Sunday, May 6, 2012

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Posted: 06 May 2012 08:00 AM PDT
SolarCity, the cleantech company backed by Tesla and SpaceX CEO Elon Musk, filed for an IPO this past week. But there’s hardly been a peep about it compared to most offerings.
That’s because under the recently passed JOBS Act, SolarCity didn’t have to publicly share anything about its financial performance when it filed. This is unlike LinkedIn and Pandora, which had to publicly release three years of data in filings that were more than 150 pages long. In SolarCity’s case, the company merely put out a two-paragraph statement saying that it had confidentially filed with the SEC and planned to have an IPO.
This is the new world under the JOBS Act, which was hastily passed last month. SolarCity qualifies as an “emerging growth” company, or one that’s had less than $1 billion in total revenues in the most recent year. If SolarCity does move forward with an IPO, it won’t have to release data to the public until 21 days before the investor roadshow. On top of that, those documents won’t have to meet the same auditing requirements that more mature publicly-held companies have to address. It will also only have to show two years of data, instead of three.
At least two other CEOs I’ve talked to who run later-stage companies and are planning to file in the next three to 12 months say they would consider it. But they’re leaning toward the old route because they’re concerned about how investors will perceive confidential filings. (The SEC FAQ on confidential filings is here.)
Are the changes good? Are they bad? Honestly, it’s hard to say because regulation usually has long-term ripple effects that are hard to see without hindsight.
So let’s consider. The JOBS Act was really a mix of several ideas: crowdfunding, loosening the 500-shareholder rule and the relaxing some of the post-Enron, Sarbanes-Oxley rules that made it expensive for smaller companies to go public.
It gives companies more flexibility in staying private or going public. On the one hand, it’s less difficult to become publicly-traded. But it’s also easier to stay private too since a company doesn’t have to release financials until it has more than 2,000 shareholders excluding employees, up from the previous 500-shareholder limit.
Net-net, it’s hard to say how this will affect the average time-to-IPO. While private secondary markets have become more important over the last five years, they are simply not large or liquid enough to give venture firms the exits they need right now. So companies still need to tap public markets. This could change over the next 10 years though. Who thought founder liquidity would have become as widespread as it is a decade ago?
The downsides to confidential filings are obvious: The public gets left in the dark for a little bit longer (though not forever). The two years of financials, instead of three, means less data to show the kind of hockey-stick growth curve that investors usually like to see. Giving “emerging growth” companies a five-year grace period to adjust to new auditing requirements means fewer controls to prevent the kind of disastrous accounting restatement that Groupon had to make earlier this year. (No, the current rules did not prevent the Groupon snafu, but does that mean we should make them even weaker?)
Now let’s go onto the positives. So first, an IPO candidate can covertly test market appetite. If there isn’t as much demand as they thought, they can pull out without the negative publicity. Secondly, if the IPO window suddenly shuts down because of market volatility like last August, the company’s not left dangling out in the open for the better part of a year.
The world has also changed quite a bit since 80 years ago, when the original legislation establishing these rules was passed. Three weeks is eons in an interconnected world where bad news spreads faster than you can say “tweet.” There are also plenty of investors like Yuri Milner’s DST and other individual accredited investors who have stepped up in secondary markets on the belief that the modern online and social media provides more than enough information to make educated investment decisions. (But Milner gets special access given how much he invests and SecondMarket usually requires the company to make some disclosures, but the company gets to choose what and with whom they share their information.)
Overall, confidential filings don’t seem bad in and of themselves, so long as the public eventually gets the information before they can trade the stock.
But as we loosen regulations, we should always remember that the system only works if investors have trust in the companies and documentation they’re seeing. What people forget is that what we have now was born out of the Great Depression, when regular people lost or were swindled out of untold fortunes. When the original Securities Act was passed in 1933, president Franklin D. Roosevelt wrote a letter to Congress, saying that the “issue of new securities to be sold in interstate commerce shall be accompanied by full publicity and information.”
He went on to say that the old Latin saying, “Caveat Emptor,” or “Buyer Beware,” should be expanded to read “Let the seller also beware.” He said, “It puts the burden of telling the whole truth on the seller.”
That burden isn’t, well, so burdensome in private markets. For pre-IPO companies, the reality is that most of the sources that journalists and the public have access to are people who are highly incentivized to make the company seem better than it really is. It’s no coincidence that most of the media attention on Groupon before it revealed its financials was all rah-rah all the time. Most every source that journalists had access to were investors or employees. These were the people who plowed nearly $1 billion into the company thinking it would be a quick 2 or 3X return by the time the lock-up ended.
In fact, in several cases so far this year like Groupon and Zynga, private secondary markets — which have less information and are much less liquid — have been far more generous with the valuations they award.
Ironically, in this tech “blubble” or whatever you want to call it, it’s the public markets that have been more judicious.

