San Francisco-based mobile gaming startup Funzio had just come off making more than $5 million in sales per month when it sold to Japan’s GREE for $210 million last week. Profits may be another story, and there’s less visibility into that. But Funzio had to decide between raising additional funding or selling at the time the deal happened.

The numbers were revealed in GREE’s earnings statement today. Funzio’s acquisition comes at a very fascinating time for GREE, a $4.8 billion mobile gaming company from Japan. Like Zynga in the U.S., GREE and its archrival DeNA are part of a younger vanguard of freemium gaming companies that have found success in their home market of Japan. The company made $168.5 million (13.4 billion yen) in net income on $578.9 million in revenue (46.2 billion yen) in the quarter ending in March. Just for comparison, that’s about 80 percent more revenue than Zynga in the same time period.

But there are threats on the horizon. GREE’s shares were absolutely slaughtered on the Tokyo Stock Exchange on Monday. The company’s shares fell a record 23 percent after the Japanese government said it was investigating the legality of various game mechanics in the social gaming industry. Many Japanese games have a slot machine-like mechanic called “Gacha,” where players will randomly win different special items. If they win all the items, they might get a grand prize. The National Consumer Affairs Agency said it’s now looking at regulating this tactic, which could seriously crimp revenues for GREE.

If anything, this underscores the urgency there is in expanding the company abroad. With the Japanese market becoming saturated, GREE is looking to the West and it’s done two major acquisitions to break into the U.S. with the $104 million deal to OpenFeint and last week’s $210 million deal to buy Funzio. The plan is to be a dual games platform and developer, just like the company is in Japan. They’ll make their own in-house games, but they’ll also distribute, publish and promote games from other developers.

San Francisco’s Funzio fits into the first-party game development side. The company, which was started by experienced game developers who had spent time at Zynga, Storm8 and hi5, had three mobile gaming titles to its name. They were behind graphical role-playing games like the mafia-themed Crime City, the military-themed Modern War and the fantasy-themed Kingdom Age.

They only arrived on mobile platforms last August with the debut of Crime City, a brand that the company had already put on the Facebook platform. That set them up to have a $2 million quarter between July and September of last year. Then they launched Modern War in November and the two titles got them to a $6 million quarter during Christmas. Finally, Kingdom Age, launched last month, got them to a $12 million quarter.

Just after Kingdom Age launched, I spoke with Funzio’s vice president of business development Jamil Moledina. Even though the game was downloaded at roughly the same pace that the company’s earlier games were, engagement was up. Both Modern War and Kingdom Age got to 1 million downloads in about the same time. But Kingdom Age saw the equivalent of 93 years of gameplay, while Modern War saw about 50 years of gameplay in its first five days.

Again, I don’t really have visibility into profits. But it wouldn’t be surprising if margins were tight as the cost of marketing apps and acquiring users has gone up dramatically over the past year. Glu Mobile, another San Francisco-based mobile game developer that’s publicly traded, posted very strong quarterly growth with $17 million in smartphone revenues for the first quarter. But it still reported a net loss of $6.8 million, which was probably partially fueled by its lingering featurephone gaming business.

Article courtesy of TechCrunch

Today at the Finovate conference in San Francisco, a company called edo announced the introduction of what it describes as “geocommerce” offers, which, as the name implies, are offers and deals from merchants that are tied to a location. But there’s more to the edo platform than that. The company also targets its offers based on your previous transaction history – not entirely unlike the early stage startup BankOns that Capital One just snapped up yesterday.

More importantly, what’s interesting about edo is how those offers work. There’s no check-in, no need to launch a mobile app, and no special hardware or Point-of-Sale modifications on the merchant’s side. Instead, edo ties to consumers’ bank cards, allowing them to not only receive the offers in real-time, but receive their discounts in real-time, too, immediately after checkout.

According to Jeff Fagel, Vice President, Marketing and Brand Development at edo, the company wants to connect online advertising to in-store through its new advertising channel. “There’s an opportunity to change how consumers shop and save,” he says. “The world is impersonal, non-targeted and cluttered – there are a lot of deals out there, but they’re not very relevant,” he explains. “We’re really about keeping it simple.”

By simple, what edo means is that using its service requires very little effort on the consumer side. All you need is a credit or debit card. In fact, in some cases, you don’t even need to sign up – you’re opted in by default by your bank. (Opt-out is available, of course). But because edo is a white label product, it’s up to the participating financial institution to decide whether or not the service is opt-in or opt-out. As of today, edo has gone live with 140+ bank and financial institutions, the largest of which are Fifth Third Bank and Ally Bank here in the U.S. And edo says more large institutions will be coming on board over the course of the year.

So how does the service work? For starters, the banks will target users based on their spending behavior. And really, just the spending behavior – the banks don’t need to pull any personally identifiable info, your demographic profile, or anything else but how you like to spend and where you spend in order to start sending you offers. And you don’t need a mobile app to receive them. Although a smartphone application is part of edo’s platform, non-smartphone owners can choose to receive offers via text or email.

Upon redemption, which again, involves no extra steps that would make it different from a normal transaction (it’s just a swipe of the card as usual), the offered discount is immediately credited to a consumer’s account. Handy.

Fagel says that edo is moving further into its testing period with its banking partners this summer, and by the end of summer, will have 10 million consumers on the platform. By Q3, it will have 50 million – a number which is being determined by the large banking partners expected to go live by then. Even in its early days, banks on edo have seen their card volume increase by 20%, driven by increase use and spend on the card. On the advertisers’ side, they’re seeing redemption rates of anywhere between 2% and 75%, but the average is around 2% to 4%. However, in certain categories like dining and quick service restaurants, redemption rates are 10% to 20%, Fagel says.

“We’re also seeing quite a bit of repeat purchase – individuals who had not been at a location in the last 60 to 90 days,” he adds. For example, in a campaign with a national sub shop, following the first redemption of the offer, 30% of consumers made 1-2 more visits and 40% made 3+ more visits. Fagel attributes the success here to the way that edo can not only attract new customers, but also encourage current customers and reactivate lapsed customers to use the discount being offered.

“There’s so much choice out there these days, we might just need an extra push or incentive,” says Fagel, “and it’s simple, you’re just using your card.”

