Watchdog Planned for Online Privacy

The Wall Street Journal

The Obama administration is preparing a stepped-up approach to policing Internet privacy that calls for new laws and the creation of a new position to oversee the effort, according to people familiar with the situation.

The strategy is expected to be unveiled in a report being issued by the U.S. Commerce Department in coming weeks, these people said. The report isn't yet final and could change, these people said.

In a related move, the White House has created a special task force that is expected to help transform the Commerce Department recommendations into policy, these people said. The White House task force, set up three weeks ago, is led by Cameron Kerry, the brother of Sen. John Kerry (D., Mass.) and Commerce Department general counsel, and Christopher Schroeder, assistant attorney general at the Department of Justice.

The initiatives would mark a turning point in Internet policy. Recent administrations typically steered away from Internet regulations out of concern for stifling innovation. But the increasingly central role of personal information in the Internet economy helped spark government action, according to people familiar with the situation.

The Wall Street Journal has been examining this online information-gathering industry in its "What They Know" investigative series.

Privacy issues are bubbling up on Capitol Hill. Rep. Joe Barton (R., Texas), co-chairman of the Congressional Privacy Caucus and ranking member of the House Energy and Commerce Committee, said he welcomed the administration's privacy initiative.

"Better late than never," Mr. Barton said. "I am glad more and more folks, in the government and otherwise, are beginning to realize that there is a war against privacy."

Yet the administration faces significant obstacles to enacting its privacy agenda. While the Republicans who now control the House of Representatives generally support privacy, they are unlikely to support any bill to expand the enforcement powers of the Federal Trade Commission, GOP congressional aides say. Privacy advocates will be reluctant to back legislation that lacks enforcement and is perceived as toothless.

There is no comprehensive U.S. law that protects consumer privacy online. Internet privacy issues generally are policed by the FTC, which can take action only if a privacy-violating action is deemed "deceptive" or "unfair."

That means the recent privacy crackdowns on Facebook Inc. and Google Inc. were led by Canada, Germany, the U.K. and other countries that have stronger privacy laws.

The central issue in writing federal privacy legislation is whether the Internet industry's efforts to police its own behavior has been effective enough. Proponents of legislation argue the industry is a Wild West where consumer data are gathered and sold without restrictions. Opponents of legislation say the industry is committed to providing tools to give consumers better insight into and control over data about themselves.

Commerce's draft report doesn't recommend specific legislation, but does indicate that self-regulation isn't robust enough, these people said. The administration would seek to guide the legislative debate through its new privacy office.

In remarks in Jerusalem in late October, U.S. Commerce Department Assistant Secretary Lawrence E. Strickling said that Internet privacy needs to be strengthened for the industry to sustain users' trust.

"It's difficult for consumers to act in their own interest if the law doesn't meet their basic expectations," Mr. Strickling said. He cautioned that the coming report isn't a final position statement, but rather the beginning of a "dialogue" that would lead to an official administration policy on information privacy.

A spokesman for the Commerce Department said the administration is "committed to promoting policies that will preserve consumer privacy online while ensuring the Web remains a platform for innovation, jobs, and economic growth. These are complementary goals, because consumer trust in the Internet is essential for businesses to succeed online."

The Federal Trade Commission is also expected to issue a report on Internet privacy by the end of the year. It is expected to call for the industry to develop a so-called do-not-track tool that people could use to remove themselves from online surveillance by marketers and others.

The prospect of new laws raised hackles at the Interactive Advertising Bureau, which represents the online-ad industry. "We believe we are living up to consumer-privacy expectations and are very advanced in privacy protections and innovation," said Mike Zaneis, senior vice president, who said he wasn't familiar with the report's contents.

Some privacy advocates expressed disappointment that Commerce isn't going further. "While [the report] gives lip service to legislation and fair information practices, its framework is based on industry self-regulation," said Jeff Chester, founder of the Center for Digital Democracy, who has met with Commerce officials about the report.

In 1999 President Bill Clinton appointed Peter Swire as chief counselor for privacy in the Office of Management and Budget. Mr. Swire helped craft privacy guidelines for the use of consumer medical and financial data. The new office would be similar but have more resources, and would engage other countries in privacy discussions and negotiations.

Google announces 'Instant Previews' Search Feature

Associated Press

People searching on Google will soon be able to see previews of websites before clicking on them.

The "Instant Previews" feature announced Tuesday is meant to help people bypass websites that are either irrelevant or simply too visually cluttered for their tastes. It works for Google Web searches, as well as searches for news, video and local businesses.

After clicking on an icon of a magnifying glass, people will see a picture of the website in the white space to the right of the search results within a tenth of a second. Although the preview photo will vary in size, just as Google Inc.'s image results do, Google designed the previews so that they'll never eclipse the search results and clutter the page.

Google will also show a box above the picture zooming in on the section of the website where the search terms appear. The search terms will be highlighted in that box.

