As companies add social software to help their employees work together more efficiently, and software makers add social features to take advantage of the kind of behavior seen on Twitter and Facebook, there is a growing risk that workers could get overloaded by all the information coming at them, says Jive Software chairman and former CEO Dave Hersh. A big part of what companies and workers have to deal with now is simply “noise management,” Hersh says, because the amount of data coming at them is so overwhelming.
“There’s just so much information out there, and it’s coming at people at a deafening rate,” the Jive founder said in a recent interview. The risk, Hersh says, is that some employees are going to start retreating from these newer tools (if they haven’t already) and take refuge in the old applications and behaviors that they are comfortable with — even if they don’t work very well. “Many people are reverting back to the things they are familiar with, such as email and face-to-face meetings,” says Hersh, because they feel overloaded by all the new tools they have to use.
The Jive founder and I will be talking about these and other issues involving what we call the “human cloud” and the future of work at our Net:Work conference in San Francisco next week, at the Mission Bay Conference Center on December 9th, along with Google’s vice president of product management Bradley Horowitz (the full list of speakers for the conference is here). There isn’t much time left, so if you haven’t registered already, be sure to get a ticket soon.
Hersh says that the increasing problem of information overload puts pressure on both companies and software makers to emphasize ease of use and the needs of users over feature-creep and the desire to have an all-in-one solution. “It’s like the TV remote problem,” the Jive founder says. “Everybody has eight remotes and they are a hundred buttons on each one, so eventually people just give up.” New tools need to be designed in such a way that they make people want to use them, he says. “They have to understand inherently why they are worth using or they just won’t do it.”
A comment from Twitter co-founder Biz Stone sparked much discussion recently about whether the company was planning to create a news service using its network. Our response was that Twitter already functions as a news network, since it allows anyone to publish quickly and easily from virtually anywhere. And we’ve seen another excellent example of what that means for real-time “networked journalism” over the past few days, as a 17-year-old resident of one of Brazil’s biggest slums used Twitter as a live-reporting tool during the riots and crackdowns by the police in Rio de Janeiro.
Brazil has been under increasing tension over the past weeks and months, as the government tries to clean up some of the crime and other issues in its second-largest city, which will be the host site for the 2014 World Cup of soccer as well as the 2016 Olympics. The country has promised to improve security as part of its bid for both, and Rio de Janeiro’s governor has also promised repeatedly to crush the drug gangs that have effective control over many of the “favelas” or slums in the city. This has included raids during the past week on the so-called German Complex or “Complexo do Alemao.”
One of the residents of that favela is 17-year-old Rene Silva. As the BBC describes in a story today, however, the teenager has been much more than just a bystander during the police raids in his neighborhood: using Twitter and a network of friends and fellow residents throughout the German Complex, he has been acting as a kind of one-man news service, reporting to the outside world in real-time as armored vehicles moved into the shantytown and heavily-armed drug dealers escaped into the hills around the city.
In addition to simply posting and re-tweeting observations from the ground on his Twitter account @vozdacommunidade (Voice of the Community), Silva even set up a mobile phone with video capabilities on the roof of his house and streamed video of the raids. And it’s clear that reporting on his community using whatever means possible was in the teenager’s blood even before Twitter came along: the name of his Twitter account is also the name of the community newspaper he started when he was just 11 years old. By Sunday night, Silva had over 20,000 followers and was being interviewed on prime-time television.
This is about more than just a kid using Twitter though. As co-founder Evan Williams described it recently in an interview, one of the powerful things about the micro-blogging network is that it lowers the barriers to publishing, and that this results in “more voices and more ways to find the truth.” Silva’s use of the service to provide an eyewitness view of the Rio raids is a powerful example of that at work.
As the BBC describes, the images of the raids in Rio de Janeiro — burning buses, firefights in the street with drug gangs, and so on — were readily available to anyone watching CNN or any other news program, along with analysis and reactions from “a succession of security experts, sociologists, lawyers and anthropologists.” But missing from much of this coverage are the people living inside the favelas themselves. In that sense, Silva’s coverage via Twitter served a crucial real-time, news-gathering function, one that would likely not have been possible otherwise.
