Category: Tech news

Editor’s note: Antony Brydon, an entrepreneur who has raised ten seed, debt, and venture rounds for four startups in the last decade and is currently a co-founder at Directly. Follow him on Twitter @abrydon.

Last week, my company Directly closed a $1.75 million seed round using an “inbound” approach to fundraising. In past ventures, we’d used the “outbound” approach that virtually all startups use – identifying investors, networking to coordinate calls and meetings, and working 1:1 to create demand. Our new inbound approach applied new marketing technology to crowdfunding sites to generate broad investor demand, track investor engagement, and transform the traditional and inefficient outbound fundraising process to an efficient inbound raise.

How much more efficient? In an outbound model, a strong startup is lucky to close 5 to 10 percent of investors contacted. In our inbound model, we closed 37 percent.

$1.25 million of our round came from investors we know well, including True Ventures, CrunchFund* and Toba Capital, as well as individuals we’ve worked with in the past, including Ray Lane and Esther Dyson. An additional $500,000 came through AngelList and SecondMarket via a strategic set of founders, senior executives and alumni from companies, including Dell, eBay, Facebook, Hewlett-Packard, IAC, McKinsey, Nuance, Oracle, PayPal and SAP.

This post will cover some of the things I wish I had known eight weeks ago. In it, I will: explain an inbound approach you can use in your next raise; describe tools and technologies you can set up in a few hours; and show you our detailed results, from first inbound contact to close.

Our overall approach applied the latest marketing technology and techniques to AngelList. We ran a campaign to generate inbound demand, hacked technology together for total investor awareness, and used a sales funnel to move from commitment to closing $500,000 from individual investors. Here’s how we did it, along with a few tips from our investor Gil Penchina, who helped design this approach.

Run An Inbound Campaign To Generate Demand

The first and most important thing we did was to shift the way we thought about the fundraising from “outbound” sales to “inbound” marketing designed to generate demand. Instead of reaching out to specific investors who may or may not like our business and chasing them for calls and meetings, our goal was to maximize our initial exposure and create interest from folks already interested in our space and company. Tactically, this meant:

– Starting with a credible and connected referrer (in our case, Gil)
– Focusing on categories we care about (mobile, crowdsourcing, etc.)
– Enlisting 100+ of our friends on AngelList to share our profile
– Publishing updates regularly to our followers
– Publishing new investors in the round every 1-2 days

By treating this as a campaign, we were able to create a surge that brought us to the top 10 on AngelList and ultimately helped us reach No. 1 and be featured. Over three weeks, this campaign resulted in 650 follows and 150 inbound introductions. We accepted 97 of the introductions that were from individuals we thought were a good fit and closed 36 of them — a 37 percent close rate.

It’s important to note that we didn’t stop our direct pursuit of investors we wanted in the round. We pursued institutions and individuals outside of AngelList, but we folded these efforts into the broader campaign.

Technology For Total Investor Awareness

The right tools changed the game for us with an unprecedented level of awareness and visibility into interested investors. In a sales and marketing context, you might use Marketo and Salesforce.com to push out content, track engagement, score leads, and prioritize your follow-up. In a fundraising, you can use less expensive alternatives to get the same benefits. We depended on Clearslide (and their companion mobile apps); Rapportive (as a sidebar in Gmail); Gmail, Gmail folders, Gmail canned replies; and Angie (AngelList’s companion iPhone app).

Clearslide. Clearslide is an online service for hosting sales presentations. I uploaded the first half of the investor deck to Clearslide and posted the link on AngelList. I configured the deck to require the viewer to sign in with their email address, and then activated alerts that emailed me whenever someone signed into the deck. Finally, the last page of the deck teased about new service we are releasing and prompted the reader to request an introduction or email me for more information. This alone created many of the inbound intro requests. You can see this deck in action here.

Rapportive. Rapportive is a social sidebar for Gmail. When I received these email alerts in Gmail, the Rapportive sidebar would link to the AngelList and LinkedIn profiles of the investor viewing the deck. With one or two clicks, I could learn in detail about the investor and determine if they were a fit and worth pursuing. In general, I responded most quickly to investors that had made prior investments off AngelList and individuals who had expertise in the areas we care about.

