Category: Misc

Can tying two rocks together produce something that will fly with investors? That’s the question that leaps to mind upon reading that AOL is mulling some kind of takeover/merger bid for Yahoo, which may or may not involve a restructuring of Yahoo and backing from private equity firms, according to a somewhat confusing report in the Wall Street Journal late Wednesday. A subsequent report by Bloomberg says that Yahoo has hired an investment bank to handle any overtures from AOL and private equity, which sources told the wire service are in the works. All the sources involved say the talks are preliminary and warn that a deal may never take place, and it’s a good thing that they do, because frankly an AOL-Yahoo merger sounds like the worst idea since… well, since AOL and Time-Warner.

To recap that mind-boggling train wreck for anyone who might not remember it, AOL merged with Time Warner just as the Internet investment bubble was peaking in the late 1990s, and the combined company quickly started to hemorrhage billions of dollars in market value, making it arguably one of the worst business deals since the dawn of recorded history. A combination of AOL and Yahoo may not be quite that bad, but taking two old and faded Internet giants and roping them together sounds more like a desperation move or Hail Mary pass than it does like a coherent strategy for growth or success — for either company.

AOL’s new CEO Tim Armstrong has had some success in laying out his vision for the company, which involves turning the former portal into a media and content producer via ventures such as Patch.com — which is spending $50 million on hyper-local journalism — as well as a blogging strategy that led to the recent acquisition of TechCrunch. And the AOL chief executive has arguably done a better job of selling this vision than Yahoo CEO Carol Bartz has of convincing investors (or users, for that matter) that the company has any kind of over-arching strategy, apart from selling off or outsourcing virtually everything, including search, and trying to build its own blogging/content model.

The reality is that both companies — and Yahoo in particular — have failed to show any compelling evidence that they understand what the real-time web is about, or how they are going to get from where they are to where they need to be in order to take advantage of that fundamental shift in how the web functions. It’s true that both companies still have millions of unique monthly visitors, and advertising-based businesses that cater to those users, but the future of that kind of platform is murky at best. The two former portals are like fish trying to grow legs and run — not an easy transformation to engineer, and it’s not clear how merging into one giant old former mega-portal is going to help them do that.

Of course if such a deal does actually proceed it will probably be fun to watch, in the same way that people often slow down to watch a car accident.

With all the fuss surrounding the recent “AngelGate” meetings and the tension between angels and super-angels and traditional venture funds, it’s instructive to listen to one of the legends of the Silicon Valley VC business — Sequoia Capital founder Don Valentine — talk about the approach and the thinking that led to his investments in companies like Apple, Cisco, Google, Yahoo and Zappos. In the video embedded below, he talks to a group of students at the Stanford University graduate school of business about what matters and what doesn’t.

Valentine says that many people assume that the reason Sequoia has been so successful is that the fund backs “the best and brightest, the greatest managers and all that stuff [but] we do not.” The only thing that really matters, he says, is the market.

We have always focused on the market — the size of the market, the dynamics of the market, the nature of the competition — because our objective always was to build big companies. If you don’t attack a big market, it’s highly unlikely you’re ever going to build a big company

As a result, the Sequoia founder says that the fund isn’t really interested in where an entrepreneur went to school, or whether they have any actual business credentials — all Sequoia is interested in is the size of the potential market they are trying to attack, and the potential value of the problem that they are trying to solve.

“We don’t spend a lot of time wondering about where people went to school, how smart they are and all the rest of that. We’re interested in their idea about the market they’re after, the magnitude of the problem they’re solving, and what can happen if the combination of Sequoia and the individuals are correct.”

In some cases — as with Apple — an idea about the potential market can lead to multiple investments in all of the various players in that ecosystem, Valentine says. Apple “had in mind the idea of you all having your own computer,” he tells the graduate class at Stanford, and the implications of that involved the need for memory makers and disk-drive companies and manufacturers of all of the other parts that were needed for personal computers. So Sequoia wound up investing in more than 15 companies in the PC category, including game-maker Electronic Arts, which was created in the Sequoia office.

The Sequoia founder also says that he had an advantage over some other VCs because he “could see the future” — meaning he understood the transformation that personal computers and microprocessors were going to unleash because he worked at Fairchild Semiconductor and co-founded National Semiconductor. For Valentine’s thoughts on Steve Jobs’ marketing abilities, the failure of Sony and Xerox (which he calls “one of my favorite tragedies”), the importance of storytelling and the launch of Cisco, please see the full video at YouTube.

As website owners try to boost the amount of time their users spend online, the all-in-one site toolbar is becoming more and more popular. Wibiya, which makes a social toolbar that websites can add in order to allow users to chat, share links on Facebook and use other social features, said today it is launching a developers platform and open API to allow third-party applications to integrate with its application marketplace. The two-year-old startup, which is based in Israel and was seed funded by ICQ founder Yossi Vardi, also announced that it is partnering with Yahoo, Bit.ly and AddThis.

