Shared by louisgray
Some great detail on PayPal's culture. Timely given Tesla going IPO today.

Why did so many successful entrepreneurs and startups come out of PayPal? I long have been fascinated by the extraordinary achievement from the ex-Paypal team and wonder about the reasons behind their success. In the past, mass media tried to answer this question several times but still couldn't give us a clear answer.

I once asked David Sacks the same question during an event in Los Angeles. He told me the secret is that Paypal has built a scrappy culture. No matter what problems they faced, they would find a way to solve them. I kind of got the idea, but was still confused about the execution details.

So when I saw some of the past Paypal employees answering this question on Quora, I was super excited! After all, they should be the only ones who can tell people the inside stories.

Below are some highlights of their answers. *If you want to check out the sources or leave your comments, please go to here and here.

On Talent Management

Peter and Max assembled an unusual critical mass of entrepreneurial talent, primarily due to their ability to recognize young people with extraordinary ability (the median age of *execs* on the S1 filing was 30). But the poor economy allowed us to close an abnormal number of offers, as virtually nobody other than eBay and (in part) google was hiring in 2000-02. (by Keith Rabois, former Executive Vice President of Paypal)

Extreme Focus (driven by Peter): Peter required that everyone be tasked with exactly one priority. He would refuse to discuss virtually anything else with you except what was currently assigned as your #1 initiative. Even our annual review forms in 2001 required each employee to identify their single most valuable contribution to the company. (by Keith Rabois, former Executive Vice President of Paypal)

Dedication to individual accomplishment: Teams were almost considered socialist institutions. Most great innovations at PayPal were driven by one person who then conscripted others to support, adopt, implement the new idea. If you identified the 8-12 most critical innovations at PayPal (or perhaps even the most important 25), almost every one had a single person inspire it (and often it drive it to implementation). As a result, David enforced an anti-meeting culture where any meeting that included more than 3-4 people was deemed suspect and subject to immediate adjournment if he gauged it inefficient. Our annual review forms in 2002 included a direction to rate the employee on avoids imposing on others' time, e.g. scheduling unnecessary meetings. (by Keith Rabois, former Executive Vice President of Paypal)

Refusal to accept constraints, external or internal:We were expected to pursue our #1 priority with extreme dispatch (NOW) and vigor. To borrow an apt phrase, employees were expected to come to work every day willing to be fired, to circumvent any order aimed at stopping your dream. Jeremy Stoppelman has relayed elsewhere the story about an email he sent around criticizing management that he expected to get him fired and instead got him promoted. Peter did not accept no for answer: If you couldn't solve the problem, someone else would be soon assigned to do it. (by Keith Rabois, former Executive Vice President of Paypal)

Driven problem solvers: PayPal had a strong bias toward hiring (and promoting / encouraging, as Keith mentions) smart, driven problem solvers, rather than subject matter experts. Very few of the top performers at the company had any prior experience with payments, and many of the best employees had little or no prior background building Internet products. I worked on the fraud analytics team at PayPal, and most of our best people had never before done anything related to fraud detection. If he'd approached things traditionally, Max would have gone out and hired people who had been building logistic regression models for banks for 20 years but never innovated, and fraud losses would likely have swallowed the company. (by Mike Greenfield, former Sr. Fraud R&D Scientist of Paypal)

Self-sufficiency individuals and small teams were given fairly complex objectives and expected to figure out how to achieve them on their own. If you needed to integrate with an outside vendor, you picked up the phone yourself and called; you didn't wait for a BD person to become available. You did (the first version of) mockups and wireframes yourself; you didn't wait for a designer to become available. You wrote (the first draft of) site copy yourself; you didn't wait for a content writer. (by Yee Lee, former Product & BU GM of Paypal)

On Culture & Ideology

Extreme bias towards action early PayPal was simply a really *productive* workplace. This was partly driven by the culture of self-sufficiency. PayPal is and was, after all, a web service; and the company managed to ship prodigious amounts of relatively high-quality web software for a lot of years in a row early on. Yes, we had the usual politics between functional groups, but either individual heroes or small, high-trust teams more often than not found ways to deliver projects on-time. (by Yee Lee, former Product & BU GM of Paypal)

Willingness to try even in a data-driven culture, you'll always run in to folks who either don't believe you have collected the right supporting data for a given decision or who just aren't comfortable when data contradicts their gut feeling. In many companies, those individuals would be the death of decision-making. At PayPal, I felt like you could almost always get someone to give it a *try* and then let performance data tell us whether to maintain the decision or rollback. (by Yee Lee, former Product & BU GM of Paypal)

Data-driven decision making PayPal was filled with smart, opinionated people who were often at logger-heads. The way to win arguments was to bring data to bear. So you never started a sentence like this I feel like it's a problem that our users can't do X, instead you'd do your homework first and then come to the table with 35% of our [insert some key metric here] are caused by the lack of X functionality (by Yee Lee, former Product & BU GM of Paypal)

Radical transparency on metrics: All employees were expected to be facile with the metrics driving the business. Otherwise, how could one expect each employee to make rational calculations and decisions on their own every day? To enforce this norm, almost every all-hands meeting consisted of distributing a printed Excel spreadsheet to the assembled masses and Peter conducting a line by line review of our performance (this is only a modest exaggeration). (by Keith Rabois, former Executive Vice President of Paypal)

Vigorous debate, often via email: Almost every important issue had champions and critics. These were normally resolved not by official edict but by a vigorous debate that could be very intense. Being able to articulate and defend a strategy or product in a succinct, compelling manner with empirical analysis and withstand a withering critique was a key attribute of almost every key contributor. I still recall the trepidation I confronted when I was informed that I needed to defend the feasibility of my favorite baby to Max for the first time. (by Keith Rabois, former Executive Vice President of Paypal)

Extreme Pressure PayPal was a very difficult business with many major issues to solve. We were able to see our colleagues work under extreme pressure and hence we learned who we could rely on and trust. (by Keith Rabois, former Executive Vice President of Paypal)

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1. Ask Startups: Is Employee Retention Overrated?
2. The Rise of Non-tech Focus Web Startups
3. Entrepreneurs should help Entrepreneurs Scaling the Power of Philanthropy

Back in February, as speculation built over how Facebook was going to work with PayPal (or compete with it), the two companies announced a formal partnership. Facebook would provide PayPal as a payment option in its Credits virtual currency, and it would do the same for its performance advertising system.

Now, the Ads payment integration is rolling out for all customers. PayPal is used by millions of people around the world, presumably including a good number of people who manage Facebook advertising campaigns the news today will make paying easier for them, and maybe even get them spending more money.

For more on PayPal, Facebook, Credits, and payments, be sure to check out this guest post from early PayPal executive David Sacks.

Genealogy site Geni is going global today with the addition of its site translated into 22 new languages, including Spanish, German, French, and Hebrew. The site will add dozens more languages in the coming weeks.

Noah Tutak, President of Geni, said that this additional language functionality is a result of the site's international user base. Half of Geni's traffic comes from outside of the U.S. But what's even more compelling than Geni's availability in additional languages is the technology that is helping to translate the site.

Geni's engineers have developed a Ruby On Rails-based translation engine that crowdsources language translations of the site. Called tr8n, the technology allowed for Geni to be translated by a few dozen volunteers into seventeen languages in less than two weeks. Translators can vote on existing translations, or submit their own inline while browsing the site. The tr8n engine even takes into account the grammar rules of each language to provide accurate translations for any context.

