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Player 1 Start: Will The Wii U And Playstation Vita Fly Or Die? (TCTV)

Posted: 11 Jun 2011 07:33 AM PDT

Nintendo and Sony just announced the much-anticipated Wii U and the Playstation Vita last week at E3 and, well, we were pretty impressed. The Wii U, Nintendo’s new console, is a real step up for the brand as it adds HD game play and a unique new controller that incorporates third-screen features with Nintendo’s own paradigm-shifting controller style. The Vita is a little less exciting to console gamers as it’s a handheld, but it is definitely an improvement over the old PSP and PSP Go and looks to be a step in the right direction for the ailing Sony.

After a bit of deliberation, Erick and I were agreed on what would fly and what would die and, more important, which consoles would soon grace our living rooms. Picking a winner this early is obviously a bit difficult, but it’s interesting to see the growth and improvement of these two platforms over the years and we’re both pretty excited for a Mario- and Metal Gear Solid-filled future.

Check out or full coverage of the Wii U and the Vita here.

Food For Thought This Weekend: “Raising Capital Is Not The Same As Succeeding”

Posted: 11 Jun 2011 07:18 AM PDT

Seth Godin often writes short blog posts that makes (or rather, should make) one reflect for a not-so-short time. How’s that for kicking in an open door? At the risk of stealing the man’s thunder, let me copy-paste an excerpt from a blog post Godin published this morning, which resonated with me and I think will resonate with a lot of TechCrunch readers:

The goal isn’t to get money from a VC, just as the goal isn’t to get into Harvard.

Those are stepping stones, filters that some successful people have made their way through.

I don’t care so much how much money you raised, or who you raised it from. I care a lot about who your customers are and why (or if) they’re happy.

It’s a premise that’s rather easy to agree with. Of course raising capital doesn’t equal success.

Of course making (and keeping) customers happy is more crucial for any business.

VC funding is just one or more professional investors betting on people, an idea, a business model they believe in, knowing full well that only a small fraction of their portfolio companies will provide them with decent returns in the foreseeable future.

At the same time, we often congratulate entrepreneurs who contact us with information about their latest financing round, or with the recognizable name of his or her latest backer.

Perhaps it’s just become a habit, but then why did it become one?

Not every startup looking for financing gets funded, and some even die trying. Still, we are not easily impressed when startups do convince investors to back them, because we realize it doesn’t usually make a lot difference for the company’s chances of survival anyway.

At TechCrunch, we champion innovation. We love to try new stuff, and we certainly appreciate entrepreneurs who approach problems in ways others never thought of.

And yet, when we hear a startup got funding, we say: ‘congrats’ or ‘cool!’. I suspect that’s because we realize raising VC is not an easy thing to do for the large majority of entrepreneurs out there. No matter how you slice or dice it, raising capital consumes time, energy and resources that are often far better used for the startup’s business in question.

It can also be a stressful thing to do, so maybe us acknowledging that raising VC is not an easy feat, and congratulating entrepreneurs who do secure financing is another way for us to give them that extra nudge they might need to continue on their journey.

And yet, Godin’s words have made me wonder whether patting people on the back when they close their funding rounds is actually the right thing to do.

Maybe we should be encouraging them to genuinely try to change the world for good with the money they’ve just raised instead, and remind them that VC is indeed only one of many stepping stones they’ll need in order to make it to where they want to go. Discuss.

(Image via Flickr user Evan Prodromou, used with permission)

CrunchGear Reviews The Fretlight FG-421 Guitar

Posted: 11 Jun 2011 07:09 AM PDT

Years ago I thought I could be in a rock band (right around the same time I thought I could make money writing poetry) but I eventually resigned myself to the fact that I’d never be a great guitarist. I didn’t have the drive to practice and the act of soloing confounded me completely. How did you play along with the Zep and the Beatles? How do you get great? How do you meet groupies? As time passed, I gave up and my guitars lay fallow in the corner, the groupies forgotten.

However, I think Fretlight may have given me a new lease on life. Fretlight makes guitars with LEDs embedded in the neck. You connect these guitars to a computer, run a MIDI player, and then follow along with the lights as the music plays. You can slow things down or speed them up and loop parts of the song over and over to practice certain riffs. The Fretlight will literally show you how to play all of your favorite songs.

Read more…

Groupon: Still Getting It In The Ass In China

Posted: 11 Jun 2011 12:19 AM PDT

Andrew Mason has been visiting Beijing and Groupon HQ has finally realized there are some problems in China.

On the Forbes website, Rebecca Fannin reports:

CEO Andrew Mason just arrived in China and hasn't wasted time shaking things up. Four expatriate executives at Groupon who were recruited from rival site Ftuan just a few months ago will be leaving Groupon China.

This seems to be a belated response to the very obvious problems at Groupon China that seasoned observers have been noting since the group buy website first opened up shop in Beijing and Shanghai:

Groupon China was started and has been managed by a bunch of trendy-looking but ineffectual foreigners who can’t speak Chinese and are completely clueless about China.

Firing four unnamed foreigners is not evidence that anything has changed.

Meanwhile, Bloomberg has this report (which I’d wager a PR company helped put together) talking up Groupon’s Chinese partner Tencent:

"Tencent's scale and user base gives Groupon an advantage, and China's group-buying market is still at an early stage and has a lot of upside," said April Su, an analyst at iResearch in Beijing.…

"We think we've found an excellent partner in Tencent and we've been very pleased with the progress we've made," Mason told reporters in Beijing today, before leaving Ouyang to field queries on Gaopeng…

Gaopeng is seeking an edge in China with "world-class brands," like Apple Inc., Ouyang said today.

"Our strategy is very strict selection of the merchant deals," Ouyang said. "It's not only about discount service but it's also about being a city guide, a lifestyle."

A few problems:

1. Tencent will end up shafting Groupon
If the Groupon model works in China, Tencent has nothing to gain by partnering with Groupon. Tencent has its own Groupon style offerings, and there is no need to make Groupon work for them to profit by the model.

2. Apple and “lifestyle”: Ha ha ha ha ha ha ha

This is too rich:

Gaopeng is seeking an edge in China with "world-class brands," like Apple Inc., Ouyang said today.

"Our strategy is very strict selection of the merchant deals," Ouyang said. "It's not only about discount service but it's also about being a city guide, a lifestyle."

So, Apple is going to sell discounted iPads in China?

Yeah right, why would Apple do this when there are already Chinese people willing to sell their kidneys to get an iPad, or get into fistfights at the Apple store just to get hold of one.

Apple and Groupon China? Simply ridiculous. Even more ridiculous is the “city guide / lifestyle” nonsense.

I first worked on city guide / lifestyle print magazines in the late 1990s in China:

There is a small amount of money to be made in city guides and lifestyle guide products in big Chinese cities. There is quite a bit more money to be made in Internet and media products that help position brands as desirable for the new rich and emerging middle classes (e.g. Cosmopolitan China magazine and Vogue China , possibly the P1 social network and the Financial TimesFT Rui magazine).

There is also money to be made and a huge user demand for Dianping, which is like the Yelp of China that offers real, honest user reviews of restaurants.

But, based on my personal experience since 1997, every foreign-funded company I have ever encountered in China talking about making money from local vendors based on a “lifestyle” proposition has about a year or so before bankrupting itself or being run out of town.

3. iResearch

A final note: I don’t know if Groupon is paying iResearch, but iResearch has a reputation in China for doing “research” for companies who pay them. Somehow, the companies always end up looking very good in their research reports.

It’s all pre-IPO spin. Groupon China is simply a way to bleed cash.

TechCrunch Turns 6

Posted: 11 Jun 2011 12:04 AM PDT

TechCrunch turns 6 years old today. Back on June 11, 2005, Michael Arrington wrote his first blog post. Then he started having parties in the backyard of his old house in Atherton, one of the YouTube guys showed up to one of them, there were lots more parties, and the rest is history.

Michael’s come a long way from those backyard parties around a campfire, and so has TechCrunch. We now have millions of readers, dozens of employees, and our gatherings have gotten quite large (2,100 people at the last Disrupt in NYC). Oh, and we are now part of AOL.

We couldn’t have made it this far without all of you, our readers, coming back day in and day out (sometimes hourly). And we wouldn’t even be here if it wasn’t for all the startups, founders, and tech companies large and small who give us so much to write about. So we may a little bit bigger now, but we’ll never forget that the best things start small—sometimes around a campfire.

Photo credit: FLickr/Tom Magliery

Joomla Quietly Crosses 23 Million Downloads, Now Powering Over 2,600 Government Sites

Posted: 11 Jun 2011 12:03 AM PDT

According to BuiltWith, of the top million websites using content management systems (or CMSes), three systems own more than 75 percent of the total market share: WordPress, Joomla, and Drupal. (All of which are open source, by the way.)

Many are likely most familiar with WordPress, which TechCrunch has covered quite a bit (and uses to power most its sites, for full disclosure). WordPress is the most popular CMS on the Web, running 62 percent of the top million websites that use a CMS, according to BuiltWith, with Joomla now ranking second at 10 percent and closing.

There are a ton of these content management systems out there, even though the top 3 claim most of the market share. And, as BuiltWith’s roster shows, microblogging and blog publishing services are often grouped in with CMSes — as some are able to be customized into a CMS — even though their scopes tend to be far more specialized. Services like Blogger and Tumblr, to name two, are sometimes lumped in with CMSes and have attracted a lot of coverage in the press, some of which is for good reason.

Because of this, services like Joomla seem to fly a bit under the radar. Or, at least so it seems with Joomla in particular, which has yet to be covered by TechCrunch. (Or has, at least, been covered minimally compared to 63 posts for WordPress.)

So what is this “Joomla”, and why should you care about it? Joomla is a free, open source CMS, written in PHP that uses object-oriented programming, storing data in a MySQL database, and does page caching, RSS feeds, printable versions of pages, news flashes, blogs, polls, search — things that every CMS should do.

And there are these impressive statistics: Joomla has now passed 23 million downloads, and currently stands at just over 23.5 million, to be precise. It owns 10.3 percent of the CMS market share, and BuiltWith shows it’s powering over 1.4 million websites. Joomla, for one, says that it’s impossible to know for sure, but estimates last year by FinishJoomla put that number between 1.5 and 2 million. Which admittedly seems small compared to the 23 million downloads.

Pure statistics are fine and dandy, but what’s led Joomla to become the second largest CMS on the Interwebs? This is an especially interesting question considering that, as an open source system, there is no figurehead or CEO pulling the strings, or making product decisions. Joomla is updated and expanded on, like WordPress(.org) and Drupal, by its community of developers.

But unlike Matt Mullenweg of WordPress (who, incidentally, was named one of the 50 most important people on the Web by PC Magazine) there is no “face” of Joomla; instead, it has been collectively run by the nearly 250K developers that use, the resource in which developers can build open source software projects, tools and extensions, for Joomla users. (And there are currently nearly 8K extensions available for the Joomla platform.)

Unlike, say Mullenweg’s Automattic, Joomla is loosely headed by, a non-profit entity that provides organizational, legal, and financial support to the Joomla community. The goal for OpenSourceMatters is to maintain Joomla’s open source nature, assuring that Joomla is a project that acts autonomously, is socially responsible, and remains accountable to its community.

According to Ryan Ozimek, president of Open Source Matters, the Joomla community has evolved significantly over the last 5 years, and in January of this year, OpenSourceMatters initiated some changes to the way the service is released to its users, that have already begun contributing to Joomla’s growth.

Namely, the service has moved away from a feature-based lifecycle to a time-based lifecycle, which means that Joomla now releases a new version of its platform every 6 months. Instead of having the lead developers writing the code behind each sporadic release of new features, Joomla allows the community of developers to make patches, fix bugs, tinker with the framework or the design for the end-user. Then, a the end of the 6 months, the OpenSourceMatters team merges everything together into a finished product, which is then released to the public.

Version 1.6, which was released in January, has been downloaded over 2.5 million times in the last 3.5 months, according to Ozimek, with 220 users now joining Joomla forums every single day.

Compared to Drupal, Joomla has traditionally been focused on smaller companies, novices, and those who aren’t necessarily experience developers, whereas the other has gone after enterprises and has a greater array of lumber and plumbing for heavier use cases. Drupal (and for full disclosure, I run a website using Drupal) also comes with a fairly steep learning curve. It’s not so easy to use right out of the box.

Once you’ve created custom fields, content types — on other words, dug into and played around with it for awhile — Drupal begins to shine. So, Joomla's strength in comparison is really that it’s ready to use; it requires no hardware investments or spending on software, and it works with a wide variety of SQL and noSQL databases.

Again, for a CMS that has nearly 24 million downloads, 10 percent market share, and 500K registered users in its forums, Joomla is relatively unheard of in the U.S. Another reason for this (and another one of its strengths) is that, since its inception, the service has been geared towards an international audience. Joomla is currently being used in over 200 countries, according to Ozimek, with more than 2,500 international government agencies using the service to run those websites. (NASA, the US Air Force and US Army, included.)

What’s more, Joomla has never taken in outside investment. Ozimek said that nearly 100 percent of the revenue for the non-profit has come from Google AdWords, or other advertising services, used across its network of websites — or from sponsorship.

Both in its open source nature, bootstrapped financing, international focus, and use among “the little guys”, Ozimek said, chuckling, Joomla has taken on somewhat of a “hippie vibe”. And, speaking like a true long-hair-type, when asked how he compares Joomla’s progress to that of its nominal competitors, Ozimek said that the goal is not grabbing market share from other platforms, the goal is showcasing the capabilities of open source communities and software. “Our competition is proprietary software”, he said. “We want to work towards a time when we’re all open coding”. What a hippie.

Contest Asks People To “Draw The Internet”

Posted: 10 Jun 2011 11:50 PM PDT

Can you draw the Internet? No seriously can you?

ArtWeLove, DeviantArt, digital ad agency Saint, The NYC Mayor’s Office of Media and Entertainment and The NYC Department of Education partnered up this Internet Week in a gallery exhibition of “Can You Draw The Internet?”, a contest that asks people to “capture the spirit of the Internet’s billions of pages in a single image.” Hmm … sounds like a Google job interview.

But more so.  In “Can You Draw The Internet,” digital artists like Douglass Rushkoff and Josh Harris joined schoolchildren in attempts to visualize what a networks of networks based on the IP protocol looks like. While the creative and digital artists received nothing but glory, the best student artist submissions received $100 gift certificates for art supplies. All submissions are being sold through Artwelove, the proceeds going to benefit NY public schools.

Defining let alone drawing something as complicated and ubiquitous as the Internet is a Herculean task, so props to anyone who entered this thing. I mean at this point 1/3 of humanity is online, so there are a lot more ways to win then to start sketching out individual data packets (I’m a huge fan of that USB brain piercing entry below).

