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Microsoft Says Rustock Botnet Still Dead, Advertises In Russia To Notify Culprits

Posted: 06 Jun 2011 09:06 AM PDT

As you may be aware, nearly two months ago Microsoft and federal law enforcement agents cracked down on the infamous Rustock botnet, which was responsible for a lot of the spam you hopefully never receive.

This morning, the Redmond software giant posted a status update on its company blog, positing that Rustock is still “dead and decaying”.

Microsoft also surprised with the announcement that it is placing quarter-page advertisements in two mainstream Russian newspapers “to make a good faith effort to contact the owners of the IP address and domain names that were shut down when Rustock was taken offline”.

As promised.

Microsoft says it has taken several technical countermeasures to prevent the bot's self-defense mechanisms from reanimating it, and that these efforts have been successful. The company says the number of infected IP addresses decline as more and more people update their software or get malware removed from their computers.

Nevertheless, some reports claim the takedown hasn’t actually made a dent in spam.

The company adds that its Digital Crimes Unit continues to follow this case, and that based on evidence gathered, the perpetrators likely operated or are operating out of Russia.

Microsoft will now run ads in the Delovoy Petersburg and The Moscow News to notify the owners of the IP address and domain names that were shut down of the takedown as well as the date, time and location of hearings where they will have an opportunity to make their case. This in addition to setting up this website.

The company says it realizes that the people associated with the IPs and domains will probably not come forward in response to a court summons, although they say they still hope the defendants in this case will present themselves. That won’t happen, of course, so Microsoft also says it intends to pursue this case, including possibly within the Russian judicial system.

We’re Live At Microsoft’s E3 2011 Press Conference!

Posted: 06 Jun 2011 09:05 AM PDT

Here we are, live in the heart of USC’s Galen Center, as we wait for Microsoft to kick of E3 2011 in a big way. We’re expecting big things from Microsoft this year. But will it be Kinect big? Last year Microsoft used this very venue with a bit of help from Cirque du Soleil to announce the company’s – can I say revolutionary? – motion controller. But will 2011 be as important as 2010? That’s what we’re going to find out in the coming minutes!

Read More

Accel Adds Enterprise Data Storage And Infrastructure Exec Kirk Bowman As Venture Partner

Posted: 06 Jun 2011 09:03 AM PDT

Accel Partners has a long, and well-known history of making solid investment bets on popular consumer facing web and mobile platforms, including Facebook, Groupon, Etsy, Trulia and Angry Birds. But the firm is also making significant movements in the enterprise cloud storage and infrastructure space with investments in Cloudera, Couchbase, Nimble, Springsource, Atlassian, and DropBox. The fact is much of the core infrastructure that is provided by many of these enterprise companies provides a foundation for consumer facing companies. Today, Accel is adding a seasoned executive in the infrastructure and storage industries with Kirk Bowman joining as a venture partner in the company’s Silicon Valley office.

Prior to Accel, Bowman was the executive vice president of field operations at data storage system company Equallogic, which was acquired by Dell in 2008 for $1.4 billion. Bowman was also executive vice president of field operations at VMware and held sales executive and general management positions a number of enterprise companies including ModelN, Parametric Technology and Inktomi.

Additionally, Bowman lectures at Stanford’s Graduate School of Business where he teaches a course in building and managing professional sales organizations. And he is currently an investor in and board member on severalIT infrastructure and cloud companies, including Nimble Storage, Delphix, and Coverity.

At Accel, Bowman says he will work closely with existing and new portfolio companies that deal with software and IT infrastructure.

Accel Partner Ping Li tells us that the firm currently has around 4 to 5 partners who are spending the majority of their time on enterprise investments. Li says that with the proliferation of data on the web, there’s a movement towards providing technologies to help companies mitigate this data overload. The two big trends that are taking place in the enterprise storage space, says Li, are how businesses can efficiently store massive amounts of data and how companies can extract value from this data.

Bowman agrees with Li, and explains that there is still a lot of room for innovation around storage and enterprise infrastructure. He tells us “cloud-based storage will dominate certain segments of the enterprise, and other segments will be dominated by on-premise.” And he believes we are still in the early stages of developing new IT architecture.

Accel isn’t the only venture firm to staff up on seasoned enterprise talent of late. Andreessen Horowitz also recently added former Veritas and Citrix Exec Peter Levine as a venture partner, in the effort to have expertise in virtualization and data storage investments.

Data storage and cloud platform are both spaces where there are a number of major exits and massive growth taking place. HP acquired 3Par for a whopping $2.4 billion and EMC just acquired Ipsilon for a cool $2.25 billion. DropBox (which is an Accel portfolio company) and are both growing fast, and could be major acquisition targets in the future. Debuts Live-Streamed Video Gaming Portal And Community TwitchTV

Posted: 06 Jun 2011 08:59 AM PDT

Startup has long offered live video streaming through its web platform as well as through various mobile apps. In fact, serves more than 300 million live videos per month. But besides streaming events, the startup hasn’t really expanded to categorized verticals. Until now. Today, is unveiling TwitchTV, a live-streamed video game portal and community for gamers.

TwitchTV features competitions of a variety of games and platforms with top gamers, tournaments and commentary. The platform aims to be a one-stop-shop for live video for ‘eSports,’ which says is synonymous with competitive video gaming. The company says because of the massive presence of online video in the gaming space, a live video portal for the vertical made sense.

The startup says that the portal soft launched a few months ago and has already seen an increase in engagement with the videos. Gamers are watching about 4.5 hours of video per month, and the site is seeing 3.2 million unique users per month and 45 million video views per month.

In order to draw more vistors, TwitchTV is partnering with video games portals and tournaments to add compelling content to the site. Currently the site features live video game battles and commentary from titles like Halo:Reach, Starcraft II, World Of Warcraft, Call Of Duty: Black Ops and others.

This week, is partering with Gamestop to stream over 90 hours of content from the video game convention E3.

TwitchTV is also featuring a program where gamers and tournaments can share in advertising revenue generated by live video streams. The company is also hoping to monetize through other premium content formats, including pay-per-view videos as well as subscription based models.’s CEO Michael Seibel says that the company does not plan to move into other verticals in the future but though e-sports was compelling because of the massive userbase around video games on the web. And the startup can tap into a built in set of advertisers.

In terms of competition, TwitchTV will face competition from Own3DTV and Break Media.

Also worth noting is another side project of—Socialcam. Launched a few months ago, Socialcam is sort of an Instagram for video, and provides users with a mobile and web app to share video with friends on Facebook and Twitter.

Mu Sigma Helps Companies Analyze ‘Big Data’, Raises $25 Million From Sequoia

Posted: 06 Jun 2011 08:37 AM PDT

Mu Sigma, a startup that provides ‘decision sciences’ and analytics services to help companies make business decisions based on ‘big data’, has secured $25 million in Series C financing from Sequoia Capital.

Mu Sigma in a press statement says it currently employs some 1,200 analysts (and growing), mostly based in India, in an effort to build the world’s “largest applied math lab”.

