At an announcement at Facebook’s Palo Alto, Calif.-based headquarters today, Kleiner partner John Doerr called the fund “a quarter of a billion dollar party.” He won on-stage testimonials from Facebook CEO Mark Zuckerberg, Amazon CEO Jeff Bezos and Zynga CEO Mark Pincus.

After backing Internet heavyweights like Amazon and Google, Kleiner missed opportunities like Facebook and YouTube and garnered skepticism about its sheen as one of the top, and most relevant, VC firms. This is a move to counter that perception (and reality). The firm clearly counts Zynga as a big win, and trumpets the fact that it’s the fastest-growing company it has ever invested in. Kleiner partner Bing Gordon, who led the firm’s investment in Zynga, will head up the sFund.

Kleiner gave examples of promising social startups it has already backed in addition to Zynga: Jive Software (enterprise social web), Lockerz (online shopping incentives for young people), CafeBots (a “Friend Relationship Management” app builder) and Flipboard (the social magazine app for the iPad). CafeBots is the only disclosed investment that’s actually part of the sFund; the others were made previous to its existence.

Investors in the sFund include Amazon, Facebook, Zynga, Kleiner Perkins, Comcast Interactive Capital, Allen & Company and Liberty Media.

Kleiner’s Gordon said the future of the social web is still ahead of us; he predicted social activity and engagement will continue to rise dramatically, and teased entrepreneurs with the opportunity to be a CEO within Kleiner’s fold, where it has access to Bezos, Zuckerberg, Pincus and others.

Bezos joked that he hoped most of the $250 million would be spent on Amazon Web Services, and said Amazon was today introducing a new tier for startups that would allow them to try AWS for free.

Please see the disclosure about Facebook in my bio.

Related content from GigaOM Pro (subscription req’d):

• Why Google Should Fear the Social Web
• Will Games Help Google Figure Out How to Be Social?
• Multiple Models for Social Media Businesses

In reality, said Posterous CEO Sachin Agarwal in an interview today, “We are on the WordPress* end of the spectrum, but people think we’re micro-blogging because we’re so simple.” As Posterous grows and becomes more full-featured, Agarwal and co-founder Garry Tan say they will never lose email posting as a core function, and will always try to build experiences that mimic and integrate with familiar interfaces. The company has some new features in the works: increased support for groups, premium accounts for businesses, proximity-based geoblogs, and a better bookmarklet to bring in outside content.

Groups. Posterous is increasingly used as a group communication tool, where users send messages to Posterous like they would a group email list or a Yahoo Group. Other group members can sign up to receive all posts by email, so the blog itself is essentially a public or private archive. The difference is, the blog format is a good way to consume and search, and Posterous is much better than email at handling media. As compared to the new Facebook Groups, anyone can participate without even creating a Posterous account.

For example, the TED Conference’s Fellows program has 150-200 people communicating with each other through a Posterous group, Agarwal said. Today, 15 percent of Posterous sites are multi-contributor, but the company thinks that number will rise as it adds new tools like automatic group creation when you cc: Posterous on an email to multiple recipients.

Premium Accounts. To date, Posterous hasn’t made any money, but it plans to start pulling its weight. In the next few weeks, it will be beta-testing Google AdSense revenue share with some of its celebrity users. (It won’t name names, but folks like Ashton Kutcher use Posterous to host their photos uploaded through Twitter clients.) Early next year, Posterous plans to roll out subscription accounts for small and medium business owners who want to use the service to manage their social media presences. Agarwal said many real estate agents already use the service today to syndicate content to their Twitter, Facebook and other online presences. This use case sounds kind of similar to tools like HootSuite.

Geoblogs. At Blog World Expo this past week, Posterous set up a group blog. Anyone who loaded up the Posterous iPhone app in the vicinity of the Mandalay Bay Convention Center was invited to contribute to a Posterous blog dedicated to the show. The company expects to use these pop-up proximity blogs around additional events, and for other purposes.

A Better Bookmarklet. This sounds a bit dangerous as far as plagiarism goes, but Posterous will be updating its bookmarklet tool so users can grab articles and videos by just selecting them and clicking. The idea is to make it even easier to add new content. Today, 50 percent of Posterous posts contain media other than text, and that portion is rising.

Posterous has just 4.4 million monthly visitors (7.1 including custom domains), according to Quantcast, compared to 30.9 million for rival Tumblr (44.2 including custom domains). It’s possible that’s an undercount of actual usage due to users who interact with the service over email, but unfortunately, Posterous doesn’t provide user or site numbers to make a more appropriate comparison. The company, which has 10 employees, has raised about $5 million in funding.

Automattic, maker of WordPress.com, is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.

Related content from GigaOM Pro (subscription req’d):

• Facebook Remained Social Media’s Chief in Q3
• How to Make Google Matter in Social Media
• Multiple Models for Social Media Businesses

Esther Dyson, Chairman of EDventure

The disclosure of personal information is a complicated subject, one that young people are starting to understand pretty well, but adults are catching onto a little more slowly, said Dyson, who is chairman of EDventure Holdings and an investor in companies like Flickr and 23andMe. While Facebook is often targeted for obfuscating and breaching user privacy, Dyson contended that the company is actually doing a reasonably good job of pushing forward its users’ understanding of privacy, with a few exceptions.