If you were searching the Internet for information on heart disease or depression, would you find it helpful to see an ad for medication or resources related to that medical problem, or would you see that as an invasion of privacy? That’s the question at the core of a formal privacy complaint launched by several advocacy groups, including the Center for Digital Democracy and the World Privacy Forum. They are asking the Federal Trade Commission to investigate dozens of websites and services — including Google and WebMD — which they say are “profiling” users based on their web-surfing behavior in order to show them related advertising.
In the complaint, the groups make a number of allegations, including that these sites engage in what they call “disease-condition targeting,” in which:
Consumers or patients who express a particular health concern or interest are digitally profiled, tracked, and served ads and content based on the collection and analysis of such information. Among the many sensitive categories used in condition targeting are depression, COPD, diabetes, and asthma.
In other words, these sites look at the search terms that brought users to the page, as well as any searches within the site, comments that might be posted, links that are clicked on, etc. — and then they deliver ads and content that is based on that information. Search for heart disease and you might get ads and other content related to heart disease. But is this intrusive, or is it actually helpful? I know that when I have been searching for medical information, seeing related content — even if it is clearly advertising-oriented — has often been useful.
The privacy groups involved in the complaint seem concerned that advertising specific medications to consumers who are searching for information is also a problem, along with “social media monitoring” and “viral and word-of-mouth buzz marketing” aimed at specific medications. They describe how sites such as QualityHealth promote their services to pharmaceutical companies by saying they can reach potential patients before they make a trip to the doctor, and theoretically influence them in terms of what medication to ask for.
Here again we have the question of utility vs. privacy. If I am looking for information about an illness, isn’t it useful to find out what medications might be helpful in treating that problem? Just because I ask for it doesn’t mean my doctor is going to prescribe it. The groups involved in the complaint say they are also concerned about insurance companies and others getting their hands on the profiling data collected about users and their medical issues, and using this to make decisions about their coverage. That seems more like something we should be worried about — not whether I get ads for Gaviscon when I search for information on indigestion.
A minor flurry erupted on Twitter and in the blogosphere today, after Twitter co-founder Biz Stone mused during a Reuters interview about creating a “Twitter News Service,” which he described as a kind of partnership with major news organizations to extract news from the micro-blogging network. A spokesman for Twitter later posted a message saying the company “no plans for a Twitter news network” and that Stone was simply thinking out loud.
Twitter staffer Matt Graves’ response was closer to the point, however: He said that the company was not thinking about creating a Twitter news service because “it already exists — it’s called Twitter.” In other words, Twitter is already functioning as a news network or distributed wire service, something we have pointed out a number of times in the past. When you can get live reports from victims and observers of earthquakes and other disasters within minutes of them happening, you have a news network.
That said, however, there is something interesting in what Stone seemed to be describing: using the massive stream of 100 million tweets a day that flows through Twitter as the basis of a kind of digital-age Associated Press or Reuters newswire, which news organizations could share and use as a tool for distributed eye-witness reporting from around the world. Reuters had the same thing in mind when it formed a partnership with NowPublic, the Vancouver “user-generated content” company that is now part of the Examiner group.
As Reuters chairman ** said at the time — not long after the tsunami in Indonesia — the newswire has thousands of reporters around the globe, but none of them happened to be anywhere close to Indonesia when the tsunami struck. Why not take advantage of the people who were there, and their ability to send reports and photos and video to the world? That’s exactly what Twitter allows, and we’ve seen it happen in dozens of cases already, from earthquakes in Haiti to bombings in London.
What news organizations really need is a way to filter through those millions of tweets and find the ones that really matter, and really add something verifiable to a breaking news story. The New York Times created its own verified lists of Twitter users during a shooting at Fort Hood and other news events, and there are tools like Storify and Curated.by that can make it easier to pull threads together during a live news story, but it is still not as easy as it could be.
What if Twitter had tools that could help them do that? That would really be interesting. Maybe the company isn’t thinking about it, but it should — there is a need, and someone is going to fill it.