Tr8n, which comes with 109 pre-configured languages, also shows you what percentage of the site is translated, has full support for right-to-left languages, and provides specialized character keyboards for specific languages with unique, local characters, such as Russian. David Sacks, founder and CEO of Geni, tells me that soon tr8n will be used to translate Yammer, Sacks' other startup, and will eventually be licensed to other Ruby On Rails sites as a plugin for crowdsourced translations.

Facebook offers a Facebook Connect-enabled crowdsourced translation tool that helped the social network translate its site into more than 65 different languages. But Sacks maintains that tr8n is a more feature-rich option for translation.

Specifically, Sacks says that tr8n differentiates from Facebook's tool by not requiring a user to have an account on another site. Tr8n also allows site operators own their translations and includes a more flexible syntax for translating complex phrases.

Additionally, Geni announced that the startup's VP of product, Noah Tutak was promoted to President and VP of engineering Amos Elliston has been named Chief Technology Officer.

[Editor's Note: Facebook has been experimenting with Credits, its in-house virtual currency, for years. But now the company is looking at ways to get all developers on its platform using Credits (while it takes a 30% fee for the service). And given Facebook's ambitions for the currency already, many people in the industry are wondering what Credits might become in the future. A "PayPal killer?" In other words, a payment wallet that can be used for any transaction across the web, if not in physical locations? That description makes for easy headlines, and there are reasons it could happen, as panelists at our Inside Social Apps looked at in April.

The debate has emerged on question-and-answer service Quora, after a user posed the question: Can Facebook Credits replace PayPal one day, why or why not? Former PayPal (and Facebook) leaders have weighed in on both sides. We're republishing David Sacks' response, but you should read what Lee Hower, Yishan Wong, Eric Jackson and other Quora users have to say, as well.]

I don't think so. Here's why:

PayPal is the low-cost provider in the industry. The main reason is that roughly half of its payments are funded from a PayPal balance or bank account instead of a credit card, virtually eliminating funding costs for those transactions. Funding costs (because of credit card interchange fees) are by far the biggest portion of the expense of processing a payment.

This funding mix was extremely difficult to achieve. It required us to drive a huge percentage of users to (1) add and verify their bank account so it could be used as a funding source, and (2) keep money in their PayPal account so it could be recycled within the system. A bank account was only verified by transferring to it two small payments (less than $1) that together constituted a 4-digit PIN. Waiting for the PIN took several days so this was a multi-step/multi-day process. It still amazes me that so many users completed it; however, we systematically created benefits for becoming PayPal Verified.

PayPal also incentivized balances through money-market interest rates and a PayPal debit card that made the PayPal account liquid at any ATM. Finally, anyone could receive payments through PayPal, which meant that ordinary buyers could accumulate a balance; although P2P payments seem easy, they are actually extremely risky and require special fraud detection systems. All of these features would be extremely difficult for Facebook to replicate; even if they did, it's not clear users would have the same incentive to verify their accounts.

As a result, Facebook will have higher funding costs than PayPal, which will prevent it from challenging PayPal on the basis of price. For many companies, like social gaming sites and apps on Facebook's platform, this won't matter. They will gladly pay more for the additional conversion that Facebook payments will generate. This is because their margin on each incremental transaction is 100%. On the other hand, price-sensitive e-commerce sites with thin margins will want to use the cheapest payment provider. If your margin is only 10%, for example, then saving a couple of points on payment processing increases your profits by 20%.

Here's how I see the market breaking down: Facebook will charge a premium fee for delivering additional convenience, distribution, and conversion to merchants. This will win over the virtual goods market. But merchants with thin margins (e.g. sellers of physical goods) will prefer to stick with the low-cost leader for the majority of their payments.

David Sacks was the original Chief Operating Officer and product leader of PayPal. He is now the founder/CEO of Yammer, a leader in enterprise microblogging.

photo by Dustin Sacks

Dustin Sacks shot this great photo of Device to Root Out Evil, an upside-down church created by Dennis Oppenheim that was installed in Vancouver and has since been removed.

UPDATE: Edwin informs us that the upside-down church is now in Calgary

This is a blog post from Laughing Squid, subscribe via RSS, Email, Twitter & Facebook.

Here are a few other possibly related posts you might enjoy:

- Vancouver International Airport

- Celebrities Upside Down Photoshop Contest

- Stephen Colbert 2010 Vancouver Winter Olympics Poster by Shepard Fairey

- Rudolph The Red-Nosed Reindeer Arrested At Vancouver Santacon

photo by Dustin Sacks

Dustin Sacks shot this great photo of an upside-down church created by Dennis Oppenheim that was installed in Vancouver and has since been removed.

This is a blog post from Laughing Squid, subscribe via RSS, Email, Twitter & Facebook.

Here are a few other possibly related posts you might enjoy:

- Vancouver International Airport

- Celebrities Upside Down Photoshop Contest

- Stephen Colbert 2010 Vancouver Winter Olympics Poster by Shepard Fairey

- Rudolph The Red-Nosed Reindeer Arrested At Vancouver Santacon

You thought my last overhaul of the Pentagon was radical? Wait 'til you see what I've got planned for next year.

That's the message Defense Secretary Robert Gates is sending to the armed services and to Capitol Hill. In a speech today at the Eisenhower Library in Abeliene, Kansas, Gates not only informed the military establishment that the post-9/11 gusher of defense spending has been turned off, and will stay off for a good period of time. He warned that he's putting everything from ships to jets to general's billets to troops' healthcare reimbursement rates under fresh scrutiny. Given America's difficult economic circumstances military spending on things large and small can and should expect closer, harsher scrutiny, Gates added.

In 2008, before Gates rolled out the budget that offed the Air Force and Army's signature programs for superpower war, he paved the way with a series of speeches blasting the military-industrial complex for not focusing on today's conflicts. This talk along with one given Monday at the Navy League symposium signal a similar approach.

Cutting hardware will almost certainly be part of the equation, once again. Gates all-but-told the Navy earlier this week that the idea of having 11 carrier strike groups was overkill. But this next time, Gates is promising to do something much, much harder. First, he wants to rejigger the military's healthcare system.

The premiums for TRICARE, the military health insurance program, have not risen since the program was founded more than a decade ago, Gates noted. In recent years the Department has attempted modest increases in premiums and co-pays to help bring costs under control, but has been met with a furious response from the Congress and veterans groups. The proposals routinely die an ignominious death on Capitol Hill.

Then, he wants to convince the military's barnacled, byzantine bureaucracy to do the unthinkable: cut itself down.

According to an estimate by the Defense Business Board, overhead, broadly defined, makes up roughly 40 percent of the Department's budget, he said. Almost a decade ago, Secretary Rumsfeld lamented that there were 17 levels of staff between him and a line officer. The Defense Business Board recently estimated that in some cases the gap between me and an action officer may be as high as 30 layers A request for a dog-handling team in Afghanistan or for any other unit has to go through no fewer than five four-star headquarters in order to be processed, validated, and eventually dealt with.

The private sector has flattened and streamlined the middle and upper echelons of its organization charts, yet the Defense Department continues to maintain a top-heavy hierarchy that more reflects 20th Century headquarters superstructure than 21st Century realities

Now, just about every military listener will answer this talk with a loud amen. The question is how many generals and how many senior execs will really put their little fiefdoms on the chopping block. As Gates noted, his successors have waged war on the Pentagon's bureaucracy, too only to be forced to retreat. Gates even gave props in his talk to Donald Rumsfeld's (in)famous statement of September 10th 2001, that the military's PowerPoint-pushers were a serious threat to the security of the United States of America.

But unlike Rumsfeld, Gates appears ready to order the bureaucratic cuts - not just bitch about the bloat.

