Category: Tech news

Yes, China is taking over the world. Or at least the Internet. No, this is not like the WE’LL-ALL-BE-WORKING-FOR-JAPAN-oh-nevermind scare of the 1980s. Why? Because China has more than 1 billion people. It already represents the largest online audience in the world and is less than 30% penetrated and has Internet spending per capita that’s less than one-third of the United States.

That means two things are true that aren’t usually true at the same time: It’s a monster now and it’s barely gotten started. The Internet– more than any other industry– is about building huge, mass audiences. China wins at that. Accept it. You can’t spend 15 years arguing size and eyeballs matter and not be impressed by what is happening in China right now.

Chinese Internet companies make up two of the five largest Internet companies on the planet. And if Alibaba can wrestle away from Yahoo, and take Taobao and Alipay public, it may have three of the largest in the near future. (Especially because Yahoo’s value would plummet.) No other country aside from the US has come anywhere close to achieving that level of business success online.

Three giants would be impressive enough. But it’s not just Tencent, Baidu and Alibaba. If you need any more evidence that the hub of  Internet returns has shifted from Silicon Valley consider the interplay of these three macro-stories.

One: Nearly every outspoken Valley-centric VC and super angel is blogging and Tweeting about strategies for surviving this “bubble” of seed investing, whether it’s Ben Horowitz saying Andreessen Horowitz is looking more at later stage deals in this over-priced climate, Fred Wilson saying that he’s seeing “storm clouds,” or Mark Suster getting applauded for his defense of relationship-driven venture capital, as opposed to hopping into a deal with no due diligence at any price. Ladies and gentlemen, there is an early-stage pricing bubble in the Valley, and we are past the point of inevitable carnage if this many people are sounding the panic alarm.

Two: The Valley is largely a bubble that doesn’t actually have returns yet. Exits have mostly been confined to a bunch of industry insiders selling for less than $100 million and employees cashing out shares in the secondary market, and yet prices are going up insanely. Huh? That is like a purple unicorn. It shouldn’t exist in nature. It is purely a function of supply and demand, a scarcity of good deals and a glut of willing capital. Of course, there are companies that will make huge amounts of money when they chose to go public like Zynga and Facebook and, I’d argue, the comparatively reasonably valued Twitter. But no one actually has and best case there are only a few names you can put in that category.

Ok, Bill Gurley, we get it. IPOs are increasing, and there is an appetite for more. But there are a few important points the Benchmark GP and defender of the not-totally-dead IPO market makes in this post. First, the reason companies that have gone public like OpenTable are soaring is because the giant Valley companies do not want to go public right now. For years now, people have been talking about this great backlog of companies. Guess what? It’s still a backlog mostly.

“A good year” relative to 2009, isn’t the same thing as good when you have an industry investing between $15 billion and $20 billion a year in startups. That math does not work on a macro-level, no matter how badly everyone in this ecosystem would like it to. Gurley argues the bar for “a good year” also shouldn’t be 1999. That’s true, but if there’s this much money going into startups, the bar can’t be pre-1999 when the asset class was a fraction of its current size either.

The last important point Gurley makes is that the bulk of the IPOs that are happening are from companies outside Silicon Valley, partially because of this shift in the Valley’s cultural desire to lead a public company. Which leads me to…

Three: Five trips to China ago I met with a wide array of startups. They were all pretty much blind stabs in the dark of who might be an up-and-coming Web company. Three of them that I wrote about at the time have filed paperwork to go public or priced right in a row: BitAuto, Tudou and YouKu. I am just not that good at picking startups in a country where I don’t speak the language and didn’t know a single contact. No one is. Chinese IPOs are just huge right now– both in the Internet and in other “old economy” sectors as well.

Chinese companies generally are making up about one-third of US IPO activity this year, according to Peter Astiz, co-head of DLA Piper’s global technology sector practice. Most high-growth Chinese companies–especially in technology–are choosing to list on US exchanges, Astiz says.

