Category: Tech news

Almost exactly one year ago, we first wrote about former Digg lead architect, Joe Stump, and former Social Thing founder, Matt Galligan, teaming up to form Crash Corp., an “alternate reality mobile gaming” startup. A lot can change in a year.

Today, Stump and Galligan are well into building out SimpleGeo, the location platform company that Crash Corp. turned into. That transformation started only a little over 6 months ago — and it may turn out to be one of the smartest pivots for a startup in years. SimpleGeo has just closed a new $8.14 million round of funding. And they’re announcing five new hires to go along with it.

The company’s Series A round pushes their total funding to just about $10 million (their $1.5 million seed round happened at the end of last November). This round was led by former backer Redpoint Ventures, with previous investors First Round Capital, Lowercase Capital (Chris Sacca’s fund), and Ravi Narasimhan also participating. SimpleGeo also picked up new backer, Foundry Group, in the latest round.

The money will be used to build out datasets, improve the API, and continue work on a new product they’re working on (for the API), Galligan tells us. The funds will also give the fast-growing company two years of burn — and that’s factoring in significant headcount increases, Galligan says. That’s good planning, considering how quickly the startup is adding new team members.

The immediate thing that sticks out about the five new hires announced today is that four of them come from the same place: Digg. As we mentioned, Stump used to work at Digg, but there was no funny business going on here, as three of them were a part of Digg’s layoffs earlier this month (a fourth left on his own). Included in this group is well-known designer Jeffrey Kalmikoff, who will now be heading up product development and design for SimpleGeo.

The others coming over from Digg include engineer Ian Eure, who will be working on Python infrastructure. Paul Lathrop, who will be a part of the Systems team. And Nicole Williams who will serve as the “Ambassador” of SimpleGeo — basically, taking care of all the logistics, facilities, and office management of the company.

SimpleGeo’s other big hire is Rob Bailey, who will be joining as the Vice President of Business Development. No, Bailey didn’t work at Digg, he comes from a company he co-founded called Delicious Brands. Alongside BD, Bailey will be in charge of sales as well, we’re told.

Two months ago, SimpleGeo hired 5 people to bring their total headcount to 13. Now, as they’re pushing 20, it’s time for another office. The startup has just signed a lease for a second office that will open in mid-June in San Francisco to go along with their headquarters in Boulder, CO. The team will be evenly split between the two cities for now, but Galligan foresees the San Francisco office quickly becoming the larger one.

With seemingly everyone in the technology space interested in location-based services right now, SimpleGeo finds itself in a very good position. Ever since Twitter acquired Mixer Labs (makers of GeoAPI) back in December, SimpleGeo hasn’t had a lot of competition in its space. They now have over a terabyte of geodata at their disposal to serve up to other startups who wish to use their plug-and-play packages.

“The new version of the API will scale better, work faster, and include more redundancy and servers around the world,” Galligan says. There will also be a new pricing model with this new API to fit different business models. This should make the service cheaper as well, Galligan says.

Not bad for what should have been an alternate reality gaming startup celebrating its first birthday.

We’ve shown you the summer cell phone lineup from KDDI (Japan’s No. 2 carrier) yesterday. Today, Japan’s third largest carrier, SoftBank Mobile, showed its own summer lineup during a special press conference, and all of their 13 new models have one thing in common: they all come with Twitter pre-installed.

The buyers of these cell phones will be able to access Twitter either via a pre-installed app or through a pre-installed widget on the homescreen. The background is that SoftBank CEO Masayoshi Son himself is a huge Twitter fan (he has almost 300,000 followers) and believes Japan is set to become Twitter country. And in fact, by some measures it’s already No. 2.

Photo gallery of all the 13 new Twitter-powered cell phones over at MobileCrunch.

E-commerce company Merchant Focus Processing and Inner Fence have acquired AppNinjas, creator of Swipe Credit Card Terminal for iPhone (formerly iSwipe). Terms of the deal were not disclosed.

Inner Fence, which is actually a competitor of AppNinjas, develops a credit card processor for the iPhone and Mac computer. Both Inner Fence and AppNinjas will be rolling out integrated retail hardware to allow for retail-based swiped transactions for processing on both iPhone and iPod touch. The plan is to offer the hardware free of charge to new merchants that enroll with either Inner Fence or AppNinjas.