Therefore, as the Defense Department begins the process of preparing next's years Fiscal Year 2012 budget request, I am directing the military services, the joint staff, the major functional and regional commands, and the civilian side of the Pentagon to take a hard, unsparing look at how they operate in substance and style alike In other words, to convert sufficient tail to tooth to provide the equivalent of the roughly two to three percent real growth resources needed to sustain America's combat power at a time of war and make investments to prepare for an uncertain future. Simply taking a few percent off the top of everything on a one-time basis will not do. These savings must stem from root-and-branch changes that can be sustained and added to over time.

What is required going forward is not more study. Nor do we need more legislation. It is not a great mystery what needs to change. What it takes is the political will and willingness, as Eisenhower possessed, to make hard choices choices that will displease powerful people both inside the Pentagon and out.

I once called Gates the most dangerous man in the military complex. But if he follows through on this speech, his most hazardous job may lie ahead.

[Photo: DoD]

See Also:

• Inside Bob Gates' Overhaul of the Pentagon
• Gates Sacks Stealth Jet Chief, Blasts Troubling Record' of
• Execs Hold Their Own Defense Industry Pity Party
• Gates Pushes for Radical Overhaul of Pentagon Arsenal
• Robert Gates is Not a Hippie
• Gates: Future Jet Supporters are Risking Today's Troops

Jessica Miller has written for Jewcy.com, The Jew and the Carrot, and is an avid digital music explorer. She holds a B.A. in religion from Barnard College, and blogs regularly on her own site, The Boomerang Blog.

You don't have to be Oliver Sacks to know that music can have a profound effect on the human psyche. Music is undeniably important in shaping moods, and, likewise, certain frames of mind require certain kinds of songs.

Luckily for us, there are now several websites out there that feature mood searches. Instead of generating artists and songs by genre or title (as Pandora does), they are able to filter songs by emotions and activities.

So whether you're feeling down and need a pick-me-up; you're down and you'd like to stay that way for a bit whether you're in an Empire State of Mind, or it's just another Manic Monday we've hand picked our five most satisfying sites for finding the perfect songs to suit your mood.

1. Musicovery

Musicovery is a fun and colorful website that lets you find your mood-appropriate music with several adjustable options. First, it instructs you to chart your mood on a grid, with the x-axis going from dark to positive, and the y-axis ranging from energetic to calm. Then, below the chart, you can select which genres of music you'd like Musicovery to dig around in for you, and which music decades you'd like to be included in the search. (If you're open minded, you can select them all!)

Musicovery then creates a brightly colored family tree of mood music for you. Each burst on the tree has a shade corresponding to a genre (rap is dark red, funk is light green, etc.). Although you have to register on the site in order to shuffle from one song to another, you can always alter your mood on the grid if you don't like what's coming up. You can also ban songs you don't like, and you'll get the next song in the lineup.

As an added perk, if you're looking for something to dance to, there's an additional grid to refine your search. This grid allows you to alter the dance-ability and tempo of your tunes. There's also a discovery feature that will just plainly surf Musicovery's library for you without any fuss.

Pros: Fun to look at, lots of fine-tuning options.

Cons: Registration is required to shuffle and choose specific songs.

2. AUPEO!

Despite the enthusiasm in its name, AUPEO! is not the flashiest website, but it gets the job done. Like Pandora, it is capable of creating a playlist for you based on a favorite artist, but it also contains an easy-to-use mood search feature.

Simply click the mood tab, and then select one of the ten provided emotions, which include aggressive, happy, relaxing, and dramatic. Then you can instruct AUPEO! to hunt for appropriate songs in all genres, or narrow its searches down to one specific classification. The menu includes nine genres ranging from pop, to country, to R&B. Hit the orange music notes icon and you're in business. You can shuffle songs if you want something new, or change your search criteria. As you listen, AUPEO! will give you album covers to look at, which is nice.

Pros: Simple and easy to use. No fuss involved.

Cons: Must search for songs one emotion and genre at a time. Occasional ads.

3. Stereomood

There are three elements to Stereomood: Mood, activity, and artist.

To get started, you can either click on one of the tags on the homepage, or use the menu at the top. The tag cloud on the front page is a wacky jumble of emotions and activities varying from the more basic (e.g. sad, jogging) to the more eccentric (e.g. lost in thought, driving Route 66.) I prefer to use the menu at the top, which is a little more organized. The menu lets you search either the site, the moods, or the activities one at a time. If you search by mood or activity, a pull down menu will appear, and you can make a choice from that list.

Whatever you choose, you will be taken to a playlist page where you can either select the specific songs you'd like to hear, or just put the songs on shuffle. There is also a menu on the left that will suggest other action, emotion, or artist playlists for you based on the one you're currently in.

If you simply choose to search the site through the menu, you can put in whatever criteria you wish, including artists you like, or your own activities/emotions. The search results tend to be a little more literal when you put in your own keywords, but, for example, if you wanted to find a whole mess of songs that contain a specific word, this would be a good tool. If you search for an artist though, you can see what mood and activity playlists your favorite band is included in, which is kind of fun.

Also, regardless of how you search, each song that comes up contains a list of tags, so you can see what other playlists each one is in.

Pros: Shuffling, and even choosing specific songs you want to hear, is possible.

Cons: Slightly disorganized.

4. Last.fm

Maybe I'm the only one, but I never realized that it's possible to search music by tags on Last.fm. Thanks to those user tags, Last.fm can be an excellent aid for finding songs appropriate to how you may be feeling.

Simply type an emotion into the music search field, and then click on the appropriate tag. You'll get a station full of songs that other Last.fm-ers have tagged as being appropriate to that emotion. In addition, you'll get a heads-up on the artists included in the station, and a list of suggested tags that might be related to what you're looking for.

Pros: Very straightforward. Easy to pick up and contribute if you already use Last.fm

Cons: Somewhat less adventurous.

5. Thesixtyone

Thesixtyone is different from the other sites because it has a strong visual component. The images and information it generates are usually nice, but can veer towards distracting or cluttered at times. Other than that, it's a fun experiment in finding mood-appropriate music, and in finding new music in general. Since thesixtyone likes to highlight newer artists, you're more likely to hear something you've never heard before on this site.

To get a mood station on thesixtyone, simply hover your mouse over where it says popular on the top right, then click on moods. A little menu will pop up with 12 moods listed (10 really, since remix and covers are not moods.) Just click on one and the station will start playing. If you'd like to shuffle forward or back, click on the green paddles on both sides of the window.

Pros: Nice photos and artist information. Backtracking is possible.

Cons: A little cluttered. Less user-friendly.

Have you found any other sites that can generate music playlists by mood? Let us know in the comments, and happy hunting!

More music resources from Mashable:

- 5 Free Ways to Identify that Song Stuck in Your Head
- HOW TO: Create Free Music Playlists Online
- HOW TO: Turn Your Android Phone Into a Killer MP3 Player
- 10 Best LEGO Music Videos on YouTube
- 10 Amazing Musical Instrument iPhone Apps

Image courtesy of iStockphoto, Neustockimages

Tags: Last.FM, List, Lists, music, music discovery, playlist, playlists, web apps

Yammer CEO David Sacks dropped by TechCrunch today to talk about corporate and sales milestones. The Twitter for enterprise startup, which won TechCrunch50 in 2008, continues to grow nicely.

Yammer now has 70,000 corporate clients, and 800,000+ total seats (users). At least 1,000 of those companies are paying for the product, and Sacks says 10%-15% of seats are converting to paid. 70% of Fortune 500 companies are using Yammer, says Sacks. Paying customers include Cisco, Nationwide, AstraZeneca, Alcatel-Lucent, Sungard and Molson Coors.

