There’s a lot of money floating around Silicon Valley right now, and it’s becoming easier and easier for entrepreneurs to get access to the capital they need to get their companies off the ground. Resources like AngelList are trying to level the playing field, and facilitate conversations between founder and investor, and the passage of the JOBS Act will alter the landscape for early-stage companies by giving them access to crowdfunding from the masses. There are even charity initiatives like the ones launched by Exec and Motion To Dismiss Cancer that give a select few access to top entrepreneurs and VCs.

At a very fundamental level, the venture capital business is being reshaped. As the Kauffman report points out, most VC funds aren’t generating more than the three to five percent return one finds in the public markets — the yield investors expect, the report finds. In fact, the report states “VC returns haven’t significantly outperformed the public market since the late ’90s”.

Speaking to a crowd at the Grind work space in New York last week, Fred Wilson addressed this ongoing shift, saying, “there’s two times as much capital in the venture capital business today than we, the professional investors who make up the venture business, can actually put to work intelligently.”

This isn’t so good for VCs, Wilson says, but it is for entrepreneurs. Of course, the fact of the matter is that the top VC firms, super angels, and angel investors have unparalleled deal flow, they see hundreds, sometimes thousands of pitches, are privy to information few outside very small circles ever get to see. They are custodians of that equally valuable currency — information. As hard as the media and others work to reveal the goings-on behind the scenes, as Chris Dixon points out, most coverage doesn’t reveal 90 percent of the relevant information. This is true not just of funding announcements in tech publications, it’s true of panels at conferences, interviews, video, and more.

Sure, there are plenty of resources where entrepreneurs can go to learn more about VCs and top entrepreneurs, where they share their inside knowledge in order to enlighten and educate. And, in terms of funding, there are incubators, company builders, accelerators, VCs, crowdfunding, and more. But, in terms of how one should build a founding team, or how one should pursue business ideas to best serve innovation — change, inspiration, product-focus — all these just become buzzwords without context. Illuminating this stuff was part of the motivation that led Mike Arrington to start TechCrunch.

In this landscape, capital is readily available, and the noise is growing — and will continue to grow. Thus, it’s becoming even more essential to understand what it is about the anatomy of startups that makes them appealing to top investors, or, what is almost more valuable, why they fail.

If Dixon is right that incumbents fail because of ineptitude or irrelevance, is the same true for startups? Questions like this have led to the overwhelming interest in the Startup Genome Project, because a group of entrepreneurs eager set out to leverage the ever-growing piles of available data produced on/by early-stage companies in an effort to answer the most relevant questions to founders: What works, and why?

They are question that every entrepreneur, investor, and member of the media are (or should be) asking. “Why?” remains the most important question, or mantra, for founders, but it’s not always asked in the proper context.

This is the reason I became fascinated with a new book, called Venture Capitalists at Work, co-written by Tarang and Sheetal Shah. Rather than present anecdotal stories, gossip, or allowing vapid buzzwords win the day, the two set out to provide entrepreneurs with real insight into how some of the top investors in the game evaluate, invest in, and mentor their startups — information that can be extremely powerful if put to use correctly.

Tarang Shah is a former VC himself, having spent 4.5 years at SoftBank Capital, and he tells us that he wanted to leverage his connections in the VC world to offer a peek into knowledge that he says has thus far really remained in a “black box.”

The book is presented in an interview format, which makes it easy to digest, and starts with a foreword from Charles River Venture Partner George Zachary before going onto pick the brains of Sequoia Capital Partner Roelof Botha, FLOODGATE Managing Partner Mike Maples, Highland Capital Partners’ Sean Dalton, Rich Wong of Accel, Tim Draper, Howard Morgan, Gus Tai, David Lee, Steve Dietz, Ann Winblad, Eric Hippeau, and many others.

These interviews set out to answer three basic questions: Why do most start-ups fail, and what you can learn from these failures? Of those that do succeed, what is their secret sauce? And what are the main ingredients that VCs identify when funding startups?

The Myths

Before jumping into the characteristics that were identified most consistently among the VCs he spoke to, Shah says that it’s important to address a few common misconceptions or “myths” that one hears a lot these days. First and foremost, there’s a perception that the top reason startups fail is because they fail to raise funding, or don’t raise enough. Startup Genome holds that, in fact, the main culprit is premature (or dysfunctional) scaling — in other words, a startup’s core operational categories (product, consumer team, finances, business model) are out of sync.

Shah agrees with this, but puts it a different way: Lack of (or insufficient) funding is not the cause of failure, but a byproduct. The real root of the problem is when startups fail to hit their key performance metrics, largely because one or multiple of the categories the Startup Genome team identifies are out of sync, are mismanaged, or are not developed properly.

Secondly, Shah points out that many believe that the best entrepreneurs look for funding when they need it, and only raise the amount they need. This, he says, is a myth. In truth, the best entrepreneurs are always fundraising, and always look to raise more than they need so that they aren’t forced to raise money at inopportune times.

The third venture funding myth Tarang sets forth in the book, which is especially relevant given the popularity of the lean startup psychology, is that it’s always better to, whenever possible, build a business without raising venture capital — or to raise as little as possible. Shah says that, on a whole, there are very few high tech models that lend themselves to successful (long-term) bootstrapping in today’s highly competitive market. “The best companies use funding to scale rapidly and own the market,” he says, “it’s not a tradeoff.”

Big, Bold Ideas

So these are important to keep in mind, but, in the end, what is it that VCs are looking for? Well, perhaps unsurprisingly for how much the word “disruptive” is thrown around and overused, Shah says that VCs love big, bold, and beautiful ideas. Consensus is your enemy, and entrepreneurs shouldn’t be afraid of being contrarian. Often, it ends up being those risky ideas that people end up believing in the most, becoming passionate about, and with big ideas, there can be room to maneuver to overcome short-term failures.