Wibiya says that its toolbars, which can be installed on any website and customized with a variety of apps and services, reach more than 175 million unique users a month and appear on over 80,000 websites, even though the company only came out of beta earlier this year. Wibiya CEO and co-founder Dror Ceder says that about 25,000 new websites have been joining the toolbar network every month, and the company has seen 15 to 20 percent growth in activity in just the past two months alone. Wibiya plans to add several additional APIs in the future, Ceder said, including a mobile one and an API that makes it easier for apps to connect to a user’s other social network profiles.

You may never have heard of the company, but you’ve probably seen the Wibiya toolbar if you go to websites such as TheStreet.com, Philly.com or Playboy.com. Each site has a customized version of the toolbar, with a different look and different services built in, including live chat (or video chat, in the case of Playboy.com), a translation tool, sharing functions for Twitter and Facebook, and links to popular news or features from the site. Wibiya’s toolbar competes against similar bars from companies such as Meebo, the web-based chat provider, and Facebook also offers its own sharing and chat toolbar for websites. Google has a Friend Connect toolbar, but it doesn’t seem to get used much.

I confess that I am not a big fan of website toolbars in general. I find they generally clutter up the screen, and don’t really provide a lot of functionality that I would use most of the time, and even when they do — in the case of sharing on Twitter or Facebook — those functions could be just as easily handled with a button on the site near the content. Its obvious that some users share my lack of enthusiasm, because a number of companies have either killed their toolbars outright (as Digg did when Kevin Rose took over as CEO), or made a point of de-emphasizing them, as both Stumbleupon and GetGlue have done.

That said, Wibiya’s growth stats are impressive, and the fact that the company is trying to open up and become a platform for any third-party service — as well as building in useful features such as Bit.ly support — is a positive sign. Whether it can become the dominant player by becoming more open remains to be seen, however.

The Wibiya network reaches more than 175 million unique users a month
Today there are over 80,000 active websites using the Wibiya web toolbar.
Over 25,000 new websites join the Wibiya network each month.

Over the past year, Groupon has become a rocket-powered social shopping phenomenon — it is one of the fastest-growing startups in decades, is valued at more than $1 billion, and expects to close the year with almost $500 million in revenue. That has gotten the attention of several newspaper chains, since they used to be the primary conduit between local advertisers and deal-hungry consumers: Cox Media Group is the latest to jump on the group-buying train, with the launch of a Groupon clone called DealSwarm. But news publishers may well be too late to this particular game, just as they failed to recognize the competitive threat that Craigslist represented.

Cox is launching its service in Atlanta, Austin, Dayton and Seattle but says it plans to roll out into other major markets nationwide over the next year. The media group claims that it will offer “outrageous online discounts of 50 percent or more on local dining, entertainment and other services from some of the most popular local businesses.” As with Groupon and other group-buying services, users register for alerts and are offered discounts by local retailers that only apply for a certain time period, or are only available if a certain number of users or customers sign up for them.

The media company doesn’t mention Groupon by name, but says that its offering is different from “others in the group-buying space” because its local media properties have already established a relationship between readers, viewers and listeners of its newspapers and radio/TV stations and local retailers, and Cox notes that all of these media outlets will be promoting the deals in question so that advertisers get more exposure. All of which makes a lot of sense — so much sense that it’s a wonder newspapers didn’t think of offering those kinds of services before, given those relationships with local advertisers.

The biggest problem for ventures like Cox’s, of course — and for similar efforts such as the Minneapolis Star-Tribune’s “Steals” offering — is that Groupon is already such a dominant force in a number of major markets, and is becoming the go-to brand name when it comes to group buying, not just in the U.S. but around the world as it has been acquiring competitors in other countries. Meanwhile, some newspaper publishers such as McClatchy have taken what seems like a smarter route and are partnering directly with Groupon for group-buying offers.

This presumably gives Groupon a large cut of the proceeds, but at least it maintains some of the existing relationship between newspapers and their local advertisers, which is one of the few weapons that many publishers have left with which to fight off irrelevance.

As millions more people tweet, blog, comment and update their status every day, the difficulty of finding signal in all that noise increases exponentially. Some services try to filter all of that social-media content by keyword, or location, or use algorithms to determine whether someone shares your interests. Klout, a two-year-old startup based in San Francisco, is trying to build a database of influence that can determine how influential an individual user is on social networks — that is, how much impact the content they create has on others around them. The company today announced that it has expanded beyond its traditional reliance on data from Twitter and is now indexing content from Facebook as well, with a view towards becoming the dominant measure of influence “across the social web.”