Revenue in 2009 was seven figures. I asked Sacks to narrow that down in the video but he refused. He does say that Q1 2010 revenue exceeded all of 2009 revenue, and that revenue is now doubling every quarter. Yammer's revenue goal by end of year is to be at a $10 million annual run rate.

So what about Salesforce's Chatter product, which directly competes with Yammer? Sacks says he's not worried. Chatter is still in beta, but will likely cost at least $50/month/user. Yammer, which only charges $3-$5/month/user, can compete on price alone very well, he says.

Yammer has raised $15 million in two rounds of financing.

A few weeks ago, we highlighted many of the cool startups that have popped up in New York City in recent years.

And now we turn to Silicon Valley.

Over the past few weeks, we've asked VCs, angel investors, entrepreneurs, and other tech journalists about their favorite up-and-coming Valley startups. We've written about many of these companies before, obviously, and we'll be writing about many of them again.

In this list, you won't see companies that have been around for years and raised multiple rounds of capital. Instead, you'll see the some of the next generation -- startups working on ideas so exciting that VCs and angels are lining up to throw money at them.

Check out the 20 hot Silicon Valley startups you need to watch >

We would like to thank Brendan McManus of Startup Digest for contributing to this list, as well as all of the investors and entrepreneurs who provided valuable insight.

Bump Technologies lets you exchange contact info and other data with other people by tapping your phones together

Founders: David Lieb, Andy Huibers, and Jake Mintz

What it does: Bump is pretty simple -- it lets you exchange contact info and other data with other people by tapping your phones together. It partners with other app developers to build that feature into their products.

Why you should watch out for it: For some reason, people can't get enough of how neat this function is. It is built in to PayPal's latest app, and completely stole the show in all the coverage of the app's release. Being tied to PayPal is a huge deal in and of itself, of course. That and the huge number of anachronistic business cards we receive make us think this could be big.

Investors: Y Combinator, Sequoia Capital, Ron Conway, Ram Shriram, Joshua Schachter, Aydin Senkut, Brian Pokorny

Dropbox is a tool that helps you sync your files across all the computers and other devices

Image: http://www.flickr.com/photos/86921622@N00/ / CC BY 2.0

What it does: Dropbox is a tool that helps you sync your files across all the computers and other devices you use. It also backs up everything in the cloud, so you can access anything from any web-enabled device.

Why you should watch out for it: More people we talked to mentioned Dropbox than any other startup. The service already has 4 million users.

Investors: Y Combinator, Sequoia Capital, Accel Partners

Twilio lets developers integrate phone calls and texts into apps

What it does: Twilio makes APIs that let web developers integrate the ability to make and receive phone calls and text messages into their apps.

Why you should watch out for it: Twilio's competitors are mostly enterprise services. Twilio is cheap, and lets developers build simple phone functionality into their products with just a few lines of code. Tumblr uses the service, as have some major brands (Sony, Cheetos).

Investors: Mitch Kapor, David G. Cohen, Manu Kumar, Dave McClure, Union Square Ventures, The Founders Fund

VigLink handles all of the busy work around affiliate links

What it does: VigLink handles all of the busy work around using affiliate links to products on sites like Amazon. These links give referring publishers a small commission on completed sales. Once a publisher signs up with VigLink, converting standard links to the special links needed to track these referrals is entirely automated.

Why you should watch out for it: There is an absolutely massive volume of web content that could theoretically include affiliate links, but whose creators can't be bothered. Unless you expect to drive a good deal of traffic to a product, setting up affiliate links is more trouble than it's worth. If VigLink -- or one of its competitors -- can change that dynamic in exchange for a slice, it could be huge.

Investors: Google Ventures, First Round Capital, Reid Hoffman, Deep Nishar, Hadi Partovi, Ali Partovi, Carlos Cashman, Micah Adler

Worldly Developments's Plancast lets you create location-based plans for future events and activities

What it does: Worldly Developments is the company behind Plancast, which lets you create location-based plans for future events and activities, collaborate with others around them, and publicize them on Facebook and Twitter.

Why you should watch out for it: Plancast combines some of the appeal of location networks like Foursquare with the practical value of event management tools like Evite. It could easily be crowded out from either direction, but there's definitely a big opportunity here.

Investors: fbFund, SoftTech VC, True Ventures, The Founders Fund, Zelkova Ventures, Dave McClure, Aydin Senkut, Saul Klein, David Cohen, Joshua Schachter, Dan Martell, Ron Bouganim, Paige Craig

SimpleGeo provides the infrastructure to allow app developers to add location-aware functions with ease

Founders: Matt Galligan and Joe Stump

What it does: SimpleGeo provides the infrastructure to allow app developers to add location-aware functions with ease.

Why you should watch out for it: Even if you're skeptical of the location app craze, there can be no doubt that a lot of developers will be betting on it, so SimpleGeo won't have a hard time finding customers in the short term. If geo data sticks as an important feature for a wide range of apps, these guys will be in great shape.

Here's SimpleGeo's neat visualization of all of the check-in activity at SXSW this year:

SXSW Interactive Checkin Visualization from SimpleGeo Inc. on Vimeo.

Investors: Ron Conway, Kevin Rose, Chris Sacca, Redpoint Ventures, Joshua Schachter, Debbie Landa, Tim Ferriss, Shawn Fanning, Gary Vaynerchuk, David Lee, Freestyle Capital, First Round Capital, David G. Cohen

Heyzap is the "YouTube for casual games"

What it does: Heyzap -- often described as "YouTube for casual games" -- lets web publishers embed games on their sites. It has its own platform for virtual goods and microtransactions.

Why you should watch out for it: Just about any website can offer up games effortlessly; publishers keep 15% of ad and transaction revenue. It's a killer business model and has seen some strong adoption numbers so far.

Investors: Union Square Ventures, Naval Ravikant, Joshua Schachter, Christina Brodbeck

Vook is a portmanteau 'video' and 'book'

What it does: 'Vook' is a portmanteau 'video' and 'book', which tells you more or less what the company is all about. Vook offers web and mobile platforms for offering up a blend of text and video content. Launched last fall, the company already has partnerships with some big book and magazine publishers.

Why you should watch out for it: Brad Inman has a strong track record, and the most natural home for this sort of content -- tablet devices like the iPad -- is about to explode. If the world wants a new hybrid medium like this, this is the time for it.

Investors: Ron Conway, Baseline Ventures, Founder Collective, Floodgate, Ken Lerer

Smule makes your iPhone an instrument

What it does: Smule is the iPhone app developer behind Ocarina, which lets you use your gadget as a wind instrument by blowing into the microphone, and I Am T-Pain, which brings auto-tuning technology to the masses.

Why you should watch out for it: Smule doesn't have a specific focus that sets it apart from the crowd in app development, but over its short life it has a great record of impressing with each weird new project.

Investors: Bessemer Venture Partners, Granite Ventures, Floodgate, Shasta Ventures

UserTesting.com provides crowdsourced product testing for websites

What it does: UserTesting provides crowdsourced product testing for websites. The company matches up publishers with web users within specified demographics who provide video recordings of their interaction with sites.

Why you should watch out for it: Publishers can get feedback on new features within hours of implementing them; web surfers can get paid to screw around on the Internet. Start typing 'UserTesting.com' into a search bar and you'll see autocomplete suggestions like 'is UserTesting.com a scam?'. The answer is no.

Investors: No publicly announced funding.

