Sachin Rekhi

I often get asked what motivates me as an entrepreneur to do what I do. For some it’s fortune, for others it’s fame. But for me, it’s this:

I recently went through the thought exercise of trying to define my professional identity on the web. When thinking about the various components that make up my professional identity, I thought about it in terms of what I’d like people to know about me and what best represents myself and my work.

My Primary Identity
The following four online presences represent the core of my professional identity.

1. My Resume - linkedin.com/in/sachinrekhi
If I had to pick a single online presence to represent me, it would certainly be my LinkedIn profile. It provides the most comprehensive view of what I’m doing, what I’ve done, and my areas of expertise.

2. My Blog - sachinrekhi.com
My blog is an equally important part of my professional identity, as I use it as a way to share in long-form my views on various technology issues, my learnings from my various career adventures, and as a platform for promoting my latest project. By perusing my blog, a reader gets a clear sense of the way I think, what I’m interested in, and ways we can mutually benefit from each other.

3. My Tweets - twitter.com/sachinrekhi
I leverage Twitter as my daily platform for engaging in conversations associated with my industry. It’s where I share in short-form what I’m reading, what’s new that I find interesting, as well as network with leaders and colleagues in the space. Given it’s daily activity, it’s by far the best way to learn what’s important to me right now.

4. My Company - connectedhq.com
No picture of me is complete without understanding my work. Thus my company’s website and product are an equally important part of my professional identity.

Up & Coming Presences
Three additional online presences have cropped up as potential additions to my professional identity. They still feel nascent, so I haven’t yet made them part of my core set, though I do think they each have a lot of potential.

1. My Answers - quora.com/Sachin-Rekhi
Quora has emerged as a great place to learn from startup luminaries about the strategies and tactics they employed to be successful. It’s also a great place to exhibit your own expertise and offer your wisdom on a variety of topics. The Quora team has done a great job of cultivating the site in such a way that a Quora answer serves equally as an answer to a question as it does an expression of your own identity. While I am concerned whether they’ll be able to keep the strength of the community as they grew, it’s certainly one that I’m eagerly watching.

2. My Presentations - slideshare.net/sachmonkey
Sometimes the best presentation of my work or learnings is in the form of a PowerPoint presentation and SlideShare provides a great way to share these with the broader community. I’ve used it on several occasions and plan to continue to do so as it provides a more engaging look into my work and thoughts than simple blog posts or tweets.

3. My Open Source Contributions - github.com/sachmonkey
While I haven’t yet made any open source contributions on github, I certainly plan on doing so. It’s become a great place to contribute to open source projects you care about, host your own open source projects, as well as serve as a great showcase for your work. It’s the best portfolio I’ve seen for developers work to date.

Gaps in My Identity
There are also a few areas I feel are lacking in terms of an online presence that I’d like to develop.

1. My Portfolio
I haven’t found a great way to represent my portfolio of work online. As a product guy, the best show case is definitely the products I’ve built. While I do list many of them here, it doesn’t provide the depth I would want from a portfolio. I’d love to find a better way to present and allow readers to explore them.

2. Buzz About Me
Outside blog and press coverage of your work and yourself is a great way to showcase yourself. It’d be great if there was an easy way to include this as part of your online identity. While I do have a press mentions page on the company website, I feel a certain amount also belongs as part of my portfolio as well as should also include interviews of me.

Alternatives I’ve Tried
In addition to the above mentioned presences, I’ve tried a variety of additional services, each with their own unique representation of you. Unfortunately most have not become a regular part of my professional identity.

Facebook - http://www.facebook.com/sachinrekhi
Google+- http://plus.google.com/114888243026382631402
About.me - http://about.me/sachinrekhi
Flavors.me - http://flavors.me/sachinrekhi
re.vu - http://re.vu/sachinrekhi
friendfeed - http://friendfeed.com/sachmonkey
Zerp.ly - http://zerply.com/sachinrekhi
Path.to - http://path.to/sachinrekhi
Geekli.st - http://geekli.st/sachinrekhi
CrunchBase - http://www.crunchbase.com/person/sachin-rekhi
YouNoodle - http://www.younoodle.com/people/sachin_rekhi
500 Startups - http://500.co/mentor-profiles/sachin-rekhi/
Gist - https://gist.com/sachinrekhi
BranchOut - http://branchout.com/Sachin.Rekhi
Xing - http://www.xing.com/profile/Sachin_Rekhi
Viadeo - http://www.viadeo.com/en/profile/sachin.rekhi
Ushi - http://www.ushi.com/p/61239
Spoke - http://www.spoke.com/profiles/mWqJNsJ
Klout - http://klout.com/sachinrekhi
Kred - http://kred.ly/sachinrekhi
PeerIndex - http://www.peerindex.com/sachinrekhi
Identified - http://www.identified.com/wombat/candidates/56068
MyWebCareer - http://www.mywebcareer.com/profile/sachinrekhi
TweetLevel - http://tweetlevel.edelman.com/User/sachinrekhi
PROskore - http://www.proskore.com/profile.cfm?ContactID=52429444
Twitalyzer - http://twitalyzer.com/profile.asp?u=sachinrekhi

If you have creative ways of representing yourself online or new services you suggest I try, please let me know!

Given the recent acquisition of Connected by LinkedIn, I thought it would be a great time to reflect on what worked well with our technology stack as well as what I would like to improve going forward.

If you haven’t had a chance to check them out, feel free to review my previous posts where I detail our technology stack and the open source libraries we leverage. In this post I’ll jump right into our learnings.

What Worked Well

Python \ Django facilitated fast iteration. Our primary purpose for picking Python \ Django as the core of our stack was to enable fast iteration with both new features as well as feature enhancements. Overall the stack held true to this core value, enabling us to release and iterate on features faster than many of our competitors. We would incubate concepts as weekend projects and have them running in production before the weekend was over.

Amazon Web Services enabled on-demand and cost effective scaling. AWS was the key to keeping our costs down but allowing us to scale with spikes in traffic. We could easily spin up additional servers to handle the additional load. Given our work load required significant resources when a member joined but fewer resources afterwards, we were often able to spin down instances to save on expenses after big spikes in traffic.

Python was versatile enough to serve as both our front-end and back-end language of choice. Python worked equally well to build our front-end website as it did to implement our sophisticated back-end infrastructure that is continuously syncing contacts and conversations from various social networks, address books, and email providers. While we have seen some developers build their front-end in say Ruby on Rails but their back-end in Java \ C++ \ etc, we were able to efficiently leverage the same language and code base for both sets of tasks.

Python \ Django libraries embodied the “batteries included” philosophy. The included standard libraries in both Python and Django as well as the broad community of available libraries ensured we rarely re-invented the wheel to support core capabilities. We were able to find reusable libraries for everything from HTML parsing, to vCard reading\writing, to Amazon S3 object manipulation.

Memcache provided a quick win for performance. Memcache as well as the native support for it within Django made it very easy to employ this distributed cache from the get-go to improve performance via caching heavily used queries as well as pre-caching expected future queries. It allowed us to build an experience that felt more responsive than many others in our space.

jQuery minimized our cross-browser JavaScript headaches. By using jQuery for all our of DOM manipulation and AJAX requests, we were able to spend minimal time on JavaScript-related browser incompatibilities.

What Needs Improvement

Database migrations are painful. While Django models make it easy to iterate on data models prior to pushing to production, once they are in production, they do little to support the sometimes complicated and painful data migration process. We ended up maintaining a migrations file with each release that detailed the SQL needed to appropriately migrate the database. To keep things simple, we required that the database and app code were migrated at the same time without requiring backwards compatibility. This was possible in the early days, but started to get more painful as we grew. Many folks have pointed to Django South as a solution to these migration issues. I haven’t yet had a chance to explore it, but certainly plan on doing so going forward.

CSS is not easy to keep cross-browser compatible. While jQuery certainly helped with JavaScript-related browser incompatibilities, we had no such help for our CSS related issues. It’s difficult when leveraging modern UI design and relatively new CSS tags to ensure your page looks good in all supported browsers. While tools like MogoTest help to show what your page looks like in each browser and reduces testing costs, they don’t solve the core issue of enabling authoring a page’s CSS once and not having to worry about such browser incompatibility issues.

Application monitoring requires custom scripts and alerts. We leverage a variety of monitoring and alerting tools to manage our overall infrastructure. These included Pingdom for monitoring up-time and overall site availability, Munin for instrumenting our common application services like Apache, Nginx, MySQL, and memcache, Amazon Cloud Watch for Amazon instance monitoring, Cloudkick for additional virtual instance monitoring, and Django Sentry for app-level exceptions. Yet our most frequently occurring issues around our queue server and third party APIs issues were reported via custom scripts and alerts which were brittle, unsophisticated, and costly to maintain. It would have been helpful to have one overall platform for monitoring and alerting that easily supported our custom events. We’ll certainly be evaluating such solutions going forward.

Nginx, Apache, and mod_wsgi is heavy-weight for Django application serving. Our web application stack consisted of nginx as a front-end web server in front of several Apache instances. Apache interfaced with our Django app via mod_wsgi, which ran a separate pool of processes to handle incoming requests. Originally nginx was responsible for serving static files, but that was eventually off-loaded to Amazon S3, so it currently isn’t doing much for us. The biggest issue though is Apache with it’s high memory usage for each process spawned by the mod_wsgi daemon. It all feels too heavy-weight for our serving needs. Some folks have recommended simply using gunicorn with nginx. I’ll definitely be looking into alternatives like this and would love to see more large scale deployments talking about their experience with them.

There is no built-in framework for versioning static files. Django 1.3’s built in support for handling static files makes it a lot simpler to collect static files from various Django apps and push them to various serving locations, including Amazon S3. However, if you are following web performance best practices by setting long expire headers for static media, you need a way to version your static files to ensure new media are served when deployed. Some of the popular mechanisms for doing this include putting a version number in the path to the static file to ensure the new version is always served. Developers are left to invent their own mechanism for doing so and it would be great if it was either natively supported by the framework or best practices were encouraged.

Sharding your database is difficult. Django 1.2 brought multiple database support to a single Django instance, which allowed you to easily setup rules for where database traffic was routed. The DatabaseRouters mechanism made it easy to setup routing algorithms that enabled schemes like writing to a master and reading from various slaves, or partitioning database tables along app boundaries. However, actually sharding user data across various database shards remains a challenge. The hints offered in the DatabaseRouter mechanism are too limited to enable easy sharding along, say, a user or profile id. Better native support for this would enable developers to plan and build for this early on, as opposed to the expensive task of adding this in later.

Enabling rich JavaScript interactions quickly gets cumbersome. jQuery makes it easy to add simple AJAX interactions to your app as well as demand load various content onto your page. However, as you try to get more sophisticated with your JavaScript interactions, it quickly becomes cumbersome to do so. The first issue you run into is the need for client-side templates. We leverage John Resig’s micro_templating.js to enable this, though the placement of these templates and the syntax was fairly messy. The second issue we ran into was managing state within the client. We began experimenting with backbone.js to implement JavaScript models, but it really only felt appropriate for JavaScript-centric pages. I think there is plenty of room for improvement and we certainly plan on exploring alternatives to rich client-side JavaScript.

Amazon Web Services scaling is not for free. While the promise of on demand resources from AWS are enticing, the reality is it takes a decent amount of work on the developer’s side to enable it and comes with it own operational issues. While on demand virtual instances are certainly broadly available across a number of providers, the mechanisms for automatically scaling up and down your resources require significant input from the developer to manage. In addition, simply adding redundancy across your infrastructure in an environment like AWS isn’t as easy as you think, as you have to think through your deployment configuration to decide whether you wish to spread your infrastructure across multiple availability zones and/or multiple regions. These have latency and cost implications depending on your choices. You also need to deal with the fact you don’t have dedicated hardware, so your instances could be restarted or terminated at any point. We had this happen to us numerous times. Building fault tolerance into your system from the beginning is certainly a best practice, but is a fairly costly hit that you need to take upfront if you are going to deploy to such an environment. It shouldn’t have to be this kind of trade-off.

Round robin DNS is a poor solution for automatic failover. We leverage round robin DNS as a way to load balance across our front end web servers. While it has issues with lookups being cached for extended periods at different points, it does a decent job of balancing traffic across our servers. We also rely on round robin DNS as a simple form of automatic failover. When a browser does a DNS lookup and gets multiple IPs it first attempts to connect on the first IP. If it cannot, then it connects on the second IP and so forth. This provides failover in the case one of your servers is down. In practice, this turns out to be far from the reality. The browser only attempts the second IP if it gets a connection refused back from your server. If your server is experiencing high latencies, the browser will continue to wait on it. The browser also doesn’t cache the fact that it has failed over to an alternate IP. So every request checks the primary IP and then the alternatives, which results in significant latency before the timeouts expire. This makes it an unrealistic solution for automatic failover. Actual DNS failover solutions seem like the right answer.

I hope this provides an interesting perspective on what worked well and what needs improvement in the Connected tech stack. I’d love to hear from any of you if you have potential solutions to some of the issues we ran into!

