Monday, July 23, 2012

The Latest from TechCrunch

The Latest from TechCrunch

Link to TechCrunch

Referly Gets More Social, Launches API: Now Any Site Can Have A Referral Program

Posted: 23 Jul 2012 09:12 AM PDT

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Some more developments for Referly, the Y-Combinator/500 Startups company co-founded by Twilio’s ex-head of marketing, Danielle Morrill. It is launching an API program that will let any online merchant create a referrals program powered by Referly’s pay-per-action marketplace. At the same time, the company is launching  a service that will drive more traffic to its own retail operation: a new shopping directory for people to browse products being recommended by users of Referly’s referral program.

Referly describes the new API scheme as “customer acquisition as a service.” Free to use while the product is in beta, it is constructed loosely around a Google AdWords-style business model: businesses decide how much they are willing to pay to get a new customer (represented by a signup, or upgrade or whatever else is chosen). The businesses ”fund their account with a pre-paid deposit,” the company says. Referly subsequently takes from that account with each reward that is paid out: users get cash rewards when they generate actions like sign-ups or sales.

“With the launch of the Referly API we're expanding our referral network beyond e-commerce sales to incentivize actions that drive the sale of software-as-a-service (SaaS) products,” said Danielle Morrill, CEO and co-founder of Referly said in a statement. “Now SaaS companies can reward their biggest fans when they generate sign-ups, upgrades or other actions in the customer acquisition funnel.”

Since launching earlier this year, Danielle Morrill tells me the company has added “thousands of users.” She notes that referrals typically have been converting “very well,” and yield three to five times the eCPMs one sees with search engine marketing.

“There is a very simple reason for this,” she says. “People are only recommending products they believe in, to people who trust them. Individuals are more creative and have better targeting with their tweets, Facebook status updates and emails than any automated ad network.”

And in what must be music to some of your ears, so far Referly has seen very little spam. “Spammers don’t win when it comes to referrals and they find out very quickly,” she heeds. The reason for that is because if you post too many recommendations to your Facebook feed, your friends will name and shame you. “There is a social contract when using these tools that requires you to do something interesting, or risk getting unfriended. It’s a natural deterrent to spam,” she says. As these services grow, it will be interesting to see if that continues to be the case.

Morrill tells me that there are already some companies signed up for the merchant API but they cannot be named because they are mostly in the same class as Referly in the Y-Combinator program, and so they have not yet been launched. These should be coming out soon, however.

Although the beta version of the API is free, longer term, Morrill tells me that Referly will charge. She says the company is exploring two different models: pay-as-you-go where Referly takes a percentage of rewards; and flat rate where a business pays would a flat amount for various transaction thresholds.

The company is taking a refreshingly fluid approach to how it takes that next. “We’re open to exploring other models, too. This is a big reason why we are not waiting any longer to launch. We need to start figuring out pricing and the market can help us with that,” she says.

The service today is being aimed primarily at SaaS companies, which rarely have social referral programs but could benefit from them. “The Dropbox referral program and Living Social referral program are awesome examples of how this tactic can be very successful,” she notes. “We want to make it much more widespread and accessible to web-based companies of all kinds.” Of course, Referly will also be looking to work with e-commerce sites, but some of that territory has already been trod by others. “We find they usually already have affiliate programs we can integrate with,” she says.

NetworkedBlogs, 750k Blogs Strong, Adds Panorama News Reader To Expand Beyond Blogger Services

Posted: 23 Jul 2012 08:43 AM PDT

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NetworkedBlogs, the popular platform that lets bloggers syndicate their work to social networking sites and embed social widgets on their blogs, is changing focus. From today, it will be relaunching its homepage to focus around a new, panorama news reader that lets you follow news on other blogs and the rest of the web, pin articles for reading later, and follow individuals — moves that it’s making to widen its audience beyond that of bloggers, according to Waleed Abdulla, the founder of Ninua, the developer behind NetworkedBlogs.

The aim is “shifting from building tools for bloggers, to building tools for both bloggers and readers,” he tells me. The dual-focus, he says, has always been the aim of the company, but it has only been possible to put it into action after receiving backing from 500 Startups and TMT Investments last year. To date, the company has raised $450,000 in seed funding.

To be clear, the news reading development doesn’t mean NetworkedBlogs is dropping its legacy business: it counts some 750,000 blogs in its network, which use the platform to publish feeds to Facebook and Twitter, and to create tabs for Facebook pages. “Of course we continue to improve our blogger tools as well,” he told me.

While that platform gets used tons daily by those 750k blogs syndicating their content elsewhere, right now the main site gets just over 1 million monthly visits, says Abdulla. The site’s existing, basic news reading app (“just a list of links” is how Abdulla describes it), had only 50,000 visits per month, he says.

The new news reader will give Networked Blogs a crack at raising both of those numbers — and potentially developing it into a consumption platform as much as one used for aggregation and distribution. “Now that we have a much better reading experience, we hope to change [those visitor numbers] soon,” he says.

It will, of course, be contending with a number of other services that are also vying to be the news readers of choice for today’s web consumers. They include mobile-friendly apps like Flipboard and Pulse, Twitter and its many clients, Google Reader and more.

NetworkedBlogs will be approaching this from the standpoint that it already has some traction with bloggers around its existing services.

Among the features: a much more visually-led layout, which uses images from content being syndicated.

And the dashboard-style view, with each blog ordered in columns, is reminiscent of TweetDeck. And for those of us who might use this to keep up on the latest news, there is a handy indication in the main list of titles that tells you the time of the most recent update to that blog.

Abdulla tells me that content on the reader will not be limited to that of the 750,000 blogs.

“You can follow any blog that’s already registered on NetworkedBlogs, or if it’s not, you can add it yourself. The only requirement is that it has an RSS/ATOM feed because behind the scenes that’s how we fetch the content,” he says. He notes that this version does not yet support importing OMPL files or subscribing to feeds without registering them in the directory. “Hopefully soon, though,” he adds.

Mobile. The new service is going live on the website, and so far there are no plans for new mobile apps. Last year, Ninua launched a separate, news sharing app for Android — also part of the strategy to extend beyond blogger services. Abdullah notes that the developers have been “hearing from friends” that they want to see our news reader on the iPad, so that might be the next likely step in mobile, he says.

A film walking you through the changes is embedded below.

Texting Doesn’t Make Your Kids Dumb, Text Bands Do

Posted: 23 Jul 2012 08:39 AM PDT

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I’m not one of those people who thinks that texting and tweeting is ruining children’s ability to communicate. Texting and tweeting are the future of communication, so if kids are learning to keep it concise or feel more comfortable sending a text to their crush than making a call, I’m all for it. That’s not to say that this communication should be at the expense of all personal real-life interaction, but it doesn’t mean that the kids themselves are becoming dumb because they can keep a tweet under 140 characters.

The technology companies are providing kids for this communication, on the other hand, is certainly becoming dumb. Take these Text Bands, for example. Hallmark thinks that they can lure kids into typing 10-character messages with the help of three buttons in a situation where messages can only be sent by a fist-bump or high-five.

