Archive for the ‘legitimate business’ tag
The Next Billion-Dollar Startup
The truth about Instagram.
There wasn’t a building high enough for me to jump off of when I first heard about Facebook acquiring Instagram for a billion dollars two weeks ago. I know that sounds extreme, but I’m honest enough to admit that I could not see straight for a couple of days post-deal announcement. It was nothing against Instagram (I love the app), it was the purchase price that made me all weak in the knees. While everyone is still wondering how the valuation of a twelve-person employee business, that hasn’t been around for three years and has no revenue could go for that kind of whopping amount, many conspiracy theorists think that it’s more of a Facebook play to prove to the market that if Instagram is worth a billion dollars, than Facebook must be worth (at least) one hundred billion dollars. Between us friends, just writing out sentences like that makes me feel like I’m typing a script for the next Austin Powers movie, instead of what I’m really trying to do: write a legitimate business blog post. Some may call it a bubble, others may claim that it’s a gross over-evaluation… either way, we’re now evaluating startups using the “b” word and that changes everything. Again.
If it happened to Instagram, the next logical business questions are…
- Who will be the next startup to get that kind of deal going?
- Will it be for more money?
Believe it or not, there is a laundry list of great, new companies who had very interesting valuations prior to the Instagram acquisition, but now they’re looking prettier than ever. Companies like Rovio (makers of the highly addictive Angry Birds video game), Foursquare (the location-based mobile social network), Spotify (the socially-driven music streaming service) and even Airbnb (instead of staying at a hotel, you can pay to crash at someone’s pad) could be next. While I like each and every one them (for different reasons)…
Here are four other hot startups that are more than capable of cracking an Instagram-esque sale price:
- Square. While Square has over one hundred employees and is already valued at over one billion dollars, I’ve been smitten with this business since it was first announced. The company was co-founded by Jack Dorsey (known as one of the creators of Twitter) as a simple way for anyone to accept an electronic payment through their mobile phone, by either swiping a card through the Square card reader (which clicks into the headphone jack of an iPhone) or by manually entering the information through an app. I love their vision statement: no more cash registers. The company makes money by charging 2.75% on every credit card transaction. You could see how financial institutions, credit card companies or any company dealing in monetary transactions might find Square to be a valuable asset.
- Pinterest. Out of nowhere, this social photo sharing site that allows users to “pin” visual content that is appealing to them, create their own “boards” to display those pins and share them, has quickly become the third largest online social network (beating out LinkedIn) and an online darling. Once the Instagram sale was confirmed, many figured that Pinterest would be next. The company, which just celebrated its one-year anniversary, was founded by Ben Silbermann and, according to Wikipedia, the site is managed by Cold Brew Labs and funded by a small group of entrepreneurs and inventors. If Twitter or Google are still steaming over not getting Instagram, Pinterest may be their golden goose.
- Fab. Originally launched as the Facebook for the gay and lesbian community, CEO Jason Goldberg and Chief Creative Officer Bradford Shellhammer soon realized that Facebook is the Facebook for the gay and lesbian community, so they turned their eyes to social commerce. Fab is an e-commerce company that creates flash sales (usually only lasting a few days) of very modern and contemporary design items (everything from artwork and t-shirts to furniture and accessories). The company has received over fifty million dollars in funding from people like The Washington Post, Ashton Kutcher, Guy Oseary (Madonna‘s manager) and some of the valley’s more impressive venture capitalists.
- Path. Path’s founder, Dave Morin, allegedly turned down a one hundred million dollar offer from Google before his mobile social network started getting the attention and users it is currently enjoying. Better known as, “what Facebook should be,” Path is a mobile-only online social network for your true friends and family. The app actually limits the amount of people you can share your online journaling with to one hundred and fifty friends. Path’s focus is on helping people build close, tight-knit social networks to deliver true value. Think of it as the social media version of “quality over quantity.” With about a dozen employees, it’s obvious how some of the more web-based businesses (Facebook, Google, AOL, etc…) would be enticed to acquire this company that understands how to help people connect through their smartphones.
While many of these companies have raised enough money to put their valuations in the billion dollar-plus range, it’s going to be an interesting few years as the general economy claws its way back to a sense of normalcy (hopefully), while these new, brash and unique digital business models unfold before our eyes. Who could have ever imagined a business landscape where a company of less than twenty-people, an Internet connection and a handful of MacBook Pros could have these types of engaged customers and these types of wild valuations?
Which new startups do you think have the billion dollar magic touch?
The above post is my twice-monthly column for the Montreal Gazette and Vancouver Sun newspapers called, New Business – Six Pixels of Separation. I cross-post it here with all the links and tags for your reading pleasure, but you can check out the original versions online here:
- Montreal Gazette – After Instagram, which startup will be Internet’s next billion-dollar baby?
