Facebook’s eight year history is famously speckled with a number of buyout offers from the likes of Yahoo, Google, and Microsoft. But each time, founder Mark Zuckerberg opted to keep his company independent — against the advice of many. Now, with Facebook gearing up to hold an initial public offering that will value the company at some $100 billion, it’s pretty apparent that Zuckerberg was right all along.

And according to new data out of global accounting powerhouse PricewaterhouseCoopers (PwC), others are opting to go the same route. Merger and acquisition (M&A) deals are taking a backseat at the moment, as more web companies are setting their sights on the possibility of an IPO.

Tech M&A Dips, Web M&A Dives

There were just nine M&A deals in the Internet sector during the first three months of 2012, compared to the 20 M&A deals that the sector saw during the first quarter of 2011, according to PwC’s latest U.S. technology M&A Insights report. Internet M&A deals also dipped on a sequential quarterly basis, as the sector saw 10 deals in the fourth quarter of 2011.

The larger technology sector overall, which in PwC’s report includes hardware, software, semiconductor, IT services and Internet companies, saw a dip in M&A deal volume as well. There were 64 tech M&A deals during Q1 2012, down ten percent from the 76 tech M&A deals that occurred in Q1 2011. On a quarter-over-quarter basis, deal volume declined by seven percent from the 69 deals that closed in Q4 2011.

Quantity Down, But Per-Deal Price Tags High

It’s also important to note that while the number of M&A deals is down, the cumulative transaction value is up — indicating that the companies who do opt for M&A transactions are seeing higher price tags. Cumulatively, Q1 2012′s tech M&A deals were worth $28.9 billion, an increase over Q1 2011 which saw $25.1 billion in deals.

Since deal volume was so low, the average deal value for Q1 2012 was $452 million, up significantly from Q1 2011 when average deal value was $330 million. There were nine billion dollar-plus tech M&A deals during Q1 2012, which PwC said represents the second highest volume of quarterly “mega deals” since 2008.

IPOs Up — Driving Valuations Up

Meanwhile, tech IPO activity is surging. There were 13 tech IPOs and 14 IPO registrations during the first quarter of 2012, continuing the trend from 2011 which saw 65 tech IPO listings overall, which itself was a 27 percent boost over 2010.

That public market frothiness is what’s mostly driving up M&A deal prices, PwC said in its report, which read in part: “Lofty IPO valuations have many companies pursuing a dual track to liquidity, preparing for both a sale and IPO, with attendant increases in valuation expectations.” With Facebook’s blockbuster IPO, which is widely expected to occur later this week, it looks like the current trends in tech M&A will only intensify — perhaps with Facebook itself emerging more as another low volume, big money acquirer.

Here are some key graphs from PwC’s latest tech M&A report (click on images to enlarge):

Article courtesy of TechCrunch

Mass Relevance, a startup that helps media companies and brands tap into this crazy Twitter thing, has raised $3.3 million in Series A funding.

The round was led by Austin Ventures, with money from Battery Ventures, Floodgate, Allegro Venture Partners, and Metamorphic Ventures. The startup previously raised $2.2 million in seed funding from most of the same backers — Battery is the only addition.

Mass Relevance pulls content from Twitter and other social networks (it announced a tweet syndication deal with Twitter last year), filters the updates according to a customer’s needs, then creates visualizations that can be embedded on a website or displayed on pretty much any screen, including TVs, billboards, and in-store signs. Founder and CEO Sam Decker says that the company started out doing custom work for each customer, but it has “productized” that work into standard visualizations showing trends, conversations, maps, polls, Q&As, and more.

The company says its clients have included the Big Four television networks, seven of the top 10 cable networks, Target, Cisco, Ford, Pepsi, and Victoria’s Secret. Mass Relevance first caught on with media companies who wanted to pull content from Twitter, Decker says, but brands and advertising agencies are getting interested too. That interest can provide monetization opportunities for publishers (say if a brand wants to sponsor Mass Relevance content on a publisher’s site), but it also a reflects growing brand interest in running social network content on their own properties — for example, the company is helping Pepsi display tweets related to its “Live For Now” campaign.

Decker says one of the main goals for the funding is to “lean in to the demand we’ve experienced from brands and agencies” by building more products designed for their needs. He plans to continue growing the company in Austin, while also hiring a few people in other cities, especially New York.

Article courtesy of TechCrunch

Lately a trend has emerged: European VCs putting down more roots in Silicon Valley to take advantage of the current scene and act as a bridge for European companies trying to form local partnerships, and of course as a mechanism for M&A or further funding with US-based VCs. One of the more recent firms to do this was Index Ventures, which a year ago put partners on the ground for the first time outside of its bases in the UK and Switzerland.

The latest to join that trend is Earlybird Venture Capital out of Berlin which has brought on Valley-based Konstantin Guericke as a venture partner. Is this part of a developing theme?

Guericke co-founded LinkedIn, where he was vice president of marketing, he took it to six million members and profitability. German born, he also served as CEO of jaxtr, a social communications start-up purchased by SabSe Technologies. He’s currently on the boards of several startups and mentors student entrepreneurs at Stanford University, where he graduated.

Guericke says startups coming out of Europe, and particularly Berlin, that are highly viral and globally scaling from Day One can “compete with the best in Silicon Valley and reach a worldwide audience.” He’s basically correct: far too many European startups are not suited to the continent’s small fragmented markets, don’t realise it soon enough and need to look elsewhere to scale.

Meanwhile, the VC trends in Europe continue.

As we know, Accel, which has a good footprint in London, is a firm with a large US arm already. The other main player in Europe are firms like Balderton, but it prefers, as does Eden Ventures and others, to bridge with US-based VCs.

