Hot or Not Tears Itself Apart, Reinvents

When James Hong and Jim Young founded HotorNot in October, 2000, they had no real plans for the service to be anything other than a fun site for a few friends. They turned a free low end computer they received for setting up an etrade account into a web server, launched the site from their house in Mountain View, California, and emailed 40 friends. By the end of the day, 40,000 people had visited the site, which now had 30 second load times.

It wasn’t too long before the service was hosted at RackSpace and the users were flooding in to rate user-uploaded pictures of themselves on a scale of 1-10. In January 2001 they added a dead simple dating site. Instead of reading endless profiles and trying to find a connection, users just say yes or no to a given picture. If it’s a yes, the other person is shown your picture the next time they look through profiles. If they like you as well, a connection is made. The Money Rolls In

Until last month, HotorNot was free until that last crucial stage when two people wanted to meet each other. At that point, one of the members (usually the man, Hong tells me) must have been a paid subscriber, which costs $6/month. Hong says their conversion rate was extremely high - 15% of active users eventually upgraded to premium accounts.

The premium revenue, plus advertising and fees for virtual flowers, soon topped $600,000 per month. Nearly all of that was profit for the two founders, who reportedly pocketed $20 million or so between them over the years. The company has never raised any outside funding.

In the last year though a few competitors have popped up (see yesnomayb, a copy of the business model) and a number of free dating sites also started to eat away at traffic. Traffic started to drift sideways, and the developers were getting bored at doing little more than site maintenance. Going To A Free Model

That’s when Hong and Young decided to rip apart their business model and remove the requirement for members to have premium accounts to talk to each other. A month ago, the requirement was turned off, and about $500k/month in revenue disappeared overnight. The founders also turned the company into a proper “C” corporation and issued stock options for the first time to all employees.

(I can’t help thinking that if HotorNot took venture financing somewhere along the way, they would not have been able to get their board of directors to agree to this.)

Hong says this lit a fire under the company, which is now running on reserve cash of a few million dollars. So far things look good. Traffic jumped over 60% - 10 million people visited the site in the last month, up from 6 million the month before. Advertising and virtual gift revenue spiked, and the site is now break even even though they killed their largest revenue stream.

Hong and Young aren’t stopping there. They have plans to expand the site greatly and say they will launch new products in the coming weeks.

Whether this works in the long run is yet to be seen. But the company wanted to try something new, and the founders took enough money off the table to be comfortable for life. Entrepreneurs tend to have a screwed up way of measuring risk - the more the better - and these guys are no exception.

RSS Feeds for Tags at Amazon.com

Amazon’s Customer Communities team has rolled out broader support for tag-based RSS feeds, according to a post from Amazon’s Ian McAllister.

The new functionality has been soft-launched and isn’t currently available on all Amazon pages. Support will become available across the board in the coming weeks.

The option allows subscription to feeds specific to the user’s interests and subsequently would also allow for the creation of widgets and mashups using the data created.

For those using the Amazon Associates Program, tag based feeds also support Affiliate Links.

Examples on the new feeds can be found here.

ThinkFree to Add Flickr Style Community Features

Online office suite ThinkFree joins the community sharing crowd Tuesday, with the launch of a number of new features.

The new (beta) version of ThinkFree Docs will allow users to search, share, tag and publish Microsoft Office and ThinkFree documents in an online social community, much in the same way that Flickr allows photographers to publish and share photos.

I’m told the thinking from the ThinkFree team was to get these features out to users now, with aesthetics to follow. And yet from what I’ve seen of the new service, I can’t fault the look. The new community tools build on an already pleasant interface, having nearly a YouTube feel to them (minus the videos).

The addition of tagging is immediately evident. Documents viewable by the community now come complete with ratings, embedding code, comment fields, downloading options and the obligatory post this to Digg/ Furl/ del.icio.us buttons. In many ways it’s moving into the territory previously claimed by Scribd, the new features at ThinkFree share a lot of similarity with Scribd, and yet they are not exclusive unto themselves, building upon an already very smart online Microsoft Office alternative.