Measuring influence isn’t just something that Klout wants to do in order to make users feel good about themselves, or so that it can give them badges for passing certain milestones (although it does that as well). The reality is that as social media and social networks have become a larger and larger phenomenon, marketing agencies and companies have become increasingly interested in using these networks and services to target specific demographics, and to target “influencers” within specific topic areas who can help spread their message. So the Palms Hotel and Casino in Las Vegas is using Klout scores to build a group of influencers it can approach with special offers, and Virgin Airlines offered special rates to Twitter users with high Klout scores.

[inline-pro-content] Twitter is obviously only part of the social web, however, and until now Klout has been restricted to measuring influence solely on the basis of tweets and re-tweets. Data from potentially hundreds of millions of Facebook users could change that dramatically (provided they want to connect their Facebook accounts to the service, that is). In a blog post, Ash Rust — the company’s “director of ranking” and a former “relevance engineer” at OneRiot — says Klout has been working for several months to analyze Facebook accounts and determine how influence functions on the social network, which sees more than 30 billion pieces of content shared every month.

Unlike some services that simply look at the number of Twitter followers or Facebook friends a person has, Rust says Klout looks at a user’s “ability to drive action,” or their ability to influence others to click and say they “like” something or share a piece of content, post a comment, etc. On Twitter, the service looks at statistics such as the number of followers a user has, or how often their messages are re-tweeted, but also looks at several different levels of influence — for example, how often a user’s messages are re-tweeted by other users who have a high level of influence. The company then ranks a user on metrics such as “reach” and “amplification,” as well as the size and influence of their larger social graph.

Rust admits in his post that Facebook allows users to “interact with their friends in more complex ways than we’ve previously seen,” and that it will take some work to come up with an accurate picture of what that means. But the payoff for coming up with an authoritative ranking of influence across two of the largest and fastest-growing social networks could be substantial — and Klout is already partway down that road, since its data is already integrated into a number of leading Twitter tools and services such as HootSuite and Seesmic. Other companies in the same space include PeerIndex and TwitterGrader.

In the race to attract attention from startups and entrepreneurs, angel investors appear to be winning, and that is accelerating an ongoing shift in the venture capital market — what some would argue is a maturation of the startup-funding model. A new survey shows that startups are increasingly turning to angels not just for their initial rounds of funding but for subsequent rounds as well, and the most recent data on the VC industry shows that traditional venture funds have only raised $9 billion so far this year, a significant drop from the amount raised in previous years. Insiders have been arguing for some time that the VC business needed to get smaller, and it appears to be doing that in more ways than one.

The latest figures from the National Venture Capital Association show that the amount raised by traditional funds in 2010 is just a little over half the $16 billion they accumulated in 2009, and dramatically lower than the $28 billion that was raised in 2008, or the $35 billion that traditional funds managed to pull in during 2007. The NVCA report also notes that the amount raised to date in 2010 was boosted by the closing of a $750-million fund at Menlo Park, California-based Institutional Venture Partners. President Mark Heesen said the industry was “experiencing a period of time in which venture capital investment is consistently outpacing fundraising, creating an industry that will be considerably smaller in the next decade.”

Meanwhile, as startups require smaller rounds in order to get moving — and are more likely to get acquired than building up to a giant IPO — angels are coming to the forefront, according to a new survey from Dorsey & Whitney, a Silicon Valley law firm that specializes in advising startups. The survey showed that angels accounted for 59 percent of the funding for startups in the past 12 months, and almost 70 percent of startups said they would be looking for funding from angels for their next round.

Startups who were surveyed said that they turned to angels in part because of a perception that angels understand the needs of startups better, that they have operating experience, and that they can get a deal done quickly. “The two factors that stood out in the survey were that the investor understood the funding needs of the startup — they didn’t push them to take more or less than they needed — and the speed of the deal,” said Dorsey & Whitney partner Ted Hollifield. “Those are parameters that angels tend to do very well on.”

Startups also said they preferred to get financial backing from someone who was a specialist in the space they were hoping to operate in, as well as someone who had operating experience, and were “not particularly interested in brand names.” And the survey also suggested that there may not be a lot of truth to the axiom that startups seek initial funding from angels and then move to traditional VCs for subsequent rounds. “The jump in VC funding was not particularly significant in terms of people taking a second round,” said Hollifield.

It’s hard not to feel sorry for new Digg CEO Matt Williams. The poor guy has only been on the job for a little over a month, after replacing founder Kevin Rose as chief executive in August, and his first major appearance is on a blog post in which he apologizes for all the flaws and missteps in the recent Digg redesign — none of which he was responsible for — and promises to roll back the changes, and restore almost all of the various features that die-hard Digg fans complained about losing. But can all of this apologizing bring back those frustrated users, or have they moved on for good?

