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Lately, group-buying sites and other companies that use discount-deals as the core of their business have become a red-hot trend, with Groupon spreading through cities around the world at a frantic pace and countless competitors and clones trying to catch some of the spotlight. Perhaps the reason for the sites’ traction is that the group-buying model is easy to understand.

For those that haven’t tried them, companies like Groupon find local restaurants, spas, or other businesses that are willing to provide large discounts, provided that their name is spread to a number of new customers. Groupon advertises the business by offering the coupons online, and takes a cut of the money spent on them. However, there are plenty of variations on the model and the differences can be confusing, so we’re going to give a primer on some of them below (note that there are plenty of similar companies abroad — these are some of the big names in the US, though some of the companies below are international too).

Groupon

Groupon is the market leader in the online “group buying” industry, and according to Crunchbase Groupon has raised a whopping $172.8M in funding to date. Available in 140 cities world wide, Groupon offers deals in more cities than any other group buying company. For every city, every day, Groupon presents a discount for a niche market item (such as a spa, restaurant, or a paintball outing), and if enough people sign up for the deal, they get the discount. The coupons are sent to the buyers by email.  Conversely, if the quota is not reached, the deal is off, and no one is charged for what they promised to buy. Of course, if the deal doesn’t work out, the company that Groupon was “advertising” through the discounts, and the people who signed up to buy them will be a little bummed.

Because the success of each deal relies on getting enough people to sign up, Groupon has created some incentives for their users to spread the word about the discounts they offer. Groupon encourages its customers to share news about deals through email, Facebook, and Twitter, and promises that if one of their users sends a Groupon link to a friend, and the friend buys a Groupon (coupon) within 72 hours, the one who sent the link gets $10 worth of Groupon credits in their account. Also, if a user sends a referral to a friend, who then subscribes within 72 hours, the person who sent the referral will get $10 worth of Groupon credits in their account when their friend buys their first deal on Groupon.

LivingSocial

LivingSocial is Groupon’s main competitor, and they serve in 26 cities across the U.S. and have received about $44M in funding. LivingSocial’s model is somewhat different from Groupon’s, as there is no minimum number of people needed to make the deal valid. But like Groupon, the discount can only be activated, and then used, after the deal’s run-time has ended. LivingSocial offers each deal for exactly 24 hours on weekdays, from 5am-5pm.

Additionally, LivingSocial uses a different incentive to encourage more people to sign up for their deals. If a LivingSocial user shares a deal through a link provided by LivingSocial, and then three people join the deal through the link, then the person who shared the link gets their deal for free.

Gilt City

Gilt City, which was recently created as a subunit of Gilt, is only available in New York City so far. Unlike many of its competitors, each of Gilt City’s deals lasts for seven days, and are updated once a week, rather than once a day. Also, rather than trying to sell as many of their deals as possible, Gilt City’s inventory for each of the discounts appears to be limited, and can become sold out, much like the rest of the sales on Gilt.

Like LivingSocial, Gilt does not require a minimum number of people to sign up for the deals to make them valid.

BuyWithMe

BuyWithMe has essentially the same setup as Groupon, with a new deal on display each day, with each the time limit for each deal set for about a week. Though they bring up a new deal each day on their main page, they do run a number of deals in each city (the number of deals running varies from city to city). BuyWithMe operates in 5 cities in the U.S, and has so far received $21.5M in funding.

Tippr

Tippr is another group-buying site, and offers deals in 25 major U.S. cities. Tippr is owned by Kashless, which has raised $5 M since starting up.

Unlike Groupon, LivingSocial, and BuyWithMe, Tippr proudly shows off three deals each day on their main site, with at least one new deal each day. As an incentive to get more people to join the deal, the discounts that Tippr offers get larger for everyone who signs up, as more people sign up for the deal, though there is a limit to how much the discount increases. A somewhat unusual aspect of Tippr is its army of ten patents, which are kept quietly on display at the bottom of the website (though it isn’t clear that these will actually help them beat the competition).

Juice in the City (JITC)

Juice in the City is a niche group-buying site that caters to mothers. This aspect of JITC is what differentiates it from the other companies in this roundup, as each deal that is offered on the site is meant to appeal to women with young children. JITC so far only serves a single deal each day within the San Francisco Bay Area and the Seattle-Tacoma area, and has not yet received any outside funding.

They promise incredible, money-saving deals like the rest, but JITC does not require a certain number of people to sign up for each deal. Each coupon is sent to the buyer via email after being purchased, though they can’t be used the day they were purchased.

We Give to Get (WGTG)

We Give to Get is available only in Chicago, and offers a new coupon (which they call a GO-GO) each day. What makes WGTG special, is that when you create an account on WGTG, you are also signed up automatically for the charity website; www.actofgood.org. As a result, whenever you buy a GO-GO, 10% of the money that is spent on the coupon will be donated to a charity of your choice, as long as it is listed on www.actofgood.org. It seems like an unusual idea to connect a money-saving action to a money-giving one, but as they say, “opposites attract”.

Similarly to Juice in the City and LivingSocial, WGTG does not require a minimum number of people to sign up in order to make the deal valid, and the coupon is sent to the buyer by email after the purchase is made.

We recently wrote about the launch of a Y Combinator and TechStars-like startup incubator in Chicago, Excelerate Labs. The program’s nine fledgling startups are set to graduate from the inaugural session of the incubator in a few weeks. Here’s a brief look at the startups that will be graduating from the incubator.

FanGo Software Systems: FanGo produces an iPhone app and mobile commerce ordering system that allows fans at stadiums and arenas to order concession food and drinks directly from their iPhone app. Food is then delivered to the fan’s seat, allowing fans to avoid long lines at food stands in stadiums. The startup is already in progress of negotiating deals with professional sports stadiums across the country.

Noblivity: Noblivity aims to bring trade shows for small boutiques and manufacturers online. Its online marketplace aims to connect small brands to small specialty stores to order jewelry, clothing, and home goods for their stock. It’s similar in theory to to Etsy, but aims to be more of a B2B platform.

PVPower: The startup simplifies the installation of solar power projects by developing a productivity tools for solar installers. The web-based application allows any contractor or installer to source solar panels, learn the best practices for installation and more.

Tap Me: Tap Me’s advertising platform iComplishments hopes to bring advertising revenue to game developers with an in-game advertising technology. The technology allows developers to reward gameplay with advertiser branded points and virtual gifts.

WeGather: WeGather’s goal is to offer religious institutions a custom based software to create a community website to engage participants. The SaaS platform helps increase donations, improves volunteer participation, centralizes e-communications, and helps create calendars.

TransFS: TransFS is a comparison shopping site for credit card processors. The startup aims to help merchants save money on credit card fees and also conducts reverse auctions to solicit competing bids from credit card processing companies. Merchants can then review each proposal and select the bid that saves the most money.