If there’s one thing that seems to define work in the digital age, it is the blurring of boundaries between our work lives and our personal lives. As we all know, work expands to fill the time available, and thanks to the ubiquity of email and instant messaging and smartphones and iPads, virtually any time is work time — and that includes family-oriented holidays like Thanksgiving, according to a recent survey from Xobni and Harris Interactive. The email service found that almost 60 percent of people check their work email during the holidays, and almost 30 percent of that group check their mail multiple times a day during their time off at Thanksgiving and Christmas.
Of those who checked email of any kind during the holidays — work or personal — 79 percent said that they have gotten a work-related email from either a colleague or a client. And more than 40 percent of that group said that they were either annoyed, frustrated or resentful at getting work-related mail while on holiday. Interestingly enough, those in the 18 to 34 age range felt the strongest about this, with 56 percent saying they felt annoyed or resentful at this intrusion into their personal lives. Only 30 percent of those aged 45 to 54 said that they felt this way.
So why do people check their work email? One reason seems to be that they know if they don’t, they will wind up with a ton of email when they return, and will have to spend hours wading through it or dealing with the fallout from not having responded. The Xobni-Harris survey found that 42 percent of those who said they check work email while on holiday believe that doing so eases the workload when they return. This is something I can personally identify with — but it creates a kind of Catch-22 at the same time: checking mail might reduce the volume after the holidays, but it can also suck you into a vortex of work that leads to even more emails.
Another interesting statistic from the survey, the full version of which is here: almost 20 percent of those who received work-related email during their holidays said that they were thankful for having gotten the messages, because it was a distraction from the family holiday. There’s a boatload of material in that kind of response for psychologists to plow through, but it seems to suggest that just as family time can provide a welcome relief from work stress, work can also sometimes provide a relief from family.
If you’re interested in issues like work-life balance, and how both workers and companies are handling the future of work in a digital age — including a look at what we like to call the “human cloud” — please join us for Net:Work in San Francisco on December 9th at the Misson Bay Conference Center. We’ve got a great lineup, including John Seely Brown, former director of Xerox’s PARC research center, and Brad Horowitz of Google. There’s a description of the event and a full schedule of speakers here, and you can register here.
There are red-hot, rocket-fueled online startups — and then there is Groupon. While plenty of other web-based companies are growing fairly rapidly, Groupon is said to be growing faster than virtually any tech-related company in history (including Google and Facebook), and is expected to close the year with revenue of more than $500 million, an incredible amount of money for a company that is barely two years old. Started by Chicago entrepreneur Andrew Mason, Groupon now has almost 1,000 employees and operates in over 300 cities in the U.S., as well as several other countries.
Not surprisingly, given this incredible growth, the company has been the subject of rumors that see Google, eBay, Amazon or some other giant acquiring it for as much as $3 billion. Groupon is also reportedly looking for new financing, after already having raised more than $170 million in several rounds of funding.
Making the coupon digital
The secret to all of this success isn’t some kind of radical new technology or device — in fact, it’s deceptively simple: Groupon has simply modernized the traditional store coupon, which it distributes to members via email. Stores, restaurants and other merchants can offer deals and discounts to their customers, and those deals are dependent on a certain number of people signing up (hence the company’s name). If not enough do so, the discount is withdrawn — but if enough people accept, then everyone gets a deal until the offer is over or the merchandise is gone. Groupon gets as much as 50 percent of the revenue from each deal.
The viral aspect of these deals — in which users pass them on to friends and acquaintances, hoping that they can gather enough people to trigger the discount — makes them an incredibly powerful tool for retailers, and the distribution that email and the web provide helps spread the news even faster. Some retailers have reported hundreds of shoppers showing up at their locations within hours of a deal being sent out to Groupon’s network. More on that a little later.
The downside
Not everyone is enthusiastic about the effect that Groupon can have on their business. In several high-profile cases, retailers have become overwhelmed by the number of customers coming in for discounts and found themselves cleaned out of inventory or actually taking a loss on an offer — but many observers have put this down to inexperience on the part of the retailer in terms of projecting demand, or their ability to fill that demand. For the most part, Groupon says merchants love its deals, and most advertisers sign up for repeat offers once they have a chance to try the system out.
