches For The Key To Video’s Heart

Posted: 01 Jul 2011 12:43 PM PDT

Google is Greek myth-level ambitious, trying to fight the war for web audience on all fronts.

And just as it’s officially begun the battle in social, reports today hold that the search company is trying to court streaming video service Hulu away from Yahoo, presumably for the potential licensing and advertising deals from major brands like Coca Cola and Disney. Microsoft is also reportedly in talks with the site, which is the 10th most popular video destination online.

Declining TV viewership has left tech behemoths scrambling to be first to capture the mindshare of web audiences. Hulu’s viewership numbers (28 million monthly viewers according to Comscore), licensing deals and the estimated $500 million in revenue that it will bring in this year from ads and Hulu Plus are a tempting proposition to web services like YouTube focused on dominating the video distribution space.

And it’d be a much better bargain than already public competitor Netflix, whose market cap is currently $14.17 billion.

Hulu also has the lure of premium content deals which Google has struggled with in the past, offering users access to popular shows like “The Daily Show” “Modern Family” and “Glee.” Google’s recent acquisition of Next New Networks and the creation of YouTube Next was in and of itself a premium content play, but for original and not studio-produced highly advertiser friendly fare. Google also continues to make television related acquisitions on the technology side as well, most recently SageTV and WideVine.

Hulu would be a good get for its advertising cache alone. Imagine the potential … Through its piecemeal efforts Google has already set up multiple distribution channels for video (Android), web (YouTube) and (less successfully) in the home with Google TV. Success is a matter of getting all these sundry interests, aligned.

Image: Divine Harvester

TC Cribs Bloopers – A Side Of Jason Kincaid You Have Never Seen Before (TCTV)

Posted: 01 Jul 2011 12:40 PM PDT

I need to start with a warning. Depending on your work environment, this may not be safe for work. Especially if you don’t want to hear some a lot of four letter words. It may not be safe around small children either. But for everyone else, you might enjoy watching this video over and over again.

One of our popular TCTV shows is TC Cribs, where Jason Kincaid goes behind the scenes of a tech company to see what it’s like to work and play there. Of course, we edit it and don’t use all the material we shoot. Our editor John Murillo decided to edit together some of the outtakes.

We posted the video on our internal Yammer and it was quite a hit. Jason says “wow that was painful for me to watch.” Michael Arrington’s favorite part comes around 1:55 and he said this needs to be posted. So, check it out. You might not look at Jason the same way again.

For the regular Cribs episodes, check out TC Cribs at

LinkedIn Cuts Off API Access To BranchOut, Monster’s BeKnown And Others For TOS Violations

Posted: 01 Jul 2011 12:08 PM PDT

Exclusive: Professional social network LinkedIn has shut down API access to a number of developers for terms of service violations, according to the company. The six developers whose access to LinkedIn’s API include Facebook-focused professional network BranchOut, Monster’s social recruiting app Beknown, brand management app, resume service Daxtra, professional reputation manager Mixtent and CRM-Gadget.

The shut down of access for BranchOut and Monster’s similar (and recently launched) app BeKnown are particularly surprising. According to LinkedIn, BranchOut, which has been compared to a LinkedIn for Facebook, violated the network’s API TOS with its plans for a premium enterprise recruiting search tool. Charging fees for access to LinkedIn’s content, is a no-no, says the network.

LinkedIn says that it cut off access to its API for BeKnown because the app was using the LinkedIn APIs to send messages to promote BeKnown (and thus profit from the API). LinkedIn is also concerned that BeKnown will be charging for enterprise services related to the API, similar to BranchOut. Mixtent and were also shut down for the same reasons. And CRM-Gadget and Daxtra were both shut down for storing LinkedIn member data.

In the case of BranchOut and BeKnown, it’s hard not to think of the whole Twitter-UberMedia debacle, in which Twitter shut down API access to UberMedia for TOS violations, including trademarks, privacy and monetization violations. UberMedia is a direct competitor to Twitter, with it army of third-party clients.

Likewise, BranchOut (and now BeKnown) are competitors to LinkedIn in some ways. BranchOut, which is backed by Accel, Norwest, Floodgate, and Redpoint, allows you to network and find jobs through your friends on Facebook. The company also allows you to import skills, education, and job history from LinkedIn as well. And the company is allowing brands and organizations to post jobs to users. The startup has been growing in a territory that LinkedIn has not yet invaded—Facebook.