Last night I attended another fantastic Startup2Startup event focused on Interaction Design. The lineup was terrific with Jason Putorti, lead designer of Mint.com and now co-founder of Votizen, Kate Aronowitz, Director of Design and User Experience at Facebook, and Garry Tan, co-founder of Posterous and Designer in Residence for YCombinator. They brought together a breadth of experience in design across all stages of the startup lifecycle.

I thought I’d briefly summarize by sharing five key quotes from the night and some of the discussion around them.

“Design is product, product is design”
Garry Tan spent some time talking about this idea that design encompasses the entire experience users have with your product. This is a fairly new notion that has become popularized with the recent rise in design thinking. Prior to this design was often seen as simply a phase in the process near the end to spruce up the user interface. But with the rise of successful startups that have focused on design first has come the realization that building your entire product from a design-centric philosophy could give you significant advantages against your poorly designed competition.

“Great design is invisible, bad design gets noticed”
Jason Putorti brought up this quote from one of his idols in the field, Jared Spool. One of the common misconceptions that he talked about with design was the idea that it was simply about the pretty visuals designers were asked to incorporate near the end of the cycle. Jason instead talked about how it’s much more about being intentional with the entire user experience. And frankly the best design is the design that goes unnoticed. The design that you don’t even think of. Think Apple and the iPhone. You forget about the product interface and focus completely on the content you are consuming. And that is part of the brilliance of it’s design.

“Designers need to have a vision for the product. A/B testing will not get you to a vision.”
Jason Putorti also talked about the fact that while A/B testing and metrics have their place, they are no replacement for having a strong vision early on. And oftentimes the best feedback early on is qualitative in nature and around whether your customer’s pain is really being solve by the product you are putting out.

In the subsequent table discussion, we talked about a variety of ways to get at this crucial feedback. The obvious choice is conducting usability studies with your users. But for early stage startups this can often be very expensive and time consuming. Instead, we brought up a variety of cheaper alternatives to this. For example, UserTesting.com provides a quick way to conduct an online user study and get immediate feedback on your product. In addition, Olark or SnapEngage enable simple online chats with your current users to hear about their pains and have them reach out when there are issues. And we also talked about instrumenting your product so that any negative user event, such as a low star rating within the product or downgrading a paid account, results in an email being fired off to your team who can then respond immediately to address or at the very least learn from their issues.

“Done is better than perfect”
Kate Aronowitz later brought up in the conversation a famous motto at Facebook: done is better than perfect. Kate spoke about how this can be quite hard at times at Facebook since when you bring together some of the world’s top designers, perfection is their ultimate goal. Yet shipping bits, getting real user feedback, and iterating is of even greater important and they often release before designers ever feel their work is done. Kate suggested this is exactly the kind of culture you want to build into your organization to make sure that you are always pushing the envelope with your actual users, not just in your lab.

“The ideal startup team consists of: a designer, a hustler, and a hacker”
Garry Tan brought up this recent quote that has been going around the valley about the makeup of the ideal early stage startup team. Only recently has it become popular to seek out a designer as a founder or one of the earliest employees.

We talked about a variety of tactics to help startups hire rockstar designers. The talent crunch for designers mirrors what is happening for top engineers, so all the same best practices from last month’s Startup2Startup apply. In addition, the panelists suggested looking outside of the valley cohort of designers since they are all in high demand. Instead they suggested taking bets on younger designers who have a great portfolio but maybe not a great set of production apps they have built. Jason, for example, noted that Aaron Patzer took a chance on him, given that he didn’t have much app experience, but instead design agency experience. But that worked wonderfully given how much recognition Jason has received for his work at Mint. So keep a look out for folks that have great design fundamentals, even if that’s in other mediums like print, because it can carry over well to the web apps world as well.

Altogether it was another great Startup2Startup event and important design lessons for all of us in the startup world.

In the wake of LinkedIn’s announcement of reaching 100 million members, I’ve been impressed with the resurgence they have had in the past year. I thought I would showcase some of the recent product innovation from LinkedIn as well as cultural shifts we’ve seen from within the company that have contributed to this growth.

Product Innovation
For the longest time LinkedIn’s product pace has always been overshadowed by the more nimble Facebook, which has constantly been pushing the envelope both on the speed and shape of innovation. While I won’t try to argue that LinkedIn has caught up, we’ve certainly seen it pick up the pace in the past year as well as start to get comfortable in its own skin, understanding exactly where it provides unique value that Facebook, Twitter, and other social networks cannot.

The latest example of this is LinkedIn Today, a social news product for professionals, that automatically builds a daily digest of the top news you’ll likely be interested in based on how it’s trending amongst your professional network. Even despite a product like Flipboard already existing, you can see how LinkedIn Today provides unique value targeted at professionals and aspires to be more on par with a next generation Wall Street Journal.

LinkedIn also realized that much of it’s value is for sales, business development, and hiring managers seeking out specific contacts that can help them achieve their goals. To that end, we saw the redesign last year of search to supported Faceted Search, a much smarter way of filtering your search results to find exactly who you may be looking for. This search mechanism differs significantly from the keyword-centric Google Search, name-centric Facebook search, and recommendations-centric Twitter results. Instead it’s precisely optimized for what LinkedIn users are doing - narrowing their results down to find candidates for the task at hand.

Beyond that, LinkedIn invested heavily in bringing the LinkedIn experience to you, with revamped iPhone and Blackberry apps as well as a new Android app. These apps provide full profile information on the go for both people in your network as well as new folks you may have just met. They are also complete with Bump-style business-card replacement functionality, enabling you to add a LinkedIn contact on the go.

This is just a taste of some of the new products LinkedIn has developed or enhanced in the past year, with many other little feature improvements throughout.

InDays
Beyond this product innovation, we’ve also seen some important cultural shifts inside LinkedIn. One of the most exciting is an initiative spearheaded by Adam Nash called InDays. Every month employees are encouraged to spend one day working on projects outside of their core responsibilities. Alongside InDay LinkedIn also throws a Hackday contest to showcase the best applications that come out of these internal projects. They started posting these internal projects publicly through a separate LinkedIn Labs site. There is some resemblance to Google’s 20% time, though the time dedicated to these efforts at LinkedIn remains fairly minimal.

The kinds of applications that have come out of InDays have typically shown the robustness, power, and richness of the unique dataset that LinkedIn has. For example, the analytics team at LinkedIn developed InMaps, a stunning way of visualizing your connection graph, complete with clustering of your contacts into similar groups. I found clusters of folks from my previous employer Microsoft, colleagues from my alma mater at The University of Pennsylvania, as well as a cluster of fellow silicon valley entrepreneurs. It’s amazing how they were able to deduce these purely on connection data.

Another great application was The Year in Review, which visualized all the contacts within your network that had changed jobs. LinkedIn ended up sending this out as a email marketing campaign to all of it’s users. It’s interesting to see how many of your colleagues have changed jobs as there are always surprises in there that you didn’t even realize.

I’m sure this culture of encouraging innovative ideas from it’s own employees has boosted employee morale as well as given user’s access to functionality that traditionally wouldn’t be on their roadmap. I’m excited to watch these efforts continue.

App Platform
While LinkedIn has been fairly slow to encourage third party developers to leverage their rich data set in their own apps, we are finally seeing this start to change. LinkedIn has been investing more resources in their API platform as of late, recently releasing OAuth 2.0 endpoints as well as a full-featured Javascript API.

Developers are also starting to leverage the API in more ways in their own applications. Cubeduel created a fun hot-or-not style contest for your co-workers, Bump leveraged it to enable sharing of LinkedIn data on meeting folks, and popular calendaring apps Timebridge and Tungle.me provide further details on meeting attendees. My own relationship managemant application Connected uses the LinkedIn API extensively to provide full work history details on all of your contacts.

This renewed energy behind the API will allow developers to take advantage of their rich dataset in functionality beyond what LinkedIn is likely to provide.

Acquisitions
LinkedIn has traditionally been absent from the acquisition scene unlike many of it’s similarly sized tech brethren. However, that all changed this past year when LinkedIn made not only it’s first acquisition, but a total of three.

The first acquisition was mSpoke in August 2010. mSpoke developed content recommendation technology which was presumably leveraged for a variety of recommendation scenarios throughout LinkedIn’s product. LinkedIn quickly followed this up with the acquisition of ChoiceVendor in September 2010. ChoiceVendor offered ratings and reviews for B2B service providers. And most recently, LinkedIn acquired CardMunch in January 2011. CardMunch makes it easy to convert a business card into a digital contact record simply by photographing a business card via your iPhone and having it automatically transcribed by humans for accuracy.

All these acquisitions have been predominantly talent acquisitions for small dollar amounts, but great ways to inject young talent into the fold.


All the recent changes within LinkedIn are clearly in preparation for their upcoming IPO, which they publicly announced their intention to do so in January. I hope this more aggressive LinkedIn continues along these lines, as I truly believe they are sitting on a goldmine of data which they have only scratched the surface on it’s possibilities.

Last night I had the pleasure of attending the latest Startup2Startup on engineering management with Yishan Wong, an early director of engineering at Facebook.

The area we spent the most time discussing, both during the presentation and during the discussion that followed, was how to hire great engineers for your startup. I thought it was a particularly appropriate topic given that I receive weekly requests from colleagues asking me for help on their quest for engineers. So I thought I'd take a moment to post on some of the most actionable take-aways from the discussion.

The fundamental insight was that a transition has occurred in the last couple of years causing the core problem of technical recruiting shifting away from being a filtering problem to now becoming a marketing problem. The reasons are obvious: the growth in tech fueled by access to capital coupled with the declining engineering graduates continues to widen the supply and demand gap. Startups need to now spend more of their recruiting resources not around improving the filtering process of selecting candidates that have applied for positions, but mainly the marketing process of finding interested candidates in the first place.

With that, let's talk about 5 practices you can put in place today to improve your chances of finding great engineers.

Leverage your network.
We have all heard that the best folks to hire are those that are already in our personal and professional networks. The first thing any of us do when looking to hire is try to recruit folks that we know or have met at some point in our career. But Yishan took it one step further by talking about specific practices that you should be employing to maximize the value of your networking for recruiting. The biggest one was not to simply reach out to folks once and see if they were interested in your opportunity. But instead to hit them up every 3 months. Circumstances change and they change especially fast here in the valley. You want to make sure that not only are you reaching out to them when it may be a good time, but more importantly that you are top of mind when they do decide it's time for a change. The other key strategy is to not simply think of people in your network that are actively looking. Some of the best hires are those that are not looking, yet still decide to jump when they find a much better fit at another company.

SHAMELESS PLUG: You might want to try out my latest product, Connected, as a great way to leverage your network for recruiting.

Become a magnet.
Yishan also talked a great deal about the need for a company to find a way to become a magnet for great talent. In the early days, Facebook widely distributed technical puzzles that they often asked during engineering interviews. While many people thought the puzzles were used primarily to asses technical talent, they were in fact used mainly as a marketing tool. They were eager to find engineers that enjoyed solving and discussing these kinds of technical challenges and wanted to convey to engineers that Facebook was the place to go to tackle them.

Similarly, we talked about how Netflix did a fantastic job of putting together an astonishing culture deck that certainly caused a boost to inbound recruiting with the company. It very clearly laid out what Netflix believed in and how they were going to win in their market and made many people feel like this was an exciting company to work for.

There are a variety of tactics that can be employed to achieve this, but the goal is to find a way for your company to become a magnet of technical talent. Only then can you expect a great pipeline of candidates.

Hire H-1Bs.
Unfortunately the immigration process in this country is still so painful and while there are efforts to resolve them, they still persist. However, many companies simply overlook foreign candidates because of all the hassle associated with the visa process. This can be a real mistake. It turns out that for certain countries, the process really takes no more than a great lawyer and some up-front legal fees. Being open to doing so gets you access to a whole new pool of talent. And frankly, these employees will be more likely to be loyal to you since you have gone through the process of getting them their visa on their behalf. I know several companies that have successfully hired many folks this way.

Contribute to open source.
Early in a startup's life, it can be difficult to justify contributions to open source projects given the limited resources the team has. But it turns out that there are two reasons you may want to reconsider this stance. First, many engineers love giving back to the community and contributing and it can be a real carrot to offer prospective candidates. More importantly, the open source community is very tight knit and having serious contributions to projects can be a great way to market your company to other open source contributors, who are often some of the finest tech talent available.

Prioritize what you need.
Given how difficult it is to hire, it's unrealistic to expect to find someone that matches all your ideal criteria. The key is to pick the few attributes you are really unwilling to compromise on and let that guide your recruiting process. While hiring the right people is paramount to success, so is making forward progress in your company. So make sure you are truly discerning in your required list of criteria. And realize that often attributes like having the right attitude end up being more important than straight technical skills or experience.

I hope that gives you some good ideas on how to super charge your startup's own recruiting process. If you come across other techniques that work, please do share!

I had lunch with an old college buddy last week and he has been considering moving to San Francisco to start his next venture. We got into a discussion of the potential advantages and disadvantages of doing so. I thought I'd throw up my thoughts on the subject for those interested.

I've been in San Francisco now for the past three years. My immediate prior residence was up in Seattle, but I originally grew up in upstate New York. I have come to love San Francisco for many reasons, but mostly because it's an ideal place to start a technology venture.

While I am clearly biased, here is my attempt at a balanced discussion of the pros and cons of starting your venture in San Francisco or the Bay Area in general.