One small business owner recently wrote in the New York Times about doing the math on a Groupon deal and described it as “a beast — a beast that can propel your business or smother it. It depends on your business.” Offering discounts via the service is just the same as advertising, this owner says: “It costs money. Instead of writing a check for an ad, you are choosing to lose money on sales.” In effect, he says, each business owner has to make assumptions about how many groupons will be redeemed and for how much, and then figure out if they can live with that.
Success breeds competition
The success of Groupon, not surprisingly, has also brought forth an explosion of competitors. These include some national competitors such as LivingSocial and Buy With Me, as well as local versions in dozens of major markets, both in the U.S. and internationally — where Groupon has expanded in part by buying local competitors in Russia and Japan. One company called Tippr offers a white-label group-buying platform that companies and publishers can use to run their own offers at a cheaper rate than Groupon charges.
On top of that, the company has been getting competition from both real-world giants such as Walmart (which recently launched a Facebook-based group-buying effort called CrowdSavers) and from online players such as Facebook — which has been experimenting with offers tied to “check ins” via its Facebook Places feature — and soon from online payment giant PayPal, which is close to launching a “social shopping” service called Shoptimist.
The secret: making shopping social
Groupon started as a company called The Point, which was designed to help people find others who were interested in the same social causes and co-ordinate efforts around issues. But cofounder and original angel investor Eric Lefkofsky said in a recent interview that the key to the company’s runaway success was when it combined shopping discounts with the social element that gave the company its name. Giving people a tangible reward — namely, money off merchandise or meals, services, and so on — combined with the incentive to get others involved in order to trigger that reward was the magic recipe for Groupon.
Other companies have tried the digital coupon or emailed discount offer before — in fact, there are dozens of them. But it wasn’t until Groupon came along that it became obvious how powerful this could be when combined with social tools such as email, Twitter and Facebook. And that success has convinced cofounder Lefkofsky, who has started an investment fund, that the use of social tools is the future of almost every business, particularly those with an online component. “We think that the most disruptive business models will take advantage of that social graph over the next five to 10 years,” he told the New York Times.
The lessons:
While Groupon tries to grow large enough that it can fend off competitors such as Walmart and Facebook, it’s worth looking at what other companies can learn from its incredible growth. Here are just a few:
** Social shopping is a real phenomenon: Groupon’s success and the arrival of mainstream competitors such as Walmart shows that this is more than just a fad, and that social shopping is something plenty of people want to participate in. How can you build that into what your company does?
** Making things social accelerates engagement: As Lefkofsky points out, the idea behind the company’s service didn’t really take off until it combined shopping and being social. How can you add social elements to your product or service, to encourage people to share their experiences or their interest in it? Give people a chance to be social and they will take it.
** Being social requires planning: One of the biggest lessons that online businesses can learn from Groupon’s critics is that being social can’t be an add-on to what you are doing — you have to think about how it is going to affect the other parts of your business, and take steps to deal with the potential fallout.
** Anyone can do it: As Groupon is discovering, the addition of social features to what is effectively the digital version of traditional coupons is not difficult. In other words, there is virtually no barrier to entry except for size and scale. If you aren’t doing it, one of your competitors probably is, or is thinking about it — and if they get the scale, you could be left on the outside looking in.
Tim Wu, the Columbia law professor who coined the term “net neutrality,” is not someone to be dismissed lightly, especially when it comes to communications and media trends. In his recent book “The Master Switch: The Rise and Fall of Information Empires” — and in a related piece in the Wall Street Journal — Wu argues that just as AT&T was a monopoly during an earlier phase of communications history, companies like Google and Facebook and Apple now have what he calls “information monopolies” that could be just as damaging to our society. But does he present a convincing case that this is true? Not really.
In his WSJ op-ed piece, Wu asks: “how hard would it be to go a week without Google? Or, to up the ante, without Facebook, Amazon, Skype, Twitter, Apple, eBay and Google?” Just for the record, I routinely go days without using Amazon, Skype or eBay and haven’t noticed any problems, and I spend most of my time online. In any case, Wu says that doing without Google and Amazon would be inconvenient, but:
Forgoing Facebook or Twitter means giving up whole categories of activity. For most of us, avoiding the Internet’s dominant firms would be a lot harder than bypassing Starbucks, Wal-Mart or other companies that dominate some corner of what was once called the real world.
