Category: Tech news

Buxfer is a social payments service that launched in 2007 as part of that class of new Y Combinator companies. The site is still live and working, but a user, Sean Leather, emailed us to say it’s a bit of a ghost town.

The blog has been taken down and was last updated in 2009. The last tweet was on October 9, 2009, six days after their first tweet. And users are wondering if the site is dead over on Get Satisfaction.

So what happened? The two founders, Shashank Pandit and Ashwin Bharambe, took jobs at Facebook. Bhramabe joined Facebook way back in October 2008, as noted on Buxfer’s About page. But according to Pandit’s LinkedIn profile, he too left the company in June and has been full time at Facebook since late 2009.

So is Buxfer dead or just walking dead? And does it really matter?

Yes, in my opinion. Buxfer also raised a $300,000 angel round of financing. I haven’t been able to speak to the investors yet, but it seems like they’re a lot less likely to see a return on their investment with the founders working at Facebook full time and no other employees around to run the site.

There’s likely a perfectly reasonable explanation for all of this, and the investors, I’ll assume unless they say otherwise, are probably resigned to a capital gains writeoff. It may be that the founders made a valiant effort at making Buxfer work, and simply took other jobs when it was clear that it wasn’t. And there’s no real reason to shut the site down as long as people’s financial information isn’t jeopardized, I guess. But, generally speaking, you don’t walk away from a startup, and your investors, when there’s still a pulse. It’s just bad form.

This looks like (it might be) another example of a trend we’ve been seeing for some time – Facebook and Zynga “acquiring” startups for their engineers, giving those engineers rich stock options but leaving investors with little more than their money back. Investors don’t balk publicly because they want to maintain an entrepreneur-friendly reputation. But behind the scenes they’re livid.

I described the issue recently:

Most investors won’t balk publicly at deals like this, they’re way too concerned that they’re seen as entrepreneur-friendly so that they can get access to future deals. But privately they gripe (in general, nothing specific to this deal). Putting money to work for only a 1x or 2x return is a great way to go out of business for startup investors, when so many of their deals never pay anything back at all.

In fact some of these deals could theoretically be a violation of various corporate and securities laws that require shareholders of a given class to be treated equally in an acquisition. But without investors actually complaining, it’s unlikely any lawyers will ever get involved.

Also, stock options are clearly being granted for future services of the acquired employees, not for past work done at the acquired startup.

Another way investors can “complain” is by simply scuttling the deal – they usually have veto rights over an acquisition baked into their deal agreements when they invest. But that, again, would be seen as completely anti-entrepreneur and would kill future deal flow.

So for now investors will simply grin and bear it. But as these types of deals become more and more common we may see changes to various state corporate laws in the future that put limits on how much consideration might be given in cash to investors in an acquisition v. how much is given to active employees in stock options on an acquisition.

Entrepreneurs need to remember that they have a reputation, too. They need to treat investors fairly, or the next time they go to raise a round for their shiny new startup they may find nothing but closed doors. At least one recent Facebook acquisition almost erupted into a lawsuit when investors said they didn’t like the deal, we’ve heard. Sometime soon we may see things turn ugly.

Dear Mark E. Zuckerberg Harvard ’06,

It’s me Alexia, from the future. Just wanted you to know that you’ve come a long long way from The Harvard Crimson’s seminal piece “Hundreds Register for New Facebook Website” which you probably think is a really big deal right now.

Just an FYI, in about six years or so you’ll be counting your accomplishments in the millions and billions, just as long as you listen to whatever Sean Parker says. Trust me, there’s going to be a Hollywood movie where you’re played by a hipster actor and everything.

In case you get discouraged on your way over here, the kind folks at www.website-monitoring.com have made this impressive infographic which you should probably print out and fold into your wallet. And just a heads up, it might be a good idea to put a kibosh on the hoodie.

Best,

Alexia

Back in June, Xobni co-founder Adam Smith wrote a blog post announcing he was moving on from the company, and handing over the CTO reins. We’ve just confirmed that fellow co-founder Matt Brezina has also left the company.

The timing of Brezina’s departure isn’t fully clear, but we hear it was also a few weeks ago — he just didn’t have the big blog post about it. Obviously, having both co-founders leave so closely to one another is a bit odd. It was only this past April that they raised a large $16.2 million Series C round led by Khosla Ventures and RRE Ventures. Talk was that this put their post-money valuation at around $65 million. The company also recently moved into a new office in the SoMa area of San Francisco (Twitter’s old offices, actually) and crazy mural spending aside, it would seem that things were fine on the surface.