So yeah “drawing the Internet” is hard, even for the most tech savvy. But if you’re in a pinch, just draw on the  best definition of the Internet I’ve heard so far, “It’s like all the world is in an room and the Internet is the air between them.”

My favorite entries, below.

EPIC Draft FTC Complaint Vilifies Facebook’s Facial Recognition

Posted: 10 Jun 2011 07:13 PM PDT

Earlier this week Facebook drew significant backlash over a feature that uses facial recognition to help users tag their friends in photos shared on the site. The feature isn’t new, but Facebook recently activated it by default for many users, drawing a wave of criticism including a probe from European Union privacy regulators (though Facebook later clarified that there isn’t a formal investigation under way). I’ve already shared my take on the issue: the EU complaints seem to have little to do with facial recognition and a lot to do with longstanding Facebook policies — and the feature in question is benign.

But plenty of people don’t share my stance, and now it looks like Facebook may be up against a challenge in the United States as well. We’ve obtained a draft copy of a complaint to the FTC penned by the Electronic Privacy Information Center (EPIC), and we hear that they’re trying to drum up support from other privacy organizations before they file the document.  We’ve contacted EPIC to clarify their intentions and will update if we hear back from them. But for now, we can still examine the complaint. Update: EPIC has written a post about the complaint here.

Parts of the document, particularly one section called ‘The Significance of Facial Recognition”, seem over the top. In it, EPIC discusses the use of facial recognition by various governments to keep tabs on people in public places, including a reference to China’s “All-Seeing Eye”. In other words, it points out that the technology can be used in scary ways, regardless of how Facebook actually intends to use it.

Likewise, some of the passages are seemingly intended to spook:

There is every reason to believe that unless the Commission acts promptly, Facebook will routinely automate facial identification and eliminate any pretence of user control over the use of their own images for online identification.


42. Facebook’s facial recognition technology works by generating a biometric signature for users who are tagged in photos on Facebook, i.e. using “summary data” from “photo comparisons.”

“Biometric signature” sounds pretty scary. But it apparently isn’t all that accurate — Facebook says that its technology couldn’t be used to identify any of its hundreds of millions of users simply by analyzing their faces. Instead, it’s powerful enough to look at your twenty best friends on the site (typically the people you interact with most) and guess if one of them is in a given photo, which requires far less computational power and less sophisticated software.

Another portion of the document that isn’t particularly convincing involves the Facebook API. The document says that Facebook”fails to establish that application developers, the government, and other third parties will not be able to access “Photo Comparison Data”‘, and seems to imply that developers can access the data using the Graph API. Facebook says that this data is not available through the API at all, though it might be a good idea for them to put that in writing.

But while parts of the document seem overly alarmist, there are a couple of legitimate points. For instance, Facebook’s help section that details how to delete a user’s ‘Photo Comparison Data’ (in other words, your facial profile) is apparently incorrect because there’s no such button in the settings menu. Facebook explains that the data is in fact deleted when a user disables the tag suggestion feature, but it seems that the help file and the control panel don’t match.

Another valid point: Sam Odio, who is the product manager for Facebook Photos, was previously quoted as saying:

“This isn’t face recognition… Picasa and iPhoto — they’ll detect a face and say, “This is Sam,” and they’ll suggest that it’s Sam. We’re not doing that. We’re not linking any faces to profiles automatically. Right now, we want to stay away from that because it’s a very touchy subject.”

Obviously Facebook has since decided to implement the technology. And given the fact that they were aware of just how touchy a subject this is, it’s surprising that they didn’t do more to explain what was going on to users as the feature rolled out. But Odio didn’t say they weren’t doing it because they were fundamentally opposed to the idea, they just knew they’d face a backlash (and were right).

Overall, while the complaint has some legitimate concerns (Facebook should be brutally transparent about what data it stores, and when it will share it with various governments), treating Facebook’s tag suggestions as a battleground over the future of facial recognition seems like a mistake. I’m no more worried that Facebook is going to build a database of biometric facial profiles with the intention of distributing them than I am about Google building a database of all my search queries and selling those.

The reality is that facial recognition is already here, and it’s not going away — so the debate at this point should be a matter of figuring out how the technology should be used rather than if it can be created in the first place (Tim O’Reilly does a good job discussing this in this post). And, as features go, suggested photo tagging just doesn’t bother me.  I’m far more concerned about the companies I’ve never heard whose whole businesses will revolve around building and selling these biometric profiles, without users ever knowing about it.

Tumblr’s New Messaging System: Another Way To Avoid My Evil Email Inbox

Posted: 10 Jun 2011 06:46 PM PDT

I hate email. Hate hate hate hate hate hate hate hate email. There’s just too much of it. It’s always flowing in. It never stops. And it’s getting worse.

As time goes on, even if inbox overload isn’t a problem for you right now, it will be. And I’m increasingly convinced that there is no actual solution. A ton of people are out there working on the problem — companies both big and small. Some of the “solutions” are nice and smart. But they’re all either masks or temporary fixes. No one wants to admit the truth: only real way to solve the email problem is to blow email up and start over again.

But that will obviously be a massive undertaking that will likely take years to get everyone on the same page, using the same service/protocol — if it works at all. So for now, might I suggest you do what I do and use a bunch of smaller solutions to ease the email pressure? And a new one appeared today: Tumblr.

Of course, Tumblr is not billing their new inbox features as an email-replacement. But it does somewhat fulfill that purpose. You see, since I run my personal blog on Tumblr, a lot of people use the Ask feature to write to me. The problem has been that up until now the only way to respond to these messages has been publicly. Yes, it was essentially Formspring, but where every answer had to be posted to your blog. There would often be questions that I would want to answer, but did not want them posted to my site (either for clutter reasons, or because the person asking was revealing information they probably didn’t want me to publish). But the new “Private Answers” feature unveiled today by Tumblr allows you to message other users without posting anything.

Tumblr also added a unified inbox that resides in the top toolbar of the Dashboard which alerts you when you have a new message (and submissions if you have those enabled). And clicking into this area will show you the messages coming in from all of your Tumblr sites (if you have more than one, obviously). And there’s new option to delete all messages as well.

Yes, all of this stuff is rudimentary for a messaging system. But again, it does offer a small email relief in that it’s a new system with a slightly higher barrier to entry (you need to have a Tumblr account, unless you choose to allow anonymous messages). Mixed with Facebook Messages, Twitter, Twitter DMs, group messaging apps (Beluga, GroupMe, etc), and soon iMessage, I have a bunch of small work-arounds to avoid the nightmare that is my email inbox.

And yes, I know this sounds insane. But that’s how much I hate email.

Tumblr’s new messages are the first of “a whole bunch” of new features they’re getting ready to launch alongside their newly updated (and slick) Dashboard.

Clothing Designer Tory Burch Wins $164M In Lawsuit Against Online Counterfeiters

Posted: 10 Jun 2011 03:20 PM PDT

Women’s clothing designer Tory Burch has been awarded $164 million in damages from online counterfeiters that have been selling copies of her shoes, bags and clothing on the web. According to Women’s Wear Daily, this is the largest amount of money awarded to a fashion designer for damages from online counterfeiters. For background, in 2008, eBay was forced to pay Louis Vuitton $61 million over the sale of counterfeit bags and accessories on the auction marketplace.

Tory Burch filed lawsuit in December 2010, alleging trademark counterfeiting and cybersquatting by a group of counterfeiters (believed to be based in China) that had set up hundreds of websites selling fake Tory Burch goods.

In addition to monetary damages, the court ordered that 232 domain names that were being to used to sell counterfeit Tory Burch products be permanently disabled and turned over to Tory Burch. The financial accounts used to sell the counterfeit goods were restrained as well. And the court has also allowed for Tory Burch to disable additional rogue websites that the counterfeiters set up in the future without needing a new lawsuit.

Tory Burch Chief Legal Officer Robert Isen tells WWD’s Alexandra Steigrad that the inspiration for the case was a judgement in favor of Polo Ralph Lauren and The North Face against a ring of 130 Chinese cybersquatters. The two brands were awarded $78 million as well as the ability to collect money from payment services that were used on the sites, like PayPal.

Isen says that so far, Tory Burch has collected hundreds of thousands of dollars from PayPal, which many of the online counterfeiters used to collect funds for goods from customers.

What’s interesting about the ruling is how the massive amount in damages will affect future rulings against online counterfeiters. And that online payements companies like PayPal are also held accountable. Clearly, the precedent is set and I wouldn’t be surprised if we see similar lawsuits (and judgements) in the future.

OcuSpec Raises 1.3M From Andreessen And Others To Build An “Affordable Kinect”

Posted: 10 Jun 2011 03:06 PM PDT

Stealth motion control startup OcuSpec has just raised a $1.3 million seed round from Andreesen Horowitz, Founders Fund, SOSventures International and angels Brian McClendon, Bill Warner and others.

Short and sweet in his emails, founder Michael Buckwald isn’t telling me very much about OcuSpec does, other than the fact that the startup is developing motion controlled technology that is “radically more powerful and affordable than anything currently available.”

From what I’ve gathered it will be sort of like a poor man’s Kinect, except that it will work across any platform. Lest you think this is a pipe dream, the startup currently has functional demo units that can track movement from a user’s hands and body, allowing 3D motion control to be embedded in anything from a laptop to a TV. Cool.

Says Buckwald, “Obviously our technology has big ramifications for gaming but we’re particularly excited about the implications that ubiquitous motion control has for the broader computing experience and content creation. ” Not to mention the exercise video industry.

Buckwald and his former NASA engineer co-founder David Holtz will be using the newfound cash to hire more people and expand their “already extensive” patent portfolio. Sounds promising.


The +1 Button Is Like A Button You Push For A Treat — Without The Treat

Posted: 10 Jun 2011 02:46 PM PDT

You people confuse me.

Ten days ago we put Google’s +1 Button on TechCrunch — because why not? We try basically all these new buttons/counters/commenting systems much to the dismay of our precious page load speed (we know, we know, it sucks — fix coming). Some of these buttons are great and make a lot of sense. The Tweet Button, the Like Button, even Facebook’s new Send button. But I just don’t get the +1 Button. At all.

Well, let me rephrase that slightly. I understand the concept behind the +1 Button — it’s a smart one. You get people to click it and it improves the page’s search ranking for logged-in Google users with social connections (and eventually maybe all results). At least I think that’s how it works. But I have a hard time believing that all of you actually clicking on the button really get why you’re doing it.

Don’t get me wrong, it’s great that you’re clicking on it! I am too on some of our stories. But I can’t help but get the feeling that it’s a bit like a cruel experiment we’re running. We put up a button, you click on it because it’s there, expecting you’ll get a treat. But there is no treat.

If the +1 Button is serving me up better results, I’m just not seeing it. And yes, I know the button push also populates your Google profile with a feed of our shared stories. But let’s be honest, no one is looking at those.

We’re definitely not seeing any noticeable bump in pageviews coming from Google as a result of the button. Maybe that will slowly change over time, but I’m not convinced. The rate at which people are clicking on the button appears to be dropping each day. And soon it may be just like the *gulp* Buzz button.

Google needs to figure this out quickly. When you push a button, you need to get a treat. People will click for a while out of pure novelty and curiousness. But that only lasts so long. Without anything noticeable happening (like a share on Twitter, or a comment on Facebook), people will just ignore the button altogether. All over the web.

I will give this to Google, the +1 Button definitely follows the Internet Self-Reference Law. That is, the stories that get the most +1s are the ones about Google — just like the stories that get the most diggs are about Digg, the stories that get the most retweets are about Twitter, the stories that get the most Likes are about Facebook, and any story you write about Techmeme always gets on Techmeme.

And while we’re on the subject, it occurs to me that the +1 name doesn’t even really make sense. “+1″ to me implies that you’re agreeing with something someone else said or did. But that’s not what the +1 Button is. Instead, it’s like you’re the person initially saying/doing something. Or you’re +1ing the initial person who +1′d something — but who are they +1ing?

+1 is hard to say, hard to write, and hard to understand. But hey, don’t let me stop you from clicking that button, Desmond.

YouTube’s ‘As Seen On’: Watch What We’re Linking To

Posted: 10 Jun 2011 01:42 PM PDT

Looking to kill some time? Check out the new feature just launched by YouTube, which they’re calling As Seen On.

The gist is simple: YouTube is crawling blogs and other websites to see which YouTube videos they’re linking to, and has compiled all of the linked videos into an easily-browsable list. You can find the TechCrunch version right here.

The result seems to work well — nearly all of the videos we link to from TechCrunch are related to tech (go figure), so you can think of it almost like a curated channel. Obviously this will change depending on which site you’re looking at (the boingboing feed has all kinds of different content ranging from inkjet print guns to the science behind cute cats).

For context, YouTube does some other interesting things with linked videos — for example, if a video on YouTube starts getting extremely popular on the site because it was embedded on a popular blog, YouTube will automatically insert a link to the blog.

Tribesports Raises $400K To Create An All-In-One Digital Resource For Sports Nuts

Posted: 10 Jun 2011 01:40 PM PDT

It’s tough to embark on ambitious fitness plans or to learn a new sport without the help of friends or likeminded people to help coach you through the process. Trying to go from lite jogger to marathon runner or from casual golfer to shooting par: The challenges are invigorating, sure, but vim and vigor won’t necessarily carry you all the way to Olympic glory. This is one of the main issues being tackled by Tribesports, an early-stage, U.K.-based startup, which wants to help motivate and encourage sports enthusiasts online to improve in their sport of choice — and be active offline.

Tribesports has essentially built a social network for sports, but there are a few bells and whistles that keep its site from being a Facebook-port for sports. The startup uses a recommendation engine, based on data collected on user interests and community interactions, to serve content relevant to their interests and chosen sport. The platform also integrates game mechanics, a la Foursquare, providing leaderboards, badges, and opportunities to “encourage” (which is an actual button) friends and fellow sports fans in their offline pursuits.

The startup, which is run by 3 former execs from mydeco (a site that offers furniture and interior design tools and ideas), has also announced that it has raised $400K in seed funding led by a group of international angel investors to launch its public beta and develop mobile apps.

“I have been taking part in marathons and Ironman events for nearly 10 years now, and have played football for as long as I can remember, but there has never been a place where I could share everything about myself as a sports person”, said Tribesports CEO Steve Reid. “Tribesports allows sports enthusiasts to create a showcase of their sports achievements and to connect with others globally to share training logs, tips, questions, tactics, advice and ideas.”