Gmail, Gmail folders, and Gmail canned replies. I drafted canned replies in Gmail to help me respond quickly to qualified investors, and I could often send them a personal note (gleaned from understanding who they were from Rapportive) and the full investor deck while they were still viewing the initial deck. Gmail folders allowed me to create individual folders for key prospects, and since I was notified each time they opened the deck, this helped me “score” them: If an investor was opening the deck frequently, their folder contained more alerts and I knew they were interested.

Angie. Angie is a companion iPhone app for AngelList and alerted me each time an investor followed the company or requested an intro. It was useful when I was on the go and away from email, helping me to follow up quickly. It also sorted tasks well and I found the stripped-down UX a good complement to the AngelList website.

The result of sewing all these technologies together is that I was able to instantly understand who was viewing the deck and reach out to them, often while they were still reviewing the materials. This allowed us to go from interest to engagement quickly.

Use a Sales Funnel To Move from Commitment To Close

The last important thing we did was treat the investor funnel like a sales funnel, moving prospects through five defined phases:

– Interest – 600 follows
– Engagement – 150 intro requests (we accepted 97)
– Reservation – 50 reservations
– Commitment – 40 commitments
– Close – 37 closed

Here’s what the same funnel looked like from a dollar perspective:

Because it was a funnel, we focused on yield – converting the reservations to close as efficiently as possible. We thought the “reservation” concept alone might lead to a lot of fallout (ask the maître d’ in your favorite restaurant about “no shows”), so we created a “commitment” step where we asked investors to send us complete investment information and to confirm their online reservation. This was effective: only three investors totaling 5 percent of the total dollars abandoned after making a commitment.

We also worked to minimize fallout over the weeks between initial interest and close. This meant a steady stream of updates – some delivered en masse, some delivered individually.

I didn’t go overboard. The trial versions of these services were inexpensive and took a total of two to three hours to set up and configure. And I managed the entire pipeline in Excel, even though we generally use Salesforce.com, because I needed maximum flexibility to reconfigure the spreadsheet on the fly (and because I was the only one updating the records). If you want a blank version of the spreadsheet I used, feel free to contact me.

Wrapping Up

If you’re tackling a big market with a strong team, strong investors and good early traction, AngelList can be an invaluable way to extend your round and your reach, and the right techniques and tools can transform an inefficient “outbound” fundraising exercise to an efficient “inbound” raise. Run a campaign to generate inbound demand, take advantage of the tools and technology that can give you precise visibility into investor activity, use a sales funnel to relentlessly close – and you will transform how you raise money.

I’ve always found fundraising exciting, but this is the first time it’s been fun.

*Disclosure: CrunchFund’s Michael Arrington also founded TechCrunch

[Image via Shutterstock]

YouTube just wrapped up its first Geek Week, a celebration of all things geek. Besides featuring daily videos of things like slow motion water balloon fights, Neil deGrasse Tyson talking about science and anime versions of Doctor Who, YouTube also featured a daily Easter Egg each day. If you’re like us and you didn’t fully pay attention to every single one of these, here is a full list of all of them, including a pretty fun Missile Command clone that has you defend your favorite videos from those pesky missiles.

We don’t know how long any of these will remain live on YouTube, so give them a try now before they’re gone.

Missile Command: To play Missile Command on YouTube, just type 1980 while your watching a video. The trick here is to just click on the white space on the page and start typing (not in the search bar!). Need some extra power? Type ’2300′ while you are playing.

My Little Pony: Looking for something less stressful? Just search for ‘ponies‘ or ‘bronies.’ If nothing happens right away, just give it a few seconds.

Space: Star Trek and Star Wars fans will be happy to hear they weren’t forgotten, either. Just type in ‘use the force luke‘ or ‘beam me up scotty‘ to get “Jedi-style control over the page elements” (that’s what Google called it) and see videos load Star Trek-style.

Elite: Still enjoy l33t speak? Type ’1337′ on any page and take a look at the YouTube comments. They all suddenly make a lot more sense.

ASCII: A slightly older Easter Egg that’s also still working is ASCII YouTube. Just put a ‘/’ in front of any search term and see what happens.

The one Easter Egg I haven’t been able to get to work anymore is “fibonnaci.” Searching for this apparently made your videos load into a golden spiral last Monday (8/5//13 – all Fibonnaci numbers).