But the issue is more practical than all that, according to Dyson. “It’s not about privacy; it’s about transparency, disclosure and control,” she said. “I don’t know what privacy is, and you as marketers don’t know what privacy means to each of the individuals you market to. What you can do is you can disclose your own practices, you can make them intelligible and you can give your users control.”

The problem is, public concern about online privacy is escalating quickly. Within a day of the Wall Street Journal posting its report about Facebook user IDs being transmitted through RapLeaf to advertising and tracking companies, two U.S. congressmen had already written to Facebook CEO Mark Zuckerberg to get him to describe the extent of the problem.

Web sites and advertisers need to get their act together, and the complicated messaging they are starting to offer about what information behavioral targeters are tracking isn’t going to cut it, Dyson said. Very soon, “the FTC is finally going to take action, and finally will regulate with a very complicated and technology-retarding action,” Dyson warned. “We have maybe a year or so to try to fix this ourselves before it gets fixed to us.”

Dyson thinks marketers should use the same personalization and creativity they’re applying to target behavioral advertising in order to craft personal messaging that informs users about any personalization that’s occurring. Here’s Dyson’s suggested mandate, and I have to say I think it’s a compelling one:

Know your customer, and talk to that person as an individual, not as someone in a bucket. Don’t talk to them as ‘Millennials,’ talk to them as ‘You, Joe, who checked in at Times Square last week.’ Take that same consumer intelligence, take that same creativity, take that same ability to personalize and apply it to these people’s data. Explain to them what you know about them in a personal way, in a way they can understand. And then they will trust you; they will make up their minds do we want the free content or not, but it will be a genuinely two-way transaction where there’s real disclosure and real consent. It’s shocking to me that with all the creativity in this industry we can’t figure out how to explain to our own customers what it is we’re doing to them and have them genuinely part of the conversation rather than watching them from behind the two-way mirror.

Related content from GigaOM Pro (subscription req’d):

• Big Data Marketplaces Put a Price on Finding Patterns
• Facebook Tries to Navigate the Privacy Storm
• Google Fighting on Two Fronts: China and Privacy

Please see the disclosure about Facebook in my bio.

For example, I said I wanted to take four days at the end of this month to go somewhere “eco” and “outdoors” with “romance” for under $1,000 from San Francisco, and Wanderfly mocked up trips for me to Bishop, Calif.; Ensenada, Mexico; and Edmonton, Alberta. I’m not sure I want to go to Canada at the end of October, but maybe I’m just a weenie.

New York-based Wanderfly is one of a few new startups attempting to create a more human approach to travel. Like Hipmunk — the flight search startup that provides some incredibly useful interface tweaks on top of an Orbitz affiliate agreement — Wanderfly uses flight and hotel data from Expedia. It also mashes up local activity recommendations from content partners like Yelp, Lonely Planet and Not for Tourists, and if you connect with Facebook, your recommendations include seeing local friends and sharing your trip plans with them.

Even if you think of sites like Wanderfly and Hipmunk as just skins for existing travel booking providers, they often give a preferable and innovative experience. Whether or not they can become a real business, and avoid getting ripped off by the big guys, remains to be seen. Wanderfly was founded a year ago, has about 10 employees, and has taken under $1 million in angel funding (it’s currently raising an additional round), and has been in private beta for the last three months with 7,000 users. Co-founder Christy Liu said the company sees itself as a sort of Pandora or Netflix for travel, and hopes to increasingly evolve and personalize its recommendations based on user behavior and additional travel and content partners.

Related content from GigaOM Pro (subscription req’d):

• What Twitter Airfare Sales Tell Us About Real-Time E-Commerce
• Is Geolocation a Real Business or Just a Feature?
• Multiple Models for Social Media Businesses

While it remains to be seen whether or not the angel boom is a success in terms of monetary results as well as hype, it’s not just the startups and angels themselves that are benefitting. There are certainly some happy lawyers and accountants out there. And there’s starting to be a business opportunity to serve the sector as a whole; for instance, the free service AngelList matches companies and investors, and has arranged funding rounds for at least 40 startups since launching in February.

Now angel investing seems to be becoming an industry of its own, complete with tools, services and even an iPhone game. Today comes the beta launch of CapLinked, a web-based tool for managing startup fundraising. Aimed at both startups and investors, Los Angeles-based CapLinked helps the two keep in communication with each other and share documents. The idea is that a dedicated platform brings all the material related to a deal into one place. For an entrepreneur, features include notifications to know when an investor logs in and views a document.

Though CapLinked (which itself is seed-funded by friends and family) is not the first tool of its kind, the pedigree of its creators made me take notice. CEO Eric Jackson previously ran the marketing department at PayPal and wrote the book “The PayPal Wars.” His co-founder Chris Grey is an investor and columnist for TheStreet.com and CTO Dave Schwartz co-founded SnapBridge and was CTO at National Payment Network.