LinkedIn, which has 20,000 developers using its APIs, has been on fairly good terms with its developers minus a few stumbles. In January, LinkedIn shut down access to CubeDuel, a service that mixes the best (or worst) of Hot or Not with the professional social network. Apparently CubeDuel exceeded LinkedIn's API limits, but it was actually the startup’s fault.

LinkedIn says it is open to reinstating its APIs to these developers and startups if they comply with the network’s TOS. LinkedIn has partnership deals with some developers where startups pay fees for the API (which they can monetize off of).

But LinkedIn could probably learn a thing or two from Twitter’s tenuous situation with its developers, and should definitely navigate these waters very carefully.


BranchOut issued this statement in response to LinkedIn’s move:

At BranchOut we consider the next generation platform for professional networking to be Facebook. Changes to the LinkedIn API have little impact on the BranchOut experience, as it was only being used by a small fraction of our users. That said, we believe user data should be owned by the user, and that people should be allowed to share their data with the new services and contexts that provide the most utility.

We’ve analyzed our statistics, and it has led to a pretty exciting discovery for us—namely that we are causing a groundswell within a much larger audience than that addressed by the prior generation of career services. BranchOut users encompass not only the professional networker, but also the far larger base of 700 million Facebook users worldwide who would like to use their social graph to help them in business, recruiting, sales, and job search. For example, in addition to white collar professionals, our users are college students, workers in retail, manufacturing, hospitality, military, government, and others who have yet to find a professional voice within a social network. We are excited to be the first to give this larger global audience a relevant professional networking solution.

And here’s Monster’s response:

We are surprised and disappointed by LinkedIn's decision, which we believe not only goes against the interests of LinkedIn users, but also contradicts what LinkedIn claims to stand for – openness and connectivity. Professional networkers are social in nature and LinkedIn has just limited their ability to connect when and where they want. They've taken away users' rights to control how and when they can share their own profile data and personal contacts. We also note that it was within days of Monster's launch of BeKnown that LinkedIn decided to block the API when there have been other networking-oriented apps using the API for months.While this move by LinkedIn creates an inconvenience for their users, BeKnown members will continue to build their networks from all the largest online sites including Facebook, Yahoo, Google and Monster.

Google Responds To Nortel Patent Loss: “The Outcome Is Disappointing”

Posted: 01 Jul 2011 12:05 PM PDT

Late last night, it was revealed that Nortel had picked a winner for their patent portfolio. To the surprise of many, that winner was not Google, which had put up the initial “stalking horse” bid to get the ball rolling. Instead, the winner was a “consortium” of industry players — a consortium that includes Apple, RIM, Microsoft, Sony, and others. In other words, this sounds to us like the absolute worst possible scenario for Google. It’s not just that one of their major rivals won the rights to the over 6,000 patents. It’s that all of them did.

Unsurprisingly, Google is not happy.

“This outcome is disappointing for anyone who believes that open innovation benefits users and promotes creativity and competition. We will keep working to reduce the current flood of patent litigation that hurts both innovators and consumers,” Kent Walker, Google’s Senior Vice President and General Counsel said in a statement that Google sent out to members of the press.

Okay, but come on, that’s a bit bland. If I were Google, I’d be more than “disappointed”, I’d be pissed off. Again, they’re the ones who got the ball rolling with a $900 million opening bid. Meanwhile, things weren’t looking too hot for Apple. While the DoJ quickly cleared Google to make a run on the patents, they weren’t so sure about Apple. And then Microsoft started complaining that if Google won the rights to the patents they could nullify the existing agreements Nortel had in place for licensing out those patents (which may or may not have even been true). It looked like Google was in the drivers seat.

But now it sure looks like that while all of this interference was going on, Google’s competitors were getting together behind the scenes to come up with a combined offer — $4.5 billion — that Nortel couldn’t refuse (and Google likely couldn’t in their right mind, match).

And the truth is that Google is pissed off. How do you we know? Because while they’re releasing muted statements, they’re also trying to have off-the-record conversations to further express their displeasure. And they’re pointing us to pieces like Mike Masnick’s which features wording like:

So, Microsoft apparently got together with Apple, EMC, Ericsson, RIM and Sony… and coughed up an insane $4.5 billion. It’s kind of brilliant in a nefarious way. With six companies together, they could each spend less than the $900 million initially pitched by Google… and then just all agree not to sue each other, but leave open the option to sue anyone else.

