Digg founder and CEO Kevin Rose will be leaving his popular Diggnation show, we’ve heard from a source. This has not been confirmed by Kevin, but we believe it’s accurate. Revision3, which hosts the show, has not yet returned our request for comment.

The show has been “aired” since July 1, 2005 and regularly attracts 200,000 or more viewers. It is the most popular show on Revision3, although new shows like Penn Point are starting to bring in real mainstream talent.

Why is he leaving? We’re speculating, but his new job as CEO of Digg may be keeping him too busy to make time for the show. Or maybe it’s just that after five years he ready to focus on something new.

It’s not clear if cohost Alex Albrecht is staying with the show, or if it will simply shut down.

Update: Rose says via Twitter that he will leave the show at the end of this year.

Update 2: Revision 3 says Kevin will be there at least through the end of the year (perhaps they think they can change Kevin’s mind): “Every year we sit down and think about what the next year of Diggnation should be. Those decisions have not yet been made, however Kevin and Alex will remain hosting the show through at least 2010 . We will also be announcing an exciting new video project of Kevin’s on Revision3 in the coming months.”

Back in fall 2008 — an eternity by mobile standards — I wrote about a fun little iPhone chess game called Chess With Friends. The game hit the App Store at a time when there were at least fifteen similar apps on the market, but it had one key differentiator: it tapped into the iPhone’s network effect to let you challenge your friends at a time when the vast majority of applications ignored the iPhone’s Internet connection. Eight months later, the small company behind Chess With Friends released the next game in the series, a Scrabble-like app that has since gone on to become a smash hit. It’s called Words With Friends. I sat down with brothers Paul and David Bettner, two of the founders of ‘Words‘ development house Newtoy, to get the back story on how the game grew to such popularity and where they’re going next.

The premise of ‘Words‘ is simple: you fire it up and are playing a Scrabble-like word game against one of your friends in seconds. There’s no single player mode — the entire experience is built around multiplayer. And that formula has proven to be golden: the app now has over 1.6 million daily active users who average a full hour of playing every day. It has been on Apple’s top grossing list for four months running and serves over 1.5 billion ad impressions every month.  Between the freemium ad-supported app and the paid version (which sells for $2.99), the game is making quite a bit of money, though the brothers wouldn’t get into specifics.

Newtoy got its start after Microsoft decided to shut down Ensemble Studios, which was developing a now-defunct game for the Xbox 360 called Halo Wars. The brothers, who were Ensemble employees, were asked to keep working on the game anyway but they declined and decided to start their own indie studio. Newtoy was founded in September 2008 and shipped Chess With Friends that November. The game was pretty straightforward, allowing you to invite your friends to play an asynchronous chess game (you make a move, they make their move at their convenience, and so on). At the time I said that the app “longed for push“, because users had to manually check in on the game themselves to see if it was their turn — they couldn’t get the push alerts that iPhone users receive today.

Chess With Friends did fairly well by 2008 standards, but it was hardly the hit that ‘Words‘ later went on to become. Still, it was popular enough that the Newtoy team had to devote more time than they would have liked to ensure their servers could keep up with demand. Their followup game was put on the back burner.

Finally, in July 2009, the studio released Words With Friends. At the time they had no idea it would become a hit — they took a small $200K seed round from friends and family and started working on an ngmoco title called We Rule (which they didn’t own full rights to) to make sure they could keep paying the bills. As they worked on We Rule, Words With Friends did fairly well but wasn’t exactly surging.

And then John Mayer happened. On October 5 2009, Mayer tweeted that Words With Friends “is the new Twitter” (the Newtoy guys say they didn’t have anything to do with it). The application promptly surged in popularity, and has since ridden on its inherent virality to grow to where it is today — as more players signed up, they’d tell their friends to join so that they could play each other (remember, the game is multi-player only). The Bettners say that the application had already started to hit an inflection point in growth before the Mayer tweet, but there’s no doubt that he gave it a major push in the right direction. The ‘With Friends’ series has now seen 6.5 million downloads.

Of course, Words With Friends was hardly the first such word game on the market, so how did it catch on?  The Bettners chalk this up to the user experience.  Whereas the official Scrabble iPhone app forced users to trudge through a few menus before they could access its multiplayer features, Words puts your multiplayer games front-and-center. You can boot up the app and be in a game in just a few seconds, which the Bettners say is key.