Jackson says companies using the platform include iizuu (which lets users monetize their social network activity) and Film Solutions (which helps film studios manage publicity photos). Angel investor Paige Craig has also offered a testimonial for the site.

However, angel investors I queried said they were unlikely to use CapLinked, saying existing tools like email, and to some extent, Dropbox and Basecamp, are a better fit for bringing the workflows of investors, startups, lawyers and accountants together.

Meanwhile, angel investing is turning into a game. No really; YD Online today launched Angel’s Choice, an iPhone app that has users “invest” in other iPhone apps and compete to have the best portfolio. It’s all virtual, though; the idea is to filter new apps and find the most interesting ones. I’m not sure exactly how in-game success will correlate to real-world success, but if the gameplay is good, it could turn into a nifty discovery engine. Creating an investment portfolio or fantasy sports-type game isn’t anything new; what’s notable that what seemed hippest was to call this an “angel” app.

Related content from GigaOM Pro (subscription req’d):

• What the VC Industry Upheaval Means for Startups
• How to Market Your iPhone App: A Developer’s Guide
• How to Manage Consumer-Grade Collaborative Tools in the Workplace

Quora co-founder Adam D'Angelo speaks at Startup School

Be a Cockroach. AirBnB started a little over 1,000 days ago, and it failed and launched something like five times before taking off, said CEO Brian Chesky. After maxing out at least four credit cards, at one point the company basically turned into a collectible cereal box distribution company, and after that died down, the founders lived on the leftover cereal for two months. The company was on the brink of doom when Y Combinator accepted it for its three-month program in spring 2009, mostly because Paul Graham was “looking for people who wouldn’t die. He said ‘You guys won’t die, you’re like cockroaches.’” By the end of Y Combinator, AirBnB was profitable. The company’s traffic and revenue have only really taken off in the last five months, said Chesky, meaning “our ‘overnight’ success took 1,000 days.”

Don’t Do a Music Startup. Former Imeem CEO Dalton Caldwell gave a crowd-pleasing talk about the failures of his music startup (which sold to MySpace and effectively died about a year ago). Imeem raised over $50 million from investors including Sequoia Capital, acquired three companies,had a headcount of 95 and reached $24 million in yearly revenue runrate. But that was nowhere near good enough. Caldwell doubts any other startup can change the music industry either, picking apart ad-supported, subscription, download and other business models to prove his point.

“For the past few years, music startups have been money transfer funds,” Caldwell said, bringing money out of VCs’ pockets, into startups, and directly to the music labels through “quarterly minimum” payments and other extractions like settlements and advances. But music startups are basically unacquirable due to the specifics of their deals with the labels. Caldwell said he thinks international governments need to standardize statutory licensing frameworks before there’s an interesting music tech startup opportunity. The next best thing would be a broadly available music API for startups to develop on, which Imeem had offered before it was taken out, Caldwell said.

“If You Can’t Sell the Shirt, Don’t Give It Away.” That’s a direct quote from GitHub founder Tom Preston-Werner, who talked about making reasoned decisions to build and grow a company. (He was being both literal and metaphorical about buying and distributing schwag, the oh-so-common startup pursuit.) Preston-Werner thinks bootstrapping instead of raising outside capital has been critical to GitHub’s success as a collaborative software development platform. The company only spends money when it can see a direct impact. If you make decisions that are positive for both you and your users, by definition, you’ll both win, and that’s good, was Preston-Werner’s message.

It’s Not Another Bubble. (Really!) Graham said in his own presentation that competition between super angels and VCs is good for startups. Now super angels are becoming more like VCs and VCs more like super angels,with quicker and smaller rounds invested from other people’s money and not necessarily requiring a board seat in return. Graham said that while valuations might be up, there’s not a larger bubble going on. Companies that can persuade angels that an acquisition is near and VCs that an IPO is in the future will get the best of both worlds. However, the question of whether super angels can have a sustainable business based on their smaller exits is still unanswered, said Graham.

Some People Are Just Born for It. Facebook CEO Mark Zuckerberg says that he didn’t really know Facebook was going to turn into anything until it did. Even when the company raised its first outside funding from Peter Thiel, the founders made it clear they hadn’t decided whether or not to go back to school. However, it wasn’t really that random. Zuckerberg says his mother told him in retrospect that she realized he wasn’t going back after he started deferring school to work on Facebook. His sister was even more clairvoyant: “Before I started college, my youngest sister made a bet with me that she would finish college before I did,” said Zuckerberg. “So I guess I owe her $50.”

