All Things Digital

Since I posted an interview with Social Gaming Network’s Shervin Pishevar today on the announcement of his $15 million funding, it seems only sporting to post this lively video interview I also did with his main competitor, Mark Pincus of Zynga, recently too.

Zynga, named after Pincus’s dog, is one of the two main social-gaming networks that are competing for audience by offering highly interactive games of all kinds. Its aim is to be more engaging and create a series of addictive games that users will return to again and again.

Pincus, who also founded the Tribe social-networking site, is a longtime entrepreneur. I met him way back when as a reporter at the Washington Post when he and Sunil Paul launched one of the few start-ups–Freeloader–in the D.C. area.

And I can report that Pincus is as jumpy and energetic today as he was 15 years ago.

He has certainly been busy lining up a spate of fancy investors, garnering $10 million in funding in January, including from: Union Square Ventures, Foundry Group, Avalon Ventures, Pilot Group, along with personal investments from Silicon Valley players Reid Hoffman and Peter Thiel.

Zynga, which is larger than rival SGN, claims 2.3 million total daily active users across Facebook, with its Texas Hold ‘Em game being the largest it offers. Other games include Sea Wars, Blackjack, Attack! and Scramble.

As I said in my SGN post, while BoomTown often makes fun of viral apps, most of which are faddish and juvenile, the better-made gaming apps actually are likely to be a real business over time, as long they remain engaging and fun to play as the classic real-life games are.

Zynga plans on making money through ads, including creating its own ad network for other gamers, as well as via the sale of virtual goods and premium offerings.

Here’s a chat with Pincus at Zynga’s offices (Pincus owns the building, by the way, which also houses a bunch of other Web 2.0 start-ups) in San Francisco:

Today, in yet another episode of the Web 2.0 lottery, Social Gaming Network grabbed $15 million in funding for its widgety gaming apps that are popular on Facebook and other social-networking sites.

The round, led by Greylock Partners, Founders Fund, Columbia Capital and Novak Biddle Venture Partners, will go toward expanding its offerings, which include the popular Warbook, and also its network for other developers to create and publish online games on.

SGN grew out of Webs.com, which used to be known as Freewebs.

While BoomTown often makes fun of viral apps, most of which are faddish and juvenile, the better made gaming apps actually are likely to be a real business over time, as long they remain engaging and fun to play as the classic real-life games are.

After all, who ever gets sick of Candyland?

SGN’s games are not quite that, focusing more on strategy and bang-bang that 12-year-old boys of any age so love, but, CEO Shervin Pishevar promises, with increasingly rich features and better graphics.

The business plan? Advertising, of course, especially sponsorships, as well as the sale of virtual goods and premium offerings.

SGN’s other popular online games include FightClub, StreetRace, Jetman, Text Twirl and Free Gifts. It has 1.1 million daily active users mostly across Facebook, but also on Bebo, hi5, and MySpace.

In the space, its main competitor is Zynga (here is a post and video with its founder, Mark Pincus). Naturally, the two bicker back and forth in the blogosphere about size and quality of games.

But it seems to me that there is room for both, so the fighting seems like a lot of noisy, well, game-playing.

Here’s Pishevar talking about the sector:

BoomTown was the first to put up the hugely popular spoof video called “Here Comes Another Bubble,” by the San Francisco-based Richter Scales.

And, the first to report on the controversial story of it then being taken down by YouTube (GOOG), in a fight the group had with a local photographer, Lane Hartwell, who objected to the use of a photo she took that was in the video without her permission or payment to her for its use.

The Hartwell photo was removed, and the copyright controversy eventually died down. And the video still remains very funny and even more realistic than ever, given the series of crazy Web 2.0 funding valuations of late.

And now “Bubble”–which opens with a BoomTown interview with investor Peter Thiel, who denies such a thing as a bubble in tech–has won a Webby Award for Best Viral Video.