- Vancouver Sun – not yet published.
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Pinterest Hires Facebook’s Former Director of Monetization
To turn the virtual scrapbook into a legitimate business, Pinterest has hired former Facebooker Tim Kendall to lead the company’s monetization efforts, according to Fortune.
New Career Opportunities Daily: The best jobs in media.
Google and Bad Ads
Google continues to work on their plan to be more transparent and today’s (or actually yesterday’s) lesson comes in the detection of bad ads.
Adwords has a checkered past with collecting money from advertisers that are, quite simply, heartless. The legal side of the ledger is not what many of these “bad ad” types ever consider. It’s whether money lands in their bank account that is the only measure of success.
Google has paid a price steep price ($500 million) in the past for allowing illegal activities to be advertised in Adwords. That payment was arrived at by the Department of Justice. Not the folks you want to be dealing with as a legitimate business.
Now in a post called “Making our ads better for everyone” Google is showing some of what they do to minimize this impact.
The blog post goes into some detail as to what they do but the post is primarily a public relations piece. The type of bad ads we are talking about occur in the usual places like mortgages and gambling. Unless you are a legitimate business in these ad areas this kind of information, while interesting, can be seen as non-essential. It’s obvious that Google is putting as much “evidence” as possible out in public to “prove” it tells people about how it does business. It’s a smart move since they appear to headed for years upon years of federal probing or committees or something that their rivals have “convinced” (read lobbied which most likely means paid) Washington heavies to start against the online giant.
It’s how we do business in the US anymore. Government officials looking for publicity and a pay day listen to anyone who has a grievance and a checkbook. As a result, companies have to create fluff pieces to say they are transparent. These pieces are never seen by a vast majority of their users because they aren’t tech insiders nor do they care to be. It’s all an interesting song and dance that is played above the day to day playing field. Honestly, it already feels played out but that won’t stop it.
Does this information help you at all? When you see a video like this from Google or read the blog post do you get the warm fuzzies? Does it help your business? We would love to hear your opinion.
In the meantime, keep your Adwords efforts on the straight and narrow. You may end up as the subject of a Google video one day.
Oh snap: Megaupload had a ‘large number’ of users from DOJ and U.S. Senate
Megaupload, the popular file-hosting site that the U.S. government shut down in mid-January, may have had many users in the U.S. government, according to new interview with founder Kim Dotcom.
Dotcom (pictured) and several other Megaupload employees were named in a 72-page indictment issued in January. It alleged that Dotcom and his colleagues facilitated $500 million in damages to copyright owners.
In a new interview with TorrentFreak, Dotcom said that Megaupload has been “negotiating” with the Department of Justice to get back files that were lost when Megaupload was shut down. At the time of the shut down, many users were vocally upset that they lost legal files that were hosted on Megaupload.
While Dotcom talked about helping users get their files back, he also let slip another revealing detail about Megaupload that could make the U.S. government look bad: “Guess what – we found a large number of Mega accounts from US Government officials including the Department of Justice and the US Senate,” Dotcom said.
If Dotcom’s statement holds true, it will likely strengthen Megaupload’s position in court. If the files U.S. employees were sharing were legal, Megaupload can use them as an example to show how it is a legitimate business. Alternately, if the files government employees were sharing were illegal, Megaupload can use them to show how it had no control over what users were doing and that even the government had copyright violators.
The non-profit Electronic Frontier Foundation (EFF) offered help to those users in early February, but Megaupload customers still have no simple way to get their files back. Megaupload users who are still without access to important files (including government employees!) can e-mail the EFF at megauploadmissing@eff.org.
Dotcom is now out on bail in New Zealand, but the U.S. government has filed extradition papers to send him to the U.S. for trial. Dotcom maintains that he is innocent of all charges.
Filed under: media 
15 file-sharing sites like Megaupload that the Feds may target next
As more details come to light in the much-publicized Megaupload case, other file-sharing sites around the web are beginning to shut their doors in fear that they could be targeted next by the U.S. Department of Justice.
Over the weekend, popular file-sharing sites FileSonic and FileServe completely turned off the ability to share files with other people. And another well-trafficked site, Uploaded.to, has blocked all U.S.-based IP addresses in fear of getting in serious trouble with the U.S. government.
Megaupload founder Kim Dotcom and several other Megaupload employees were arrested and named in a 72-page indictment issued Thursday by the DOJ. The indictment against Megaupload alleges that it is connected to a vast criminal enterprise and has caused more than $500 million in harm to copyright owners. If convicted, the company and its executives could serve many years in prison.