Of course, AppNinjas and Inner Fence will face competition from Jack Dorsey’s Square, which just debuted in the app store and has been receiving rave reviews. Square works by way of a tiny card reader that plugs into the headphone jack on the device. It takes finger signatures on the touchscreen, generates email or SMS receipts, calculates sales tax, and comes with an online accounting dashboard to keep track of sales.

Unlike Square, however, AppNinjas’ app does not come with a actual swiping device. You input a credit card’s information into the app to process the transaction.

Professional social network LinkedIn is adding another member to its board, Netflix Chief Marketing Officer Leslie Kilgore. LinkedIn, which has 65 million members, recently named former Ask.com CEO Skip Battle to its board, joining founder and chairman Reid Hoffman, current CEO Jeff Weiner, Greylock’s David Sze, and Sequoia’s Marc Kvamme.

Kilgore joined Netflix in 2000 and has helped the company grow its subscriber base from fewer than 100,000 to more than 13 million subscribers. Prior to joining Netflix, Kilgore was director of marketing for Amazon.com, and also held positions at Procter & Gamble and Booz, Allen and Hamilton.

Of course, the appointment of Kilgore and Battle to the board is interesting when you consider that both executives have significant experience in advising technology companies through the IPO process. Kilgore, of course, has helped Netflix go public and Battle serves on the board of OpenTable, Expedia and Netflix.

Is an IPO in LinkedIn’s future? CEO Jeff Weiner isn’t ruling out any possibilities, but the idea has certainly been bandied about quit a bit. While LinkedIn is a strong IPO candidate, LinkedIn co-founder and Chairman Reid Hoffman told us at TechCrunch50 last fall that he’s not in any rush to go public. Later, Hoffman told Reuters that the company plans to pursue an IPO at some point, but not any time soon.The company was valued at around $1 billion in its last round of financing in 2008, and has been profitable since 2007.

Easily one of my favorite apps for the iPad is the Kindle app. Weird, I know. But in some ways it’s superior to the iPad’s own iBooks experience. You can sync it across multiple devices, for example. And this Summer, that will also include Android phones. And there’s a nice big bonus for that platform too.

Amazon has announced tonight that Kindle for Android will available in the coming weeks. For now, they have this landing page to tell you a bit more. The big news: you’ll be able to buy books right from Android devices.

For anyone who has used the Kindle app on the iPhone or iPad, not being able to do that is one of the big annoyances. If you want to buy anything, you’re kicked out of the app, back to the web, to make the purchase.

Yes, it’s silly. But both sides likely put up with it for their own reasons. From Apple’s perspective, the Kindle Store directly competes with its own iBookstore. From Amazon’s perspective, there’s no way they’d pay Apple a 30% commission to sell their titles as in-app purchases.

Android doesn’t present those issues.

This could be a killer feature for the Android version. Amazon has to know that its hardware strategy isn’t sustainable. It simply can’t compete with the likes of Apple and the dozens of other hardware manufacturers who are about to enter the tablet space in a major way. But by spreading quickly to all of these other platforms, the Kindle Store store seems poised to live on — and possibly even thrive. Even with direct competition from Apple.

Alongside the iPhone, iPad, and now Android phones, Amazon also has a Kindle app for PCs and Macs, as well as BlackBerry devices. And again, everything can be synced across all devices — a universal bookmark.

A few notes about this version from Amazon:

• Requires Android OS 1.6 or greater
• Requires an SD card
• Supports Droid Incredible, Google Nexus One, HTC MyTouch, Motorola CLIQ, Motorola Droid, and many more Android phones
• Buy a book from the Kindle Store optimized for your Android phone and get it auto-delivered wirelessly
• Search and browse more than 500,000 books, including more than 96 of 110 New York Times bestsellers. If you are a non-U.S. customer, book availability may vary
• Find New York Times® Best Sellers and new releases from $9.99
• Get free book samples. Read the beginning of books for free before you decide to buy
• Books you purchase can also be read on a Kindle, computer, or other Kindle-compatible mobile devices
• Kindle newspapers, magazines and blogs are currently not available on Kindle for Android

Back in the days before Gmail, webmail on the Internet was really, really bad. Inboxes were limited to 10 or 20 megabytes, interfaces were slow and ugly, and the experience simply didn’t come close to matching what most desktop clients offered. This is how I remember Hotmail. I hated it. In fact, since signing up for Gmail in 2004, the only times I’ve checked out Microsoft’s webmail client were immediately after big launches, at which point I would reactivate my account, give it a quick run through, and promptly decide that it still wasn’t very good. So when I say that the new version of Hotmail that’s launching this summer has me excited, that’s saying something.