Posted: 06 May 2012 07:04 AM PDT
Editor’s note: Wayne Sutton is an Entrepreneur, Advisor and Partner of NewMe Accelerator, a residential technology start-up accelerator/incubator for businesses that are led by under-represented minorities in the technology industry.
One of today’s most challenging yet promising markets is the educational system. If you want to see startups hungry to disrupt an industry, look no further. Founders are trying to solve the problems plaguing our education system: including reconciling student debt, providing students with the skills required to land a job both before and after graduation, and offering the best course material online regardless of age, location and educational level.
Millions of people are headed to the Internet to learn. And now everyone, from professors to entrepreneurs, are looking to launch a platform to solve the problem of a broken traditional educational system  – And many believe that Silicon Valley will have the answers.
If you look at the demographics (high school dropout rates, high unemployment and the number of people taking online courses) you'll find a common denominator; minorities are leading in three categories. In 2011, only 57 percent of blacks and Latinos graduated from high school, compared to 80 percent of Asians and 78 percent of whites. While data reports that only 1% of tech startups are founded by African Americans, you'll find a significant number of educational startups founded by minorities (women, Hispanics and African Americans) in the now-increasing 1% of minority tech startups.
So where are all these startups hiding you ask? Well here are seven up-and-coming educational startups founded by minorities that I believe will have an significant impact in the educational space  – not just for minorities but for anyone looking to learn online, current students and teachers alike.
1. UniversityNow
The mission of UniversityNow is to help ensure that affordable, high quality post-secondary education is available to people everywhere. To accomplish this, UniversityNow is building a network of the most affordable and accessible accredited universities in the world, starting with the launch of New Charter University.
Gene Wade, Co-Founder
2. Houlton Institute
Houlton packages courses into credentialed and non-credentialed programs targeting adult learners. By revenue sharing with partnering institutions, partners are able to monetize their expertise. Houlton creates one-of-a-kind online programs from its unique and exclusive partner network, which are disseminated via Houlton's scalable, personalized, web-based learning platform.
Dennis Robinson and Dan Merritts, Co-Founders
3. Demo Lesson
Demo Lesson is a revolutionary online hiring platform that gives teachers the power to market themselves.
Mandela Schumacher Hodge and Brian Martinez, Co-Founders
4. Qeyno Labs
Qeyno Labs works with local partners and schools to bring technology-enabled career discovery into under-served classrooms using game-like rewards and mentorship from successful professionals.
Kalimah Priforce, Co-Founder
5. StockOfU
StockOfU allows individuals and businesses to buy "shares" of college students in order to help subsidize a student’s education costs.
Ty McDuffie, Founder
6. Pathbrite
Pathbrite delivers next-generation solutions that help students and learners of all ages collect, track and showcase a lifetime of achievement, and recommend pathways for continuous success.
Heather Hiles, Founder and CEO
7. Code Academy
Code Academy is an 11-week program that teaches people how to build web applications.
Neal Sales-Griffin and Mike McGee, Co-Founders
With these seven startups, and many, many more launching shortly, the educational system is ready for disruption. And after that, the real question is “What impact will these educational startups will have on our economy?”  And “Will they prepare students to land qualified jobs after graduation? Or provide them the skills to launch their own businesses?”
Do you see the educational system being changed by these new startups?

Posted: 06 May 2012 02:00 AM PDT
Editor’s note: Evan Peelle is a Los Angeles-based marketer with experience in web-based startups and conducting online marketing campaigns, including PPC, mobile, and search marketing.
"Money alone isn’t enough to bring happiness . . . happiness [is] when you’re actually truly ok with losing everything you have." – Tony Hsieh, Delivering Happiness: A Path to Profits, Passion, and Purpose
Disclaimer: This article's sole purpose is to address the core principles of advertising in a new and edgy  way. This is not for the faint of heart or those highly sensitive to socially charged public issues. So suck it  up and buckle up. You're about to be taken to school (of hard knocks). Class is now in session.
Everyday we surge past the homeless never stopping to consider the power they possess to  advertise effectively with no budget(literally). Startups could learn a thing or two from these highly misunderstood band of street-smart entrepreneurs.
Seriously, they ARE testament to the fact that you and I have hard-wiring to market to others in attempts to meet our survival needs(both in business and in life). Carefully observe how these 5 use cases display the 5 levels of advertising power.
Note: You're probably working at a business right now that's been founded on one or more of these five principles. Observe carefully.
The Screamer
“The truth isn’t the truth until people believe you, and they can’t believe you if they don’t know what you’re saying, and they can’t know what you’re saying if they don’t listen to you,. . . unless you say things imaginatively, originally, freshly.” - William Bernbach (1911 – 1982), Founder of DDB Int Agency.
The Screamer curses yelling absurdities to get attention. His audience doesn't understand his message no matter how loud) and they avoid him like the plague. To survive in business it's essential to have at least ONE clear message. Lack of empathy for prospects could cost us our lunch.

Hype works the same way, it's divorced from a target audience and falls short of connecting with target audiences and what's meaningful to them.
The Beggar
“Advertising is a tax for having an unremarkable product.” -Robert Stephens, Founder of the Geek Squad.
Begging is the oldest profession. He'll get face-to-face asking directly for what he wants. "Change please?", or the more ambitious, "Got five dollars". He gets results by asking clearly for what he wants. Though his business is severely limited by the steep investment of time and energy.
It's easier to receive payment when you can ask clearly and directly… if you ask enough people.
The Cardboard Holder
"Make it simple. Make it memorable. Make it inviting to look at. Make it fun to read." - Leo Burnett (1891-1971), Advertising Executive, Named New York Times 100 Most Influential Men of the 20th Century.
These guys invented automated advertising. He finds heavy traffic(literally) and posts his message (Ad) for the world to see. The message gets leveraged across 1000's of eyeballs everyday with little to no effort on his part. As a business using leverage to his benefit. His message appeals to an almost infinite number of people. He'd make a kick-ass Search Engine Marketer.
His strategy is to present clear compelling messages in front of large audiences.
The Street Performer
“Let us prove to the world that good taste, good art, and good writing can be good selling.” - William Bernbach (1911-1982), American advertising creative director.
The street performer presents his talent to a captive audience. He salts the crowd, incites interaction, and gets involvement, making them a part of his own show. Using juggling, strumming, and dancing as sweat equity he demonstrates entertainment value. All the while risking lighting himself on fire (risk liability). As a business he's a step above, understanding the power of giving value up front and then asking for money after delivering. This keeps them coming back for more, over and over again.
The talent model is one of exhaustive effort yet generates customer loyalty through participation.
The Funnel Builder
“What really decides consumers to buy or not to buy is the content of your advertising, not its form.”- David Ogilvy  (1911-1999), Dubbed The Father of Advertising
These kids were tossing money off the pier. They were playing a game made by a homeless guy. He had made it out of cardboard, cups, and a blanket. People tried to get their money into the various cups 'winning points' in hopes to sink one into the elusive jack-pot!
It was a cash(coins) machine(asset), accumulating wealth while he was on the beach getting tan sipping mojitos somewhere. It was a funnel that attracted prospects with a value proposition. A perfect example of a user driven experience (giving the audience tools to play the game.)
Building an automated funnel that generates cash while you're not around (no labor, low overhead) is the zenith of entrepreneurship. Do this and your golden ticket to financial freedom is guaranteed.
Live Your Own Dream
Does that sound familiar to any of us? The entrepreneur's dream; raking in dough while sipping margaritas on the beach. Here's the recipe to turning your startup into an automated advertising cash machine.
  1. Listen to your customer carefully.
  2. Use one clear and direct message to speak to their needs.
  3. Find out where your prospects already are, then place your messages in front of them.
  4. Give value up front. Incentivise them to take action.
  5. Build your product around their secret hopes / desires or fears / frustrations.
Follow these timeless and proven laws of advertising to supercharge your start up, blow past your break even point, and wiggle into profit. Live it up my friends and make an asset that will pay you in your sleep (on the beach).

