Category: Tech news

Editor’s note: Guest author Semil Shah is an entrepreneur interested in digital media, consumer Internet, and social networks. This is the second in a series of essays on Quora that he will post on TechCrunch. Shah is based in Palo Alto and you can follow him on twitter @semilshah

In 2010, a handful of mobile photo-sharing applications unleashed armies of handset users to snap pictures and instantly share them across multiple platforms and networks: Instagram growth exploded to become a Twitter for pictures; Picplz received generous funding, Path emerged from stealth mode, Occipital enabled 360-degree panoramic experiences, Foodspotting encouraged users to capture food images, DailyBooth positioned itself to focus on the front-facing camera, and World Lens translated signs from English language to Spanish. Photo-sharing features were also embedded into existing sharing services, such as Foursquare and Posterous. (This entire arc was captured in a discussion on Quora, “What explains the explosion in social photosharing entrepreneurial activity?”)

The act of taking and sharing pictures prompted many to label this a “key wedge” activity which companies could leverage in order to build out new social networks and new products or services, either around location, food, smaller circles of friends and family, and so forth. The wedge being used, in this case, is pictures as the first entry point into building something bigger. Hunch co-founder Chris Dixon laid out the theory and practice in this post.

Wedge activity isn’t just confined to social picture-sharing. What if, in the case of Quora, their “thin edge of the wedge” was interaction around Q&A activity?  What markets can that wedge help open up?

On the surface, the Q&A activity at the heart of Quora appears designed to engage users around interesting people, topics, and questions with strong incentives to contribute content, as well as to participate in voting, messaging, commenting, and sharing. As it turns out, Quora’s “thin wedge” is not so thin and has triggered a new class of content creators and is well on its way to successfully tackle the Q&A problem that has been attempted by nearly 30 different companies in the past.

But I believe this initial activity is just Quora’s thin edge of the wedge. The first arena the site has been successful in altering slightly is the concept of network blogging, all of which has been well documented by others—many times over. As the product matures and as contributors, consumers, and search engines crawl across the site looking for structured content, Quora could be slightly reorganized and positioned in a variety of new ways to challenge existing Internet products and services, many of which today are themselves large, multi-million dollar businesses. In no particular order, here is a list of markets where Quora could offer an alternative, leading all the way to the other edge—the thick edge—search.

• Brand Management & Customer Service: A powerful yet somewhat under-reported feature of Quora is that while the individual user can follow topics (which include companies), those topics cannot in turn follow and message individuals. Instead, individual users who work for specific companies may act on behalf of their employers or clients on Quora and work with admins to manage the topic. For instance, you can follow the topic “TechCrunch” on Quora and interact with the 20,000+ individuals who follow the same topic. Today, a brand such as TechCrunch could engage parts of its audience through Quora, which currently allows for anonymity for those who pose and answer questions, but not for those who up/down vote or comment. It’s not hard to imagine a world where big brands have links to their Quora topic page on their homepage to interact with others. Quora offers brands a more civil forum to engage with users than Facebook, Twitter or other social networks without having to appear cute. Even if brands resist, enough influential Quora users could engage around a topic, such as customer service at Comcast, and create a situation in which Comcast would have no choice but to respond publicly. A few brands have already started, and this is likely to become more evident to the naked eye in 2011.
• Social & Professional Networking (including Messaging): Facebook is ubiquitous and tries to capture all activity under one roof. LinkedIn is very structured. Twitter can be a social network, but its asymmetry creates noise if not managed correctly; at its core, it is a communications and distribution channel. Google will introduce something social in nature, but it will be a challenge to create a stir. In this world, Quora straddles an interesting middle line, somewhere between a niche network of users organized around topics and a full-blown social/interest network where a Quora profile becomes a sort of personal homepage or splash page, linking your audience with your other networks. In parallel, messaging norms could change. Email is considered “broken” by many who feel inundated by spam, offers, and long messages. Twitter’s forced character limit and asymmetric network presents a new model to manage inbound messages, where the user controls who has the right to message and where those messages must be less than 140 characters. Quora Messages, while open like Facebook, is clean, light, and loads fast, and is more secure than Twitter Direct Messages today. Facebook’s social inbox message aggregator may end up working for personal accounts, but may not satisfy the professional end, and that is a realm Quora could capture.
• Endorsements, Reviews & Advice: By organizing people around topics and questions, combined with user identification and the ability for the audience to up/down vote contributions, Quora may also become a mechanism by which individuals and entities are publicly endorsed (or criticized). The identification system that Quora is built on, as well as incentives to contribute content, creates an opportunity for the site to act as a repository for timely consumer reviews of products (such as when the new Apple Macbook Airs were released) and services (“Is it worthwhile to buy Apple Care?”). Topics can be automatically created and collect relevant questions, where the user can search for the latest user reviews of new electronics, automobiles, and a host of other verticals.
• Content Verticals and Syndication: Quora has been very successful at creating incentives for users to contribute content to its site. According to the site itself, content on Quora can be re-posted across the Internet, subject to a few conditions and controls, and must link back to Quora. One can imagine, over time, that the reviews (as collected above) can be repurposed on larger content verticals such as automotive, health, and finance.  These may come online in new ways through Quora and be redistributed via syndication to other sites.
• Education: There are many ways Quora could invade the classroom, such as providing a complement to textbooks or periodicals, as well as classroom management software, group projects, tutorials, test prep, online collaboration tools, and so forth. Teachers and administrators could encourage students to ask and answer questions within defined topics and perhaps even within their own school topics, managed by the school itself. Where Google Wave failed as a collaborative solution, Quora may be flexible and simple enough to succeed. (One of the best answers to this type of use case was contributed by a Quora engineer, Tracy Chou: “How can I best use Quora as tool for the classes I teach?”)
• Digital Media and News Discussion: As mentioned earlier, Quora has already proven itself to be innovative in the world of blogging. This contribution on its own is newsworthy and, as the successes of Tumblr and Posterous demonstrate, quite valuable. But, text blogging is just the tip of Quora’s iceberg. Quora users are already sharing external links and a few photographs, so more picture- and video-sharing could make it a stronger source for news. And, as the site becomes more robust and establishes its place as a hangout for discussions around news topics, it could continue to grow to be a major source for long-form and investigative journalism.
• Expert Research and Analysis: The design and “feel” of Quora makes it possible to encourage individual experts to share sensitive information and insights. Private research organizations make a good profit conducting their own research and analysis for sale to large companies and governments. Gerson Lehman Group, for instance, is a $400 million per year business. While their reporting is deep and technical, one drawback is that in the process of research and writing, which takes time and focus, elements change within fields at a much faster rate. And, it’s costly. Research authors like Gartner and Forrestor charge premium rates. In certain instances, Quora could provide a novel alternative.