While some VCs are market-focused and others are entrepreneur-first, obviously if you want to build a billion-dollar company, you’re going to need both. But, when it comes to the entrepreneur, the common perception is that you need to be hyper intelligent, have a big ego, be a visionary, experimental, focused, and passionate. While these are all essential to the equation, Shah says the the traits that really matter most are authenticity, integrity, and motivation.

So, take “ego,” for example. While an entrepreneur has to have enough confidence and ego to be stalwart in the belief that the current products on the market aren’t good enough, and to be confident enough to pursue unconventional ideas and solutions, it’s all about balance. One’s ego has to be in-check enough to admit weaknesses, and be able to surround one’s self with a team of people that are smarter than they are, and can leverage their strengths where you can’t.

It’s not about whether or not you’ve started eight companies: “We do not look at serial entrepreneurship as a positive trait,” says Mike Maples. “We look at authenticity and unconventional, proprietary insight as the key difference.”

What’s more, there are way too many entrepreneurs today who get caught up in the drive to make money, to become the next Instagram, lusting after that billion-dollar valuation. But that’s not what turns on venture capitalists. “The key characteristic is the desire to solve a problem for the customer. That is the driving passion, not ‘I think this is going to be a billion-dollar company and I want to hop in because I can get rich,’” says Roelof Botha. “We’re looking for people whose ideas get floated around. People who fight over the chance to work on solving a problem rather than passing the buck.”

Authenticity, Integrity, and Motivation

Money is not a sufficient motivator to overcome the ups-and-downs of the startup journey, Shah continues, instead entrepreneurs have to search for their true motivation and pursue problems that they feel genuinely passionate about. But, again, passion alone is not enough. Something that many entrepreneurs suffer from today is letting their ego take control — because they believe in their vision and their idea, they assume that the market is theirs and theirs alone.

In the media, although often guilty of revving the hype machine ourselves, we see this a lot, and it’s always a mark against. You’re never alone, unless, as Peter Thiel would say, you can adequately (and subtly) describe how you’ve created your own market. And there are few that have the brains, cojones, and creativity to do it — Stanford/Harvard MBA or not.

Part of the “authenticity,” which admittedly sounds like a buzzword, comes from experience and market analysis. But this is hard-won. Successful entrepreneurs aren’t just passionate about their idea, they have a product view that’s informed by Malcolm Gladwell’s 10K Hour Rule — they have deep experience that provides insights into the finer nuances of both the market and their target customer.

When we asked the co-founders of Lynda.com (which has made it to $70M in annual revenue without taking a dime from outside investors) what was the secret to their success, they kept coming back to the fact that it’s not about finding an exploitable, untapped niche (market opportunity), but being experts — and passionate ones at that. Putting in the time and effort required to really understand the market is what can separate the big successes from those that find themselves floundering into the deadpool.

In the rush to get funded, to scale, and ship, a lot of entrepreneurs lose sight of this, Shah says. And I am in full agreement. When Shah asked Mike Maples what made Twitter appealing for him early on — while many in the media were busy writing Twitter off — was the fact that Evan Williams had gained his “authenticity,” his experience and understanding of the market, from Blogger, informed his vision what micro-blogging could become.

Of course, the “authenticity” of one entrepreneur can’t do the job alone. The other key, as mentioned before, is a passionate disinterest (or an objectivity) that leads one to be able to surround them with the best people — to admit weaknesses and build the right team accordingly.

DNA

Shah found time and time again that one of the most overlooked parts of the process in building a company is those first 10 to 12 hires. The first handful of employees determine the “cultural DNA” of a company. While young companies without much capital may look to hire people that they can train on the job and can be molded into the right fit, Shah says that early employees need to hit the ground running, and make a difference right away.

That doesn’t mean that their functional skills have to be out-of-this world, as the key is to hire people that are right for your culture — people that have the same passion. And this is where that “integrity” is so important. Because, let’s be honest, the early stages of building a business are really tough. When no one knows your name, or your startup’s name, what convinces the best people to join and stay with you while things are tough is your character, your belief, and those you surround yourself with.

Solo co-founders just aren’t as successful as founding teams, Shah says, and those who hire co-founders that can hit the ground running tend to be the most successful. If you can reduce the dissonance inherent to a founding team by finding others that believe in the vision, personal chemistry can be worked on thereafter, if their personality and mindset is a good fit.

“I think what matters most is team culture and unit cohesion. I almost always in some ways recruit the personality type as much as functional skill,” says Rich Wong of Accel Partners in Venture Capitalists At Work. “I have a triangle in my head — functional skill, raw intelligence, personal turning radius. Smart, hard-working, and paranoid together kind of radiates raw horse power.”

Just last week, we talked about the war for top talent that’s currently being waged in the industry. It’s tough for young startups that haven’t yet closed those mega-million funding rounds to compete with the Facebooks of the world, which will always be able to offer more money, and more perks. But, if founders are willing to employ unconventional means to pursue top talent, sell the big idea for their business in an appealing and convincing way, they can win the battle for talent with creativity and by effectively wielding their integrity.

“One of the things about ‘A’ people is that they hire people smarter than themselves, and they are actively searching for people with other knowledge that they do not have,” says Howard Morgan of First Round Capital. “They are also passionate and persistent. They are willing to suffer through the setbacks which will come, and not see them as the end of the world.”

Objectivity & Adaptability

That’s why “Objectivity and adaptability” are part of those fundamental traits commonly identified in Venture Capitalists at Work as leading to success. It’s tough, but being passionately disinterested and brutally honest about everything that matters is key. In the book, Gus Tai talks about how it is essential for entrepreneurs to seek the truth, but not to be predisposed towards what they might find out. If it requires having to change direction quickly, throwing untold hours that have been spent on that one route, so be it.