Whether a user is slowly training for their first 10 mile run and enjoys the odd game of tennis or is a seasoned decathlete and captain of their basketball team, Tribesports allows users of all skill levels to build complete profiles of their sports life, like one can on Facebook. Users can join “Tribes” (like Facebook Groups) based on their favorite sports, location, playing position, and ability level. And the best part is that users can seek advice and guidance from more seasoned athletes or connect with people on their level.

You can also take “Challenges” in personal fitness (100 crunches a day, for example) or organized events in just about every sport one can think of. Other users can also donate to your challenges by using JustGiving integration and can then track your progress as you go, making sure you’re not spending the money on beer or snacks.

And because most athletes have their own tools of the trade, users can search from more than 1 million products (across more than 1K sports), adding equipment to their personal profiles, which they can then review and have other users comment on, or just add a piece of equipment to their wish list.

This is also where the startup’s revenue model comes into play. Tribesports will take a commission of all products sold through its website. It will then supplement commerce commissions by offering companies targeted sponsorship and advertising packages that reach a particular group of athletes or sports fans.

The site’s registration and interface are both straightforward and easy to navigate, and offer the familiar status update and the ability to post images, video, and links to relevant content. Users can also connect with Facebook and sign in through a mobile-friendly webpage when they’re on the go. Mobile apps, the company said, are on the way.

For more on Tribesports, check out the video below:

Cafepress IPO Filing Gives A Glimpse At A Crowdsourced Business Model

Posted: 10 Jun 2011 01:20 PM PDT

Another day, another tech company is filing for a public offering. This time it’s Cafepress, which allows users to design, buy and sell merchandise such as t-shirts, hats, bags, mugs, bumper stickers and more. The company just filed its
S-1 today, and aims to raise as much as $80 million in an IPO.

Cafepress, which launched in 1999, essentially crowdsources designs from its community and allows users to sell these designs on products. Users can customize and design their own stickers, coffee mugs, and other tchotchkes and Cafepress will they manufacture them for you on a one off basis. In 2010, Cafepress had 2 million customers, 2.7 million orders, with the average order size around $47. The site currently has 325 million unique products offered for sale.

In terms of financials, Cafepress posted $128 million in revenue in 2010 and $2.7 million in profits. But if you take a closer look at Cafepress’ financials in the last 5 years, they were almost the same as in 2008, then the company got hit by the economic downturn in 2009. In 2008, revenues were as high as $120 million but dropped to $103 million the next year.

The filing says revenues were down in 2009 and 2010 because it was aggressively focused on order and customer growth, which included increasing sales and marketing expenses as well as acquisitions.

Sales seem to be climbing back up; the company posted $32 million in revenue in Q1 2011, but it is back in the red with a $831,000 loss.

In the filing, Cafepress says: A key differentiator of our business model is our ability to profitably produce customized merchandise in small quantities on a when-ordered basis. So, the company isn’t operating a booming business, but it’s pretty decent considering that transactions are so small and in such small volumes, considering the customized nature of the products being sold.

Right now, CafePress is a $127 million business, and it’s got some growth ahead of it obviously. But is it ever going to be a $1 billion business?

Foursquare (Finally) Checks In To Its Very Own SOMA Office [Pics]

Posted: 10 Jun 2011 01:20 PM PDT

As Steve Jobs has proven times a million this week, if you want your employees to feel great about working for you, give them a great office.

Foursquare‘s San Francisco outpost has amazingly enough shared space with mobile payments Square from August 2010 until earlier this year, when it got too big for the Square offices and bumped itself up to another floor in the same building. Well, the company is moving once again, this time to startup saturated SOMA, at 363 Clementia, between 4th and 5th Street.

The startup will be leasing the entire top floor of the 363 Clementia building, using the 5,500 square feet to house an additional 50-60 people (more than doubling its current staff), Foursquare head of Talent Morgan Missen tells me. Foursquare SF expects to occupy space for several years.

“We believe in going where the talent is,” Missen says. “We had 3-4 employees working remotely from SF for the past year, simply because they were the best ones for the job and they were rooted in SF. When we realized the need to hire engineers faster, it was a no brainer to expand our presence there.” Missen says that the company is in the process of hiring Software Engineers and has snagged a few key hires from Twitter and Google (but won’t tell me who they are just yet).

As soon as the company has decorated it’ll be holding the first of many Foursquare sponsored parties/concerts and events. “As you can see from the photos, there’s obviously a lot of work to do,” Missen explains.

Foursquare currently has 65 employees (and “a lot of summer interns”) and is thisclose to hitting 10 million users, with users averaging about 3 million check-ins a day.

Those of you looking for the new Foursquare SF venue on Foursquare can find it here. Currently Foursquare VP of Mobile and Partnerships Holger Luedorf is mayor, but with only two check-ins I’m sure he’ll be swiftly unseated.

Favorite Moments From Disrupt NYC Day One

Posted: 10 Jun 2011 12:39 PM PDT

Day one of Disrupt in New York City was packed with all-star speakers and interviews. All of the videos from Disrupt can be found here and pictures here, but we wanted to do a quick breakdown of videos and pictures of our favorite moments from day one.

When Erick Schonfeld sat down with Fred Wilson, we weren’t really ready for what was about to be said. When asked about the Twitter ecosystem and Twitter’s recent moves to discourage app developers from building Twitter clients, Wilson replied by saying, “Don’t be a Google bitch, don’t be a Facebook bitch, and don’t be a Twitter bitch. Be your own bitch.” He went on by saying, "Twitter wasn't planned. It just happened." The crowd loved it.

Brooke Hammerling
"Don't be a google bitch. Don't be a facebook bitch. Don't be a twitter bitch. Be your own bitch." @ at #TCDisrupt

Be sure to watch the whole interview between Schonfeld and Wilson below.

like in an airplane hanger or something. It's like an airplane hangar, yeah. So, just to set the stage a little bit you've been very active for this class of social internet companies that have really kind of grown into these large valuations and large companies over time. So just let me list some of the companies that you were an early investor in, and you can add like twenty more I'm sure.

Of this Twitter, yeah.


People always talk about Twitter and Zynga, but I really think of the first sort of defining investment that we made was in Delicious, back in 2005 and a lot of the things that Delicious represented to us are evident across a lot of our most successful investments. We're investors in Foursquare and Etsy and Tumblr and, and a host of others.

40-some companies in total. So, you know, in hindsight, you did great, but at the time of the investment, it was very difficult to know which one of these would fly and which ones wouldn't. So, how do you invest early and invest right? What's your criteria are you investing in the person or are you investing in the idea?

Both. I think it's important to have an investment thesis, and when we started our firm back in 2003 and 2004, we built an investment thesis before we went out and raised the money and that investment thesis has been very narrow and specific. And so the idea has to it inside that investment thesis.

And if it fits inside the investment thesis, then we really move to the team, and if we think the team is highly capable of executing on the idea, then that's kind of the magic.

I see.

So you talked a lot about valuations. You avoid the bubble term. So far you've avoided the bubble term. But that valuations are definitely getting frothy. and they've been getting frothy at the seat stage for a long time.


We just had a linked in IPO that doubled in the first day.


Ten billion dollars. So is it a bubble yet, and if not, what would it take to make it a bubble?

I don't like to use that word, just because to me it's very reminiscent of what happened in the late 90's and I don't really think that what we're seeing now is exactly the same thing. So I like to just say that we're in a frothy investment period. We 're in a period where people are more focused on the upside than the downside, and valuations reflect that.

And yes, things have gotten very expensive if you're an investor. If you already are invested in a company, then you definitely benefiting from that right now.

And how has that changed your approach to investing? Have you passed or stayed away from companies that you otherwise would have invested in because they are too expensive? Or are you just you know, kind of, you've got to suck it up and pay up.

No, we definitely have a style of investing and there are certainly opportunities that come along that we like that just don't fit our mold anymore, but that said, our mold changes a little bit. So if you look at the average valuation of a seed round that we did, or an A round that we did, or a B round that we did, three years ago, and you look at we've done in the past 12 months, you'll see that on average the valuations probably are up between 25 and 50 percent across the board, entry prices.

So we have to move with the market, but there comes a point where the market moves beyond our comfort zone, for a particular transaction anyway, and we won't do that.


So have you sold any of your Twitter stock?

You know, I don't want to talk specifically about what we have done but generally speaking, you know, I wouldn't argue with the news reports that are out there.

So what is, I think there is a sense that, at least it used to be, that if you're a VC and you didn't sell we sold before an IPO that was maybe frowned upon.


Things have changed obviously in the whole market. But what's your stance on when is the right time to sell?

Well, I want to be aligned with the founders. And so, we certainly wouldn't sell stock in a company that we're involved in if the founders haven't had the opportunity to sell, either before we sold, or at the same time that we sold. So we don't want to get out ahead of the founders. We also don't want to get out ahead of the companies own capital needs.

We wouldn't sell in second market or shares post, or any of those kinds of things. But, if the company was organizing an opportunity to sell, or if ale transaction came along that the company was a part and parcel to we would look at doing that as long as we were in sync with and aligned with company and the founders.

So if the founders are selling, it's okay for the early investors to sell, essentially. Look, it's a complicated set of issues. I don't think you can say it's just if the founders are selling everyone should sell. because there are many cases in our portfolio where the founders have been selling and we've been buying.

So, the secondary markets have changed the way venture business is done these days, and we've had adapt to and react to it. Sometimes we are a buyer of founders stock. Sometimes we are a seller in same transactions when founders were selling stock and we have to deal with it on a case by case basis.

But when founders and early investors are selling stock, either to big billion dollar funds that JP Morgan is setting up, or that in secondary markets, isn't that a signal that those valuations are a little bit too high? If they're still gonna keep on going, why wouldn't they just hold on to their stock?

Well why wouldn't founders hold onto their stock? The reality is that if you buy stock at 5 cents a share and someone's coming along and offering you 50 cents a share, $50 a share. You know, you have to think about that, whether you're a founder or an early investor. And you don't sell 100% of your stock, you sell 5% of your stock or 10% of your stock and even by selling five or ten percent of your stock, you might make ten or twenty or thirty times your entire investment.

It's hard not to do that when you're an investor. And I think that it may not even be prudent not to do that if you're an investor. But the thing is, that by doing that, you allow the company to stay independent and grow and become a bigger company.

And one of the problems we've had in the past ten years is we haven't seen too many companies stay independent and people are starting to say where are the next goes where are the next Ciscos? Where are the next Microsofts? Where are the next Oracles? Where are the next Googles going to come from if everyone is selling their companies?

And now with the emergence of this secondary market, it's easier for the founders to take a little money off the table, and it's easy for the angels to take a little money off the table, and it's easy for the first institutional investors to take a little money off the table. The shareholder base moves around a little but the company stays independent and can continue to grow and become a big company.

But isn't all of this a sign that the public markets are broken? I mean, you know ten years ago you would have had these companies go public at a billion dollar valuation and now you've got some of these companies ten, you know, Facebook, $50 billion valuation, it's still not public.

I think there are some things wrong with public markets, but I also think that there's some great things about private markets. So in a public market situation, you're reporting your financial information every quarter, and you're also disclosing anything that's material to the public markets. You have to do that.

Your stock trades every day, you know, every second of every day that the markets are open. And it changes a little bit of the culture in your company when all of a sudden you're, one, accountable to a whole set of investors who are very quarterly, short-term driven, when your employees start to see their net worth go up and down every day in the public markets.

By staying private, you avoid some of those issues, and I think it's, in some cases, healthier to be a private company than to be a public company.

But are you getting some of those same issues now with those secondary markets? All the employees see, well, you know our share is traded for, you know, $50 on SharesPost or SecondMarket . Then they calculate.

Some of those very issues are starting to seep into the private market and the companies that are being actively traded in the private market and those companies whether it's Facebook or Twitter or Zynga or a host of other companies are starting to figure out how to deal with that, and they're starting to put in policies and agreements with their shareholders and their employees that they try to limit some of that.

So do you think the SEC should re-write the rules for who can invest in private companies.

I do, I think that it would be good if the SEC made it possible for the sophisticated investors who may not have quite the same net worth requirements that are in the rules today to be angel investors, and I think that opening up private markets a little bit more I think would be a healthy thing.

So you think that the definition of an accredited investor should be lowered a little bit?

There are people who work inside our portfolio companies. Software engineers, marketing people, who've worked inside these companies for decades and they are as sophisticated about what's going on in these markets as anybody and yet in many cases those people don't qualify as a credit investors; they can't participate in, you know, an angel round of one of their friends who's starting a company.

And I think that's not great.

But on the flip side, if they lowered the bar, what protections, you know, do you think would be fair to protect unsophisticated investors who also [xx]?

I like the idea of basically saying OK if you have a net worth of $100,000, you can invest $10,000. If you have a net worth of $500,000 then you can invest $50,000. If you have a net worth of a million you can invest $100,000. Just tier it up that way so that you don't have somebody who's got a net worth of a hundred thousand dollars putting their entire net worth into their friends' start up you know but something that just, you know, takes the rules and basically scales them all the way down.

Right and do you think that there's a way for private companies to maybe who've participated in that, maybe disclosed more about their financials. Not total Sarbanes-Oxley but private companies are already filling out tax returns there are certain data and certain work they've already done that they could share with investors.

You know, I've got mixed feelings on that you know, our companies benefit from being able to keep their information private and that's one of the reason they stay private. I also understand the information I don't really have a good answer for that question but, it's a big issue and it's going to have to get tackled.

So, if you look at the last you know, sort of two waves of internet investing, in the nineties I think you've said this once that really a lot of the value came from the companies that were building up the infrastructure of the internet right. Cisco's the center of the world. And then after that, what we've seen this past decade is people building apps on top of that infrastructure.

right, Facebook, Twitter, Four Square. So what's, what are you investing now for the next day?

You know my partner Brad said to me early on when we were starting Union Square Ventures that he thinks it's better to be an anthropologist than a technologist in the venture business. And so he made me read a book called Technological Revolution and Financial Capital written by a professor named Carlota Perez.

And in that book, she goes back and looks at every technological revolution, going back to the steam engine, railroads, automobiles, and internet. And what you see is a very similar pattern. The first decade or two you build the infrastructure, so for cars it was cars and highways. And then you go build the applications.

So for automobiles it was you know McDonald's and strip malls and Levittown and things like that. And so, you know, when we wrote our original investment thesis we said okay the infrastructure has been built now we are building applications. We got to go find a McDonald's strip malls and Levittowns of the internet, and that's what we've been investing in for the past seven or eight years.

If you look what happens next, you see basically huge societal upheaval, and you see, basically, you know, societal revolutions. And what happened after Levittown and McDonald's and strip malls is you got, you know, the 60s.

You got sexual revolution, you got feminism, you got anti-war movements and anti-establishment movements. And I think that's probably what's next for the internet.