All of these scenarios are theoretical, and surely there are more opportunities I’ve missed. (Please add your own thoughts in comments, or chime in on Quora).  It could take many years for Quora to test these markets, if it ever does, and that will require the long-term commitment of Quora users to contribute content to the site in exchange for the opportunity to socially interact with others based on interests, to build reputations, and to collect endorsements. Over time, the content contributed to Quora will constantly be improved, refined, aggregated, and structured. Like a stone in a tumbler, the edges will get smoother. One effect of the tumbling and fine-tuning is that the site will become better optimized for search.

And, this is where the other edge of the wedge, the thick edge— will come into play. Search has undergone tremendous change and will continue to do so. The opportunities in new search methods are numerous and the future is exciting, but it’s also hazy with low visibility. We simply just don’t know how we’ll search differently, a theme which is at the root of many of the fascinating heavyweight fights going on in Silicon Valley. There may be room for more winners, and those winners will likely have figured out how to effectively segment their users according to a variety of factors and then, according to those segments, to create the proper blend of incentives to encourage the behaviors it needs to survive. For Quora, that formula may look something like this: Small segments of curious users who feed the system good questions; slightly bigger segments who contribute knowledge to the system in response; and hopefully an enormous segment that searches the Internet in a variety of ways and somehow end up on Quora for their answer.

Photo credit: Flickr/mtsofan

Every few eons we get another RSS is dead swarm of stories, usually involving Dave Winer versus the rest of the universe. Sub-themes include dead calling is stupid, I found this post on RSS, and get off your porch grandpa. Typically Dave uses the event to launch yet another version of Radio 8 tricked out to convince us that his lack of business model business model beats traditional data silo roach motel closed software. It may sound like I am pursuing a personal vendetta.

I’ll admit to some mixed emotions about Winer and his attempts to regain control of what he calls RSS but is in fact a new socially adept layer dominated by Twitter. Starting with my post several years ago on TechCrunch, I’ve stated the obvious, that RSS has become at best a formative technology that has led to the development of realtime social streams of citations. When Winer led the development of XML-RPC, SOAP, RSS, blogging, and podcasting, he was often the single reason these technologies broke out of their original niche and expanded across mainstream media, tech platform players, and a broad coalition of individuals who could now make a difference. For Winer, success proved a difficult pill to swallow.

In calling the moment as I saw it, I in no small part was emulating what I view as Winer’s incredible sense of strategy. When Twitter took off, I teamed with Winer to organize BearHugCamp, so named as the result of a post where I described Winer’s strategy of bearhugging a similar technology to create more momentum and an adhoc standard. But bearhugging Winer himself only goes so far; he likes to be the hugger, less so the hugged.

This presents a problem when Winer’s motivation seems to be to absorb all post-RSS innovations under the blanket RSS model. When some Google engineers produced a service called PubSubHubbub, Winer attacked it as a bigco project even though it was created expressly as an open service that could and was adopted both by Google and non-Google companies and individuals. Then Winer produced RSS Cloud, which he pitched as being unencumbered by bigco politics. Certainly having a choice is a good thing, but I found the motivation for the effort to have more to do with Winer’s view of his legacy than any notable difference in technology or what is called openness.

But what I initially called out as a turning point had less to do with what RSS did and more to do with what it didn’t. Twitter’s social metaphor, the Follow, created a data model for extending and amplifying attention, something I had been exploring for some time beginning with attention.xml and continuing with the AttentionTrust and its attention recorder plug-in. With the ability to track and model the intersecting clouds of people, who they follow and are followed by, we could now begin to cultivate the full value of the realtime stream, its content, and its gestural metadata. RSS and its popular renderings such as Google Reader were succumbing to overload.