Edo currently has partnerships with 200 national and local merchants, and it takes its cut from the overall purchase price paid at checkout. The rate varies somewhere between 5% and 10% on the target basket, with the advertiser/merchant paying out both edo’s cut and the discount to the consumer.

While the service will only initially be available to banking and financial services institutions, which will then offer it to their own customers, edo is already working on other direct-to-consumer offering through other partners, like PageOnce, for example, which will allow others to sign up, too.

Article courtesy of TechCrunch

Chicago-based Belly, a startup that is a fast-growing contender in the local business customer loyalty and rewards space, has raised $10 million in Series B funding from Andreessen Horowitz. The company also announced that Andreessen Horowitz partner Jeff Jordan, former chairman and CEO of OpenTable and former president of PayPal, will join the Board. This latest round of funding adds to a seven-figure round raised by the startup from Lightbank, the venture firm founded by Groupon co-founders Eric Lefkofsky and Brad Keywell.

Belly wants to reinvent customer loyalty rewards through gamification, digital check-ins and a iPad setup for businesses. But the startup has a slightly different take on how to achieve this. Belly offers a quick-setup, plug-and-play rewards platform to merchants. Part of this is an in-store iPad (which Belly supplies) that is used to validate paying customers right at the point of sale, and serves as a check-in point. Belly will also train employees to encourage them to participate in the program.

Merchants pay a monthly subscription unlimited Belly cards to hand out to customers, in-store marketing materials and secure access to customer data that reveals sales, points and redemption data, as well as insights into foot traffic and card usage patterns. Businesses can even use Belly data to send out push-notifications about exclusive promotions and other rewards to Belly customers.

On the consumer side, to check in, customers can scan their smartphone at an in-store iPad POS and with each check-in, you get closer to a specific milestone, and reward (as stipulated by the business). You simply scan a Belly card (provided by the merchant), or use Belly’s iPhone or Android Apps on the businesses’ Belly iPad app (which sits next to the register). Once you check-in you accumulate points, and can start earning rewards.

On the Belly mobile apps themselves, you can simply open the app and see a list of merchants that are Belly users by your location. The app completely replaces the merchant card at all of these businesses. With the Belly card, you have one universal rewards card (that is attached to your email) which can be used at all participating Belly merchants.

The premise, says co-founder and CEO Logan LaHive, is that consumers don’t want to carry several different cards, and businesses need a loyalty system that everyone can use. “We’re eliminating overstuffed wallets,” says LaHive.

Jordan has high hopes for Belly, “We are optimistic that the startup has huge potential to revolutionize loyalty for businesses,” he says. “Now customer loyalty programs can be digitized with the web, data analytics, and smartphone. This used to be an inefficient system but Belly makes this is highly efficient and gives merchant great information on who their best customers are.”

He also adds that the talented team, elegant product execution with the iPad, and the backing from Lightbank all made the investment attractive for Andreessen Horowitz. In particular, Jordan feels that the loyalty market is fragmented and Belly is in a prime position to scale its business.

Of course, as CEO of OpenTable, Jordan has insight on how to scale a business catering to small restaurants and merchants. He says that Belly will need to build a sales team, fast. “The key is to get in as many cities as fast as you can,” he says.

Even in the past 9 months, Belly has been scaling fairly fast. Launched in August 2011, Belly has over 200,000 active users who have checked in over 800,000 times. Belly currently partners with 1,400 merchants and adds 100-plus new businesses each week. And starting today, Belly is available in New York and Boston, in addition to its existing roster of businesses in Chicago, Austin, Milwaukee, Madison, Washington D.C. and Phoenix.

One of the differentiating factors for Belly from its many competitors, says LaHive, (which include LevelUp, Perka, PerkVille, and PunchTab) is that businesses are able to tailor their rewards program.

Currently rewards at businesses range from a comic book store that offers customers a chance to punch the owner in the stomach, to a bakery that rewards customer 10 minutes all you can eat cupcakes. You can arm wrestle a sandwich restaurant owner or ride along in a food truck that will let its best customers “egg” the truck as it drives by. Dog-A-Holic will post a “Portrait Of You And Your Dog On Our Wall and Red 7 Salon allows customers to “Shave Our Heads With A 1-On-1 Owner Buzz Cut.” Belly works closely with each individual business to ensure the rewards are unique and personalized to that business’ brand and culture.

Another added bonuses for businesses is that they can see when each customer is checking-in, how often and more. Businesses can get a clear view of their most loyal and valuable customers. another data area where Belly may expand into is transaction data. Currently the app doesn’t track what the customer actually bought but is looking to integrate with Point of Sale systems in the future.

“We’re moving beyond the buy ten get one free program to work closely with each merchants to try to uniquely appeal to their customers,” says LaHive. “Businesses want to create personal relationships, and take what is offline and put it online, and analytics on how to manage customer behavior, communications tools, email and social media allows these business to have an ongoing relationship with customers.

The new funding will be used to build and staff a larger sales team to expand to other markets. While many of these sales people will be based in Chicago, others will be located in the local markets as well.

LaHive is also focused on product development and will be looking to transition all the startup’s apps from HTML5. The company will also being making a number of speed, and UI improvements as well as redesigning the experience.

As for location, LaHive plans to stay in Chicago. “For an earlier stage startup in Chicago, raising funding from a firm like Andreessen Horowitz is validating,” he says. “We feel that we are best scaled to roll out a quality loyalty program for businesses.”

Article courtesy of TechCrunch

We all know what a wild success the Angry Birds franchise has been for Rovio, with the best-selling mobile games spawning cookbooks, toys and much more besides. Today the company revealed just what kind of an impact that has had on its bottom line for its really Big Year.

The company today issued a statement that noted that the company made $106.3 million (€75.4m) in revenue in 2011, with earnings before tax at $67.6 million (€48m) — with 30 percent of that coming from its merchandising and licensing activities. Monthly active users of the app are now at 200 million, with 648 million games downloaded in total.

