This request came from Ad.ly, the in stream advertising company that is run and was started by a friend of mine Sean Rad. Sean was funded last year by a very well respected VC, Mark Suster of GRP. What I really like about what Sean is building is his focus on “streams” and not only Twitter. Obviously, Twitter is the webs strongest stream today, but many services are going to the stream model & this will be a huge opportunity.

This is the email that I received, a request to tweet this appropriately called out (Ad) for a total of $4.23. So, as a starving entrepreneur I decided to get my $4 bucks.

I clicked ‘Approve’ shortly after I got the email and this was the result…

For $4 bucks, I’d say it was totally worth the tweet. I do think it would be a pretty shady practice if that little “(Ad)” was not included in the tweet however.

Maybe the most interesting realization after the tweet was to see my friends/followers respond to the tweet. I had about 2 people tweet me to call me out for selling out my stream, 1 person who thought my account was jeopardized or hacked and then friends just curious about my tweeting ads. Friendly concern.

So, would I tweet more ads in the future? Possibly. I can tell you that I’ve turned a couple other tweet requests down, so I won’t be tweeting just anything (my stream is respected, I love you guys) so I’ll keep it pretty clean. However, I’m not apposed if I’ve used the services that are included in the sponsored tweets.

Twitters Solution

Twitter is executing a similar behavior by promoting tweets within Twitter searches. I’m still skeptical about how much people actually use Twitter to search, but like anything the search behavior on Twitter, will grow. Twitter posted on their blog this answer to the question about promoted tweets.

Q: What are you launching? What are Promoted Tweets?
A: We are launching the first phase of our Promoted Tweets platform with a handful of innovative advertising partners that include Best Buy, Bravo, Red Bull, Sony Pictures, Starbucks, and Virgin America—with more to come. Promoted Tweets are ordinary Tweets that businesses and organizations want to highlight to a wider group of users.

What this means is that when someone searches for “coffee”, Starbucks will have a tweet (like the one above) that regardless of timing of that tweet it will stay at the top of that search. The kicker here is that the Starbucks tweet will NOT be to the side like a Google ad, these tweets will be “in stream”, just like Ad.ly.

I do think, for the record, that there is plenty of space for third party in stream advertising regardless of Twitters entrance to the space.

This week I had back to back experiences with iPhone payment systems. I figured I’d document it here and show the differences between the two. Also I’ll shed some light on which, in my opinion, will win.

First, above is the image I took after signing my iPhone based receipt generated by Square. I had a delicious coffee at Sightglass Coffee in SOMA, SF. Just like at Starbucks I order my over-priced (it is SF) Latte and she whipped it up. Then when asked cash or card, I obviously said card and she pulled out a wifi enable iPod touch. The iPod had a funny little ‘square’ plugged into the ‘jack’. The barista (if they’re called that outside of starbucks) sturdied the square and swiped my card. Then she handed me the iPod for me to sign with my finger. The next step was a prompt with the request, “how I would like my receipt, sms or email?”, so I requested email and entered my address. Very simple, I was done.

Below is the email that I received with a link back to my web based receipt.

This is an image of that receipt on Square’s web site. I was very intrigued by the inclusion of the “This is your first payment here.” This data got me thinking about the possible foursquare integrations, etc. It’s inherently social because Square begins to use payments as checkins (like Foursquare). They can tie in the location, with the transaction, with other peoples transactions around the same time. With a Blippy / Square combo you could have payment authorized checkins, with the social blast of the transaction.

My next experience was at the Apple store on Market St. in San Francisco. The experience was similar in that when I pulled out my credit card for payment I was greeted with an Apple device, this time an iPhone. This iPhone was sitting in a cradle of some sort that had a slot for the card on the right hand side. Much larger than the Square but still with one swipe I was charged, not interacting with the phone at all. The person manning this device asked for my email which he punched in and I was off. $30 bucks later for a Snow Leopard update, I got an email that was similar to Square’s except it had a PDF attachment with the receipt.

This is the Apple receipt. The gist here is that it just gets the job done. The payment process was simple but there isn’t really anything interesting about this, we’ve all seen a receipt.

So which system do I think will make the most impact? Well, if Apple lets Square into the app store which they must or it will be a PR nightmare, I really think that Square’s system has a significant upside. Here’s why:

1) The experience was a bit smoother

2) The trust is higher in that I was required to sign the receipt and if someone else were to use my CC I would immediately get an email about the transaction (once I associate my cc to my email, this should be automatic).

3) The distribution of the tiny Square device that plugs into any jack (not just iPhones) is small and cheap. They even plan to try and distribute these devices for free.