Shailendra Singh, Managing Director at Sequoia, posits that Mu Sigma offers ‘the most impressive analytics service’ of any company the investment firm has met with over the years.

Headquartered in Chicago, Mu Sigma raised its first institutional venture money from FTV Capital back in 2008.

Live From Apple’s WWDC 2011 Keynote

Posted: 06 Jun 2011 08:26 AM PDT

We’re live in not-so-sunny San Francisco, where Apple is hosting their annual Worldwide Developer Conference — and, more directly important to the masses of Apple fans around the world, the WWDC Keynote.

We already know some of what Apple’s announcing: OS X Lion, iOS 5, and a new, mostly-mysterious product called iCloud. From what we’re seeing, though, they’ve still got at least one secret up their sleeve. Join us after the jump for all of our up-to-the-second updates.

The main event begins at 10 a.m. Pacific. Tune in early, though: we’ll have color commentary and pictures from the scene beginning by around 8:45 a.m.

Greenvity Raises $7 Million For Chip Technology To Make Electronics, Vehicles Smarter

Posted: 06 Jun 2011 08:09 AM PDT

Greenvity, a startup that makes “system on a chip” (SOC) technology for use in smart grid-connected equipment or energy saving consumer electronics, has raised more than $7 million in a series A round led by DFJ VinaCapital. The round was joined by undisclosed angels and one chip manufacturer, reports managing director of the Ho Chi Minh City-based venture fund, Phuc Tan.

Greenvity’s chips could be used in everything from energy meters, home appliances, electric vehicles and solar inverters to mobile phones and routers, Tan confirmed.

In an e-mail interview with TechCrunch, the investor also explained:

“[Today] only a small number of devices and appliances in the home incorporate energy saving features, partly because of cost…and the lack of a robust enabling technology. Greenvity's [chip technology] paves the way for a larger number [of these] to have smart, energy saving features.”

Greenvity plans to generate revenue by selling chips to manufacturers, but hasn’t ruled out the possibility of licensing its technology. So far, the startup— which has significant operations in Vietnam— is working with prospective customers that manufacture: home appliances, smart meters and set top boxes, so far. Its customer list is confidential due to non-disclosure agreements, however.

Designed to work with a range of CPUs including: the X86 Intel embedded CPU, Atom CPU, ARM CPU, and custom embedded CPUs, Greenvity’s chips will also include encryption and security features. That could make Greenvity’s technology distinct from competitors’ offerings. The “system on a chip” space is crowded. A handful of U.S. based competitors to Greenvity range from: Conexant to Palmchip and Texas Instruments.

Greenvity will focus on markets in countries where smart grid infrastructure is taking off, affordable smart devices are in demand, and energy costs or consumption are on the rise. Its sales efforts in the near term will be throughout the U.S., Europe, China, Japan, Korea and Taiwan, Tan confirmed.

RethinkDB Expands Beyond SSDs, Launches Its Speedy Database To The Public

Posted: 06 Jun 2011 07:08 AM PDT

Back in July 2009 I wrote about an ambitious Y Combinator-backed startup called RethinkDB that was setting out to create a new kind of database, built from the ground up for solid state drives (SSDs). It was an intriguing idea — SSDs are faster and more reliable than traditional platter-based drives, and they’re becoming less prohibitively expensive. But, as it turns out, there are still a lot of people who are using traditional drives, particularly on services like AWS. So RethinkDB decided to shift gears. As founder Slava Akhmechet puts it, “We changed because we would have been leaving so much money on the table.”

Which brings us to today: RethinkDB has just launched its 1.0 release to the public, and it’s offering a product geared toward NoSQL installations — and it will work on SSDs, traditional drives, and cloud-based services like AWS. The startup has also moved away from MySQL and now fully supports Memcached.

Akhmechet says that the main incentive to use RethinkDB is speed — he believes that it’s eight times faster than other solutions on the market. He adds that while it’s “pretty easy to build something that’s faster at one thing, it’s harder to do fast in general. And we’re fast in general.” The company has some detailed benchmarks listed on this page. In addition to improved load times, Akhmechet says that RethinkDB can actually save companies money by reducing how much they need to spend on infrastructure and cloud services (for example, he says you could jump from a high-end node on EC2 to a less expensive tier and achieve the same performance).

Here are some of the use cases from RethinkDB’s website:

It can be used as a replacement for Memcached in a caching infrastructure, or Memcached-compatible key-value store products such as Membase, MemcacheDB, Tokyo Tyrant, and Schooner Membrain. RethinkDB is designed for exceptionally high performance and reliability on a wide variety of workloads and edge cases. It is especially useful for the following reasons:

  • Handle important workloads that competing solutions are unable to handle (e.g. fast startup time, high performance when data goes out of RAM, handling of unusual burst activity, highly unbalanced or variable read/write ratios, large database size, etc.)
  • Provide sophisticated durability tuning and guarantees to allow the administrators full control of performance and durability tradeoffs.
  • Significantly increase performance of your caching and key-value store infrastructure to allow your existing hardware to scale to much higher load.

Akhmechet says that the company is in talks with multiple popular sites about deploying their software, though at this point he can’t talk about them.

For pricing, RethinkDB is offering both free and premium plans. The free option includes a commercial license and all current features — a premium version, which runs $1500 per machine per year, includes support and all future software updates. Akhmechet says that the free version will get security updates, but that it won’t necessarily receive new features in the ture, whereas the premium version will. There’s also an option for enterprises to purchase at a discount.

RethinkDB raised $1.2 million in April 2010 and is currently in the process of raising another round at what Graham says is a surprisingly high valuation.

ShareThis Study: Facebook Accounts For 38 Percent Of Sharing Traffic On The Web

Posted: 06 Jun 2011 07:00 AM PDT

Sharing is big on the Web. We all know that. But exactly how big? ShareThis has some answers in a study it put together with Starcom MediaVest Group and Rubinson Partners. Looking across the sharing and clicking habits of the more than 300 million people a month who pass links with a ShareThis button on over a million websites (producing 7 billion pageviews a month), a few things stood out.

Overall, sharing now produces an estimated 10 percent of all Internet traffic and 31 percent of referral traffic to sites from search and social. Search is still about twice as big.

When it comes to sharing on the Web, Facebook rules. Facebook accounts for 38 percent of all sharing referral traffic. Email and Twitter tied for second with 17 percent each. Those are the percentages that actually clicked through. The raw sharing numbers are higher. Facebook makes up 56 percent of all shared content (up from 45 percent in August, 2010), followed by email at 15 percent (down from 34 percent) and Twitter at 8 percent (down from 12 percent). The difference between these two sets of numbers is that some content is shared that is never clicked on, thus the raw numbers are higher.

Facebook may be gaining share, but Twitter is holding its own in terms of actual clicks. On average, Twitter links are clicked on 4.9 times each, versus 4.3 times for Facebook links and 1.7 times for emailed links.