BearHugCamp succeeded in describing the possibilities for unifying around a defacto set of APIs that would speak across Twitter and its much smaller competitors. Perhaps too successful, because Twitter developed so much velocity that other sites such as Identica (now statusnet) using a clone of the API were vulnerable to Twitter gating realtime access to its full firehose. FriendFeed and even Google Buzz were also constrained from symmetrical access to and from the Twitter stream. Facebook’s acquisition of FriendFeed has still not precipitated realtime pushing of its updates into the Twitter stream. Bearhugging has passed its moment of opportunity, at least for now.

In the aftermath, Winer has shifted to attacking Twitter as closed while promoting what he sees as an open federated approach that uses his RSS Cloud work at the center. The biggest problem with trendjacking the open meme is that the cloud makes size irrelevant. You can operate in the realtime Twitterverse with a few well-chosen @mentions and be virtually indistinguishable from any Fortune 500 megaprise. In that climate, attacking big companies for proprietary manipulation is as good as attacking oneself. From there it’s a long slow slog trying to define what open is in such a way as to advance your particular proprietary interests.

In the RSS argument, Twitter is demonized for having control of the stream. Certainly the company has the ability to pull metadata out of the message body and establish a proprietary wrapper, as they’ve done with retweets. But to service their third-party client platform, they’ve made their proprietary wrapper available via their API. When you click the retweet button in the Twitter clients, the API produces this string — you: @retweeted: and the message body. In other words, your username followed by a colon (minus the @ symbol,) the @mention of the retweeted user followed by a colon, and the body with text, URL citations, and any other @mentions.

In effect, Twitter has established an open standard around the @mention syntax. When a Twitter retweet is consumed by a down-level client, the object is translated into you: RT @retweeted: message body. This format and its analog via the API are the open standard for retweets, since every other kind of manual retweet and Twitter retweets all conform to the same syntax and output. As long as Twitter retains this format, the standard persists. And it encourages other players to support the standard, thereby increasing the “lock in” for the standard. As with the way many defacto standards emerge, we see Twitter syntax being used in Facebook messages even though the @mention syntax is not officially recognized. Quora uses the @mention to push you back into its silo, rather than out to Twitter.

If the @Mention Cloud is open, then what does that say about RSS? Does RSS support the @mention extension for retweets? Probably, but if not, why not. If it’s supporting the open standard, then it’s supporting the broader micromessaging standard. Which makes sense for RSS, given micromessaging has garnering the lion’s share of attention. Which was the whole point of my original post about the death of RSS. That’s what happens when foundational technologies become oil. They live on as fuel for the new black.

This of course is hard to swallow when you’ve spent years struggling to get sufficient momentum to send RSS into orbit. Many of us have been doing that for years, not just Winer, but also a broad coalition of journalists, technologists, publishers, entrepreneurs, and competitors. We knew a game changer when we saw it and made it an imperative to support it until it could accelerate under its own power. And like all proud parents, at some point we have to kiss our children on the forehead and see them go out on their own.

What RSS did was create and nurture an information landscape based on the authority of the author. It allowed those authors to gain such authority both within and outside the media infrastructure of that time. But it also gave rise to a separate wave of authority, that of the reader, the analyst, the commentator, and so on. The blog post maintained its central role even as it absorbed every other document and media type, and it was joined with a seat at the table by a metadata stream of attention and gestures. Suddenly the root object was the @mention, whether a Tweet by the author, a retweet by a reader, an @mention of other such authorities, the implicit clouds of such signals.

Winer indirectly recognizes the power of the @mention. In a recent post, he acknowledges sitting on the @mention stream as his favorite view into the Twitter cloud. Of course, he mentions this (cough) in the context of explaining why he blocks anyone who spams that view by using @davewiner to force his attention. Blocking not only removes the blocked offender from his follow stream, but also from the @mention view.

Winer mentions one side effect that blocking produces, that the blocked person can no longer follow or view the blocker’s tweet stream. But interestingly, blocking an identity also blocks @mention updates of that user by other people that also include @davewiner. Retweeting a post with one name which then is retweeted by another produces a conversational thread opaque to the blocker but visible to the rest of the network. That may be a desirable effect, but until Track or some more flexible block mechanism is offered, Dave’s blockmention model is unlikely to gain traction.

The @Mention Cloud is the new black and nothing will stop it, just as nothing will slow the steady march toward the cloud in general. The @mention cloud scales beyond what I know to what we know, elastic in context and realtime relevance. RSS lacks the core components of the social web, and survives as a really simple reminder of how to get where we are going. Certainly it could and should be reworked to mine the @mention cloud precepts. Call it @RSS Cloud.

Earlier this week we had a special episode of OMG/JK to mark the launch of the Verizon iPhone, but we’re already back for more. I know what you’re thinking: this may be the best week, ever.

In this episode we discuss recent rumors about the iPad 2 — which will likely come with a new, higher resolution screen and a SD card slot. We also take a look at the rumors that the iPad and iPhone may soon ditch their single, iconic buttons.