What is a monopoly?
The author goes on to argue that despite the Internet’s reputation for encouraging freedom, it looks “increasingly like a Monopoly board” with most of the major sectors controlled by “one dominant company or an oligopoly.” According to Wu, search is “owned” by Google, while Facebook owns social networking, eBay rules auctions, Apple “dominates online content delivery” and Amazon owns online retail. But as more than one person has pointed out, none of these examples — with the possible exception of Google and search — meets any kind of real test of the term monopoly.
It’s not clear what Wu even means by saying that Apple has a monopoly on “online content delivery,” although he seems to be referring to iTunes and the control that the company exerts over distribution of music, movies, books, magazines and so on, either directly or via its mobile apps. But that doesn’t really qualify as a monopoly either — record labels, movie studios, newspapers and other content companies are free to distribute their content in other ways and still reach the same audience (or an even broader one), using the web and other services.
Google probably comes the closest to a classic definition of a monopoly — not so much on the search side, but when it comes to advertising and particularly search-related advertising, where the company clearly has a dominant position. As a result, Google has already come under scrutiny for acquisitions such as the purchase of the mobile advertising service AdMob (which got cleared after Apple bought Quattro Wireless) and others have recommended that regulators investigate the proposed purchase of the travel-information service ITA as well. But even so, arguing that Google is a monopoly is not a slam dunk.
Facebook and Apple don’t qualify
Facebook and Apple, meanwhile, don’t really fit any definition of monopoly — unless you broaden the word to mean “a really big company with products that a lot of people use.” It may be true that Facebook doesn’t make it easy for certain kinds of data to be exported from within its walled garden — something that has recently been criticized by the father of the web himself, Sir Tim Berners-Lee — but that doesn’t really make it a monopoly. If Facebook is a monopoly, then Friendster and Myspace could just as easily have been accused of being monopolies when they were top dogs in the social-networking space. Instead, they are proof of just how fragile such a position is.
Facebook seemed like an also-ran just a few years ago — similar to Friendster and Myspace, but with not as many features. Now it is valued at more than $33 billion and is feared by everyone. Could it be the next Microsoft, and therefore deserving of our criticism for being a quasi-monopoly? Perhaps, but that case has yet to be made. And look at Twitter: in just three years, it has gone from being a quirky toy used primarily by geeks to a digital-age communications network that is used by hundreds of millions of people as a real-time news medium, and has a theoretical market value of more than $3 billion.
Wu argues that while they may not be strictly defined as monopolies, these companies are large enough and have integrated themselves into our lives in such a way that they might as well be monopolies. The risk with this argument, of course, is that governments tend to take a dim view of monopolies, whether metaphorical or otherwise, and talking about Google or Facebook in those terms could make it even more appealing for regulators and politicians to get involved in legislating technology markets and services — which is rarely a good thing.
The network effect works both ways
In his WSJ piece, Wu says that he believes the Internet is more prone to monopolistic behavior because “a single firm can dominate the market if the product becomes more valuable to each user as the number of users rises. Such networks have a natural tendency to grow, and that growth leads to dominance.” But what Wu is describing — the so-called “network effect”– is a double-edged sword. Just as it built the former empires of Friendster and Myspace and AOL, it just as efficiently dismantled them when a better (or at least more popular) network came along.
Should we be aware that Apple is trying to control too much? Undoubtedly. And we should also be vigilant when networks like Facebook try to control too much of our information, as Tim Berners-Lee advocates. But Wu seems to want to draw a comparison between AT&T’s control over telecommunications and companies like Google and Facebook, and the analogy just doesn’t work. There are too many variables now, and the ubiquity of the web arguably makes monopolies more difficult to maintain, not less.
If News Corp. founder Rupert Murdoch and the Internet were friends on Facebook, their relationship status would say “it’s complicated.” While the billionaire media mogul no doub realizes that the Internet has huge potential as a medium, he has spent the past few years failing repeatedly to take advantage of that potential, misunderstanding how the Internet works, railing against its most powerful features and doing everything he can to avoid using it properly. The latest in this parade of bad ideas is the iPad newspaper he is supposedly working on called “The Daily.”