The opposing view of course is that so long as you have contacts, you don’t need an office on the ground. The reverse is working in Berlin of course: VCs are flying in and out of the place (in some cases even just commenting from Munich or Hamburg) but few have felt the need to open full-blown offices. Perhaps the renowned Berlin winters are putting them off for now? Admittedly Wellington Partners is in Berlin so often it might as well have an office.

Earlybird is the exception, moving its full operations to Berlin and raising $100 million for their new fund.

But right now there is a debate raging about whether European Venture Capital has much of a future. Atlas’s Fred Destin has returned to that theme again recently saying Euro VC is too unwieldy, too in hock to governments and hide-bound by staff incentivised by management fees rather than exits.

Are European VCs, like their political equivalents in Brussels, now viewing Europe as a burning building with not enough exits, as UK PM Cameron once said of the Euro? Is that why we are seeing this attempt to bridge with the U.S.?

Conversely we’ve seen the rise of new entrants like Passion Capital and the soon-to-launch Hoxton Ventures. These guys are actually pretty optimistic about Europe and its ability to build companies outside the salary inflation (and the rest) of the Valley.

You pays your money and you takes your choice I guess.

Then there are quite different new entities like Blackbox VC where early stage startups literally live in a dorm in Atherton trying to catch the ear of the Valley.

More on that later, but for now let us know your thoughts in the comments.

Article courtesy of TechCrunch

Back in March this year Microsoft launched its first ever “direct” startup accelerator, based out of Tel Aviv, Israel. That meant it would, for the first time, be an accelerator owner/operator. Dubbed the Windows Azure Accelerator (WAA) it looked, at least on first inspection, to be designed to push its Azure cloud computing platform. Perhaps this was some paper-thin marketing initiative? “Look everyone, startups are choosing to use Azure!” seemed to be the initial message.

Indeed, the move led to some confusion in the market. Microsoft already works with TechStars and all members of its Global Accelerator Network. It also has an ongoing BizSpark marketing programme to push Microsoft products, and numerous R&D centres around the globe. What on earth was going on? Was this going to be some sort of prison for startups, where they would be force-fed gruel and lashed like galley slaves if they didn’t use Azure? It turns out, no. But there is a back story to this move and a strong hint that this single move may, in the not too distant future, lead Microsoft back to its roots and re-inject that essential startup DNA back into the corporate giant.

I took a trip out to Tel Aviv to get under the skin of this new initiative, to meet the startups they are backing and work out why the hell Microsoft would be doing an accelerator.

But let’s look at the detail first.

Housed in the Microsoft Israel Research and Development Center, the Accelerator is part of the Center’s outreach program ThinkNext, a startup engagement program. Run a little like TechCrunch Disrupt, the ThinkNext Summit is an in-house, invitation-only Microsoft conference which has been running for 4 years featuring key MS people, but which also puts 20 startups on stage. It’s also taken under its wing the Microsoft “BizSpark One” program, which deals with about 50 companies out of a broader 45,000 BizSpark startups.

THE WINDOWS AZURE ACCELERATOR

The Windows Azure Accelerator itself is a four-month, biannual program for 10 startups. Featuring over 30 mentors from the industry (from CEOs to investors to marketing experts), startups also get all the usual free software offered through Microsoft BizSpark Plus.

At the end of the programme they get a demo day for investors in Israel and one in Silicon Valley in September.

Running the WAA day to day is Hannan Levy a former serial entrepreneur and cofounder of United Parents Online which has been covered on TechCrunch. A CTO for the Accelerator is due to be hired. The key point here is that Microsoft isn’t hiring from within its own borders, but bringing in entrepreneurs who can understand other entrepreneurs.

As with most accelerators, the startups get free office space, coaching, mentorship, legal assistance – the usual.

There will be a big focus on User Experience, something Israeli companies haven’t traditionally been strong in and – in something of a first for a Microsoft initiative – Agile and Lean Startup methodology will be promoted.

The specific Azure cloud use element is good for two years (worth up to $60,000) – so in some respects this is kind of an investment.

Now, you’d think the startups would be leaned on to use it. But in fact I saw zero evidence of this. Quite the contrary – when I visited I saw startups happily talking about their iOS or Android apps and working on Macs just as much as PCs.

The startups also get access to customers and advertising/design partners like the giant Y&R ad agency. In reality I spoke with the mentors from these companies and it’s a lot simpler and less corporate than it sounds – what they are getting in practical terms is the time of two key guys from those companies, and their ability to green light anything the startups need.

Mentor David Sable of Y&R says it’s about “giving the startups practical real-life understanding of what they need to sell and to understand what their clients will need.” At a WPP level Y&R is accountable for the entire Microsoft relationship so he calls it the WAA initiative a “strong partnership” which “is a huge value add for us” and adds “huge energy to my company”.

Yoram Tietz of E&Y explains: “Big companies have a problem with innovation. The position of E&Y is pro bono. E&Y was chosen as partners because they have a market reach into the Israeli tech market.”

The other mentors on the programme feature many well known names from the Israeli tech scene including Zohar Lvkovitz – Founder of Amobee; Guy Schory – head of new ventures, eBay; Moche Levin – managing general partner, DFJ Tel Aviv ; Shmulik Well – founder, SundaySky; Gil Peretz, a Neuro Linguistic Programming expert and Ali Diamnt, Former funder of Emblaze Systems, now in the Microsoft R&D centre.

SO WHAT”S THE DEAL?

More unusually the startups inside WAA get no money from Microsoft. But then again, no equity is taken either. So, free offices, free mentoring, access to lots of big potential partners. It’s all just a little too good to be true. What’s going on here?

WHAT DOES MICROSOFT GET OUT OF THIS?