Next, we examine Google’s recent bold moves to promote WebM and move away from H.264, which has the web in a bit of a tizzy as it debates what this will mean for the future of web video.

Finally, we take a broader look at some of the problems that Google has had lately, and why the public and the press seem to have been criticizing the search giant more than usual.

And yes, we do a deep analysis on rampant rumors that Facebook may shut down on March 15. Or not.

This episode ran a little long (we had a lot of ground to cover when it came to all of the negative press aimed toward Google). So we’ve included handy links below that will let you jump to each topic.

Video Links:

Our discussion on WebM

Our Discussion on the Google backlash

Here are some articles relevant to this episode:

• The Future of the iPad 2(Engadget)
• So Much For Standards, Google Says WebM Plugins Coming Soon For Safari And IE9
• Google Clarifies Their H.264 Stance, Hands Keys Of Web Video’s Future Back To Flash

Subscribe to us on iTunes!

Bob Muglia moved on from Microsoft this week, and I for one was not a little surprised. You see, Bob is one of the few Microsoftees that sits (sat) across the two worlds of Microsoft. One is the old world, of Windows and Office and the predominant position in the technology community. The other is where the company sits today. Bob was comfortable in both places, in a way that no-one has been since, well, Bill Gates roamed the halls.

That’s not to say that Bob is a direct peer of Bill, but rather that Bill was able to sit across old and new through sheer force of saying it was so and therefore making the distinction irrelevant. Bob had a more parochial role, but his understanding of the underlying dynamics, what the strategy was and would be, was comprehensive in its ecumenical flavor. When he and Ray Ozzie played doubles with the media, they fit together in surprising ways.

Such was Bob’s skill that he would turn a softball aimed at Ozzie into a screamer hit back at the unsuspecting questioner. Ask Ray whether Silverlight was going to replace Windows Presentation Foundation and effectively subsume Windows into an Internet OS, and he would say no by saying yes. Then Bob would say yes by saying no. Put the two together and you got one answer. Tuesday that answer changed.

When Ray Ozzie quit, there was a reasonable interpretation that things would continue as planned. When Bob Muglia quit, you could no longer make that assumption. Ray had Bill’s blessing, Bob had a business unit with growing revenues. In effect, he was a consigliore to Ozzie, the guy that could manage the often challenging relationship between what makes money at Microsoft and what that would have to become in the Cloud era. Put another way, he could walk into a poker game with Sinofsky and put some chips down to call a bluff.

The bluff is that Windows revenue trumps everything, that Windows Phone will get its share, that a Microsoft tablet will stop both Apple and Android from eating the heart out of Office. As we found out on today’s Gillmor Gang, Google is being called on another such bluff. Namely, that yanking H.264 from Chrome is all about the open Web. That WebM will stop Apple from eating the heart out of Android and Chrome and maybe YouTube. Already Google is re-explaining the move.

But not soon enough to stop Danny Sullivan, Robert Scoble, Kevin Marks, John Taschek and me from having some fun on the Gang this week. Danny Sullivan’s filibuster about who is the better friend of the user is worth the price of admission alone. Robert Scoble is getting smarter by the week, and Kevin Marks, well, it was fun to see the ex-Googler voice outrage at Google’s moronic move. Even noted Android fanboy John Taschek recognized that the more pressure Apple puts on the carriers, the happier users get regardless of which phone they buy.

In the good old days of tech media, Microsoft led the charge in impossibly convoluted contortions around self-interested maneuvers. Today Google has taken over that role. And the new Microsoft stands as a pale shadow of itself, fighting tooth and nail to rescue defeat from the jaws of victory. With Steve Ballmer as Donald Trump: Nice job, Bob. You’re fired. Thanks for the material, guys.

On Wednesday, it was announced that a game called Minecraft had hit a million sales. This probably isn’t the first time that you, a denizen of the internet, have heard that word. But unless you’re in the habit of following up on every mention of every indie game you happen to see, there’s a good chance this particular title might have slipped under your radar.

So what is this Minecraft, and why is everyone talking about it? And more importantly, why should you care?

Continue reading…

Tim Ferriss is a 33-year-old Silicon Valley angel investor, consultant, Singularity University advisor, and former entrepreneur who in 2007 published a book called The 4-Hour Workweek; in 2008 won Wired‘s “Greatest Self-Promoter of All Time” prize; and last month published a sort-of-sequel, The 4-Hour Body. His books seem roughly equally divided between really worthwhile, interesting advice and totally ridiculous crap. What’s most interesting about them is their approach. In his own bizarre yet effective way, Ferriss has become the world’s first hacker-guru. And I hate to admit it, but I must confess: I have halfway become a devotee.

The 4-Hour Body attacks self-improvement in the same way Silicon Valley startups strive for success: data-driven decision-making, A/B testing, iterative development, willingness to pivot. (Watch Andrew Keen’s TCTV interview with him). This isn’t new. A sizeable subset of the hacker community has been “hacking their body” for years, and sites like Lifehacker have grown around that approach. Ferriss, though, is the first to promulgate that ethos to the general population – and he has been wildly (and deservedly) successful. 4-Hour Body rocketed straight to the top of the New York Times bestseller list.