Part of this is that culturally there’s a massive preference for an IPO over an acquisition in China. That’s the exact reverse of what Gurley aptly describes as going on in the Valley. You think China is still a “communist” country? Get. On. A. Plane. It is authoritarian, sure, but it is capitalism gone wild. “I’ve been in this business 25 years including when everyone was saying we should learn Japanese, and it’s clear to me China’s cultural model towards entrepreneurialism is the closest to the Silicon Valley model of entrepreneurialism I have seen anywhere,” Astiz says. I haven’t spent 25 years doing this, but I have spent more than a decade in the Valley and half of the last two years meeting with entrepreneurs in eleven different countries, and I couldn’t agree more.

The Valley is not anything like 1999 right now, no matter how much term sheets and deal negotiations look like it. In 1999 the deals were driven by the fact that you could take a company public at inflated values in 18 months and exit. To date, only YouTube has had a $1 billion-plus exit and Web 2.0 has been going on for about five years. And the truth is, China isn’t just like 1999 either. Companies aren’t exiting at the same speed, some have spent years building their companies and a lot of them are making money. But unlike the Valley, everyone in China wants to go public, and it’s hard to argue some values aren’t getting inflated as investors grapple for position in a market that is going to be huge and one where US companies have not proven they can succeed.

And yet, when I travel to other emerging markets, I always get questions about why all the big Web companies still come out of the US. The world needs to wake up. Value-judgements aside, the Internet will be transformed as more of the aggregate Internet market value flows east. Just like when new-world AOL suddenly bought old-world TimeWarner, one of these Chinese companies will be smart enough to leverage their inflated position while they can. (And an ensuing good v. evil media/political brouhaha is going to explode.)

I’ll tell you who isn’t surprised by anything I’ve written in this post: Valley venture capitalists who started investing in China eight-to-ten years ago. Are many of these companies over-valued? Yep. But that doesn’t mean it’s not lucrative for VCs who got in early and a huge wave of Chinese entrepreneurs. And like our own Internet bubble, it doesn’t mean there aren’t real fundamentals and lasting companies buried in all that hype.

You remember those bumper stickers spotted in the early 2000s that read “Please, Lord, Give Me One More Bubble”? Well, hallelujah, Sand Hill Road, if the flurry of recent Chinese Internet paperwork, pricings and rumors of both are any indication, your prayers might be answered. Only a few years ago there were widespread worries that VCs investing in China were throwing their money down a black hole. This week several firms have told me their China funds might out-perform their US funds– at least in the short term.

Seasoned investment advisor Frank Quattrone took the stage with Bill Gurley at Web 2.0 Summit today to talk about the difference between the climate in 2010 and when Quattrone began his career in the pre-IPO-boom 1980s.

What’s the same, according to Quattrone? “The creativity and risk taking and the passion that people have as entreprenuers and also the infrastructure to support people who take risks.”

What’s different? In the late 80s there were 285 public tech companies valued at a 237 billion dollar market cap, whereas today there are 6,000 public tech companies worth trillions of dollars. Tech is a much more fundamental part of economy.  While the IPO market incentivizes entreprenuers to take risks, Quattrone said, “It’s a lot easier to go public than to be public,” because right now there are 6000 companies you need to compete against.

Gurley asked Frank to give the startups in the audience a quick Frank Quattrone IPO tutorial. Quattrone said that companies considering going public should ask themselves the following questions:

1) How important is it for us to be a public company?

2) Do you have the 5-10 year snapshot or better video of your strategy?

3) Are you sure you’re not a trick pony?

While IPOs can be great especially if you’ve got employees itching to exercise liquidity options, companies need to give it some thought before they hitch themselves to the quarterly wagon. “Sometimes it’s great to have a report card about what you’re worth every day and sometimes it’s not so great.”

Quattrone emphasized his “not always so great to go public” point with the above slide, with so many top tech companies with money to burn the M&A market is also currently a really attractive option.

SlideShare,the “YouTube for presentations,” is launching a new feature today—Company Networks. Networks are basically a way for businesses to curate content from all of their employees and partners on one branded page.