While someone looks at a picture of a website, Google will load visual previews for other search results in the background so that people can quickly compare websites by rolling the cursor over the results on the page.

The feature is a follow-up to Instant Search, a feature Google unveiled in September that updates search results as people continue typing. Last week, Google said that people who own an iPhone or a smart phone running Google's Android software can use Instant Search too.

Google said it is introducing visual previews because word-based search results can only tell someone so much about what a website holds in store. People who use Google can already read short snippets from a site before they click on it, as well as, say, the date a news story or article was published.

All told, Google claims that people who use Instant Previews are 5 percent more likely to feel satisfied with the website they chose.

Google will roll out Instant Previews in 40 languages over the coming days.

Google Instant Adds $5M a Week to Google's Search Revenues

eWeek

Google may say it didn't launch Instant to make more bucks from Google.com searches, but that's exactly what has happened since Instant launched Sept. 8.

When Google launched Google Instant to the market in September, financial analysts assumed the company designed the predictive search technology to boost search revenues.

Analysts believed Instant, which displays changing results on the fly as users type, would help users conduct quicker searches, leading to more searching on Google, ultimately accelerating search ad revenue.

While Google has said it created Instant to improve the user experience, it also appears it is making more money from Instant—about $5 million per week extra.

Paid search management platform provider Marin Software found that impressions for paid search ads increased by more than 9 percent while clicks increased by more than 5 percent through the first two weeks of Instant's existence on Google.com.

Spending rose 2 percent after Instant launched, according to Marin, which compared data for keywords from the two weeks before and after the launch of Google Instant.

Marin, which sampled clients that together manage $1.3 billion in paid search spend per year, asserted this is proof people are actually searching and clicking more as a result of Google Instant.

Using Google's approximate $3.3 billion in AdWords revenues for Q3 and Marin's estimate that AdWords spending was up about 2 percent after Instant launched, Search Engine Land concluded Google pocketed an extra $10 million in two weeks from Instant.

A Google spokesperson told eWEEK Google wouldn't comment on "individual firms or campaigns' performance metrics."

Instead, he pointed to the comments Jonathan Rosenberg, Google's senior vice president for product management, made on the company's third-quarter earnings call Oct. 14, 12 days before the Marin report.

Unprompted, Rosenberg told financial analysts that the search engine didn't launch the Google Instant predictive search technology to make more money.

"We launched Instant because it's so much better for the user. In fact, from a revenue standpoint, its impact has been very minimal; and from a resource standpoint, it's actually pretty expensive. So why did we do it? Well, we believe from a user standpoint, Instant is outstanding and the data that we are seeing actually bears this out."

Google may say it didn't launch Instant expressly to boost search revenues, but Rosenberg and his colleagues had to know it would make more money. It's straight common sense: More searches on Google.com equals more search ads shown equals more clicks and impressions on AdWords ads.

Marin's data proves Instant is performing well for Google.

Rosenberg also said Google Instant for mobile will come this fall, and Google delivered that functionality for iPhone 4 and Google Android 2.2 handsets in the United States Nov. 4.

Bing goes live with Facebook Social Search

cNet

Bing has rolled out its new social search, a feature that can display profiles and updates from your Facebook friends as part of your Bing search results.

This step of the Facebook integration has been in the works for a few weeks, but the techs at Bing fine-tuned the feature before yesterday's rollout, according to a post on the official Bing blog.

The new social search integrates with Facebook in a couple of ways.

If you opt to link your Facebook account with your Bing log-in, searching for the name of one of your Facebook friends in Bing brings up a link to that person's entire profile in your results. This is true even if that person has elected not to share their Facebook profile with any search engines, since only you can see those results. So if you have a Facebook friend named Jerry Seinfeld, a link to his profile will appear alongside results for the famed comedian.

Early testers of the Facebook integration were apparently unhappy that they couldn't view the profiles of their friends through Bing with the same ease they could through Facebook itself, according to the blog, leading Microsoft to set up this specific type of access.

Further, Bing tweaked the age requirements. Facebook requires its users to be 13 or older, but Bing initially limited profile search results to people 18 and older. Based on customer feedback, Microsoft changed this option to let all your Facebook friends regardless of age show up in your Bing search results.

The Bing and Facebook team-up also can retrieve results for items "liked by your Facebook friends." So if you're looking for opinions on a certain movie or restaurant, Bing can show you any Facebook friends who "liked" those specific items.

The ease with which Facebook information can flow into Bing may arouse some privacy concerns. The integration is a one-way street, so no information goes from Bing back to Facebook. But still, anyone wary of the new social search can control or turn off the feature on both accounts.

Broadband Usage growing even as Gaps Persist

Associated Press

The U.S. still faces a significant gap in residential broadband use that breaks down along incomes, education levels and other socio-economic factors, even as subscriptions among American households overall grew sevenfold between 2001 and 2009.