Join Somebody Else’s Startup. Quora co-founder Adam D’Angelo focused much of his talk on the idea that if you want to be an entrepreneur, a great way to learn is to be an early employee at someone else’s promising startup where you can gather experience, recognition and connections. Obviously, that was D’Angelo’s experience, as an early employee and CTO of Facebook. But the decision to join Facebook wasn’t necessarily obvious at the time, he said:

I was leaning towards Google and talked to [early Facebook president] Sean Parker on the phone, and he said, “Adam, if you don’t take this I guarantee you will regret it… He said the company might be worth $1 billion… He said it would be the best possible education I could have in how to start and grow a company. It’s turned out to be much more true than I realized.”

Conviction Isn’t Everything. “You’re not building a piece of art; it’s a tool,” said Groupon CEO Andrew Mason. He discussed how the previous iteration of his startup, a collective activism platform, was a lofty idea but ultimately the wrong one. It took just a month to make the first version of Groupon, and since then, Mason’s focus on making Groupon useful, practical, constrained and paranoid has spelled its success, he said. The company now has a 2,500-person staff that’s a “deal-creating machine,” Mason said.

Scaling Also Isn’t Everything. Quora’s D’Angelo: “It’s OK to do something that’s not scalable if it gets you to a position where you’ll have other strengths that will make up for this in the future.” At Quora, he and other early employees spent days answering questions on the service so when they opened it up to users there would be an archive of good content. Facebook paid early interns to index college course catalogs so it could provide a feature where students shared which classes they were taking. AirBnB’s founders went door-to-door when they were trying to break through and recruit users. “Do things that won’t scale; it will teach you,” Chesky said.

Mistakes Were Made. Facebook’s growth from a site to a platform may seem fated at this point, but it wasn’t. The initial architecture of the Facebook platform was the biggest technical mistake that the company made early on, said Zuckerberg in response to a question from Y Combinator’s Jessica Livingston. “I think we just got it completely inverted, and we’re still paying the costs of this,” Zuckerberg said. More precisely, “FBML was all about developers putting some sort of visual markup on a person’s profile page. It was not about the social graph or the connections behind it.” The company has since re-architected its platform to be the inverse, where the Open Graph brings in content from all over the web as Facebook objects integrated into the site experience. Facebook has now finally made it to 1 million developers on its platform, said Zuckerberg, “but it’s taken years to get to that point.”

Photo courtesy Flickr user Robert Scoble.

Please see the disclosure in my bio about Facebook.

On my daily commute to the GigaOM office, I spend 10-30 minutes offline, depending on the whims of the San Francisco MUNI gods. I carry an iPhone 4 and an HTC Droid Incredible, and I grab one or the other from my purse to amuse myself. The best possible scenario is if I grab my iPhone before I go offline, sync up Instapaper, and happen to have recently saved some interesting articles that I haven’t yet read. If I haven’t made those stars align, I play a game — usually Angry Birds or Word Warp.

But for the most part, as soon as I lose connectivity, my mobile apps are mostly broken. Tapping my most-used apps — Gmail, Facebook and Twitter — only gets me error messages and frustration. Even Angry Birds and Word Warp are handicapped when they’re offline; they lose their social features and word lookups, respectively. If I organized my apps into panels of those that were useful offline and ones that needed connectivity, it’d be incredibly lopsided.

For a better user experience, I’d like to suggest two things:

1. More offline content until we have more universal connectivity. This would probably in the Instapaper model where you refresh before you go out of range, and then access the content offline.
2. Better transitions between offline and online experiences. Instead of giving you an error message, it would be great if an app cached what you’re doing and dealt with it next time it reconnects to the server.

For instance, it would be cool if you could press a button in your Facebook and Twitter apps to grab and cache the 50 latest updates from your contacts as well as all the web pages they linked to, so you get a capsule of the experience offline. This would probably be pretty hard to execute, as it would require fetching a whole bunch of diverse and not pre-formatted content in a short amount of time that wouldn’t necessarily even be consumed by the user. And it would increase mobile data usage even when that content went unread. But it would be super useful.

Another experience that seems promising is the HTML5 version of Gmail on mobile. When you press send on a message, Google immediately gives you a yellow confirmation bar saying it’s been sent, so you can return to your other business in your inbox. In reality, the message hasn’t actually been sent, but is being sent in the background. This is a dangerous little trick, because it’s possible that the message could fail to send after the user has already been told it’s gone through successfully. But — perhaps with a tweak to make the wording more explicit, like “we’ve got this and we’re dealing with it” — it’s actually a really neat trick.

HTML5 promises to help solve the offline app problem (along with the climate crisis and world hunger). I was recently talking with Giles Goodwin, co-founder and CTO of Widgetbox, who has been working on some nifty mobile web app creation tools using HTML5. Goodwin and I spoke a bit about the tools that HTML5 provides to make offline work: The manifest holds rules for offline storage, web storage stores data on the device, and SQLite in WebKit gives access to stored complex data.

Goodwin says,

One good way to go about using this group of technologies is to create a manifest file that supports offline [access] then store[s] all remote data in the Web SQL DB as it is accessed. This way when the app is loaded you can fetch the latest feed data, stick it in the db, then read out of the db when the app is used offline. There are a number of tricks to do this right including setting up all the assets correctly in the manifest and dealing with binary data like images correctly.

