Changes at AOL’s local content site, Patch: CEO Jon Brod will step down and is being replaced by COO and President Steve Kalin, according to an internal memo the New York Internet company sent to the division’s employees today.

As part of the move, Brod will be going back to run AOL Ventures, in a job where he began at the company.

In addition, sources said a little less than three percent of the 1,400-employee Patch staff will be laid off. The memo notes that downsizing, without giving the numbers, which includes consolidation of several parts of Patch by streamlining its regional structure from 20 to nine teams.

According to the memo, the layoffs are to “make Patch profitable in 2013 and a commitment to continue to improve our business model.”

AOL confirmed the contents of the memo, saying in a statement, “Patch is streamlining its regional editorial structure across the country by moving from 20 to nine teams. We are implementing this team approach based on the success of our field tests earlier this year. The team approach allows for flexibility based on the unique needs of each community and the strengths of our editors. We are not reducing our number of sites or our coverage area as a result of this change. Making these important changes came with the difficult decision to eliminate some positions. We recognize these changes are painful for individuals and for our organization — and we are committed to handling the people impacted with care and sensitivity.”

Patch is growing, according to comScore. In April, traffic was up 26 percent since last year to 13 million unique monthly visitors, who are consuming about 1.3 million pieces of content that are now being served up per month.

Still, Patch has attracted a level of investor pressure and criticism, even as AOL CEO Tim Armstrong has stuck strongly with the hyperlocal content effort and invested heavily in growing out a network of sites across the country aimed at neighborhood news and events.

But Armstrong signaled changes when he was queried about Patch during AOL’s recent quarterly call: “What you’re going to see as we approach Q4 is us trying to get to the finish line of profitability, and we will use all means possible to get there.”

Apparently, Armstrong means what he says and says what he means.

Here’s the memo:

Patchers,

Since the day Jon, Warren, and I founded Patch, we have had one mission in mind — improve the lives of people in local communities by 25 percent. Patch has become an important brand in the hundreds of towns we serve, and it is a staple of our communities. With the average Patch just over two years old, we are well on the way toward our goal of improving peoples’ lives and building a sustainable business in the process.

Over the past year, Patch has made an enormous impact in our communities. The coverage of the Boston Marathon bombings, the lifeline that Patch provided residents during the Sandy Hook school shootings and Superstorm Sandy, and the exclusive Sanford-Colbert Busch debate in South Carolina stand out as powerful examples. The new Patch platform that is rolling out now will only increase Patch’s ability to instantly improve communities.

As we have made a commitment to improve our Patch towns and communities, we made a similar commitment to make Patch profitable in 2013 and a commitment to continue to improve our business model. Just as we have rolled out new products and services to Patch, we are announcing today the rollout of the recently tested town structures, which will help us serve communities in a more local way and move Patch meaningfully toward profitability.

The changes have two main goals:

1. Improve and increase our hyper-local programming and deepen our user engagement through the Patch 2.0 platform; and
2. Implement a structure that unlocks the path to profitability.

To accomplish these goals we are taking the following steps, effective immediately:

We are combining the East, Central and West editorial zones to create a simpler structure that will enable faster decision-making and a more coordinated editorial effort across Patch. Anthony Duignan-Cabrera has been promoted to VP, Editorial Director, overseeing day-to-day editorial field operations, and will continue to report into Rachel in her role as Chief Content Officer.

We are streamlining our regional editorial structure across the country by moving from 20 to nine teams. We are not reducing our number of sites or our coverage area as a result of this change.

We are promoting Katie O’Connor to Director of Editorial Operations and Content Strategy. In this role, she will work with our editorial teams to help create new content and programming.

We are implementing a “team approach” for our sites, based on the success of our field tests earlier this year. This approach allows for flexibility based on the unique needs of each community and the strengths of editors.

Jon and I have decided to elevate Steve Kalin to the CEO position at Patch. Steve has done a fantastic job since he began at Patch in December as President and COO. Jon and I hired Steve with the thought that his extensive background in scaled, local platforms would eventually allow him to run Patch on a day-to-day basis.

