Groupon will abandon its use of a controversial financial measurement it was using to indicate performance, two sources told Reuters. The daily deals website, which also doubled its number of subscribers to 115 million this year, will stop referring to a measurement called Adjusted Consolidated Segment Operating Income, a metric that excludes marketing costs. READ MORE
McAfee, an Internet security company, uncovered the largest series of cyber attacks to date, which infiltrated networks of 72 governments, companies and organizations around the world, including the United Nations. READ MORE
Google is now dangling an interesting carrot in front of select U.S. AdWords users: a new low-interest credit card with no annual fee. The only catch is you can’t use it to buy office supplies or airline tickets but only Google advertising. According to Alexei Oreskovic reporting for Reuters, the AdWords Business credit card is Google’s first inroad into vendor financing. READ MORE
Move over, journalists. Social media is taking over your realm of influence. The death of Osama Bin Laden and the outbreak of tweets, posts, and videos about the historic event provides the most recent example of how anyone with a smartphone can and does generate the news. READ MORE
It was almost midnight, but David Sifry was still sitting at his office computer, nervously zinging instant messages back and forth with friends and employees. Sifry knew that his fledgling business, the popular blog search engine Technorati, was about to get a gigantic new rival: Google. It was a moment Sifry had been anticipating. When he founded Technorati in 2002, he knew that if blogging became as big as he anticipated, he’d almost certainly face competition from the giants. Indeed, he had spent the previous three years trying to take maximum advantage of Technorati’s first-mover status, the better to protect his company when the big boys made their play. On September 14, 2005, that day arrived. Google Blog Search was making its debut. Similar offerings from Yahoo and Microsoft were said to be in the works. If Technorati was to survive, Sifry reasoned, it would have to do so on the basis of its technology. From the outset, he had been pushing his programmers to refine Technorati’s novel way of searching the growing number of weblogs. And despite the long and admittedly scary shadow cast by Google, Sifry’s instincts told him to ignore the new competition and stick to his plan. Google, after all, had added other new services without killing its smaller rivals. The search engine Ask Jeeves, for example, remains viable. And Shopping.com, a shopping search engine, not only survived Google’s 2002 launch of Froogle, but wound up being purchased by eBay for $620 million in June 2005, which was hardly a bad outcome. Still, it was hard to imagine sitting back and doing nothing as one of the most powerful companies in the world encroached on his turf. “I take them extraordinarily seriously,” Sifry says. “These are very smart people, smarter than me, and they’ve made tons of money.” But Sifry didn’t see many options. Launching a major brand-building campaign to reinforce Technorati’s image as the original blog search engine wasn’t viable; after all, who can outspend Google? And he didn’t particularly want to cut and run and start looking for a buyer. A computer geek at heart, Sifry had a lot of faith in the technology he’d developed. Indeed, his bet all along had been that Google’s approach to searching the Web wouldn’t be the right fit for the blogosphere. The company’s famed PageRank algorithm indexes keywords and looks at the number of people linking to websites in order to establish the best matches for a search. In essence, Google treats the Web like an enormous library, sifting through millions of pages and displaying the most relevant ones, regardless of how old they might be. Sifry believes the blogosphere is different. It’s not so much a library as a conversation, and old blog entries get stale fast. That’s why he’s made sure that the first page of Technorati search often yields items posted in the past 10 or 20 minutes. A former Wall Street analyst, Sifry developed the technology in early 2002, while working as chief technology officer at Sputnik, a wireless computer networking start-up he had co-founded. On the side, he kept a blog, mostly to expound on tech issues, and he was curious to know who was reading it. So he spent an evening writing software code that would help answer the question. At the time, most bloggers were techies like Sifry or teenagers posting their diaries. But the phenomenon took off, and Sifry’s website, which he had dubbed Technorati, was seeing rapid traffic growth and even some paying customers–including The New York Times and Reuters, both of which licensed the technology to track what bloggers were saying about their articles. When AOL called and said it wanted to collaborate with Technorati on its new blogging service AOL Journals, Sifry realized that Technorati was no fluke and could be a lot more than