It’s clear Microsoft wants to get something out of this relationship but, but it’s also, at this stage, happy to be vague about the outcomes.

The criteria for startups to join WAA is simple enough: they need to have a cloud component, a big vision for their product, they need to be “coachable / mentorable”, be a small team of less that 4 people and be capable of being nimble.

Amongst the startups I met, it was clear they were small, but hard working. After speaking to a few people I uncovered some typical startup behaviour – office hours amongst these guys usually work 11am to midnight, for instance.

In return for this social contract, Microsoft gets to plug into new ways of working and new trends in technology. Yes, it could get those in other places, like the Valley, but not in such an intimate setting. Indeed, if the startups in WAA choose NOT to use Microsoft technologies, then guess who gets to pump those guys for information directly about why not? Microsoft gets to work out how to fix these issues much simpler way than if they had to engage with startups outside of any Microsoft connection.

It’s true that Microsoft wants to encourage more entrepreneurs to build their cloud-based applications using Windows Azure – but the reality is subtler than that. As I worked my way through the people involved it became clear that they have big plans for the place. And it’s not really just about Azure – it’s about connecting with the startup vibe and informing wider strategy.

Perhaps that’s better done outside of the stuffy confines of Redmond, in a venue spitting distance from Tel Aviv’s gorgeous beaches. But this is no holiday camp.

BUT WHY ISRAEL?

The background to this is instructive. Microsoft has been in Israel since 1991. It created the first R&D centre outside the US in Tel Aviv. Microsoft’s R&D Center houses 550 engineers. And while there are now 45 R&D centres globally, only three are considered “Strategic” ones. They are located in India, China, and Israel. While the former two are – how can I put this? – cheaper to run, Microsoft maintains its R&D centre in comparatively expensive Israel.

The reasons have been expounded up so many time they are barely worth repeating, but for the record: Despite its small 8 million population, Israel has the third latest VC spending in the world according to the OECD and is third only to Silicon Valley and New York in total numbers (not per capita). It’s number four in the world in patents after Taiwan, China, Japan and the US (even though many patents in the US were originally developed in Israel, according to the WEF Global Competitive Report 2011-12). Israel has the largest number of tech startups traded on the NASDAQ. It has 4 of the top 30 computer science universities in the world. Of course, it goes without saying that the reasons for this tech proficiency are obvious: it’s a country with few natural resources, surrounded by enemies and on a constant state of near-war footing. Unfortunately, there’s nothing like a cold war to accelerate innovation and the heady mix of Israeli culture and national army service ends up producing a lot of technically proficient people, as was documented at length in the book Startup Nation.

WHERE DID THE WAA COME FROM?

As Zack Weisfeld, Senior Director of Strategy and Business Development at Microsoft’s Israel Development Center, tells me, it was out of this startup-driven R&D centre, plus the ThinkNext programe, that they came up with the idea of the accelerator. (Weisfeld is a startup veteran who was at Modu and M-systems, acquired by SanDisk in 2006 for $1.6 billion).

They were no longer talking about just innovation, but “innovation excellence” and “fast productisation.” Out of this R&D culture came the die of “rainmaking” – literally seeding the clouds. Clearly there was a missing link to achieve this: they needed the mojo of startups. And thus came the idea of the Azure Accelerator, says Weisfeld.

Gradually people inside Microsoft listened to these siren voices. They needed more than R&D – they needed new blood. They needed the special energy bright by startups, and an accelerator was born.

They also realised startups want more interaction with large corporates in a more collegiate atmosphere.

Admittedly the stock markets might disagree with him but, as Weisfeld told me: “It’s not about Windows versus iOS versus Android or whatever. It’s more complicated than that. It’s not about selling more Microsoft Office licenses.

“It’s really about working across all platforms. Azure is not the main target of the accelerator – it’s about being more connected to startups, trends, ways of working,” he says. Eventually this helps impact MS in other ways. Using Azure is genuinely not mandatory, he says. “Working with startups gives Microsoft a better chance to compete in the future.”

“People forget Microsoft is still a huge tech company and innovator. It suffers from a bad reputation in some ways, but this initiative shows it can work with startups.”

As Weisfeld says, Microsoft getting access to fast-moving, agile startups “makes us better”.

NEXT UP – THE XBOX ACCELERATOR

The Windows Azure Accelerator is just the first of, perhaps, many more. Weisfeld says that while WAA is the first, others are likely to follow globally.

More interestingly, the next one will be in the same building as the Azure Accelerator and will focus on the Xbox.

Yes, Microsoft already has a ‘Kinect Accelerator‘,which is a venture run with TechStars in Seattle. But TechStars takes its usual 6% equity stake.

This Microsoft-run version will be quite different. This Xbox accelerator will sit next to the Azure Accelerator and right next door to the R&D centre. This makes plenty of sense – the special technology associated with Kinnect comes out of Israeli ‘Machine Vision’ engineering, and guess where Machine Vision is a speciality? Yep, the Israeli Armed forces.

CAN THE WAA IDEA SCALE?

What stuck out eventually about the WAA startups I spoke to was that they were all from Israel. Technically speaking, that needn’t be the case, and I was told the WAA had had applications from 10 countries globally. However, practically speaking, startups don’t get funding to come and live and work in Israel. That meant the gene pool was going to limited to startups from Israel, or even just Tel Aviv.

On the plus side, I was told that in the future the WAA “will be happy” to house startups from other counties, and even “regionally”, so long as they could fund their 4 months in Tel Aviv. Personally, I took this as code for ‘other countries in the Middle East’ – quite some leap of faith for an Israeli initiative. I was also told to “watch this space” on that front.

