Category: Tech news

There are few people I would get up to meet on a Sunday morning after spending five weeks on the road and mired in China-to-SFO jet lag. There are also few people I would believe when they said they were building a great “Enterprise 2.0” company. Tony Zingale is one of those people.

We’ll get to why in a moment. But first the news: Jive Software—a nine year old company that Zingale became CEO of in February on an interim basis—is launching two new products today and continuing a big press push that’s tantamount to announcing they are a serious, next-generation enterprise software company. (He’s also recently dropped “interim” from his title, the CEO equivalent moving out of beta.)

The company operates fully-featured social networks for businesses that change how people inside the company work and communicate, and how they interact with their external partners and customers. Bolstering the news are some impressive partnerships: Jive will integrate LinkedIn profiles into the site, license the full Twitter firehose of Tweets and offer a free month trial of its service in Google’s App Marketplace. Jive is funded by Sequoia Capital; our previous coverage is here.

Feature-wise the company is launching a App Marketplace (who isn’t?) and a “What Matters” product that’s like a corporate news feed. Data from existing business collaboration tools not to mention LinkedIn and Twitter will be pulled up and the most relevant pieces of data will be abstracted from the what-you-had-for-dinner-last-night noise.

I am incredibly skeptical about the whole “enterprise 2.0” shtick but Zingale isn’t screwing around with some feel-good freemium model. He’s doing sales in the range of $75,000-$150,000 per company, on average, but the dollar amount is increasing. He’s done ten $1 million deals and four of those came in the last two quarters. The company has 3,000 customers, 15 million users, and will end the year on a $100 million run-rate. Considering that a few years ago open source darlings like Jboss were valued at hundreds-of-millions of dollars when they were doing less than $50 million in revenue, that’s a decent software business.

The other reason I’ll give Jive the benefit of the doubt is Zingale. He is a man who has proven the difference between being lucky and being good. Sure, he benefited from the glory days of the business software boom early his career—when a lot of people looked smarter than they were because the world had billions to spend on Greenfield software opportunities. But he’s also
navigated a lot of unforeseen challenges. He was the no. 2 guy at Cadence Design Systems back when it had its worst quarter in history and some of its employees stole its core software to start Avanti. In 1997 he came into turn around CRM company Clarify and sold it to Nortel for $2 billion. He could have ridden off into retirement after that. Instead, in 2004 Zingale inadvertently took on his most brutal challenge yet.

He’d just become President and COO of Mercury Interactive with the understanding he’d become the CEO in about six months. The company missed the first quarter in 2005. Uh oh. Then it barely made the second quarter. Not great, but could be worse. These were not exactly enterprise software’s glory days. Then, SEC investigators showed up. Oh, shit. Mercury was proven to be one of the egregious abusers of the options backdating scandals that rocked the tech markets in 2005 and was made one of the biggest scapegoats. Zingale had nothing to do with this— he was on the board of the company but not when it went happened. But he didn’t abandon ship. He quickly fired the people who’d hired him, and he took the CEO job over a few months earlier than anticipated.

I called him for an interview when the November 2005 Mercury bombshell hit. I was covering software for BusinessWeek and this was one of the hottest stories of the week. Most CEOs would have said “No comment.” But Zingale—who I’d met just once at an industry dinner— invited me in and we had a frank face-to-face conversation about the situation. He looked me in the eye, told me he had nothing to do with this and how he was going to save this company, and I believed him. He spent much of the rest of the year having the same come-to-Jesus meetings with every shareholder and major Mercury customer. Less than a year later, he sold the company to Hewlett Packard for a $5.1 billion—a 50% premium. Meanwhile a host of hot 1990s software companies who hadn’t had Mercury’s legal troubles were walking dead.

Simply put, Zingale is a bad ass. He is one of those rare old-school software salesmen who also comes across as genuine. And he’s beyond battle-tested, pulling a de-listed, radioactive company back from the dead to be worth $5 billion.

It’ll take someone like that to actually create a company out of all this Enterprise 2.0 hype. And I hope he can pull it off, because Silicon Valley is desperately in need of an enterprise software resurrection.

One thing is certain: Jive will either be raising more money in the future or filing to go public as soon as it can. Zingale has a big vision here and building a real enterprise software company takes cash.

From Bangalore, India, to Sofia, Bulgaria, to Los Angeles, California and back to San Francisco, our network of readers threw an unforgettable, global, TechCrunch birthday bash. As a thank you and tribute to our readers, we’ve put together a brief video to highlight your efforts. Video above.

According to Meetup, the final tally was 360 meetups on Friday, with more than 4,400 attendees.

There was no dominant format. Some featured full-blown agendas complete with panels and startup presentations, others offered TechCrunch Jeopardy and many, simply featured beer. American Fork, Utah, which did not offer beer or Jeopardy, was still home to possibly the largest TechCrunch event with more than 500 attendees, according to organizer Dan Garfield (manager of online marketing for OrangeSoda).  The meetup, which featured musical acts, the consumption of more than 1200 hotdogs and sausages and a dancing man in an orange, full-body spandex suit, was part-barbecue, part-block party, and all held in OrangeSoda’s parking lot. You can find their full video here.

Meanwhile, more than 8,000 miles away, underneath a section of scaffolding in Bangalore, India, nearly 150 people gathered to discuss the latest technologies and listen to presentations from local startups. Further south, in Jakarta, Indonesia, 99 attendees showed up, including representatives from Admob and Yahoo Indonesia, to discuss Yahoo’s recent acquisition of Koprol, the investment climate, and how to do business abroad.

