The most baffling thing about the Wikileaks Cablegate kerfuffle is the massive foot-shooting overreaction across the entire American political spectrum. Here in the rest of the world (okay, in Canada), we’ve already moved on, because (to date) the cables are more shrug-inducing than explosive—but US senators are still in the throes of a bizarre frenzy of rabid chest-beating and tooth-gnashing.

Dianne Feinstein, a Democrat, has called for Julian Assange’s prosecution, despite the general consensus that he hasn’t actually committed any American crime. Mitch McConnell, a Republican, has a slightly clearer-eyed view; he wants the law changed so that Assange can be prosecuted as a terrorist. Joe Lieberman wants a criminal investigation of not just Assange but also the New York Times.

What exactly do they hope to accomplish? Do they think that if they do somehow manage to convict Assange—who, remember, was only the publisher, not the leaker—they will have eliminated the threat of Internet information dissemination forever? Don’t they realize that with every boneheaded speech and op-ed, they ratchet up the free publicity and do Wikileaks a huge favor, when a dignified silence plus a few veiled threats would have been far more effective? Can they really be so stupid?

Well, yes. The US government is like Wall Street: behind their veneer of all-powerful control, most of the people who run things are not particularly bright. I just read Michael Lewis’s The Big Short, which depicts the financial collapse of 2008 as a catastrophe caused not because Wall Street was corrupt—which would have been almost okay—but because it was lethally stupid.  His next book should be about Washington.

The American diplomatic corps actually comes across as smart and competent in the Wikileaked cables. Unfortunately, the politicians they report to seem anything but. The scariest truth that Wikileaks has confirmed is that most of the world’s decisionmakers, like most Wall Street ‘wizards’, are petty, bureaucratic, dogmatic, myopic, and hostile to any innovation, largely because they’re not very intelligent. Not that smarts are everything, but it’s hard to tackle complex problems when you don’t fully understand them. It’s easy to forget this in the tech world, which is (relatively speaking) a results-oriented meritocracy … until you step into most governments or megacorporations, and find that suddenly the ambient IQ has dropped 20 points.

The tech sector is the only thing America has going for it these days. (Unless you count crumbling infrastructure, runaway debt, paralyzed government, or a trillion-dollar military bogged down in pointless faraway non-wars.) Unfortunately, the American government seems too dumb to realize this: so they maintain stupid visa laws, while ignoring smart alternatives; keep playing fast-and-loose, at best, with net neutrality; and, oh yes, plan to wiretap (and—thanks to Wikileaks—censor) the entire Internet, at great cost, apparently in the hope that bad guys will never discover the magic of public-key encryption.

You probably don’t want to read about political idiocy here, and I can’t blame you. But it may be time for the tech industry to start paying much more attention to the political world, because as Wikileaks vividly illustrates, these days almost every political issue has tech aspects—and hence, down the road, tech repercussions.

If you’re as addicted to startups as we are, you’ll love Betali.st. Inspired by the just as minimal Museum of Modern Betas, Betali.st creator Marc Köhlbrugge has started curating an online list of not yet public startups that are currently or will soon give out invites to their private betas. Bookmark it in your browser if you want to be first to try the next Twitter or Instagram, call dibs on your account name or just see what the competition is up to.

Eat your heart out tech hipsters.

Bad news from Japan’s multi-billion dollar social gaming industry earlier this week: Tokyo-based mobile gaming heavyweight DeNA (current market cap: US$4.5 billion) was investigated on Wednesday by the Japan Fair Trade Commission (JFTC) over antitrust issues.

The allegation: DeNA, which recently paid US$400 million to acquire American smartphone game maker ngmoco, pressured Japanese mobile game developers to release titles exclusively on Mobage-town (its mobile social gaming community) – and to not provide games on rival GREE‘s mobile platform.

The JFTC’s decision to conduct a spot inspection of DeNA’s headquarters came as not too big of a surprise after TechCrunch Japan first reported about rumors circulating in the country’s social gaming sector in August.

According to some sources I have talked to over the last few days (and months), DeNA executives approached a number of local game makers saying they will see a negative impact on their business on DeNA’s Mobage-town platform when they release games on GREE (I live in Japan). One developer told me that soon after ignoring this “advice”, he saw his games dropped off the search results on Mobage-town – which currently lists about 600 different titles. (Needless to say, this is by no means evidence that DeNA did anything wrong or broke the law, especially as the investigation still continues.)