These are $15 wristbands, meaning that all the specs, including wireless, are severely limited. That means that transmissions only work if the two bands are within a foot of each other. Past that, kids have to scroll through each letter of the alphabet using a three-button menu until they’ve filled out their message, with 10 characters max.

The issue is that most kids have evolved far beyond this type of gimmicky product. I’m sure a few of them will realize that Text Bands may be good for telling a friend a secret in a crowd, but so is a cell phone text. Two-year olds sit down with an iPad and understand it almost immediately. Small children can usually figure out how to make a phone call or open up an app if you hand them your phone, even if they can’t read.

So to think that a kid, even a small one, would be satisfied with this is a joke. Text Bands are a toy and nothing more, and in a world where kids are getting cell phones and smartphones at relatively young ages, there is really no place for something so cheap and useless.

In any case, the Text Bands are available at Hallmark stores today starting at $14.99.

Workplace Collaboration Tool Asana Raises $28M At A $280M Valuation

Posted: 23 Jul 2012 08:26 AM PDT

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Enterprise workflow tool Asana has raised a $28 million Series B round, it announced earlier today, bringing its total funding to $38 million. The round was led by storied investor Peter Thiel and Founders Fund, who invested in the collaboration software alongside existing backers like Benchmark, Andreessen Horowitz, and Mitch Kapor.

We’re hearing that the valuation of the Series B was at a formidable $280 million post money ($252 million pre). We’re also hearing that the pretty solid B round was a substantial initial investment for leader Founders Fund.

While he would not confirm the valuation, Asana co-founder and former Facebooker Justin Rosenstein did tell me that the company would be using the financing to bulk up on staff. “We’ve known from the start that hiring the world’s best designers, engineers, and other contributors is critical to achieving the Asana vision,” Rosenstein said, “And this capital enables us to continue doing just that.”

When asked why the company went with Founders Fund as a lead after many expressed interest, Rosenstein said, “Peter and Founders Fund have been clear that they’re interested in collaborating on bold projects that can have significant, leveraged, positive impact on the human condition. All of us agree that reshaping how people coordinate their collective action is a key opportunity to do that.”

Rosenstein wouldn’t reveal Asana user numbers, but told me that the startup had “tens of thousands of teams” using it (including us here at TC!) to manage tasks, and had doubled from tracking 9 million tasks to 18 million tasks within the past four months. One VC recently told me that almost every startup coming in to pitch was using Asana: A trendy enterprise app! I am seriously awed and impressed.

“I know enterprise isn’t usually your beat,” Rosenstein remarked when I mentioned that I had heard about and was interested in Asana’s popularity, “But I’m guessing that’s related to the fact that most enterprise services are just bad products, they’re made to appease the CIO instead of the end-user.”

One might say that Asana is the poster-child for the consumerization of the IT industry, “I’d like to think one of biggest things we’re doing differently is that we come from a deep product user-experience-above-all-else background.”

Well, whatever they’re doing, it’s working: After much initial hesitation, I am now an Asana convert. And yes, it’s actually helping me work. Like right now, even.

Asana aims to inspire not just with software. Check out the start of the company’s “Toast to The Future of Work“:

We are privileged that our jobs are fundamentally creative. That is, they consist in creating — in taking some bold idea or vision that begins life just in our minds, just in our collective imaginations, and manifesting it in the physical world. In so doing, we change the world around us. We can change the lives of others for the better, make something beautiful where before there was nothing.

From skyscrapers to software, from vaccines to space travel, greatness is the fruit of human collaboration, of groups of people with a shared vision working together, step by step, task by task.

Some see work as a way to become wealthy. We see "work" as an act of service, an act of love, for the greater good of humanity. Some people think of "corporations" and think of amassing capital, of accumulating resources for its own sake. While we do intend for Asana to thrive in the fiscal marketplace, we see that only as a means toward an end. We see companies as groups of people contributing something to the world. By working together, they can accomplish so much more than the sum of their parts.

 

Hipmunk Aims At Assistants And Office Managers With Its First Paid Product, Hipmunk Business Class

Posted: 23 Jul 2012 08:10 AM PDT

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Travel search startup Hipmunk is launching its first paid product today — Hipmunk Business Class, which offers extra features designed for assistants, office managers, and other folks who have to book trips for multiple businesses travelers.

CEO Adam Goldstein tells me he originally designed the site as a response to his own personal travel experiences, with the expectation that it would be used mostly for leisure travel, but feedback and data is showing that there are users who find Hipmunk “way more useful in a business context.” After all, one of Hipmunk’s key insights is the fact that some people aren’t just looking for the cheapest way to book a flight, and instead may care more about reducing their “agony” by avoiding things like red-eye flights and multiple layovers. That probably resonates if you’re an assistant booking a flight for a business executive, where you care more about agony (or at least convenience) than price.

The biggest addition in Hipmunk Business Class is a new process for approving travel. Previously, if you wanted to make reservations for someone else on Hipmunk, you probably ran a search, made a list of likely flights, and then copied the details into an email. Then, once they’d chosen a flight, you’d redo the search, select the flight again, and purchase the tickets.

Now, Hipmunk has streamlined that process — you can automatically create an email listing any of the flights that you want to include, and the recipient can hit an “approve” button from directly within that email to make their selection. Once they do, their assistant (or whoever) gets a notification that takes them directly to the right flight on the Hipmunk site.

Other features include integration with Outlook calendars (Hipmunk already integrated with Google), so you can see someone’s schedules and remove any flights that conflict with existing meetings. When you’re booking a hotel, Hipmunk Business Class can also bring up a map showing where a hotel is in relation to someone’s scheduled meetings, allowing you to ensure that you don’t accidentally book them in an inconvenient location. And you can save different travel preferences, like their favorites airlines and hotels, for different users.

Goldstein says there are no plans to develop paid products for other customer groups. It made sense in this case, he says, because assistants made up a significant part of the Hipmunk customer base (the company estimates that about one-third of its traffic comes from business travelers), they had needs for specific features that probably wouldn’t get used by everyone else, and at small and medium businesses, many assistants are probably paying $25 or $35 per phone call to book travel with various agencies. So developing a paid product seemed like a good way to justify the investment in new features.

This is probably one of the big product announcements that was promised when Hipmunk raised a $15 million Series B last month.

Hipmunk Business Class will cost $10 per month, after a 60-day trial period. You can read more here.

Georama’s Map-Based Travel Search Service Goes Live

Posted: 23 Jul 2012 07:56 AM PDT

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Chicago-based Georama is now launching what it calls a “map-based travel platform.” In layman’s terms, that’s a travel search service that’s entirely based on top of a map. It can either suggest places for you to go based on your interests or other factors (e.g. time of year), or, if you already have a few places in mind, you can use Georama to explore things like local attractions and activities, restaurants, nightlife, weather, news, deals and more.

