Saturday, March 31, 2012

The Latest from TechCrunch

The Latest from TechCrunch

Link to TechCrunch

(Founder Stories) Kayak.com’s Paul English: On Hiring Athletes, Design Simplicity & Angel Investing [TCTV]

Posted: 31 Mar 2012 07:59 AM PDT

Kayak Video 2 Out.mov

In part II of his Founder Stories interview with host Chris Dixon, Kayak.com's co-founder Paul English discusses why job applicants will be hard pressed to find job postings on Kayak.com, relays the lessons he learned from Kayak's mobile app and tells Dixon the traits founding teams need to possess in order to impress him as an angel investor.

Having helped grow the company to roughly 150 employees, English says Kayak is somewhat unorthodox when it comes to hiring talent. “We don't hire for open positions but we are looking for athletes, we are looking for star performers and then when we find someone great, we make a spot for them.” He adds, “I am always recruiting.”

In addition to beefing up staff, Kayak has expanded into mobile, which accounts for "almost 20-percent of our traffic" says English. Initially weary that its mobile platform would be a watered-down version of its website, English's fears have been swept aside. "The team that we hired to build our iPhone product actually found a way to build the version of Kayak that has all the same power of Kayak but is expressed in way that was actually more simple than our website.” He adds, "I think the design experience we have learned on the iPhone, which is to force simplicity, because you have less real estate, has caused us to rethink how we do design on the web.”

English wraps the interview by telling Dixon key lessons he’s learned as an entrepreneur and offers what he looks for when investing in startups.

Make sure to watch the entire video to hear all his insights, and watch episode I of this interview here.

Past episodes of Founder Stories featuring founders ZocDoc, Charity: Water, Turntable.fm, Bump, Birchbox and many other companies are here.

Is Technology A Zero-Sum Game?

Posted: 31 Mar 2012 06:00 AM PDT

pacman

Editor's note: Contributor Ashkan Karbasfrooshan is the founder and CEO of WatchMojo, he hosts a show on business and has published books on success.  Follow him on Twitter @ashkan.

In last week's Get Rich or Die Trying article, I mentioned that "tech is a zero-sum, winner takes all game".  A reader objected, arguing: "I think that may be an inappropriate use of the term 'zero-sum' – one company's increase in profits (or revenue) does not mean a competitor must see declining profits (or revenue)".

History suggests that Jack Welch's philosophy that “a company should be #1 or #2 in a particular industry or else leave it completely” is even more applicable to the tech industry, where the top player can build a sustainable and ever-growing business but everyone else is practically better off getting out.

Examples of market dominance by the #1 that come to mind include:

-          Google in search,
-          Facebook in social networking,
-          Groupon in daily deals, and
-          Amazon in e-Commerce.

This doesn't mean that the:

-          #1 player isn't susceptible to the Innovator's Dilemma, or
-          #2 competitor can't build a massive business.

Indeed, Microsoft's Bing or Living Social are meaningful #2's in search and daily deals respectively, but clearly the network effects and economies of scale that come with market share dominance make it nearly impossible for challengers to remain relevant over-time.  Monopolies are nothing new and come and go: Google is the evolution of Standard Oil, AT&T and Microsoft in search, you can argue that Apple is next in line in mobile.

What is Zero-Sum Game Anyway?

First, the definition:

"In game theory and economic theory, a zero-sum game is a mathematical representation of a situation in which a participant’s gain (or loss) of utility is exactly balanced by the losses (or gains) of the utility of the other participant(s). If the total gains of the participants are added up, and the total losses are subtracted, they will sum to zero."

Indeed, while the tech sector is huge, within each segment, you see a zero-sum game from each individual purchasing decision out.  For example,

-          a consumer will buy a Mac or PC; an iPhone or Android device, etc.
-          a business will adopt a solution from Oracle or Siebel, for example,

But it's rare for a consumer to buy or a company to adopt both.

If you repeat this binary-like decision process throughout the industry and economy, you get a zero-sum situation where one competitor's gains come at the expense of others' in the industry: Apple's iPhone sales obviously put a dent in the Blackberry; and its iPads are evidently going to affect PC sales – no matter how much some want to deny it.

It's Like This in Most Industries, The Only Difference Ss Severity

I run an online video content company and categorize video companies into four quadrants:

-          Content (creators),
-          Distribution (search, distribution),
-          Technology (content management systems, content delivery networks), and
-          Advertising (ad networks, servers)

Clearly there's a lot of overlap and how those four interact with one another merits an article in of itself (or hundreds).  While technology (with a lower case) enables Content companies, it increasingly underpins Distribution, Technology and Advertising companies.

As such, I see this zero-sum phenomenon every day with the latter three.  When TechCrunch's parent AOL bought 5Min for example, it was a matter of time before AOL stopped licensing Brightcove's Online Video Platform and instead use 5Min's player.  Seeing how AOL and 5Min were my distribution partners, I kept that thought to myself, but it was a matter of time.  Today AOL's main platform for video is indeed 5Min (note: I am not an AOL/5Min employee).

Content Isn’t a Zero-Sum Game: “I’m Your Pusher”

In content, it’s not really like that. ABC, CBS, FOX, NBC all have meaningful franchises.  Sure, if you watch FOX on Sunday at 6pm then you may not watch ABC at that time, increasingly with cord-cutting and time shifting that isn't the case anymore.  In fact, content is so not a zero-sum game that a company like Viacom has multiple brands to address that reality.

Indeed, if you want to travel to Barcelona, you won’t watch one video or read an article, you will read/watch many and I'd argue that content consumption – like a drug – just creates more demand.

But if you want to book a ticket to Barcelona, you will either use Travelocity or Expedia, for example.

Place Your Bets

That makes content a less-risky endeavor, and, with digital media and digital distribution reducing the marginal cost of production and distribution, then content has become a better risk-adjusted bet, though arguably not as scalable and certainly not a winner-takes-all gamble.

It will take an entire generation before investors realize this; though some argue that it's already started. According to media guru Jack Myers, "VC funds are being redirected away from tech and toward content. Technology-based venture opportunities in the media and advertising space have been largely played out. Bottom line, venture capital funds will be shifting from technology to content, context, commerce and research."

I'm not holding my breath, even though digital content is effectively the new software.

In Tech, Competition Becomes Blurry Over Time

The same way that the Internet has changed content, it has also changed technology.  For one, with consumer-focused technology companies being free, advertising-supported businesses, the prevailing asset isn't necessarily the underlying hardware or software, but rather, the audience.

This is why tech companies are all seemingly fighting one another:

-          Facebook vs Google in search and social networking,
-          Google vs Apple in mobile,
-          Amazon vs Apple in tablets and entertainment,
-          Microsoft vs Google in search.

You get the idea: in tech, everyone morphs into everyone's competitor… and since the main asset – the audience or consumer base – is so fleeting, tech becomes an even riskier bet.

The Four Horsemen

Whereas initially the Web pitted "content vs. tech", as the Web matures, it becomes "tech vs. tech" with Content becoming Switzerland amongst Distribution, Technology and Advertising companies.

In the real world, there is no perfect example of a zero-sum game – granted.  But whereas Jack Welch argued that a business ought to be #1 or #2 or get out, the network effects that the web has unleashed over time force technology (lower case) businesses to either be #1 or get the hell out.