Jon has led Patch since it was just an idea and helped scale it into one of the most significant brands in local communities in the U.S. Under his guidance, Patch has gained tens of millions of users and more than ten thousand advertisers; and it has covered millions of local stories. Going forward, Jon will return to AOL Ventures full-time and lead our push into several areas we have identified as significant future growth opportunities for AOL.

The changes we are making at Patch, however, come with the difficult decision to eliminate some positions. These employees have contributed greatly to Patch’s business with passion and dedication. We sincerely thank them for all they have done to make Patch what it is today. Their impact will always be felt here. We wish all affected employees continued success. They are truly Patchers for life.

This is an important time for Patch. We have many great opportunities in front of us, and we continue to make decisions to ensure Patch’s success. AOL’s Board of Directors and I remain firmly supportive of Patch and our mission. Together we are building a company for the long term, one that can grow and thrive — now and far into the future.

We will be having team calls today and a Patch All-Company call this afternoon at 6pm ET, to discuss these changes in more detail. I encourage you to join these calls. Keep an eye out for invitations to follow.

I want to thank you for your continued commitment to Patch and to serving your communities, and for staying focused on our goals. Patch is one of the fastest growing sites and brands on the Internet. We have the right plan, we have a great team, and I’m confident we can win together.

Keep going — TA

And Animoca couldn’t be happier about that.

Co-founder Yat Siu calls them “fast food apps.” His 150-person company, a conglomerate of 12 smaller studios, has developed and published more than 350 apps, he said, currently at the rate of about four every week. Its goal is to one day crank out a new app every day as it expands its reach further into Asia and beyond.

Siu, who is also the CEO of Animoca’s parent company, Outblaze Ventures, said as much in a recent interview with AllThingsD. But he also had a lot more to say about the advantages of working outside of Silicon Valley, the maturation of Google’s Android ecosystem and why quantity is sometimes better than quality.

AllThingsD: What’s the difference between being based in Hong Kong and being based in Silicon Valley?

Yat Siu: In terms of our [Android] ecosystem, it is the dominant marketplace, whereas in the Valley, there’s a lot of focus on Apple. We don’t have that much venture capital available to us, so we have to focus on profitability and the bottom line very, very quickly. Our games aren’t all profitable, but our business is. And we’re just a small island city, so we do not have a domestic market. It’s go global or die.

How do your games fare in different regions?

When we first started [in 2011], the U.S. was our biggest market, but just because it had a larger ecosystem. That’s changing today. North America as a continent is now in second place to Asia because Japan and Korea are driving a lot of the revenues. … The people who are buying iPhones or Android phones in the U.S. today are not the first movers, whereas in Asia, a lot of the marketplace still has way under 50 percent smartphone penetration rates. In Japan, at the start of this year, it was under 30 percent.

Is Android fragmentation a problem for you? Putting most of your eggs in that basket means you’re dealing with phones that range from the very low end to the very high end, right?

Two years ago, we had a testing rack of 600 devices. Now, Samsung is outselling basically everyone else, except in China and Japan. The second thing that’s different now is that “low end” is no longer really “low end.” You used to have really poor devices with poor resolution and processing power. Even the so-called “cheap” devices that are sold in China today are quad-core or dual-core devices; they just cost $100, is all. And they’re all standardizing around Jelly Bean (the most recent version of the Android OS). The whole Android philosophy was, “Here, take the operating system. Do what you want. Good luck!” We had weird memory issues because people would be coding stuff on top. Now, with Jelly Bean, most of the stuff that’s going on in the operating system is going on in the application side.

Pretty Pet Salon is one of the more popular games Animoca has published, and started a “Pretty Pet” franchise.

Tell me about your games and how they perform. How do you evaluate success?

We look at every product as a gateway to another product. The key driver is popularity. Monetization will come, we think, once people are in there, but the ability to cross-promote to other games becomes important. We want to make sure that the user always has at least a few of our games to play, because we don’t believe that there is such a thing as a person who can play a game for years and years and years. It’s “fast-food apps.” People just want to consume quickly, move quickly and go on to the next thing. It doesn’t mean that they won’t come back to it, but they’re not prepared to invest console-style, sitting down and playing for four hours.