For here’s the rub. For a global organisation like Microsoft, should we not ask the question: is Microsoft’s first direct accelerator too focused on one country? Surely it ought to be the case that for a huge organisation like Microsoft to start a brand new accelerator then it should be one to all comers not just to Israeli start ups?

It’s a delicate question which is perhaps best understood in the context of Israel’s powerhouse technology centre – one which almost rivals Silicon Valley in hard-core technology and innovation.

The signs are though, that despite it’s all-Israeli makeup – Microsoft’s first ever direct accelerator is likely to be the first of many, as we’ve seen above with the Xbox initiative.

CORPORATE ACCELERATORS – THE NEW NEW THING

The WAA is clearly part of a wider trend. OK, you haven’t seen Apple or Facebook open accelerators, and nor are you likely to. But while Google hasn’t opened a direct accelerator it is certainly dipping its toes into the water. It recently started Campus London, a large building in London’s high tech cluster in the East of the city which houses accelerators and co-working spaces. Meanwhile, Telefonica is rolling out its Wayra incubators globally, while Deutsche Telekom announced its hub:arum incubator for Berlin this month.

But in truth it feels like the more corporate the company culture, the more need there is for this kind of initiative.

NEW MOJO FOR MICROSOFT?

Ultimately, though, I think what we are looking at here in Israel is a kind of prototype accelerator, the model for which will inform Microsoft’s roll out of similar initiatives.

It’s interesting that one of the key missions Microsoft’s R&D center is to look at social networking and monetization – that means social startups need to be part of the equation. And social startups are clearly in this first tranche at WAA.

Perhaps all this activity will inform Microsoft’s future direction as a company. Or perhaps some corporate drone will dismiss it as a flight of fancy, and they should just concentrate on selling more Office and Azure products.

Only time and – many more startups – will tell.

THE STARTUPS AT WINDOWS AZURE ACCELERATOR

Durados
Durados is developing a cloud database application generator without coding. It basically generates templates for any kind of cloud app, like workflow or CRM. It’s aiming to launch on Microsoft’s Azure and Google Apps Marketplaces.
Founders: Itay Herskovits, Relly Rivlin

Evento
Evento is creating a Facebook application initially which makes it easier of events to go viral on social networks and address the problem that about 40% of event tickets go unsold due to lack of exposure. They are targeting sports, entertainment, music, and culture events run by SMEs. You get a lot more management options than the Facebook event application including live maps of stadiums and theatres where you can book a seat. They take a cut of the ticket booking, which is taken from marketing budget not the ticket sale. The system also finds your friends and places you near them in the venue. It’s designed to rewards people with virtual or real goods to incentivize people to spread the event socially. Closest competitor is Ticketmaster’s “Seat New Me” just on the web, but it’s not social. Launching around August with a sports team in the UK.
Founders: Ophir Zardok, Harel Shemer

EverCloud
This Cloud Services Broker (CSB), offers enterprises the ability to dynamically expand on-premise enterprise applications, such as Microsoft Exchange and File Servers, to public Clouds. The multi-tiered SaaS platform maintains communications with the
private Cloud via a proprietary protocol.
Founders: Yuval Rapaport-Rom, Gadi Rapaport

MediSafe
People who consume medication often forget taking their medication or over-medicate, especially if they are elderly. (In the US, over 30,000 people annually die as a result). Scan the Barcode on the medicine packet, and then MediSafe syncs someone’s medication routine with other members of the family. So when your daughter forgets to take her medicine at school, you receive an alert about it. She has to ‘check-in’ that she’s taken the medicine otherwise the Android app alerts the parents. Of course, this works for anyone.
Founders: Omri (Bob) Shor, Rotem Shor

Vidit
Vidit is a cool technology for collect videos taken by many people at a single event. Using a video synchronization algorithm it synchronizes and edits all clips into one. The result can be a rock concert from hundreds of angles in the crowd. The user that uploaded the video appears in the final video incentivising them to create more. A feature also allows you to pick which angle you like best. I’ve seen it and it sort of blows you away.
Founders: Eldad Bercovici, Elad Gariany

AppsFlyer
A Mobile Apps Marketing platform that helps App-Developers, Brands and Adagencies to track and optimize their user’s acquisition funnel. In plain English, this is a analytics for mobile app advertising networks for an app publisher to work out which networks they are getting their best responses from.
Founders: Oren Kaniel, Reshef Mann

Twtrland
Founded by four brothers and with 500k monthly users, Twtrland analyses Twitter profiles for influence on topics. Check out your profile and you may be surprised.
Founders: Eytan Avigdor, Noam Avigdor, Guy Avigdor, Lavi Avigdor

RotaryView
RotaryView lets you take 2D photos of an object and turn them into a 360° / 3D image. This helps online vendors grow more quickly. You just shoot and upload the photos.
Founders: Gev Rotem, Ofir Shefer, Gal Rotem

Stevie – Stealth mode company
WebTalk – Stealth mode

Disclosure: Travel costs to Israel were met by Microsoft

Article courtesy of TechCrunch

For awhile now “gamification” has largely existed as a buzz word. It’s felt just as ridiculous to write the word as it is to read it. However, as Tim Chang pointed out this weekend, although it’s important to avoid thinking of “gamification as the panacea,” it’s real, it’s moving beyond media and fitness, and it needs to be taken seriously. When it comes to educational tools, gamification has real value in its ability to make learning more fun and engaging. But as with all emerging trends, it can’t be applied willy-nilly.

BenchPrep, a young edtech startup backed by $2.2 million from Lightbank, launched last year to convert content from big educational publishers, like McGraw-Hill, into interactive web and mobile courses. While the startup expanded beyond college admission test prep in January, today it’s announcing that it is teaming up with Princeton Review to contemporize test prep for students, using game mechanics, leaderboards, and social features to make the tedious and teeth-grinding process of test prep more engaging and, hopefully, more effective.