4) The potential integration with other social systems is huge. Although not everyone tweets, or blogs, 400 million people are on facebook and there are tons of interesting ways that venues could use this dynamic, recorded by actual transactions, to reach new customers.

Lastly, adoption is the only worry. We need to start to condition people to understand that a mobile device is no longer just a cell phone. With UberCab we’re training drivers that a mobile device can help then attract new business. With USAA’s new iPhone app you can actually deposit checks using images of those checks taken from an iPhone. This is not a phone anymore, it’s a computer, and with things like Square, UberCab, or new banking systems the world is changing literally in the palm of our hands.

The New York Times announced that they plan to start charging for the online content. This has been a VERY scary thing for the industry and a topic of much debate. As Fred Wilson said back in July, “the newspaper industry is doing a lot of soul searching for the right revenue model”.

So why hasn’t monetizing new content worked well to date? Why hasn’t the ‘freemium’ model worked well for the news industry like it has for so many other industries? In short the answer is, they’ve gone about it in the wrong way, and luckily it seems that NYT is learning from others mistakes. As newspaper readership migrates from print to web they’ve got to be able to monetize the move and it seems the solely advertising model has proven to be an insufficient way to monetize that content.

If a newspaper was to charge you based on how much you consume (per-article) that would be like slapping your most valued customers in the face everyday. So, they had to come up with a model that works in the opposite way… Reward the best customers, retain the exposure to search (Google juice, Bing, Tweets), and use curiosity to drive sales. I think they’ve found a way to do this through their improved ‘freemium’ model (that Financial Times, FT.com, already uses btw). It sounds like, starting in 2011, they will allow a certain amount of “free reads” per month, then after X amount of articles read (likely 10) you’ll get a pop-up asking you to pay a one time fee for unlimited reading for the rest of the month. This allows the casual reader to get their fix and it rewards the valued customers (Super User) to pay a nominal one time fee and have the ability to read like mad.

The term super user derives from computer operating systems and is used to refer to a system administrator account. This means that they have all the access rights possible or needed. This model targets and rewards they’re best customers or super users by keeping prices low relative to the amount of content consumed. Fred Wilson intuitively called this, monetizing the audience, not the content. Newspapers have got to charge something to stay alive, but they are rewarding their super users by keeping the fee minimal and one time.

I personally hope this works well because my forward thinking self :) realizes that without a model that proves profitable, the quality of the news we receive will begin its inevitable decline. I like having quality journalism on a daily basis and would pay my nominal fee for it.

###

In a semi unrelated note, I heard that Amazon can charge Kindle users a dollar to subscribe to my blogs RSS feed. They’ve monetize my FREE content. Is anyone paying for this blog (or any other) via Kindle? How do you feel about doing that? Love to hear your thoughts.

image via flickr

Quick thoughts on big valuations from pre rev startups:

There are a lot of folks that don’t understand why Twitter or other startups like them can be valued at such enormous valuations while showing minimal or zero revenues. I respect your skepticism. It’s tough to understand why these early stage start ups have millions of users but aren’t profitable. Please understand that most of them could create revenues if they wanted to, but just turning on the revenue spout isn’t most important. Turning on the revenue spout when all the pieces are connected properly is critical. I’d like to use this analogy to explain this further.

If your connecting a hose to the spout/spigot and you turn on the water prior to ensuring you have the hose connected properly, you’re going to have a mess on your hands, everyone’s getting wet and the process of watering your grass and using the hose is a failure. However, if you ensure a proper connection from spout, to hose, to sprinkler, you’re going to have a great experience, the grass get’s water and growth occurs.

These companies have already proven that they know how to acquire users, the water is running, now it’s a matter of connecting the pieces properly before they turn it on so that the combination of water (users), hose (business model), and sprinkler (team) are all connected properly to maximize their revenue opportunities.

Excuse errors, first post from my iPhone. (Update: added photo)

Update: Twitter is reported to be profitable after making search agreements

These days it seems like 25% of the ads on TV are for app this or app that. The iPhone app store just hit 100k in applications. Now the Verizon/Motorola/Google Droid comes out and says iCan do everything that the iPhone can’t. You know, Droid Does. One of the coolest things about this Droid phone is the fact that the app store will be just as open and the internets. If you know how to build an app for it, do it, no controlling application or approval process from Apple, Google, or anyone else…at least that’s what they say.

So, where is the money to be made in the App Economy? Well obviously the content creators, the folks who have the most data, whether that’s news, images, or a social graph. Those will always win. Then there are the builders, those who build the best apps will get the most attention, tons of shops have already popped up as the app developers, web developer just doesn’t market as well these days. Mobile is , so if you’re a developer and want to stay relevant, I’d be mastering the iPhone SDK and the Android 2.0 SDK (software development kit). Then come the aggregators, these folks make things easier on the users, and this is what I want to touch on today.

