Let’s be clear on the much-awaited Asian deal that Yahoo and its Asian partners have been working on: While it is certainly still moving forward, once signed, it will not actually officially close until next year.

Yes, that’s right — 2013!

Still, what everyone and his investor is waiting for is the splashy announcement of the agreement, which involves the Silicon Valley Internet giant, China’s Alibaba Group and SoftBank, a large shareholder in Yahoo Japan.

Yahoo leadership has been hoping that could happen before Feb. 24, an important date after which activist shareholder Daniel Loeb could begin to mount a proxy fight against the current board.

And while the definitive agreement — involving the sale of Yahoo’s 33 percent stake in Alibaba and 35 percent stake in Yahoo Japan — has been moving back and forth among the dealmakers, one source said its completion might take a little longer than that, perhaps even into mid-March.

“It is one of the most complicated cross-border transactions in a long time,” said one person close to the situation. “It’s three different languages, three time zones and three companies that have not always seen eye to eye.”

It’s not that the companies don’t have the top talent on the effort. For Yahoo, it is CFO Tim Morse (who most recently also warmed the CEO seat, until Scott Thompson’s recent appointment); for Alibaba, it’s CEO Jack Ma and CFO Joe Tsai; and, for SoftBank, it is top man Masa Son and his top man Ron Fisher.

To make things even more complex, at the same time as the negotiating is going on, the trio also has to pay mind to how the Internal Revenue Service in the U.S. is going to view the whole deal.

As you can see here from a Wall Street Journal chart, it’s a pretty complicated “cash-rich split-off” to avoid taxes.

While the IRS cannot take an application for a “private letter ruling” until it has an actual agreement in hand, and will not issue one on a hypothetical transaction, the agreement still must be crafted so it is most likely to pass muster.

And only then can anyone move on to the many billions of dollars that Yahoo will instruct Alibaba and SoftBank to pay or contribute in kind for the asset part of the arrangement.

As the Journal noted, in more clarity than I ever could: “A key part of satisfying tax-code requirements is that the company shedding its shares get assets, not just cash, in exchange for them. Cash can’t account for more than two-thirds of the transferred value, tax rules say. This restriction was adopted in 2005 to limit misuse of the provision.”

While Yahoo’s execs have met about the various possibilities, it is more considering now than anything else.

And although a lot of names have been bandied about — Weather Channel, WebMD, as well as Glam Media and even Digg — the more likely direction Yahoo will go in will be different, according to many sources.

First, said sources, the key criteria for the purchase will be to diversify revenue streams, a theme Thompson sounded in his first earnings report recently. That could mean more online commerce, perhaps, rather than advertising or media assets.

Second, said sources, international properties might be more valuable to Yahoo than owning more U.S.-based ones, which opens up a range of interesting possibilities.

This could even include some already held by Alibaba, for example, such as garnering a big stake in its publicly-traded Alibaba.com. Technically, via Alibaba, Yahoo already owns some of the e-commerce giant, but not directly. Another possibility is to get back the Yahoo China business, also now owned by Alibaba.

Third, U.S. companies that Yahoo might look at could be unusual and even bold. Two names brought up in recent internal meetings, for example, were Netflix (before its stock revived) and Yelp (which is prepping for an IPO, and which Yahoo once tried to buy already).

And if things were not already needlessly complex in fixing its Asia problem, expect a change in the Yahoo board composition, too, as early as this week.

As I previously reported, at least four directors are expected to move on. More to the point, there will also be replacements announced at the same time.

To stave off Loeb and even give him a perceptible win, sources said the company is considering announcing the changes sooner than later, with the hope that fresh new members will placate other shareholders.

Lastly, with Thompson starting to take the reins after a month there, I would also expect he’ll weigh in on some significant restructuring (his word, not mine!) at Yahoo soon enough, too.

Complicated? Sure is! Perplexing even? And how! But until Asian and board resolutions, the real work of fixing Yahoo can’t really begin.

As the father of eight kids — now all between the ages of 12 and 21 — he knows a thing or two about the importance of finding the perfect place. (Note: Kaufer delicately calls family trips “adventures,” while getaways with his wife are “vacations.”)

Since then, TripAdvisor has become the online go-to destination for reviews of hotels from Barbados to bed-and-breakfasts in New York City.

In 2004, Kaufer sold the company to IAC for $210 million, setting off a somewhat complicated operating journey. A year later, TripAdvisor spun out of IAC as part of Expedia. It remained a division within the online travel agency until last month, when it broke off into an independent publicly held company.

Today, the Newton, Mass.-based company has 1,100 employees, attracts more than 50 million unique visitors and has published more than 60 million reviews. It trades on the Nasdaq under the ticker symbol “TRIP,” while Expedia continues to trade under the symbol “EXPE.”

Kaufer talked to AllThingsD about being an independently traded company, and about the media company’s prospects for growth:

AllThingsD: What is it like to be out from under Expedia’s wing?

Stephen Kaufer: There was a joke when we were spun out as part of Expedia from IAC. People asked me, “What’s your vision for TripAdvisor?” I would always say, “I want to be bigger than Expedia,” and people’s response always was, “That’s what the little brother might say.”

A year or two ago, we passed Expedia in comScore metrics, and are still experiencing growth. It’s a free service that’s valuable. It’s worldwide. TripAdvisor is in 21 languages, and three-fourths of the traffic comes from outside of the U.S.

Now that you are out from under Expedia, do you have more flexibility on where you send leads that are generated from people reading reviews on TripAdvisor?

Under Expedia, we had no obligation to send traffic to them … That never happened, and we were allowed to run independently. But at the end of the day, they [competitors] knew their marketing spend was going into Expedia’s pocket. That’s the most exciting thing. We are now completely independent. Expedia now owns no stock, so when I talk to Orbitz or Priceline, these folks can now partner with TripAdvisor without any hint of helping to fuel the competitors.

Why the spinoff now?

It was announced back in April, but basically there was a view that there was a class of investors that liked a pure Internet category leader and a fast-growing media company like TripAdvisor, and there’s another class that appreciates Expedia, which is in the dominant online travel agency position.

We were blurring the two when they were together. It gives Wall Street the opportunity to invest in either, and each company will find its own set of investors.

Do you think Wall Street is correctly valuing TripAdvisor? (The stock failed to come roaring out of the gate.)

No. But I’m not complaining. I think Wall Street, over the next couple of quarters, will appreciate how both companies perform as independent companies. The numbers have been a little hidden because they were jumbled together. … They’ve never seen TripAdvisor operate independently. They ask, “What will you do differently? How will things be the same?” Watch us, and I think you’ll like what you see.

Will you grow mostly organically, or through M&A?

We have a good track record on acquisition and product innovation.

The last few acquisitions, you saw a focus on our strategic priorities: A mobile company, a social company, two vacation rental companies and a company in China. Our four key investment areas that we called out are vacation rentals, mobile, social and geographic expansion.

In many ways, TripAdvisor was one of the original social networks, where users shared information on their vacations. Now you see Facebook getting into the space with Facebook Connect and other initiatives, too.

Everyone feels like being able to get travel recommendations from their friends is a natural evolution for getting a better recommendation, period.

There’s a couple of different angles. Some social travel companies are focused on making planning a group trip easier. No site out there has scale and does that well, and we don’t do that now. Facebook is a great platform to do it on, and it may be interesting to us in the future.

Our focus is leveraging the friend graph on Facebook and our rich content to give someone the experience of seeing recommendations or ratings from friends.

We love the concept, and we are furiously building up our own product offering to make it more valuable. If it’s not too early to call someone a leader, we are clearly it, because we have the content and the friend graph. We aren’t a site that’s based on Facebook, which is an advantage, because you can do anyting you want to do on the Web or the tablet or mobile.

What about Google moving into travel?

They have a couple of different approaches. They have Google Places, which reviews everything; and they have Google Hotels, which is a hotel finder; and then Google Flights, to help you find the best fare.

With Google Places, they still can’t seem to generate enough high-quality reviews to be useful. They compete with Yelp and us, and I’ve yet to be concerned. I was concerned about Google Flights — a lot — before they launched, but you cannot book through an online travel agent like Expedia — only directly through the airlines for now.