Thinkfree currently has 275,000 users. Previous TechCrunch coverage here and here.

Useful Alt+Tab Replacement Power Toy

For those of you who use the Alt+Tab key combination to switch between open windows on your desktop, I am sure you have encountered times when you cannot distinguish one window from the other due to having more than one instance of the same program open.

Microsoft became aware of this draw-back after releasing the XP operating system and subsequently released a "Power Toy" to resolve this issue. The Power Toy resolves this issue by replacing the program icons with actual screenshots of your open windows. This way you can locate exactly which window you wish to switch to, which is immensely useful when navigating between several SAP windows at one time. Here are pictures of using the Alt+Tab key combination both pre- and post- installation of the Power Toy:

As you can see in the first example above, it is impossible to differentiate between the IE instances and the SAP instances by looking at the icons. In the subsequent example, the screenshot clearly differentiates the windows.

Here are the instructions to install:

-Copy URL to browser: http://download.microsoft.com/download/whistler/Install/2/WXP/EN-US/TaskswitchPowertoySetup.exe

-Choose "Run" from pop-up dialog box

-Choose "Run" a second time, this will kick-off the installation of the Power Toy

-Once you get the "Installation Complete" dialog, the toy is successfully installed. No need to reboot your PC.

SlideAware to Add New Features to Presentation Management Platform

Presentation management platform provider SlideAware will be launching new features Monday that build on what is already a useful tool.

SlideAware launched in March with a feature set that included the ability to create a flash version of a PowerPoint presentation, host it on SlideAware and then share a link to the presentation. Whilst far from being alone in offering this functionality, SlideAware offers additional services that make it a better candidate for business use; fine grain access control, including the ability to make presentation private and password controlled, detailed analytics on viewing of the presentation and support for key PowerPoint features including builds.

On Monday SlideAware adds a number of new features:

1. The ability to add notes to specific areas of slides, similar to comments in ConceptShare 2. Rich presence management (picture in picture like preview of slides that other users are viewing and the ability to sync with a single click) & chat 3. The ability to retrieve all notes directly in PowerPoint so that updates can be made

The new feature set will not go astray in strengthening SlideAware’s pitch as a collaborative tool.

The company offers a free version for basic personal use, and paid versions for professional and workgroup use.

Exclusive screen shots of the new features in action as follows:

Attack of the Advertising Widgets

Widgets are being turned into advertising delivery systems. Their nature - rich media applicatons that are easy to build, customize and add to a site - also make them an attractive way to add advertising to small sites. Google is now testing gadget ads, and we’ve written about services like boobox and AuctionAds (a sponsor) that easily ad affiliate advertising to a site via widgets. Last week eBay also launched “to go” widgets that let publishers embed ebay listings into websites, although for now there are no affiliate payments tied to those widgets.

Two more are coming this week. Tonight Silicon Valley-based Tumri is announcing a new product called Tumri Publisher, and Seattle’s Mpire will announce an advertising widget later this week.

Tumri Publisher, which is described here, allows users to create highly customizable widgets that promote specific products on their websites, in exchange for an affiliate or other fee. Tumri has twenty or so direct relationships with ecommerce sites like Overstock, Walmart, Shop.com and others to promote their products. Most advertising pay on a purchase, although at least one partner pays a on each click to their website.

Tumri splits revenue from the advertising 50/50 with advertising, and they say they’ll pay up to 70% of proceeds to larger publishers.

The widgets are javascript powered; the company says Flash versions are coming soon.

Tumri was founded in 2004 and has raised $6.5 million in a Series A round of financing from Shasta Ventures and Accel. They are currently closing a second round. They have 31 employees (16 in India, 15 in Silicon Valley).

Windows Live Hotmail Debuts

Hotmail, perhaps the first major success of Web 1.0, has evolved.

Microsoft has announced the launch of Windows Live Hotmail globally in 36 languages, complete with AJAX goodness.

The new service has been built to be a vast improvement over the previous Hotmail offering, incorporating input from more than 20 million beta testers. However todays offering is only the move from beta to roll out.