Posted: 05 May 2012 07:20 PM PDT
It was less than a week ago that Tenthbit, the developers of the buzzy, new social-networking-app-for-couples (or other partners) Pair, picked up a $4.2 million seed round, money the founders said would be used to expand its mobile development and design teams. Now it looks like some of those funds might also need to go to legal bills.
Tenthbit is getting sued by pair Networks, a hosting and domain registration company based in Pittsburgh, for trademark infringement.
Tenthbit, meanwhile, has also sued pair Networks, to try to prevent the other suit from going ahead. Pair Networks is asking for an injunction on Pair the app, as well as “other relief as this Court deems appropriate.” Tenthbit argues the two do not compete directly, and would therefore not result in any brand confusion.
While trademark cases can be a dime a dozen — and there is no guarantee of how this one will fall — this one is interesting for a few reasons:
One is that it pits a startup working at the forefront of mobile social networking, against the kind of Internet company that has been around for years and is not so much about disruption as it is about making the internet work like it’s supposed to.
Another is that this old-school Internet company has apparently taken others to court for the same reason — and won. And there a couple of other twists to this story, as you’ll see below.
Tenthbit’s case against pair Networks was filed first, in a U.S. District Court in the District of Northern California, San Jose, on April 6 in an apparent attempt to stop pair Networks from filing its own case. That didn’t seem to work, and pair Networks filed its own case against Tenthbit in a Federal court in Pennsylvania on April 27. Both suits are embedded below.
Pair Networks alleges in its suit that Tenthbit “doubly infringes” on pair Network’s trademark through both the use of the brand “Pair” as well as its URL, Pair Networks says that it has spent “substantial amounts of time, effort, and money” to ensure that the public associates the Pair family of marks (these include,, and, among others) with its own company.
Pair Networks, founded in 1998, offers its services both in the U.S. as well as internationally and claims to be one of the world’s biggest privately-held hosting companies. It says it delivers more than one billion Web hits per day via its servers.
Pair the app, meanwhile, has seen over 220,000 downloads since it went live in the app store a month ago.
Pair Networks says that it has been policing for the use of its name by Internet-related companies for years now, and cites three different examples in its complaint where courts have ruled in its favor in other trademark infringement cases.
Still, there is something a little depressing, and desperate sounding, about when companies begin to get possessive about basic words — “pair”, meaning two, perhaps being one of the most basic of all.
For its part, Tenthbit maintains that it is not in the same business as pair Networks — with a consumer mobile app being on the opposite end of the Internet spectrum from offering hosting and domain registration services to websites.
“It is axiomatic and commonplace that the same word may be used as a trademark by different parties provided that such use does not create a likelihood of confusion on the part of relevant consumers,” the app makers’ lawyers, Orrick, Herrington and Sutcliffe, write in response to the infringement claims.
There are a few other eyebrow-raising points in pair Networks’ complaint against Tenthbit:
  • Pair Networks claims that its reputation is being damaged because Pair the app is associated with “explicit adult activity” like “sexting.” (The suit doesn’t mention the spinoffs that Pair has spawned, such as PairMixer, which helps you find someone to pair with on the app if you are unattached.)
  • Weird coincidence: Pair Networks claims that Tenthbit possibly already knew about pair Networks when it had registered its own domain as because it turns out that among the companies hosted by pair Networks is Y Combinator, the incubator where Tenthbit created and launched Pair. Y Combinator used pair Networks for hosting for at least six years.
  • Pair Networks is asking to get all the profits that Tenthbit will have made from Pair the app. (For now, it’s a free app for iOS only, with no revenue-generating services incorporated into it at this point.)
The cases are due to be heard later this year. We have reached out to Pair, pair Networks and their legal teams for further comment.
Pair’s $4.2-million seed funding round, announced on May 1, came from an A-list of angels that included Ashton Kutcher's A-Grade Ventures, Dave Morin, Paul Buchheit, Founder CollectiveSV AngelLerer Ventures, Michael Birch, Sam Altman, CrunchFundTencent, Yuri Milner,Betaworks, Alexis Ohanian, Garry Tan, Harjeet Taggar, Gary Vaynerchuk, Brandee Barker, Brian Pokorny, Elad Gil, and Susan Wu.

Posted: 05 May 2012 07:00 PM PDT

In the past year or so since he became the mayor of San Francisco, Ed Lee has become a household name of sorts in the Bay Area technology community — no easy feat for an industry that’s known more for forging its own speedy path, rather than mixing with the notoriously bogged-down world of politics and legislation.
For years, companies have been known to flock more to SF’s southern suburbs or to San Jose some 50 miles south, where space is often cheaper and the tax situation has historically been more lax. But surrounded by tech-focused supporters such as Ron Conway and Marissa Mayer, Ed Lee has made it a major priority of his administration to bring more technological innovation and startup businesses into the city of San Francisco. His methods have been controversial in some circles, but with rapidly growing companies such as Twitter and Airbnb signing major contracts to keep their operations within the city limits at times in their development when many tech companies typically decamp to the South Bay, they have clearly been effective.
TechCrunch TV had the opportunity to grab a brief interview with Ed Lee when he stopped by NewMe Accelerator’s Demo Day held at Google’s San Francisco office this past week. Watch the video above to hear him talk about the TechSF initiative launched last month with a $5 million grant aimed at fostering more high tech jobs, and why he’s working to keep tech companies within the urban center of San Francisco.
Feature image of the San Francisco skyline courtesy of Flickr user moonlightbulb.