And they’re pointing out what they believe to be similarities between this situation and the one involving Novell patents, which the DoJ looked into and decided to force changes — pointing out that the open source community was not happy. Of course, this has nothing to do with the open source community. But it certainly is possible that the DoJ will not like this consortium bid on the Nortel patents one bit. The courts in both the U.S. and Canada still have to approve the bid for it to clear, and it certainly is possible that changes will be forced once again.

We’ve told Google we’re happy to have an on-the-record conversation about all of this. I’m just not sure what the point of venting off-the-record is at this point. Google is pissed off, and they should be! And they should express that openly!

Facebook Will Launch In-Browser Video Chat Next Week In Partnership With Skype

Posted: 01 Jul 2011 11:45 AM PDT

Earlier this week while visiting Seattle, Facebook CEO Mark Zuckerberg tipped off Seattle press that the company would be launching an “awesome” new product next week that has been built by Facebook’s Seattle team. The press invitations to that event went out today, saying nothing more than “Please join us for an event at Facebook” on July 6.

So what is the new product? MG Siegler speculates here that it might have a desktop component given all the desktop software hiring going on in Seattle.

And he’s right. This isn’t the main project that team is working on, but next week, says a source with knowledge of the partnership, Facebook will launch a new video chat product, powered by Skype, that works in browser. Suddenly those chat icons in the invitation have a lot more meaning.

The product has been built on Skype and will include a desktop component. It’s not clear to me whether that means it will just work if a user has Skype already installed on the computer, or if additional software will need to be downloaded even if the user already uses Skype. But it’s clear that there’s very deep integration between the products, and from the user’s perspective, the product will be an in browser experience.

Facebook and Skype have already been working together, including integration of various Facebook features into the Skype service.

But this is something else entirely. The partnership could substantially increase Skype usage. Facebook has more than 750 million active users. Currently Skype has just 170 million. And it will certainly help Facebook become even stickier for users as they start to have voice and video chat as an option to communicate.

And this also brings Facebook even closer to Microsoft, which is a Facebook shareholder and has a pending acquisition of Skype. The guys in Redmond must be smiling today, something that happens far too infrequently at Microsoft HQ.

Zynga And Facebook: Pray They Don’t Alter The Deal Any Further

Posted: 01 Jul 2011 11:07 AM PDT

Minutes ago, social gaming giant Zynga filed its much-anticipated S1, beginning the path to an IPO in which it’s looking to raise $1 billion. We’re currently combing through the document, which lays out some of the company’s key statistics and financials for the first time. And there’s a clear trend: the word ‘Facebook’ appears in the document some 204 times (Google clocks in at 10).

The reasons for that should be obvious to anyone that’s tracked Zynga’s rise to success: the company is tied at the hip to Facebook Platform. It relies on Facebook’s viral channels, like News Feed and Notifications, to help its games grow. It’s reliant on Facebook’s Credits for monetization (Facebook now forces all games to use Credits). And it’s subject to whatever changes Facebook makes to its terms of service, or tweaks it makes to the way applications can interact with users. In other words, Zynga is warning investors that if Facebook changes the terms of their relationship, they’ll suffer.

But there’s one possible catch: an addendum that is repeatedly referred to throughout the S-1 that guarantees a 70/30 split between Zynga and Facebook on items purchased using Facebook Credits. The fact that an agreement exists isn’t news — Zynga and Facebook announced that they’d forged one last year after Zynga threatened to leave the platform. But the terms of their deal have been a mystery. And it seems like they still are.

Here’s the section that goes into most detail about the financial terms of the agreement:

Facebook Credits is Facebook's proprietary virtual currency that Facebook sells for use on the Facebook platform. Under the terms of our agreement, Facebook sets the price our players pay for Facebook Credits and collects the cash from the sale of Facebook Credits. Facebook's current stated face value of a Facebook Credit is $0.10. For each Facebook Credit purchased by our players and redeemed in our games, Facebook remits to us $0.07, which is the amount we recognize as revenue. We recognize revenue net of the amounts retained by Facebook because we do not set the pricing of Facebook Credits sold to our players.

That’s pretty straightforward (all developers are currently offered the 70/30 cut), but the S-1 alludes to some other aspects of the deal that are not described in the S-1 — namely, that it operates under modified Terms and Conditions compared to other developers (emphasis mine).

In 2010, we entered into an addendum with Facebook that modified Facebook's standard terms and conditions for game developers as they apply to us and that govern the promotion, distribution and operation of our games on Facebook. In July 2010, we began migrating to Facebook Credits, and by April 2011, we had migrated all of our games on Facebook to Facebook Credits.