Success has come with a few hurdles, though, namely that Newtoy has to deal with a massive number of moves every day (players have cumulatively made over 1 billion moves). In some ways, this has held Newtoy back. Anyone who has played Words With Friends can probably tell you that adding friends in the game is a pain — instead of hooking into Facebook Connect, users have to manually type in their friends’ aliases, which is the sort of mechanic you might have expected a few years ago but feels woefully out of date now. There’s no Facebook application or web presence of any kind, so you have to make all of your moves from an iPhone or iPad. And the game isn’t available on any other mobile platforms like Android.

When I pointed out these shortcomings to the brothers, they repeatedly responded “We know! We’re working on it!”. I couldn’t get a hard timeframe out of them, but it sounds like Facebook Connect will be coming first, followed by some kind of web app, with an Android version at some point in the not particularly near future (lame). But the brothers also point out that Apple is planning to release GameCenter, a social gaming network that is being built directly into iOS, which should be even easier to use than Facebook Connect.

Looking forward, the Bettners say that they have more games in the works as part of the ‘With Friends’ franchise, and they’ll be able to nudge their current userbase toward the new apps.  When I pushed for more details on these games they declined, explaining that they’re “sort of like Apple when it comes to new games”.  I think they’ve still got a ways to go when it comes to secrecy though — I doubt Apple would have agreed to talk with me in the first place.

During the last World Cup in 2006, Twitter had just a few thousands users. Now they have 125 million users sending 65 million tweets a day — and 65% of those users are outside the U.S. As such, they’ve created a special section on twitter.com to highlight this year’s version of the sporting event that brings the world together.

This section highlights the key matches coming up as well as top tweets from Twitter accounts affiliated with soccer in some way. Notably, each World Cup matchup will get its own page and live-updating tweet stream about that particular game. For example, here’s South Africa vs. Mexico.

But the coolest thing may be the way you can show your allegiance to one team using a special hashtag. Twitter only hints at this feature, but as you can see, employees are already using it. In this tweet from Twitter’s Vitor Lourenço, he’s clearly rooting for Brazil, and you can see the Brazilian flag in the tweet. How did he do that? Simply use the hashtag “#BRA”.

Twitter also has new special backgrounds for the World Cup that members can decorate their profiles with. It’s also worth noting that “England and Spain have banned Twitter usage by players during the World Cup,” according to Twitter.

Update: Also cool, the country flags link back to the special Twitter World Cup pages built for that country. For example, see my tweet here and click on the U.S. flag.

Editor’s note: The following guest post is written by Larry Chiang, author of What They Don’t Teach you At Stanford Business School and an advisor to the new Stanford Student Startup Lab.

STANFORD, CA—Here on campus, a couple of undergrads successfully built their own Y Combinator. It launches today.

It’s called SSE Labs and it is modeled after the incubator Y Combinator, except it take zero equity. One company in its portfolio is already making waves, Alphonso Labs. Alphonso created the Pulse News Reader app for the iPad, which is the top paid iPad app in iTunes right now. Aksahy Kothari and Ankit Gupta are founders.

The inaugural startups are:

Alphonso Labs—iPad news reader, with plans to expand to the iPhone and Android.
Think Bulbs—Builds mobiile photo discovery apps for the iPhone
FountainHop—Building an event mapping platform that intelligently and intuitively gives users access to geo-temporal data relating to their physical surroundings.
Naquatic—iPhone and iPod Touch game developer creating large scale, online, social games starting with world conquest games.
Black Swan Solar—Goal is to make solar energy cheaper than coal.
InvestAway—A platform for delivering personalized, professional advice to individual investors.
MyLinkPower—Help professionals get jobs through their social networks.
Motion Math—Create educational games that kids love and parents trust. Inspire kids to learn by creating intuitive understanding through mobile game play.
Loki—Location-aware mobile gaming.

Penda: The big question that Penda answers is “What are your friends doing online?” Platform for users to share the information they’re consuming and need.

Stanford Student Enterprises Labs accelerates startups like Alphonso Labs by providing office space, housing, cash stipends, workshops, access to mentors, a rolodex of tier-one VCs, speaker training for CS majors and distribution to industry conferences. It also gives feedback to iterative product updates via weekly dinners. (Disclosure: I am on the Board of Advisor but I do not take money or any equity position. I am helping SSE Labs because I think entrepreneurs should own 100% of their company or as much as possible, anything else is asse9).

