Category: Tech news

exp(21 – 1.1*log(#followers))

If you ever wanted to know where you rank among Twitter users in terms of the followers you have, that’s the equation. Well, for most of you anyway. Twitter tech lead Pankaj Gupta tweeted that equation out earlier today.

A Twitter Equation: If accounts were ranked by #followers, approx. rank=exp(21 – 1.1*log(#followers)). e.g., 331 with 1M followers!

Sure enough, exp(21 – 1.1*log(1,000,000)) = 331.272, if my math is correct. And by “my” math, I of course mean WolframAlpha’s math.

The caveat is that this equation only holds if you have between 100 and a million Twitter followers, Gupta tweets. “It’s amazing how seemingly complex systems are internally just equations,” he notes.

But since that range covers the vast majority of Twitter users, this should be useful to see where you stand.

Plugging my own numbers (31,074 followers) into the equation puts me at a rank of around 15,085 in this system. Mike, with 58,722 followers, would be ranked around 7,490. Scoble, with 156,709 followers, would be about 2,544.

All of this is particularly interesting since we know that Twitter has a secret “reputation ranking” score for every users. This is something Twitter might even make public in the future. But this equation has nothing to do with that, apparently. “I should add that this is not how we rank twitter users for anything interesting we do internally,” Gupta tells us.

I still prefer to use my Twitter Golden Ratio.

Also, if my math is correct here. That means that Twitter has about 331 users with more than a million followers.

Right about now, as college students across the country start to go back to school for the Spring semester, things are starting to pick up at Chegg’s 600,000 square foot warehouse in Shepherdsville, Kentucky. The warehouse sits right next to the main UPS shipping hub and across from a Zappos warehouse.

The textbook rental company sees its busiest times peak twice a year at the beginning of each college semester. Books from last semester come in around Christmas and new ones start going out by New Year’s. “To me,” says CEO Dan Rosensweig, “watching the ball drop is just inverting the rental tracker.” The books that come in need to be inspected, sometimes repaired, and shipped out again for the next batch of student textbook renters. The warehouse has the capability to ship nearly 17,000 books an hour. “On our biggest day hundreds of thousands of books are processed,” says Rosensweig.

To manage the operations, Chegg board member Tom Dillon has officially joined the company as senior vice president of distribution. Dillon was the first chief operating officer of Netflix, and set up its hub-and-spoke DVD distribution centers. (Former Netflix CFO Barry McCarthy is also a board member).

Since demand for Chegg’s textbooks is highly seasonal and concentrated in those two times a year, Chegg must staff up both its warehouse and customer service with temporary employees. Chegg employs a couple hundred people full-time, but it quadruples its staff during peak times, with more than 500 workers in the warehouse alone. But Chegg is fanatical about customer service, and bulks up on customer service reps to answer students questions during rental season.

Despite competitors like BookRenter and eCampus nipping at its heels, Chegg remains the undisputed leader in the growing textbook rental market. The company plants a tree for each book it rents, and over the past three years it has planted over 4 million trees. “From peak to peak we are seeing excellent growth,” reports Rosensweig, “we don’t feel we have hit penetration or are even close yet.” And while it is still early, so far numbers are up this year again.

Rosensweig wouldn’t go into specific financials, but he did confirm that the company did better than it had been projecting for the year. Onstage at Disrupt last September, when I threw out our 2010 revenue estimate of $130 million, at the time he said it wasn’t far off the mark. Round that up to $150 million and that is probably pretty close is my best guess.

Chegg already rents to students in about 7,000 of the 8,000 college campuses nationwide, and its focus is to spread across campuses to more students and to rent more books to existing customers. It also acquired CourseRank and Cramster, which help students pick courses and study for them. The company has raised $219 million to date, most recently a $75 million round last Fall.

Shipping books is a capital-intensive business, and eventually it could be threatened by the rise of digital textbooks. In fact, Chegg co-founder Osman Rashid is bringing to market the Kno Tablet to offer digital textbooks to students.

Rosensweig thinks that in a few years digital textbooks could be a factor, and he’d like to offer them to students if there is demand for them. Already Chegg offers digital textbook supplements online. But for right now, he says electronic textbooks are “insignificant.” He points out some of the challenges. “Battery life is not better than a book;” publisher availability is not complete (all a student’s textbooks need to be available on one or what’s the point); and, “Right now, it is less expensive to rent a physical textbook than to get one digitally.” He expects all of these things to change, but not overnight. Until then, he’s got a huge warehouse to keep humming at full capacity.

Around 2006 there was a sudden increase in so-called “partial liquidations,” where entrepreneurs could take some money off the table during a mid-stage funding round. Considered unheard of at the time, now they’re the norm for companies doing well.