This is where the final traits of the successful entrepreneur come in: Rapid iteration and pivoting. It’s essential for founding teams to operate at high RPMs, iterating on product ideas and pivoting until they find the right product-market fit. The key is always to have the big goal, the big problem in mind, and be laser focused on it, but to be flexible and willing to pivot from idea to idea until one finds the right solution. Those that fail are more often than not unwilling to let go of the original solution. The companies that have iterated and pivoted from earlier, less successful versions are too many to name, but Facebook, Chegg, Groupon, and Instagram have all done pretty well.

In talking to Shah about his experience speaking to countless founders and top investors across the U.S., that’s what struck me most. It’s that so many entrepreneurs think that when pitching VCs it’s all about the business model. That’s not to say that VCs don’t care about your business model or how you’re going to make money — far from it — it’s that they’re just as interested in how they tell the story.

For VCs, whomever is behind the business plan tells the real story. During partner meetings, when investors sit around that boardroom table, hearing entrepreneurs pitch their business, they’re just as interested in how the founder who’s responsible about the business plan demonstrates the knowledge of their customer. Investors, Shah says, want to hear about the whole bullpen — or pipeline of ideas — that founders can turn to should that original business plan fail to make the grade. They want to know that entrepreneurs have put the time and thought necessary into understanding the core problem from 5 miles up and magnified 5 times under a microscope — well enough so that they have viable alternatives.

If you sit in that pitch meeting and don’t demonstrate both a subtle and deep understanding of what your customers really need, if you can’t present a workable structure under which the business can iterate and pivot until the right solution materializes — you’re doomed. So, it’s not just about a willingness to be flexible six months from now, it’s being able to demonstrate a level of preparedness and a fullness of understanding that makes maneuverability a given from to get-go that will make you and your team appealing to investors.

Venture Capitalists at work is full of tremendous insight like this, and with analysis of more than 70 success stories of billion-dollar companies like AdMob, Bebo, Chegg, Facebook, LinkedIn, PayPal, Twitter, YouTube, etc., there are plenty of opportunities to find material that’s applicable to your business. And if that doesn’t convince you, the gushing review that sits prominently on the back cover of the book comes from Ron Conway — the Chuck Norris of venture capital.

For readers looking for more on this subject, you may also want to check out this recent guest post by Onswipe CEO Jason L. Baptiste, in which he shares an excerpt from his latest book The Ultralight Startup: Launching a Business Without Clout or Capital.

You can find Venture Capitalists at Work both in print and in eBook form here. More in the slideshow below:

Article courtesy of TechCrunch

Wow, Pinterest’s porn section is fairly tame. I was just curious about the type of not-so-mommy-friendly content that might be popping up on what’s now the third-most popular social network after Facebook and Twitter. (Also I’m bored). After all, Tumblr houses, like, a lot of porn.

Both services aim to help their members find platforms for self-expression, one through pinning images for inspiration, the other through blogging, and both have also had to fight unwanted content on their networks.

For example, both Tumblr and Pinterest recently implemented changes to their Terms of Service banning self-injury and self-harm. This includes the cult of the “thinspo” posters, who like to find “inspirational” imagery encouraging and celebrating their anorexia-induced starvation.

Tumblr seemingly took a more proactive stance in its bans, announcing it would apply the policy on a blog-by-blog basis. And yet today, thinspo searches on Tumblr bring back hundreds of posts of jetting collarbones, ribs poking out, thighs that don’t touch, and more. Sadly, these are mostly fashion industry photos, so what can you do?

Pinterest, which enacted a similar ban on thinspo and other self-harm imagery, a month after Tumblr did, has also apparently had a tough time keeping thinspo off its site. Searches reveal this is still a popular topic for its users.

Even Instagram isn’t immune to this community, which is incredibly tough to police. When is a photo art, versus something encouraging a disease?

That’s why it’s interesting how the three social services far on other NSFW topics. You know, the dirty ones. There’s no #porn or #sex on Instagram, at least not that which you can query up by tag, that is. Depending on when you query it, the #porno tag is either pretty lame or shows full-on nudity. #Pornstar is about the same. But then someone told me about #pornstagram, and yep, there you go. Plus, all those pictures are tagged with other words that can lead you down the Instagram rabbit hole of shame. (To get to the raunchier stuff, you have dig into the tags and accounts of the users posting the images).

Pinterest, I first thought, was much cleaner. Apparently, there, porn means food porn, art and kind of silly posts (Kermit watching a nature show with frogs doing it, e.g.). A search for pornstar gets a little dirtier. But guess what mommies like to post? (hint: it’s not T&A) Still, the section itself is very small. (The section, I said.) But seriously, even searches for a certain “c” word return pictures of chickens. I guess women really do prefer recipes and shopping to hot, hot sex? Then I found some other boards. Oh, I guess not.

Tumblr however, gets freakin’ filthy. I mean, really, really #NSFW. It’s been said that Tumblr’s secret to success is its adult content. Several years ago, that was probably true. Today, Quantcast’s Tumblr subdomains’ stats show that content has diversified quite a bit. No longer are adult sites the majority of the top destinations on the network. But did it scale on top of porn? Of course it did. And those sites are still out there, if you dig through the subdomain rankings.

And let’s get real here: Tumblr’s own content guidelines have long stated that it’s A-OK with porn. Just tag it #NSFW and don’t upload adult videos (embed, them, says Tumblr).

Why is this important? Well, maybe it isn’t. I mean, this is the Internet after all, it’s not all kittens and rainbows out there. It’s not a new problem either. (Hi,Flickr).

But I find it funny that the services are taking the time to worry about the sad, disturbed kids cutting and starving themselves, and yet, aren’t worried all that much about the fact that they’re hosting teens’ posts and photos alongside some very, very adult content. At least some porn sites have the decency to make kids do a little “what year were you born” math before seeing this kind of stuff. There’s not a warning message in front of http://www.tumblr.com/tagged/nsfw, but Tumblr does tone down what you see if you’re not logged in. (The company says it has developed several “tools for filtering and warning users about ‘nsfw’ content,” and will soon be adding more.)