Advantages
Discussions on startup tactics & methodologies
One of the things I appreciate most is the open dialog on the best practices in starting and running a startup. You know that if you run across a problem, you can leverage the fact that many others in the valley are thinking about the best way to tackle it, whether it's user acquisition, metrics, marketing, etc. Even more interesting is the open debate about the best methodologies for building your company, including recent debates on agile development, customer development, etc.

Network of people to help you
Since there are plentiful startups in the exact same boat as you in the Bay Area, there is an amazing network of people that can help you achieve success in their area of expertise. This could be anything from technical to product to business development to sales expertise. You can rest assured that someone has been there and done that and oftentimes is willing to help a fellow startup out in order to prevent you from making the same mistakes they made.

Access to capital
The available capital sources, including angel investors and venture capitalists, are definitely most plentiful in the Bay Area. Many investors prefer investing in companies that they are close to, so simply being in the Bay Area can often give you a leg up. In addition, since there are always startups looking to raise money here, there is a growing ecosystem of help in order to get the round done. There are people that can help you get the right introductions, refine your pitch, and help you with negotiating the best possible round of funding.

My kind of fun
When you are like me and feel like you live to work (instead of working to live), you will love the fact that you can find people to engage with you on your startup 24/7. Whether its conference, happy hours, coffees, lunches, or just geek hangout fests, there is limitless events to keep you in and around the startup sphere as much as you like. There are also great incubator-style open work spaces that are full of startups all day long that you can participate in. Some people think doing a startup can be lonely. But that is definitely not the case here in San Francisco.

Nice weather
While this may seem like a trivial one, I think having nice weather in the Bay Area is a nice plus. As many who have started a startup will tell you, your startup will be an emotional roller coaster ride with high and lows as the business ebbs and flows. If you were stuck in cold and dark weather, it does nothing but make those emotional highs and lows even more acute. California weather helps to generally keep you a little more optimistic about your startup's prospects.

Disadvantages
Group think
One of the main disadvantages of living in the Bay Area is that the startup echo chamber can often result in group thinking. This means many people are chasing the same ideas, leveraging the same methodologies, and following the same trends. While leveraging best practices in general makes a lot of sense, oftentimes the most successful startups are those that go against the grain and do something no one thought would work. In some cases it can be harder to pursue those kinds of ideas here or at least you may gravitate to chasing whatever the hotest trend is: social networking apps, mobile apps, real-time apps, location-based apps, etc.

Not a friendly incorporation state
Despite being home to a ridiculous number of startups, California is not the ideal state to incorporate. Both in terms of forming an LLC or Corporation, California is not as advantageous as places like Delaware. Because of this, many corporations still choose to incorporate in Delaware even if their primary business location is in California. Similarly for LLCs, California imposes high taxes just to get up and running, versus other states like Washington where there are no such taxes.

High state taxes
Another governmental drawback of starting your venture in California is the high state taxes. This was especially acute to me coming from Washington where there are no state taxes. But across the country, California has some of the highest. This just drives up the cost of doing business and ultimately increases your burn rate.

High cost of living
Along the same lines, San Francisco is just an expensive place to live. Regardless of whether you are in the city or one of the suburbs, you are going to be paying a premium in terms of cost of living compared to many other parts of the country. This again results in increased burn rate.

One of the most disruptive trends in the Internet era has been turning a culture of scarcity on its head and transforming it to one of ubiquitous access. No longer is the news, music, videos, and games we consume controlled by powerful oligopolies who artificially constrain supply in order to increase the value of their offerings. Instead, the new found democratization of media and information has been a win for all consumers, giving them the ability to consume their content wherever, whenever, and however they wish. While this transformation isn't complete, it is well on it's way across almost all major content verticals.

Yet with this new world has come new challenges. Specifically, finding the information most relevant to you right now has become a real struggle with the explosion of availability of content. When you look across the web today at the most successful properties, they can often be looked at as productivity tools helping us to increase the signal-to-noise ratio to make sense of our new information overload challenges. These services help us to filter and discover the content that is most relevant to us right now.

Given that this is still an emerging space, there are a variety of tactics that are being used across these services to increase the signal to noise ratio. I thought I'd take a moment to discuss ten trending tactics that these services are leveraging so that you can bring them to your own applications. I expect to see us refine our best practices across each of these tactics as well as see new ones emerge as we continue to understand how to handle this explosion of content that empowers the Internet today.

1. Search
Search is clearly the predominant way that users find information relevant to them on the Internet today, as evidenced by Google being the #1 property on Alexa's Top 500 Global Sites list.

The thing to remember about search is that it has itself been a mini revolution within the Internet. In the early days the major portals like AOL, MSN, and Yahoo controlled our web experience and search was a very insignificant portion of it. But user's behaviors have now changed to come to expect keyword search based experiences.

Given this transformation, if you don't at least have a search bar on your own application, your missing out on a great opportunity to leverage user's existing behaviors and help your users get to their desired content fast. This doesn't have to be an expensive feature. You can leverage Google Custom Search Engine to simply show Google Results for your site on your page, styled to your own CSS.

Based on a suggestion from Andrew Chen, I spent Saturday afternoon reading The Monk and the Riddle by Randy Komisar, which put me in a reflective mood on my own goals and vision for success here in Silicon Valley.

Randy Komisar put together a short narrative that challenges the traditional assumption of the deferred life plan, romanticizes the notion of business as a creative pursuit, and even finds room to go into a discourse on self-knowledge of one's own motivations. Beyond this, Randy litters throughout the book a great set of lessons from his own career as a successful entrepreneurial executive.

I thought I'd take a moment to share some of the highlights through a set of my favorite quotes from the book.

The Deferred Life Plan

The Deferred Life Plan. For the promise of full coverage under the plan, you must divide your life into two distinct parts:

Step one: Do what you have to do.

Then, eventually-
Step two: Do what you want to do.

The Deferred Life Plan certainly dominates Silicon Valley. Most people think getting rich fast provides the quickest way to get past the first step - and where can you get rich faster than Silicon Valley? The problem is that, despite the undisguised affluence, the verdant hills, and media-generated mythos, the vast majority of people in Silicon Valley will not get rich. Most business ideas do not find funding. Even the majority of those that are funded - that is, vetted by very smart people who think enough of the ideas to invest in them - ultimately fail. And the lucky winners may get to step two only to find themselves aimless, directionless.

It comes down to my realization over the years that business isn't primarily a financial institution. It's a creative institution. Like painting and sculpting, business can be a venue for personal expression and artistry, at its heart more like a canvas than a spreadsheet.

Most of us have inherited notions of success from someone else or have arrived at these notions by facing a seemingly endless line of hurdles extending from grade school through college and into our careers. We constantly judge ourselves against criteria that others have set and rank ourselves against others in their game. Personal goals, on the other hand, leave us on our own, without this habit of useless measurement and comparison.

Passion and drive are not the same at all. Passion pulls you toward something you cannot resist. Drive pushes you toward something you feel compelled or obligated to do. If you know nothing about yourself, you can't tell the difference. Once you gain a modicum of self-knowledge, you can express your passion.

The first CEO is "the Retriever". From the muck she must assemble the core team, the product or service, and the market direction - all around a coherent vision. She must also raise the money and secure crucial early customers and partners. She is prized for her tenacity and inventiveness. The second CEO is "the Bloodhound." He must sniff out a trail - find the market and prove the business. He needs to build an operating team and establish a market beachhead. He is prized for his keen sense of direction and company-building skills. The third CEO is "the Husky." She must lead the team, pulling an operating company that grows heavier by the day with people and public company responsibilities. She is prized for her constancy and scalability. None of these, to me, is top dog. All are equal in importance, just different in skills and temperaments.

Every week I meet with different entrepreneurs asking for my advice on topics ranging from funding strategy, exit opportunities, user acquisition, monetization, to technology investment. However, unlike others who often have a set of best practices they like to dispense around these topics, I find myself spending a considerable amount of time understanding the entrepreneur's personal goals before laying out my recommendations.

Entrepreneurs come in all shapes and sizes and there are a variety of successful outcomes that can be achieved. It's therefore important to be wary of anyone that gives you one-size-fits-all advice before understanding your needs.

One dimension along which I wanted to elaborate is a founder's choice to optimize for building fundamental vs strategic value. Let's start with some definitions. An entrepreneur that focuses on building fundamental value is optimizing for creating a standalone business that generates meaningful cash flow and profit as an independent entity. On the other hand, an entrepreneur optimizing for strategic value is one that is building their organization in such a way to maximize potential value to a larger organization that will ultimately benefit from an acquisition of the entrepreneur's startup.

When superficially looking at these definitions, one could argue that every startup is in the business of generating profits and therefore all startups are focused on building fundamental value. In addition, one could also argue that these are not mutually exclusive and ideally when an organization is building fundamental value they are also increasing their strategic value for potential acquirers. While both of these statements are true, the reality ends up being much more nuanced.

With the nature of startups having limited resources, entrepreneurs find themselves either consciously or unconsciously biased towards optimizing for fundamental or strategic value. With every decision an entrepreneur makes comes a set of trade-offs that could result in the maximization of either of these types of value. And a lot of my advice on the topics above depend on which direction you go. For example, your funding strategy may vary significantly depending on the outcome you are optimizing for. The timing in which you choose to focus on monetization may also differ depending on this strategy.

Let's take a look at some concrete examples.

Last.FM, a social music service founded in 2002, was ultimately acquired by CBS Interactive for $280M in May 2007. I remember chatting with Michael Marquez, who was in charge of the acquisition at CBS, about why they ultimately decided to purchase Last.FM. As a media conglomerate, CBS was very interested in aggregating meaningful target demographics that they could monetize by leveraging their existing sales force and brand relationships. At the time Last.FM had one of the largest online music communities. In addition, Last.FM had experimented with a variety of ad units and had shown some initial traction on ability to monetize it's inventory. However, Last.FM had not built out a large sales team nor was it already making meaingful revenue. It had simply shown that it worked on a small scale, which ultimately proved to CBS that if they married their own large sales team with the Last.FM inventory, it could be a match made in heaven. Last.FM's decision to focus on growth at the time clearly helped to boost it's strategic value. In addition, it's revenue experiments without huge investments in building out a large sales organization also improved strategic value.

imeem, similarly, optimized for strategic value. While imeem was interested in reaching profitability to ensure its on sustainability, it nonetheless regularly made decisions to trade-off short-term profitability for maintaining strategic value. For example, imeem could have chosen to stop servicing international markets that were shown to have little monetization potential, yet continued to do so in order to maintain its large user audience that could be attractive to an acquirer. Similarly, when imeem's VIP subscription service started to show traction, imeem could have decided to push more free features into the premium service in order to boost revenue, but leadership chose not to out of unwillingness to alienate it's large free user base. Unfortunately in the end for imeem this bet did not pay off since the market for such media acquisitions softened, imeem was unable to prove profitable per unit economics to potential acquirers, and it simply ran out of cash to continue fighting the good fight.

LinkedIn, on the other hand, continually shows that it is focused on building fundamental value. LinkedIn has been profitable for years and many say it's an ideal IPO target. While they are in no rush to actually pursue the IPO, the decisions they make on a day-to-day basis are optimizing for fundamental value. One example of this is their API platform. While they have finally released an API platform, it is by no means as open or powerful as similar platforms from other social nets like Facebook and Twitter. And in many ways it has to do with the fact that LinkedIn has existing revenue lines from paid subscriptions for pro users and recruiters, as well as licensing and advertising revenue, which they are unwilling to sacrifice simply to provide a more open API to their users. Some may argue that this is shortsighted of LinkedIn in that a more open API may result in an ultimately more profitable business, yet you can't argue with the fact that LinkedIn is consciously making the trade-off to continue to maximize it's fundamental value over all else.

My point with these examples is to show how decisions are made in startups every day that trade-off fundamental vs strategic value. There is no "right" answer on whether to optimize for one or the other. It depends on a combination of the founder's personality, risk tolerance, desired company culture as well how best to reap the value in the specific opportunity one is pursuing.

In the end though, the answer I hear most frequently from entrepreneurs is that they are pursuing fundamental value but are opportunistic about considering strategic opportunities. On one hand this is a very reasonable answer as entrepreneurs don't want to take options off the table. But at the same time, it's really a non-answer and I urge entrepreneurs to consciously realize what they are currently optimizing for in the decisions they make every day.

Lately I've been spending time thinking about freemium business models and how best to structure them to maximize conversions. I believe we are still early in our understanding of these models and to date most of the available analysis has been limited to anecdotal evidence, one-off case studies, tips & tricks, and a few early overviews of what's been tried.

Despite this I think we are starting to see some interesting emerging design patterns and best practices coming together. I wanted to discuss one such design pattern, including examples of it's usage and potential limitations.

One of the segmentations that is often talked about among Chris Anderson, Eric Ries, etc. is dividing freemium plans into 3 main tiering types: time-limited, capacity-limited, and feature-limited. Canonical examples of each include 30-day trials for 37 Signals' Basecamp, storage space limitations for Dropbox, and mobile access for Remember the Milk, respectively.