EduLender: EduLender, which has yet to launch, is a comparison search engine for student loans. You simply enter your name, location and financial information, and EduLender will show you all of the lenders serving your area that offer student loans, requisite interest rates, and what your loan will cost in real dollars in an apples-to-apples comparison.

GiveForward: GiveForward is an online fundraising tool aimed at a niche audience. The platform aims to make it easy for people to raise money for a loved one’s medical expenses. The allows anyone to create customizable fundraising pages where friends and family from across the world can donate online.

MathZee: MathZee aims to make learning math more fun for small children. The online platform teaches math via games that utilize audio, visual, and interactive features.

C$ cMoney, a mobile payments startup based in Houston, is having quite a week. On Friday, the company announced an impressive funding round of $100 million from private equity firm AGS Capital Group. In total, cMoney has secured $115 million in funding commitments from AGS and a NY-based firm called Kodiak Capital Group.

The latest announcement was picked up by a few news outlets, including the WSJ’s Venture Capital Dispatch which touted cMoney as “a start-up with a funky name [that] has an ambitious plan for replacing consumers’ debit and credit cards with a mobile-payment system.”

Sounds like another promising company in the red-hot mobile payments sector—a market that Nokia, PayPal, and a host of startups like Zong are trying to crack. Except, I don’t buy it. There is too much hype, and too little actual product coming from cmoney.

That highly-touted $100 million funding, for instance, turns out not be a venture round at all, but rather an equity line of credit (a lot more on that later). And the company is being sued by a CEO it recruited. Read on for a tale of a bizarre reverse merger, promises of million-dollar fees, and a young, 28-year old founder who lists among her accomplishments and  qualifications her childhood sports activities, including “dance, gymnastics, soccer, softball and tennis.”

What is cMoney?

The company, which launched in March 2009, is developing a mobile application that will let users send or receive money via temporary connections. According to reports, the application will be linked to a users’ credit cards and accounts. When s/he wants to make a purchase, the user logs-in to the app, submits information on the transaction, punches in a password and retrieves a code. The user will be able to give that code to a cashier for payment and after 15 minutes the code will expire.

Like many startups, the company’s product is not ready for market, it’s in the “demonstration” phase. However, cMoney has struggled to meet its own deadlines. According to an April press release the launch was scheduled for this summer, then a May SEC filing predicted a fall release, and now, in its latest press release, the company is predicting a 2011 launch.

Beyond the delays, the structure of the startup itself, is odd: cMoney acquired a company called Bonfire in May 2010 in a reverse merger transaction. According to an S-1 filing, Bonfire had no active operations and was previously a business based on “producing, marketing and selling audio recordings of folk tales, fairy tales and other children’s stories under the brand name ‘Bonfire Tales.’”

Bonfire also disclosed in late March, just before the merger, that it had “no cash and a working capital deficit of $28,845.”

In fact, there was only one employee, the director, Tim DeHerrera, who was scheduled to resign after the deal.

Unless cMoney wanted to tap Bonfire’s rich trove of children’s fairytales, why would a mobile payments company purchase a seemingly defunct company with only debt, no synergies and virtually no employees? The only real interest here, seems to be Bonfire’s status as a publicly traded company, trading over the counter as a penny stock (under ticker symbol PINK:BNFR). Reverse mergers are typically done by companies who cannot go public in a more straightforward fashion.

The Case Of The Missing CEO

On May 6, 2010, cMoney named Lawrence Krasner to the position of CEO, Krasner is a fairly seasoned veteran of Wall Street, as a former Senior Vice President of Lehman Brothers, a Senior Manager of Ernst & Young, and a VP of JPMorgan. Sounds like a solid coup for a fledgling startup, except Krasner never spent a single day as cMoney’s CEO, according to the company’s SEC filing.

Instead, Krasner is building a legal case against the company, suing them for damages in excess of $700,000 and 1,950,000 in fully vested shares of the company’s common stock, according to a filing. I reached out to Krasner on Friday, but he said he could not comment at the time. The company says the claims “are without merit.”

The founder of the company, Jennifer Pharris, has assumed the role of CEO and Chairman of cMoney. With the exception of a thin LinkedIn profile and her official bio on cMoney’s website, there’s very little information available on Pharris online. However, that official bio is worth a read— if you can make it through the syntactical quagmire:

Jennifer Lynn Pharris, 27 , is a College Girl who turned to the Corporate World with her quest to save time and money in the new age revolution of instant gratification, she designed a revolutionary product called C$ cMoney !

Jennifer was born in Dallas, Texas lived there for (12) twelve years with her family and was very active child in dance, gymnastics, soccer, softball and tennis winning top awards and always known as a leader.

Her high school career outside Memphis, TN graduated her with Top Honors and was recognized as Who’s Who in American High School Students and active member of SADD, FTA, FHA, and DECA and received a scholarship awarded through FTA.

While attending college at Middle Tennessee State University outside of Nashville, TN, she concentrated her degree plan in business, marketing and economics. Jennifer was a Kappa Delta legacy member wherein her mother and grandmother were former members as well. Jennifer was active in her community and various social affairs.

Jennifer while attending college began work on dream concept which was to eliminate the need for Mom and Dad to wire transfer money to her account when she needed money at College, but Jennifer created a better way, just send the money to me on my cell phone. That small step back in college and some (4) four years later has evolved a new company, C$ cMoney and worldwide patents.

Jennifer and her love for Houston moved back home to the Houston Area after college with the one plan in mind which was to follow her dream and build her company. Jennifer gives all the credit to her relationship with the “Lord” and her active time with her church, Fellowship of The Woodlands which helped her to reach her goal. Jennifer’s goal was to make Houston the New Top Technology City with her new revolutionary product called C$ cMoney !

Highlights include the random capitalization of words like “College Girl,” “Mom” and “Corporate World,” and my favorite (for its casual, mid-sentence transition from the third to the first person):

Jennifer while attending college began work on dream concept which was to eliminate the need for Mom and Dad to wire transfer money to her account when she needed money at College, but Jennifer created a better way, just send the money to me on my cell phone.

In fact there are typos and run-on sentences all over the website, with words like “trough” and “prividing” popping up on the investor relations and FAQ pages. While it is a bit unfair to judge them in this manner, this is supposed to be a startup valued north of $115 million. It’s hard to comprehend how any investor would look at this website and agree to plunk down $100 million— or even a million dollars. Which brings us to that $100 million question.

Why did AGS and Kodiak Capital Group invest in cMoney?

At the time of this post, the firms had not responded to my requests for comment. With no ready-for-market product, six employees, a poorly managed website, a lawsuit from an almost-CEO, and apparently more than $2.5 million in accumulated losses on the books and just $47,831 cash on hand (according to an S-1 May 27th filing), cMoney doesn’t seem like a prime candidate for a $100 million cash infusion.

Then again, cMoney may not see a lot of that cash after all.