Neck-and-neck race in a huge market

Japan’s mobile social gaming market is the world’s largest, and DeNA and GREE are the leading players, which means the JFTC raiding DeNA’s offices is a pretty big deal.

Just a few numbers: DeNA is on track to generating over US$1 billion in revenue this year (mainly through sales of virtual items) and currently counts 22 million users. GREE expects revenue to hit up to US$700 million in the current fiscal and has about the same number of users (market cap: US$2.9 billion). What’s amazing is that about 99% of the business both companies do is Japan only and mobile only.

DeNA and GREE have been in a neck-and-neck race in the last few years. For example, both companies are spending more money on TV ads than big consumer brands like Toyota or Sony, trying to attract programmers with unusual incentives, and even don’t refrain from suing each other for copyright infringement (a relatively rare incident in Japan).

Expect to hear more from these companies in the future, especially when they accelerate their internationalization efforts (DeNA has been active in the US for years, and GREE is rumored to follow suit in the next few weeks).

I’ve been an Android fan for a while now, but I can’t remember the last time I had anything good to say about its integrated application marketplace, Android Market. Compared to the iPhone’s App Store, Market’s experience has always looked less visually compelling, and in general it’s been harder (and less fun) to navigate.  Today, the Google team has announced that Android Market will be getting an upgrade over the next two weeks. And good news: this update will be going to all Android users who are on version 1.6 or higher, which means it will go out to the vast majority of devices.

I haven’t gotten access to the application yet, but judging by the screenshots the Market has gotten a fresh coat of paint, and looks much more modern. Promoted applications — which until now have been tiles at the top of the screen that would change every few seconds — will now be featured in a swipable view that looks a lot like Apple’s CoverFlow.

Data about each application will now be consolidated into a single window pane. The Market will also include a content rating system (this is not shown in the screenshots, so you can’t really see what this looks like yet). And app targeting has been improved while size restrictions are loosened:

To make it easier for developers to distribute and manage their products, we will introduce support for device targeting based on screen sizes and densities, as well as on GL texture compression formats. We are also increasing the maximum size for .apk files on Market to 50MB, to better support richer games.

One major change that I’m sure developers will applaud involves Android’s refund window. Historically Android has offered a 24 hour return window for users who purchased an application and decided they didn’t want it; this time limit has now been cut down to 15 minutes. Google’s explanation is that this is because it will “help developers manage their businesses more effectively”, and that ”most users who request a refund do so within minutes of purchase” anyway. It’s probably because developers feel frustrated when users buy a game or utility, use it for a full day, and then get a full refund (and there may be some accounting issues, too).

And, from the I-can’t-believe-it-didn’t-have-this-already department, Android Market now has separate categories for Widgets and Live Wallpaper applications. And it looks like the Android typeface (which always made things look a little less polished for some reason) has apparently been abandoned in some menus.

Of course, this new release is still missing one key feature: a web version of Android Market. This was previewed during Google I/O way back in May, promising to let users browse through Android applications from their web browsers, and then wirelessly ‘push’ the applications they purchased to their phones with no tethering needed.

My hunch is that this functionality (or parts of it) is latent in this new version of Android Market, and that Google will activate it once the web component of this is done. Here’s what the team had to say about upcoming releases:

However, we're not done yet. We plan to continue to rapidly enhance Android Market for both users and developers and make it the best content distribution service for the Android ecosystem.

Please stay tuned as we continue to deliver new capabilities in the coming weeks and months.

When former Facebook Senior Platform Manager Dave Morin left to begin a new startup, it was a solid bet that it would play nicely with the world’s largest social network. But when Path launched in November, just about everyone on the web was surprised at just how… antisocial it was. Well, maybe “antisocial” is the wrong word. It’s more like “antiviral” — something which most apps feel they need to be to survive these days. What led to this antiviral backlash? The fact that you couldn’t push pictures from Path out to the big social networks like Twitter and yes, Facebook.

Well today, Path has finally embraced Facebook. Sort of.