This morning, Microsoft showcased this new version of Hotmail to a room full of press at its offices in San Francisco. It’s fast, slick, and comes with a set of new features for managing large amounts of email that make it a much better rival to Gmail. Does it look like a revolution? Not really. But it does incorporate some very nice features — things that seem quite obvious once you seem them in action, but aren’t already available elsewhere. And more importantly, they’re features that regular people will actually use.

First, the stuff that Hotmail is really just playing catchup with. The first thing you’ll notice is that threaded conversations are now offered, and it looks like they’re the default (though you can turn them off). The search box now features auto complete. You can flag messages (I can’t believe this wasn’t available before). There’s better spam protection. Gmail users should stop yawning, because there’s plenty of other good stuff.

Perhaps the most important suite of features, at least to people who commonly experience inbox overload, are all the new filtering and message management tools the new Hotmail comes with. My favorite is called ‘Sweep’. If you’ve subscribed to a newsletter but decide you don’t want to filling up your inbox any more, you can hit activate this option to move every message you receive from that sender to a folder other than your main inbox. Other webmail clients can do this too, but the flow for this looks easier than, say, making a filter in Gmail.

Another feature, called Hotmail Highlights, breaks out your messages according to where they’re coming from. One section shows you at a glance whether you’ve received any messages from people in your address book. Another shows you any messages you have from social networks like Facebook. On the left hand side of the screen, you’ll see a few options under the label “Quick View”. One of these is for photos — click it, and you’ll see all the messages in your inbox that have either image attachments or links to photo albums on sites like Flickr. There’s a similar option for Documents, as well as one that lets you immediately find shipping updates.

The other big features involve reading and composing messages. When you receive a message that has either photo attachments or links to an online photo album, Hotmail will use those photos to build a slick slideshow (it uses Silverlight). The service is even better for sending photos. Most email services aren’t great for sending photos, because they have a limit of 10-20 megabytes per message (and you also have to worry about whether the recipient’s service will allow for messages that large). Hotmail works around this by automatically uploading your images to Microsoft’s cloud storage service SkyDrive, which is free up to 25 GB. The resulting message looks great — Hotmail builds a photo album that should be visible in any mail client that supports rich formatting, and it doesn’t kill anyone’s inbox storage.

Finally there’s Hotmail’s integration with Microsoft’s online version of Office. When you receive a document in Hotmail, you have the option to view and edit it using the online versions of Office, and then save and send any changes back to the original sender. These online apps have strong integration with the desktop versions of Office 2010, but you don’t need the desktop apps in order to use the online versions for free. This is of course Microsoft’s answer to Google Docs, which is itself integrated into Gmail, and it looks well done (I expect document fidelity will be better for Microsoft, which may be a big sticking point).

I should point out that Yahoo Mail offers some of these features already (like the ability to break out messages that were sent by your contacts). And while Gmail doesn’t offer some of these features as part of its default set, you can reproduce some of them using filters. Hotmail doesn’t necessarily need to outdo its competitors in every respect — it’s still the largest email provider worldwide, with 360 million active accounts. But Gmail is growing fastest, and Microsoft is looking to curb that growth.  This new launch probably  isn’t going to spark any kind of mass migration away from Google’s services, it may well draw a few more former AOL users who are now looking for a new webmail provider.

Microsoft expects to ship the new Hotmail in mid-summer.

Is the Internet finally ready for a live streaming video network? Jason Calacanis thinks so. Calacanis and two of his LA pals—Matt Coffin (founder of LowerMyBills, and who just launched the DailyD) and Sky Dayton (founder of Earthlink, Boingo, Helio)—just put $300,000 into Calacanis latest per project, This Week In. The original founder of Weblogs Inc before he sold it to AOL (and current CEO of Mahalo), Calacanis says he wants to do to live video on the web what he did with blogs.

