OverMatter

Bit.ly’s Grand Plans

"URL shortener and analytics service Bit.ly has been working on a new set of products, being referred to as “Bit.ly Now” internally, which will define the next stage of the company’s growth. The company confirmed these plans to us today. The services will include both a destination website as well as a distributed service via expansions to the Bit.ly API.

The core Bit.ly service, which lets users shorten web URLs into something suitable for Twitter and other services with limits on characters per post, has continued to grow quickly. 7 million URLs are shortened via the service each day, the company says, and 2-3 million of those are unique URLs Bit.ly has not seen before. Those Bit.ly URLs are clicked on 150 million times per week across a wide range of services - Twitter, Facebook, instant messaging, email, etc. Twitter itself now uses Bit.ly for URl shortening, and the service has quickly taken the lead in their market.

The magic behind Bit.ly are the stats that the service makes available on the underlying domains being clicked. Investor John Borthwick explained it all to investors in an email we obtained earlier this month:

bit.ly has been on a tear since we launched it last summer — let me sketch out what it is, why its useful and offer some data points on progress. bit.ly is on its surface a link or URL shortener, helping people take long and unwieldy links and make them short and easy to share via email, Twitter, Facebook etc. But once you shorten a link with bit.ly the fun begins. You can put a simple “+” on the end of any bit.ly link and see, real time, the pace at which that link is getting shared and clicked on as it moves around these social distribution networks.

Bit.ly Now will take all of this deep (and wide) data on popular real time URLs and turn it into a service. That’s where the inevitable clash with Digg comes in.

Digg shows popular links based on what people vote on, filtered massively for fraud. The Digg home page is populated with the top stories voted on by Digg users.

But only 20,000 or so new links a day are submitted to Digg (compare that to 2-3 million for Bit.ly). And Digg has to constantly fight users who try to game the system and get access to home page traffic. They also rely on users to categorize links and provide other metadata about the stories.

That’s why Digg launched their own URL shortener service, and are planning a new real time product of their own. The goal is to reduce the dependence on this flawed human voting system.

Bit.ly’s new Bit.ly Now service will show popular links at any given time, just like Digg (for now, Bit.ly sends the most popular link every hour to a twitter account). When Bit.ly Now launches, that link data will be combined with additional metadata about the URLs. In particular, they plan to extract important entities, people and topics from the stories in real time, allowing for a categorized approach to popular links. Bit.ly says they are talking to a number of third party services, including Reuter’s Open Calais, to help them do this.

Those are two big advantages Bit.ly has over Digg - distributed link clicking data that is far harder to game than Digg, and automated real time categorization of links. But there’s a third advantage as well.

Bit.ly says that the data flow they are seeing is so massive that they are getting very good at predicting the number of clicks a link will get in the future. They look at acceleration of clicks as well as the source (Facebook, Twitter, IM, whatever) and whether people are clicking that are outside of the social graphs of other people clicking.

In other words, you could say that Bit.ly knows what will be on the Digg home page tomorrow.

They knew, for example, that the Neda Youtube video would be popular far before it was featured on CNN and other major media sites and then made its way to Digg.

The Bit.ly Now service will be both a destination site as well as a distributed service via the Bit.ly API. Third parties will be able to access the data based on topics or keywords. News sites may find this particularly valuable to monitor trends and supply additional relevant content to readers.

Perhaps even Digg may find this interesting. The real time stuff Digg is working on will overlap significantly with Bit.ly, we’ve heard. Digg will be looking for link information beyond what the Digg community adds directly.

The last thing Digg wants is to become reliant on Bit.ly data, though, with a directly competing Bit.ly destination site out there. If I were Digg, I’d start talking to Bit.ly now to see if I could find a way to avoid that situation.

It’s also clear that the new service will become a huge competitive advantage to Bit.ly’s core shortener service. Sites like ours, which use our own shortener service, will be left out of the Bit.ly service. Publishers who otherwise wouldn’t care will start to use Bit.ly to increase exposure in the ecosystem. Then the network effect kicks in - as more people use Bit.ly they get more data, making the service stronger, and forcing more people to use the service. It’s a great place to be."