But sharing isn’t as viral as most people might think. Links are much less likely to be clicked beyond the initial set of people they are shared with. In other words, if you share a link directly with me and I know you, I will probably click on it. But if I then pass that link along to people once or twice removed from you, the chances they will click on the link falls dramatically.

And when it comes to sharing, 80 percent of people share only one category of links and more than 70 percent will only ever click on one category, whether that is business, politics, or entertainment. Facebook is especially strong when it comes to sharing entertainment and even shopping links, whereas email and Twitter seem to make some inroads when it comes to business or health.

Two Hours Before Opening, The WWDC 2011 Line Was Already 4 Blocks Long

Posted: 06 Jun 2011 06:58 AM PDT

Excited about Apple’s developer conference, are we? According to Storify founder Xavier Damman, the line for WWDC 2011 was already 4 blocks long at 6:15 AM.

That’s almost two hours before the doors open and nearly four hours until the keynote session.

Update: TechCrunch is currently live at WWDC 2011.

And as noted by Business Insider, at 4:15 AM the line was already two blocks long, too.

Damman has a video to prove it:

Intertainment Gets In On The Daily Deal Frenzy, Acquires

Posted: 06 Jun 2011 04:44 AM PDT

Canada’s Intertainment Media has agreed to acquire Canada’s, a me-too daily deals site. The company coughed up half a million dollars in cash and $200,000 in Intertainment common stock at $1 CDN per common share to purchase its technology, deal pipeline and team.

The acquisition is expected to close by the end of this month (Intertainment is a publicly listed company so needs regulatory and board approval first). isn’t actually live yet, and is scheduled to become available in early July 2011. According to the press release announcing the acquisition, DealFrenzy has partnerships in place with brands like Yogen Fruz, Things Engraved and Jamba Juice.

The service will be integrated with Intertainment’s Ortsbo, a real-time experiential translation platform, allowing offers to be communicated in over 50 languages. I don’t know how valuable that will turn out to be for a local commerce service, but that’s just me.

In addition, Intertainment’s KNCTR platform will provide registered DealFrenzy members with free voice communications and other social media tools in order to offer more communication means for collective buying of deals.

Birch Secures $77.5 Million To Repay Debt, Fund Acquisitions And Growth

Posted: 06 Jun 2011 04:29 AM PDT

Atlanta-based Birch Communications, an IP-based telecom and managed services provider to SMBs, has scored a $77.5 million finance package which will serve to repay outstanding indebtedness. The capital will also be used to fund future acquisitions, network build-out and for 'general corporate purposes' (new coffee machines ftw!).

Waze Launches Its Social Sat-nav App For Traffic-Mad UK Drivers

Posted: 06 Jun 2011 12:48 AM PDT

In December last year Waze, the social traffic and navigation app for smartphones, raised a hefty $25 million Series B round of funding. With growth doubling from 2 million users worldwide in December last year to four million users in 45 countries now, Waze clearly knew it was on a roll. And today it launches its app in the UK [iTunes link]. (Indeed, I’ll be interviewing Waze’s VP Community Geographer Di-Ann Eisnor tonight in London at this event.

To kick off the UK launch Waze CEO Noam Bardin struck a deal with Denver-based Intermap in February to provide users with a base road grid across Britain on which they can play. Intermap has re-mapped entire countries and built uniform national databases for Europe – so expect plenty more European country roll-outs from Waze based on this data (France and Italy are already live).

Moshi Monsters, The Social Networking Game For Kids, Passes The 50 Million Users Mark

Posted: 05 Jun 2011 11:59 PM PDT

Two years ago, Mind Candy was just another online gaming company. It had some minor success with interactive puzzles and an alternative reality game called Perplexcity, but the future wasn’t exactly bright. As entrepreneurs are wont to do, Mind Candy CEO Michael Acton Smith made one "last roll of the dice" and created a virtual world game for kids called Moshi Monsters. Though the move may have been a last ditch effort to save a stagnating company at the time, today the move seems a stroke of entrepreneurial genius.

On Monday, Mind Candy announced that Moshi Monsters has passed the 50 million registered users mark, with 15 million of those users in North America, and is one of the fastest growing children’s entertainment brands in the world. In February, Moshi Monsters had racked up 35 million users, so in less than 4 months, the game has added another 15 million.

For those unfamiliar, Moshi Monsters is a game that enables kids to adopt one of six virtual pet monsters that they can customize in various ways and add the monster to their own virtual room, which can be outfitted with virtual goods. Kids can then navigate their way around “Monstro City”, and solve puzzles to earn virtual currency, which they can use to personalize their monsters and their personal rooms, or communicate with friends in a social networking environment.

Geared towards kids 12-and-under, Acton told my colleague Erick Schonfeld that the idea behind Moshi Monsters was to create not "just another bloody virtual world", but a safe social network. "Instead of copying Club Penguin," he said, "we focused more on Facebook and tried to re-imagine that for kids." As such, there is pin board where friends can leave messages and a news feed, but there are also games, quizzes and virtual world activities.

Part of Moshi Monsters exponential growth it seems is its movement into offline products, having launched toys, books, video games, trading cards, and even a “Moshi magazine” within the UK and Australia. Today, Mind Candy is announcing that children’s entertainment company, Spin Master, has become the startup’s U.S. toy partner and that Moshi Monsters toys will launch in North America this summer via an exclusive partnership with a major retail partner (to be announced soon).

Besides the fact that Moshi Monsters books from Scholastic and Topps trading cards are already on shelf in the U.S., the company is also working on music, live tours, TV shows — and even a Moshi Monsters film. It probably wouldn’t be crazy to speculate that Moshi Monsters Happy Meals are on the way, too.

From near-bankruptcy in 2008 to 50 million registered users and $100 million in expected gross retail sales in 2011, Mind Candy and its Moshi Monsters have pulled off quite an impressive turnaround. As younger generations continue to become more and more wired, activities thought reserved for older audiences are proving to be equally as appealing and successful among younger audiences. It will be interesting to see if Moshi Monsters can follow in the footsteps of Pokemon and become more than just a passing fad. If its crossover into offline markets flies, it could be that we have the next Barney on our hands.

For more on Mind Candy and Moshi Monsters, check out TCTV’s interview with Mind Candy CEO Acton Smith here, and Paul Carr’s in depth coverage here.

Lady Gaga, Eric Schmidt And Others Invest Over $1M In Backplane

Posted: 05 Jun 2011 11:30 PM PDT

What do Lady Gaga and Google Executive Chairman Eric Schmidt have in common?

Well according to a very interesting piece in the New York Times by former TechCruncher Evelyn Rusli, they’ve both invested in Backplane, a new startup founded by Lady Gaga’s business manager Troy Carter.

Schmidt’s Tomorrow Ventures and Gaga have partnered up to finance Cartier’s still in stealth startup, with Gaga being a 20% shareholder. Tomorrow Ventures is leading the angel round, which is currently at over $1 million. It is not clear yet as to whether the round has closed.