SlideShare lets anyone share presentations and video and also serves as a social discovery platform for users to find relevant content and connect with other members who share similar interests. IBM is launching as a pilot partner for the Company Networks feature, with the IBM Expert Network. The page shows all of the IBM employees or experts on Slideshare page as well as content that is curated from each expert’s profile. Slideshare also allows users to feature particular presentations more prominently and categorize content from employees.

SlideShare’s CEO Rashmi Sinha tells us that the ability to create a branded company network is part of the company’s premium offerings, which were rolled out in August. She says that since moved to a freemium model, traffic has been increasing from 30 million unique visitors in August to 40 million unique visitors in October.

As we’ve written in the past, SlideShare is branding itself as a sharing platform for professional content and is steadily gaining traction as a hub for this type of content. And bringing on a big name company like IBM as a partner is certainly a coup for the company.

A few weeks ago I wrote about some office space that was available in the South Park area of San Francisco’s SoMa district. Why was it interesting? Because it was Twitter’s original office. And that’s exactly how the startup that currently owns it, One Block Off The Grid, was pitching it to startups in hopes that they would sublet it. Well, they found one.

A certain startup getting an amount of early buzz that some might say is comparable to that of an early Twitter is taking the lease: Instagram.

In fact, the photo-sharing startup secured the space today, co-founder Kevin Systrom tells us. Previously, they had been working out of Dogpatch Labs in San Francisco. But that was when they were a company of only two: Systrom and co-founder Mike Krieger. But now they’re a team of four.

The company has just hired their third full-time employee, Shayne Sweeney. Systrom describes him as a “rockstar iPhone dude” and notes that he helped build the popular Foodspotting iPhone app. Additionally, the company has a fourth employee, Josh Riedel, who is helping out part time as the community manager.

The move to Twitter’s first office is a homecoming of sorts for Systrom. “I’ve always loved South Park — after my internship with the Odeo folks, I used to go visit them at that office. So when the opportunity arose, I figured we should jump on it,” he says. Odeo was the podcasting startup that eventually gave birth to Twitter.

“Karma: This is Twitter’s original office“, is how the office space was being pitched. Will that be good karma for Instagram? Do they even need it given their current growth?

And no, they didn’t need new funding to secure the space.

Today, the senate voted to work on a bill called the FDA Food Safety Modernization Act that would, among other things, require food producers, facilities and distributors in the United States to evaluate hazards more rigorously, undergo more inspections each year and implement preventive measures to keep food pathogen-free.

Green tech companies that could benefit from higher standards for food safety provide: tests for e.coli, listeria, salmonella, and the geographic origins of food (IdahoTech, Picarro); energy-efficient refrigeration (NanoICE, CamFridge); and inventory management systems (Erply, OpenBravo).

With films like Food Inc. and books like Jonathan Safran Foer’s Eating Animals winning praise for investigations that reveal how commercial food and farming exhausts natural resources, pollutes the air and soil, and hurts human health on a number of levels, the bill seems timely at least.

If passed into law, it would empower the Food And Drug Administration to force food recalls. Today, food regulating agencies (the FDA and USDA) negotiate with food business owners who ultimately conduct recalls voluntarily, but are often too late to stop people and animals from getting sick, or too slow and ineffective to stop vast amounts of food waste.

According to the author of American Wasteland, Jonathan Bloom, about 25% of all food produced domestically is tossed and not eaten each year. The Center For Foodborne Illness Research And Prevention (CFI) reports that 76 million illnesses result domestically from bacterial contamination in food and water yearly, costing more than $10 billion, and leading to 325,000 hospitalizations and 5,000 deaths.

In food safety news this summer, Wright County Egg in Iowa recalled hundreds of millions of eggs contaminated with salmonella. The company’s owners in 1997 paid a $2 million fine to the Occupational Safety and Health Administration for workplace violations; they’d forced workers to handle manure and dead chickens with their bare hands, among other things.