Bit.ly’s Grand Plans, And Their Inevitable Clash With Digg: Bitly Now.

Googling with Bing

See more funny videos and funny pictures at CollegeHumor.

Betaworks

"We are still in the early days of building betaworks into a new type of media company - one characterized by a loosely coupled network of companies. A network that is connected by shared data services matched with a bottoms up structure."

Betaworks --- Email To Investors

Dr. T.J. Rodgers, March 25, 1993

Dr. Rodgers' Testimony: High Technology Innovation: Free Markets or Government Subsidies? - Cypress Semiconductor

Redbox's machines vs Netflix's envelopes

"With more subscribers than ever flocking to its DVD-by-mail service, Netflix Inc. is one of the few companies to prosper during the worst U.S. recession in 70 years. Yet Netflix CEO Reed Hastings still has something to worry about: an even cheaper DVD rental service run by one of his former lieutenants.

Once just an incongruous experiment amid the burgers and fries at McDonald's restaurants, Redbox has emerged as the largest operator of DVD-rental kiosks, with more than 15,400 vending machines set up to dispense $1-per-day discs in supermarkets and discount stores.

With Redbox opening an average of one kiosk per hour to lure budget-conscious consumers, Hastings is concerned that this upstart might upstage Netflix, whose cheapest mail-order plan costs $5 for two movie rentals in a month.

"By the end of the year, kiosks will likely be our No. 1 competitor," Hastings said in a recent conference call. "There are already more kiosks in America than video stores."

The fight for DVD-rental loyalties figures to intensify as Netflix, Redbox, Blockbuster Inc. and others vie for the attention of frugal consumers looking for inexpensive home entertainment. According to research from PricewaterhouseCoopers, Americans last year spent less money buying DVDs and more on rentals from stores, kiosks and online services like Netflix. The trend is expected to continue this year.

Redbox began in 2002 as a way for McDonald's Corp. to expand beyond the burger business. A strategy group inside the company tested a few "automated retail" ideas, as it called them.

"Vending sounded so last-century," said Gregg Kaplan, who led Redbox from inception until April, when he became chief operating officer of its parent company, Coinstar Inc.

McDonald's also tried a machine that made fresh french fries and an 18-foot-wide automated convenience store that sold everything from toilet paper to fancy sandwiches. Only the DVD kiosk stuck.

The group running Redbox grew from operating 12 of the DVD machines to about 900 in three years. By the middle of 2005, Redbox was itching to expand beyond burger joints, and McDonald's agreed to let it seek out another partner.

Coinstar already had a national sales team placing machines that converted loose change into bills in supermarkets, drug stores and other retailers — relationships it could use to pave the way for Redbox kiosks, too. In 2005 and 2006, Bellevue, Wash.-based Coinstar invested $37 million in Redbox and took majority ownership, and this year Coinstar bought out McDonald's and other investors for up to $25 million.

Redbox, still based near McDonald's in Oakbrook Terrace, Ill., said last May it planned to go public, but the economy deteriorated and an IPO never materialized. Now DVD kiosks account for more than half of Coinstar's sales and profit. That profit more than doubled in the last quarter on sales that rose even more swiftly to $154 million. (An undisclosed portion of that came from DVDXpress, a much smaller kiosk chain Coinstar also owns.)

Meanwhile, Netflix grew at a slower pace, with first-quarter revenue rising 21 percent to $394 million.

Mitch Lowe, Redbox's president, came to the company after six years with Netflix, where he was vice president of business development. While at Netflix, he managed one of the company's competitive advantages: a popular system that recommends lesser-known movies to subscribers based on ratings for films they've already watched. That helps Netflix's 10.3 million customers sift through 100,000 movie titles.

In contrast, Redbox machines carry about 700 discs with 200 titles, mainly recent releases, and rely instead on the $1 nightly rate to encourage people to experiment. Four million people have swiped a card at one of the kiosks in the past month.