Just to recap, Digg launched the new version of the site in late August, after more than a year worth of planning and design. In addition to some stability problems that kept the site down for most of the first day of the launch, and made it unreliable for some time afterward, almost immediately there was a backlash from long-time Digg users about many of the changes. Many were concerned that too much content from mainstream media outlets was making its way to the site’s front page, instead of the quirky or off-beat content that Digg became famous for, and they also criticized the removal of the so-called “bury” button, which users could click in order to vote a story off the site.

While he was still CEO, Rose wrote a blog post in which he agreed that some of the criticisms from users were well placed, and said the site would bring back certain features such as the “Upcoming” page, as well as allowing users to change the default view of the site to a list of most-voted for stories, rather than the new “My News” view, which featured links posted by a user’s friends and accounts they had chosen to subscribe to or “follow.” But the Digg founder remained adamant about some changes, including the removal of the bury button, which he said was necessary to “put a stop to the bury brigades” who would target content and try to get it removed by working as a group.

The new CEO, however, says in his blog post that the bury button is being restored, and that user profiles are also returning, along with better navigation for videos and images, a tool for users to report comment violations and an update to the front-page algorithm. Williams also admits that the launch “didn’t go smoothly” and that the company is “deeply sorry that we disappointed our Digg community in the process,” and thanks the site’s users for “your patience and your extremely candid feedback.” And he notes in passing that Digg still has 23 million unique visitors a month, a comment that appears aimed at reports of plummeting traffic at the site since the redesign.

On the one hand, responding to criticisms from users is clearly a good thing for a site like Digg to do, since — as the new CEO points out — without that community the site is nothing, and without a loyal user base it isn’t going to be able to compete with other social tools such as Twitter and Facebook that have stolen a lot of its thunder. But what about the reasoning behind those changes? Rose argued that the disappearance of the bury button and other changes were necessary because “power” users of the site had too much influence, a view supported by some prominent Digg users such as former Engadget editor Ryan Block, who said that the redesign “realigns interests and does a lot to remove the incentives to game the system.”

As I argued in a GigaOM Pro piece after the backlash (subscription required), the upheaval at Digg shows just how difficult it is for a social network to change the way it functions on a fundamental level. Many of the changes were clearly designed to blunt the power of hard-core users and make the service more appealing to a broader range of users, but the revolt made it obvious that the changes had seriously alienated some of the site’s loyal fan base. This kind of strategy only works, however, if enough new users arrive to justify the loss of that traditional fan base.

By apologizing for and unwinding most of its recent changes, Digg appears to be admitting that it backed the wrong horse. But will simply restoring the site to the way it worked before be enough to pacify those irritated users — and more importantly, will backtracking so publicly make it even harder for Digg to change and evolve in the future?

Real-time data is becoming a fundamental part of the web, and social gaming is at the forefront of that wave. Market leader Zynga, for example, is famous for tracking hundreds of different metrics about its games in real-time, down to the smallest detail — where its users come from, what they do, when they leave — and making changes to them on a daily or even hourly basis. As the need for real-time data accelerates, so does the need for analytical tools to make sense of it all, a hole that services like Kontagent are hoping to fill. The two-year-old startup just announced a new version of its dashboard that it says gives app and game developers even more real-time tools to work with.

The principle behind Kontagent — which raised a funding round of $1 million earlier this year from a series of angels, including James Hong of HotorNot and Mike Sego of Gaia Online — is that real-time social activity like social games on Facebook require a different kind of analytics than the traditional pageview-centric and click-focused model associated with Google Analytics and Omniture. There are a couple of reasons for that, says Kontagent founder Albert Lai, and one is the fact that traditional analytical tools tend to use data sampling rather than providing true real-time data.

Data sampling — which involves looking at 10 percent or so of the traffic and then extrapolating from that to overall trends — is a bad thing, Lai says, because it fails to capture important info that social-game makers and others need to track the virality of their apps and services. “That 10 percent may not capture the ‘whales’ or power users,” he said. “And that can be really important in terms of tracking your growth.” Traditional pageview-based analytics also doesn’t provide the kind of detail that developers need, Lai argues. “You might know that people came to you through a search for a specific keyword, and at best you might have a cookie, which you assume is the same user — but you don’t have a unique user ID and a demographic profile and the other detail that we have,” he says.

The Kontagent founder also argues that traditional analytics tools like Omniture are a lot more expensive for developers and app-makers because they charge on a per-click or per-action basis. “For some of our customers, like PopCap Games, they have 10 million monthly users,” says Lai. “If they tracked every action with something like Omniture they would bankrupt the company.” Kontagent tracks hundreds of different real-time actions related to more than 70 million monthly unique users across a number of leading game platforms, Lai says.