Booyah is the developer behind MyTown, an incredibly successful iPhone game

What it does: Booyah is the developer behind MyTown, an incredibly successful iPhone game. MyTown has stayed in the news recently on the strength of its geo component, because it has much more impressive adoption figures than Foursquare or its competitors. That's mostly a head fake, though, as MyTown doesn't have much in common with those networks. It's more like a Zynga game for your phone.

Why you should watch out for it: Being compared to Foursquare is great for attracting media attention, but actually being like Zynga is great for making money. MyTown is already raking in cash from microtransactions. Booyah's founders are Blizzard alumni with experience in the Diablo and World of Warcraft franchises, so if turning this sort of game into a richer experience ends up proving economical, they'll be well positioned.

Investors: Kleiner Perkins Caufield & Byers

Polyvore brings together clothing and related products from different places on the Internet

Image: http://www.polyvore.com/cgi/profile?id=879071

What it does: Polyvore's users put together and show off 'outfits' by bringing together clothing and related products from different places on the Internet.

Why you should watch out for it: There is no shortage of people who think they have important contributions to make to the world of fashion, and having people encourage each other to spend more money on clothing is good business.

They were also just written up in -- of all places -- the New Yorker.

Investors: Benchmark Capital, Harrison Metal Capital, Matrix Partners

NotchUp is a crowd-sourced lead generation platform

What it does: NotchUp is "A crowd-sourced lead generation platform on top of social networks (currently focused on LinkedIn)."

Why you should watch out for it: NotchUp is premised on the notion that there is a key, unexploited space for apps on top of professional networks, analogous to the space in which companies like Zynga operate on social networks. There is a lot of value in improving these networks as recruiting tools, and we certainly expect someone to make a lot of money doing something like this.

Investors: Floodgate

Sharethrough helps brands distribute and promote viral marketing videos

What it does: Sharethrough helps brands distribute and promote viral marketing videos.

Why you should watch out for it: This is obviously a crowded space, but it's also one that is still growing. An investor tells us "they have generated millions of brand endorsements across more than 200 campaigns for more than 100 national brands including Activision, Sony, BMW, Audi, Nestle and Microsoft."

Investors: Ron Conway, Floodgate, Baseline Ventures

Recurly makes it easy for companies to offer subscription-based Internet services

What it does: Recurly makes it easy for companies to offer subscription fee based Internet services. There is plenty of competition, but most of it is expensive; Recurly doesn't charge any monthly flat fee, making all of its money by taking a percentage of transactions.

Why you should watch out for it: Its relative ease and affordability make Recurly an attractive option for startups. Its still in closed beta, but it already has a few promising clients; if some of them start blowing up, so will Recurly's revenue.

Investors: Dave McClure

DailyBooth is a photoblogging platform and social network

What it does: DailyBooth is a photoblogging platform and social network. Users post photos of themselves along with updates on what they're up to. You can follow other DailyBoothers, much like on something like Twitter.

Why you should watch out for it: We don't actually see the appeal ourselves, but there's no denying the growth and level of engagement. The site is just over a year old and has already hit 3 million photos. Investors love it.

Investors: Y Combinator, Sequoia Capital, Betaworks, SV Angel, Kevin Rose, Caterina Fake, Ron Conway, VaynerMedia, Brian Pokorny, Lowercase Capital, Felicis Ventures, Joshua Schachter

KISSmetrics provides analytics tools, focusing on "the conversion funnel"

What it does: KISSmetrics provides analytics tools, focusing on "the conversion funnel" -- the steps a user takes leading up to completing a transaction or signing up for something.

Why you should watch out for it: KISSmetrics is in closed beta, so we're relying on word of mouth, investor interest, and the experience of its team and advisors.

Investors: Polaris Ventures, True Ventures, SoftTech VC, Felicis Ventures, Dave McClure, Shervin Pishevar, and Bobby Yazdani.

Sofa Labs introduces people to friends-of-friends through Facebook

What it does: Sofa Labs creates services built on top of existing social networks like Facebook. Its first two products, Frintro and Thread, are both built using Facebook Connect and focus on introducing people to friends-of-friends.

Why you should watch out for it: An emphasis on friends-of-friends and the links connecting you to other people was a popular aspect of the social networks that didn't make it, like Friendster. Facebook's tighter privacy controls did away with this, but it makes sense for a third party to bring it back. The team is flush with ex-PayPal talent.

Investors: fbFund, First Round Capital, Sequoia Capital, fbFund, Ron Conway, David Sacks, Auren Hoffman, Reid Hoffman, Joe Greenstein, Shervin Pishevar, Saran Chari, FF Angel LLC

Threadsy is a tool for aggregating and organizing communications

Founders: Rob Goldman and Udi Nir

What it does: Threadsy is a tool for aggregating and organizing communications from all of your email accounts, instant messaging clients, and social networks.

Why you should watch out for it: There is no shortage of people trying to do things very like this, but that's because it desperately needs doing. A few winners in this space could get huge.

Investors: August Capital and Harrison Metal Capital

TrialPay is an "alternative e-commerce system"

What it does: TrialPay is an "alternative e-commerce system" that lets people get products and services for free by agreeing to purchase something else from a list of vendors.

Why you should watch out for it: Founded in 2006, TrialPay is just about too old and well funded to be on this list, but the enthusiasm for it was too great for us to leave it off. VCs who aren't in on it wish they were, and there's still plenty of room for TrialPay to get bigger.

Investors: Baseline Ventures, Battery Ventures, Index Ventures, Bob Pittman, Ron Conway, Skype, Google, Atomico Ventures

Those are some of the most promising new startups in the Bay...

Now check out the 20 hot New York City startups you need to watch >

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Many years ago, as a grad student attending an LSA summer institute, I took a course from Harvey Sacks and Emanuel Schegloff based on their work with Gail Jefferson, published as "A simplest systematics for the organization of turn-taking in conversation", Language 1974. That paper's abstract:

The organization of taking turns to talk is fundamental to conversation, as well as to other speech-exchange systems. A model for the turn-taking organization for conversation is proposed, and is examined for its compatibility with a list of grossly observable facts about conversation. The results of the examination suggest that, at least, a model for turn-taking in conversation will be characterized as locally-managed, party-administered, interactionally controlled, and sensitive to recipient design. Several general consequences of the model are explicated, and contrasts are sketched with turn-taking organizations for other speech-exchange systems.

At the recent IEEE ICASSP meeting in Dallas, one of the papers that caught my eye was Chi-Chun Lee and Shrikanth Narayanan, "Predicting interruptions in dyadic interactions", ICASSP 2010. Their paper starts like this:

During dyadic spontaneous human conversation, interruptions occur frequently and often correspond to breaks in the information flow between conversation partners. Accurately predicting such dialog events not only provides insights into the modeling of human interactions and conversational turntaking behaviors but can also be used as an essential module in the design of natural human-machine interface. Further, we can capture information such as the likely interruption conditions and interrupter's signallings by incorporating both conversation agents in the prediction model (we define in this paper the interrupter as the person who takes over the speaking turn and the interruptee as the person who yields the turn). This modeling is predicated on the knowledge that conversation flow is the result of the interplay between interlocutor behaviors. The proposed prediction incorporates cues from both speakers to obtain improved prediction accuracy.

This work comes out of Shrikanth Narayanan's SAIL ("Signal Analysis and Interpretation Laboratory") at USC, where a lot of interesting work is done. But before going on to tell you a little more about this work on interruption-prediction, I want to note the curious lack of communication between the disciplinary configurations represented by these two quoted passages.

Reading the two passages, an outsider might think that the researchers responsible for them were working on the same range of problems, and even in the same general disciplinary tradition, modulo the changes to be expected over a timespan of 35 years. But in fact, they come from two radically different traditions, which may or may not be mutually intelligible, but in any case are almost entirely without any direct communication.