It’s an incomplete product, so I still use TripAdvisor flights, or go to Expedia or Orbitz. They get better results, and maybe aren’t as fast, but more information is still better.

They say they want to include online travel agents, but the airlines won’t let them. … Don’t mistake my tone for being sympathetic to Google on this one.

What about vacation rentals? HomeAway went public last year.

After HomeAway, there’s not that much.

We agree it’s a great market, and it deserves to be online. It helps consumers and there’s a need to bring a trust element into the equation. Folks who have tried it have liked (renting homes), and a whole lot of people haven’t tried it, because a hotel is all they’ve ever tried.

If they are reading hotel reviews, but I see that you are trying to stay seven nights in Orlando, I might say, “Did you know that you might be able to save money and get a private swimming pool?” They never would have thought of that as an opportunity, but there’s lots of great opportunities in Orlando and tons of other cities.

HomeAway dominates the category, but there’s plenty of room for a second, third and fourth.

I’m surprised that already three-fourths of your traffic comes from outside the U.S.

Yes, and that portion is growing. We have offices all over the globe, and our biggest investment opportunity is in China. We purchased a metasearch site for air, hotel and train in China. We view international growth as a tailwind to the business.

So what’s your price target for the stock? It’s currently trading around $25 a share.

I’m looking at how I can grow the business over the long term, and that’s why we are making some of these investments. I might be ahead of it, or other folks ahead of me, but I’m a nuts-and-bolts operator. I like to build stuff, and getting TripAdvisor to the next level of functionality and awareness is my priority — not the stock price.

The partnership understandably ended once Microsoft’s big search rival, Google, acquired The Dealmap in August.

“We can confirm that Bing is no longer partnering with The Dealmap and is now partnering with local and daily deal aggregator 8coupons,” a Microsoft spokesperson said. “We’re excited about the partnership with 8coupons and to be able to offer our customers access to great deals and discounts from across the Web — all in one place.”

A spokesperson for 8coupons also confirmed the partnership, adding that it started to replace The Dealmap a couple of weeks ago.

Rather than build a Groupon copycat as Google and Amazon have done, Microsoft has decided to partner with an aggregator that collects offers from various providers around the Web. Deals delivered by 8coupons come from Restaurant.com, Yelp, LivingSocial and GiltCity, among many others, as shown on the Bing Deals homepage.

Google’s purchase of The Dealmap was relatively small, especially compared to its failed $6 billion offer to buy Groupon. So far, The Dealmap is being used for the underpinnings of a pilot project that Google Offers has rolled out in the Bay Area.

In San Francisco, Google works with more than a dozen deal providers so that it can offer a variety of deals every day. It believes that in order to have relevant offers for all types of consumers, you need a lot of good deals, not just one a day.

For context: In Silicon Valley, you often find fabulously wealthy people going back to the drawing board — hoping for another strike of genius so they can prove they’re good instead of lucky. So-called “serial entrepreneurs” are an exalted local species, and everyone wants to be one.

Here are some of the latest efforts on that front, all of whom seem worth keeping an eye on:

1. Yelp co-founder Russel Simmons, who left the local reviews giant a year and a half ago, is working on an education project called Learnirvana.

It looks like Learnirvana’s first product, Lentil, just came out. It’s a Web tutor program that helps users learn the capital cities of the world or to read Japanese through constant quizzing. The interface is simple and unassuming, and had me recognizing some basic kanji within a few minutes.

A source said Simmons has been dreaming up this kind of product since before Yelp started. Simmons did not respond to requests for comment.

Yelp filed to go public last month.

2. YouTube co-founder Jawed Karim, who left the company in its early days to finish grad school (but still made tens of millions of dollars when it sold to Google), has created a travel photography site called Fotons.

Fotons’ “about” page says: “Our mission is to create the best collection of great photos from around the world. With your help we aim to catalogue every notable country, city, building, river, stadium, statue, castle, library, zoo, island, river, cave, volcano — you name it.”

Users are told that they can only upload photos they have taken themselves, and that each picture must be at least 1,600 pixels wide or tall.

Karim said over email that Fotons “is in the middle of some big changes.” In other words, he warned not to look at the current site as a fully baked product. But that doesn’t mean it’s not usable now.

(It should also be noted that both Simmons and Karim worked at PayPal in the early days, and as such are part of the “PayPal Mafia.”)

3. Lastly, and perhaps the most vaguely, 23andMe co-founder Linda Avey — who left in 2009 to start a foundation focused on Alzheimer’s research — has a new company called Curious.

Curious has a only landing page for now, but a source said the company is working on topics around monitoring and sharing personal health information. Avey did not respond to a request for information.

Based on public posts, it seems Curious has three co-founders: Avey; Mitsu Hadeishi, who was previously at DonorsChoose.org; and early blogger Heather Anne Halpert.

Now in the age of everything-on-the-Web, that information is usually obscured by multiple listings, and then once you find the right listing it’s often inaccurate or outdated. Local businesses open and close and expand so quickly that it’s difficult to keep track, and any two sites listing information on a given business can contradict each other.

A start-up called Yext is out to fix that with a service it calls PowerListings Turbo. The basic idea is this. Say you’re a sandwich shop in the West Village that wants to get listed on Yelp and HopStop and Yahoo and Superpages and a handful of other sites where hungry customers might be looking for you. You send your info to Yext, including photos and maybe an opening special, and Yext gets your listing on all those sites.

Now fast forward a few months. Say a better location opens up a block away and you jump at the chance to move because it’s closer to the subway stop. You move. All that listing info is out of date. Don’t worry. Send Yext the updated info including the new address and within minutes all the listings on all those other sites get updated, too.

CEO Howard Lerman demonstrated it for me last week and said that one in every five searches for business information returns inaccurate data. And the problem gets only further compounded when you’re a big company with hundreds or thousands of locations. Update a location once with Yext and it’s taken care of within minutes across whatever other sites it may be listed on.

Yext works with 36 different sites that host business information and so far is the platform behind 35,000 different listings. The New York-based company has been around since 2006 and has investments from Sutter Hill Ventures, Institutional Venture Partners and WGI Investments, and has raised about $39 million in four rounds.

The company, which offers user-generated reviews of businesses through its website and mobile apps, is seeking to float its shares as a wave of similar social-media companies goes public.

Read the rest of this post on the original site »

Now, the company will face its own public scrutiny, starting as soon as Thursday.

According to IPO watchers, the Indianapolis-based firm is one of nine companies that are anticipating going public this week.

Earlier this month, Angie’s List said it planned to sell about 8.8 million shares at $11 to $13 apiece to raise as much as $114 million. Including overallotments, that could increase to $131.5 million.

At the high end of its price target, the company will be valued at $722 million, based on 55.6 million outstanding shares after the offering.

The company will trade on the Nasdaq market under the symbol ANGI.

Angie’s List is similar to Yelp in that consumers use it to review services, ranging from home improvement to physicians. However, you must be a paying member to read the reviews.

The company, which estimates it will bank $66.4 million to $81.1 million in the IPO, will spend the proceeds on advertising strategy to drive membership growth and for general working capital.

Angie’s List charges $6.80 a month to receive both home and health and wellness reviews, plus an additional $10 sign-up fee. If users sign up for a year or more, the sign-up fee is waived. One year costs $62.40; four years costs $164.80.

Yelp is reportedly working with bankers and is moving closer to an IPO next year.

In the past several weeks, founders of San Francisco-based Salesforce.com Inc., Twitter Inc., Zynga Inc. and Yelp Inc., along with several investors in those companies, have contributed thousands of dollars to try to keep interim mayor Ed Lee in office. They support Mr. Lee’s policies that have shaved millions of dollars from some Web companies’ tax liabilities in an effort to ensure they remain based in the city.

One high-profile result of their effort is an online video that appeared last month and that has since gone viral. It features San Francisco Giants pitcher Brian Wilson and musician and Bay Area native MC Hammer singing to the latter’s 1990s hit “2 Legit 2 Quit,” with new lyrics that endorse Mr. Lee.