BenchPrep CEO and co-founder Ashish Rangnekar tells us the startup’s core mission is to take the multitude of quality educational content out there — on a host of subjects — and transform it from static, linear material, into an experience that’s engaging, and personalized. Gamification of education is severely undercooked — like entertainment was 15 years ago, the CEO says, as the big publishers are, by and large, hesitant to experiment.

The high cost of education is just one of the industry’s many problems, but the real problem, he says, comes from a dearth of sticky, engaging experiences. Long term, the co-founder tells us, BenchPrep wants to become a platform where any student can go to study for an exam, using material from any publisher on any device. The content is out there, but the rest isn’t.

BenchPrep is already working with Princeton Review, Jon Wiley, McGraw-Hill and others, and the CEO believes it’s among the first to focus on building an interactive learning platform in which students can study on the Web, iOS, Android, and tablets.

So, the startup has teamed up with Princeton Review to launch GRE ScoreQuest, an iOS app that gamifies the study process for students taking the GRE. Obviously, the target audience is fairly limited, as it is intended for those studying to take the standardized test to get into grad school.

But the BenchPrep CEO calls the app “a bold experiment,” which takes the reputable content-heavy world of the Princeton Review and attempts to stretch the boundaries of test prep by bringing in social analytics and gamification. The company wants to use the app to prove that the model works, to validate the idea, and then apply this model to the content from all the big publishers, for all forms of test prep.

And so far, the experiment is showing positive results. In the two weeks since launch, 300+ students signed up, and 99 percent have downloaded the app and are spending more than 30 minutes a day in the app. Those students who used the app regularly over those two weeks have seen a 20 percent rise in performance.

So, how does the app work? Rangnekar, although he hesitates to use the analogy given the implications, likens the experience to that of Angry Birds. The app presents the test prep content through storyboards, like Angry Birds, there are a series of rooms in which there are 9 or 10 quizzes, ordered in level of difficulty.

The average number of questions per quiz is about five, with each quiz taking about 10 minutes to complete. If the student answers four questions correctly, they move onto the next quiz. If they fail to answer four correctly, the app explains the answers, including each part of the multiple choice answers, why each was incorrect, and so on.

Besides this process of leveling-up, BenchPrep wants to give context — something that’s extremely important for a sticky experience. So, the app allows students to see how their test results compare to all those studying for the GRE, as well as to break it down to compare only to those studying for their specific test, like Arts & Humanities, for example.

So the app offers tests in a bunch of different categories, from text completions and sentence equivalence to Algebra and Geometry, with more than 300 practice problems. Students unlock new problems, levels, and boards based on their performance, with this intelligent report card that analyzes each test.

For a free app, the GRE ScoreQuest is off to a great start. There are a huge amount of explanations so that students can understand what they’re getting wrong, they have a valid score card, and then get to compare to local and national leaderboards, which makes the experience that much more engaging. It’s the kind of experience you react to with, “I wish they had this when I was studying for the SATs.” I’m not even studying for the GREs, but I found myself taking the quizzes nonetheless.

Typically, the BenchPrep CEO says, students are opening the app at least twice a day, which he says has been great early validation on this model. Going forward, BenchPrep wants to focus on being the tool, or platform that enables these mobile and web experiences for educational publishers. It’s a complementary gamification service to the approach Inkling and Boundless Learning are taking to eTextbooks, for example.

There’s plenty of opportunity for tools like this in higher education, especially in test prep, and BenchPrep obviously hopes that this is just the beginning.

For more, find the app here, and BenchPrep at home here.

What do you think?

Article courtesy of TechCrunch

This morning, Nielsen is putting hard numbers to how consumers like to shop with their smartphones, backing up trends we already suspected to be the case. In particular, the new report examines how consumers use their phones when shopping out there in the real world (what’s that?) – using phones to compare prices, scan barcodes and even redeem coupons. Not surprisingly, how you use your phone has a lot to do with where you’re shopping and what you’re shopping for, says Nielsen.

The trends are sort of obvious, but there are some interesting bits to be pulled out of the data.

For starters, mobile coupons are most popular at grocery stores, (41% of mobile shoppers said they used coupons there), department stores (41%), and clothing stores (39%). At electronics stores, the majority (73%) read reviews, compare prices (71%), and scan QR codes (57%).

It seems the higher the purchase price, the more likely it is that users will whip out their phone to shop around. Or perhaps electronics buyers are just a bit more smartphone-savvy than the rest, happily scanning QR codes and the like? Something notable here, perhaps – assuming that, for many of these shoppers, price is the reason for the extra research, it initially seems somewhat odd that furniture shoppers don’t do the same. Only 19% read reviews, and a paltry 5% scan a QR code. And yet, their big-ticket purchases often cost more than a new HDTV. Why is that?

Well, besides the fact that furniture is a more personal purchase, like clothing, it’s mainly because the exact same Ethan Allen sofa isn’t going to be found at a Ashley store for less. But it would be interesting if there were apps that could scan a furniture barcode or “see” a photo you snap then show you similar sofas at nearby stores or online as well as their prices. (Is someone building that? Because I’d use it today. I hate my sofa.) Unless you’re not in the income bracket where cost is not a concern, this seems to be an unfilled niche. One of the top reasons why people don’t buy furniture they fall in love with is because they feel the need to shop around.