And if you spent $60 on a game, you’re probably going to invest a lot more time than if you spent nothing or spent 99 cents.

That’s true, too, definitely. But also, with mobile, whether it’s in trains or one-handed game time, sometimes it’s just when you’re lying in bed, the behavior that we’re seeing now is that a person is playing a game, and then after five minutes, he wants to move on to another game. He’s not necessarily playing the same game for an hour. He’s like, “I feel like something else.” It’s no different than people switching TV channels every once in a while, except they’re switching games.

So it’s not as much of a “hits-driven” business for you as it might be for others?

It’s all relative. What is a hit? Because it’s a global audience, a niche segment is pretty large. And yet, if you have a five-million-user niche, is that a hit? It’s probably a hit for an indie studio, but it’s not a hit for us because of the scale we operate in. Typically, we call anything a hit if it has over 15 million downloads, but as a franchise, as a series. We might have one app, and then if it does well and has a few million downloads and reasonable revenues, then we put sequels and additions on top of it. Out of the series, we may wind up having something like 20 or 25 apps.

For those games that aren’t sequels to existing games, how do your studios come up with new things to publish?

We have studios that are as small as six people. The producer is empowered to have his own budget and his own creative vision. There’s a weekly meeting where all the producers come together and talk about what they’re doing, and then go off and do their own thing. The advantage for the business is, if you start off with a studio of six people and it bombs, who cares? It’s not great for them, but the business can afford to do it. If they do well, they have a platform.

The independence of our studio is also attractive to our staff. They have the chance to be a startup without the startup risk. They don’t have to worry about payroll or finance, they can focus on the product and build their own team. The additional unintended advantage is that, in Hong Kong, we’re unique. So, if you want to do games and you want to publish your games, then, frankly, there’s nowhere else to go. People come to us because the other option is banking or finance — which is a good career, just not if you don’t like it. If we were in the Valley, we might end up getting slaughtered by the amount of recruitment and loss of staff. Who knows?

But it’s worth noting that you do also maintain an office here in San Francisco for non-game development roles like partnerships and PR.

In the past, the meccas of the global gaming space used to be different. They used to be Sony, Nintendo and, at one point, Sega. But it was never centered around Silicon Valley. That changed with the smartphone. Now the new mecca is the Bay Area, because Google Play is here and Apple is here. We have an office here because we have to pay homage to the new temples. Even though we’re not in the Valley, it’s absolutely required for us to go in. Every other app company that’s international that wants to succeed must do the same.

Almost all of your revenue, about 95 percent, comes from in-app purchases. Are you looking at other business models?

Advertising will come, but it is not dominant yet. Primarily, the buyers for that now are other app companies, and we’ve got our own network. If we focus more on our cross-promotion, we get more out of that than necessarily opening up inventory to everyone else. Right now, ads are generally low-quality, and they’re also spammy, so it’s a bad user experience. But that will change. The experience is there already — think about how much time you’re spending on mobile versus PC — but [ads] have to deliver value to the user. Facebook has the right idea. People who like casual games, you should really only show them other casual games. Today, the targeting doesn’t exist.

What does your conversion rate of non-paying to paying players look like? The typical curve has a lot of people at the bottom paying nothing or almost nothing, then a long tail with a bump at the end, composed of a small number of players who pay a lot.

That is the hardcore type of model, where basically you have a very low conversion rate, something like 2 percent, and a very high consumable model where people can spend thousands of dollars. That’s not our model. If you look at games like Pretty Pet Salon, you’d be hard pressed to spend more than 20 bucks, just because of the game play. We are expecting to have more volume of titles with a larger frequency of players coming in from outside. So, for instance, Pretty Pet Salon has an 8 percent conversion rate. Now, when we start working with Forgame (Animoca recently accepted a “strategic minority investment” from the Chinese hard-core game maker), that is different. We will listen to their suggestions, and it does appear that that will be the strategy, because people are prepared to spend that kind of money. It’ll be a learning experience for us.

The move is meant to regain the trust of Bloomberg’s terminal clients, like J.P. Morgan and Goldman Sachs. They’re understandably perturbed by revelations that reporters at Bloomberg News used a function that tracks how recently a client has logged in as a way of generating story leads about personnel changes.