Well, congrats to the creators of the video, which mocks the current Silicon Valley culture with affection, set to the tune of Billy Joel’s “We Didn’t Start the Fire”:

Project Granola?

Apparently, that’s the jokey nickname that’s been given by some in the company to Microsoft’s (MSFT) new online strategy, in the wake of its failed efforts to acquire Yahoo (YHOO) that ended in a big heap of mess this past weekend.

Now, sources tell BoomTown, it is all about “organic”–hence the image of a healthy handful of granola (except for the fact that, in my experience, nobody really likes granola after eating it as much as they think will before).

In any case, it is a word Microsoft folks have been slipping into the conversations with BoomTown over the past few days, so much so that I have started to feel like I was talking to execs from Whole Foods.

Now Microsoft’s greenness has gone public.

Case in point: Brian Hall, Windows Live General Manager, who trotted out the organic word in front of Merrill Lynch analysts yesterday, as reported by CNET’s Ina Fried, saying: “We’ve withdrawn the offer and moved on, and now are focused on how we grow as fast as possible organically.”

But what does organic mean exactly?

Two things, it seems.

First, stepping up spending on marketing, technology and research to try to find ways to differentiate from Google (GOOG) and get into the No. 2 spot now held by Yahoo.

Of course, that plan has not worked out so well as yet for the software giant, with Microsoft spending billions of dollars with no profits and little gain in online search or ad market share, while its archrival Google keeps growing stronger.

Even so, while in Korea today, Microsoft Chairman Bill Gates backed Microsoft CEO Steve Ballmer’s do-it-yourself path and his move to walk away from Yahoo.

“The key decisions on that will be made by Microsoft CEO Steve Ballmer, who took a look at Yahoo and decided that, on our own, he likes the stuff that we’re doing,” said Gates.

Gates also added what amounts to the second option for Microsoft. “I wouldn’t rule out some partnerships, but we don’t have anything imminent there,” he said.

While a return to Yahoo is a possibility, in fact, buying up Web 2.0 stars is likely to be a bigger focus of the company.

“Yahoo can twist,” said one source. “Microsoft has lots and lots of other options.”

According to sources close to the company, for example, Microsoft’s bankers had been putting out subtle signals to Facebook to see if it would be open to a full buyout.

Microsoft already invested $240 million in the hot social-networking site, an investment that gave Facebook its kooky $15 billion valuation.

And its execs have long told Facebook execs they wouldn’t mind a bigger bite–um, like all of it.

“We just wanted to gauge their interest, more than any real effort,” said another source, who expects Facebook to stick to its longish path to an eventual IPO.

But, as is no secret, Microsoft has selections all over Silicon Valley to help it improve its Internet chances.

Those would include buying bigger vertical sites in strong categories like autos or jobs or finance, and also scooping up smaller but fast-growing socially oriented sites like Digg, Meebo, Yelp or focusing on ad plays like Spot Runner (which just got another big dollop of funding).

There might even be some sense in spinning some of these and all Microsoft Web units off into a separate Internet company, which would be another way of integrating even bigger deals for properties like Time Warner’s (TWX) AOL or News Corp.’s (NWS) MySpace (which are longer shots, I think).

In a post I did in February right after Yahoo rebuffed Microsoft for the first time, I suggested such a course for the company.

As I wrote:

Here’s a list: LinkedIn. Digg. Flixster. Slide or RockYou. Veoh. WordPress. Sphere. Sugar. Some international stuff. And more.

Then, some noted, Microsoft would have to give massive financial incentives to those entrepreneurs to stay and thrive. Most importantly, it would have to keep its Redmond hands from interfering.

Now that would send shivers up the spine of Larry and Sergey.”

And that, most of all, would be more like icing on the cake for Microsoft and be much more tasty than a bowl full of granola.

And, as Martha Stewart says: It’s a good thing.

Silicon Valley luminary Marc Andreessen (pictured here) has been asked to join the board of Facebook, according to several sources with knowledge of the situation.