That’s easier said than done. The first version of the new Widgetbox mobile product won’t be released with offline support. “[I]t’s one of the more difficult technical problems we had to solve in building our mobile app builder, and we’re not quite ready to release it due to some issues across devices and with some content,” Goodwin says.

We all want universal connectivity — and San Francisco MUNI should really just get Wi-Fi already — but in the meantime, apps should work to bridge the offline gap. Or maybe next time I commute I should bring a paper book.

Related content from GigaOM Pro (subscription req’d):

• The App Developer’s Guide to Choosing a Mobile Platform
• HTML5′s a Game-changer for Web Apps
• App Developers: Are You Ready for HTML5 and Metered Data?

Google today broke out some numbers on its quarterly earnings call that it doesn’t historically give (and doesn’t promise to give in the future): revenue and monetization rates for display, video and mobile advertising. Those are Google’s big non-search, growth businesses, and the intent was clearly to show that Google is not purely a search company.

Here are the specifics: display advertising is now worth $2.5 billion in revenue; YouTube is selling 2 billion views per week (50 percent more than last year); and mobile ads are now adding $1 billion in additional revenue.

Those three areas are still a sliver of the company’s business; Google brought in $7.29 billion in total revenue in the third quarter alone. But what I found interesting was the way Google disclosed them, with Jonathan Rosenberg, SVP product management saying that display is already Google’s next billion-dollar business, and that mobile is the future of search.

Google is explicitly responding to criticism that it needs to diversify. It’s also responding to the fact that it’s no longer universally considered the most interesting and influential technology company (a banner which many people are now handing to Facebook — where more than 200 former Google employees now work).

With regard to Facebook, and the data it’s giving Microsoft to power the new social search features on Bing, Google basically said it aims to improve social search without those kind of deals. The company will soon add more social signals to its search rankings, said executives, and will ramp up efforts to try to persuade users to log into their Google accounts where they can be provided with personalized results.

Google CEO Eric Schmidt (who made a surprise appearance after not speaking on the last few earnings calls) dismissed the idea of getting exclusive or preferential access to data, which is what Facebook is giving Microsoft (at least for now). That’s a little hypocritical, since Google has paid Twitter for real-time data.

“The web continues to grow at such a blazing pace that anyone who would be private is completely swamped in this wave of the Internet,” said Nikesh Arora, Google president of global sales operations and business development. Added Schmidt, “We’ve taken a position from a religious and business perspective that the world is better off if you take the information you’re producing and make it searchable.”

Google executives flat-out admitted they’ve begun shaping the tidbits they release on earnings calls specifically to address criticism, saying that the only reason they’d talked about YouTube profitability on past earnings calls was “because there was so much distortion in the market we just thought it was an OK time to set the clocks properly,” and warning analysts not to count on any further specific numbers about YouTube.

Please see the disclosure about Facebook in my bio.

Photo courtesy Flickr user ElbtheProf.

Related content from GigaOM Pro (subscription req’d):

• Why Google Should Fear the Social Web
• How to Make Google Matter in Social Media
• Multiple Models for Social Media Businesses

Kovacs was most recently at SAP through its acquisition of Sybase; and previously worked on mobile for Adobe, which he joined through its acquisition of Macromedia. He also founded a mobile software and services company called Zi Corporation and spent 10 years at IBM.

Mountain View, Calif.-based Mozilla Corp. is owned by Mozilla Foundation, a non-profit, and it has a bit of a hippie culture. In announcing the change, Mozilla Foundation chair Mitchell Baker (herself a former corporation CEO, before Lilly) wrote, “[W]e often speak of “poetry and pragmatics” as fundamental to the nature of Mozilla, and Gary understands both these are critical for Mozilla to thrive.”

Lilly, for his part, wrote of Kovacs, “[H]e’s got deep background in the battlefields that will define the future of the Open Web: mobile and rich media, and he’s been involved in building great organizations several times over.”

Mozilla has recently started moving away from its close relationship with Google, but only by baby steps. The company will offer Bing as a search toolbar option in Firefox 4, though Google will remain the default. Google provides Mozilla with millions of dollars in affiliate revenue for that privilege, even though its Google Chrome browser is a direct competitor.

Related content from GigaOM Pro (subscription req’d):

• HTML5′s a Game-changer for Web Apps
• What Does the Future Hold for Browsers?
• Google’s Chrome Is Poised to Come on Strong

A (very fuzzy) chart shows Digital Chocolate's increasing ARPU with Facebook Credits

Credits first launched in alpha in May of last year and have been rolling out with select developers since this February. The service is now up to 200 games and apps from 75 developers. The big selling point of the program is that users now have one consistent and unified place to buy virtual currency for almost all social games, which means many of them will have Credits on hand next time a game asks them to pay for something. Liu said developers across the board are seeing 5 to 10 times the number of conversion rates for players who have already bought and stored credits. She said more than half of today’s Facebook game experiences now include Facebook Credits as an option.