The startup, which we hear is in talks with entities like the NFL and other musicians, will blend technology and entertainment and plans to provide a venue for online communities by combining brands’ various social media presences into one platform.

Gaga is an advisor as well as an investor, and apparently has incorporated elements from her music videos and tours to add “authenticity” to the site’s design. Omg I can’t wait to see it.

Fresh off completing partnerships with Zynga, Google, Gilt and Amazon, it seems natural that Gaga go the Ashton Kutcher route and start investing in startups herself.

Her manager Carter, who spoke at the first New York TechCrunch Disrupt, is also an investor and has funded companies at the cusp of entertainment and technology like Bre.adLumier and TinyChat in addition to Backplane.

Backplane will launch this month and I’m in the middle of tracking down founder Matt Michelsen, so you’ll be hearing more about it here. Promise.

In the meantime here’s Lady Gaga’s “Google Chrome” commercial. I have no idea how I missed this.

We’re (Almost) Live At E3 2011 In Los Angeles

Posted: 05 Jun 2011 09:27 PM PDT

The biggest gaming convention in the US is about to be underway here at the Los Angeles Convention Center, and we’re covering it live. We’ll have video streams, posts, and direct feed from the latest games, as well as interviews and the inevitable “bloggers at bars” footage. It can all be found at our E3 2011 tag, soon to be bursting with gaming flavor.

We expect new systems from both Sony and Nintendo and hands-ons with a ton of new games. Not only that, but as with our CES and Disrupt coverage, you’ll be able to communicate with us live, sending requests, questions, kudos and jeers via Twitter. There may even be some giveaways. How is this possible and when should watch, you ask?

Read on.

Eric Schmidt And Others Invest In Rich Media Display Ad Startup Spongecell

Posted: 05 Jun 2011 08:57 PM PDT

Spongecell, a startup that places rich media ads in display advertisements, has raised a new round of financing led by Eric Schmidt and Jim Pallotta, Chairman and Managing Director of Raptor Group. Participating in the round are Brian Rooney, Board Member of the Pittsburgh Steelers, and Silverhaze Partners. The amount of the round was not disclosed but we heard from people familiar with the matter that the investment was just under $1 million.

Spongecell transforms standard banner ads into rich-media-like interactive ads that can run in display ad formats. SpongeCell’s ads include video, social media, interactive maps, carousels, and downloadable/SMS coupons, and can be created and implemented within a matter of days. The startup’s technology can be integrated with popular ad serving platforms such as DoubleClick or Atlas.

Spongecell says its ads improve engagement rates from 2.4% to 11.9%. Interactions within Spongecell ads are anywhere from two times to eight times as frequent in comparison to average display ads.

Founded in 2006 by a team of Carnegie Mellon computer science graduates,
Spongecell previously raised capital in 2007 from Halo Venture Partners, The
Pilot Group and SilverHaze Partners. Spongecell actually started out as an Ajax calendar built on the Ruby on Rails platform. CEO Ben Kartzman says that the team pivoted from this model and started offering ads within widgets, but agencies and marketers didn’t respond with the sort of enthusiasm that could build a lasting business.

Kartzman says that the startup decided that display ads would find a resurgence and brought rich media to display ads. And the bet is paying off. Spongecell is working with around eleven large ad agencies to help bring rich media to their client’s display ad campaigns.

And Spongecell has gotten a big endorsement in the form of an investment from Schmidt, former CEO and current chairman of Google, which is a giant in the display ad space.

Kartzman says that when he sat down Schmidt, he said that the startup’s technology is essentially the future of display, calling Spongcell ‘everything that display advertisement can be’ in the future. Coming from Schmidt, that’s a huge compliment.

Instagram Turns Your Likes Into Photo Albums

Posted: 05 Jun 2011 08:06 PM PDT

Social photo app Instagram pushed out a new update today on the iPhone. The first thing you notice is that uploads are a lot faster. Speed, quite frankly, is one of Instagram’s competitive advantages. But the update also includes some new features, the most important of which is the ability to see all the photos you’ve liked in the past.

It sounds pretty basic—and it is—but up until now Instagram has been a fleeting slideshow. Just like a stream of tweets, the Instagram feed is a realtime stream of photos. You had to launch the app to check it out. If you miss some, no biggie, more will keep filling your feed. But there wasn’t even a way to save photos other than your own. You could “like” someone else’s photo or comment on it, but that was it. Now, all of the photos you’ve ever liked are organized for you in their own album. You can find them under “Photos you’ve liked” in your profile, right under “your photos.”

Now liking a photo is not just a lazy signal, it is an act of curation, or at least a handy way to save photos. I like that very much.

The update has a few other features, such as auto-completing hashtags in comments. This is not something I personally do that much, but maybe I would if there was a way to organize photos by hashtags. Also, profile photos are now saved to your iPhone’s photo library and you can add a link to a website to your bio so that other members can learn more about you.

Will Airbnb Ever Be “The Airbnb For X”?

Posted: 05 Jun 2011 08:02 PM PDT

"If your company is ever used as the subject of the “X for Y” analogy, that’s success. AirBnB used to be the eBay for vacation rental. Now other companies are the Airbnb of things."

far33d, Hacker News

With Airbnb about to enter the billion-dollar startup club, we've seen an influx of "X is Airbnb of Y" headlines. While the "X for Y" trope is extremely common in the notoriously unimaginative realm of tech reporting, the real reason "Airbnb for X" has become a cliche is that it's a lot easier to write (and read) than "collaborative consumption."

The collaborative consumption space, which basically includes almost all marketplace startups that provide accoutrements like payment and reputation platforms for users who want to buy and sell from each other, is SO HOT RIGHT NOW.

As Forbes writer Nicole Perlroth put it, "The Airbnb of office space!, The Airbnb of tutoring! Airbnb for cars! And my personal favorite, Airbnb for experiences!" (Note: I am probably the worst this offender on the TC team).

Airbnb seems to be the one that got away for many investors, who are now closely watching the roster of startups that are slowly disrupting certain sections of Craigslist (and in the case of Airbnb, doing this literally).

With over 60K listings on the site and 50% bookings growth monthly, its no surprise that the pioneering peer to peer accommodations marketplace is raising 100 million in funding. And its no surprise that collaborative consumption startups like Taskrabbit, Vayable, Skyara, Tutorspree and Getaround and others are also generating buzz and cash.

Getaround (Airbnb for cars) founder and TC Disrupt winner Jessica Skorpio tells me that the “Airbnb For X” phenomenon rests on the fact that getting used to the idea of one means that you'll get used to the idea of others, "When users adopt one collaborative consumption service like Airbnb (new way to travel/offset housing cost) other collaborative consumption services are preferred like Getaround (new form of car rental/offset vehicle costs)."

And where users go investors follow. Skorpio tells me that she feels that investors are more likely to invest in Getaround because of the success of Airbnb.