AGS’s funding committment is contingent on several conditions and the structure of the deal itself is bizarre. Under the agreement, cMoney has the right to compel AGS to purchase its common stock shares, to “put” shares to AGS. Depending on the price of the share at the time, AGS will get a discount— for example, cMoney is currently trading at 3 cents a share, AGS would be eligible for a 50% discount to 1.5 cents a share. However, the key part in this agreement, is that cMoney “can not put shares to AGS if such put would cause AGS to own in excess of 4.99% of our outstanding shares of common stock.” In other words, once AGS hits that 4.99% bar, cMoney can no longer compel them to purchase the common stock and with the company currently trading at a market cap of $1.36 million — AGS is only on the hook for maybe a couple hundred thousand dollars. Of course, AGS could elect to buy more shares, but I’m going to make a bold prediction here that the final investment will be laughable compared to the promise of $100 million.

Here’s the pertinent excerpt from cMoney’s July 7th filing:

On July 7, 2010, the Corporation has entered into a Reserve Equity Financing Agreement (the “AGS Equity Line of Credit”) and Registration Rights Agreement with AGS Capital Group, LLC. (“AGS”). Pursuant to the AGS Equity Line of Credit, we have the right to “put” to AGS (the “AGS Put Right”) up to $100 million in shares of our common stock (i.e., we can compel AGS to purchase our common stock at a pre-determined formula) for a purchase price equal to from 50% to 95% of the lowest closing bid price of our common stock during the five consecutive trading days immediately following the date of our notice to AGS of our election to put shares pursuant to the AGS Equity Line of Credit. That percent discount is: 50% if the price of our common stock is less than $0.11 per share, 25% if the price of our common stock is between $0.11 and $0.19, 85% if the price of our common stock is between $0.20 and $0.74 per share, 10% if the price of our common stock is between $0.75 and $0.99 per share, and 5% the price of our common stock is above $1.00 per share. The maximum dollar value that we will be permitted to put at any one time will be, at our option, either: (a) $100,000 or (b) 250% of the product of the average daily volume in the U.S. market of our common stock for the ten (10) trading days prior to the notice of our put, multiplied by the average of the ten (10) daily closing bid prices immediately preceding the date of the put notice. However, we must withdraw our put if the lowest closing bid price of our common stock during the five consecutive trading days immediately following the date of our notice to AGS of our election to put shares pursuant to the AGS Equity Line of Credit is less than 98% of the average closing price of our common stock for the ten trading days prior to the date of such notice. We can not put shares to AGS if such put would cause AGS to own in excess of 4.99% of our outstanding shares of common stock.

And why does a young startup, with such a small staff, need a huge cash infusion? It’s unclear how the money will be used to build the actual mobile application, but at the very least, we know they are spending a large chunk of change on salaries for the executive team. The chief operating officer, chief marketing officer and chief financial officer have a base salary of $250K per year, the chief technology officer is promised $215K.

Meanwhile, cMoney directly pays Pharris $500 a week, but (and here is where it gets interesting) her other company Global 1— which is not mentioned in her profile—receives $41,543 per year for 5 years of management services. As explained in a recent filing, these “management services are expect to be provided by Ms. Harris.”

More significantly, in April of this year, cMoney entered into a “technology license agreement with Global 1 Enterprises, Inc. Under the agreement, C$ cMoney will pay Global 1 $1,500,000 per year for an exclusive and non-transferable license to certain intellectual property included trademarks and patents. Global 1 is owned by Jennifer Pharris.” Thus, to spell it out slowly, Pharris is charging cMoney hefty fees for the rights to license the technology from her other company. It’s hard to estimate what her cut is from this deal, but I imagine it’s a substantial amount (there was no reference online of any other executives at Global 1). For a company that is still bleeding cash, it’s strange for Pharris to charge such a high premium to access technology.

Who knows, cMoney could have a brillant project underneath the jumble, but at the very least, this strange constellation of facts and questions paints a dubious picture. I have asked several people in the mobile payments space, including those who cover the sector for investment firms, whether they have heard ever of cMoney or AGS— no one said yes.  As always, buyer beware.

Josh Harris lived through a version of the future—a future where TV is replaced by constant, live video chat/surveillance over the Internet—and it almost made him go insane. His experiments from a decade ago with filming people day and night in a New York City bunker, and then himself and his girlfriend in his own wired loft, were documented in the movie We Live In Public. Now, after many fits and starts, he wants to take another stab at making that future a reality through a new Internet TV project he is pitching called Wired City, which he explains to me in the video interview above. You can also go through the exclusive pitch documents which I’ve embedded at the bottom of this post.

Harris made his first millions by founding market research firm Jupiter Communications. He then ventured into Internet TV way before broadband with Psuedo, one of of the more spectacular flameouts of the 1990s dotcom era. At one point, Harris had a net worth of $80 million. That all disappeared, much of it during the time he was broadcasting his life 24 hours a day over the Web in 2001. He later created a live video chat community called operator11, which also quickly went out of business. Harris decided to unplug and went to to live in Ethiopia for a few years. But now he’s back, pitching his new project which is a continuation of his decade-long quest to turn reality into TV. He says he only needs $50 million to do it right this time. With everything from Chatroulette to the iPhone’s new video-chat FaceTime feature, the time seems ripe for video chat TV to finally find its audience.

When I first met Harris, I asked him what he thought of Chatroulette, the random live video chat service started by Russian teenager Andrey Ternovskiy. He shrugged and said, “It is child’s play.” And Facebook, to him, is nothing more than “an advanced message board.”

Wired City is Chatroulette on steroids. It starts with video chat rooms where the audience comes and watches each other. Since anyone can set up a home studio with a webcam, anyon can become a “ChatStar.” These chat rooms are organized in what Harris calls “Net bandstands,” which are divided into different categories such as music, gaming, fashion, news, lifestyle. The Chat rooms are organized in a hierarchy and linked together. A video DJ or director controls what is seen in each chat room, and when something interesting is happening in his chat room, he can signal up the chain to get his live video into more popular chat rooms. Some combination of eyeballs and money will determine which videos get promoted.

At the very top of the stack is a Hollywood production studio filled with the most popular ChatStars. Harris proposes to “build a sound stage and the sound stage is cast from people at home.” If you do something special that attracts a lot of attention or advertising or both, your live video gets promoted in realtime up the stack, and as you gain points you get a chance to go to the big stage which is promoted on the homepage.

“As you go up higher in the stages, just like in a massive multiplayer online game, you get more powers,” says Harris. “Or to put it more industrially, you get better administrative controls.”

In this way, thinks he can create a mass audience attractive to advertisers. Everything on that set can be sponsored, from Gillette shaving mirrors to the Swanson’s Hungry Man dining table. He wants to sell micro-day parts of people’s lives, and over the long term he thinks that these mundane videos will have value to people who want to go back and reconstruct parts of their lives.