More stringent inspections and food safety laws could make the dirtiest practices of factory farms cost-prohibitive. However, opponents of the senate bill (writing in Grist) believe the bill hurts the small farmer, and gives too much control to the FDA. They also worry that the regulations would cause untenable price hikes on food, thanks to increased fines for violations, and the cost of new technology and talent companies would have to attain and manage to become compliant.

A senior consultant with Sparta Systems, Katie Dowling, says the food industry is well overdue for a tech makeover, and food businesses could actually save money by improving operations. Sparta’s TrackWise application helps highly regulated businesses— like food, drug, pharmaceutical and medical device makers— manage quality issues.

Dowling says:

“One of the biggest technological challenges faced by food manufacturers today is that they have to know where their food was produced, down to the longitude and latitude coordinates where something was grown for any ingredient they use, or product they distribute. If there was cattle next to lettuce, there could be e-coli contamination going on… They need to know where it comes from.

Most of the systems food producers and facilities have been using until now— especially as you go back through the supply chain and get down to the farm level— they don’t talk to each other, they don’t record data in real time, and they dont’ track some of the most important safety data.

Smaller farms and food businesses think they can’t afford technology to do more than a manual report on Excel, but it is far more costly if they lose a major customer because they caused a problem, or if they have to pay fines if they don’t have appropriate documentation when the FDA shows up for an inspection.”

Dowling believes software and systems that work on mobile devices, or that use temperature controls and sensors in food facilities could be in high demand if the senate bill becomes law. President Obama has expressed his support of the proposed regulation, and in March 2009 launched the Food Safety Working Group to advise him on how to upgrade the U.S. food safety system.

Eggs image via: TheMonnie

LinkedIn CEO Jeff Weiner just dropped some numbers on the LinkedIn social platform’s measurement of user engagement, revealing that the social network now boasts 85 million members and is adding a member each second. “That’s the fastest ever,” Weiner said revealing that it took the site 477 days to get the first million and 9 days for last million.

“We have begun to establish critical mass, especially on a global basis,” said Weiner. Indeed, half of new membership now comes from overseas. The site is also close to hitting 60 million monthly uniques according to Comscore which means that a good proportion of its members return visit.

LinkedIn currently has $103 million in funding led by Sequoia Capital. You can watch more of today’s Web 2.0 Summit talks on the Livestream here.

Today at the Web 2.0 Summit in San Francisco, LinkedIn CEO Jeff Weiner took the stage to talk with host John Battelle. One question was about why we need LinkedIn in a world increasingly run by Facebook? Weiner had a two-word answer to that: keg stands.

Weiner noted that while Facebook is great for showing how we spend our time and expressing ourselves, most employers probably shouldn’t see all of your extracurricular activities. And you clearly wouldn’t want them to see that. Like keg stands.

But when Battelle asked if that meant LinkedIn was opposed to some sort of social hook-up with Facebook, Weiner said it would depend on the value. Currently, LinkedIn has a feature that ties it in closely to Twitter, but not for Facebook.

Weiner said that while LinkedIn is lumped into being a social network with Facebook, Twitter, and others, there are big differences between them. And plenty of room for all of them.

Weiner also had plenty of interesting stats to share.

[photo: flickr/mcclouds]

Today at the Web 2.0 Summit in San Francisco, FCC head Julius Genachowski sat down with New York Magazin’s John Heilemann. One question Heilemann asked was Genachowski’s thoughts about the joint Google/Verizon net neutrality policy that they put out there in August.

“I would have preferred if they didn’t do exactly what they did when they did,” Genachowski said. “It slowed down some processes that were leading to a resolution,” he said.

That said, Genachowski did say that to the degree that two large entities formerly on opposite sides of the big issues are now coming together seems to be a good thing. He just doesn’t seem to like the exact way they did it.

Immediately after the proposal was announced in August, the FCC put out the following statement:

Some will claim this announcement moves the discussion forward. That’s one of its many problems. It is time to move a decision forward—a decision to reassert FCC authority over broadband telecommunications, to guarantee an open Internet now and forever, and to put the interests of consumers in front of the interests of giant corporations.

In other words, the FCC wants actions, not more words. And the Google/Verizon proposal led to more words.