Why Google Might Be Going to $0

Posted: 31 Mar 2012 03:00 AM PDT

google

Editor's note: James Altucher is an investor, programmer, author, and entrepreneur. He is Managing Director of Formula Capital and has written 6 books on investing. His latest books are I Was Blind But Now I See and FAQ ME. You can follow him on Twitter @jaltucher.

Ken Lang could perform miracles. In 1990 we would head off to a bar near where we were going to graduate school for computer science, and we would bring a Go board. Then we would drink and play Go for five hours. At the end of the five hours, after a grueling battle over the board, I remember this one time when magically Ken would show up with two girls who were actually willing to sit down and hang out with two guys who had a GO BOARD in front of them. How did Ken do that?

Fast forward: 1991, CMU asks me to leave graduate school, citing lack of maturity. The professor who threw me out still occasionally calls me up asking me when I'm going to be mature enough.

Fast forward: 1994, one of our classmates, Michael Mauldin is working on a database that automatically sorts by category pages his spider retrieves on the Internet. The name of his computer: lycos.cs.cmu.edu. Lycos eventually spins out of CMU, becomes the biggest seach engine,  and goes public with a multi-billion dollar valuation.

Fast forward: Ken Lang starts a company called WiseWire. I was incredibly skeptical. I read through what the company is about. "No way," I think to myself, "that this is going to make any money".

1998: Ken files a patent that classified how search results and ad results are sorted based on the number of click-thrus an ad gets. He sells the company to Lycos for $40 million. Ken Lang becomes CTO of Lycos and they take over his patents.

$40 million! What? And then Lycos stock skyrockets up. I can't believe it. I'm happy for my friend but also incredibly jealous although later in 1998 I sell my first company as well. Still, I wanted to be the only one I knew who made money. I didn't think it was fun when other people I knew made money. And, anyway, weren't search engines dead? I mean,what was even the business model?

Fast forward: the  2000s. Almost every search engine dies. Excite, Lycos, Altavista. Before that "the world wide web worm". Lycos got bought by a Spanish company, then a Korean company, then an Indian company. To be honest, I don't even know who owns it now. It has a breathing tube and a feeding tube. Somehow, in a complete coma, it is being kept alive.

One search engine, a little company called Google, figured out how to make money.

One quick story: I was a venture capitalist in 2001. A company, Oingo, which later became Applied Semantics, had a technique for how search engines could make money by having people bid for ads. My partner at the firm said, "we can probably pick up half this company for cheap. They are running out of money." It was during the Internet bust.

"Are you kidding me, " I said. "they are in the search engine business. That's totally dead." And I went back to playing the Defender machine that was in my office. That I would play all day long even while companies waited in the conference room. (See: “10 Unusual Things I Didn’t Know About Google, Plus How I Made the Worst VC Decision Ever“)

A year later they were bought by Google for 1% of Google. Our half would’ve now been worth hundreds of millions if we had invested. I was the worst venture capitalist ever. They had changed their name from Oingo to Applied Semantics to what became within Google…AdWords and AdSense, which has been 97% of Google's revenues since 2001. 97%. $67 billion dollars.

Don't worry.  I'm getting to it.

(Yahoo won hundreds of millions from Google on the Overture patent even before Google amassed the bulk of their $67 billion in overall revenues from AdWords)

Fast forward. Overture, another search engine company that no longer exists (Yahoo bought it) files a patent for a bidding system for ads on a search engine. The patent office says (I'm paraphrasing), "you can file patents on A, B, and C. But not D, E, and F. Because Ken Lang from Lycos filed those patents already."

Overture/Yahoo goes on to successfully sue Google based on the patents they did win. Google settled right before they went public but long before they achieved the bulk of their revenues.

Lycos goes on to being a barely breathing, comatose patient. Fast forward to 2011. Ken Lang buys his patents back from Lycos for almost nothing. He starts a company: I/P Engine. Two weeks ago he announced he was merging his company with a public company, Vringo (Nasdaq: VRNG). Because it's Ken, I buy the stock although will buy more after this article is out and readers read this.

The company sues Google for a big percentage of those $67 billion in revenues plus future revenues. The claim: Google has willfully infringed on Vringo – I/P’s patents for sorting ads based on click-throughs. I remember almost 20 years ago when Ken was working on the software. "Useless!" I thought then. Their claim: $67 billion of Google's revenues come from this patent. All of Google's revenues going forward come from this patent. And every search engine which uses Google is allegedly infringing on the Vringo patent and is being sued.

Think: Interactive Corp (Nasdaq: IACI) with Ask.com. Think AOL. Think Target which internally uses Google's technologies. Think Gannett, which uses Google’s technology and is also being sued. Think, eventually, thousands of Google's customers who use AdSense.

Think: "willfully". Why should you think that? Two reasons. Overture already sued Google. Google is aware of Yahoo/Overture's patent history. The patent history officially stated that Ken Lang/Lycos already has patented some of this technology.  What does "willfully" mean in legal terms? Triple damages.

Why didn't Lycos ever sue? After Lycos had its massive stroke and was left to die in a dirty hospital room with some uncaring nurse changing it's bedpans twice a day, Google was STILL Lycos's biggest customer. Why sue your biggest customer? Operating companies rarely sue other operating companies. Then there are countersuits, loss of revenues, and all sorts of ugly things. The breathing tube would've been pulled out of Lycos and it would've been left to die.

Think: NTP suing RIMM on patents. NTP had nothing going on other than the patents. Like Vringo/Innovate. NTP won over $600 million from RIMM once Research in Motion realized this is a serious issue and not one they can just chalk up to a bad nightmare.

(the beginning of the end for RIMM)

Guess who NTP's lawyer was? Donald Stout. Guess who Vringo's patent lawyer is? Donald Stout. Why is Donald Stout so good? He was an examiner at the US Patent Office. He knows patents. They announced all of this but nobody reads announcements of a small public company like Vringo. It's hard enough figuring out how many pixels are on the screen of Apple's amazng iPad 3.

Well, Google must have a defense? Even though their AdWords results are sorted by click-throughs in the way described by the patent maybe they sorted in a different way (a “work-around” of the patent), and didn't infringe on the patent.

Maybe: But look at Google economist Hal Varian describing their algorithm right here in this video. And compare with the patent claim filed in court by Vringo. You decide. But it looks like the exact same to me.

Maybe: But does Google want to risk losing ten billion dollars plus having all of their customers sued. The district the case is getting tried in rules 70% in favor of the plaintiff in patent cases. Most patent trials get settled on the court steps.

Maybe: But then there's still Microsoft /Yahoo search which, by the way, sorts based on click-throughs and has not been sued yet.

Guess what? Google's patent lawyer is Quinn-Emmanuel. They are defending Google. Oh, and here's something funny. Guess who Yahoo's lawyer is? Yahoo is suing Facebook for patent infringement in the search domain. Quinn-Emanuel. So the same lawyer is both defending and accusing in the same domain. Someone's going to settle. Everyone will settle. If anyone loses this case then the entire industry is going down in the same lawsuit and the exact same lawyer will be stuck on both sides of the fence. I'm not a lawyer but that smells. The trial is October 16 in the Eastern District Court of Virginia and will last 2 weeks. An appeal process can take, at most, a year.

I've known Ken for 23 years. I've been in the trenches with him when he was writing what I thought was his useless software. I watched his company get bought and we've talked about these technologies through the decades.