Whatever those adjusted terms are, they clearly don’t negate Zynga’s current reliance on Facebook.

All of the S-1′s financials are reported after first subtracting Facebook’s 30% cut whenever relevant, but it doesn’t look like Zynga breaks out just how much of their revenue is generated through Facebook, which is almost certainly a vast majority. I’m sure investors will be curious about that — and I’d also be eager to know just what kind of advantages the addendum gives Zynga over its competitors. Because on Facebook, even features that sound minor, like access to certain notification channels, can make all the difference in helping a game rise to massive popularity.

Of course, Zynga isn’t exactly without leverage. The company’s games continue to be a huge draw for users, and Facebook would suffer greatly if Zynga left the platform (especially if its games were available on a rival service, like the newly-launched Google+). Zynga’s deal with Facebook runs through 2015 so that doesn’t seem likely, but, again, it’s not clear exactly what that deal guarantees for both parties.

Here’s one relevant passage outlining how Zynga views its relationship with Facebook:

We have benefited from Facebook's strong brand recognition and large user base. If Facebook loses its market position or otherwise falls out of favor with Internet users, we would need to identify alternative channels for marketing, promoting and distributing our games, which would consume substantial resources and may not be effective. In addition, Facebook has broad discretion to change its terms of service and other policies with respect to us and other developers, and those changes may be unfavorable to us. For example, in 2010 Facebook adopted a policy requiring applications on Facebook accept only its virtual currency, Facebook Credits, as payment from users. As a result of this change, which we completed in April 2011, Facebook receives a greater share of payments made by our players than it did when other payment options were allowed. Facebook may also change its fee structure, add fees associated with access to and use of the Facebook platform, change how the personal information of its users is made available to application developers on the Facebook platform or restrict how Facebook users can share information with friends on their platform. Beginning in early 2010, Facebook changed its policies for application developers regarding use of its communication channels. These changes limited the level of communication among users about applications on the Facebook platform. As a result, the number of our players on Facebook declined. Any such changes in the future could significantly alter how players experience our games or interact within our games, which may harm our business.

As Zynga Files For $1B IPO, LinkedIn And Pandora Stocks Pop

Posted: 01 Jul 2011 11:05 AM PDT

Zynga filed for its much awaited $1 billion IPO this morning, revealing some impressive revenue and profit numbers. And it looks like recent tech IPOs Pandora and LinkedIn are seeing some major increases in stock value in morning trading after a rocky few weeks.

LinkedIn, which opened at $83 per share in May, has hovered between $60 and $75 per share for the past month, dipping as low as $60 per share. Over the past few days, LinkedIn stock has climbed upwards, closing at $89.94 yesterday. And today, stock reached as high as $94.99 this morning, giving LinkedIn a $9 billion valuation.

Pandora, which opened at $20 per share, has dropped as low was $12.10 per share, and has hovered between $12 and $15. Today, Pandora’s stock rose as high as $21.20, giving Pandora a $3.4 billion valuation.

We’ll see if Pandora and LinkedIn can sustain these stock values beyond today.

Zynga’s Largest Shareholders And How Much They Own

Posted: 01 Jul 2011 09:56 AM PDT

Zynga just filed for its much-awaited $1 billion IPO and now we know how much founder Mark Pincus and the company’s investors own in the company. Zynga’s investors include Reid Hoffman, DST, Google, Tiger Global, Kevin Rose, Kleiner Perkins, Union Square Ventures, Andreessen Horowitz, Peter Thiel, Foundry Group and IVP.

Pincus is the largest shareholder of Zynga, with 16 percent of the company (all in terms of Class B shares). Kleiner Perkins owns 11 percent of the company; IVP owns 6.1 percent; Union Square Ventures owns 5.5 percent; Foundry owns 6.1 percent, Avalon Ventures owns 6.1 percent and DST owns 5.8 percent.

Pincus makes a salary of $300,000, and Van Natta earns a salary of $200,000.

Pincus actually sold 7,840,836 shares for a total of $109,458,070 in March. Union Square Ventures, Foundry, Kleiner Perkins, Avalon and IVP all sold shares back to Zynga earlier this year (see chart below).