The company has bootstrapped itself to $250,000 and raised another $250,000 from undisclosed New York angels a couple of months ago.

Georama was founded by Nihal Advani, an ex-Microsoftie who previously worked in Search (Bing) and Display (Microsoft Media Network). He also interned at Google while in college. Serving as CEO, Advani leads Georama’s team of 17, who are based in both Chicago and India.

So, what’s the big idea with a “map-based” platform, I wanted to know.”We believe in providing an experience for travelers, something that hasn't been done that well in the online travel industry so far,” Advani tells me. “We built a one-of-a-kind interactive map from scratch  - it's patent pending – to craft a visual experience that is unique, immersive, and fun,” he says. “Georama is also the only true one-stop solution…we have partnered with 20+ providers (and this is just the initial list) bringing together the best content, fares, and social networks from across the web in one place.” The partners provide the content related to fares, destinations, news, deals, etc. on the site.

To be completely frank, color me skeptical about the benefits of a “map-based” travel platform. That’s something that sounds like what people want, but in practice, navigating and exploring through numerous destinations via a map feels unwieldy and cumbersome. I remember talking to JetPac CEO Julian Green earlier this month following his company’s raise of $2.4 million for its iPad travel search platform. He told me that the company had specifically not focused on a map interface, because “even though people like looking at the map – it’s sort of cool – they get stuck, they don’t know where to start.”

To be fair, Georama is trying to help people figure out where to start – its interface lets you click on icons like “beach,” “family,” “golf,” “ski,” “eco-friendly,” etc. to narrow down ideas. But I found that, when pulling up items on the map, pushpins would be dropped on top of other pushpins from the zoomed out worldview, meaning you had to zoom in to click accurately. There is a lot of information available once you have a destination pulled up, however, and the Facebook Connect option lets you see if you have local friends, which is handy. But overall, the UI here needs work – its pop-up destination windows, cluttered interface, and black-and-white icons felt a little old-school for my tastes. Your mileage, as they say, may vary.

However, it is nice to have the destination discovery, social features (it also connects with Foursquare, Instagram and YouTube), and the ticket booking process under one umbrella. That’s something that not all competitors in the “social travel” search space currently offer, often focusing more on the “inspirational” rather than the “transactional” part of the equation. One-stop shopping is one of the many reasons why newly-IPO’ed Kayak is so popular, for example. You can browse interests and deals before booking. But Kayak still feels like it’s more for the final step in travel process – buying tickets – and is not as focused on “where do I want to go?”

Georama has some interesting advisors on board, it should be noted. Currently an ex-Orbitz COO, an ex-President of United.com, an ex-VP of Sabre, the Country Head of Microsoft India, and the Head of BMGI India are all helping Georama, Advani tells me.

The platform launched into private beta at the DEMO conference this year, but is now open to all.

MacBook Pro With Retina Display Shipping Estimate Improves To 1-2 Weeks

Posted: 23 Jul 2012 07:38 AM PDT

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The line for a MacBook Pro with Retina Display just got a bit shorter. The US Apple Store now pegs the new MBP’s shipping estimate at 1-2 weeks.

The MacBook Pro with Retina Display launched with much fanfare in early June. Apple called it the “most beautiful computer we have ever made.” The model quickly sold out, pushing shipping times to 3-4 weeks, which later fell to 2-3 weeks. Best Buy lists the model with a shipping estimate of 7-30 days.

MacRumors points out that the ship time improved to 1-2 weeks in the European and Asia-Pacific regions.

While the supply levels are improving, the models might still be hard to get a hold of for the forseeable future as the back to school season approaches. Apple’s PC market share is increasing as more people seemingly jump the Windows ship onto Apple’s party boat. The MacBook Pro with Retina Display does not currently have a direct competitor thanks to its amazing screen, thin chassis and class-leading battery life.



Droplings Is A Little App That Makes It Easier To Share Dropbox Files

Posted: 23 Jul 2012 07:08 AM PDT

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It’s actually quite hard to send a public link to someone in Dropbox. You have to dump the file, find it, sometimes right click and sometimes jump over to the website, and then grab the right link. Thankfully, Droplings improves things immensely.

To use Droplings, you simply drag a file to the tiny drop in the corner of your OS X screen. The file is uploaded automatically and a public link appears in your clipboard. The system also builds a preview page around the file that you can edit to suit your own needs. It’s really that simple. The app is free right now, although there could be a paid version forthcoming.

The app allows you to create custom link screens, thereby allowing you to customize the experience your clients or friends see when they grab our files.

Munich-based programmer Carlo Zottmann built the app so he could share files with his clients quickly and easily. It requires your Dropbox user ID which you can either find in a public link or, barring that, in most pages of the Dropbox site when you’re logged in. Just view source and look near the top of the code.



API Management Platform Mashery Closes On $10 Million, Doubles The Number Of Mashery-Powered Apps

Posted: 23 Jul 2012 06:52 AM PDT

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It was just over a year ago that API management company Mashery was touting its $11 million Series D. Today, the company is announcing $10 million in new funding, led by OpenView Venture Partners, with participation from existing investors Cisco, Formative Ventures, First Round Capital, and .406 Ventures.

As a reflection of the growth of web-based businesses, the number of developers using Mashery’s service has been booming. In 2010, there were just 35,000 developers in Mashery’s network. A year later, there were 100,000. And today, Mashery says its network now has 160,000 members.

That’s equivalent of 30% growth over the past year, the company reports this morning. Also growing, its SaaS-based API management platform which has seen 272% growth in traffic year-over-year. The number of applications built on Mashery-powered APIs grew over 75% year-over-year, currently totaling 50,000. That’s double what Mashery was seeing last May, for comparison purposes.

“As you can imagine, given the explosive growth in the mobile and app worlds and the need for APIs as the ingredients of apps, we’ve grown a lot,” Mashery CEO Oren Michels says. “We’re now 90 people and have offices in SF, NYC, Boston and London. As we support larger and more complex API programs, our product and service offerings need to continue to expand to maintain our leadership and serve our customers. This round will fuel that.”

Alongside news of the funding, the company highlighted the massive growth in APIs over the past year in general, which it called the “most aggressive growth to date.” According to API catalog ProgrammableWeb, API volume doubled three times faster in 2011 than in 2008. By May, it reported a 15% increase in enterprise APIs alone. Mashery notes that it works with many of these companies, including 10% of the Fortune 100, and 150 brands like ABC News, Choice Hotels, Cisco, ESPN, Harper Collins, Intercontinental Hotels Group, USA TODAY, Expedia, Travelocity, Klout, Rdio, Comcast and more.

As before, it’s not only the growth in “desktop-sized” web businesses that are fueling Mashery’s growth – mobile plays a big factor here as well. Apps, and particularly those on iOS and Android are creating demand for more APIs.

“When we started, there was no iPhone or App Store or Facebook platform – and although I’d love to say we were eerily prescient and predicted all that, we didn’t,” Michels admits. “But we did know that companies need to work in partnership with others to grow, and that there was a better, faster, and more frictionless way to do that, through APIs. We see similar evolution in adjacent areas, and we’ll be investing this capital to capture that market as well,” he adds.