Other providers of real-time analytics aimed at social apps and games include Mixpanel, which tracks not just games and apps on Facebook but other web-based social apps as well, and just recently launched mobile app tracking for the iPhone. The company, which was founded by former employees of the social-game company Slide (recently acquired by Google), says it is tracking more than a billion user actions per month. Database company Vertica is also making a play for the social-gaming market, offering companies like Zynga the ability to crunch massive amounts of data in order to track what content is the most appealing in real-time.

Google is apparently testing the integration of Twitter within Google News, according to a report from Search Engine Land, which in turn was based on a tip from a reader who apparently saw the experiment in action and posted a snapshot of what it looked like on Twitter. The feature adds a small box to the right-hand side of the page that allows users to login with their Twitter credentials and then “see when people you follow are talking about the news.” Search Engine Land even found a help page about the experiment.

The description of the feature says that it will allow users to “find news articles that your friends are sharing on Twitter,” but notes that the new Friends section will only show articles that can be found in Google News. “If someone you follow has shared an article or a link that cannot be found in Google News, then you will not see that update in the Friends section,” it states. It’s not clear from the description whether the links that Google parses for the feature will include blogs or only traditional mainstream news sources. When you do a search on Google News, the “blogs” category is one of the filters you can choose from the left-hand column, but those articles aren’t included in the typical Google News home-page layout.

In comments last month about Google’s plans to become more social, CEO Eric Schmidt said that the company was not planning to launch any kind of massive Facebook competitor, as some had speculated, but intended to add “a social layer” to its existing services by pulling in data from places like Facebook and Twitter. The experiment with Google News appears to be part of that plan, although whether it will make it to prime time or not — and whether people will actually use it — remains to be seen

Google has made a number of enhancements to try and make its news offering more social, including a redesign earlier this year that added a section called “News For You,” and also allows users to give news sources a thumbs up vote, from which the Google algorithm is supposed to learn what they like. The initial response from readers was not positive, however, so it will be interesting to see what the reaction is to Twitter integration. Among the other ways of reading news links that are recommended by your followers on Twitter are the Paper.li service (which I wrote about here), as well as Twitter Times and a new service called Tumbl.in.

When Wired launched its magazine app for the iPad in May, it got a wave of publicity — in part because it was the first, and also because it released a gee-whiz video pointing out how the ads actually moved, and so on. But now there are more and more iPad magazine apps every day, with Esquire’s only the latest example from the Hearst empire, and one thing is becoming clear: publishers just want you to look at their content, and are hoping you will forget about the Internet and social media and all of those irritating things that get in between you and the consumption of their wonderful content.

Everyone talks about how what publishers love about apps is the ability to charge readers for their content again (especially now that Apple says it will allow them to charge subscriptions). But I think a close second in the motivation sweepstakes is the fact that the app economy marks — for now at least — a return to the good old days when the walled-garden approach to publishing was the norm, and the Internet was just some pesky chat room for nerds. Wired’s app provides a really slick interface to the magazine, but no way of actually sharing any of that content, or of linking it to related content somewhere else — not even to the company’s own website. It’s like an interactive CD-ROM from the 1990s.

The new Esquire app also has plenty of “interactivity,” if you mean the ability to click and watch an ad for a new Lexus, or listen to cover boy Javier Bardem recite a Spanish poem, or swipe your finger and watch a timeline of the construction of the new World Trade Center. All of those are very cool — but if you are looking for the kind of interactivity that allows you to post a comment on a story, or to share a link via Twitter, or to post anything to a blog and then link back to the magazine, you are out of luck. In fact, if you like the app or any of the stories within it, your only option is to close the app and email someone to let them know.

Esquire editor David Granger admits in his editor’s letter for the inaugural iPad issue that magazine apps are “a mixed bag” so far. “They’re convenient, I guess, but boy, some of the added features are either stupid or annoying,” he says — while assuring the reader that the Esquire app is “pretty good [and] it’s certainly not annoying.” I’m going to have to take issue with him there, however; I found it quite annoying in a number of ways.

To take just a few examples, it isn’t clear that you need to tap on the screen once in order to remove the table of contents, which obscures the text and can’t be moved. And whenever you click on the cover image, you have to watch a Lexus ad, or click the “close” button, even if you have seen the ad already. Also, when you click on the Bardem story that is the cover, it’s not obvious that you have to swipe down to see the rest of the story rather than swiping to the right (which moves to the next story). If you swipe right and then go back, of course, you get the ad again and have to watch or close it again. And the ad itself, which is a movie clip, first appears as a tiny square, so you have to tap on it and then use the pinch-expand motion to enlarge it.