One variant of capacity-limited freemium tiering that is particularly effective for products targeted at the SMB market is to scale pricing with customer success. What I mean by this is providing various premium tiers of your product that will become appropriate for your customer as they are more successful in their own business. Typically this means tying the tiers with capacity-limits that either directly reflect or proxy the customer's growth in their own user base or revenue.

What's nice about this model is that it appropriately segments your potential customers into pricing buckets by ability and often willingness to pay. Businesses that are just getting started, pre-revenue, or early in finding product\market fit can often leverage your product as part of the free tier or low priced tiers. This provides few barriers to adoption and get's them quickly onto your product. And as their business scales, they'll think twice about switching since they've already been successfully using your solution. On the other hand, larger businesses will pay against a higher tier appropriate for their level of success.

Let's take a look at 5 different products targeted at SMBs that leverage this freemium design pattern.



Mixpanel offers a sophisticated set of analytics tools that picks up where Google Analytics leaves off. It often replaces hard-to-maintain home-brew solutions that companies put together themselves. Mixpanel works by allowing you to instrument your application to track custom data points and then does all the data crunching and segmentation to present the data in an easy-to-consume fashion.

The way their pricing structure works is by pegging the monthly subscription rate to packages of tracked data points. The free package provides up to 10,000 monthly data points. The next package allows 100,000 data points for $25/mo. And so on. While the number of data points collected does depend on how many individual event types you wish to track, the biggest determinant is total number of users using your service and you'll likely only scale to a larger plan when you reach new customer segments. Thus tiering on tracked data points provides a close proxy for their customer's own success in user growth.



Recurly is a service that makes it easy for SaaS businesses to manage their customer's monthly recurring subscriptions. Since billing is not where a service wants to innovate, Recurly provides a great solution to let them take the load off of managing this part of their business.

Recurly's fee is based on number of subscriber's to the customer's business. If your business has less than 50 customers, then Recurly is free. Above that amount, the Recurly monthly subscription ranges from $28-$2,650, depending on various bucket sizes for number of customers. So their pricing structure directly reflects the user growth of their customers.



MailChimp is an e-mail marketing solution that provides e-mail list management, an html editor for designing your e-mails, and detailed email analytics.

MailChimp offers two pricing plans, one based on total mailing list subscribers and the other based on volume of e-mails sent. While one is a direct reflection of customer user growth, the other is a close proxy, thus causing the cost of using MailChimp to increase as your customer's user base continues to grow. Their free plan allows managing and sending monthly newsletters to a list of up to 500 subscribers.



UserVoice is a customer feedback solution that allows you to easily collect, aggregate, and make your user's feedback actionable.

UserVoice allows you to setup a free forum for your customers to supply their feedback. One of the biggest values that UserVoice provides is allowing users to vote on the various feature requests. And it's the number of potential voters that UserVoice divides it's various freemium plans along. Your forum gets 100 voters for free. The premium tiers then allow various numbers of additional voters. The number of voters you will need at any given time is designed to be a function of the customer's own user growth, with UserVoice even detailing that they expect on average 3-7% of your user base to become voters.



FreshBooks provides an invoicing solution for consultants, contractors, freelancers, etc. to make it simple for them to generate, send, receive payment for, and track the entire invoicing process.

FreshBooks tiers it's offering along the obvious scheme of number of clients. You get to invoice up to 3 clients for free and additional premium tiers allow various numbers of additional clients. As your business clients grow, so does the fee you pay to FreshBooks for supporting you.

Limitations
There are a variety of reasons why such a freemium scheme may not be appropriate for your product as well as additional considerations to carefully evaluate before implementing.

Customers may not be very amenable to such a pricing scheme if they did not perceive additional costs for you to offer them support for a larger customer base. But it is often the case that your own costs scale in proximity to this tiering.

At the same time your costs may end up scaling along another axis tangential to growth in customer's own users and revenue numbers and this may make it difficult to leverage this tiering scheme. But keep in mind that you should be looking at costs in aggregate over your entire customer base and not just for individual tiers.

This freemium design pattern does not remove the essential critical question in every freemium tiering scheme, which is where to divide the free and paid plans. While this design does give guidance on along what dimension to segment, you still are free to decide what capacity each plan allows. Is MailChimp giving away too much with allowing 500 free subscribers? Is FreshBooks being too restrictive by only allowing 3 free clients? These are tough questions that remain. And despite our industry's best efforts to optimize through analytics, I've seen very little effective A/B testing done along pricing tiers. The difficulty arises from significant user backlash resulting from taking away features from a free plan.

Also along these lines, if your product ends up being applicable to a wide range of organizations and business sizes, there may not be a way to easily design a free plan that allows every organization to try it out. For many user segments they may just see your service as a SaaS offering with no free level. While this may be advantageous to you overall, it does limit many of the benefits of allowing all users to start for free.

I'd love to hear your feedback on other considerations you think are important when evaluating this freemium design pattern. As well as other patterns that you think have worked well.




I also wanted to mention that I've very excited that Charles Hudson this year is putting on The Freemium Summit. As this business model and marketing strategy reaches heightened interest across consumer and business applications, the time is ripe to bring together the early implementors and thought leaders in the space to discuss these exact design patterns and overall benefits and drawbacks of freemium models.

The Freemium Summit has already put together a great set of panels with speakers including leaders from some of the products mentioned above:

• Ben Chestnut, Mailchimp
  
• Lance Walley, Chargify
  
• Isaac Hall, Recurly
  
• Drew Houston, Dropbox
  
• Peter Harrison, TripIt

• Charles Hudson: Thoughts on Free Powered Business Models and Why Time Beats Features
  
• Eric Ries: Three Freemium Strategies
  
• Andrew Chen: How to Create a Profitable Freemium Startup
  
• 37 Signals: The Secret to Making Money Online
  
• Chris Anderson: Free: The Future of a Radical Price
  
• Fred Wilson: The Freemium Business Model

• Shortcomings of Google App Engine
• Google App Engine Task Queues, Push vs. Pull Paradigm, and Web Hooks
• Is Google App Engine Ready for Prime Time?

• Monetize the Twitter API
• Does Facebook Connect Deliver on its Promise?
• Top Underhyped Open Platforms

• On the Inside Track in Venture Capital | Mayfield Fund
• What's an Entrepreneur-in-Residence | Andrew Chen
• Bessemer Snags a "Designer in Residence" from Mint.com | TechCrunch
• What Does An Entrepreneur in Residence Do? | Business Insider

As many of you know, I spent the better half of 2009 as an Entrepreneur-in-Residence at Trinity Ventures. It was one of the most rewarding experiences I've ever had and would encourage anyone who gets the opportunity to do it. Working alongside Gus Tai, Ajay Chopra, Jim Tybur, Dan Scholnick, and the rest of the Trinity team provided an inside look into the world of venture capital. Given that I've spent most of my entrepreneurial career in scrappy startup environments, I developed a valuable new perspective on evaluating opportunities.

I thought I would take a moment to share some of the most compelling lessons I learned during my Entrepreneurship-in-Residence.

• My Muses for Brainstorming Startup Ideas
• The Value of the Y Combinator Experience
• Make Something People Will Buy

It has been exactly a year since I started this blog, as it was one of my new year's resolutions for 2009. So how did I do? Well, I'd say it went as well as a typical new year's resolution: highly motivated at the beginning with great progress in the first half of the year, then the consistency started to lapse, with eventual abandonment towards the last quarter of the year. All told I authored 23 posts, which is almost 2 posts/month, though they heavily skewed towards the first half of the year.

While it's far from where I'd like to be with blogging, 2009 was a solid start. And it was a very rewarding experience when I did make time for it. It helped collect my own thoughts on a variety of topics, get feedback from a growing audience of readers, and meet quite a few interesting people along the way. Here's a look back at the highlights:

Top Five Posts from 2009 (by pageviews)

1. Is Google App Engine Ready for Prime Time?
2. The Value of the Y Combinator Experience
3. My Muses for Brainstorming Startup Ideas
4. 5 Music Startups to Watch in 2009
5. Make Something People Will Buy

With the start of 2010 comes a new blogging resolution (and a revamped blog design). This year I hope to blog weekly. It's a big step up from last year, so here's to hoping I can keep up the pace. I hope my readers help hold me to it! You can look forward to posts covering all my interest areas, including technology, entrepreneurship, product management, platforms, monetization, productivity, and more.

Happy New Year!

Despite my post last week on the Shortcomings of Google App Engine and my decision to move away from it as a viable platform for upcoming projects, I have been impressed with the overall architecture and design of their experimental Task Queue API.

Google throughout its years has been a leader in interface design and that has been reflected not only in the UI of the products they have built, but the countless API interfaces they have published. Google has made available some of the most easy to use yet powerful API interfaces. A clear focus on leveraging open standards where possible has helped them along the way. Google App Engine is probably the strongest testament to this, allowing developers to quickly build web applications that scale to millions of users on an easy to use Python or Java runtime environment. Their latest experimental design for the Task Queue API in Google App Engine is no exception.

Definition
Before I discuss its advantages, I should provide a definition of a task queue:

• Shortcomings of Google App Engine
• Is Google App Engine Ready for Prime Time?
• Top Underhyped Open Platforms

As many of you know, I have been a huge fan of Google App Engine. I love the vision and truly believe its the first real platform-as-a-service as opposed to the other dominant cloud platform Amazon AWS. While AWS has significantly moved the industry forward with on-demand virtualized instances and cloud storage, it has not developed a fully scalable runtime environment comparable to Google App Engine. Sure Google App Engine only supports a very restricted use case and set of technologies, but constraints can be liberating. If the scenario fits for your web app, the freedom to focus on your app and not on infrastructure and scaling is very compelling.

Thus far I've created a variety of small production apps on app engine, including this blog, TuneChimp, and MonkeySort. I am now in the process of embarking on a large project and have been planning on using Google App Engine for it. However, I have run into a variety of shortcomings in GAE that currently and for the foreseeable future seem insurmountable. It has led me to have to reconsider my platform choice for this project and at this point relying on Amazon AWS (or an alternative cloud platform) seems like the ideal option.

For those also considering building applications on top of Google App Engine, I wanted to discuss these shortcomings so that you can make an informed decision when making your own platform choice.

Urlfetch Requests Can't Take More Than 10 Seconds
Google App Engine in Python requires you to proxy all your third party HTTP requests through their urlfetch library. They have created a lightweight wrapper around it to allow python developers to use their typical urllib and urllib2 interfaces. However, the urlfetch library still has a hard restriction that enforces a deadline on any outgoing HTTP request to a maximum of 10 seconds. While in many scenarios this restriction is fine, when building a mashup application that leverages third party APIs (whether its Twitter, Facebook, YouTube, or others), there are many scenarios where you realistically run into this urlfetch deadline restriction. Some APIs allow you to break up long requests by paging, which allows you to get below the 10 second limit, but this often needlessly complicates your code. In addition, some third party APIs are simply poorly written, don't allow paging, or have high latencies that make it impossible to get meaningful results within the 10s limit.

While Google has already increased this deadline once to the higher 10 second limit, they have provided no roadmap or expectation of increasing this deadline further.

Requests Can't Run for More Than 30 Seconds
In addition to the urlfetch restriction, any web request cannot take longer than 30 seconds. This is the entire time allotted to responding to a request. The scenarios for longer requests typically are not user web requests, but instead offline tasks that periodically call to third party APIs to get the latest data and cache it locally or any other kind of offline computation. While Google App Engine has provided the scheduled tasks and task queue APIs to create a nice facility for this, the fact that any individual task can still only take 30 seconds severely limits the possibilities. While in many cases you can smartly divide the tasks to less than 30 second increments, this again requires significant management of task breakdown which may create needless complexity in your application. Or there many even be scenarios which just simply can't be modeled as tasks that must return within 30 seconds.

Since Google App Engine is designed primarily to respond to user web requests and not designed to be an engine for significant offline processing, there is no roadmap for significantly increasing the amount of time an individual task can take.

Can't Open Sockets To Arbitrary Ports
Given that Google App Engine is a constrained runtime environment, it has an understandable limitation of preventing you from opening sockets on arbitrary ports. This restriction is necessary for security and scalability and Google can only be expected to enable these scenarios by providing their own wrapper libraries for each desired scenario. However, this leads to restrictions on important scenarios. For example, if your application wants to incorporate email and connect to an IMAP server, then you have no ability to do this on GAE.

While Google does plan to eventually add additional services to their capabilities, there is no plan for providing a general capability for opening sockets.

Can't Support HTTPS on Own Domain
Google App Engine allows you to launch applications on either their appspot.com domain at a custom subdomain or to host your application on your own domain through Google Apps. However, if you want to handle HTTPS requests, it has to be done on the appspot.com domain. You cannot support HTTPS on your custom domain. This is a significant restriction since it prevents you from providing a fully secured experience for a user on your own domain.

Given technical limitations, Google has not provided a roadmap for when this issue will be solved, leaving people who require this functionality to simply find another cloud platform.


While I love the promise of Google App Engine, each of these technical limitations in the current platform with no clear roadmap to enable these scenarios has led me to abandon Google App Engine for my next project. I plan to continue to monitor Google App Engine developments and see where it goes as I still believe it is a great platform for certain constrained scenarios. But I plan to spend my time now investigating Amazon AWS and Rackspace Cloud.