I think you're starting to see that with things like Wikileaks and Bitcoin, the Arab Spring, things like Anonymous' attack on Sony. And I think that we're in for pretty big societal upheaval.

And I think it's coming pretty fast. I'm not exactly sure how to invest in that.

I'm not even sure it's investable. But if you look at something like Twitter, I think you can see that something like Twitter not only benefits from that but also helps facilitate that so those kinds of ideas, truly disruptive ideas, that are actually almost anti-establishment in nature, I think, are probably where we're gonna see the biggest opportunities over the next 10 years.

So you want to invest in the cultural revolution on the internet?

Yep, absolutely.

Right. And how do you, you see that playing out what across, I think you wrote a post recently about mega trends and how it's social, it's mobile, it's global, and what was the fourth one?

The cloud would be the other one.

And the cloud, right.

What I see is four big trends, the movement of all data and application to the cloud, mobile, social, and global. Those to the big four things.

Right. And you recently, finally went all the way to the cloud with your.

Almost all the way.

Productivity, right?

I still have Excel, Word, and PowerPoint on my laptop.

You pretty much, Microsoft is mostly out of your life right now Yes, Microsoft, it was just Microsoft. This isn't an anti-Microsoft stance. It's just an anti what that meant, you know, to be. It just, it bogs you down, it creates a lot of overhead thatyou don't need once you get everything to the cloud.

Is Microsoft over?

No, Microsoft's not over any more than IBM is over. You know, these big tech companies adapt and change and get to be different kinds of companies, but they don't go away.

You do a lot of blogging. You 're an early blogger, right?

Right, and definitely that sort of raised your visibility in the press and amongst founders. To what extent (a) has a blogging helped you source deals, and to what extent has it helped you become a better VC?

It certainly helps me source deals, but I think the thing it does more than that is it helps us become better investors because were able to put our investor thesis out there every day. Just like I was just saying were interested in investing in the cultural revolution. That 's a statement we make, and then we can start to work that investment thesis publicly with literally hundreds and thousands of people who can come in and engage in Conversations about what that means, people will tell me I'm an idiot.

People will say, oh, that's really smart have you looked at this. And you know, that changes the way we think about these things. It allows us to become more and more granular and specific about these ideas, and it leads to I think, a very, it leads to, I think an evolved investment at thesis. We're evolving our investment thesis real time publicly and I think that's really valuable.

So let me ask you about a few of your investments and if you can think back to when you first met the founders, what was it about them or the company that made you want to invest?

The thing that I have come to appreciate most about founders is a deep obsession about one thing over a long period of time. When we first met Joshua Shafter he had launched three versions of what were sort of social bookmarking, that he had then shut down before he launched Delicious. Dennis Crowley has been working on what has become Four Square since vindigo, which was a flat iron portfolio company that we invested in over 10 years ago.

Jack Dorsey you know, came up with the original version of twitter back in the late 90's and he had been obsessed about that idea for almost a decade before he built it inside ODEO. And I can go on and on and on, but that sort of maniacal obsession about a specific issue and a specific domain and a specific kind of service, is the thing that to me is the most compelling trait of an entrepreneur.

I think Jack Dorsey once said, when they were looking for the first VC, is they were looking for a, they knew that they were going to get a boss that they couldn't fire. The relationship between the VC and the entrepreneur is very unique one, right? You're the boss but you can't be fired, in fact you can fire them, right?

Yeah and Twitter also was a founding team not a founder. So, I really like to talk about the founding team at Twitter in the context of the Beatles, right. So Ev is you know, Paul, and Jack is John, and Biz is George, and Jason is Ringo. And so when you are dealing with founding team that's different than when you're dealing with founder, Dennis Crowley who's gonna come up next, I think of as a founder even though he has a team around him, he was the person whose had that idea and has been obsessed about it for a long period of time and he's built a company around him and that idea and Twitter evolved in a different way.

So Twitter is a fascinating company. Just, like, if you look at the corporate history, right, especially through the eye's of the founder. So Jack, was the early CEO, there was all these issues with scaling and then he moved aside and Ev became the CEO, but he didn't leave, he was always, he still remained the Chairman, right?

And then now he's back as the Head of Product. Now Ev is gone so, here seems to be a lot of revolving chairs, but the same people are kind of revolving in the chairs. What's going on there?

Yeah, I think it's getting the right person for the right job at the right time. I mean when you have a founding team, you have the possibility that different people can take different rolls at different times and I think Ev, for example, was a really great CEO for that period of time where Twitter had to go from being a project to a company and had to evolve into an organization with managers and hundreds of employees and you did a great job at that.

I'm not sure that Ev would have been the right person to be CEO at the very beginning when Jack was the CEO, and I think Jack did a great job during that period of time. So I think that we 've actually benefited from having different people playing that role at different times.

Right. So, Twitter started out as a very open ended platform play, right? They kind of invited the community to come and build apps.


For it, and then about a year ago, they started closing off those options and saying, well, actually we want to build, we want to own this part of the stack. In fact you wrote a post about people should stop filling holes.


Which from the outside it almost look like to me it was an unofficial memo from Twitter and rode it. Did they wait too long to close those options?

I think the thing you gotta remember with Twitter is it started out as a side project inside another company, grew very quickly. They spun it out into its own company, but even then, it was growing faster than the company was, they could support it. And if you look at - Twitter had no clients other than the web client, but they had an API, and so all these people built mobile clients and desktop clients and all these things.

If you'd really thought about Twitter from day one as a entrepreneur thinking about how am I going to build this you would have launched it with all the clients out there but they didn't, and they are just playing catch up, constantly playing catch up. Mostly on scaling issues, couldn't really get to a lot of the other stuff, but they had this robust API that everybody loved to build on top and so, Twitter kind of happened.

It wasn't planned how Twitter happened. Twitter happened. And then, management team for the past 3 or 4 years has been trying to get their arms around it and turn it into a business. I think they've done a pretty good job at it actually.

How far along are they? They are very far along, a lot farther along than most people know.

Really. So you're feeling pretty good about the monetization?

I'm feeling really good about Twitter right now.

But getting back to the platform. It seems like now they're either building or buying those platforms. Has the Tweet Deck a bunch of other clients. Let me put it this way, do you feel that the holes had been filled or how many holes left to be filled?

Well the, you know, I think on the client side anyway, it's pretty clear what Twitter's objectives are, and I think most of that scenario has played itself out and I think that's probably the greatest set of holes that were out there that were on the client's side. There are a few other areas, I think, that Twitter has, advertising for example is one which Twitter has a lot of specific Plans for, and I think they've been reasonably transparent about what their strategies are around advertising.

But I think it may be that there are some advertising companies out there that are headed for a little bit of a..


Yeah.That happened with Facebook too, right. You know, my friend Seth Goldstein had a company called Social Media that built one of the first ad networks on Facebook, and one day Facebook decided they didn't really want Social Media to exist, and they didn't. So in But what message does that send out to other developers and start ups that they build on the platform, they build business on the platform and then they get the rug pulled out from under them.

I have a saying, don't be a Google bitch, don't be Facebook bitch, don't be a Twitter bitch, be your own bitch.


I don't have a response for that.

So if people have questions, line up here on the mic and I'll call you Okay, another question I wanted to ask you was about venture capital and how that,, you know, the whole venture capital industry is being disrupted for a variety of reasons. It's cheaper to build a company. Companies don't need as much capital as they did at one point.


There's a lot more more capital, angels. Got Ron Conway there who started as an angel, now I consider him sort of a premium VC but he's like a micro VC. But, what's the difference between angels and super angels and VCs who invests and seems a lot more competition for that, and prices are getting bid up.

So, it's a different game, right?

It's a different game. Venture businesses change changing a lot. The good news is that there's more capital than there has been in a long time in the venture business, and it's much more stage agnostic or maybe not stage agnostic, but there's capital at all these different stages, so there's lots more angel money, there's lots more seed money, there's lots more early stage money, We want more later stage money.

So just more capital out there, which is good news for entrepeneurs, not particularly good news for investors. But we still can get in to the transactions we want to get into. I think if you have a reputation for being a entrepreneur friendly investor who is savvy about the market you invest in, who has worked with a lot of good companies over the years, and has built a good reputation, you can still get into the deals you want to get into.

But you have, there's a lot of venture capital firms out there raising billion dollar funds.


Because they can, right? You just raised a new fund, just to put money on the shelf in case you needed it. But you raised about 165 million dollars.

That 's correct.

So why so modest?

I just don't like managing a lot of money. I think that it creates a big burden in terms of what you have to return to your investors. If you raise a billion dollar fund, you gotta return three billion dollars to your investors. That's a lot of money. Think about that. Let's say on average you own ten, fifteen, twenty percent of the companies you invest in.

In order to return three billion dollars, you got to be involved in companies that end up being worth, you know, somewhere between 15 and 30 billion dollars in the aggregate. That's a lots of companies. One Facebook will do it. But, you know, one Facebook, Google come along once a decade, right? So, it's just too hard.

I don't, you know...I don't think that it's any fun managing a billion dollars.

Okay. Let's go to the questions. There's a question right here?

Hi, this is Frank Denbo from Somsical. My question is about making investments in highly regulated industries. So, I'm creating something in the music industry and I'm wondering what you think about as an investor, in terms of the, you know, the industry, if you feel like, you know, there are certain regulations and things aside from the actual idea that might be important to think about.

You know, the music business is an interesting business. I don't think of the music business as highly regulated, but it's controlled by a small set of companies and it's a very difficult business to operate in. We only We have one company that's really tangentially related to the music business, and that's Sound Cloud, and they're really focused on audio, not just music.

And we probably wouldn't have made that investment if they were just focused on music. I just think the balance of power in the music industry is so concentrated that it's very, very difficult for entrepreneurs.

Okay, Saul?

Saul Hansell Hey, Saul.

I'm really interested in you The way you think about the modernization of Twitter in the context of what I thought was the most interesting thing about the company, which is how radically open it was. There was a standard where people can have their entire experience with Twitter on sites or applications or devices that the Twitter company had nothing to do with.

And I think that openness and the value created for companies and users is, arguably, a big piece of their success. It's a company that made a little bit of money and created enormous value. As you and your follow on investors get aspirations. My question is, how much do you cut that off? Do you say if you want to do this thing on an application, or do this kind of other thing, you have to do it for Twitter.

You make it less open, and how do you balance getting a fair return for you, and actually, with choices that eliminate the value that's gonna create an ecosystem, and does that slow the growth over time?

I think there are four platforms that really interesting to look at right now, Android, Apple, iOS, Facebook and Twitter. And I think you see all of those platforms more or less trying to figure out the answer to that question. I think Android would be the most open, then Twitter, then Facebook, then Apple, and I think that the choices you make in terms of how then you want your platform to be, on two dimensions.

One is how large do you want to see the ecosystem and how well do you want monetize it. I think if you're radically open, you'll have this immensely large ecosystem - which is I think what Android is headed towards - that is largely "un-monetized" for you as the platform creator. And I think, you know, on the Apple IOS side, you have a platform that's highly controlled, that you can monetize and then, you know, a lot, and then, you know, you just kind of go down that dimension.

And I think companies just need to see where they need to decide where they want to be on that spectrum. Anywhere on that spectrum is okay, but you just have to choose where you want to be on it.

Okay, so we have time for one or two more questions. Quickly, please.

Yeah. Hi, Fred. Percofi.

Hey, how are you? Nice to see you this morning.

Hi. I asked if you could think up a company that had lasted more than ten years and you just came up with one.

Well, you asked me for...

many companies have been eaten by these larger companies, you know, like Skype and I just wonder if your revolution is eating its children.

So this is in reference to a blog comment on over the weekend. You asked me for one company that had survived more than a decade, and I gave you one company. But, I think it is true that the technology industry eats its young, and it's very, very hard to remain at the height of the technology industry for long.

Google would seem so dominate in the business three years ago and people were starting to talk about antitrust issues now looks like, an also ran compared to Facebook and I think in three years Facebook will look like an also ran compared to someone else. It's just the nature of the business and I think that's what makes it great to be an entrepreneur, and rankly what makes it great to be a venture capitalist.

Ok, well Fred, I know you you have a board meeting, so thank you so much for joining us here and I think it's great that, you know, we have a New York city venture capitalist who's kinda leading the charge here with all these new companies. Everyone give a round of applause to Fred.

Thank you very much, it's fun.

So next up we've got Dennis Crowley the founder of Four Square, and Michael will be interviewing them unless they're out in the back there. So please give a round of applause to them, and

When Foursquare CEO Dennis Crowley took the stage, Michael Arrington was prepared to chat with Crowley about acquisitions, partnerships, valuations, and even a potential partnership with Groupon. Was that all discussed? No, not really. Instead, the talk had something to do with makeup, hand-holding, and an infamous Gap ad in which he modeled for, among other things.

Check out what was really talked about below.

First round Capitol said that Fred Wilson is the best investor of our generation.


From New York, even.

Even from New York, yeah.

Yeah, what do I gotta do?

What's that for? Oh, that's where you're setting up, okay. Dennis ?

Hi, hello.

Everybody welcome Dennis Crowley, the founder of Foursquare. So, you have an announcement to make today? We're gonna do that in a minute though right?

Okay yeah, thanks for having me on the program.

Thanks for coming.

Yeah .

Let's see, last night we had a quick talk.


We talked about this big announcement you have coming up here in a minute. You said you are happy to talk about anything at all on stage, anything, as long as we don't talk about evaluation, acquisitions, or fundraising?

Yup, that's right.

So, my first question is there's rumors that you're raising a new round now and that you're either going to do that round or just take an acquisition. What's the evaluation on that round and how do you compare that to a possible acquisition by Google or someone else.

So I think I can string three no comments in a row for that, but yes I have to give you our boilerplate; we cannot comment on evaluations, acquisitions, or fundraisng process. Or we have nothing to announce.

Alright, well that's all I have for you.

Good, thank you. Good night.

How's the modeling thing going? I know the GAP commercial, which hopefully we'll be able to show off here. You have done some GQ stuff. Is that taking up a lot of your time now?

Yes that is about all we are doing now. We run around from one shoot to the next. No, the Gap stuff was for charity.

It was for charity?

Yeah it's a good way to spread the word of Foursquare and donate some money to Camp Interactive which is a charity in the Bronx.

They were going to show it up there, but I guess we're not gonna get it. So let's talk about the real stuff now. There we go.

Next slide.

See it? Isn't that great? That was for charity.

Well, it was for charity, yeah. And also if you saw it had said, you know, "Dennis and Naveen of Foursquare," so it's a good way to kind of spreading the Foursquare.

Are you wearing any makeup in that shot or is it?

I'm wearing a lot of makeup, my hair is styled, and I'm not holding Naveen's arm. That's Naveen's hand.