While the arrangement is not completed yet, sources said the longtime entrepreneur has verbally agreed to accept the post to become the fourth member of the board of the Palo Alto, Calif.-based social-networking site.

Other board members include Accel Partners Jim Breyer, Founders Fund’s Peter Thiel and Facebook CEO and Founder Mark Zuckerberg. Greylock Partners David Sze also has observer status on the board.

Since he co-founded browser pioneer Netscape in the 1990s and helped usher in the Internet age, Andreessen has been an active investor and has created several successful start-ups.

His most current effort has been Ning, also based in Palo Alto, which is a white-label social-networking company that recently raised another $60 million in funding.

If Andreessen joins Facebook’s board, the move is yet another sign that the much-hyped start-up, which has undergone some growing pains over the last year, as well as garnering a $15 billion valuation, is growing up by bringing some major high-profile tech figures into its ranks.

Last night, for example, BoomTown broke the news that Google PR head Elliot Schrage had accepted a similiar job at Facebook.

That comes after Facebook hired another top Google (GOOG) exec, Sheryl Sandberg, as its COO, in March.

A while back, BoomTown suggested that Web 1.0 golden boy Andreessen–pictured here on the iconic Time magazine cover in 1996–would be a good mentor for current golden boy Zuckerberg, in a piece I did about potential execs for Facebook.

As I wrote in February:

But why not go for the man who was Zuckerberg before Zuckerberg was cool. Yes, the shiniest of Golden Geeks himself, Marc Andreessen.

I could go on and on about the similarities I find between the two, if you compared today’s Zuckerberg with the Netscape founder in the mid-1990s.

From their arrogant innocence to their visionary qualities to their enfant-terrible charm, it is almost as if they were separated at birth.

But now Andreessen is all grown up and much, much matured from when I covered him. He has become all calm and sage and he even does a very decent blog.

Plus, he has also started and run a number of start-ups after Netscape, giving him deeper managerial experience over the last dozen years.

And, best of all, Andreessen knows the pressure of being the best-thing-since-sliced-bread in the tech sector, and its inevitable downside too.

Overall, a real mentor and partner for Zuckerberg, making a perfect pair of Golden Geeks.”

Here is a BoomTown video rant on online advertising, which I spewed at a Web 2.0 Expo Web2Open event I did Wednesday.

I am talking quickly since it was a “speed-Q&A” session, where five of us moved from table to table and quickly answered questions shot at us from the people gathered at each.

They were split into like-minded groups–developers, designers, business types.

This video was shot on a Flip camera, the kind BoomTown uses for our own riveting videos, by tech writer David Spark.

Excuse the mysterious Ray-Ban look–the shades are prescription and I left my regular glasses at home. (Also, I was trying to avoid intimacy in this speed Q&A thing!)

Here Spark is asking me about my bête noire in the Web 2.0 space–lack of specifics about monetization.

I always get annoyed by the same stock explanation from entrepreneurs when I ask about it: “Advertising, of course.” But when I then ask for more detail and actual results, that’s where things always get a little fuzzy.

I also talk about the need for Web 2.0 wunderkinds to be scrutinized just the same as any business leader, rather than worshipped by a slavish press.

Hence, my rant:

Last night, BoomTown loaded the kids into the car–you try finding a sitter on a Tuesday night!–and went early to a pair of dot-com parties being thrown at some trendy spots in San Francisco related to the Web 2.0 Expo taking place this week.

Our quest was to find out what some savvy Web 2.0 types thought would–or should–happen next in the Microsoft (MSFT)-Yahoo (YHOO) takeover battle, following Yahoo’s earnings report yesterday.

Thus, we made the scene–at widgetmaker RockYou’s “Rockin’ Spring Mixer” at Bong Su and news site Digg’s get-together at Mighty–to get some advice on what’s going to happen next.

Frankly, BoomTown is running low on ideas and we got a good range of predictions to bolster our bare cupboard.