a hobby. He wound down his relationship with Sputnik, signed a deal with AOL, and started raising some angel capital. In September 2003 he devoted himself full-time to Technorati. Its mantra: “Be of service.” Sifry’s instincts about the blogosphere proved correct, and Technorati has been scrambling from the outset to keep up with the blogging world’s explosive growth. In 2004, the company raised $6.5 million in venture capital. By the fall of 2005, more than 15 million blogs were being read by 30 million people, and Technorati was performing millions of searches a day. The company wasn’t profitable. But it was building a real business, using a business model not unlike Google’s–selling advertising and sponsorships, and syndicating its technology to other websites. It had much better brand recognition than its competitors, most of them start-ups such as Feedster, PubSub, and Bloglines. But going head-to-head with Google would be an entirely different matter. Sifry wondered what Google had up its sleeve. It might, for instance, have more effective ways to deal with the growing number of blog spammers trying to game the search engines (spammers had generated lots of complaints about Technorati). Indeed, the company was vulnerable on a number of fronts. Keeping up with demand was a constant challenge. Searches on Technorati were taking longer and were increasingly generating error messages. Customer support was overwhelmed, with some queries taking as long as a week to answer, sparking more complaints among bloggers. What if Google’s technology simply worked better? What if the company had developed entirely new approaches that Sifry hadn’t even considered? Could he really just stand by and do nothing? The Decision The prototype of Google’s Blog Search went live at midnight on September 14, 2005. Most of Technorati’s work force of about 30 was online, waiting. Sifry spent about half an hour checking it out, then posted a welcome note to his new competitor on his blog, including some friendly trash-talking about all the things Technorati could do that Google couldn’t, such as image finding. Then Sifry went home and got some sleep. There were no big surprises. Google Blog Search, he concluded, was solid but simple. It seemed to have a hard time keeping up with the dynamism of the blogging world; many search results it displayed were more than 24 hours old, which is ages in the blogosphere. On the other hand, Google delivered those results in less than half a second, compared with at least a full second for Technorati. It sounds minor, but in the world of Web search, that’s a big difference. “We knew we had a lot of work to do,” Sifry says. Since then, the company has been scrambling to keep its edge by launching new features. First up was a tool that provides constant updates of the things that matter most to people who write and read blogs at any given moment–such as the most-discussed books, movies, and news items on the Web. Then in October, it added a feature that is able to determine who is the most authoritative blogger on any particular topic. In November, a “Mini” search window debuted that automatically refreshes users’ favorite searches while they’re doing other things online. And in December the company introduced a prototype called Technorati Explore, an experiment in creating a newspaperlike front page from blog posts. Traffic growth slipped slightly in September. But it rebounded in November and is still growing faster than Google Blog Search, according to Hitwise, a company that monitors Internet traffic. As of mid-December, Technorati was tracking some 23.4 million blogs, adding some 70,000 more to the list every day, and getting 1.53 visitors for every one visitor to Google Blog Search. Sifry, of course, knows that Google’s product will almost certainly get better. He’s also facing new competition from Yahoo, which rolled out a blog search function on its news page in October. But he remains confident that Technorati will not lose its technological edge for some time. “What we’re building is fundamentally difficult,” he says. “If it were easy, everyone would be doing it.” Another advantage: Unlike Google, Yahoo, or any other major player, Technorati needs to keep its focus on just one thing–the blogosphere. With blogging more popular than ever, Sifry says he’s currently evaluating more than 100 potential deals–primarily advertising, sponsorship, and syndication deals. And a lot of the credit, he says, goes to Google. “I no longer have to explain what a blog is,” he says. “It’s absolutely an easier business discussion now.” The Experts Weigh In Switch to services Technorati has some good technology, but I’m not sure that it has a strategy that can keep it alive. In fact, I’m not sure what its strategy is. I’d like to see Sifry build a business around services, not search. Many of Technorati’s rivals are offering private label services for Web publishers or platform services to bloggers, like hosting and tools. Technorati seems to be doing neither. It has introduced