Harris believes that everything he has done so far is leading up to Wired City. The technology behind it is an advanced version of Operator11, combined with creating their own home studios like he did with his loft. It is a real-life massive multiplayer game where the goal is to get onto the physical set and become Internet famous. What happens on the physical Hollywood set is “scarce and a highly coveted place to see and be seen,” says Harris, “sort of like the bunker in We Live in Public.

Rather than approach VCs, Harris is trying to go straight to ad agencies this time, and maybe start with one sponsored ‘Net bandstand” to prove out his concept. He is also talking to reality TV studios in Hollywood. But his past and his history of startups that run through cash isn’t making it easy. He knows what he is up against: “The tech guys don’t seem to appreciate the Hollywood style production elements and the television people can’t see beyond the next reality show. And then of course there is the “Josh Harris factor” which I can’t (or don’t want to) shake.”

Whether you think Wired City is an abhorrent example of Internet over-sharing taken to the extreme or you too cannot wait to begin lifecasting 24/7, it is instructive to look at how Harris thinks it can work. He has been obsessed with this idea longer than most people. Below are some slides taken from his pitch document and the entire document as well.

Tesla Motors Founder and CEO Elon Musk isn’t a man that backs down when facing the press. When the New York Times wrote an error-filled article, Musk lashed out at the author, saying “What is he doing picking on an electric car company? Why would he pick on the little guy who is trying to do good when you’ve got egregious waste of money in the tens of billions occurring in Detroit?” He added “He’s a huge douchebag…and an idiot.” And that was just when a journalist was poking at Tesla. Get into Musk’s personal life and he’ll take off the kid gloves.

Valleywag’s Owen Thomas, now writing for VentureBeat, has for some reason become fascinated with Musk’s personal life and continues to write about the man’s marital woes. He’s called Musk a liar on multiple occasions and seems delighted to get into the sordid details of Musk’s divorce. Musk wrote his side of things on the Huffington Post. Thomas hit him again.

Musk is now responding yet again, below. What bothers me about this exchange is that Silicon Valley press, VentureBeat in particular, is so focused on an entrepreneur’s personal life. A divorce isn’t anything that our readers want to know about. This isn’t Hollywood and these individuals aren’t out there trying to get lots of press about their personal lives. If they were, they’d hire agents and publicists and make the best of it. Instead they are focused on imagining and building the future. There’s no place in our community for these kinds of attacks. VentureBeat should apologize and move on, and let Tesla continue to disrupt the car industry.

Below is Musk’s response:

Why Owen Thomas is Silicon Valley’s Jayson Blair

The latest article by Owen Thomas, “Tesla CEO can’t handle the truth”, continues his damaging and fraudulent crusade against Tesla and me personally. Tesla has received a great deal of press, both positive and negative, but it is amazing how much of the truly negative press can be traced directly back to one man.

Despite numerous successes at both Tesla and SpaceX, Thomas has never once written a positive article about either company. Every one of the dozens of stories he has written – without a single exception – has been a nasty hit piece. Even if all those stories were factually correct, and they certainly were not, he has still fundamentally misled the public about my companies by failing to provide even a token number of positive articles. Lying by omission is still lying.

Responding below under similar headings Thomas uses in his article, I address the inaccuracies in his latest article, where he again lies with great conviction. It is impossible to stop Owen from continuing to write such erroneous garbage, but, as I do not have the time or inclination to refute all bad reporting on his part, I would like it known that nothing he writes is remotely objective. Any future articles written by Owen Thomas should be viewed with this in mind.

Tesla IPO Filings

Thomas says “Tesla updated its IPO filings to acknowledge substantially all of the concerns we [ie Owen Thomas] raised as potential risk factors investors should consider”.

We updated our IPO filings simply to state that what Thomas had written had no basis in fact. Since Tesla was in the IPO quiet period, we could not respond directly with a press release. Instead, we had to update the IPO documents to assure investors that what Thomas had stated about Tesla being reliant on me for funding or there being a DOE loan default risk related to my divorce were both false.

Even without the IPO proceeds, Tesla has enough funding from its many venture investors, Daimler and the DOE to complete the Model S with no financial help from me. The reason for the IPO was to provide cash for additional new developments and a small percentage of liquidity for long time shareholders, including me (I sold 5% of my holdings). If this had been a real issue, it would have been placed in the IPO prospectus by the bankers and lawyers long before Owen Thomas raised it.

This is one of many situations where he created a real problem for Tesla out of thin air by writing a misleading article.

My Personal Spending

In his section entitled “Musk’s personal spending”, Thomas does some creative math to claim that one of my “whoppers” is that I suggest I’m spending $30k per month, excluding legal fees. This is completely made up. I never state that anywhere in my piece, nor can it be computed from a collection of my other statements.

Thomas intentionally conflates a statement I make about the average of what I’ve been forced to spend on divorce lawyers over the past two years and my household expenses last year, ignoring the fact that a huge portion of the legal expenses occurred this year in the run up to trial.

Founding of Tesla Motors

Here Thomas relates an anecdote about a serious issue Tesla had with Martin Eberhard, one of the cofounders of the company. Eberhard filed a lawsuit against Tesla (and me) that was filled with inaccuracies.

Tesla was going to file a counter suit, but before we filed, Eberhard and I settled our differences with a few hours of mediation. I’m glad that we made peace. The result obviously satisfied both Eberhard and me or it wouldn’t have been settled. However, Thomas quotes Eberhard’s lawyer as though this was a one sided victory. He could just as easily have quoted my lawyer who would have made the same statement.

What Thomas forgets to mention is that Eberhard was forced to withdraw his lawsuit weeks before the mediation even began. If Eberhard’s position had been strong, he would not have had to withdraw his claims unilaterally well before mediation started.

The Safety of Customer Deposits

Thomas states that I both told customers that I would personally back their vehicle deposits and that I said their deposits were at risk. He is again intentionally conflating facts to make it sound as though I had contradicted myself.

Here is how Owen Thomas once again misleads the reader: the statements are actually referring to different vehicles at very different stages of maturity, but he pulls each quote out of context and pretends they refer to the same thing. When I said that I would back customer deposits personally, which I did directly to customers on several occasions as well as in a Car & Driver article, that was clearly and explicitly regarding the Roadster.

I knew that my resources, combined with Tesla’s, would be enough to pay them back personally if need be. Moreover, Tesla had not been sufficiently clear with customers in the early days that the Roadster deposits were at risk. It would not be right for customers to have those funds at risk without their explicit consent.

On the other hand, the statement I made to Claire Cain Miller of the New York Times at the Model S launch specifically and clearly referred to the Model S reservations. I knew that my and Tesla’s resources could not also cover the Model S deposits in a worst case situation. However, unlike with Roadster, we were very explicit that Model S reservation dollars were at risk and that the funds would be put to use doing advance development of the vehicle.