So here’s a good mix of interviews on the topic, with folks such as RockYou CEO Lance Tokuda, Broadband Mechanics’ Marc Canter, Digg Founder Kevin Rose (in the very, very dark and noisy club–sorry!–but you can hear him at least), Digg CEO Jay Adelson and others.

And, at the end of the video, using a dinosaur toy as a metaphor, Louie and Alex Swisher, who pretty much have the situation down cold.

Here’s the video:

OK, I like Twitter a lot, but what is up with all this tech news coverage of its outages?

With the Twitter service being glitchy all weekend, for example, the jump-to-the-next-big-thing champ Robert Scoble wrote another piece yesterday smacking his old amour and praising his new love: FriendFeed.

You know, the new pretty young thing in Silicon Valley (ex-Googlers involved make it hotter still!).

You don’t know?

Neither does most of the human race, in truth, which is just getting around to noticing Facebook and maybe, just maybe, figuring out how to properly use a SuperPoke (my advice: never ever!).

And, while Twitter is amazing in many ways, its tech glitches don’t deserve this level of emergency alarms.

But that has not stopped the echo chamber of Silicon Valley from making a lot of really noisy noise about the indignity of it all.

Isn’t there a recent Sarah Lacy interview with some random Web 2.0 player they could egregiously overreact to instead?

In a weird way, though, this reminds me of the outrage when AOL (TWX) went down for 19 hours in August of 1996. (To date myself, I was actually at AOL HQ in Virginia at that very time with CEO Steve Case, working on my first book.)

At the time, AOL’s 6.3 million users had their first collective digital nervous breakdown and the outage resulted in national headlines–as well as later governmental investigations–across the nation.

“If this (outage) is a sign that AOL can’t handle its growth, that’s a very bad message for the professionals that use it,” Gary Arlen, president of Arlen Communications, said ominously to CNN at the time.

Now, 6.3 million users over a decade ago in today’s terms is a lot more in comparison to Twitter’s current users.

But the difference: Today, one single person like Scoble can tweet louder than millions can complain and it sounds like it is exactly the same thing.

While the tech blogosphere fiddles away on navel-gazing stories–Who are the top tech bloggers? Do they Twitter to get to the top? Or do they FriendFeed? Do they feed friends while tweeting? More importantly, will there be chicken wings?–I’d advise anyone interested in the much more serious issue of making some money from Web 2.0 to take a gander at ReadWriteWeb’s piece yesterday on enterprise spending in the arena.

According to a new report from Forrester Research (FORR) the site references in the post, enterprises will spend much more in the coming years on social networking, RSS, blogs, widgets and such, making it a $4.6 billion market by 2013.

Here is an interesting data table from the ReadWriteWeb post (click on the image to make it larger):

Of course, that doesn’t mean that Twitter’s creators should be jumping up and down now that an actual business plan might be surfacing.

In fact, a lot of popular consumer products might not port over to the business market, even if the concept does.

And, naturally, the old grumps in the IT departments loom large over what gets into corporations and what does not, the ReadWriteWeb piece notes, although other enterprise departments like marketing are already enamored with Web 2.0 tools.

Still security and scaling issues remain paramount, and start-ups that have pioneered these apps in the consumer space might lose business to big copycats like IBM (IBM) and Microsoft (MSFT).

I saw real evidence of the shift at an event in Silicon Valley last week, related to Rohit Bhargava’s new book “Personality Not Included: Why Companies Lose Their Authenticity and How Great Brands Get It Back.”

And, although I expected much more of a corporate love fest, since the affable Bhargava is an SVP of digital strategy and marketing at Ogilvy Public Relations, it turned out to be a very interesting discussion of ways companies could embrace Web 2.0.

I was particularly struck with the very sharp questions from the Silicon Valley-heavy corporate audience too, who were savvy but still curious about the potential pitfalls and benefits of such tools.

Such discussions will be even more interesting, as they percolate across the country to places where most people are just hearing the word widget.