Believe it or not, Stanford Business School does not really support the SSE Labs. Perhaps that is because SSE Labs is at odds with the venerable Stanford Tech Venture Partners. STVP is the staid, old-guard organization at the university that believes entrepreneurship should not be incubated within the bounds of the 94305 zip code using university resources.

Further pressure to keep SSE Labs from starting, came from the Dean of the Graduate School of Business in an email to the entire GSB student body asking that no B-schooler take part in SSE Labs inaugural set of teams. SSE Labs was hatched under considerable and sustained pressure to kill the first business accelerator on campus. But SSE Labs is legally able to operate this accelerator because it is an independent 501 c3 with revenues of about $1.5 million. It is run by founder and managing director, Cameron Teitelman and Tomas Vacek who manages and invests SSE operational funds. They are both undergrads on-track to graduate in June. Non-students are allowed to participate on teams. The requirement is each team needs one Stanford student enrolled 2009-2010. If you think your team qualifies, apply here.

One of the keys to Twitter is that on the face of it, it’s very simple to use. You just type in 140 characters or less, hit “Tweet,” and you’re done. But actually it’s a bit more complicated if you want to get more out of it. So Twitter has started doing what any good company should — they’ve started making video tutorials.

The recently launched Twitter Help Center now features a number of videos to answer questions such as “What is Retweet?” “What is Following?” “What is a Timeline?” and “How to Find People and Be Found“. Twitter has also set up a YouTube account for these videos.

“These are new videos that we made in house. We’re experimenting with videos to gauge the impact on helping people use and understand Twitter better,” a Twitter spokesperson tells us.

So how good of a job does Twitter do explaining its service? Check out the video below and judge for yourself.

With TechCrunch’s fifth birthday less than 24 hours away, a certain degree of navel gazing is appropriate, if not required. On Wednesday afternoon, TechCrunch founder and newly minted Seattle resident, Michael Arrington, dropped by Atlassian’s Starter Day for a double header: an interview with Redfin CEO Glenn Kelman and “Tom Cruise” (more on that later).

Over the last few years, Arrington has interviewed Kelman several times (most recently here), but at Starter Day, Kelman got to turn the proverbial tables on Arrington, taking the questions to him. For those who want a primer, or more insight on the origins of TechCrunch, why he hasn’t sold the company yet, why he doesn’t think he would make a good CEO, and the value of boat ownership, see the video above.

Now on a more serious note, what about that “Tom Cruise” video you ask? Well yes, this also happened:

Some of you might have seen “Tom Cruise” in this Mac Vs. PC spoof or on FunnyOrDie:

Dead-on Cruise cackle aside, “Tom Cruise” is actually Evan Ferrante, an actor and producer who launched his Hollywood career on his uncanny knack for mimicking Cruise’s swagger and yes, memorizing virtually every line in Jerry Maguire and Top Gun.

What started off as a way to meet women in college with his friend (who of course, had a natural Jean-Claude Van Damme impression), quickly turned into a handful of viral videos on YouTube and FunnyOrDie, and ultimately a legitimate career.

After doing some recent online work with Disney as “Tom Cruise”, which was packaged with content for the Twilight series, Ferrante says his career took off with corporate gigs and commercial work at home and abroad (apparently the Tom Cruise impersonation business is huge in Australia). His next move: an upcoming HBO documentary, Teenage Paparazzo, a project he co-produced that will apparently not include any Cruise cameos. Our brief backstage interview with Ferrante is below.

What does this have to do with TechCrunch’s Fifth birthday? Absolutely nothing, but it is a gold mine for TechCrunch readers who’ve always wanted to see a slightly amused, slightly confused Arrington bombarded by a barrage of Tom Cruise-isms.

If you would like to contact Evan Ferrente for an event, before he actually reaches Tom-Cruise-level-fame, you can reach him at [email protected].

Back in April when HP bought Palm, we spoke with HP Senior Vice President of Strategy and Corporate Development, Brian Humphries, who made it clear that the acquisition was about webOS. “Our intent is to double down on webOS,” is exactly what he said. Palm’s intellectual property was another key part of the deal, we were told. Downplayed was the role Palm employees would play after the merger — including key Palm executives. Now we may know why.