I've read the patent case. I watched Hal Varian's video. Also look at this link on Google's site where they describe their algorithm. Compare with the patent claim.  I have a screenshot if they decide to take it down. $67 billion in revenues from this patent. Imagine: double that in the next ten years. Imagine: triple damages.

Vringo will have an $80 million market capitalization post their merger with I/P. NTP won $600 million from RIMM using the same lawyer. RIMM's revenues are a drop in the bucket compared to Google. And compared to 1000s of Google's customers who will be embarrassed when the lawyer shows up at their door also. That's why I made my investment accordingly. Is Google going to take the risk this happens?

I doubt it.

You can think to yourself: “ugh, patent trolls are disgusting”. But the protection of intellectual property is what America is built on. Smart people invent things. Then they get to protect the intellectual property on what they invents. Other companies can’t steal that technology. That’s why we have such a problem outsourcing to China and other countries where we are worried they might steal our intellectual property. Patents are the defense mechanism for capitalism.

Ken can perform miracles. But no miracle would save me. At the end of one evening of Go playing and beer drinking in 1990 we gave two girls our phone numbers. I don't know if Ken ever got the call. I didn't. But I guess I'm happy where it all ended up.

Here Are The Women of Y Combinator And They Are Awesome

Posted: 30 Mar 2012 06:40 PM PDT

Olga-Vidisheva

I would normally rather have a root canal instead of write about the issue of women in technology. I just find most essays on this really tedious and obvious. (Sorry Alexia.)

But I do want to point one thing out. When I went to my first Y Combinator Demo Day three years ago, there was one woman. At this week’s Demo Day, there were six companies with one or all female founders among the 66 startups in the class.

I’m going to keep this post simple. No complaining. Less navel gazing. Just more role models. So here are the women of Y Combinator and they are awesome. (Update: We’re missing two at the moment, but they will be added soon hopefully. They are Tracy Young of PlanGrid and Somaira Punjwani of MedMonk.)

And ladies, if you’re interested in joining the next class, the deadline just passed. But there are two classes a year, so the next one will come up soon.

Nikki Durkin, 99Dresses

Durkin wrote her first business plan when she was eight years old. As a girl growing up in the Australian countryside, she desperately wanted a horse. After begging didn’t work, she biked down to her local co-op, determined the price of hay, calculated out operational expenses and wrote a cost-benefit analysis, even sticking in a risks section just in case the horse died.

“Ever since then, I’ve been pretty good at figuring out how to get what I want,” she said.

At 15, she and her thirteen-year-old brother started their first online business called KultKandy, where they designed T-shirts and drop shipped them from China.

While in college, she came up with a concept around dress swapping. She put her idea on Facebook and sent it out to friends in Sydney. In less than three weeks, suddenly 20,000 women signed up from around the country.

“It wasn’t really planned out to the nth degree, but it really resonated,” said Durkin, who is now 20 years old. “Girls absolutely loved it.”

The idea was to have a market where women post pictures of their clothing and swap it. The seller would set the price and handle shipping costs. Instead of using a real currency, Durkin wanted to use a virtual one so that the experience would really feel guilt-free. She asked the community for a name for the virtual currency, and they came up with “Buttons,” for which she now charges $1 a piece.

Within four months, women had uploaded 4,500 dresses and sold 3,500. She hadn’t even heard of Y Combinator until a business adviser Matt Barrie, who is the chief executive of Freelancer.com, told her about it.

“I told him that I’d love to get into the American market but I didn’t have any of the connections or a tech team,” she said. She rounded up a technical co-founder, applied, got in and moved all the way from Australia to the Bay Area. “There’s a lot of potential here,” she said.

Olga Vidisheva, Shoptiques

After making her way to the U.S. as a teenager from Kyrgyzstan and Moscow following the collapse of the Soviet Union, Vidisheva didn’t have much money to pay for living expenses and tuition at pricey Wellesley College. So she modeled on the side, doing everything from wearing Ben Sherman to appearing in vacuum cleaner ads.

Little did she know, that experience would pay off years down the road. Today she’s running Shoptiques, an e-commerce play that brings high-end boutiques online. Even before Demo Day, the company’s seed round was snapped up by three of Silicon Valley’s top tier venture firms including Greylock Capital, Andreessen Horowitz and Benchmark Capital.

Vidisheva’s modeling helped her understand how to present merchandise and do high-end photography for her clientele.

“Very highly curated models can work well,” she said, pointing to models like Fab, a design-centric flash sales site. “We’re creating a market for tastemakers.”

Shoptiques handholds sometimes very tech shy fashion boutiques onto the web. Vidisheva’s startup eats the up-front costs of building the e-commerce presence and photographing the apparel. The company sends these shops the shipping labels, provides the tracking analytics and handles payment processing. Naturally, Shoptiques intends to make its money back through a revenue share on sales. It’s just launched with 50 stores around the U.S.

Vidisheva isn’t just a pretty face. She graduate Phi Beta Kappa and was one of two women out of around 100 men in her investment banking group at Goldman Sachs. In business school, she researched the plan for what would become Shoptiques for well over a year.

“I saw this huge gap in the market,” she said. “I wouldn’t have been able to breathe if I wasn’t doing this business.”

Paul Graham, Y Combinator’s co-founder, paired her with some alums who were behind Anyvite, an events invitation startup that came out of a mid-2008 class. Dan and Jeff Morin were thinking about next steps with their company, and Graham suggested they meet Vidisheva. After trial run where they worked together for a few weeks, they joined full-time on the startup.

“PG is amazing at figuring out people who will work well together,” she said.

Elli Sharef, HireArt

Growing up in Colombia, Sharef was lucky to have a strong female role model right by her side. Her mother had a Ph.D. in economics

“She’s a strong figure with opinions and she was an intellectual,” Sharef said. “I never thought about being a man or woman. She just told me to be ambitious, to do my thing and try and build something good for the world.”

Sharef’s company is attacking the HR and recruiting space. She’s a co-founder of HireArt, which is trying to ease that first step of sifting through an impossible number of resumes.

HireArt has job candidates actually perform a series of tasks or do video interviews. For example, if an interview candidate says they are an expert in Excel, they can demonstrate their skills on HireArt by creating an Excel model using a dataset.

“I saw how hard it was to hire the right person. Everyone knows that the right person can 10X your team,” she said. “At the same time, it’s equally bad when you don’t hire the right person. It can be really terrible.”

HireArt’s site is growing 40 percent week over week and currently has 238 open positions. The company earns revenue every time a candidate is successfully placed, the way a good recruiter might earn a fee or a salary percentage if they find a good hire.

To get into Y Combinator, Sharef came together with a few friends from her university days at Yale: Dain Lewis and Nicholas Sedlet.

There’s a question of how easy it will be to scale HireArt’s model given the idiosyncrasies of hiring and finding a good cultural fit between employees and employers.

Sharef says that over time, the company will collect more and more data from employers about interview questions or tests that are strong predictors of success.

“We really try to work with data to understand which questions work the best. You can think about it like designing the SATs for different jobs,” she said, pointing out that one of her co-founders has experience working with huge data sets as a commodities trader and quant.

Kathryn Minshew, Alex Cavoulacos and Melissa McCreery of The Daily Muse

This trio met on their first day at consulting giant McKinsey. After finding that they worked well together through their two-year analyst stint, they started thinking about what to do next.

“While we felt like we got a lot of great training at McKinsey, we felt like there wasn’t a go-to resource for young women who wanted career advice,” McCreery said.