Look, porn has its place in society, and always will. And, really, it’s fine if all these user-gen content services want to host it. And it’s fine if you want to go check it out. I don’t care. But let’s not rave too much about they have the best interests of kids in mind when they launch outreach efforts to save kids from the evils of thinsporation and whatnot.

They have a nifty PR campaign, but at the end of the day, they’re fine with porn. And they’re not that concerned about what kids see on their site. And, yes, some of this stuff still matters.

Pinterest has 11 million registered users.

Tumblr, 50 million blogs (some users have multiple blogs)

Instagram, some 50 million users.

Image via badkikgirl on Instagram

Article courtesy of TechCrunch

Editor’s note: James Altucher is an investor, programmer, author, and entrepreneur. He is Managing Director of Formula Capital and has written ten books. His latest books are I Was Blind But Now I See and 40 Alternatives to College. You can follow him on Twitter @jaltucher.

Warren Buffett is like my ten year old. When she gives me some BS story about something she needs to or something she is suggesting there’s always a good reason for it. But whenever there’s a good reason, there’s always a real reason. And the two are starkly different. My job is to figure out the real reason while horse vomit is still spitting out of her ten year old mouth.

With Buffett it’s the same. He’s like this saintly investor who can do no wrong in the public perception.  He’s America’s grandpa investor, filled with sexual innuendos made honest and funny in that way that elderly people can transform ancient history into metaphor. And while he’s talking and you’re smiling, he very quietly tries to put his hand in your pants, on your wallet. It’s all innocent. Until you realize he just got more rich and you got more broke. And then you’re in handcuffs. And then you’re dead.

Let’s look at his hidden agendas. Just like we should always look at the hidden agenda of anyone who has power over us (even my ten year old, who has infinite power over me). There’s nothing wrong with having hidden agendas. It’s just better to be aware of them than to be fooled by them. As background, I’ve attended his annual meetings, I’ve written a book about him, and probably hundreds of articles about him.

A) He declared nuclear war on the US. This is a slight exaggeration but in 2001, almost immediately after the 9/11 events, he said on national TV that there was almost a 100% certainty that there would be a “nuclear event” on US soil within the next 50 years. He had no evidence to back this up. He said this when the US was at its most fearful. Living only 4 blocks from Ground Zero I took his words as gospel and I was very afraid and would have nightmares at night. After all, Warren Buffett has the trust of the nation and he’s saying we are going to be attacked by a nuclear event. I could only imagine it would be right near my home, where I had 1 kid, and another on the way. In part, I ended moving far away because of this.

So what’s the reality of why he said this? Well, he has the largest insurance company in the world. Guess what? Suddenly he created a new market for himself. He’s the best businessman and salesman alive. He started insuring major events for nuclear catastrophes. After all, “there’s a near certainty” that one will happen. He made probably hundreds of millions of dollars over that one statement that instilled such fear in the nation.

B) He has his hand in my wallet. The guy has made billions of dollars by exploiting every possible situation he could. That’s fine. That’s what capitalism is. I’m a capitalist. But take your stinking hand out of my wallet, you dirty ape. Why do you care how much someone is taxed? You say there is going to be societal unrest unless the people who provide funding for companies, create jobs, invest in innovation, are taxed? Societal unrest? Why not encourage that innovation instead of trying to steal everyone’s money straight out of their wallets. Why not shut down our various wars and 150 military bases if you want to pay down the deficit. There’s a million other ways to do it than putting your hand in everyone’s wallet.

C) He pretends to give to charity. I have nothing against giving to charity. In fact, I often think people give to charity for the wrong reasons and don’t really understand much about the charities they are giving to. Buffett has said repeatedly he won’t give charity because he thinks its better for him to compound his money and then give upon his death, which is what he is doing with the Gates Foundation (and which he has already started to do). So suddenly he is labeled as the greatest philanthropist ever, when, in fact, he has barely given a dime to charity. Except in one case:

D) He lies about his kids. He often says his kids will get basically nothing from him. He says, nobody should win the “genetic lottery”. In fact, there’s a notorious story where one of his daughters had to buy a necklace from Zales Jewelry (which Buffett owns) on a layaway plan.

Meanwhile, Buffett has given each of his kids a charitable foundation with billions each to manage. If a foundation has $3bb in it, then something like $90mm can go to salaries. I think his kids will do fine with that kind of money. Buffett barely spent time with his kids when they were growing up (this is well-documented in every biography about him), he lies about how he gives them almost nothing, but meanwhile, they can make $90mm a year salary. I don’t care about any of this. Just stop lying to us all about parental values and lecturing people on how much they should leave their kids. It’s all BS and once again, take your hands out of my wallet.

E) Taxes, part II. Despite his ongoing demands that people pay more taxes, Berkshire Hathaway has been in an ongoing tax dispute with the IRS since 2002. In other words, he doesn’t want to pay taxes (note how he conveniently avoids the estate tax by giving it all to charity upon his death) and his company doesn’t want to pay taxes. Why is this? Because he correctly believes that he is a better allocator of money than the US government. Well, I think I am also and most people are (I wouldn’t send little kids to fight 5 wars for instance). So why is Buffett so insistent that everyone pay more taxes than him? Think, people, what his real agendas are.

F) He’s not your Grandpa. Everyone loves Buffett. He has fun sexual metaphors to describe complicated business situations (in the 70s when he found lots of cheap stocks, for instance, he felt like a kid in “a whorehouse”). Every annual meeting is usually filled with fun sexual innuendos and everyone laughs. “Oh, that Warren”. He has a small house on a suburban block. When I was in Omaha a cabdriver even offered to drive me past there. It really was a small house on a suburban block! That’s amazing! He’s so humble! I don’t know what homes he owns now but at least in the past ten years he owned this nice Laguna Beach $4mm home:

Again, nothing against him. It’s just that my grandpa doesn’t own a home like that.