I’m not totally sure — I’m still hunting — but it looks like this might be the first time ever that Rovio has put out annual results like this. It might be because it is looking for some more transparency in the lead up to an IPO. It’s something that has been informally discussed in the press before, with the Mighty Eagle, Peter Vesterbacka, in December telling Reuters that an IPO could come in 2013 on the Hong Kong exchange.

Today, Vesterbacka formally told me that there are “no further comments” on IPO plans.

The $106.2 million revenue figure/200M MAUs are nothing short of an enormous leap for Rovio. In 2010, it reported revenues of $7 million from the period from July to December. GiordanoContestabile from PopCap estimates that Rovio made $10 million in total in 2010. The company announced in March 2011 a Series A investment of $42 million from Accel and Atomico, and at that time it had “only” 40 million monthly active users.

Angry Birds first went live on iOS in December 2009.

Of $106.3 million in revenue, $32 million is coming from what Rovio calls Consumer Products, which includes both merchandising and licensing. Rovio says that it now has 200 licensing partners developing new products and services.

The company looks like it will be putting the gas on doing more of that in the future, even as it launches new games, perhaps beyond the Angry Birds brand:

“The strong growth in revenue clearly demonstrates the popularity of the Angry Birds brand.” Mikael Hed, Rovio CEO said in a statement. “The heavy investments made in 2011 to all business areas will be seen in future products. To ensure continuous success we need to be creative and stay focused on entertaining our millions of fans by continuously developing new and innovative products and services.”

The company also ramped up its headcount about tenfold: it now has 224 employees compared to just 28 at the start of 2011.

Release below

ROVIO ENTERTAINMENT REPORTS 2011 FINANCIAL RESULTS

07.05.2012

Helsinki, Finland – Rovio Entertainment Ltd, the world’s leading provider of mobile entertainment and creator of the Angry Birds franchise, today had the pleasure of announcing the financial results for the full calendar year of 2011.

Total revenue amounted to €75.4 million ($106,3 million) driven by strong growth in game download activity and consumer product sales. Earnings before tax were €48,0 million ($67.6 million) or 64% of total revenue in 2011.

“The strong growth in revenue clearly demonstrates the popularity of the Angry Birds brand.” Mikael Hed, Rovio CEO said. “The heavy investments made in 2011 to all business areas will be seen in future products. To ensure continuous success we need to be creative and stay focused on entertaining our millions of fans by continuously developing new and innovative products and services.”

The Angry Birds franchise fuels Rovio’s performance

The financial outcome of 2011 is very positive for Rovio.  Rovio’s different business areas, Games, Advertising, and Consumer Products, are fully rolled out and generated both revenue and profit.

The Consumer Products business area, which includes both Merchandising and Licensing income, generated revenues that represent a about 30% of total revenue in 2011. The company was working together with more than 200 licensing partners on developing new products and services within the Angry Birds franchise.

Rovio’s game offerings in 2011 consisted of three games, all based on the Angry Birds characters: Angry Birds, Angry Birds Seasons, and Angry Birds Rio. The games are available as both free and paid versions on all popular mobile and connected devices. The total number of game downloads reached 648 million by the end of year 2011 and the total number of active monthly users, across all platforms, reached 200 million.

The number of employees grew from 28 to 224 during the year 2011.

Market and business development expectations

Future sales will to a large extent depend on the launch schedules and success of new games and initiatives in 2012. As sales of new devices remain the main driver for mobile game downloads, Rovio expects business to continue to grow accordingly.

“We are very optimistic about 2012 due to significant investments in product development, cutting-edge branding, brand protection and corporate infrastructure,“ Mikael Hed said.

Notes:
- Currency exchange rates EUR/USD is based on 2011 median of 1,41.

- Rovio Entertainment Oy´s financial figures have been prepared in accordance with Finnish Accounting Standards (FAS).

Article courtesy of TechCrunch

Editor’s note: David Blake is the Founder of Degreed, the new degree for the new world. Previously, he helped launch New Charter University and was a founding member of Zinch, since acquired by Chegg.

Jailbreak verb. 1 To get out of a restricted mode of operation. 2 To enable use of a product not intended by the manufacturer.

Currently, the degree is the only meaningful “unit” of education to which employers give any credence. Of this dependency, TIME magazine writes, “The tight connection between college degrees and economic success may be a nearly unquestioned part of our social order. Future generations may look back and shudder at the cruelty of it… It is inefficient, both because it wastes a lot of money and because it locks people who would have done good work out of some jobs.”

The traditional degree, with its four-year time commitment and steep price tag, made sense when the university centrally aggregated top academic minds with residency-based students. Education required extensive logistics, demanding deep commitment from students worthy of being rewarded with the all-or-nothing degree.

But education isn’t all-or-nothing. College and its primary credential, the degree, needn’t be either. The benefit of modern, online education is that the burden of logistics and infrastructure are greatly reduced, allowing for the potential of a fluid, lifelong education model. The problem, to date, is that formal, online education is still being packaged in all-or-nothing degree programs, falsely constraining education innovation. The New Republic writes, “Online for-profit colleges haven’t disrupted the industry because while their business methods are different, their product—traditional credentials in the form of a degree—is not.”

Technology creates efficiencies by decreasing unit size while increasing utility.  To falsely constrain anything to historically larger canons is to render technology impotent to do what it does best.

Clayton Christensen predicts, “I bet what happens as [higher education] becomes more modular is that accreditation occurs at the level of the course, not the university; so they can then offer degrees as collection of the best courses taught in the world. A barrier that historically kept people out of university [is] blown away by the modularization and the change in [course-by-course] accreditation.”

With education, there is a particularly strong analog to what iTunes and the digital single did to the album:

Why buy a whole album when I only value a few songs enough to purchase? Why am I required to finance an entire degree only to be forced to take courses that I do not value? By bundling education into its most popular format, the four-year degree, we are inevitably adding low-utility courses that the consumer should be enabled to avoid.

Seth Godin writes, “Transparency in… school might destroy it. If we told the truth about the irrelevance of various courses, about the relative quality of some teachers, about the power of choice… could the school as we know it survive?”

To be explicit, in seeking to evolve beyond the four-year degree we need not be anti-college. iTunes didn’t render the musician irrelevant just the album. But just as Napster, YouTube, iTunes and Spotify evolved the paths, careers, and distribution of musicians and their music, the role that the university plays will evolve dramatically.

