<![CDATA[Gawker: valleywag, startups]]> http://tags.gawker.com/assets/base/img/thumbs140x140/gawker.com.png <![CDATA[Gawker: valleywag, startups]]> http://gawker.com/tag/valleywag/startups http://gawker.com/tag/valleywag/startups <![CDATA[The Insanely Rich Young Mobile Ad Broker You've Never Heard Of]]> No one knows what Facebook and Twitter are really worth, sexy though the startups may be. But AdMob, an obscure company in Silicon Valley's hinterlands, has a very clear, solid value: $750 million in stock from acquirer Google. Yay boring!

The AdMob deal announced today is the third largest acquisition in Google's history, behind only DoubleClick ($3.1 billion) and YouTube ($1.7 billion). But no one's really been talking about the mobile advertising network or its early-thirtysomething founder Omar Hamoui until now. Hamoui is downright anonymous.

Here's what we've learned about him based on his low internet profile and scant press clippings:

  • Has all of 441 followers on Twitter. In contrast, Jason Calacanis, who sold his weblogging company for less than 1/20th as much, has 77,000 followers.
  • 32 years old as of May.
  • Earned a bachelor's in computer science from the University of California, Los Angeles and dropped out of the MBA program at Wharton School of Business at the University of Pennsylvania.
  • Ran computer programming company Vertical Blue for almost four years.
  • Senior program manager at Sony Pictures Digital, about two years.
  • COO of startup called GoPix.
  • Started HerBabyShower.com.
  • Started FotoChatter, for sharing pictures between cell phones, but left the venture behind after becoming frustrated with the inefficiency of advertising his site to mobile users.
  • Came up with AdMob as a solution to the FotoChatter advertising headaches while at Wharton, at age 28.
  • In 2007, Bill Gates personally asked Omar Hamoui to speak at Microsoft's annual gathering of journalists, according to a July 207 Ad Age article. Gates had just bought one of Hamoui's competitors.
  • Last year, toured Kara Swisher of All Things D through his cramped headquarters in San Mateo, a town on the San Francisco Peninsula not exactly famous as a startup hotbed. (See below).
  • Google bought AdMob after attempting to launch a mobile ad network of its own (AdSense Mobile).

Yes, Hamoui will share much of his Google take with investors, who put at least $31 million into the company. But he should do well for himself: Hamoui is the lone founder (no splitting his dough) and was cashflow positive as of a year ago (giving him more bargaining power with investors). Which just goes to show that buzz, Twitter juice, and the Silicon Valley groupthink that has valued both so highly, can be utterly irrelevant when it comes to making actual money.

(Pic: Hamoui by Rodrigo SEPÚLVEDA SCHULZ )

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<![CDATA[The Retreat of King Twitter]]> With great power comes great responsibility, and with great responsibility comes great headaches. So after years as the hottest, most talked about startup in Silicon Valley, Twitter is ready to relinquish some control of the national conversation.

Step one: Slowly destroy the Suggested User List, a list of Twitter's favorite websites which is used to populate the accounts of new users. CEO Evan Williams now says ""I desperately want to kill it or evolve it," according to Business Insider. A few weeks ago, Williams said, "we don't think it's our job to editorialize" through the list, according to NYU professor Jay Rosen.

Indeed, the list gave the microblogging startup tremendous unchecked power to instantly bestow large audiences on various Twitter publishers, yet it was assembled somewhat haphazardly, in a process that involved a "gut check" with "a couple folks" at Twitter Inc. The company reportedly and apparently removed TechCrunch publisher Mike Arrington from the list after, over Twitter's loud objections, he published internal Twitter documents obtained from a hacker. TechCrunch appears to have since been restored to the list; the below chart from TwitterCount shows the long fallow period in Twitter follower growth for TechCrunch when it was apparently out of Twitter's favor:

Step two: Provide search data to rivals. The value in Twitter is in its real time "fire hose" of tweet data. But the company has guarded that data jealously, providing it to only some companies who request it, and then often at a cost of thousands of dollars per month. But Twitter is now nearing a deal to finally sell access to its "full feed" to Microsoft for the Bing search engine, reports Kara Swisher of All Things D. The company is also believed to have been in talks with Google for a similar deal. Sharing with such large competitors is quite a bit of letting go — albeit with financial compensation — for a company that has treated its real-time content feed as a major strategic asset.