Palmisano, Bloomberg said in a statement, will “immediately undertake a review of the company’s current practices and policies for client data and end user information, including a review of access issues recently raised by the company’s clients.” He’ll report directly to the company’s board of directors. Helping him will be the Hogan Lovells law firm and the Promontory Financial Group.

One wonders if part of the job will be to conduct a full audit of how many reporters used the controversial “Z function” to view client activity, how often it was used and what the result was, specifically if its use led to stories that were published. As I wrote earlier this week, that data probably exists, because Bloomberg has always been a big data company with a knack for keeping track of what its reporters do. And if there is an audit, will its results be publicly disclosed?

The function in question showed two bits of data that have made Bloomberg clients — essentially the who’s who of Wall Street and the financial industry in general — a little queasy. First, it reveals the last time a person logged in to his or her terminal. Reporters would sometimes use that to start asking questions about whether or not someone had left a given firm, and, if they had, write a story about it.

The other thing it was said to show is how often a client used a given function, though not in such granular detail that you could see what stocks or bonds were being researched. But again, it’s the sort of thing that might lead to questions that wouldn’t otherwise be asked, and eventually to stories that wouldn’t otherwise have been written.

Bloomberg also named its editor at large, Clark Hoyt, a former public editor at the New York Times, to review the relationship between Bloomberg’s commercial operations and its news operations.

(Of course, in the interest of full disclosure, I should remind you that for about a year during 2009-2010, I was an employee of Bloomberg News after the company bought BusinessWeek magazine from the McGraw-Hill Companies and relaunched it as Bloomberg Businessweek.)

For now, there’s no reason to worry about surreptitious Meta usage in bars and locker rooms.

The latest is Meta, an immersive 3-D headset layered on top of the real world. Meta wearers can interact with virtual games, architectural renderings and other 3-D objects by using their hands. The device captures gestures with an outward-facing camera (similar to Kinect or Leap Motion).

Meta launches on Kickstarter today, and is also announcing that it will be participating in the next Y Combinator batch out in Mountain View, Calif. Backers who commit $750 will be promised an early version to be shipped in September of this year.

Meta is a young company developed primarily by a Columbia University undergrad student and his adviser, with 12 more employees recently hired. But it is getting a leg up through compatibility with widely used 3-D game-engine maker Unity Technology, and it has a hardware partnership with Epson, and it aims to get devices to buyers this year. (Correction: An earlier version of this story said Meta already had a partnership with Unity. It does not currently.)

Meta will support the popular Unity 3-D software, so other developers will be able to build applications in an environment where they’re already comfortable. A developer kit is available today.

A Meta rendering shows a wearer adjusting 3-D landscaping in front of a virtual building.

If Google Glass brings your phone to your face, Meta aims to bring the computing power of a PC to your face, said Meta founder and CEO Meron Gribetz. “Before you can have the phone, you should have the PC,” he argued.

The “meta1” is not pretty; it definitely looks like a camera mounted to giant wraparound stereoscopic glasses. But it does seem like it’s at least close to working. Yesterday, I briefly tried a demo version that was tethered to Gribetz’s laptop, and there seemed to be minimal latency between me wiggling my fingers and moving my hands farther and closer to interact with the virtual spaceships and hovering balls I was seeing.

Gribetz said he is launching the Kickstarter campaign primarily to build awareness of the device, so he set his goal at a relatively low $100,000 in order to sell a few hundred or a thousand of them.

On May 9, a day after the company posted its first-ever quarterly profit, the stock exploded higher in heavy trading. Ms. Baiynd, a full-time short-term trader since 2006, pounced. From her home office in Charlotte, N.C., the 48-year-old says she scooped up shares at $67.15 and sold them on Monday for a 31 percent gain.

The very next day, Ms. Baiynd changed tack, she says, successfully betting Tesla would head lower on a day when the shares finished down 14 percent from their intraday high.