Read the rest of this post on the original site ’

The former DoubleClick executive, who sold his company to Google for $3.2 billion, had his pick of high-profile jobs, but instead has landed at a company most people probably have never heard of.

You can be sure that between Rosenblatt’s appointment and an injection of capital from Benchmark, that’s about to change.

Both Rosenblatt and Benchmark’s General Partner Matt Cohler will join the company’s board. Neither 1stdibs nor Cohler would disclose details of the investment.

In an interview, Rosenblatt told me that, unlike DoubleClick, this is not an advertising play.

“What was exciting to me about DoubleClick was that it was an opportunity to usher an industry into the digital age,” he said. “I think we have a comparable opportunity here at 1stdibs in the luxury marketplace. That’s what gets me excited about it. It’s not an ads business.”

The company’s obscurity in tech circles did not dissuade Rosenblatt from the opportunity.

“I have never come across a company that is as unknown among the Internet crowd, but is known as well as it is in its vertical,” he said.

Rosenblatt quoted from a Bain & Company study to highlight the size of the opportunity. It found that only three percent of luxury spending was spent online as of 2009, even though the market size totaled $257 billion in 2010.

Already, Rosenblatt said, 1stdibs’ gross merchandise volume of goods (the value of goods sold by dealers on the site) was set to exceed $500 million in 2011. He said the average price of each item sold is $5,000, which sets it apart from other luxury players, like One Kings Lane and Gilt Groupe, both of which are focused on offering daily discounts for items.

1stdibs plans to expand into more categories and geographies for growth. It has already gone beyond furnishings to real estate, fashion, fine art and jewelry. The company is a marketplace, so it makes money by charging dealers a listing fee to post items on the site. Currently, it has 1,200 dealers, who sell 6,000 items a month. Because dealers and sellers connect directly, similarly to eBay, 1stdibs does not stock inventory or have to manage warehouses.

Rosenblatt said he discovered the company through Benchmark’s Cohler.

Cohler said he learned of the site through his brother, a well-respected interior designer who was helping him decorate his house.

Cohler said that countless items in his house were found on 1stdibs. “I was astonished to see how incredibly powerful it was,” he said.

Ironically, Cohler was able to close the investment with 1stdibs and recruit Rosenblatt faster than it took to redecorate his house, which “is never really done,” he joked.

Cohler said that Rosenblatt’s appointment will lend the company the operational expertise it needs to scale a large Internet company. “I don’t think there’s anyone better in the world to take the company forward,” he added.

The 1stdibs marketplace was founded in 2001 by Michael Bruno, who had the goal of bringing the Paris flea market — famous for its one-of-a-kind items — to the Internet.

Bruno, who Rosenblatt calls a charismatic entrepreneur, will continue to play an active role at the company by working on strategy and consulting directly with customers.

Rosenblatt will continue to sit on the boards of Group Commerce, Twitter and IAC.

In the month of September, Yelp said it registered 8.5 million visitors on its mobile Web site and iPhone, Android and Blackberry applications.

It said nearly 60 percent of that traffic was coming through its apps, but the remainder was from visits to its mobile Web site. To help those users, Yelp is updating its site today with a better design.

However, Yelp’s mobile visits are likely to spike in the coming months due to a new partnership with Apple.

Earlier this month, Apple announced it was integrating sites, like Yelp and Wikipedia, into its voice-activated service, called Siri.

In his recent review of the phone, Walt Mossberg had this to say about it:

Siri can find information in Wikipedia, Yelp and Wolfram Alpha. It successfully answered when I asked it, “Who’s the president of Iran?” (though it misunderstood me the first time) and “Who stars in ‘Boardwalk Empire?’” When I asked for a “French restaurant in Bethesda, Maryland,” it instantly returned a list from Yelp, ranked by user reviews.

Yelp will still have a long way to go, however, before a majority of its visits come from mobile.

Compared to the 8.5 million mobile visits in September, 54.5 million visits were made to its traditional PC site.

Mobile apps often don’t deliver the full experience of social and user-generated Web sites, given how much content they need to deliver, the constraints of the small screen and the different expectations for mobile participation. For instance, the Wikipedia iPhone app is read-only; Yelp doesn’t allow users to write full reviews from its apps; and Facebook doesn’t fully support some more complicated features, like photo tagging, from mobile devices.

Development of the Quora iPhone app was focused on delivering speed and supporting content consumption, and on inspiring lots more local questions and answers, said Quora co-founder Charlie Cheever in an interview this week. (See the map view with local questions pictured below.)

The normally quiet Quora considers the iPhone app its biggest new launch since its Web site, which went live to the public about a year ago and has been incrementally improved since.

Quora execs wouldn’t share anything terrifically informative about their progress, like traffic or user numbers, but noted that on the topic of local content, their largest userbase by location is now New York City. That’s important because Quora is often dinged for its Silicon Valley-centricity, a criticism people at the company said is becoming less valid.

Cheever said that he expects Quora’s next mobile effort will be an Android app.

Ready, aim, fire — at Google at the Senate Judiciary Committee’s antitrust subcommittee hearing happening right now in Washington, D.C.

It is titled: “The Power of Google: Serving Consumers or Threatening Competition?”

Here we go:

11:04 am: As usual in D.C., the Senators on the committee get to pontificate first.

Oh, joy! (I used to live there and cover Congress stuff for the Washington Post from time to time and I am having bad déjà vu right now.)

A quick cut to Google Executive Chairman Eric Schmidt, who is appearing alone. He looks a little peaked, especially as the pols begin to describe the scary behemoth the search giant is.

And also that it is trying to force users to its other products.

Rut-roh.

11:07 am: Sen. Mike Lee, the Republican from Utah, who is a Google critic, is talking on about the search giant’s power, reading from his testimony in a dullish style.

I thought this dude was a Tea Party firebrand!

“The primary focus should be consumer welfare,” he says, blah, blah, blaaaaaaah.

11:09 am: Now, the subcommittee’s dour chairman, Sen. Herb Kohl from Wisconsin, is introing Schmidt, who is actually being introed by California Sen. Dianne Feinstein.

She is an Eric fan, obvi, praising his accomplishments at Google. But she also gives props to Jeffrey Katz, CEO of Nextag, who is testifying against Google later. Also, let her add, is the fabulous CEO of Yelp, Jeremy Stoppelman, another anti-Google speaker to come.

“I hope they tango rather than tangle,” says Feinstein inexplicably about those called to testify. Hey, white geeks can’t dance, although wrestling would also be hard for them too.

In any case, gotta love these everybody-loving pols!

11:14 am: Finally, Schmidt, who — of course — starts off invoking the last big tech giant who was here getting spanked by Congress.

Schmidt does not name Microsoft — classy, by which I mean not at all — but is referring to the software giant.

“We get it,” he says about the lessons Google has learned from Microsoft’s own antitrust troubles back in the day.

11:18 am: Schmidt is talking about Google and saying he welcomes the competition.

“Today it’s Google turn in the spotlight,” he says, still not uttering the word “Microsoft,” much as Microsoft execs have often not been able to say Google. “One company’s past [should] not be another company’s future.”

Now, the senators can have at him. Kohl is up first.

11:20 am: The first question is if Google is favoring its own products, via search.

Schmidt harkens back to what he calls early Google lore that it is just trying hard to get consumers stuff quicker.

The need for speed!

“Is really trusting Google to do the right thing sufficient?,” asks Kohl, who quotes former President Ronald Reagan’s famous line: “Trust but verify.”

That gives Schmidt the chance to talk about how quickly Google could lose out to competitors and then is onto how hard it is to do what Google does.

It takes extra-smart smartypants. Trust us, he says, as we are smartier!

11:24 am: Kohl comes back with a damning quote from Google’s famous Marissa Mayer, who apparently has said that the company favors its own products and why not?

Schmidt says he was not there when she allegedly said this, but that its own testing and intuition tells Google if consumers want a Google map or whatever tout de suite!

Kohl repeats the Mayer quote again: “We do all the work for the search page, so we put [a Google Maps link] in first.”