Even with that trouble brewing, many sites that emulate Megaupload’s basic capabilities still work just fine. The CEO of popular file-sharing site MediaFire told me Sunday that the company isn’t too concerned about government scrutiny because it is a legitimate business and doesn’t incentivize piracy like Megaupload did before it was shut down. That said, just because you’re confident about your legitimacy and you don’t absurdly flaunt your wealth, that doesn’t guarantee the government won’t investigate you.
“At this point, it’s hard to tell how far you can extrapolate, but I don’t think anyone should rest easy,” said Felix Wu, assistant law professor at Cardozo School of Law at Yeshiva University. “The Megaupload case will set precedent for these types of businesses and how liable they are.”
With that in mind, we’ve compiled a list of 15 file-sharing sites (in alphabetical order) that the government could potentially target next. Take a look:
1. BayFiles
Hong Kong-based BayFiles may be one of the file-sharing sites that attracts government scrutiny based on pedigree alone. The site was created by two of the founders of notorious torrent website The Pirate Bay, which said two weeks ago that it would gradually stop serving torrent files because of sustained heat. BayFiles’ terms of services says that content that “violates third-party copyrights” is not permitted to be uploaded, but the site still makes it effortless to share copyrighted material with others.
2. DepositFiles
Cyprus-based DepositFiles has an extremely bare bones design, but the site has pretty incredible sharing capabilities available for free. Users can upload and share files up to 300MB without registration and if you do register, you can upload up to 2GB files for free. The site also offers a Gold membership that allows you download with multiple connections, no waiting time for downloads and no advertising. Having people pay for higher quality download connections to large files is one of the things that got Megaupload in trouble.
3. Divx Stage
Divx Stage is one of the shadiest looking sites on this list, without question. The site blatantly advertises that it will pay $10 for each 1000 full movie streams for movies that are uploaded on the site. The site lets you upload up to 1GB files and features tons of TV shows and movies to watch for free. Some shows on the first pages of the site as of Monday include the Mark Wahlberg film Contraband and the latest episode of ABC’s Once Upon a Time.
4. HulkShare
HulkShare is a strange beast of a file-sharing service that walks the line between promoting artists and enabling those to spread copyrighted music illegally. The site makes it extremely easy to upload song files and let other people listen to those files using its embeddable HulkShare Player. The site’s terms of service states that is copyrighted material “strictly prohibited,” but in line with DMCA, artists must let the site know if a file is there without authorization to get it taken down.
5. MediaFire
Texas-based MediaFire lets users upload and easily share up to 200MB files without registration. While I believe MediaFire makes a convincing case that it is a legitimate company targeting professionals, the site has a huge amount of users that use the service for spreading copyrighted files, especially music. If you do a Google search for a song name, an artist name and “MediaFire,” for example, it will likely bring you to a copy of that file that can easily be downloaded from a MediaFire page. CEO Derek Labian told us that the fault belongs to Google for indexing shared MediaFire pages, and that Google should look into the problem.
6. MegaShares
It probably won’t help MegaShares that the word “Mega” is in its name, but it might have other things to worry about. The site lets users upload up to 10GB files and it pays users for the amount of downloads they bring to the site. Every “unique premium download with a minimum 5MB file size” earns you a “1 cache point” and when you reach certain numbers of points, you get cash.
7. NovaMov
NovaMov is quite similar to the aforementioned Divx Stage site, and it’s just as shady. It rewards users for uploading movies up to 2GB in size and keeps a searchable directory of streaming movies that are infringing on copyrights. Users that upload files are paid $10 for each 1000 full video streams.
8. OvFile
On its face, OvFile is a lot less nefarious looking than Divx Stage and NovaMov. But because it allows you to easily upload up to 1GB movies and its plenty easy to find OvFile links through Google searches, it’s still just as capable of infringement as those other sites.
9. PutLocker
MediaFire CEO Labian told me PutLocker was one of the biggest sites on the web giving file-sharing sites a bad name. The site allows users to upload and share files up to 1GB for free and there’s no time limits on streaming shared videos through the site. In a move likely because of Megaupload, PutLocker will be ending its affiliate program on Feb. 1 that gives users cash for streams. That’s at least a start but the site will still almost certainly be a place for sharing and watching copyrighted movies without authorization.
10. RapidShare
Switzerland-based RapidShare is one of the oldest file-sharing sites and currently has a global traffic rank of 211 on Alexa. The site has had numerous legal issues, but it still operates and serves millions of users daily who share files. The site has no limits on upload and download sizes, but if it does make you wait to download files if you are not a premium user. If you a premium user, you can download simultaneous large files and not having any waiting time.