Investor Fred Wilson admitted to making a mistake ignoring the model in March:

"We couldn’t wrap our heads around air mattresses on the living room floors as the next hotel room and did not chase the deal. Others saw the amazing team that we saw, funded them, and the rest is history. Airbnb is well on its way to building the 'eBay of spaces.' I’m pretty sure it will be a billion dollar business in time [Editor's note: Good call Fred].

We made the classic mistake that all investors make. We focused too much on what they were doing at the time and not enough on what they could do, would do, and did do … The cereal box will remain in our conference room as a warning not to make that mistake again."

Vayable (Airbnb for experiences) founder Jamie Wong explains the rush of investor interest surrounding the space, "It’s interesting that these two side-by-side questions seem to be dominating tech discourse right now: “Are we in a bubble?” and “What’s up with all this collaborative consumption?”  I think the latter helps answer the former. Startup entrepreneurs interested in ecommerce and consumer products are gravitating toward collaborative consumption models (or in tech jargon, “The Airbnb for…”) because it provides a sustainable economic model."

According to TaskRabbit  (Airbnb for services) founder Leah Busque, "2011 will be dubbed the year of The Sharing Economy.  I think we are finally at a place in time where technology has become savvy enough to provide solutions to stale business models.  People are getting more and more comfortable with sharing their space (instead of booking hotel rooms), sharing their cars (instead of purchasing their own), and utilizing people sharing their free time and skills (instead of hiring a personal assistant)."

And perhaps Airbnb itself will save us the pain of having to use "Airbnb for X" repeatedly in headlines? In an interview Brian Chesky did with Om Malik in February (when the pressure of a $1 billion valuation wasn't so high) he alludes to his company expanding into other verticals.

"I've seen the Airbnb for tutoring, I've seen the Airbnb for food, the Airbnb for cars. I think that our model can work for a lot of verticals. Very candidly I think that we'll probably enter some other verticals as well. I don't think we're going to get to all these verticals. There wasn't an eBay for stamps, and eBay for collectibles, and eBay for cars.  There was just eBay."

It's easy to talk about an expanded vision, and hint that your company will enter other categories in 2011, but it remains to be seen whether the practical execution of "entering other verticals" in this case means either acquiring or getting into the markets of other collaborative consumption startups or just limiting your model to lodgings (the company plans on launching sublets soon).

Chesky told me in an email, "We think that this new economy of consumption, which Airbnb pioneered, will eventually consolidate into a few marketplaces, rather than having the 'Airbnb for' hundreds of categories." When repeatedly asked the (pretty annoying) ‘Does Airbnb want to become the Airbnb of X?’ question marketing director Chris Lukezic told me that company is currently focused squarely on accommodation and wouldn't elaborate further.

Fair enough. They've a hard time enough making sure all those headline writers aren't spelling it "AirBnb" (true story). In the meantime, please leave your suggestions for alternate ways of writing "The Airbnb Of" in our headlines, in the comments.

Image: Andrew Parker

Is This iOS 5? Dunno, But It’s Likely The Right Idea

Posted: 05 Jun 2011 07:11 PM PDT

Could it be? Is this it? iOS 5?! I honestly have absolutely no clue. But it certainly seems like it at least could have the right idea.

Tomorrow morning, Apple is set to preview iOS 5 for the first time during the WWDC keynote. It’s likely that developers will get access to the initial build as well, so they can start working on updating their apps to take advantage of all the new features/functionality. But some select developers are believed to have already seen iOS 5 (notably those who are likely to present on stage tomorrow). And while not a lot has leaked out, we have heard a few things supposedly coming: widgets, Twitter integration, and revamped notifications.

The last two are particularly interesting given the image above. Again, no clue if it’s actually real or not, but the idea might be right. Notifications that come down from the top bar could be how Apple ends up doing things in iOS 5. After all, this would mimic already existing functionality — when tethering, a blue strip appears along the top; when on the phone, it’s a green strip. Might notifications (or at least Twitter notifications) produce a gray strip?

If so, when clicked on, what happens? Does it launch the Twitter app? Or are you taken to a notifications page to show you all the notifications you’ve missed? Or does it actually copy the Android idea, where you pull down this menu to display all your notifications?

This concept isn’t quite as slick as some of the mock-ups we’ve seen over the past couple of years. Nor is it as slick as some of the jailbroken ones — which actually led to a new Apple hire. But again, it does fit in with the current iOS workflow. That may or may not matter at all. Regardless, this way of doing things would be much better than the current pop-up method for Push Notifications.

Before you go yelling “fake” on the obvious things, a couple notes. First of all, yes, 11:54 PM is in the future — in the United States. But if the Weather app is to be believed, this is clearly a European version of iOS (note the 23 degrees Celsius in the icon instead of 72 degree Fahrenheit as you would see in the U.S.). Second, the Camera app icon is totally different, and looks a little odd being all-black, but who knows, maybe it’s changing. The icons are in the “correct” default order. Finally, if the talk of deep Twitter integration into iOS 5 is to be believed (we heard a bit, others have heard a bit more), it’s entirely possible that these new-style Twitter notifications could be working in iOS 5 right out of the box.

But again, who knows — no one outside of a handful of people before tomorrow morning. Well, and the guy below.

Update: At the very least, we’re hearing “right idea”.

Dogs On Tiny Rocking Chairs: Will A Groupon IPO Injure Them?

Posted: 05 Jun 2011 03:45 PM PDT

Hurrah! It’s time again for my favourite week of the year: the week when tech writers are given a much needed break from the day to day drudgery of reporting and analysis and are instead encouraged to spend time away from their keyboards; having dinner with family members, taking long walks with husbands and wives, kicking around a ball with children.

Yes indeed tech writers, stop all the clocks, cut off the telephone, prevent the dog from barking with a juicy bone: it’s time for International Fuck It Let’s just Phone It In Week.

The week was kicked off in vintage style by the Financial Times’ Cardiff Garcia with a post entitled “How to write about the Groupon IPO when you don’t really care“. The post, which opened with the line “Asinine joke about how this IPO isn't the kind of discount you'd find on the Groupon site itself. Shoot yourself” perfectly embodied the spirit of IFILJPIIW, managing to both entertain readers and show total contempt for them at the same time. Kudos, Cardiff.

Meanwhile here on TechCrunch, our very own Erick Schonfeld also chose Groupon as the subject of his IFILJPIIW post. With classic Schonfeldian pluck, Erick didn’t even bother writing a single fresh word: instead he just copied and pasted one of his own tweets! Brilliant.

Traditional media got in on the fun too, with the New York Post’s Nina Mandell employing the classic IFILJPIIW trick of reposting an article that has been written four billion times before, and simply updating the headline and date. The result: “1500 people show up for 16-year-old’s birthday party after she forgets to set Facebook settings“. Well played, Nina! (Not to be outdone, the Washington Post’s Rob Stein reports that “Cellphones [are] ‘possibly carcinogenic‘” LOL!)