“Exact same model as Weblogs Inc,” he says: “Try a bunch of different shows, recruit tons of talent and double down on big winners. It’s blogging all over again… the land grab is on!”

This Week In already has eight shows, a couple of them hosted by Calacanis himself. A year ago, Calacanis launched his own weekly live video talk show called This Week In Startups. There is also Kevin Pollak’s Chat Show, This Week In Twitter, This Week In iPad, This Week in Android, This Week In Venture Capital, . . . you get the idea. Of course, there is also another live video streaming network that uses the “This Week In” naming convention, Leo Laporte’s This Week In Tech (aka, TWiT.TV). But Calacanis is not one to shy away from controversy, and most of his viewers probably don’t care anyway.

Calacanis tapped Mahalo CTO Mark Jeffrey to be CEO of This Week In. He says that all the shows combined are getting 450,000 downloads or streams per week, with three of them (This Week In iPad, This Week in Startups, and The Kevin Pollack Chat Show) topping 100,000 downloads/streams each. The shows are streamed live via Ustream.TV and then are available as video podcasts on iTunes. Commercials from sponsors are read out loud on each show.

ThisWeekIn plans to launch another 30 shows over the next two years. Why now? Broadband is pretty ubiquitous, for one thing. But Calacanis is especially excited about the possibilities the iPad will bring as a viewing device. “Watching streaming shows on your iPad and TV is the future,” he declares. Can he take the Weblogs model and repeat it in live online video? It certainly will be entertaining to watch him try.

We’re big fans of UK-based startup Huddle, which offers a business-friendly collaboration and storage platform for the workplace. Today the startup is announcing that it has closed $10.2 million in Series B funding led by Matrix Partners, existing investors Eden Ventures and Charles McGregor, participating in the round. This brings Huddle’s total funding to $15 million.

Huddle, which employs more than 40 staff in the UK and U.S. and recently became cashflow positive, is planning to use the funding to expand to the U.S. and build a presence across the Pond. More than 50 percent of Huddle’s “Hundreds of thousands of users” are based in the U.S., so it makes sense for the startup to build out sales, marketing and research and development teams in San Francisco, says Andy McLoughlin, co-founder of Huddle.

Huddle aims to be sort of a one-stop-shop for collaboration and project management for businesses. The product is a network of secure online workspaces where you can share files, collaborate on ideas, manage projects and organize virtual meetings. Most recently, Huddle added web conferencing, integration with Microsoft Office, LinkedIn and Facebook integration and an iPhone app to the mix. McLoughlin says that at the moment, Huddle is focusing on making Huddle even more realtime, and looking into adding a desktop integration as well.

For a relatively small startup, Huddle’s product has gained significant traction, with big-name customers including Procter & Gamble, Edelman, Disney and HTC. Because of the startup’s multiple services, Huddle faces competition from a number of startups and tech giants including, Lotus, Salesforce Chatter Box.net, Microsoft Sharepoint and WebEx.

It’s been a pretty rough few weeks for Facebook, at least from a PR standpoint. There’s been the barrage of complaints over the site’s privacy changes, not to mention a bug that could expose private Facebook IM conversations. Now, rubbing just a dash more salt into those wounds comes one more privacy hole.

Brace yourself: Facebook’s iPhone application ignored user privacy settings on the “Favorite Quotations” section. That’s right. Those cheesy movie quotes, emo song lyrics, and inside jokes that you have in your profile could be accessed through the official Facebook iPhone application by anyone, even if you’d restricted the visibility of that section.

We alerted Facebook to the glitch and they had a fix in place within a few hours. The odds of anyone freaking out about this are quite low. But it does raise the question: how exactly do bugs like this keep making it to production? The iPhone app, in particular, has had a handful of strange privacy glitches in the past, including one that ignored the privacy settings of user status updates.

Other recent Facebook security issues include multiple XSS holes discovered on Yelp, which could have exposed user data through Facebook’s controversial Instant Personalization feature.