Back to the report. It’s not surprising to see minimal usage of the various smartphone technologies at fast-service or low-ticket item stores like convenience stores, dollar stores and office supplies stores, but it’s somewhat interesting to see moderate use at mass merchandisers (Walmart, Costo, etc.). Even though those stores appeal to users because of their low prices, it’s apparent that not all shoppers are convinced that they’re getting the best deal: 34% read reviews and 31% scan QR codes at these outlets. Given the right pricing on the right products, it seems department stores, electronics retailers and online shops can woo customers from the Walmart-sized chains, when it comes to higher priced goods. With brick-and-mortar stores turning into Amazon’s showroom, it’s more important than ever that merchants offer in-store shoppers some other advantage besides low prices. Expect the new crop of customer loyalty startups to have a big role in framing what that advantage might be.

Article courtesy of TechCrunch

Editor’s note: Guest author Keith Teare is General Partner at his incubator Archimedes Labs and CEO of just.me. He was a co-founder of TechCrunch. Follow him on Twitter @kteare.

Facebook’s Week In Wall Street Hell

This week Facebook did a virtually unprecedented thing. In the middle of its IPO roadshow it modified its S1 filing in reaction to questions it had been being asked by analysts. The modification I refer to stated that Facebook wanted to acknowledge a trend; that trend is the declining ARPU (average revenue per user) being seen in its current quarter. This trend is being driven, Facebook said, by the growth in its usage on mobile platforms and its inability to monetize those platforms in the same way, or at the same rate, as its desktop/laptop offerings.

The previous iterations of the S1 had all contained the possibility of this trend. Even the likelihood of it. But the actuality of the trend was noted here for the first time in the S1.

The Street Knows The Truth

This is a company about to sell shares at a multiple of earnings that dwarfs companies with massive revenues, profits and growth rates – like Apple’s. Facebook’s multiple is of a size that is traditionally only justified by high growth rates. And now “the street” has picked up on the fact that the rate of revenue growth is declining as traffic migrates to mobile. It is even feasible, if this rate accelerates that revenues could fall in absolute terms, as they did in Facebook’s most recent quarter. The street is not happy.

This is a historic event. A high growth company entering its IPO whilst its revenue growth decelerates amidst a huge and structural change in the usage patterns of its product is not the norm. Especially when it is the biggest IPO in US history.

Amidst the rhetoric that the IPO is over-subscribed, one wonders if the shares can possibly be worth what people are being asked to pay for them. I am not a stock analyst but I think buyer beware is not an unreasonable conclusion to draw from these events and the fact that more than $5 billion of insider money is selling at the IPO price may mean that there are some smart insiders who know the risks.

It isn’t about Facebook, or the IPO, its about Mobile and the future.

Yet, this weeks events are about more than Facebook’s IPO and the issues are far from new. Here on TechCrunch we have documented the impact of the rise of mobile and the end of Web 2.0 for some time, stressing that Web 2.0 era companies, running SAAS like cloud services, will be threatened by Apples success in driving large numbers of us to primarily use mobile devices, in an app-centric, message-centric world. In Google’s case they are contributing to and suffering from the problem simultaneously through the success of Android.

On August 27th 2011, I wrote “Smart Mobile and the Thin Cloud” in which I said that there is a trend in play that:

“…will transform the entire software ecosystem over the next 5 years. The changes will be so dramatic that the current discussions of a bubble will appear silly. Huge companies will fail and even bigger new companies will be formed”.

The article predicted Facebook will be challenged by the growth of mobile devices and the impact of that on the way users interact with data.

On January 26th this year, in “Google, Look out Behind you” I said:

“Apple has a platform that will soon be numbered in the hundreds of millions. Every device has communications built-in, personalization built-in, media capture built-in. And with iCloud, there is now a place to store the output of each device. How relevant is the Facebook hosted social graph in that world? How relevant is the web ecosystem that Facebook connect has helped penetrate? It seems likely that Facebook will have many of the same challenges as Google as it contemplates the rise of Apple, and the rise of mobile.”

A few days later – on February 4th – in “Facebook – Run from the Bulls” I said:

“Google’s present – and Facebook’s future – involves the painful fact that the very success of mobile platforms in helping human beings be productive, on the go, has a negative impact on the desktop-based advertising programs of the past 10 years. Mobile growth impacts web advertising revenues, except of course for Apple who make money from hardware and software and so benefits from these trends. The reason is simple. We do less ad-centric activities on mobile than we did on the web. And we are less likely to click away on an ad when we are focused on a specific goal on a largely single window device.”

Then, on April 15th in “The Mobile Paradox” I wrote:

“I believe what we are seeing here is the start of a secular trend that represents nothing less than the end of the web 2.0 era where we all consumed services through a browser on a computer. Replacing that era is a new, app-based, message-centric mobile Internet. In this new era the essential unit of advertising (a page based ad, whether text, display or anything else) is simply the wrong monetization vehicle. Something new has to emerge.”

Death or Mobile?

Facebook is not alone in being threatened by these trends. Google has missed its “Cost Per Click” numbers two quarters in a row now – for similar reasons.

The real question is whether Facebook and Google understand the scale of the problems and how to address them.

There are only two possible answers.

1. Despite all of the above Facebook (and Google) know well what the problems are and will figure them out in time.

Or

2. Facebook and Google go the way of the Dodo (as predicted in Forbes last week). Just as Web 2.0 killed Yahoo as a growth company –  due to its inability to adapt – so Mobile will kill the Web 2.0 giants

I think 1 is more likely than 2.

Why the belief? Facebook did another thing this week that is highly relevant to this issue. It launched its own app store. Facebook’s app store enables an app developer on either Android or iPhone to use Facebook to trigger users to visit the iPhone app store, or the Google Play app store, and install an app. Facebook becomes possibly the primary way that happens. It may drive millions of app installs across many platforms. These installs are not free, they are pay to play.