Manny Schegloff is still an active researcher, in the sociology department at UCLA, roughly ten miles away from USC. I suppose that Schegloff and Narayanan must know of one another's existence. However, in documents on SAIL's website, Manny Schegloff never cited or mentioned. (This is not an indexing problem, since e.g. Liz Shriberg is cited 49 times, as well she should be. ) And the lack of communication is apparently mutual Narayanan is apparently not mentioned in any of Schegloff's publications.

I wouldn't normally comment on this sort of thing, but I couldn't quite resist the irony of two researchers working on communicative interaction, at institutions less than ten miles apart, without any communicative interaction. Still, I should make it clear that this is not a matter of personal relationships, as far as I know, but rather the typical circumstance of disciplinary isolation. The world of speech and language research could be described as a sort of intellectual Balkans, except that the norm is not so much mutual hatred as mutual ignorance. There are at least half a dozen major cultures, and dozens more minor ones, all living and working more or less as if they were separated by impassable mountains and unfordable rivers.

OK, back to Lee and Narayanan's interesting work on interruption:

We used the IEMOCAP database for the present study. It was collected for the purpose of studying different modalities in expressive spoken dialog interaction. The database was recorded in five dyadic sessions, and each session consists of a different pair of male and female actors both acting out scripted plays and engaging in spontaneous dialogs in hypothetical real-life scenarios. In this paper, we are interested in the spontaneous portions of the database since they closely resemble real-life conversation. During each spontaneous dialog, 61 markers (two on the head, 53 on the face, and three on each hand) were attached to one of the interlocutors to record (x, y, z) positions of each marker.

Here's what the marker positions were like:

The basis of the study was a comparison of 130 interruptions and 252 "smooth transitions": In total, we annotated 1763 turn transitions in which 1558 were smooth transitions and 215 were interruptions. Since the distribution of these two types of turn transitions is highly unequal, we downsampled the data by including only three sessions (six subjects) of the IEMOCAP database with three dialogs chosen for each recording session. Subjects and dialogs were selected to include a majority of the annotated interruptions. In total, there are 382 turn transitions annotated with 130 interruptions and 252 smooth transitions used as our dataset in this paper.

Thus in classifying transitions as "interruption" or "smooth", the baseline performance is what you get by always guessing "smooth", namely 252/382 = 66%. Using the face and body-gesture features of the interrupte, and various acoustic features of the interruptee, both taken during a one-second period prior to the transition, Lee and Narayanan were able to do a bit better than this:

Logistic regression got them to 68%, and a "hidden conditional random field" model, with some special attention to feature selection, got them nearly to 71%. (The "Precision" and "Recall" values mean that in their best-performing model, 57% of the transitions predicted to be interruptions actually were interruptions, while 51% of the interruptions were predicted to be such. And they used a cross-validation approach, so that the numbers are not inflated by testing on the training set.)

The most striking fact about this result, it seems to me, is that interruptions turn out to be so hard to predict, at least in this particular collection of interactions. I wouldn't have predicted that.

They also tried predictions based only on one side or the other of the interaction. Here again, the results are a bit surprising:

In other words, when they try to predict interruptions solely from the interrupter's face and body kinematics, they do a bit worse than chance. Predicting solely on the basis of the interruptee's audio features, they do somewhat better.

Last week, Sony announced the PlayStation Move, a new motion-based controller to compete with both the Wii and, more importantly, Microsoft's upcoming Project Natal full-body motion controller.

That's why we made the topic of the latest edition of our Web Faceoff about Sony and Microsoft's upcoming next-generation gaming controllers. We asked you to tell us which excited you more: Microsoft's Natal or Sony's Move. After over 2000 votes

Project Natal emerged victorious. With 56% of the vote (1,268 votes), Natal was more than a match for the PlayStation Move, which mustered 30% of the ballots (668 votes). 170 voted that you didn't care for motion controllers, while antoher 150 preferred the Wii.

Tune in tomorrow for the next edition of our web faceoff series!

Tags: microsoft, Nintendo, playstation move, poll, project natal, PS3, sony, web faceoff, Wii, xbox, Xbox 360

This week I had the opportunity to walk up these steps and into this amazing home at 1610 Carla Ridge in Beverly Hills, which was designed and built by Steve Hermann Design. As you walk into this masterpiece you are instantly greeted by the city lights, sparkling brightly, just beyond the edge of the infinity pool.

The view from this dining room has got to be one of the best in Los Angeles.

When you have a dining room with these views, I can bet there will be lots of dinner parties. This Poliform kitchen is sure to be put to good use!

This stunning 16-foot long fireplace mimics the flickering of the lights beyond and invites you to gather around and enjoy. I love how the seating in this room allows you just take in the exquisiteness from whatever vantage point you choose.

In the bedroom, the soft gray and white palette mixed with the floral wallpaper make it feel soothing and inviting. It is modern and elegant without being too stark or stuffy. I think I could pretty much spend my entire day relaxing in the bedroom.

and this bathroom. The Antonio Lupi Baia bathtub is calling my name as the Jesse Faucet is just standing there looking gorgeous. The master bathroom is filled with all the luxuries you could want; steam shower with glass tile, faucets that look like fine jewelry, gorgeous Poliform vanities and storage cabinets, and a built-in plasma TV. I dream of this bathroom

when I'm not dreaming about this closet! I'm going to let you in on a little trick. The Poliform closet looks even bigger than it actually is by the use of a floor to ceiling mirror on the back wall.

The guest bathrooms are also filled with glass tile from Ann Sacks and Antoni Lupi bathroom compositions. The concealed drains on the shower floors and the vanity are such gorgeous details. The mixture of materials is done with such perfection that these sleek modern bathrooms take my breath away.

As designer and builder Steve Hermann says this home moves you emotionally. Absolutely perfect in every way. I could not agree more. I honestly did not want to leave! This home is currently on the market and could actually be yours!

Last month I gave Yammer (a product I like) a hard time because it doesn't integrate with microblogging clients like Seesmic and Tweetdeck and I feel that their pricing is prohibitive to large, enterprise companies.

I got several comments from people and had some really good discussions around the use of Yammer and the good and bad people face with the product. To my surprise the most engaged commenter was David Sacks, Founder and CEO of both Yammer and Geni, was previously the COO of Paypal and if that wasn't enough, producer of the movie Thank You For Not Smoking.

I've been meaning to, to do a follow up post on what Yammer decided to launch instead of the features I thought they should have implemented but yesterdays Social Business Summit provided the perfect fodder I needed.

Lane Becker, CEO of Get Satisfaction, made the comment that we need to create more edges in our companies. Edges are where the cool things happen, it's where conversations with partners and customers happen; it's where innovation occurs.

John Hagel then later made the comment that companies need to move from knowledge stocks (proprietary IP that they milk dry) to knowledge flows (rich interactions and collaborations with stakeholders).

Earlier this month Yammer released Yammer Communities a tool that can do just that. From the Yammer blog:

This new product feature enables companies and organizations to create a new type of Yammer network that is not restricted to a common email domain. Yammer Communities provide companies with a secure, private, and separate space to communicate with their external business contacts.

This is an excellent move for Yammer. Traditional partner portals or extranets are secure, intranet like sites where companies can share things like documents and announcements with partners and over the years extranets have grown to include some level of collaboration. Most extranets suck for two reasons:

• They're hard to use have horrible UX
• People don't want one more place they have to remember to check

I have no doubt Yammer will destroy current extranets on both accounts. However I still think that being able to access Yammer from an aggregated application like Tweetdeck or Seesmic will make the service much easier to use. But David is a successful serial entrepreneur, the one category of business person I have the most respect for, obviously knows what he's doing and shouldn't be listening to every blogger with an opinion and an overinflated sense of importance.