Of course, there are publications for which IFILJPIIW poses an annual challenge: how to mark the event when your writers already phone it in most weeks? Business Insider’s Henry Blodget solved the problem with deft irony by massively over-reporting a virtual non story. Unphoning in a total phoner! Brilliant! Now back to the slideshows of cute programmers!

Speaking of cute, here’s a video of a duck following a puppy. What do you think of ducks following puppies? Tell us in the comments!

The Power Of Online-To-Offline Is Moving Beyond Local Commerce

Posted: 05 Jun 2011 02:36 PM PDT

While the idea of ‘online to offline’ for purchasing is proving to be powerful in the local commerce world, the trend of linking the physical world to the web is producing a number of startups that are innovating beyond just purchasing from local merchants or finding a product nearby. Many of the most interesting startups that have emerged over the past year or so are making our lives in the real world better; using data, location and curation as their competitive weapons.

And although these startups have presences on the web and mobile devices, they are also disrupting services in the physical world. So who are these startups that are taking the ‘online to offline’ trend to a whole new level? Below I discuss five different types of startups taking advantage of this trend: Uber, J. Hilburn/Trunk Club, Jetsetter, GetAround, Zaarly and Airbnb.


Take Uber, which allows you order a private car from an iPhone app at discounted rates. Basically, Uber allows you to order a black car to come to your location via the mobile app, and then watch it come to you as the app tracks the car via GPS. Payments are handled automatically by charging the card you have on file, and it costs at least 50% more than a taxi. The online to offline connection is obvious, as you order online for a car that picks you up in the physical world.

While Uber cars are more expensive, the benefit is that you don’t have to wait for a cab. All cars are town cars, so you’re getting a luxurious ride. Uber tracks all cars, so in case you leave something in the car, you’ll be able to track your car down. The startup has a loyal following in San Francisco and has since expanded to New York. And the service will eventually launch in Boston, Chicago, Seattle, and D.C.

The ability to pay and book a car online (based on your present location no less) and then use the car to arrive at a physical destination is no doubt disrupting the private car and taxi industries.

J Hilburn/Trunk Club

Want custom-designed clothes or a personal shopper to pick your wardrobe? No need to visit a custom tailor in your town or hire a stylist from Saks. J Hilburn and Trunk Club are two startups disrupting the men’s fashion industry and bridging the online to offline worlds.

J Hilburn offers an e-commerce site that allows men to buy custom-designed shirts and trousers online. The beauty of the site is that it offers designer-like styles for less. The company also employs a salesforce of 800 "style advisors" across the country, who make appointments to visit customers in their homes and offices. The advisors measure the customers, show them swaths of fabric, and help them select a few options. Revenue is growing fast, and men can find affordable custom made clothes by simple entering their measurements and sizing on the web, and have the clothes delivered to their door.

Similarly, Chicago-based Trunk Club offers men personal stylists to pick out clothing, which is delivered to customers’ homes. Men sign up via the website, pick preselected looks, and answer a small questionnaire with questions like "where do you shop right now?," "what's your favorite item in your closet," sizes, price and color preferences and more. A stylist will then call/contact the customers via their preferred method of communication (many choose email). Once the stylist gets an idea of the customer's style, he or she will send a "trunk," of clothes and ship out via Fedex a handpicked collection of shoes, pants, shirts, and more. Clients keep the clothes they want and send back the items that don’t fit. You are only charged for the clothes that you keep.

Like J Hilburn, The Trunk Club buys clothing at wholesale and sells it at a normal retail markup. There are no sales/discounts on clothes and Trunk Club stocks its own inventory. Customers don't pay anything extra for them as they would in a fancy department store.

Once again, an online experience is disrupting an offline experience in the physical world. In this case, Trunk Club and J Hilburn are making the physical acts of trying on clothes, finding custom made clothing and picking out clothes that match your style much more efficient by adding an online component.


Getaround, which just won Techcrunch Disrupt in New York, is a car rental market place where you can rent a car by the day, hour or week through a smartphone app. Getaround's all inclusive package, which includes insurance, 24 hour roadside assistance, a Getaround car-kit, iPhone app and a web app makes it easy for people to conveniently car share anywhere.

While GetAround is still new, the model has a lot of promise. GetAround disrupts car sharing similar to the way Airbnb disrupted the home rental and hotel industries. Both link the ability to monetize sharing of a physical property.

As of last week, the company had already signed up 1,600 cars for sharing, which is 20 percent of car-sharing giant Zipcar's fleet of 8,000 cars.


I am a huge fan of Jetsetter (and so is my colleague Sarah Lacy). The flash sales site for luxury travel has been innovating the hotel industry by allowing consumers to access the best hotels in the world at discounted prices. And the site goes beyond just commerce, even adding an editorial component to accessing information about hotels.

The company, which is a subsidiary of flash sales giant Gilt Groupe, has just unveiled a brand new service which essentially brings services of travel agents online. As Sarah Lacy wrote in her review, Jetsetter’s travel planning service is essentially a travel agent 2.0. Jetsetter is leveraging its network of more than 200 travel writers to help members plan itineraries for vacations. The service isn’t cheap. It costs $200 for three hours of consultation and a detailed itinerary, that their specialists will book and arrange for you at no additional cost. If you book a hotel through Jetsetter, you get $100 back.

While many people don’t use travel agents anymore because booking is so easy online, many travel booking engines miss the personal curation that that travel agents provide.


Airbnb, which launched in 2008, has been disrupting home-sharing for over three years now. As you may know, Airbnb lets anyone that owns space fit for accommodating travelers, whether that’s a couch in a small apartment or entire villages, post that space as a listing on its website and connect potential renters to its respective owners.

The company takes the physical act of renting rooms or spaces in other people’s homes and makes it much easier for users to access this online. The platform grew 800 percent in 2010, and is now being valued at $1 billion.

Airbnb is one of the best examples of a company that brought an online component to a real-world action. And Airbnb continues to disrupt additional markets as well. While there have been bumps in the road, the startup’s success is a testament to the power of the online to offline model.


Backed by an impressive list of investors, Zaarly, a web and mobile service that connects buyers and sellers in a localized market place. It’s sort of like a mobile-centric reverse Craigslist service.

On the site or via the startup’s mobile apps, you post what you're looking for (i.e. cupcakes), how much you're willing to pay for it and how soon you need it. Zaarly will then share your request in the local community through the platform, and also allows you also post your request to Twitter and Facebook.

People or businesses nearby can access and see your request and then anonymously message each other to complete the transaction of delivering the cupcakes you want. Sellers bid for the tasks, and the buyer chooses the best one, with Zaarly connecting the two via an anonymous Twilio-powered phone number. You can use cash or Zaarly's integrated credit card payment system to pay for the transaction.

Zaarly just launched less than a month ago, so it should be interesting to see if it can find the success that Craigslist experienced.

These are just a few of the startups which are making improving our lives by linking the offline world online. Of course, the idea of linking the physical world online isn’t a new phenomenon. OpenTable and CraigsList have been doing this for years.