They had worked on a previous startup before, but then decided to start over with a new concept called The Daily Muse, a career resources destination for high-achieving young women. They packed it with advice on salary negotiations, interviews and how to manage people for the very first time.

But there was a lucrative piece that was missing — job search. Because the site had started attracting a small, but valuable audience of young women from top-tier universities, employers reached out wondering how they could recruit some of these visitors.

“Talented people choose jobs, not the other way around. So we realized there was a need for us to profile awesome companies,” she said. ”Women and men look at things differently. Women will go to a store and browse. But job search is built around knowing what you want and going after that.”

So The Daily Muse has these immersive company profiles, which tell the story of the company’s culture and explain what it’s like to work there. There are video interviews with current employees and professional photos of the office space. ”We want to be the go-to career resource for young, professional women, and now we’re also helping them discover cool places to work,” she said.

McCreery says that The Daily Muse already has 25 paying companies. Monthly fees are variable, but a ballpark range puts them around $1,500. Then there are another 70 companies that are on the waiting list.

Admittedly, any content-centric play is going to have issues scaling. But McCreery says the team has experience. ”We’ve never seen ourselves as just a media company and we’ve done scaled content before,” she said, saying that the site the team last worked on had 200 writers and a full-time editorial staff of five. The company is working on training three full-time employees to make the company profiles.

Hallmark Greets Digital, Acquires SpiritClips To Let You Send Photo/Video E-Cards

Posted: 30 Mar 2012 04:15 PM PDT

Hallmark SpiritClips

Photos and video can be even more personal than a handwritten card. That’s why Hallmark has just acquired SpiritClips, an online video production and streaming service that also makes personalized digital greeting cards. It looks like Hallmark customers will soon be able to create and send e-cards by uploading their own photos or choosing from video content created by SpiritClips.

Hallmark already has its own line of animated video e-cards, but they’re not very personalized. As more of our intimate connections happen online, the SpiritClips acquisition will let Hallmark stay relevant rather than living off its dead-tree printing business.

SpiritClips has been running a $3 to $5 a month subscription service where users could get streaming access to an array of heartwarming, family-friendly films and documentaries produced by the company and sourced from elsewhere. Customers could also create personalized digital greeting cards where they upload photos and SpiritClips then collates them into videos. Now its content, team, and tech will serve Hallmark customers.

The two companies were already working together, as SpiritClips is the official online, on-demand, and streaming-to-tv provider for Hallmark’s Hall Of Fame inspirational film series. Hall Of Fame has been delivering original content to TV since the 1950′s, and the SpiritClips production staff should make its films even warmer and fuzzier. The startup’s team will continue to operate from its California headquarters rather than moving in with Hallmark in Kansas City, Mo.

While services like Animoto may offer more powerful photo and video editing tools for creating e-cards, they could be too complicated for the average Hallmark customer. Hallmark could use SpiritClips to make it as simple as possible to create e-cards full of user generated content. That way Hallmark could could bring even its least-savvy offline customers into the modern age where 1s and 0s can express love.

“Girls Around Me” Creeper App Just Might Get People To Pay Attention To Privacy Settings

Posted: 30 Mar 2012 03:30 PM PDT

girlsaroundme1

Cult of Mac has a great write-up of an app for iOS called Girls Around Me, which essentially displays the public check-ins and profiles of girls around you. With a little shift in context it could easily be confused for a hot new startup (discoverability meets speed dating!), but no, it really is just a way for guys to creep on nearby girls who have failed to lock down their info.

It’s sad, but maybe something like this is what people need to shock them into understanding just how much information they put online.

The app itself is pretty much straight-up stalker material, but the fact is it uses publicly available information — information that, really, is being deliberately broadcast. There is a larger debate to be had about the nature of privacy and how information like location and profiles should be handled, and many subtle points to be made. But right now it seems that things must be done in broad strokes, and it’s mainly broadly offensive things like this app that will bring attention to the issue.

It’s perfect fodder for evening news debates: “After the break, we talk with our tech experts about a new app that lets you track women in your area without their knowledge.” And that’s a good thing: the more exposure the problem gets, the better. Many of the people being tracked by this app, male and female, haven’t even considered the idea that their movements might be tracked systematically by a stranger.

For example: all these options in Foursquare default to on, which is really fine, since after all the service is about sharing your location. And linking it to your Facebook or Twitter account is a natural step for many. But at the same time it’s easy to fail to understand that one is providing a sort of path that strangers can follow from a face on the street to a name, other photos, current location, and a number of other things.

Girls Around Me is a shortcut for creeps, but it’s not like it had to do anything illegal or complicated to get this information. A handful of public APIs is all it took to put a faces on a map and link them to a trove of personal data.

Apps like this one are distasteful, sure, but they are also important ways to show how exposed many of our friends and peers are. An understanding of social media is not prerequisite to its use, and many are ignorant of the level to which their actions and data are public. With any luck, Girls Around Me and its ilk will convince these people to take their own privacy seriously.

Update: Foursquare has reached out to say that the app was in violation of their API policy, so they’ve revoked access. I feel safer already!

Groupon’s Profit In 2011 Was Actually $22.6 Million Less Than They Previously Said

Posted: 30 Mar 2012 02:45 PM PDT

groupon_logo

Daily deals site Groupon today issued a pretty significant revision of the financial results it previously reported for the fourth quarter and the full year of 2011.

According to the company, it actually made $14.3 million less in revenue during the fourth quarter of 2011 than it previously reported — $492.2 million, compared to the previously stated $506.5 million. It also spent more in operating expenses than it previously said it did — resulting in its Q4 operating income and net income being $30 million and $22.6 million less, respectively, than the company initially said it was.

How did this mixup occur? Groupon said in a filing with the Securities and Exchange Commission that the revisions “are primarily related to an increase to the Company's refund reserve accrual to reflect a shift in the Company's fourth quarter deal mix and higher price point offers, which have higher refund rates.” (Full disclosure: I’m not sure what that means.)

Not surprisingly, Wall Street was none too happy about the news. Groupon issued the revision on Friday afternoon after trading stopped for the week, but at the moment (2:45 PM Pacific Time) the company’s stock price is down 6.4 percent in after-hours trading. The company’s stock price as of market close today was $18.38, which was already well below the $20 share price of its initial public offering back in October.

Groupon’s accounting practices have raised many eyebrows in the tech and business worlds, particularly in the run-up to its stock market debut last fall, so this is not a completely unexpected situation. Going forward, though, the company vows that it has its financial house in order. Groupon’s CFO Jason Child said in a press release today: “We remain confident in the fundamentals of our business, as our performance continues to highlight the value that we provide to customers and merchants.”

Evinar – A Google Hangouts For Facebook That Broadcasts Anything (Except The Audience)

Posted: 30 Mar 2012 02:36 PM PDT

Evinar Screenshot

With Evinar, you can’t bring audience members onto a live streaming stage with you, but you can broadcast anything else. Evinar is a new Facebook Page app launching today via TechCrunch that lets you stream to a live audience nearly nearly any type of content, including YouTube, Ustream, Hulu, Facebook photos, Flickr, SlideShare, tweets, or uploaded text and images.

Evinar definitely lacks interactivity. You can’t collaborate or video chat with the first 10 viewers like on Hangouts, or pipe in the webcam streams of any audience member like promising startup OnTheAir. Plus you can’t stream your own webcam directly. Still, web celebs and thought leaders could use Evinar to connect with their fans in more ways than a standard video stream.