some very clever technology, but I don’t think an advertising-based revenue model is enough to sustain the business. Susan Mernit Partner, 5ive, a digital media consultancy in New York City Look for a buyer Technorati can point to different features it has that Google doesn’t, but that’s only for now. Technorati’s best bet is to try to get acquired. It needs to stop worrying about search technology and take the head start it has in creating online communities and leverage it. Bloggers come to Technorati for more than just searching. Building on that community will make Technorati more than just another search engine. Anything it can roll out that makes it harder for people to switch will make it a sweeter acquisition target. Stephan Spencer President, Netconcepts, a Madison, Wis.-based Web consultancy It’s all in the execution I use Technorati every day to see what’s being said about my blog. It’s not clear to me what Technorati thinks its market is. Is it trying to be an entry point for consumers? Or a tool for blog publishers like me? Compared with Technorati, Google is terrible, especially in terms of timeliness. On the other hand, Technorati is overwhelmed by spam. Technorati’s strategy is not unique, so its execution has to be perfect. Sooner or later, somebody’s going to get it right. I hate to say it, but it’s probably Google. Peter Rojas Co-founder, Engadget, a New York City-based blog about tech gadgets
Desktop real estate – the amount of monitor screen space you have – comes at a premium these days. As people use more applications, the standard 15- or 17-inch monitor is falling short. Unless you are prepared to shrink your font size so low that you’ll need binoculars to read it, there’s only one answer: get another monitor. In fact, analysts at Stanford Research, who study the electronic display industry, are now targeting 19-inch monitors as the fastest growing segment. Many customers, however, are trading up without giving away their older 15-inch models. The option of putting two monitors on one computer works well for the busy person who has a lot of activities going on at once. Windows 98 offers a two-monitor feature that lets you simply add a second monitor card, then attach two monitors to the PC. That approach has some limitations, however. It uses a lot of the PC’s processing power, so it noticeably slows down the computer. And some applications, like DVD or certain graphics programs, don’t split well over two monitors. Here’s another answer. Check out the new Matrox Millennium G400 card. For about the same price as a good graphics adapter card, you can buy this DualHead display and TV output card. With it you can hook up your computer to a pair of monitors, LCD projectors, TV sets, or flat-panel monitors. Since Matrox puts its own graphic accelerator magic into the card, you can run two monitors without slowing down the PC. The graphics card is adaptable to many tasks. One person can be watching a DVD movie, while the other is composing an e-mail message. Or, your kids may ask to borrow it and prove to you that they can watch a movie and do homework at the same time. In fact, the graphics card is so flexible you can even configure it to run a DVD display split between both screens. The graphics adapter is a boon for busy researchers. You can put a Web browser on one screen and your report on the other. It’s much easier to correctly cite the work when you can bring it up in front of you. Or for making presentations, you can click through the electronic slides on one screen and make notes on the other. If you do any work with touching up pictures, the zoom feature of the G400 lets you put the picture on one screen and a zoomed-in version on the other. Each pixel-by-pixel change can be simultaneously seen at close up and at regular size. Of course, I can see other ways to use the G400. For those people looking at financial markets in this nanosecond world, it’s great to get the full view of real time quotes, news, and your portfolio information simultaneously. And, after hours, you can get a new experience with products like Microsoft’s Flight Simulator 2000 or Combat Flight Simulator. Put the pilot’s view on one screen and the controls on the second monitor. If you haven’t seen the view from two monitors, it’s a whole new world. With 13 books and more than 600 magazine and journal articles to her credit, Ms. Currid also writes regular magazine columns appearing in InformationWeek, Comdex Show Daily, LAN Times, and the Houston Chronicle. She has also contributed her opinions on computer industry trends to PC Week, InfoWorld, Network Computing, Windows Magazine, and other industry periodicals, as well as business media including the Wall Street Journal, New York Times, Reuters, Associated Press, Investors Business Daily, Forbes, Fortune, ABC, NBC, CNBC, and PBS. Ms. Currid lectures internationally, serves as a keynote speaker, and conducts seminars on how to get the best from information technology. Copyright © 1999 by Cheryl Currid and used with permission.
