Category: Tech news

Editor’s note: Mike Jones, formerly CEO of Myspace, is the CEO of Science, Inc., a Los Angeles-based technology studio that nurtures successful digital businesses by bringing together the best ideas, talent, resources and financing through a centralized platform. Follow him on Twitter @mjones.

The story is one we’ve heard before: plucky startup sails through seed fundraising, unfurls its wings, then runs into the brick wall of not enough venture and shatters into pieces. The numbers speak for themselves. There were 65 percent more seed-stage deals in 2013 than in 2012 while venture funding stayed relatively flat – 7.5 percent fewer dollars, 7 percent more deals.

But the forgotten winners behind this equation – the ones we’re not really talking about because we’re busy lamenting the hardships of fledging entrepreneurs – are venture capitalists. That venture as an asset class has struggled is not a surprise given its lackluster performance following the bubble years of the late nineties. But all that is about to change.

Supply-Side: Too Much Seed Money?

There are several structural factors that have increased the supply of seed funding in the short-term and contributed to the perception of a supply-demand imbalance. One is that the Silicon Valley has become a victim of its own success: every successful IPO yields newly liquid and wealthy early-stage employees/investors.

Facebook’s IPO alone was expected to create over 1,000 new millionaires by some estimates. Perhaps most importantly, these individuals/firms are more likely to invest in highly speculative assets/seed stage companies due to the “house-money effect.” They are already winners, so why not roll the dice again?

Secondly, the number of crowd-sourcing platforms and startup incubators has exploded, giving early-stage startups access to more money and increasingly inexperienced investors.

Finally, one can even take a stab at making a quantitative easing argument (when in doubt, blame the Fed!). The Federal Reserve purchases $75 billion in treasuries and mortgage-backed securities every month. As the risk-free rate is forced down, investors rotate out of treasuries and into high-yield and equity markets, causing risk premia across the board to fall.

Active/non-indexed investors are then increasingly forced to look at non-traditional asset classes for market-beating returns. Hence the increase in hedge funds, asset managers, and Middle Eastern royalty investing in pre-IPO companies like LinkedIn and Twitter. As traditional VC returns come under pressure from the influx of capital (it’s hard to compete on valuation with a Saudi prince), they too are forced to swim upstream, increasing the amount of capital deployed in early-stage/seed rounds. In a world awash with liquidity, “next best alternative” style investing eventually becomes…well, Bieber’s selfie app.

However, while important as catalysts, in the long-run none of these drivers should persist. More seed funding without a corresponding increase in Series A should theoretically lead to higher failure rates and lower returns for seed investors, and an ensuing drop in capital allocation to seed rounds.

Demand-Side: Not Enough Series A?

Of course, the flipside to this narrative is that more, better, companies are being created today compared to five years ago, and the problem lies with Series A VCs who have failed to adjust accordingly. For example, starting a business is becoming far less capital-intensive, leading to efficiency gains and increased competition among early-stage companies.

VCs can also be overly myopic and short-sighted. As noted by David Freedman, VCs might be missing out on great businesses that, while not the next Facebook, could have niche markets or longer development timelines.

In any case, if Series A investors have access to a surplus of high-quality deals and are currently only cherry-picking the very best, returns for VC funds should be increasing. Following our previous logic, this should theoretically lead to a market correction and an increase in capital allocation to Series A rounds.

Historical LP Returns Tell The Real Story

According to the Kauffman Foundation, VC LP returns have drastically underperformed the public market since the tech bubble. In fact, the average VC fund has failed to even return 100% of their invested capital back to LPs (a negative IRR!). When analyzing their own portfolio of investments in 99 VC funds from 1989-2011, the Kauffman Foundation reported a slightly higher, but still modest average net return multiple of 1.31x.

In contrast, an academic study backed by the Kauffman Foundation reported that earlier stage angel investors achieve on average a 27 percent IRR, with an average net return multiple of 2.6x. Seed/angel investing is a bit riskier than VC investing, and as a result, should achieve somewhat higher returns. However, this does not explain the unexpectedly large gap between basically similar asset classes, nor does it explain the underperformance of VCs relative to public equity markets.

This disconnect implies that historically, there has been a glut of VC funding and a dearth of earlier-stage seed/angel investors. Therefore, what we perceive as a “Series A Crunch” actually represents a long-overdue market correction. A portion of the correction is manifested by a shift in VC capital allocation, away from later-stage companies and towards earlier stage seed rounds.

However, there is also simply more seed capital available due to lower startup capital requirements, lower transaction costs, and innovative financing platforms. These structural developments should deliver more and better companies to Series A investors, helping boost returns in what has historically been an under-performing asset class.