Bonus: In case you are wondering what ‘bronies’ are all about, here is a video that explains it:

Today the Guardian reported that a change to section 702 of the FISA Amendments Act (FAA) appears set to allow for the searching of communication information of United States citizens. Previously, section 702 was restricted to communications of foreign individuals who were located outside of the United States at the, to quote the Guardian, “point of collection.”

United States citizens were outside the scope of section 702 authorization. However, that appears now to be potentially changed.

An image published by the Guardian’s James Ball – it was leaked by Edward Snowden – states that a change has been enacted to section 702, that “the FAA 702 minimization procedures approved on 3 October 2011 now allow for use of certain United States person names and identifiers as query terms when reviewing collected FAA 702 data.”

In other words, the NSA now claims the authority to search databases for the communication data of United States citizens.

However, there is a firm caveat to the above: “[A]nalysts may NOT/NOT implement any USP [United States Persons] queries until an effective oversight process has been developed by the NSA and agreed on by DOJ/ODNI.” That’s somewhat encouraging, as it demonstrates a certain moral imperative at the NSA to build oversight into its activities, even if it appears to be able to set its own rules.

What is discouraging is that the NSA appears to be reinterpreting section 702 far from its earlier mission. This is a key change, and one that should be aggressively pushed upon for distinction. And if the above “oversight” process has been put into place, we need to understand its strengths, and weaknesses.

There is a current school of thought that, sans proven abuse of collection and search operations at the NSA, we are not proving enough; that until we have documented cases of misuse, we are overreacting. It’s my view that mere existence of programs and authorities that could quickly allow for the abrogation of rights should be opposed simply given their potential. Therefore, in my view, we do not need to wait for the gun to smoke. The firearm is sufficient. Now you know my bias.

According to Ball, Sen. Wyden told the Guardian that section 702 allows the NSA “warrantless searches for the phone calls or emails of law-abiding Americans.” If that is not correct the onus is now on the NSA to step up and explain itself.

Top Image Credit: Robert Scoble

You can get a little music from a lot of places, but Spotify is on a quest to be your omni-jukebox. It’s already offers on-demand streaming and radio, and it’s just launched Browse, a new way to discover critic and community playlists for different moods and genres. Spotify hopes to combine social, algorithms, and expert curation to beat the platforms and become the only music companion you need.

“It’s a really good time to be in music ” Spotify product manager Miles Lennon tells me. “Five years ago people wrote off the ability for music startups to succeed. We’re really happy to be part of a resurgence.”

The only problem is music is becoming a commodity. Every smartphone manufacturer and operating system want to have their own music service, because the iPod proved that music is a fundamental part of the mobile experience. Apple has iTunes, and soon iTunes Radio. Google just launched Google Play Music All Access. Nokia and Samsung have their own, while HTC bought MOG. They all have the benefit of device pre-installations or preferred access.

How can Spotify compete? By being a music company. Not a “media company” that dabbles in video and books. Not an advertising company that uses music as a medium. And not a hardware company looking to round out its offering. Spotify just has to be a music company 100%.

That’s the plan. Spotify now has over 24 million active users and over 6 million premium subscribers. A spokesman says its global headcount is now around 800, and financial filings show it doubled its revenue in 2012 to $533 million.

It’s a good start, but Spotify is still struggling to convince people music is worth listening to ads or paying for after the Napster era convinced the world that music is free. Spotify Director and Napster co-founder Sean Parker has said that the only way to beat piracy is with convenience and accessibility, so Spotify is trying to put access to every music service you could want in one easy place.

A Little Bit Pandora, A Little Bit Songza

At first it just did on-demand streaming like Rdio and now Google Music, letting you play anything from a huge catalogue whenever you wanted at no cost per song. Then in late 2011 it barged into Pandora turf and with a radio service that learns from your tastes and lets you expand any artist or song into a station. Just this week Rdio also added adaptive radio stations and soon iTunes will enter this fray. In December, Spotify tackled social networks like Facebook and Twitter with new friend and influencer following capabilities.

Basically, if you knew exactly what you wanted to listen to, you could search for it, and if you didn’t know or care, you could turn on the Spotify Radio. But what was missing was a more human touch. Often when we reach for music it’s because we’re in a particular mood or situation and wants sounds that match well. You could make your own digital mixtapes with Spotify, but many people don’t have the time or expertise to constantly build fresh playlist.

