Wednesday, September 29, 2010

Why TechCrunch Was Acquired by AOL...

Yesterday it was announced that the popular technology blog, TechCrunch, was being acquired by AOL for a reported $25 million.

A few observations...

First of all, if TechCrunch, which receives about 3.8 million hits per month, and turns a profit of $3.5 million annually, can be valued at $25 million, then that's a pretty good barometer to use for valuing websites in general, and blogs more specifically. After some detailed calculations, I have determined that The Nerfherder is not quite there yet :-)

Second, it's almost surprising to hear that AOL is still alive. What have you heard about them in the past five years, really? Their latest plan to stay in business is through acquiring media companies, like TechCrunch and Engadget, hoping to turn a profit through advertising. Even if you're not skeptical about their chances for success in that enterprise, you have to admit that they joined the ranks of the irrelevant quite a while ago.

Third, Michael Arrington, TechCrunch's founder, illicits a mixed emotional response here. On the one hand, you've got to give the guy credit for starting up a website from scratch and cashing it in for $25 million within only a few short years. He's living the dream. On the other hand, his public statement about how he sold TechCrunch simply because AOL has top engineering talent and that he wanted to be focused on writing, and not be distracted by the engineering challenges of maintaining a website, is so phoney-baloney that you have to roll your eyes a bit. Is anyone in their right mind really expected to believe that nonsense?

I have a sneaking suspicion the $25 million played a bigger role in his decision-making process than his statement leads us to believe, and that he didn't sell TechCrunch to AOL simply for engineering help, or for The Greater Cause.

But good for him, nonetheless.

Sunday, September 26, 2010

Cyberwarfare Against Iran as Smart Policy...

When nations launch bombs or send in armies to attack other nations, we call it a war. When nations launch a cyberattack against other nations, you would presume that we would call that an act of war as well. But that is decidedly not the case.

And governments may be using that to their advantage.

Last week, news reports surfaced that Iran is under cyberattack. The most sophisticated computer worm ever (according to some experts), named Stuxnet, has already infected industrial plants across Iran, possibly including the famous Natanz nuclear facility, which has long been suspected of enriching uranium for nuclear weapons.

Stuxnet, which was first publicly identified several months ago, is aimed solely at industrial equipment made by Siemens that controls oil pipelines, electric utilities, nuclear facilities and other large industrial sites.

Given the sophistication of the worm and its aim at specific industrial systems, many experts believe it is most probably the work of a state, rather than independent hackers.

Iranian officials are, of course, playing down the threat - despite one claim of at least 30,000 computers being infected.

It's extraordinarily difficult to identify the origins of computer worms. But who are we kidding, right? The instinctive reaction is to assume that American, Israeli, or European governments are behind this cyberattack. Naturally, they have all denied such involvement, and there is no proof linking them to it.

But setting aside conspiracy theories for the moment, there is an interesting question raised by the Stuxnet case... Can governments really launch a cyberwar against their enemies without fear of reprisal? If so, wouldn't that be a smart thing to prescribe in order to attain desired political outcomes?

Already, there is a history of cyberwarfare between national governments where the reprisals were little more than verbal condemnations. Prominent examples include the cyberattacks launched by China against the U.S. and Russia against Estonia.

Again, it needs to be reiterated that these are not cases of individual hackers causing mischief. These are overt acts perpetrated by national governments against other national governments. That's the defining characteristic which makes it true cyberwarfare. If governments are hesitant to carry out certain political objectives for fear of a military response - like having bombs dropped on them - then perhaps launching direct, targeted cyberattacks to carry out those same political objectives is actually smart policy. Particularly when there are no clear consequences.

If Stuxnet can set back the Iranian nuclear weapons program by a few years, just as air strikes might have - but without the political or military fallout, then that sounds like awfully smart policy to me.

Wednesday, September 22, 2010

The Rise of Apps Culture...

The gold rush is on! Ask any computer programmer today where they see immediate entrepreneurial opportunity, and the answer is almost certainly... "in apps". That's where all of the energy in the industry currently resides.

A new report by the Pew Internet & American Life Project illustrates the growing market for apps. A few stats worth noting...

  • 82% of American adults have cell phones, and 23% now live in a household that has a cell phone but no landline phone.

  • Among those with cell phones, 43% have cell phones with apps, but only two-thirds of those who have apps actually use them.

    NOTE: This is a recurring theme in the report. There is still a gap between people having apps versus people actually using apps.

  • 29% of cell phone users have downloaded an app to their phone, while 38% have purchased a phone with preloaded apps.

  • One in ten adult cell phone users (10%) had downloaded an app in the past week; 20% of cell phone users under age 30 download apps this frequently.

  • One in eight adult cell phone users (13%) has paid to download an app.

  • Among cell phone users with apps, the average adult has 18 apps on his or her phone.

Furthermore, apps continue to rank low on the list of non-voice cell phone activities...

Take a picture76%
Text messages72%
Access the internet38%
Record a video34%
Play music33%
Instant message30%

So we can see that, not only is the market for apps growing rapidly (this segment of the industry basically did not exist two years ago), but the market still has plenty of room for future growth. It clearly remains in - that phrase which entrepreneurs so cherish - its "embryonic stage".

Tuesday, September 21, 2010

How Much is a Tweet Worth?

The folks at Twitter are still trying to figure out, years later, how exactly to make some money off of their website's phenomenal success. Meanwhile, celebrities on Twitter are cleaning up.

TwitChange is a celebrity auction where Twitter users can bid to get three things: be followed by their favorite celebrity on Twitter, retweeted, or mentioned by them in a "special" tweet.

All of the proceeds go to the charity,

What's most fascinating about this auction is that, for the first time, we can gauge how much a tweet is worth. Some of the celebrities participating are also among the most followed Twitter users, so it helps set a type of max ceiling on tweet values.

For example, take a look for yourself at the auction list. As of this writing, you can see that people are willing to pay nearly $5000 for Jessica Alba to mention them in a tweet. Also, somehow, Dana White (from Ultimate Fighting Championship fame) will tweet about you for a staggering $15,000!

One can only imagine Eva Longoria getting all upset and wondering why her tweets are worth so much less.