Another difference: Because Netflix pays postage twice for every DVD it rents out, it does best when customers choose ambitious subscription plans but are slow to watch and return movies. By comparison, Redbox's profits depend on it renting out each disc as many times as possible before demand for the movie peters out.

To that end, Redbox tracks rentals to predict the right mix of titles and the right number of copies for each location. It also lets customers go online and reserve a DVD in a specific kiosk, then pick it up in person. The $1 price may be the initial draw, but most people end up paying to keep DVDs for two or three days.

If Redbox grows into a serious challenge to Netflix, it will have done what two much larger companies, Blockbuster and Wal-Mart Stores Inc., could not.

Both tried to match Netflix's DVD-by-mail success. Wal-Mart quit the business and gave all its customers to Netflix. Blockbuster still trails Netflix in DVDs by mail, and is also closing a growing number of unprofitable stores.

Now Redbox's success has prompted Blockbuster to promise 10,000 DVD kiosks of its own in a deal with NCR Corp. The maker of ATMs and cash registers acquired the second-largest movie kiosk company, TNR Holdings Corp., in April.

Redbox kiosks also sell used DVDs for $7, sometimes less than two weeks after they're available to rent, rather than the two or three months video stores usually wait. The practice irked some Hollywood studios — which may jeopardize the $1-a-day rental model that helps make Redbox so attractive.

Last year, NBC Universal's DVD distribution arm, Universal Studios Home Entertainment, pressed Redbox to limit the number of Universal DVDs its kiosks could carry and to destroy used discs instead of selling them at cut-rate prices. When Redbox refused, Universal ordered its partners to stop selling DVDs to Redbox at wholesale prices. Redbox sued Universal for violating antitrust laws, among other claims.

The case is still underway and Redbox would not say what effect it might have on its DVD rental or resale prices. But Wedbush Morgan Securities analyst Michael Pachter bets that if Redbox loses the lawsuit, other studios could follow Universal's lead, pushing Redbox to either agree to restrictions or buy movies at retail prices, then raise rental rates.

Universal Studios Home Entertainment did not return a call for comment.

In the era of YouTube and Hulu, video iPods, Netflix's own streaming video service and devices that connect TVs to the Internet, storming an industry by way of supermarket vending machines seems very yesterday.

But while DVDs will someday disappear, for now the market dynamics still work for Redbox: almost 90 percent of U.S. homes have a DVD or Blu-Ray player, while only a sliver download movies to their computer or stream them from the Internet, said Russ Crupnick, an entertainment analyst for market researcher NPD Group.

Crupnick doesn't expect streaming services to fully catch on until the technology is built into more television sets. And since many people just invested in new flat-screen TVs, it will be years before they replace them.

"Digital options and physical options can coexist," said Crupnick. "People think there's this balkanization — `Once I get Netflix, I never go to Blockbuster. Once I go to Redbox, I don't need Netflix.' That's really not the way that it works in the world.""

The Associated Press

What's off the table?

"Breakthroughs always come from doing something that everyone else says is off the table."

Seth Godin

Daily Show Rips The New York Times

Google Translator Kit

Automated Translation Meets Crowdsourcing

Harvesting

"When you start a business, a brand or a project, there's a lot of work to be done. You must tell a story, build credibility and a permission asset. People don't trust you or believe you and you must earn their attention and trust. On top of that, you need skills, systems, machines and a team that works.

Quite an investment.

The goal is to reach the point where there's some harvesting going on. The first sales might cost you a hundred or thousand dollars each to make. At some point, though, you want sales to happen for free, people to show up with money. At some point, you want word of mouth to replace promotion and to earn back the money you invested up front.

That's why it's astonishing to me that people develop projects where harvesting is difficult or impossible. Here are some of the elements of a market where you are likely to reach the point where you can harvest the benefits of your investment:

* Word spreads. You want a market where stories of your success and reputation will reach other prospects.