And, as he points out, it’s very hard and expensive to grow and succeed if you don’t have an API platform.  ”Being a platform allows you to leverage services and/or distribution built by others, he says. “If you’re not a platform, you need to build all those services and fund that distribution yourself.”

Mashery says it’s planning to use the new funding to expand its platform, operations, sales and marketing forces. So, everything. And yes, that means it’s hiring.

I think Michels’ earlier quote (which I loved) also still holds true, and even more so today than ever before: “People used to sit at a desk to 'Internet'. Then they would get up and stop Internetting. Now they Internet wherever, whenever — even when they don't think they are doing it.”

Note: Updated with more comments from Michels, following initial publication. Mon. 11 AM ET.

WedPics, Pinstagram For Weddings, Preps For Launch With Teaser Video

Posted: 23 Jul 2012 06:41 AM PDT

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The wedding space is blowing up, with Appy Couple, Wedit, and Lover.ly offering brides ways to organize, plan, and share their wedding. But for attendees, something a little lighter may be in order. Perhaps, an Instagram-like sharing app that replaces those stupid disposable cameras.

That’s where WedPics comes in. The service is prepping for an August 7 launch of the app and website, but luckily we got a sneak peek during our Raleigh-Durham mini meetup. Essentially, WedPics is a mobile app that lets guests snap pictures and add cool filters (Instagram-style) at the wedding. The pictures then go into a unified wedding album for later perusal by the happy couple and/or their beloved guests.

But the service doesn’t pull from just one of our favorite photo sharing services, but two. The app has a Pinterest-esque structure to it, displaying images in that same half-drop grid format we’ve grown so accustomed to. Users have the option to “love” various images as well as comment on them.

The bride and groom can also write a little blurb to their users thanking them for attending and giving them any pertinent information they might need.

There is a slideshow feature, along with tabs to connect with different people or jot down a few notes. WedPics also offers printing services, ranging from a traditional photo album to canvases and iPhone covers.

The app for Android and iOS will go live on August 7, along with the website, but if you sign up now you’ll get 50 percent off the $99 flat rate price to brides and grooms.

Click to view slideshow.


Cross-Platform Gaming Startup TreSensa Locks Up $1 Million In Angel Funding, Launches SDK Into Beta

Posted: 23 Jul 2012 06:30 AM PDT

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Well, New York-based TreSensa is having a busy morning. The cross-platform gaming startup revealed that it has locked up a cool $1 million in angel funding, and launched its new TreSensa game engine SDK into public beta.

TreSensa is the brainchild of Rakesh Raju and Tremor Video alums Rob Grossberg and Vincent Obermeier, who departed from the digital video company shortly after it acquired ScanScout in 2010. In short, the year-old company's mission is to provide support and tools to developers who want to create HTML5 games for players sitting at desks or on the go.

The company’s focus on cross-platform gaming may seem worlds away from Tremor's digital video roots (the pair was apparently “burned out on video”), but Grossberg tells me that the theories behind both projects aren't that different. According to him, both companies aim to provide "content creators an in emerging arena" with the tools to make them successful. For Tremor, that meant (among other things) helping those creators monetize their videos with ads, but TreSensa game creators will be able to tap into the company's distribution services and the ability to integrate features like asynchronous multiplayer (currently in private beta).

It's up to each developer to decide how much they want to bank on TreSensa's platform — they can dive in head-first and use TreSensa's own game engine, but that's hardly a requirement. Co-founder Obermeier was quick to note that developers who use other engines or SDKs will still be able to add TreSensa's additional features into the mix.

"We're making TreSensa component-sized," he said. "Say you're using Unity or Corona — you can do that and still use our backend services to implement things like multiplayer support."

Of course, helping to monetize those games remains a big focus for TreSensa — the company's first step is to implement support for current monetization models like offering paid virtual goods and digital currencies. From there, the pair peg advertising as playing a critical role because of the extensive reach that HTML5 games have — after all, they can be played by anyone with a smartphone or a reasonably up-to-date web browser.

It's still early days for TreSensa, but the startup's development platform has already garnered some attention from interested investors. As it turns out though, that angel fund raising process was relatively painless, mostly because Grossberg and Obermeier entered into it with a considerable network of contacts and resources.

"We're not spring chickens here," Grossberg quipped.

That said, it's not like the two of them embarked on the process without any help. Grossberg cites New York startup incubator First Growth Venture Network as a crucial resource for the team as they worked to get TreSensa off the ground. Now, developers and media companies are showing signs of interest in TreSensa's nascent offerings. YouTube content partner Mondo Media recently used TreSensa's game engine SDK to create an HTML5 game based on the Happy Tree Friends franchise, and Grossberg mentioned to me that a "very large, New York-based media company" has expressed interest in TreSensa's multiplayer functionality.

Pinterest Analytics Site PinReach Puts Itself Up For Sale As Co-Founder Joins Google

Posted: 23 Jul 2012 06:11 AM PDT

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Well, it looks like the market for social media analytics has gotten a little less crowded, for now at least: the Pinterest analytics startup PinReach – which had originally been called PinClout until a cease & desist from Klout forced it to change its name – has just put itself up for sale on Flippa. You can buy it now for $10,000, or bid against others to see where you get.

Chris Fay, one of the co-founders, says that the reason for the sale is because he has accepted a position with Google, “and to avoid a conflict of interest my co-founder and I have decided to sell.” Included in the sale is the site’s technology “powering the aggregation and analysis of Pinterest data,” as well as the PinReach brand and domain.

We are reaching out to Fay to find out exactly what his role with Google will be — and whether it will have anything to do with building either a Pinterest-style service, or one that helps analyse and monitor activity on social media sites.

PinReach currently has 22,000 registered users, and claims it was the first of the Pinterest analytic services on the market, launching in early 2012. It got the cease & desist “within a few days” of our launch, Fay writes. That led the company to rebrand and also extend itself from just Pinterest influence measurement to the wider role of analytics. Up to now, the service has been free, “and as such we have virtually no revenue to show,” although Fay does point out that demand for the service is seeing usage numbers continue to rise.

As you can see from the site’s statistics, embedded below, its traffic was on the rise. The falloff in the last day, I believe, could have been down to the site itself going down for maintenance. (It’s back up at the time of writing, though.) Most of its users are in the U.S. and Facebook is the biggest provider of incoming traffic.

While social media sites like Pinterest continue to grow, the number of companies springing up to make sense of the data swirling around in them have been sprouting up, too. One of them, Pinpuff (which says it measures ‘Pinfluence’), recently got bought by the LA-based tech incubator Science. Another, Curalate, picked up a $750k seed round from NEA and others.

With Pinterest referral traffic now beating sites like Twitter, StumbleUpon, Bing and Google (but not Google Organic), you can see where big data might well smell an opportunity.