G) Stocks forever. But it’s because of this “Grandpa” image that he’s able to say things to people like they should “buy and hold stocks forever” and people listen to him. Of course he wants you to hold a stock forever. Let’s say he owns the same stock as you. You own 10,000 shares and he owns 20 million shares. If things start to go down with that company you have an enormous advantage over Buffett. You can sell in one day, in one trade even. It might take him months to sell. Buffett does not buy and hold stocks forever. Just in the past six months alone he’s sold hundreds of millions worth of Kraft Foods and Johnson & Johnson.

[See also, "10 Reasons To Never Own Stocks Again" or "Who Really Makes Money on Wall Street"]

H) Healthcare. Despite Buffett’s support of Obama (he can support whoever he wants, I could care less) it’s interesting how he has common sense when it comes to Obamacare, saying that it is insufficient. However, even though I believe this also, I still think its worthwhile looking carefully at his agenda. Of course he is going to criticize any system that puts stress on the insurance industry. He’s the largest insurance company! One of his criticisms stated that the “medical industry is very focused on maintaining it’s income”. Duh! Again, Warren, keep your hands out of other people’s pockets. By the way, my own personal feeling, which I believe Warren supports, is that companies like CVS (which he just bought shares of ) and Wal-mart should continue to open cheap healthcare facilities to provide lower cost medical care. This is the real direction of healthcare right now. Not over regulation.

Meanwhile, even more revealing about Buffett’s opinion on healthcare is his statement to John Gutfreund during the 1987 RJR Nabisco battle documented in “Barbarians at the Gates”: “I’ll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It’s addictive. And there’s fantastic brand loyalty.”

Great stuff, Warren. According to cancer.gov, of the “250 chemicals in nicotine, over 50 are known to cause cancer.”

I) Is he a straight shooter? Buffett has long been known for his honesty and forthrightness. Little is brought up of his penny stock manipulation in the 70s (the SEC slapped him on the wrist ). Far worse were the financial transactions Gen Re arranged for AIG so AIG could produce fraudulent results that lifted its stock price. It’s these manipulations that, in part, caused the AIG collapse and part of the collapse of the entire economic system. Buffett’s firm paid a $90mm fine (give or take). A slap on the wrist. Did Buffett know what was going on? “I saw the contract” was all he admitted to.

J) For more, see my post: “8 Unusual Things I Learned From Warren Buffett” including his worst investment ever (not what you would guess) and his being a victim of reverse antisemitism (cruel irony considering his father was a John Birch republican)

I don’t think Buffett is a bad guy. I don’t know him. I have no personal opinion of him. But he’s not your grandfather. Like any hard-core investor, he’d slit your throat in a dark alley before letting you make a dime of profit off of him.

My main point is: always look at agendas. Try to understand the real reasons behind someone’s “good reasons”. And yes, I know there will be comments like “blah blah Buffett is 1000x the investor and man you are.” He probably is. I’m probably a worse punk thank he is. But I admit it. Also, before anyone brings it up: why is this on TechCrunch? Buffett has long commented that “tech is too complicated for me to invest in” and yet now he is one of the largest tech investors on the planet with his investments in IBM, INTC, and DTV. When someone who is so good at crafting agendas turns his eye towards you, you better keep your hands on your wallet.

Article courtesy of TechCrunch

If social media mattered in elections, Ron Paul would have a realistic shot at being the Republican nominee and Barack Obama would be on track to crush Mitt Romney in the biggest landslide in American history.

Despite the hype over follower counts, a new study shows that there’s no credible evidence that Twitter can be used to predict how elections will turn out. “It can be concluded that the predictive power of Twitter regarding elections has been greatly exaggerated,” writes computer science professor, Daniel Gayo-Avello, in an unusually strident rant (for an academic). Gayo’s conclusions are intuitive: social media users are an unrepresentative slice of voters, and tweets may not accurately reflect how voters behave.

And, his principles apply not to just Twitter, but to all social media. In reality, much of a candidate’s social media “fans” are a composition of individuals who are not swayed by campaigns: reliable supporters, opposition spectators, and the growing army of non-voting 20-somethings.

Let’s look at the numbers: Paul has five times more Facebook fans than Rick Santorum (950K vs. 189K) and about 50% of the current front runner, Mitt Romney (1.67M). Yet, Santorum narrowly lost to Romney, and Paul lost by a landslide to both. In other words, the number of social media followers has little correlation with electoral wins.

Aware that raw follower count is an empty campaign asset, social scientists have attempted to analyze whether social media “sentiment,” or tone of the discussion, can reveal how much a candidate is liked, and therefore which candidate would win an election. According to arguably the top social media analytics firm in the industry, Crimson Hexagon, Paul outperformed all of his conservative counterparts as measured by total volume of Twitter mentions. Twitter chatter around Paul was of 26% of the total political conversation in the run up to the New Hampshire primary, while, Mitt Romney, the actual winner, had 22%. Paul, too, had a slight popularity advantage, with relatively more positive comments about him then his duller opponent (12% positive and 14% negative for Paul vs. 9% positive vs. 13% negative for Romney)

Why is social media such a false temptress for campaigns? First, Twitter is largely a shouting match among a small percentage of of hyper-vocal users: 50% of the most influential tweets are produced by the top 0.05% of users and most users are inactive [PDF].