“I will let Marissa speak for herself,” says Schmidt, now too deep in the weeds of her verbal faux pas. Get out, Eric!

11:28 am: Sen. Lee is up, not taking any of this speedy, we-know-best business.

And he has a chart! I love a good chart. It shows Google info always ranks first in listings versus other sites it competes with.

Schmidt has not seen this poll, but thinks it is not accurate.

11:31 am: Let me note that Schmidt’s grey suit is fantastic looking. And right behind him, you can see Google’s top lawyer, the always nattily dressed David Drummond.

Back to the chart!

Lee wants to know why, according to his chart, that Google seems to come up first.

“Either way, you’ve cooked it,” claims Lee.

“Senator, I can assure you we have not cooked anything,” counters Schmidt.

(Note: Google does have an excellent cafeteria in Silicon Valley, complete with organic arugula and Kombucha for all.)

11:33 am: Hoo boy! But Lee’s time has expired, so Schmidt gets a break in the form of New York’s Sen. Charles Schumer.

I like the way he says “ee-no-vation” for innovation.

He does an expected plug for New York, of course. Somehow it is No. 1 in tech. Not so much, but brag on, Chuck!

11:38 am: Schumer is still talking about New York and its fab entrepreneurs.

Apparently, he has done a lot of jawboning with start-up dudes (likely over Kombucha) and they think Google is a positive force.

“Google is actually pretty good, we don’t see them as rapacious,” Schumer says the New York nerds tell him.

Is “rapacious” the criteria here?

Schumer is running out of time and has yet to ask a question and now is trying to get Schmidt to test Google’s broadband project in the Hudson Valley.

Now that’s rapacious!

Is there going to be an actual question here?

Yes: Oh please tell us, genius boy, what could Google do better?

Really.

11:42 am: Now, Sen. John Cornyn from Texas is on and asking about the prescription controversy Google was embroiled in recently.

Oops, I missed a bit when someone called me about the CEO mess at Hewlett-Packard I reported on earlier.

Onto Senator Amy Klobuchar from Minnesota. She is cleverly using an article about the Vikings football team to ask about how Google’s super-secret-sauce algorithm works and how it ranks results.

“Do you think companies should have a lot more certainty in how they are ranked?,” she asks.

11:51 am: Schmidt is not really answering, except to say Google is not perfect.

“We don’t know how to do it with more certainty,” he says, which is odd for a company that is perhaps the most irksomely certain group of geeks ever assembled on the planet.

Klobuchar moves to copyright issues. “There’s a real problem here,” agrees Schmidt.

Yes, and some media companies think Google is the problem and has not done enough to fix the problem.

“It’s difficult,” says Schmidt. Well, isn’t Google smartier?

“We’re under great pressure to resolve this,” he says.

11:55 am: Klobuchar is still worried about the small businesses, but she wants Google to come to Duluth.

Good lord, it’s a shakedown in plain sight. Maybe Google isn’t the scary one here! These pols seem pretty frightening.

Now Iowa Sen. Charles Grassley is saying he will attend some Google event in his state.

Of course!

Grassley makes a wishy-wishy statement, and we get to hear from Iowans on both sides.

Some are apparently concerned that Google is a troublemaker and some aren’t.

Iowans, like a lot of folks, are torn.

“We are happy to be judged,” says Schmidt.

12:00 pm: Now it is time for Sen. Al Franken from Minnesota.

“First let me say, I love Google,” he says.

Otay. I wonder if Franken knows that Google is a giant scary computer.

But, as a citizen of San Francisco, I say he should love whoever he wants!

Franken is also concerned about his love’s behavior and is taken aback by one of Schmidt’s previous answers.

It’s that irksome Marissa Mayer quote again.

When asked if the algo was unbiased, Schmidt apparently was not as sure as shootin’!

Now, it is onto Yelp and the fiery quotes from Stoppelman about how Google nefariously blocks the review site’s content.

Eric “generally” disagrees with Jeremy.

At one point Google tried to buy Yelp, so this is a fraught situation.

Does Franken know about the previous Google-Yelp hookup?

Drama!

Schmidt says it is Yelp’s fault for asking to be removed from the algo. Actually, Yelp only asked Google to stop jacking its fare.

12:11 pm: Oh noz, another pol? This time Sen. Richard Blumenthal from Connecticut.

He is super-smiley, while calling Google a “behemoth.” I like that word a lot and use it for the company often, although I always like to use a qualifier like “thuggish” or “freaky.”

Back to the blabby Blumenthal, who cannot seem to get out a question.

Wait! He asks if Google can suggest some fixes to “avoid government regulation.”

I. Kid. You. Not.

12:21 pm: Kohl is back and giving Google a little more slap-a-doo.

I like the whole Kohl thang of looking over his glasses down at Schmidt.

He asks: Should we trust Google? Should we?

In my opinion: If your mother says she loves you, you should check it.

So, no!

Schmidt assures him: “We make mistakes.”

Lee is then back, asking if Google gives preference to its own products in search?

Exactly the point and a question that is still not answered properly.

12:24 pm: Lee remains troubled by Schmidt’s testimony.

He uses terms like “leverage its natural dominance” and “significant market share to disadvantage” competitors.

Sounds like, um, Microsoft. And then it is back to that niggling Marissa Mayer quote. (Memo to the voluble exec, who apparently never met a microphone she didn’t want to talk into: You might want to take a day off today at the Googleplex.)

Google-luvin’ Franken is back and he is asking about mobile search.

Where Google is dominant again! (Jellllllo, Al, we in Silicon Valley know that one already!)

He asks if all Android devices come pre-loaded with Google products. Schmidt thinks two-thirds come with it, but handset makers can choose.

12:31 pm: Back to all-smiles Blumenthal, who says he has come to no conclusion.

But lo! He is not as silly as he seems and goes into an interesting racetrack analogy about how Google owns the track and now has horses and now those horses are winning.

Hmmmm…

Schmidt disagrees, natch!

He thinks the Internet is the platform and Google is the GPS.

Metaphor contest!

I think Google is a big tasty banana cream pie we can’t stop eating, although we know it’s bad for us.

That or an alien wearing an expensive suit who will soon eat us all.

Franken comes in with a doping horses joke. Remember when he was funny on “Saturday Night Live”?

Me neither.

It goes on without a lot of really good discussion. Klobuchar asks something, but I forget it immediately. My bad!

She has a last question about advertisers and privacy. Softball!

Let me write this for Schmidt before he inevitably spits it out: Of course, Google wants to protect privacy.

12:37 pm: Finally, the second panel of critics. Sadly, I must go to an appointment in Silicon Valley to visit one of its rapacious companies.

Oops, I meant ee-no-vative.

But, no worries, John Paczkowski will take over from here once it gets going again after the break.

12:47 pm: The panel’s back in session. The first critic to take a shot at Google, Thomas Barnett, a lawyer for Expedia.

12:51 pm: Riffing on Schmidt’s earlier “We know, we get it” comment, Barnett argues the opposite.

“Google doesn’t get it,” he says, adding that the company’s ever-expanding market power is troubling.

12:54 pm: Google is a monopoly, Barnett continues, and it has a duty not to abuse that position. He concludes by saying antitrust enforcement can and should play a role in maintaining competition in the markets in which it does business.

12:57 pm: Moving on now to Nextag CEO Katz, who has some tough words for the search giant. “Today Google doesn’t play fair,” he says.

He argues that Google rigs its results to drive consumers to Google Product Search when they search for information to inform their purchases.

1:00 pm: Next: Stoppelman of Yelp, who wonders if it’s even possible to create a company like Yelp today because of Google’s massive market power.

1:04 pm: Google’s outside lawyer, Susan Creighton, takes the mic next. Having trouble with the video stream from the Senate, but as best I can tell she talked broadly about the competitive landscape and reiterated Schmidt’s “competition is just a click away” narrative.

1:08 pm: She concludes by saying government oversight of Google’s search results rankings would put the company at a disadvantage and turn its search service into something akin to a “regulated utility.”