There are currently 39 sites tagged “pinterest” for sale on Flippa, ranging from straight-out Pinterest clones to those marketing themselves as SEO and Pinterest business services.

A Tiger And A Monkey Walk Into A Tech Party

Posted: 23 Jul 2012 06:06 AM PDT

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Many people in tech balk that this kind of fun culture stuff, both the reporting of it and the doing of it, is not “serious,” arguing tautology. It’s not serious for a reason dummy, it’s what people do for fun. You wanted a tautological argument, so there you go.

I for one am in love with the culture surrounding startups as well as the bumbling, subjective “journalistic” coverage of it. The fashion, music, memes, parties, artwork, literature, etc of tech, love it all — And I especially love the fact that taking it seriously pisses people off like no other.

From this post about VC socks, to this post about swag, to this post about mogul fashion, to most of Quora, to hell, even the specious brogramming trend pieces, I find the cumulative behaviors of our community fascinating, namely because getting a bunch of geniuses in one place makes for a lot of creativity. And, whether you admit to it or not, you do too.

Which brings me to an interesting Valley dichotomy, that Jay Yarow put most succinctly in this mock exchange, “Silicon Valley: We’re changing the world, give us millions of dollars. World: Really? Let’s film a show about it. SV: Ummm, we’re boring!”

So why, if we’re actually in the middle of transforming the way people live and do business, are we so quick to say we’re bores? Because well, in a sense, we are — faux humility aside.

This hotly contested Nick Bilton article is a heavy-handed interpretation of what’s happening: Yes, there are more billion dollar valuation companies than there were four years ago, and those companies use some of their cash to hire Snoop Dogg. There exists a cheesy-looking reality TV show. One founder bought a fancy pair of jeans. The sky isn’t falling

Sorry Nick, while there are some riveting things about The Valley, the tech parties as a whole are not one of them. In fact it’s almost amazing how dull most “official” startup parties are in Silicon Valley; Rooms full of pale, doughy guys in khakis and blue shirts drinking bad wine and talking about the challenges of mobile.

A few outliers a bubble does not make. Parties happen in good times and bad, and Sean Parker model parties are an exception, not the rule. That’s why people talk about them. No one is going on about those raging Friday afternoon pizza parties at TechCrunch neighbor ShopItToMe. And I’m willing to bet that Bilton’s ridiculous Monkey/Tiger fete was an enterprise thing.

Jokes aside, this really isn’t 1999, which is everyone’s baseline for insane. Apparently there was coke around in 1999 (I was still in high school so I don’t know), a pretty accurate bellwether for excess. What I do know is I’ve never even SEEN cocaine at a Valley tech party, compared to the almost every time I see it in NYC.

“We’re definitely not in 1999 land on the parties,” Founders Fund partner Brian Singerman told me when I asked him to contrast today’s party scene to then over the phone, “In 1999 when you went to a random Silicon Valley party, there would be dudes on stilts and lobster. And this wasn’t Google and Amazon and Yahoo, this was bitlocker.com.”

TechCrunch founder Michael Arrington, who used to throw some celebrated backyard parties himself, gave Bilton the following hilarious advice, “Stop going to parties. Then use all that free time to start spending time with the serious people, doing serious things. They aren't at those ridiculous parties. So, why are you?”

Even this is sort of wrong. The “serious” people do in fact party, just at different kinds of (ridiculous) parties. The really interesting parties in The Bay Area aren’t lavish or douchey, they actually have good music, and just so happen to be thrown by people in tech. Usually they have (gasp!) a cover charge.

“Some of us work in tech, some don’t,” Johnny Hwin, co-founder of popular SF event space The Sub tells me, “A lot of people who come to our events are entrepreneurs, but a lot are artists too. If anything, we’re in a creative bubble. I think we’re seeing more creativity applied to parties and events.”

I agree with him (the last party I attended at The Sub was a strange kind of futuristic art auction, and the attendees ranged from Mission hipsters to Thiel fellows), and will add my observation that the coolest parties have only a tenuous relationship to the “tech scene,” and usually involve some sort of costume.

Company parties usually suck, no matter which company: I ended up leaving that Snoop Dogg party Bilton refers to because I was bored and had lost my voice.

“At the best Silicon Valley parties, it doesn’t matter who the entertainment is or what there is to drink,” says our resident TechCrunch party expert Josh Constine (seriously, ask him how he just got a concussion), “The true makers end up on the back corner of the dance floor dreaming. The soirees fade to colorful backdrops, and the visionaries take the little time they have together as a chance to help each other unravel their most burning questions.”

And there are no caged tigers.

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Google Affirms The Nexus 7′s Main Fault With This Adorable Commercial

Posted: 23 Jul 2012 05:47 AM PDT

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The Nexus 7 is a fantastic tablet — for the price. To me and many others its only downside is lack of built-in wireless data connectivity. It can only connect to the internet’s tubes through WiFi.

Google apparently agrees. I won’t spoil the cute commercial but let’s just say the dad isn’t using a WiFi hotspot to entertain his son.

With WiFi hotspots, phone apps, and USB modems, there are a ton of ways to feed a tablet or computer wireless data while on the go. But none are as seamless or efficient as a built-in solution. Requiring another device adds another potential point of failure.

Still, even though the Nexus 7 is only WiFi-only, it’s still an amazing tablet that’s totally worth its price. But I wouldn’t buy it. I’m spoiled by a Verizon iPad and, before it, a first-gen Xoom. I simply cannot imagine owning a tablet that requires another device to connect it to the internet. I mean, I really don’t want to bring my phone along on a camping trip, but a tablet is a must-have to keep the kids entertained. What else are they going to do camping? Get dirty and have fun? Pssh. It’s Kingdom Rush time!

Amazon Just Put A Rocket Under London’s Biggest Tech Startup Cluster

Posted: 23 Jul 2012 05:03 AM PDT

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With the news that Amazon will open an R&D hub in London focused on developing services and APIs for TVs, games consoles, smartphones and PCs, we’ve reached a big inflection point in the development of London’s largest single cluster of internet-oriented tech companies.

It’s eight-floor, 47,000-square-feet space in Glasshouse Yard, Barbican, is equi-distant from the large Shoreditch-centred cluster centred around the Google-backed Campus London (containing Seedcamp, Springboard, TechHub, Central Working) and the smaller (but developing) Clerkenwell cluster centred around the Passion Capital-backed White Bear Yard. (We’ve taken as our reference data for this, the excellent map produced by Duedil, which does not focus on the East of London but maps all tech clusters in London).

But Amazon’s arrival is significant, not because of the name but because of what they will do: engineering and development. Now, I don’t want to sound ungrateful, but until now many of the initiatives in the East London tech cluster have focused around, well, initiatives. That’s not to do down the many events and conferences and meetups which have made it so vibrant in recent times. And it must be noted that Google’s Campus – produced after prodding from Number 10 and the TCIO – doesn’t put much onto its bottom line, so it’s pretty altruistic stuff. (Indeed, our sources say No. 10 ‘nudged’ Amazon into the area as well). But what’s been more important has been the development of the underlying core strength of companies: companies like Moo, Songkick, Mind Candy’s MoshiMonsters, and the like.