It helps that he’s obviously a really charmingly enthusiastic guy, and a good writer to boot. But it’s his commitment to evidence-based decisions that sold me. Ferriss can’t stop citing the science behind his conclusions, had a blood-glucose monitor implanted in his body as part of his three years of research, and writes proudly about the time he spent weighing everything that went into or came out of his gastrointestinal tract. Better he than me. I’ve known for years that I’d eventually have to start paying attention to my diet to maintain my fitness level; so my girlfriend and I decided that this painstakingly researched eating plan – an iteration from the paleolithic, South Beach, and low-glycemic diets of yesteryear – was for us.

Not that it’s just a diet book. There are sections about ultra-endurance running, optimizing the female orgasm, living on less sleep, gaining muscle, and “becoming superhuman.” (See the “ridiculous crap” caveat above.) But it’s his data-driven slow-carb eating plan that struck me most, because, well, it’s wildly effective.

I spent a day in headache-ridden sugar withdrawal at first. Who knew I was a junkie? Since the first week, though, it’s been bizarrely agreeable. Our general mood and feeling of wellbeing has improved. The mid-afternoon downbeat lull no longer hits. Judging from my weightlifting and running, I’m near a lifetime apogee of fitness. Our desire to eat bad food has diminished. I do miss beer, but wine and Laphroaig fill that void. (I have, however, not stopped eating fruit. Sorry, Tim.)

And the weight loss was startling. I wasn’t that interested – I’m not particularly thickset – but when I boarded the 4-Hour train, our fancy-schmancy scale reported that I weighed 197.6 pounds. Ten days later, after morning coffee & protein? 187.0. (For calibration, I’m 6’1″.) I assume most of the difference is water weight, but still, that part actually seems to work as advertised. I expected no less, given the the data that drove it.

I know, I know: “why are you writing about your lunch on TechCrunch?” Because my lunch is a data-driven iteration from the previous state of the art – in other words, a technical innovation. Look beyond the Valley (and its counterparts around the world) and you’ll find that approach can and will pay dividends almost anywhere.

The next generations of telecom technologies are called “LTE” or “4G”. China’s Huawei believes that by 2015, it will hold 15–20% of the worldwide patents in these technologies, and that these will earn it at least 1.5% of the sales price of every device—every cell phone, laptop, and tablet—that uses them.  Huawei is on track to achieve its goals: in 2007, it held just 152 patents; by the end of 2009, it had applied for 42,543 patents, of which 11,339 had been granted in China, 215 in the United States, and 1282 in Europe. Huawei’s rival, ZTE, claims to hold 7% of the world’s LTE patents and plans to increase this to 10% by 2012.

Emboldened by these successes, the Chinese government has initiated a nationwide program to make China the world leader in patents in every important industry.  The New York Times reported that the government is offering cash bonuses, better housing, and tax breaks to individuals and companies filing the most patent applications. According to the Times, China’s goal is to increase the number of its yearly “invention” patent filings from this year’s 300,000 to one million by 2015. And it wants another one million “utility-model patents”, which typically cover items like engineering features in a product. In comparison, there are 500,000 invention patents granted every year in the U.S. The requirements for “utility-model patents” are so mundane that they are not even recognized in the U.S. as a legitimate criterion for the existence of intellectual property.

The Times quotes David J. Kappos, director of the United States Patent and Trademark Office, as saying that the leadership in China “knows that innovation is its future, the key to higher living standards and long-term growth. They are doing everything they can to drive innovation, and China’s patent strategy is part of that broader plan”. Kappos seems to believe that, with patents, China is unleashing a golden age of innovation.

Kappos is wrong.

The reality, as I explained in my BusinessWeek column China Could Game the U.S. in Intellectual Property, is that patents will neither make China more innovative nor benefit the global economy. Just as the vast majority of China’s academic papers are plagiarized or irrelevant, so will its government-sponsored patents be tainted. In contrast to the tiny proportion of Chinese academic papers that serve to expand the world’s knowledge base, however, Chinese patents will serve as land mines for foreign businesses. They will allow China to demand license fees from companies that do business there or to shut them out entirely. (And these will hurt China’s own startups.)

In the tech world, patents don’t foster innovation; they inhibit it. They are like nuclear weapons in an arms race, in that companies use them to hold competitors back or to extort license fees from companies that can’t afford the time and cost of litigation. These battles play out every week in Silicon Valley: among the behemoths—Microsoft, Hewlett-Packard, IBM, Oracle, and SAP—and between behemoths, startups, patent trolls, and large corporations. Startup entrepreneurs live in constant fear that behemoths or patent trolls will bankrupt them with frivolous lawsuits.

Most U.S. patents are commercially frivolous and irrelevant. The Chinese patents will be even more so. As The Economist reported, Chinese patent examiners are paid more if they approve more patents, and so routinely approve even the most dubious filings. Chinese academics, companies, and individuals have strong incentives to patent worthless ideas: with more patent grants, professors gain tenure, workers and students gain residence permits to live in a desirable cities, corporate income tax is reduced from 25% to 15%, and companies win lucrative government contracts. The reward doesn’t come from innovation, but from the act of filing a patent application.

So in the years ahead, China will have lots of patents—far more than the U.S. You can’t fault China; it is simply taking a page from Silicon Valley’s playbook. Its leaders have figured out how the American patent system works and how to master it.