Earlier this week, Google CEO Eric Schmidt spoke about this topic a bit also. There’s been a criticism that Google has turned its back on net neutrality because they’re not asking for wireless regulation. But Schmidt says that it’s more of getting what needs to be done now done (wired) and taking a wait-and-see approach with the more competitive wireless space.

We think this gray area is still pretty frightening. And it’s good the the FCC is wary of doing anything just because two huge companies put it forward.

The 2011 Audi A8′s feature list reads like it’s out of a fantasy car: NVIDIA-powered multimedia interface on a retractable 8-inch LCD, Google Maps, night vision, touchpad input, front and rear radar. Then there’s the selectable drive modes, solar sunroof, dual rear-seat 10-inch screens, Bang & Olufsen sound system, rear power sun shades, LED headlights, taillights and interior lights, and massaging seats with 22 points of adjustment. All this in a massive sedan powered by a 4.2L V8 mated to an 8-speed transmission that’s supposed to get great gas mileage.

Sadly the one just dropped off isn’t fully loaded with all the available gizmos. Our 2011 tester came sans night vision and the rear executive package, but that’s fine. It’s still one of the most technically advanced saloons on Earth. Yeah, I’m in love with its body and soul.

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Today during the Web 2.0 Summit in San Francisco, DailyBooth CEO Brian Pokorny took the stage to talk a bit about “picture talking” — that is, social communication through photos. Obviously, Pokorny believes this is a key form of communication amongst the younger generation. But he’s not the only one. Mobile photo sharing apps are getting a lot of buzz and gaining a lot of users now.

But Pokorny has an interesting insight as to why DailyBooth is different from the rest of the pack. In Pokorny’s view, the hot apps like Instagram, Picplz, and Plurk are “back of the phone apps”. What he means by that is that their users mainly use the back camera on their smartphones. But new smartphones are increasingly gaining a front-facing camera too. And that’s DailyBooth’s wheelhouse.

Further, he said that back of the phone apps mainly appeal to users over 25. Front of the phone apps are appealing to those under 25. And back of the phone apps are mainly for shooting objects. But front of the phone apps are for faces.

Pokorny says that these front of the phone apps like DailyBooth are opening up a whole new way to socialize in the modern world. It’s sort of like the older generations going into a bar or cafe — it’s people watching, Pokorny says.

And he says companies like Apple are quickly recognizing that, and that’s why they’ve added a front-facing camera to devices like the iPod touch.

First, the numbers. The Disqus commenting system (which we use on TechCrunch) is now reaching over 200 million people a month, according to their Quantcast data. That means it took them only about 6 months to double traffic. And by that measurement, it makes them the fourth largest U.S. network, with over 95 million of those users based in this country. There are now 500,000 communities and websites using the service. And there are over 18 million profiles and over 160 million conversations across the network.

And so today it’s time for the next step. Currently rolling out across their network, the latest version of Disqus (technically, version 4) brings three key things: a new design/interface, premium add-ons, and a new API.

While many of the features users know and love about Disqus remain intact, the service has given a fresh coat of paint to some areas of the commenting system. The biggest changes here are in the deshboard area which admins and moderators use to control the comments on a site. Things have been cleaned up quite a bit, and the end result is a simplified moderation system. End users will also be able to more easily manage their own comments from here.

The bigger news is the availability of add-ons. It used to be that certain power features were only available to VIP members of the service that paid for it. These were mainly larger blogs (like this one) that needed and/or wanted more data about their comments through tools like analytics. Now Disqus is giving other sites access to these tools bundled together in smaller packages. For example, while VIP service costs $999 a month, you can pay $19 a month for the Plus service at get access to analytics, realtime updating, moderation reports, admin logs, and preferred support.

There is also a Professional package for $199 a month that adds a few things like single sign-on, an advanced theme editor, and partner API access.

Speaking of the API, with this version 4 roll-out, it has been completely redesigned from scratch. It’s still a bit of a work in progress, says co-founder Daniel Ha, but it should be more powerful. In fact, the new Disqus website is running off of it.