You know, pretty much everywhere except here.

AOL is turning into the Oprah Winfrey of the digital world, it seems, opening up Time Warner’s (TWX) checkbook to as many start-ups as it can.

Last month, it was $850 million in cash for social-networking site Bebo.

And, today, it’s a much smaller slug for Sphere, which started as a blog search engine and morphed into a widely distributed “contextually relevant” content engine, used on news and blog sites across the Web (and which AllThingsD uses on this site, in fact).

While one source said the price was upward of $25 million, sources at other companies to whom the San Francisco-based start-up also talked, including Google (GOOG), said Sphere was looking for more than that.

In any case, the sale is surely a win for CEO and Co-Founder of Sphere Tony Conrad, a longtime entrepreneur who also has been a VC at True Ventures, which also invested in Sphere.

Oh, it’s a mosh pit of jolly interbreeding in the Web 2.0 start-up world!

Sphere raised about $4.25 million from many investors, some of which included Radar Partners, Trident Capital and well-known Web players Scott Kurnit and Will Hearst.

AOL has surely shown a knack for snapping up small and innovative properties with clever technologies–the Truveo video search engine and communications app maker Userplane, for example–and has let them stay relatively intact, as it has promised it will do with Sphere.

But it also has not exactly leveraged any of them in a massive way either and still faces the problem of holding onto talent from those start-ups, as BoomTown reported here.

One hopes that AOL can do more with the more complex and elegant Sphere, which has deep relationships with major publishers all over the Web, including many Time Warner properties like Time.com and CNN.

It would be a shame for Sphere to fall into one of AOL’s deep holes there.

But perhaps not, given all the frenetic multitasking activity at AOL of late, including yesterday, when it also announced a deal in which its Platform-A online ad division would sell ads for Verizon (VZ) on the Web and for its mobile units.

Oh, and its top execs, CEO Randy Falco and President Ron Grant, whom AOL sources tell me have been AWOL of late, have also been ferreting away on a possible deal to be the alternative for Yahoo (YHOO) in its takeover battle with Microsoft (MSFT).

While Yahoo troops are not really happy with such a union, as BoomTown reported here, neither are some top Time Warner execs at the possibility that AOL might simply be being used as a stalking horse by Yahoo, in an effort to get Microsoft to up its bid.

“Do you think they’re using us?” joked one Time Warner exec to me yesterday, given the deal activity seemed to have slowed down this week.

Um, yes, of course!

While that wouldn’t be sporting, if Yahoo does end up going to Microsoft, it just means AOL will need to get a lot more energetic and do a lot more Spheres in the future to keep up.

Sung to the tune of Billy Joel’s “We Didn’t Start the Fire,” this music video by the San Francisco-based Richter Scales is pure genius.

And so, as the song asks, we sure will blog about it (plus it uses our interview with Facebook investor Peter Thiel, also below, at the start).

In fact, it’s an honor to, as these guys get the Web 2.0 mania better than pretty much everyone in Silicon Valley.

And a warning to all: The video was so hysterical, it apparently made Robert Scoble spew Diet Coke through his nose. That’s, of course, not such a funny image.

And here is our original Thiel interview:

Even with Abu Dhabi buying up shares of tech firms like Advanced Micro Devices and the bubbly euphoria in Silicon Valley’s Web 2.0 sector, the tech picture is getting less pretty, according to a report by Barron’s Eric Savitz on the downgrading of software stocks by Goldman Sachs.

Noting a softening in capital spending, Savitz quotes Goldman’s report that said, “with software a typically back-end loaded sale, if there is any concern on budgets in the early part of 2008, we would expect CIOs to hold off their purchases until later in the year.”

So Goldman cut estimates slightly on Adobe, Autodesk, BEA, BMC, CA, Check Point, Citrix, Cognos, CommVault, Informatica, Macrovision, McAfee, Oracle, Quest Software, Red Hat, RightNow, SAP, Secure Computing, Symantec and Tibco.