But before we confirmed the Brezina news, we had been hearing whispers of growing discontent within Xobni. The direction of the company and current management was cited as being two issues of concern in particular.

Initially a Y Combinator company, Xobni launched at the first TC40 conference in 2007. In 2008, the company was about to be acquired by Microsoft for something in the $20 million-range (they had only raised about $5 million at the time) but they walked away at the last second. At the time, they were focused on improving Microsoft Outlook, but they’ve since taken their tools to everything from BlackBerry to Gmail.

Update: I’ve now spoken with Brezina who confirms his exit but says it’s only because they’ve hired good people to run the company — of course, they always tend to say things like that, and in fact, Smith said the same thing. That said, Brezina did confirm that he and Smith are still on the board and involved.

As for what’s next, Brezina is working on it. Stay tuned.

Child safety monitoring service SafetyWeb is releasing a free version of its online tracking tool today, specifically for law enforcement agencies.

The SWOT tool allows police to secure the social networking accounts of a missing child and access recent status updates. Basically it tracks recent activity across platforms like Facebook, Twitter, Myspace and any other social networking services a missing child might use to rely information on their whereabouts. The platform also provides instant alerts of its video, social network and photo site tracking.

SWOT got a standing ovation when demoed by SafetyWeb founders (and parents) Geoffry Arone and Michael Clark at the Crimes Against Children Conference last week, which SafetyWeb co-sponsored with Google and Facebook.

This realtime monitoring of  a child’s accounts could be crucial in gathering data leading to a child’s safe return; With over 2000 children going missing daily, free technology that can scour for online traces of missing children is a boon to beleaguered law enforcement officials, as well as frantic parents.

SafetyWeb has recently acquired Odojo as well as announced a $8 million funding round from Battery Ventures and First Round Capital. It shares the child safety and online tracking space with SocialShield and Kidsafe.

On Sunday, a dozen startups from around Silicon Valley came together for the Startup Cup — a soccer tournament raising money for charity:water that rounded up over $1,200. Companies playing included Box.net, Slide, WePay, Scribd, Weebly, Xobni, Square, UserVoice, Revision3, and Kabam.

The matches were hard-fought, and much sweat (and some blood) was spilled as each company vied for the top prize. In the end, SocialText came out the leader, led by company cofounder Ross Mayfield. And there were no losers: everyone got free Chipotle burritos and Subway sandwiches. I’ve never seen so many burritos at once. It was beautiful.

As with any good sporting event, the tournament was not without its controversy — it didn’t take long to figure out that many of the teams in contention had brought a few ringers who didn’t actually work at their respective companies.  But nobody seemed to mind too much.

For those wondering, Team TechCrunch had a strong showing. Because the rest of the staff was back at TCHQ monitoring the day’s news we could only afford a pair of employees (myself and Alexia), but we rounded out the roster with members of the WePay squad. We won the second half of our match 1-0, but unfortunately the first half (which we considered a warmup) was lopsided in the other direction, leading to our untimely demise at the feet of Team Footbalistic in the first round of the tournament.

Hat tip to Trista Myers, currently an intern at Weebly, for putting the whole thing together.

When AOL bought hyperlocal news site Patch in June, 2009, it covered five towns in Connecticut and New Jersey. On Tuesday, it will open its 100th Patch, and by the end of the year it plans to open 400 more for a total of 500.

I recently visited AOL’s headquarters to learn more about what Patch is all about. “We look at what we are doing as digitizing towns,” says Patch president Warren Webster (see video interview below). Patch was first founded and funded by AOL CEO Tim Armstrong when he couldn’t find a resource on the Web for volunteer activities his family could do together in the small Connecticut town where he lives. Armstrong bought Patch afterwards when he came to AOL, but only took back his initial investment in AOL shares—and he is obviously very interested in the product. He stuck his head in the conference room where I was getting my demo because he saw the Patch screen projected on the wall.

Matching volunteers with local organizations is still one of Patch’s features, but its main focus is covering local news and creating an in-depth directory of local businesses and places of interest. Each Patch covers a small town with a population between 15,000 and 75,000, places like Fairfield, Connecticut, Mill Valley, California, Scarsdale, New York, and Morristown, New Jersey (which will be the 100th Patch).