If you enjoyed this post, feel free to subscribe by RSS or email or follow me on twitter.

Related Posts

• Is Google App Engine Ready for Prime Time?
• Top Underhyped Open Platforms

Several months ago I had the opportunity to sit in on a guest lecture Clara Shih gave at the Stanford Seminar on People, Computers, and Design. Clara has spent the last several years at Salesforce leading their social networking product strategy as well as developed Faceconnector, the first business app on Facebook that made it easy to integrate Facebook profile data into Salesforce CRM tools. With this insight, Clara recently authored The Facebook Era, a look at how social networks have changed people's behaviors, expectations, and relationships, and the resulting business opportunities it has created.

After attending the seminar, I decided to read the book and wanted to share some of the key trends discussed and the business opportunities that arise from them.

Opportunity #1: Transparent transitive trust opens up social advertising possibilities
Clara speaks at length about transitive trust: the notion that if I have mutual friends with you that I trust, I am by extension more likely to trust you. In addition, if a friend of mine endorses a product or service, I am more likely to respond positively to the brand. Facebook creates complete transparency in both of these scenarios, allowing you to quickly see who are your mutual friends with someone as well as to see a variety of brand endorsements through fan pages, groups, status messages, and a variety of notifications of engagement with various brand applications.

Facebook's enabling of passive word of mouth of brand recommendations creates many opportunities around social campaigns that leverage the higher conversion rate associated with word of mouth referrals. Brands can capitalize on this new channel and user's willingness and desire to associate themselves with the brands they care about to supercharge their previously offline and unscaleable user referral programs.

SocialMedia has been one of the early innovators on social ads, with the Word of Mouth Impression being their latest ad creation. This new ad product attempts to incorporate your friends sentiment around the advertised brand to increase conversion rates of ad campaigns. Appirio has also built a Referral Management for Viral Marketing product to enable brand advocates to easily share their brand preferences with their friends on Facebook.

Opportunity #2: Explicit self expression makes hyper targeting a reality
Compared to the social networks that came before it, Facebook has encouraged authentic online identities and personalities. This has led to users willingly and explicitly expressing themselves on their profiles and streams. With this has come never before available deep data about user's demographics, behaviors, and interests. Of course this creates exciting new opportunities for advertisers to hyper target a set of users based on their interests.

The Facebook Ads platform has provided an opportunity to get at some of this hyper targeted data. Advertisers can now target their campaigns on specific demographics and interest keywords found on user profiles. However, this platform is still in its infancy, only scratching the surface on the targeting vectors that are possible. Hopefully with time Facebook will continue to innovate on their ad platform as well as open up an advertising API to allow third party developers to help with the innovation around targeting. To date third parties have been severely limited by Facebook in their ability to use the data available on user profiles for the purposes of targeting.

Opportunity #3: New forms of casual interactions enable maintaining and growing weak ties
Clara also emphasizes the importance of weak ties on social networks. These are the friends you have on social networks that aren't your closest real life friends, but instead the people you casually or occasionally keep up with. What's important about this class of individuals is that research has shown these are the connections that will be most important to you in terms of business relationships, since over the life of your career these are the people that you are likely to benefit from in one way or another. Facebook enables you to easily maintain and grow connections with these weak ties through casual interactions, including reading their status updates, posting wall posts, sending messages, and more.

Many applications have been developed on Facebook to further encourage casual interactions to grow these weak ties. MyCalendar and Birthday Cards enable you to easily remember your friends birthdays and events and send them online greeting cards. Even many of the social games on Facebook have the affect of allowing you to casually interact with your friends and remind them of you.


Facebook has truly enabled new scenarios and behaviors for people across the world. With these new interactions come many new business opportunities to leverage the social graph to create value. Clara Shih has done a great job of researching and documenting this trend. So check out her book!

As today marks my first day as an Entrepreneur-in-Residence at Trinity Ventures, I'm spending a lot of time thinking about how to formalize my process for starting a new venture. Every startup goes through phases including brainstorming ideas, selecting evaluation criteria, performing due diligence on top ideas, picking a winner, deciding on a corporate structure, putting together the team, evaluating funding options, and more. While the popular press often glamorizes the startup story as an epiphany moment from an opportunistic individual that grows to a successful corporate behemoth, I prefer a much more systematic approach to entrepreneurship (and life in general, for that matter). As I begin this journey myself, I thought I'd document my new venture process along the way, share it with all of you, and hopefully hear from you on your own thoughts.

Often one of the earliest steps in forming a new venture is coming up with the idea. I won't argue that this should necessarily be the first step though, since in my previous venture Anywhere.FM we picked the team before the idea and that was the right choice for us. I also won't argue that it is necessarily the most important step, because while a startup needs a great idea, it's not without great execution that an idea can become a successful endeavor.

I'm often asked where I come up with all my ideas, as I'm typically chock-full of potential ideas percolating in my head. I have a variety of sources of inspiration that help me put together laundry lists of potential startup opportunities. Before I dive into my muses though, I think what's important to realize is that the best idea brainstorming happens outside of any specific brainstorming phase. Good idea generation is like a muscle that you are constantly flexing. It's a mindset and attitude towards the problems you face everyday and your ability to effect change. While some people are innately curious and problem solvers, I still think like any muscle, this skill is something that can exercised and improved.

I'm personally innately curious. But what has been a huge boon for me was learning to program on my first computer, an Apple IIc, when I was in middle school. I quickly learned BASIC and fell in love with the idea that I could make things. In the early days it was often games to amuse myself (which is what typically attracts many young boys to programming), but as time passed I started making more useful applications. One of the issues I had early on was quizzing myself on vocabulary words. I quickly wrote a program I called Vocabulary Master to provide me random word definitions, give me three attempts to guess the word correctly, and tell me the word if I failed to remember it. It was a very simple application, but was the foundation for my strong belief that I can solve real world problems through software. Ever since then I've constantly had a list of potential ideas. Oftentimes when something bothers me or I think that something can be improved, I add it to a list of potential projects (and I have to say that I love the fact that now I have an iPhone always in my pocket to record my ideas). It's this critical lens of looking for ways to improve what you see every day and having the attitude that you can do something about it that I think makes for a great base of idea generation.


Logo for Vocabulary Master

Beyond that, there are specific muses I've used to help jump start my creative juices:

Improving Your Work Life
I think often the best source of ideas comes from your area of expertise and the problems you face on a day-to-day basis in your career. You probably find yourself saying "Why is this so hard? There has got to be an easier way" every so often. It may be a product extension to your existing business's core products, or may be unrelated to the business, but a pain point you feel trying to get your job done. From my experience at imeem focusing on monetization, I've come up with countless pain points in trying to monetize social media and large publisher sites that could be fruitful startup opportunities.

Analyzing Macro Trends
I think another very important exercise is analyzing macroeconomic trends and thinking about the opportunities it creates. What obviously comes to mind first these days is the recession, and I think a lot of startup opportunities will come out of that. Anywhere from helping people save money, find jobs, or tapping into the funds made available through the stimulus bill. But beyond the recession, I think there are a lot of other exciting market trends that are creating countless opportunities. Anywhere from the proliferation of APIs, to the rise of cloud platforms, to the opening up of mobile devices.

Bringing Existing Innovation to New Applications
I believe there remains significant inefficiency in applying new technologies across multiple vertical applications. It behooves a startup to focus at least initially on a very specific application to prove out the model and to provide the best experience. But this creates significant opportunity for other startups to bring that existing technology innovation to new verticals and thus becomes a fruitful source of startup ideas. I often think about how trends in certain spaces can be applied to new segments. For example, can we bring the viral spreading of applications native to Facebook apps to iPhone applications? Or can we bring the successful virtual goods monetization model from social games to non-gaming sites?

Latest News in Your Area of Interest
If you have a specific area of interest or vertical segment that excites you, I think its hugely valuable to constantly keep up with the latest news in that area. These days its so easy to use Google Alerts to subscribe to daily feeds of the latest news, blogs, and search results of your topic of choice. I have these setup for various areas of interest, including open platforms and personal productivity.

Exposure to Startup Ideas
I think it's also very important to constantly be exposed to new startup ideas. When you hear people's ideas and their take on solving them, it definitely helps to get your own mind thinking about related opportunities in the space or at least helps to think critically about how they may have come up with such a solution. I daily skim TechCrunch as a great source of startup ideas. I think Jessica Livingston's Founders at Work was also a great case study of many different startup ideas.

Talk to Existing Entrepreneurs
As I said, great entrepreneurs have this ability to constantly come up with ideas and potential solutions. I've been spending the last month catching up with a lot of my fellow entrepreneurs to not only chat about their business, but more importantly, interesting things that they have seen outside of their own startup. When an entrepreneur is busy executing against a specific idea, he is knee deep in one specific space. That doesn't mean though that he doesn't think about other ideas or have other ideas percolating in his head. I think its often great to tap into this creative thinking to spur some of your own ideas.

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Related Posts

• Protect Yourself With the Corporate Veil
• Make Something People Will Buy
• Lessons Learned from imeem

While I am a big believer that entrepreneurs should spend the majority of their time focusing on getting a quality product to market, one piece of overhead that should never be overlooked is incorporating or forming an LLC prior to product launch. To some this is obvious. Of course you setup your corporate structure before anything else. But to hackers and hobby programmers this may not be their first instinct. Sometimes you have a hobby website that just starts taking off and you never planned on it being a real business. But then it starts to become one and you may not have the protections incorporation affords.

Take a look at this recent case, EMI vs. Seeqpod. This case has received a lot of press lately not only for the fact that EMI has joined Warner in suing Seeqpod, but EMI went so far as to sue Ryan Sit, creator of Favtape, for simply using the Seeqpod API. This case has huge implications for mashups across the web because it then potentially holds all mashup developers liable for potential infringement due to their use of third party APIs.



Many saw this case as particularly nasty of EMI because they sued Ryan Sit, the developer of Favtape, himself. Since Ryan Sit was named directly as a defendant, all his personal assets are now potentially at stake in this law suit. It's an unfortunate turn of events given that Ryan built Favtape simply as a side project outside of his day job. But what isn't evident from the press is whether Ryan ever incorporated or formed an LLC around Favtape in the first place. The site nor the parent company Freestyle Labs show any indication on their sites of being incorporated, which could suggest the company may likely be simply a Sole Proprietorship.

Regardless of what the specifics of the Favtape case end up being, the point is that it is important for every entrepreneur to protect himself by forming either a corporation or an LLC, which affords limited liability protection to the entrepreneur. While sole proprietorships and partnerships are the easiest corporate structures to form, I would highly discourage them since they provide no such protections.

Even among the corporate structures that do provide limited liability protection, one must still decide between forming an LLC, C-Corp, or S-Corp. Out of the three, an LLC is the easiest and cheapest to form. It simply requires an $80 filing fee, a few corporate documents, and paying the annual $800 minimum tax. You can even use services like MyCorporation to come up with and file the documents for you for a nominal fee. So I would suggest that at the very least, you do this.

However, there are many cases where a C-Corp or S-Corp is a much better fit. If you intend to take any outside money at all, you will very likely be required to form a corporation and thus its better to directly incorporate (though you can convert an LLC to a corporation when required). Incorporation is more involved, requires more organizational maintenance, and is more expensive. It can run anywhere from hundreds to upwards of ten thousand dollars to setup everything correctly and maintain it. It is best to work with an experienced corporate lawyer to ensure it is set up appropriately.

I am by no means a lawyer and am not qualified to recommend a specific corporate structure. All I am suggesting though is that you please protect yourself and make sure to incorporate or form an LLC prior to launching your product to ensure that you are not one of the victims in this highly litigious country of ours!

Before moving on to a new phase in my career, I always like to reflect on the previous experience and put together key takeaways that I can leverage in the next opportunity.

It's that time again as this past Wednesday was my last day at imeem. As some of you know, imeem acquired Anywhere.FM at the end of 2007. Since then I've helped to migrate Anywhere.FM, develop the imeem Media Platform, and contribute to a variety of monetization projects. But now I'm eager to move on to the next adventure :)

Since I have a blog this time around, I thought I would share my lessons learned from imeem with all of you.

Content Matters. Having interesting or exclusive content is a great source of traffic. imeem's decision to allow user uploaded content has definitely helped it obtain valuable SEO for hard to find tracks. People who really want access to a specific song will go wherever they need to in order to find it. imeem's ability to get exclusive content like the Britney Spears' Circus pre-release album definitely resulted in a nice bump in traffic as well.

Creating a Community. While many people would say developing a web 2.0 UGC site is easy because users contribute significant content, it's actually a lot of work to harvest the desired community. It requires staff to police user-contributed content, answer questions\moderate forums, contribute\manage editorial content, encourage appropriate behavior, and so on. In order to scale, it's important to automate as much as possible and allow users to help manage the community themselves.

Conversion Funnel Optimization. Don't underestimate drop-off rates resulting from adding an extra click in a flow. There are lots of flows that can be optimized simply by removing extraneous pages or reducing non-essential exit paths. It's worth re-looking at all your important conversion funnels to see if you can further optimize (sign up, contributing UGC, sharing, purchase events, premium account sign up, etc).