Anatomy David Gilmour’s start-up is based on the provocative idea that companies should mine their employees’ E-mail for business information Let’s say you want some inside information on a big potential customer. Maybe one of your employees has a buddy who works there. But how do you discover that useful connection? Finding out exactly who in your organization knows what — whether it is people, places, technology, or product information — is a maddeningly imperfect process. Simplifying that process is what Tacit Knowledge Systems, a Silicon Valley start-up, is all about. Tacit’s software primarily uses an employee’s E-mail messages to build a profile of all the subjects that the employee knows about so that his or her coworkers can leverage that information better. “The first place a new idea shows up is in a private message from one person to another,” Tacit CEO David Gilmour explains. “The question is, Can you pop open the lid on that treasure chest and use what’s in the mail?” Gilmour sees Tacit’s software as the crowbar companies can use to remove that lid. Founder’s Bio NAME: David Gilmour, 42 FAMILY: Married to Anula Jayasuriya; the couple have a seven-year-old daughter, Shanika. ON TWO-START-UP COUPLEHOOD: Gilmour’s wife is a molecular geneticist who currently is doing business development for another start-up. Between them, the couple hold seven degrees from Harvard. HOW HE EARNED HIS WINGS: Gilmour, a licensed commercial pilot, was formerly a general manager of a division at Lotus Development Corp. He also founded ExperNet, which he folded into Giga Information Group in 1996. Along with Giga cofounder Gideon Gartner, Gilmour grew the company to $10 million in revenues at the time of its initial public offering. ON HIS WORKLOAD: Gilmour hasn’t quite finished filling out his management team, so his schedule is frequently ravaged by his need to spend time recruiting and juggling the chores of the senior executives he hasn’t yet hired. One typical afternoon last spring, the CEO fielded first a phone call from a trademark lawyer (“That was something a CFO would handle,” he said dejectedly) and then another call from his affable but empty-handed recruiter. The software — sold under the name KnowledgeMail — tracks the words and phrases that employees use in their E-mail correspondence, as well as in the documents in their personal directories. Using a password-protected Web site, staffers of a Tacit client can search for people who have used specific terms in their messages and documents, just as they would do a search at Web sites like Yahoo or Google. But instead of receiving a list of Web-page matches, employees receive a list of the names of coworkers who have used the specified search terms. Gilmour believes that KnowledgeMail will help companies find critical business information more quickly and inexpensively than ever before. He also believes it will compel them to reward smart, well-informed employees for sharing information with their coworkers. “When there’s a question within an organization, our system gives employees a chance to raise their hands,” he explains. Perhaps. But what about the fear factor? The idea of having their E-mail musings cataloged automatically may be enough to send workers into an Orwellian panic. And make no mistake: workers do worry about Big Brotherism in corporate America. “I think privacy has become the #1 civil-rights issue of the information age,” says Dave Steer, spokesman for TRUSTe, a nonprofit that tracks how technology affects privacy concerns. “Any effort by a company to collect information about people — without disclosing what’s being done with that information — will fail.” Gilmour couldn’t agree more. In fact, the Tacit CEO argues that his product actually enhances employees’ privacy within a company, even as it sorts through their E-mail. An employee’s profile is private until he or she decides which pieces of it to make public. The software ensures that privacy by giving employees the power to add terms to their individual profiles, in effect giving them veto power over the system. “Privacy is the means we use to draw users into the system,” Gilmour explains. “The profiles are visible only to that particular employee. At the technical level, customers are not allowed to tamper with their employees’ profiles.” But even if workers choose to keep private all the terms derived from their hard drives, they’re still drawn into the system. If you know a lot about Java programming, for example, but you don’t include that on your public profile, the system will still E-mail you when a coworker searches for Java experts. The searcher doesn’t know you’re out there, but you’ll know your coworker is in need — so maybe you’ll volunteer to help. Tacit reports that adoption of the technology by users has, so far, been good. At one large