It’s clear now that the cluster is developing core “Anchor Companies”. These are the companies around which any cluster can really start to thrive because they employ large engineering teams, out of which new innovations grow, new companies are born, exits are made and investments are re-cycled back. We’ve identified the main ones as:

Amazon
Mendeley
Yammer (now part of Microsoft)
Huddle
7Digital
Moo
Mind Candy

Yes, there are plenty of others: Amee for one is trying to measure the planet’s carbon footprint. And there is Editd, Lookk and plenty of others. But these are still relatively early companies. The companies above are big, well-funded and proven. And Amazon’s arrival is about to supercharge that cluster in ways we haven’t seen before in London.

Amazon today specifically mentions the development of APIs. It owns UK streaming service and Netflix competitor LOVEFiLM as well as UK-based TV app company Pushbutton. We are not talking far-flung sales arms with no engineers. We are talking software engineers, user-interface experts, graphic designers, the works. Those people will be within walking distance of some of London’s hottest tech companies, and that can only be a good thing.

So, it’s exciting to see some real technology talent arriving to address all those issues we’ve been highlighting recently.



Research: Samsung Has Sold 10M Galaxy S3′s, But ‘iPhone 5′ Still The Most-Wanted Phone

Posted: 23 Jul 2012 04:26 AM PDT

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You know a brand is doing something right when people go a little crazy for its products even before they’ve been announced. A new survey out from 451 Research/ChangeWave on consumer smartphone sentiment found that Apple’s iPhone 5 — whatever that may turn out to be — is seeing an “unprecedented” wave of advance demand — higher than any other iPhone model has had before, with 14 percent of respondents saying they were “very likely” to buy the iPhone 5. In contrast, the S3 from Samsung, got a 2 percent “very likely” response from users planning to buy a smartphone in the next 90 days. The news comes one day after Samsung noted it has passed 10 million in Galaxy S3 devices in the two months since launch in other markets.

Apple is likely to launch a new smartphone later this year, the 451/ChangeWave researchers note, and that will put it in a perfect position to take advantage of what they believe will be a high-water mark for smartphone purchases. Samsung will also reap some benefits, it notes, although that will be proportionate to weaker demand for its brand. The rest of the competitive lineup may not fare so well.

“Overall smartphone sales should spike to an all-time high this fall, and of course Apple is going to be the number one beneficiary,” notes Dr. Paul Carton, 451 / ChangeWave’s VP of Research. “But besides Apple, and to a lesser degree Samsung, no other manufacturer is likely to benefit from this coming wave of demand.”

Among those other results, overall demand for Nokia is now at 2 percent, up one point from March. Demand for Motorola is now at 4 percent overall, down two percentage points since March. And HTC and RIM were unchanged, respectively at 3 percent and 2 percent — with the latter “all-time low” for RIM.

ChangeWave’s survey canvassed opinion from 4,042 mainly North American buyers in June 2012. In addition to finding that 14 percent of consumers said they were “very likely” to buy an iPhone 5, a further 17 percent said they were “somewhat likely to buy it in the future. As a point of comparison, when the same questions were asked about the iPhone 4s before it launched, 10 percent said they were very likely; and 11.5 percent said they were somewhat likely to buy it. And that’s for a device that is now “considered the most successful smart phone release in history,” Carton notes. The numbers for those “unlikely” to buy the device also went down:

What’s interesting is that ChangeWave doesn’t take into account that before the iPhone 4S launched, many thought it would be the fabled iPhone 5 — when in reality it physically looked exactly the same as the iPhone 4, and had much of the same functionality — with one notable exception being the addition of the Siri voice assistant. So what we may be seeing here is an increased, pent-up demand from people who have actually held off from buying the iPhone 4S in anticipation of a major update and upgrade.

But that’s not to say that Samsung is not doing very well, too. ChangeWave notes that in fact it has been seeing a four-fold surge in demand for Samsung since March — at a time when Android competitors like HTC and Motorola have been more challenged.

ChangeWave puts Samsung’s recent rise down to positive reactions to the S3, which features a bigger screen, more processing power, a better camera and 4G capabilities.

That popularity was spelled out yesterday by Shin Jong-kyun, president of Samsung’s information technology and mobile communication division, who yesterday told reporters that the S3 had passed the 10-million sales mark since launching at the beginning of June. The Yonhap news agency, which quoted Shin, worked this out to sales of 190,000 daily, with sales potentially reaching 40 million by the end of the year.

Still, even with that momentum, it’s not registering at the same level of hype as Apple’s iPhone 5, as evidenced by these two comparative charts that measure “advance” demand for both devices.

A key difference here, which should be noted, is that while Apple has yet to any anything official on its next iPhone, the Samsung Galaxy S3 was launched months ago, and so people who are being canvassed would have already known more about what the device had (or didn’t have) when responding — even if the phone had yet to hit the market. In the case of the iPhone 5, ChangeWave says that it presented respondents with a description of “probable” features for the device.

Those included a larger screen, better camera, new OS and 4G capability.

Both the Galaxy S3 and the iPhone 5 will likely be sold at the same price points — currently the S3 goes for $199 for the 16GB model on a two-year contract.

Europe’s Square, iZettle, Is Coming To Android, Testing First On Samsung Devices In Sweden

Posted: 23 Jul 2012 03:09 AM PDT

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A big development today for iZettle, the “Square of Europe” that wants to become the biggest mobile payment platform in the region. It is now extending its dongle-based service Android devices, to add to a service that already works with the iOS-based iPhone and iPad. The company tells me that the first step is a test phase on select Samsung devices in its home market of Sweden, “but our ambition is to make iZettle available to Android users across all markets where iZettle operates.” iZettle says that in launching on Android, it will become the first company to provide a mini chip-card dongle for Android devices, the prevalent smartphone OS platform, installed on some 60 percent of all devices.

iZettle’s service is currently testing on Samsung Galaxy S II, SIII and Galaxy Note devices, and comes just one month after the company announced $31.4 million in Series B funding as well as the launch of an API that lets third-party developers embed the iZettle payments service into their own apps.

As part of the test phase, the company is distributing 500 chip-card-reading dongles free to interested Samsung owners in Sweden. The app is free to download from Samsung Apps (not the Google play store).

Coming to Android is “the start of something very, very big” for iZettle, co-founder and CEO Jacob de Geer noted in a statement. IDC says that Android is now on 60 percent of all smartphones worldwide, and it will continue to be the most dominant platform until 2016. Samsung is playing a very big part in that. Just yesterday, the company noted that it had sold 10 million Samsung Galaxy S III smartphones in the two months since launch.

Is this a signal for further platforms to be added? Not necessarily, says the company. “We prioritise the platforms after market demand. No plans for Windows yet, but will keep you posted,” a spokesperson told me.