Analyzing it from this perspective, the Series A Crunch becomes not so much an imbalance of supply/demand as it is a long-awaited rebalance. If the past is any indication, the process of correction will be slow, but will produce years of outsized returns for recently struggling venture capital funds.

The team over at Anki is so thrilled about being a Crunchie Award finalist for “Best New Startup of 2013″ that they’ve decided to show their appreciation to our readers by spreading the Anki love and giving away Anki Drive starter kits (each valued at $199.95) to 20 lucky people. One very lucky person will also receive a free ticket to the Crunchies (valued at $120). This is your chance to take home an Anki Drive and then share your racing experience with the tech industry’s best and brightest at the Crunchies on February 10th.

Anki Drive has been described as “Mario Kart” that comes to life on your living room floor. Did you hear that? Mario Kart! For a hands-on look at Anki Drive, check out Greg’s review below.

To enter the giveaway, all you have to do is follow the steps below. We will be choosing 10 from each step, and you may do both to double your chances:

1) Comment below telling us what you like about driving/racing

2) Tweet this article with the #Crunchies hashtag

The giveaway will start now and end Wednesday, January 29th, at 7:30pm. Please note the Crunchies ticket is for one ticket only, and does not include airfare or hotel. Also, voting closes tomorrow at 11:59pm PT. Don’t forget to vote for your favorite Crunchies finalists here.

Good luck!

Our sponsors help make the Crunchies happen. If you are interested in learning more about sponsorship opportunities, please contact our sponsorship team here: [email protected].

Yes, Tom Perkins went there.

In a letter to the Wall Street Journal published this morning, with the surprising title “Progressive Kristallnacht Coming?,” the legendary venture capitalist compared Nazi Germany’s war on the Jews to “the progressive war on the American one percent.”

Before going too much further, let’s get this one little thing out of the way: Nothing should EVER be compared to the Holocaust, a tragedy in which 6 million Jews and another 5 million Germans lost their lives, except the Holocaust, or at the very least, other massive state-run genocides.

Godwin’s Law notwithstanding, there are serious issues with Perkins’ letter, both in his perception of the problem and tone deaf reaction to it.

“From the Occupy movement to the demonization of the rich embedded in virtually every word of our local newspaper, the San Francisco Chronicle, I perceive a rising tide of hatred of the successful one percent,” Perkins writes. This, at least, most people agree on.

The problem is that Perkins only reinforces that hatred with his parallel between the distraught working class citizens of San Francisco and a national movement to eradicate an entire ethnic group.

There is no centralized movement to remove the 1 percent from their penthouse apartments and send them to work camps. There’s no planned nationalization of the region’s thriving tech sector. There’s no threat of assets being seized and redistributed by a fascist government body.

Protest is nothing new to San Francisco: Its citizens were some of the leading voices in the Vietnam War in the 60s and 70s, and during the AIDS crisis of the 1980s. That many in the city would rally around the Occupy Movement and call attention to the rapidly growing income disparity that is taking place in their own back yard should not come as a surprise.

Blaming the victim is hardly the way toward progress or compromise. But Perkins’ letter does just that.

Perhaps what is most alarming is that Perkins doesn’t seem to understand why people are upset about the growing income disparity, why there is resentment against the one percent. It’s this lack of self awareness which is most distressing, because it reinforces some of the very same stereotypes many in the industry are trying so hard to debunk.

And for those who want to effect real change in the Bay Area, for those who are trying to bridge the divide between the rich techies and their less fortunate neighbors, for those who truly believe that “it doesn’t have to be this way“… Perkins’ letter makes things just that much harder.

Update: The Twitter account of Kleiner Perkins just issued the following statement:

Tom Perkins has not been involved in KPCB in years. We were shocked by his views expressed today in the WSJ and do not agree.—
Kleiner Perkins (@kpcb) January 25, 2014

Gillmor Gang – Robert Scoble, Kevin Marks, John Taschek, Keith Teare, and Steve Gillmor. Live recording session has concluded for today. “Like” us on Facebook at Facebook.com/GillmorGang

Dash, a Techstars New York-backed startup that wants to be like a Fitbit for your car, has now launched. The product includes a combination of a hardware device and smartphone application which offers real-time feedback on your driving, trip logs, access to vehicle diagnostics (that pesky “check engine” light, and who can fix it!), a map showing where the cheapest gas is nearby, and even social features.