But of late, there’s been a proliferation of startups that have adopted the OpenTable or Airbnb model of linking online to offline  that have emerged. These startups are continuing to disrupt industries, such as car-sharing, customized travel planning, personal shopping, and more that have not had strong online presences. Essentially these startups make industries in the physical world more efficient, and thus make our lives better. The consumer is empowered with a better experience with the addition of a mobile technology or a web-based platform that saves time and sometimes money as well.

There’s no doubt that this trend will certainly continue as more startups bridge online to offline. It’s just a matter of which industry will be disrupted.

Making Time

Posted: 05 Jun 2011 11:00 AM PDT

Why Netflix rocks is the same reason that tomorrow’s iCloud announcements will rock. It’s not about the technology, it’s because of the technology that counts. You can feel it if you make the time to. Making time means what?

One evening last week we sat at the bar downstairs at 1 Market after a long workday. John Taschek and several others were extolling the virtues, no, the imperatives of motorcycle ownership. You know, the usual keep the motor running head on down the highway testosterone. The kind of stuff Gary Busey still can’t get out of his head no matter how much he resists wearing a helmet. Gary, you’re fired.

But hiding in the camaraderie was a simple truth, that the 15 minute commute into the office on his BMW gives Taschek the time to think. And what we’re going to hear tomorrow is the result of a lot of time to think. And why Microsoft hasn’t figured out how to make that time.

iCloud is a state of mind Apple has been working toward for many moons now. Not so much the OK now we get cloud computing kind of mind set, but the OK now we are ready to apply our methodology toward the sweet spot of our competitors kind of value proposition. You hate iTunes and the stupid sync cable? OK, it’s gone. You feel locked in to the Apple restrictions on what you can do when you want to do it? OK now they’re removed. You want a real bit rate, a real screen, a real sense of ownership again?

These are big promises to deliver on, but from the look of things, we’re about to get them. If we read this right, for starters we’re going to get full quality streaming of the music of our times. For those of us who grew up not so much listening to music as living it, the biggest inhibitor to downloading music was the lack of full quality, the state of whatever art we are at. The Apple codec is excellent, but you could only get that by buying the CD and ripping it. A good compromise between hard drive consumption and quality, nonetheless it still sucked given the fact that my record store has devolved to Starbucks.

The alternative, downloading from iTunes, or worse from Amazon, is capitulation: 128 or whatever pseudo quality iTunes is or Amazon’s MP3. Give me a break with MP3. It’s like putting auto-tune on Aretha. The very thing you can’t quantify is the stuff we’ve been wanting to pay for ever since Napster. If you don’t know what I’m talking about, that’s OK, but trust me, up until maybe tomorrow I’ve only bought the iTunes thing out of necessity.

Let’s say for grins that tomorrow iCloud performs a checksum on our files on disk and gives us a stream version at full quality. If we’ve bought the CD for its liner notes, it gives us the liner notes on the iPad, not just the Mac like the Hendrix Anthology. If I’ve bought the latest Neil Young record on iTunes because there are no record stores left on Sunday or any other day, let me pay the iCloud freight to upgrade to the real deal. Let’s say the algorithm is that if I’m willing to give you access to my credit card on a monthly subscription basis, I’m trustable enough to get access to the real product, not the one with the digital condom desensitivity layer.

Seems like a minor nit pick to you? Much ado about nothing, this 60′s post yuppie yearning for the good old days. Whatever, when an artist like Lady Gaga or the Black Keys taps into what used to be called show business at a meaningful soulful level, the resultant force has only recently been matched by social media. Just what do you think Twitter is all about? What I had for breakfast? No, the context of our times. We live, we die. What happens in between?

This sense of ownership I mentioned, it’s the iceberg just below the water line. The new sense of owning is what the Cloud is all about, the understanding that to the best of our abilities, our access to who and why we are will remain constant. I’ve long since abandoned the notion that because I have something stored on a hard drive or a disk, I own it. In fact, all I own is an object for which the reader has vanished, or the media has corrupted, or the basement has flooded. Netflix is now my basement, cool and safe and shareable.

What I really want is something I can count on, and iterate on, and share with my world, and be shared with. I think it’s very possible that what Steve Jobs will show tomorrow has that same goal in mind. He grew up loving Dylan and the Beatles. And he delivered them, or almost. Unlocking the last foot, the bits, that is something really big. If he turns Apple TV into the flagship of the digital revolution, I’ll gladly pay the freight. And for those who say they don’t want an Apple-owned world, this will open the door for Google as it has with Android. Who knows, even Microsoft may be able to get a piece of the action.

But for Microsoft to be more than an afterthought, they have to make the time to think. Think about what we want and need to live our lives to the fullest. If that means think about a world without Windows in order to understand what we want, that’s a tough one. The usual logic about Windows, or Office for that matter, is that 97% of the world’s on it so it’s not going away. But if you own an iPad, 100% of Windows and Office has gone away. As I started to write this, Pages pushed an update with the new document button replaced by a + sign which when clicked gave me a bunch of iCloudy-looking choices. IDisk?

In the World of iPad, MobileMe is like saying I’ll have a slice of pizza pie. Does that mean two slices? The iPad is MobileMe, and MobileYou too. It’s become for the most part the place where I make time to think. Spare me the Apple fanboy jibes; I’m a fan of big visions that deliver. Besides, something about what’s coming tomorrow makes me think this will turn out well for more than just Apple. It goes back to Netflix and our search for something to watch on a weekend night when the kids are asleep or, in the case of the teenager, taking care not to party too hard.

So we’ve seen all the stupid romcoms and learned that theCuban Missile crisis was actually resolved by bands of warring mutant superheroes. Now I’m on Netflix trolling New Releases, deep in the More button view. If you want to truly grok the depths of mediocrity of Hollywood, go there with me. And then salvation In the strange form of the Scottish guy who appears after Letterman, a Craig Ferguson special shorn of the oh la las and innuendo that are required on broadcast television, and replete with all the funky obscenity and drug references of his dissipated youth. In short, the real full quality stand up of a very funny guy. And as we laughed and cringed at his stroll through our not so secret inner sanctum, he reminded me of what is possible when we put our minds to it. Born in the mix of mediocrity and limitations, carrier lock down and conformity masquerading as 50′s sensibility.

It may seem like a small thing, a foul-mouthed talk show host breaking free for a moment on a streaming connection. But that’s the stuff from which great things came, the Goon Shows from the halls of the straitlaced BBC, your 19th Nervous Breakdown, Jeff Beck’s A Day in the Life at the Rolling Stone Anniversary Concerts, Scoble’s photo on the Edwards campaign plane, the Dylan outakes, the iCloud. It’s an alternate show business that will inevitably swallow the current version and return us to the epicenter of the creative renaissance we are so lucky in which to be born.