1:09 pm: Interesting. Creighton says she doesn’t believe Google has monopoly power.

1:10 pm: “Each of you right now can test whether or not you like Google’s search results and if you don’t like them it’s free and instantaneous to try someone else.”

1:22 pm: Apologies, the Senate video feed has gone from bad to worse.

1:23 pm: Franken asks Yelp’s Stoppelman and Nextag’s Katz if they could start their companies today given Google’s market power.

Both say that’s unlikely.

1:26 pm: Terse exchange between Franken and Creighton about whether Google paid Apple to be the default search engine on its iOS devices. Lots of back and forth, but Creighton finally concedes that there’s some sort of financial deal between the two companies.

1:39 pm: Sen. Lee asks what Google might do to “level the playing field.” Stoppelman suggests separating search from its other properties. Pipe dream.

1:40 pm: Well, it looks like it may be getting near the end of the session, which is a good thing because we get it to by now.

And that is: Nothing significant is going to get said here.

Later today, Google Executive Chairman Eric Schmidt will appear at the Senate Judiciary Committee’s antitrust subcommittee for hearings on whether Google is a search bully or not.

Schmidt, according to written testimony obtained by the Politico blog, will be trotting out the company’s longtime argument that its competitors are “only one click away” from taking Google down.

And, in what can only be described as a you’ve-got-to-be-kidding furthering of that meme, Schmidt will apparently claim that Microsoft’s much tinier Bing search service could catch and pass Google by next year.

Reads the testimony, according to Politico: “Microsoft’s Bing launched in June 2009 and has grown so rapidly that some commentators have speculated that it could overtake Google as early as 2012.”

Say what? Say ridonkulous! The Facebook worry, I get, but costing-Microsoft-a-billion-a-quarter Bing?

That’s because in the most recent market-share report from comScore, Google had 64.8 percent of the total, with Yahoo at 16.3 percent and Bing at 14.7 percent. Even combining the pair — who are currently in a search partnership — they still have less than half the share that Google has.

In any case, although the Google-as-imminently-threatened concept displays a lot of gumption, it’ll be interesting watching Schmidt try to sell it.

And also to see Google’s critics call foul.

After Schmidt appears, there will be a second panel, featuring Yelp CEO Jeremy Stoppelman; Jeffrey Katz, CEO of Nextag; and Tom Barnett, spokesman for FairSearch.org and counsel to Expedia.

Stoppelman, who almost sold his online reviews company to Google in late 2009, has since become a vocal detractor of the search giant’s methods.

In his testimony as well as exhibits, all posted below, Stoppelman paints a more dire picture of Google:

“When one company controls the market, it ultimately controls consumer choice. If competition really were just ‘one click away’ as Google suggests, why have they invested so heavily to be the default choice on web browsers and mobile phones? Clearly they are not taking any chances.”

Stay tuned for my liveblog at 11 am PT, as well as other AllThingsD coverage of the hearings.

9.21.11 Verbal Testimony _10am final_

9.21.11 Written Testimony _clean_

9.21.11 Exhibits

In a preview of Wednesday’s Senate antitrust hearing on whether Google abuses its dominance on the Web, representatives of the sites — which help people search for information on consumer goods, local businesses and airline flights — said in interviews this week that Google has increasingly sought to drive people who use its search engine to its own specialized sites that compete with theirs.

One of the companies, Nextag, is going even further. Chief Executive Jeff Katz said Google also prevents his company’s site from bidding on the prominent ads that show up next to search results for products such as running shoes. Instead, he said, because Google sees his company as a threat, Nextag can only bid to appear in text ads lower down on the results page, limiting its exposure to consumers.

Read the rest of this post on the original site »

When a start-up pitches itself as “kind of like the Google for local,” ears perk up — mostly because everyone uses the search giant for the inevitable comparison.

But that’s not a terrible description of what local info start-up Loku is after.

The consumer-focused Web application, which recently closed a seed round of funding from Dave McClure’s 500 Startups fund, aims to take local info search to the next level by “bringing in the power of big data,” said CEO and co-founder Dan Street.

Saying your start-up uses “big data” today is kind of like saying two years ago that it was “social.” The term that used to mean employing statistical methods to understand macro-trends in huge data sets is rapidly becoming just another tech buzzword.

For Loku, though, it seems to mean something concrete.

Street explained: “Bringing big data to local info is really about using tools to add another level of analysis to how information is served. We don’t want to deliver you things just based on geo-location — it should be based on more.”

As it stands, a Loku user can search using natural language, like any Google search, and Loku spits out info either as pins and cards on a map, or in a “tiles” interface, where hyper-linked images fit together like a photomosaic on the screen. Some are wide and some tall, some big and some small.

Clicking on either the map pins or the tiles will display more info about the selected link and where it exists on the Web. This interstitial view is Flipboard-like in that it lets users see what they will get by clicking on a link, before leaving the page.

In practice, at least in the current beta product, that means Loku does a combo of natural language analysis of articles, listings from other services, and places.

The hope is to deliver not just the dog parks you searched for, but only the good dog parks, and maybe some local postings about a new dog park being added in your neighborhood.

Loku is in private beta today, and Street was very cautious about not giving a timetable for public release — although the Loku I saw was a lot closer to a functioning consumer application than other products I’ve written about here.

Much ado has been made about hyper-local and location-based services, but location is “just one part of the equation,” Street said.

Street hopes Loku will deliver results that are hyper-contextual, not just hyper-local.

Street sat down for a quick video interview about the future of Loku, and what it means to challenge Google and Yelp in the same sentence. Enjoy.

]]> http://allthingsd.com/20110909/loku-wants-to-beat-yelp-and-google-at-local-search-with-some-help-from-big-data/feed/ 6 http://allthingsd.com/20110908/opentable-investors-queasy-after-google-zagat-meal-er-deal/ http://allthingsd.com/20110908/opentable-investors-queasy-after-google-zagat-meal-er-deal/#comments Thu, 08 Sep 2011 23:06:34 +0000 Tricia Duryee http://allthingsd.com/?p=118790 OpenTable’s shares tumbled more than 10 percent during the day, following the announcement that Google was buying local review site Zagat.

By the end of the day’s trading, the restaurant booking site had regained some ground, closing down only eight percent, or $5.23 to $57.50 a share.

But at least one analyst called the market’s bluff, concluding that the purchase did not mean Google was interested in competing with OpenTable.

OpenTable currently accounts for 10 percent of all diners who end up being seated in a restaurant, while Google mostly gains customer reviews and surveys from Zagat.

“The risk here … is that this marks Google’s attempt to compete directly with OpenTable in the Restaurant Reservation segment. For now, we don’t believe it,” wrote Citigroup’s Mark Mahaney in a note to clients. “Although Google has thrown a few surprises by us recently, we see it as highly unlikely that Google would want to enter the salesforce-intensive/truck-roll/hardware & software-install Restaurant Reservation business.”

Mahaney also noted that there’s little risk that traffic to OpenTable will fall because of the deal.

Today, only five to 10 percent of all reservations come from third-party networks like Yelp, Google, Yahoo, Zagat, etc. OpenTable, for example, is the exclusive restaurant reservation service on Zagat. Another review site, UrbanSpoon, was purchased by IAC two years ago. IAC, which owns a very diverse portfolio of businesses, saw its stock sink 15 cents today to close at $39.53.

Citigroup reiterated its buy and said its current price target is $82 a share.

The purchase of Zagat is likely a bigger blow to Yelp, which is still seeking an exit of its own after turning down a half-billion-dollar offer from Google two years ago. The companies are not completely alike. Yelp has been fairly successful in gaining a very broad audience, especially since Zagat charges for many of its publications and mobile applications — a very un-Google approach.

Google said this morning that Zagat will work closely with its search and maps divisions, but it also would make sense for it to work closely with Google Offers, which is trying to be the local deals equivalent to Groupon.