We’ve covered Windows Live Hotmail previously: back in February Michael Arrington took a look at the then beta service and the results weren’t positive, the new Hotmail ranking third behind Gmail and Yahoo! Mail.

Windows Live Hotmail launches with an initial 30 million users, with over 250 million additional users to be bought across in the coming months.

The new Hotmail is built on completely new code and marks the continued consolidation around the Windows Live brand.

In the coming weeks, Microsoft will be releasing a new free mail client meant to replace Outlook Express, Windows Mail, and Windows Live desktop. The new client is called Windows Live Mail and will be a desktop client that provides Hotmail’s feature set locally on a users desktop. It will also support management of non Hotmail accounts.

There is some added benefits of logging into the new Hotmail; support is built in to allow Instant Messaging of contacts, or VOIP call contacts, with one click, which will also tie in with the Microsofts desktop IM platform.

My only question is why didn’t Microsoft build on the wonderful foundation that is Silverlight. Instead of promoting a platform that has such wonderful potential, Microsoft has seemingly ignored it with Hotmail. I’m sure in the coming months that others will be more willing to utilize the potential of Silverlight than Microsoft is.

HubPages Debuts New Look, Ad Yield Technology

San Francisco based HubPages, a revenue sharing community content destination, debuts a new look and ad yield technology today, building on a portal that is now attracting 2.4 million unique visitors a month.

We’ve previously covered HubPages here and here: the company took $2 million in funding from Hummer Winblad in August 2006 and on its initial launch in February 06 Michael Arrington asked the question as to whether HubPages was a better Squidoo.

The team behind the service has a particularly strong heritage: CEO Paul Edmondson was previously the Group Product Manager for MSN Entertainment, Jay Reitz was the Development Manager, and Paul Deeds was a developer in Windows Media Internet Services.

The new look follows extensive community consultation with over 14,000 authors across 20,000 hubs. On top of the visible changes that will be evident to the casual visitor, HubPages has included support for slide shows and multiple pictures, forums, and hub grouping tools that allow for easier navigation.

On the advertising side, HubPages officially launches what it’s calling “Behavioral Formatting Yield Optimization” technology. In layman’s terms it works out where advertising works best on each hub and places the ad unit to suit.

I spoke to Paul Edmondson ahead of the announcement. He told me that they currently have a handful of publishers making in excess of $1000 a month from their hub pages, with the top publisher currently making $1800/ month. Although by no means full time incomes, for the average writer these are good figures, decent pocket money for those looking to make money online from writing as a part time pursuit.

The newly announced “Behavioral Formatting Yield Optimization” technology has already resulted in an increase in advertising returns of up to 43% averaged across the board in testing to date.

HubPages currently utilizes advertising from Google Adsense, Commission Junction, Amazon and the beta of eBay’s Contextual Advertising units, with plans to roll out direct sponsorships of hubs in the foreseeable future.

There’s a lot to like about this service. The revenue sharing model is generous compared to others; a straight 50/50 split compared to Squidoo’s 50% of profits only, and publishers are paid direct by the advertiser: advertisements are rotated 1:1 with each publisher’s code and HubPages’ code. The question of Intellectual Property Rights is straight forward: publishers own the content and can do with it as they please.

Having worked in the blogging industry, both as a blogger and blog network owner, I can’t help but think that this is a better model than many blog networks out there currently offer. The flexibility and open nature of content creation at HubPages is a solid idea, the need to deal with payments is gone, and the positive word of mouth from those users making money from the service is bound to drive future growth.

U.S. Teen Hacks AOL, Infects Systems

A New York teenager broke into AOL LLC networks and databases containing customer information and infected servers with a malicious program to transfer confidential data to his computer, AOL and the Manhattan District Attorney's Office allege.

In a complaint filed in Criminal Court of the City of New York, the DA's office alleges that, between December 24, 2006 and April 7, 2007, 17-year old Mike Nieves committed offenses like computer tampering, computer trespass and criminal possession of computer material.