Could ad-supported or commerce-driven Web sites be next? To say nothing of the spate of pre-revenue–our kind way of saying none to speak of–Web 2.0 start-ups.

I am at a new conference organized by August Capital’s David Hornik called The Lobby on the Big Island of Hawaii.

It is thick with Web 2.0 players, all here to interact and discuss issues, although without a formal program that is so typical of most Internet conferences.

In other words, the schmoozing in the halls is front and center, an interesting cut-to-the-chase twist from the gadfly VC Hornik.

So what was the talk last night at the opening cocktail party? The Facebook deal, of course, with most people being alternately incredulous, dubious and in awe of the $15 billion valuation that Mark Zuckerberg snagged from Microsoft.

In general, people were worried about the impact on their own companies, most agreeing that it would make the bubble even more bubblicious and that it marked the return of that frothy but queasy feeling of the first Internet bubble when AOL somehow managed to grab Time Warner in a deal that, as it turned out, will now live in infamy.

We’ll see about that, but now it is off to some mysterious group activity all day and, at some point, natch, a beach party.

Or as Elvis sang so movingly: Clambake! Geeks going to a Clambake!

Here’s some video, featuring folks like Kevin Rose and Jay Adelson of Digg:

Please see this disclosure related to me and Google.

It’s an open secret in Silicon Valley that search giant Google grabbed YouTube from Yahoo at the last minute in a deal-making frenzy.

I didn’t mean in my last update posted earlier today to leave out that possibility happening again with regard to Facebook’s current round of funding discussions.

While Yahoo and Microsoft have been most aggressive in courting the hot social-networking site, sources close to Facebook said that Google is also part of the ongoing discussions about a new round of funding for Facebook, although it might not take the form of a large investment.

What’s of interest to Google, as well as Yahoo and Microsoft, is Facebook’s potentially large international ad-sales business, which all three would like to have.

Under a different kind of scenario, Facebook would take an investment from a range of private equity investors, do an international ad deal with Google (which might or might not make an investment in the company) and still have its U.S. ad sales served by longtime partner Microsoft.

Such an arrangement would be a blow to Microsoft, which has been seeking to get closer to Facebook, partly out of paranoia of Google and its own lack of innovation in the Web 2.0 space.

But, according to sources, that’s just what might happen given that Facebook execs are wary of linking themselves too closely with Microsoft. Plus, a stronger relationship with Google would burnish its independent credentials, which many think is critical in the next phase of Facebook’s development.

Who’s to say what’s going to happen, but it could happen rather quickly, even within the next 24 hours.

And that’s a good thing, because to my mind, Facebook’s got to get this funding roundelay behind it and get busy making its service bigger and more powerful.

It’s easy to get sucked up into the Silicon Valley reality-distortion field, and Facebook would do well to get the giant bag of cash it thinks it needs and move on.

Our very own Digital Daily’s John Paczkowski–he of the arched eyebrow–did such a good job live-blogging our own fifth D: All Things Digital conference this year that we thought we would step up our game and send him out and about more often.

First stop, Apple’s special event today, starting at 10 a.m. PDT, at the Moscone Center in San Francisco, where Steve Jobs will yawn and all hell will break loose. We know, it’s some iPod news–and we are probably using the term “news” rather loosely here–but John will be on the case in text and video!

And there will be more exciting, you-are-there-but-not-really live blogging ahead from John, such as the upcoming Web 2.0 conference, helmed by John Battelle and Tim O’Reilly and also in San Francisco, in mid-October.

Now, it seems, both John and BoomTown will have to be in the front seat with our eyes wide open for that event, given that Web 2.0 will announce today that News Corp. Chairman and CEO Rupert Murdoch (and new owner of Dow Jones and, by extension, this site) and MySpace Co-Founder Chris DeWolfe will be delivering its dinner keynote on opening night Oct. 17.