Hosts control Evinar from a separate web interface, while viewers watch via the Evinar app on the host’s Facebook Page. Setting up a broadcast takes just a few seconds, and then you can promote your Evinar event with tweets and Facebook updates, unroll the graphic curtains on your stage, and start broadcasting one of the supported content types. You don’t even need embed codes — just paste in a URL from your address bar and Evinar scrapes and embeds the content.

Evinar lets you broadcast to up to 50 viewers for free, so if you’ve got a Facebook Page you could watch YouTube videos with friends or show them your vacation photos. Premium accounts cost between $9 for 500 simultaneous viewers and $49 a month for 10,000. Hosts can allow viewers to freely text chat with them and each other below the video, or require messages to be approved before appearing.

Evinar co-founder Adeel Raza tells me he built the product because he thought Livestream and Ustream were too focused on streaming webcam feeds rather than other content types. The team proofed the idea for a Facebook Page to fan communication app with a group chat app called Clobby that it says has received 3.5 million installs. Ad revenue from Clobby is giving the bootstrapped company some runway, but it hopes premium account subscriptions will eventually support it.

For now Evinar’s biggest strength is that viewers don’t need to download anything or have a Google+ account to watch. Otherwise Hangouts is a better, much more interactive solution. The lack of a native, direct video streaming option in Evinar is a big annoyance, but the team tells me it’s currently building that functionally on top of the TokBox OpenTok API. The ability to watch from outside Facebook would be nice too.

My biggest gripe with Evinar, though, is that most of the content types including Facebook photos, twitter content, and SlideShare can only be broadcast from a paid account. If Evinar is going to grow, at the very least it needs to make these features available for all users to demo. So in conclusion, a cool app that could kill itself by trying to monetize too aggressively.

Ultra Disappointment? Nah, Ultrabooks Are Just Getting Started

Posted: 30 Mar 2012 02:16 PM PDT

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This year was supposed to be the year of the Ultrabook. It was supposed to be the year where svelte notebooks became standard. It was supposed to be the year that Intel’s latest ultra-mobile platform gave Windows PC makers something to celebrate.

But that’s not happening. At least not yet. And that shouldn’t come as a surprise.

PCs are struggling in this age of the iPad and shipments fell 6% in the last few months of 2011. Gartner expects PC shipments to grow just 4.4% in 2012. A Gartner analyst told TechCrunch that consumers just aren’t replacing existing PCs with new models. The one bright spot is Apple who managed to increase its 4Q2011 shipments by 21%. Intel designed the Ultrabook platform to allow other PC makers to quickly replicate Apple’s formula for the MacBook Air.

Intel coined the term Ultrabook to refer to a very thin notebook that uses a low-voltage CPU, SSD hard drive, long battery life, and ideally, a price under $1,000 — so in other words, a MacBook Air clone.

The first crop of of these thin notebooks hit last fall from Asus, Acer, Toshiba, and Lenovo. These models were priced around $1,000 and offered a fair balance of computing power and battery life — but most reviews still favored the Ultrabook’s chef competitor, the Apple’s MacBook Air.

Several key Ultrabooks were announced at CES 2012. Dell announced the carbon-fiber XPS 13, HP revealed the entry-level Folio 13 and high-end Envy 14 and Samsung unveiled the Series 5 and Series 9 Ultrabook, with the former challenging the traditional definition of an Ultrabook thanks to an optical drive.

For the most part the tech press was generally excited about these new models. Besides the Samsung Series 9 which comes out next month, all of these models are currently available. But they don’t seem popular yet. The Asus Zenbook, which was released back in October of 2011, is the lone Ultrabook on Amazon’s list of best selling notebooks. Neither Best Buy nor Newegg list an Ultrabook on their best sellers lists. On all three sites consumers overwhelmingly favor inexpensive Windows notebooks or pricy Apple MacBooks.

The Ultrabook is likely falling victim to past computer selling strategies. For years Windows PC makers raced to the bottom, conditioning consumers into valuing price over portability. Now, when PC makers are trying to hawk pricy, but very nice computers, consumers are seemingly ignoring the offering. They’re instead opting for cheap, bulky, but in many cases, more powerful notebooks than Ultrabooks that cost twice as much.

CNET suggests that Ultrabooks are done, killed by the PC industry. By including optical drives and traditional spinning disk hard drives, they’ve diluted the meaning of the Ultrabook, says CNET. That’s fair, but at the same time major product changes cannot happen in a period of several months. Ultrabooks are just 6 months old. PC makers cannot simply pull the plug on their low price options, which consumers are currently favoring. Samsung, the main example in CNET’s article, is including familiar elements in its Ultrabook offering. Believe it or not, some consumers still want optical drives in their computers. They shouldn’t have to slum with an 8-pound monster just to have a DVD drive.

It’s a bit premature to call Ultrabooks a failure. Intel delayed the next-gen platform that was supposed to drive Ultrabook prices lower while increasing their overall power. Meanwhile, retailers and PC makers must retrain consumers to stop looking at the raw clock speed and hard drive size and instead think mobility with low-voltage, but still capable, CPUs and small SSD hard drives. If these marketers do it right, the term Ultrabook will never be associated with a certain sub-set of computers. The average consumer will just naturally gravitate towards the new models that happen to be a tad more expensive, but also thin and light.

When Intel unveiled the Ultrabook in the middle of last year, part of the excitement came from the high-end feel of the computers; MacBook Airs for the everyman. The move to thin and cheap computers will happen. Ultrabooks are still the future even if these notebooks do not fit Intel’s definition for several generations.

Twitter Takes Tweetdeck Offline After Apparent Bug Opens Up Access To “Hundreds” Of Accounts [Back Now]

Posted: 30 Mar 2012 01:46 PM PDT

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Twitter has taken its Tweetdeck app offline after an apparent bug has possibly given some Tweetdeck users access to others’ accounts.

A Sydney, Australia-based Tweetdeck user named Geoff Evason says he discovered today he was somehow able to access hundreds of other accounts through Tweetdeck. In an email to TechCrunch, he explained the situation like this:

“I’m a tweetdeck user. A bug has given me access to hundreds of twitter and facebooks account through tweetdeck. I didn’t do anything special to make this happen. I just logged in one day, the account was was slower than normal, and I could post from many more accounts.”

He provided more details in a follow-up email:

“I normally use the tweetdeck web client. A few days ago it started freezing when I logged in. Today I downloaded the native mac client, and it crashes too, but not before it shows me some streams and lets me post.

He also Tweeted about the situation here:

And demonstrated that he could access another account by sending this Tweet:

Other accounts may well be affected, as Twitter quickly shut off access to Tweetdeck entirely to “look into an issue.” They’ve offered us no comment other than their Tweet:

Tweetdeck is an app beloved by the “power user” set for posting and managing messages to Twitter. Tweetdeck was previously a standalone company before it was acquired by Twitter in May 2011 for some $40 million.

Update: The company now says it’s back online with minimal damage.

  TweetDeck is now back online.

As soon as we learned about the issue today, we took TweetDeck down to diagnose the situation. We discovered a bug that caused a very small number of TweetDeck users to have access to other TweetDeck users' accounts. (The accounts that could be accessed were random; it was not possible to select specific accounts and access them.)