In Brussels, Belgium more than a dozen readers gathered at a bar named Au Soleil, while in Tokyo, attendees celebrated a man (who for one reason or another, that may or may not be related to TechCrunch) dressed as a storm trooper, and finally, in New York, attendees took advantage of a four-foot tall ice luge.  Yes, it was strange, yes, it was wonderful, and yes, this post doesn’t have a lot to do with “technology news,” but we can’t wait to see what you guys come up with next year.

“Can Tim Armstrong make AOL king of content by 2010?” – Blog headline

If it were done when ’tis done, then ’twere well / It were done quickly” – Macbeth

There’s something about the idea of “New York Internet Week” that I’ve always found inherently funny; like “Saudi Arabia Bring Your Daughter To Work Day”, or Greenland being called Greenland.

Ironically for a city that’s always been so adept at branding itself, New York has always struggled to articulate its place in the worldwide web, and Internet Week is the clearest manifestation of that identity crisis. Name an industry that the Internet is disrupting: newspapers, publishing, advertising, banking – and you’ll find its heart in Manhattan. Despite the best efforts of Mayor Bloomberg and, uh, Dennis Crowley to paint New York as the place to do business in Web 3.0, the fact is that billions of advertising and investment dollars continue to flood west, never to return. And yet New York, bless it, continues to try to stay relevant – for one week a year at least – to the industry that’s bleeding it dry.

Witness the Webbys – the awards ceremony that congratulates New York based celebrities who have learned to tweet – witness the awkward panels filled with mismatched home-grown personalities (“Julia Alison meets Jeff Jarvis“) and witness (if you can’t avoid it) the week-long parties where thousands of identically unique hipsters cram into lofts to drink booze sponsored by one or all of the east coast’s four successful start-ups.

Even when they invite west coasters to get involved, the effort manages to come off more weird than wired: I was flown to town, on the kind of handsomely subsidised meal ticket only New York can offer, to moderate a panel on “Internet dating in a web 2.0 world” for an audience of feature writers from women’s magazines. This despite the fact that asking me to help navigate the minefield of online dating is like asking Rudolf Hess to give guided tours of Dachau. Nice try, New York.

And yet. While it’s easy for me to mock New York Media’s bewilderment over the Internet (see!), there was a marked change in atmosphere during this year’s Internet Week, compared to last year’s. A definite uptick in confidence, not all of which can be put down to the fact that Dennis made it on to the front cover of UK Wired. No, the change in attitude in New York towards the Internet can more fully be attributed to one word: content.

New York is a content town and, thanks in large part to AOL and Yahoo, content is once again king. Speaking at Disrupt last month, AOL’s Tim Armstrong boasted that AOL “is planning on being the largest high quality content producer for digital media”. Yahoo is taking a similar – if less clearly defined – approach, purchasing Associated Content for somewhere in the region of $100m and now, if rumours are true, eying up the Huffington Post. For the New York media crowd, this is great news – great news for journalists who are being laid off left right and centre, great news for newspapers and publishers who smell lucrative content syndication deals and great news for pro blog networks who might finally see an exit. If content really is king, then New York is its ready-made kingdom.

And yet. And yet.

The way that the likes of Tim Armstrong use the phrase “content is king” conjures up a noble image. An image of professional journalists and highly-skilled writers, possibly wearing crowns, slaving over hot typewriters to produce 1000 words of crisp copy for an eager online audience; or perhaps of sharply-written web video, a la College Humor’s original programming, or the New York Times’ daily video podcasts. For ‘content’, New York media folks read a web 3.0 of professionally produced news, analysis, entertainment – the antithesis of web 2.0′s user generated horse-shit. No wonder they’re salivating.

But that’s a very east coast – with its proud history of newspapers and publishing – interpretation of the word. Over on the west cost (and note: I’m using that term in its laziest sense to cover all Internet companies including those who, by accident of birth, have offices back east), “content” means the precise dictionary definition of the term: “something contained, as in a receptacle”; generic filler to pack inside an empty box to make it attractive to advertisers. Low-paid, illiterate swill, commissioned by the ton to provide SEO ad inventory. Just consider Associated Content and how it describes its goals post- Yahoo acquisition…

“Associated Content is now a part of Yahoo! – the world’s largest online company, with more than 600 million unique visitors a month. Yahoo! plans to leverage our content to extend its leadership and build upon their global properties to deliver personally relevant content in a scalable and efficient manner.

I mean, kudos to the company for not using the words ‘writing’ or ‘journalism’ to describe what their crowd-sourced hacks do, but it’s still hard to imagine a more mercenary way to describe the craft of writing. These are not writers, or journalists; these are self-confessed generators of content in the much the same way that horses are self-confessed generators of glue.

At least the Huffington Post employs real writers – assuming your definition of ‘employs’ doesn’t require there to be payment or any meaningful editorial support and if your definition of ‘writers’ includes the authors of stories like “Sex Tapes Of The Past Decade: A Look At The Noughties’ Naughtiest” and “Indonesia’s First Celebrity Sex Tape Scandal” and “Kendra Wilkinson’s Sex Tape RELEASED, NSFW Preview” – all examples from the past few weeks.

Even the web editions of respected offline brands are going the same way. The editorial focus of Forbes Online – a mish-mash of celebrity slideshows and tacky lists of ‘Americas best paying blue-collar jobs‘ and ‘hottest summer convertibles‘ – couldn’t be more different from its print counterpart which still has ambitions to be a serious news magazine. (Truth is, today’s Forbes Online is a pale shadow of even its own glory days: this is the online publication which saw Adam Penenberg break the Stephen Glass story).

Of course, the relationship between editorial content and advertising has always been strained, in a cant-live-with-it-cant-live-without-it way. But in traditional media – for the most part – the lines were respected: editorial staff did their job, advertising staff did their job and somehow the relationship chugged along.