So far, iZettle is being used by 50,000 merchants across Sweden, Denmark, Finland and Norway. It is also being tested in the UK and slated for a commercial release in the country in the “near future.”

Although iZettle’s service will work just as it does on iOS devices, there is one distinction: it will plug into the handset’s audio jack, rather than on the charging dock, as it does on iOS devices.

Unlike other dongle-based mobile payment services like Square and PayPal's Here which use a card's swipe strip for processing, iZettle has focused on chip-based transactions, with each transaction on MasterCard, Visa and Diners Club charged a flat 2.75% commission (3.75% for AmEx except in the UK, where it’s a 2.95% commission).

The focus on chips is because these are now ubiquitous in Europe and are considered more tamper-proof than the strips. Speaking to me in June around the company’s big funding round, De Geer told me he thought that the focus on chips would help the company bring on both more merchants and consumers to the service as it looks to take its offering mass market. "Security comes built into that," he says.

TaskRabbit Gets $13M From Founders Fund And Others To “Revolutionize The World’s Labor Force”

Posted: 23 Jul 2012 02:59 AM PDT

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Labor-marketplace TaskRabbit is today announcing a $13 million C-round of funding, led by Peter Thiel’s Founders Fund. The C-round will bring the collaborative consumption startup’s total funding to $38 million.

As part of the round, Founders Fund partner Bruce Gibney and former eBay VP and current Trunk Club COO Rob Chesney will be joining the TaskRabbit board. Existing TaskRabbit investors Shasta Ventures, Lightspeed Venture Partners, Baseline Ventures, Shervin Pishevar, and 500 Startups also went in on the financing.

Newly reinstated TaskRabbit CEO Leah Busque tells me that she will be using the funding for aggressive company expansion, with her sights set internationally on London. In four years the startup has gone from two to 53 employees, and grown from its birthplace in Boston to outposts in Austin, Chicago, LA, Orange County, New York City, Portland, San Antonio, Seattle and San Francisco.

Busque hopes that TaskRabbit will “revolutionize the world’s labor force”; “It’s our job to deliver this platform and the resources and tools to do so.” She tells me that her ambitious plan for the company led to her taking on extra funding, “Let’s get this done now,” she remembers thinking about TaskRabbit’s future, “This is all about getting the right people in place and around the table.”

Busque views TaskRabbit’s competition as the crop of task startups like Exec which have turned categories of posts on TaskRabbit into niche verticals. To complement the startups who use the TaskRabbit API to outsource tasks, like Astrid and Producteev, Busque is planning on tailoring the TaskRabbit platform around these specific verticals.

She views household chores as the most ripe area for expansion, and the company recently launched Delivery Now, an anytime delivery service to compete with one of those startups, Postmates, which is an “Uber for couriers.”

The fact that Founders Fund, which prides itself on its “big idea” investments like SpaceX, Palantir and Climate Corp, took an interest in TaskRabbit seems natural to the industrious CEO. “One area that they haven’t delved into is the labor market, the way people find jobs. People are starting to rethink the concept of full time work in general, and the younger generations want to be empowered to have more control over their work.”

“The U.S. has much higher underemployment and unemployment than it should not because there isn’t supply and demand, but because supply and demand have such hard times meeting,” new board member Bruce Gibney tells me, confirming that the VC firm made the investment because labor is in dire need of innovation.

“TaskRabbit solves both sides of the problem, matching pre-screened high-quality TaskRabbit Runners with responsible Task Posters in a simple system that ensures work gets done quickly and well, at the most competitive price. In doing so, it goes a long way to fixing the largest and worst structured market in the world, and provides thousands of people with the opportunity to work on their own terms.”

So will TaskRabbit eventually offer the perks and benefits provided by more traditional employers? “Absolutely. There is definitely big potential there and we have been looking into it.”

I for one am looking forward to a future where technology leads to a yield management system of human resources, especially one that leads to increased societal support like healthcare. The average unemployment rate in the U.S. alone is at a scary 8.2%, and don’t make me get started on what’s going on in Greece.

Good luck Leah.

(Interview with Leah via Kevin Rose’s Foundation. You can read more about TaskRabbit here.)

Amazon Ramps Up Global Expansion, Opens Massive Media R&D Center In London

Posted: 23 Jul 2012 02:31 AM PDT

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As Amazon gears up for its quarterly earnings later this week, the company today has announced an expansion that points to its big ambitions in digital media, and an increasing focus on how that growth will come from outside the U.S.. Amazon is opening a new R&D hub in London focused on developing services and APIs for TVs, games consoles, smartphones and PCs, with the aim to roll those out across the company’s global footprint. That is a major development for a company that has been somewhat slow to roll out its newest services beyond its U.S.-homebase.

Amazon says that the eight-floor, 47,000-square-feet space in Glasshouse Yard — not far from London’s “Silicon Roundabout” tech hub — will house software engineers, user-interface experts and graphic designers. The company owns UK streaming service and Netflix competitor LOVEFiLM as well as UK-based TV app company Pushbutton, which will both be relocated to the new center. Paula Byrne, the MD of Pushbutton, will become the MD of the new R&D operation.

Although the center will be built out of Amazon’s UK holdings, what’s clear in today’s announcement is that Amazon is thinking beyond just the UK. The work, it says, will be focused on “new digital media projects that will benefit Amazon customers all over the world.”

That’s a sign that the company may be looking to accelerate the pace at which it rolls out products. To date, Amazon has been (some would say frustratingly) slow in how it takes products internationally. The Kindle existed in the U.S. for nearly two years before it first hit international waters. The Kindle Fire has yet to go beyond the U.S. in its distribution. The Appstore is still U.S.-only, too. The company has been making more efforts to open this up, however. In June it finally unveiled an international Appstore portal for developers, the first step in getting that store outside the U.S.

But apart from that, it’s also potentially thinking beyond what we already know as Amazon’s own services: the company makes specific mention in its announcement of the development of APIs — an indication that it is looking to further the concept of an Amazon-centric ecosystem as much as something that Amazon might develop itself.

Amazon, which first came to the UK in 1998, already has an extensive world-wide digital media operation that includes video streaming services (including LOVEFiLM and Amazon Prime in the U.S.), digital music services (downloads and streaming), an app storefront for Android devices, and games.

That’s on the retail side; on the wholesale side, its cloud infrastructure plays host to some of the most popular services around — with the recent, storm-related outage of a major data center, taking down sites like Instagram with it, a testament to what a big deal Amazon is on that side of the story.

Amazon’s no slouch in hardware, either. If you believe the many reports that have come out, it will soon be adding a smartphone to a device portfolio that includes the Kindle e-readers and the Kindle Fire tablet. That tablet, incidentally, will soon be making its way to the UK by way of a surprise partnership with UK bookseller Waterstones.

Those devices, combined with Amazon’s cloud-based media operations, are key focuses for the company as it further diversifies beyond its bread-and-butter online marketplace for books and more, and so it makes sense to put more investment into services that will help both of these keep growing in users — and revenues.

