Category Archives: Web/Tech

Who Makes Money in the Cloud?

This is my seventh AlwaysOn Stanford Summit. I thought it looked a little smaller, but Tony Perkins told me at lunch that they had 850 people on the register, and that they had sold out of CEO Showcase spots.  I can see that, because the showcases seem packed.  There are many startups in the world.

Here’s my friend Rafe Needleman, CNET Editor whose writing I’ve been following for ten years through various incarnations as a tech journalist,  moderating the next panel on Rainmakers in Cloud Computing. The participants are Kenn Comee, CEO of Cast Iron Systems, Monica Lam, Co-founder of MokaFive, Juan Carlos Soto, VP, Sun Microsystems, Chip Hazard, General Partrner, Flybridge Capital Partners, Michael Stein, CEO of Darkstrand, Michael Peachey, Chief Architect & Dir. Cloud Computing, TIBCO.

Over lunch, several people talked to me about cloud computing.  Most didn’t know what it meant. Some language: “outsourcing,” “the mainframe is back and it’s sexy,” “hosted applications,” “pay as you go,” “software subscriptions.”

There has been a technological shift in the last five years that has changed “utility computing” to cloud computing and in ten years the software business and the cloud will be synonymous, some of these panelists say. Desktops have been virtualized, and almost all desktop apps can be put up in the cloud.

We can now “pay by the drink.” It’s the mainframe all over again, shared computing power with a “thin client” that looks like a browser. But will enterprises want to shift all their digital data to the cloud? Not quickly, and not to the public cloud. But private clouds will run in ways that look like the public cloud.

What are the big opportunities for making money on cloud computing? Infrastructure is actually one of them, and new kinds of apps enabled by the cloud will help the business user who doesn’t know how to deal with IT.

What’s the next new Salesforce.com? The landscape of horizontal software-as-a-service is pretty built out. But there will be needs for new infrastructure that will help IT departments run apps in a private cloud. The side benefit is that the cloud is an enabler of application development, as Dave Winer can already tell us. Disaster recovery and backup will cross the boundaries from the enterprise to the cloud.

Issues?  Quality.Rafe says all these web apps can be built for next to nothing, because they’re built on Amazon Web Services and running in the cloud. But many of them aren’t making any money. So there will have to be a rationalization to optimize how clouds work (Ken Comee). Then many things running in the cloud will die, but the best ideas will percolate up.

Infrastructure. Michael says that GE is trying to deploy a SmartGrid for utilities, but it can’t figure out how to run that in the cloud because the backbone of utility companies has data rates that will bog down the traditional internet. The cloud will get too crowded, and there won’t be “room” to put everything on the internets. Moving a terabyte of data on Amazon Web Services is no fun. So Sun has tried to bring many of the concepts of running your own  datacenter into how you would run your own cloud so you are not on the public cloud.

So the networking side of cloud computing has a lot of opportunity.

Security. How far can people in the enterprise go with an app before the iron hand of IT comes down on them? That depends on the application. People will then develop private clouds for niches like HIPAA compliance. There will be many clouds ooptimized for different market segments.  That would be happening today but for interoperability issues — which will be solved. Security is the number one reason enterprise apps are afraid to go to the cloud. 75% of enterprise people  wouldn’t move their apps because of it.

To what extent do security issues like the break-in at Twitter undermine the premises of cloud computing? Most of the apps Twitter used were in the Cloud, like Google docs, and the hacker came right in and got all their data. But the panelists agreed that security policies at Twitter have been lax, and that even if the docs had been on internal servers, a hacker could have gotten them given Twitter’s security policies.

There are no HIPAA compliant clouds out there today, although there are SAAS-based EHRs. As a user, I’m not worried about someone taking my medical information, but I am very worried about Google mining my data, or my insurance company. This is a reason for a private cloud and locked down security.

Return on Investment. From a VC standpoint, it takes a long time to run a subscription business past the Valley of Death.  Time to revenue for a cloud business is very long, because revenue comes in a stream, not a lump. Driving sales has to be very swift and very focused.

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Who’s Making Money in Mobile

After listening to Paul Jacobs of Qualcomm talk about where they are focusing, which unsurprisingly includes health care  and remote patient monitoring, the panel at the AlwaysOn Stanford Summit on who is making money in the mobile space went off into much more  interesting business models. They convinced me we have only begun to see money made on mobile platforms — ANY mobile platforms.

Moderated by Mark Newhall, co-founder of IdeaWave Solutions and INmobile.org, the panel consisted of Bart Decrem, CEO of Tapulous,, which develops social games for the iPhone;  Simon Khalaf, CEO of Flurry, a mobile analytics firm; Matt Murphy, a KPCB partner in the space; Dorian Porter, CEO of Mozes, a text company; and Purnima Kochikar, a VP at Nokia.  Yes, I knew mobile was coming, and has been coming for a decade, but a lot of my assumptions were outdated.