It’s this premise that’s made Songza successful. The service suggests expert-chosen playlists for particular scenarios like stargazing, waking up for work, or when you’re feeling romantic (time for the ”The Golden Age Of Slow Jams”).

So in May, Spotify acquired Songza competitor Tunigo, which it tells me powers the new Browse feature it just launched. Open up the tab and you’ll see an array of playlist themes like Party, Chill, Mood, and Top Lists. Each contains a set of playlists — ones for dinner parties and dance parties, classical chilling or techno chilling, excitement or heartbreak, and top indie songs or top songs in Sweden.

Some of these come from music experts Spotify works with directly, and others are surfaced from the billions of playlists created by Spotify’s users. Lennon says “If it’s five minutes before friends arrive and you think ‘shoot, I haven’t put together the music I need’, you’re two clicks away from a playlist designed for having friends over for dinner.” The launch could be tough on Songza but great for Spotify and its community.

“Browse is a great distribution system that’s giving a lot of love to these playlists” Lennon explains to me. He believes that by netting subscribers and messages of thanks for normal users who build playlists, Spotify can offer “emotional reward” that endears them to its service.

Fostering that emotional connection also led Spotify to revamp its messaging features. The new Spotify inbox collects all your messages with each friend into lifetime threads of every piece of music you’ve shared. It also lets you start a new thread with someone without a song attached, so you can simply send some kudos for a great playlist of the posted on Facebook, or ask for recommendations. The new Spotify messages system is coming to desktop soon and mobile later.

Becoming The Omni-Jukebox

What’s Spotify missing? Well you can’t add your own songs like SoundCloud, buy MP3s like on iTunes, identify songs you hear like Shazam, or listen to live FM radio. Those last two could create new inroads to Spotify or suck in talk radio fans.

Spotify’s also isn’t pressuring celebrities to make playlists. Lennon insists, We don’t need to go out and recruit celebrities because celebrities want to be curating on the service to connect with their fans.” Yet none of these organic celebrity playlists have reached the stellar popularity of “Hipster International”, Sean Parker’s ever evolving mix that has over a 800,000 subscribers.

It does have exclusive content, though. Turning concert bootlegs like Robert Delong at SXSW or stripped-down studio sessions with bands like The 1975 into albums only available on Spotify keeps these artists; followings loyal to the service.

Still, Spotify now has the building blocks of an omni-jukebox. It just needs to make it better. A better way to save your favorite music to a collection, improved mobile navigation, and better personal profiles would smooth out Spotify’s edges.

“It’s important to have it all under one roof. Our hypothesis is that the best discovery experience will combine social — recommendations from people you trust, influencers, and artists; intelligent recommendation algorithms based on your listening history and tastes; and human curation by experts and millions of community members. The way we move the needle is by satisfying more use cases” Lennon tells me.

Breadth could be the answer to fighting off focused music services, outdoing the platform owners, and seducing the mainstream. If Spotify can fulfill all of your musical desires, your ears will never go astray.

The Moto X is a device that will melt away into pure information. It’s capable of doing things without having to be asked. Or at least, that’s the promise. But the reality doesn’t quite get there.

If there was ever a time for Google and its Nexus 7 hardware partner Asus to step up and deliver something new and improved, it’s now.

Beddit, a Finnish company that has long made sleep trackers for medical professionals, is looking to tap into the broad consumer market with a $149 sleep tracker that uses a thin-film sensor on your mattress.

The sensor can send data back to a person’s smartphone, that tells them when they’ve been snoring or when they’ve fallen into deep sleep. Beddit says it can measure data as detailed as a person’s heartrate during the night. The startup is launching the new sleep sensor with a campaign on Indiegogo to raise $80,000. Backers get a discount with a $99 price point instead of a $149 one, and Beddit is looking to bring its product to market by November.

While the company has been around since 2006, they’ve been considering bringing a cheaper consumer-facing product to market for years, said CEO Lasse Leppäkorpi. But up until recently, the cost of manufacturing and then selling a sleep sensor for a mattress was prohibitive at a 500 euro ($669) end price point.

“We had been focused on basic monitoring in hospitals with tracking heartrate and breathing without touching the patient,” Leppäkorpi said. “Now the next piece is to bring this technology in the form of a consumer mobile app to market. We’ve been developing this for a long time.”