But even those are mostly just design irritations — the biggest flaw for me is the total lack of acknowledgement that the device this content appears on is connected to the Internet, and therefore it is possible to connect the content to other places with more information about a topic, or related material of any kind, let alone any kind of social features that allow readers to share the content with their friends. Some magazines have made some tentative steps in this direction, but so far they are few and far between. Meanwhile, Flipboard and Pulse have taken Twitter and Facebook and RSS and turned them into magazines — and much more appealing ones in lots of ways.

About the only magazine that has taken any kind of creative steps in this direction with its iPad app is Gourmet magazine, which used the services of Anil Dash’s Activate design consultancy to come up with an interesting experiment: the Gourmet Live magazine app is what Dash calls a “massively multiplayer magazine.” As you read the contents — and share them via Twitter and Facebook — you gain points and thereby “unlock” new content, in the same way a player would in World of Warcraft. The content that is unlocked in some cases is a profile of a specific person or a set of related recipes.

I’m not convinced that the Gourmet Live approach is going to appeal to the majority of readers, but at least they are trying something different — and they are taking advantage of being connected to social media and the Internet, instead of trying to pretend it doesn’t exist.

Fred Wilson — the Union Square Ventures partner whose fund has invested in companies such as Twitter, Foursquare and Zynga — came to Toronto earlier this week for a series of meetings with startups and venture investors, and I had a chance to sit down with him and get his thoughts on “AngelGate” and some other things he is interested in. I also sat in on one of the meetings he had at the office of local VC Extreme Venture Partners, followed by a visit to a local DemoCamp organized by local startup advisor David Crow.

Both during the meeting and in an interview with me (a clip from which is embedded below), Wilson said that Toronto reminded him of New York in a number of ways, and that he is looking at startups — both in the city and elsewhere in Canada — that might make for good investments by Union Square, preferably in partnership with Canadian venture capital group that knew the local market and the entrepreneurs involved. In some cases, Wilson said, good ideas come from outside the usual markets of Silicon Valley and Boston and New York because the people in those areas are thinking outside the box.

As an example, Anand Agarawala — founder of BumpTop, the innovative 3-D desktop interface acquired by Google earlier this year — said that he wasn’t sure the startup would have been created if he had been living in Silicon Valley. Not only would there have been “a lot more distractions,” he said, but the idea might never have even occurred to him, since he would have been surrounded by people working on more traditional interfaces. Wilson agreed that in Silicon Valley there are “lots of people doing things in the same ways they always have,” and so creativity — particularly in interface design — isn’t as likely.

The Union Square partner said that he thinks the best cities for startups are “those with a bunch of different industries, because there tends to be more creativity” due to the mix of different backgrounds and skills — although Wilson also freely admitted that Silicon Valley doesn’t really fit that description, and in fact “much of the evidence tends to suggest that I might be wrong.” In any case, he said that Toronto reminds him of New York in part because it has a mix of a number of different industries such as the financial industry, media, advertising and government.

Among the startups that Wilson met with during a morning meeting were Rypple (which recently closed a $7-million funding round), an image-recognition software company called Idee (which has an image-tracking service called TinEye), along with social-game maker Uken Games, health-information site Well.ca, mobile utilities maker Fixmo and news- aggregator Eqentia — whose founder William Mougayar was instrumental in convincing Wilson to come to Toronto.

At the DemoCamp later in the day, Wilson did a short talk, in which he reiterated his 10 golden rules for successful web apps (including speed and instant utility), followed by a question-and-answer session. Among other things, Wilson talked about his belief that the technology business needs bubbles and “really stupid amounts of spending” on certain technologies, in order to create the foundation for future investment. “We overbuilt broadband infrastructure during the last bubble,” he said. “And thank God we did,” since plenty of companies have been built using that cheap infrastructure.

The companies that Wilson judged during DemoCamp included Visibli (an online advertising service formerly known as Assetize), an app called TaskAve — a “Remember The Milk” type of service that was only 10 days old, having been created during a recent Startup Weekend coding contest — as well as Top Hat Monocle, which makes e-learning software, and GuestList, which is building a mobile invitation service. Wilson told GuestList that he liked the fact that they were trying to be simpler than their competitors, but was concerned about their reliance on PayPal, and he told TaskAve that he liked the fact that they were trying to help him remember things, but didn’t like the map as an interface.

Facebook rolled out a comprehensive upgrade to its Groups feature on Wednesday, but judging by some of the responses from both high-profile users and regular Facebook fans, the ability to “tag” anyone and add them to a group automatically is not winning the company much support. For some, this feature appears to be another example of Facebook’s preference for opting people in to new services by default and forcing them to opt out, which it did with the recently launched Facebook Places as well. Others, however, greeted the new Groups with open arms and said that the new features might even replace Twitter for some of their conversations — words that will probably be music to CEO Mark Zuckerberg’s ears.