* Needs are similar. You want a market where the skills you developed to help one person can also be used to help another person.

* Budgets exist. You want a market where there is more than one player with money to spend (on you) to solve a problem.

* Barriers exist. The market should reward insiders (like you) but make it really difficult for copycats to come in and steal share and lower prices.

* Price should rise with value delivered. As your work spreads and your reputation increases, you should be able to charge more, not less.

I think 90% of all markets don't meet these standards, and given the choice, I'd avoid them."

Seth Godin's Blog

Predictably Irrational

Best Cell Phone Company Ad Ever

V.C.’s Ignore Business Plans

"Go ahead and write that 50-page business plan about your fledgling venture if it helps you to focus. Just do not bother showing it to venture capitalists, because it will do nothing to improve your chances of getting financing.

That, The New York Times’s Brent Bowers writes, is the surprising conclusion of a new study by researchers at the University of Maryland’s business school.

Researchers found that venture capitalists, who screen hundreds or thousands of solicitations each year, pay little or no heed to the content of business plans. Instead, the study said, because they make decisions “under conditions of high uncertainty,” venture capitalists rely on instinct and their expertise in ferreting out information by other means to evaluate the prospects of a business.

That means, the study said, that they pay little attention to the documentation from entrepreneurs about their academic credentials, work or start-up experience, previous success in raising equity capital, ability to form a top-notch management team or even how much money they want.

“In general, business plans don’t matter,” said Brent Goldfarb, an associate professor of management and entrepreneurship at the Robert H. Smith School of Business, who wrote the study with David A, Kirsch, also an associate professor at the school, and Azi Gera, a doctoral student. “Nobody is going to read them.”

That assertion flies in the face of the conventional wisdom that writing a business plan is one of the first and most essential tasks an entrepreneur should undertake, Mr. Goldfarb acknowledged. But, he says, the report’s conclusions jibe with the feedback he gets from venture capitalists.

Jeff Fagnan, general partner of Atlas Venture in Waltham, Mass., which provides seed money for young businesses, said he agreed with the study’s main premise. “I’ve never given funding to an entrepreneur who had a business plan with him when he walked into my office,” Mr. Fagnan told The Times. “Never. Most of the information you find there, five-year financial forecasts and so on, is not relevant.”

He says he looks for “market validation,” hard evidence that the entrepreneur has actually sold his product or at least lined up enthusiastic potential customers. Mr. Fagnan says that, rather than reading a report, he wants to hear the evidence in PowerPoint slides, white board presentations or “somebody just talking.”

But if he does not look at their business plans, how do entrepreneurs gain an audience with him? “The No. 1 way is referrals” by a respected figure in business or banking, Mr. Fagnan said. If he asked the people referred to him for a business plan, “they would probably say they don’t have one,” he told The Times.

Greg Herro, chief executive of LifeGem, a maker of specialty jewelry in Elk Grove Village, Ill., laughed when asked about the business plan he wrote to show to venture capitalists and other professional investors a few years ago.

“It was no use to us whatsoever,” Mr. Herro told The Times. “Investors might read a business plan’s executive summary, but they have no interest in the endless pages of nonsense that entrepreneurs like me put out. If you don’t have a track record or actual sales, they are leery.”"

V.C.’s Ignore Business Plans, Study Finds - DealBook Blog - NYTimes.com.

Efficient vs Effective, Part 2

"In the early stages of startup, focusing on ‘execution’ will put you out of business. Instead, you need a ‘learning and discovery’ process so you can get the company to the point where you know what to execute."

(betaworks)

Obama's Global Tax Bungle

"President Obama revealed Monday that he's half a supply-sider. If only someone could explain to him the other half. We have a tax code, the President said, "that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York." That sounds like a great argument for lowering taxes on the guy creating jobs in Buffalo. Alas, that's not what he has in mind.