I'm looking forward to giving the new communities feature a test to see how well it works.

It's pretty long (just under 30 minutes) but if you're interested here's an interview Robert Scoble recently did with David.

I chat with the CEO of microblogging and corporate social service leader, Yammer, about what they are doing and how the enterprise market is becoming hyper competitive with companies like Salesforce, Jive, Socialtext, SocialContext, Google, and Zoho all angling for the market that Yammer was first in.

Internal social media is about to go through the growth external social media went through for the last few years. It's going to be exciting to watch.

None Found

Marc Benioff, CEO of Salesforce, has been using the bully pulpit over at Techcrunch to tell everyone that how we work together is about to radically change to be more like how we are able to share photos and fun things with each other over on Facebook. He's right, but I'm not sure yet Salesforce is really going to be the one to lead us into this new world. He recently told me what Salesforce is trying to do with its entry into this space, Chatter, and I got a separate demo of Chatter's newly shipped beta on video. You should watch both of those to get up to speed on what Salesforce is trying to do.

Other companies like Yammer, SocialText, Jive, SocialCast, and others have actually been doing the harder foundational work here of trying to convince us all to bring socially collaborative services into our workplaces. Yesterday I sat down with Yammer's CEO, David Sacks, and talked about the industry and what Yammer is doing (Yammer was first to bring microblogging streams inside corporate firewalls and won TechCrunch 50 two years ago because of that).

I've been going around this enterprise world trying to understand it. I recently visited SocialCast and talked with CEO Tim Young about how he sees this revolution taking shape (and how he views Salesforce's entry into it). In the interview you'll hear Tim tout his advantages: that SocialCast is runable both on its servers, but can also be run on your own servers inside your firewall, or on your own infrastructure. Enterprises in healthcare, pharmaceuticals, and banking will want to do this and won't go with the Google or Salesforce model of run it on our servers, they are safe, promise.

I also talked last week with SocialText's founder, Ross Mayfield. SocialText was the first company into this new Enterprise 2.0 space and they just shipped a new version that has a much broader range of applications than SocialCast or Salesforce has (spreadsheets and wikis, to name two) that are integrated deeply into its socially collaborative streams. Companies that want a complete set of applications should look at SocialText.

But, now, don't miss what Google did last night (it turned on the Google Apps Marketplace). It's big. But even more exciting and potentially revolutionary was the Gmail integrated contextual apps extensions. These let developers integrate all sorts of enterprise data right into Gmail. You can see where Google will go next, right? An enterprise version of Buzz with these widgets integrated into Buzz messages. Salesforce is actually ahead in integrating its partners' data right into its feeds with Chatter, but it's clear that window will close pretty quickly as Google keeps building its Enterprise Reef (my term for all the various projects that Google is stitching together). If you are interested in the enterprise space, I'd definitely watch the video presentations from last night. Salesforce has a few million users, Google has 25 million users, so you can see the relative strength of Google's moves. Salesforce must articulate a strategy of how it will both partner with, and differentiate from, Google's reef.

After the presentations last night I talked with executives from Zoho, Atlassian, and other companies. They agree with Benioff that a revolution at work is underway. They are seeing sizeable sales and adoption into enterprises as we all change how we work from a file-based and email-based system of working to a socially-collaborative feed way of working.

This is also why the most important panel at SXSW will be the Activity Streams panel. All of these companies need to adopt standards-based stream formats so that they can easily interoperate with each other and all the data sources that will need to shove data and reports into our work streams of the future. I'll be there and will report more on Saturday as I understand more about the state of the art.

Are you feeling this revolution yet? Are you changing how you work with others? Or are you still only using email and Microsoft Sharepoint to collaborate with your coworkers? If you are, beware, your work life is about to change big time.

If you work at a company like Jive, SocialCast, SocialText, or Salesforce, what do you think? Are Marc Benioff's moves important?

Scribd, which is like YouTube's unpopular little brother, came out with a new look today in honor of it's birthday, as covered by Tech Crunch:

To celebrate its birthday, Scribd just rolled out a redesign with a new Zune-brown logo, much faster document search (to support 1.4 million searches a day), and other small new features such as the addition of collections. It lets you explore by category or trending documents.

I've always liked the concept of Scribd. It's like YouTube for writing. I like YouTube...I like reading. It should be a great match!

But there's one problem with Scribd-much like YouTube, finding good content means wading through an enormous amount of crap.

I didn't realize how much I took YouTube's popularity until I started checking out Scribd. YouTube is popular enough that chances are, you don't even have to go looking far to find something entertaining. Sites, friends, social networks-they all recommend YouTube videos-no search required.

Scribd just isn't that popular, so you have to look for yourself. I've put in quite a bit of time into checking out Scribd, and have found some good stuff on there, but it did take a lot of time.

Scribd is also making a big push into mobile reading by making it easy to send documents to avariety of mobile devices, including iPhones, Android phones, Blackberries, Kindles, and Nooks. The company has raised $13 million total from Charles River Ventures, Redpoint, Marc Andreessen, Jeff Jordan, and David Sacks (who recently joined its board).

I'm hoping that as e-readers and e-books become more popular, so will Scribd. I doubt it will ever get to YouTube like proportions, but it would be nice to see links to things on Scribd. Scribd needs love too.

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Document-sharing site Scribd launched three years ago with the idea of making PDFs and other text-documents more Web-friendly. Now three years later, the site stores more than 10 million documents, which in turn have been embedded more than 10 million times across the Web. Scribd says it reaches more than 50 million people a month worldwide (Quantcast).

To celebrate its birthday, Scribd just rolled out a redesign with a new Zune-brown logo, much faster document search (to support 1.4 million searches a day), and other small new features such as the addition of collections. It lets you explore by category or trending documents.

Scribd took a big hit to its traffic in the middle of last year when it started getting serious about cracking down on pirated documents, from which it still hasn't completely recovered. But its stronger copyright filtering makes partners like major publishing houses more comfortable using Scribd as a way to promote and distribute its books. Scribd's biggest competitor DocStoc is also growing at a nice clip and adding new features at a steady clip.

Scribd is also making a big push into mobile reading by making it easy to send documents to avariety of mobile devices, including iPhones, Android phones, Blackberries, Kindles, and Nooks. The company has raised $13 million total from Charles River Ventures, Redpoint, Marc Andreessen, Jeff Jordan, and David Sacks (who recently joined its board).

In the last few months I was hearing positive things from customers about Yammer. Then I saw Emergence Capital put in $10 million. There must be some serious traction for that to happen. So I spoke to David Sacks, CEO at Yammer, to find out the story behind this news. There are some interesting lessons in their success for other SaaS entrepreneurs.

Sponsor

Yammer Traction

Raising $10 million from VC that really understand SaaS is not traction, but it is evidence that traction is probably already there. I was keen to find out some numbers.

Sacks told me that Yammer has over 60,000 networks (a.k.a companies using Yammer) and that the average network has more than 10 employees. So that means that they have over 600,000 "seats".

But most of those are free. The Yammer story is about how well freemium can work if done right. Sacks told me that they have a conversion of about 10% to 15% from free to paid. So you can do the math. Actually you cannot really, this is normal in a private company that opens the kimono slightly but won't do the full disclosure that you get and expect from a public company.