People always complain that the iPhone app store sucks to navigate and they’re right. It’s terrible. Nobody really knows what the Droid app ecosystem will look like because it’s going to be user generated and the users just aren’t there yet. One huge opportunity regardless of platform is application discovery. The proven model of discovery in almost any vertical these days is through the social graph. This means, what apps are my friends downloading, I want them too.

Enter, Appolicious. The social graph for apps. They’re creating compelling ways to discover new apps through a Facebook enabled social network and an easy tool to upload your entire (iPhone only for now) app collection…and if they’re smart, which I believe they are, there will eventually be no limit to which app ecosystem you’re interested in. Within Appolicious, when I search for foursquare I’ll eventually see both their iPhone app, their native Android 1.0 app, and their new Droid app, and also their Palm Pre and Blackberry apps (yet to be released). I want all apps, all platforms, and all my friends reviews.

How many app developers, content creators, and others will want to get a piece of that pie within Appolicious’s soon to be powerful network of people who own apps? Answer: All. This will likely become the most powerful site for application promoters and marketers because this will be the primary tool for application discovery. You might have said, “yea but Apple will just do it and wipe them out”, this application ecosystem diversification is exactly what will give Appolicious staying power.

Alan Warms, the Chicago based CEO of Appolicious, wrote an interesting post back in October about how free apps are the future (I agree) and this statement shows he clearly has a good grasp on where this application economy is going and how best to participate in it.

With yesterday’s announcement (10/15 Apple announces in app purchasing), every company out there can offer a free iPhone App, thereby reducing the friction of driving adoption, knowing that over time they can work with their consumers to find offers that make sense for both parties.

Alan is taking a big bet on Apps, and I think it’s a safe one. Applications, through the increase of mobile computing will become the quickest, easiest way for users to reach the web and the content they need. They’ll increasingly see their smart phones and mobile devices as their tool box to accomplish specific tasks and their apps will be their tools. We all know how much easier a job is with the right tools.

Here’s an interview Alan did with Robert Scoble about Appolicious.

image via flickr

http://www.techcrunch.com/2009/10/31/scamville-the-social-gaming-ecosystem-of-hell/

Then the next day on Nov 1, Tech Crunch followed up with quotes from two respected entrepreneurs who admittedly said they’d executed these types of ad strategies in the past and weren’t proud of it. One even said, “I’m surprised it took this many years to be reported by the “media”. These kind of scams have been going on for years…”

http://www.techcrunch.com/2009/11/01/scamville-hotornot-plentyoffish-facebook-myspace/

Then Dennis Yu the CEO of BlitzLocal wrote a very honest post about scamming Facebook and the 3 most common ways to do it: 1) Downloading a spyware tool bar, 2) Tricking users to give up their email using ‘you’ve won a “free” camera, just tell us you email address’, or 3) Getting a users phone number by using ‘thanks for taking that IQ test, give us your phone number so we know where to send it’, which charges a user $20/month.

http://www.techcrunch.com/2009/11/01/how-to-spam-facebook-like-a-pro-an-insiders-confession/

The next follow up was from Zynga’s VP of Biz Dev Andrew Trader who stated that about 1/3 of Zynga’s revenue comes from advertising. This is the same advertising that Arrington calls ‘scammy’.

http://www.techcrunch.com/2009/11/02/scamville-zynga-says-13-of-revenue-comes-from-lead-gen-and-other-offers/

Next Mark Pincus, who I wrote about last week, responded to Arrington’s claims with a very thoughtful post about the industry and openly admitting that yes, some players on these social media platforms are ‘scammy’ advertisers and they’re creating bad user experiences. He also raised a point I hadn’t thought of; there are many users who don’t have access to online payment methods (broke kids) who are still interested in making in game purchases. So they’re able to take survey’s and perform tasks to earn in-game-currency. Pincus says this about the worst offender:

In fact, the worst offender, tatto media, referenced in the techcrunch article, had already been taken down and permanently banned prior to the post.

There is no doubt that social gaming is entering the mainstream culture and there is a business to be created around fun….

As we evolve to a world where people connections are the basis for the largest consumer services, we will face more challenges. I’m confident that with so many smart people (and critics) we will overcome these.

http://markpincus.typepad.com/markpincus/2009/11/my-take-on-zynga-and-cpa-offers.html

Then yesterday Arrington respectfully responded to the Pincus post:

Hats off to Zynga. Flat out admitting that the problem exists and taking early steps to fix it is just something you don’t see from most companies.

http://www.techcrunch.com/2009/11/02/zynga-takes-steps-to-remove-scams-from-games/

I hope that I could catch you up to what’s going on here and make it easier for you to follow than reading every post (although you can of course). As I stated last week in my application economy post I really think that Pincus is a sharp entrepreneur. He understand that you can’t just F’ the user and still build a great business so I’m excited to see how he responds to this in the longer term. I wouldn’t doubt it at all if Pincus were to push Facebook to adopt the standards that Arrington et al. are calling for.