A/B Testing. Everyone knows that A/B testing is a good idea and they should do it. Yet still so few people do. And why is that? It's because A/B testing is hard and the tools often used to perform it are limited. However, if you take the time to either build or use an existing great A/B testing framework, the cost of A/B testing goes down significantly and becomes easier to do on a regular basis. Investing in A/B testing tools is hugely useful, especially for optimizing monetization for sites where small gains have huge effects due to volume. (There's likely a startup opportunity to provide better A/B testing tools that let you look at the full effect of variations over time).

Widgets. While allowing widgets to be embedded on third party sites significantly extends your reach and can be a huge opportunity for building your brand, the amount of traffic that converts to destination site users is often minimal and the ability to monetize widget traffic is still dismal. When developing widgets, one needs to think very carefully about the actual benefits for the site and exactly how much functionality to expose in the widgets versus reserving for only the destination site.

Using an API Internally. Building an external API is a great discipline for even improving the quality of internal API methods. It forces you to think through good design, re-usability, and creating common usage metaphors. All things you should be thinking about for internal APIs. Speed to market for imeem's own apps has significantly increased with the creation of our external APIs. The audio and video flash players, the imeem Uploader, the VIP player, MySpace\Hi5 apps, and the mobile app were all built on top of these APIs.

Evangelizing a Platform. While getting large well-known companies to use your developer platform provides great case studies that will help you convince other developers to jump on board, you have to trade this off with the fact that large companies take a long time to decide whether to engage as well as a long time to build. For each large integration, you could probably get 3-5 small integrations up and running.

Focus on Monetization. Very few music startups have focused on monetization. There is still a lot of novel business models that should be tried in the music space. Instead startups have focused on building compelling products without much care to the business model. There is room for innovation in the music space if people are willing to tinker with music business models as well.

Competing with Free. It's very difficult to compete with free. Users have come to expect free music streaming from the days of Napster and BitTorrent. And now there are plenty of free music streaming services (either illegal or legally ad-supported) and continue to propel user's expectation to pay nothing for music consumption. It's very difficult to aggressively advertise or charge users without fear of user's flocking to the competition, which just gives it all away. The one nice thing about the recession is that it has forced imeem's competitors to more aggressively monetize in order to stay afloat\get funding and therefore allows imeem to follow suit without fear of losing traffic.

Media and Entertainment Monetization. It's tough to monetize media and entertainment properties through advertising, lead gen, or affiliate revenue. This is because users are there for socializing and consuming content and have very little purchase intent. While they do share a vertical interest in music, associated music commerce opportunities are limited either because of the small margin the publisher gets working with partners for digital downloads and ringtones or because the providers for concert tickets and merchandise are still not aggregated well or lack established affiliate programs. (There's likely another startup opportunity in an aggregated music merchandise storefront and affiliate program).

Direct Sales. Having a direct sales team is expensive. Not only do you need sales reps, but you need sales planning support, post sales production support, and trafficking support. It may make more sense to outsource direct sales to rep firms in the early days of a startup's life.

International Monetization. It's very difficult to monetize traffic outside of the US and a few key markets (UK, Canada, etc). Ad spend in most other countries is still very low since their online ad markets are still nascent. Oftentimes it is probably a better use of time trying to improve US monetization or trying to attract additional US traffic as opposed to trying to optimize international monetization. (I smell a startup opportunity for anyone who can crack international monetization).

Users Willingness to Pay. I was surprised that users are actually willing to pay for online services. Obviously conversion rates are very very low. But it was surprising to me to learn that people were willing to pay at all - anywhere from $3/mo - $100/year for imeem's VIP subscription service. The features were really around convenience. Not even access to content. People will pay for quality products.

Online Audio Ads. Online audio ads are a promising area for innovation and monetization. There is still $21B being spent on offline audio ads and there is clearly an opportunity to move some of those dollars online. No one is aggressively innovating with the right ad unit. Most are simply re-purposing offline audio ads online.

Incentivized CPA Offers. Incentivized CPA offers can be used to monetize a variety of digital goods even outside of the social gaming space. However, the highest eCPMs seen thus far are still in their use in social gaming.

Music Licensing. It's very difficult to get on-demand streaming deals done with all four major labels. And this doesn't even include indie content. Even if you get the deals, you are looking at a large upfront payment to each label, giving up equity, plus a rev share or per-stream fee. The labels have not been looking to give the deals to everyone either, instead focusing on making some large bets.

Value of Data. Every site of any interesting size has a wealth of data. It's important to know exactly what data is tracked and available and to mine it wherever appropriate. All too often this valuable data goes unleveraged. On the other extreme, many believe that the ultimate business model lies in selling data. For those who believe this though, I think it's tougher than one thinks to monetize data itself. But there are many valuable insights that can be gained by mining it for product improvements and getting a better insight into your audience.

Don't Believe Everything You Read. It's interesting being on the inside of a large web property with many eyes watching it. Since I had the inside scoop, I knew that many times imeem was written about, the reporters simply got it wrong. Either because of misinformation, not really understanding the service, or some rumor that someone else started. Because of this, I've become much more critical of what I read online in the tech press and look much more closely at their stated sources of information.

I'm often asked about my Y Combinator experience so I thought I would take the time to blog about it. I did Y Combinator the Summer of 2007 in Boston with two awesome co-founders. We built Anywhere.FM, a web music player that brought an iTunes-like experience to the web, and eventually sold it to imeem.

So what is Y Combinator? Y Combinator is a new kind of seed stage venture firm. While they provide financing and advice like all venture investors, their model for doing so is very different. They give small amounts of cash (
I would break down the value of the Y Combinator experience into four main benefits: jump starting the startup process, access to a fraternity of entrepreneurs, investor day, and funding.

Jump Start the Startup Process
Starting a company is a lot of work and a lot of very important decisions need to be made early on. Who do you pick as co-founders? How should you set up vesting schedules? What corporate structure is best? How do you assign board seats? How much money should you raise? What do you focus on early on?

Y Combinator not only provides a solid battle-tested structure for setting up your startup, but also gives tons of advice on how to succeed at your startup. The advice comes from a variety of speakers that Y Combinator bring ins. This included people like Langley Steinart, founder of TripAdvisor, who shared incredible advice on getting deals with partners and having a strong hand in investor meetings. Greg McAdoo, venture capitalist at Sequoia, also came in to provide us a complete inside look into the VC funding process. And Paul Buchheit, creator of Gmail, provided a ton of valuable lessons learned from the early days at Google and how to build a product to tens of millions of users. It's these kinds of high quality speakers that YC is able to attract that would be difficult to have access to on your own.

Fraternity of Entrepreneurs
One of the most remarkable phenomenons is the bond that is created between fellow entrepreneurs who have gone through a shared experience of trying to make something people want. What results is a fraternity of startup founders. This fraternity extends beyond your own class of YC startups to the entire alumni network of YC startup graduates.

This strong network is accessible each and every day for founders to get advice ranging from who is the best hosting provider, to evaluating deal terms, to making intros, and more. I've never met a group of people more willing to help you out. For those new to the startup community, there is no easier way to get assimilated.

Investor Day
The culminating Investor Day is by far one of the most valuable aspects of the YC program. In one or two days, you get access to an unbelievable number of top notch investors that are eager to hear your pitch. Due to early YC success stories, including Reddit, Loopt, Xobni, and Zenter, YC has been able to attract an incredible line-up of VCs who come out every batch in search of the next big thing. These investors span the entire range of angels to VCs looking to make small to large investments in a variety of tech startups.

Funding
While the funding is an important benefit, I believe it is actually the least important of the above mentioned benefits. YC only invests a very small amount of money, which is really just enough to help you cover basic expenses during the three month project. It's not difficult to scrap this kind of money together on your own. So if you evaluate Y Combinator purely as a funding source, there are many other options out there. But the real value of YC comes from the funding combined with all the other more important benefits.

My overall assessment is that Y Combinator is an amazing program for a young first time entrepreneur who is serious about jump starting the entrepreneurial experience with the advice and guidance of a strong network of fellow entrepreneurs and successful investors.

A whole class of Y Combinator style seed stage venture firms have cropped up due to Y Combinator's success. They typically offer a similar program in a different city. These range anywhere from TechStars in Boulder\Boston, LaunchBox Digital in Washington DC, DreamIt Ventures in Philadelphia, Shotput Ventures in Atlanta, or Seedcamp in Europe. My advice though is if you are serious about starting a company, I would highly encourage you to get to Silicon Valley, as its a night and day difference between starting your company in the heart of technology innovation as compared to the outskirts.

So what are you waiting for? Go ahead and apply. The deadline is March 18 :)

Despite the over 200 music startups that launched in 2008, I am disappointed with the lack of startup innovation in the space. While many of them definitely nailed building something people want, most failed to make something people will buy. When developing a startup, figuring out a viable business model is as important as producing a compelling product. And unfortunately there was little in the way of innovation in business models in the music space.

This is an even more pronounced issue in music, where content licenses are owned by an oligopoly of four highly litigious record labels. The labels have been eager to shut down or sue a variety of music startups, including Muxtape, Songbeat, Seeqpod, Project Playlist, and others. Yet what the labels are struggling most with is recouping lost revenue from the 45% drop in CD sales since their peak in 2000. What they are most desperate for is not a large settlement, but a new sustainable revenue stream. What they need are startup partners seeking to help them generate new commercial value with their content and through relationships between artists and fans.

There are a few notable exceptions who did focus on business model innovation. LaLa, for one, introduced a new a la carte on-demand streaming pricing model, charging users 10 cents per track for unlimited on-demand streaming. Sure one could argue that there are already too many free alternatives for on-demand streaming and thus there is a significant uphill battle for LaLa to gain traction. But LaLa is focusing on trying to build a compelling enough user experience with a clean playback experience that would be worth paying for. And at the same time, it's still to be seen whether the existing fully ad-supported music streaming services are going to be profitable businesses. To be sure, LaLa is far from a success, but at least it went out on a limb and tried something new.

However, the most interesting potential bright spot in online music monetization is monetizing time spent listening through online audio ads. While the online audio ad market is still nascent, the offline radio advertising market is still a $21B industry. The time is now for these dollars to move online in a meaningful away.

There have been various attempts at developing the online audio advertising space to date. Unfortunately early attempts were limited in success. Some have tried to bring the same offline radio ad spots from broadcast radio to online music streaming services. These are your typical 30-60 second national brand ads, like Geico car insurance ads. The attractiveness of this format is that it is much easier to convince ad agencies to take their existing audio creative and do a test buy online. For broadcast agencies, it is exciting to finally have access to actual impression data. To them it is a novel concept to actually know exactly how many people viewed their ad spots, since in the offline world much of the metrics are based on sampling. Yet this traditional radio ad format is completely inappropriate to the web world, where oftentimes users choose to move to online music services to get away from these long obnoxious ads.

What is needed in the online music space is an entirely new audio ad format that is appropriate for the medium. Just as how the online video space has developed its own unique format - the video ticker overlay ad unit - a similar new ad format needs to be developed to adjust to user behavior and expectations regarding online music.

And that's exactly what we are finally starting to see happen. imeem, for one, is serving a unique 5-8 second audio ad spot at a low frequency with a companion medium rectangle (300x250) banner that takes over the player during ad playback. Pandora just introduced 15 second audio ad spots with an initial frequency of one spot every 2 hours. TrueAnthem has developed an 8 second audio spot with a companion banner played at a frequency of once per session. Jingle Networks, which provides a free 411 voice service, has been serving 10-12 second audio spots from both national advertisers and geo-targeted local advertisers. They have had no trouble filling their inventory and have even launched a complete voice ad network to allow the insertion of in-call audio ads for other services.

There are several existing online audio ad networks already out there, including Ronning Lipset Radio and TargetSpot, which recently merged to create the largest online audio network. Unfortunately a lot of the units they carry tend to be the longer more traditional 30 second ads. This month Google announced that they would be shutting down their broadcast radio advertising business that Google has pursued since its acquisition of dMarc Broadcasting in 2006. While many picked up on that news, I think the most interesting piece is that Google also said that they are going to now actively pursue online streaming audio ads. I'm excited to see Google enter this space and I hope they bring with them advertisers willing to try shorter and more innovative formats, even if it means Google or someone else taking on the challenge of producing this new custom audio creative. This is exactly what VideoEgg had to do in the early days to get advertisers to embrace the video ticker overlay.

Early data suggests that in-stream audio ads have higher CTRs and greater brand recall than traditional online banner ads and can be minimally detrimental to site usage when done tastefully with shorter audio spots at low frequencies. Instead of seeing yet another slick AJAX interface for creating and sharing music playlists, we need more entrepreneurs to optimize the audio ad format to figure out the right set of parameters to make this work. Whoever does that may be able save the music industry and line their pockets all at once.

So are you thinking about adding a virtual economy to your app or website? The great news is there are a variety of startups out there waiting to help you!

Incentivized CPA Offers and Direct Payments
Over the last two years more than a half dozen partners have emerged to supply publishers with offers and direct payment options to fuel cash flows into their virtual economy. Most partners in the space offer both a set of direct payment options as well as a large selection of offers.