First of all, as you may have expected, the iPhone changed everything. People now pay for things they wouldn’t pay for before on the web. Music was obviously first, but Bart Decrem said that although he thought a million users in a year was an audacious goal, Tapulous is now in its second year and has 15 million unique installs and about 10 million users. Its revenue has doubled every twelve months. And that’s “just” a gaming application–TapTap Revenge. He thinks he will get to be a $100m company.

He also noted an amazing engagement on the Apple platform, which means people actually keep the apps on the phone and interact with them. That’s important because it makes way for in-application ecommerce and advertising. And every time he releases a new product now, his revenue spikes.

So clearly mobile is a disruptive platform, and application developers are already making money. There are 64,000 apps in the App store now, and $.99 can be a profitable price point. The app store is actually growing at 25x the rate of iTunes, and even the paid apps part is growing at 7X ITunes. A lot of money will be made in software.

Who is not making money right now? Carriers. Formerly in control of the show, they are now buying business, hoping to make it up in volume later, as big brands enable online marketing strategies and they can take a piece of the revenue. That kind of direct marketing through mobile devices is still in its infancy.

After all the talk about iPhones, it was fascinating to hear Purinima talk about Nokia.  She’s got the global view outside of smart phones, and she said Nokia has realized two areas that people will pay for, even in developing countries whose populations do not have smart phones.
1) Complete indulgences – games, efarts, etc.  Ads work here, on premium game content.  Video ads inside gaming content are much better targeted, and pull good CPMs and different CPMs. So different that the Army uses in-game ads for recruiting tools and find them extremely effective. The Army’s entire business process has been altered by its use of mobile gaming applications.
2)Self-improvement – the bottom of the pyramid really wants to pay for this, and they are the long tail. There are entire
populations discovering things on the phone instead of the PC. Their three high priority needs: Get ahead in life, get more money, get a wife.  They will pay for this, usually on a cash subscription model. Smart phones are only 10% of the market globally,  the rest still being feature phones. Feature phones can be enabled to give access to lots of apps through proxy browsing, and that will teach many young people in developing countries to move up to smart phones, which are aspirational to them today.

FCarriers, out of power in the new environment, are now interested in supporting multiple app stores. Similar business interests around mobile ads, mobile marketing, mobile payments will encourage carriers to move fast and participate in direct-to-consumer economy. They can participate by setting up open stores. They can’t control anything. (Decrem: For iPhone, Apple controls the carriers and app developers don’t even have to deal with carriers anymore.)

Final words of advice to would-be successors to Tapulous: develop first for the iPhone, and then for Android. Blackberry’s a distant third that needs to get its act together, and for Palm, it’s too early to tell. It is, however, a land grab right now in the mobile space.photo-6

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LiveBlogging #CrunchUp for the Folks at Home

There’s no way not to love Ron Conway’s experience. Here at Crunchup, he’s talking about the startups he has invested in with John Borthwick from BetaWorks, Steve Gillmor, and Mike Arrington. He has made two fabulous points so far. The first is very general, but tells the story of the difference between Silicon Valley and other areas of the country that hope to be centers for entrepreneurship. :Here in Silicon Valley, we invent something first, see if there’s a market, and then monetize it.”

This is a very telling comment that presumes the availability of capital to support the new concept or technology until it is ready to be monetized. He said it with respect to Twitter, a product almost everyone is curious about. How will Twitter make money?

Here are the top ten, according to Ron, ways Twitter can be monetized. Although Arrington pushed him for his entire list of 30, which he said he summarized in an email to Evan Williams a while ago,(update: Arrington grabs the email out of his hand and finds out it’s really to Heather Hardie) he wouldn’t reveal the entire list, so there’s something even better in the cards. His Top Ten list includes
lead generation
coupons
analytics
crm
payments via real time web
commerce
user authentication
syndication of new ads
context sensitive ads
display ads, and
acquiring followers

This panel agrees that much is also happening outside Silicon Valley, especially as we begin to participate in real time communications on a large scale. John Borthwick of Betaworks says his company has just announced a $sm investment in Tweetdeck, which stores groups and search, and navigates and manages streams. Betaworks has also incubated bit.ly, which has gone in less than a year from incubation to 27 million decodes a day thru its partnership with Twitter. (Arrington pushing to know when bit.ly will sell to Twitter.)

Which brings me to the next point Ron makes that I loved: “real time stream” is the wrong term for what’s happening now, because it doesn’t take into account the social nature of these conversations. Instead, let’s call in something like “now media,” which makes more of the social interaction that takes place.

