Tech Town, NC

In an updated to the last post, Lulu PR has confirmed rumors that they have acquired weRead. Lulu would not release details of the transaction but said it was more strategically motivated than monetarily (presumably, though, their strategy does include money…). Anyway, they went on to describe the move as for the “benefit and continued empowerment of our collective user groups.” On its face the combination does seem to fit that description and we expect to see the continued growth of the weRead apps.

As part of the acquisition the original press release states:

“weRead is headed by founders Krishna Motukuri and Harish Abbott who will divide their time between Lulu’s US offices and weRead’s center of operations in Bangalore, India.”

Congrats to Krishna, Harish, and the folks at Lulu.

Morrisville based Lulu.com has partnered with Bangalore, India startup Ugenie and their flagship application weRead. Ugenie’s facebook app, iRead, has over 1 million users on facebook according to their website (though facebook puts them at 552,687 active users at the moment, still none too shabby). The facebook app, and similar apps on other platforms, track books people are reading and encourages sharing of reviews and recommendations. Lulu will apparently hope to find synergies in giving their catalog of self-published works an extra push on this network and streamlining the listing and recommending of newly published titles.

According to Lulu’s press release:

“weRead gives users access to an expanded library of all books in print, so self-published works can be compared favorably, or otherwise, with Shakespeare, John Grisham or J.K. Rowling. The possibilities are virtually limitless.”

On top of the sensible partnership of publisher and marketer, Pluggd.in thinks the “teaming” might actually be an acquisition. There is some chatter in the Twittersphere, but no hard evidence yet, so we’ll have to wait and see what comes out in the near future.

We all know about the failed ad campaign of “the algorithm” and those shabby guerrilla marketing spots that Ask.com tried to indoctrinate us with. But, other than giving Kato Kaelin another few minutes of fame, they didn’t accomplish much, and Ask saw its share of search queries drop from 5.1% in the Spring of 2007 to 4.5% as of this June according to ComScore. They’re not thought of as a major player in search anymore.

But they’ve recently been testing some new video ads that focus on their core in a much more sensible way. The spots pose simple but tempting queries like “is chocolate really bad for dogs?” and “what toys are dangerous for babies?”, and pairs them with the ace in the hole of ad agencies everywhere - video of dogs and babies. It’s a tempting click that takes you straight to your answer, via ask.com. IMHO they’re very well done. They reinforce the brand, deliver on the promise, and are pretty cute as well.

Recent Alexa rankings show that the engine may be gaining some ground, and in search every inch counts:

With paid search, we’re talking about a $12 billion market here, and growing. So if Ask has indeed increased its traffic as much as Alexa indicates, they could be looking at tens, or hundreds of millions of dollars in revenue growth. Of course, Alexa is quite often wrong, and Compete is showing no such bump, so this may be a false alarm (though compete updates less frequently). that being siad, I thing the new strategy of focusing on everyday answers is a much better bet than a mass market campaign, especially one that just didn’t makes sense.

For more background, check out Don Dodge’s great piece last year on why 1% of search market share is worth over $1 billion in market capitalization.

One of the brightest lights of the local tech scene, Shoeboxed.com, just celebrated its 1st birthday on Thursday, July 24. Kudos to the team of Taylor Mingos, Dan Englander, and the rest of those happy warriors over in Durham. In just 12 months they’ve established themselves as a thoroughly useful service with some really great technology behind it. It’s a simple concept, eliminating paper receipts and the clutter that ensues, but they’ve gotten the execution of it absolutely right. With the burgeoning mail-in service they’re making it that much easier for all of us to evolve and make the transition. And they’ve got a business model, with paid subscriptions weaning them off the typical “ad supported” model. I’d say that for a 1-year old, that puts them way ahead of the game.

Happy Birthday Shoeboxed, and good luck the next year and beyond.

Tim Simmons of the New & Observer has a good piece today on iPhone apps developed by local companies and hobbyists that goes to show just how broad the app store’s appeal is.

The most notable app of the bunch is Twitterific developed by Iconfactory in Greensboro. The straightforward Twitter management tool has exploded in popularity to the point that the twitterific bird is now one of the most recognizable characters in the Twitter and iPhone communities. Its spread has taken the folks at Iconfactory completely off guard.

Other, more fun ‘n games apps, are Sumo, from Stinkbot in Durham, and Lumina from CrossComm in Durham. What’s interesting about these offerings is that they were developed as afterthoughts. Rob Terrell works full time for Avacast, a webcasting company, but wrote Sumo years ago and quickly ported it to he iPhone. Don Shin wrote Lumina as a side project.

The most useful looking app came from Modality in Durham, which ported its academic offerings, including Netter’s Anatomy, to the iPhone. That’s going to be a great reference for Med students, and even doctors, when they’re on the go.

I’d missed the last few Social entrepreneur meetups with vacation and work, but I’m glad I attended this one. We were treated to four strong presentations and lots of new faces. The crowd continues to diversify in all respects, most notably in terms of age, attracting a larger share of more mature entrepreneurs to balance out all the youth.