Posted: 05 May 2012 04:00 PM PDT
Editor's note: Erin Tao is a business development associate at Aviary — and, yes, its hackathon organizer. Follow her on Twitter @etaooo.
For anyone who enjoys (or has a knack for) planning, organizing a hackathon is not terribly difficult: it's a matter of understanding your goals, assessing needs, and figuring out how to bridge the two. Naturally, this is much easier said than done.
The most important part of a hackathon, by far, are the demos. I mean, they’re what make the event worth attending in the first place. Sponsoring companies wouldn't offer money to anything that didn't provide exposure. Developers wouldn't forsake sleep if they couldn't show an eager audience the hacks they built overnight.
Pulling off demos at Photo Hack Day and Photo Hack Day 2, for example, has proven to be a continuous learning process, with a much more public (and much less forgiving) learning curve. There's no need to be a n00b, we've actually done a lot of the screwing up for you.
Almost every sponsored hackathon will have two sets of presentations: those that kick off the event (for sponsors to introduce developers to their APIs) and those that close it (for hackers to show what they've done). Since company demos are the most visible component of the hackathon, ensuring that this portion runs smoothly is key to the event's success. The caveat: extensive preparation is useful to a certain degree. You can – and absolutely should – do a number of related tasks in advance, but a significant portion of hacker demos require efficient, on-the-fly work that takes place within a short amount of time.
Photo Hack Day 2 was organized almost entirely through three tools: email, spreadsheets, and HackerLeague. How you choose to keep track of everything is up to you, but I'd strongly suggest the following for each set of demos.
Part I – API demos:
  • Keep a company database handy. Any correspondence with a particular company should be labeled and filed away. It wouldn’t hurt to note how up-to-date companies are with their essential obligations, such as a cross-promotional blog post, whether or not they supplied a logo for the website, or when they paid any sponsorship dues. A CRM will help streamline the inbound and day-of workflow, but keeping everything in a consolidated document in a single browser window saves a significant amount of time compared to digging through archives. I've included a sample spreadsheet where I organized the relevant information, and left a few examples of notes that I didn't want to forget. (Note: the template is the same as what I used for both Photo Hack Days.)
  • Encourage presenters to use layman's terms for sake of efficiency. If hackers are curious, they will approach a company developer and ask questions after a presentation is over. Being overly technical hampers presentation speed.
  • Distribute guidelines on good presentations ahead of time. As a rule of thumb, attendees and developers are generally fond of the following: Cool APIs, funny presentations and no PowerPoint.
  • Establish time limits and follow the schedule. Higher-level sponsors generally demo longer, and with more materials. Giving your headline company five minutes to speak in front of a captive audience with a laptop and projector is ample time; the next tier of sponsorship can have three minutes with a laptop and projector. Non-sponsors are allowed a one-minute pitch with a microphone, and can host non-mandatory demos and workshops during hacking hours instead.
Part II – hack demos:
  • …Clearly establish time limits (yes, it's important enough to mention twice.) – Unlike sponsors, each team of developers gets an equal amount of time to present. Two minutes is standard and a well-planned presentation can cover the high-level ins and outs of a hack in that much time.
  • Ban PowerPoint if you have to – This is also worth mentioning twice, because too many teams continue to try to use it. It may even be worth an explicit ban. It’s a waste of time and they can’t effectively showcase an app or service’s functionality.
  • If companies are providing their own sponsored prizes, supply a list of hacks (and, if possible, the demo order) that can be filtered by API usage - This enables them to know who to look out for; shareable spreadsheets on Google Docs are perfect for this.
  • When s#*t breaks — and trust me, it will — have multiple spares on hand - During Photo Hack Day 2's Demo Day, we destroyed General Assembly’s two HDMI and VGA cables (they were taped to the floor underneath the audience chairs, so when people moved around, the cables were yanked from the wall and damaged). So, keep two or three spares of everything to keep the party going: electricity, Wi-Fi, presentation tools, dongles, cables, power strips, extension cords and even a projector! (Pro Tip: keep your receipts!)
  • Prepare any relevant material for the judging panel - Provide all judging criteria ahead of time and make this publicly available for attendees and hackers alike. Provide plenty of writing materials and judging templates (usually a list of hacks; this falls under the category of things you'll need to create on the fly). Encourage judges to ask questions and push back on developer ideas – for instance, “Why did you do it like x when you could have done it like y?” If hackers can consolidate important development points in ten seconds or less, that will definitely win over technical judges.
To-do on the fly
Remember the aforementioned caveat? This is it, and it's the trickiest, most stressful portion of the event.
  • Demo order – Consolidate signups into one place. Categorizing demos based on requisite equipment (i.e. live websites, locally-hosted applications, mobile apps), will prevent you from having to scramble to find the appropriate cables / dongles every time a new person comes on deck. Test your platforms thoroughly; you'll need to be very familiar with the sign-up procedure that your hackers will be relying upon.
  • If you’re using social media to post updates, create incentives for people to follow relevant feeds - During Photo Hack Day 2, we posted most of the updates via Twitter with the #PHD2 hashtag. Everything seemed fine until the demo sign-up process was announced, both over the microphone and via Twitter — Not everyone could hear us, nor were they checking Twitter.
By creating incentives (i.e. sponsor giveaways to those who follow the feed, tweet about the event, or retweet any official posts), you gain a stronger following while making sure that hackers stay in the loop. This translates to a less chaotic process of organizing demos.
  • Voting process – Whether you choose a web or mobile service, it helps to have SMS voting enabled. I say this because (1) I have yet to find a platform that I love to use on mobile browsers, and (2) most Demo Day attendees are not going to bring a laptop with them. Be sure to test it ahead of time to avoid hiccups.
  • Prize ceremony - If there are only official event prizes, the process should be easy enough: emcee as necessary, but allow judges to briefly talk the audience through some of their thoughts before delivering the verdict. For company prizes, be sure representatives know when to be onstage. Keep timeliness and brevity in mind. Feel free to relax now.