In this section, Thomas also says that I announced that a Tesla financing round had closed in November 2008, when it actually closed in March 2009. Whether intentionally or not, he is getting the dates confused between when the financing round documents were signed (representing firm commitments), which was actually December 2008, and when the last of the cash was wired in, which was March 2009. This is common in complex financial rounds with a large number of participants.

My History as an Entrepreneur

In this section, Thomas casts aspersions on both Zip2 and PayPal, my first two companies, talking about management changes that occurred at both and not acknowledging one positive thing about either company. The reality is that Zip2 (which I started at age 23) sold for over $300M to Compaq and PayPal sold to eBay for over $1.5B after going public. Anyone reading Thomas’s twisted account of their history without knowing better would think that both were failures.

It is worth noting that of the five companies that I’ve been a key part of creating (Zip2, PayPal, SpaceX, Tesla and SolarCity) over the past fifteen years, every round at every company has been an up round, even in the worst of all market conditions. In other words, no matter whether you were a series A, B, C, D, etc investor, you always made money. With a public company, there are of course significant short term fluctuations in share price, but those investors that believe in a long term hold strategy should be comforted by this track record.

Thomas also falsely states that I’m alienated from the rest of the management team at PayPal and have a completely different version of history to them. In reality, Peter Thiel, who replaced me as CEO of PayPal, later became one of the biggest investors in SpaceX. Max Levchin (PayPal CTO), Peter Thiel, David Sacks (PayPal COO) and I produced a movie together soon after we worked together at PayPal. There are half a dozen other ventures involving me and several other members of the PayPal management team.

Tesla’s Investors

Thomas references another NY Times Miller article about an email I wrote to customers and claims I said Tesla would start getting DOE funds in four to five months.

What I actually said was that the DOE had told me to expect funds disbursement in four to five months. This was absolutely true. In the end, it took the DOE six months longer than they themselves expected, since the ATVM loan program was brand new.

In any event, Thomas bizarrely manages to create a fake negative story out of what was actually a huge victory for Tesla. We were selected as the first winners of the Advanced Technology Vehicle Manufacturing program, along with Ford and Nissan. One of the requirements of this program was that you had to demonstrate that you were a viable ongoing business and that you had a compelling technology and business model for the funds sought.

This is completely different from the auto bailout program for GM and Chrysler, although many in the media confused the programs. In fact, the reason that GM and Chrysler were excluded from the ATVM program, is that they were going through bankruptcy and therefore obviously failed the requirement to have a viable ongoing business.

Thomas falsely states that Tesla wasn’t profitable last year, even though I said it would be. In fact, Tesla was profitable in 2009, albeit only for the month of July. That’s the best we could do, given the ramp up in Model S expenses, but nonetheless it was an important symbolic victory. If all Tesla did was focus on being a small sports car company and sell powertrain technology, it would still be profitable today, as both businesses generate a good margin.

However, my goal from the beginning has been to make electric cars that anyone can afford (Model S is step two in that process, not the end game), which requires a huge expansion in production. We are trying to go from about 500 Roadsters per year to 20,000 Model S vehicles. In other words, production is intended to be 4,000% of what it is today in only a few years time. There is just no way to remain profitable with that level of growth and capital expenditure.

Regarding Car & Driver quoting me as saying that GE would be an investor, that was an error on my part that was corrected as soon as C&D published. The C&D interview occurred a few months earlier when GE had confirmed via email that they would be investing. Then GE had some sort of internal crisis and pulled out at the thirteenth hour (they had asked us to extend the closing deadline to allow them to participate), which was unfortunate for them. Their investment would have done incredibly well.

Thomas pointedly ignores actual Tesla investors. In addition to the excellent venture investors of Valor Equity, DFJ, Technology Partners and others, there is Daimler and Toyota. Daimler invested $50M in Tesla after working with us for a year on the electric Smart car and doing extremely detailed technical and financial due diligence. When we did another investment round late last year with ADWEA and Fjord Capital, they invested again. When we did the IPO, they didn’t sell a single share, despite having a roughly threefold return on investment.

The Toyota Deal

Thomas states that although Toyota and Tesla announced that they would be developing a vehicle together, the SEC filings done right after the press conference say that we have no written agreement and there is no guarantee that we will get one done. Therefore, he concludes that I (and presumably Akio Toyoda), were misleading the public at the press conference!

Thomas actually knows better, but, for those who aren’t familiar with the requirements of an IPO prospectus (aka S-1), you always have to state the worst case scenario. This is done for liability protection, but is definitely not what is actually expected to occur.

Anyone who thinks that Akio Toyoda, the president of Toyota, would give a major public speech in front of the governor of California about doing a joint electric vehicle project with Tesla and not follow through is a complete fool. As was announced last week in Japan by Toyota, we have now signed the agreement and will be delivering the first prototypes this month. The vehicle and details of the program will be unveiled at another event later this year.

Despite Toyota’s recent troubles, they are still the largest car company in the world and by far the leader in hybrid electric vehicles. For them to have invested in Tesla, (moreover at the IPO price) and want to partner with us to produce a vehicle is a great honor and a powerful endorsement.

Purchasing the NUMMI plant for $42M, which has the ability to manufacture half a million vehicles per year or almost 1% of global automotive production, and making that our Tesla factory is another valuable element of the relationship. I should mention that NUMMI was owned half by Toyota and half by the General Motors spinoff (Motors Liquidation Corp), so we owe them a debt of appreciation too.

The main reason I love this factory is that it accelerates our ability to produce an affordable mass market car. The Model S platform will at most consume 50k to 100k of the NUMMI capacity. The remainder of the plant will be sectioned off until we can bring our high volume affordable electric car to market, which has always been my dream for Tesla.

Google has quietly (secretly, one might say) invested somewhere between $100 million and $200 million in social gaming behemoth Zynga, we’ve confirmed from multiple sources. The company has raised somewhere around half a billion dollars in venture capital in the last year alone, including $150 million from Softbank Capital last month and $180 million late last year from Digital Sky Technologies, Tiger Global, Institutional Venture Partners and Andreessen Horowitz. The Softbank announcement was never officially confirmed by the company, however, and the Google investment was likely part of that deal as well.

The investment part of the deal closed a month ago or so. A larger strategic partnership is still in process.

The investment was made by Google itself, not Google Ventures, say our sources, and it’s a highly strategic deal. Zynga will be the cornerstone of a new Google Games to launch later this year, say multiple sources. Not only will Zynga’s games give Google Games a solid base of social games to build on, but it will also give Google the beginning of a true social graph as users log into Google to play the games. And I wouldn’t be surprised to see PayPal being replaced with Google Checkout as the primary payment option. Zynga is supposedly PayPal’s biggest single customer, and Google is always looking for ways to make Google Checkout relevant.

And there’s more. These same sources are saying that Zynga’s revenues for the first half of 2010 will be a stunning $350 million, half of which is operating profit. Zynga is projecting at least $1.0 billion in revenue in 2011, say our sources. This blows previous estimates out of the water.