It is easy to imagine a few years from now looking at a chart similar to the one above, only seeing the numbers of people taking individual courses exploding as the complete-degree programs careen towards zero.

Jailbreaking the degree and making courses the “unit” of education will unlock a flood of unmet demand and a new wave of possibilities in how we learn and consume education.

Article courtesy of TechCrunch

Editor’s note: This guest column is from Raj De Datta, the CEO and co-founder of BloomReach. Follow @BloomReachInc on Twitter.

With the influx of information flooding the web – 90% of the web having been created in the last two years alone – web businesses are looking for ways to understand and use big data to drive their business. Just as SaaS and the cloud completely revolutionized the way businesses operate, so will Big Data applications (BDAs). BDAs are web-based applications that interpret and use massive amounts of enterprise and web-scale data to deliver more intelligent results for their subscribers. BDAs leverage the best of the cloud; they’re web-hosted, multi-tenant and use Hadoop, noSQL and a range of recommendation and machine learning technologies.

But the real question is – so what? So what if the underlying data structures use Hadoop or noSQL? No CEO of a major business gets excited about a value proposition around more scalable data structures. That’s where BDAs come in. BDAs don’t just repackage your data in a cool interface or offer productivity improvements in data scalability, they harness the world’s data to deliver you a better outcome – like more revenue.

SaaS was a different delivery model for enterprise software: available for immediate sign-up, it dramatically reduced integration costs, enabling try-before-buy, scalability and shared tenancy with meter-driven pricing. Salesforce.com started the cloud revolution by transforming the CRM industry and was quickly followed by the SaaS-ification of every category of enterprise software (Taleo/Successfactors for HR, Netsuite for ERP, Omniture for web analytics). SaaS both increased the market size for business software (by enabling mid-size companies to buy at a lower cost of entry) and delivering a better ROI for bigger businesses. But it did not do one important thing–it didn’t change the functional capabilities of the core application.  Salesforce didn’t add CRM features for businesses vis-a-vis Siebel – it simply made it easier to adopt and cheaper to maintain.

Big data on the consumer side of software is well-understood – Google, Amazon.com, Facebook. In a recent keynote speech at Cebit, Amazon CTO Werner Vogels noted that when mistakes have been made, it’s because there isn’t enough data to back up a recommendation. All of these are applications that get stickier, smarter and more valuable as more users and data pour into their core engines. Now, we are seeing the beginning of enterprise BDAs, and they are the future:

• Linkedin (NASDAQ: LNKD) is a BDA for the recruiting/talent acquisition software market. LinkedIn doesn’t ask you to add your contacts in an isolated contact list, it networks those contacts, connecting users with users and recruiters with key competencies. Every user that joins LinkedIn adds a signal to the LinkedIn BDA stack, enabling the recruiter to harness all their millions of profiles, not just their individual silos. As a result, smaller, specialized recruiters are competing with the biggest executive search agencies with comparable reach.
• Bazaarvoice (NASDAQ: BV) is a BDA for social sharing. Bazaarvoice collects customer reviews from across the web, then powers multiple websites with that information. The traditional SaaS-based approach to this problem would simply have provided software to accept and publish reviews on individual sites. Instead, Bazaarvoice collects review data from across the web to make sure when you pull up a product on one of its customer websites, the right reviews are presented to you. Bazaarvoice gives all sellers comparable review databases to Amazon.com.
• Salesforce (NASDAQ: CRM) understands that BDAs are the future of SaaS. When it acquired social listening software company Radian6 and contacts company Jigsaw (now Data.com), Salesforce understood that the powerful application for brands would be aggregating social data points on brands from across the web and networked contact information to salespeople.
• Our business, BloomReach, is a BDA for marketing, the next $10bn category in software. We could have merely analyzed websites to identify missing relevant content that could drive revenue across search, social and advertising traffic and made workflow and content recommendations to site owners. Instead, we decided to analyze and interpret web-wide demand, build semantic models around web content for a given customer and then dynamically augment websites with the most relevant content for their users. Adobe’s Omniture packages your data in a cool SaaS application to make marketing recommendations for your business. BloomReach analyzes the web’s data and then acts on it to drive more traffic and revenue to our customers.

BDAs are inherently better than their SaaS equivalents because they have all the delivery model benefits of SaaS, plus a network effect in the data being collected. Unique data, put to work for each customer, is an asset that creates network effects over time for both subscribers and for the application provider. These days, there is so much more data outside the enterprise than within it, that the notion of re-packaging an enterprise’s own data for analysis and workflow seems quaint.

BDA companies create value differently than SaaS companies. BDA companies are built by teams of people with a strong background in large-scale systems and machine learning / data mining (like my co-founder Ashutosh Garg). They will also be valued differently than SaaS companies.  While both sell into enterprises, BDAs deliver much more value per dollar spent, because each acquired customer adds data to the engine, which in turn improves the service for all its customers. Markets typically value SaaS companies on three basic metrics: Customer Lifetime Value (higher LTV is better), Cost of Customer Acquisition (lower CCA is better) and Rate of Growth (higher is better). Certainly, most SaaS companies have a great growth rate. But BDAs will have higher LTVs (because value/customer is higher and churn will be lower) and lower CCA (because of network effects; consider the CCA for LinkedIn to acquire a new recruiter now, versus five years ago).

The BDA revolution is just beginning. If we were building CRM again, we wouldn’t just track sales force productivity; we’d recommend how you’re doing versus your competitors based on data across the industry. If we were building marketing automation software (Marketo, Eloqua), we wouldn’t just capture and nurture leads generated by our clients, we’d find and attract more leads for them from across the web. If we were building a financial application, it wouldn’t just track the financials of your company, it would compare them to public filings in your category so you could benchmark yourself and act on best practices. Every category of software will have a BDA leader (some may be current SaaS companies that adapt or acquire).

Like anything in technology, the next new thing doesn’t mean the old things go away. Oracle and SAP are still big companies but Salesforce.com is the newest $20 billion behemoth. The new kids on the block will be BDAs.

Hello BDAs, Goodbye SaaS.