Did you get to keep the clothes?

No, we didn't get to keep the clothes, but my mom got me that exact same outfit for Christmas, and she thought it was like the most hilarious thing ever. It kind of was.

I wish you had worn that outfit today. That would have been great.

It's really hot. It's really heavy.

O. The reason I brought this up wasn't just to humiliate you. Actually, it's seems to me that, you know, you're a bit of a rock star here in New York, sort of a poster boy for, you know, start up entrepreneur, successful start up entrepreneur. I think in many ways Kevin Rose was that for quite a while in San People will quick to tear them down when things started to go wrong.

Are you afraid of that at all here? Do you feel like maybe you're becoming too much of a rock star? Would you rather people toned it down?

I don't always see it that way. I see it as what we are doing as a company. We are kind of like public figures and I think I have always been a public figure on the Internet since 1998, Yeah.

when I started doing the first round of things online. To be honest, in the first round of the dot com days, I looked up to the people that were in Silicon Valley, insiders. I used to work at a company called Vindigo and the two founders, Jason and David, they were the guys that I looked up to. And it's kind of, I'm starting to understand now, I think that there's people that look up to us in the same sense.

Hey, we went to being unemployed to doing interesting things to turning the things that we're excited about into a company.


And you know, that's exciting for us, but I feel like we're inspiring other people to go down the same path that we went down.

OK. Last year at Disrupt, you told us that the product is ten percent of what it needs to be.


Last night we talked about some of your recent stats think you said, did you say half a billion check-ins?

Yeah, it's actually more than that.

In the last year.

Six hundred million check-ins.

Six hundred million check-ins in the last 12 months?

Well it's total now, yeah. So it's accelerating, yeah.


So if you look at the whole database, it's about 600 million.

How many a day?

It's about three million check-ins a day.

Three million?

Yeah, some days.


Tuesdays are lower, and Saturdays are the biggest days.

And you're approaching 10 million, at least registered users at this point.

Yeah were pretty close we are somewhere between nine and ten right now.

So, you talked about, besides that is great, you talked about all the data your sort of gathering.


And things you want to do with that. Can you talk a little bit about that, like, what you're going to do with that data?

Yeah, I mean, when I said that last year, like, there's, you know, we were only ten percent of the way through the road map. There 's, you know, there's certain things that you can do with a scale, that you can't do without scale, and it's scale in certain levels, right? So we've got 60 people now working at Foursquare, so we've got people that are dedicated just to machine learning and coming up with recommendations on things.

We've got 600 million check-ins, that's a lot of data that allows us to flip through the types of places that people are going to and use that stuff for recommendations. Then we've got a critical mass of users, like almost 10 million users and these people are kind of along for ride with us, They're banging on the stuff that we're building, they're giving us feedback, and it's kind of like, we put those three pieces together, we can do the stuff that we haven't been able to do.

Okay. There's a rumor today that you guys are going to do with deal with Groupon similar to the Looped deal...partnership. I imagine it's, you know, people check in or they're near something where there's a Groupon-type deal. Is that happening and when?

Is that what?

Is that happening - this partnership - and when?

Oh, well, I guess the fourth thing is I can't really comment on partnerships either. But, you know, I think it goes without saying that we talk to people in this phase. We try to figure out the best way to...

Just give me
this one. I mean, no one's evening paying attention, like...You can just say. You doing a Groupon deal? Like...

Well, know, we talk to lots of people.
We have nothing specifically to announce on that.

You're not going to budge on that one?

Not what?

You're not budging on that one.

Yeah. I should have said there was four rules instead of three rules.

How is monetization going? That's not one of the four, now four things partnerships monetizations, I'm allowed to ask about, how is that going?

No, you are.

Do you have revenue?

We've generated some revenue, mostly off of a lot of the stuff we've been doing with Brendan Badges and some of these other partnerships. It 's interesting because I get these questions from people a lot, like how does Foursquare going to make money? Do people here understand what the Foursquare revenue model is?

No? Yes? Does anyone understand this?

Why, yes?

No, maybe this early, thank you, in the front. No, I mean, the products that we're building they're turning out to be very, very efficient at helping our users find their way to new businesses, and helping those businesses keep and retain existing loyal customers. Like a lot of the stuff that we're doing is focused on loyalty.

Who are your best customers? How do you bring them back in on a regular basis? I don't know if you guys have seen the merchant dashboard that we built for a lot of these merchants, but we show them, these are your best customers, these are the stats about the folks that are visiting. Here are things that you can do to optimize to get people in the door more efficiently, or get people in more often.

I think those tools are going to be valuable to local merchants. I think that's going to be one of things that that we'll be monetizing.

So, what is revenue now? Is it less than a million total?
Yeah and again, revenue, non-disclose. But the stuff that we've been generating from revenue is, or the revenue that we've been generating so far, it's...

I'm adding that to the list then, of things we can't talk about.

Are we on five now?

We're on five, yeah.

But if we're going to end this thing in like five minutes, then. But, no, the revenue that we generated is so far has been the stuff that's outside of what we expect the majority of the revenue to be from.


We're not charging local merchants for the tools that we built yet. Everything's self service. Everything 's free, you guys have a... You know your local coffee shop or the guy who runs the local bar or cafe, you should get them on the Foursquare platform.

You want to talk about this new announcement? Now?

I'd be honored to.

Do you have it ready? OK, so it's all yours. That should work.

How do you? Although the light's not on.

Well presumably if you put the phone down.

It turns on?

Things will happen.

I don't know how to do that.

And backstage, if we could turn on the overhead projector? There we go.

Did someone just flip the switch or did that magically happen?

It's on now.

OK. So do you guys remember there's a whole bunch of noiseis , I guess.

So what is that device we're looking at?

This is the INQ Cloud Touch, also known as the Facebook Phone. You guys remember the announcement from back in February, or so? So, this is made by the folks at INQ. Hi. Thanks for putting your hands up in the front. I'm like, hey. This is made by the folks at INQ. It 's available right now in the UK.

It's hasn't come to the US yet.

Do you know how many of those have been sold?

I don't know actually. Frank's here, we can ask Frank after. But it's an Android phone that has... so, this is the standard Android screen. But when scroll to the right, just like the widgets are, you know it has all of this Facebook content as well. And so, these guys have done a great job pulling a lot of the Facebook graph into Foursquare.

And so, and what we've announced, or what we're announcing today, is that if you scroll to the left, you end up seeing, you know, the default view for location now is going to be all the Foursquare data. So this is a view that any user with this phone is going to see. And its just really a list of the things that happen to be nearby.

Now right now we're on 55th and 9th so I can flip through and it's showing me, you know, photos that were taken from Foursquare. these are interesting venues that came out of the explore tab, which is the recommendations filter that we have built into Foursquare. So these are the most interesting things to do nearby.

There's a couple of quick widgets. You can click the check-in button. You can add this to your to do list. It shows you if there's a special there or not. So, you know, we're thinking this as, we 're seeing that this is a great way to introduce people that, introduce it to folks that have never used Foursquare, that may be Facebook users.

Introduce them to all the interesting things that we're doing around recommendations and discovery of local places and places that are nearby.

And so this will, this is not available yet on this phone, but as this phone gets its AOS upgrade, I think it's later on in the summer, you'll be able to see this and all users will have access to this.

Alright, if you have questions for Dennis, go ahead and line up at, there's two microphones at least here in the front. We'll take a couple of questions.

Can I also say one more thing about this?

Nope. hat's it, you're done.

That's it, I'm done. I think one of the most interesting things about this, is that it's all built off our API, so there's no real special arrangement with the guys from INQ. It's like they were interested been doing this, we've pointed with our API documentation, they're working with our, you know, platform evangelist back at the office.

And this is stuff that, you know, that, you know, we've got almost ten thousand developers that are building off the API now and as we're starting to hit that critical mass we're seeing these things get a lot more interesting and like a lot more viral and just reaching a much larger audience so it's really exciting for us.

So there is no commercial deal at all with them? It's just No.

They're using your API?

Yeah, they, I mean this has our "China make the best phone possible".


Their thinking is like if you pull in location data from Four Square it makes the device a lot more interesting for everyone.

Last question and then we can go to other questions from the audience. You know there was a lot of worry in the tech press when Facebook launched a competitive product. It's been a while now. I think you guys have continued to grow. Has the growth rate increased since Facebook launched? Has it been studied?

How are they as a competitor?

Yeah. The growth numbers have been great like we'll still seeing, we pick up almost a million users a month, you know.

Yeah.It 's funny about a month and a half ago we were celebrating the fact that we got 2 million check-ins in a day. Then a month and a half later it's like okay now we are at three million check-ins a day, so everything's accelerating for us. I think, you know, the Facebook stuff is interesting because, in the same way that, you know, Facebook and Twitter taught the world about sharing, I think Facebook places is teaching a critical mass of users, like, hey, location is interesting, interesting things come out of it.


And I think because that's the core thing that we focus on as a company and a product, like it enables us to make just more interesting products around location and I think people will ultimately start gravitating towards us.


We have a question here.Just state who you are as well

Frank Dimball from Sonsical. My question is about the direction of Foursquare.

So when I first heard about it, it was pitched to me as like a game for real life.


So you have badges and leader boards and things and especially with the explore tab now, it seems like you're kinda moving away from that and just being like a tool for location based services?


So, I'm wondering like which direction you guys think you're gonna go into, you gonna have more game elements or if you are you gonna help out in the real world?

Yeah, I never really thought thought of it as a game. With a game, it's like winners and losers and I didn't want to go down that direction. I've always thought of it as a social utility. Even going back to the dodgeball days. Dodgeball was a social utility that was meant to be fun and playful. And it's kind of the same thing that's true of course, we start with the utility, use some game mechanics to do some of the on boarding and really use game mechanics to make it fun and interesting, maybe a little bit competitive.

But it was never really meant to be like a game with a beginning and an end. You know, the thing that we've always had our eyes on is all the stuff we can do to help people to explore the world around them in different ways. We were talking about finally being able to do the things we want to do because of the critical mass of users and data.

Just the right employees like that. That is what you see in the explore tab. So the direction that we are going towards, it's all about, okay, you've got this device in your pocket, it's a network sensor. Like, we should be listening to everything that's going on, taking into consideration all the things that you've done, based on your Foursquare history, and maybe the history from other grounds, and then we should be able to serve up, like what is the best thing for you to do right now?

Should you walk down this direction and visit the shop? Is there a friend you should know that's a couple blocks away, and it's really, you know, taking advantage of the sensors to, just, you know, introduce people to new and more interesting experiences around them.

Thank you.

Can I see the phone?

Yeah. Yeah.

May I? Is it your personal phone, or is it one I can play with for a second?

This is, no, you can play with this one.

It is your personal phone?

No, I have an iPhone, I'm switching over to, I've been playing with Android more often now?

So your email isn't hooked up to this?


Just opening up Gmail. Nope, it isn't. What advice do you give to young start ups? I'm sure young entrepreneurs come to you all the time, maybe they're just starting, or they've started, and maybe they're going to, you know, have somebody like Facebook compete with them?


Do you give them advice, of like, you know, don't worry about the competition, just focus on your product. What kind of advice do you give companies?

Yeah, I think, are you just trying to distract me so you can go through my phone?

You what?

Are you just trying to distract me so you can go through my phone?

No, no, I'm not doing anything .


If I'm gonna do that, I won't do that in front of 2000 people.

That's fair. No, I think some of the best advice is, you know, we've got our own envision of the things we want to build, and there's other people that are making noise around us like people that are being inspired by the stuff that we're building, you see a lot of things that look very similar. You know, I find that it's most helpful just to keep executing on our vision, and like, and if we start chasing what other people are doing, whether they're bigger competitors or smaller competitors, it just, it's a distraction, it's a waste of time for us.

This isn't really working.

This is, what do you mean? Well I'm trying to find nearby, it's giving me Sullivan's Bakery?

Yeah, right now, because this is the prototype, the location is hard coated into it, Yeah.

So, the next version that will come out will have, you can see the general mock, you can flip through some of the screens back and forth.

So, it doesn't really work yet.

Yeah, it's like a rough prototype.

OK. Where are your text messages on here?

Luckily, they're in my backpack, on my iPhone.

Let's have another question.

Hi, my name is Andrew Furman, I'm a student at Carnegie Melon. You keep saying that you want to keep you know, I've really thought about, you know, it'd be cool if I could say, hey I'm going to be at this venue at this time on Foursquare.


Have you thought about that, or can you comment on what the big, next feature is going to be?

Yeah, we do think, Foursquare is very much based on the present tense. Like what is happening now, what's happening in the next three hours or so. We haven't really done anything in the future tense, a lot of what we're doing is in the past tense right? So we look at the history of all the things you've done, and that's the power of the explore engine.

So, I think there's an opportunity to do some of the future planning stuff, and that's stuff that we've been paying a lot of attention to.

Internally, as a company, we have a rallying cry every quarter. For Q1, it was like every check in counts. Right? We wanted users to feel like every time they were checking in it was actually going to some greater good. And that's why the game mechanics got revamped, and that's what happened with the explore tab.

Like, every check in, no matter where it is, is contributing to that algorithm. For this quarter, it's like make the thing lighter and faster and easier. I think the product is pretty good right now, I don't think it's great. It's a little bit slow, it's a little bit heavy, there's things that we definitely need to fix a lot of the stuff we focus on in this quarter.

What is it, it's May right? We should be launching a bunch of stuff, next month, that fixes a lot of those core issues.

We have time for one more question. Who really wants to ask a question? You okay with that?

I can be quick.

Well we don't need to be quick, we can only do one person. Let's go to here. If she's quick, then we'll go to you.

Alright, thank you. My name is Michelle Sun. I work for for a blog on China Tech called Technote and I was just curious that Foursquare, like all location based services, how do you tie to margins on the ground? And what are your plans internationally and especially in Asia? Thanks.

Sure, and what are our plans in general or with merchants? Oh, you got cut off.

Yeah, in general, like internationally.

Yeah, it's interesting. About 50 percent of the users and usage for Foursquare is outside of the US, which is a huge plus. The first time we ran it it was 40 percent. I was like No way that's true. We ran it again, and we're seeing huge growth internationally. It's really coming from all over. We see big pockets in Europe.

Are fifty percent of the check-ins outside of the U.S. as well?

Yeah, users and usage. Yeah.

Yeah, OK.

So, we see big pockets of usage in Europe. Brazil is lighting up for us right now. Like, a lot of Southeast Asia. Japan is huge for us.

Did you say Brazil was the largest?

Not the largest, but that's, we've seen a huge growth spurt as of recently. You know, we're thinking of, we've translated the app into five different languages and we're kind of planning what the next four languages are going to be, based upon like the other areas of the world that are really picking up with Foursquare usage.