Zynga continues to work on high level strategic business development deals. The reason these deals are so attractive to companies like Yahoo and now Google is this – Zynga allows them to rebuild the massive social graph, currently controlled by Facebook. For whatever reason people love to play these games and get passionately addicted to them, coming back day after day. That’s helped Facebook become what it is today. Google, Yahoo and others want some of that magic to rub off on them, too.

We’ve reached out to both Google and Zynga for comment. Neither have responded.

There will be lots more news on Google Games in the near future, we’re guessing. Here’s a job opening for a Product Lead for Google Games, for example:

Product Management Leader, Games – Mountain View

This position is based in Mountain View, CA.

The area: Product Management

One of the many reasons Google consistently brings innovative, world-changing products to market is because of the collaborative work we do in Product Management. With eyes focused squarely on the future, our team works closely with creative and prolific engineers to help design and develop technologies that improve access to the world’s information. We’re responsible for guiding products throughout the execution cycle, focusing specifically on analyzing, positioning, packaging, promoting and tailoring our solutions to all the markets where Google does business.

The role: Product Management Leader, Games

The Product Management Leader, Games will be a flexible, results-oriented, and experienced senior leader who will be responsible for developing Google’s games commerce product strategy and partnering to build and manage the business with a cross-functional team. You will have visionary product insight, combined with experience in the online content business, significant technical expertise and extensive leadership and business skills. The Product Management Leader, Games combines a great instinct for developing compelling products with a strong focus on users and technical aptitude to work with a world class engineering team and the business sense to drive product goals and strategies.

Responsibilities:
Identify market opportunities and define product vision and strategy.
Develop and launch new products and enhance existing products.
Lead and mentor a team of Product Managers.
Engage closely with the engineering team to help determine the best technical implementation methods as well as a reasonable execution schedule.
Establish partnerships as necessary to drive the growth of Google’s products.

Requirements:
Technical degree or equivalent experience. Masters or PhD preferred.
Experience building an online gaming business both on the web and on mobile devices. Deep understanding of the game business and how to create hits.
Proven success in driving product strategy and product design for a successful game.
Solid product management experience with a track record of creating innovative and winning Internet or software solutions.
Significant people and organizational management skills. A natural leader and mentor.
Demonstrated ability to gather user requirements and convert them into a winning product vision. Strong quantitative and analytical abilities.
Strong communication skills with the ability to evangelize the merits of Google’s products internally and externally.

The other day I was talking to an old friend. Not only is this friend outside the tech sphere, he’s just about as opposite of tech savvy as a person can be. He’s basically a luddite. In fact, I was surprised he was even IMing with me, he’s so seldom online. But I was more surprised by what he asked me. “What do you think of the new iPhone?“

It’s one thing to know what an iPhone is, but the fact that he was aware that there was a new iPhone caught me a bit off guard. As did the fact that he was talking to me about it. I directed him to my review. But he took one glance at the 3,500+ words and immediately came back at me. “I just want to know if it’s any good.” I told him I thought it was the best out there. He thanked me and said goodbye. But before I let him go, I asked him why on Earth he wanted to know. I mean, again, this is a guy who undoubtedly uses one of these types of phones. He said that he travels a lot now and wants a better way to connect with his girlfriend on the road. I asked him, “why the iPhone?” His answer? The commercial.

Watching Apple’s iPhone 4 FaceTime commercial again, it reminds me of something: Mad Men. The television show is starting its fourth season in a couple of weeks, but the commercial takes me back to the end of season one — an episode called “The Wheel.” I’ve actually talked about this episode before because it contains a scene that is perhaps the best in the entire series. In it, ad man Don Draper gives a presentation to Kodak showing why Sterling Cooper should be handling the account for their new picture projector.

The pitch (which you can see here, but sadly I can’t embed) starts out with two execs from Kodak acknowledging that creating an ad around this “wheel” is hard because “wheels aren’t really seen as exciting technology, even though they are the original.” Draper fires back, “Technology is a glittering lure. But there’s the rare occasion when the public can be engaged on a level beyond flash. If they have a sentimental bond with the product.“

In the iPhone 4 FaceTime commercial, that’s exactly what Apple is playing up. As we’re all well aware, video chat, even on phones, is nothing new. Sure, Apple has simplified it, but they’re not really showcasing that here. Instead they’re going right for the heart strings. They’re doing something rather incredible. They’re conveying how you’ll feel if you use the product, by making you feel alongside those in the commercial. They’re creating this sentimental bond.

Draper continues, talking about an old copyrighter he used to work with, Teddy. “He also talked about a deeper bond with the product. Nostalgia. It’s delicate. But potent.” Draper fires up the projector. “Teddy told me that in Greek, Nostalgia literally means ‘the pain from an old wound.’ It’s a twinge in your heart far more powerful than memory alone.”

Again, that’s this FaceTime commercial. It’s not old pictures, but it’s more powerful. It’s loved ones that you haven’t seen in a while, that you’re apart from, right there in front of you, live. ”It takes us to a place where we ache to go again,” as Draper puts it. ”It lets us travel the way a child travels. Round and around and back home again. To a place where we know we’re loved.“

And Apple goes a step further. Rather than just playing up the family bond which they do with the baby crawling on the bed, the mother with the baby, and the grandparents with the graduating grandchild, Apple shows a pregnant wife getting an ultrasound and her husband in the military, presumably overseas, watching. When the wife hits the button to flip the camera and show the unborn baby on the monitor, they cut to a shot of the husband and his face drops as if he’s about to cry. It’s extremely powerful stuff.

Then Apple kicks it up another notch. They show a girlfriend waving to a boyfriend through FaceTime just as any other couple might. Only then they reveal that the boyfriend is deaf. But thanks to the video functionality, the two can sign with one another. The commercial wraps with them each looking at the phone in awe after they sign their goodbyes, as if they’ve just done something unbelievable. Something extremely important to them. And they have. It’s delicate. But potent.

It shouldn’t be surprising that Apple hired Hollywood director Sam Mendes (American Beauty, Revolutionary Road) to direct this commercial. Levels of sentiment that people often feel while watching movies rarely, if ever, travel over to advertising. But they have in this FaceTime commercial, just as they have in Draper’s Kodak presentation. It’s as if the Apple commercial borrowed a page out of the playbook that Draper was talking about in that episode.

Apple, of course, has a history of great advertising campaigns. From the ’1984′ Super Bowl commercial (directed by another Hollywood guy, Ridley Scott), to the Think Different campaign, to the Get a Mac spots, each was effective at conveying different things about the brand. But this latest commercial is the first (to my knowledge) that really aims to connect with people on a deep emotional level. And it’s going to help Apple sell a massive amount of iPhone 4s.To people like my friend.