What's more, even when controlling for key socio-economic characteristics, the U.S. continues to confront a racial gap in residential broadband use, with non-Hispanic white Americans and Asian-Americans more likely to go online using a high-speed connection than African-Americans and Hispanics.

Those are some of the key conclusions of a new analysis of Census data being released Monday by the Commerce Department. It found that the percentage of households that connect to the Internet using broadband grew to 63.5 percent in 2009 from 9.2 percent in 2001, reflecting increases across nearly all demographics.

The report - prepared by the Commerce Department's National Telecommunications and Information Administration and the Economics and Statistics Administration - is based on a Census survey of about 54,000 households conducted in October 2009.

The new report provides some of the deepest analysis yet of broadband usage trends in the United States. And it is likely to help guide Congress and the Federal Communications Commission as they develop policies to ensure that all Americans have access to affordable high-speed Internet service.

The analysis, said Lawrence Strickling, head of the NTIA, shows that "there is no single solution" to make this happen.

Among the major findings:

- 94.1 percent of households with income exceeding $100,000 subscribed to broadband in 2009, compared with 35.8 percent of households with income of less than $25,000.

- 84.5 percent of households with at least one college degree subscribed to broadband last year, compared with 28.8 percent of households without a high school degree.

- 77.3 percent of Asian-American households and 68 percent of non-Hispanic white households subscribed to broadband last year, compared with 49.4 percent of African-American households and 47.9 percent of Hispanic households.

- 65.9 percent of urban households subscribed to broadband in 2009, compared with 51 percent of rural households.

Closing such gaps is a top priority for the FCC, which released a sweeping national broadband plan filled with policy proposals in March. The agency's top recommendations include tapping the federal program that subsidizes telephone service for poor and rural Americans to pay for broadband, and unleashing more airwaves for wireless connections. Wireless broadband is seen as a particularly attractive option for bringing high-speed connections to rural areas that may be too sparsely populated to justify costly landline networks.

At the same time, the NTIA and the Rural Utilities Service, part of the Agriculture Department, have been handing out roughly $7 billion in stimulus money to pay for new broadband networks and programs to get more Americans online.

Strickling stressed that one key challenge for policymakers lies in convincing Americans who are not online of the benefits of broadband.

The Census data found that 38 percent of Americans who don't have broadband at home say they don't subscribe because they don't need it, while 26 percent say it's too expensive and only 4 percent say it's not available where they live.

A survey conducted by the FCC last year reached many of the same conclusions. It found that 35 percent of Americans do not use broadband at home, including 22 percent of adults who do not use the Internet at all. Of that 35 percent, 36 percent say it is too expensive, while 19 percent do not see the Internet as relevant to their lives. Another 22 percent lack what the FCC calls "digital literacy" skills.

To try to change such attitudes, the stimulus program includes $250 million for projects to teach digital literacy skills and encourage broadband adoption, plus another $200 million for public computer centers.

One surprising finding of the new Commerce Department report is that African-Americans and Hispanics lag behind in broadband adoption even when controlling for factors such as income and education. The data show a gap of 10 percentage points in broadband use between whites and blacks and a gap of 14 percentage points between whites and Hispanics even after controlling for socio-economic factors.

Although the data do not provide an explanation for these numbers, Rebecca Blank, under secretary for Economic Affairs, believes it could reflect limited exposure to the Internet among certain racial groups.

"Internet usage relies on networks," she said. "If the people around you don't use the Internet, you will be less likely to use the Internet, too."

Cable Subscribers flee, but is Internet to Blame?

Associated Press

 

TV subscribers are ditching their cable companies at an ever faster rate in the past few months, and many of them aren't signing up with a satellite or phone competitor instead.

Their willingness to simply go without pay television could be a sign that Internet TV services such as Netflix and Hulu are finally starting to entice people to cancel cable, though company executives say the weak economy and housing market are to blame.

Third-quarter results reported this week by major cable and satellite TV companies show major losses, but don't settle the question of what's causing them.

If "cord-cutting" in favor of Internet video is finally taking hold, that has wide-ranging implications. Consumers who use the Internet to get their movies and TV shows bypass not just the cable companies, but the cable networks that produce the content. The move could have the same disruptive effect on the TV and movie industries as digital downloads have already had on music.

A few weeks ago, the CEO of phone company Verizon Communications Inc. likened cord-cutting to what started happening to the local-phone companies five or six years ago, when people started giving up their landlines in favor of relying solely on their cell phones.

"The first thing when that happens is you deny it," Ivan Seidenberg said. "I know the drill. I have been there."

On Thursday, Time Warner Cable Inc.'s chief operating officer, Landel Hobbs, said the company doesn't see evidence of people dropping cable in favor of the Internet. He said the biggest subscriber losses have been among people who don't have cable broadband services; high-speed Internet - from cable or a competitor - is key to watching video online. These people seem to be going to satellite or giving up on pay TV entirely.