Among his alleged exploits:

-- Accessing systems containing customer billing records, addresses and credit card information

-- Infecting machines at an AOL customer support call center in New Delhi, India, with a program to funnel information back to his PC

-- Logging in without permission into 49 AIM instant message accounts of AOL customer support employees

-- Attempting to break into an AOL customer support system containing sensitive customer information

-- Engaging in a phishing attack against AOL staffers, through which he gained access to over 60 accounts from AOL employees and subcontractors

Nieves faces four felony charges and one misdemeanor charge. He was arraigned on Monday and remains detained, a DA's office spokesman said. His next court date is Friday for a procedural hearing to determine the next step in the case, the spokesman said. Nieves' attorney didn't immediately return a call seeking comment.

The alleged acts cost AOL over US$500,000. It's not clear whether customer data was stolen. AOL declined to comment. The DA's office spokesman said the investigation into Nieves' alleged acts continues. "It's too early to tell exactly what [data] he compromised or not," he said.

The complaint states that Nieves admitted to investigators that he committed the alleged acts because AOL took away his accounts. "I accessed their internal accounts and their network and used it to try to get my accounts back," the defendant is quoted as saying in the complaint. He also admitted to posting photos of his exploits in a photo Web site, according to the complaint.

One doesn't have to be a computer genius to carry out the alleged acts, thanks to the free availability of multiple hacking tools, said Mark Rasch, managing director of technology at FTI Consulting Inc., in Washington, D.C. "Even a disgruntled kid working alone can throw a virtual tantrum and cause a significant amount of damage to a large technology corporation," Rasch said. "Welcome to the new world."

If the defendant was honest about his motivation in his reported confession, it's safe to assume that he wasn't interested in stealing data for financial gain, Rasch said. Still, it'll be interesting to find out what steps AOL is taking if customer data was in fact compromised, he said.

There aren't enough facts available to judge whether AOL could have done more to prevent the alleged intrusion. "We'll learn more as the case goes on," he said. "AOL has had pretty good security over the years."

Authorities arrested Nieves after AOL provided them with information from an internal investigation into the alleged acts. AIM subscriber information and IP address data involved in the acts led AOL to Nieves, whose address and phone number AOL had on file, according to the complaint.

Microsoft's Vista sales boost 3Q profit

Windows Vista buoyed Microsoft Corp.'s quarterly results, easing fears that the new operating system is too pricey, requires too many hardware upgrades and doesn't work with other companies' applications.

For the quarter ended March 31, Microsoft's profit jumped 65 percent to $4.93 billion, or 50 cents per share, from $2.98 billion, or 29 cents per share, in same period last year, boosted by sales of Vista and Office 2007, and by upgrade coupons issued over the holidays.

Excluding one-time items, profit totaled 49 cents per share, ahead of Wall Street's view for 46 cents per share, according to Thomson Financial.

Shares rose $1.20, or 4.1 percent, to $30.30 in extended trading after the results were released Thursday. The shares had gained 11 cents to close at $29.10 on the Nasdaq Stock Market.

Revenue for the fiscal third quarter rose 32 percent to $14.4 billion. Analysts were looking for $13.89 billion in sales.

Vista Security

In late March, when security researchers stumbled upon drive-by download attacks exploiting yet another serious Windows hole, they had an eye-opening surprise: The vulnerability--caused by the way Windows handled animated cursor (.ani) files--didn't affect just Windows XP. It also hit Vista, Microsoft's new security-centric operating system.

Security experts still proclaim Vista a major improvement over previous Windows versions, and readily say that its important new safety features--including an improved firewall, a "Protected Mode" for Internet Explorer, and User Account Control--make it much more resistant to the most common forms of spyware and malware.

However, this latest flaw (now fixed) is a major black eye for Microsoft; along with two other critical security patches issued for Vista in its first three months on shelves, the problem has tarnished Vista's security sheen (see "Vista's Vulnerabilities" for details). The new OS may be safer, but its users must still be on their guard.

Google aims to expand China market share

Google Inc., No. 2 in China's Web search market, is giving its local managers more autonomy and investing more in China in an effort to make up for its late entry and take the lead in the industry, CEO Eric Schmidt said Friday.