Oh, Internet, is there anything you can’t do? iChatr, a new app for the iPhone, is essentially Chatroulette for the iPhone. It’s pretty barren right now – I saw the same people once or twice – but the quality is pretty good and if you have a Sing-a-ma-jig, you can actually make dour iPhone 4 users smile. To move to the next person you simply swipe their face.

Read more…

Back in February 2009 we covered the launch of DevHub, a startup that helps users build their own blogs and websites. At the time the site creator was pretty straightforward, with a focus on monetization through some syndication deals. This week, it’s modifying its approach: DevHub now features a gaming mechanic that’s designed to help new users turn their bare-bones blog templates into full-fledged websites.

DevHub cofounder Mark Michael says that a lot of users of the old version of DevHub would create their sites and only take advantage of the most basic features, leaving skeleton websites in their wake (a phenomenon that is doubtless seen on other website creators). To help remedy this, the new DevHub walks you through creating your site step by step, rewarding you for completing actions with points that can be used to further improve your site.

When you first sign up you’re asked to choose from four tracks: blog, ‘WebHub’ (which is a portal with your social media profiles), a small business site, and a product promotion site (Michael says more tracks are on the way). After choosing a track, the site will show a wizard pointing out its main features. Finally, once you’re in the builder, you’ll be prompted to complete tasks like adding a profile photo, connecting your Facebook account, and blogging something.

Completing these actions allows you to accrue virtual points, which can in turn be used to further improve your site. Additional features that can be purchased in the DevHub marketplace include new templates, the ability to embed widgets, and a link roll. Michael says that earning these doesn’t actually take very long (he wagers you could earn them in around twenty minutes of fixing up your site) — the goal is to get people to fill everything out and build a full-fledged website, and this provides a way to handhold them through the process. Alternatively, users can purchase these features without earning them for pretty steep amounts of real money.

Obviously there’s a ton of competition in the site creation space, but this seems like a pretty good way to get users engaged to the point that they’ll keep coming back to DevHub after signing up. Along with the main site, DevHub also white-labels its platform.  The company has raised around $1.5 million dollars and has around fifteen employees.

It appears that Foursquare has just crossed the 2 million users mark this morning. The location based social network has been growing fast, adding 100,000 users per week. Only three months ago, Foursquare passed one million users after taking a year to accumulate one million members.

Over the past several months, Foursquare has had a number of impressive stats for a startup. Some of them involved SXSW, some involved overall check-ins numbers. And it seems to be growing faster than its main competitor, Gowalla.

Of course, to expand upon this growth Foursquare has just raised $20 million in funding at a $95 million pre-money valuation, led Andreessen Horowitz with existing investors Union Square Ventures and O’Reilly AlphaTech Ventures participating. The new funding is going to be used to hire additional staff, for product development and a new office space. And we know that Foursquare has some interesting ideas to incorporate gaming with check-ins.

It’s important to note that other competitors have already crossed this mark. MyTown, another location-based network hit that number in May, Brightkite hit 2 million users in February. And, Loopt just passed 4 million users.

Congrats to Travis E for being Foursquare’s 2 millionth member.

Hat Tip to Finbarr.

I doubt that Steve Jobs has ever asked Apple customers what type of products they want, or that he cares about what they need. Jobs believed that if he developed a mobile phone that plays music and surfs the web, he could create both the want and need. He was right: his iPhone changed the industry and started a mini technology revolution.

Most of the entrepreneurs I know fancy themselves to be like Jobs.  They think they know—better than their customers—what the customers want, and what they need. Or they believe, as in the movie Field of Dreams, that if you “build it, they will come”. But it just doesn’t work this way in real life. The vast majority of technology startups fail because no one buys or uses their products.

Strategy consultant Sramana Mitra calls this failure “Infant Entrepreneur Mortality”. She says that in the hundreds of companies she has mentored, lack of customer validation is by far the biggest cause of failure. Startup guru Eric Ries says that “validated learning” about customers is even more important than revenue for a nascent startup. Revenue, by itself, doesn’t build traction for a business; it is only when you have products that are tested and proven, that customers are ready to buy, and that you can sell and deliver profitably that you have the right ingredients for a successful business.

How do you determine what customers will buy (or, if you’re building a free web technology, what it is that they will invest the time and effort to use)?  Unfortunately, this isn’t a simple matter of asking. Your customers know what their problems are; they know what they like; and they know what they don’t need. They don’t know what you can uniquely develop for them that they will really want. This is what you need to figure out. Start by understanding what the customer’s problems are; use your experience and vision to conceive solutions; share this with potential customers in ways that they can understand; and learn. It is an iterative process.

The best example I’ve seen of a startup looking before it leaps is Campfire Labs. The startup has spent 14 months prototyping products. It hasn’t even started developing its products yet. It could be that Campfire never gets off the ground, but if and when it does, it has a better than average chance of becoming a Zynga or Facebook. In the meantime, it has already lived at least three lives (but, fortunately, hasn’t had to die three painful deaths). Campfire was founded by former Yahoo! search technologist Naveen Koorakula and, former Youtube head of international strategy and product, Sakina Arsiwala. Their goal is to change the way people collaborate on line—to make it more meaningful and to better manage the many contexts in which they interact (work, home, school, etc.).

Naveen and Sakina started by building a prototype of a personalized news/media site and sharing it with friends. But, while their techie friends would really get excited about algorithms, the others would scratch their heads trying to figure what the purpose of the product was. Next, they experimented with content sharing, interest graphs, and other technical concepts. They came with product ideas and asked their friends who were specialists in various disciplines to brainstorm with them. Once they thought they were on to something, they talked to random people on the street and workers in the mall next door. They went to university campuses and bought smoothies and sodas in order to get students to spend a few minutes with them. They carefully observed user reactions, read between the lines, and dug deeper to understand what the users were really saying.  They incorporated what they learned into the next iteration.

Last time I met the Naveen and Sakina, they were still trying out new ideas. But they seemed to be getting closer and closer to having a product that users were eager to use.

Getting back to Steve Jobs. Does he really have some secret powers or a divine vision that lets him build one earth-shattering technology after another? I don’t think so. My guess is that in his secret lab, Jobs has teams developing and testing hundreds of ideas. He just implements the best of them. Jobs is not afraid of abandoning failures, and when something does click, he rules like a tyrant and makes it happen. Eric Ries agrees with me and prescribes a five-step process that can help people become more like Jobs:

1. Hold your team to high standards; don’t settle for products that don’t meet the vision; iterate, iterate, iterate.
2. Be disciplined about which vision to pursue; choose products that have large markets.
3. Discover what’s in customers’ heads, and tackle problems where design is a differentiator.
4. Work on as few products as possible; keep resources in reserve for experimentation.
5. Start over (change direction) if you find yourself with a product that’s not working.

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.

In a slightly odd blog post published Friday night, Condé Nast-owned news recommendation service reddit calls for help.

The company would love to hire engineers to complement the current technical team, which has been struggling with site sluggishness and outages lately and would also like to add some new features to reddit at some point.