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In announcement issued Friday morning, the agency said it has granted iOS devices running iOS 6 FIPS 140-2 certification and STIG approval, granting them the same security clearances it issued to BlackBerry and Samsung last week. A crucial endorsement, and one that should open the door to lucrative contracts from customers in highly regulated industries like healthcare and finance.

Certainly, Apple views it that way and used DOD’s announcement to plug the inroads its iOS devices have been making in enterprise lately.

“With iPhone and iPad being tested or deployed in almost every Fortune 500 company, Apple continues to scale across enterprise with nearly 30,000 companies globally developing and distributing iOS apps for corporate use by their employees,” Apple spokeswoman Trudy Muller told AllThingsD. “The FIPS 140-2 certification and STIG approval demonstrate our ongoing commitment to deliver a secure platform to our enterprise and government customers around the world who deploy iOS devices on their networks.”

The London-based financial newspaper (and competitor to The Wall Street Journal, which, like this website, is owned by News Corp.) saw both its main website and several Twitter accounts attacked, according to a report by another British newspaper, the Telegraph.

As of 10:30 am ET, Twitter accounts belonging to the FT’s Lex column, its tech news section and a few others were all suspended.

But this attack was a little different from the more recent moves by the pro-Assad group. Lately, they’ve stuck to attacking the Twitter accounts of Western media organizations including CBS, the BBC, the Guardian and the Onion. This time, they actually attacked the main website, as well, and left headlines announcing that they had visited.

Zach Seward of Quartz.com nabbed a screenshot, which he shared on Twitter:

Syrian Electronic Army appears to have hacked the Financial Times tech blog http://t.co/M2RAVhgDP3 @fttechnews http://t.co/A3r2JVuZWm

May 17, 2013 5:03 am via webReplyRetweetFavorite

@zseward

Zach Seward

But if you want to make the “pro” case for the deal, here’s how to do it: Pretend that Yahoo is Facebook, and Tumblr is Instagram.

The Facebook/Instagram deal is just over a year old, which means it’s still pretty early to gauge it. But so far it seems to have worked perfectly.

Facebook promised that Instagram would operate autonomously after the acquisition, and from the outside it appears to have kept that promise. People who read sites like this know that the two companies are linked, but lots of other people don’t, which is a huge plus for Instagram. (See: Parents who won’t let their kids use Facebook, but are okay with Instagram. For giggles, tell them the two are owned by the same company, and watch their faces turn ashen.)

And we’ve yet to see Instagram clutter up with lots of ads — or any ads at all. Result: The app is still growing like a weed, which helps mollify critics who worry about Facebook’s inevitable slowdown.

So that sounds like a pretty good model, right? Can Yahoo do the same thing with Tumblr?

Maybe. Tumblr is a much more mature company than Instagram, with a much bigger infrastucture. Kevin Systrom had about a dozen employees when he sold his company. After keeping his staff super lean for many years, David Karp has been on a hiring spree, and Tumblr’s head count is on track to hit something like 200 this year, with its own sales staff. So it will be harder to just tuck that away in the Yahoo org chart.

The crucial difference between the two scenarios, though, has less to do with the seller than the buyer.

Facebook bought Instagram because Mark Zuckerberg wanted to remove an obstacle. If Marissa Mayer buys Tumblr, it’s because she’ll be looking for a boost.

That makes it much less likely that she’ll be able to resist leaving Tumblr alone, and letting it figure out how to sell ads. Zuckerberg can drop a billion (or so) on Instagram, leave it unmonetized for a year, and Wall Street shrugs. Hard to imagine investors reacting the same way to this one.

Look out Facebook! Hours spent participating per member dropping seriously. First really bad sign as seen by crappy MySpace years ago.

– Rupert Murdoch, still steamed about that whole MySpace thing, tweets a warning to Facebook

The bigger of today’s two is Tableau Software, which specializes in data visualization. Yesterday, the company announced that the shares priced at $31, raising north of $254 million in the process.

The company will be listing on the New York Stock Exchange with the ticker symbol DATA. Goldman Sachs and Morgan Stanley are running the deal. Credit Suisse, J.P. Morgan, UBS Investment Bank, BMO Capital Markets and JMP Securities are also underwriting.