Article courtesy of TechCrunch

Fresh off a $35 million round of funding, mobile payments company Boku is announcing a direct carrier agreement with Sprint that will allow Sprint customers charge online purchases to their Sprint wireless bill through a two-step authorization process. The agreement was made possible via a partnership with mobile payments operator BillToMobile.

As you may remember, Boku offers an online payments platform that allowed users to pay for online goods by charging the transaction to their mobile phone bill. When a user wants to purchase a virtual item, he can enter his cell phone number on a site, the site sends a text message to the phone, the user confirms the transaction with a short reply, and all the charges show up on his phone bill.

Direct carrier relationships are important because historically, mobile payments companies face the challenge of lofty carrier rates. Wireless carriers have charged roughly 30% to 40% to process transactions made via mobile phone accounts, making it very difficult for mobile payment companies like Boku to scale beyond virtual goods. These transaction costs are passed down to developers using Boku, which are then passed to the consumer. To avoid these costs, Boku has been negotiating direct relationships with carriers as a way of possibly avoiding these costs.

Boku President Ron Hirson tells us the rates with Sprint are in the “teens.”

With the Sprint deal, Boku now has direct billing partnerships with all of the major carriers in the U.S., including AT&T, Verizon and T-Mobile.

Sprint customers will be able to make purchases online from BOKU’s merchant network of Web-based gaming companies, social networks and service providers. BOKU’s mobile payments system on Sprint includes partners such as Electronic Arts, Riot Games, Jagex, Stardoll, Kingisle and Gaia.

Boku is also announcing a number of key hires today. Jon Prideaux, EVP for Visa, and Stuart Neal, Managing Director of International Development for Barclaycard, are joining the company’s executive team as Chief Business Officer and Senior Vice President of Business Development, respectively. As we reported a few months ago, Boku recently launched a new NFC payments system with MasterCard.

Currently, Boku, which processes “hundreds of millions of dollars in mobile payments,” works in 66 countries and with 40 currencies, and has deals with more than 250 carriers covering some 3.2 billion consumers.

Article courtesy of TechCrunch

I know we’ve been taking the piss out of Aol* all day, but someone in Aol PR must be drunk, because this bizarre “BREAKING: Board Has Presided over Improvement of AOL’s Operating Results and Financial Strength and Unlocked over $1.7 Billion in Value in Two Years” press release just happened.

We figure that this must be some sort of Zodiac Killer-like word puzzle, where if you take out every three letters it’s an actually a crazy rambling essay about how much who ever wrote this hates their life.

*Disclosure: Aol owns TechCrunch, even though I think they probably regret it at this point.

Full release below.

Board Has Presided over Improvement of AOL’s Operating Results and Financial Strength and Unlocked over $1.7 Billion in Value in Two Years

NEW YORK, May 02, 2012 (BUSINESS WIRE) — –AOL Urges Stockholders to Vote FOR the Board’s Nominees on the WHITE Proxy Card Today

–Mails Letter to Stockholders

AOL, Inc. AOL -1.34% today mailed a letter to stockholders in connection with the Company’s 2012 Annual Meeting of Stockholders scheduled for June 14, 2012.

The following is the text of the letter from Tim Armstrong, AOL’s Chairman and CEO

May 2, 2012
Dear Fellow Stockholder:
Since AOL became an independent public company in late 2009, AOL’s
Board of Directors (“Board”) and senior management have successfully
charted a new strategic and financial course for the Company. This
new approach has significantly improved AOL’s results, enhanced the
prospects for sustained growth, and created value for all
stockholders.
You now face an important decision about the future of your
investment in the Company. At our Annual Meeting of Stockholders on
June 14, 2012, Starboard Value L.P. (“Starboard”), an AOL
stockholder, is seeking to elect its own slate of three Director
candidates to your Board in order to advance its own interests. We
urge you to continue to support the AOL Board and our strategy for
success.
Your vote is important in this election, and we urge you to
vote so that your voice is heard. To elect the AOL Board’s
nominees, we encourage you to vote today by telephone, by
Internet, or by signing and dating the enclosed WHITE proxy card
and returning it in the postage-paid envelope.

AOL HAS BEEN SUCCESSFULLY IMPLEMENTING ITS CLEAR STRATEGY TO DELIVER LONG-TERM STOCKHOLDER VALUE

– We have STREAMLINED our operations by reducing annual costs by approximately $500 million prior to investment in areas of strategic focus, reducing headcount by 37%, ending unfavorable distribution deals and exiting unprofitable markets.

– We have MONETIZED our patent portfolio by entering into a definitive agreement with Microsoft Corporation (“Microsoft”) to sell over 800 patents and license 300 additional patents and patent applications for $1.056 billion in cash in a tax efficient transaction.

– We have RETURNED capital to stockholders by buying back more than 12% of our outstanding shares since August 2011, and have committed to return a significant portion of the proceeds of the almost $1.1 billion patent sale.

– We have ENHANCED the consumer experience offered by our products by significantly reducing the number of advertisements on our pages, introducing industry-changing offerings like Project Devil, by investing in high-growth opportunities like The Huffington Post, goviral and Patch, by improving our search product, and by tailoring our Subscription service to our customers’ needs through curated service bundles and

– We have FOCUSED our product portfolio by investing in key destination brands, including AOL.com, The Huffington Post, Moviefone, DailyFinance, Stylelist, Engadget and TechCrunch, while outsourcing non-core content such as Sports, Health and Real Estate Listings.

Our strategy has positioned the Company to succeed in a digital
landscape that is still being formed. AOL has developed a
premier portfolio of online brands. On a monthly basis, our brands
serve the needs of more than 200 million consumers around the
world and we have a full-service suite of advertising products
that allows our thousands of advertising partners to reach
meaningful audiences at scale. We believe our strategy has
positioned AOL for success today and in the future of the digital
media space. Our strategy is working, has created significant
stockholder value, and will create even more stockholder value
over the long-term–if YOU, by supporting the AOL Board, allow
that strategy to proceed.