Jessica Rovello, president and co-founder of game maker Arkadium, told other game developers her company had learned a few ways to maximize value from selling virtual goods:

1. Price items in credits, rather than dollars (or another real currency), because users often choose to “grind it out” to earn an item rather than pay for it with an actual currency.
2. Familiarize users with price points before offering discounts or bundles.
3. Introduce new items often and retire older ones; don’t offer items that don’t expire.
4. Make sure premium items actually advance game play.

Related content from GigaOM Pro (subscription req’d):

• A Mobile Payments Glossary
• The Real Impact of Facebook’s New Approach to Gaming
• Report: Virtual Goods for the Enterprise Market

Please see the disclosure about Facebook in my bio.

Bing search results pages now include a “Facebook module” that shows Facebook activity by a user’s friends (their public “likes” of various topics on Facebook and around the web) related to the search term. This appears automatically if a user is logged into Facebook, an implementation of the company’s controversial “instant personalization” product. The module shows up higher in the page if Bing thinks the social results are relevant, or not at all if they’re not. Bing is also adding people search, which ranks results based on the closeness of a person’s relationships based on Facebook connections (this is what Facebook already offers on its site). So if you search for “John Doe,” the John Doe determined to be most likely to be your friend will be the top result.

“Search will be better because of your friends,” said Yusuf Mehdi, Microsoft SVP of online audience, speaking at a launch event at Microsoft’s offices in Mountain View, Calif. “It isn’t just about the connections of data, it’s about the connections between people.” Because of its dependence on the anchor text that describes what links are about, “Search is good at looking for sites, but not a person or knowledge,” said Microsoft President of Online Services Qi Lu. The goal of social search within Bing “is to ensure that people and the social relationships around people can truly become first-class citizens of the search experience,” Lu said.

Mehdi said Bing receives 1 billion queries per month for people, but users say they are satisfied with the results for people queries less than 20 percent of the time. He said that in addition to the social features launching today, Bing wants to add Facebook likes and user photos to all its search results, in addition to weighting of friends based on their expertise on a topic (look out, Q&A sites!).

Facebook CEO Mark Zuckerberg appeared at the announcement to give it weight, saying “the thing that makes Microsoft such a great partner for us is they’re the underdog in search,” and therefore motivated to make bold moves. Zuckerberg said he sees search as a more serious opportunity than photos or games, which Facebook has already been able to influence and improve through social integration. Facebook had searched for a social search partner, said Zuckerberg, and chose Microsoft in part based on the company’s existing relationship (Microsoft is an investor in Facebook, its on-site search partner, and has helped with ad sales).

Facebook has five instant personalization partners to date, including Yelp and Pandora. The Bing instant personalization implementation was completed in two months, said Dan Rose, Facebook’s VP of partnerships and platform marketing. Bing users who think Facebook instant personalization is creepy will be able to opt out by responding to pop-up messages the first five times they access the feature.

Please see the disclosure about Facebook in my bio.

Related content from GigaOM Pro (subscription req’d):

• Why Google Should Fear the Social Web
• How to Make Google Matter in Social Media
• Could Privacy Be Facebook’s Waterloo?

Anomaly Innovations co-founder Jay Air presents at i/o Ventures

In an increasingly crowded market for tech startup incubators, i/o doesn’t have a particularly distinctive angle, besides the fact that it’s located in a hip neighborhood of San Francisco where lots of young founder types live and/or hang out. i/o does have a friendly and non-pretentious vibe, and seems likely to turn into a bit of a frat house, given it will be open 24 hours a day to anyone who rents desk space. That vibe is in keeping with its founding partners, who aren’t exactly the bad boys of Silicon Valley but have helped create relatively non-nerdy companies like MySpace, BitTorrent, HotorNot and an early location-based social service called Meetro.

The i/o Ventures space

The usual super angel/micro VC clique wasn’t in full attendance at for i/o’s “Demo Day,” though that’s not to say there weren’t well-known faces like Naval Ravikant and Kent Goldman of First Round Capital taking in the companies’ presentations. The startups weren’t noticeably different or more raw than those at other incubators, even though i/o is just getting started. AppRats said it is “sushi profitable” (instead of “ramen profitable“); Appbistro has already raised $600,000 and is out raising more; Socialvision bragged that it’s currently participating in “advanced” acquisition talks; and Damntheradio has big-name customers like CBS and Sony Music.

The earliest-stage company presenting last night was probably Skyara, which I believe was founded as a Groupon for activities (like Zozi) but now has pivoted to be a marketplace where users can sell each other experiences (the kind of stuff that would normally be offered at a charity auction, like a personal cooking lesson). That version has yet to launch, but it sounds like it could be pretty neat, in the vein of user marketplaces like Etsy and AirBnB, but for services and activities.