But you get the basic picture. They are getting lots of free users and converting a reasonable number to paid. And they don't need Superbowl ads to do this. So the CAC/ACV ratio (customer acquisition cost divided by annual contract value) looks like it must be pretty good.

Simple Is Good

When Yammer won TC50 I saw many other ventures that had far more sophisticated technology and models. So it seemed like a joke that something as simple and derivative as Yammer should win.

But in the startup game, simple is good. There is a reason we often have to remind ourselves to KISS - keep it simple stupid. It is hard to get noticed and even harder if your proposition is not brain-dead simple.

One analyst who tracks Enterprise 2.0 told me that Yammer was like the "gateway drug for social media in the enterprise". It is so simple to get started. Then when you get some benefit you look around for additional features. Sacks was keen to point out the sophisticated features that Yammer has now built for enterprise customers. You can see them on their site, and the big companies using Yammer and singing its praises (such as Sungard) would demand these features.

But adding on features when you get market traction is not that hard. That is not the story. Getting traction is the story.

The 'Google Price'

Their base price is $3 per user, per month, and they have a Gold version at $5 per user, per month.

That is what some people call the "Google price" (how high they price their apps). Zoho is in the same range. In the non-digital world we call this the Walmart price, a.k.a the China price.

At scale, these prices lead to a great business. But you have to get to scale. Starting with these price points makes scale more achievable.

No SaaS startup can ignore this price point any more. A low entry price reduces friction. Remember the 10% to 15% conversion from free? Price is key to that.

Google Buzz Will Kill Them. So Will Twitter. Hmmm...

I spoke to Sacks on the day that Google Buzz was buzzing. Actually I had already switched off Buzz, deciding that it is a time suck, and no longer believe that Google wins at every game they enter just because they won the biggest game of all - search/PPC.

When Yammer first came out I thought that Twitter could replicate their "private mode" with a few lines of code. They could and it would have stopped Yammer dead in its tracks. But they did not. They still could, but now Yammer has some traction. If Twitter offers this capability now, Yammer can still make it. And Twitter has a priority list of mega-big opportunities as long as your arm - and this one is probably way down the list.

So Yammer may be able to carve a big enough role for itself between the gorillas.

The Great Unified Messaging In The Sky

Yammer is a replacement for email. That obviously does not mean people stop using email, they just stop using it for some messages. That is happening already. Messaging is getting fragmented and that creates its own problem. So lots of smart folk are going after unified messaging. Google is using millions of people as a consumer research panel by throwing Wave and Buzz out there and analyzing the reactions.

Somebody will get unified messaging right. But it will require some user interface magic. If Apple focused on this... ? In the meantime, we can expect fragmentation for a long time to come. Yammer's approach to this was simple and elegant. Discuss

At the last Twiistup event, on a panel with diehard Los Angeles entrepreneurs and investors Yammer CEO David Sacks explained that Southern Californians wouldn't need to have a panel on Los Angeles startups if it really did receive the same recognition and credit as Silicon Valley. This week the Bay Area is hosting two women in tech events including yesterday's Girls in Tech Catalyst Conference and upcoming weekend event She's Geeky. While both events feature major industry leaders, I can't help wondering if a separate conference for women is akin to the separate panel for Southern Californians.

Sponsor

As per Jolie O'Dell's Open Thread on Women in Technology, we know that gender separation between web professionals is a controversial topic. In a tech community that often identifies as a meritocracy, we asked three event organizers why the industry needs female-centric events.

The Girls in Tech Catalyst Conference

When asked why she saw the need for a women's tech conference she replied, "The opportunities for women in technology companies are still extremely sparse and our conference is one way to help women build confidence and create a platform for their ideas to be heard. By putting on this event I know we've identified some of the best women in the field and we've likely tripled the list of good female speakers for other tech conferences."

BlogHer

Says Page, "We started BlogHer in 2005 to answer a question we thought had to die, namely: 'Where are the women bloggers?' The truth is that women are more than half the population, more than half the voters, more than half the Internet users and about half the bloggers. Moreover, women control more than 80% of the household spending. And yet women are not represented to anywhere near that degree in *any* hall of power from industry, to politics, to the media. So until that day, we see a lot of value in our mission to shine a spotlight on the great work of women, and serve our mission of creating opportunities for women to pursue."

She's Geeky Unconference

She suggests several reasons why women are under-represented as tech leaders including job descriptions which deter women by asking for typically male qualities and the potential isolation of being one of few women on a mostly male team. She cites Clay Shirky's Rant About Women in suggesting that women underrate themselves and lack role models, while men proactively promote themselves. Hamlin suggests that events and in-person meetings between women in tech fill the gap for role models.

She says, "I think the world would look a lot different if half the developers were women. Information technologies are shaping the future and if women are not active participants in the product design and development, then their perspectives are not included and it won't work for them."

Hamlin points out that many of the first modern programmers - those working on the Electronic Numerical Integrator and Computer (ENIAC)- were women. For a look at some of today's successful founders and technology professionals, she points to the Women 2.0 list of founder successes.

"Young girls need to be encouraged to study the basic courses that lead to careers in tech. It's still not the "organic" choice for them or the career channel encouraged by adults."

As part of her quest to provide positive female role models in tech, Hamlin is showcasing some of the best female technology groups at a booth at South by Southwest including DevChix, LinuxChix, Anita Borg Institute and Women 2.0. To participate your group can visit the She's Geeky SXSW page. To purchase tickets for this weekend's She's Geeky event, register here.

Photo Credit: Woodley Wonderworks

Scribd, a site that lets users and publishers upload and share documents, has a new board member. David Sacks, the founder of Geni and Yammer (and former COO of PayPal), joins the company as a director as of today.

Scribd had 8.1 million unique worldwide visitors in November 2009 (Comscore). They've raised $12.8 million in three funding rounds. Sacks is already an investor in the company.

Finally. Over a year after iPhone users got their native Yammer fix, Android has an official Yammer application available on Android Market. The application, while still fairly basic, comes with support for most of Yammer's core functionality. If you use Yammer and you have an Android phone, you'll want this app. We can't link directly to the app because Google still hasn't launched a strong web presence for the Market, but you can find it by running a query for Yammer from your phone.

The new application is actually derived from the codebase of Yowl, a third party app for Android that Yammer acquired a couple months ago. CEO David Sacks says that the application has been off the Market since the acquisition, primarily so that the team could fix a few issues. Now it's good to go.

While a mobile application isn't totally essential to using Yammer (you can use SMS, and the web app works well enough from mobile browsers), they sure make life easier. The Android application can automatically notify you when you have new messages, and you can leave it running all day in the background (on the iPhone you have to set up Push notifications). We've relied heavily on Yammer since its launch at TechCrunch50 2008, and this will make things much easier for those of us who have made the jump from the iPhone (or something else) to Android.

I've been playing with the app throughout the day and found it to work well overall, but it isn't perfect yet. I found a bug or two (for instance, whenever I try to jump back in a message I'm writing to correct a typo, the whole message disappears). And there are some features that aren't in the app yet, like the ability to granularly control which messages should issue an audio/vibrating alert. Sacks says the app will definitely be upgraded with more features in the future.

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This is part of my new series on what makes an entrepreneur successful. I originally posted it onVentureHacks, one of my favorite websites for entrepreneurs. If you haven't spent time over there you should.

I started the series talking about what I consider the most important attribute: Tenacity. I then covered Street Smarts.

This is part of my new series on what makes an entrepreneur successful. I originally posted it onVentureHacks, one of my favorite websites for entrepreneurs. If you haven't spent time over there you should.

I started the series talking about what I consider the most important attribute: Tenacity. I then covered Street Smarts.