A number of Palm’s Senior Vice Presidents appear to be out the door, some of their own accord, and some not, we’re hearing from a couple of sources. This may not be that surprising considering how many had left in recent months (and most recently two key webOS guys had), but HP did say in April that they had put thought into how to retain key members of Palm’s team. All that thinking apparently hasn’t paid off based on what we’re hearing now.

The timetable for the exits isn’t yet clear, but it should be soon. Also not entirely clear is just which executives are leaving and which are staying. But from what we’re told, it will be more clear than ever that HP didn’t buy Palm for the management team.

One wild card in this remains Palm CEO Jon Rubinstein. Before the HP deal, we heard rumors he may be out — those turned out to be not true, perhaps because his former employer — he worked at HP in the 1980s — was buying his company. Immediately after the acquisition, HP’s press release stated that Rubinstein expected to remain with the company. But when we asked, Humphries wouldn’t say exactly what Rubinstein’s role with HP would be. It’s not clear if he’s going to be one of the executives leaving HP now as well.

We’ve reached out to HP for comment, but have yet to hear back. Stay tuned for more information as we get it.

[photo: flickr/echiner1]

Last night, Google decided to temporarily abandon the principles behind its famously spartan homepage in favor of something a little different: a background image, which has been a design element present on rival search engine Bing since it launched. Users predictably went nuts as their clean, bare homepages suddenly featured flowery hippo things and other colorful photographs. Countless tweets have complained about the images, and our story last night racked up over 200 comments. “Remove google background” is currently the fifth highest trending topic on Google.

Now Google has apparently decided that imposing a background image on users wasn’t such a good idea after all, and they’ve turned off their experiment around ten hours early according to a tweet from Marrisa Mayer, Google’s Vice President of Search Product and User Experience. Users that visit the Google homepage are now shown the normal design, along with a link that says “Curious about today’s homepage? Add your own background image now”.

According to a post published on its official blog last night, Google was planning to rotate some professional photographs on its homepage over the course of 24 hours, with plans to return it back to normal once that timeframe ended. The trial was obviously meant to promote a new feature Google released last week that allows users to add their own background images, the difference here being that all users were temporarily being given a background image whether they wanted it or not.

Update: Google has updated its blog post to explain why they cut this short. They’re blaming it on a “bug” that failed to display an explanatory link:

We had planned to run an explanation of the showcase alongside it—in the form of a link on our homepage. Due to a bug, the explanatory link did not appear for most users. As a result, many people thought we had permanently changed our homepage, so we decided to stop today’s series early. We appreciate your feedback and patience as we experiment and iterate

Twitter just announced the acquisition of Smallthought Systems, an analytics startup that helped the microblogging site create its online internal network based off of DabbleDB. Terms of the deal were not disclosed.

While Twitter had worked with Smallthought on the Dabble project, the startup caught Twitter’s eye with the creation of Trendly, an tool that helps web sites distinguish signal from noise in their Google Analytics data. Twitter started using the service and realized that it would make an complimentary addition to their analytics team in terms of both talent, and technology.

Analytics are a part of Twitter’s monetization plan, as the post indicates that the analytics team will be focusing “on integrating ideas from Trendly into our current tools and building innovative realtime products for our future commercial partners.” Clearly Smallthought will help boost any in-depth analytics offerings Twitter may have up its sleeve.

This marks Twitter’s sixth public acquisition. Twitter has bought Summize, Values of n and more recently Mixer Labs, Tweetie maker Atebits, and Cloudhopper.

Google is making a few changes with web alerts this week. The search giant is retiring web alerts and replacing it with an ‘everything’ option.’

Google says that they are retiring web alerts because they weren’t used by enough people. Everything essentially will return the same results as web results. You can also filter your results by news, blogs, video and discussions.

Could this be the beginning of the end of Google Alerts?

Here’s the message Google sent to Web alerts users:

Dear Google Alerts user,

We’re contacting you because you have an alert of type Web. We’ve
decided to retire Web alerts because (1) they are used by very few
people and (2) an alert of type Everything will find the same results.

This week we’ll be changing all alerts of type Web into alerts of type
Everything. Your alert will continue to include results from all kinds
of web sites.

You may receive more results after this change. If you find that you
are getting too many results, you can change the “How often” setting
to “once a day” or “once a week.” You can also change your search
query. You can do this on the alerts management page
(www.google.com/alerts/manage), or by removing the alert using the
link at the bottom of each alert email and creating it again with
different settings.

We hope that you’ll continue to find your alert useful.

Hat tip to Wallace N.