Like several of the “connected car” products on the market, Dash’s hardware involves an OBD device you can purchase from either within the Dash mobile application or the Dash homepage. The Dash software will also work with any Bluetooth-enabled OBD device, if you happen to already have one, or you can choose from two types of devices Dash’s homepage points to: generic devices found on Amazon for $10 and up, or a premium OBD LINK LX which is a steeper $69.

The Dash software works with either type of device, the company says. But the premium hardware offers a better build quality, power management capabilities, and connection reliability, among other things.

Once installed, the device connects via Bluetooth with your Android smartphone to communicate with the Dash app.

The app offers you a variety of helpful tools, both when you’re on the road and when you’re off. The app’s design is well done, too – very modern and clean, which is still somewhat of a surprise on Android, though that’s increasingly less of a case these days as developers begin to treat the platform with the respect its larger marketshare has earned.

As noted above, Dash offers a variety of “connected car” features, including the ability to track your trips, watch your gas consumption, find nearby gas prices, detect crashes and alert emergency services, understand the warning messages your car’s computer throws and even locate a reliable mechanic who can resolve the problem. Mechanics are ranked by proximity and star ratings, explains Dash co-founder and CEO Jamyn Edis.

Edis and Brian Langel both previously worked at HBO before starting Dash, where Edis was VP of R&D, which included tech strategy for HBO GO, and other skunkworks projects using augmented reality, video search, smart TV apps, Nike Fuel-like hardware for HBO Sports and more. Before that, he spent a decade at Accenture, working on large-scale technology projects and strategy for a variety of clients, including Sprint, British Telecom, Fox Interactive, MySpace, Warner Music, PlayStation and many more.

Meanwhile, Langel, now Dash CTO, had previously built the backend architecture for HBO GO, and worked on HBO Sports. He has also worked for Union Pacific Railroads and McGraw Hill.

For a long time, the two had been looking to work on a project together around the idea of smart, connected devices. And when the company was founded back in June 2012, the landscape for connected car was fairly barren. 

Today, that’s not necessarily the case.

“What’s different and fresh about our approach here is that we’re tackling cars as a platform – one that we think is really under-leveraged as a consumer technology,” explains Edis. Plus, he adds, “we’re technologists. We love data and we think we can improve our lives by using data, whether that’s physical fitness with Jawbone, or whether that’s home and HVAC using Nest.”

With Dash, the improvement also includes a focus around safety and overall smarter driving. In the case of the former, while the app is in “in transit” mode, it will actively warn you through auditory alerts when something goes wrong (e.g warning you that you were breaking too hard, or other bad behaviors). But instead of just being an annoying robot “backseat driver,” Dash gamifies the experience, pitting you against friends or other nearby in a competition to earn the better “drive score.”

Meanwhile, similar to Prius, the app will inform you while driving of your fuel economy, allowing you to make adjustments in response.

Edis says that all this is just the beginning, too. The company is working on a bevy of other features, including targeted promotions that are based on your driving, location and other non-personally identifiable features, an iOS application, and partnerships around its developer API which would see Dash able to communicate with other smart devices, like those which Edis calls “trigger services” or other smart home platforms.

The seven-person New York-based company has raised an undisclosed seven-figure round of seed funding from Techstars, VCs (with car manufacturers as LPs), and angels including Foursquare co-founder and CEO Dennis Crowley, Makerbot co-founder and CEO Bre Pettis, Dave Morin, and others.

Dash now competes with a number of ODB apps and similar services in an ever-crowded market, including YC-backed Automatic (whose “Link” dongle is a bit pricier at $99.95), Carvoyant, CarMD, Torque, Car Doctor, and many others.

The Dash app is live on Google Play here.

Let’s face it: a disturbingly large portion of the American electorate are not-so-knowledgable about their world. As of 2008, 30% still maintain that Saddam Hussein was stockpiling weapons of mass destruction and 18% think the sun revolves around the earth. So, when our friends in the press ran headlines about how most Americans had heard “nothing at all” about President Obama’s recent surveillance reforms, I would have been surprised by exactly the opposite.

Let’s take a trip down the rabbit hole of America’s civic knowledge and whether it matters to a functioning democratic state.

Most Americans Haven’t Heard Of [Insert Issue Here]

Pew surveys released fresh stats about the number of Americans who approve of the National Security Agency’s dragnet program, along with a pie chart showing that 50% had heard “nothing at all” about President Obama’s proposed reforms.

To political pollsters, results like this would be a regular Tuesday. Indeed, it was almost embarrassingly easy to find the exact same results for any given issue.

–Fewer than 25% of Californians knew “much at all” about the massive healthcare overhaul, the Affordable Care Act, that impacts every single American.

–Fewer than half of parents with children in public schools knew anything about the Common Core Standards, arguably one of the most radical overhauls of education in at least 50 years.