In new media, however, editorial content exists to serve only one purpose; as a hook on which to hang advertising. When an Internet company commissions content, their measure of success is quantitative not qualitative: does the block of words pack in enough high-buzz keywords to rope in a hundred thousand or so Google searchers? And can it be spread out over enough pages to provide half a dozen ad impressions for each of those users? If so, great: now they just need the users to click on one of those ads and GTFO, which probably explains why so much online content peters out within 30 seconds of the headline.

Jeff Levick, president of global advertising at AOL, sums up the company’s editorial policy thus: “we have insights into our audience, and can produce content they want, which leads to engagement, which leads to what advertisers want.” Therein we see the critical difference between the old media attitude towards content and the new media alternative.

The old model favoured originality: break a story that no-one else has covered or write a fresh new take on the world and the audience would come, bringing with them advertising and sales. Under the new model, originality and exclusivity are the kiss of death. SEO-driven advertising depends on knowing what people are already looking for, and delivering content that satisfies that desire; nothing more nothing less.  SEO-driven content is the opposite of journalism and creativity, just like New York’s interpretation of the phrase ‘content is king’ is the opposite of Silicon Valley’s.

It’s a depressing truth, but an important one for anyone in New York media – or elsewhere – gets too excited about the idea of a content revival. Before Harry Potter, no-one knew they were looking for books about wizards; before the Washington Post broke their most famous story, no-one knew they were searching for information about a robbery at the Watergate building, or the subsequent money trail to the White House. Put simply: if Ben Bradlee were an editor at one of today’s Internet companies, instead of the Washington Post in the 1970s, he’d almost certainly have spiked the first Watergate exclusive in favour of a slideshow of cats who look like Nixon.

“We know there’s a market for that shit. I’ve seen the numbers!”

Editor’s Note: This post is written by Dave Schappell, Founder and CEO of TeachStreet. In it, he talks about his company’s transition from a free to a paid service, and shares five tips that may help other startups make the leap as well.

Over the course of the last two-plus years, I’ve worked with a team that has lived the web service transition from free to paid, as TeachStreet has evolved from a place to find local classes in Seattle, to a global supplier of online and local classes (I’ve included a high-level timeline of our full 2-year transition, at the bottom of this post).

The discussions around freemium and the like are numerous — I won’t bore you with additional words on those topics.

I’ll assume that:

• you agree that ultimately your revenues need to exceed your expenses
• you’re able to build something that delivers value for your customers, and some of them are willing to pay for that value
• turning on fees won’t destroy your business (in our case, we were a class/course marketplace; we needed to be sure that fees wouldn’t cause our inventory of classes, that we had built up since April 2008, to disappear)

Finally, I’ll assert that there are many reasons to offer a product for free (e.g. it may be an incomplete product in the early days; free is an excellent way to allow customers to try your product and gauge the value delivered; free may help with distribution/spread; and many more totally valid reasons)

The big question is, “how do you transition your free customer base to a paid customer base, without upsetting/losing all of them?“

Here are 5 tips to help you transition customers to a paid service:

1) Give your customers plenty of notice, and give them a (real) chance to comment/contribute feedback.

Remember that many customers are not only willing to pay, but deem for-pay services to be of a higher quality. When we pre-announced our pricing changes, we had our share of negative responses. But, we also received positive public replies, and many private mails telling us that they were excited about the change (because it would reduce the clutter/competition for their classes; they wanted us to be around over the long-term; it would mean we’d have money to advertise for even more customers; etc.)

The response from customers also told us that we had been doing a very poor job of communicating our value to them. Many said that we’d never delivered customers, but when we looked at their teacher dashboards, we saw large volumes of visitors, and leads delivered. We realized that we had forgot to set up and communicate that value with a regular metrics mail! Thus, we prioritized building and delivering that communication before we turned on fees.

Several teachers also asked why they couldn’t ‘earn listings’ by doing things other than paying money. We thought that was a wonderful idea, and built a way to do just that (see #3 below).

A recent example where a fee increase was initially handled poorly was at ZenDesk. Initially, their announcement led to a huge customer backlash; happily, they made changes to the pricing proposal that grandfather’d in existing customers. As a long-time ZenDesk customer, I’m glad they listened and made changes, but I’d bet they could have handled this better with some more open customer discussions.

An example where I think this was handled very poorly was when Ning changed their fees — it seems like they just threw many customers out to the curb, with no input, and no negotiation.

2) Price it ‘fairly’ (probably still at a deep discount)

The price obviously needs to work for your income statement as you look out 6-12 months. But, it really needs to work for your customers. If the alternatives are much more attractive, expect to see customers flee.

In our case, we priced new listings at $3 — those listings last 30 days, or until we deliver 10 customer leads (whichever comes first). Many in the lead-gen industry scoff at this $0.30/lead pricing, but we had to look at free alternatives such as Craigslist and Twitter. Ultimately, we know that we’re a lot more than just a listing tool — we deliver strong SEO benefits, reviews/ratings, payments, UGC tools and more. And, all for less than a cup of (Seattle) coffee. If we can’t make that pricing work, then we’ll just have to deal with the ramifications. It seems fair.

Results to date are very promising – our number of teachers paying for listings, subscriptions and featured fees have grown by 6-7x since before the change – in order to continue their support, we know that we’ll need to deliver them value (i.e. student leads):

Will we have to raise prices in the future, or adjust the # of leads? Of course, that’s a possibility. But, we don’t expect to do so in the next year. We’ll continue to review the service/benefits, and we’ll do our best to be transparent with our customers.

3) Offer your customers a way to get your product for free

Money is one of many forms of compensation. In our business, high quality content (articles, Q&A, etc) are equally or more valuable, as they help search engines to find our site, and in turn, help people discover great classes/courses, and teachers/schools.