Then in 2009, we saw the rise of secondary markets, which allowed early stage investors and employees to take some money off the table at more frequent intervals. That’s still controversial in some quarters, but becoming the norm for hot companies– and at huge sums.

And now, Dow Jones VentureSource has been tracking a new trend in the same vein: An increase in private equity money not just cashing out some founder or early investor shares, but buying the whole company as a way for everyone to exit and still keep the company private. In 2010, there were 23 buyouts of venture-backed companies by private equity firms totaling $1.9 billion. That’s a small percentage of the overall liquidity last year, but more than half of the $3.4 billion brought in by IPOs. And like IPOs, these buyouts usually represent larger exits than corporate acquisitions.

These three trends–partial liquidations, secondary trades and private buyouts– are all intermingled and all symptoms of the same problem: Most startups hate the idea of being a public company. In most cases, this urge to find liquidity elsewhere has nothing to do with Wall Street demand for growing companies; it has to do with companies and founders not wanting to file. That’s a massive cultural shift from the ecosystem on which the Valley and the Internet was built. It also is emblematic of the strong divergence between short-term flips for the singles, increasingly long-term investment horizons for the homeruns and the relative lack of doubles and triples in the middle that we wrote about yesterday.

Interestingly, this buyout trend isn’t just because IPOs have been out of favor for the last few years. In a poll, more than 50% of VCs told Dow Jones VentureSource that they expected private buyouts to increase as a viable exit strategy in 2011 even as the number of big IPOs increase. In many cases, the buyout is a just step to an eventual IPO, in others it may be the final destination.

This is strange, because buyout firms and venture capital shops used to be the polar opposites of the private equity world. One was known for taking has-been public companies and helping streamline and relaunch them anew inspiring books like Barbarians at the Gate, and the other was known for creating huge, new companies from nothing but an idea inspiring books like The New, New Thing. Few people saw a trend of one cashing the other out coming.

Jessica Canning, research director for Dow Jones VentureSource, joined us via Skype to talk about the trend, whether it’s a good or bad thing for venture returns over time, and who is most likely to write the biggest checks as the trend continues.

We knew they were coming and Asus was the one that told us (twice): Tablet, lots of tablets. Asus just pulled back the sheet on several new slate devices.

The first device out the door is a the 7-inch EEE Pad MeMo. Android powers the devices and with a Qualcomm Snapdragon is at the core that can even playback 1080p content. Asus is using a 7-inch IPS screen up front and is stylus compatible.

Read more…

The check-in app for TV content Miso has just announced $1.5 million in new funding led by Google Ventures with Hearst Interactive Media also participating in the round. The startup had previously raised seed funding last May from angel investors and from Google Ventures.

Similar to GetGlue, Tunerfish and others, Miso applies Foursquare’s check-in model to television content. The idea behind Miso is that as you watch TV shows and movies, users can check-in to this content, follow specific shows and earn points and badges for interacting with this content. Miso offers iPhone, iPad and Android apps for users on the go as well as a web app.

The startup now has 100K registered users (which actually seems small compared to GetGlue’s active users), and is rolling out an API to partners.

And Miso, which is developed by Bazaar Labs, landed a pretty high-profile new media partner—Oprah’s recently launched OWN Network. Specifically, if users check-in to Oprah’s Search for the Next TV Star show on Miso, users will earn exclusive OWN badges.

Miso’s founder Somrat Niyogi writes that 2011 will bring a new strategy of expanding interaction beyond just the check-in, and it should be interesting to see how the startup plans to do this. Niyogi, who thinks there isn’t really a long term value for badges as rewards, says the “second-screen” market is still relatively young relative to TV content, and there is a lot of potential for advertising on this new experience. And having Hearst, with its media empire of television stations, and Google as media partners isn’t a bad way to start the New Year.

Here we are again: CES. We’re all here in Vegas ready to bring everything the massive trade show offers to your interwebs. There’s going to be livestreams, hands-ons, liveblogs, all with a fair amount of debauchery. CES.CrunchGear.com should serve up all your CES needs with the UStream window embedded up top and the latest news directly underneath.

The Ustreaming festivities kick off tonight with an event called CES Unveiled, which is sort of like a mini-CES with the best from the show jammed into one room with each vendor only having a few folding tables to display their wares instead of massive booths. Tomorrow is filled with press conferences and general chaos followed by the actual show starting Thursday morning.

Read More

Someone sneaked past security and took a picture of something called Avatar Kinect, a system for XBox Live avatar interaction in a separate “chat room” where players talk to each other outside of the games. Considering the 3D scanning capabilities of the Kinect, it’s a pretty cool idea.