On the theory that college students might be among the first to drop cable TV, the company looked at changes in subscriber figures in college towns such as Austin, Texas, and Columbus, Ohio. They weren't out of line with previous years, and they corresponded to the level of student enrollment, he said.

"We'll continue to monitor cord-cutting, but haven't found evidence where you might expect to see it," Hobbs told analysts on a conference call.

Time Warner Cable lost 155,000 video subscribers in the July-September quarter, compared with 64,000 a year ago.

The only larger cable company, Comcast Corp., reported last week that its subscriber loss more than doubled in the third quarter, to 275,000. Comcast said many of those leaving had taken advantage of low introductory rates that the company offered last year when the analog TV broadcast network was shut down.

Of the satellite companies, DirecTV gained subscribers and Dish Network Corp. lost them. On a conference call Friday, Dish CEO Charlie Ergen said the Internet was making itself noticed as a competitor.

"You know, my kids think I'm crazy for being in the pay-TV business because they don't pay for TV. They don't pay for movies," Ergen told analysts.

The country's eight largest publicly traded pay-TV companies, representing about 85 percent of the subscriber total, had reported their results for the third quarter by Friday. These cable, phone and satellite companies showed a combined gain of 66,700 video subscribers, or a 0.3 percent increase at an annualized rate, about a third the growth of the population.

The figure was a slight recovery from the seasonally weak second quarter, when they gained just 12,400 subscribers. But it's far short of the 401,300 subscribers gained a year ago.

Missing from the tally is the third-largest cable company, Cox Communications, which is privately held and doesn't report subscriber counts publicly. If it lost cable subscribers at the same rate as Comcast and Time Warner Cable, the nine largest pay-TV companies had zero net gain for the latest quarter and lost subscribers in the second.

Cable companies have been losing video subscribers for some time, but they have been compensating by upgrading basic subscribers to more expensive digital tiers, as well as adding broadband and phone subscribers.

However, both Time Warner Cable and Cablevision Systems Corp. lost digital video subscribers in the third quarter. Both added record-low number of phone subscribers, as years of growth are coming to an end.

Meanwhile, Netflix Inc.'s streaming service has become so popular that it is now the largest source of U.S. Internet traffic during peak evening hours, according to Sandvine Inc., a Canadian company that supplies traffic-management equipment to Internet service providers.

A variety of gadgets can send Netflix's streams to the living room TV, including game consoles and the $99 Apple TV box. Many high-end TVs now come with the built-in ability to play Internet content.

Thomas Clancy Jr., 35, in Long Beach, N.Y., canceled the family's Cablevision subscription this spring. He said he has been happy with Netflix and other Internet video services since then, even though there isn't a lot of live sports to be had online.

"The amount of sports that I watched certainly didn't justify a hundred-dollar-a-month expense for all this stuff. I mean, that's twelve hundred dollars a year," Clancy said. "Twelve hundred dollars is ... near a vacation."

But Clancy - who has no relation to the thriller writer - is also an example of the hurdles cord cutters face. He uses an Internet-connected Blu-ray player to get Netflix movies to the TV. And he pulls a cable from his computer to the TV for Internet content Netflix doesn't have. Clancy owns a computer consulting firm and is tech-savvy enough to do all that. Most people wouldn't know how.

Cablevision wanted to raise Clancy's Internet bill when he canceled TV service. That would have made cord-cutting less attractive, but he happens to live in an area where Verizon provides Internet service at speeds that are comparable with the best cable has to offer. He got a better deal from Verizon and switched to that provider.

Most people who have the technological skills to take advantage of Internet video find that the selection of movies and shows isn't broad enough to make the jump worth it, Sanford Bernstein analyst Craig Moffett said.

On the other hand, poor people have an excellent motive to cut cable and simply replace it with an antenna or nothing at all, he said.

"The price of cable TV has risen to the point where it's simply not affordable to lots of lower-income homes. And right now there are an awful lot of lower-income homes," Moffett said. "The evidence suggests that what we're seeing is a poverty problem rather than a technology phenomenon."

In addition, high unemployment means fewer new households, as kids are probably delaying moving out of their parents' houses, or people move in with roommates. That can reduce the number of households that pay for TV.

Cable companies would like to get low-income customers back with cheaper cable packages, but their hands are tied. Content providers such as The Walt Disney Co. and News Corp. won't license their channels one by one, so subscribers have to take big, expensive channel packages, or very basic ones, which offer little beyond what's available with an antenna.

Content providers now get billions of dollars in fees from cable service providers, and they want to make sure that whatever new industry model comes along, they'll get paid. It's not obvious yet that Internet video will let them sustain their profit levels.

Six companies create the content that consumes 85 percent of U.S. viewing hours, Moffett said. "Until they get on board, the train's not leaving the station."

Start-Up Covets Browser Market

The Wall Street Journal

A Silicon Valley start-up is entering one of the most hotly contested software markets—Web browsers—with a strategy to integrate social networking and other features that have changed the way people use the Internet.