Just four months after a major investment from Japan’s SoftBank, Ustream has officially launched its Asian arm. The live broadcasting site unveiled Ustream Asia this Monday, a joint venture with TV Bank Corporation (a unit of SoftBank). Ustream is also rolling out two new Japanese apps for the iPhone, a viewer and a broadcaster, specifically made for the market. The roots of Ustream Asia will be based in Japan but the company plans to expand to the greater Asia Pacific region.

Under the deal, Tomoraka Nakagawa will serve as CEO of Ustream Asia. Ustream will own 32% of the venture, TV Bank takes the majority with 60%, and venture firm DCM holds 8%.

“The number of Internet users in Asian countries is growing dramatically, and Ustream Asia will be a live video distribution platform for this huge market,” Softbank’s CEO Masayoshi Son said in press release. “In Japan, the number of Ustream users is growing rapidly, so I am excited for this business opportunity in Asian countries including Japan.”

Since early 2010, Ustream has been preparing for a major Asian expansion. The company has frequently reiterated its commitment to the region, especially Japan, and China, Korea and India. In January, Softbank agreed to invest up to $75 million in Ustream by 2011. The Japanese telecom and media giant has completed the initial investment of roughly $20 million (a 13.7% stake). According to Monday’s press release, SoftBank will inject $10 million in June and is on track to complete its full $75 million investment by July 2011. That investment will make SoftBank the company’s largest shareholder, with over 30% of outstanding shares. Ustream has been a magnet for capital, the company has so far raised $87.8 million (assuming Softbank completes its investment), putting its valuation at roughly $230 million.

As a prelude to Ustream Asia, the company also launched a Japanese site last month. By creating a tailored experience for its Japanese consumers, Ustream has enjoyed a major surge in traffic: in January, the company logged 1.8 million visits from Japan, in April that soared to 5.2 million.

Video of the announcement.

For months, the Federal Trade Commission has been considering whether or not to block Google’s acquisition of Admob for $750 million, which was announced back in November. As part of its investigation, the FTC has been reaching out to developers of mobile applications to get their thoughts. The only problem? Numerous developers and even some Admob competitors are coming out to say that they support the deal, and some of them believe that the people involved in the investigation are either unqualified or have an anti-Google agenda. The latest to join the fray is Echofon, which has just written a blog post likening its conversations with the FTC to an interrogation.

The post was penned by Chika Watanabe, who writes that she has spoken with the FTC for at least five hours about the deal. Overall, Watanabe writes that “the FTC seemed to have a (strong) agenda”, as it pounced on things she said that could possibly be used against Google. As an example, Watanabe recalls a discussion in which she mentioned that Google may have pulled a ‘bait and switch’ by offering high ad rates at first and then dropping them, but she didn’t have evidence and didn’t consider it to be a major issue. But the FTC wouldn’t let it go:

The FTC staff seemed to jump on my comment, and tried to use it to portray how unfair Google was.

I made sure to emphasize that we had no proof that Google did this intentionally, and the drop could have been due to many other reasons.

In fact, it did not affect our choice of ad networks either. Since we can allocate our ad inventory among different ad networks on the fly, we just allocate more of our ad inventory to an ad network when it’s performing well, and less it when it’s not. This real-time allocation is done with an ad mediator service. There were several of those ad mediators, and we use Adwhirl.

The FTC staff kept going back to the possibility that Google did the bait-and-switch intentionally, and I had to say we had no proof for that several times.

In another discussion, Watanabe attempted to bring up the issue of the Apple/Quattro deal and iAd, which could potentially block third-party ad networks from appearing on the iPhone. She was told that it was “irrelevant” (it clearly isn’t). Later, when the FTC produced a written declaration and asked Watanabe to sign it, it lacked any mention of the Apple/Quattro deal. Watanabe fought back until it was added:

After my insistence, they included one paragraph about it but without any explanation of why this was significant to Google/Admob deal, making it sound out of place. After one or two more back-and-forth, they finally put my whole argument in the declaration.

Watanabe also addresses the opinions some developers have had that the FTC is simply not qualified to make this decision. She disagrees, explaining that she believes they do have the capacity to make an informed decision. Unfortunately that doesn’t mean they’ll do it fairly. Toward the end of her post, she writes:

To me, the problem was that the FTC seemed to be determined to stop the deal from the beginning. Though they did agree to put together the declaration close enough to my belief in the end, I felt I was pressured to say things in a way that met their goal. (The word “interrogation” came to my mind several times while talking to them.)