We ended up creating a virtual currency model where a teacher earns a ‘point’ for each article written, or question answered. And five points can be redeemed for a free class listing. A teacher can quickly find five questions to answer, and thus earn a free listing in less than 10 minutes. Within a week of launching our virtual currency, 9% of all our listings that week were paid for with points. This helps us (great keyword-rich content for search engines), but also helps the teacher, as we automatically merchandise their class listings around any articles and answers that they provide. And active teachers have their classes show more highly in search results. We see this as truly a win-win, and we don’t miss the $3 at all!

Many businesses could do a better job with this. I like how Flickr handles it, as I’ve fluctuated often between a Basic and Pro Flickr member. I know that I’ll always return as a Pro, but there are times when it’s less necessary. Thank you to Flickr for making it so easy. I wish Netflix would do a better job of this, giving me continued access to my movie wish list, and recommendations, as I frequently transition from paying to non-paying customer, as my free time fluctuates. But, they lock me out of my movie list when I’m not paying — why?

4) Provide Grandfather’d Pricing for long-time customers, or give them exclusive benefits

If you have a free service, this one is quite difficult, because there are bills that need to be paid. But, if you’re a service that has decided that you need to raise prices, you should seriously consider locking in the old pricing for your existing customers. Or, gradually increase prices. Or, provide them with a generous allotment of credits (you get the idea).

In our case, we created a promotion, offering 6 months of Pro Member benefits for $10 per month (compared to $29.99/month). The weeks prior to this promotion our Pro Member subscribtions were relatively flat; two week after running the promotion our subscriber base increased by 152%. We were psyched to see the level of redemptions on this offer, and hope that we can continue to earn their trust/business over the next 6 months. If we don’t, we didn’t deserve it to begin with.

Some other examples:

• SEOMoz is probably the best source of SEO advice/tools on the internet. They used to be free, but have gradually introduced monthly/annual memberships. The current cost is $799/year (I think), but when I joined in 2006, it was $299/year. What’s cool is that they still honor the $299/year fee. At that price, I’ll never go away — and, I continue to rave about them to my friends! And, while I know it’s a steal at $799, I still may balk at it, because I know what I paid once upon a time. Great job, SEOMoz, for thanking those who helped you get where you are today.
• Airlines do a TERRIBLE job of this — how many of us have been lied to by airlines with their frequent flyer programs? They tell us 20k miles will get us a free flight. Then they limit the seats. Then they have offers for 40k and 60k miles. Then they shut down the programs entirely. I’m OK if they change the rules going forward, but to change the rules for the miles that I earned under their earlier offer is just wrong.

5) Make the transition gradual, if possible — people should only pay if you’re delivering value

In our case, we decided that teachers should only have to pay to re-list a class if we’ve delivered a lead to them in the preceding 30 days. So, if a teachers lists a piano class or a photography lesson and we don’t get them a customer phone call, message, or enrollment in the next month, we simply re-list the class for free. That way, they don’t need to think about re-paying until the point where we’ve delivered value. And, we grandfather’d in our existing listings in a similar fashion. This served a double-benefit — for teachers, they’re guaranteed value (it’s another way of saying ‘thank you’ for being early supporters) and for TeachStreet, it maintained class selection, which is good for search engine traffic. In fact, we’ve grown our overall listings significantly since before the change in fees.

Other businesses will have their own unique characteristics — you could slowly implement fee increases for existing customers (as discussed above), provide transition pricing, or convert past-activity into benefit/tier levels, to name a few. But, you get the idea.

Moving from a free service to a paid service without scaring off customers can be done. With better quality data on TeachStreet we have been able to increase the number of leads to teachers by 25%, students are receiving faster responses from active teachers, and our operational revenue has doubled since launching our paid service.

In closing, remember that making the free-to-paid transition gracefully is just good business. Not only are these your longest-time customers, who have helped you in myriad ways (feedback, patience, content, etc.) but the impact of making this transition poorly can be disastrous and/or long-lasting, with negative PR, ruined relationships, and unpleasant employee morale issues.

I hope the list above is helpful — and, I’m sure that I missed some things. Please contribute ideas in the comments.

This is a high-level view of TeachStreet’s product/pricing history:

• April 2008 – launched site for classes, courses, teachers, schools (TeachStreet) in Seattle with ~25k classes, courses, schools and teachers – teachers could add unlimited classes, and students could contact teachers. The product had limited functionality, but it let us demonstrate value, work on our user-generated-content tools, and learn from customers (100% free)
• August 2008 – April 2009 – expanded to ~7 additional cities, and significantly expanded tools for teachers (phone tracking via twilio, teacher metrics dashboard, and much more) (still 100% free)
• July 2009 – introduced Student-to-Teacher payments (powered by PayPal), so that enrollments and payments could be processed on the site. Note that it took us 15 months to launch this feature — you could argue that we shouldn’t have launched without this, but we believed that we needed to demonstrate other value-add first. Students paid a small booking fee (to cover payment processing costs) and Teachers paid a commission (still 100% free to create class listings, but some fees coming from enrollments)
• September 2009 – introduced Pro features for teachers at $29.99/month. Gave them extra on-site promotion, additional marketing tools, free payment processing, and more. (still 100% free to create listings, but revenues are building from services)
• September 2009 – April 2010 – tested/optimized/weblabbed the site – implemented additional lead-tracking and lead-measuring improvements – we knew that if we didn’t deliver value (more, new students) to teachers/schools that we’d never earn their business. (still 100% free to create listings, but revenues are building from services)
• April 7, 2010 – we “pre-announced” the introduction of fees for all new class listings
• April 27, 2010 – we “turned on” listing fees for all new listings (100% of new listings are paid; All Listings are Revenue-enabled)
• May 12, 2010 – last day of $10/month promotion to “Go Pro” (6-months at $10/month; compared to regular $29.99/month rate) (100% of new listings are paid; All Listings are Revenue-enabled)
• June 6, 2010 (at present) — Traffic’s been growing, Revenue has ramped sharply, and we’re 100% sure that we’re going to have to keep pivoting. Because that’s what startups do.