The front page covers local news much like you would find in a local small town newspaper (“Police Investigate Drowning,” “A Guide To Walkable Westchester,” “Coyote Attacks Another Young Girl In Rye, Bites Neck“). Each town has its own editor, a “walking newsroom” who writes stories and assigns them to an average of 11 freelancers, who also fill out listings in the directory and take photos. There are also events, announcements, and volunteer opportunities. Readers can add their own.

Some complaints have surfaced about Patch’s low pay and the grueling working conditions (mostly, it seems, from older out-of-work journalists who aren’t used to the rapid-fire pace of Internet publishing). Webster responds that Patch pays “competitive market rates for community journalists” and that “75% of local editors are making the same or more than they did at their last job in journalism—the other 25% came from journalism school or were freelancers.”

But the real engine of Patch is the database it is building up of local businesses. So far it has 105,000 local listings, and is building out more every day. Before Patch launches in a town, it creates a directory of the local businesses, parks, hospitals, schools, and other public places. It launches with about 1,200 for each town, which get entered into Patch’s structured database. Each place gets its own profile page on Patch, with a description and highly detailed data such as teacher/student ratios for schools or suggested dress code and parking options for restaurants. For instance, here is directory listing for the Crabtree Kittle House & Inn in Chappaqua, NY.

The local directory of places is how Patch makes money. If a business wants an enhanced listing, complete with a video tour (shot by one of the 40,000 freelance videographers who work for another AOL acquisition, StudioNow) and preferred placement, that costs $1,000 a year. Patch is going after Yellow Pages and local newspaper advertising dollars.

These profile pages are very search-engine friendly, and any time a Patch article mentions a place in the database, it is automatically linked. “A lot are using their Patch profile as their place on the Web,” says Webster. Patch also offers a self-serve ad tool that turns any directory listing into an online ad unit which can be used on any Website and link either back to their Patch listing or to their own site.

Webster explains Patch’s rollout in terms of phases. The first phase is to get up and running in hundreds of towns and get local residents engaged. The goal is to reach half of each town’s population. “We exceeeeded every metric we had set for ourselves,” boasts Webster. “Phase 2 is how do we get people to buy things from local stores.” That is where the coupons and local deals come in (you saw that one coming). The coupons are shown as ads on the homepage of the towns where the businesses are located, as well as on their directory listings.

The local coupons are still pretty primitive compared the experiments we are seeing from geo startups like Foursquare and shopkick, but Webster hints that a mobile Patch app is coming soon. And when I asked about whether the directory would become available to other developers and startups through an API, he notes that could be coming soon as well: “We are looking at every possible way to distribute Patch content.” Once Patch gets into gear, it could definitely start driving a whole new class of advertising revenues for AOL.

It’s not often that we fight. Actually, no, that’s not even slightly true. It’s not often that we fight on camera. But this week’s episode of Too Long; Didn’t Watch is one of those times.

Our guest is Gene Massey from Cinema Shares – an LA-based startup that hopes to allow filmakers and other media moguls to do mini-IPOs to raise capital for their projects. Both of us were excited by the idea of the business – but when it came to whether the idea of fan-funded films will be good or bad for the world… or whether Paul was suggesting that Christians and NASCAR fans are idiots… well, watch the video to see what happened.

Video below. Note: due to some choice language, this week’s episode is more not safe for work than usual.

Over the weekend, the Wall Street Journal published an interview with Google CEO Eric Schmidt that covered a range of topics including Google’s future, newspapers, and privacy. The article contains some choice quotes about the future of search (there’s a somewhat ominous bit about Google knowing about your location, friends, and interests, so it can figure out what you want before you even want it — but this really shouldn’t be news to anyone). And then there’s this, as first called out by ReadWriteWeb:

Mr. Schmidt is surely right, though, that the questions go far beyond Google. “I don’t believe society understands what happens when everything is available, knowable and recorded by everyone all the time,” he says. He predicts, apparently seriously, that every young person one day will be entitled automatically to change his or her name on reaching adulthood in order to disown youthful hijinks stored on their friends’ social media sites.