We haven't, we don't really have like a strong like a policy around international expansion, it's just been happening.

Are you,you're only English?

No, no, no, we're in five languages.

What are the five languages?

Actually it's six languages: English, Spanish, German, French, Italian, Japanese.


And we're looking to do a couple of other languages later this quarter as well. So we haven't had a real plan around international expansion. It's just been happening. You know, as we start to grow the company, we think about, like, do we have to open European office. We're have to open an office in Asia.

Those are things we're going to have to think about within in the next year or so. But there's no formal international expansion plan yet. It's just kind of happening, and we're along for the ride.

I can do a minute total question and answer, so go ahead.

I'll skip to the question, so there's Google Places. Who does mission data, and mission usage integrated data and social graph based recommendations. Which one do you see winning in the long term and why?

Are you talking about just the API just the Places database?

No, the whole system, the whole ideal. Are you going to trust the machine more or social network and usage generated data?

Well in terms of what product wins, I think that we definitely win.

Be more specific on places on Foursquare, location places.

Yeah, it's interesting. If you look at the stuff out of the API, I think one of the reasons our API is so interesting to the developers is because it's You can take the data, you can share it however you want. We're not held down by licensing restrictions because the 15 million venues that have been added by users, those are user generated content.

We can do whatever we want with it. The developers can do whatever they want with it. It's an interesting data set, so if you are using Google places API or the Facebook places API, you're basically using other aggregated data sets from elsewhere. One of the things that is really interesting about the Foursquare one is that you get every cafeteria in the googleplex.

You get every classroom at NYU. You get strange, you know you get train stations, just interesting places that people tend to congregate, right? So it's a much more colorful database. I think represents, not just merchants, but the type of places people want to go and the type of places people like to share that they've been there.

So I think that gives us a slight advantage there.

Are you getting more check ins via the API?

I'm sorry, we're done. You're the one who told me I have to wrap up now, and then now you're This is a good question.

I don't know what the actual breakdown is. 100 percent of the check ins come from the API You know this phone, the apps that's running on this are built off the API, but our own apps are built on top of our API.

Yeah, but that's not what he's asking.

What percentage of check ins?

What percentage come from elsewhere?

Your half.

I don't know what the number is. I can follow up with you, but the majority of the stuff is coming from our clients.

Thank you. We're gonna have to end. Sorry. Dennis, thanks so much for your time.

Cool, thanks for having me.

Thanks for announcing this on stage. Great. Yeah.

After you.

Great, thank you.

Then, Arianna Huffington took the stage to chat with Nora Ephron and Jay Rosen. After their discussion, the three of them walked off stage, but not before Arrington stole Huffington away for a little impromptu chat. It was a hilarious and unexpected moment, fueled with questions from a curious Arrington. With Arianna dodging most of the questions, she shot back with her funniest response near the end of the chat. “We’re going to go to dinner,” says Arianna, “I’m going to get you drunk, and then we’ll see what happens.”

Rebecca Silver
Arianna Huffington to Mike Arrington at #TCDisrupt: "I'm going to get you drunk and then see what happens."

Be sure to watch the whole conversation in the video below.

before or after? Great show!

The what?

Great show!

Thanks, its your show now! So you, how the hell did we both end up at AOL, that's what I am trying to figure out. Like, a year ago, we just made fun of AOL, right?

We didn't actually make fun of AOL. Remember a year ago, we thought if we could afford you, we wanted to buy you, remember?


We had one meeting in my at my office, after finding out the cost.

We talked about it.

You had talked to our CEO, Eric Hippeau, and we thought, "wouldn't it be great if we brought Mike and Tech Crunch into the Huffington Post?" Then we realized that we were slightly above our budget.

Yeah, I don't really want to talk about this part of it. I was hoping to talk about you less than us but, yeah, we talked about merging and then we ended up with AOL. I thought you were going to IPO, but instead, you're now at AOL and you're my boss so I actually have to report to you and we've already had a couple of sticky situations and is it as awkward for you as it is for me in the sense of I'm not good at reporting to people, so is it going to work?

Do you think?

So far it has worked.


I think so far it's been really good. As you said we did have actually one situation. I don't think more than one over the whole issue of conflict of interest, and reporting, and disclosing, and financial conflicts and you and I resolved it.

We worked it out.

And we haven't even announced our resolution but maybe we can use the Tech Crunch conference to announce that we decided that we want to use Tech Crunch as a petri dish for this, for disclosing and discussing multiple conflicts of interest that journalists are not discussing, whether it's financial conflicts of interest or conflicts of interest when it comes to sources, and access to sources are in fact people you invite to your conference.

And because you are inviting the CEO of the company to your conference, you are perhaps not going to be as completely open and same sort in the coverage of the company. So we found a solution, which was was basically using TechCrunch when your redesign becomes public, which we hope will be soon, to also have that open conversation that is not happening at the moment.

Yeah. Yeah, and I'm going to talk to Jeff Jarvis later today as well about this issue a little bit. But one more question, I know we are over time, but do you think the content strategy stuff is going to work? I mean, we kind of live in our own little world at TechCrunch, and then occasionally we get poked by AOL, but you're in it.

I mean, you're next to Tim all the time. You're obviously making the strategy. Is there any real hope for any of this working?

Absolutely . I would say its its a guarantee that it's going to work, that's how optimistic I am. Let me explain why. First of all because, look at what we've done already. You know, AOL bought the Huffington Post in February.


And we didn't even become legal until 6 weeks after that, right? And here we are we brought edit and tech together on the 5th floor. I don't know if you've been to the new newsroom since you have been in San Francisco but I'd love you to come and see. Cubicles are down, we have a really amazing newsroom now with great journalists that we've brought in.

We've hired 130 new journalists, and we're hiring another 50 to 60. Basically the kind of journalistic newsroom culture that Jay was talking about combined with that. We moved staff to the sixth floor so they can do their very important job but not interfere in the day to day way with what we're doing at it.

We are creating the kind of culture which is open, which encourages all viewpoints,but which is an obsession with facts and fact checking and the great thing is whether it is politics, Mapquest, or movie phone.


Our goal is to bring better and better story telling.

You just plugged two AOL properties that I.

Three AOL properties.
Oh I love it.


Moviefone and Mapquest.

Mapquest is amazing. I was, I was in bed recently. I don't know use it but if you expect.

No Mapquest is a huge piece of crap compared to Google Maps.

Why? This is so entirely wrong, OK.

You never used Mapquest.

I have totally used Mapquest.

I would question that you've ever. I don't want to call you a liar on stage but I'm calling you a liar if you say you used Mapquest.

Not only have I used map web regularly because I'm you're dyslexic. And if you are an especially dyslexic person, Mapquest is infinitely better than Google Maps.


On top we have an infinitely cooler name. I mean Mapquest is about the journey.

Are we?

And one of the things we are doing now is we're integrating the journey into the destination. So it is not just about getting there but what are you seeing along the way?

So I report to you? Does that mean that at the end of the year or something you're gonna review me? In like this was good, this wasn't so good. How's that gonna work? I'm not good at taking even constructive criticism.

Okay, here's what I'd like to do at the end of the year. I'd like to take you to a great dinner.


With fabulous orzo and Greek wine.

The AOL business conduct policy doesn't allow us to drink, even off hours, I don't think..

I haven't signed off on that AOL policy, I don't know where you found that.

Yeah I don't know. So we're gonna go out to dinner, and then you're gonna get me drunk, and then we're gonna talk about little areas I need to improve in.

We're going to go to dinner, I'm going to get you drunk and then we see what happens.

All rightnteresting, so far.

Okay, I just want to say one more thing about MapQuest.

About MapQuest? Yeah.

Because I was in Denver two weeks ago for the fifteenth anniversary of MapQuest.

Have they updated it at all in those fifteen years? That's okay. That's what I love about Michael that he can just say anything he wants to even if its not based on fact, except on background. On stage you can do that. But here's the thing, here's the thing.

That was mean.

That was mean?

You added that Tech Crunch thing, but.

You told me that I wasn't checking on MapQuest. Incidentally, if you go to Andrew Ross Sorkin, who is.

To what?

Andrew Ross Sorkin, who's in the news this week with his movie. He will tell you.

He used MapQuest before?

Not only does he use MapQuest but MapQuest, he says, is better than Google Maps if you want to get there. And my goal as the Editor and Chief now is to also make it better about how you get there. I mean, I just want you to hear me out here because we have all these amazing sites around food, books, travel, and you can bring all that so that when you start on the journey.

You know a lot more about what's happening along the way and then you can share it with your friends.

I love your enthusiasm. When you all start using MapQuest. Just give it a try, OK?

We're all going to do that, yeah. Do you own any stock in AOL?

Yes. I've got 25% percent of the proceeds that I got from the sale, I got in stock. And then I got additional stock as part of my deal.

No ours was all cash.

You use your own cash?


What about your own personal dealers running a tech branch. And do you have some stock?

I didn't quite understand what you asked. I own no AOL stock.

Peter, that's a mistake because I think that if you buy some AOL stock now you're going to make a lot of money.

Right now?


Is that based insider information that you have.

Oh, I am sorry I am not allowed.

I'm trying to find exactly when I should buy and then when I should sell.

Based on no insider information, I would suggest you buy it right now like as soon as your off the stage!

I think you might be breaking the law right now actually.

Really? No, not until you buy it. Don't buy it until we check with the council, OK? If you don't buy then I'm not breaking the law.

Thank you so much for coming.

Thank you.

Thank you well I tried to get Bill Keller from the NY times to try and debate Arianna but he chickened out, but I think this was actually better. So, we are running a little bit late. So, we're going to take a break now

Tim Armstrong and Michael Arrington were the last speakers for the day before the Startup Battlefield sessions began. When Arrington asked Armstrong why he wasn’t granted Arianna Huffington’s spot when he was hired, the crowed laughed and became quiet, eagerly waiting for a response. The whole chat between Arrington and Armstrong was pretty funny, and a little awkward at times. Especially when the two of them started talking about AOL’s official drinking day, which is Thursday, and when Mike asked about the internal AOL emails we are continuously kept away from. Armstrong mentioned something along the lines of, “We honestly don’t really ever think about you guys..”

Inc. Magazine
How Michael @ livens up a conference (and riles up his bosses, @ and @): #tcdisrupt

The whole conversation below is a must see.

Mike was having with Arianna, I guess.

Wow. they've applauded for every speaker, but you, dead silence. Oh, there it goes.

So it was a year ago, here, that you asked me how things were going? And I said i was dead tired, ready to retire and end all this. And you said that's too bad because we'd like to buy you." And I said "I feel great, more energetic than ever." And things went from there. So thank you for buying us by the way, I appreciate that.

Give me the report card for one year in. We didn't talk about this yet, but Well, your check is cashed.

It was good.

It was awkward when suddenly I was working for Ariana Huffington, and I found via some press release. I felt like that was something that, I don't like working for other people so much, and that was a little weird, but it turns out We get along really well. She mostly leaves me alone. So, that's good.

From your perspective was it a good deal? Was it something you're happy with?


Would you re-do it? Would you not?

No, I think really with the deal overall. And I think both deals actually. I think the Techcrunch deal and Huffington Post deals. I will say this, people don't know this, last year, backstage, as Michael and I had this conversation, you told me 'I don't have my questions. My questions aren't ready for you.' So we did our-


And we did some joint questioning, and then this year I showed up and things are much more organized. By the way, this place is a lot better than the place last year.

It's a lot bigger and nicer. It's funny because now we have all this staff to help with things. And so, somebody from AOL has been helping me prep on speakers, and she actually works in Brad Darlinghouse's group. So, some of the questions she's recommended, I think, are sort of interesting based on that.

Talk about how handsome he is and things like that. Let's start off with a hard question. Is
Is any of this stuff you are doing going to work?
Are you going to make a business out of this whole content thing?

I hope so.

But seriously, revenue has been declining for the most part. Although you said that display advertising was up a little bit last quarter, right?


So, here's the reason I think the business one is going be a great business. First and foremost, I think the intersection of information and commerce is a very powerful place to be for any business, and when you add on the disruption with the Internet, with information, and commerce, I think where we've positioned ourselves is where the internet is going to be, and where it's going, so there is a device war in Silicon Valley.

All the major companies are battling each other on online platforms on devices.


Everybody in that space is using content to differentiate themselves and my guess is they're going to do a lot more of that in the future. And on the consumer side, if you look at how fast the Internet is expanding, the top 150 content Sites were expanding twice as fast as the internet so you know if we wanted to skate where the puck is going I think AOL is the furthest, the company probably pushing that on the envelope the most.

By the way, I love the fact that people think content is not a great business because it keeps people out of the business. Intuit allows us to only hire people who believe in that business and I think that's been a huge strategic asset for us.

Do you see acquiring more content companies like TechCrunch and HuffPo?

I think one of the things we did internally this quarter is say we were gonna focus on execution and integration. So we kind of took a breather from doing deals. That being said I think if there are opportunistic things to, we would do them and and I'm a huge believer in content and content brand so I think we would do more deals.

What are the five companies you'd like to own that you don't?

I can't tell you that publicly. But I have a list in my head and we have ongoing discussions with a lot of people in the space and there's nothing imminent that we're going to do but I see five or ten companies I think are really interesting in the context that.

But, really, what you'd like to see is sort of a combined Yahoo and AOL, I assume.

You know, I'd like to see a, The look on the face was classic I would love to see the content space be very successful and I would love to see, what ever you want to call it. The portal space is not the most popular space in the world. But I think that is a misnomer for what the opportunity is. I think the opportunity is, people want to have contextualized information and have people provide information that's going to make their lives better and I think that's one of the things we're focused on, have more products against over the coming year.

If you were...Thank you. You didn't answer the question at all but that was a good answer. I can talk to you on stage, I just can't talk to you in the work environment and get away with it.

If you happened to be the CEO We had a leadership meeting in California with the AOL executives a few weeks ago and part of it was, and I'm not going to answer.

I wasn't invited to that meeting.

I won't answer to Yahoo specifically.

Why wasn't I invited to that meeting?

We have to keep these separate. There's a Chinese wall. If you want to come over the wall, I'll have you next time.

I'd love to sit in on those meetings.

You're more than welcome to come. Why don't you come to the next one?

But sorry, you were saying? So, you were talking in that meeting about what you would do when you get takes to be a great company and I think the great company comes down to three things. I think one is having a real clear vision for the future.


Second is having an execution plan; for that, a clear execution plan, clear metrics and follow-through on that and the third thing is the culture. I think the culture is actually the most important thing when you take a giant step back, because it's how people basically operate. And, so, regardless of what business you have or who is running what business, I think those three things are absolutely critical, and the same advice I got from other CEO's, I would give to any other company.