When deciding on partners to integrate with, there are a variety of considerations to think about. Each partner offers a different revenue share, so its important to negotiate to ensure you are getting the lion share of the revenue. I have seen the rev split be anywhere from 50% - 90% net to the publisher. Keep in mind that it may make sense to separate the rev split for offers vs. direct payments, as its often very easy for a publisher to sign up direct payment providers like PayPal, Amazon, Zong, etc themselves and as such, the offer providers aren't justified in taking much of an additional cut on the transaction.

Another very important consideration is the breadth of offers that are available from the provider. Providers have a mix of both hard offers (requiring a credit card or purchase) and soft offers. You want to make sure that your partners have a diverse mix both in terms of types of offers but especially in terms of availability of offers per country. You'll find that some partners are stronger in certain international countries than others. In general though you should expect international monetization to be significantly lower than the US, as availability of offers are limited outside of the large ad markets (US, UK, Canada, etc).

When it comes to direct payments, the direct payment options and country coverage are both very important. Most partners integrate with PayPal or other credit card options as well as mobile payment options. The mobile payments space is still nascent and no one yet has coverage of mobile payments in all countries. So you'll want to ensure the partner you go with has mobile payment coverage in the countries that are most important to you.

Let's take a look at the players in this space:



Offerpal Media, founded in June 2007, is the most well known managed offer provider, supporting 2.5 million completed offers per month across hundreds of apps and websites. Offerpal is a full service provider, offering a variety of direct payment options (Paypal, Amazon, Mobillcash, and Ultimate Game Card) as well as a diverse selection of offers.

Offerpal makes it easy for any publisher to integrate, offering a complete self service platform as well as a dedicated business development and technical staff ready to assist you in your implementation. Offerpal has also sought to establish thought leadership in the space, putting together great articles for publishers as well as events to help publishers learn from each other's success.



Super Rewards is definitely Offerpal's fiercest competitor, launching their product publicly in December 2007. They are aggressive about winning your business and have obtained a lot of high profile Facebook and MySpace applications on their platform. They are definitely worth a look.



Gambit is a fairly new entrant in the space. Built by a group of developers who originally used the technology to monetize their own Facebook sports related applications, they have recently made the same technology available to any third party application.

Being small gives them the agility to innovate on a daily basis. I've made suggestions to them to improve their offering and have been amazed to see them implemented immediately and carefully tuned to optimize conversions. I've already seen their eCPMs start to surpass that of the more established players.



Most offer providers obtain their offers from large CPA ad networks. Several of these CPA ad networks realized that they themselves could get into the business of providing a managed offer product. PayBuyPartner is one such product brought to you by CPA Storm.

The attractiveness of working with them is that it cuts out a middleman which should theoretically result in higher returns. However, they are focused on both offer acquisition as well as offer optimization, which may spread their efforts thin.



SocialCash is another offer provider built by Gratis Internet, one of the largest CPA ad networks. Gratis Internet was even the CPA ad network that brought us the most notorious of incentivized cpa offers: free ipods!

However, they have recently launched a new ad product called Headliners, which has resulted in them de-emphasizing their virtual currency PointCash product. While SocialCash may make sense if you are interested in offers in international countries where they are strong, I would suggest avoiding them as a general solution as they will likely no longer be innovating on this product.



TrialPay, founded in 2006, has a long history of providing qualified offers from prominent merchants. With the growth of virtual currencies, TrialPay has adapted their system to work in the virtual currency environment. There solution isn't quite as plug-and-play as some of the others, but definitely worth looking at for their offer selection.



Peanut Labs originally built Xuqa, a social network that has taken off in Turkey. When ads weren't working, Xuqa introduced a successful virtual currency called peanuts. Peanut Labs is now offering this same monetization platform to third party developers.

Peanut Labs specializes in quality market research surveys, which are often the best type of soft offer. Peanut Labs also has built an impressive selection of direct payment options that differentiates them from other players in the space.

Offer Provider Optimization
Given that there are already so many different offer providers and more coming, a solution is needed to easily A/B test them to select which work best for your site in each country. This should be done for both offers and direct payment options. Since every offer provider will tell you that they are confident they are better than their competition, the only way to know for sure is to test and find out!



Sometrics is the first to build a virtual currency manager product that makes it easy to test multiple offer providers and specify rotation ratios for each provider. They have done a good job encouraging developers to get the most out of offer providers. This product is still in its infancy and not without its limitations, but its a great start at a product specifically designed to address this very real need.

I hope to see others enter this emerging space.

Virtual Economy Optimization
In addition to optimizing the offers and direct payment options, its important for publishers to carefully monitor and tune their virtual economy. For example, a publisher needs to look at available sources (ways of acquiring currency) and sinks (ways of spending currency) to ensure they are appropriately balanced. By graphing currency acquired and currency spent over time, a publisher can ensure that the graphs are aligned. If, for example, the currency spent dips compared to currency acquired, a publisher needs to introduce new valuable virtual items available for purchase or generally increase the price of their goods to keep their users hungry for currency.



SocialGold by Jambool is a great virtual currency analytics product to help you easily monitor your virtual economy, study price elasticity, and generally tune your virtual currency. Through simple instrumentation of your application, you get access to easily understandable graphs and tables overviewing the performance of your economy. In addition, SocialGold provides a wide selection of direct payment options across both credit card and mobile alternatives. Definitely worth checking out as well.

Additional Opportunities
Beyond these existing startups, there are still additional opportunities for startups to build tools to help support the virtual currency ecosystem. With the continued growth in both usage and revenue from social games and virtual economies it's a valuable startup opportunity.

One area ripe for innovation is merchandising of virtual items in social games. Every social game has some form of store where users can spend their virtual goods. This has effectively made every social game an etailer. However, social game developers are not well versed in the best ways to merchandise items in their storefront, on deciding how to feature the most valuable items, on suggesting related items, managing shopping costs, order histories, etc. And it's not necessarily something developers want to focus on when there is enough to deal with in developing the core game mechanics of their experience. It provides an opportunity for a partner to provide expertise in retail to the social games arena.

I expect in 2009 we will see continued growth throughout the virtual currency ecosystem. Got a new product in this space? Let me know!

2008 saw an explosion in virtual currencies and their associated virtual goods all across the internet. With Facebook social game Mob Wars suspected of making a million dollars a month and Zynga rumored to have made $50 million in revenue in 2008 off of its social and iPhone games, companies are seeing real revenue from this burgeoning monetization model. Even other indie social game developers like Mobsters and Lil Green Patch who also monetize virtual currencies have seen huge success with 13M users on MySpace and 5.9M monthly active users on Facebook, respectively. To top it off, over $580 million was invested in virtual goods related startups in 2008.

While social games is the newest category of apps monetizing virtual currencies, MMOs like World of Warcraft and Second Life have had vibrant virtual economics for years. In addition, casual MMos like Gaia Online, Habbo, and IMVU have also built thriving currencies.

Yet the most recent trend that is fascinating to me is the incorporation of virtual currencies in non-gaming sites. As growth in the online advertising market continues to deteriorate, sites are seeking alternate forms of monetization to wane their dependence off ads. Many eye the robust gaming virtual currency revenue stream and are eager to expand its success into non-gaming environments. With Facebook itself estimated to have made $30-$40 million from its virtual gifts, many others hope to imitate and expand upon such early success.

Given this, I decided to put together a quick case study of five of the most interesting virtual currencies in non-gaming sites today.



myYearbook, a teen oriented social network founded by two high school students in 2005 with now over 4.4M US uniques, is a popular destination for socializing, meeting new people, and entertaining yourself.

myYearbook has incorporated their "lunch money" virtual currency into every aspect of their experience. Even when a new user first creates an account, they are awarded lunch money for simply uploading a profile picture and inviting their friends to join. Wherever possible, myYearbook attempts to offer you additional lunch money for additional activity across the site. By getting high scores in flash games on the site, you are awarded lunch money. For winning popularity battles, you are granted additional lunch money. myYearbook has even built their own rendition of Friends for Sale called Owned. Users acquire points through the game but also spend points to purchase their friends. You can also acquire points through various offers as well as direct payment options ranging from credit card, to mobile payments, to PayPal.

Once you have acquired lunch money, you have a variety of ways to spend your currency. In addition to buying your friends in the Owned game, you can purchase additional top friends slots to showcase your friends on your profile. You can also purchase a pimped out mp3 player and more songs for your playlist. Or battle super votes to ensure you win battles or support your friends. They have even built a Causes application, allowing you to contribute lunch money toward world causes like hunger, global warning, save the rain forest, and more. myYearbook then converts your contributed lunch money into hard cash that they contribute to the appropriate charities.



Heysan is a mobile web-based IM aggregator allowing users to easily connect to MSN, AIM, ICQ, Yahoo, and Gtalk on the go from their phone.

Similar to myYearbook, Heysan initially offers up "coins" for simply joining the service and inviting your friends. Heysan also provides additional coins for performing actions on the site that they want to encourage, including daily sign-in, validating your phone number for SMS notifications, or filling out your profile. You can also get additional coins through various offers and direct payments.

What's cool about Heysan is how you can spend your coins. They can be used to get exclusive emoticons, new buddy icons, wallpapers, photo backgrounds, background colors, profile font colors, friend gifts, feature profiles, and more.



Scrapblog is the easiest way to create stunning multimedia online and print scrap books. With over 2 million registered users, media partnerships with Disney, Discovery, and Photobucket, and a newly raised round of $4 million, Scrapblog is poised for success.

Scrapblog has traditionally monetized through printing and sponsored promotions. However, they have recently introduced the Scrapblog Marketplace, which allows you to purchase premium content for your scrap book with Scrapbook "credits" that are purchased with a credit card.

These credits are used to purchase anything from new backgrounds to specially made stickers for your scrapblog. A variety of premium designers have put together an expansive selection of exclusive content for your scrap booking needs.



Dogster is the premier social network for a man's best friend. Showcase your own animal, browse your friends dogs, and check out the half a million dogs already captured on the site.

Dogster has monetized through advertising sold through their own direct sales team targeting the $42B pet industry as well as a premium subscription service for $20/year that provides benefits including the ability to upload more pictures, photo captions, ad-free browsing, and more.

In addition, Dogster has monetized through its own virtual currency, known as zealies. Dogster provides a variety of free ways to acquire zealies. You get some when you join. If you give them more info about yourself, they'll award you more. Sometimes you get them from games and other times they give them away for holidays. They try to rotate a variety of free ways of acquiring zealies. You can also acquire zealies by purchasing them at a rate of 20 zealies for $5 through Paypal. Users can additionally get monthly zealies through the paid subscription service.

Zealies are then used to purchase a variety of gifts for dogs across the site. Gifts include rosettes, which are one-month lasting ribbons you can give to your favorite dogs to recognize them. Then there are a variety of holiday related gifts. They even have sponsored gifts, including a recent Febreeze branded collar that was given away for free and paid for by the advertiser.



Mahalo recently launched Mahalo Answers, a Q&A service similar to Yahoo and Google Answers.

The interesting twist for this service is that besides users answering questions for free, the question asker can also offers Mahalo Dollars to the best answerer. This Mahalo Dollars virtual currency can be funded through PayPal. The question asker then awards the tip to the best answer. The users who receive Mahalo Dollars can convert it back to real cash after they reach a minimum amount of tips and after Mahalo takes it 25% cut.

Mahalo has also created a points system, allowing people to acquire points for answering questions well and adding friends. As a user acquires points, they progress through multiple belt levels, with higher belts designating that you are more of an expert in the community.

Resources

• Inside Facebook: 10 Tips for Monetizing Social Traffic Through Virtual Currencies
  
• Venture Beat: Virtual Goods Starting to pan out for Facebook Game App Developers and not just the Venture Funded Ones
  
• Virtual Goods News

Last year at the SocialMedia Business School I gave a presentation on Media APIs and how they could be leveraged to enhance existing experiences or build entirely new services around freely available media content. Since I have received many follow up questions, I thought I would take the opportunity to expand on the topic.

Media APIs
2008 definitely saw a rise in media APIs across the major media content types with ProgrammableWeb cataloging 38 music, 42 video, and 37 photo APIs.

Photos
In the photo space, Flickr continued its dominance and saw strong growth in the use of its APIs, reaching a record of 704 API calls per second and ranking as ProgrammableWeb's second most popular API (after only Google Maps).

Videos
YouTube finally launched its own video APIs in a big way in March 2008, quickly becoming the default video API of choice. YouTube did a great job with their offering, providing full programmatic access to their video player as well as a chromeless player to allow third party sites to brand the experience and customize the player controls as they saw fit.

Music
2008 also saw a slew of entrants in the music API space, with imeem launching its APIs in March (disclaimer: I manage the imeem APIs), followed by Last.FM API 2.0 in June, Yahoo Music in August, and iLike and MTV in September. Each came with its own strengths, ranging from unlimited on-demand full length streaming, to limitless music-related metadata, to high quality music videos.

In all 3 categories, API providers have offered very complete solutions to recreate the entire site's user experience as well as leverage a lot of the site's underlying infrastructure. Each provide upload APIs to offload the cost of uploading, storing, and serving media content. They each also provide advanced search APIs to programmatically find exactly the content you are looking for as well as full access to associated metadata for every media item.

Media API Mashups
We are already starting to see categories of resulting mashups emerging, including startups seeking to innovate on the browsing, personalization, and social aspects of experiencing media.