AOL’S STRATEGY IS WORKING, GENERATING IMPROVED RESULTS AND POSITIONING THE COMPANY FOR GROWTH

AOL ended 2011 with our best relative performance as a Company
in the past five years with advertising revenue growing once
again for the first time since 2008, with significant improvements
in legacy revenue streams and with substantial cost reductions. As
a result, the Company is well on its way to achieving its goal of
total company revenue and adjusted operating income before
depreciation and amortization (“Adjusted OIBDA”) growth in 2013.
Our improved results demonstrate the significant progress we have
made in executing our strategy.

– We have ACHIEVED revenue growth in global display revenue for the first time since 2007 in the first quarter of 2011 and grew global display revenue year-over-year in each quarter of 2011 and by 15% in the fourth quarter of 2011.

– We have ATTAINED four consecutive quarters of year-over-year revenue growth in search on AOL.com and three consecutive quarters of year-over-year revenue growth in Third Party Network revenue.

– We have ACCOMPLISHED significant improvements in key metrics in the fourth quarter of 2011, including a double-digit growth rate in video revenue, video ad impressions, Project Devil advertisers and revenue, and a triple-digit growth rate in local traffic, advertisers, ad impressions and revenue.

– We have PRODUCED substantial progress in moderating the decline in subscription revenues, with the first sequential growth in subscription revenues since 2006 occurring in the fourth quarter of 2011 and

– We have REALIZED two consecutive quarters of sequential Adjusted OIBDA growth through the fourth quarter of 2011 and the first increase in free cash flow year-over-year since the first quarter of 2009.

AOL is investing in high-growth areas, such as Patch. Patch
offers a flexible and powerful solution connecting national,
regional and local advertisers with highly-engaged, hyper-local
audiences on one platform. The opportunity for local online
advertising is massive and growing, with the market expected to
increase to $38.5 billion by 2016 (BIA/Kelsey, March 2012). As
part of our strategy to leverage our existing competencies in this
area by growing consumer traffic to Patch sites and then
implementing a scaled monetization plan, we have established more
than 850 individual Patches and we are now focusing on increasing
the monetization of those Patches. We believe this strategy is
working, as Patch ended the fourth quarter of 2011 with
triple-digit year-over-year revenue growth and approximately 6,500
advertisers. Furthermore, as of March 2012, Patch had already sold
advertising equivalent to over 80% of its revenue for the entire
year in 2011, illustrating that the growth witnessed in the fourth
quarter has continued into 2012. We expect to remain on this rapid
trajectory of revenue growth and assuming that trend sustains and
is coupled with expense control and continued strong consumer
engagement, we will maintain our course to take advantage of this
opportunity. We believe Patch is exceptionally positioned to grow
in the local space and we believe it will yield meaningful returns
for our shareholders in the years to come.

THE BOARD HAS TAKEN ACTIONS THAT HAVE DELIVERED SIGNIFICANT STOCKHOLDER VALUE

The Board has a clear and consistent pattern of unlocking
significant stockholder value and has increased our cash
position from $100 million as of December 31, 2009 to more than
$400 million as of December 31, 2011:

– In 2010, we DELIVERED $650 MILLION in stockholder value by divesting non-core assets, such as Bebo, buy.at, DMS, ICQ and certain real estate properties.

– In 2011, we INITIATED A $250 MILLION stock repurchase authorization and

– Now, in 2012, we will GENERATE OVER $1 BILLION in stockholder value from the Microsoft patent transaction, and we intend to return a significant portion of these proceeds to our stockholders.

Our Board is committed to creating stockholder value and
nowhere was this more evident than on April 9, 2012, when AOL
announced that it had entered into a definitive agreement with
Microsoft to sell over 800 patents and license 300 additional
patents and patent applications for almost $1.1 billion in cash.
The structure of this tax-efficient transaction, with a combined
sale and licensing agreement, allows AOL to monetize its valuable
patent portfolio without selling the Company’s foundational
patents that span core and strategic technologies. The patent
transaction represented the culmination of a process of exploring
ways to monetize intellectual property that began in October 2011
and was the result of a robust auction process.
AOL will return a significant portion of the sale proceeds from
the patent transaction to stockholders. Having unlocked the
value of the Company’s patent portfolio for stockholders, AOL
intends to return a significant portion of the proceeds to
stockholders and we will determine the method to do so prior to
the closing of the patent transaction. The current Board and
management of AOL have a track record of actively returning
capital to stockholders, with the Company having repurchased more
than 12% of its shares outstanding since August 11, 2011.

AOL’S STOCK PRICE HAS APPRECIATED AS THE MARKET HAS RECOGNIZED THE COMPANY’S ACCOMPLISHMENTS

As AOL’s stock price has appreciated, it has outperformed the
Company’s peers. Our strategy has delivered improved
performance and our stock price has increased. AOL’s stock price
has appreciated approximately 144.6% from its 2011 low and 65.6%
year-to-date through April 20, 2012. Even before the recent
significant increase due to the patent transaction, AOL’s stock
performance through April 5, 2012 represented a 80.2% increase
from its 2011 low and a 22.0% increase year-to-date. Furthermore,
AOL’s stock price has outperformed the market over the last 12
months, appreciating 25.3% relative to (1.3)% and 7.1% returns for
the S&P Midcap 400 index and NASDAQ Composite index, respectively.
Our stock price also outperformed the market prior to the patent
transaction, with our 22.0% increase year-to-date as of April 5,
2012 beating 12.0% and 18.2% returns for the S&P Midcap 400 index
and NASDAQ Composite index, respectively. Your support will
enable us to continue to pursue the strategy that has achieved
these returns.