Beddit is competing against a host of activity tracking devices using accelerometers like the Fitbit or the Jawbone.

But Beddit, of course, is just focused on sleep.

Beddit says it uses ballistocardiography, with a sensor sensitive enough to measure the mechanical forces from a person’s heartbeat, their breathing patterns and their movement in bed. The sensor is a thin strip of film with adhesive on one side that acts like a sticker on a mattress. There aren’t any batteries required because it needs a low-voltage USB power supply.

It connects to a smartphone using Bluetooth, not unlike other activity trackers like the newly-launched Shine from Misfit Wearables.

The app shows a timeline of a person’s sleep activity during the night and awards them a quality score. It also can track light and noise during the night from the smartphone to tell if those factors might be affecting a person’s sleep. There’s also a smart alarm clock built into the app that can wake a person up inside a certain time window when they’re sleeping lightly. The app also gives personalized coaching and tips for how to improve a person’s sleep.

Leppäkorpi said most of Beddit’s customers are usually surprised when they’re faced with actual data about how they sleep.

“You spend one-third of your life in bed but people know very little about how they actually sleep,” he said. “Most of us think that we know how we sleep — that we sleep well or that we sleep poorly. But it’s often a surprise.”

The company has taken about $2.5 million in angel and government investment so far, and has yet to go for a full venture round.

To very loosely paraphrase Tolstoy, all successes are alike, but each epic failure fails in its own unique way. But here in the tech industry, we don’t discuss failure stories nearly as much as success stories — and that’s a shame, because even the biggest winners in the world of entrepreneurship have had their fair share of missteps.

So we at TechCrunch created Fail Week, five day long video series that shines some light on the dark days that even the most lucky of entrepreneurs go through.

Today we’re featuring Marc Suster, who famously had success on “both sides of the table” as a repeat entrepreneur turned investor over nearly two decades in the industry.

But not all of his efforts have been winners. Watch the video embedded above to hear about how he got caught up in believing his own hype and proceeded to make “every single mistake you can make” in building a startup — he bit off much more than he could chew in terms of funding, press coverage, product development, investor expectations, hiring, you name it, and eventually it all came crashing down.

You can find all our Fail Week stories here.

The alleged email provider of National Security Agency whistleblower Edward Snowden has suddenly shut down, leaving just an ominous message in its absence. “I wish that I could legally share with you the events that led to my decision,” writes Lavabit owner Ladar Levison on the company’s front page. “I would _strongly_ recommend against anyone trusting their private data to a company with physical ties to the United States.”

The note, which we’ve pasted in full below, alludes to Levison being silenced under a gag order, forced to choose between being “complicit against the American people” or continuing to operate Lavabit.

According to Human Rights Watch representative Tanya Lokishina, Snowden was corresponding with a lavabit.com email address. Levison is asking readers to contribute to his legal defense fund and support laws in Congress that permit greater transparency.

Unfortunately for Levison, none of the current proposed laws would likely help him. The closest proposal, from Representative Zoe Lofgren (CrunchGov: Grade A), would allow tech companies to reveal the number of Foreign Intelligence Surveillance Act (FISA) court data requests to their users. There’s no language in the Surveillance Order Reporting Act that would permit people under gag orders to reveal their cases publicly.

Major US Internet firms have vehemently denied active participation in an alleged dragnet program, but this latest development doesn’t bode well for their reputation.

Letter below:

I have been forced to make a difficult decision: to become complicit in crimes against the American people or walk away from nearly ten years of hard work by shutting down Lavabit. After significant soul searching, I have decided to suspend operations. I wish that I could legally share with you the events that led to my decision. I cannot. I feel you deserve to know what’s going on–the first amendment is supposed to guarantee me the freedom to speak out in situations like this. Unfortunately, Congress has passed laws that say otherwise. As things currently stand, I cannot share my experiences over the last six weeks, even though I have twice made the appropriate requests.

What’s going to happen now? We’ve already started preparing the paperwork needed to continue to fight for the Constitution in the Fourth Circuit Court of Appeals. A favorable decision would allow me resurrect Lavabit as an American company.

This experience has taught me one very important lesson: without congressional action or a strong judicial precedent, I would _strongly_ recommend against anyone trusting their private data to a company with physical ties to the United States.