You talk about culture. It's interesting, we've written about the AOL culture clashing with our own, for the most part we just want to be left alone. And AOL, the one thing is you send us all this promotional stuff like morale boosting snow globes, and wine.

Do you keep it?

We write about most of it.

We drank the wine. It was good. But the question I have is there's these weekly drinking events and it's almost sort of forced drinking, you know what I'm talking about the luge?


And there is actually a policy against drinking in the office. It seems like the forced drinking event conflicts with the 'no drinking in the office' and I've even asked on the record, what's the deal with that and are we, because we don't really participate, is that bad for us? Like, my review, will that?

What's the deal with that? There's a lot of drinking that goes on at AOL.

Well, Thursday nights we have these luge parties which allows everyone to get together, and kind of celebrate.

And do like shots of vodka off of an ice slide.

I think that happened one week. I haven't seen the ice luge again. I did catch my eye when I was at that party for a little while. But I was working with you in mind.

I would have loved to have seen you, a picture of you doing a shot of it.

There 's a reason there's no picture on it, because I didn't do it.

But we also are doing a lot of things. We have just actually installed speakers in all the offices and at 5:30 every day we're having a DJ play music every night. And so I think we're trying to do a lot of things that just make it interesting and creative to be at AOL. It doesn't have to do with drinking .

It has to with just the culture we wanna have, we're trying a lot of different things.

Are we considered stuffy because we don't participate in some of that? Or is that okay?

I don't want to say this, but I don't think you guys are considered like that at all. Obviously because, we care about you and we love you, but.

That reminds me of last year, when Carol Bart said, "You have a tiny, tiny company," she said to me, right before she told me to fuck off.

I don't think so, as you guys do your own thing. I don't see any ..

You mean you don't think about us all day every day?

I do think about you all day every day, but Thursday night luge events. I figure, Michael Ennerton, you probably have your own editorial parties. What do you guys do?

I'm going to ask you the hard questions now.


You know, as I told you, the person who wrote these notes works for Brad Darlinghouse.nd the question I'm supposed to ask is "Brad Garlinghouse's team is building some cool products these days. When are you gonna start monetizing them?" So, he owns e-mail and AIM? and Addition, reader,

Any revenue at all coming from any of those products?

Yes, as a matter of fact we're up pretty significantly in mail revenue year over year.

What is mail revenue?


No, how much revenue?

Oh, how much of it? I don't think I can disclose that but its a lot. So, we've done a very good job.

If it was a lot a lot, you'd have to disclose it, right?


So it's It's bigger than a breadbox.

OK. That's been successful, and frankly, I've told Brad, for the new products that we're working on in his group, I'm not concerned about monetization. for those products. I'm concerned about consumer usage, so, if you takes something like, which is growing really quickly, I don't think we've had one conversation about ads for that product and I wouldn't expect to have any conversations about ads for that product until we really nail the consumer DNA for that, and I think we're working on that.

Brad, on some of our traditional projects, mail and AIM, he's under more revenue pressure, but for the new products and services we're under, its probably the exact opposite. Like, put non-pressure on them about monitization because I feel it's more important to have great consumer products and services than it is monetization.

Which execs run Business Alliance? There's Greg Garlinghouse. There is John Broad.

Yep, with Ariana. You have the most media group in patch.

Okay. Who runs patch? John does.

John. Well, John and Ariana both, yeah.

So, it's really Garlinghouse, John, and Ariana.

Ned Broadie runs the B to B business. We service 26,000 other publishers.

And Ned Broadie, which is, yeah.

Of those four, which one is the most talented, do you think?

Which one's the most talented? I think they're all pretty talented and they have different skill sets but.

Which one would you fire, if you had to fire one, which one would it be?

You know, as of right now, they're all on my good list. So I don't have anybody's line.

Why is Arianna editor-in-chief? Why am I not editor-in-chief?

I didn't think you wanted the job!

I 'm not sure, but I probably would have if I knew that, it was, you know, but you could have brought them in under TechCrunch right, so it could have been TechCrunch and then have Arianna report to. I just can't.

I remember we talked about that last year.

We naming the company TechCrunch?

Yeah . AOL has.

Wait, wait, wait. By the way, I'm supposed be your boss here. Are we doing better this year or worse? It looks like its a bigger space. But are we doing better this year, or worse this year? Revenues, tenants?

What's that? Thumbs down, worse this year? Defend yourself up on the microphone is there a mic there? Yeah. There's no mic there, is there? Oh, there is. And we're going to need security to escort him out in a moment.

It 's a fake microphone.

Only the AC unit keeps coming on.

It's a little too cold isn't it?

Well no, it's just really loud.

It is a little loud. Yeah, we'll have that fixed right away.But otherwise, fantastic.

Thank you for coming, and we're sorry you have to leave now.

Hold on, how many people were last year at TechCrunch? Three. So these are all new customers.

I think we had about 1,700 people last year, this year we have 2,100.

Are we making more or less money this year?

We're making a lot more money this year.

Yeah yeah, you know well you'll see later. It was great though because before we got to keep all the money. Now, you know there's no incentive at all for us to be profitable, but somehow...

It seems to be working.

The last thing I'd like to talk about is, we talked about Yahoo! and you're not gonna talk about that. My guess is, in a year there's a decent chance that AOL and Yahoo! are the same company. And that's based on -

Why do you think that?

Well, based on internal memos I've been reading. It seems like both companies are going to struggle alone, but together they have a lot lot of, they have a lot more users.

Do you think AOL is struggling?


How come?

I think there's a plan. If you didn't have the dial-up revenue, the company wouldn't be profitable, would it?

That's opinion.

That should be fact. It might be right or wrong, but it should be fact. It feels like its getting a little insensitive now. I'm not an AOL cheerleader. Although I think that the company is clearly, I've said this before you bought us, is that there's clearly a vision. And clearly we're executing on that vision, unlike Yahoo!

which doesn't seem to have a vision, and we'll see what happens.

So I think we clearly know where we're going.I think we have more work to do,but if you look at our results from last quarter there's a lot of cost issues that Wall Street brought up but when we look at the revenue the display revenue underneath. I think we're making tremendous progress there, and I said publicly that we want to be in industry growth rates by the second half of this year and I think we're on target to do that.

I think there's also really exciting things like Patch locally and other things that we're working on. Look, AOL has been a turn around, we said how it's a comeback. I think we're very clear on what we're doing. It's up to us. I don't think there's any competitive dynamic in the market that's gonna get in the way of us being successful.

I think it's up to us to kind of plow forward, so.

Okay, we get to have one question. Don Dodge?


Hi, Tim Hey Content is king, that was what we heard back in the boom times. If that's true, it seems like you believe content is king, but if that were true, why don't pay walls work? And why does local content monetize terribly?

So one is local content does not monetize terribly. I think that people write a lot of stuff about our investment patch and other things. But you know when you look at the pure monetization, I think somebody wrote an article saying it's getting a couple dollars CPM. You know, it couldn't be further from the truth.

So I think local's actually going monetize at a very great level overall .

And I think, second of all I think paywalls are going work. I think to some degrees people haven't pushed paywalls far enough or made it easy enough.

And I think there's two things with paywalls. One is, what are you putting behind the wall, and is it worth paying for? I mean that's a pretty basic question . The second one is, what's the experience of paying? I think how you pay actually matters a lot, and I think if you look back, I think Apple's done a great job in the music space.

The process of how you do something almost as important as what you get especially in these micropayment areas, so I think people do it. Our strategy has been term believer in paid content also for the web. And I think it's a huge opportunity. So, and it' s been interesting to watch people's negative feedback on content.

I mean people are so incredibly negative on the content models overall.

But I think when you look at the larger dynamics of how consumers are behaving, how the device companies are behaving, and some of the things like Netflix some other things, it's very exciting I think were are at the start of the next evolution of content and the companies that focus on and do a really good job of it will probably build brands for the next ouple decades, if not more.

And part of the reason we bought Techron is because I'm a huge believer in brands overall. I think Techron occupies a pretty unique space. Let me just bring up one other example. When I left Google to go to AOL I was also personal investor, and start ups in New York City like Betaworks and other things like that, and you look at something like TechCrunch from a brand perspective, which You might disagree, it was a mainly California brand for a long time, a Silicon Valley brand, but I think this conference in general shows you What are you talking about?

Were you or no?

We had parties in London and we had a year. That's just ridiculous. We are a global brand.

You 're a global brand with users but I don't think you guys have expanded out of Silicon Valley enough. So, I mean I think in general, Mike will disagree, but the fact there's 2100 people here and TechCrunch is a huge part of New York, that's what we're betting on for the future in all of our spaces.

You didn't fire me when I announced that I had made a bunch of investments in start-ups. So, I'm assuming that that's all fine.

I think that's a good idea, actually.

No problem?

I think there's a whole future of journalism what journalism looks like but I What does it look like?

But I think if you do things that are negative because you made an investments you're going to screw your own personal brand up in the TechCrunch brand.


So, I don't know why you'd have incentive to do that.

I think technically, I violated a policy or something. I think we're good right? On the record? Everything's good. Thank you very much for your time. Is there anything else you want to say? Anything like, you know you really want people to focus? How about this? If people in the audience that don't use any AOL products right now, except for Techcrunch, the one product that you want them to checkout, would it be

Like something you think is really important? is pretty cool. I think the new ...

Who has an

Who has pages? That's not bad. I think also - how many people in here have businesses of you own? So, you should also check out the AOL Sponsored Links product, which is a great little product that actually does a lot of revenue, is growing very quickly. And then I would also say that if you live in a patch town, you should sign up for a patch newsletter because my guess is you'll use the newsletter more than use the site.

It's very useful information; very local, and I live in a patch town. I get a lot of my local information just from the newsletter every day and it takes about five seconds. It's great. All right.

Thank you very much.

Thanks for having me.

And thanks for coming.


We're gonna have a quick session with Jeff Jarvis. Come on out.

You changed sides.

Hey Jeff, I wanted to mix things up a little bit. You know on the agenda I don't think we

There were many other discussions that took place, all of which can be found here under the day one section.

As for Startup Battlefield presentations, they were all incredible. You should all know who the winner was by now (Getaround), and who made it to the finale (all of which can be found here), but one of our favorite presentations from day one involved a startup that was actually one of the Audience Choice Winners from Startup Alley: Happy Toy Machine.

Be sure to catch their whole presentation below and scroll down to check out some of our favorite pictures from day one.

Shub, I think it's pronounced and Kush Bu Shah from Happy Toy Machine with their happy toys.

Hi everybody, I'm Scott and this is Kush Bu, and I wanted to thank everybody who voted for us in the audience choice. These are my props. You 're going to put them out there. Oh yes, let's pass them out to the judges, by all means. So our website is called Happy Toy Machine. And our mission in life is to give users the ability to create cool, cute and crazy custom plush toys online.

So you can call us "CafePress for Toys", you can call us "Build a Bear on Steroids", but that's our mission.including plush toys have done surprisingly well in a networked world and 1.7 billion Meanwhile, more and more customers are getting use to designing their own custom products online at sites like Cafepress, Zazzle, Blanklabel and Chocomize.

We're combining these two trends to create something truly cool and unique for our customers. So I want to talk a little bit about some of our current customers and some of our target future customers. Our initial website launch is targeted at mostly individuals. So Sam is 8 years old, but he's not too old to play with plush toys, especially when you can make them in the shape of a ninja, or a robot, or an alien.

Jessica is 80 years old and while she's not above buying plush toys for her grandkids, she's also not above buying them for her best friend, Ursula, either. In future iterations of the website we hope to target small businesses and organizations. Hendrick would like nothing better than to make a run of plush toys for his kids' t-ball team.

While Andy works for Intel and would like to do the same for his team's next product launch.

So are we going to do a short demo?

When users visit our site, they come to our toy designer and this is where they can design their own custom plush toy. They can change the colors, they can change the body parts. They can change the decorations, they can write their name on it, and do all sorts of things to create their truly own personal and unique toy.

But the really cool thing, is that when your done making your toy online, you can press "Build It" and we actually manufacture the toy, physically manufacture the toy, and send it to you. You see some of the samples littered about up here. You see here a video of just some of the things going on in our factory and this is the really really cool part, this is the secret sauce that above all else enables us to truly make a unique and custom experience for our customers So here's a word from our customers: "Happy Toy Machine." "Happy Toy Machine." "Happy Toy Machine!

Happy Toy Machine! Happy Toy Machine! Thanks a lot. Alright, I was Happy Toy Machine. I like this guy. Alright, so judges, any question about Happy toy machine? How much, on average, are their products? So, we have two sizes, the small size you see here is $30 and the larger size you see sitting over there is about $50.

And it's "all-you-can-eat" pricing, so that includes any features and embroidery you care to put on it. How does that compare to build the bear?

So if you look at, we always compare ourselves to build the bear and so that's $30 is roughly the same as a as a Build the Bear toy, and we offer a lot more customizable options.

Strangely enough in a previous life I was a toy designer, and in the bitching community And if you learn anything, it's the Barbie model, right, the Barbies that cost and it's what you build around it. So I'm surprised, in a custom bear, you're not doing custom stuff for the bear, or is that kind of where you're going next?

That's where we're going once we can hire a couple more programmers.

How do you get customers? How do you, I mean, it's expensive to get a brand out there like this direct to customers outside of going direct to businesses, how are you finding customers?

Right, so in the early stages, and again, we're just getting off the ground, we've done it with word of mouth, now that alone may not scale the business, and we're looking at doing things down the line once we get established a little bit like for instance, partnering with somebody where we can plug our back end into their front end.

For instance if they have a video game with a lot of traffic but nobody is paying for it, and we can help solve their problems and they can help solve our problems.

Yeah, a platform where they can come up with their own arcs, and you just print.

We are not quite there yet. We argued to implant pictures, like upload your own picture and we'll embroider it onto the toy.

I know there is a lot of difficulty in the back in actually making that work. But is that? I mean, do you see yourself more as sort of a tool for other folks to key the distribution, where they come up with ways of coming up with things that can, the way the bear can look. You can okay whether it's actually feasible and work with them, but than they sell it?

We can do that, I mean our initial vision is that we make it, just - it's about simplicity. So If we, if we remove a couple of features but we make it dead simple to design and you don't have any back and forth and fill out forms about what you like and we miss understand what you like, then, all the better.

I always benchmark, I have four kids and I always benchmark it to my 6 year old. If he can use the site unsupervised then I figure we're simple enough.

Is the uniqueness the process where you can take someone where they can build very easily and then you can manufacture with very few people, or is it, is that sort of the...