Err, seriously? Google’s CEO thinks that people are going to start changing their names as a way to distance themselves from their past indiscretions on social media sites? Maybe I’m just myopic (I’m sure Schmidt has a much better understanding of the future of search than I do), but this notion isn’t just scary — it seems downright pointless.

Consider this: it’s in the best interest of just about any business to figure out if any of its prospective new recruits has a criminal record. And to verify that their job history checks out. And that their college degree is more than a figment of their imagination. Schmidt may be envisioning a centralized system where such critical background information is available to employers without their needing an applicant’s full name, which could make a name change worthwhile. Fair enough.

But if this name-changing practice became commonplace, how long would it take for an entire industry to emerge built around helping businesses who wanted to go the extra mile and link people with their “former” identities? You can bet they’d pay for that privilege. There’d probably be a pretty hefty market for people running searches on their new boy- and girlfriends, too.

And then there’s always the possibility that a spiteful ex tweets out your “old” name as a act of vengeance, or that a friend accidentally tags you under the “wrong” name on Facebook (or whatever social network is popular in this hypothetical future). Good luck getting that back in the bag — you can bet that these new-and-improved search engines are going to be far less forgiving than they are today. And Schmidt has previously said that Google can visually identify people with a mere fourteen photos, which could render this all a moot point to begin with.

In other words, in an age where search will be much more powerful than it is now, a simple name change probably won’t present much of a hurdle to anyone actively looking to dive into your online past. Schmidt’s right about one thing though: society really doesn’t understand what will happen when “everything is available, knowable and recorded by everyone all the time”. Let’s just hope it eventually comes up with a better way to deal with that problem than a new nametag.

Product: V2220H

Manufacturer: BenQ

Wired Rating: 7

My life was about to be complete. I had just received the Knight Rider DVD box set and was gearing up my home office (which doubles as a media center) for a weekend of curly mullets, fast cars and smarmy talking computers. I just had one problem: My monitor was literally a holdover from the same era. I could almost hear KITT, “Your tech is obsolete, Michael.”

Thankfully, to help in my quest to attain true Hasslehoff nirvana, I tested BenQ’s V2200H monitor. Sporting a 1080 x 1920 Full-HD native resolution, it’s an ideal screen for watching movies without scaling or cropping, and the 16 x 9 widescreen format is also perfect for viewing two documents side by side for easy comparison and editing.

The V2200H easily handled any graphics task I threw at it. It was quick enough to keep up with even the fastest action games and Blu-ray movies without ghosting or blurring, while the LED backlighting helped maintain exceptionally even illumination with fantastic contrast levels.

The screen displayed very deep blacks and grays, yet still managed to keep the subtle details of shadows alive. Highlighted areas were very bright without looking washed out. This not only helped with movies and games, but also made text reading a bit easier on my tired eyes, and helped photo-editing accuracy.

Color reproduction can be fine-tuned to near perfect, if you’re patient and take the time to tweak all the individual settings. However, BenQs proprietary “Senseye” tech — which is used in the Movie, Photo, and Game modes — over-exaggerated contrast and saturation levels, making grays bluish and rendering skintones too red.

Aside from the usual DVI and VGA ports, the V2200H comes armed with an HDMI port and 1/8-inch audio-out port, so it can even double as a small TV … sort of. While you can connect virtually any HDMI equipped device, from a game console to an AV receiver, the V2200’s audio port emitted a horrible buzz while automatically switching video modes. While not a complete deal-breaker, you’ll definitely want to plug in an external set of speakers.

Measuring just over half-an-inch at it’s thinnest, the V2200H bulges out to over an inch near the video ports, but it’s a pretty sleek-looking monitor. Unfortunately, the lame stand is an Achilles heel. It can only adjust for 15 degrees of forward tilt, there is no swivel or height adjustment, but worst of all, the tiny base feels as tippy as a toy sailboat.

While BenQ’s V2200H has handicapped ergonomics and audio, it does have good graphics chops to handle daily computing, movie watching, and even multimedia or AV applications. After all, this screen made KITT’s hot wax look great without much hassle. The Hoff would definitely approve.

WIRED Very deep blacks and even lighting across the entire screen. Nonglare matte screen finish is great for mixed lighting environments. Good menu system and color adjustments.

TIRED Wimpy, wobbly base feels like it’s ready to tip over when you bump the screen. Audio port emits buzz when the screen switches modes. Senseye default color settings are cartoon-like.