We’ve seen how Unvarnished is setting out to create a kind of “Yelp for people” where you get reviewed as a person whether you like it or not. Now a new startup has appreared hoping to do something similar, but this time within a network that will give it significant traction from the word go: LinkedIn.

Here’s how it works: A user of Duedil will be able to submit comments or “reviews,” whilst other users will be able to “reply” to them by deeming them “fair” or “unfair.” In other words it’s a kind of ‘karma reputation’. Since the reviews themselves are subject to the scrutiny of other users, the reputation system itself becomes the focus of the system, rather than the object of the reviews (you).

Russian website Chatroulette, founded by Andrey Ternovskiy, is perhaps most well known as a place to watch men expose their genitals.

But that hasn’t stopped up to a million people a day from visiting the site. And it has been featured on both the Daily Show and South Park.

And wow has Ternovskiy been courted by Silicon Valley and other investors. SGN founder Shervin Pishevar helped bring him to Palo Alto and get set up in an apartment. In May the New Yorker talked about how Russia’s DST was having him followed when he first visited the U.S. And we’ve heard rumors of angel investors and venture capitalists circling Ternovskiy like a hawk.

The problem is the site is quickly losing its appeal as more and more people are turned off by the sheer number of people exposing themselves or worse on the site. The brand is becoming permanently associated (with help from those Daily Show and South Park features) with the more disgusting parts of humanity.

Can Chatroulette become something more? Look for feature changes soon that will try to send all those penises to the background. The service may add software that can quickly scan video to determine if a penis is being shown. And users that are consistently quickly skipped over (presumably because they are exposing themselves or otherwise being disgusting) can be flagged as well. With those and other changes Chatroulette may be able to put people who actually want to talk to each other in touch much more often.

And that’s where real growth might happen. “There just isn’t anywhere on the Internet for you to meet new people anymore,” says one investor that wants in on Chatroulette. “The potential for online dating, which is largely what pushed early Facebook growth, is unlimited.”

But Ternovskiy’s caution may doom the site. He has rebuffed most offers for help, say our sources, and investors and advisors are starting to give up. “If he doesn’t make a dramatic move soon to clean up the service, the brand will be permanently tarnished,” says another interested investor.

One person that Ternovskiy does seem to trust is Napster founder Shawn Fanning, who is currently hard at work on his most recent startup Path. Fanning is an advisor to Chatroulette, he confirms, and has been working closely with Ternovskiy for the last month or so. “I’m fascinated by Chatroulette and Andrey,” he told me yesterday, “and I want to help him any way I can.” Fanning stresses that the advisory role is informal, uncompensated and that he works with a number of other entrepreneurs as well.

It isn’t clear yet what happens next for Chatroulette. Ternovskiy will either push on independently and try to grow and clean up the site on his own, or he’ll embrace the Silicon Valley ecosystem and get other people and investors involved.

It’s clear that people are fascinated by the concept of talking to strangers from the relative safety of their computer screens, and Chatroulette satisfies some basic human need to connect to others. But sadly it also satisfies the basic human need of some people to show the world their penis. And that parade of penises is driving everyone else away. Chatroulette needs to decide what it wants to be when it grows up, and it needs to decide soon. Otherwise it will be nothing more than the punchline of a joke, and even that will grow old quickly.

Watch our interview with Ternovskiy here.

Le Web, in Paris on December 8-9 2010, has announced their initial speaker list. It has clearly emerged as the largest and most important Internet and technology conference in Europe and is becoming a must attend event despite the miserable Paris weather in December. Co-organizers Geraldine and Loic Le Meur continue to ham it up with promotional videos for the event, and this one cracks me up. In the past we’ve partnered with Le Web to do startup launch events and I’ve had one or two controversial moments on stage. I’m looking forward to being there again this year.

Just a handful of the 30+ Geeks On A Plane (GOAP) who started their Asian field trip in Shanghai, and then moved on to Beijing, Seoul, and Singapore, made it to Japan, the final stop of the tour. The highlight of the Japan leg was the Infinity Ventures Summit (IVS) in Sapporo [this and many of the following links are in Japanese], a two-day, invitation-only event that takes place twice a year. Organized by VC firm Infinity Venture Partners, the IVS attracted over 400 people from the domestic web industry and a number of international attendees this time.

The agenda was filled with panel discussions and presentations on the hot topic in Japan’s web industry today, social gaming. The other current hot topic, the launch of the iPad in this country late last month, was reflected in the launchpad, which gave a total of 11 Japanese startups the chance to demo their products.

In the end, V-Sido For Smartphones, a piece of real-time control system software for humanoid robots, won the title of best demo.

But here are short profiles of all the 11 products that were shown on-stage. (Please note some of the companies have yet to launch homepages in English.)

The winner and runners-up of the IVS launchpad

V-Sido For Smartphones by Wataru Yoshizaki
Best of show went to robot fanatic Wataru Yoshizaki who already made it to second at the last IVS launchpad. V-Sido For Smartphones is a real-time control system for humanoids that turns smartphones into multi-touch remote controls for those robots. For example, if the user draws the shape of a star on the phone’s screen, the humanoid in question does the same in the real world (and in real-time). Move your fingers faster, and the robot will move its arms faster, too. Yamazaki said his future plans include developing a solution of life-sized robots and commercializing V-Sido by year-end.