–A measly 39% of Republicans who think the 2012 attacks on an embassy in Benghazi was the “biggest political scandal in American history” could identify that event took place in a country called Libya.

–For kicks, 41% of Americans cannot ID their folksy deputy commander-in-chief, Vice President Joe Biden

Polls Get More Disturbing/Hilarious

In truth, polls may be radically overestimating Americans’ knowledge. Respondents are known to offer strong feelings for policies that do not actually exist. To test the extremes of this fact in the most disturbing/hilarious possible fashion, I conducted a national poll to see how Americans thought about military intervention in an imaginary country. This was around the time when the president was debating forceful humanitarian intervention in Syria.

A whopping 63% of Americans polled had an opinion, either for or against, helping out the good people of “Guavastan”. Guavastan, not yet an actual place, is a luxury island I hope to inhabit after striking it rich in the field of journalism.

Some folks got our little joke. One respondent quipped, “guavastan…is that near papaya ville”. Others just had a knee-jerk reaction, “who can prove if they used biological weapons some news sources say pictures are a hoax?” The results were dispiriting to say the least.

Here’s the point: mathematically speaking, Americans are bigger fans of believing things than knowing things.

Does It Matter?

It’s nice rhetorical fodder to call for greater American civil involvement, but it’s not entirely clear that an informed America is a different America. In 1998, two Political Scientists, Arthur Lupia and Mathew McCubbins found the beliefs of politically ignorant Americans correlate nicely with their more informed counterparts. Indeed, this is exactly how a representative democracy is supposed to function.

They write:

Experimental evidence seems to (partly) corroborate this finding. One of my favorite Political Scientists, Alan Gerber, randomly assigned a group of citizens to receive a free subscription to the Washington Post. In the depressingly titled paper “Does The Media Matter”, his team found no effect of either paper on political knowledge, stated opinions, or turnout in post-election survey and voter data.”

Gerber and others [PDF] have found that informed people tend to shift their favor towards the Democratic Party, which may lead to increased to support for laws focusing on lower socioeconomic status individuals.

To be sure, other democracies around the world are more engaged and civil, but it’s largely because they either have a multi-party system or a robust informal civil society. No country on earth is an informed Utopia–or anything close.

That said, I’m more optimistic that information does matter. So, TechCrunch is also conducting its own experiment, partnering with Reframe.it and the Knight Foundation on a so-called “deliberative poll.” Deliberative polls are a snapshot of what Americans would think about an issue if they were educated. A random, representative sample of the population is intensively educated about an issue and then we record how opinions shift.

In previous deliberative polls conducted by Stanford, there have been some shifts in opinion which suggest that yes, information does matter.

When it comes to tech issues, TechCrunch will find out, hopefully soon.

Editor’s note: Glenn Solomon is a Partner with GGV Capital. Some of his recent investments include Pandora, Successfactors, Nimble Storage, Isilon, Domo, Square, Zendesk, Quinstreet and AlienVault. His personal blog,goinglongblog.com, focuses on growth-stage entrepreneurs who are thinking big. Follow him on Twitter @glennsolomon.

Average valuations for venture-backed M&A deals typically come in a pretty tight range.  According to the National Venture Capital Association (NVCA), in 2013 there were 377 total M&A exits of venture-backed companies with mean pricing of $161 million. This compares with total deal count of 499 and 488 and mean pricing of $143 million and $173 million in 2011 and 2012, respectively.

Every once in a while, however, a $1 billion or even multi-billion M&A deal for a venture-backed, relatively young company pops up, such as the recent Nest/Google announcement. These deals defy conventional valuation logic since the acquired companies are early in their revenue curve or sometimes even pre-revenue. Where do these billion-dollar deals come from and what factors are involved in their creation? Below I’ve identified three primary drivers that motivate acquirers.

Billion-Dollar M&A Drivers

Rocket Ship Riding. Sometimes a target achieves such incredibly fast early growth that acquirers become enamored with the potential for the future. Particularly in the consumer Internet context, these companies are often pre-revenue, with growth coming in other key metrics. Facebook’s $1 billion acquisition of Instagram is a good example. Facebook clearly saw Instagram’s growth as both a threat to its own popularity and an opportunity to continue to expand engagement among its core constituents. Price didn’t matter as much as this future potential. Google’s near $1 billion acquisition of Waze was similarly driven by the traffic app’s growing popularity and Google’s recognition that it could integrate Waze functionality into Google Maps, further enhancing its own product line.