Set aside that India is a poor example to make Mr. Obama's point, since its corporate tax rate on foreign-owned companies can be as high as 55%. The President's argument is that U.S. tax-deferral rules make it more expensive for American companies to reinvest overseas profits at home than abroad. This, he claims, creates a perverse incentive for companies to "ship jobs overseas" and reduces investment and job creation in the U.S.

He's right, except that his proposals would only compound the problem. His plan would limit the tax deferral on income earned abroad by tightening the rules, limiting allowable deductions and restricting eligibility for foreign-tax credits. This "solution" is antigrowth, job-destroying, protectionist and unlikely to raise the tax revenue Mr. Obama predicts. Other than that . . .

The current tax-deferral system is a clumsy attempt to deal with the fact that most other countries don't tax their companies' overseas profits. A German firm doing business in Ireland, say, pays no German income tax on its Irish profits, but it does pay Ireland's corporate income tax at its 12.5% rate. The U.S. company competing with that German business in Ireland, by contrast, pays Ireland the same 12.5% on its profits -- and it then pays Uncle Sam up to 35%, minus a credit for what it paid the Irish. And because almost everyone else's corporate tax rates are lower than America's (see nearby table), U.S. companies end up paying higher taxes than their international competitors.
[Review & Outlook]

Congress long ago created the corporate tax deferral to compensate for this competitive disadvantage. Under deferral, a company doesn't have to pay the U.S. corporate rate until it repatriates its earnings. It can retain them overseas or reinvest them abroad with no penalty. But if it brings them home or pays them as dividends, the tax bill comes due.

The German company faces no such quandary. It pays the Irish tax, and it's free to invest that money in Ireland or Germany or anywhere else. This territorial tax system, embraced by most of the world, eliminates the perverse incentive to hold money abroad that America's deferral system creates. Adopting a territorial system would be the most obvious and simplest way to eliminate the distortion that tax deferral creates. Alternatively, Mr. Obama could lower the U.S. corporate tax rate to a level that is internationally competitive.

Yes, we know: Few major U.S. companies pay 35% of their profits in taxes because of the foreign tax-deferral and other deductions, credits and loopholes. But that's precisely why Mr. Obama should want to take the better path to corporate tax reform by reducing the rate and removing loopholes. America now has the worst of both worlds -- a high statutory rate and a tax code so riddled with complexity that it is both expensive to administer and inefficient at collecting revenue. And yet Mr. Obama's proposal to limit deferral only layers on the complexity.

In promoting its new global tax raid, the White House fingered the Netherlands, which it lumped with Ireland and Bermuda as "small, low-tax countries" that supposedly account for an outsize share of reported foreign profits of U.S. firms. The Dutch corporate tax rate is 25.5% -- which isn't even all that low by current European standards. And the U.S. is the largest foreign investor in that "small, low-tax country," according to the Dutch Embassy. Perhaps reducing American investment there and slamming the Netherlands as a tax haven is Mr. Obama's way of reaching out to friends and allies.

But the Netherlands won't be the only country hurt. The explicit goal of this plan is to reduce the incentive for U.S. companies to invest abroad, which Mr. Obama derisively calls "shipping jobs overseas." Foreign companies may relish the loss of U.S. corporate competitiveness that his proposal will bring in the short term. But in the long term, reducing U.S. investment globally will hurt everyone. And that investment is a two-way street -- the Netherlands is also the fourth-largest foreign investor in the U.S.

Some of Mr. Obama's advisers understand all this, but then their real goal isn't tax reform or U.S. competitiveness. It's a revenue grab, one made easier by the fact that overseas tax "avoidance" is easily demagogued. To that political end, Mr. Obama conflates tax deferral with the offshoring of jobs -- hence the sly reference to Bangalore, India. With trillions of dollars of new spending, the White House and Treasury are desperate for new tax sources to pay for it all.

But even as a revenue raiser, this is likely to fail. Fewer companies will keep their headquarters in the U.S., especially small or mid-sized firms that can slip away without becoming a political target. Those companies that can't flee will sooner or later demand relief from Congress, which will be happy to create even more loopholes.