One of the more vocal opponents of the new Groups feature is entrepreneur Jason Calacanis, founder and CEO of Mahalo, who published an email he wrote to Zuckerberg and chief operating officer Sheryl Sandberg about being auto-added to a group called NAMBLA (the North American Man-Boy Love Association). According to Calacanis, he was never asked to join the group, and was not informed that he was “force-joined” to the group. He closed the email by saying: “If you guys want to run these new features by me before you launch
them, I can probably save you from a couple of privacy law suits each year.”

Anil Dash, founder of Expert Labs, said Thursday morning on Twitter: “Oh, Facebook. I wanted to like groups, but now I’m on 50 unwanted email lists. More incompetent defaults, or an attempt to undermine email?” Others complained about a deluge of auto-add emails from Facebook Groups, including Daniel Victor, the online community manager for TED.com, who said Thursday: “I’d rather be invited than added to a group on Facebook. Woke up with 45 unexpected e-mail notifications today. Spammer’s dream.” Among those who also weren’t impressed with the rollout were technology blogger Dwight Silverman and Socialtext co-founder Adina Levin, who said that the implementation of Groups “has some serious social design flaws.”.

Laura Fitton, co-founder of the Twitter app directory oneforty.com, asked on Twitter “Did Facebook simply “forget” 15 years of email list best practices? ie, email lists should be opt in, not opt out?” Liz asked Mark Zuckerberg about the auto-adding feature during her interview with the CEO on Wednesday, and he said the idea was to “make it as easy as possible” and to enourage “self-selection” — suggesting that groups which might try to trick you into joining would not prosper. He and Groups manager Justin Shaffer (who joined Facebook via the recent acquisition of his company Hot Potato) also noted that you can turn groups off, you can leave a group with a single click, and once you leave a group you can’t be re-added to it without your permission.

Despite the criticisms, however, there were some fans who seemed to take to the new Facebook Groups features fairly quickly — and several who said that they could see using the new service more than Twitter in some cases. Journalism professor Jen Lee Reeves wrote a blog post describing how the new implementation of Groups seems more “alive” than it did before, and added that while she used to use Twitter for such conversations, “this changes it all.” Francine Hardaway of Stealth Partners, meanwhile, said Thursday morning on Twitter that Groups had produced an “amazing transformation” and that “in one day, all the action in my “intellectual” life switched from Twitter to FB groups.”

Angel investor Dave McClure has added a roster of mentors and advisors to the team at his recently launched seed fund/incubator 500 Startups — a group that he has decided to call (not surprisingly) 500 Mentors. Although there aren’t actually 500 people on the list, it is a fairly impressive collection of talent that McClure says will be available to help the startups that he is investing in, some of which include Foodspotting and Flowtown. The mentors include Google’s “open advocate” Chris Messina, Josh Elman of Twitter, Slideshare CEO and co-founder Rashmi Sinha of SlideShare and Hunter Walk of YouTube.

Playing on the recent AngelGate furore — in which McClure played a role after being singled out for mention in super-angel Ron Conway’s leaked email on the topic — the startup investor described the mentor team as “a super-secret society of powerful tech-heads [that is] gathering their forces even as we speak, coming together with a shared mission of world domination – er, no, wait, we mean souped-up startup support.” McClure said that while many of the mentors come from the Bay Area, others come from a range of cities, including Seattle, Boston, New York, Vancouver, Tokyo and Paris. The advisors will be available for one-on-one discussions as well as presentations and advice, and some will even be working from 500 Startups headquarters, he said.

The full list of mentors is embedded below. McClure also named another group of “venture advisors” that is much smaller, including Brady Forrest of O’Reilly Radar, Rashmi Sinha of SlideShare, Dave Schappell of TeachStreet, Sean Ellis of Startup Marketing and Hiten Shah of KISSMetrics.

I had a chance to talk with Union Square Ventures partner Fred Wilson this morning, both during and after a meeting he had with half a dozen startups at the offices of Extreme Venture Partners, a fund and incubator with dual headquarters in Toronto and San Francisco. Wilson — whose firm has a stake in a few companies you may have heard of, such as Twitter, Foursquare and Zynga — came to town in order to meet with both venture investors and startups with a view towards possibly investing in some Canadian companies, and said afterwards that the Toronto startup environment “reminds me a lot of New York.”

I’m going to write a separate post about some of the companies that Wilson met with and his thoughts on the local startup ecosystem, but during our conversation the venture investor also had some comments about the recent “AngelGate” clash between “super-angels” and traditional VCs, as well as some advice about what some of the big trends are online that he is thinking about as he makes investments for Union Square.

On AngelGate:

The reality is that that market has changed a lot in the last two or three years. There’s a lot more money out there, it’s gotten very competitive. And usually what happens when things get competitive is prices get bid up, terms change, and the early participants feel it — they can’t win every deal, they can’t be in every deal and I think people start to get nervous. I think that’s largely what you’re seeing. You’re seeing people who’ve been in the market for a long time worrying about the fact that their market position isn’t what it used to be.