Fear of Losing Out. In addition to perceived potential, fear is also a very powerful motivator.  Acquisition prices can be driven up to billion dollar levels when an acquirer develops the fear, real or not, that they might lose an opportunity, either to a competitor or to the target itself gaining enough traction that it will remain independent and become a threat to the acquirer over time.

When DoubleClick was acquired by Google for $3.1 billion, Microsoft was widely rumored to be aggressively pursuing the deal, as well. No matter that DoubleClick had been acquired by private equity firms Hellman & Friedman and JMI Equity for approximately a third of that price just a few years earlier. The perception that the inventory DoubleClick controlled was extremely strategic gained footing in Google’s board room, similar to Microsoft, which led to the outsized outcome.

When VMWare acquired early-stage Nicira for $1.3 billion, VMWare execs saw this as a move to protect their core server virtualization franchise and extend into network virtualization, as well. When looked at from this vantage point, the price makes more sense.

Lottery Pick on Draft Day. Innovation is rarely a core competency at large tech companies.  In fact, executional excellence, at which large tech companies usually excel, often runs counter to the culture of risk taking required to spawn new, disruptive initiatives. Execs at large tech companies know this and it can be very frustrating. This can motivate the desire to bring in a team of people who are perceived to have skills and abilities to drive innovation that otherwise won’t occur. With this logic, acquisition price becomes a minor issue.

Google’s recent $3.2 billion Nest acquisition must have been driven, at least in part, by Google’s desire to bring in a talented consumer hardware team, headed by Tony Fadell, that can innovate in the connected home area. This is a market Google has identified as important, but without a tiger team like the one from Nest, Google execs recognize they will likely never get from here to there.

Consideration and Considerations

Although entrepreneurs who end up selling for $1 billion or more rarely begin their journeys thinking they sell their companies, there are several issues that should be considered carefully if this becomes an option.

Cash vs Stock. With growing piles of cash on the balance sheets of many large tech companies, the ability to pay cash for some or all of the purchase price in a billion-dollar M&A is more common these days. Cash obviously removes any uncertainty with respect to the ultimate price. Stock prices can plummet, adding possible risk to a stock deal for entrepreneurs, their employees and investors. Especially if you’re being acquired as a lottery pick, expect acquirers to want you and your key team to stay for many years. The purchase price will highly incentivize you to stay, including stock vesting. Each entrepreneur has a very unique and personal situation and needs to weigh the pros and cons carefully.

Certainty of Closure. When an acquirer floats a very large acquisition price, the risk of the deal not going through to completion increases.  Recognize that someone at your potential acquirer is probably staking her or his career on the decision to pay up to acquire your company.  Its human nature to get cold feet.  Pay close attention to who the acquirer is – what’s their reputation is for going through with acquisitions?  what’s the status of the company right now?  how powerful is the board and/or CEO and are they behind the deal?  It’s not atypical for a target to go with a lower price from an acquirer who has a higher perceived certainty of closure versus other higher offers from riskier would-be acquirers.

Fit and Alignment. For entrepreneurs, there’s no rule that you must accept an acquisition price once it hits a certain level. Many potential acquisitions don’t consummate because the perceived cultural fit and/or alignment on the future vision doesn’t completely align.  Most entrepreneurs with whom I’ve spoken who have sold their companies (whether at billion dollar levels or lower) regret the decision later due to poor fit with the acquirer.  It’s critical to get this right.

For many entrepreneurs, their own indomitable will doesn’t waver, even in the face of a billion-dollar M&A offer, and it’s go long and go big or bust.  For example, Snapchat appears to be on this path, at least for now.  For some others, the appeal of taking a billion dollar offer is high enough to veer off the independent path.  Instagram went this route.  There isn’t a right answer.  But, recognizing the motivation of would-be suitors – be it rocket ship, fear of losing out, all-star draft picks, or some combination of the above – can help navigate the waters.

Talk about a minimum viable product. The co-founders of Fuzmo, a site that just lets you share pictures of cute pets with other enthusiasts, originally started out as a simple Instagram account, Insta_Animal.

But they clearly hit on a winner. In the last year they grew the account to 1.5 million followers, and from this have spun out seven other ‘cute pet’ accounts with a combined following of 2.5 million.

From this marketing base they created Fuzmo as a platform where people can share their own pet pictures.

They are now crowdfunding the development of a mobile app (going after £40,000 pin Seedrs) to build on that traction and spin out more products and features around a pets photo sharing app. Oh yes. So far they’ve raised over 16 per cent of their total.

If it works, it’ll make an interesting case study in how to build out from ‘boostrapped-from-nothing’ into an actual product.