Skip to 3.08 in this (Japanese) clip for a short demo:

AQUSH by Exchange Corporation (first runner-up)
Much like Zopa in the UK, AQUSH is a peer-to-peer lending service that connects people with extra money with those who want to borrow money. Launched in December last year, the site allows lenders to set their desired investment amount and interest rates from 4% to 15% for 5 classes of borrower credit risk, as denoted by AQUSH itself. Loan applicants are screened by AQUSH based on their credit histories, financial situation and FICO scores. AQUSH says borrowers borrow at 11.6% on average (6.5% cheaper than traditional lenders), while lenders can expect a return on investment of 7.8% on loans (compared to 3 year time deposits that pay 0.15%). The goal is to unlock some of the more than $7 trillion of retail cash and bank deposits by offering individual investors access to the $300 billion Japanese consumer loan market.

iogous by Fringe81 (second runner-up)
iogous is a patent-pending display ad optimization solution. The tool breaks down each display ad into six components: main visual (for example, a picture), catch phrase, logo, “action button” (for example, “Click here”), format, and background color. iougous can then create thousands of “optimized” banner ads by combining these elements (see some examples in the image below). Fringe81, the startup behind the service, claims customers can expect up to 80% increase in CTR when compared to using traditional, static banner ads (more info in English here).

PartyGames by KLab (third runner-up)
PartyGames is a series of multi-player games developed for the iPad and iPhone. The main idea is to use an iPad as the main screen and then have a group of players use their iPhones as individual game screens, for example to play poker in the real world (the devices are linked via Bluetooth). KLab has so far brought PartyPoker to the Japanese AppStore. “PartyCoupleMatching” (game for group dates) and others (PartyDarts, PartyBowling etc.) are on the way.

Here’s a video showing how PartyPoker works (here‘s the PartyCoupleMatching video):

Lifelog system L+ by Ryo Koshino (fourth runner-up)
L+ is a lifelog tool for Android that makes use of four hardware elements: GPS, Bluetooth, accelerometer, and microphone. The tool aims at answering the question what you did at which location, at which time and possibly together with whom. L+ helps you to keep track of how many steps you took at a given day (via the accelerometer), how you moved around the city (via GPS and Wi-Fi), and whom of your friends you met or who’s around (via Bluetooth connection). Activity is recorded for future reference through Google Maps, calendars, and various stats L+ creates while in use.

The best of the rest of the IVS launchpad

Here’s a list of the six other products that didn’t make the cut:

• Zeptopad Planner Note, a note and whiteboard app for the iPad that lets you easily create vector images and comes with a ton of features (iTunes)
  
• Cerevo Cam Live!, a 9MP “social camera” that uploads pictures to the web (via Wi-Fi or 3G) and livestreams video over Ustream directly from the device
• GQ iPad version, an app that focuses on monetization through digital ads from luxury brands and features in-app movie clips (for example, movie trailers)
• Fastweet Live HD, a Twitter client for the iPad that helps users keep track of “hot” hash tags and displays relevant tweets in matrix format (not yet released/iPhone versions in iTunes)
• Motion Dive .Cast, a feature-rich application that lets users remix and create videos with their iPad
• TweetBubbles, an Adobe AIR Twitter app that allows participants of presentations to overlay comments or questions (as tweets) in bubbles on top of the presentation

Japanese tech blog Tech Wave offers video recordings of all 11 demos on its Ustream channel (all presentations were held in Japanese).

A handful of Silicon Valley entrepreneurs (and one lucky blogger) enjoyed a San Francisco Giants baseball game this evening at AT&T Park. Twitter creator and Square co-founder Jack Dorsey had a surprise for us to celebrate TechCrunch’s fifth birthday – a big Happy Birthday message on the main scoreboard. Thanks Jack – it made our day.

So you’re at the coffee shop, and you’ve walked over to the counter to order another half-frap-double shot raspberry no fat mocha, and left your iPad (or iPod) plugged into your laptop. Suddenly, that skeevy looking fellow who was sitting two tables away makes a grab for your iPad, and runs for the door! You don’t see him because you were looking away, but you still know your kit has been boosted! How do you know? Well, you had the PadLock installed.

Read more…

Yesterday we reported on a music-streaming iPhone application called Rdio that has been waiting for weeks to have an update approved by Apple. Now we’ve learned that this may be part of a new trend: MOG, the music portal that offers an impressive on-demand streaming music service, is also having issues with the App Store. MOG submitted its iPhone application over a month ago, and has heard nothing from Apple since. Phone calls and emails have gone unreturned. And the company is understandably getting nervous that Apple may be thinking of blocking the app.

MOG has a lot riding on its mobile applications — it just closed a new $9.5 million funding round, some of which is going toward expanding its mobile platform. At SXSW it held a press event to preview its iPhone and Android applications, and what it showcased was pretty impressive. For $10 a month, users can stream any song or album they want, and they can locally download entire albums to their phone (which will work even when they lose connectivity) in one tap.

It’s possible that Apple is concerned that MOG’s app is too good. If you listen (and pay for) a lot of music, MOG’s all-you-can-eat service can quickly pay for itself. And it makes tethering your iPhone to your PC every time you want to sync songs a thing of the past. Apple has long been been rumored to be working on its own cloud music service, especially since it acquired Lala last December, and may be worried about getting beaten to the punch. Thing is, Apple has already approved Rhapsody, which offers much of the same music streaming functionality (albeit without the full-album download button) and Spotify.

On the other hand, Apple may just be overwhelmed — it has the release of the iPhone 4 and iOS 4 just around the corner, and now has to deal with developers who are upgrading their apps in time for the new OS launch.