And, the lopsided political demographic of Internet users doesn’t end with Twitter. For instance, the legalization of marijuana continues to haunt President Obama whenever he’s asked questions from an Internet audience (whether on YouTube or through the giggly Twitter representative of Jimmy Fallon). And, while, yes, the war on drugs is an important issue to discuss (read: please don’t send me hate mail), we get the false sense from the Internet community that legalizing marijuana is more pressing than the combined threat of a recession, terrorism, a broken education system, and a nuclear-armed Iran. In other words, the “vocal minority” drowns out the voices of the “silent majority.”

Second, while young people dominate social media, they vote in negligible numbers. “If no one under the age of 30 had voted, Obama would have won every state he carried with the exception of two: Indiana and North Carolina,” write Chuck Todd and Sheldon Gawiser in How Barack Obama Won. More than any other generation in the past century, Gen Y is inundated with a peculiar brand of politically engaged, non-voting citizen, who would rather pitch a tent in Zuccotti park than schlep to a polling booth on election day (side note: are you listening Occupy Wall Street?! This is why the Tea Party is kicking your political butt).

So, when election day comes around, arm yourself with some healthy skepticism against amateur statisticians stoking the social media hype. For example, In 2010, the Facebook politics page put out a misleading post, “Facebook Fans Help Predict More Than 70% of Key Races.” The statistic is technically true, but correlation does not equal causation. Politicians with more Facebook fans are likely more popular with voters anyways, not because they had a crack social media team who could boost their fan count.

Additionally, while 81% of Senate candidates with more Facebook fans did win their race, 83% of incumbents also won re-election. Incumbents are simply more popular, both because they have the advantage of political office and because opponents want to follow their social media feeds by “fanning” their page. In this case, Facebook fans are paraded around as a key variable, when, in fact, Facebook fans are likely a symptom of popularity, not the cause.

This isn’t to say that social media is an inconsequential player in the political landscape. Candidate Barack Obama did more than broadcast press releases in 140 character chunks; he engaged fans, pioneered tools for organizing, and inspired a culture of viral artistry. However, since 2008, the world hasn’t seen much in the way of election innovation. Ultimately, it isn’t who’s listening, but who’s acting.

[Top image via researchgirl/Flickr.]

Article courtesy of TechCrunch

The Olympus OM-D E-M5 is arguably the best micro four-thirds camera Olympus has to offer. We’ve had issues with past m4/3 iterations like the EP1 and EP3, like awful color reproduction and slow auto-focus. The same problems don’t persist here, and anything that impresses John on the photography front is a rare gem certainly worth consideration.

In terms of specs, we’re looking at a 16-megapixel sensor with removable flash, a digital viewfinder, and obviously interchangeable lenses working with a retro design. It’s compact, and in the words of John, we “really like the solidity of the device.”

In his testing he also found that it’s quite fast to shutter, and that color on this thing is a huge improvement from past iterations. Our one issue of resistance would be the price point, but the best of the best deserves a high price point, which in this case is $1,000 for the body alone ($1,200 with lens).

Article courtesy of TechCrunch

EveryMove, an alum of TechStars’ Seattle accelerator program building what they’ve dubbed a “mileage plan for health benefits, today announced that it has closed a $2.6 million round of series A financing. Participating investors include Penera Blue Cross, Blue Cross, Blue Shield of Nebraska, BlueCross BlueShield Venture Partners, Founders Co-op, Summit Capital, Jonathan Sposato, Voyager Capital Partner Geoff Entress, Matt Shobe, William Lohse, BuddyTV Co-founder Andy Liu, Ken Kuntz, and others.

As the startup is currently in private beta, it will be using this infusion of capital to ramp up its team as it prepares to launch into the market more broadly in the third quarter.

So what is EveryMove all about?

Founder and CEO Russell Benaroya tells us that the way health care is set up (in the U.S.) today, the people making healthy lifestyle choices end up subsidizing those who are making unhealthy decisions; instead, they should be rewarded for it. If the country is going crazy for consumer-centric healthcare, then that inherently demands that people be given control over their health (and healthcare).

EveryMove is looking to give consumers control by way of an interactive web and mobile platform that helps them connect and organize their health and fitness activities while turning their lifestyle actions into rewards and incentives within their health plans. The market has been primarily focused on “wellness” and “behavior change,” but wellness, Benaroya says, happens to crowded and employer-centric, while behavior change is actually really hard to get right because building a “one size fits all,” scalable platform tends to do so by sacrificing the individual.

In turn, health providers have less than growing reputations among consumers (let’s be honest here — just ask Castlight) so they’re looking to build closer/better relationships with their customers. Generally speaking, to do this, they’re looking to partner with them to encourage actions that have a positive outcome on their long-term health — and their wallets. (This latter part is, admittedly, hard to believe given where their interests lie, but again, see our Castlight coverage.)

In other words, U.S. health insurance premiums increased by an average of 8 percent between 2008 and 2009 (which has gotten worse since) and health care costs comprise a bigger portion of America’s household budgets year-over-year than most others as costs rise and income growth remain flat. As a result, Americans are trying to be smarter, make better lifestyle decisions to avoid going to the doctor, and EveryMove wants to reward them for doing so.

Instead of going after wellness or behavior change, EveryMove is taking a different approach: Marketing. The service connects people through their lifestyle actions, which are captured through the passive collection of data via health apps, devices, and platforms, with companies that want to engage those healthy customers. This can be plans, employers, or brands, the EverMore CEO tells us, but, importantly it’s the consumer that gets to main control of their data — data which is portable and isn’t tied to their employer or insurance company.

EveryMove plans to monetize its platforms on a cost-per-action basis by taking a fee when users redeem rewards or incentives from their plan, brands, or employer. As EveryMove plans to sit in the middle of the marketplace, it takes a toll on each transaction.

Benaroya has been working on EveryMove for the last two years, working closely with Premera Blue Cross, he says, to understand their goals and objectives as the healthcare landscape changes. Benroya himself is a co-founder of Blink Digital Health, REM Medical, and a former senior associate at Blue Point Capital Partners. Taking the customer development work with the insurance plan and his experience with the marketplace, the founder has been looking to build something that’s not just a “nice to have” app, but a “need to have” source of information that will be critical to core business decision making.