Here’s what I still haven’t figured out

Should there be a cap to the number of demos?
This has some very obvious pitfalls, but after four hours of demos, the judges and audience at Photo Hack Day 2 were equally exhausted. This translated to a rushed prize ceremony: it was getting dark, everyone had been at General Assembly since lunch, and hackers were beginning to shut down after a night without sleep.
If judges and attendees are only interested in the high quality hacks, should there be some sort of screening process? The tradeoff for a large turnout is a long Demo Day, and you’d hate to end the event on a poor note (read: tired, grumpy hackers and attendees.)
What alternatives exist to the monotony of demos? Is it worth dividing hack submissions into categories?
After the hackathon (and a much-needed day off), our team broke down the areas where we thought there was room for improvement – and there were plenty. Though the demo tech mishaps were the most glaring, the actual process of demoing needed work.
The consensus was to encourage (and more importantly, reward) creative and entertaining presentations with prizes; they provided a much-needed relief to the spell of monotonous ones. Good demos – especially those that are funny – make the entire afternoon worthwhile. In terms of condensing the block of time required for participants to demo, the jury is still out.
A final note
This is the summary of everything I've seen and experienced from the two hackathons I've organized, and the three cumulative months I've spent planning. There are certainly alternatives to all of these "methods" and a better way of approaching these things is to consider them variables. Trust that you understand the nature of your hackathon well enough to know what will work and what won't.
Yes, demos are time consuming, and yes, they are stressful, but I absolutely wouldn't mind doing it all over again. For the developers who appreciate cool APIs, for anyone who loves observing the creative process, and for the many people out there concerned with building community: organizing these type of events is so gosh darn rewarding. Awesome people should meet awesome people, and awesome products beget even more awesome products.
This, in a nutshell, is why we put on hackathons in the first place.

Posted: 05 May 2012 02:22 PM PDT
An automated Facebook spam filter gone slightly awry, not purposeful censorship, is to blame for startup enthusiast Robert Scoble and some other commenters getting blocked, according to a company spokesperson.
Users attempting to comment on blog posts have recently been prevented from doing so, with warning text from the company saying that “this comment can’t be posted” because it is “irrelevant or inappropriate.” We’ve heard back from Facebook, and here’s what it says has been going on.
The company says that the intention is to bar spammy or abusive commenters. Scoble’s comment was specifically blocked because of its length, and the length of the comment thread it was on. Long and popular threads are particularly attractive to spammers as they provide the largest distribution for whatever content is being spammed. Facebook also may block other types of comments that go against positive conversation, such as some ASCII art. Other factors may include who you’re commenting on, how long the comment is, and who is commenting.
Sentiment itself is not considered, the company says.
The wording is somewhat confusing, as “irrelevant or inappropriate” comments are a subjective judgement that could apply to many topics. But this doesn’t appear to be some sort of content filter that Facebook could tune to specific political content in order to get the social network approved to operate in certain countries like China. The company will be sending us an official statement soon and the specific reason Scoble’s comment was barred.
Here’s what the company just told Scoble, which he’s commented (!) with further thoughts on our previous post:
Facebook PR responds.
I just talked with Facebook PR about my “comment censorship issue.” They say what actually happened is my comment was classified as spam. He further said that this was a “false positive” because my comment was one that Facebook doesn’t want to block.
Turns out that my comment was blocked by Facebook’s spam classification filters and that it wasn’t blocked for what the comment said, but rather because of something unique to that message. They are looking more into it and will let me know more later, after they figure out what triggered it. Their thesis is that my comment triggered it for a few reasons:
1. I’m subscribed to @max.woolf and am not a friend of his in the system. That means that the spam classification system treats comments more strictly than if we were friends.
2. My comment included three @ links. That probably is what triggered the spam classification system.
3. There might have been other things about the comment that triggered the spam system.
The PR official I talked with told me that the spam classification system has tons of algorithms that try to keep you from posting low-value comments, particularly to public accounts (er, people who have turned on subscriptions here on Facebook).
I actually appreciate that Facebook is trying to do something about comment quality. I had to recently change my privacy settings to only allow friends of friends to comment on my posts because I was getting so many poor comments on my posts (when I did that the poor quality posts instantly stopped).
The PR person also said that a team is looking into why this message got a false positive, and will be adjusting the algorithms to let messages like these get through the system.
Also, the error message made it sound like the message was blocked because of the content of the message, not because it looked spammy. They are looking into the wording of the error and will update that to make the error clearer as to what’s going on and why the spam classification system got kicked in.
More as I learn more.
[Image via Robin Wauters/Flickr.]