The idea of a newspaper — or rather, a paperless news service — that is designed from the ground up for a device like the iPad is a good one. Instead of taking the existing structure of a newspaper, with its printing plants and rigid publishing schedules, and trying to adapt that to a digital, always-on medium, creating something that is designed specifically for that medium, and for a tool like the iPad, makes a lot of sense. Unfortunately, that’s not what Rupert Murdoch is creating, or at least not according to the reports we’ve heard so far.
One of the major flaws is telegraphed by the name of this new creature: “The Daily.” According to New York Times media writer David Carr, the staff that Murdoch has put together at a cost of about $30 million or so will be creating content that will mostly be published once a day, just like traditional print newspapers are. Why? Good question. One of the most obvious features of Internet-based news is that it is happening at all times, and from dozens of different sources, every minute of the day and night. Maybe stepping back from that has some value — but publishing once a day seems hopelessly antiquated, like a monthly newsmagazine.
Another major flaw, as Salon founder Scott Rosenberg and others have noted, is that because it is solely a for-pay service, The Daily’s news will not really be part of the Internet at all — there will be no links to its content from outside the News Corp. venture because it will live behind a paywall (although the new publication will apparently have a website that “mirrors” some content to give readers a peek at what is available). No sharing via Twitter, no posting links to Facebook, no blogging about the content — nothing that creates the kind of buzz and connections that a modern Internet media entity should be taking advantage of.
Contrast Rupert’s vision with the one put forward by Information Architects, the Swedish design firm that created the news iPad version of the German daily newspaper Die Zeit. It isn’t an app at all, but a brilliantly-designed iPad version of the paper’s website, which uses HTML5 to give the site an app-style look and feel, while still using the Internet as its delivery system instead of Apple’s app platform. Since it is freely available, links and sharing of content are built right in. Will some readers subscribe to Murdoch’s iPad paper anyway? Undoubtedly. But whether it will be enough to make it a viable business remains to be seen.
If all that wasn’t enough to make you pessimistic about The Daily’s chances, there’s Rupert Murdoch’s track record in digital ventures: after years of railing against Google “stealing” his news content for Google News, the media mogul spent over a year and more than $30 million trying to build a competitor before finally killing it. He is also said to be close to putting a bullet in Myspace, which has been both losing traffic and hemorrhaging money over the past year, thanks to Facebook. And a paywall attempt at News Corp. flagship The Times in London is either a gigantic failure or a small, qualified success, depending on whom you choose to believe.
The bottom line? Rupert Murdoch keeps fighting the Internet, and the Internet keeps on winning. The Daily may have some powerful friends in Steve Jobs and the iPad as a platform, but it sounds like the Internet is probably going to win this one too.
With the holidays approaching, we’re entering that time of year when desperate people grab things like ties, inappropriate books and goofy toys in a pathetic attempt to bring joy to their friends and loved ones. Can algorithms help? New York-based startup Hunch thinks that they can: Gifts.com, the shopping site that is part of the IAC empire (s iaci), has been using Hunch’s recommendation engine for almost two weeks now, and the company says its conversion rate (i.e., the number of people who go from being shoppers to buyers) is as much as 60 percent higher than it was before the site started using the tool to make recommendations.
When you go to the Gifts.com section that is using Hunch, you are prompted to log in with your Facebook account, since Hunch uses your Facebook “social graph” or friend connections to power the feature. When you log in, you see a list of your friends (inclduing those who have birthdays coming up) and clicking on any of them brings up a suggested list of presents, along with the question “would this person like this?” and two buttons for yes and no. You can click those buttons to refine the search, or you can answer some Hunch questions to fine-tune the profile of that person.
Just as they are on Hunch’s website, the questions that the service asks range from the prosaic (does the person tend to vote liberal or conservative, etc.) to the somewhat bizarre — including “would this person think it is wrong to train dolphins and keep them in captivity for aquatic shows?” and “Would this person believe that alien abductions are real or fake?” Hunch founder Chris Dixon says that people’s answers to those kinds of questions can indicate where they fall on other spectrums of likes and dislikes, and can be used to make guesses about what they might be interested in.