AOL’S BOARD IS EQUIPPED WITH EXPERIENCE HIGHLY RELEVANT TO OUR STRATEGY, IS INDEPENDENT AND REPRESENTS THE INTERESTS OF ALL STOCKHOLDERS

AOL’s Board has the experience, qualifications and diversity
necessary to provide effective oversight and direction to the
Company. All of AOL’s Directors have extensive executive
and/or public company board experience in a variety of businesses
that are highly relevant to oversight of AOL. These businesses
include display advertising, marketing, journalism, digital media,
television, finance and business development. Your Board has
brought its substantial experience to bear through active
engagement in AOL’s turnaround strategy to create value for
stockholders, with members holding or having held senior
management or board positions at brand-name companies such as
Amazon.com, Automatic Data Processing, Inc., CBS Corporation, Gilt
Groupe, Inc., Google Inc., Kraft Foods Inc., The Proctor & Gamble
Company, and respected organizations including the John S. and
James L. Knight Foundation, and The Paley Center for Media, among
many others.
AOL’s Board is independent and has a stockholder-friendly
corporate governance structure that provides rigorous oversight of
AOL’s strategic direction. Your Board consists of eight
highly-qualified, annually elected Directors, seven of whom are
independent. In addition, all five of the standing committees of
the Board are comprised entirely of independent Directors and the
Board has a Lead Independent Director to ensure effective and
independent oversight of management. Because all of our Directors
have joined the Board within the past three years, each member
brings a fresh outside perspective.
The interests of AOL’s Board and management team are directly
aligned with the interests of our stockholders. All of our
Directors and senior executives own AOL stock. To ensure that the
interests of senior executives are fully aligned with
stockholders, the Company instituted stock ownership guidelines
for AOL senior executives that encourage behaviors that have a
positive influence on stock price appreciation and total
stockholder return, and all executives are in full compliance.
Additionally, AOL Directors and executive officers collectively
hold almost 5% of AOL’s stock. Furthermore, cash compensation
from performance bonuses for senior executives is almost entirely
tied to Adjusted OIBDA and Free Cash Flow. In 2011, over 69% of
our Chairman and CEO’s compensation and 78% of our other senior
executives’ compensation was from equity and cash performance
bonuses as the Company had its second sequential growth in
Adjusted OIBDA in the fourth quarter of 2011 and saw Free Cash
Flow grow year-over-year for the first time since the first
quarter of 2009.

PROTECT YOUR INVESTMENT: SUPPORT YOUR BOARD’S EFFORTS TO ENHANCE STOCKHOLDER VALUE VOTE THE WHITE PROXY CARD TODAY

AOL seeks your support in electing the Company’s eight highly
qualified nominees and your Board unanimously recommends that
stockholders vote “FOR” the Company’s experienced and
highly qualified Director nominees: Tim Armstrong, Richard
Dalzell, Karen Dykstra, Alberto Ibarguen, Susan Lyne, Patricia
Mitchell, Fredric Reynolds and James Stengel.
Your vote is extremely important, no matter how many or how few
shares you own. Whether or not you plan to attend the Annual
Meeting, you have an opportunity to protect your investment in AOL
by voting the WHITE proxy card. We urge you to vote today
by telephone, by Internet, or by signing and dating the enclosed
WHITE proxy card and returning it in the postage-paid envelope
provided. Please do not return or otherwise vote any proxy card
sent to you by Starboard. If you have any questions or need
assistance voting your shares, please contact MacKenzie Partners,
Inc., which is assisting us in connection with this year’s Annual
Meeting, at 800-322-2885.
On behalf of your Board, we thank you for your continued support
of AOL as we work to create a lasting business that provides
stockholders with exceptional value.
Sincerely,
/s/
Tim Armstrong
Chairman and Chief Executive Officer

If you have any questions, require assistance in voting your
shares, or need
additional copies of AOL’s proxy materials, please call
MacKenzie Partners
at the phone numbers listed below.
Mackenzie Partners, Inc.
105 Madison Avenue
New York, NY 10016
(212) 929-5500 (call collect)
Or
TOLL-FREE (800) 322-2885
———————————————————————————-

About AOL

Having helped millions of Americans to get online, AOL Inc. AOL -1.34% is on a mission to inform, entertain and connect the world. The home of a world-class collection of premium brands, AOL creates original content that engages audiences on a local and global scale. We help marketers connect with these audiences through effective and engaging digital advertising solutions.

From time to time, we post information about AOL on our investor relations website ( http://ir.aol.com ) and our official corporate blog ( http://blog.aol.com ).

Forward-Looking Statements

This letter may contain “forward-looking statements” within the meaning of the federal securities laws, including statements concerning anticipated future events and expectations that are not historical facts. Words such as “anticipates,” “estimates,” “expects,” “projects,” “forecasts,” “intends,” “plans,” “will,” “believes” and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify forward-looking statements. These forward-looking statements are based on management’s current expectations and beliefs about future events. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances. Except as required by law, we are under no obligation to, and expressly disclaim any obligation to, update or alter any forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise. Various factors could adversely affect our operations, business or financial results in the future and cause our actual results to differ materially from those contained in the forward-looking statements, including those factors discussed in detail in the “Risk Factors” section contained in our Annual Report on Form 10-K for the year ended December 31, 2011 (the “Annual Report”), filed with the Securities and Exchange Commission. In addition, we operate a web services company in a highly competitive, rapidly changing and consumer- and technology-driven industry. This industry is affected by government regulation, economic, strategic, political and social conditions, consumer response to new and existing products and services, technological developments and, particularly in view of new technologies, the continued ability to protect intellectual property rights. Our actual results could differ materially from management’s expectations because of changes in such factors. Achieving our business and financial objectives, including growth in operations and maintenance of a strong balance sheet and liquidity position, could be adversely affected by the factors discussed or referenced under the “Risk Factors” section contained in the Annual Report as well as, among other things: 1) changes in our plans, strategies and intentions; 2) continual decline in market valuations associated with our cash flows and revenues; 3) the impact of significant acquisitions, dispositions and other similar transactions; 4) our ability to attract and retain key employees; 5) any negative unintended consequences of cost reductions, restructuring actions or similar efforts, including with respect to any associated savings, charges or other amounts; 6) market adoption of new products and services; 7) the failure to meet earnings expectations; asset impairments; 9) decreased liquidity in the capital markets; 10) our ability to access the capital markets for debt securities or bank financings; 11) the impact of “cyber-warfare” or terrorist acts and hostilities and 12) the approval of the patent transaction with Microsoft Corporation by antitrust authorities and the satisfaction of the other closing conditions to that transaction as well as to factors that could affect the manner, timing and amount of the return of any of the sale proceeds to AOL shareholders including the need for AOL to retain cash for its business or to satisfy liabilities.