In addition to the huge numbers, what will make it even more difficult for western businesses is that these patents will be in Chinese. These businesses will have to hire Chinese lawyers to search the Chinese State Intellectual Property Office database for patents that cover any of the technologies they want to sell in China. And if someone has already beaten them to the punch and filed an application for a similar invention, they must fight it out in Chinese courts—where judges are likely to side with locals. Intellectual-property lawyer JiNan Glasgow told me of a case in which this happened recently: a supplier used e-mailed design documents and product specifications and filed its own patents in China and then enforced them against the inventing company (its customer).  Rules of evidence made it nearly impossible to prove that the invention and figures originated in the U.S., because e-mail and electronic documents are not considered admissible reliable evidence in China.

This is a battle we can’t win. The Chinese economy will be littered with millions of stumbling blocks for foreign business. These companies will have to offer up their intellectual property in exchange for Chinese intellectual property—in the same way that IBM and Microsoft trade patents. Or they will have to pay license fees to enter the Chinese market. And China may challenge the U.S. globally with its new patents as it plans to do with 4G.

It’s best to disarm before it is too late.  That means reforming the patent system. We really don’t need software patents, and we really don’t need patents in other technologies that evolve rapidly. In these fields, speed and technological obsolescence are the only protections that matter. I’ll concede that in some slow-moving fields, patents do have a role. Patents successfully protect the designs of industrial equipment, pharmaceutical formulations, biotechnology products and methods, biomedical devices, consumer products, advanced materials and composites, etc. But we can have different rules for different types of products.

And once we reform our patent system and unleash greater innovation in the U.S., we can teach other countries how to reform their systems. Innovation is a game that the U.S. can easily win at. And when we compete on innovation, it’s win-win rather than lose-lose.

Editor’s note: Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. You can follow him on Twitter at @vwadhwa and find his research at www.wadhwa.com.

Back in December, we spotted an SEC filing indicating that Union Square Ventures was raising between $135 million and $200 million for a new “Opportunity Fund.” The offering wasn’t complete and the firm could not discuss it, but today partner Fred Wilson explains in a post what the new fund (which ended up being a $165 million fund) is all about.

The fund is not about going after different opportunities than Union Square has been focussed on since the outset. It is that the size of the opportunity Union Square is focussed on—which Wilson describes “Internet services that create large networks”—is larger than ever. And the new fund will provide more dry powder to invest in network startups, whether they need $25,000 or $25 million. Wilson explains:

Since 2004, the opportunity to invest in networks has evolved. In 2004 the entire market capitalization of the social media sector was probably less than $100M. Today a single company in that sector is valued at over $50B. The amount of venture capital focused on the sector has exploded. Networks that did not exist in 2004 now consume a huge chunk of users’ time and attention, making the launch of new networks more challenging. The opportunity to invest in networks has changed, and once again we are changing with it.

Union Square is an investor in Twitter, Zynga, Tumblr, Foursquare, and Disqus—all of which fit under the network thesis. As these companies grow and command higher valuations in private rounds (Union Square sat out Twitter’s latest $200 million round), the Opportunity Fund will allow Union Square to keep participating. It will also be tapped to invest in companies in later rounds (something Union Square has shied away from so far, they like to be first) and other special situations such as spin-offs. Interestingly, Union Square is not committing to invest all the money raised. Maybe they should have called it the Dry Powder Fund instead.

Inspired by the epic Angry Birds for BlackBerry, Myspace VP Sean Percival has come up with a mock hypothetical of what the popular photosharing app Instagram would look like on the text-heavy and camera-weak BlackBerry platform. The above image is particularly humorous when coupled with the fact that Instagram, which just hit one million downloads, has not yet launched on Android.

Percival’s ultimate message here is intended to go beyond humor however as he’s actually posted the image to Instagram as an experiment, “With so many brands getting into Instagram I was curious how a piece of humor (or viral) content might do within the Instagram ecosystem itself. No doubt those brands will need to bring something more than that perfectly filtered photo of a kitty cat to make an impact.”

Going “Popular” or viral with “Likes” on Instagram has become a bit of a status symbol amongst the tech set as of late, and it will take some pretty creative maneuvering to get people to “Like” a branded photo of a Peets or Starbucks logo, no matter how artful.

Editor’s note: This guest post was written by Raj Lalwani, the co-founder and CEO of Hallmark Social Calendar (formerly Social Calendar), a birthday reminder app on Facebook.

In 2007, when Facebook opened its platform to developers, it seemed Facebook was using Microsoft’s playbook—let developers create apps using their platform and see what apps succeed (just like Microsoft did with Lotus 1-2-3, WordPerfect, and Harvard Graphics). Then acquire or clone the successful ones (Microsoft Excel, Word, PowerPoint) as the cash cows and leave the crumbs (relatively speaking) for others. But something seems to have gone wrong—the third-party app ecosystem is not exactly thriving and Facebook still has no cash cows like Microsoft does (Office and Windows).

Instead, Facebook is increasingly looking like Yahoo!—it does everything from Photos and Chat to Email and Places. It provides just enough features to be functional but leaves much to be desired, and increasingly depends on advertising as the revenue model.