Without the right goggles, a bluebird day on the mountain is nothing more than a recipe for snow blindness. This year, we looked around for a few pairs that addressed two main challenges — comfort and lens-swapping — and also checked in on Oakley’s updated Airwave with the heads-up display.

Tomorrow, Vine will celebrate its first birthday.

Celebrating in our own way, we asked Vine’s GM and co-founder Colin Kroll about the last year of Vine, and what to expect in the future. He said one thing that really surprised him about Vine was how people collaborated within the app, and how interested people were to “hardware hack” with camera accessories.

“One thing that I find particularly interesting, and unique to Vine, is the elaborate collaborations and cameos that continue to spring up on the service,” said Kroll. “Also, early on, we saw people pushing the boundaries of Vine through hardware hacks, like adding a fisheye lens to their phone’s camera or using iPhone tripods for stabilization.”

That said, Vine has expedited the growth process with the help of Twitter’s built-in platform, and is now a mature social network. That brings the company to a new phase that isn’t just concerned with growth, but perhaps monetization. When asked what year two holds for Vine, Kroll was all about discovery.

“This year, we’re really focused on making it easier to discover those videos and find new accounts,” said Kroll.

The six-second video sharing app has had one heck of a year under Twitter’s watchful eye, so we thought it was interesting to take a look back at some of the service’s ups and downs.

A Look Back

As you may very well remember, Vine was acquired by Twitter before it ever even launched. When the app launched, it only took a day to swing to the top of social in the App Store.

But with any instantly popular social media service, Vine grew a porn problem less than a week after launch. In fact, it got so out of control that a hard-core porn video was posted to Editors’ Picks, Vine’s main discovery feed for popular videos.

The company immediately apologized and explained that human error was the cause of the accident. As punishment, Apple kicked Vine out of the App Store.

To make matters worse, Vine also experienced its first service outage that week.

But by day seven, Vine had already grown bigger than its next closest competitors.

Following a whirlwind first week, Vine implemented a 17+ age rating in February to keep things kosher, and by March, Vine’s dominance over competitors like SocialCam, Viddy, and others was apparent.

So Vine partnered with The Tribeca Film Festival to launch its own 6-second films competition. It was a huge success.

Just after the two-month mark, Vine released an update that supported video embeds, as well as more integrated sharing on Facebook and Twitter, and by early April, Vine hit number one in the App Store.

This was all less than six months after being acquired by Twitter, mind you, and less than three months after launching.

On April 30, Vine released its second major update, adding user mentions and front-facing camera support, just as I had predicted.

By then, brands, and especially movie studios, were anxious to leverage the network.

Once summer rolled around, Vine had picked up steam. The team announced 13 million users in Early June, along with the launch of the Android app.

It only took a week for the app to surpass Instagram on Google Play’s social charts.

But Instagram had its own plan. Facebook’s photo-sharing phenom launched Instagram Video on June 20, and many thought it would be the end of Vine.

But Vine fought back.

In fact, Vine had gotten so popular by the summer that photographers had found a way to make a decent living by just creating vines for brands.

In July, Vine launched a massive update that totally redesigned the camera, added helpful features for hard-core viners and stop-animation enthusiasts, and added channels to help with discovery.

By summer’s end, Vine had topped 40 million users.

Dealing with the pushback of Instagram video, and learning from Instagram’s successes and failures, Vine launched an update in October that let users save drafts and edit videos for the very first time, conceding a bit to Instagram Video’s rules.

And just in time for Thanksgiving, Vine launched on Windows Phone. The team spent the rest of the winter focused on growth, launching the app in web profiles just after the new year.

Looking Forward

It was a lively first year, but what lies ahead?

Instagram continues to grow, and continues to pose a competitive threat against Twitter’s video service. And to make matters worse, Snapchat surely grabs a chunk of the video pie. Personally, snapvids are some of my favorite because they are so real and uninhibited and the closest to living an experience IRL.

And then of course there are existing competitors like Viddy and SocialCam and Cinemagram lagging far behind, alongside a new crop of video sharing startups trying to add music tracks to videos.

It’s getting crowded.

And it only makes sense. Video is the new frontier.

Remember when YouTube came to the internet? And watching video, posting video, sharing video on the internet actually became a relevant thing?

We’re on the precipice of a new period in mobile multimedia. The same way Instagram and Facebook and Twitter have asked us to take and upload more photos than we ever have before, apps like Vine and perhaps Instagram and Google and many, many others are heading off to war. The war for our mobile video.

Video has already infiltrated verticals like dating, professional networking, and moving. And there are even hardware developers looking to leverage our growing addiction to video via mobile. The space is up for grabs.