The closely held company, RockMelt Inc., is backed by investors that include Marc Andreessen—who helped develop and popularize the first widely used browser—and William Campbell, a veteran technology executive who is chairman of Intuit Inc. and a board member of Apple Inc.

RockMelt, which is to release a test version of its software on Monday, is entering a market dominated by Microsoft Corp.'s Internet Explorer, Mozilla Foundation's Firefox, Google Inc.'s Chrome browser and Apple's Safari. The start-up hopes to differentiate its product with some fundamental technical differences.

One is that RockMelt isn't only software. It comes with an Internet service that the company will operate and use to funnel updated information to users.

They must log into the software, using their credentials from Facebook Inc. The design allows information about friends from the popular social network to appear without having to keep returning to Facebook.

A selection of a user's Facebook friends remains on one edge of the browser, making it easy to send instant messages to them or share videos or other items by dragging it to that portion of the screen, said Eric Vishria, RockMelt's co-founder and chief executive. Another key feature, he said, is that updates from news sites are pushed constantly to the browser, so users don't have to keep visiting those sites for the latest information.

"The way people use the Web has changed dramatically over the years, but browsers haven't changed much," Mr. Vishria said. RockMelt "brings the browser into this decade," he said.

The company has links to a prior decade of browser wars. Its co-founder, Tim Howes, worked in the late 1990s at Netscape Communications, the company co-founded by Mr. Andreessen that pioneered the browser market until overtaken by Microsoft. He and Mr. Vishria later worked at Loudcloud, a company led by Mr. Andreessen and Ben Horowitz that was renamed Opsware and sold to Hewlett-Packard Co.

Andreessen Horowitz is the lead investor in RockMelt, which has raised $10 million. Other investors, besides Mr. Campbell, include Diane Greene, former chief executive of software maker VMWare Inc., and Ron Conway, a well-known Silicon Valley investor.

Charlene Li, an analyst at the market-research firm Altimeter Group, said that a company called Flock Inc. previously introduced a browser targeted for social-networking applications and has failed to make much headway. On the other hand, she said, the rise of Chrome—which offered tighter integration of Google's search functions than competing products—indicates that users remain open to trying new browsers with the right features.

"This is not going to be everyman's browser," Ms. Li said of RockMelt. But the ability to make browsing a more shared experience with a user's Facebook friends could be a powerful draw to some people, she said.

RockMelt plans to give away the browser. Mr. Vishria said the company has no immedate plans for generating revenue, but he said future options include receiving payments for referrals from search engines, an income source for other browser makers.

Success Tips for Social Media Customers

Forbes

Social media usage continues to grow explosively. Not surprisingly, businesses want to leverage social media for customer acquisition and retention, as well as brand building. Providing good customer service to the social consumer is emerging as a critical imperative to achieving these objectives since social media is also a natural venue for customers to air their grievances.

While going social in customer service makes sense for many businesses, it might pay to be "antisocial" first, meaning a deliberate approach to social media customer service will maximize the odds of success. It is not uncommon for businesses to simply rush into social without giving themselves adequate time to assess the need, develop a strategy, formulate policy and practices, and put the required technology, process and people infrastructures in place. The Web is rife with examples of poor social practices caused by rushing in.

Here are five "antisocial" steps businesses need to take before making the social plunge, in order to avoid such missteps and the resultant damage to their brands:

1. Do I really need to be social? Social media is best suited to address customer service queries of low-to-moderate complexity. Complex queries will involve significant back and forth and one-to-one communications that are often not relevant to the broader community.

2. Get picky about the venue. One size does not fit all when it comes to social media. As an example, social "clubs" like supplier-moderated or third-party-moderated forums are more appropriate for B2B businesses, for instance, than broad social networks like Twitter and Facebook. The more complex the products and service interactions, the better is the fit for focused media like forums and traditional one-to-one communications. Moreover, answers to complex queries do not lend themselves to the character limitations of a medium like Twitter, further limiting the fit. Pick the medium that makes sense for your business and prioritize your investments accordingly.

3. Get picky about the people. It is important to prioritize social customer service based on the financial and influence value that the social customer brings to the business. The Pareto principle applies here as well--a minority of social customers is likely to add the most financial value and wield the most social influence. Businesses are better off focusing on these high-priority customers before expanding their social efforts to the broader market.

4. Don't be impulsive. The speed of social can thrill or kill. The velocity of market influence and the resulting brand enhancement, or damage, is exponentially higher in social media than traditional one-to-one communication channels. This applies to business brands (e.g. "United Airlines broke my guitar" incident) or personal brands (e.g. Tiger Woods). Furthermore, customers often go social with their complaints when traditional customer service channels fail.

So, there's less room for error in social customer service, and the speed and quality of responses need to be much higher in social media than in traditional channels. Make sure your organization has the policies, technology, knowledge, process and people in place to provide high-speed, high-quality customer service that is required by social media before jumping in. No social is better than bad social!