An interesting post just went up on the Groupon blog announcing a lawsuit filed against Australian Groupon clone Scoopon. The post explains the unprecedented move of taking legal action against a Groupon clone, which apparently is squatting on the Groupon.com.au domain name. The case goes to Australian court on February 4th, and in the meantime Groupon will be doing business in Australia under the name Stardeals.

Says Groupon CEO Andrew Mason:

“The worldwide proliferation of Groupon clones has been well documented. One particular clone in Australia called Scoopon, created by the brothers Gabby and Hezi Leibovitch, has been making life difficult for us. Scoopon went a little further than just starting their Groupon clone – they actually purchased the Groupon.com.au domain name, took the company name Groupon Pty Limited, and tried to register the Groupon trademark (filing for the trademark just seven days before us) in Australia.

The way we see things, this is a classic case of domain squatting – an unfortunate reality of the Internet business. As Groupon became internationally known, opportunistic domain squatters around the world started to buy local Groupon domain names, thinking that we’d eventually be forced to buy them at an insane price. In fact, we tried to do just that, reluctantly offering Gabby and Hezi Leibovich about $286,000 for the Groupon.com.au domain and trademark—an offer they accepted. But now they’ve changed their minds, and we believe that they’ll only sell us the domain and trademark if we’re willing to buy the entire Scoopon business from them. Left with no other options, we’ve filed a lawsuit against Scoopon, claiming that their Groupon trademark was filed in bad faith (amongst other things).”

Groupon will also be prosecuting the Leibovich brothers for trademark infringement in its home state of Illinois, despite Scoopon being Australia-based. While it remains to be seen how valid a claim on a US trademark will be considered internationally, with Groupon in the process of raising nearly $1 billion at a $4.75 billion valuation, it certainly has a war chest to go after any of the thousands of clones stepping on its toes.

Kevin Marks has a good post today about the “two faces of Android.” What he means by that is that there’s the fully open source face, and the Google face. In other words, the face that lets you do whatever you desire, and the face that makes you follow some rules in order to include Google’s own apps and possibly their branding.

As Marks notes, it’s an interesting dichotomy because with regard to the former, “there is already a Cambrian Explosion of new Android devices going on in China and India.” And that’s likely to continue and accelerate. But there’s also the potential for this divide to get a lot more interesting. This will happen when other companies start using Android as the base for their own branded OSes.

At the end of his piece, Marks hits on this:

However, a lot of the day-to day utility of an Android device is in the proprietary, partners-only layer – that you only get after doing a business development deal with Google of some kind. What we will start to see is alternatives for these Applications being developed. To some extent we’re already seeing this from US carriers, but I think this year we’ll see both an Open Source suite of apps to swap in many of these functions, and other proprietary offerings to compete with the Google upper half.

Who could build such a suite? Facebook, Twitter, Microsoft clearly have most of the necessary pieces, but how about Baidu, Tencent, Vkontakte or other companies with strong regional ties?

What’s interesting here is that when we were digging in to all the hoopla surrounding the “Facebook Phone” this is essentially what started to surface: that Facebook was digging into Android to see if and how they could use it as an underlying layer for their own mobile OS. As Facebook CEO Mark Zuckerberg has said, it would take Facebook years of work to create their own OS from scratch. But with Android as the base, that could be cut to months.

And if Facebook did that, would they want to have to work with Google to ensure their apps are on such a device? No way. In fact, they undoubtedly would not want to work with Google on it. Instead, as Marks suggests, they would build their own suite of apps to replace the Google variety. And they already have a number of them. Gmail? Messages. Talk? Chat. Contacts? Better contacts. Maps? They’d presumably use Bing Maps. Search? Again, likely Bing Search mixed with Facebook’s own search (just as they do on their site).

The question then becomes: does this piss off Google enough to limit the open source Android in some way? You’d have to believe the answer to that is “no”. Google has played up the “openness” way too much to be so hypocritical in that way. And that’s good. Hopefully this type of competition would force them to react simply by making their own flavor of Android better and more appealing to both partners and consumers.

And if one company is able to utilize Android successfully in their own way, you would likely see a swell of copycat activity. That’s where the BaiduPhone, the TenecentPhone, and maybe one day the TwitterPhone would come from. It’s a fascinating possibility.

Of course, there’s the downside. As Marks also notes, to some extent, U.S. carriers and OEMs have already begun manipulating Android for their own purposes. Right now, this is mainly just scratching the surface. There are skins, apps that are pre-installed (and can’t be uninstalled), and new app stores popping up. But what happens when the Droid by Verizon simply becomes the VerizonPhone? That is, what happens when Verizon decides that they want to wipe Android down to the open source basics and build their own OS filled with all their ugly red-tinged stuff? Then AT&T does the same? Etc.