And while Vine has a solid position now under the care of Twitter, the space will only continue to grow more crowded.

Instagram Video is different from Vine, in a lot of ways. Instagram caters to a more sporadic, casual video experience than Vine’s more hardcore base of creators. Still, the media weapons of Twitter and Facebook will obviously be battling over user mindshare and splitting engagement.

Snapchat is also quite different, with far fewer tools to make professional-looking videos but an added benefit of privacy and ephemerality. Again, Snapchat will continue to grow and steal video-hungry eyes.

That could split again if a major player lands a smash-hit in video. Like, oh I don’t know, Google with YouTube. Imagine if Google+ started out as a way to easily shoot and share your own feed of videos on YouTube mobile. Perhaps people would actually be hanging out there.

Moving forward, Google is certainly working on personalizing and perfecting YouTube’s channels.

But all that said, the future also holds the promise of even more mobile video players, both as consumers and creators.

In 2014, Vine could benefit from deeper integration with Twitter. Twitter could add Vine as an option in the media creation section of a draft, where you can take or add photos. An app within an app-type thing. Vine videos could also be formatted differently within the Twitter feed on mobile, to take up more of the screen and grab more attention.

And alongside integration with the growing Twitter network, Vine would also cultivate a strong user base through excellent discovery tools, something they’ve been working on for a while.

As social networks like Instagram and Vine mature, they become competitive landscapes for social media celebrities and brands. Getting on the popular page can make or break a user, but at a certain point it’s nearly impossible to get enough momentum to beat a user with a huge following.

If Vine can continue to offer new and up-and-coming users to “make it” on the site and grow the following, it will create even more loyal users in the long term. Luckily, Kroll confirmed that this is a focus going into the next year.

Right now, Vine appears to have a bit of critical momentum in the creator space. Its limited scope and creative-friendly toolset have made it a place where interesting stuff gets made and posted. Whether that’s enough to fend off old rivals and new entrants remains to be determined, but it should be an interesting year for video services either way.

Image modified from a photo by Vivian D Nguyen

Is Qualcomm preparing for the revival of the personal digital assistant? The San Diego-based Qualcomm just announced that it has acquired 1,400 patents from HP covering Palm, iPaq and Bitfone patents and pending patents.

It’s unclear how many are from each portfolio, but Qualcomm just made a big leap in owning a chunk of patents covering the fundamentals of mobile operating system techniques.

The price of the sale was not released.

When HP purchased Palm in 2010 for $1.2 billion, the move was widely speculated as a patent grab. HP wanted to bulk up on key patents as the computing world was moving increasingly fast towards mobile devices. Qualcomm is seemingly following the same strategy.

Why would Qualcomm want such a massive cache of patents? Beyond the legacy of this portfolio and the importance of any individual patents, it’s all about the numbers. When you’re as large as Qualcomm, your patent armory is like a defense mechanism, not unlike the quills of a porcupine. The more you have, the less likely someone is to cry foul if you’re trying to tip-toe around a patent of theirs — because when you’ve got a monstrous portfolio, chances are strong they’re doing something that violates one of yours. It’s awful, but it’s all part of the game today.

HP went on a tear during the last decade, acquire competitors and smaller companies. On the surface, this portfolio is part of that legacy. Compaq released the first iPaq in 2000 and the company was later purchased by HP in 2002. HP then acquired Bitfone in 2006 and Palm in 2010.

Don’t expect Qualcomm to revive the TouchPad, though. HP unloaded webOS on LG in February 2013.

Welcome back to a brand new episode of TechCrunch Cribs, the show that takes you inside the doors of the tech industry’s hottest companies to get a look at what the workaday life there is like.

This time we headed over to the Union Square neighborhood of San Francisco to the headquarters of Practice Fusion, the web-based electronic medical records company. Practice Fusion is based in a beautiful art deco style building that used to house NBC’s West Coast headquarters back in the mid 20th century, so there are a lot of nice older architectural elements mixing in with the more modern tech vibe of the company.

It also turns out that Practice Fusion isn’t just concerned with the health of the people whose medical records it helps organize and protect — the company also wants to help its staffers be in the best shape they can be. So Practice Fusion gives each of its employees their own FitBit, and provides some pretty solid incentives to whoever racks up the most activity each month.

At the start of my visit, Practice Fusion’s co-founder Matthew Douglass gave me a FitBit to wear for the Cribs tour, so I did my best to clock as many steps as possible (taking the stairs up and down the several floors that the company is spread out over certainly helped.) Check out the video above to see how many calories I burned while exploring Practice Fusion’s fun and very dog-friendly digs.