Product: Asgard Headphone Amp

Manufacturer: Schiit

Wired Rating: 8

Just because my audio expertise falls somewhere between Cupertino-issue earbuds and Justin Bieber doesn’t mean I want my music to sound like Schiit. Or does it?

At first glance, the Schiit Asgard Headphone Amp seems to be the kind of fully discrete (non-tube), single-ended (drains juice but sounds great), Harry Potter–in–hardcover–sized, brushed-aluminum beauty that even a Luddite could love.

But on first listen, the Luddite may realize it’s the kind of specialty device best left to the audiophile. While I did notice a perceptible increase in general clarity when I listened to some lossless White Album tracks on my Grado RS-1s, the improvement was pretty subtle. We’re not exactly talking swimming in an infinity pool as opposed to a drainage ditch here, people.

However, after some coaching I was able to hear an improvement in separation. That said, I did notice, for the first time ever, that the jet engine backs the entirety of “Back in The USSR.”

I thought my observations warranted a few second opinions. (Not the jet engine thing. That’s a fact.) So I passed it on to two Wired staffers who know a lot about music, which, as it turned out, is where their similarities ended.

The first liked the Asgard so much he wanted to buy it. His reasons? A nice smoothing of the frequency response, good price, U.S.-made parts, buttery volume controls and the beautiful design.

But the second echoed my assertion, reporting only a small decrease in muddiness at the high and low frequencies when listening through his Sony MDR-7506 headphones. He suggested that using low-impedance cans (which Schiit already urged us to do, but no one listens to Schiit) as well as plugging it into a decent stereo instead of an iPod, might yield more-exciting results.

What does this all mean? Well, if you are very sensitive to bad vibrations or spend a lot of time listening to Aphex Twin, the Asgard is a good bet, as it pretty much indisputably makes music sound better. If you still listen to the earbuds that came with your iPod, you would probably be wise to invest in some good headphones before you start dropping money on this Schiit.

WIRED Beautiful. Great price for refined construction and U.S.-made parts. Makes for a subtly better listening experience, by staying fuzz-free on even the most complex music. Awesome five-year warranty for parts.

TIRED This is hot Schiit, literally: After a couple of hours the amp gets almost too hot to pick up. Some listeners noticed a weird, buzzing sound. Not enough of an improvement for all but the most-expert audiophile.

Editor’s note: This guest post is written by Dmitry Dragilev, the lead marketer at ZURB, an interaction design firm whose clients have included Facebook, eBay, Yahoo, NYSE, Britney Spears, and Zazzle. They are also behind the Web notation products Notable and Bounce.

Ever read a great book? What do you remember about it? Maybe a few dramatic moments, some wild story twists, and most definitely the ending. Your product is just like a book. You’re telling a story to your customers and they’ll remember only a select few moments from what you tell them. What are these moments? Can you use these moments to plant a memory in a customer’s mind?

There are millions of books, courses and talks out there about building great products online. An awful lot focus on “user experience” as a silver bullet to delighting customers and driving revenue for businesses. Everyone gets caught up thinking it’s user experience they need to worry about, but it’s what they remember about their experience that’s critical. Their memory is what they’ll draw on to tell other people about it. Their memory is what they’ll project into the future. We should focus on making experiences happen that plant memories in people’s heads, like in Christopher Nolan’s film Inception.

It turns out there are three different kinds of moments in your story customers remember: transitions, Wow moments, and endings.

How to plant a memory

There are three particular kinds of experiences capable of turning an ordinary moment into a memory that will stick in your customer’s head. Focusing attention on these three experiences will help you create memorable products.

1. Transitions

These are similar to those surprising plot twists in a story. Giving customers one sensation and then transitioning to another causes a change customers will recognize and are surprisingly likely to remember. Transitions need a clear end and a new beginning, which will trigger the right-to-left-brain transition and form a memory. Here are some examples of memorable transitions that reinforce the core value of each product:

? Ever Skype with your grandparents in a remote village in the middle of nowhere? Remember how their still image turned into video for the first time? That’s hot! You’ll anticipate this every time you Skype now.

? Have you tried to use Facetime on the iPhone yet? That initial call transition to the high quality video of the person on the other side is extremely memorable. This is something you’ll be mentioning to your coworkers the next day.