For me, the real time is not nearly as important as the social. Because I live in two cities, I have two sets of friends. There’d be no way I could stay in touch with both without the now-media-social-real-time-stream. I’m ecstatic that SIlicon Valley will invent things I can use without worrying how they will make money. And this is why, at the end of the recession, Silicon Valley will recover. It’s the people, stupid.

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The Next Generation of the Internet, Part Two

Five more companies you may want to know about from Launch Silicon Valley. The general takeaway from this is the preponderance of peer-to-peer services as a way of lowering the cost of streaming content, and the general movement to the cloud.

Update: Here’s the second set of companies.

CellWand isn’t really next generation of Internet; it’s mobile voice apps accessed through abbreviated dialing codes (#taxi #home #pizza). It’s a pay per use app ($1.25-1.79 per call), partnered with carriers. They get big margins from loyal users, and use the wireless carriers, alcohol companies, and media partners for marketing. CellWand is live in Canada, and penetrates at 1 call per 250 mobile phone users. If they penetrate similarly in the US, that would be $1m/month revenue. They also use the carrier billing systems. They have locked up all the Canadian carriers


Surf Canyon
– delivers relevant personalized search results. It re-ranks results according to what you might have clicked on from the first search — on the fly, in real time. Another Firefox add-on, also works on IE. And for good measure, it also personalizes the sponsored links. Works with Bing, Yahoo, Google.

Dacast, a product of Andolis LLC believes the future of TV is multicast. The company has a peer to peer system to cut the cost of live streaming and unite all the Dacast users in an ecosystem. That allows for more appropriate advertising to users. So Datacast is free for content owners, cheaper to stream, and more carefully targeted. The company projects profitability by end of 2010. Every player wins: Advertisers get more clicks, users get free content, content owners get more money.

Wowd – is now in private beta. It turns the wisdom of crowds into useful work finding content, tagging itself “the web you want.”
“Wowd connects people to a planet’s worth of content.”

YOICS “Your Own Internet Connected Stuff”
Cloud IT services for the rest of us. Private bookmarks only available to you or people you are connecting to, using the internet as your own private LAN. This could also be used for security services, and you would be able to see it on any browser anywhere.

You can use it as a replacement for an FTP service. You can download the Yoics app, drag a file form your computer to it, and make it accessible to a selected group (like a graphic designer could do for clients).

It will be interesting watching these people get acquired by the already-existing companies in the internet space. I think none of them are really stand alones. Again, I’ve jumped to a conclusion here:-)

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Jumping to Conclusions: The Next Generation Internet

For many reasons, I’m interested in the next generation Internet. This morning, I’m at Launch SIlicon Valley, watching ten companies in this space present their concepts.

I haven’t finished listening, but I have already jumped to my conclusion. According to these presenters (who were quite good, by the way), the next generation of the internet solves problems created by the current generation of the Internet.

In other words, it’s full of refinements and improvements, rather than big technological jumps. A better process here, a better algorithm there, and lots of emphasis on smart phone apps or Firefox add-ons. The most interesting company by far was from China, which is definitely kicking our ass in next-gen internet stuff according to this presenter, the first Chinese company ever to present at this conference.

World’sLaw is a legal service. Its competitor is Legal Zoom, but these guys have attorneys, while Legal Zoom is only document preparation services.
By Jobi – a power search with saved search with timelines and keywords, language and location, domains and file types. It’s a power search built on top of Google
GazoPa similar image search. Uses features such as color and shape to find images, and uses the image itself, not just keywords, as the search key.
The founder actually drew a watch on his computer, uploaded it, and got photos of watches back. Even now, it has an iPhone app to upload pictures from your iPhone and search images.
With current mage search engines, if large volume of data, can’t return images quickly. But for them, the more data they have, the better they can return
Gliider – manages travel for you. It holds on to your travel information, replacing bookmarks, cut and paste, printed documents. ‘There’s no good way to hold on to my travel info when I am planning a trip.” It’s now in private beta, and is a Firefox add-on.
Gamexiu. Games and social networks are two fastest growing segments in China. 16,000,000 games, growing at 17% a year. 200,000,000 users are on social networks in China, and the virtual goods business is a $4 billion business. Most users are single children under 25, using social gaming as the way of getting companionship.
It’s the world’s first 3-D Internet social gaming platform. Completely integrates into other social networks, so is also distributed. The avatars can go anywhere across the web, and the application itself can be embedded in other social networks.
They are a social world similar to Second Life. It looks easier to bring the user into an immersive life than SL, however. And the selling of virtual items is huge!