However, they write, although the company is owned by a mega media corp with billions of dollars in revenue, there’s isn’t any budget to hire people and add more resources.

Its own revenues are too weak, they add, in a – refreshingly – brutally honest way.

But here’s the thing: corporations aren’t run like charities. They keep separate budgets for each business line, and usually allocate resources proportionate to revenue. And reddit’s revenue isn’t great.

According to the company, reddit traffic has now grown to roughly 280 million pageviews per month, and a team of merely four engineers to sustain the site and add new features is simply not cutting it any longer.

So the team turns to what is arguably its most powerful asset: its very own user base.

Reddit is hoping that its users and fans will donate the money needed to hire more people and buy more servers, so they don’t have to revert to other tactics like intrusive and obnoxious advertising. But rather than call it what it is – donations – the company is asking people to subscribe to reddit gold and pay as much as they want for it.

What does one get for subscribing to reddit? Nothing yet, apart from the team’s “undying gratitude and an optional trophy on your userpage”, but should the program become successful enough, reddit hopes to give subscribers better incentives in the coming months.

Evidently, there’s a lot of debate on reddit about the program, the blog post, and a ton of other topics. To join the conversation or learn how the community is responding to the pledge drive, go here and check out the comments (2837 at the time of publication).

Or tell us what you think of all this hereunder, of course.

Product: Hydration-Bottle Packs

Manufacturer: CamelBak

Wired Rating: 0

Ah, summer: The time when runners don their skimpiest spandex and hit the trails in search of sunshine, fresh air and dehydration and, uh heat exhaustion.

Seriously, staying hydrated is important. It’s even more critical if your run stretches to an hour or more and the weather is hot. Unless you’re on a well-stocked marathon course with water and first aid stations every few miles, you’ve got to carry your own refreshments. That means some kind of pack.

We tested four waist packs, a popular choice for runners. (Water-filled backpacks are too hot and heavy for most runners, and most people don’t like handheld bottles.) We subjected each pack to at least 10 miles of city and trail running.

What we found didn’t exactly impress us: The bottles bounce, their straps chafe and you’ll spend way too much time cinching and un-cinching them in search of the perfect fit. Our advice: Go to a store where they’ll let you try them on before you buy, because the ideal fit is going to come down to the shape of your body.

On the plus side, carrying water could mean the difference between finishing that 8-mile run with a smile on your face and collapsing halfway through in a puddle of sweat and muscle spasms. As a bonus, most of these packs will also hold your phone, iPod, high-tech energy gels and any other gadgets you consider essential for running.

Amphipod Full-Tilt Velocity

A horizontally mounted, contoured bottle helps this pack snug up against your lumbar area, a bit higher than most water-bottle packs. Because of its shape, it bounces less too. However, the location also makes it more difficult to get at anything you’ve stashed in the nylon pocket.

WIRED Snuggest fit of the packs tested here.

TIRED Horizontal bottle, with a nylon hold-down loop, is a little hard to remove and reinsert. Exterior stretchy pouch accommodates a phone, but feels a little delicate.

$32, amphipod.com

Amphipod PureRun Trail

The only bottle pack to use a stainless-steel bottle, Amphipod’s PureRun Trail is compact, relatively bounce-free and includes a pocket that’s large enough to accommodate an iPhone, a Clif bar or two, and your car key. Unfortunately, it’s too easy to leave the bottle cap only partially closed, with the result that water leaks all over your butt. How embarrassing!

WIRED Bottle imparts no nasty plastic taste. Largely chafe-free design. Looks cool! OK, looks less dorky than most hydration packs.

TIRED Bottle cap more complicated than it needs to be, and can leak if not carefully closed. Standard bottle only holds 16 ounces. Weighs more than a plastic bottle.

$50, amphipod.com

CamelBak Delaney Plus

Bigger than the other packs in this roundup, the Delaney sports two separate modules: A main, back unit that holds a generous 24-ounce bottle, with a mesh pocket for Gu packets and gorp, plus a front unit that looks like a mini-fanny pack, with a small zippered pouch for your phone and a pocket for other stuff. If you’re running the ridge trail and expect to be away from civilization for half a day, this pack’s your friend.

WIRED Room for lots of stuff.

TIRED Feels bigger than a Hummer and twice as ugly with a leopard-print paint job.

$40, camelbak.com

Nathan Elite 1

This diagonally mounted water-bottle pack is straightforward and bare bones. If you don’t need much more than the 22 ounces of water it holds, it might be sufficient. But one annoyance kept nagging at us: The little Velcro straps for bundling up the tail ends of the waist belts are just plain annoying. Bundle the end around itself and it bounces around while you run; strap it to the main waist belt and it will scratch you all day long: Either way it’ll drive you up the wall.

WIRED Trim, lightweight design. No unnecessary frills.

TIRED External pouch is too small to hold an iPhone or similar-size phone.

$30, nathansports.com

Beyond the Rack, a members-only sample sale site, has raised another round of funding today. The startup has just announced a $12 million round of funding from Highland Capital Partners and BDC Venture Capital. This brings the Beyond The Rack’s total funding to $16.5 million.

Similar to Gilt Groupe, HauteLook and Ideeli, Beyond the Rack is a members-only shopping site that offers steeply discounted (from 50 to 70 percent) on designer brand clothes, accessories and other goods. The site says that its revenue growing over 30 percent per month and currently has 1.5 million members, doubling its userbase from six months ago.

Beyond The Rack launches up to eight new sales events every day, with each event only lasting a few days. The model has done fairly well in the space, with similar sites seeing rapid growth. There’s the rumored acquisition of European sample sale site Vente-Privee by Amazon for an estimated $3.01 billion. And sample sale sites Gilt and Ideeli have recently raised large amounts of funding. While the flash sales space is full of worthy competitors, clearly there is room for a number of sites to operate.

This morning, we covered the debut of 1000Memories, a Y Combinator backed startup that helps family and friends memorialize loved ones online. The company was started by three friends, Brett Huneycutt and Jonathan Good, formerly of Mckinsey, and Rudy Adler, a former employee of ad agency Wieden + Kennedy.

Adler and Huneycutt dropped by our studios for our latest episode of TechCrunch NOW, to discuss the challenges of their business model and the theory behind the site’s design. See video above.

The founders cobbled together the first draft of the site in roughly one month, with a few goals in mind: create a sleek design that does not distract from the person’s story and offer the product for free. The founders say 1000Memories will always be free and sans advertising, but they plan to roll out optional products for purchase soon, like framed photographs and memory books.

Huneycutt also responded to commenters from Arrington’s post, who wondered what would happen to the content if the business went belly-up: “I think if someone takes the time to create a memorial site for their loved one, they want to make sure that their photos and their memories are there forever, so along those lines we are making a personal pledge never to erase anyone’s data or content… if things do go wrong, we will never erase it and we’ll make sure to get people their data back.”