Posted: 05 May 2012 02:00 PM PDT
As we put more of our private information online and entrust it to web services, privacy breaches become almost inevitable. One major problem with online privacy is that there is really no enforceable chain of confidentiality. So when a third-party service makes your information available to another party, things can get complicated. A new paper by Samford University law professor Woodrow Hartzog argues that traditional privacy laws aren’t the best ways to protect private information online. Instead, he suggests an approach that’s more like the U.S. HIPAA rules that currently govern how private health information can be shared between your health provider and third parties. The system he proposes would be based on established principles in confidentiality and contract law.
Confidentiality law, says Harzog, typically only binds the first recipient of information. Online, that obviously isn’t enough to protect a user’s privacy and most scholars have argued that confidentiality law is simply not suited to deal with online privacy issues. Hartzog, however, argues that a HIPAA-like “chain-link confidentiality” regime would be more effective in protecting users’ privacy than current regulations. This system would not just ensure confidentiality between the user and the first service where data is stored, but the obligation of confidentiality would also flow downstream. Under this regime, he writes, “Internet users could then pursue a remedy against anyone in the chain who either failed to abide by her obligation of confidentiality or failed to require confidentiality of a third-party recipient.”
Hartzog argues that our current privacy regulations are “a patchwork of laws and remedies” and often in conflict with other laws and evolving technologies. It’s also often unclear how “privacy” is actually defined and what, for example, constitutes a “reasonable expectations of privacy.” In Hartzog’s view, “traditional privacy remedies are inadequate in the digital age.”
Here is what chain-link confidentiality on the Internet would look like in practice: a website that collects your personal information (and that explicitly allow to share your information with other services) would also have to establish a confidentiality contract with any other company it discloses your information to – and those companies would be required to establish the same kind of contract with every subsequent recipient as well. These contracts, of course, could also simply prohibit any further dissemination of your personal information or limit it to certain companies or companies that fulfill certain security requirements. Every web service could, of course, also tweak this contract depending on its needs.
In a way, this isn’t all that different from the Creative Commons “Share Alike” provision: depending on the Creative Commons license used – artist can allow others to remix their work, for example, as long as it is then shared under the same license terms as the original work.
The chain-link confidentiality approach then would allow for the flow of information, says Hartzog, ” by continually re-creating an environment for sharing that accommodates the sender, receiver, and the subject of the personal information.”
Even though this isn’t a cure-all – your information, after all, could still leak out or be scraped by others – it’s an interesting way of looking at privacy from a more contractual point of view, especially because it sets up a legal framework for sharing information between services.
For the more lawyerly and in-depth discussion of this, take a look at Hartzog’s paper here.
[Image credit: Flickr user Yandle]

Posted: 05 May 2012 12:31 PM PDT
Screen Shot 2012-05-05 at 4.51.28 PM
Updated. Today was just another Saturday morning in blog land when Robert Scoble, the well-known tech startup enthusiast, went to post a comment on a Facebook post written by Carnegie Mellon student (and TechCrunch commenter extraordinaire) Max Woolf about the nature of today’s tech blogging scene. Scoble’s comment itself was pretty par-for-the-course — generally agreeing with Woolf’s sentiments and adding in his own two cents.
But when Scoble went to click post, he received an odd error message:
“This comment seems irrelevant or inappropriate and can’t be posted. To avoid having comments blocked, please make sure they contribute to the post in a positive way.”
Now, Facebook makes no apologies for working to create a safe and clean environment on its corner of the web by shutting down abusive or harassing behavior, content such as pornography, or generally spamming of the system. This particular method policing “inappropriate” comments may be new, but it would fall within the same general realm.
But even so, this instance seems to be a very strange enactment of any kind of Facebook policy. Scoble posted his original comment in its entirety on his Google+ page, and it’s clear that it contains no profanity or even any obvious argumentative language.
Of course, what makes a comment “positive” or “negative” is a very subjective thing. Since Facebook is a global site, and what is acceptable in one culture is offensive in another, the company generally relies on a combination of software algorithms and notifications from other users to identify inappropriate behavior. This seems to show a glitch in that system.

This could be similar to what happened to film critic Roger Ebert back in January 2011, when Facebook temporarily disabled Ebert’s blog because of allegedly “abusive comment.” It turns out that Ebert’s blog never actually contained objectionable content — a number of Facebook users had flagged his page as “abusive” after he wrote a critical tweet about Ryan Dunn, an actor who died in a drunk driving accident. It could be that Robert Scoble has been similarly flagged by other Facebook users, for reasons justified or not.
Scoble’s a pretty popular guy on the web, so not surprisingly his Google+ post about the incident attracted more than 100 comments within the first hour after he posted it. Several other people there report having seen the same message in recent days, and one person named Steven Streight wrote that recently his Facebook commenting ability was “temporarily limited” because of comments that he says were similarly benign such as “I’m a married man.” TechCrunch commenters have weighed in on this post as well to recount similar experiences.
Not surprisingly, a number of people are seeing this as an example of censorship — a word that almost always has negative connotations in the tech world.
We’ve reached out to Facebook for more information on what this policy means, how it is powered, and what specific words or behaviors it is meant to filter. We’ll update this post if we hear anything back and as the situation develops.
Update: A Facebook policy spokesperson emailed the following explanation:
“To protect the millions of people who connect and share on Facebook every day, we have automated systems that work in the background to maintain a trusted environment and protect our users from bad actors who often use links to spread spam and malware. These systems are so effective that most people who use Facebook will never encounter spam. They’re not perfect, though, and in rare instances they make mistakes. This comment was mistakenly blocked as spammy, and we have already started to make adjustments to our classifier. We look forward to learning from rare cases such as these to make sure we don’t repeat the same mistake in the future.
For more information about our spam prevention systems, please see this blog post:”
Also, my colleague Josh Constine has written a detailed report on Facebook’s explanation on the situation, which can be found here.