Additional Information

In connection with the solicitation of proxies, AOL has filed with the Securities and Exchange Commission, a definitive proxy statement and other relevant documents concerning the proposals to be presented at AOL’s 2012 Annual Meeting of Stockholders. The proxy statement contains important information about AOL and the 2012 Annual Meeting. In connection with the 2012 Annual Meeting, AOL has mailed the definitive proxy statement to stockholders. In addition, AOL files annual, quarterly and special reports, proxy statements and other information with the SEC. You are urged to read the proxy statement and other information because they contain important information about AOL and the proposals to be presented at the 2012 Annual Meeting. These documents are available free of charge at the SEC’s website ( www.sec.gov ) or from AOL at our investor relations website ( http://ir.aol.com ). The contents of the websites referenced herein are not deemed to be incorporated by reference into the proxy statement.

AOL and its directors, executive officers and certain employees may be deemed to be participants in the solicitation of proxies from AOL’s stockholders in connection with the election of directors and other matters to be proposed at the 2012 Annual Meeting. Information regarding the interests, if any, of these directors, executive officers and specified employees is included in the definitive proxy statement and other materials filed by AOL with the SEC.

SOURCE: AOL, Inc.

Media:
AOL, Inc.
Maureen Sullivan, 212-206-5030
Maureen.Sullivan@teamaol.com
or
Investor Relations:
AOL, Inc.
Eoin Ryan, 212-206-5025
Eoin.Ryan@teamaol.com

Article courtesy of TechCrunch

A potentially big move forward for cloud-based telephony API startup Twilio — and an intriguing development for Microsoft, given its would-be ownership of Skype: Twilio and Microsoft have formed a strategic alliance to offer Twilio’s APIs to developers on the Windows Azure platform.

The offering will cover both Twilio’s voice and messaging services, and Twilio is sweetening the deal by giving developers a credit of 1,000 free text messages or inbound voice minutes when they sign up.

Windows Azure — Microsoft’s cloud platform for building and deploying web, mobile, enterprise and other apps — is playing an increasing role in the company’s bigger strategy to target developers — and make sure that they don’t all keep opting for a competing service from Amazon, EC2.

Microsoft has a hurdle ahead of it: as pointed out by Wired last week, Azure is “the world’s most misunderstood cloud.” (Poor Microsoft!)

The Twilio features are useful in that they, too, are cloud-based and do not require consumers/end users to have any applications or clients downloaded to use them. (That’s one way Twilio is differentiated from Skype.) Features available via Twilio include interactive voice response, mobile app distribution via SMS, call automation or two-factor authentication.

As more applications and the servicing of them move to the cloud, I think we’re going to see a much bigger emphasis on solutions that deliver functionality without too many strings attached. Microsoft seems to think so, too: “We’ve seen the innovation happening around Twilio, and we want to make it as easy as possible for Windows Azure developers to build great apps that use Twilio’s communications platform and take advantage of Windows Azure’s scalability, reliability and flexibility,” Scott Guthrie, corporate VP, Microsoft, said in a statement.

The move is the next chapter in the expansion of Twilio’s business. Last week the company announced that it hired a new, full-time, European marketing director — James Parton, who got poached from Telefonica — in order to build out its relationships and business on that side of the pond.

Twilio’s VoIP API is already used by companies like eBay, Airbnb and Hulu, as well as many smaller developers, to add voice and text services into their consumer apps. Twilio has to date raised $33.7 million in funding from an A-list of backers including Besssemer Venture Partners, Union Square Ventures and Dave McClure.

[Image: Sean MacEntee, Flickr]

Article courtesy of TechCrunch

Make way for another VC firm in Europe: Today sees the launch of Connect Ventures, a new London based fund that will focus on seed and Series A stages in European tech companies. It’s kicking off with €16 million ($22 million), which will be dispersed in investments of between €250,000 and €1.25 million ($330k-$1.7m).

Led by co-founders Pietro Bezza and Bill Earner, Connect Ventures will be focused on early stage companies in the consumer web, digital media, e-commerce, entertainment and gaming sectors. The first recipient of money from the fund is the London-based private sales site SecretSales, which is getting a £300,000 ($487,000) investment on top of the £6.3 million ($10.2 million) round that it got in February from a consortium of investors that included Doughty Hanson, Pantech Ventures and others.

And another two investments are close to completing: for an e-commerce company in Berlin and another London startup, focused around mobile apps. “One has revenue worked into its business model already, while the other is a bigger play that won’t have revenue for a while,” Earner says.

Some believe that the venture capital world may be getting a little overcrowded and overheated, with firms doing battle to get in on funding rounds for the choicest startups. So why launch a new fund now? For one thing, says Earner, the situation is less hot in Europe, and he says there a “gap” in the market for funding in the seed and Series A stages in tech here to help them grow faster.

“Not every startup has the privilege of going quickly from a few hundred thousand users to 20-30 million,” he says. “There are still opportunities to invest in really great companies that are not so hot that larger funds will get them automatically. We feel that those [smaller companies] could be attractive investments for us.” The goal is for this first fund to grow to €43 million from its current size of €16 million for such investments.

Secret Sales, he says, is a good template for how Connect Ventures wants to approach investments in the future: CV gives financial help, but also expertise — Earner is ex-Amadeus Capital Partners and has also worked at a number of startups in engineering, product management and marketing roles. Bezza has built and sold two digital media companies of his own, Neo Network and Magnolia, now part of the Zodiak Media Group of content companies, and has been an active angel investor in companies that include Picklive, PlusPlugg and Dri Dri.

“We invested in Secret Sales because we really liked the team and it has good investors backing it. We felt it would be good for us to be investing with quality investors like that,” Earner says. “Plus there are some specific skills that we are able to help out with, for example in areas like CRM and analytics. We see a valuable role for us there.”

The first targets within Europe, says Earner, will be startups in London and Berlin, where there is already “a lot of energy and startup activity.” Further along, he believes that there is a lot of undiscovered startup talent out there, and at least in one case his partner’s own background may help them in this respect: “There is a surprising number of good companies in Italy,” says Earner. Italy, he notes, has no hub in terms of a city where they have all converged, and that’s made discovering them more challenging.

Article courtesy of TechCrunch