No one’s password was compromised, and we aren’t aware of any instances where this access was used maliciously. As a precaution, we removed account credentials associated with affected TweetDeck users; they will need to log in to authorize the TweetDeck application to access their accounts.

Ingrid Lunden contributed reporting to this story.

Gillmor Gang Live 03.30.12 (TCTV)

Posted: 30 Mar 2012 01:01 PM PDT

Gillmor Gang test pattern

Gillmor Gang – Robert Scoble, John Taschek, Kevin Marks, Rob La Gesse, and Steve Gillmor. Recording has concluded.

Inside Best Buy: An Anonymous Store Manager Speaks About Recent Changes

Posted: 30 Mar 2012 11:56 AM PDT

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From the outside, we early adopters see Best Buy as a dinosaur in a dying world. The company recently announced the closing of 50 stores in the U.S. and 400 layoffs, mostly in corporate. It would be easy to say “Good riddance” and ignore the slow decline of bricks and mortar, but I wanted to speak to someone inside the company.

I got a hold of a manager who wished to remain anonymous and was considered a solid and dedicated employee. I asked him what it’s like inside his store right now.

“Basically what’s going on is that we got to work and heard about the 50 store closings and we started wondering about job security. Immediately my reaction was ‘Oh, crap, what am I going to do?’” he said.

Management told the employees that the stores to be closed were “bottom performers” and that all of the job cuts were “almost exclusively at the corporate level.” In an organization as Byzantine as Best Buy – simply spreading news of the cuts will take a week as corporate talks to management, who in turn talks to the districts – the move to “cut the fat” heartened his employees.

Best Buy will also open 100 or so new Best Buy Mobile stores with a smaller footprint. There they will sell higher margin items like phones and mobile devices.

“It’s an $800 million cost reduction,” he said. Employees will also be part of a newer profit sharing structure, essentially “raising wages.”

“A lot of these trims are happening so they can expand the appliance market and the high end computer market along with custom integration and whole home networking,” he said. “I’m really excited about that. That they’re expanding that from West Coast to East Coast is a huge opportunity.”

Even the long-daunting price differential between online stores and physical Best Buy shops is slowly changing. For example, there is a new “unilateral merchant retail pricing” rule appearing in some distribution contracts which means a merchant cannot sell an item below the UMRP without facing a fine. This means Best Buy and Amazon would both be forced to sell at the UMRP and no lower.

“Works in huge favor for brick and mortar stores,” he said.

While he feels comfortable and he hasn’t been fired, he’s hedging his bets by going back to school. “Everyone was nervous,” he said. “Once they found the facts, they got more comfortable. We’re basically repositioning ourselves to be more like Starbucks. More, smaller stores and a focus on premium items.”

“It did shake me up a little bit,” he said. “Just in case something doesn’t go right I want to be able to do something else.”

Is There Money To Made In The DIY Sentry Gun Open Source Scene? Yes.

Posted: 30 Mar 2012 11:49 AM PDT

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It’s hard to forget that scene in the Graduate when the young, confused Benjamin is approached by a family friend who tells him the future in two words: sentry guns. Now you, too, can enter this lucrative world with Project Sentry, an open source tracking sentry gun system that uses a webcam to scan the scene and take down your prey.

Built by Rudolph Labs, this project involves a sturdy tripod, an airsoft or paintball gun (or real gun) and a PC. The PC uses a webcam to scan the scene and reports back when there is movement. When the sensor finds a target, it can stick to it and fire at will. It can even anticipate where the target will move, ensuring a steady stream of hot lead during your autonomous sentry operations.

The parts list, without computer, is about $110 and the makers warn that the project could take a bit of time:

) It’s going to take up all your free time. This will take a lot of effort, probably a few afternoons to build it, then some more work to get it set up with your computer. And, if you are a truly inspired person, you won’t want to stop tweaking and personalizing it after it is finished.


Remember: if you don’t do it right, it’s not worth doing at all, so make sure your first sentry gun is your best one. Show your future employers that you have the gumption, the know-how, and the sociopathic desire to anonymous gun down everything in your path with an unfeeling robot. It’s the only way to make it in the world these days.

Amazon’s Appstore Generates More Revenue Per Daily User Than Google Play

Posted: 30 Mar 2012 11:42 AM PDT

Revenue Comparison - iOS vs Amzn vs Android-resized-600

According to new data released today by mobile analytics firm Flurry, Amazon’s Appstore for Android is generating more revenue per daily user than the Google Android Market, which was recently rebranded as the Google Play store. That shouldn’t be surprising, given that Amazon vets apps for quality, runs promotions to entice users to return daily, and perhaps most importantly, is able to leverage its established user base of Amazon account holders who already have credit card information on file – perfect for one-click checkouts.

To generate its figures, Flurry examined a set of top-ranked apps that have a presence on all three stores: Apple, Amazon and Google Play. Combined, the apps average 11 million daily active users.

Flurry set the revenue generated in the iTunes App Store to 100%, then compared the relative revenue generated by Amazon and Google to that of the App Store. In doing so, the firm found that Amazon revenue is 89% of App Store revenue and Google revenue is 23% of App Store revenue. Or, in other words, for every dollar an iOS app makes, it generates 89 cents in the Amazon Appstore and 23 cents in Google Play.

The findings back up Flurry’s December report, which found the Android Market to generate 23 cents of revenue for every dollar generated by iTunes.

Flurry cites Amazon’s online retail prowess as reason for its success. “Amazon, who invented the one-click purchase, perfected online shopping with data, efficiency, and customer service,” says Flurry’s VP of Marketing Peter Farago. Meanwhile, running a store – whether digital or retail – is not one of Google’s core competencies, he notes.

The data speaks to Amazon’s potential (or really, its place) as a viable third ecosystem for developers looking to generate revenue, which leaves one wondering where the Microsoft/Nokia ecosystem will fit in. Can the mobile app ecosystem support it as a strong fourth player one day, too?

Farago tells us that Flurry believes it can. “We believe that Microsoft + Nokia have a lot of the key assets to succeed, from a powerful OS, hardware know-how and, most importantly, building robust third party developer support. We are bullish on their progress,” he says.

He also suggests that Amazon’s success may leave other players considering similar tactics – that is, forking Android to build their own Android-flavored OS and associated app store.

Samsung, specifically, is called out as one company that might see this path as appealing. Farago explains that most OEMs want to differentiate their software, if for no other reason than to please carriers which want unique phones.

“Software is the easiest way to achieve this,” he says. “If all hardware makers have the same software, then differentiation drops.”

With Amazon’s growth as a revenue generator for developers as well as a new hardware competitor, Flurry thinks Samsung may be considering its own Android fork.

“If you put together the idea that OEMs want differentiation and Amazon is now competing strongly against Samsung in the tablet category, as well as its ability to make revenue for developers, then a fork for Samsung becomes a real strategic choice to consider,” Farago explains. “Let’s also not forget that apps will soon be on TVs, where Samsung already has a strong footprint in hardware. Finally, Samsung has Bada. If they haven’t switched to that already, then it’s because Android is working for them well enough, until possibly now. If that’s the case, a fork of Android again looks like an alternative to evaluate.”