Related content from GigaOM Pro (subscription req’d):

• Making Coworking Corporate-scale
• Here Come the Social TV Apps
• Multiple Models for Social Media Businesses

ZestCash CEO Douglas Merrill

The alternative to asking a benevolent rich family member is to get a payday loan, as 30 million Americans did last year, but payday loans are “fundamentally abusive,” says Merrill. The average payday loan is $300, which borrowers can extend every two weeks (at a cost of $60 per extension) for an average of four months. The borrower’s average total fees are $420 on top of the $300 loan, according to Merrill. That’s an awful deal, but it’s pervasive, with “more payday loan stores in the U.S. than Starbucks and McDonald’s combined,” as Merrill puts it.

Merrill set out to build a company that would provide loans of up to $500, which are paid back in installments that go toward both interest and principal. Called ZestCash, Merrill’s Hollywood-based startup launches tomorrow in the Utah market.

So great; ZestCash is providing an alternative to predatory lending practices. But how does Merrill plan to make this a good business? That’s where his Silicon Valley tech startup experience and approach is coming in handy, he says. ZestCash will quickly complete “massive-scale data analysis” about a potential borrower rather than doing a traditional credit check.

“One of the lessons of the Internet is there’s vast quantities of data, and by using it cleverly you can make a better decision,” says Merrill. This underwriting analysis process is the company’s “special sauce,” says Merrill. The one example he would provide is that a person who has regularly paid her phone bill is extremely likely to pay off a loan on time. In addition to good underwriting ZestCash also thinks it can maximize its chances of getting its money back by doing three things:

• Making a loan come from a real person. To take out a ZestCash loan, a borrower fills out a web form, and then shortly thereafter receives a phone call from a ZestCash relationship manager. The ZestCash representative makes the decision to lend in the course of a short phone call, and deposits the money in the borrower’s bank account within 24 hours. The borrower gets the direct phone number and email address of the ZestCash rep, and can call them with any issues. The ZestCash rep is given flexibility — much more so than the traditional customer service rep — to do things like skip the latest installment if the borrower calls asking for forgiveness.
• Setting a payment schedule from the outset. Research shows that borrowers who select their own payment plans are more likely to complete them, says Merrill, a psychology PhD.
• Not changing the rulebook. ZestCash co-founder and Chief Risk Officer Shawn Budde formerly ran Capital One’s sub-prime credit card portfolio. Though that might be a taboo credential these days, Merrill says ZestCash is using the same financial models as Capital One, with an origination fee, interest rate, and cost modeling.

ZestCash plans to advertise extensively both online and offline to attract new customers, though it will operate entirely online. How will it convince customers that it’s not just another too-good-to-be-true scam? “We’re focusing very hard on being completely transparent,” says Merrill. “We’re radically different because we have not organized our business to rely on late fees.”

ZestCash has seven full-time employees, is about a year old, and is funded by Merrill, Flybridge Capital Partners and GRP Capital.

Related content from GigaOM Pro (subscription req’d):

• Big Data Marketplaces Put a Price on Finding Patterns
• How Regulated Industries Can Move Towards the Cloud
• A Mobile Payments Glossary

Stone said he could see validity in Gladwell’s point that effecting meaningful and sustained social change requires strong relationships and hierarchical structure. But he added,

The real-time exchange of information — a service like Twitter — it would be absurd to think it’s not complementary to activism. When it really comes down to it, it’s not going to be technology that’s going to be the agent of change. It’s going to be people; it’s going to be humanity.

Williams, for his part, said of the Gladwell article, “It was a very well-constructed argument but it was kind of laughable. He pointed out that you don’t ever get much of anything done by just telling people you’re going to do it; you actually have to do it.

Twitter's Biz Stone and Evan Williams

“Anyone who’s claiming that sending a tweet by itself is activism, that’s ludicrous — but no one’s claiming that, at least no one that’s credible,” said Williams, who stepped down as Twitter CEO last week to focus on product and cede the role to more of a manager and business operator, former Twitter COO Dick Costolo.

“If you can’t organize you can’t activate,” Williams said, criticizing Gladwell for at one point conflating the editability of Wikipedia with Twitter. “I thought [the article] was entertaining but kind of pointless.”

Stone (at this point basically piling on) said he gave Gladwell props for mounting an argument against Twitter. “He could have stuck to email and texting,” Stone pointed out, which probably wouldn’t have instigated nearly such a large and viral discussion of the article.

The Twitter guys said they don’t want to take as much credit as some people have offered them for playing a role in catalyzing the Iranian election protests last year. Even though Twitter may have had little to do with actual citizen organization in Iran, it helped bring global attention to the events, they said. Williams disclosed that #iranelection was Twitter’s No. 1 trending topic in all of 2009.

As another example of Twitter being applied for social good, Stone brought up usage of Twitter after the Haiti earthquake in January, which included emergency services coordination but also was a major driver of publicity for text-message donation campaigns that generated record contributions.