Sincerely,
Ladar Levison
Owner and Operator, Lavabit LLC

Ride sharing startup Lyft hit a big milestone yesterday,* reaching its one millionth completed ride about a year after opening to the public. The company also continues to expand into new markets, launching most recently in Washington, D.C.

The 1-million-completed-ride milestone comes as Lyft has been expanding quickly into new markets. In fact, the number of rides has doubled in just the last three months, as the company has added new cities and grown its existing markets. With that in mind, Lyft keeps adding new cities.

The latest is Washington, D.C., as the ride sharing service became available to friends and family in the nation’s capital last weekend. (It’ll be launching to the public this week.) D.C. is the seventh market for Lyft in the U.S., following launches in San Francisco, Los Angeles, Seattle, Chicago, Boston, and San Diego.

The new market was launched a week after Lyft, SideCar, and Uber received a big victory in California, where the local regulator issued a proposed set of regulations that would legitimize certain new transportation services provided by unlicensed drivers. The new regulations came out after a year of negotiations between the California Public Utilities Commission and the new transportation startups.

But how local regulators will react to Lyft’s launch in D.C. isn’t clear. It took a long time for Uber to get on the right side of the D.C. city council, and the local taxi commission seems to be still looking for ways to keep that company out of town. Still, Uber was able to reach a deal with the city and create regulations that enable its service to continue operating in the capital.

While those rules did make e-hailing a taxi or black car legal in D.C., there are no provisions for the kind of ride sharing service that Lyft operates. In fact, the D.C. city council regulations requires all drivers to be licensed, which, of course, Lyft drivers aren’t.

Lyft president John Zimmer said that the company has been talking to local officials in D.C., and that “conversations are ongoing.” The hope is that D.C. — and for that matter, any city that Lyft seeks to launch in — will look at the proposed regulations put forth in California and consider adopting them, or at least, build a similar framework.

That’ll be important, as Lyft plans to keep adding new cities. Next stop is Minneapolis, where the local press noticed that Lyft was hiring drivers and believes it could face some regulatory scrutiny there. And the company plans to launch in another two markets in the two or three weeks after that, according to Zimmer, putting it in 10 cities by September.

With that in mind, the company is growing fast. It just reached 100 employees, and is adding about five to 10 new full-timers each week. That growth comes after it raised $60 million in funding led by Andreessen Horowitz and also pocketed some cash from the sale of its legacy Zimride assets. With capital in hand, the company plans to accelerate its growth with lots of new hires and new cities over the coming months.

==
* Full disclosure: I just happened to be in the Lyft office when the company hit its millionth ride. We had scheduled a time to catch up and I was planning on just chatting about the D.C. launch, but the company had a ticker counting down the number of rides in the front of the office and it was at 999,900 when I walked in. Kind of a coincidence, but it was a pretty crazy thing to witness.

Not everyone can be as obsessive about journaling as, say, a lovesick 14-year-old or Samuel Pepys, but that doesn’t mean you can’t try. That’s why Narrato is so interesting.

Created by a London-based team of Wayra graduates, Narrato allows you to enter notes, take photos and describe your feelings and mood in an app that is reminiscent of a version of Path that you’d actually use.

Because the system is ostensibly private you can tell Narrato your deepest secrets and share some of your most candid photos. You can later export the data to your desktop or just go through and recall the days of your lives.

Apparently the app has gotten very popular in Japan where mobile-only journal-makers have been creating digital diaries for months. It’s available for iPhone right now and will soon be available for iPad and Android.

The system uses two ways to view your online life. There is your private journal — a system that auto-populates with the date, time, location, and weather — as well as a Life Stream page that shows the photos you’ve taken as well as tweets and other social media updates you’ve made during the day. You can bring these images and notes into the main journal and comment upon them.

The app costs $3.99 and costs $4.99 a year to maintain your journal. When you’re ready to export the journal it outputs all of your data in a JSON-compatible format along with the images and media you’ve selected. You can also create multiple journals or delete your account entirely to protect the innocent.

Will I use it? Probably not (but I’d never tell you, would I?) However, I could definitely see the draw. Because it’s not inherently social you don’t have to pretend to be someone you’re not. It’s simply a journal, like so many others out there, but it’s beautifully designed and quite usable.