Keen On… Chad Mureta: How Apps Can Change Your Life [TCTV]

Posted: 30 Mar 2012 10:58 AM PDT

Mureta

Back in 2009, Chad Mureta was an 18-hour a day real estate salesman living from one paycheck to the next. Driving home after a basketball game one evening, he hit a deer, flipped his truck over four times, mangled his arm and almost killed himself. Then, recovering in his hospital bed, Mureta – who knew nothing about technology or the Internet – was introduced to the app economy by a friend who gave him a newspaper article about how apps can generate significant revenue. When he got out of the hospital, Mureta borrowed $1,800 from his stepfather, built an app called Fingerprint Security Pro which eventually generated $800,000 in revenue. Mureta is now an app entrepreneur and, in good Tim Ferris style, travels around the world as a member of what he calls “the new rich”.

And you can be like Mureta, too! In his new book App Empire: Make Money, Have a Life and Let Technology Work For You, Mureta explains how the app business can transform all our lives. Earlier this month, Mureta came into San Francisco’s TechCrunch TV studio to explain not only how we can all become members of the new rich, but also to give his tips about the hot new areas of the app economy.

Second Prize Is A Set Of Steak Knives: MarGenius Is A Social Network For Networkers

Posted: 30 Mar 2012 10:42 AM PDT

Screen Shot 2012-03-30 at 1.32.35 PM

So you’re in town to follow up on some weak leads and your boss says you’ve got to stay put for a few more days because there’s an old lady out near Patton Road who is looking to buy and you call back and say you got to get back to HQ for some paperwork and your boss says “Make the most of it.” The only thing that counts in this world, friend, is getting them to sign on the line which is dotted. Am I right?

So you need some new leads, or at least some new people in your Rolodex. That’s where marGenius comes in. You import your Google or Microsoft address book and calendar (don’t worry, nobody else can see it) and it figures out if there are people you need to see and talk to near you, right in town there. Doesn’t matter if the lady near Patton Road’s crumb cake is from the store. You got four more new leads out of marGenius and you can give them a call or even schedule a meeting right from the app and ring a ding ding you’re up on the big board again, at least for a while.

And don’t tell me the leads are weak because they’re not weak. They’re solid. The app correlates people you know with people you know, kind of like LinkedIn, and then helps you introduce yourself. Mitch & Murray didn’t pay for these leads. You made these leads yourself. These leads are gold.

Founded by a small team in DC led by Saurabh Dharia and Sundeep Sanghavi, the app came about when the team members recalled ending up stranded in a strange city after a cancelled meeting. Instead of drowning their sorrows in Old Fashioneds, they decided to build a system that would ensure they never waste time out in Cedar Rapids again. They needed a method to network on the fly and thus marGenius was born.

Although not every meeting set up through the app will bring cash into the company, the networking opportunities it encourages are presumably priceless.

Unlike “free” social networks, marGenius is aimed at actually getting you some business, so they will eventually charge a small fee for use. You can use the app to plan trips, as well, by entering the name of a city you’re about to visit. Using marGenius’ opportunities engine, you can then figure out who’s who on the ground.

The app is in beta and supports data imports from Gmail, Hotmail, and Exchange. CSV support is forthcoming. And next time the boss asks you “You call yourself a salesman, you son of a bitch?” you can keep your head held high and your chin up and your eyes open and you can say to him “Yeah, I think so. And I know so, too, so stuff it.”

Product Page

PayPal Teams Up With Gas Station Chain On A Payment App And Fuel Discounts

Posted: 30 Mar 2012 10:40 AM PDT

cumby

There’s no shortage of apps that help people find cheap gas these days, but apps that let you pay for it? And ones that give you a discount for doing it? Sign me up. The Boston Globe’s Scott Kirsner reports that regional gas station/convenience store chain Cumberland Farms has done just that with their new SmartPay app, which in addition to letting users pay without leaving their seats, offers them a $.05 cent/gallon discount.

Here’s how it all goes down: once a driver signs in with a PayPal account, they can pull into a supported Cumberland Farms location and fire up the iOS/Android app or the mobile website. From there, the app uses the device’s GPS to hone in on the gas station they’re parked at, users punch in their pump number and voila — their gas charges are sent to PayPal, and users get an email receipt.

Ready from the bummer? The pilot program is currently live at 50 gas stations in Massachusetts for now, though Cumberland Farms CIO Dave Banks hopes to get the company’s 600 stations across the East Coast and Florida tricked out in the future.

The app is novel and all, but what really gets me is the discount — the margins on fill-ups can be pretty thin, so it’s a bit of a surprise to see a company dip prices like that. If we dig a bit deeper though, the reasoning becomes a bit more clear — according to Innovation Economy, Cumberland Farms approached Boston-based startup Fig Card about integrating their mobile payment tech into local gas stations. Fig Card was subsequently snapped up by PayPal last April, and they’ve apparently being working on it since. As it turns out, PayPal is actually the one funding that nifty discount in order to drive awareness around the app, and Banks says it could potentially reach as high as $0.10 off per gallon.

Cumberland Farms isn’t the first company to try a mobile payments model — apparently, a chain of gas stations called Murphy’s started letting people pay for their gas via text message late last year. It worked, technically, but the onboarding process seemed like a real pain in the rear. PayPal and Cumberland Farms have touched on what seems like a pretty frictionless way to make this payment model work (and a way to incentivize it), now all we need is for every gas station in the country to start doing it.

Netflix Sharpens Focus On DVDs With DVD.com, But Don’t Cry Qwikster. (It’s Staying)

Posted: 30 Mar 2012 10:39 AM PDT

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Netflix has been making a few moves to separate its DVD business more from its streaming operation, and today brings news of the latest move in that direction: the company has bought the domain name DVD.com, the company has confirmed to us.

The news raises questions of Netflix possibly getting ready to pull a Qwikster on us after all and separate its streaming and DVD businesses — something others have suggested it might do — but TechCrunch understands that there are no plans to spin off its DVD business into a separate company, à la the Qwikster strategy of last year that so qwikly spiraled into a PR disaster for the company, and was then abandoned.

News of the DVD.com domain purchase was first reported by Domain Name Wire earlier today. We reached out to Netflix, which told us that this was part of its bigger strategy to improve user experience around its DVD rentals business, a service it offers only in the U.S.

“In the U.S. we look to provide a great experience for our members, those who have DVD only, streaming only and those who have both,” a spokesperson told us. Indeed, on Netflix some reviewers pinpoint specific features in DVDs that do not appear on the streamed editions of certain pieces of content — for example extra features, commentary, and so on. Similarly, the streaming comments often related to the actual quality of the streams — again, not so relevant for DVD users.

Ratings, we understand, will continue to remain centralized and go across both streaming and DVD versions of the same piece of content.

Last time around, Netflix qwikly saw the err of its ways in trying to separate those two parts of its business, so this time around it’s very unlikely to try to repeat the same thing again.

At this point the DVD business is actually proving more lucrative in terms of revenues for Netflix than the streaming business. In Q4, Netflix had 11.1 million DVD subscribers, which represented revenues of $370 million. U.S. streaming subscribers for that quarter were nearly double, at 21.6 million, but only had revenues of $476 million.

Of course, there is likely to be significantly more overhead in running that DVD business longer term. But for now it seems that streaming isn’t big enough to really stand on its own for the company. Also, there are very likely more promotional costs in building out that streaming business — that includes the increasing costs associated with getting exclusive rights to content in the face of a number of competing services from Amazon, Google and others also going for same users, and the same catalog of films and TV shows.