A Snapshot Of Zynga’s Financials: Revenues Grew 392 Percent Last Year To $600 Million

Posted: 01 Jul 2011 09:52 AM PDT

Zynga finally filed for its IPO today, and we now we get to take a look at its financials. At a high level, the company made nearly $600 million in revenues last year, and $90 million in profits. It grew at an incredible pace, with revenues growing 392 percent in 2010, up from $121.5 million in 2009 (and up from $19 million in 2008).

In just the first quarter of 2011 alone, the company’s revenues reached $235 million (or a $940 million revenue run-rate), and that was up 134 percent from the first quarter of 2010. What is particularly amazing about all of these revenue growth numbers is that Zynga started paying Facebook 30 percent of all Facebook Credits-related revenues starting in July, 2010, and only barely skipped a beat. Sequential revenue growth slowed from 32 percent in Q3 2010 to 15 percent in Q4 2010, but then accelerated again to 20 percent growth in Q1 2011.

The good news for investors is that Zynga actually makes a profit. After a $53 million loss in 2009, it swing to a $90 million net profit in 2010. And profits grew 84 percent in the first quarter of 2011 to $11.8 million.

Zynga makes almost all of its money from the sale of virtual goods (95 percent of Q1 2011 revenues), and the rest is advertising. Advertising revenue grew 321 percent in the first quarter to $13 million, while online gaming revenue grew 127 percent to $222 million.

Zynga also reports a non-GAAP (Generally Accepted Accounting Principles) measure, which it calls Bookings. In this sense, it is joiningother recent Net IPO filers like Groupon, which also put forth their own non-GAAP measure of revenues. In Zynga’s case, Bookings make it look even bigger. For instance, total Bookings in 2010 were $838.9 million, or 40 percent higher than its $597.5 million in revenues.

Zynga defers the recognition of all of its revenues, which is actually a more conservative accounting approach and is a godo thing. But it still wants to get credit for what it could have recognized, so it reports Bookings as well. It’s kind of like a way for Zynga to pat itself on the back in its financials.

Here is how Zynga explains Bookings in the S-1:

Bookings is a non-GAAP financial measure that we define as the total amount of revenue from the sale of virtual goods in our online games and advertising that would have been recognized in a period if we recognized all revenue immediately at the time of the sale. We record the sale of virtual goods as deferred revenue and then recognize revenue over the estimated average life of the purchased virtual goods or as the virtual goods are consumed.

Advertising revenue is treated the same way.

Some other key metrics investors will want to keep an eye on (all numbers are as of March 31, 2011):

  • Total Q1 Revenues: $235.4 million
  • Online Game Revenue: $222.4 million
  • Online Advertising Revenue: $13 million
  • Cash and Cash Equivalents: $996 million
  • Operating cash flow: $103 million
  • Cash flow from financing activities: $225 million
  • Daily Active Users: 62 million
  • Monthly Active Users: 236 million
  • Monthly Unique Users: 146 million
  • Employees: 2,268

The difference between active users and unique users is that active users are counted per game, whereas a unique user might play more than one game. In other words, there is an overlap in active users. In March, 2011, 146 million people played one or more Zynga games. So Zynga makes about $1.60 per user per quarter.

Zynga’s cash flows from “financing activities” was twice as big in Q1 than from operating activities, which is interesting. In the filing, Zynga discloses that it sold $287.2 million worth of marketable securities in the first quarter, primarily related to a $485 million financing which it raised during the quarter (but it also repurchased $261 million worth of stock in the same period).

TechCrunch Giveaway: Xbox 360 Console And Two Tickets To Our August Capital Party #tcaugustcapital

Posted: 01 Jul 2011 09:00 AM PDT

For today’s giveaway, we are giving away one Xbox 360 4GB Console with Kinect and two tickets to our 6th annual summer party at August Capital. The Xbox 360 Console comes with the Kinect sensor, built in Wi-Fi, Xbox LIVE, the Kinect Adventures game and more. Tickets to our summer party at August Capital are selling out fast, so this is a great way to win tickets plus something a little extra. The winner of this giveaway will win the Xbox 360 Console and the two tickets.

If you want a chance at winning them, make sure you follow the steps below.

1) Become a fan of our TechCrunch Facebook Page:

2) Then do one of the following:

- Retweet this post (making sure to include the #tcaugustcapital hashtag)
- Or leave us a comment below

The contest starts now and ends July 3rd at 7:30pm PT.

Please only tweet the message once or you will be disqualified. We will choose at random and contact the winner this weekend with more details. This giveaway is for U.S. only and does not include airfare.

Good luck!

A special thanks to for the Xbox 360 Console with Kinect.

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