Other tidbits from this Twitter founders’ conversation with BusinessWeek’s Brad Stone:

• Williams pointed out that his new product role is his fourth position at Twitter (in as many years). He said of promoting Costolo, “I thought I could be more useful doing that role, and Dick could do my role better.”
• Biz Stone said that Twitter doesn’t have too much of a problem with censoring pornographic tweets. “It’s hard to get super porny in 140 characters,” he said, joking, “That ASCII art is going to have to be pretty sophisticated.”
• Twitter is not prioritizing making its service available in China, where it is currently blocked: “China’s very big but there’s lots to do in the rest of the world,” said Williams.
• Like Facebook expects to hit 1 billion users, Williams said Twitter will get to 1 billion members too. Biz Stone added “Not the same billion.” Brad Stone asked when. Williams replied “In the future.”
• Williams said that he thinks an interesting and unexploited use of Twitter would be to create an account that “just retweets other tweets” on a topic, like the best of San Francisco or baseball. Not everyone has to produce content, he said; you can also help curate and spread good stuff.

Related content from GigaOM Pro (subscription req’d):

• Why Google Should Fear the Social Web
• Lessons From Twitter: How to Play Nice With Ecosystem Partners
• What We Can Learn From the Guardian’s Open Platform

Image courtesy Flickr user evhead.

The TNS study says that 69 percent of Malaysians and only 18 percent of Japanese online consumers use social networks on computers, which seems like quite a spread. (Compare that to 50 percent in the U.S.) The relatively small Japanese usage isn’t because everyone is accessing social networks on phones instead of PCs; TNS measures Japanese mobile social networking use at 15 percent.

TNS also finds that 52 percent of Chinese Internet users access social networks on computers (and 39 percent of them on mobile), with an average of 68 friends each. That high degree of usage but relatively low number of friends indicates “a culture that embraces fewer but closer friendships,” according to the study.

TNS also quantifies some of the difference in usage between growing online markets and more developed online markets:

• 88 percent of online users in China have written a blog entry
• 92 percent of online users in Thailand have shared photos online
• In Latin America, the Middle East and China, users spend 5.2 hours on social networking per week, compared to 4 hours on email, while in “mature markets,” users spend 3.8 hours social networking and 5.1 hours on email. Users in Malaysia spend the most time on social networks, at 9 hours per week.

Some of the data indicates that developing market trends are in alignment with mobile usage. For instance, TNS says mobile users spend more time on social networking (3.1 hours per week) than email (2.2 hours per week). If you want to play with some of the data yourself, check out the visualizations here. (Note: The screenshot of the visualization I embedded above says Japanese users have 28 friends each, instead of 29 as stated in the rest of the materials. I don’t know why there is a discrepancy.)

Related content from GigaOM Pro (sub req’d):

• Report: The Consumer Video Chat Market, 2010-2015
  
• With Ping, Apple Builds a Social Network Inside a Walled Garden
• Lessons From Google: How Facebook Can Reach One Billion Users

A Microtask visualization from an animated promo video on the company

Crowdsourcing is often used for fairly menial tasks: correcting databases, screening offensive images, transcribing audio. But what if you could make those little bits of human labor even more menial, discrete and interchangeable? That’s what the Finnish company Microtask does. I met with Microtask CEO Wili Miettinen and CTO Otto Chrons earlier this week while they were in town for CrowdConf, the first major gathering for the crowdsourcing industry.

Miettinen calls Microtask “the extreme approach to digital labor.” The company’s software divides work into highly standardized tasks — on the level of validating the data in a single form field — that can be completed in 1 to 2 seconds. Unlike something like Amazon’s Mechanical Turk, workers don’t get to choose their next project; Microtask queues up new tasks for as long as the person works. Because Microtask can create “strictly defined inputs and outputs” and use redundancy, it can offer customers service level agreements to guarantee its results. You don’t usually see SLAs in crowdsourcing.

Microtask sells its product in two ways. Companies who want to use their own workforce pay for seat licenses. So for example, an existing insurance company customer outsources the process of entering information from paper forms into a database to a division of its own company in the Baltics, Miettinen said, where labor is one-fifth as expensive as at its home office. Or, Microtask will use its own worker pool and extract 10-15 percent of the cost of labor as its cut based on the number of transactions completed.

Miettinen thinks he thinks the next big thing could be outsourcing labor to social games. “Game designers are the experts in motivating people and getting them to do repetitive stuff,” he said. So for example, Zynga could contract Microtask to have its FarmVille players complete menial tasks, rather than pay money or credits, to buy virtual goods to help tend their farms within the game. That might increase the number of players Zynga can monetize; right now only a small portion of players ever pay for virtual goods in social games – less than 5 percent. Finding ways around paying real money for virtual goods is a known opportunity, though offers from companies like Offerpal have been tainted by scamming, and surveys from companies like Peanut Labs are hard to scale in part because the self-selecting userbase of survey takers may not be a great representative sample.

Microtask employs 12 people and has raised €1.2 million ($1.7 million USD) in two rounds from investors including Sunstone Capital. Miettinen previously sold his real-time 3-D graphics company Hybrid Graphics to NVIDIA in 2006.

Related content from GigaOM Pro (sub req’d):

• Why Labor as a Service is as Cloudy as it Gets
• A Town Hall Talk on the Future of Work
• NewNet Market Overview, Q2 2010