I’m sure the carriers will keep some Google Android phones as options for customers willing to pay a bit more. But they’ll probably market the hell out of their own devices. Devices with Verizon mail, Verizon maps, VCAST apps, VCAST media, etc, etc, etc. It will be open source used to create the ultimate closed phone environment. And it will happen. Just wait.

At that point, it will become a battle of the goodness of open source (cool FacebookPhones, super-cheap generic Android phones) versus the greed and manipulation of the carriers (the VerizonPhone, backed by $500 million in marketing, and buy one get 6 free). Let’s hope the good guys win.

[image: Warner Bros.]

Here we go: the first outrageous claim of CES, right on time. Peep Wireless is attempting to create ad hoc P2P networks between mobile devices by turning them into “client/server viral transmitter/receivers.” What does that mean? It basically piggy backs on the phone’s wireless connection to connect one phone to the next and then route calls that way. Obviously we’re dealing with a few fatal flaws. First, if there’s only one Peep device in the area, you’re SOL. Second, carriers will never allow this, also putting you SOL.

Sascha Segan at PCMag asked how it worked and got this reply:

“Anything with ROM or RAM on it and a bus can use our system,” a company representative said in an email. “Any game box, any car with programmable Bluetooth, any PC in a café with Wi-Fi, any device you can download to or any device that uses a voicemail system. The first app we intend to launch is the iPhone App, to be followed by the Droid app, to be followed by the Win[dows] phone app to be followed by an API for anybody left out in the phone world.”

We’ve just been invited to an HP event on February 9 in San Francisco. The topic? webOS, according to the invitation.

The invite’s main header reads: “Think big. Think small. Think beyond.” Could this mean an expansion of webOS to many types of devices? At the very least, we should get the skinny on the full webOS 2.0 release, which is only available in a very limited way thus far.

The timing is interesting since webOS originally launched at CES ’09. That conference starts today and ends a month before HP’s event, I guess HP will be using their muscle to do things a bit differently than Palm did.

But that timing also means that HP will be facing even more competition from devices just launched at the Vegas convention, many of which will be powered by the rival Android platform.

It also has to be noted that HP is likely to be up against at least one Apple event, which is expected to take place in January. That could mean either the iPad 2, the Verizon iPhone — or both. I don’t think it’s a stretch to think that HP should be talking about both tablets and phones at their event…

We’ll be there to find out more on February 9.

GroupMe, a startup conceived at the TechCrunch Disrupt: New York hackathon, has closed its second round of financing. This new round, $10.6 million, is a big round for a startup that’s just 8 months old and had previously raised $850,000.

Khosla Ventures led the round, and partner David Wieden joins their board of directors. New investor General Catalyst Partners also participated, as did previous investors First Round Capital, Lerer Ventures, betaworks and SV Angel.

The service allows users to create on the fly text messaging groups and conference calls. Millions of text messages are being sent via GroupMe each week, says the company. They now have 10 employees.

So there I was flying back to San Francisco after the Holidays, flipping through the United Hemispheres magazine to better understand my awesome Snack Box options, when I was stopped by an animated drawing of Twitter founder Evan Williams and an accompanying Q&A for joe-plane-traveler about the popular site.

The interview starts with a throw-away clause saying Williams is credited with inventing blogging, which is weird because I have never even heard Williams claim this. (Perhaps they meant inventing Blogger?) More to the point, the Q&A ends with Williams saying this in response to all those concerns about business model: “There aren’t many things on the Internet or anywhere else that I can think of that have died of popularity.”

Williams is right. But plenty of things have died in spite of popularity, like Friendster, which never had near the audience of Twitter, but for a certain period in the Internet’s history was just as much of a phenomenon. Another example might be Napster, which fundamentally changed how people viewed what the Internet could be used for and permanently disrupted the music industry, but never built a business, even when it was sold and launched as a legal service. Then there’s MySpace– which had a nice exit, but nowhere near what it should have gotten for eclipsing Yahoo in page views. What’s more, it was only able to approach $1 billion in revenues thanks to a Google ad deal that wasn’t renewed.

On a smaller level there’s a curiosity like Chatroulette or a killer-but-challenged app like Spotify. And on an even more micro-level there are legions of “Internet famous” people, very few of whom are known outside techie circles or ever manage to convert their online popularity to TV deals or actual, robust income, no matter how badly Hollywood agents try. As far as offline goes, almost everything that’s ragingly popular runs its course in popular culture. I mean how many people are still going around saying “Where’s the beef?”