Anti-piracy agency Hadopi just broke a record. In less than three years, it has sent more than 2 million warning emails for copyright infringement. Warning emails are just the first strike in the “three strike” scheme. After that, it sends you registered snail mail, and finally it takes you to court. Yet, only four people were convicted. The most surprising aspect is that the agency is still going strong despite the change of government in 2012.

As a reminder, the Hadopi pays a private company to spy on BitTorrent activity regarding popular music, TV shows or French movies. Then, ISPs are supposed to comply with the Hadopi to give the real identity of the person behind an IP address. Offenders don’t receive a warning because they downloaded a movie, but because they failed to put proper security on their Internet connection. It’s a lot more pernicious.

While the Hadopi originally wanted to automate the third step and fine everyone who was caught three times, this part of the bill didn’t pass. A court has to decide whether an offender is guilty or not.

With a budget of $16M for 2012 alone, the agency managed to fine two persons for a grand total of $1,000.

Only 10 percent of the offenders received registered mail (200,000 people). 710 people are supposed to be tried but there aren’t enough resources to bring all of them to court. So far, only four had to defend themselves in front of a court — less than 0.000002 percent of those who received the first warning. The result isn’t a glorious victory for the government, the results of the cases including a discharge, an “exempt from penalty”, a $200 fine (€150) and an $800 fine (€600) with 15 days of Internet blackout.

In other words, it’s a failure. With a budget of $16 million (€12 million) for 2012 alone, the agency managed to fine two people for a grand total of $1,000. Some detractors claimed that France created the most expensive newsletter in the world.

Back in 2012, then presidential candidate François Hollande was reluctant to say that the Hadopi would end with his presidency. That was one of the reasons why Aurélie Filipetti was named as the Minister of Culture, because she seemed to get along well with right holders. The government doesn’t want to simply kill the Hadopi and leave a void. It would send out the wrong signals to music and movie companies.

Instead, the government put Pierre Lescure in charge to find an alternative. While his conclusions are now available, the 719-page report has yet to become a law or a new authority.

Patch, AOL’s hyper-local news effort, will lose up to 550 employees this Friday, according to a local editor at the group. Hundreds of sites in the network are expected to close in the process.

In recent calls with Patch employees, AOL CEO Tim Armstrong avoided the word “layoffs,” and instead stated that hundreds of Patch employees would become what he called “impacts.” (AOL owns TechCrunch.)

There will be between 200 and 550 “impacts,” according to sources at AOL, a surprisingly broad range of potential layoffs. It isn’t clear how the company can be so unsure of its plans, but I would interpret the range as indicative of AOL’s hope that it can salvage some of its Patch sites that currently lose money. In its most recent public earnings call, Armstrong noted that certain Patch sites may be able to find local partners. Perhaps if some do, layoffs will be toward the lower end of the stated range.

According to TechCrunch’s source, and separate sources that spoke to Jim Romenesko, up to 300 individual Patch sites will be axed in the process. The local editor that spoke to TechCrunch indicated that the layoffs will impact the editorial, sales and management of Patch. In short, Patch is about to get quite smaller.

The news is set to drop on a call scheduled for Friday at 9 a.m.

The local editor at Patch was blunt about the situation: “If people at Patch didn’t see this coming for years, they are total idiots.” In the editor’s view, Patch has gone from being free-wheeling to overly controlling with its local editors and then back and forth between the two.

Patch’s history can be described in two parts: over-expansion, and a long painful decline.

Why the layoffs now? AOL has made a promise: Patch will make money by the end of the year. Revenue isn’t likely to ramp quickly enough to meet that goal. So cuts are needed. Also, a separate source informed TechCrunch earlier that job offers are being yanked, indicating that hiring at Patch is slowing, if not halting, altogether.

Patch must hit the black by the end of the year. This is more than a promise to investors that a long-term bet will stop financially harming AOL; instead, Patch is making the rest of AOL’s media properties look bad. The company’s first-quarter earnings makes this point explicitly: “While significantly improved, Brand Group Adjusted OIBDA remains negative reflecting our investment in Patch.” The company lists other costs as adding drag to the adjusted operating income of the Brand Group — of which TechCrunch is a part — but Patch is the first listed, and I think for a reason.