Domain Dollars: Now Up For Sale

Posted: 05 Jun 2011 10:39 AM PDT

We just wrote about the sale of, which will auctioned off this week at DOMAINfest Barcelona with an opening bid of a whopping $5 million. The current record holder for the highest sale of a domain is, which sold for $13 million in April. And today, we hear a new domain is on the market which could also bring in millions. is now listed exclusively for sale with DomainAdvisors. The domain company’s CEO Tessa Holcomb seems optimistic that the domain will command a “multi seven-figure price tag.”

The time seems to be right for the domain to bring in big bucks, as the payments wars heat up between players like Google, PayPal and Square. Google just unveiled their mobile payments technology, Google Wallet; and Square’s disruptive payments platform is continuing to grow like gangbusters.

PayPal also has a massive presence in the payments space, and is fast approaching 100 million users.

It should be interesting to see if a payments or financial company does snap up the domain. What do you think? Will pay up more money than or

Photo Credit/Flickr/Amagill

Prediction: Facebook Will Surpass Google In Advertising Revenues

Posted: 05 Jun 2011 08:24 AM PDT

Editor’s note: Continuing our exploration of how Facebook could eat Google’s lunch, guest author Hussein Fazal makes the case for Facebook’s potential advantage in advertising. Fazal is CEO of AdParlor, an ad management and technology company for Facebook campaigns.

Not too long ago—the common perception was that Facebook advertising did not work. Why would a user notice an advertisement with a small image discretely tucked away in the right-hand column? In fact, most users were building up their “banner blindness,” and ignoring the right-hand column altogether.

However, much regarding Facebook ads has changed since then. Changes in profile design encouraged users to provide more complete information and advertisers became educated in the value of hyper-targeting. Facebook's ad serving algorithm improved dramatically and the launch of the Ads API allowed for an additional layer of intelligence to be built on top of that. Gradually, right-hand column marketplace ads became more effective for all types of advertisers—while Facebook concurrently grew its sales team to push out premium ads to brands and agencies. With all this progress, eMarketer estimated Facebook's ad revenues at almost $2 Billion in 2010 and over $4 Billion in 2011.

Despite all this success, Facebook's revenues are still far behind the search giant, and claiming that they will surpass Google is a bold statement. However, there is a very clear path for this to happen and it is simply a question of when. The timeline will be dependent on how aggressively Facebook executes on their advertising products. The fundamental reason why I believe Facebook's revenues will surpass Google is the untapped power of social advertising. The concept that your friend “likes” and endorses the content behind a particular ad unit changes the game.

Data from over a hundred billion Facebook marketplace (right-hand-column) impressions that AdParlor has managed shows indisputable evidence that social ads produce a significant jump in performance. In several cases, we have seen social marketplace ads double the Click-Through-Rate (CTR) and deliver 5-10x the volume of impressions at the same Cost-Per-Click (CPC) bid compared to regular marketplace ads on Facebook (plain-vanilla display ads not socially targeted). Combine that with a lift in brand recall (1.6X), message awareness (2X), and purchase intent (4X) and we can see why social ads is an extremely powerful product. However, to see the real benefit, we need to look beyond the right-hand column ads and see how social advertising can be applied in other areas. Data from Nielsen shows a similar trend:

Display Advertising

When looking at online advertising revenues as a whole, the IAB reports that roughly a quarter come from display. With over 2.5 million web sites having integrated with Facebook Connect and 10,000 new ones joining daily, Facebook is building up a huge network of external web sites with deep Facebook integration. The opportunity for these sites to display advertising that melds contextual and social is a stone's throw away, and something that Facebook can aggressively turn on if it so chooses.

To take things further, as “like” buttons become ubiquitous across the web, user profiles are growing with data on what they do, buy, and endorse. While Google and others leverage re-targeting, Facebook will be able to take it one step further with social re-targeting. If my significant-other visits and “likes” a pair of boots, that advertisement could now follow both of us around the web.

Every few years, a new layer is built on top of traditional display advertising (contextual, behavioural, re-targeting) but we haven't seen innovation in quite some time. Social will be the next fundamental change, and Facebook is positioned to take advantage of it.

Search Advertising

The same IAB report shows that roughly 45% of online advertising revenues come from search. The reason why search is so much more powerful than any other medium is because it targets users that have explicit purchase intent. For example, if I search for “car insurance,” I have a very real interest in making a high value purchase. Insurance providers pay big dollars to Google for these clicks knowing that they have a good chance of converting that user into a sale.

Alongside Facebook's deeper integration with Bing, it is inevitable that at some point we will see advertising that combines the power of intent-based search with social recommendations. However, this will be dependent on how much users are willing to share and “like.” Perhaps aggressive campaigns by car insurance providers (“Get $100 off your premium if you ‘like' us on Facebook”) will allow us to one day search for car insurance, and see which provider each one of our friends is with. This will undoubtedly be more powerful than traditional search.

Even with this layer of social, in order to be successful, search market share must be won. With Facebook's social graph, they have the first real opportunity at dethroning Google and winning that market share. Whether Microsoft ends up selling their money-losing search business to Facebook as a starting point, or whether Facebook builds an independent search product from the ground-up, this is where the biggest impact will be made in increasing Facebook's advertising revenues relative to Google.

Mobile Advertising

With over 250 Million active users accessing Facebook via their mobile device, Facebook is building up an audience on the hottest emerging platform. With free and popular iPhone, Blackberry, and Android apps available, Facebook has yet to serve up a single advertisement on mobile and doesn't seem to be in a rush. However, things may be changing with a small but targeted recent acquisition. It will require some work to figure out the right format, but again Facebook is at a huge advantage with the user base it has and the social graph that connects these users.

The U.S. local online ad spend is estimated at $20 Billion – which is why Google was so interested in Groupon. Now combine local with mobile and social—and you have the blueprint to build a money-spitting machine. Facebook could theoretically serve you an advertisement like this directly on your phone—"You and your good friend John are a block away from each other, you both like Pizza and its lunch time, go to Pizza Hut together and save $5 on your order"—of course with less words and more pretty pictures.

Now that the mobile advertising dollars are finally starting to materialize, we still have not seen the hockey-stick curve that we all expected. This will occur when more innovative mobile ad products are built out—and again, Facebook is at a massive advantage.

When Facebook's VP of Global Marketing Carolyn Everson said at Disrupt NYC, "We're one percent done on our ad products," it may not be an exaggeration. Ads that live within the Facebook site really are the beginning of where things can go. As Facebook gears up for an IPO, expanding its portfolio of advertising products through display, search, and mobile will change the landscape in each one of these areas. It becomes even more impactful when we think about how these different products can work together connected through the social graph.

While many people think about Facebook as a powerhouse due to the number of users on the site, the real power comes with the way they are mapping users to their friends and the products, people, and places that they “like.” When Facebook decides to turn up the revenue dial, they will be able to leverage this graph and create powerful social ads across multiple platforms to a degree of scale and sophistication that no other company can match. As these products develop, Facebook will command the lion's share of online advertising dollars—and they will undoubtedly surpass Google.


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