The idea of the London center will be to bring some of this together, leveraging R&D talent in London and from around neighboring countries in Europe to build it.

“London is a hotbed of tech talent and testament to that fact is Amazon choosing the capital as the location for the new global Digital Media Development Centre,” said Byrne in a statement. “Innovation is part of the Amazon DNA and we are creating a British centre of excellence to design and develop the next generation of TV and film services for a wide range of digital devices.” One product in this vein, Amazon notes, is LOVEFiLM Instant, an unlimited, flat £4.99/month streaming service that works on 280 Internet-enabled devices from PCs to the Sony PlayStation 3, the iPad, Xbox 360, and connected TVs.

There is one other thing to keep in mind here, from out of left field: at the time of the gTLD domain name news, Amazon emerged as a key player, applying for dozens of new domain names. It will be interesting to see whether that strategy — which saw Amazon applying for new domains like tunes, mobile, game and movie — meets up with whatever gets created at this new center.

Make Your Users Do the Work

Posted: 22 Jul 2012 10:00 PM PDT

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Editor's Note: Nir Eyal is a founder of two startups and an advisor to several Bay Area companies and incubators. He is a Lecturer in Marketing at the Stanford Graduate School of Business and blogs about the intersection of psychology, technology, and business at NirAndFar.com. Follow him on Twitter @nireyal.

The belief that products should always be as easy to use as possible is a sacred cow of the tech world. The rise of design thinking, coinciding with beautiful new products like the iPhone, has led some to conclude that creating slick interfaces is a hallmark of great design. But, like all attempts to create absolute rules about how we should interact with technology, the law that design should always decrease the amount of effort users expend doesn’t always hold true. In fact, putting users to work is critical in creating products people love.

Several studies have shown that expending effort on a task seems to commit us to it. For example, when buying a lottery ticket, players are able to either choose their own numbers or play a set of digits generated randomly. Certainly, choosing either option has no effect on the odds of winning. Traditional thinking would predict that the less effortful path would be the one users prefer.

However, the opposite is true. Despite the considerable effort required to pick the lottery numbers, a process reminiscent of filling out multiple choice questions on the S.A.T., players who choose their own numbers play more. This phenomenon isn’t just about a skewed perception of luck. According to a classic study by Ellen Langler, even when players are explicitly told their chances of winning, they choose to trade worse odds for the ability to play the numbers they spent the time and effort picking.

Examples of how escalations of commitment makes our brain do funny things abound. Its power makes some people play video games until they keel over and die. It's used to influence people to give more to charity. It has even been used to coerce prisoners of war to switch allegiances. Commitment is powerful stuff and it plays an important role in the things we do, the products we buy, and our perception of who we are.

Totally Committed

The last step of the Desire Engine, a framework I developed to help explain a pattern found in habit-forming products, is the investment phase. After a user has been triggered into action and duly rewarded, the investment phase is where the user is asked to do work and starts building commitment. It is here that the user is prompted to put something of value back into the system, typically in the form of time, money, physical effort, social capital, or personal data.

As in any feedback loop, the cue, action, and reward cycle predictably condition a series of behaviors. Whenever users want the reward, the thinking goes, they do the intended action. For example, what prompted you to start reading this article? You were probably feeling a bit bored and were looking for something stimulating to read. You took the cue (boredom), now you’re doing the action (reading), and you’re now anticipating the reward (keep reading, it’s coming).

But this pattern differs slightly in products that truly hook users. The brain has a unique system for keeping us searching for rewards; it adapts. Soon, something that seemed novel and interesting becomes common and dull. To keep pace with the brain’s adaptation to stimulus, habit-forming products improve with repeated use. It is here that the investment phase is critical.

Bits of Work for Future Reward

Unlike actions in the standard feedback loop, investments are about the anticipation of rewards, not immediate gratification. The investment is a bit of work, which makes the user more likely to use the product in the future. In Twitter, for example, the investment comes in the form of a follow. After a few flicks through the stream have primed the user with titillating tweets, the user will find someone new and interesting to invest in. While there is no immediate reward for following someone, doing so makes the service more valuable and more likely to be used next time.

LinkedIn provides another example of a company that understands the power of asking users to make small investments in the site. As Josh Elman, an early Senior Product Manager at the company told me, "If we could get users to enter just a little information, they were much more likely to return." Elman continued, "We made you type in your current title and position at sign up and then were able to use that to draw you back in." The tiny bit of effort associated with providing workplace information created a hook the system could use get users to return.

Commitments as a Strategy

Habit-forming technology creates an internal trigger, an itch to use the product, unprompted by an explicit call to action. The user engages with the service whenever cued by a particular emotion or context. The investment is the string that pulls the user back. The aim is to get the user to return unprompted. To do this, the habit-forming company increases the value of the product with each pass through the Desire Engine. Value is added to the system in two ways.

Stored Value

Every time users input data, they create stored value. Evernote, Salesforce, and Pandora provide examples of products which do not necessarily create burning desires, but create habits by getting users to do bits of work. A habit is a behavior without, or with very little, cognition, and thus these products meet this definition. People use these stored value products as part of their regular routines. The more users invest, the less they think about using them. Evernote’s "smile graph" demonstrates how over time users increased engagement with the service the more they used it over time.

Other stored value technologies, like games, create rabid users by getting them to invest every time they play. Racking up higher scores, advancing to the next level, or earning and tending to virtual goods like a cow on a farm or the clothes on an avatar, are all examples of the power of commitment. These game mechanics disappear if the user stops playing, increasing the need to stay engaged. The stored value of these elements of the game are earned with time spent playing or purchased outright with real money.

Network Value

Products that increase in value as a greater number of people use them have a network effect. Companies which display this characteristic give investors joyful palpitations because of their ability to become industry standards and crowd-out rivals. Ebay, Skype, AirBnB, Pinterest and older technologies, like the fax machine and telephone, get better the more users join the network.

The Killer Combo

Where user investment really becomes valuable is when stored value meets a network effect. Facebook and Pinterest, both services which were useful as stored value products, exploded in use when the power of the network effect took hold. Both are habit-forming products, which bring large numbers of users back unprompted. The combination of stored value and a network effect, along with continual investment from users who regularly add content, has created a strong pull for a large percentage of their users.

Habit-forming technologies take hold when a pattern of trigger, action, reward, and investment, creates desire in the user while providing increasing amounts of value. The more users invest in a way of doing things through tiny bits of work, the more valuable the service becomes in their lives and the less they question its use.

Of course, users don’t stay hooked forever. Though these companies have a good ride, the next big thing inevitably comes along and creates a better way to start building user commitment. While the mantra of making the experience easier to use certainly has its place, the rule must be followed with a strategic purpose in mind — namely increasing the value of the service the more people use it.

Note: If you liked this post, and committed to reading this far, you should follow me on Twitter or signing-up to be the first to receive future essays like this one free via email. It's a wise investment.

Thanks to Josh Elman, Jules Maltz, and Max Ogles for reading early versions of this essay.
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