We’d previously heard that the FTC was aiming to reach a decision in early May, but it has since been reported that it got a two-week extension. Expect a final decision soon.

Last week, as the outrage grew over the privacy implications of Facebook’s new ambitions to spread its tentacles deeper into the Web, Michael offered some advice to MySpace. This is MySpace’s moment to shine, he argued:

MySpace, the once great social network that still has scores of millions of active users, should be reworking their policies and products at a feverish pace to provide the perception of giving users fair and easy to use privacy controls along with a promise never to change those controls without their express permission. YOUR DATA IS SAFE WITH US is how the messaging would read.

It looks like MySpace took our advice. Today, co-president Mike Jones announced that MySpace will roll out new, simplified privacy settings. The options will be simplified to “public, friends only, or public to anyone 18 or over.” In a blog post Jones writes:

We respect our users’ desires to balance sharing and privacy, and never push our users to an uncomfortable privacy position. That’s why we give our users control over their data, following the fundamentals of notice and choice.

Well played, sir. Well played.

Apple hates Flash. Adobe “loves” Apple. Apple hates Android. And now, yes, Android loves Flash.

It’s widely expected that Google will unveil the latest version of Android, 2.2 (codenamed “Froyo“), at Google I/O which starts on Wednesday. The update is promising big things including huge performance improvements, tethering, and the ability to create your own WiFi hotspots with your phone. Another huge feature is expected to be the integration of Flash 10.1, a version finally optimized to run on mobile devices. And Google is apparently going to be highlighting the feature the moment you update to 2.2.

From what we hear, Android users with phones eligible for the 2.2 upgrade (Nexus One, Droid, and soon, HTC Evo) will be greeted with a link to an Adobe Mobile website after the upgrade. This page will give you the option to “View Flash enabled websites” or “Get Adobe products.” If you click on the first link, you’ll get a full list of sites Adobe is featuring that take advantage of Flash 10.1. These sites include Sony Pictures, Warner Brothers, BBC, Google Finance, and a whole range of others.

In fact, the list of sites is already live for both the Nexus One and the Droid. What’s odd is that the list is different depending on what device you’re using (Droid shows many fewer sites). I have no idea why that is, but maybe that will change before the launch.

Adobe’s Mobile page also lists sites enabled for Flash on the Palm Pre. And, humorously, has a page for the iPhone which has a “Get apps” link rather than a “View Flash enabled websites” link.

This list seems to be a direct response to Apple’s list of sites that are optimized to run on the iPad — meaning, they don’t use Flash. It’s an obvious thing for Adobe to do, but the most interesting aspect is that Google will apparently promote it. Clearly, they believe Flash support will be a big selling point of Android phones versus iPhones. And Google is also working with Adobe to bake Flash into its Chrome browser (and yet, soon Chrome OS too).

In case it wasn’t clear, the war between Google and Apple is on. And Google is moving fast to ensure that Adobe is one of its soldiers.

The group buying craze is now officially in overdrive. There are so many group buying sites—Groupon, LivingSocial, BuyWithMe, SocialBuy—that it is hard to know where to go for the best deals. Enter the DailyD, a new site that just launched today which pulls together all the deals for a city in one site and sends out a daily email as well.

The founders of the DailyD are Matt Coffin and Doug Hirsch. Coffin previously founded LowerMyBills, which he sold to Experian for $330 million, and Hirsch started online support-group site DailyStrength, after being a product manager at Yahoo and Facebook (where he launched Facebook Photos). They are funding DailyD in Los Angeles with their own money.

DailyD already covers 53 cities, and it works on an affiliate model. Every time somebody follows a deal link from DailyD to one of the daily deal sites, DailyD gets an affiliate fee. DailyD is basically aggregating all the deals in one place and acting as a marketing channel. In addition to becoming a one-stop shop for social commerce, DailyD will also add on top its own set of personalization and other features.

“The daily deal space advertising is so pervasive that it reminds me of the mortgage ads of 2004 and 2005,” says Coffin. He wants the DailyD to be “positioned as the go-to service for consumers and consequently the #1 source of traffic for the deal sites (outside of facebook). I look at this whole category as ripe for experimentation and that’s what Doug Hirsch and I are going to do—and then we will layer intelligent advertising on top of that to drive a big audience.”

