Kenneth Musante

Beware the Bubble

Billion dollar valuations for Twitter and Groupon “mathematically insane,” according to IAC founder and chairman Barry Diller.

Diller addressed a packed house at the SXSW conference in Austin, and covered a range of topics from Apple’s iPad 2 and the issue of network neutrality, to Rupert Murdock’s iPad only magazine, The Daily, and Hulu.com. But what caught our ear was his more pessimistic view of some of the crazy prices people are paying for startups these days.

Twitter, which gained early publicity at the SXSW conference in 2007, received a valuation of between $4.2 billion and $4.5 billion after a fund run by Silicon Valley investor Chris Sacca, with backing from JPMorgan Chase, bought about $400 million worth of shares in February.

And group buying site Groupon, which at one point turned down a $6 billion buyout offer from Google, is pushing toward an IPO that could be worth $15 billion, according to the New York Times.

It’s mostly hot air according to Diller, who is no stranger to bubbles. He led the media conglomerate that would come to be called InterActive Corp. through the dot-com bubble late 90s. However, this time around, “all the money that’s going to be lost will be by people who can afford to lose it,” he said.

Forget March Madness… Get Ready for Startup Madness

Startup incubator TechStars is holding a bracket-style tournament to find out which startup reigns supreme.

Sixty four startups that have a functional product, but have not been through the TechStars program, and have not yet raised or earned $250,000 will face off against each other in a battle royale for $25,000 in prizes. The tournament winner based on user votes will get Rackspace hosting, free advertising, and other goodies, while semi-finalists get invited to the TechStars for a Day mini-camp, and automatic consideration as a TechStars program finalist.

The voting will start on March 14, and TechStars is taking nominations through March 9. The 64 with the most nominations will make the cut.

Nominations are being accepted through the TechStars web site, and through Twitter by tweeting “Hey @TechStars, I nominate @COMPANY TWITTER NAME HERE for the @StartupMadness Tournament http://tsta.rs/sumadness”

Square Drops Transaction Fee

Square, the startup that lets mobile vendors take credit card payments through their phones has taken a jab at competitors by dropping its $0.15 per transaction fee.

Now Square says it will charge a flat 2.75% of any transaction, regardless of size. The goal is to make payments easier for users and combat hidden fees commonly seen in the credit card industry, according to General Manager Keith Rabois.

“In the end accepting payments should be as easy as using a microwave,” Rabois told TechCrunch.

Competitors such as Intuit’s GoPayment system charge the flat 15 cent fee per transaction in addition to taking a percentage cut.

Payments via the internet have necessarily been growing less and less complicated, and more and more mobile. Shoppers can send and receive payments via PayPal on their phones, they can send money via Twitter, and a technology called Near Field Communication will let people zap money into the pockets of vendors by simply waving their mobile devices over a receiver.

White House Explains 'Startup America' with Markers

Still confused about Presidant Obama’s Startup America program? Well, Austan Goolsbee, Chairman of the Council of Economic Advisers, has drawn everything out for you on a white board.

As part of the White House White Board series, Goolsbee explains how the public-private initiative is trying to get entrepreneurs over the “valley of death.” He actually presents a fair overview of how it’s all theoretically supposed to work: Entrepreneurs need capital, less red tape, mentorship, and low taxes.

He goes on to say that “Americans understand the business model of a kid in a garage who creates the giant company. We invented it! We’ve done it before, we’re doing it now, and with Startup America we’re gonna do it better than ever!”

You said it Michael Scott! Er… I mean Chairman Goolsbee.

You Launched the Company, Now Wear the T-Shirt

Business around Silicon Valley is booming biggert than ever. And in a bid to make fun of the rapidly growing startup scene, clothing designer Gemma Aguiar launched Startup Apparel, a company that sells goofy t-shirts aimed at the entrepreneurial set.

Aguiar is no stranger to startups. Spurred on by friends such as Chris McCann, co-founder of Startup Digest, she started Design Like Whoa!, a custom printing business back in December. After seeing all the startup activity around her, she thought “I can make shirts out of this and it would be really funny.”

With slogans such as the hash tag-infused “It’s All About the #startuplife,” and “Will Work for Equity,” they aren’t for everybody. But for the jeans and t-shirt entrepreneurs in the San Francisco Bay Area, we think they fit just fine.

Groupon Super Bowl Ads: Fun or Flop?