If Mr. Obama's proposal has a silver lining, it is that he has embraced the principle that tax rates matter to investment decisions. If his new and short-sighted proposal becomes law, he and all Americans will discover just how much."

(Obama's Global Tax Raid - WSJ.com)

What people really are paying for new cars

TRUECAR - The Authority on New Car Pricing

Twitter Auto-Follow

"Ironically, the asyncronicity of Twitter was hotly contested by a lot of early adopters who pressured the Twitter team heavily to change it to an auto-follow model. Evan Williams & crew always held out, convinced it was of key importance to how the site would grow and scale. Looks like they were right."

Twitter’s Real Edge: It’s not Scary

Powerthirst

Can they see you in China?

Website Test behind the Great Firewall of China

The Banker Who Said No - Forbes.com

"In late 2006 he sold $74 million of preferred stock although he had no immediate use for the proceeds. He says he couldn't resist the "stupidly mispriced" terms--as low as Libor plus 1.7 percentage points for 30 years. He wanted as much money available when the boom turned to bust. With the extra money the bank could pay off nearly all its depositors with capital on hand--nearly unheard of in the history of banking.

Then came a shocker: Amid one of the most reckless lending sprees in history, regulators focused on the one bank that refused to play along. Beal's moves confused and worried them, and so they began to probe him with questions. "What are you doing?" he recalls them asking. "You're shrinking yet you're raising capital?"

Says Beal about the scrutiny, "I just didn't fit into any box." One regulator, the former head of the Texas Savings & Loan Department, Charles Danny Payne, says, "I was skeptical at first, but I've gained a lot of confidence over the years," adding that Beal has an "uncanny ability to sniff out deals."

Next, the credit rating agencies started pestering him about his dwindling loan portfolio. They never downgraded him but scolded him for seeming not to have a "sustainable" business model. This while their colleagues were signing off on $32 billion of bum collateralized debt obligations issued by Merrill Lynch."

Forbes.com

On Tesla

On Bailouts and Sports Car « The Jason Calacanis Weblog

To Be or To Do?

Col John R. Boyd, USAF

[July 1, 2007 - Of all the things Boyd wrote or said, we probably get the most requests for his "To be or to do?" invitation. Although Boyd associated with many junior officers during his Air Force career, there were a few, perhaps half a dozen, that he had such respect for that he invited them to join him on his quest for change. Each one would be offered the choice: Be someone - be recognized by the system and promoted - or do something that would last for the Air Force and the country. It was unfortunate, and says something about the state of American's armed forces, that it was rarely possible to do both.

Boyd's biographer, Robert Coram, collected the invitation from an officer who got it and selected the "to do" option, and he confirmed its essence from several others. CR]

“Tiger, one day you will come to a fork in the road,” he said. “And you’re going to have to make a decision about which direction you want to go.” He raised his hand and pointed. “If you go that way you can be somebody. You will have to make compromises and you will have to turn your back on your friends. But you will be a member of the club and you will get promoted and you will get good assignments.” Then Boyd raised his other hand and pointed another direction. “Or you can go that way and you can do something - something for your country and for your Air Force and for yourself. If you decide you want to do something, you may not get promoted and you may not get the good assignments and you certainly will not be a favorite of your superiors. But you won’t have to compromise yourself. You will be true to your friends and to yourself. And your work might make a difference.” He paused and stared into the officer’s eyes and heart. “To be somebody or to do something. In life there is often a roll call. That’s when you will have to make a decision. To be or to do. Which way will you go?

Defense and the National Interest » To Be Or To Do?

Defense and the National Interest » John Boyd Compendium

John Boyd (military strategist) - Wikipedia, the free encyclopedia

Lab126

Invented Here.

How Twitter Was Born

140 Characters

Inter-Network SMS

Odd to think that inter-network SMS in the USA only dates back to 2002...

Cingular Joins Inter-Network SMS Move | Communications Today

Tips for Startups in a Down Market

Seth Godin's 7 Tips for Startups in a Down Market - mashable.com