Furthermore, organizations need to make sure that they do not create a social interaction silo that is disconnected from traditional interactions of the social customer with the business. Cross-channel amnesia on the part of businesses is a common problem in traditional media, and customers wouldn't want to see it extended to social media as well.

In fact, a Pan-European survey of 4,000 telecom subscribers in 2010 revealed that customer service basics such as getting knowledgeable and consistent responses within and across traditional one-to-one communication channels was more important to them than social customer service or access to human agents.

5. Research before you leap. While social engagement and interactions take time to prepare for, businesses should start monitoring social networks suited to their business sooner rather than later. This will help them identify opportunities they could leverage and issues they need to defuse, as well as make the internal business case for implementing social customer service and obtain funding.

A final word
Social customer service can enhance customer experience and brand loyalty. However, an "antisocial" wet-foot-first approach rather than an "ultra-social" jump-headlong approach will increase the odds of success.

Facebook’s Initial Crew Moving On

NY Times

 

 

Facebook, the most successful start-up of the last decade, is only six years old, and an initial public offering is still a way off.

But a number of Facebook’s early employees are giving up their stable jobs, free food and laundry service to build their own businesses. Many of them are leaving as wealthy, either on paper or after cashing in their ownership stakes to do what they say they like best: start companies.

Dustin Moskovitz, 26, who co-founded Facebook with his Harvard roommate Mark Zuckerberg, left his job on Facebook’s technical staff to create Asana, which makes software that helps workers collaborate.

Another Facebook co-founder, Chris Hughes, also 26, has started Jumo, a social network for “people who want to change the world.”

Dave Morin, formerly the senior platform manager, is building Path, a still-secretive venture, while Adam D’Angelo, who was Facebook’s chief technology officer, and Charlie Cheever, another senior manager, set off in 2008 and 2009 respectively to start Quora, a question-and-answer site. More than half a dozen start-ups can trace their origins to Facebook alumni.

The departures follow a familiar pattern among other Silicon Valley successes like Yahoo, eBay and Google. After amassing fortunes, early employees start walking out the door.

PayPal’s have gone off to start YouTube, Slide and Yelp, and staked Facebook. They are known as the PayPal Mafia. Google’s former employees are called Xooglers. Mr. Morin, who left Facebook this year, offered this suggestion: Facebook Society. “We’re social,” he explained.

But the Facebook Society is slightly different from the earlier alumni associations. The other serial entrepreneurs usually cashed out before resigning.

These ex-Facebookers are leaving before any I.P.O. of the company’s shares. They can do that because Facebook shares are surprisingly liquid. The rise of exchanges like Second Market and SharesPost over the last couple of years have allowed shareholders in private companies to sell their stakes more easily than before. These markets function much like a stock exchanges for publicly traded companies, although the pool of buyers and sellers is much smaller. Facebook’s overall value is around $30 billion on the exchanges.

Last year, Facebook helped current and former employees to cash out some of their shares to a Russian Internet company. Digital Sky Technologies, now known as Mail.ru, agreed to buy up to $100 million in stock to increase its existing stake in Facebook.

Many of Facebook’s alumni are wealthy from stock options they earned while working there. The Facebook expatriates are not saying who among them is rich on paper only and who has actually cashed in some holdings. But Mr. Moskovitz owns around 6 percent of Facebook, according to the book “The Facebook Effect,” and would therefore be worth about $1.8 billion.

By no means is Mr. Zuckerberg watching a mass exodus. The number of people leaving has been relatively small. Larry Yu, a Facebook spokesman, said that the company’s early employees tended to be entrepreneurs at heart, and it was therefore not surprising that they had left to start their own companies. “We don’t view attrition as a particularly prominent issue for us at this time,” he said.

Former Facebookers describe the company as a fabulous training ground. Mr. Zuckerberg hammered home the lesson of focusing on the long term by declining to accept ads on the site during its infancy or to be acquired by other companies.

Fellow colleagues expounded on entrepreneurship. Netanel Jacobsson, who was Facebook’s director for international business development before leaving last year, said the company’s start-up culture inevitably changed as a few hundred employees grew to around 1,700 today. “Eventually, I felt it became too big and too corporate, and that’s when I decided to leave,” Mr. Jacobsson said.

After taking time off to decide what to do, he began advising a social gaming company. He liked the industry so much that he created a social gaming company of his own, PlayHopper, which is to introduce its first product this year.

The company, which is financed from Mr. Jacobsson’s pocket, has a dozen or so employees scattered across the globe. “I’m back to what I really like and what I’m really passionate about — the growth stage of a company, and watching it take off,” Mr. Jacobsson said.

Getting the business off the ground at his age — 40 — is more complex than for other of Facebook’s spawn, who tend to be much younger, he said. For one thing, he has a wife and three children. “It’s almost a suicide mission,” Mr. Jacobsson said.