During one of the Super Bowl’s many commercial breaks on Sunday, viewers were treated to a string of controversial ads from Groupon, the two-year-old group buying startup that has been raking in cash from investors (and customers).

Groupon brought in This is Spinal Tap director Christopher Guest to direct four spots that juxtaposed celebrities and socially or environmentally conscious causes against tangentially related cut-rate deals that can be found on Groupon. In one spot, Elizabeth Hurley addressed the issue of the destruction of the Brazilian rainforests, and then began hawking 50% of Brazilian waxes. In another, Cuba Gooding Jr. encouraged viewers to save the wales, and then pitched a wale watching cruise.

The spots have been taking a lot of hits from critics who say the ads were insensitive and made light of issues that demanded more serious discussion. The most panned one featured Timothy Hutton speaking out against the oppression of the Tibetan people, and then advertising a deal on fish curry at Himalayan Restaurant in Chicago.
Read more

Dating Site Apes 250,000 Facebook Profiles

When online dating site lovely-faces.com launched this week with 250,000 profiles, the German creators Paolo Cirio and Alessandro Ludovico proudly announced that they had acquired those users not from legitimate sign-ups, but from scraping public Facebook profiles. Their explanation: it was an art project. Facebook is not happy.

Cirio, a media artist, and Ludovico, editor-in-chief of Neural, a new media arts magazine, claimed that they used custom software to collect information about 1 million public Facebook profiles. They scraped names, locations, and photos, and then picked out key descriptive words such as “sly” and “easy going” to organize their unwitting “users” into dating categories.

The duo claims it was all an experiment to point out how easy it is to steal peoples identities.
Read more

Obama Launches Startup Non-Profit

In a bid to encourage U.S. entrepreneurs, the White House launched the Startup America Partnership, a non-profit campaign to encourage the development of new businesses.

With backing from Facebook, IBM, Intel; and leadership from AOL founder Steve Case, Startup America, the campaign pledged to provide $2 billion in matching funds from the Small Business Administration to select startup companies.

In partnership with Colorado-based startup incubator TechStars, the campaign also intends to expand the TechStars mentorship model to nurture 6,000 new entrepreneurs around the country; and encourage large businesses to invest in smaller ones. IBM has pledged to invest $150 million in new entrepreneurs, and Intel has pledged $200 million, according to U.S. Chief Technology Officer Aneesh Chopra.

Other partners include Facebook, which intends to host startup events around the country, HP, and Google.

Startup America will be funded in part by Case’s Case Foundation and the entrepreneurship-focused Kauffmann Foundation.

Kickstarter and Sundance to Help Films Get Funded

Kickstarter, the startup that helps projects find funding through crowd sourcing, has hooked up with the Sundance Institute to help fund independent film projects.

Many indie films have already gotten financial backing on Kickstarter, including at least five that were shown at this year’s Sundance Film Festival. The company also maintained a presence at the festival, with co-founder Yancey Strickler holding a series of filmmaker workshops.

Starting next month, Sundance will be picking plays, documentaries, feature films, shorts, and other projects from affiliated artists, and using Kickstarter to gather official backing from alumni and other film fans. The projects will also be featured on Sundance.org.

“Expect the first projects from this collaboration in the coming weeks. We’re looking forward to them,” wrote Strickler on the company blog.

Kickstarter has been on a roll since launching in 2009. More and more ambitious projects are pulling in respectable levels of funding. For example, back in December a project to make an iPod Nano watch raised nearly $1 million.

Kickstarter takes a 5% cut of all funds raised, has been used to fund everything from films and music to hardware projects and video games.

Social Analytics Startup Predicts Purchases

Do you know what you’re going to buy tomorrow? Social analytics startup Viralheat thinks it does. The company’s new Human Intent analysis engine scans through Twitter tweets and other social media updates looking for key phrases that could indicate that someone is ready to buy.

Human Intent looks for key words and phrases in a potential customer’s social stream, and then finds contextual and linguistic cues to determine where a person is in the purchasing process, according to co-founder and CTO Vishal Sankhla in an interview with Mashable. He claims the tool can even figure out if a person is complaining about an existing product they own and thinking about purchasing a replacement.

According to Sankhla, Viralheat came up with the idea about a year ago after analytics customers began saving key phrases such as “looking to buy a bed,” or “looking to buy a phone,” to determine peoples intent to buy.

The Human Intent feature launched Tuesday in beta, and is only available to existing Viralheat customers, but the two-year-old Viralheat says it will eventually roll out a full scale product.