We’ll be keeping an eye on this to see how it develops.

A months long fundraising process for Foursquare is in its last stages, we’ve heard from multiple sources, and Andreessen Horowitz looks to be preparing to check-in to Foursquare to take an investor badge.

The company has delayed committing to new venture capital as they considered buyout offers – negotiations went deep with both Yahoo and Facebook, and possibly Microsoft. The Yahoo discussions ended weeks ago, and Facebook passed on an acquisition earlier this week, we’ve heard.

That means the company is raising that big new round of financing. And a slew of venture capitalists, including Accel Partners, Andreessen Horowitz, Khosla Ventures, Redpoint Ventures, Spark Capital and First Round Capital were all rumored to competing heavily for inclusion despite the $80 million or so valuation, say our sources.

Andreessen Horowitz, despite rumors that they were pulling out of discussions with the company weeks ago over concerns that too much information was leaking to the press, is the last venture capitalist standing. The fact that founding partner Marc Andreessen is on the board of directors of Facebook, a key partner or competitor of Foursquare, may be the factor that put them over the top.

Existing investors OATV and Union Square Ventures will also participate heavily in the new round, we’ve heard. In the meantime they’ve likely already loaned additional capital to the company.

It’s not clear if the final terms of the round have been set, or who’s putting in how much money.

We sat down with Foursquare founder Dennis Crowley two weeks ago at TechCrunch Disrupt to talk about his vision for the company. Watch that interview here.

David Park and Eric Bahn are earning more at their startup, called Beat The GMAT, than they ever did in the corporate world. Every penny of profit from the business goes directly into their bank accounts. They enjoy being their own bosses; have become experts in sales, marketing, customer support, computer programming and graphic design; feel good about helping students gain admission to business school; and are grateful that they can spend their time doing things rather than discussing things—because they don’t answer to anyone. Why should they sell their business and be back to working for companies like Intuit or McKinsey & Co., they ask?

Ryan Sit, who runs a website called Picclick.com, feels the same way. His visual sales site attracts 300,000 unique visitors per month and generates millions in product sales for eBay and Etsy sellers—netting him a healthy six-figure income. He works from home and spends as much time as he wants to with his two small children and wife.  Ryan cherishes the freedom to do anything he wants—like experimenting with new website ideas. The last thing he wants to do is to raise capital or merge with a bigger company. “You become a slave when you are funded, and having lots of employees is just a pain”, Ryan says.

What business schools teach, and the conventional wisdom in Silicon Valley, is that a tech startup must have a clearly defined exit strategy and focus all of its energy on reaching this final goal. In other words, entrepreneurship is all about the exit—wealth needs to be built by taking the company public or selling it to a larger player. Before any Angel or VC invests in a business, he evaluates its exit strategies and cross-examines the entrepreneur to make sure that he/she isn’t even thinking of building a “lifestyle business” (the ultimate sin). VCs include terms like “demand registration rights” in their funding contracts. These terms give the right to force a company to go public, in case the founder succumbs to the temptation to live off the profits of the company rather than exit. So growth becomes more important than profit; the destination—an exit—becomes more important than the journey; and the employees are simply a means to an end.

But must this be so?  Technology entrepreneur and strategy consultant Sramana Mitra asks a great question: “What if the idea of exit was removed from the equation… what if the investor and entrepreneur agreed to a different model—the model of sharing dividends”? She says the mathematics is simple: if a $500,000 investment helped in building a $10 million-a-year company with 20% profit year after year—which is entirely possible—angel investors would collect several million dollars in dividends. And entrepreneurs would build companies that they can nurture over a longer period, and “enjoy”.

This makes a lot of sense for many of the entrepreneurs that I know. Yes, some of my friends are highly ambitious and need to try to build a Google or a Zynga. But most will be happy to build a lifestyle business that pays the bills and lets them learn, grow, and “enjoy” the entrepreneurial journey. They would rather build wealth slowly and steadily than live in fear of investors’ forcing them to bring in another CEO, or to take the company down the wrong path. This revealing interview with Tony Hsieh of Zappos shows the pressure that even the most competent company founders face.

Sramana has started a program called 1M/1M—which aims to help 1 million entrepreneurs reach 1 million dollars in revenue by teaching them the fundamentals of bootstrapping, customer validation, and positioning. This is done through a series of online strategy roundtables—a reality show of sorts, where she coaches five entrepreneurs per session, with up to a thousand others listening. And Sramana is trying to persuade Angel investors to look more closely at companies that can be profitable and produce dividends but will never scale to be the next Google

Do all “enjoyable” business have to be small, like the ones that Sramana is nurturing? Certainly not. Take the example of Hannon Hill, which develops a web-content-management system called Cascade Server. David Cummings started the company as an undergrad at Duke in late 2000, and has grown it and the spin-offs to over six million dollars in revenue. It employs 51 people. He says his company has grown every year since inception; he has no co-founders, no investors, and no desire to exit. David is investing a major part of his profits in growth because he sees the potential to build a hundred-million-dollar business.  And he gets to build a company with an “awesome corporate culture”, pay himself a “nice” salary, and work on fun projects.

And then there is SAS Institute, of Cary, NC. Founded by Jim Goodnight and John Sall in 1976, the business-intelligence and customer-relationship-management software company has grown to be a highly profitable $2.3 billion-dollar business. When Jim showed me around his campus a few years ago, he took great pride in the rare artwork that his company had accumulated, as well as the benefits SAS provides its employees—like two on-site childcare centers; an employee-health-care center; wellness programs, which include a 58,000-square-foot recreation and fitness center; “eldercare” programs for parents of employees; and soda fountains and snacks in every break room. No wonder SAS is always rated as one of the best places to work in America. Jim doesn’t have to apologize to anyone for putting the needs and welfare of his employees ahead of profits. In turn, his employees reciprocate with hard work and dedication: SAS’s turnover rates are the lowest in the industry.