Twitter co-founder Biz Stone has raised a Series B round of investment led by Greylock Partners, with Spark Capital participating. The raise comes just under a year after it raised a Series A round from Spark, Jack Dorsey and Greylock, via its Discovery Fund.

The app — essentially a human-powered discovery and search parsing engine driven by images — launched early this month.

“Jelly is a small team with modest capital requirements and we intend to keep things that way while growing a global service that changes how we find answers,” said Stone today. “This partnership with Greylock means more time to focus on improving Jelly along with some talented and helpful folks on our Board of Directors.”

There’s no word about what the numbers involved were here, but the investment comes on the heels of rumors that Greylock could be participating in a $20M raise for blogging platform Medium, from Stone’s Twitter co-founder Ev Williams. There were no numbers announced at the time of Jelly’s Series A, but we’ve heard a few million.

TechCrunch spoke to Greylock Partner Josh Elman, who will join Jelly’s board with this round as well. Elman was previously a product manager at Twitter where he worked with Stone. Elman shared an anecdote with us about his early experiences testing the app.

“As I played with the product during the early days, I had a few experiences that had me thankful I had Jelly. Someone on Jelly helped me realize I had a leak in my shower based on a spot on my siding 20 feet below. I was able to help others with planning trips and shopping for the perfect new monitor,” he detailed in a post today. “My favorite was when my daughter asked me repeatedly to find an Angry Birds level with “a ding dong and a box”.  Several hours later, after much searching and whining, the perfect answer came in on Jelly that helped me be her hero…”

Other investors in Jelly include Bono (yes), Evan Williams and Jason Goldman, Al Gore,  director Greg Yaitanes and entrepreneur Roya Mahboob. Spark General Partner Bijan Sabet is already serving on Jelly’s board.

Post updated to adjust rumored Series A amount.

Apple released a number of updates to iWork today, across all platforms, including OS X, iOS and iCloud on the web. Improvements include the addition of customizable alignment guides and a vertical ruler on the Mac, a built-in remote feature on iOS (which replaces the standalone app) and, perhaps most importantly in terms of helping those looking to use iWork for iCloud instead of competitors like Google and Microsoft for web-based document editing and collaboration, password-protected sharing of iWork documents, spreadsheets and presentations.

The password protection for shared documents is a big step, especially among people who want to use iWork as a serious professional tool for sharing documents and presentations with clients with a degree of assurance that only the desired audience will be able to view them. You can now share the docs via iCloud with a user-assigned password using either Pages 2.1 on iOS, or using the iWork for iCloud beta. It’s also easier to review your shared content on the web, thanks to a new list view of all documents, spreadsheets and presentations that have been shared with you.

Other updated features include sorting using multiple columns or rows in Numbers 3.1 on OS X, the addition of new transitions and display options to Keynote, landscape viewing and editing of spreadsheets in Numbers on IOS and keyboard shortcuts object manipulation in the iWork for iCloud beta.

Today after the bell Microsoft reported its fiscal second quarter performance for the calendar fourth quarter period, including revenue of $24.52 billion and earnings per share of $0.78.

The company also reported net income of $6.56 billion on operating income of $7.97 billion.

Investors had expected Microsoft to earn $0.68 on revenue of  $23.7 billion. In after-hours trading, Microsoft is up several points. In regular trading, Microsoft managed a gain of under 0.2 percent by the end of the day.

Today’s earnings follow a strong fiscal first quarter for the company.

Microsoft reported Surface revenue of $893 million. In the final calendar period of 2013, the company introduced new Surface models, and saw shortages of the product. In the preceding quarter Microsoft had Surface top line of $400 million. So, the company more than doubled its Surface revenue in the quarter, which I think will more than meet expectations.

In related news, Nokia this morning reported a disappointing quarter-over-quarter decline in sales of Lumia Windows Phone handset, clouding Microsoft’s larger hardware vision. Still, the company claimed 7.4 million Xboxes sold to “the retail channel.” That combined with the Surface number means that Microsoft is performing well on two of its three main hardware efforts.

Critically, Windows OEM revenue for the period only declined 3 percent, a figure that was cushioned by 12 percent more OEM revenue to commercial customers. So, large companies offset weak consumer demand, mostly.

Revenue at the company’s Devices and Consumer group grew 13 percent to $11.91 billion. The company’s Commercial group saw its revenue expand 10 percent to $12.67 billion.

In total, and we’ll hear more on the call, Microsoft had a strong quarter. As the company looks to crown a new CEO to continue its new business model, the firm can for now be somewhat content that its current operations are in good health.

I’ll be digging into the Surface numbers shortly.