Right, so
it's in the process, so basically We we've automated as much of the, especially the design process but also the but also the back end process where we developed software that can basically massage the inputs into the outputs that our machines are expecting, for instance, and so we can reduce the manual part of the process to as little as possible.

Why toys versus furniture, other areas, when they have higher margins?

Maybe it's just my experience, because I'm a dad of four. But, when I looked at going into kind of a custom manufacturing, and I kind of came in at it from the technology side, and then I looked at my kids... I said, well, let's not try to convince people to design something that they're not already designing.

And then when I looked and I saw my kids, they were going on or Nick Jr. and they're making these characters. What if we can suck that out of the computer and give it to them? And of course when I brought it up to them, they thought it was a great idea.

Could you use it, though? Because I know, for example, MakerBot[sp?] and the 3D printing has become unbelievably huge for corporate purposes. Is there a business use?

Right, so we did explore also plastic toys, and if we go that way in the future then that could be one way to do it. This is what I'm curious: could you sell to Disney, and say hey I'll do a lot of this hard work, you guys, and, you know, you're selling to a much more intelligent audience who can actually work a little bit more timely with you to you're more of a B to D play, it might make more sense to get greater distribution.

Yeah, yeah I didn't think of that. That's a good point. Very cool. Very nice. Thank you. Yeah. Okay, well, that was Happy Toy Machine. The stars of Alley Audience Choice congratulations for making through this far.

Thank you.

Congratulations those who managed to catch little best choice as well. And that brings us to the end of today's sessions and it brings us to the end of the whole event today. So, let's get one more round of applause for all of our fabulous judges. Thank you, thank you guys for sticking around. I know we were running late today but, but yeah some amazing companies right at the end so it was worth sticking around for and then let me hand you back to Eric.

Yeah so there 's an after party hosted by Media Temple.

Again, a huge thank you to all of our sponsors, partners, and volunteers who helped us make this all possible. Thanks to Zecco who launched Wall Street at Disrupt NYC and placed the first trade on Facebook. And to GE Illustration who captured all of the conference thought-leadership conversations.

If you would like to attend Disrupt SF, September 12th – 14th, extra early bird tickets are on sale now.

If you’d like to become a foundational part of the Disrupt experience and learn about sponsorship opportunities, please contact Jeanne Logozzo.

(Founder Stories) Mike McCue On Surviving A Downturn: The TellMe Years

Posted: 10 Jun 2011 11:15 AM PDT

Mike McCue knows a thing or two about raising a lot of money to keep as a war chest for his startups. Recently he just raised $50 million for Flipboard, but at the end of the first dotcom boom he raised $250 million for his last startup, TellMe. Resuming his conversation from Part I of Founder Stories with Chris Dixon, in the video above McCue dives into additional detail about preforming triage on TellMe, his voice recognition company that narrowly survived the dotcom bust and was ultimately sold to Microsoft for $800 million

With TellMe, the company raised a big round in 2000, just before everything started to crash. McCue had to make some hard decsions to cut back spending and focus the company. At first he laid off 50 people, which was devastating, but it wasn’t enough. “I made the classic entrepreneurial mistake of not laying off enough people, so I had to do another one a quarter later,” he recalls.

His employees and management team started to question his judgement. The first-time CEO found himself in a situation where started to question his own abilities and even started to look for a replacement. But then he had “an epiphany at night.” He asked himself, “What is this new hotshot CEO going to do?” And it was obvious: bring costs down, focus the strategy, start winning customers. McCue had been “in denial about” all of these things, but once he accepted that they needed to be done, he did it himself. “We did it in two weeks, we had a strategy that even the receptionist could articulate,” he says.

It took another three years to become cashflow positive. TellMe focussed on enterprise customers, large telecom companies that needed to automate their call centers and 411 services with voice recognition technology. It took 2 to 3 years to win a customer, and then another year to get them live, but these big enterprise customers drove a huge amount of revenue. By the time Microsoft came calling in 2007, Tellme had a $110 million revenue run-rate.

But that is not why Microsoft bought TellMe. In the video below, McCue explains that it was the bigger vision of voice search that appealed to Microsoft. He always thought the enterprise business would be “eroded by the Web.” Even though the financial reality forced him to pursue the enterprise business first, he always thought bringing voice search to consumers would be bigger over time. “I kept the consumer stuff alive on life support,” he says. “It was a reason why customers worked with us because we had a vision of where everything was going to go.”

That vision is still playing out today with Apple’s acquisition of Siri, Google’s work on voice commands and search on mobile, as well as TellMe’s technology which became part of Windows Mobile (now Windows Phone). “When you are using a phone you are doing it in a distracted state of mind,” he says. Being able to speak commands and get back results, directions, or other information right on your screen is still justin its infancy. But McCue is onto other things with Flipboard, which he will talk about in the next episode.

Make sure to catch past episodes of Founder Stories with guests ranging Dennis Crowley and Mike Walwrath to David Karp and Lauren Leto here.

With Neighborhoods And A New Website, SoundTracking Sounds More Like The “Musical Postcard”

Posted: 10 Jun 2011 11:13 AM PDT

When we first covered the launch of SoundTracking back in March, co-founder Steve Jang explained his vision for the service as a sort of “musical postcard”. That is, it’s not just about the music, it’s about the music mixed with location and images to convey a true sense of place alongside your musical expression. With a new iPhone update and completely revamped website, SoundTracking is closer to this concept than ever.

The latest version of the iPhone app (version 1.1), adds a new feature called “Music Neighborhoods”. This allows a user to post a song to an area of a city that’s not a specific venue. You can also post a song on the higher city level as well. In addition, users can now browse all SoundTracking posts by neighborhood/city. “We think there is a music personality to neighborhoods and cities,” Jang says, and the new feature aims to expose that.

SoundTracking is using SimpleGeo’s APIs to do this, and Jang hints at a feature down the road where you may be able to load up the app and discover music on the fly simply by entering a new neighborhood. Musical geo-fencing.

But the original venue concept is still important to SoundTracking as well. With version 1.1 of the app, they’ve expanded it a bit. Using Foursquare’s API, SoundTracking can now find trending venues as well as your favorite venues (assuming you connect your Foursquare account).

Improved location is one aspect of getting closer to the musical postcard, the other is the visual aspect. SoundTracking has also improved the music post view to place comments, likes, and loves cascading below the image. This leaves the image itself cleaner and more emphasized.

But the bigger improvement in the visual sense is the new SoundTracking website. While there is a traditional feed view where you can use SoundTracking just as you would with the app (liking, loving, commenting, etc), the more interesting view is the large image one. Jang calls this the postcard view, and it puts a huge emphasis on the images (either album artwork or your own images).

“If a picture is worth a thousand words, then what is a song and a photo worth?  The metaphor of a ‘musical postcard’ is something we thought about as a description of what we wanted to allow people to quickly create, share and view with friends,” Jang says, noting that these updates improve upon that vision. As a higher level, “the SoundTracking app and community is designed to not only offer music discovery through social, which is the usual goal for most social music services, but it is also intended to offer social discovery through music,” he says, noting the integration with Facebook, Twitter and Foursquare (in addition to their own, quickly growing community).

The updated iPhone app, which can be found here, also features new user profiles (including bios) and performance enhancements.

SEC Watch: Female-Focused Personal Finance Guide LearnVest Raises $12 Million

Posted: 10 Jun 2011 11:10 AM PDT

Personal finance site for women LearnVest has raised $12 million in new funding (out of a $19 million round) according to a recent SEC filing. Last year, the startup raised $4.5 million from Accel Partners and seed investors.

LearnVest, which launched at TechCrunch50 in 2009, has a simple goal: to help women organize their finances and learn how to become financially savvy. It's kind of like an online version of financial planner Suze Orman blended with personal finance site

For example, the startup launched three online programs last year, called ‘bootcamps,’ to educate women on various financial subjects, including a Financial Basics Bootcamp, Cut Your Costs Bootcamp, and Investing Bootcamp. The company also sends users a daily email with financial tips and information called the LearnVest Daily.

Founded by entrepreneur Alexa Von Tobel, the startup is filling a big hole in terms of providing an online destination that is catered towards educating women about finance. And LearnVest has captured a bunch of mainstream attention, including appearances on The Today Show, Nate Berkus and others. As Von Tobel told us last year, “we are focusing our passions on educating women and helping them solve financial problems.”

Google Offers Is A Cheap Knockoff

Posted: 10 Jun 2011 10:28 AM PDT

Editor's note:This guest post was written by Rocky Agrawal is an entrepreneur who has worked on local products since 1995.  He blogs at reDesignand Tweets@rakeshlobster. His previous post was Why Daily Deals Are Becoming A Raw Deal.

Google’s recently released Offers product is showing mixed success in Portland, its first market. In this post I will try to look at both the good and the bad of Google Offers. As I point out below, they get an A- for effort, but a C for originality.

Since launch, the offers have included discounted coffee, pool table time, a Lebanese restaurant, tanning services and a pedicab brewery tour. The coffee and restaurant deals did very well, while the pool table time and tanning services didn’t come close to their sales caps. The pedicab sold 26 out of 700. The contestants on The Apprentice generated more revenue from pedicab tours—$1,270 vs. $1,170.

Perhaps not coincidentally, the successful deals provided the most generous and obvious discounts on everyday needs (70% off and 50% off.) The tanning deal was a 75% discount off a fake price. (The same salon offers promotions that are lower than Google’s listed regular price. Some tanning salons give away free tans to new customers.)

Google in Portland

For the past six months, Google has been aggressively marketing its local services in Portland. It’s easily the largest Google consumer marketing campaign I’ve seen. By my estimates, they’ve spent at least $1 million promoting Google Places. Street teams have been out encouraging businesses to claim their business on Google Places and giving them NFC stickers for their store windows.

Google has sponsored events including a bus tour to four Portland microbreweries, three private concerts with tickets given out at local businesses, as well as numerous cocktail parties. They’ve also given out a lot of Google gear. (See this slideshow of Google’s marketing activities.)

Although I would have done a few small things differently, it’s been a really solid effort. I would rate it an A-. They’ve created awareness of Google’s local and mobile offerings and highlighted local businesses. It’s very much along the lines of what Yelp did in its early stages to foster community, only with a much bigger budget.

What I really like is that they’ve promoted quality and differentiated experiences.

Google Offers vs. Groupon

The structure of Google Offers are very similar to Groupon. There are some differences around the edges:

  • Google has a 60-day return policy. Groupon’s is indefinite.
  • Google explicitly puts the risk of merchant bankruptcy on the deal purchaser. Groupon doesn’t address this, but the Groupon Promise is broad enough that it should cover this.
  • Google provides 360-degree interior views of some businesses. These are mildly interesting, but I’d rather see a slideshow with various elements that illustrate various dishes and ambiance.
  • Google doesn’t have a tipping point. If only 1 person buys the deal, it’s active.
  • Google doesn’t offer its customer service number on its Web site; you have to enter your phone number and wait for a call back. Groupon has a toll-free number listed.
  • Google’s payment terms for merchants are more generous, with merchants receiving 80% of their share in about four days. Groupon pays out 1/3 in 5 days, 1/3 in 30 days and 1/3 in 60 days. If Groupon is forced to match this, this could be a real issue for Groupon as their S-1 warns that “We use the operating cash flow provided by our merchant payment terms and revenue growth to fund our working capital needs.”

The biggest potential difference that we can’t see is the cut that Google takes of each deal and how it compares with the cut that Groupon takes. Neither company is transparent about this and the ranges are wide. In some cases, the deal company pays the merchant more than the revenue generated; in other cases, they want all of the revenue and the merchant gets nothing.

Despite all of Google’s recent talk about Google Wallet and Offers with NFC payment, that’s not available yet. Nor is a mobile app. Groupon has long had a mobile app that allows you to redeem offers without a printout.

Not Googley

Google has long been a leader and an innovator in local and mapping. I remember when I first saw Google Maps, it was a wow experience that was way ahead of Mapquest. That gap has steadily grown over time.

That’s why it’s so disappointing to see a product that is essentially a knock off with no meaningful improvements over what’s out there.

Google’s products have typically revolved around solving hard problems with innovative technology. Even failed products like Google Wave and Google TV have tackled really difficult problems. Offers does not. It’s just a ploy for revenue.

One area where I expected Google to excel—given their bias toward data—was in collecting data. In order to truly determine if an offer works for a business, you need to track a number of metrics: percent of deals sold to existing customers, unredeemed offers, fraudulently redeemed offers, repeat visits from offer purchasers, sales above voucher face value, sales below voucher face value, average ticket size and more. Data on redemption patterns could be used for capacity planning.

With the high margins built into the daily deals business, it would be possible to equip merchants with a $200 Android tablet that could do all of this.

This is also important for fraud prevention. For the offer that I redeemed at Floyd’s Coffee, for instance, the cashier manually copied the coupon number onto a piece of paper. It would be easy for someone to print out dozens and redeem them because they are not validated in real time. This is an even bigger issue at merchants like Floyd’s, which have multiple locations. While Google does offer online validation via PC or mobile device (as does Groupon), some businesses don’t have the infrastructure in place. Even adding the ability to validate by SMS would significantly improve validation and tracking.

These data are also critical to understanding behavior and designing future local products. The tablets could also be used for future offer management purposes.

All in, it’s a weak first effort and I hope it fails. I’ll talk about why in the next post.

TechCrunch Giveaway: Motorola Xoom And Free Ticket To Disrupt SF #TCDisrupt

Posted: 10 Jun 2011 10:11 AM PDT

Sadly, Disrupt NYC is over. However, we saw amazing new startups and had the time of our lives in New York City. You can find all of the pictures from Disrupt NYC here and take a peek at all of the videos we captured, including backstage footage here. The ultimate guide for Disrupt NYC can be found here, and we will also be breaking down some of our personal favorite moments in the days to come.

We are very excited that the second Disrupt of this year is taking place in San Francisco! We will have more of the best new startups, all-star guests and speakers, after parties, and many more surprises that will be revealed in the upcoming weeks. Disrupt SF starts on September 12th and goes through September 14th. Today, we are giving away one free ticket away to one lucky reader. Not only are we giving away one free ticket though, thanks to, we are also giving away a free Motorola Xoom.

Want the Xoom and a chance to come with us to Disrupt in SF? Just follow the steps below.

1) Become a fan of our TechCrunch Facebook Page:

2) Then do one of the following:

- Retweet this post (making sure to include the #TCDisrupt hashtag)
- Or leave us a comment below telling us why you want to come

The contest starts now and ends June 12th at 7:30pm PT.

Please only tweet the message once or you will be disqualified. We will choose at random and contact the winner this weekend with more details. Anyone in the world is eligible, as long as you can receive delivered packages.

Good luck :)


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