Only one segment of AOL’s larger business has positive adjusted operating income, the Membership Group, which is a brilliant holdover from the days of dial-up. That’s the entire profit source for AOL. The company’s other segments, the Brand Group and AOL Networks, both lost money in the most recent quarter.

However, the Brand Group saw its adjusted second quarter operating loss fall from $15.2 million, to $1.4 million over the past year. If Patch were to fire up to 500 people, it’s hard to see how the Brand segment could not find aggregate profitability.

I’ll simply say that the slashing of Patch budgets in an attempt to find short-term profits appears to have led to a hollowed out, understaffed and unimpressive product. Ask yourself: When was the last time that Patch was relevant to your local life? Exactly.

More in the morning.

Top Image Credit: IvyMike

Earlier this year, Google pledged not to sue open-source developers over 10 patents related to MapReduce. Today, the company is expanding this pledge by adding 79 new patents to its Open Patent Non-Assertion Pledge. These patents, Google says, cover software that is “used to efficiently operate data centers, including middleware, distributed storage management, distributed database management, and alarm monitoring.”

Google acquired these 79 patents from IBM and CA Technologies and include patents that were filed in the U.S., Europe and Asia. They include patents on things like a “method of creating and using notes decision capsules,” a “database table recovery system” and for a “service agent for fulfilling requests of a web browser.”

The company says that even though the pledge currently mostly covers back-end technologies, it’s also looking to add others that would be related to consumer-facing technologies because “open-source software is also transforming the development of consumer products that people use every day.”

As Google noted when it first announced its pledge, it hopes that this move will “serve as a model for the industry, and we’re encouraging other patent holders to adopt the pledge or a similar initiative.” Given the size of Google’s patent portfolio, having 89 patents that are covered by this pledge is obviously just a small gesture on Google’s part. However, it is part of an overall movement against patent trolls and other abuses of the patent system by large tech companies — though even they obviously continue to sue each other and patent trivial inventions.

Google AdWords customers can now better target mobile device owners via an updated ad experience within the Google Maps app on Android, iPhone, and iPad, Google announced today. This news follows a recent update to the Google Maps app, which previously saw a number of changes and additions, including an updated user interface, integrated traffic reporting, Zagat reviews, changes to how business ratings display, and more.

In the updated Google Maps application, advertisers can now target Maps users after they’ve performed a search. Here’s how it works: after a user performs a keyword search in the native app, a box appears at the bottom of the screen which includes a title, text and link to get directions for a relevant business. Users can also tap or swipe up on this box to see more information.

In the example Google provided today, a user searches for “gardening shop” and an ad appears below for a gardening supplies store nearby their location.

When clicking (err, tapping) on that ad, Maps users will also be able to view the business address, phone, photos, reviews and more – just like a regular business listing would show. However, the listing is preceded by a small purplish icon reading “ad” to indicate that this is, in fact, a paid placement. The icon on the map is also purple, as opposed to the standard red.

Some actions a user takes are free, including saving business information for later, sharing a business listing with a friend, or starting navigation, for example. Meanwhile, others are paid. Advertisers who want to enable the initial “get location details” click, the “get directions” option, click-to-call’s, and clicks on the ad headline, have to pay, says Google.

Reporting is available for both types of actions, and can be filtered by choosing the “click type” in the reporting screen.

To get started, Google advises advertisers to add  location extensions to their search campaigns or create an ad with AdWords Express. Ads also have to be configured for mobile devices and on Google search partners in the AdWords settings.

Prior to today’s change, Google’s Map apps on iOS and Android had been updated with a new interface where business listings appear at a box a the bottom of the screen. Users can swipe up on these in order to flip through them one-by-one, or they could just tap on the “list” icon next the search box at the top of the screen to see a full list of nearby results. Now Google is making it so advertisers can pay to be that “first click,” so to speak, which could boost a business’s exposure in terms of attracting foot traffic to their store, or reaching those in search of something in particular (e.g. sushi, and not just restaurant). 

Google first previewed its updated version of Google Maps at this year’s I/O developer conference, when it announced new plans for AdWords location extensions, which would enable ads beneath the search box and on the map on the web, too.

Maps has long since been used by Google advertisers, but this year’s user interface overhaul changed the way ads will display, and what sort of options advertisers can now pay for and track.

Google offers more details about the setup process here.