I think of the app center as providing Facebook with a new type of advertising format – an ad, with an action (an install), and a price on success.

As Larry Page noted on Google’s earnings call this quarter, mobile demands new types of ad format. He cited “click to call” as an example. Both Facebook and Google will begin to evolve ad units that are a better fit with the user experience on mobile, and ones that reflect the customer goals or the advertiser better. So far, ad formats on mobile have been simply copies of tried and trusted web formats, poorly suited to the new environment.

Option 2 – death of the Web 2.0 giants – only seems to be likely in a scenario where these companies fail to understand that their web pasts count for nothing in this new mobile world. This week, if anything, has served as a huge reminder of that.

Facebook (and Google) will most likely, by building or buying, evolve their monetization strategies to better suite the mobile future. It may take time, it may be painful, they may even fail. But try they will and try they must. Facebook 2.0 will try to kill Facebook 1.0 and Google 2.0 will try to kill Google 1.0. It’s not a good time to be going public, or to be public. But, mobile is the future – they can’t live with it, and they surely can’t live without it.

Article courtesy of TechCrunch

Editor’s note: Tim Chang is a managing director at Mayfield Fund. Follow Tim on Twitter @timechange. He’s hosting a workshop on gamification at the Mayfield Fund offices on June 6 and has reserved 10 spots for TechCrunch readers — more details at the end of this post.

I have been active in the field of gamification for the past couple of years, working with companies like Badgeville, HealthTap, Gigya, Basis and others on leveraging game mechanics for end user behavior measurement, scoring and shaping. Last week, I participated on an investor panel of at VatorSplash’s Gamification Summit and the group shared several noteworthy points:

Gamification is expanding beyond the initial verticals of media and fitness: The next target verticals are education, eCommerce, local retail (example: Belly), and financial services.

Gamification is not just for consumer end users, but also corporate employees: Corporations can not only gamify their products and services for consumers and end users, but also leverage game mechanics to make work more fun, measurable, productive, and rewarding for internal employees. In fact, the internal enterprise-facing gamification market may turn out to be just as large (if not larger) than the consumer-facing opportunity, given the budgets and SW/SaaS spending involved with worker productivity.

Companies that let customers embrace gamification in baby steps will win: Rather than slamming existing and new users into a fully gamified experience out of the gate, companies may want to allow users to opt in to the game mechanics that they find most compelling and appealing. After all, different personalities “play” in different ways, and a common mistake for businesses is to assume that a single gamification element will appeal universally to all users. That said, simply bolting on gamification-lite to an existing business is likely to flop (remember when many companies attempted to add in avatars or virtual currencies because it was the trend at the time?) Companies should first think about their key business goals and target outcomes, match appropriate game mechanics to these goals, and then weave them into the user experience as seamlessly as possible — even if this means allowing users to initially opt-out or not engage in gamification elements.

Gamification needs to address all four phases of the user life-cycle: Think about leveraging game mechanics to facilitate and graduate users along each specific phase of the user experience: 1) new user onboarding (gamification is an excellent way to implement interactive tutorials); 2) user engagement; 3) conversion of free users to paid (or opt-in data sharing); 4) retention of power users. Remember that different mechanics are best suited for certain personality types and phases.

Gamification and Social often go hand in hand: Just as games come in single-player and multi-player flavors, gamification can be oriented towards solo or social play. For many companies, implementing gamification may first require installing social plumbing. As an example, Mayfield portfolio company Gigya (www.gigya.com) is a SaaS social infrastructure company that provides a suite of tools (like Social Login) that enables any business to add a social layer to their Web presence. Interestingly, they have found that users who are logged-in with Social Login spent 30% more time on-site than users who sign in with native site login. Customers like Pepsi use Gigya to build custom co-viewing experience sites for Pepsi-sponsored TV shows like The X-Factor, The Grammies and the SuperBowl, allowing users to collect “caps” (badges) and gain social ranking by commenting, sharing, and liking other users’ comments. Verizon Wireless created a community site of local events called VerizonInsider, where users are rewarded with points and badges for interacting with content.

Gamification design is about to emerge as a specific skill set: There’s likely to be a whole new talent pool trained at places like Playdom and Zynga that will be branded as “gamification designers” – many of our portfolio companies are already actively hunting for such people!

The possibilities for gamification are universal and endless: Every aspect of the human experience is a journey of sorts, meaning that there is a learning and leveling curve, a start, mid-point, and end goal…and multiple ways and strategies to reach the destination. Gamification should be thought of as helpful signposts, markers, scorecards, feedback loops and treats to guide the user along the way, show him or her different ways to “play” and provide hints as to what may be behind choice A, B, or C that they’re about to make.

Note to Entrepreneurs: Please avoid the “gamification as panacea” trap, tacking gamification as a “badge” onto every pitch, as VCs can see through this, just as consumers will shun bolted-on game mechanics.

We will be hosting an interactive evening workshop on gamification and game mechanics on June 6 at the Mayfield Fund offices on Sandhill Road, which will cover a broad range of topics including consumer motivation, leveling curve designs, pros and cons of various gamification tools; freemium conversion tuning for microtransaction and subscriptions; and using the seven deadly sins as a design framework.

We have reserved 10 spots for TechCrunch readers/entrepreneurs.  To be considered, please comment and share this post to Facebook and we will pick the folks who we think will benefit the most from the discussion.

[image via flickr/Fiona Shields]

Article courtesy of TechCrunch

Dave McClure’s 500 Startups crew is at it again, with another group of companies joining its Accelerator program. The fourth group of startups in the 500 Startups Accelerator follows a lot of the same trends from previous participants, as McClure & Co. continue to bet big on female entrepreneurs and international startups. There’s also the continued focus on revenue-first startups, rather than those which need to hit “critical mass” before monetizing.