Browsing Experience
We saw a variety of startups in 2008 evolving the user experience of browsing and consuming media content. For example, uvLayer created a beautiful and fluid webtop experience for experiencing YouTube and Flickr content.

Personalization Experience
Given the continued media fragmentation and move away from prime time TV towards online content spread across dozens of popular destinations, it has become much more difficult for a consumer to constantly find interesting content to consume. To fill this void, a variety of media aggregation plays have emerged to bring the best of these content sites together and provide recommendations based on your personal tastes. ffwd is one such service that has aggregated videos from many APIs and organized them in personalized channels based on your expressed tastes.

Social Experience
Others have focused exclusively on the social experience of sharing and discovering media with your friends. Slide has spent a lot of its effort on this, with the integration of premium video into FunSpace and premium music into Top Friends.

API Cost
All the major API providers have decided to provide their APIs for free to developers and hope to monetize through advertising within the media playback experience or indirectly monetize through driving traffic to their destination sites. This is good news for entrepreneurs looking to take advantage of these APIs.

However, I suspect with the flight towards revenue for many technology companies in 2009, entrepreneurs leveraging the media content should expect significant advertising in all syndicated media.

Licensing Limitations
It's not all good news though when it comes to media APIs. Some have very serious licensing limitations that can have significant implications on a startup that is built completely on top of them.

The limitations range from caps on number of API calls, to explicit language preventing building products that compete in any way with the API provider, to the ability to force you into a rev share agreement at a later date. So read the terms of use of each of the APIs carefully before embarking on an integration.

Monetization
The most serious limitations that some API providers have are those around commercial use. This limits your ability to monetize the service that leverages the third party content. Some prevent it outright whereas others have severe limitations on how and when you can monetize the content. Keep in mind as well that the content provider typically reserves the right to advertise in the media itself (instream audio or video pre-rolls\overlays typically). This also limits your own ability to command high CPMs from brand advertisers on media pages as you cannot ensure you can command 100% share of voice for the advertisers.


I hope this provides a more detailed overview for anyone thinking about leveraging media APIs in their next application. Embedded below are the slides from the original presentation.

The most exciting news out of CES 2009 was the Palm announcement of the Palm Pre, webOS, and Palm Mojo Application Framework.

Palm to my surprise has reinvented itself and gotten back into the smartphone game with the release of the sexy Palm Pre device and new webOS operating system. Early indications suggests it should be in the same consideration set as Apple iPhone, Android G1, and Blackberry Storm. Yet the most innovative news of this announcement was the new Palm Mojo Application Framework.

Only several weeks ago I was having a conversation with one of my colleagues about the double-edged sword of open native mobile platforms. While the opening up and associated app stores have created a lot of opportunities for developers, they have also required developers to learn many disparate development platforms for each and every device. Sure Android should make it simpler to port apps across supported devices, but I suspect it will go the ways of OpenSocial in that it won't bring the promise of write once\run everywhere, but instead the philosophy of learn once and then simply minimize cost of porting to anywhere.

In the desktop world we have just gone through a revolution where we have moved many apps away from native Mac, Windows, and Linux applications to a web world where we build cross-browser and cross-OS experiences. And we are continuing to encourage the revolution with even more powerful browsers like Firefox and now Google Chrome.

I am eager to skip the pain of native proprietary platform mobile client apps and jump right to a world of mobile web browser based applications with cross-device javascript libraries to provide hooks into the native operating systems. Of course the typical criticism of browser based mobile apps today is that they can't take advantage of many of the benefits of the native device, including location based services, address book, local cache and offline data access, and native UI components and gestures. Yet these are all solvable problems by simply having each of the popular platforms exposing javascript APIs for each of these components. Joe Hewitt's early work on iUI shows just how powerful the existing iPhone Safari browser already is in allowing you to recreate full fidelity iPhone native app experiences within the browser.

Palm is taking the first step in realizing this vision and releasing the Mojo Application Framework to allow developers to build application on the new webOS using the web technologies they already know: HTML5, CSS, and Javascript. This thus allows organizations to tap into their existing web assets and already vast experience in building scalable web applications. Developers can leverage the local storage capabilities of HTML5 to have offline access to data. They also have full access to gestures, transitions, and more and access to many of Palm's native device components. It even has full support for background running applications and user notifications, a common criticism of the iPhone platform.

While its too early to tell whether the Palm Pre, webOS and Mojo will take off, it is definitely a step in the right direction for mobile developer platforms. I see way too many examples of native applications on the iPhone that could be much more cheaply developed, more stable and robust, more easily maintained, and available across many more devices by simply making enhanced mobile web apps. I hope to see iPhone and Android opening up even more capabilities in their browsers through javascript APIs and making apps developed with web technologies feel like full fidelity applications on the device, just as Palm is promising to do.

2008 was definitely a year of open platforms with the continued growth of the Facebook and OpenSocial communities, the unveiling of the iPhone and Android app stores, and the countless Twitter clients and mashups.

Yet I believe there is still considerable untapped opportunity in several promising platforms that have yet to see significant traction in terms of hype, developers, and ultimately end users.

So here is my list of the top underhyped platforms that I hope to see many entrepreneurs build on in 2009.

Webmail Platforms: Yahoo! Mail, Gmail
There are so many interesting problems to solve with email and we as entrepreneurs are finally going to be able to innovate on them with the opening up of the popular webmail platforms.

Just think of the pain that is email today:

• Constant overload of email volume and very few ways to sort through the clutter
  
• A sophisticated and natural social graph locked in email with no easy way to leverage it
  
• Endless files shared through email that are problematic to find, store, and share
  

It's that time of year that everyone is putting together their predictions for 2009 and so I decided to do one of my own.

Over the past year I've had the opportunity to work with a variety of music startups. Not only with the two music startups I've been directly involved with (Anywhere.FM and imeem), but also countless music startups looking to leverage the imeem Media Platform APIs I manage at imeem. Based on what I've seen, there are three music verticals that I am bullish about and 5 exciting startups that have started to pursue them in 2008 and expect to see much more from them in the new year.

Music Gaming
Music gaming has benefited from renewed traction in recent years. The current explosion can be attributed to the tremendous success of both Guitar Hero (2005) and Rock Band (2007), but we can't forget the earlier successes of Dance Dance Revolution (1998) and even further back with Parappa the Rapper (1996). What's most exciting about it this time is the size of the opportunity. The Guitar Hero franchise alone has seen over 14M units sold generating $1B in sales in North America. On top of that they have seen over 5M song purchases. And for the first time ever Beatles music is actually available digitally through Rock Band (even though the Beatles have classically refused to make their music available on iTunes, music streaming services, etc).

In 2008 we started to see what the next generation of music gaming will look like.

JamLegend



JamLegend is best described as a web based version of Guitar Hero. Not only have they done a great job of recreating the fun of Guitar Hero on the web and your computer, but they've opened up the opportunity for very interesting web-based additions. One exciting opportunity for them is continuing to build out their massively multi-player capabilities, tournaments, and leaderboards. At the same time the ability to eventually crowd-source all the tracks and build the largest library of playable content will be key. JamLegend could become the newest form of music promotion for artists and both indie and major label artists will be looking to take advantage of this latest phenomenon.

Ocarina



Ocarina is by far the most clever music game I've seen to date. Ocarina is the first true musical instrument created for the iPhone. Simply blow into the microphone, press down on the four keys, and you're playing beautifully sounding music through your Ocarina. And the social experience is great as well, since you can click on the world map and see who else is currently playing their Ocarina across the globe and tune in to enjoy their music. I'm excited to see these guys expand to actually hosting concerts, recorded videos, and even more instruments.

Rock Legends!



Rock Legends is the latest social game from Serious Business, the startup that created the Friends for Sale social game on Facebook. This time around a user starts a rock band, picks what kind of rocker they want to be, and recruits others to join their band. It's a social experience complete with playing gigs, battle of the bands, and more. I would be excited to see Rock Legends integrate JamLegend style playback into their game to tie the best of music gaming together.

Live Events
Another space in music that continues to be attractive is live events. Unlike the ongoing decline in CD sales and the slim margins of digital downloads, concert tickets sales continue to enjoy high margins and make real money for the artist. Yet there continues to be unsold seats at the majority of events. There clearly continues to be an opportunity in 2009 to more efficiently bring fans to see their favorite artists at live events.

SongKick



While there are a lot of players trying to tackle this space, I'm most excited by the work SongKick has done. In a little over a year they have built a comprehensive concert listings engine and database. It's no easy task as very few clean feeds exist out there from venues and ticket providers. Most recently they've been doing a lot to build out their website experience to make it easy for fans to find when their favorite artists are coming to their area and even recommend artists you may enjoy. With a new round of funding, it will be interesting to watch how they expand in the new year.

Dis-intermediating the Major Labels
What I am most passionate about are those out there seeking to dis-intermediate the major record labels. The major labels have been unable to come up with any significant revenue stream to offset their losses in CDs and unfortunately it hasn't been due to lack of technology innovation. They have for the most part failed to support the most creative entrepreneurs out there by making it very difficult for them to get access to legally licensed content. As many have recognized, its time to move beyond them and seek to establish relationships directly with artists and their fans and either create the next generation record labels or remove the need for labels entirely.

Topspin Media



Topspin Media is the most promising startup in this space. Topspin focuses on providing tools to artists to make it easy for them to communicate directly with their fans through a web presence, email distribution, and more. Topspin has started by smartly focusing on super-fans who are willing to devote time and money to engaging with their favorite bands through premium purchases, subscriptions, etc. I hope to see Topspin unveil additional products in the coming year and expect both its artist and fan footprint to grow substantially.

I recently took the time to build a web application on Google App Engine and wanted to share my thoughts on the experience and the pros and cons of Google App Engine as a web development platform.

TuneChimp



The app I developed is TuneChimp, a music mashup that was recently named ProgrammableWeb's Mashup of the Day and a finalist in Mashable's Y! BOSS Challenge. TuneChimp makes it easy for you to discover the very best music, videos, photos, and more for an artist by mashing up content from imeem, YouTube, Flickr, Yahoo, Last.FM, Google News, and more. TuneChimp takes advantage of the dozens of music-related APIs that are now available on the web to auto-generate an artist profile to quickly discover new artists or play music from your favorites. The most useful feature is that it takes the top tracks from an artist based on robust Last.FM audio-scrobbling data and creates a playable playlist using imeem's on-demand music streaming platform.

The core of the application calls 11 different APIs, appropriately caches the datasets, and cross-links the various dataset to put together a meaningful artist profile. The APIs are all accessible through REST endpoints in either JSON or XML formats.

Pros
The single greatest advantage of Google App Engine is speed to market of an application. TuneChimp was designed as a small weekend project to let me perform competitive analysis on the most popular music-related APIs (I manage the imeem Media Platform and wanted to see how we fared against other offerings). The beauty of GAE was that the same day I started coding I had a basic site up that pulled data from several APIs. Since GAE only supports a narrow web app scenario, it makes it extremely simple to setup, develop, and deploy an app. No need to install an OS, configure apache, nor optimize mysql.

While some complain the datastore APIs are limiting because you can't perform classic relational join operations, anyone who has been involved in a large web app built on an open source stack knows that those operations don't scale anyway. GAE forces you to design for scale from the beginning, but its an easy mental model to learn and super-fast to get up and running. The dbmodel objects are similar to any web framework, like RoR and others, so its also very easy to pick up. And the immediate scalability benefit makes it so you don't have to worry how you are going to handle extra load.

Currently GAE is limited to Python and that has put off a lot of people from trying it. I decided to bite the bullet and learn Python and I have been so happy that I have. I see Python as a great compromise between PHP and Ruby on Rails in that python is more explicit like PHP but cleaner in code and still has many of the productivity benefits of RoR with the GAE framework (or Django framework if you choose).

Cons
Unfortunately I encountered some serious bugs in GAE during my development. One bug prevented any web request in production from returning multiple cookies. Unfortunately many APIs use cookies for authentication and it was impossible to read from certain APIs without implementing hacks. I filed the bug, complained to my contacts at Google, and it still took months for this issue to be addressed. GAE is still clearly a work in progress and the bleeding edge developers who are willing to engage with it now will have to continuously invent hacks to get around these kinds of bugs for some time to come.

In addition the restrictive exceeding high CPU quotas and inflexibly short time-outs make it VERY difficult to reliably build on top of third party APIs with varying response times. I ended up having to build in retry logic and significant caching to try to work around these time-outs. At the same time, without the ability to run long run processes and cron jobs, a developer is forced to continue to host a server outside of the GAE environment to perform batch processing and more.

Probably the greatest detractor from Google App Engine though is the propriety stack that it is built on and the resulting lock-in. This creates significant technology risk for a startup to build on top of GAE since its going to be extremely costly to move to a different infrastructure if necessary. Hopefully some of the projects third parties are working on to port the GAE web framework and datastore will mitigate some of the issues associated with this lock-in.

Overall
While Google App Engine has become my web development platform of choice for all my weekend projects, I would not yet take the risk of running a production web business on top of GAE. The platform though is very promising and I hope to see my concerns addressed over time as well as large web app success stories built on top of this cloud platform.