Mr. Morin, 30, said that he had always harbored entrepreneurial ambitions, even before joining Facebook in 2006. “My dream was always to start a company,” Mr. Morin said. After helping to build two central pieces of Facebook’s service, Connect and Platform, he saw an opportunity in the growing use of smartphones and decided to capitalize on the trend before it was too late.

In February, Mr. Morin left Facebook and began working on Path, which is to introduce its service before the end of the year. He has assembled a team of a dozen employees who work in a high-rise apartment building in San Francisco.

Early on, Path’s team tested a service that enabled users to create and share lists online. Mr. Morin said the company had since changed direction, but he declined to offer details.

Facebook’s former employees say that their tenure provided them a fantastic network of contacts to tap into. Although the former Facebook workers do not meet formally, they often ask one another for advice.

Arranging meetings with venture capitalists or angel investors is also easier when you have Facebook on your résumé. Former colleagues turn out to be some of the most eager investors, much like the PayPal Mafia, whose members have a reputation for supporting one another’s companies.

Matt Cohler, a former Facebook vice president who is now a venture capitalist with Benchmark Capital, epitomizes Facebook’s clubby extended family. He has invested some of his own money and Benchmark’s in several companies founded by former colleagues, including Quora and Asana.

As with many families, Facebook’s relationship with its start-up offspring includes some tension. Facebook is a tough competitor when it sees an opportunity, even if that opportunity is already the focus of some of its former employees. Quora publicly introduced its question-and-answer service in June. Facebook followed with a similar service a month later.

Facebook has tried to minimize conflict by having exiting employees agree to no-poaching agreements.

Many former Facebook employees acknowledge the extra pressure to succeed because of their pedigree. If their companies flop, they know that they will be in the headlines, whereas other start-ups that fall short may go unnoticed.

“There’s a lot of expectations, so the stakes are higher if you fail,” Mr. Jacobsson said.

Google makes Gmail Statement Regarding Google Buzz Lawsuit

    From: Google Buzz
    Date: November 2, 2010 3:30:00 PM EDT
    To: @gmail users
    Subject: Important Information about Google Buzz Class Action Settlement

Google rarely contacts Gmail users via email, but we are making an exception to let you know that we've reached a settlement in a lawsuit regarding Google Buzz (http://buzz.google.com), a service we launched within Gmail in February of this year.

Shortly after its launch, we heard from a number of people who were concerned about privacy. In addition, we were sued by a group of Buzz users and recently reached a settlement in this case.

The settlement acknowledges that we quickly changed the service to address users' concerns. In addition, Google has committed $8.5 million to an independent fund, most of which will support organizations promoting privacy education and policy on the web. We will also do more to educate people about privacy controls specific to Buzz. The more people know about privacy online, the better their online experience will be.

Just to be clear, this is not a settlement in which people who use Gmail can file to receive compensation. Everyone in the U.S. who uses Gmail is included in the settlement, unless you personally decide to opt out before December 6, 2010. The Court will consider final approval of the agreement on January 31, 2011. This email is a summary of the settlement, and more detailed information and instructions approved by the court, including instructions about how to opt out, object, or comment, are available at http://www.BuzzClassAction.com.

Twitter Tests Intuitive Advertising Systems

Bluhalo

 

Don't be surprised if you suddenly notice ads while using your Twitter account that seem to almost eerily match the content of your tweets and are strangely relevant to the topics that you most often discuss on the popular social media website.

According to the micro-blogging website's estimates, nearly 100 million tweets are posted by members each day, and, in a new move, the advertising that appears in any given user's timeline will attempt to focus on the topics or keywords mentioned in their posts.
As such, a Twitter enthusiast who blogs mostly about health or medical issues may find advertisements from companies or organizations offering alternative medicine solutions to common ailments.

Twitter's new advertising program is called "Promoted Tweets," and while the social media website might soon extend this revenue generating strategy to include all users, during the initial testing phase targeted ads are only visible to those who access their Twitter account through HootSuite, a third-party website.

Matt Graves, Twitter's spokesperson, tried to calm potentially nervous social media enthusiasts who may have mixed feelings about seeing ads each time they log onto their account and the increasingly commercialized nature of this service. Graves insisted that the company's approach to targeted advertising will be "thoughtful" and actually aim to improve the site's usability.
 

In reaction to the murmurs, Twitter is taking it slow and has decided to postpone extending the ad system to all users until the firm feels that it actually improves each user's experience in a noticeable manner. A similar situation occurred earlier this year when Twitter started displaying ads on search results, to great success. In August alone, Twitter users searched for well over 130 million terms, using the website's dedicated search engine.

EBay Attempts to Clean Up the Clutter

The Wall Street Journal

Redesign This Week Uses Technological Overhaul to Organize Thousands of Listings

 

As eBay Inc. prepares for a critical holiday shopping season, the company this week plans to unveil new elements of an overhaul in how shoppers find and buy products on its Web site.