It would appear that Twitter is learning a lesson crucial to all sorts of small businesses: if you want to be successful at something, you have to give up on being successful at everything. One would think a company founded on tiny, 140-character status updates would have learned the benefits of limits much sooner.

(Pic: Williams, earlier this month, by Bruno Pin.)

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<![CDATA[U Can Haz Cheezburgur, World Dominashun, LOLZ at Other Starupz KTHXBYE]]> The I Can Haz Cheezburger guy, Ben Huh, got an AdAge profile. They've got 21 full-time employees, 30 blogs, and 11.5M visitors a month. They were profitable in their first quarter "almost entirely via ad networks and Google AdSense." [AdAge]

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<![CDATA[Facebook's Wacky Prank on Journalism]]> The social network can and will fuck with you, as TechCrunch found out, after Facebook targeted an elaborate hoax at just its reporters.

The company altered its code to insert a fake "Fax This Photo" link under every Facebook picture viewed from the account of at least one TechCrunch reporter, Jason Kincaid. After Kincaid emailed Facebook's PR team, he got the reply, "We already faxed you a statement on this??? Didn't you get it?" Which, of course, was part of the joke.

For a startup like Facebook that hates growing up, stunts like this one must be more fun than running a business. But as long as Facebook is procrastinating on revenue development, why not just skip work entirely, maybe grab a beer? Fun can involve things other than computers and programming, Valley geeks!

(Top pic: Kincaid via Crunchbase)

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<![CDATA[Julia Allison's Clone Army]]> Julia Allison wants to be a Web mogul. Foreman of a fameball factory. Oprah to a dozen young Dr. Phils. In short, she'd like to replicate herself. Ominously, for such grand ambitions, she's recruiting on Cragslist.

Allison has confirmed to us that her "lifecasting" startup, NonSociety, is behind this audacious Craigslist ad. It's already been chewed up and spit out in the blogosphere for, among other things, asking the world for a "vibrant" personality, "ridiculously reliable" work ethic, maybe a Harvard degree and a glamorous spouse in return for no money and no equity. Or, as Allison puts it, "all of the support, the audience, the connections and the PR you need to launch your brand."

It doesn't help that the list of potential lifecasting roles outlined by Allison and her partners sounds like it was ripped from a catalog of stereotypes: "gay, style guy, teen, prom obsessed" ... "alternative lifestyle, interior/exterior design expert" ... "preppy" ... "rapper." As Just Another Brooklyn Blog put it:

Oh, so I can either have some quirky skill, or just enjoy man on man anal sex. In lieu of a resume, should I just send you a picture of me giving another man a reach-around.

If your life fits into a category that Allison and business partner Megan Asha consider brand-able, AND you clear their application process, you'll have the privilege of constantly broadcasting your life for NonSociety through "text, photographs, videos, perhaps music selection, quotes - and beyond." And beyond.

And, who knows, maybe after a few years you can graduate into a paying gig endorsing consumer electronics or "enhanced water." If that doesn't pay the bills, why not start a lifecasting platform of your own? After all, the internet fame game played by Allison and her protocelebrity cohorts might be a deflating bubble, but that doesn't mean there aren't plenty of people still willing to buy into it. It's not like media and financial companies are hiring much these days.

(Pic: TMIWeekly)

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<![CDATA['In Lieu of Gifts, Please Give Us Free Venture Capital']]> Drue Kataoka and Svetlozar Kazanjiev have come up with a novel way to hit up their wedding guests for cash: explain the cash will be used to generate even larger sums of cash, via the internet.

They even made a video to explain everything, above. The couple claims to have inaugurated "The World's First Start-up Wedding Registry" to fund their super-secret Web company Aboomba. Friends and family can "feed an outsourced engineer for a day" to make the couple rich, or maybe pay the utilities for a month, to make the couple rich or even buy some banner ads, which will also help make the couple rich. Delightful!

VentureBeat's Anthony Ha thinks this is great; when it comes to his own friends, he'll "be much more excited about supporting their business than I will about buying them a toaster." Not us. If we're not buying something for your kitchen, where you might hypothetically entertain us some day, we want equity.

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<![CDATA[How a 'Made' Startup Was Clipped]]> Two years ago, music service iLike appeared to be set: Its CEO said it was "made," its investor mused it could be a "billion-dollar winner," and the press was enthralled. Now the poster child is a cautionary tale.

iLike became something of an icon for a certain class of startup: Built on social networks, fast-growing, unprofitable, advertising supported. The company's impending sale to MySpace at a fire-sale price could hardly be a bigger wakeup call to these fellow makers of software "widgets."

The company was once valued at $53 million, back when Ticketmaster bought a 25 percent stake in late 2006, according to the Seattle Times. iLike amassed a total of $17 million from Ticketmaster and other investors like Silicon Valley venture capitalist Vinod Khosla and former AOL exec Bob Pittman. Now it's negotiating to sell for just $19.5 million, All Things D reports, and $6 million of that is contingent on retaining certain employees in coming months.

It's quite comedown. But it's easy to see how iLike became a media darling and a hero to other makers of widgets. In the late spring of 2007, iLike ported its music recommendation service to Facebook, and in the process spiked its user base dramatically, to 15 million from 3 million over six months. In one week just after the Facebook launch, four venture capitalists asked CEO Ali Partovi (pictured) to lunch, the Seattle Post-Intelligencer reported; the company reportedly added close to 200 servers over the course of the summer.

After retaining insidery Silicon Valley flack Brooke Hammerling, iLike saw its praises sung widely in the media (emphasis added):

  • Wall Street Journal, June 2007: "'Somebody's going to end up being the Facebook music service,' [co-founder Hadi Partovi] says. 'It's either going to be us, in which case we're made, or it's not.'" (By the time Patrovie gave this retrospective quote, iLike was by far the dominant music service on Facebook.)
  • Billboard, July 2007: "The smart money says someone will acquire iLike, and soon. The company's social media discovery capabilities are a natural extension to any digital music service, particularly iTunes."
  • BusinessWeek, July 2007:"'Widgets are a fundamentally important idea,' says Vinod Khosla... who has invested in two widget makers, Slide and iLike. 'I believe it has the potential to create big billion-dollar winners.'"
  • Forbes, October 2007: "Says Khosla [Ventures]'s David Weiden: 'Widgets are the next kind of media network.'"
  • USA Today, November 2007: "The company... has become an overnight sensation... Dave McClure, an angel investor in Silicon Valley, wouldn't be shocked if iLike... and others eventually go public."

Revenue was presumably slow in coming, though, because by fall of the following year iLike was said to be trying to sell itself and Ticketmaster wrote off half the value of its investment. Now investors are basically trying to break even with the MySpace sale. The music and advertising businesses have their own unique problems, but startups in other hot sectors, like iPhone apps, should beware: The excitement can dissipate as quickly as it inflates.

(Pic: Niall Kennedy)

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<![CDATA[Ashton Kutcher, Exploited Twitter Spokesmodel]]> Has any celebrity tied himself so closely to a technology product as Ashton Kutcher with Twitter? It's doubtful, and yet Kutcher hasn't received a dime for his defacto endorsement. That's not lost on the actor.

Kutcher pointedly notes his lack of compensation in the attached clip from Monday's Tonight Show. He even mentions equity; is Kutcher hinting he'd like some pre-IPO shares in the hot microblogging startup? He's certainly put in sweat equity, and not just by uploading pictures of his scantily-clad wife: Kutcher has posted some 3,000 tweets to his 3 million followers. Oprah Winfrey, in contrast, has written just 56 tweets, to 2 million followers.

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<![CDATA[Meet San Francisco's 'Naked' Hippie Internet Startup]]> In Silicon Valley, the line between cult and company can be thin. Leave it to Steve Newcomb to toe that boundary, with a San Francisco "idea factory" that sounds as much like a religious order as a startup.

The company, Virgance, has high ideals; its projects include a collective solar-power buying effort, a green blog network and a corporate philanthropy contest. This idealism is felt within the company as well, judging from the, uh, unique working conditions described by Venture Beat's Kim Mai Cutler:

  • Work for free to prove your devotion: If you want to join the cult get hired, you'll have to put in a full month of labor, unpaid.
  • The commune decides your fate: To prevent impure subpar employees, final hiring decisions are made by the consensus of the entire staff. "A single veto can kill a candidacy." Newcomb justifies this with a Valley cliché: "A-level people bring other A-level people, while B people will bring C people."
  • You are never alone: There is only one door in the entire office.
  • Leader gets 'naked' with you: How's this for a ritual? Every Thursday, all staff gather on a lawn near headquarters. These are known as "Naked Thursdays," since anyone can ask Newcomb any question, and he'll answer it with total honesty. What a privilege!
  • You're sort of naked too: Financially, at least; all salaries and equity stakes are open to everyone else in the company.

Virgance takes to an extreme the egalitarian patina common on tech companies throughout the Valley, especially in San Francisco. But the veneer of equality does not equality make. Recall how one associate described Newcomb's management style amid executive turmoil at his last venture, Powerset

:

Pell and Newcomb set themselves up as lords of this feudal society with

C-level titles and then built a company without VPs in the name of a

flat, post-modern organizational style. The truth is they didn't want

the peons anywhere near the decision-making or basking in the

glamorous, self-aggrandizing PR campaign they launched way too early.

Newcomb (pictured) at least delivered financial results, although the $100 million Microsoft paid for Powerset was reportedly less than investors had hoped for. This time around, no matter what his mouth might say about open equality and collective decision making, it's safe to assume Newcomb's eyes remain fixed on the bottom line. Just like any cult leader worth his salt.

[Venture Beat]

(Top pic: From a YouTube of Virgance staff rolling around on a lawn together; second pic via Virgance)

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<![CDATA[Barry Diller Just Bought This Kid a TV Studio]]> At the ripe old age of 28, Ricky Van Veen is finally putting CollegeHumor.com behind him. He's leaving the site he co-founded and starting a production company called Notional. But the young man remains in Barry Diller's well-padded nest.

Diller will play sugar daddy to Notional; the IAC chairman will fold it into his ConnectedVentrues division, alongside CollegeHumor.com. The video content will be similar — cheap to make, zeitgeisty — but on television proper rather than the Web. Read: Potentially more lucrative. Reports PaidContent:

The focus will be unscripted programming, broader than comedy aimed at young males that they have been known for, and will include all genres.

Van Veen will report directy to Diller. The elder mogul has run Paramount, Fox and USA Broadcasting and no doubt relishes the chance to bestow his knowledge on an adoring young acolyte. One imagines Diller might become something of a father to Van Veen. Or perhaps more like a stepfather.

(Pic: Van Veen, by Nick Gray)

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<![CDATA[New Twitter Ad System Tested by New York Times Reporter]]> How will Twitter ramp its revenue from nothing to $21 million a month in less than two years, as its managers forecast? Maybe by simply monitoring what you tweet about, and then targeting ads at you.

Saul Hansell of the New York Times tweets that he's testing just such a system. Now, it's possible that the tech writer was trying out a third-party advertising platform; i.e. ads served by a company other than Twitter Inc.

No matter: The concept is sound, and contextual ads based on user input have been Google's cash cow; given how many of its users tweet in order to find information, Twitter would be wise to at least test out such an elegantly simple system, if the microblogging service can find a way to show the text ads unobtrusively (for example in the sidebar, where it places those paid concept definitions).

As far as conceivable multimillion-dollar advertising schemes go, that would be among the least obnoxious. And if there's one thing Twitter users hate, it's obnoxiousness, right?? (*Cough*)

(Top pic: Twitter CEO Evan Williams at the company's San Francisco HQ, March 10. Getty Images.)

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<![CDATA[Sun Valley's Lusty Old Men Are Fickle]]> Allen & Company is doing its annual thing in Sun Valley, Idaho, in which old moguls shamelessly ogle the most supple young internet startups. This year, everyone's drooling over Twitter. Last year's trophy companies? Not looking so sexy.

It's a tough world for a flirty company on the make. In summer 2008, media honchos like Barry Diller and Jeffrey Katzenberg were making eyes at social networking companies like Slide, the well-funded maker of Facebook applications started by PayPal founder Max Levchin. Just in time for this year's conference, Slide is laying people off and scrapping its failed business model.

Levchin got cozy with Diller last year, but Twitter is playing hard to get: CEO Evan Williams "attended Wednesday's sessions, but didn't speak up when other executives expressed doubts about Twitter's revenue prospects," according to the New York Times' Andrew Ross Sorkin, who adds that both Diller and cable honcho John Malone (pictured together) disparaged Twitter's advertising prospects.

They doth protest too much: Any firm that can reunite those bitter ex-partners (and former courtroom nemeses) is clearly a stimulating concern.

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<![CDATA[Twitter, Facebook Just Actively Ignoring Business Opportunities Now]]> Who can afford to be blasé about making money in this economy? A hot Web 2.0 startup, it turns out.

It turns out Dell sold $3 million worth of computer gear through its Twitter feed alone, meaning it has made $3 million more off Twitter than Twitter itself. Shouldn't Twitter be charging these guys? The revenueless microblogging service insists any moneymaking schemes must be sufficiently "interesting" and "innovative."

Enterprising Facebook employees, meanwhile, wanted to charge users a nominal fee for those custom short URLs that go on sale tonight ("facebook.com/whoever"). But the company reversed this decision, Business Insider reports. Bizarre. Is earning revenue at the nickel and dime level so shameful? It might be tougher than depositing a check from a Russian hedge fund, but the money is also free of money related complications.

(Pic by Joi Ito)

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<![CDATA[Inside the Startup Office from Hell]]> The image associated with this post is best viewed using a browser.The image associated with this post is best viewed using a browser.Frank Addante, the Los Angeles tech entrepreneur, has helpfully consolidated pretty much every terrible office idea and Web 2.0 startup cliché into one place: This video tour of his online ad company, Rubicon Project.

We actually stopped the video halfway through to make sure it wasn't a conscious parody, maybe a viral ad for some new Office-like television show. Nope: Addante is very real, and he and his videos have already earned more than his share of notoriety.


Here's quick tour of Addante's tour:


Above the reception desk are the first of many pointless flat-screen monitors.


The image associated with this post is best viewed using a browser.The office is built on the set of 24, which is a great idea if you value panic, screaming and torture in your place of work.


The image associated with this post is best viewed using a browser.These 11 cultural values shall "govern the behavior" of all who enter. Consider yourself warned.


The main penoffice. Rubicon has a "No Office Policy," because it is so egalitarian and communicative. This explains why Addante introduces the cofounder he sits next to, but not the random woman he also sits next to.


Addante is trying to ring the "Victory Bell" more frequently, probably because its clang is so delightful for employees trying to get work done at the surrounding desks.


This "countdown clock" is like the one in 24, except instead of nuclear apocalypse it counts down to something you don't care about.


Yes, you really work for a company whose slogan is "Make Mad Cash From Ads On Your Website." If you ever doubt this fact, just look up at the wall.


Yammer is like Twitter, except you read it by standing in the middle of the office and craning your neck to read another pointless, wall-mounted flat screen television.


Remember the room in 24 where they always torture terrorists? Addante thought it would be cool to hold company meetings there, and call them "boiler room" gatherings to boot.


It seems the employees gulped down the on-site alcohol much more quickly than anticipated. Go figure.


In 2009, being told your company "is managed like a financial institution" is not so comforting. Thank God there's another pointless, flat-screen television to soothe your pain.

[FounderBlog]

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<![CDATA[Silicon Alley's Bitter Awards Scramble]]> The image associated with this post is best viewed using a browser.For a startup founder itching to cash out, the recession can be tough: The economy fades hopes for an acquisition or plum funding round. Perhaps this explains some of the testiness around this year's awards from Silicon Alley Insider.

Corporate awards might seem silly, but for some entrepreneurs, they are among the few forms of recognition still within reach. And the Insider's Silicon Alley Awards, intended to "celebrate the resilience of New York's digital industry in the face of the global economic collapse," has its share of obsessives. One even wonders if the selection process has been tilted in favor of nominees with financial ties to the Insider.

Henry Blodget's publication yesterday released its final list of nominees. The nominees were selected by the Insider with input from an online poll.

As our tipster notes, the 25 finalists include Gilt Groupe, co-founded by the same team that started Silicon Alley Insider; Huffington Post, co-founded by Insider investor Ken Lerer; and Thrillist, started by Ken's son Ben Lerer.

It's hard to argue with, say, HuffPo's impact over the past year; it pioneered a particularly effective form of citizen journalism and grew both its traffic and profile by leaps and bounds. But, as with the other two nominees, its links to the Insider were not disclosed; maybe they should have been, as our tipster argues, if only to keep the awards above reproach.

Blodget, who says he "understand[s] the concern about disclosures," he since added a note to his nomination post outlining "every possible conflict I could think of." And while he conceded "there was definitely some subjectivity in the selection of the final nominees," he defended his process:

We explained up front that, while we would take the nominations and votes into account when picking the final 5 nominees, the votes would not determine our selections.

The reason we don't use straight votes in these things, by the way, is that we have learned from experience that they are too easy to game...

For what it's worth, we won't be involved in picking the winners [see explanation at bottom of this post].

For those still dissatisfied with the process, just remember: It's only an arbitrary prize. They're a dime a dozen. If you don't win SAI's, why not go for a Webby? They hand those out to practically anyone!

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<![CDATA[Zombie Business Model Revived By Hungry Blogs]]> The image associated with this post is best viewed using a browser.Tech blog company GigaOm is starting a subscription research service to drum up cash; some think TechCrunch could soon follow. It would seem everything old in tech media is new again: Bloated dot-com magazines attempted this same tactic amid the popping of the last financial bubble.

John Battelle's Industry Standard hired research analysts near the height of its hubristic expansion c.2000. Former Red Herring editor Jason Pontin recalled that his magazine, the thickest of the dot-com bibles, attempted the same. He writes in an email:

We hired and built an entire research division: some of its material found its way into the print and online products. I do not believe they ever succeeded in selling much in the way of proprietary research...

You need to understand that there are really two kinds of research products. The first, which we tried to do and failed at, I completely supported as the editor at the time: expand our editorial products into higher-priced subscription research on the model of The Economist Intelligence Unit.

The second is truly proprietary research bought by a single client or group of clients: I wasn't sure that was a great idea, because it was an entirely new field for us requiring a new infrastructure and staff, and we failed at that, too.

Not coincidentally, perhaps, GigaOm publisher Om Malik is a Herring veteran, and made his bones on Wall Street, where proprietary research is common. His current effort is relatively inexpensive ($80/year) and targeted at broad groups of readers. It also has some sort of Web 2.0 twist involving outside contributions.

Hopefully for Malik, those differences will be enough to keep history from repeating itself.

(Pic by Jyri Engestrom on Flickr)

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<![CDATA[The World According to Twitter]]> The image associated with this post is best viewed using a browser.How distorted is Twitter's view of the world? That question is neatly answered by Topsy, a new search engine that's like Google, except sorted by the attention-deficit-disorder sufferers who live on Twitter.

Topsy launched last night. Its trick — ranking Web pages based on their popularity within Twitter — works awfully well for searches related to technology and breaking news. But it also effectively illustrates just what is important to Twitter's young and overcaffeinated users.

Some examples:



Who is Barack Obama? Why, he's that guy who recorded an audiobook with lots of funny swear words!



Chile is a mall in the Southern Hemisphere, recently blessed by the Jonas Brothers with an awesome concert.



Afghanistan is known primarily for a pig flu outbreak.



John McCain is an old guy whose speech was interrupted by a music video.



Topsy is useful enough that it's starting to look like maybe a big deal. Good for it! But here's to hoping it never replaces Google.com.

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<![CDATA[Clinging to Dying Web 2.0 Dreams]]> The image associated with this post is best viewed using a browser.Being a startup is way more fun than being a business. Which is why we see Twitter and Facebook in seeming economic denial this morning. Who wants to confront financial reality, like Google?

Google, once a Silicon Valley fantasyland, increasingly looks like other bloated corporations: with antitrust concerns, fringe-benefit cutbacks and, reports the Wall Street Journal this morning, a robotic human resources operation. Literally:

The Internet search giant recently began crunching data from employee reviews and promotion and pay histories in a mathematical formula Google says can identify which of its 20,000 employees are most likely to quit... Google's algorithm helps the company "get inside people's heads even before they know they might leave," said Laszlo Bock, who runs human resources for the company.

Creepy and inhuman? Sure, but deemed necessary at a company where workers "continue to decamp to hot start-ups like Facebook Inc. and Twitter Inc."

Then again, those companies look less "hot" each day. Facebook was just offered venture funding that valued the company at $8 billion, according to TechCrunch — half what Microsoft valued the social network at a year and a half ago.

Twitter, whose utter lack of revenue has unintuitively been one of its key selling points in Silicon Valley, is now groping for various ways to make money as it races to double its headcount this year to keep up with user growth. Among the ideas outlined by co-founder Biz Stone yesterday: Begging some more money from wireless carriers as compensation for all the lucrative text-messaging traffic the microblogging service generates on their networks.

More free money, in other words. Because who wants to dive into the cold waters of economic reality during a recession? Not Facebook, which dismissed the investment it was proffered (over control of the board, supposedly) and the lower valuation along with it. And not Twitter, which rejected any thought of selling advertising as boring, or "not quite as interesting to us," in startupese.

Making money isn't much fun, especially if you have to do it in such a clichéd manner as selling ads. But recessions, like breakups and other misfortunes, have a way of bringing out the desperate banality in everyone.

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<![CDATA[The New York Times Battles a Googler for New Jersey]]> Why is the Gray Lady building websites for the obscure suburbs of South Orange, Maplewood, and Milburn? Perhaps because those are the exact same towns Google executive Tim Armstrong picked for Patch, his local-news startup.

Armstrong, Google's top U.S. sales executive, has invested in Patch, a company which promises to develop "hyperlocal" websites focusing on news coverage specific to their communities. He's putting in money from his own fortune — money which he made through Google's lucrative IPO — but one must imagine New York Times executives view Patch as a stalking horse for the search engine.

Hence the new Times feature called The Local. Besides Patch's three towns, The Local will also cover two Brooklyn neighborhoods. It will be entertaining to hear the Times spin on why it picked Patch's turf to launch The Local. Milburn's attractive demographics? South Orange's thriving cultural scene? No, the Times is waging an old-fashioned newspaper war — on the still-unfamiliar turf of the Internet, against a Google millionaire. This will be by far more interesting than anything else that happens in Maplewood.

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<![CDATA[At Last, Google Funds a Bailout for Reporters]]> Journalism pundits have been begging Google to put its billions behind the project of saving journalism. At last, a Google executive has come through. Here's Tim Armstrong's secret plan to save the local news business.

Armstrong, the handsome and high-ranking Google executive who runs the company's advertising operations — that is, the actual business that generates cash — in both North America and South America, is backing a startup called Patch through his personal investment fund. The startup aims to run local websites in small communities. Armstrong's biography on the site makes it sound like this is more of a cause than a cash-in attempt:

Polar Capital Group, Tim Armstrong's private investment company, is an investor in Patch. Polar invested in Patch because Tim believes that Patch should be in every community in America, and wants Patch in his town. He wants to read local news stories done by journalists, make sure that local government is transparent and accountable, see all the ways he can give back to his community, and have his town be as interesting and alive online as it is offline. Tim is also a believer in American ingenuity and knows that products like Patch will help deliver a commercially viable way for communities to support the important work of local journalists, institutions, governments, and businesses. Tim works at Google and his family lives in a Connecticut patch.

The site is presently limited to three suburban towns in New Jersey — South Orange, Maplewood, and Milburn. But the company, based in New York, already has 20 employees.

Will this save journalism? A form of it, perhaps. The big-city dailies have been retrenching from the suburbs for years. But Patch is hiring one journalist per town, to cover local news with a heavy emphasis on charities. That's exactly the kind of starter journalism job desperate grads take straight our of J-school, and work like heck to escape as fast as they can. The difference, in this Google-funded scenario, is that there won't be anywhere else to go from there.

And why is Google letting Armstrong freelance as a startup investor? Google's compliance cops have already greenlighted his investment in Associated Content, an ostensibly independent startup which lives off Google ads. Perhaps it's because his startup experiments may well help his employer.

Could Patch be a Trojan horse for Google to get into the local news business? Google has struggled with local advertising, partly because there's not enough obviously local content online to advertise against. Google would spark a massive outcry if it got into the news business directly. But through a trusted proxy like Armstrong, it can keep a close eye — and move in once Armstrong has discovered his "commercially viable way."

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