First we got a high concept presentation from Jordan Qualls of Clean Aeronautics (not sure if the site’s up yet). Touting lighter-than-air transportation, Jordan made a pitch for the revitalization of the zepplin industry - you read that right, zepplins - that use Hydrogen to stay aloft. As the world economy tries to recalibrate to expensive gas, Jordan might have a shot with this. In fact, no less than Boeing is already exploring the use of zepplins for shipping - how’s that for proof of concept? Now they just need $400-500 million to “get this thing off the ground.”

We also heard from Scott Saxson of Durham Tech Shop, an idea that really captured people’s attention, mine included. Tech Shop is a “membership based DIY workshop” that has tons of cool tools that most of us could never afford on our own. Most of the equipment is probably beyond me, but they’ll have metalworking equipment, laser cutting tools, even a 3-d printer for prototyping (or for fooling around)

They are still raising some funding to purchase the rest of the pricey tools, but seem to be well on their way. Memberships start at $1000 for the year, or you can opt for monthly or even daily passes. However, they are hoping to get a steady flow of tinkerers and inventors to use the facility on a more long term basis. Basically, it sounds like it will serve as a mini-factory that keeps overhead to an absolute minimum for engineering startups. They’ll also be working with schools and teaching classes to the community. The Durham Tech Shop is patterned after a sister establishment in Menlo Park, CA.

Joel Thomas presented on his organization, Nourish International, and the work it’s doing to help poor communities abroad help themselves by building a sustainable future. Joel’s presentation was actually about two things, both the work that Nourish does to alleviate poverty, and Joel’s highs, lows, and lessons learned while starting his own non-profit. He detailed how chapters raise money, train and launch projects each year. But one lesson he mentioned about starting a company/non-profit really stuck out as a tough, but important one - Hiring the right people matters. Saying goodbye to the wrong ones can save your venture.

Finally, Ryan gave the first part of a summary of his trip to Uganda with Roey Rosenblit and his organization, Village Startup. Village Startup is a company devoted to connecting communities with the right technology to unlock their human and economic potential. In addition to working with inventors, suppliers, and buyers, the company also organizes trips to the communities it hopes to change. Ryan took one of these trips to see the work being done through his sponsorship of the organization. He shared some great pictures of students attending a school they are working with, showing how the school made due with second hand books and old computers, but still gave the students valuable instruction. Ryan also shared his thoughts and takeaways from the trip. Suffice to say, it only reinforced his explicit desire to change the world.

For some reason there is a meme going around that Google is a “natural monopoly,” but no one has made a convincing case on why that is. Henry Blodget compares them to Microsoft’s natural monopoly in operating systems, but never supports this claim. He simply states that they “should continue to appraoch…” Microsoft’s share of 90% in operating systems. But are Google and the search business a natural monopoly? No, they aren’t.

Search is different from operating systems in many ways. Programmers have thrived in the windows environment and neglected Macs because of the benefits of scale (this is less true now, but I’m thinking historically here). Program for windows first and you reach billions of users. Program for mac first, and you miss 90% of your market. Google’s leverage is nothing like that. Design a website for Google, and Yahoo will still find it. Design it for Live Search, and Google will find it. There is no lock in.

However, there are certainly advantages of scale that Google HAS exploited. Their buisness is about search results, yes, but it’s also about servers. Do SERP’s change much when more people are using them? Not really. But the fact that Google adds servers like crazy and seems to have the best cloud computing engineers in the world means they are quicker in almost every way than their search competitors. That’s what scale brings you.

The problem, though, is that the data google uses to build its superior indexes with is almost all public information, i.e. links. Anyone can analyze link data if they have the computing power, and google can’t protect that. It’s not a weakness for google, since they’re better than everyone at indexing, but it is a vulnerability. They are taking steps to address that, though, gathering data from all sorts of proprietary channels, such as gmail, igoogle, and google accounts in general. But they may not even lead in that department, with Yahoo Mail and Hotmail boasting much larger user bases. Not to mention the treasure troves of data that News Corp is compiling in MySpace, or the data that Microsoft may snatch via a Facebook acquisition.

None of this is to say that Google is in trouble, but they’re not in a position that would allow them to release a “Google Vista” either.

Adam Ostrow gives credit where credit is due by lauding a couple big steals in the world of web 2.0 acquisitions: MySpace and Flickr. When Mr. Murdoch bought MySpace for $580 million in 2005 many thought he had lost his mind. In retrospect, that was chump change.

Microsoft has ponied up about half of that amount ($240 million) for a mere 2% stake in facebook. Now, that could mean that Microsoft is just very, very serious about winning the web 2.0 war (I’m sure they are) but it also highlights the fact that they’re very late to the game. If they had Rupert Murdoch on their M&A team, we might now be talking about how Google was the one who needed to play catch up.

Flickr is a more quiet success story since it was initially purchased for just $35 million, but it’s grown steadily into an anchor of the web. It’s 40 million or so users have built a lively community and some of them are even paying customers. All that pegs Flickr’s value somewhere north of $1 billion, possibly up to $4 billion.

These acquisitions have 3 important things in common:
1) The acquiree was supported by an enthusiastic community
2) The acquirer stayed mostly hands-off and let the property continue to grow
3) The acquirer got in ahead of the curve

Who fits that mold? A few companies come to mind - LinkedIn, Yelp, Twitter, and Digg most prominently. So what should Microsoft do? Keep their eyes out for a bargain, and let their new pet grow.