Behind the new look, which includes eBay's first major home-page redesign in nearly four years, is an urgent effort to close a technology gap that has caused the onetime Web pioneer to lag behind rivals like Amazon.com Inc. Amazon for years has had many of the same features that eBay is adding.

"One of the most important things we had to do was become more of a technology-driven company," says eBay Chief Executive John Donahoe. He says that while the company has made "significant progress" in its turnaround, eBay is only about halfway through some major technological goals, such as building a product catalog for the millions of products sold on eBay.

As part of the overhaul, eBay's home page will provide recommendations based on previous searches and feature a list of the hottest items. In recent weeks, shoppers looking for DVDs, MP3 players or GPS devices have begun seeing a single page for each model of a product, consolidating the sometimes thousands of different listings by sellers and highlighting the best deal at the top. The company says more such pages are to come.

The technological shift is crucial in turning around eBay. Over the past two years, the San Jose, Calif., company's core marketplace business has underperformed the U.S. e-commerce market. And while sales on eBay were twice as much as those on Amazon last year, Amazon in October of last year moved ahead in U.S. traffic.

This holiday quarter, a period in which eBay typically sells 30% of its yearly nonauto merchandise, will provide a test of whether the changes are effective and working fast enough.

"If they hadn't addressed their technology problems, they would have continued to lose market share," says Sandeep Aggarwal, an analyst at Caris and Co.

Created in the late 1990s, eBay's marketplace was built to let mom and pop merchants sell all sorts of goods in auctions. Merchants typed in details about millions of products, giving the site an assortment of goods that remains unrivaled. But eBay had few ways to sort and organize those individual listings, other than by which auction was ending soonest.

Meanwhile, retailers like Amazon focused on new, fixed-price merchandise, relying on organized catalogs that let the online retailer keep track of what it was selling. That created the ability to cross-sell products and recommend other merchandise.

EBay's system, which involved 25 million lines of inflexible code, soon became a liability. The company, for example, couldn't figure out which of its hundreds of thousands of "iPod" listings were for a given model or for iPod accessories.

EBay's challenges with outdated technology are common for Web pioneers, whose systems were built with custom software that is now too old and rigid to adapt to a competitive and fast-moving market.

To change a website's underlying technology is "one of the most difficult and dreaded things you can do" as an information-technology manager, says Rob Enderle, of tech consulting firm Enderle Group. "The benefits are fuzzy and the risks are very real. Yet you have to do it. If you don't, you fall behind and you go out of business."

EBay's tech overhaul began soon after Mr. Donahoe became CEO in 2008. He quickly hired a new chief technology officer, Mark Carges, and gave him free rein and sufficient budget to recode the software that powers eBay's marketplace.

"It's like having the jet engines changed while the plane is flying," Mr. Carges says. He ended up hiring 150 engineers. Mr. Carges also had eBay purchase Positronic Inc., which has built predictive models for financial-services clients.

Early last year he assigned the Positronic team, including eBay Vice President Dane Glasgow, to revamp eBay's search engine and build a catalog so the company could organize its listings, steps designed to help shoppers find what they want to buy more quickly.

The engineers created templates for types of products, filled with details like color, make and model. After a year of work, eBay's catalog had grown to 8% of all listings from 3%. Now, two years in, some 20% of eBay's listings are in the catalog.

Mr. Donahoe says eventually eBay could catalog about half of the site's inventory. The other half, he says, defies cataloging because it consists of odds and ends, like fossils or cave homes. He has set an internal goal to increase the size of catalog to 40% of inventory by the end of next year.

The effort has had to overcome cultural stumbling blocks. For years, tech staff didn't attend key strategy meetings, including those in which eBay decided to emphasize fixed-priced goods.

Mr. Carges, the technology chief, is now a key voice within the company and encourages engineers to take the initiative in testing new ideas and adding features. He created an area on eBay's site called "The Garden," where engineers can try ideas and solicit shopper feedback.

The underlying tech changes, which were made in consultation with some merchants, already have enabled eBay to roll out popular shopping apps for smartphones and shopping pages built with eBay's new catalog and search technology.

Some eBay merchants applaud the changes. "This should be a huge benefit to us and eBay buyers who will benefit from a better shopping experience," says Israel Ganot, CEO of used-electronics seller Gazelle.com.

But other merchants say the effort is too little, too late. Skip McGrath, a popular eBay merchant who sells kitchen items and writes books about e-commerce, says eBay's new catalog and search engine haven't helped him sell items like knives.

"We are on eBay version 2.999216. They have never made the step to eBay 3.0," he says.

EBay says a fashion section of the site rolled out in April that was made possible by the tech improvements contributed to an 8% increase in third-quarter sales of clothing, shoes and accessories.

"We have been responsible in driving pretty aggressive change," says Mr. Donahoe. Still, "I always want to go faster."