Tableau’s biggest shareholder is the venture capital firm New Enterprise Associates, which led two investment rounds for a combined $15 million, the last being a $10 million series B in 2008 in a deal led by Forest Baskett. NEA’s stake amounted to about 37 percent before the sale, worth more than $607 million at the share offering price.

Founder and chief scientist Pat Hanrahan has about 18 percent of the company, worth about $295 million at the offering price. His co-founders — Christian Chabot, chairman and CEO, and Christopher Stolte, chief development officer — have about 15 percent each, with both stakes worth north of $235 million. Meritech Capital Partners has a stake amounting to about 6.5 percent, worth more than $102 million at the offering price.

The other one going today is Marketo, the cloud-based marketing software company. Market price yesterday was at $13 a share, raising almost $79 million. It will trade on the Nasdaq under the symbol MKTO.

Goldman Sachs and Credit Suisse are leading the offering. UBS, Canaccord Genuity, Raymond James and JMP Securities are also underwriting.

Marketo’s biggest shareholder is InterWest Partners, which prior to the sale had a 33.3 percent stake worth more than $302 million. Storm Ventures has a stake of a little more than 17 percent, worth $66 million. Battery Ventures, which led a $50 million Series F in 2011, has a 7 percent stake, worth about $28 million.

Only in the past few years has the Central Intelligence Agency issued standardized guidelines on how to use social media, according to one former intelligence official. The line these guidelines draw appears to be thin: Revealing too much on Facebook and Twitter risks tipping too much to the other side. But given that social media use is becoming ubiquitous, revealing too little could also arouse suspicion.

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Research outfit Raymond James says that the debut of BlackBerry’s new BlackBerry 10 operating system and the two handsets on which it runs have gone a long way toward repairing the home-turf market share erosion the company has suffered over the past few years. In the fourth quarter of 2012, BlackBerry’s share of the Canadian market topped out at a dismal 6 percent. But by the first quarter of 2013 it had more than doubled, rising to 13.5 percent.

The reason? The BlackBerry Z10, the company’s new all-touch handset — one that finally gave it table stakes at the smartphone game from which Google and Apple had ousted it. The Z10 had a strong Canadian launch, according to BlackBerry, which said the device’s debut was more than 50 percent better than any other launch day in its history in the country. Evidently the device has retained enough of that early momentum to drive continued market-share gains.

And now, with BlackBerry’s second BB10 handset — the Qwerty-keyboard Q10 — recently introduced in Canada, the country’s largest technology company may be poised to reclaim even more ground in its homeland.

“I think the Q10 will see much better demand than the Z10, as I have to believe the primary reason users are still on BlackBerry is for the physical keyboard,” Raymond James analyst Tavis McCourt told AllThingsD. “That being said, a lot of that demand may get stretched out over a few quarters, as it will take time for enterprises to adopt BlackBerry Enterprise Service 10, which is needed to support the Q10.”

Make no mistake, these days Canada is more an iPhone nation than anything else — Apple’s smartphone claimed 40.1 percent of the market in the first quarter of 2013. But that’s down from the 44 percent share it captured in the fourth quarter of 2012. If that trend continues, maybe BlackBerry can reclaim not only the market share it lost in the country, but its national pride, as well.

As Andrew MacLeod, BlackBerry’s managing director for Canada, told the Financial Post earlier this: “Canada is incredibly important to [us.] It is our home market, but it is also a very strategic market for us. We are very strong here, and I think we have a very unique relationship here with Canadians, that we treat with an endless amount of respect, attention and resources.”

Ms. Powell Jobs has ramped up her years-long crusade for the Dream Act, which would give citizenship to young people who were brought to the U.S. illegally. She says she also wants Congress to pass “common-sense immigration reform” for the nation’s 11 million undocumented immigrants. She has commissioned polling, lobbied Congress, urged President Barack Obama to take action and funded a documentary about undocumented youth.

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I came to realize that there was a real need to present business wisdom in a format that is more accessible to the younger generation. It was with this in mind that I spent a week in LA earlier this month recording Hardly Workin’, a seven song album of motivational business music targeted at people newly entering the workforce.

– Andrew Mason, in a personal blog post about what he’s been up to