Until recently Microsoft had the largest market cap in technology (it’s Apple now). Here is what Facebook should steal from Microsoft’s playbook.

Facebook Must Make Sure The Third-Party App Ecosystem Is Thriving

This is important for two reasons. One, it keeps the platform alive and vibrant for users—Windows would not have been very interesting or successful if all apps came from Microsoft. Two, successful ideas will come from this ecosystem. If the Facebook platform is not viable for app developers, they will continue to look for alternatives and someone will crack the social graph code sooner or later elsewhere. For instance, Apple’s iPhone is becoming a meaningful platform for app developers.

It seems Facebook has thrown the baby out with the bath water when it comes to communication channels that were being abused by some app developers. I used to play Scrabulous on Facebook. I tried playing Scrabble recently but the other player wasn’t notified that it was her move! Since then I started playing Words with Friends on iPhone and it just works. As soon as my friend makes a move, I get a Push Notification. Facebook should handle notifications the same way as publishing on the Wall—ask users for explicit permission to send a notification to a friend.

News feed stories increase engagement and discovery for apps. But the volume of stories generated has forced Facebook to algorithmically decide what stories to show on the home page. Have you visited FarmVille or Causes lately? They both prominently display friend activity on their home page. Why? The same reason that made Facebook so successful—users can see what their friends are doing—an explosive mix of social discovery, social proof and voyeurism. This is where I see the solution for resolving the battle for news feed stories between Facebook and app developers. Instead of each app trying to implement its own friend activity, Facebook should provide an easy way to display the app-specific news feed inside the app. At the same time, Facebook should continue to bubble up interesting stories on its home page.

That leaves the problem of app discovery—reaching out to new users who are not yet app users. If social discovery is going to be the killer app for Facebook (I will come to that in a moment), app discovery is just a small part of that. Showing apps used by a user on their Profile, as Facebook used to do before, is a good start. But when it comes to discovery, Facebook can borrow from another playbook: Google’s. Some developers will be happy to pay for leads. How about sponsored links just above the organic list of apps used?

Facebook Must Find Its Cash Cow—Fast

To me social games like FarmVille seemed like a cash cow. Facebook should have acquired or cloned Zynga. It seems Facebook has chosen a platform angle instead, namely, advertising and Facebook Credits, which has the potential to be a cash cow for Facebook.

However, I believe, “social discovery” is potentially the killer app for Facebook. If you are like me, you discover new restaurants because a friend recommends or takes you there. I always ask my friends about new movies—I know which friends have similar taste as me,and which ones I can safely ignore. The list extends to TV shows, plumbers, books, music, kitchen appliances, and gadgets. (Facebook’s Photos app has become so popular mainly because of social discovery of new photos uploaded by friends. Tagging is just a mechanism to facilitate discovery.) When I buy a book on Amazon.com, I should be able to publish a story for my friends (but not an automatic story—remember Beacon?). When any of my friends clicks on the action link or completes the transaction, Amazon would pay Facebook. Such sponsored feed items should be clearly marked and shown prominently just like sponsored links on Google.

Facebook should look to Microsoft for its playbook to make its platform more developer-friendly, but also sprinkle in a bit from Google’s sponsored links and apply them to social discovery.

I love Twitter for Mac. Love it. It has completely altered my day-to-day workflow. And it has changed the way I use Twitter itself. And that was before I found out about this killer little hidden feature today: Tweet from anywhere.

I don’t know how I missed it before, but apparently installing Twitter for Mac adds a new “Tweet” command to basically a ton of apps running in OS X. MacStories first pointed this out earlier today, and now I can’t get enough.

For example, if you’re browsing the web in Safari or Chrome, highlight a word or passage and right-click. At the bottom of the drop-down, you’ll see the “Tweet” command. Hitting it will populate a tweet for you with the highlighted section. And it works in TextEdit, iChat, Calendar, Mail, etc. If you read it, you can tweet it.

One thing I wish it did in web browser was automatically add a link as well as the text you’re highlights, but baby-steps. I have a feeling that will come.

And yes, plenty of plug-ins have had this ability for a while, but now it’s system-wide. It’s as if Twitter is now baked into OS X.

The SecondMarket Facebook shares auctions are back on after a holiday break, and the valuation is up big time. The last auction prior to this one closed December 15 at $22.75/share. Today it hit $28.26 per share. With 2. 5 billion or so shares outstanding, that’s a $70.65 billionish valuation. A month and a half ago shares were trading on SecondMarket at a $50 billion valuation.

What’s changed? The Goldman Sachs investment announced earlier this month increased the hype even further. No wonder the SEC is starting to pay attention to these trades.

Sounds like Accel Partners may have sold a little before the peak.

The email from SecondMarket is below:

Subject: Privileged and Confidential – SecondMarket’s Facebook Auction Update

To Facebook market participants:

Thank you to those who participated in this week’s SecondMarket auction for Facebook shares. The auction was successful and fully cleared at a per share price of $28.26. Next week, the floor price will be $26.25 and we will require a minimum sale of 25,000 shares. In observance of the national MLK, Jr. holiday, please find the adjusted auction timeline for next week below.