I may be glorifying lifestyle businesses a little more than I should. It is never easy to build a profitable business, and there are many risks. Without input from shrewd investors who keep their ears to the ground, a company risks rapid obsolescence. Technology changes very fast, and you can go from boom to bust overnight. If David Park and Eric Bahn were to get a respectable purchase offer from rival GMAT test-prep companies like Kaplan or The Princeton Review, I would advise them to sell. With a few million dollars in the bank, they will have the luxury of starting a new business without fear of having their families suffer in case they fail. They can follow Jim Goodnight’s path when they have financial security.

I also don’t want to discourage entrepreneurs from being ambitious. I say they should shoot for the moon. The point I want to make is that if you build a company with the right values, you are more likely to be successful and enjoy the journey than if you just focus on the exit—and that it is okay trade a little bit of ambition for happiness.

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

During his keynote address at WWDC on Monday, Apple CEO Steve Jobs rattled off some key statistics. Among them was that there are 8,500 native iPad apps. Actually, at the time, Apple had over 9,000, but we’ll let that slide. How do I know how many app there were? Because unlike other stores Apple oversees, they actually posts the number of apps available for the iPad. And that number just hit 10,000.

If you go to the App Store app on the iPad and click on the “Release Date” area, you can see the total for yourself. Along the top of that area, it will read “1 – 12 of xxxx” — “xxxx” being the current number of apps that are built to run on the iPad.

Back at the end of April, it was reported that Apple was approaching 5,000 iPad apps (actually, they were past that number at the time). That means that in about six weeks, the iPad App Store has doubled in size. Given the iPad’s stellar sales, this is hardly a surprise.

Recently though, a number of developers have noted a long-than-usual wait time for app approvals. One is Reeder, an awesome iPad feed reading app (which was just approved after waiting for a couple weeks). One reason for the delay is likely that Apple is trying to get iOS 4-compatible apps approved in time for the launch of that OS (and the new iPhone 4) in a couple of weeks.

Well, this is getting more interesting. This morning, we reported that Jason Calacanis’ Facebook account was still active, despite his very public deletion of the account about 20 days ago. When he found out about this, Calacanis sent an angry email to Facebook CEO Mark Zuckerberg, COO Sheryl Sandberg (and copied us on it). According to him, third party sites were keeping this account active — a move which seems pretty sketchy. We reached out to Facebook to get a statement, and they’ve finally responded. According to them, basically, Calacanis is lying.

Facebook engineer Mike Vernal left a comment on our original post this morning. Facebook VP of Communications Elliot Schrage then emailed us, pointing us to the comment. I’ll copy of those messages below, but first let’s recap what Calacanis said.

In his email (to Zuckerberg and Sandberg) Calacanis wrote, “Seems my personal Facebook got turned back on by a 3rd party service that logged into it.” After we printed that (with his permission), he later clarified, “the third party sites didn’t turn it back on… i needed to login to a 3rd party site that i used FB connect on (i think last week)… might have been an iphone app, i can’t remember. so then my account goes back on and all the connected services start flooding it.“

Obviously, the second statement contradicts the first, but this is sort of confusing stuff for any user. Maybe Calacanis just stated it poorly the first time. But both explanations are impossible according to Facebook. According to them, the only way Calacanis’ profile was still active was if he logged into his account and explicitly asked for it not to be deleted.

Here’s what Vernal wrote in the comment (I’ve highlighted the key parts):

Greetings, all. I’m an engineer at Facebook who wanted to offer up a little bit of context on this post.

With account deletion, we wait 14 days between receiving the request and deleting the account. This is based on extensive feedback from people who contact us shortly after deleting their account asking for a way to recover their accounts. Since deletion is irreversible, this allows people to log back in and proactively cancel their deletion request within the 14 day window. This timeframe also gives us time to ensure people are able to be notified of their deletion request in the event that the request was made maliciously by someone who has access to the person’s login credentials.

In this situation, we’ve investigated and concluded that all of our policies were followed. We don’t get into specifics about individual users but in theory, the only way someone would be able to log back in to Facebook or another website with their Facebook information is if they had cancelled their deletion request before the 14 day window expired.

In other words, Facebook is saying that the only way a user would be able to log in to another site with Facebook information is if they actually cancelled their deletion request. This directly contradicts what Calacanis said to us in his clarification.

Meanwhile, Schrage wrote to us (I’ve highlighted the key parts):

I think it merits an update to your post.  Just to repeat — the only way someone would be able to log back in to Facebook or another website with their Facebook information is if they had cancelled their deletion request before the 14 day window expired.   This would NOT happen if some third party site automatically pings your profile.

This last sentence directly contradicts Calacanis’ original statement. So either way, Facebook is effectively saying that Calacanis is lying. They’re saying that there’s no way a third-party site could have kept his account active. And there’s no way he could have kept it active by logging into a third-party site (through Connect) without him explicitly canceling his deletion request first.

Just to make sure, we understood exactly what they were saying, we wrote back to Schrage, “wow. you sure about this? once this is out it can’t go back in.” He has yet to respond — and he’s usually very good about that. So we’ll take that as a “yes.”

The key part of this is: “In this situation, we’ve investigated” — so Facebook specifically looked into what happened with Calacanis’ account before making that statement. They humorously (and for legal purposes, no doubt) say “in theory” — but they’re actually saying that they looked into it, and Calacanis (or someone with access to his account) cancelled the deletion process.

We’ve notified Calacanis of Facebook’s statement and will obviously update when if hear back.