But before I get into all that, check out this video. Seriously. Watch it. This story will still be here when you’re done:

Ok, so now that you’ve gotten your fill of 500 Startups’ hilarious take on the Hunger Games, let’s talk about the companies themselves. Of the 27 startups in the program, seven have at least one woman founder, and more than half of the startups are from outside Silicon Valley. Of those, 12 are from outside the U.S., hailing from locations such as Australia, Brazil, Canada, China, India, Italy, Japan, Mexico, the Philippines, Slovenia, and the U.K. Others come from U.S. cities that include Austin, Chicago, New York City, and Washington, D.C.

Putting investment in non-Valley startups isn’t the only somewhat contrarian move from this Silicon Valley-based incubator. The current class also has a bunch of startups focused on unpopular market segments like parenting and education, small- and medium-sized businesses, and subscription e-commerce.

That’s because big wins on companies like Instagram are rare, and McClure’s not trying to hit a home run every time he comes up to the plate. Instead, he’s focused on singles and doubles. That means helping along startups that might not be sexy, but bring in revenue.

So what do the participating startups get? As with previous classes, all 500 Startups Accelerator participants get investment of $25,000 to $250,000 in exchange for five percent of equity. They also get some swank office space, access to hundreds of mentors, help in marketing, business development, administrative stuff… And, of course, help with future fundraising.

The Accelerator actually kicked off on April 2, so the program is already well underway, with demo days scheduled for July 17-18 in Mountain View, and July 23 in New York City. In the meantime, check out the next 27 companies to participate in this class:

• ActivityHero – Yelp for kids activities
• Bluefields – Intelligently organizing recreational sports
• Bombfell – A monthly subscription service for men’s clothing
• CardFlick – Create and share beautiful digital cards
• Chalkable – An app store for school and a platform to make those apps work
• Fontacto – Virtual phone system for entrepreneurs and SMBs in Mexico & Latin America
• Groupiter – Adds group conversations to the files you share on Dropbox
• Happy Inspector – An app to revolutionize inspections
• Ingresse – Brazil’s first social ticketing company
• Monogram – Flipboard for fashion
• PocketOffice – An app to help grow your small business from your smartphone
• PublikDemand – Helps consumers launch viral complaints against big companies
• ReClipIt – Social catalog for coupon and deal lovers
• Sqoot – Provides a daily deal API, like Twilio for local deals
• Storypanda – Next-gen interactive iPad kids books
• Teamly – Helps teams by stay focused, collaborate better, and celebrate their achievements
• TeliportMe – Lets users create high-res panoramas anywhere
• TenderTree – Helps families find a caregiver for the elderly or disabled
• TieSociety – A try-before-you-buy subscription service for men’s neckwear
• Timbuktu Labs – An iPad magazine for you and your children
• TokyoOtakuMode – A place to share Japanese otaku culture, like manga and anime
• Toshi – Super easy personal finance manager and bank data aggregator
• TwitMusic – Helps musicians effectively share & promote their music on Twitter
• UmbaBox – A monthly subscription service for discovering handmade women’s goods
• Uscoop – A social commerce platform for young style influencers
• Wanderable – Honeymoon registries for couples who want experiences
• Yogome – Fun & educational games for kids aged 6-12 on the iPhone & iPad

Article courtesy of TechCrunch

Despite reports that social readers are “all collapsing,” an analysis of monthly and daily active users of Facebook-integrated social news applications shows no clear trends in growth or decline across the board.

We looked at 12 media sites and apps that integrate Open Graph to allow users to automatically share their reading and viewing activity with friends, and have concluded there is no single trend affecting these apps the same way. The Huffington Post‘s web and mobile integration, for example, continues to steadily gain new monthly active users. The Washington Post Social Reader, a canvas application with a mobile component, has seen a decline over the past month. Yahoo‘s web and mobile integration has seen a dip in MAU recently, but it has more than doubled its usage since March to become the app with the more MAU than any other built on the Facebook platform.

The slight downward trends within the past week indicate Facebook might have changed something as far as how it displays social reader activity to some users. For example, we’ve seen the site testing a new Trending Articles feature and icons to indicate whether user activity will be shared.

However, a closer look at some of the less popular news integrations show that the decrease in MAU is not consistent across all apps. In fact, MTV.com, Mashable and ESPN have all seen increases in that same period.

It is also worth noting that the dramatic changes in some apps’ numbers around April 10 are related to the fact that Facebook did not return MAU data for a period of five days leading up to that date. As such, the growth or decline appears more suddenly than if the graphs included growth for those five days prior. It’s possible Facebook made some changes during this time that might have affected apps afterward, but there is no universal trend that we can identify.

There are also a number of factors on the publisher side that can have an impact on growth or decline in MAU, for example, ad campaigns or changes in how clearly an app prompts users to log in with Facebook. The Washington Post spent $800,000 in Facebook advertising last quarter, according to Facebook’s filing for an initial public offering. It’s possible that the app’s lower MAU is related to a change in ad strategy or spend this quarter. The Independent‘s decline could be related to a bug. We were unable to log into the site using Facebook, and a number of commenters appear to have had the same issue.

Many users have complained about social reader applications, mostly those that require users to authorize the app and share their activity in order to read any article. We recommend developers add clear controls for users to decide what to share, when and with whom. There also seems to be a lack of explanation of what users gain from enabling this type of sharing. Facebook and news outlets that create these integrations should consider how to reframe the benefits of these applications so that users want to add them to their Timelines, rather than feeling forced into it.

Article courtesy of Inside Facebook