? You know how when you type a city into Google Earth and watch the globe spin around to the country it is in and then zoom into the city? That transition is what you probably mentioned to others when you first described the app.

2. ‘WOW!’ Moments

Ever have a moment when you just can’t put down the book you’re reading? You’ve got to finish the chapter you’re on. The same happens with a product. Very little of what you create for a customer will ever be remembered by them. They will only remember the peak experiences they have and refer back to them to sum up their feelings about your product. Here are some examples of peak moments that give customers a great story to pass along to their friends:

? Ever trip over your MacBook Pro power chord? Remember how the magnetic power cord came out from your laptop without bringing it crashing down to the floor? “Wow! Thank you Apple!”

? Do you remember the first time you won an auction on eBay and got your favorite gadget for half the price it would cost you in the store? Do you still tell this story to all of your family and friends?

? Ever find that awesome movie from your high school years on Netflix and stream it right away? Were you surprised at how good the movie looked?

? I’m continually impressed each time I open Google Maps on my iPhone and Google something in the area, then hit directions and it fills in Current Location > Search Result and just gets me there, by car or walking.

? Remember the first time you used Picasa? The first promise Picasa had was: “Find all the photos you forgot you had.” The first run experience delivered exactly that for a disorganized user like me. I rediscovered all sorts of ‘lost’ photos, like an unexpected walk down memory lane.

3. Endings

If you’ve read a novel you probably remember the ending. But how often do we worry about how our customers’ experiences with a product ends? That last impression turns out to be very important. Endings can put a positive spin on a negative experience or take a positive experience and ruin the whole thing. People remember endings. Here are a few examples of what we’re talking about:

? Good ending: Becoming a Mayor in Foursquare. What an awesome ending to your hard work of check ins. Folks get excited about this.

? Bad ending: You’ve been checking in for months and have not received any messages or earned anything for doing it. You’re sick of competing with others without any reward and so you give up.

? Good ending: You contact the tech expert on Crossloop and get your computer virus removed in 10 minutes. You’ll definitely be telling others about this experience.

? Bad ending: You contact a tech expert to resolve a problem and you get no response for days. By that time you’ve given up on the service all together.

? Good ending: You click Google Docs Save and Close button and know that: “Certainty I won’t lose my doc!”

? Bad ending: You click the Close button on a cloud app doc and are not sure if your changes were saved.

? Good ending: Flickr’s Contact updates provide a never-ending ending, a continual positive spin on our initial investment of putting our own pictures in there

? Bad ending: You keep putting pictures online and don’t hear about any responses to your pictures for months.

These examples above form memories in customers’ minds that sell these products over and over again. If you want your product to sell you’ve got to start with focusing on transitions, Wow moments, and endings to make it stick in a customer’s mind. How sure are you that your customers will tell others about these moments versus another one you’d rather they forget?

Like the author of a book, you are not just making a product or providing a good user experience, you are giving people a story that will plant memories, and those memories will drive their behavior in the future. Make sure they have good ones.

I knew I would be touching a raw nerve with my last two posts, on patents. But I was really surprised at the divergence of opinion. Entrepreneurs overwhelmingly supported my stance that software patents hamper innovation and need to be abolished, but friends at Microsoft, IBM, and Google were outraged at my recommendation. The big companies’ executives argued that abolishing patents would hurt their ability to innovate and thus hamper the nation’s economic growth. (They believe that companies like theirs create the majority of jobs and innovations, and they claim that without patents they cannot defend their innovations.) I am not convinced that software patents give Google any advantage over Microsoft and Yahoo, or make IBM’s databases any better than Oracle’s. But I do know one thing for sure: it isn’t the big companies that create the jobs or the revolutionary technology innovations: it is startups. So if we need to pick sides, I vote for the startups.

Let’s start with the question of who creates the jobs. This is one of the issues that I recently took Intel co-founder Andy Grove to task for, in BusinessWeek. Grove wrote a profound essay lamenting the loss of American manufacturing jobs. I share his concerns about jobs. But Andy’s protectionist recommendations for restoring America’s competitiveness were largely based on his flawed premise that companies like Intel create all the jobs—not the startups. I also discussed the tradeoff between bailing out companies like General Motors, AIG, and Citibank and nurturing startups in this BusinessWeek piece.  This question is more important than it may seem.