Don’t get me wrong, popularity is worth a lot online. If something launches and has a huge audience, it is worth something. Even the above examples were worth something. And Twitter is arguably popular on a bigger scale than almost any popular service that eventually withered in spite if itself. I’m a big believer that companies should have a few years to figure monetization out. That’s what venture capital is for.

But it’s been a few years, and it’s clear that the bloom is once again coming off the eyeball rose in Web land. With 1 billion people now online, we’re living in a world of runaway eyeball inflation. And given the fact that the bulk of them are in emerging markets that are still little-understood by the Valley, the value of those eyeballs is even more in question. Tony Conrad of About.Me spoke to this new-found ease of getting eyeballs as almost a caveat to his site’s impressive user growth, crediting Twitter itself with the ability to get users today even more quickly than Twitter could when it launched a few years ago.

Twitter is not hurting. It had a huge $3.7 billion valuation in its last round, and I’m still bullish on the company’s ability to make money. I still think it will land a $1 billion-plus exit….eventually. But not everything popular or transformative becomes a business automatically, and the clock is ticking. Especially in a time when the other big Web 2.0 names like LinkedIn, Pandora, Facebook, Zynga and Groupon are all somewhere on the continuum of solid business model to minting money.

If Twitter is going to stay in that elite group, it’s going to need to build something more than popularity in 2011.

You might remember social media comedian Alex Blagg from “The Greatest Elevator Pitch You’ve Ever Seen.” Now he’s taken 2011 by the horns with “Important Internet & Tech Predictions That Will Definitely Happen In 2k11 (VIRAL VID),” making fun of the infinite series of prediction posts that come out this time of year.

I’ve watched the above video three times this morning and I still can’t get over “There will be a ton of real huge deals, who are the players? It doesn’t matter” line, because it’s totally something I would say.

Those of you who really want to read a more serious predictions post can do so here (some of them have come true four days in even). Now if you’ll excuse me, I need get back to work on my new predictions book, What Experts Expect When They Are Expecting. See you in 2012!

Sex.com. It’s a domain name with quite a history – heck, it was rocky enough for a book to be written solely about it. I’ll spare you that story and let you discover it on your own, though.

TechCrunch had an exclusive interview with the guy who currently owns the valuable domain name – he acquired it for $13 million a couple of months ago. For a variety of reasons, he wishes to keep his identity under wraps, at least for the time being, but he did share some interesting insights into how sex.com fares now that it’s parked.

And he’s keen to figure out what to do with it now, too.

Now, it would be wrong to state the purchase of the domain name was made without thinking things through, and that there are no plans to commercialize it. In fact, the buyer has long focused on the acquisition and development of other high-value generic domain names, so he has years of experience under his belt for this type of thing.

Yet the owner – let’s call him Jeff – has gotten a number of business partnership offers, has some ideas of his own, but soon has to make a solid decision on which road to take to make good on his sizeable investment.

For your background: the former owner of Sex.com, Escom LLC, failed to turn it into a viable business and declared bankruptcy in 2010.

According to Jeff, Sex.com brings in quite some money even now that it’s still parked. In fact, he claims the placeholder website receives more than 125,000 visitors on a daily basis, from all over the world (but mostly from the United States, India and Germany).

The ad-littered parking page was set up as a placeholder while he figured out how best to develop the domain name, but the revenues he’s received from Sex.com already far exceed his expectations – he wouldn’t provide more details, but says the page is on track to return well into seven figures a year.

That means that even if Jeff ends up never doing anything with it other than forwarding the domain name to a parked page, he could potentially still make $13 million from it by 2024, earning back his investment.

Obviously, that’s not his goal. There are lots of opportunities to develop a domain name like Sex.com in my mind, adult businesses being an obvious choice. However, Jeff says he’s gotten a handful of interesting offers from mainstream media companies, technology companies and even one from the pharmaceutical industry so far. He hasn’t made up his mind on how to proceed with the commercialization of the domain name yet, but Jeff adds that he and his team have a deadline they’re working towards.

The reason he doesn’t simply jump into the lucrative online porn industry? Because such an endeavor would close the door on other, more mainstream options, narrow down his exit possibilities – such as selling to a public company – and limit the ability to take the business public in the future, Jeff says.

Basically, he’d prefer to build something more mainstream, but still profitable.

The idea is to pick the right business model and then grow Sex.com over the course of the next decade, Jeff says, so I’m interested in seeing what he comes up with.

If you’d just dropped $13 million for Sex.com, what would you do with it? I asked the same question on Quora, so if you’re a user you can also head over there to discuss possibilities.

Update: check the thread on Hacker News too.