This new API will allow people to better integrate the service into mobile apps, allow them to write plug-ins, and eventually be able to even write their own frontend end for the commenting system. Here’s the link to the new API docs, and the new console.

In October, Job search engine Indeed.com slipped past Monster.com to become the largest job site in the U.S. According to comScore, 12.3 million people visited Indeed in October, up 19.6 percent. Monster.com attracted 12.1 million people, and CareerBuilder.com came in third with 11.3 million job seekers. It is still pretty close, with Indeed just barely edging out Monster. But this could very well be a turning point for leadership of the online job search category.

(Note: These numbers are just for the respective main sites, and do not include each property’s larger networks. CareerBuilder and Monster are still larger by that measure, with 21.2 million and 14.7 million monthly uniques, respectively, compared to 12.5 million for Indeed.)

Indeed passed Monster in pageviews last year, and currently gets an estimated 334 million pageviews a month, compared to 311 million for CareerBuilder and 205 million for Monster. And since most of those pageviews are pure job search, Indeed boasts more job search pageviews (305 million) than the other two combined, plus HotJobs search pageviews (299 million total for all three). Monster bought HotJobs from Yahoo earlier this year. The number of visitors to HotJobs.com is down 67 percent from a year ago.

These other sites offer other features and content besides job search resumes builders, career advice, or other tools. But the growth of Indeed once again suggests the power of search can trump everything else.

Native applications may be all the rage these days on mobile phones, but plenty of companies — and developers — would love to see web applications take the lead. One of the biggest advocates has, unsurprisingly, been Google, and it’s actually walking the walk: its Gmail mobile web app is among the best I’ve used to date. Today, the company is bringing another of its web apps up to speed: Google Docs is finally getting the mobile treatment it deserves.

Up until now, you’ve been able to access Google Docs from your iPhone, iPad, or Android device without any problems, but it’s been read-only access — there was no way to edit a document. That’s changing in the next few days, as Google begins to roll out support for document editing.

I just used the new feature on my iPad and it worked as you’d expect. Tapping in a text field will bring up your device’s keyboard and you can start typing away. Changes will appear in “near realtime” for other users who are editing the same document, and you can use Android’s voice transcription, too.

One thing that’s apparently missing: document creation. It’s possible that I’m losing it, but I can’t find an option to create a new document anywhere; it looks like you can only edit existing docs for now. Update:: Google says you can add new documents (I think this may have been added since this morning).

You can find Google’s blog post on the news here.

Today is Day 3 of the 2010 Web 2.0 Summit. We will be livestreaming the event all day right here for the folks at home and as yesterday proved, this year’s theme, “Points of Control” gets all sorts of industry people riled up. The event should  start in about five minutes at 10:15 AM PT.  Speakers today include Evan Williams, Jeremy Stoppelman, Matt Galligan, Brian Pokorny and Susan Wojcicki.

Here is the full speaker schedule for today all times are Pacific Time.

Discovery engine StumbleUpon recently announced App Discovery, a free beta feature of its Android app that basically suggests mobile apps based on a user’s individual interests and preferences and those of friends and like-minded users.

Turns out people love to stumble, even on the go.

Asked if the feature has taken off, the company told me that, in the 2 weeks following its release, they’ve recorded more than 1 million App stumbles already. Considering the fact there are over 100,000 apps for the Android platform at this point, there’s clearly a need for such app discovery services.

StumbleUpon’s Android app not only recommends native applications, but also Web content. The company tells me, already, 25% of all stumbles are for applications, which means the large majority of people still use StumbleUpon the same way they do on their desktops.

Either way, StumbleUpon tells me downloads of its free Android app have soared, doubled even, since the new feature was introduced.

And here are the top 5 most installed Android apps that were discovered by users through StumbleUpon’s App Discovery feature:

– Angry Birds (but of course)

– Camera 360

– Google Sky Map

– Gmote 2.0

– Alchemy

If you’re interested in checking out the app and feature, you should also size up other app discovery services for Android, such as Appsfire and AppAware.