Is there too much money? I think it depends who you ask. Certainly for entrepreneurs there’s not too much money. But for people who used to be able to get into every deal at really great valuations, yeah there’s too much money for them — but for the market as a whole I’m not that worried about it. It’s certainly a good thing for me as an investor because more opportunities are getting funded, and it’s certainly good for entrepreneurs because more of them getting funded, so I think largely it’s a good thing.

Wilson also talks in the video about whether the so-called AngelGate meeting represented “collusion,” and whether some of what happened was a result of personal egos getting out of joint. During the startup meeting he attended, when asked about the “super-angel” phenomenon, Wilson said that he thinks on balance it can be a very positive thing for VCs like Union Square. “If someone wants to put in $250K and work as hard as I do, even though I’ve invested a lot more? I say bring it on,” Wilson said. “That’s a home run for me and a home run for the entrepreneur.” Among the super-angels who take this approach is Ron Conway of the SV Angel fund, Wilson said — “he works that hard for everyone, regardless of how much he has put in.”

Trends to be aware of:

Globalization is a huge trend. If you look at FB, Twitter, Google — 75 to 80 percent of their users are outside the U.S., so globalization of web services at scale is something I’m really interested in. There are entrepreneurs all over the world creating new web services that are as interesting as those getting created in the traditional tech centres like the Valley, Boston, New York. So globalization is probably the number one thing I’ve been thinking about.

Wilson also talked about the implications of mobility and how he is thinking about that in terms of his investments — and not just mobile with respect to specific devices or services, but how people can participate online from anywhere, and how more and more data is being produced because mobile devices have sensors that can change your experience or add value to it.

What he is thinking about now:

I’m really interested in the intersection between reputation, identity and knowledge — so things like Quora and StackOverflow (a Union Square Ventures portfolio company). These kinds of services use social media in a narrower and maybe higher value way to help people, and that’s really interesting to me. If you look at StackOverflow, developers who do the best job of generating answers to software development issues have their reputations rise in the system, and on the back side of StackOverflow is a job board, and so employers can come in and hire people and see what their reputation is. So when you think about how a Q&A site flows into a job board and how reputation is the key connective tissue there, I think that’s a really fascinating thing.

When it comes to live-blogging news events, plenty of bloggers and journalism outlets use their own in-house tools — but more and more news organizations are turning to all-in-one, cloud-based solutions such as ScribbleLive, a service that sees itself as more than just a live-blogging tool for the Academy Awards or a keynote by Steve Jobs. “We see ourselves as becoming a fully fledged content-management system,” ScribbleLive founder Michael De Monte said during a recent interview in San Francisco.

The company’s software allows news outlets to quickly set up a liveblog that looks and feels like a regular page on their website, complete with all of their branding and sidebar widgets or whatever else is on the page, says De Monte. Other solutions that provide similar live-blogging or live-discussion features — such as Cover It Live, which is owned in part by Demand Media through its Pluck division — restrict the content within a widget or window that can’t be indexed by search engines or easily converted to other formats, De Monte says.

ScribbleLive, which is based in Toronto, recently launched the next generation of its content-management tools, which add a number of different ways of getting content into the live-blog or news discussion. In addition to pulling in Twitter accounts or keywords automatically (which can be filtered to include or exclude specific phrases), the software also allows reporters to contribute their comments via email, SMS, voice-mail or the ScribbleLive web interface, which can be accessed either on the site or via an iPhone app.

During the G20 demonstrations earlier this year in Toronto, for example, De Monte says that one of Canada’s major broadcasters kept a running update of what was happening during the riots by calling a voice-mail number and leaving a message, which the system imported automatically as an audio file. Not all reporters are comfortable with Twitter or SMS, the ScribbleLive founder says, “so we provide whatever means they can feel comfortable with for them to provide their analysis and perspectives on the news.”

The company’s software is used by Reuters and Hearst Television in the U.S., as well as several other news organizations, and has also been used by a number of non-media entities such as Greenpeace, which used ScribbleLive to report on the live demonstration over an oil well. After the event, the searchable pages remain available so that anyone looking for information about that even will be able to find and review the live-blog. “ScribbleLive changes the traditional linear flow of the newsroom to a more dynamic, collaborative process that empowers real-time reporting and audience engagement while ensuring editorial control and journalistic integrity,” De Monte said.

The company was bootstrapped for the first year or so of its development — while De Monte and his partner worked at CTV, a large Canadian media network — then got seed funding from Rogers Ventures in 2009. ScribbleLive just closed a second round of seed financing from Rogers, De Monte says, and is currently looking to raise a Series A round of funding.