]]> http://allthingsd.com/20110908/opentable-investors-queasy-after-google-zagat-meal-er-deal/feed/ 0 http://allthingsd.com/20110908/google-acquires-zagat-to-beef-up-local-reviews/ http://allthingsd.com/20110908/google-acquires-zagat-to-beef-up-local-reviews/#comments Thu, 08 Sep 2011 15:35:14 +0000 Tricia Duryee http://allthingsd.com/?p=118585 Google said this morning that it has acquired Zagat, which will become the cornerstone of its local strategy by offering reviews, ratings and insights for services and restaurants worldwide.

It’s unclear at this moment what Google paid, but you have to wonder if it’s anywhere near the half a billion dollars that Google offered for Yelp (and which Yelp walked away from) in 2009. Since then, Yelp has been touting a potential IPO.

Google’s Marissa Mayer, who is VP of Local, Maps and Location Services, made the announcement in a blog post.

Mayer also announced it over Twitter, using a haiku: “Delightful deal done; Zagat and Google now one; foodies have more fun!”

In the post, Mayer says more officially that Zagat gives Google “a world-class team that has more experience in consumer-based surveys, recommendations and reviews than anyone else in the industry.”

Zagat was founded by Tim and Nina Zagat more than 32 years ago, and since then has become a trusted voice of authority for consumers who want to know whether a restaurant or service is worth spending money on. It operates in 13 categories and more than 100 cities using its well-known Zagat rating system.

In a letter on Zagat’s site, Tim and Nina say they will continue to be active in the business as co-chairs, and that the merger of resources and platforms “will give us the opportunity to expand.”

“We have spent enough time with Google senior management to know that they fully share our belief in user-generated content, and our commitment to accuracy and fairness in providing consumers with the information necessary to make smart decisions about where to eat, travel and shop,” they wrote.

]]> http://allthingsd.com/20110908/google-acquires-zagat-to-beef-up-local-reviews/feed/ 0 http://allthingsd.com/20110831/angies-restricted-list-should-tempt-investors/ http://allthingsd.com/20110831/angies-restricted-list-should-tempt-investors/#comments Wed, 31 Aug 2011 12:00:08 +0000 Rolfe Winkler http://allthingsd.com/?p=115518 For social networks trying to defend their turf, a good barrier to entry may just be a barrier to membership.

That is the idea behind Angie’s List, a members-only site for business reviews that filed for an initial public offering Thursday. More popular review sites like Yelp and TripAdvisor accept reviews from anyone and post those reviews for all to see. This leaves them vulnerable to merchants potentially paying Web surfers a small fee for positive reviews or even just submitting their own.

The downside to falling for bogus restaurant or hotel reviews may just be eating a chewy filet or sleeping on dirty sheets. But the consequence of hiring a bad roofer can be more problematic. So Angie’s List focuses on “high cost of failure” segments — plumbers, contractors, doctors and the like — where being able to trust reviews really matters.

Read the rest of this post on the original site »

]]> http://allthingsd.com/20110831/angies-restricted-list-should-tempt-investors/feed/ 0 http://allthingsd.com/20110825/exclusive-groupons-mason-tells-troops-in-feisty-internal-memo-it-looks-good/ http://allthingsd.com/20110825/exclusive-groupons-mason-tells-troops-in-feisty-internal-memo-it-looks-good/#comments Thu, 25 Aug 2011 22:02:13 +0000 Kara Swisher http://allthingsd.com/?p=114157

Facing a barrage of negative press about its upcoming IPO, Groupon CEO and co-founder Andrew Mason took up a pen to counter critics of the social buying service.

Especially under scrutiny has been the Chicago-based Groupon’s accounting of its finances — along with worries that its torrid growth is slowing — both of which Mason addressed in detail in a pugnacious email memo to his thousands of employees.

Specifically referencing a recent article speculating that the daily deals site was running out of money, Mason said, in part:

“While we’ve bitten our tongues and allowed insane accusations (like in the article above) to go unchallenged publicly, it’s important to me that you have the context necessary to brush this stuff off.”

Mason also took on the controversial ACSOI — or adjusted consolidated segment operating income — metric that Groupon used in its initial filing and later stepped back from.

“The reason we didn’t realize everyone in the world would hate ACSOI (no, it’s not the same reason we didn’t realize everyone in the world would hate our Superbowl ad), is that we think it actually does a pretty good job at describing our marketing expenses in a steady state — we just didn’t realize there would be so many skeptics,” wrote Mason.

Mason also took some aim at competitors, such as LivingSocial and Yelp, in the email.

As for the public offering, which is expected next month:

“If there’s a silver lining, it’s that we’re almost on the other side, and the negativity leaves us well-positioned to exceed expectations with an IPO baby that, having seen the ultrasound, I can promise you is not one of those uglies.”

Then again, that is exactly what a dad-to-be would say about his baby, whatever it looked like.

Mason, when asked about the memo, declined to comment.

There is a lot more than that, so here’s Mason’s full email for all you pencil pushers to peruse:

Dear Groupon,

This weekend, I did a Google News search on our company — my first in awhile. The first story that popped up was called The Fall of Groupon: Is the Daily Deals Site Running Out of Cash? I laughed when I read the headline (in the car by myself, weirdly). First — with this article, the degree to which we’re getting the shit kicked out of us in the press had finally crossed the threshold from “annoying” to “hilarious.” Second, I was struck by the irony — I had just finished a board meeting last Wednesday saying this to myself: I’ve never been more confident and excited about the future of our business.

I realize that this sounds like the kind of thing that CEOs say when they’re trying to pep people up. First of all — I’m all about not pepping people up. If you don’t believe me, just ask my fiancée, Jenny “why don’t you ever say anything nice about me” Gillespie. Want another example? Look at the magazine covers in our lobby, which are there to make you sad by reminding you of the impermanence of success.

I’m going to spend the rest of this email explaining why I’m so excited. You need some ammo to argue back against your blog-reading “friends” (silently argue in your mind, that is — you can’t actually say any of this yet), and I’ve been told that the “what have you ever done with your life that’s so great?” rebuttal isn’t working as well for you guys as it has for me.

While we’ve bitten our tongues and allowed insane accusations (like in the article above) to go unchallenged publicly, it’s important to me that you have the context necessary to brush this stuff off.

I’ll summarize my excitement with four points: 1) Growth in our core business is strong 2) Our investments in the future — businesses like Getaways & NOW — look great, 3) We are pulling away from competition, and 4) We’ve built a great team that I would pit against anyone. In other words, all the stuff that one would want to look good? It looks good.

Many of the long-term unknowns of our business are becoming known, and we like the answers. I will now elaborate in a level of financial detail that will give Jason Child a stomach ulcer.

1. GROWTH IN THE CORE BUSINESS

Thanks to a tremendous effort by our sales team, August in the U.S. is shaping up to be a pivotal month. It appears that will revenues grow by about 12% over last month (which is a lot), while we cut our marketing expenses by 20% in the same period.

Beyond their obvious goodness, these numbers are important because they answer one of the main criticisms thrown at us in the past few months, relating to a metric we put in the S-1 called ACSOI (adjusted consolidated segment operating income) to help people understand how we think about marketing expenses. The reason everyone in the world seems to hate ACSOI is that it makes us look magically profitable by subtracting a bunch of our customer acquisition marketing costs from our expenses. The reason we didn’t realize everyone in the world would hate ACSOI (no, it’s not the same reason we didn’t realize everyone in the world would hate our Superbowl ad), is that we think it actually does a pretty good job at describing our marketing expenses in a steady state –we just didn’t realize there would be so many skeptics. I think it’s worth going deep on this one more time — brace yourself.

Our internal forecast shows two different types of marketing: what I’ll call “normal marketing” — which is NOT excluded from ACSOI — and “customer acquisition marketing,” which is. The way Groupon spends on marketing is unique in three ways:

1. We are currently spending more than just about any company ever on marketing — in Q2, we spent nearly 20% of our net revenue on marketing, while a typical company spends less than 5%. Why do we spend so much? The simple answer is “because it works.” But thats only part of what makes our situation special.