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WordPress’s Matt Mullenweg at WordcampSF

Image representing Matt Mullenweg as depicted ...
Image byMatt Mullenweg, ma.tt/about

via CrunchBase

WordPress is now one of the highest skills in demand! Large portions of the web are being built on a system that is completely open source

WordPress was born on a blog- a b2 blog
Early versions focused on ease of installation
B2 was his first experience with blogging software, and it had the GPL, which enabled him to modify the software when the lead developer went away
Wordpress was a fork from B2
1.2 had plug-ins
Themes came in 1.5
Plug-ins and themes were the most important decisions in WP history
It allowed WP to become a platform and allows others to be part of the community without mutiliating the core software, which stays clean

Stats:
10m downloads
5.5m .org blogs
58m new posts
22b page views
55% of pageviews are on .com
Predictions:
1943-Thomas Watson said there would be about 5 computers in the world
Matt probably wearing 5 computers on his body this year
1943: Bill Gates said Spam will be solved in 2008
Last year, Matt predicted Crazyhorse

Crazyhorse: Matt thought it would be super-important in 2008, but he didn’t know it was the name of a strip club in SF  The Crazyhorse project produced the interface closet to the one we use today, and the goal of it was to make WP faster and make it invisible. Quickpress came in with Crazyhorse, and so did threaded comments, the plug-in browser, and Intense debate. Also one-click upgrades

Matt also said this year would be the year of themes, and WP introduced its theme directory
Themes are free at the core, but now some themes are premium
GPL gives you freedom to charge for the theme, but then you are also free to redistribute it
(I use a premium theme)
Matt’s introducing a page for premium theme developers
The famous themes inspire innovation, and themse are built on themes
(Shows 4 incredly different themes all built on Thematic)
On the Internet, no one has to know you are using WordPress

Using the GPL in business: Introduces Alex King, who owns a company called Crowd Favorite in Denver, which exists entirely by designing and developing on WordPress. He has also produced a framework called Carrington, which allows people to build themes on it

And he has started an on-call WP Help Center wphelpcenter.com 512.788.9236 for small questions and customization

P2: It’s like Twitter.
But it moves the conversation to the home pages, threaded and in line
It’s a real time, asynchronous chat, but it’s in a blog
That is going on the home page of every blog

Buddypress: Developed by Andy Peatling.  Facebook in a blog. A social network built on open source. This will get bigger next year.
Can be skinned and branded for everyone’s site.
421 days of love to build it to 1.0
Will this be the way people socialize their WordPress sites?
Buddypress has the momentum WP had in the early days

Plugins:
Wordtwit
Yet another Related Posts
WPtouch – makes wordpress mobile from iPhone

Viddler – brings in video to WP
Comment Moderator
Licensing for Picapp
Polldaddy
Videopress – customized player on your home page. Now available on WordPress.com, but coming to .org

2.8 is coming
.

2.7 tired everyone out. And it was almost bug free. But in 2.8 the infrastructure will be better. Theme previews, 800 themes, better sidgets, multiple galleries, and a new widgets API

And big thing are planned for 3.0 already.

42% of downloads this year were international. So now videos are being captioned in various languages by .dotSub

The big challenge for internation is plug-in localization. Frameworks for different languages. Huge open sources communities in places like Indonesia and Brazil are beginning to make big contributions.

ichat with WordPress: log into im.wordpress.com on Jabber

Big news: WPMU and Worpress.org are merging their code! WordPress.org is going to evolve a community.

More big news: Canonical plug-ins are coming.
Random stuff:
Matt: “Friends don’t let friends use the wrong W”
See http://www.Edmorita.com for a guy who got  a real tattoo of the WordPress logo.  It’s gorgeous!

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Optimizing Your WordPress Blog for Google

Image representing WordPress as depicted in Cr...
Image via CrunchBase

Live blogging Matt Cutts‘ excellent presentation.

WordPress solves 90% of SEO optimization
Flash cannot be crawled–don’t use it

Cutts only uses these plug-ins:

Akismet
Feedburner
Cookies for Comments
Enforce www. preference
WP Supercache

Google crawls roughly in decreasing order of page rank
Page Rank is named for Larry Page
Number of people who link to you and how important they are
Not just the number of links
High quality content is important
Page rank is really community
Page rank evaporates each time it goes across a link
Avoid obsessing about backlinks

keywords – think about keywords users will search for. include attributes think of all the different ways someone would describe these
Check the Google keyword tool
Tweak your URL, permalink and title to optimize search “changing” and “change”
Do the post, go to the Google keyword tool, think about words you want to rank for, and make sure those words are in your post
also use categories
keywords in URL paths: stealthmode.com/keywords
How so you get a reputation?
Be interesting
Update often
Provide a useful service
Do original research or reporting
Give great information
Find a creative niche
Video can help
Feedburner.brand.com is free  Brand your Feedburner
Update your evergreen content or write a new post
Keep your WordPress updated

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