DailyD seeks to fill an organizing role in a highly fragmented market right now. Who ever thought so many people could become so excited over digital coupons? I guess everybody loves a good deal.

A couple years ago when Twitter was having major scaling issues, engineer Alex Payne was able to work through them to help create the Twitter API. That API, of course, is now one of the most important on the web. And now Payne is moving on to a new challenge.

As he tweets today and writes on his personal blog, Payne has quit Twitter to join the social banking startup BankSimple as a co-founder. More on that in a second. First, a little bit more about Payne’s time at Twitter, and his departure.

Payne started working at Twitter in January 2007, when it was technically still under Obvious Corp. By May, he had moved to San Francisco, just as Twitter was starting to take off a bit. While at first, he was working on a random selection of things that Twitter needed, he eventually focused on the API. That API quickly became the way most users were interacting with the service. And in August 2008, Payne was rewarded for his foresight by being promoted to API Lead.

But along with Payne’s success, he also seemed to find controversy. In 2008, Payne posted a Q&A on the Twitter Developer Blog, answering questions from third-party developers. One question asked if there was anything users could do to lighten the load (Twitter was in the midst of major scaling issues at the time), Payne responded that “popular” users were generally the ones that hit the system the hardest and caused issues. While true, this upset some of the “power users” such as Robert Scoble. He felt that his heavy use of the service contributed to its fast success and that he shouldn’t be blamed because they couldn’t scale to match it.

Twitter quickly clarified Payne’s comments, but again, noted that the Scoble problem was an issue. That issue, was of course solved eventually. But others arose.

In February of this year, Payne made headlines again when he tweeted that some of the site features that Twitter was working on may make users forget about using third-party Twitter clients. This enraged (and scared) a portion of the Twitter developer community, which thought Twitter was now coming after them. Payne once again had to backtrack from those comments, but in reality, he was in many ways right. Soon after, Twitter bought Atebits, the makers of Tweetie for the iPhone, and launched their own Android and BlackBerry apps.

More importantly, Payne’s comments were not something he should have had to apologize for. It’s ridiculous to think that Twitter wouldn’t be working on building the best product that it could make. Still, the incident presumably led Payne to take a hiatus from blogging.

Meanwhile, Payne was also taking a step back from his role at Twitter. Back in October of last year, he noted that he was “taking on a new challenge.” This included “working on new layers of Twitter’s infrastructure” but Payne also tweeted that he was working on some sort of unnamed project. It’s unclear what that was or if that will see the light of day now. More significantly, this move meant that Payne was no longer in charge of the API, as the more robust Twitter Platform sprouted up around him.

With regard to leaving Twitter, Payne notes that, “Walking away from Twitter wasn’t an easy decision. Working there has been a life- and career-changing experience. I’ve learned all sorts of lessons, made great friends, and worked on something that millions of people now use every day.” When I asked Twitter about the departure, I got back that the move was “absolutely amicable.  He has a great opportunity on his hands, and we’re happy that Twitter provided a key role in giving Alex the experience to help him obtain it.”

So what is this new project?

As I noted, Payne will be a co-founder, as well as Chief Product and Technology Officer at BankSimple. According to their about page, BankSimple is “an easy, intuitive, and social bank for people who appreciate simple online services. Unlike other banks, we don’t trap you with confusing products nor do we charge any hidden fees. No overdraft fees. We use sophisticated analytics to help you better manage your finances by providing you a individualized service, catered to your needs and goals.“

The service is set to launch later this year “with a simple card with in built checking, savings, rewards and a line of credit.“ This post from April on their blog gives a bit more about the idea behind the company.

“We have absolutely no intention of spending your money on high-budget ads. The best way to sell a product is to have a kick-ass product. And for us this means no hidden fees, fantastic online experience, awesome customer service and, a much simpler, personalized financial service.”

The post concludes with, “By not sucking, we will win.” I like the sound of that.

Of course, online banking with a bank that’s not an established one is bound to be controversial. And maybe that’s a perfect fit for Payne.

[photo: flickr/DaveFayram]