The founder also sees real opportunity long-term in big data around lifestyle analytics — how that data and info can help inform decisions companies are making around positioning their products and services.

The ability to offer health plans that provide customized incentives for leading healthy lifestyles “is key to helping meet both employer and individual needs,” says Kent Marquardt, the executive vice president and CFO of Premera Blue Cross. (Premera is also an investor.) Programs like EveryMove, he says, can help them find better ways to do just that.

For more on EveryMove, check them out at home here. Below you’ll find Benaroya’s pitch from TechStars’ Demo Day:

Article courtesy of TechCrunch

People deal with the pain of online hotel search is different ways. For many, it means spending hours and hours of research spread across dozens of browsers tabs. In my case, I usually throw up your hands and say, “Screw it, I give up, I’m just going to pick an affordable hotel that doesn’t look completely terrible.” Either way, there’s something broken here — the fact that without being there, it’s hard to tell what a hotel is really like.

That’s what a startup called SimpleHoney is trying to solve. It was co-founded by Eric Nakagawa (a software developer who created the famous Icanhascheezburger blog) and Joyce Kim (a former corporate attorney who was previously CEO of Korean pop music site Soompi.com and is probably best-known to the startup community as co-host of the GigaOm Show).

Kim, who’s the company’s CEO, walked me through the sign-up process: When you create a SimpleHoney account, you’re asked for some basic information about your travel preferences, and the site starts recommending hotels based on those preferences. You can also fill out a longer quiz, answering questions like what you prefer to do on vacations and how long your trips normally last. Then you’ll be assigned a travel personality type (if you’ve ever taken a personality quiz on a dating site, this will be kind of familiar), which is used to refine the recommendations.

In other words, you’re no longer choosing a hotel based solely on the price and a star rating, but on how it actually fits with your personality and preferences. (And since SimpleHoney stores your personality data, you won’t be starting from scratch the next time you plan a trip.) Behind the scenes, the SimpleHoney team is doing a lot of footwork to make sure the hotel recommendations are accurate, including interviewing the management and visiting the locations.

If you think of yourself as someone who doesn’t have travel preferences, well, so did I, but as I filled out the survey, it backed up what Kim was telling me: “People don’t realize they have a travel style until they go through this.” You may not care about staying in the fanciest hotels, but there’s probably something that matters to you, even if it’s having the cheapest and most convenient experience.

One thing you may have noticed was missing from the description: Any information about where you’re traveling. That’s because SimpleHoney is a bit limited right now — it’s only listing hotels in San Francisco (where the company is based) and Hawaii (where Nakagawa is from, and where the team retreated to build the first version of the product). Also, the website doesn’t support bookings yet, instead pointing you to the hotels’ websites. That’s going to change this summer, first with the launch of booking capabilities, then with expansion to new markets.

Looking further down the road, Kim says SimpleHoney can also allow hotels to target deals based on user interests. For example, she’s a big surfer, so a hotel could try to lure her by offering free surfboard rentals. Another possibility she mentioned is collaborative trip planning, where you and your travel buddies get group recommendations based on everyone’s preferences.

If you’re interested in the idea but plan to wait until there are more features, you should still sign up now — SimpleHoney says it will charge a one-time $100 membership fee (because members will have access to unique “amenities, perks, experiences and rates”), but it’s waiving the fee for early users.

The company has raised a seed round from Socialcast and About.me co-founder Tim Young, Mochi Media co-founders Jameson Hsu and Bob Ippolito, former Middleware Company CEO Ed Roman, Causecast founder Ryan Scott, and 500 Startups’ Dave McClure. Nakagawa and Kim also invested.

Article courtesy of TechCrunch

Two big pieces of news today for First Round Capital — a sign of more growth, and more opportunities, at the early-stage VC firm: the company has closed on another fund, and it has created two new partners, Phineas Barnes and Kent Goldman. Previously both had been principals with FRC, which they each joined in 2008.

The move signifies the focus that VCs are keeping on early-stage investment and the efforts they are making to find the best entrepreneurs and startups to fill out their portfolios by putting strong talent into their teams. Barnes and Goldman will join existing partners Chris Fralic, Rob Hayes, Josh Kopelman and Howard Morgan.

Kopelman notes that the new fund, First round Capital IV, will be the same size as its last fund, $135 million, and that the investor base will also remain the same.

“Every single one of our existing institutional Limited Partners has recommitted to our new fund – and we are honored and thankful for their continued support,” he wrote in a blog post. We first reported on this fund back in April when we noticed the SEC filing announcing it.

He also notes that the company will continue to remain focused on seed-stage investments. “We believe that the first 18-24 months of a company’s life are a special time – where the DNA of a company gets established.  And seed-stage is the only place we play.”

Meanwhile, Barnes says that there are no new specific investments being announced alongside the news, and that in large part it will be business as usual for him and Goldman: the two will continue to work on firm initiatives like Office Hours and the Plus Startup speaker series, in addition to their core investment activities.

“In many ways the change in status reflects a title catching up with the reality of our responsibilities,” he told me earlier. “We will maintain our focus on helping them build great companies by leveraging our time, our personal networks, and the fantastic products, services and events available through the First Round Network and our active community of world class entrepreneurs.”

Just as FRC itself has grown from being a single office outside of Philadelphia to a business with additional offices in San Francisco and New York, funding some 185+ companies, the market for seed and early-stage investment has also boomed in the last several years — both in terms of the VCs offering it, and the startups seeking it.

“I think this is good,” Barnes told me. “More access to capital at this stage means more ideas get funded, but it also forces the sources of that capital, including First Round, to innovate and provide meaningful value beyond the check that we write.”