The alien abduction question, for example, “tends to correlate highly with political orientation,” Dixon says, and the answers that you provide to those kinds of questions allow Hunch to make “cross-category inferences” about whether you might like a certain sports team, or whether you like Italian food better than French cuisine. Gifts.com is one of the companies and websites that are taking part in the rollout of Hunch’s recommendation platform, along with ShopStyle, Milo and FanBridge — and Hunch has also been talking to other companies, including some of the major cellular carriers.
The most obvious comparison to Hunch’s partnership with Gifts.com is Amazon’s gift-suggestion service, which also looks at your Facebook social graph in order to make recommendations — something Amazon launched in July. I haven’t used Amazon’s feature that much, but after trying it out a few times I found that it was just barely better than a guess, or a random pick from one of the site’s top most-recommended items. In many cases, it didn’t do any personalizing at all because the friend’s profile didn’t have enough information about their likes and dislikes.
Dixon says that this is one of the things Hunch’s database of correlations between questions and likes or dislikes tries to do: namely, to fill in the gaps or make connections between the things people like on Facebook and the things they might like elsewhere. And it learns over time — Hunch’s recommendations, for example, seemed fairly wide of the mark for many of my friends, even after I did some training of the algorithm by answering questions, but Dixon said that the overlap between the kinds of products at Gifts.com and the kind in Hunch’s database is not very large, and so the system is still learning.
“I think it probably needs another two weeks or so before it becomes mature,” Dixon said. The good part of such relationships for Hunch, he says, is that the more data it pulls in about what people like or don’t like — and the average user at Gifts.com is giving feedback on 20 items, which is higher than expected — the better the system gets at making recommendations. And maybe some day it will be better than just randomly picking up a pair of cufflinks or slippers for that person on your holiday list.
We are hearing that Tumblr, the web-publishing platform that has seen spectacular growth over the past several months, has landed a huge new round of funding led by veteran Sand Hill Road VC firm Sequoia Capital. This news, which has also been reported by Fortune magazine, confirms rumors that we first reported on last month. Sources with knowledge of the deal put the total raised at $30 million, which would give the three-year-old company started by entrepreneur David Karp a market value of close to $135 million.
Why so much interest in the New York-based startup, which competes with other publishing platforms such as WordPress and Posterous? (please see the disclosure below). The obvious answer is that Tumblr has taken off like a house on fire over the past year: its monthly unique visitors have more than tripled, from about 2 million to more than 6 million, and comScore says the site had 1.2 billion pageviews in October — or more than four times what it had just six months ago. Although other platforms also allow relatively easy publishing of content, Tumblr seems to have achieved these kinds of viral-growth levels primarily because of its easy “re-blogging” feature, which lets other Tumblr users share a post with a single click, much like a Twitter re-tweet.
As Om noted in his piece on recent financings for Groupon and several other hot startups, these kinds of deals are contributing to the growing fear that Silicon Valley is in the grips of another financing bubble, with valuations as high as $3 billion for Twitter and more than ** billion for Zynga, and rumors of potential multibillion-dollar acquisitions by Google and other web players. Fred Wilson of Union Square Ventures recently talked about and has written about his concerns that the market for consumer-facing web services is getting frothy, which makes the Tumblr financing somewhat ironic, since Union Square is one of the company’s backers.
Not everyone is convinced that the rounds being raised by startups like Tumblr are evidence of a bubble, however: Chris Dixon, an angel investor and founder of Hunch, says that he isn’t concerned, and isn’t going to get worried until “Google, Apple, etc. start hurting.” Dixon also noted that there were bubble-type concerns raised after some early financing raised by Facebook and Twitter at what seemed like incredibly high valuations. Bryce Roberts, meanwhile, a partner with O’Reilly AlphaTech Ventures, says that he believes Tumblr in particular is worth the reported valuation given to it by the latest financing.
Union Square and Spark Capital put $5 million into Tumblr last April, adding to the earlier rounds of funding they participated in and bringing the amount raised by the company at that point to a little over $10 million. At the same time, Tumblr talked about adding a number of potential revenue-generating features to the site, including stickers and a marketplace where designers could sell their Tumblr themes.
Disclosure: Automattic, the maker of WordPress.com, is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.