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Someone who I don’t talk about often on this blog but that I do have a lot of respect for is Mark Pincus. Mark is the CEO of the company that makes virtually games, specifically Farmville…yea you’ve probably played it. The game has 20 million active users as of last week. Mark is one of the most forward thinkers when it comes to the web and where it’s going. He also has some very strong beliefs that there are particular ways to monetize things on the web and his track record and performance proves that he knows what he’s talking about. His company, Zynga has 50 million active users and is currently contemplating going public. Wouldn’t it be wild if a Facebook app company went public before Facebook did?

There’s been a lot of talk recently on TechCrunch and others about Web 3.0 and what the next era of startups, specifically web startups will look like. Mark said this about monetizing in Web 3.0:

We have entered the third business plan of the web….

Web 3.0 is about monetizing this massive web audience through users paying for mostly digital goods and services. The product will be a service or at least ongoing relationship. Distribution could be through Apps or even daily emails. The currency will be DAUs (daily active users). This will be higher margin and fuel an exponentially greater number of companies.

Web 3.0 businesses will be measured in $$/pixel/minute. This is a throw back to hsn and qvc. These home shopping services proliferated because they could better monetize local cable screen time which couldn’t be sold as it wasn’t measurable.

After reading Mark’s bio and reading more about what Zynga has been able to do, he’s become of of those guys that I won’t miss a word of what he says. I’d be foolish not to pay attention to people who are not only forward thinkers but are at the forefront of building the future. Mark was the founder of Tribe.net, one of the first social networks back in 2003, well before Facebook or even Friendster.

I encourage you to follow Mark.

http://twitter.com/markpinc

http://markpincus.typepad.com/markpincus/

They’ll start in July of 2010 providing every person one-megabit of broadband connection with full intention to increase that to 100mb by 2015. This is an enormous first step towards a future of unbelievable connectivity. Obviously, we would all say that the world is extremely well connected today, but if this law were to be passed in other countries I believe we would see unparalleled positive effects.

The amount of people that would benefit from a program like this around the world is staggering and it’s exciting to think about the increase in thought, sharing, innovation, productivity, and yes, entrepreneurial effort that would occur because of a change like this. A few startup pioneers are pushing for something called the Startup Visa. My opinion has yet to be made on this issue but I sincerely believe that a “broadband for all” effort would dominate that effort in it’s affect on innovation in the States. I’d like to see those same pioneers push for something similar to this here in the US.

As of December 1, the Federal Trade Commission is going to require bloggers, and prominent tweeters and Facebook types to disclose any paid endorsements to their followers, online friends and readers. These new rules have the potential to change everyone’s online habits.

A trend, al biet not a common one, among bloggers is to take a small fee in exchange for positive evaluation of a product. Under the FTC’s new rule all bloggers who do this must disclose that they are being compensated. And, they will have to disclose what they will receive. I’ve gotten free books and have blogged my reviews of them in the past. I don’t always review positively, I review honestly, but I would still be required under these rules to tell my readers that I received the book for free.

In my reading most bloggers already disclose this stuff. Dishonestly on the web spreads quickly and credibility fades just as quickly. It’s not worth skeeming this way because it really won’t last long.

Where this really gets ridiculous is these same rules will likely apply to Twitter. So if a celeb promotes a product, they’ll also have to disclose that fact. Are they suppose to do that within the same 140 characters? Celebs receive gifts all the time, venues what celebs talking about them, but if they have to disclose EVERYTHING they get for free this will ‘disincentivize’ the venues from give those things for free, could this ruin the hora of being a celeb. Probably not but you see why it’s getting ridiculous.

Take this scenario into consideration… If you get paid for your job, which is why most of go, then you’re not allowed to tweet, blog, or social media whatever, about your company without publicly disclosing that you’re an employee of that company. In the FTC’s eyes there is no difference between a free book with a  positive review and a full-time salary with a positive employer review. Now do you see why it’s ridiculous?

The last scenario that I want to point out that proves how ludicrous these new rules are is that of a startup investor. Take Brad Feld, Bijan Sabet, or Fred Wilson as examples. Most of what these guys do online is about their existing portfolio companies or finding new companies for their investment portfolio. Now by these new rules they would be required to disclose that they have a financial interest these companies before tweeting or blogging about them. I’m unsure of the detail required