Kauffman Foundation has done extensive research on job creation. Kauffman Senior Fellow Tim Kane analyzed a new data set from the U.S. government, called Business Dynamics Statistics, which provides details about the age and employment of businesses started in the U.S. since 1977.  What this showed was that startups aren’t just an important contributor to job growth: they’re the only thing. Without startups, there would be no net job growth in the U.S. economy. From 1977 to 2005, existing companies were net job destroyers, losing 1 million net jobs per year. In contrast, new businesses in their first year added an average of 3 million jobs annually.

When analyzed by company age, the data are even more startling. Gross job creation at startups averaged more than 3 million jobs per year during 1992–2005, four times as high as any other yearly age group. Existing firms in all year groups have gross job losses that are larger than gross job gains.

Half of the startups go out of business within five years; but overall they are still the ones that lead the charge in employment creation. Kauffman Foundation analyzed the average employment of all firms as they age from year zero (birth) to year five. When a given cohort of startups reaches age five, its employment level is 80 percent of what it was when it began. In 2000, for example, startups created 3,099,639 jobs. By 2005, the surviving firms had a total employment of 2,412,410, or about 78 percent of the number of jobs that existed when these firms were born.

So we can’t count on the Intels or Microsofts to create employment: we need the entrepreneurs. And there is an important lesson here for the states and cities that offer huge incentives to companies like Dell, Google, and Intel to locate their operations there. The regions should, instead, be focusing on creating more startups, not providing life support to technology behemoths.

Now let’s talk about innovation. Apple is the poster child for tech innovation; it releases one groundbreaking product after another. But let’s get beyond Apple. I challenge you to name another tech company that innovates like Apple—with game-changing technologies like the iPod, iTunes, iPhone, and iPad.  Google certainly doesn’t fit the bill—after its original search engine and ad platform, it hasn’t invented anything earth shattering. Yes, Google did develop a nice email system and some mapping software, but these were incremental innovations. For that matter, what earth-shattering products have IBM, HP, Microsoft, Oracle, or Cisco produced in recent times? These companies constantly acquire startups and take advantage of their own size and distribution channels to scale up the innovations they have purchased. They let the startups take the risk and prove the business models.

This raises an interesting question. Google and Microsoft have always prided themselves for hiring the cream of the crop of software developers. It is ridiculously hard to get a job at either company. But when technology’s top guns join these companies, they seem to make a smaller impact than those that don’t get hired. So would these companies be better served by releasing their most brilliant developers into the wild and arming them with seed financing to start companies? (They could negotiate partial ownership and right of first refusal on acquisition.) We would certainly get more innovation this way.

Simply put, if we are serious about lifting the economy out of its rut, we need to focus all of our energy on helping entrepreneurs. Provide them with the incentives (tax breaks and seed financing); education; and infrastructure. And gear public policy—like patent-protection laws—toward the startups. Let’s not bet on the companies that are too big to fail or too clumsy to innovate.

Editor’s note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at the School of Information 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.

Picture this. You’re the world’s biggest search engine, and you just became the target of a patent lawsuit that could potentially put your massively successful mobile operating system at risk. Your hardware and carrier partners are keenly watching your response, not to mention the constant government scrutiny you see on a day-to-day basis. So, throwing caution to the wind, you pull out your digital middle finger and delist your opponent entirely from search results, then shoot off an internal memo with the subject line “FREEDOM” and a link to the Braveheart Theme.

That’s the story that IPWatchdog published last night, claiming that Google “seemingly tampered with [its] search algorithm and database by eliminating Oracle altogether” from its search engine (okay, there wasn’t anything about an internal memo). Gene Quinn, the article’s author, claims to have confirmed the search issue at 3 PM EST yesterday, stating that it was back to normal a few hours later. Unfortunately, it’s totally bogus.

As Giorgio Sironi spells out on his blog, some trickster used a variety of UTF-8 characters (not from the standard English alphabet) to craft the query, which yielded a mere six results. It’s easy to see why someone might mistake this at first glance — I suspect IPWatchdog “confirmed” it by clicking on a link to the misleading query, rather than entering it themselves.

However, as far-fetched as all of this may sound, Google has had glitches when it came to searching for competitors. Back when the Palm Pre first made its debut, Google Mobile couldn’t find any results for it. That was pretty clearly a temporary glitch, though, as other queries containing the word “palm”, like “palm tree”, were coming back empty as well.