11. SockShare
SockShare is one of many sites that allows users to share streaming videos links. There is a 1GB cap on what unpaid users can upload and a 5GB cap on what premium users can upload. It is troublingly easy to Google a video name and “SockShare” to find a watchable stream on the site. However, just like PutLocker, SockShare will be ending its affiliate program on Feb. 1 that gives users cash for video streams.
12. UploadHere
Users on UploadHere can upload files up to 2GB, but you must be a premium member on the site to download files over 1GB in size. That sort of business model clearly leads to the site profiting on the download of large, mostly copyrighted files. The site charges $7.99 a month for premium memberships and it charges slightly less per month as you pay for months in bulk.
13. UploadKing
UploadKing offers people almost exactly the same service as UploadHere, except it costs slightly less for premium downloading status. Free users are encouraged to upgrade to premium because it limits free users to download files under 1GB in size and does not let you download several files simultaneously.
14. WUpload
Hong Kong-based WUpload will likely be one of the most-used file-sharing sites now that Megaupload has been taken down. The site allows users to upload and download files up to 2GB for free. It encourages users to sign up for premium accounts, which allow for simulatenous large downloads, no delays on downloads and downloads that do not time out.
15. ZShare
Hong Kong-based ZShare is another bare bones sharing site, but unlike many others it is completely free and ad-supported. It allows uploads and downloads up to 100MB. ZShare does not allow users to search directly on the site for files but it is easy to Google a file name and “ZShare” to find shared pages.
Filed under: cloud, media, VentureBeat 
MediaFire CEO: Unlike Megaupload, our business model isn’t built on piracy
As the strange case of file-sharing site Megaupload continues to unfold, many wonder if the federal government will begin to clamp down on similar sites that function like Megaupload, with easy sharing and hosting of copyrighted files.
Already, two well-known file-sharing services, Uploaded.to and Filesonic have disabled several features of their sites this weekend because of the Megaupload scandal. Others are sure to follow.
But Derek Labian, CEO of popular cloud-based file-hosting site MediaFire, told VentureBeat in an interview today that he isn’t too concerned about the government going after his company because, unlike Megaupload, MediaFire doesn’t incentivize piracy.
“We don’t have a business built on copyright infringement.” Labain said. “Like many other cloud-based sharing services like Box.net and Dropbox, we’re a legitimate business targeting professionals.”
When it comes to Megaupload, Labian described Kim Dotcom and his organization as “shady” and said the $175 million in revenues the company made should give people pause. He noted that Megaupload’s structure gave users monetary rewards for uploading pirated content. Users of the service could upload without a cap but users who want to download a large file (or download it faster) would have to pay for it. Those who uploaded the best files would be given free account upgrades or even cash.
“Megaupload was making a ridiculous amount of money with a ridiculously bad service,” Labian said. “We frankly don’t see ourselves in the same space.”
A little more background on MediaFire: The privately funded company out of Woodlands, Tex. was founded in 2006 and has steadily offered better ways to host and share large files. Because it offers an incredibly easy to way to share 200MB files for free with other people, the company has attracted employees at 86 percent of the Fortune 500 for sending files that are too large for e-mail. It offers unlimited downloads and file storage, and if you want to upload larger files with long-term storage, you can pay $9 a month for a Pro account or $49 a month for a Business account.
But the company’s free file-sharing solution can also be used easily for sharing copyrighted files, especially music, with friends, relatives or anyone on the web. A Google search for a song name, an artist name and “MediaFire,” for example, will likely bring you to a copy of that file that can easily be downloaded from a MediaFire page.
When asked about the Googling issue, Labian said that MediaFire is a “private service” and the only reason Google indexes a MediaFire page is when it has been shared without authorization by a user. He said MediaFire isn’t at fault for this and said Google should look into the issue.
“We try to steer clear of things that would attract scrutiny,” Labian said. “If people are pirating on our service, we don’t want those people to use it.”
Another reason Labian said he wasn’t worried about the government stepping in is because the company maintains a “good relationship” with various government bodies, including “Homeland Security, ICE, and the FBI.” Following DMCA protocols, whenever MediaFire is notified of a copyrighted file being shared inappropriately, the company immediately takes it down.
As for the future, MediaFire is optimistic about what’s to come. Labian said the company has been working for a year on its next set of products, which will emphasize collaboration and focus on business users. He teased what was coming by saying that cloud storage providers Box.net and Dropbox significantly disrupted the cloud storage space, but MediaFire would do it next.
“This is a tough market to be in, but we’re constantly looking to innovate,” Labian said. “Sharing will always be important, but it’s not the only important aspect for our customers.”