2. Our marketing — at least the customer acquisition marketing that we remove from ACSOI — is designed to add people to our own long-term marketing channel — our daily email list. Once we have a customer’s email, we can continually market to them at no additional cost. Compare this to Johnson and Johnson, McDonald’s, or most other companies. If I’m a Johnson, and I’m trying to sell you a box of Band Aids, I have to keep spending money on commercials and magazine ads and stuff to remind you about how sweet Band Aids are, even after you’ve bought your first box. With Groupon, we just spend money one time to get you on our email list, and then every day we email you a reminder of the sweetness of our metaphorical Band Aid. There is no cost of reacquisition — that’s unusual (and we created ACSOI to point that out). If Johnson wanted to follow the Groupon strategy, he would have to start a free daily newspaper about bandages and then run Band Aid ads in it every day.

3. Eventually, we’ll ramp down marketing just as fast as we ramped it up, reducing the customer acquisition part of our marketing expenses (the piece that we remove in ACSOI) to nominal levels. We are spending a ton now because we’re acquiring as many subscribers as we can as quickly as we can. We aren’t paying attention to marketing budget (just marketing ROI) in the way a normal company would, because we know that even if we wanted to continue to spend at these levels, we would eventually run out of new subscribers to acquire. So our customer acquisition spend drops severely to reflect the fact that eventually we’ll run out of people we can add to our email list. We view this internally as a very large one-time expense and then our job forever after will be to continually convert these subscribers into customers and to make sure our customers keep buying from us. Ongoing, the normal marketing dollars we spend are not something we would remove from our internal calculation of ACSOI.

I tried my best to explain this simply, but it’s not lost on me that if you actually understood this, you probably had to read it three times. It’s not easy stuff. It’s much easier to assume that we’re goons. So people can be forgiven for being suspicious. In fact, feel a little bad about how downhearted the critics will be when we don’t turn out to be a Ponzi scheme — those are good impulses for journalists to have, and I hope our non-evil ways don’t destroy their spirits.

Anyway, there’s a reason that I just went on about ACSOI. One of the questions that skeptics ask is, “when you ramp down marketing, won’t revenues stop growing as well? Aren’t you just buying growth?” Over the past several months we’ve been consistently reducing our marketing spend and yet revenues are still increasing at a significant pace. In Q1 of this year, marketing represented 32.3% of our net revenues. By the end of Q2 it had fallen to 19.4%. And it has continued to fall over the past several months all because we’ve been investing in our own long-term marketing channel — our email list.

Internationally we see the same trends — marketing is down, but revenues are up — every country is either losing less or making more. Even in young markets like Korea, where we’re still making massive investments, we’re seeing unprecedented growth. We started building our Korean team this January, despite the presence of two competitors that were larger than any we’d previously battled from behind. Thanks to the brilliant execution of the Korean team, we are set to be the market leader within months. We’ve never had a country grow as fast as Korea!

What about our joint-venture with Tencent in China? Did you read the article that Gaopeng’s CEO has kidnapped the first born children of all our employees and is putting them to work building a laser beam he’ll use to slice the moon in half? It turns out that that one isn’t true either. China is definitely a different market, but every month we inch closer to profitability. As has been our strategy in launching other countries — Germany, France, and the UK, included — our China growth strategy was to hire quickly and manage out the bottom performers. So far, that strategy has improved our competitive position in China from #3,000 to #8. Will we one day reach the dominant status we enjoy in most (come on, Switzerland!) other countries? It’s too soon to tell, but there’s no question in my mind that we’re building a business that will be around for the long haul.

2. NEW BUSINESS LINES ARE BOOMING

Travel and Product are enormous opportunities. After only a few months, they’re already making up 20% of revenue in some countries. We sold $2M worth of mattresses in the UK — in one day! Groupon Getaways will do $10M in its first calendar month — which you might think is awesome, but we’re actually disappointed with those results because we know how much better we’ll be doing soon.

While there’s still a ton of work to do, Groupon Now! continues to see weekly double digit growth. The model works and I believe it will play a major part in the future of our global business as more merchants and customers join the marketplace.

3. WE ARE PULLING AWAY FROM COMPETITION

If there’s a question I’ve received from Groupon skeptics more than any other, it’s, “how will you fend off the competition — especially massive companies like Google and Facebook?” I could give a dozen reasons to bet on Groupon, but it’s impossible to predict the future or the actions of others. Well, now the sleeping giants have woken up — and the numbers are showing that what was proven true with literally thousands of other competitors is just as true with the incumbents of the Internet: it’s kind of hard to build a Groupon. And since anyone with an Internet connection can track the performance of our competitors, I can be more specific:

Google Offers is small and not growing. In the three markets where we compete, we are 450% of their size.

Yelp is small and not growing. In the 15 markets where we compete, our daily deals are 500% of their size.

Living Social’s U.S. local business is about 1/3rd our size in revenue (and smaller in GP) and has shrunk relative to us in the last several months. This, in part, appears to be driving them toward short-sighted tactics to buy revenue, like buying gift certificates from national retailers at full price and then paying out of their own pocket to give the appearance of a 50% off deal. Our marketing team has tested this tactic enough to know that it’s generally a bad idea, and not a profitable form of customer acquisition.

Facebook sales are harder to track, but are even less significant at present.

My point is not that our competitors will fail — some may actually develop sustainable businesses, or even grow — after all, local commerce is an enormous market. The real point is that our business is a lot harder to build than people realize and our scale creates competitive advantages that even the largest technology companies are having trouble penetrating. And with the launch of NOW, I suspect our competition will have an even harder time in light of the natural barriers to entry that are needed to build a real-time local deals marketplace.

4. OUR TEAM

This is the fluffiest of the four points, but maybe the most important — we’ve built a global team of hungry entrepreneurial operators and seasoned executives that rivals any team I know of. Almost every day, I find myself in a scenario where I silently think, “I can’t believe I got this person to work for me — that failure of judgement is perhaps their single flaw.”

I point out the team because while today the business is strong and it appears we must endure success for awhile longer (despite its impermanence), we will inevitably be challenged with issues we didn’t predict — and when that happens, the quality of our team will be a deciding factor in our ultimate long-term success.

FINAL THOUGHTS

I wrote this email because when I read some of the press this weekend, I realized a rational person could read this stuff and wrongly conclude that we’re in trouble. The irony is hopefully clear: We’ve never been stronger.

And while we’ve refrained from defending ourselves publicly, you’ve continued to create our best defense, with every department innovating new practices that are taking our business to the next level. Thanks for staying tough, determined, and agile throughout this process. For now we must patiently and silently endure a bit more public criticism as we prepare to birth this IPO baby — a breed for which there are no epidurals. If there’s a silver lining, it’s that we’re almost on the other side, and the negativity leaves us well-positioned to exceed expectations with an IPO baby that, having seen the ultrasound, I can promise you is not one of those uglies.

I’ve been as candid as possible — hope this sheds some light on things. Reply with your questions if anything remains unclear. Amidst all this, I hope you remember what we’re doing here — we are making history together. I guess you don’t get to build something that reshapes the local commerce ecosytem without getting a few bruises. I’m so proud of the work we’re doing, and I feel extraordinarily lucky to work on what I think is the best thing that’s happened to small businesses since the telephone We’ve invented something that is catalyzing millions of dollars of local commerce every single day in 45 countries and fills the lives of millions of customers with unforgettable experiences — it’s pretty remarkable.

Looking forward to getting this behind us!

Andrew

P.S.: I almost forgot to address the nonsense about us running out of money in the article above. If you apply the same logic used in the article, you’d have concluded long ago that companies like Amazon and Wal-Mart were running out of cash too. Both have often had payables far in excess of their cash. Finance geeks call this a working capital deficit. It’s normal, manageable and a lot of folks actually believe it’s good thing and would kill to get paid from their customers long before they have to pay their suppliers. We are generating cash, not losing it — we generated $25M in cash last quarter alone, adding to the $200M we had before. In other words, we’re doing the opposite of running out of money.