company, for example, in a matter of two weeks 130 of 150 software engineers registered to use the system. Gilmour first conceived of Tacit three years ago in an airport-bound taxi. He jotted down notes on the plane ride and then pitched the idea to an executive at Texaco. The executive said he’d gladly sign on as a paying customer if Gilmour could build the product. Within weeks Gilmour was working from home on the prototype. Since then, Tacit has focused almost exclusively on signing up customers of Texaco’s size, on the presumption that companies with legions of anonymous employees are more likely to need the tool. “For us, the low-hanging fruit are watermelons,” says Chris Palombi, Tacit’s director of business development. Larger clients also mean larger sales transactions, since Tacit charges for its product by the number of profiles. But that doesn’t mean Tacit will always focus exclusively on big companies. “Almost every company should be a customer and willing to pay enormous amounts of money for the software,” coos Steve Jurvetson, managing director at Draper Fisher Jurvetson, a venture-capital firm that has funded Tacit. “We’ve worked with a lot of enterprise-software companies, and from prior to the launch until today, this company has booked more revenue than any company we’ve ever heard of.” Tacit ideas: Gilmour argues that his product actually enhances employee privacy. Although his company does have first-mover status, Gilmour understands that Microsoft and IBM control the E-mail-software market and that either company, seeing Tacit’s early success, might choose to bring a similar product to market. Then again, one of them might just make a juicy buyout offer. Gilmour says that he’s already received “ambiguous and unambiguous overtures,” though he has no plans to sell. Of course, any whiff of a windfall for Gilmour and his crew is premature. As with all technology businesses, the company’s success hinges on how much its product is adopted by end users. That’s where that privacy issue comes to the fore. Gilmour is betting that his solution will satisfy even the most skeptical Texaco employee. If he’s right — and if he lands the customers he’s targeting — “this company has the potential to have revenues well north of $100 million in short order,” he predicts. Expert advice Potential customer Joe Palazola, district manager, AT&T Business Services Sales Systems Team “The more I hear about this thing, the more I think it’s going to take off. My boss is always talking about creating profiles about employees’ training and skill sets. This plays into that desire, and I think users will embrace it. At AT&T, for example, a lot of general managers and tech people have left for dot-coms. That leaves behind a lot of people who don’t know who to talk to when they have questions. We have a young sales force, and it would be great to enable them to identify who has sold a certain product before or who can give them information about a specific customer. Of course, we’re always leery about buying from start-ups. We need to get testimonials from other customers, and the product needs to go before a review board for testing. We want to know that this product can take a pounding.” Industry observer Sarah Gerdes, CEO of Business Marketing Group “Tacit needs to show the two dominant E-mail players — Microsoft and Lotus — that its product will extend their technical offerings where neither larger organization can go alone. This is just a guess, but I suspect that Tacit is working on future joint development with both of these companies. But it’s hard to work with two platform companies because, ultimately and inevitably, they’ll want software developers to make a choice about which platform they use. It is possible to say no, but you won’t get preferential treatment beyond that point. Historically, several companies have grown quite large by playing Switzerland between two big players. But, for example, Tacit might find that a competitor will try to gain an edge with Microsoft by agreeing to focus exclusively on Microsoft’s platform.” Start-up checklist Pricing: Before discounts, KnowledgeMail licenses are $400 per profile per year. Projections: Gilmour is slippery on this subject but says he had zero revenues in 1998 and believes the company will top $10 million this year. Funding: First round, $240,000 from Gilmour’s savings and two angels. Second round, $4 million from Draper Fisher Jurvetson and a few angels. Third round, nearly $6.9 million from Reuters Greenhouse Fund, Draper, and some angels. Patent applications drafted: 17 Patent applications filed: 4 Number of foosball tables: 2 Public customers: J.P. Morgan, Texaco, and Giga (which owns a piece of the company) Incognito customers: At least 4 of the top 100 companies on the Fortune 500 Please e-mail your comments to editors@inc.com.