Barnes notes that at FRC this has translated into a lot of activity around what FRC calls the “Platform,” run by Brett Berson, which includes engineers on staff that build products and a team dedicated to other services and events to help portfolio companies.

He says that these extras are essential value-adds in today’s world of easy funding, where a VC has to stand for something more: ”When a watch can raise $7 million on Kickstarter, investors have to add significant value to be relevant to the smartest people who are building the stuff that will change the world.”

In terms of what companies are exciting Barnes and Goldman (and the rest of FRC) these days, it seems to be a moving target based on how the target customer is being engaged. “I tend to start with the end user and if there is magic in that interaction, if a company is creating an experience that changes the way the end user does something (the way they learn, the way they buy, the way they manage their money, do their job or engage with their health) I am inspired and want to learn more,” he told me.

The respective experience that the two have are nice bookends to the life of a tech company: from startup stage to huge global entity. Barnes was the founder of ResponDesign, an independent video game company. Meanwhile, Goldman spent years at Yahoo (before it, in the words of Michael Arrington, it started to get “ridiculed” in 2008).

First Round Capital has already made a pretty big impact in the startup world, as evidenced by some of their portfolio companies. They include car service Über, mobile payments company Square, social network Path, and Simple, as well as a number of e-commerce investments like Warby Parker, Birchbox and Fab; and a few B2B properties, too, such as Monetate.

Article courtesy of TechCrunch

In recent years a flurry of electrified two-wheeled motorcycles and scooters have emerged from companies like Zero, Brammo, Mission Motors, BRD and Evolve. While some are still in the prototype phase (I’m looking at you BRD!), others have shown rapid advancement to meet rider needs, preferences and performance. Though they’re still light years away from their gas-powered counterparts, the release of Brammo’s 100MPH and 100-mile range electric motorcycles later this year will undoubtedly turn some heads.

Originally announced in July 2010, the Oregon-based startup today announced both pricing and availability for the Empulse and Empulse R. During a demo earlier this month in San Francisco, the changes made from the original Enertia were glaringly apparent to me from two feet away. Having ridden the original Enertia, I can say that it wasn’t the most pleasant riding experience. Not that it was uncomfortable by any means but it didn’t feel like any motorcycle I’d ever been on. Geometry on the Empulse is much more akin to something between a Ducati Monster and a supermoto. In other words, I’d have no problem riding the Empulse on the pothole-riddled streets of Manhattan or in the twisties. And if I really needed to carry a passenger I wouldn’t hesitate to throw one on the pillion either, a first for an electric moto. Though I didn’t get a chance to actually ride the Empulse, I’m looking forward to a bit of seat time later on this year.

Other than seating position, range and top speed, you might be wondering what else makes the Empulse special. That’s easy to answer, too. For starters, it has a six-speed gearbox and regenerative braking (similar to engine braking) like a normal motorcycle. Brammo’s Brian Wismann, Director of Product Development, told me that he hasn’t had to change his riding style in any way, especially when it comes to entering or exiting corners at speed thanks to upgraded parts like brakes and suspension. He rides a BMW S1000RR, so I’m inclined to believe him.

More importantly, the 9.3 kilowatt battery driving the bike can be recharged in 3.5 hours from your standard plug. And the startup process is basically the same as any gas-powered motorcycle.

Priced at $16,995 the baseline Empulse is equipped with an assortment of Italian made components similar to those on the Ducati 848 StreetFighter. The Empulse R fetches an additional $2,000 and includes a plethora of carbon fiber farkles like front and rear fenders, headlight shroud, tank and tail. A limited run of the Empulse R will come off the line in June and based on demand could hit full production in Q3. The Empulse, unfortunately, won’t be ready till Q1 of 2013. Check out Brammo.com for more details.

Click to view slideshow.

Article courtesy of TechCrunch

In my four-plus years covering tech, I don’t think I’ve ever met another blogger who was happy with the search feature on their website. The options range from terrible to functional, but it’s never good, and I’ve always found that it’s easier to just search via Google.

Apparently Matt Riley and Quin Hoxie saw the same problem when they were working at Scribd. So they left to build a better website search engine, one that they’re calling Swiftype. The startup was part of Y Combinator’s latest class of companies, and it’s launching today.

What makes Swiftype better? For starters, Riley and Hoxie say that unlike Google Site Search, it’s not just taking Google’s global web rankings and filtering them for one website. Instead, it builds (in Hoxie’s words) “a PageRank that’s specific to individual websites.” So it looks at the signals of importance on your website and prioritizes content accordingly. For example, if you link to anything from your front page, that’s a pretty big signal that it’s important to you and should be ranked highly.

On top of that, Swiftype also allows site owners to pin and unpin different items to the top of their search results. If you’re a news site, that might mean pinning the most popular and best articles, or it might mean promoting content that’s related to an ongoing sponsorship campaign. And Swiftype offers a set of tags that publishers can include in their pages to show which content should be surfaced in the results.

Other features include analytics data and auto-complete for people typing in their search.

Riley and Hoxie showed me the process of creating an engine for your site. You point Swiftype at the URL, and it crawls the site multiple times, refining the results as it goes. Then you can adjust the rankings to your liking, choose from a couple of different layouts, and finally grab some code to add to your site. (Among other things, Swiftype is supposedly easy to integrate with Tumblr.) In other words, there’s virtually no technical work required from the publisher — something else that distinguishes Swiftype from the various other search products and open source libraries out there. At same time, companies who want a little more control can access Swiftype through its APIs.

Swiftype has been working with a few beta customers, including Twilio, TwitchTV, Parse, Listia, and Fastly. These are technically sophisticated companies, so it’s not like they couldn’t build their own search features, but Riley says they realize it’s “not their core competency,” so they’re looking for something like Swiftype that’s “dead simple to use.”

Article courtesy of TechCrunch