"We are catching up. Our investment is working and we will eventually be the leader," Schmidt told reporters.

Google has 21.7 percent of China's search market, well behind industry leader Baidu.com Inc., which has 55 percent, according to market data company iResearch Inc.

Schmidt said Google was gaining market share but he declined to give figures. He expressed confidence that its greater financial and technical resources would help close the gap.

Google came to China after other Internet services such as Yahoo Inc. (Nasdaq:YHOO - news), launching its China-based search site, Google.cn, in January 2006. Google opened a Beijing research center one year ago.

Schmidt said Google plans to give its China operation, led by Kai-Fu Li, a former Microsoft Corp. vice president, greater autonomy to develop new products and respond to the local market.

"One of the big projects this year is to push more autonomy and more decision-making to Kai-Fu and his team," Schmidt said. Asked for details, he would say only that it involved more decision-making power.

China has the world's second-largest population of Internet users, with 137 million people online, and is on track to surpass the United States as the largest online population in two years.

Baidu has tried to expand its appeal in recent months by striking deals with Viacom Inc.'s MTV Networks to distribute music videos online and with recording company EMI Group PLC for streaming music.

Industry analysts say Google's handicaps in China include its failure to aggressively promote online music and to offer its G-Mail service on Google.cn. The company refrained from offering e-mail in China after the controversy over Yahoo Inc.'s China arm providing information that led to a reporter's being imprisoned.

AOL One Step Behind Again: New Home Page Identical To Yahoo

AOL has started beta testing a new home page (the main AOL.com portal). AOL Senior Product Manager (and occasional TechCrunch contributor) Frank Gruber introduced it on his personal blog earlier today, although he is not the product manager for the product.

Nice portal…but it is nearly identical to Yahoo home page, which was redesigned last year. Click on the image above for a larger view. Internally, I’m hearing AOLers refer to the new portal as “the Yahoo Portal” although its official name is AOL 3.0.

Internet companies like to copy things from their competitors that work, but as we’ve seen even the largest companies sometimes get caught copying a little too much.

AOL says they are building best of breed products, not simply copying things from Google, Yahoo and others that are proven to work and porting them to its less cutting-edge audience. In the past year, though, we’ve seen them largely copy digg and then release a new mail product that would have been awesome two years ago but which stacks up poorly to the current versions of Gmail and Yahoo Mail.

David Liu, Senior Vice President of Portals & Personal Media at AOL, has told me that a number of new products in development are going to be impressive. I’ve seen early demos and wireframes of some of them, and I think he’s right. The company needs a category killer to get some street cred

Steve Jobs: “People want to own their music”

Apple’s Steve Jobs, perhaps the most important person in the music industry today, says again that Apple is not planning on selling music via a subscription model like many of his competitors.

The strategy certainly makes sense as long as as Jobs continues to win territory in his war against DRM, and the subscription music services fail to lure a critical mass of consumers.

More than 2.5 billion songs have now been purchased from iTunes and they control 85% or so of the download music market. DRM free songs on iTunes cost 30 cents more, almost certainly creating greater margin for Apple per song.

The subscription music services are highly competitive, leaving little profit for the providers. As long as Apple can keep selling tracks for a dollar or more per track, they’ll resist entering this market.

Akamai Releases FoxTorrent 1.0 - Firefox BitTorrent Add-on

Red Swoosh (acquired by Akamai for $15 million earlier this month) released v1.0 of FoxTorrent today. This is a fully functional BitTorrent client for Firefox that works cross platform (Windows, Mac, Linux) and has a very cool additional feature - the ability to stream files as they are downloading.

This is no Azureus (my BitTorrent client of choice), but it does the job and saves time by allowing you to manage torrents directly from the browser. I tested it on a few (non-copyright infringing, of course) files and it worked great on the standard BitTorrent functionality. Streaming just didn’t work, although with the way the BitTorrent protocol breaks files into pieces and reconstructs them in a non linear way means you may have to wait until the file is mostly complete to even begin streaming. I’ll try it again once the files are nearly complete.