Speaking of “it looks good,” here is Conan O’Brien with a Tourette’s version of Mason’s new catchphrase:

]]> http://allthingsd.com/20110825/exclusive-groupons-mason-tells-troops-in-feisty-internal-memo-it-looks-good/feed/ 0 http://allthingsd.com/20110825/tech-firms-move-to-hip-new-home/ http://allthingsd.com/20110825/tech-firms-move-to-hip-new-home/#comments Thu, 25 Aug 2011 13:00:55 +0000 Joseph De Avila http://allthingsd.com/?p=113874 The media have Midtown. The banks have Wall Street. Now tech companies are laying their foundation near Union Square.

The emergence of Union Square as a destination for technology firms got its start several years ago. But the neighborhood’s tech community received a boost this year with the arrival of household names such as computer giant Apple Inc. and the impending arrival of user-review site Yelp.

Those big companies are among nearly a dozen tech firms that have signed leases this year for a combined 135,000 square feet of office space in Union Square, according to the Union Square Partnership.

Read the rest of this post on the original site »

]]> http://allthingsd.com/20110825/tech-firms-move-to-hip-new-home/feed/ 0 http://allthingsd.com/20110811/citysandbox-berkeley-lab-launches-qa-site-for-civic-action/ http://allthingsd.com/20110811/citysandbox-berkeley-lab-launches-qa-site-for-civic-action/#comments Thu, 11 Aug 2011 12:30:42 +0000 Alexandra Chang http://allthingsd.com/?p=108265

When Greg Niemeyer takes his kids to the park, he doesn’t let them to play in the sandbox. It’s because of the trash. And broken toy fragments. And the fact that local cats have made it their litter box.

He asks himself, “Why is this sand so dirty?”

The answer isn’t something you will find on Quora, or on Google, either.

That’s why Niemeyer — and the University of California at Berkeley Social App Lab he leads — is building CitySandbox — a place for people to Q&A on issues affecting their municipal community.

Niemeyer, who co-directs the Social App Lab and oversaw the development of CitySandbox, believes a major failing of the Internet is how self-focused its content is.

With the exception of commerce-based ranking sites such as Yelp, Niemeyer thinks the Web is still not closely tied to the physical world.

“There are fairly few resources that describe the world as a place where things don’t need to be bought or sold, but where instead things can be acted upon by citizens,” he said in an interview.

CitySandbox attempts to fill the gap by making physical location the central way to navigate questions, setting it apart from other question services. And the embedded Google maps let users see what people are saying about, for example, the park down the street.

But the real differentiator, according to Niemeyer, is CitySandbox’s “Events” feature — soon to be reworked into “Challenges” — which encourages people to get their analog hands dirty.

Getting people to take part in challenges, however, has proven a challenge itself, according to CitySandbox lead developer Alex Nisnevich.

“Right now there are many civic issues that are discussed on the site, and the discussions are usually informative and helpful, but not once has any action ever been taken as a result,” he said.

That’s a shame, since just a little more than a month after launching, there are more than 240 users, 190 questions and 430 answers on the site.

But as physical-world as CitySandbox’s focus is, there is still a serious tech/real-world discontinuity it has to address: Tech products such as CitySandbox are built quickly, and real vacant lots get filled at a much slower pace.

Thus Niemeyer thinks his app lab — protected from the ravages of market forces by its position in academia — is the ideal place to solve the harder problems.

Some might ask why academia is even needed in the space.

“Mostly we are expecting business to address problems. Recycling has become a business, for example,” said Niemeyer. “We always tend to think that solutions are productive in a business sense.”

That’s not always so, and it means that CitySandbox’s success will depend on people’s desire to take action.

The real unanswered question remains: Can we rely on people to take civic action via the Web?

The CitySandbox team is optimistic. After all, you can’t Quora-away the mess from a sandbox.

]]> http://allthingsd.com/20110811/citysandbox-berkeley-lab-launches-qa-site-for-civic-action/feed/ 1 http://allthingsd.com/20110728/yelp-hires-cfo-to-work-on-that-other-three-letter-acronym/ http://allthingsd.com/20110728/yelp-hires-cfo-to-work-on-that-other-three-letter-acronym/#comments Thu, 28 Jul 2011 21:55:52 +0000 Liz Gannes http://allthingsd.com/?p=103983 Local reviews site Yelp, which has said it intends to go public, today announced it has hired Rob Krolic to be its CFO. Krolic was CFO of the public online real estate company Move, and before that was at eBay and Shopping.com. Yelp had said in April it was looking for a new CFO in the lead-up to an IPO.

]]> http://allthingsd.com/20110728/yelp-hires-cfo-to-work-on-that-other-three-letter-acronym/feed/ 0 http://allthingsd.com/20110718/alfred-app-gives-personalized-restaurant-recommendations/ http://allthingsd.com/20110718/alfred-app-gives-personalized-restaurant-recommendations/#comments Mon, 18 Jul 2011 23:08:57 +0000 Liz Gannes http://allthingsd.com/?p=99414 It’s a merger of two of the trendiest start-up topics in the new iPhone app Alfred: restaurant recommendations and data mining.

Alfred, built by the Stanford PhD-led team at Clever Sense, aims to learn what types of restaurants and bars a user will like based on comparing a few of their inputted favorites to analysis of existing reviews from around the Web.

Clever Sense CEO Babak Pahlavan says he’s hoping for a “Rosie from ‘The Jetsons’”-type experience, or perhaps “Pandora for the real world.” The premise is “Teach it what you like, then put it on cruise control.”

Alfred is all recommendations and no direct search, so users will have to be in a sort of lean-back-and-explore mode to enjoy the experience. What seems most useful is that you could teach the app about your local favorites and then get personalized recommendations when you travel to a new city.

Alfred was actually the dummy name for a test version of the app, but it’s gotten enough traction (20,000 downloads over the past weekend) that Clever Sense is scrapping the intended launch name, Seymour. That’s still incredibly small potatoes next to market leaders like Yelp and Google Places and even Foursquare, but unplanned growth is at least a good omen.

Mountain View, Calif.-based Clever Sense has 10 employees and $1.6 million worth of funding.

(Alfred, by the way, is already the name of a Mac application launcher app, which could potentially be confusing.)

]]> http://allthingsd.com/20110718/alfred-app-gives-personalized-restaurant-recommendations/feed/ 0 http://allthingsd.com/20110718/att-interactive-takes-on-groupon-by-launching-yp-com-daily-deals/ http://allthingsd.com/20110718/att-interactive-takes-on-groupon-by-launching-yp-com-daily-deals/#comments Mon, 18 Jul 2011 22:09:30 +0000 Tricia Duryee http://allthingsd.com/?p=99266 Despite Groupon’s and LivingSocial’s early leads in the daily deals space, the two companies are not stopping others from jumping on the bandwagon — especially if those others already have a national sales force.

The most recent addition to the list: AT&T.

As expected, AT&T Interactive, which operates its YP.com brand, today launched its first daily deals associated with its yellow pages offering in Atlanta, Dallas/Ft. Worth and Los Angeles.

In many respects, the offers represent just another ad unit its sales force can pitch to merchants. To date, it’s primarily been focused on selling search terms, banner ads, coupons, and more recently, mobile ads.

Since May, YP.com has been collecting email addresses from customers who were willing to sign up for the offers in those three markets. Registration is now open nationwide as it plans to expand in other cities.

In addition to distributing the offers by email, AT&T Interactive plans to push them out over mobile phones.

Last week, Foursquare announced that AT&T’s Deal of the Day offers will be distributed and available to Foursquare’s app users, and AT&T Interactive plans to integrate Deal of the Day offers into its YPmobile app on iPhone and Android in the next few months.

In Los Angeles, it’s first offer was for $20 worth at Em’s Artist Café for $10; in Atlanta, it’s first offer is for 52 percent off three art classes; and in Dallas, it’s selling half-off tickets to see “America’s Got Talent” runner-up Jackie Evancho.

In addition to Groupon and LivingSocial, some of AT&T’s direct competitors will be Google, Yelp, OpenTable and Travelzoo, which are all trying to leverage their brand recognition and monthly visitors to enter the frequently very profitable daily deals space.

]]> http://allthingsd.com/20110718/att-interactive-takes-on-groupon-by-launching-yp-com-daily-deals/feed/ 0