Posted: 05 May 2012 12:00 PM PDT
Editor’s note: Henry Fong is CEO of Yodo1. Yodo1 is a market entry specialist and full service technology provider helping Western game developers successfully gain traction in the China mobile games market.
Mark Zuckerberg's visit to China back in December 2011 created a storm of speculation on whether Facebook was preparing for a full scale entry into the most populous country in the world. Photos of Zuckerberg visiting Sina's headquarters in Beijing, leaked by a Sina employee and reports of him meeting with other major Chinese Internet companies such as Baidu and Alibaba have further fueled rumors that Facebook is looking for a local partner to facilitate its China entry.
Putting aside the rumors and speculation, there is little doubt that Facebook is looking for a way to enter the China market and the real questions lie not in the "if," but rather the "how," "when" and whether Facebook will be able to make a success of their China market entry when countless other western Internet juggernauts have bruised and battered themselves against the Great firewall of China.
License and Registration Number Please…
For Internet companies, the "rules" for playing in the China market are many and varied, the most basic of which includes the acquisition of an ICP (Internet Content Provider) license which only a local Chinese company can obtain. There are many ways and mechanisms via which Western companies can obtain this license, or at least obtain the rights to use it, the most popular of which is in the form of a set of Variable Interest Entity (VIE) agreements and structures. This mechanism is used by most of the local Chinese Internet companies that are listed overseas (hence making them non-local companies) and a good article explaining how VIE's work in detail can be found here, compliments of the China Accounting Blog.
Besides the ICP, a broad based Social Network platform such as Facebook will require a whole bundle of other licenses based on different core functionality including but not limited to a Network Culture Operation License, which is required for all gaming platform operators. Also needed, an Internet Publication License, a requirement for video and photo sharing services, Payment Service Operator license required for Facebook’s credits service and likely dozens of other licenses from a multitude of different government departments including:
  • General Administration of Press and Publication (GAPP)
  • People's Bank of China (PBoC)
  • Ministry of Culture of the PRC
  • The Information Office of the State Council of PRC
  • The State Administration of Radio Film and Television
  • The Ministry of Information Industry
To put things into perspective, here's an example of the licenses that were obtained by a video broadcasting company operating in China and the scope of services provided by them is but a fraction of the services available on the Facebook platform.
Rewriting the Book of China Entry or Same Book Different Chapter?
Facebook's formidable war chest of cash and equity value from their impending IPO provides alternatives for obtaining the relevant operating licenses through acquisition of local Chinese companies that already have them. However, this seemingly obvious path to a quicker China entry poses many other challenges, and one look at the trail of failed market entries by other leading Western Internet companies certainly paints an unfavorable picture.
To provide perspective, let's take a look at the China eCommerce space to get a feel of the challenges for leading Western players entering into China. eBay and Amazon have both tried their hand at the buy vs build approach to enter the market thru their respective acquisitions of Eachnet and Joyo.  Amazon's entry into China though unimpressive, can be categorized as a "success" on relative measures if you compare them against that of eBay, arguably the most high profile and widely published "failed" China entry in the Internet space. After eBay's 2003 acquisition of EachNet, then the leading B2C provider in China, eBay successfully eroded EachNet's user base and leadership position into a blip on the radar screen and handed China's B2C market to Jack Ma's Taobao. This market has now grown over 100 times in transaction volume since eBay's initial entry in 2003.
The reasons for eBay's China failure are many and varied, but there are a number of relevant chapters from "eBay's book of disasters" that Facebook can learn from in hopes of avoiding a similar fate. Chief among eBay's fatal errors is that they failed to understand what the Chinese consumer really wanted from a B2C service, focusing instead on replicating their global model that had proven successful in Western markets to the Chinese community who's shopping behavior, culture, product needs and purchasing power were extremely different to that of their Western counterparts.  Concurrently, Jack Ma launched his B2C offensive with Taobao, a services that provided free listings with content and navigation tailored to the tastes of the local consumer. Today, Taobao is by far the dominant player in the B2C space and processes 79% of China's online transaction value.
Fight for Past or Fight for the Future?  Some Food for thought for Zuckerberg.
Some would argue that the war for dominance of Social Networking in China has already been fought and won, with major players such as Tencent, Sina and RenRen each claiming a significant slice of the Social Networking market, each leading in terms of specific demographics, features or access methods. The challenge for Facebook is that its broad platform of functionality competes directly and extensively with each of the above existing leaders in the market, though less so with Sina whose primary social asset is the Sina weibo services which is more competitive to a Twitter offering than a Facebook.
Before deciding how Facebook should enter the Chinese market, a more relevant consideration for Zuckerberg is what markets does Facebook want to compete on in China. Given the plethora of regulatory challenges and the steep learning curve that the company is likely to face, it might make more sense for Facebook to choose a new battle ground that has yet to see an entrenched player in the market, but is significant enough that success in this area would provide a significant footprint for Facebook to leverage its other services into the region.
One such market that might make sense for Facebook to target is the market for smartphone services. China already has the largest install base of smartphone handsets in the world with an estimated 100m units and projected doubling of unit shipments by the end of 2012. The battle for this rapidly growing access method has already started with Sina and Tencent duking it out via their respective mobile Weibo (microblogging) services and RenRen's initiative to expand their traditional Social and gaming services onto the smartphone platforms.  Facebook's recent acquisition of Instagram provides an opportunity to leverage the app's popularity among Chinese users as a potential route for a broader Facebook market entry in a way that is relatively non-threatening to Instagram's Chinese partners such as Sina, whose social features are well integrated into the Chinese version of the app.
At a macro level, the opportunity to dominant China's smartphone market is HUGE, much bigger than what Instagram can provide today and potentially dwarfing the existing web-based social networking market in the coming years. Facebook and other players in the market have an opportunity against a limited time window to make a significant impact in this space where mobile social networking, smartphone payment methods, gaming and a number of other billion dollar plus markets are still in its infancy. What's more, the smartphone platform war is an area that Facebook has yet to make a significant impact on in its home markets. The Chinese market can be a great way to experiment with new mobile services and business models quickly and cheaply in a market where there is only upside potential for Facebook.

Posted: 05 May 2012 11:05 AM PDT
modernist cuisine myhrvold
Nathan Myhrvold, erstwhile Microsoft CTO and now patent powerbroker extraordinare, has hit the news this weekend, but it’s not for his latest licensing deal with a mobile phone maker, or for a lawsuit against a tech company (or three) that refuses to pay up for patents that his company, Intellectual Ventures, owns — but for a different kettle of fish altogether.
Myhrvold has won the James Beard Foundation book award for cookbook of the year — the top prize in one of the industry’s most prestigious accolades — for a book that deep-dives, appropriately enough, into the science and technology of cooking.
His book, the self-published Modernist Cuisine, is a six-volume, 2,438-page effort that he co-wrote with Chris Young and Maxime Bilet (and a 20-person team of cooks), which is selling for $625 (or $455.11 on Amazon).
Myhrvold, it turns out, has been a foodie for decades, starting some serious amateur training in Burgundy, France at the La Varenne cooking academy, while he was still at Microsoft.
According to this lengthy profile in Men’s Journal, Myhrvold’s basic interest was then further concentrated (geddit?) after meeting and befriending Heston Blumenthal, the British chef famous for popularizing the whole concept of molecular gastronomy — the art of applying science and technology to figuring out why food tastes the way that it does, and how to use scientific techniques make that even better.
If Myhrvold’s contribution to the tech world has been one of inventions and — perhaps more controversially — a certain kind of business acumen to leverage his and other’s inventions, then his Modernist Cuisine is perhaps the culinary equivalent:
Molecular gastronomy has made its way to the forefront of haute cuisine, with restaurants like the Fat Duck, El Bulli and Noma leading the charge, and as that trickles down to the masses you can see how Myhrvold’s tome could be useful to the wider world of chefs keen to apply some of these methods in their kitchens. As for the content: “water baths, homog­e­niz­ers, cen­trifuges, and ingre­di­ents such as hydro­col­loids, emul­si­fiers, and enzymes” are very much the norm in this book.
In its most positive and optimistic light, the book and the whole effort gives a totally different spin to a man many commonly think of as a patent troll. As Men’s Journal writes: “If Myhrvold wants to bridge his ideas to reality and not be deemed a mere opportunist, or monsteret, what better route to the public's love than through its stomach?”
On a more cynical note: do you think Mhyrvold looked into whether any of these cooking ideas can be patented — and if so, have they been?

Posted: 05 May 2012 10:46 AM PDT
Editor’s note: This is a guest post by Maria Constantinescu, founder of Slickflick, the photo story app.
Today, in 2012, there is a talent war like no other. The Valley is abuzz with a hiring frenzy. Startups can’t compete with Yammer, Zynga, Twitter, Facebook and the rest for developers. Perhaps the answer is to look elsewhere? To countries where the old Soviet education system produced maths and science graduates by the truckload? To Kiev, Belgrade, Slovenia and others? And perhaps to Romania.
For Romanians, perhaps for the first time in history, the world is now flat. Forty-five years of Stalin-esque communism meant sports and education were the only acceptable ways to compete in Romania. Soviet-era industrialisation ended up producing a country where almost half of the educated population were trained to become engineers. Today, in 2012, they are more likely to be coders. And now they can take their place with the rest of the world on the level playing field of technology.
The best Romanian coding talent was noticed by Microsoft in its hay day. It’s now gradually becoming democratised, spread out across more platforms, initially through outsourcing and now through the influx of Western start-ups in search of affordable skills. So what exactly should you expect to find in Romania? What are the pros and cons? Here’s the lowdown, with some generalizations.
People are smart, educated, fluent English speakers and resourceful lateral thinkers. On the downside, entrepreneurial culture has not yet developed. This translates into a reluctance to take risks and a lower ability to collaborate across teams. It might sound odd to Valley readers, but Romanian engineers would much rather work for a salary than for a stake in a business.
There are some examples of local entrepreneurial communities, like the one formed around the Timisoara Tech Incubator or Startupper supported by the team of Adulmec in Bucharest. But the most impactful movement is the one involving start ups that left Romania, with the likes of Ubervu, Summify and Brainient.
There is a discrepancy between skills. There is a lot of Java, .NET and PHP skills. More ‘exotic’ coding languages like Ruby, Python are harder to find. On the mobile side, there are considerably more Android coders than iOS developers.
One appeal for many western startups that either set up shop in Romania or develop a team there is the ability to offer student internships straight out of university, pick the best and groom them with the kinds of skills that they need.
Salaries are low in Romania compared with Berlin, London, Silicon Valley. This reflects the reduced access to opportunities and lack of exposure to cutting edge developments. You would expect to pay €2,000 (net) for a great developer in Bucharest. The rest of Romania is even cheaper, by about 30%. But beware of confusing the tax systems and bureaucracy.
You will find the largest tech communities in the historical university centers of Bucharest, Cluj, Timisoara & Iasi. In Bucharest you have the largest and most diverse talent pool, but also a more competitive environment with higher volatility. In smaller communities there’s a stronger sense of reputation. Western cities like Timisoara and Cluj tend to have better work ethic.
Finding really valuable engineers takes time. The general guidelines are to hire a ‘magnet coder’ that can attract other trusted people from the community. When recruiting, look for Polytechinc graduates from one of the above university centers. The most popular job sites are, and
The best screening for engineers is high school. There is a bit of an ‘Ivy League’ of high schools in Romania. These schools are focused on math and computer science. Every large city has one or two. Generally, people coming out of these top schools are no schmucks. Also, pay attention to see if they won any competitions and whether they had jobs or pet projects while still in school. University education in Romania, though thorough, tends not to encourage independent thought.
Good Romanian engineers don’t like to be the 15th person down the chain working on a little piece of code or feel disconnected from the business. They are more likely to defect to another business if they don’t feel inspired by you or your company or the team you assemble. The real geniuses will do their own thing, just as anywhere else.
Finally, the most appealing trait of Romanians is that they live on both sides of the brain. They have ingenuity and skill, a precious combination no matter where you find it. Soon know-how and self-belief will catch up and they will be on a truly level playing field, possibly for the first time ever.

Posted: 05 May 2012 10:00 AM PDT
Gillmor Gang test pattern
The Gillmor Gang — Doc Searls, Robert Scoble, John Taschek, Kevin Marks, and Steve Gillmor — surfed the Social Holodeck for signs of intelligent life and overload. Meanwhile: @scobleizer and his Facebook UnLike engine, @dsearls and the Intention Economy, @kevinmarks on the patents protection racket.
If @jtaschek is right, the Facebook IPO will unleash a startup spending spree the likes of which we’ve never seen. But what I’m waiting for is the app to end all apps, or at least autodelete an old one every time I download a new one. Now that will be an algorithm to apply to the push notification queue.
@stevegillmor, @dsearls, @scobleizer, @kevinmarks, @jtaschek
Produced and directed by Tina Chase Gillmor @tinagillmor

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