What this will mean, effectively, is that DVD users will eventually have their own web site to visit to order their DVDs and otherwise manage their subscriptions, rather than have to navigate through a Netflix site that will most likely be more completely given over to streaming promotions.

By separating DVD and streaming customers more, there seems to be a bit of a question mark over how successful Netflix has been in upselling those DVD customers to streaming. Perhaps that was the original idea, but by separating them even more, it seems to imply that those customers are being found elsewhere more readily. So why not make the experience for the DVD users a little nicer in the process?

Engineering Serendipity

Posted: 30 Mar 2012 10:38 AM PDT

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I don't know if Highlight, Glancee, Banjo, or any one of those other startups you're now officially sick to death of hearing about are going to make it, but I know that for the first time in a long time, we're starting to move in the right direction in terms of mobile innovation. And no, I don't mean we need more people-stalking apps, I mean we need more passive use of our mobile phones.

Less life lived looking down means more life actually lived.

The trend that strikes me here as being important is not necessarily "ambient location" or even “people finders” – that’s just all we’re capable of today. The real end game is engineering serendipity.

Each of the new contenders, oddly, has decided to go after the same vertical: people tracking. Perhaps this is the more easy and obvious market to first attack, given the apps' abilities to run on top of existing social structures like Facebook or Foursquare. But arranging serendipitous encounters isn't always a function of who you know, it should also be a function of who you want to know. Or who you should want to know, even if you don't realize you should want to know them. That's a bigger challenge than any of the new socializing apps can address.

Consider this, instead, a giant alpha test in preparation of taking that next step.

To move forward, the metrics these startups should be obsessed with should not just be how many users signed up, how many downloads they have, or how many pings they sent out, but how many real connections between people are actually being made. This is the Holy Grail for engineering serendipitous people discovery: alerting users immediately that somebody is nearby, but also making sure that’s a connection the person actually wanted to make. (It's too bad all smartphones don't have a nifty proximity sensor in them that can detect when you're rapidly closing the distance between you and a fellow app user, for example. That would indicate a real connection! There are ways around this, but they're far more complex than tapping into a provided sensor like the GPS).

Case in point of what a poor serendipitous experience feels like: one of the top apps alerts me that Steve Wozniak is at the airport, and he’s even in my terminal! He’s having a bite at a nearby restaurant. I rush to the other side of the terminal (which was a hell of a lot bigger than I thought), and scope out the restaurant, but no Woz. I scope out the nearby gates, still no Woz. What happened? A little manual people-stalking of my own and I find his flight took off over an hour ago. Fail, fail, fail, fail. (True story, sadly.)

A good app wouldn’t have even mentioned he was there. A good app would wait until it could say, Steve Wozniak is at the airport…and HE’S RIGHT BEHIND YOU!

So yes, all these apps still have a way to go before they even work correctly at their primary function.

While I know that it’s one step at a time, I worry that the market will see these apps as tools that do only one thing – merely alerting us to nearby people of interest – and will later give up on them when the trendiness wears off. That concerns me because we’ll then lose sight of other, bigger challenges companies operating in this space could one day solve. Challenges that take time. Not months, but years: engineering serendipity is not just about the who, but also the what, where, how and why.

A little history: a couple of years ago, Google's then CEO, now Executive Chairman, Eric Schmidt spoke of a world where our phones alerted us to nearby shops and deals and discounts as we walked down the street, all personalized to our own interests. Serendipitous discovery of the world around us.

Now forgive me for saying so, but a world where Google knows what I want to do before I do it, gives me a chill. Can't someone else build this first, please? And build it on top of data that comes from everywhere, not just one big Google-owned database?

Apps could start by telling you who’s nearby, then slowly grow, until they could alert you about all sorts of things, and do so just as spontaneously.

One company already doing this, to some extent, is Foursquare. With its Radar feature, Foursquare is branching out from check-ins to become a tool for exploring by suggesting nearby places and alerting you to nearby friends. In terms of engineering discovery of the world, not just people, it’s already ahead of the trendy background location apps. As CEO Dennis Crowley explained, “what we have been doing with Radar is finding a way for people to use the app really without having to actually use it.” BINGO. But this is all such a new game; anyone can still win.

Engineering discovery is a complicated one to solve. For example, it's a combination of knowing not just where you say you like to shop, but where you've actually shopped; not just where you say you like to dine, but where you actually dine. It also needs to know what sort of activities you would want to attend (Concerts? Games? Family friendly outdoor festivals? Dog shows? Plays?), then ping you accordingly. It needs to tell you of a concert only when there are still tickets left. It needs to know personal details like your shoe size, shirt size, dress size, and then check the in-store inventory levels before it ever bothers you about a nearby sale. And so on. It needs intelligence. Otherwise, the damn thing will be way too annoying.

And yes, some of this may not even be possible yet. But it will be, so plan ahead.

Oh, and here's another tricky part: for any app to be able to truly be capable of serendipitous discovery, it would also have to surprise you from time to time with something that's just outside your typical interests, but where historical, aggregate data from a wide user base indicates that hey, you just might like this, too.

So how would any app be able to know all these things? Well, APIs, for starters. Many web companies provide them, but apps tend to build on top of only the social three (Facebook, Twitter, Foursquare).

How interesting would it be for apps to build on top of your preferred food-sharing and wine-tasting apps, your travel logs, your Amazon purchases, your credit card statements, your daily deal buys, your past check-ins, your Eventbrite ticket purchases, your Meetup groups, your Kindle e-book collection, your favorite shops at Fab and Etsy, etc., etc.? Oh, and all those your friends like too, of course?

Scenario: That guy browsing cookbooks at the bookstore knows your friend Julie and is currently reading the Steve Jobs bio (he’s got it on his Kindle, actually). PING!

Scenario: When you were in N.Y., you went to a restaurant your friend Joe recommended and loved it. This local restaurant is owned by the same folks and your friend Jim ate the ribs here two weeks ago and thought they were crazy good. PING!

Scenario: That little black dress that’s been sitting in your Amazon cart for 2 days looks a lot like the one this store is selling. And it’s half off. And they have your size in stock. PING!

Does any of that sound crazy? Then you’re not dreaming hard enough yet.

Or maybe it just sounds terrifying. Well, sorry (old fart?), but the machines are coming and they want to get to know you better.

Unfortunately, not all the data to build a (creepy) understanding of you and your behavior is available via API just yet, but by the time anyone could get around to expanding into all these verticals, that may change.

To be clear, the end result is not a scenario where every store you walk by blasts you with a geo-targeted deal, just one store does, and the result is incredibly, almost disturbingly, relevant. The apps don’t tell you about every possible dinner recommendation, only if the restaurant you’re considering now is any good. They don’t tell you about every person you’re somehow connected to nearby, only the ones you really want to know.

Or in other words: serendipity means you don't have to manually launch apps all the time to know what’s going on. The apps launch you.

They don’t constantly ping you, and bother you with every little thing. Every time the phone buzzes, it would feel random, but would be meaningful and important to address.

Looking at what we have now, well, let's just say we're far, far away from that vision. But in the people trackers, we see the first baby steps.

That’s why they’re interesting.

And, who knows, at the end of the day, maybe such a thing won’t even be an app, but an extension of the handset itself. Maybe that’s what Siri and its VPA brethren will become. A smarter Siri who doesn't just wake when you need something, but who, like a real-life assistant, would tap you on your shoulder and whisper, Pssst….Did you know?

Image credit: Flickr user ktoine
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