If you own shares that you are eligible to sell and wish to participate as a seller, please complete the attached Seller Information Form and submit it to SecondMarket at [email protected] by Thursday, January 20 at 7:00 PM EST.

Please see below for detailed results on previous auctions and for next week’s adjusted auction calendar:

Previous Auction Results:

Total Shares Cleared to Date: 2,721,265 over five auctions

Clearing Price in Most Recent Auctions:
January 12, 2011: $28.26
December 15, 2010: $22.75
December 8, 2010: $21.90
December 1, 2010: $21.01

Next Week’s Adjusted Auction Timeline:

• Thursday, January 20 at 7:00 PM EST – Seller Information Forms due

• Thursday, January 20 at 8:00 PM EST – Buyers informed of share quantity available and minimum purchase amount

• Monday, January 24 at 12:00 PM EST – Buyer Information Forms due

• Monday, January 24 at 5:00 PM EST – Participants informed of auction results

• Monday, January 24 at 8:00 PM EST – Transaction documentation distributed to buyers and sellers

• Wednesday, January 26 at 4:00 PM EST – Completed transaction documentation due from buyers and sellers

• Wednesday, January 26 at 7:00 PM EST – Notice sent to Facebook, Inc.

By reading this email, the recipient acknowledges and agrees that all of the information contained herein is confidential and that the recipient will keep this information confidential. The recipient further agrees that it will not copy, reproduce, or distribute this email in whole or in part.

Please contact us at [email protected] or 212.668.3919 if you have any questions.

Please note that the information in this email does not constitute an offer to sell to, nor a solicitation of an offer to buy from, nor shall any securities be offered or sold to, any person in any jurisdiction in which such an offer, solicitation or sale would be unlawful.

Regards,

Boyd

Former TechCrunch developer Ben Schaechter left TC a couple months ago to launch his own startup and today we finally get to see the fruits of his labor. Sick of the poor analytics, lack of geographical information and little vote analysis on industry leaders like Poll Daddy, Schaechter built GoPollGo to maximize what he felt was the potential of polling services.

Says Schaechter, “The polling space is crying out for disruption and innovation. There is *so* much information that can be dervived from vistors.  When mashed up with users’ opinions, the data gets thoroughly interesting.”

The beautifully designed site is based on a freemium model. It’s simple to make an embeddable poll like this one, this one or this one. Users can then share it with friends via Facebook and Twitter, get comments or discover new polls. Premium subscribers can also access analytics on their polls, segment voting data and as well get reports like the one below.

Schaechter has already had hundreds of users and hundreds of thousands of pageviews since he launched the site two days ago and plans on opening up the premium features to big brands soon, “Think of it as a really simple method of market research.”

Schaechter’s future plans include building out the feature base and community for the bootstrapped GoPollGo as well as raising funding to potentially hire more people. “[We’re] focusing on building the best social polling website on the Internet,” he says.

You can take the “Apple vs. Google” poll here, or just have it out in the comments.

Garry Tan, one of the cofounders of easy-to-use blogging service Posterous, is moving on from the company. Tan will be leaving to take a position at Y Combinator, where he will serve as a designer in residence. Posterous doesn’t put much weight on titles, but Tan had a hand in the site’s engineering, design, and product development.

Posterous isn’t taking off as quickly as its competitor Tumblr, but it has a solid audience and has recently released a neat Groups feature. Tan didn’t elaborate much on his reasons for leaving, but says that it boils down to wanting to work with smaller teams, which he’ll be able to do at Y Combinator (Posterous is now at around 13 employees). He also added that Posterous is going “gangbusters” and that he expects 2011 to be “really phenomenal”.

Posterous has raised over $5 million, including Y Combinator funding and a Series A round in March 2010.

Here’s Tan’s post announcing the news on his Posterous blog:

Just as Posterous has prospered, grown and changed, so to is it time for me to evolve my role. Effective today, I’m ending my day-to-day development with Posterous and moving into an advisory role. Though my day-to-day may change, my faith in the team and the product is unchanged and unwavering. Posterous is in good hands and on the right track to fulfilling its potential. I am proud of what we’ve built together and look forward to the future with anticipation to see where the team and you, the users, take this very special community.

My greatest passions lie with the early stage of building world-changing consumer products. To that end, I’ve decided to join the team at Y Combinator as a designer-in-residence and help the dozens of top pre-seed startups in the newest Winter 2011 batch reach their potential through excellent user experience.

I am greatly thankful to our team, investors and most of all our users for all the amazing work and adventures. Thanks for all of your support.

I have a dilemma with Ask a VC. Generally, I’m trying to do shows that are under 10 minutes, so they’re more consumable. But in the case of Ask a VC, I want to get to as many reader questions as possible and would rather not cut someone off when they are giving you business advice. So starting this week we’re going to post the whole show as usual below, and give you links to each question and answer.

That way if you don’t have 15 minutes to watch it all, you can still find out the answer to your question or a question that you are grappling with. I usually find that its easier to consume long-form videos in podcast form than during my daily blog reading, so as a reminder, you can also download the episodes of any of our TCTV shows from iTunes.

This week, Redpoint Ventures’ Satish Dharmaraj was our first return guest and we got to a good number of questions including: