The Latest from TechCrunch |  |
- The Squeeze Continues: Venture Fundraising Shrinks 82 Percent in Second Quarter
- The Time Has Come To Regulate Search Engine Marketing And SEO
- MySpace Outsources International Advertising Operations To Fox International Channels
- European Publishers Band Together To Underscore Lack Of Understanding Search Engines, The Web
- The Complete Guide To Microsoft’s Office 2010
- Rollip Brings Back Distant Memories Of Discolored Polaroid Photos
- TWS2009 Showcases Ten of Israel’s Most Promising Startups
- TeachStreet Launches Payments Platform For Teachers
- Photos From 2009 Techcrunch Crunchup and August Capital Party
- Push Notifications On The iPhone Are Great, But…
- OurStage Raising More Funding In Quest For Profitability
- Is Free The Future Of Enterprise Software? Yes And No.
- Want To Give Pinboard A Try? You’ll Have To Pay $2.84
- Favstar.fm Makes The Twitter “Favorite” Less Of An Unwanted Step-Child
| The Squeeze Continues: Venture Fundraising Shrinks 82 Percent in Second Quarter Posted: 13 Jul 2009 07:18 AM PDT Venture capital keeps getting squeezed as an asset class. The second quarter of 2009 saw the lowest level of capital going into VC funds since the first quarter of 2003, according to the National Venture Capital Association (NCVA). During the second quarter, VC funds in the U.S. raised only $1.7 billion, an 82 percent drop from the second quarter of 2008, when $9.3 billion was raised. The amount raised is 63 percent less than than the $4.6 billion raised during the first quarter of 2009 (see interactive iCharts below). The number of funds which raised capital also dropped in half from last quarter to 25 funds, a 13-year low. And the average amount of new capital going to each fund was $68 million, down from $94 million in the previous quarter. Capital is fleeing the sector, partly because there is less capital to go around, and partly because venture capital exits appear to be blocked. Although there was cause for hope during the quarter—which saw five venture-backed IPOs poke their heads above the water—the NCVA doesn’t expect venture funds to bring in major new infusions of capital until 2010. For startups with proven traction there is still money out there. For instance, Pandora just raised a massive $35 million round last week and we tracked $6.4 billion in venture money going into companies last quarter, a 25 percent drop from the year before but still a healthy rate of investment. VCs are getting more selective about where they put their cash, but when they do they are more likely to bet big.
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| The Time Has Come To Regulate Search Engine Marketing And SEO Posted: 13 Jul 2009 05:45 AM PDT
He is starting a discussion on the need for government regulation of the organic and paid search policies of Google, which maintains a commanding lead in search market share today. Or at least transparency in how search results are determined. There is clearly growing frustration on the constantly changing “border policies” that are created and enforced by Google and other search engines. It is a fascinating read. Imagine, if you will, that the entire Internet is contained within a single continent. That continent is filled with countries, states and cities. Each jurisdiction is autonomous, relying on visitors to cross on to their turf to engage in commerce. Now, imagine if the only way to get into this continent involved just two methods: SEO and SEM. Let's further imagine that the borders to this continent were controlled by a single company. Let's also hold that the rules for search engine optimization listings and search engine marketing were not only defined but were completely controlled at the whim of this single company. Of course, we all realize that word-of-mouth marketing and viral marketing also contribute to traffic to individual websites. That said, the primary methodology for all users to reach any individual website destination is still search, of either paid or organic listings. Or suppose the paradigm is the streets of Los Angeles. Let's imagine that in order to enter the city you had to pass through a single gate. And once you entered that gate, the streets you were or were not allowed to go down — and thus the businesses you were or were not allowed to visit — could be randomly blocked from your access. Blocked to a point where you might not even know they exist; whatever streets were available for you to traverse were in essence the only streets you knew where business could be transacted. Whatever the scenario, it's unsettlingly close to the situation that prevails today in search. It's now conventional wisdom that search engine optimization, representing the organic result sets on any search query, is more voodoo than science. Through an uncontrolled set of factors search engines determine which listings appear at the top and bottom of any individual query. In addition, consumer behavior dictates the top three results on any search page are all that matter. If you happen to own an online business, unless you exist within those top three, the amount of individual traffic you will obtain from organic listings is very, very low. As the proprietor of that business you may hire search engine optimization companies to assist in increasing your rankings on organic results, with or without success. And at any one time, the controller of these borders (that is, the search engine itself) can change and manipulate those rules – and that can substantially decrease or destroy all organic traffic coming to your website, without notice and without your knowledge. Search engine marketing now faces a similar challenge. Although anyone can open an account to buy paid search listings, the rules on each account are arbitrary. Accounts can be shut down at any time, without notice to the website owner. In other words, if you haven't successfully obtained enough traffic to your site from organic listings and you decide to rely on paid search, you still face a situation where regardless of how much you bid per click you may or may not show up at the top of the paid results. That's because paid results that are displayed on any query are not only determined based on the price the buyer is willing to pay. Unlike other auctions that are completely priced-based, these results are determined and sequenced not only on price but also on quality of advertising and click-through volume. For example, if company A was willing to pay $1 per click on a certain term and company B was willing to pay 10 cents but company B's ad generated ten times as many clicks as company A's, the yield to the search engine would be identical between the two. The second factor is that the search engine can, at any time, determine that either company A or company B may or may not buy traffic within its index. And without notifying the company and with no path toward recourse and statement, the search engine can disable the paid search account from either business. Returning to the continent metaphor, this ends up looking quite a bit like free trade. Various businesses (call them sellers), operating within this continent, wish to conduct business with the rest of the world (that is, the population of buyers). The border — which in this case is the search engine — thus has complete control of who can transact and how often. And at its discretion, the search engine can decide to increase, decrease or completely disable access between buyers and sellers. Because search is the dominant methodology for consumers to find what they are looking for, whether a product or a service, the unilateral control that search engines wield enables them to control billions upon billions of dollars of consumer spend every year. It also gives them the ability to completely determine which companies become more successful — or less so. The situation we face today is unique. Due to Google's dominance — and the fact that it controls such an enormous amount of consumer behavior through paid and organic search listings – the company in essence governs commerce on the web. And any company that falls out of favor with Google, whether for reasons of bad practice or simple disagreement, can find itself at risk of going out of business. This system also benefits the few in a host of other ways. Because the rules of organic and paid search change frequently – and remain undefined — agencies and other traffic brokers can win big; through their experience, they're capable of reverse-engineering these rules. This means that, as this market matures, individual businesses have a diminishing chance to actually compete and gain search market share. That, in turn, puts them in a position of not only needing to hire an agency in order to find any traffic, but also making it more expensive overall to build businesses on the web. I've worked with many businesses who feel they are playing in Google's world — behaviors from product decisions to marketing strategies rely completely on appeasing these undocumented and often mystical Google desires. I've seen companies choose to not work with Google's competitors for fear that by building those relationships, they're damaging the ability to be indexed properly on Google and are anxious that result sets will be compromised. Many likewise believe that by having a monetization relationship through Google, they will somehow achieve higher quality listings through organic search. I've also witnessed companies who, in addition to using Google for monetization, have preferred relationships with purchasing traffic through Google Adwords. By supporting this dual relationship, they appear to want to live by two sets of rules – those that exist within the Adwords marketplace and those that apply to the Adsense product. And because they're walking on both sides of the (Google) street, they feel they have a strategic advantage — as though the Adwords product will enable them to acquire traffic at both a lower cost and with a looser rule set than their competitors. Here's where the parallel to free trade breaks down. There are no perfect paradigms looking at free trade and import/export laws that exactly define or address this challenge. Neither would a secret relationship between the government and the search engines solve the problem. The only real solution is disclosure. Transparency. Those traffic generators that use rule-based algorithms to determine result sets must publicly disclose their methodologies. That is the means by which all businesses can compete freely in the organic and paid search marketplaces. If we lived in a world where Google didn't hold sway over such a significant portion of consumer behavior, this kind of regulation wouldn't be necessary. The market would be self-correcting, and we could trust the individual decisions of a healthy and competitive search industry. Regrettably, due to search dominance, the industry can't be left to its own devices. 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| MySpace Outsources International Advertising Operations To Fox International Channels Posted: 13 Jul 2009 05:24 AM PDT
According to new MySpace CEO Owen Van Natta, this is the first result of its international operational review, which comes a few weeks after the company gutted much of its operations abroad. Van Natta asserts that the new partnership will allow MySpace to further slash operational costs and effectively leverage FIC’s local knowledge and relationships. Fox International Channels, obviously also owned by News Corp, operates 170 linear and non-linear television services, their websites and an international online advertising business in a number of Latin-American, Asian and European countries. Starting today, FIC will start managing marketing and advertising sales for MySpace in Argentina, Brazil, Spain, Italy, Poland, Mexico, and Turkey, effectively keeping the troubled social networking company’s local operations and advertising efforts in these countries from shutting down altogether. In my opinion, this is a necessary and logical move by Van Natta. We’ve earlier noted that MySpace laid off most of its staff in countries where it isn’t competing well against Facebook, and to me it makes sense to cut your losses when you’re in apparent trouble. By effectively outsourcing the management of local advertising and marketing to another unit within MySpace’s parent company, the synergy can be mutually beneficial plus it allows the company to refocus most of its attention to the countries where it is still holding strong without suddenly losing whatever revenue came out of the countries cited above. If it’ll be enough to keep the ship from sinking remains to be seen. Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0  
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| European Publishers Band Together To Underscore Lack Of Understanding Search Engines, The Web Posted: 13 Jul 2009 05:02 AM PDT
That’s the title of a press release distributed late last week by the European Publishers Councel (EPC), which you can find here. Pretty heavy stuff, right? They don’t ask, they demand. They’re not looking for more effective application of the current IP rights protection, they want an entirely new one. And once they’ve secured that, the future of journalism will be safeguarded (hold the applause). The rest of the news release contains more gems, like this quote from Gavin O’Reilly, Group Chief Executive Officer, Independent News & Media, President of the World Association of Newspapers and News Publishers (WAN-IFRA) and Chairman of ACAP (Automated Content Access Protocol):
Whether you agree with the man or not, read Danny Sullivan’s many excellent blog posts on this topic to get some perspective. My personal favorite is this one: “Google's Love For Newspapers & How Little They Appreciate It”. There’s no better response to O’Reilly’s assertions. So what exactly prompted the EPC to push out the press release, once again underscoring their desperation in finding a viable business model now that media usage and content generation has fragmented to a point where the world of information consumption is simply not what it used to be anymore, whether publishers like it or not? Turns out the Council has started petitioning Europe's media commissioner Viviane Reding against unpaid use of their members’ content by aggregators and search engines. Their intentions are neatly outlined in this Hamburg Declaration (PDF), which is rapidly garnering loads of signatures from publishers around the world, including Mathias Döpfner (Axel Springer AG, Germany), James Murdoch (News Corp, Europe and Asia), The Rt. Hon. The Viscount Rothermere, (Daily Mail and General Trust, UK), Ian Smith (Reed Elsevier, UK), Hannu Syrjanen (Sanoma, Finland), Robert Thomson (Dow Jones, Wall Street Journal, US) and many more. An excerpt from the declaration:
Translation: we still want all the traffic Google is sending our way for free so we can generate enough page views to keep our advertisers happy and revenues up (barely), but we also want to be able to charge people for reading our content and punish those who spread this information to even more people. Surely, that will safeguard journalism. Miss Reding, you can safely ignore this declaration, no matter how many dinosaurs link their name to it. And feel free to quote me on that anywhere on the Web. Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.  
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| The Complete Guide To Microsoft’s Office 2010 Posted: 13 Jul 2009 02:50 AM PDT The web has been abuzz the past few weeks with chatter about Microsoft’s announcement today at its Worldwide Partner Conference in New Orleans about the new version of Microsoft Office 2010. There’s even a mini-movie about its debut. Facing potential challenges from Google’s browser-based Apps products and its new Chrome OS, Microsoft has been touting its three screens strategy, which is the ability for products to synchronize across the phone, browser, and desktop, for some time now. With the release of Office 2010, SharePoint Server 2010 and Visio 2010, we finally see the implementation of Microsoft Chief Software Architect Ray Ozzie’s mantra. We had the opportunity to see an in-depth demo of the new suite of products from Microsoft’s Group Product Manager for Office 2010, Chris Bryant. Here’s a complete breakdown of all the functionality that has been added, including screenshots: The Move To The Browser Most certainly a direct response to Google Apps, Microsoft is rolling out lightweight, FREE, Web browser versions of Word, PowerPoint, Excel and OneNote. All based in the cloud, the web-based versions of these products have fewer features than their desktop cousins but still give users basic tools to edit and change documents. PowerPoint 2010 PowerPoint has been upgraded not only with a new browser version, but also a slew of bells and whistles have been added to the desktop version. Users now have the capability of editing video and images within PowerPoint with a basic video editing tool (not so different from the capabilities of iMovie) and an image editing tool, which is like a basic, simple version of Adobe Photoshop. Microsoft has also added the ability for users to launch a WebEx-like live sharing feature with other users. So if you create a slideshow in PowerPoint, you can share it with other people in real-time (which can be run on top of Sharepoint). Here’s what the video editing tools look like in PowerPoint: To share a deck with other users, you send an email to individuals with a link. Once they click the link, they will see the slideshow within the browser. This feature can also be used on a mobile phone’s browser. You can also create a slideshow in the desktop version and then publish it to the web version to access it via the browser. The browser version of PowerPoint doesn’t include the video editing features, but most of the functionality of 2008 is included in the browser version. Excel 2010 Excel spreadsheets can now run in the browser, and similar to PowerPoint, spreadsheets can be published to the browser via the desktop version. The browser version of Excel has limited features, but offers more in-depth functionality than Google Spreadsheets. Microsoft has added a particularly innovative feature called Sparklines, which gives a visual snapshot image of a data trend over time within a cell. You can also share Excel via the browser with other users and set special permissions on who can access the document. Here’s what the web version of Excel looks like: Word 2010 Bryant says that the number one piece of feedback from users producing documents on Microsoft Word is that they want to preserve the look and feel of a document created in the desktop version in the browser. Microsoft calls this “document fidelity” and created the browser version of MS Word accordingly. In the browser, documents retain the same look and feel as in the desktop. The browser version still has the “ribbon user interface,” where you can change fonts, size, formatting, styles etc. An image of the web version of Word: Microsoft has also updated the desktop version to have collaborative features so that multiple users can be editing a document at once. This collaboration is not available in the web version, unfortunately. Microsoft says that users don’t want this feature but this might be a move to protect the Office revenue model. When two people are editing the same document (in the desktop version) at the same time, Word will notify each user when there are changes that need to be synced with their document. The copy/paste function of the desktop version has also received an upgrade, where you can see see a live preview for the paste function. The paste function also has an advanced option to create and insert screenshots. To make moving around a long document easier, Word now has a visual navigation pane and section header breakdown which makes it easy to jump around different sections of a document. Outlook 2010 Outlook 2010 now has a ribbon user interface, like Word, PowerPoint and Excel. The UI of email conversations has been upgraded to look almost like a message tree, allowing users a more visual view of sent and incoming emails. Search functionality has been improved as well, making it much easier to find content. Also, you can preview calendars in emails and choose to ignore selective email conversations. Sharepoint 2010 Like Outlook, Sharepoint now gets a ribbon UI, making the document-hosting product more similar to Microsoft’s flagship products, like Word. You can tag authors of documents now and can share documents and files more easily. Microsoft says that its browser versions have been tested on all major browsers aside from internet Explorer, including Firefox and Safari. Office 2010 is still being tested and reworked to function on Chrome. Microsoft also announced that it is streamlining the number of Office editions from eight to five. Office Web applications will be available in three ways: through Windows Live, where consumers will have access to Office Web applications at no cost; via on-premises versions; and via Microsoft Online Services, where customers will be able to purchase a subscription of MS Office. Microsoft says Office 2010 will be available in the first half of next year. The key part of all of this news is the free, browser-based versions of Microsoft’s most popular Office products. Bryant says that Microsoft expects the browser products to be especially popular amongst student, but I think that the web-based applications will be hugely popular in the enterprise space as well, as long as there are security precautions taken to put documents in a secure part of the cloud. But as more and more businesses are becoming comfortable with trusting cloud environments, Microsoft’s move to the browser could pay off in a big way, especially because it’s so easy to use both the desktop and browser versions of products interchangeably. The more successful Microsoft is in its browser strategy, the more they validate Google’s approach in the space, which will eventually put price pressure on Office. Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.  
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| Rollip Brings Back Distant Memories Of Discolored Polaroid Photos Posted: 13 Jul 2009 02:49 AM PDT
Once you have, you can download the photo or share it on your social network of choice or by e-mail. Here’s a picture I took last week at The Europas event in London, featuring TechCrunch’s Sarah Lacy and Paul Carr. Polaroid version, courtesy of Rollip Original picture (Thank you, MoMB) Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.  
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| TWS2009 Showcases Ten of Israel’s Most Promising Startups Posted: 13 Jul 2009 01:33 AM PDT
The event is aimed at showcasing ten promising Israeli startups and to serve as a networking platform for the individuals and companies leading Israel’s startup scene. All ten companies were chosen by a world-class panel of judges, ranging from über-Angel investor Ron Conway, to legendary ICQ founder and current founder and CTO of Dotomi, Yair Goldfinger. Below are the official company descriptions for the ten startups chosen by the judges to present their products on stage in front of over 700 private and institutional investors, executives and entrepreneurs:
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| TeachStreet Launches Payments Platform For Teachers Posted: 12 Jul 2009 11:23 PM PDT TeachStreet, a Yelp-like service for real world classes (cooking, dog obedience, music lessons, ballroom dance, foreign language, golf, yoga, etc.), is launching a marketplace feature for teachers to be able to coordinate payments from students. TeachStreet, which serves seven metropolitan areas in the U.S. including New York City, Silicon Valley/San Francisco and Seattle, allows instructors to upload information about classes. Users can look for available classes, and read and write reviews on the course and the instructor. Currently, the site includes a selection of more than 135,000 classes and teachers, across more than 700 subjects and categories. TeachStreet payments enables credit card payments for a portion of teachers/classes, letting teachers who are unfamiliar with e-commerce be able to elicit sales leads from the web. TeachStreet’s founder, Amazon and JibJab Alum Dave Schappell, tells us that the site is powered by PayPal Website Payments Pro to make it easy for both students and teachers to use the system. TeachStreet charges students a 5% for booking and charges teachers a 4.9% processing fee. Teachers pay an additional 2.5% first-time-student payment fee to TeachStreet. While adding a listing and profile on TeachStreet is free, teachers only pay out to the site when a sale takes place. TeachStreet plans to also let teachers also opt out of the fee-model and pay monthly fee but the pricing has not been determined. TeachStreet doesn’t just simplify e-commerce for teachers. The site is also letting teachers use a call-tracking service (powered by Twilio), which gives teachers an 1-800 (or local) number that allows any messages to be forwarded to email and lets teachers keep their numbers private. TeachStreet also provides teachers with data and analytics, including number of visits and views, number of sales leads from e-mail messages, phone calls and site-visits, and competitive information on other teachers and classes in their categories and geographical areas. There’s no doubt that TeachStreet’s new features are going to be particularly useful to teachers who want to implement e-commerce to get sales leads, but don’t want to pay to power the site themselves or simply don’t know how to navigate the process. It’s seems like a win-win for teachers, especially considering that TeachStreet’s fees are fairly low. TeachStreet has had a bittersweet year so far. The startup had a small round of layoffs in the spring, but rebounded with a $1.2 million extended Series A funding round in May from Madrona Venture Group and Bezos Expeditions. Competitors include School Of Everything and Libersy.  Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.  
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| Photos From 2009 Techcrunch Crunchup and August Capital Party Posted: 12 Jul 2009 09:40 PM PDT Thanks again to all of you who came out to our Real Time Stream CrunchUp and August Capital Summer Party. We broke 600 attendees to the Real Time Stream CrunchUp, double our initial expectations, and we hosted lots more of you at the August Capital outing. We had an amazing group of CrunchUp speakers to talk about new trends, boundaries and your passions. And we fit in 22 new product highlights from start-ups and big internet companies alike. It was a blast, and we’ve got the photos to prove it. Photos by Marc Salsberry
Click through on any thumbnail to view a photo at full size
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| Push Notifications On The iPhone Are Great, But… Posted: 12 Jul 2009 07:27 PM PDT
The issue I’m noticing now is that if you have too many apps with Push Notifications turned on, the whole system becomes a lot less useful. You see, Push Notifications are basically Apple’s way to get around allowing third-party apps to run in the background of the iPhone. So apps can now send these push messages to your phone to let you know if there’s some kind of message or update that you should open an app for. But if you have a lot of push messages coming in, I’m finding that you either have to pull out your phone every couple minutes, or risk still missing notifications that you probably want to see. The problem is that the Push Notification message indicators are not built for heavy use. If you have multiple push messages coming in to you phone, only the latest one will be shown on the screen. And even when you unlock your phone, it’s hard to tell which push messages have come in. Though you can set a badge on app icons to let you know there is a message, if it was overridden by another message, you are forced to open the app to figure out what it was. And let’s be clear: It’s not like I’m using Push on a ton of applications. I’m basically only using it (regularly) on three right now: Foursquare (a location-based social network [iTunes Link]), GPush (which does push for Gmail, which sadly isn’t approved in the App Store, yet), and Boxcar (which does Twitter @replies and DMs [iTunes Link]). At one point, I had it on for AIM too, but that got to be too much to handle in and of itself. Between just those three, I’m getting pinged every few minutes during the regular hours of the day (if not more often during peak hours). And while that’s fine, because I can change things like the audio notifications, I want to be able to see a full list of what has come in since I last looked at my phone. Google’s Android platform handles this in a much nicer way, with a top drop-down menu that breaks up your notifications (which are also a bit different since applications can run in the background on Android). Of course, that is only after you unlock your phone, but still, that would be much more ideal than the current iPhone method.
This guy did a nice mock-up last year, but that was before Push Notifications were even available. And Apple has been thinking about this too, according to its patents. A system that is something like this (right) is needed even more now. Naturally, this should all be user-adjustable in the settings, but it seems like an easy enough thing to do. Because as many people are shortly going to find out, the current way of handling Push Notifications just isn’t cutting it unless you’re only using one app that gets messages once every few hours. And with more Push-capable apps coming everyday, the problem is only going to get worse. [mockup: robertsdonovan.com] Crunch Network: CrunchBase the free database of technology companies, people, and investors  
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| OurStage Raising More Funding In Quest For Profitability Posted: 12 Jul 2009 05:11 PM PDT
OurStage says it intends to double the amount of financing for the Series B round, which would bring the total investment put into the company to $23 million by the end of 2009. Since launching publicly back in April 2007 the company has been steadily attracting users to join its service, which enables people to discover new independent artists, rank and share music with others and communicate directly with upcoming singer/songwriters and bands. Thanks to viral growth in combination with dozens of partnerships with music festivals, radio networks and media companies like AOL/WinAmp, OurStage is currently nearing 1 million registered users. The company has also managed to sway 95,000 artists into joining the platform, and in combination with the strong user base they currently receive about 3 million unique visitors on the site every month. So how do they monetize the service? By focusing on three good old revenue streams that seem to work well for them: sponsoring, advertising and data services. The latter I think is interesting: OurStage is beta testing a service called TRAViS (shorts for Track Validation Services) that is currently being trialled by divisions of four major record labels and will be publicly launched in Q4 2009, and expects to add some more services targeted at industry professionals soon. Somehow OurStage has also found a way to get close to running a cash-flow positive business with classic advertising (powered by ad platforms like MTV Tribe, AOL’s Platform A and IndieClick) and sponsorships from major corporations like MTV2, JetBlue, Radio One as well as notable artists like Bow Wow, Busta Rhymes and John Legend. According to the company, ad revenues alone have grown tenfold year-over-year compared to the same period in 2008. Not enough to impress you? Maybe the startup’s board of directors will convince you the company is onto something great here: it includes a former CMO of Yahoo!, David Moore (founder and Chairman of 24/7 RealMedia), the founder and CTO of Maven Networks, the former Chairman and CEO of Interpublic and since last month, former Chairman and CEO of Sony Music Don Ienner. Refreshing to hear this type of update from an Internet startup these days. Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.  
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| Is Free The Future Of Enterprise Software? Yes And No. Posted: 12 Jul 2009 04:30 PM PDT
There’s now a lot of buzz debating the business model of “Free” with the release of Chris Anderson’s new book. Most of the conversation has focused on free media and free consumer services, but ultimately the effects and expectations of free in our consumer lives will begin to emerge within our business lives. Today, there’s no shortage of examples of free or “freemium” business software, from commercial services (37Signals, PBworks, Google Apps) to open source (Mysql, SugarCRM), yet, there’s still a great divide of SaaS solutions selling their software with an “older” format (Salesforce.com) and even some with a really old model (SharePoint). Simply judging by the relative market caps of companies pursuing each model, no one in SaaS has built up a substantial enterprise business yet with the model of free or freemium alone. Mysql only got to $50M in revenue before it was acquired, and the majority of freemium enterprise service providers are still in the tens-of-millions range, with few exceptions. Mark Cuban brings an interesting point to the debate: when you live by your free service, you die by your free service. There’s certainly merit in this argument if your business model is an advertising model based on pageview volume alone or if you’re holding up solely because of venture capital. When your uniqueness and flavor dries up, so may your users, and thus your revenue and funding. This was generally Mark’s concern when we introduced the free version early in 2006 (he was an early investor in Box, with no current stake): Why would people ever pay? How do you avoid just eating up a ton of costs with no revenue to supplement? What about when someone else comes out with a version of your service that’s also free with more bells and whistles? How will you remain competitive? To put one main argument to rest, we’ve learned that there is no business model in Free alone (duh), while there may just be a large business model in Freemium in time. There are a few reasons why the freemium model has enabled new software products to grab significant market share while also build a strong enterprise business in the face of dozens of startup competitors and giants like (both free and pay). This model allows you to surface your service to a much wider customer base (cross vertical, geography, function) and learn from and efficiently attract all types of users onto the service. And - more significantly - maintaining a free version of your service for a single user or small group is a very efficient way to get users to eventually actually pay for your product: customers can quickly try out your service without a lengthy sales pitch and users with limited requirements can get by for free, but recommend the business version to their company when the time is right. Take a look at Google Apps for a great example of this model done right. You can use as much Gmail and Calendar as you want as a single user or small group, but if you want the real business version on your domain, it’s time to pay up (see their 15,000 seat Genentech deal). Instead of spending large amounts of money on marketing that tells people about a product, create a community of free users and create evangelists in the process. It also helps avoid the risk of competitors coming in and undercutting your costs - fun fact: when in a sales “bake off,” Box.net loses the largest amount of deals to ourselves, not to another service. Let me emphasize that in case you missed it: Not everyone will find the same value in your product or service. For those that don’t, why not keep them as users and turn them into evangelists? Freemium allows the actual consumer of the technology to make decisions in an unprecedented way: if the product doesn’t solve their problem, they move on to something else. This forces you to create better, more usable products, and not simply build your business on aggressive and costly marketing and sales. Instead of focusing primarily on the purchasing party (often an IT or department manager), the model is inverted, with more power being put in the hands of the end-user of the technology. Onerous contracts and deep sales relationships don’t keep them there. This means your product has to rock, and it has to constantly be asking and answering the same fundamental question: are we providing the best valuable possible? If you’re not, Free users will leave and the rest certainly will never pay. Freemium is also great strategy for products that have high switching costs - why not allow me to start using a free version, get hooked, and begin charging me when I hit a threshold of activity? Every day, in our own business, we have to make budget decisions on new software which can ultimately hold up the purchase by months; whereas if we were able to start using the product immediately we’d quickly hit a usage threshold, and we’d be more convinced about the solution at the point of purchase (no more buyers remorse). Instead, we end up doing a price bake off between multiple solutions, and whoever has the better sales rep and “story” essentially wins. What if Salesforce.com gave you the first 100 contacts for free, then you start paying once you need more? Once my first 100 leads are added into SalesForce, I’m not going anywhere else. If your service offers true ROI once implemented, why not let me implement it for free and charge me once I achieve some success? These strategies will reduce the sales friction of any service, allow businesses to be more competitive, and expand the potential market dramatically. The great news is that because software distribution and sales models are adapting with the times, the number of people that can now access and afford your product has gone up exponentially in the past decade. Given the fact that we can now develop and deliver software much more easily and cheaply (distribution over the web vs. hardware and software sales), and thus reflect these cost improvements onto customers, we can now go after much larger or harder to reach markets more efficiently (small businesses, for instance). With the right product, reaching 10 million potential business users and customers is now trivial. Imagine doing that 10 or 20 years ago. And with an addressable market in the millions of users, it becomes a lot more practical than ever before to make a meaningful business just selling to a subset of that base. So what to take from all this? Here are some quick lessons we’ve learned from “Free” in the enterprise:
This discussion certainly isn’t over. We’re going through a major sea change. It happened to music, it happened to consumer services, it’s happening to newspapers and publishing, and it will happen to business software. The business models are changing. It means software businesses will need to be innovative and adaptable, but ultimately you’ll survive if people want what you have to offer, regardless of the price tag. Of course there will always be room for premium software to be pay-only, just like we still expect to pay a premium for a variety of content in the “real” world (movies, research reports, education, etc); but, for mass penetration the reality is Free and Freemium will you get there quicker, faster, and with less friction along the way. If that’s what you’re looking for, then it’s just up to you to figure out the actual business model if you want it to last. Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.  
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| Want To Give Pinboard A Try? You’ll Have To Pay $2.84 Posted: 12 Jul 2009 03:57 PM PDT
Last week I wrote about a snappy new bookmarking tool called Pinboard. The best way to describe it is Delicious before Yahoo mangled that product into an over-featured sluggish shadow of its formerly zippy self. Founder Maciej Ceglowski, a former Yahoo and Twitter engineer, noted a surge of new account request in a blog post, noting that he was putting new resources in place to take on the new users. Today, though, he sent out an email to people requesting accounts telling them they’ll need to pay a “small signup fee” to create a new account:
This is a side project for Ceglowski, so charging a fee for new users certainly isn’t a dumb business move. And if enough people pay to use the service, maybe it will signal to him to move this front and center on his priority list. I would have done things a little differently, though - let people in for free and charge them after a week or so or shut down their account. That lets people try it out before they open their wallet. Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0  
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| Favstar.fm Makes The Twitter “Favorite” Less Of An Unwanted Step-Child Posted: 12 Jul 2009 03:32 PM PDT
One would assume you’re supposed to use it to start your favorite tweets, but I don’t use it like that, because what’s the point? Instead, I mostly use it to bookmark tweets that I want to find later. But a new service Favstar.fm hopes to take the Favorite functionality back to its roots, and make it useful. While the fairly popular Favrd service has revolved around favorites for a while, it is basically only useful to show the most favorited tweets across the whole network on any given day. You can find individual user pages, but it’s not very obvious how to do that, and results only go back for a few weeks. Favstar.fm wants to be the all encompassing Twitter favorites destination. The main page shows a recent leaderboard that can be set to show tweets of only a certain level (10 favorites, for example). If you sign in via Twitter OAuth, you get a whole range of functionality, including the ability to follow people from Favstar.fm and see what tweets your friends are favoriting. Also, by signing in it is easy to see who is favoriting your tweets. As we all know, a big part of Twitter is vanity, so many of us likely want to know who is favoriting which tweets of ours. With Favstar.fm, it’s easy to see that. Because it’s aiming to track favorites across the whole network for all time periods, Favstar works a little slower than Favrd does, developer Tim Haines tells us. But it seems like a fair trade-off to get all this data. And if you want your data quicker, Favstar.fm prioritizes those users who sign in via Twitter OAuth. Crunch Network: CrunchBase the free database of technology companies, people, and investors  
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The following post was written by a well known executive at one of the largest sites on the Internet. The author has requested to remain anonymous - not for dramatic effect, but because of the backlash he would receive from the SEO industry and possibly Google itself. He also doesn’t want his company associated with the post. 
International publishers demand new intellectual property rights protection to safeguard the future of journalism. 
Unless you’re the nostalgic type (I know I am), this won’t interest you much. 
This morning is the kickoff of 
After being scarce for the first couple of weeks following the new iPhone 3.0 software rolling out, apps with Push Notifications are now rolling out at a healthy clip. And that’s great, because the feature is really useful. To a point.
But better would be some sort of way to break up these messages when you still have the phone locked. I’m thinking first of all maybe breaking up Push Notifications, text messages and calls by colors, and displaying them in a list on the screen. Then then having some way to further break down Push Notifications on that screen, maybe placing the app icon next to each and saying something like (4) new Foursquare messages, like Apple currently does for text messages.
Indie music discovery service 
Aaron Levie is the CEO and co-founder of 
Here’s an innovative idea - charge users to beta test a product.
The “Favorite” is kind of like the unwanted step child feature of Twitter. Though it has been around since the early days of the service, they have never really done anything to promote its use.
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