As Morin posted to the Path blog tonight, “Path and Facebook are now in an open relationship.” But it’s not the kind of all-out makeout session you might imagine. Instead, Path is taking it slowly.

Right now, you can visit this page to link your Path page to your Facebook account. And while all the social sharing permissions are covered, it appears that Path is currently only using the connection to surface the Facebook friends you have that are also on Path, so you can easily follow them. That’s a decent first step that a lot of people have been asking for. Previously, the best way to find friends was if they were already in your phone’s contact list.

But Morin hints that more Facebook integration is coming. “We'll be doing more with Facebook's world class social platform technology to help you build your personal network on Path in the coming months,” he writes.

Last week, Path was the featured App of the Week on iTunes. They also recently rolled out an update to let you upload pictures after you take them.

Update: Path has also just announced that a new version of their iPhone app has hit the App Store, version 1.1. This brings the ability to find friends via Facebook (as mentioned above), a way to communicate to photos via text message or email, and a way to see larger versions of images.

The service has also rolled out a new web interface with a revamped UI. This includes a way to see who has viewed your Path images.

The big thing here is obviously the reply via text message (or email if they’re on an iPod touch). The allows you to click on any picture in your Path stream from a friend and quickly send that person a text message (again, or email).

It’s not quite comments, but it’s certainly an interesting idea. Of course, the reply could be a bit out of context depending on how old the image is, so be sure to clarify why you’re texting your friend with “Nasty!”

Three or four jobs ago, (who can keep count?) Paul was a columnist for The Guardian and he made a quick name for himself in Valley circles with a blistering critique of Le Web, a conference he hates so much he attends every year. But he says, after this year, he’s done. (Again.)

He’s back in London now, and he’s almost as miserable. In this edition of “Why Is This News?” we revisit a few familiar themes: How can all Skype connections in London be so horrible and are the startups any better.

Spoiler alert, Brits: Get ready to send more hate mail.

We’ve been tracking these fabulous SecondMarket Facebook stock auctions for the last three weeks. The shares hit a roughly $50 billion valuation in a big auction in late November, when $40 million changed hands. Last week the price edged up 1.2% to $21.01.

This week’s auction has now closed as well. The closing price was $21.90, up 4.2% from last week. Someone actually guessed that price in our TechCrunch tshirt contest (see comments), and we’ll be contacting them and shipping it out right away.

What will next week’s price be? Be right and get a TechCrunch Tshirt.

Here’s the email to participants:

To all Facebook shareholders:

Thank you to those who participated in this week's Facebook auction. The auction was again successful and fully cleared at a per share price of $21.90. Next week, the reserve price will be $21.50, and we will continue to require a minimum sale of 25,000 shares.

If you own shares that you are eligible to sell and wish to participate as a seller, please complete the attached Seller Information Sheet and submit it to SecondMarket at fb@secondmarket.com by Monday, December 13 at 11:59 PM EST.

Please see below for detailed results on previous auctions and for this week's auction calendar:

Previous Auction Results:

Total Shares Cleared to Date: 2,471,265

December 6, 2010:
Total Number of Shares Offered for Sale: 100,000
Number of Shares Cleared in Auction: 100,000
Reserve Price: $21.50
Clearing Price: $21.90

November 29, 2010:
Total Number of Shares Offered for Sale: 475,000
Number of Shares Cleared in Auction: 475,000
Reserve Price: $20.60
Clearing Price: $21.01

November 22, 2010:
Total Number of Shares Offered for Sale: 1,896,265
Number of Shares Cleared in Auction: 1,896,265
Reserve Price: $20.60
Clearing Price: $20.76

Next Week's Auction Timeline:

· Monday, December 13 at 10:00 AM EST – Auction process commences

· Monday, December 13 at 11:59 PM EST – Seller order forms due

· Tuesday, December 14 at 9:00 AM EST – Buyers informed of share quantity available

· Wednesday, December 15 at 12:00 PM EST – Buyer order forms due

· Wednesday, December 15 at 5:00 PM EST – Participants informed of auction results

· Wednesday, December 15 at 8:00 PM EST – Transaction documentation distributed to buyers and sellers

· Friday, December 17 at 4:00 PM EST – Completed transaction documentation due from buyers and sellers

· Friday, December 17 at 7:00 PM EST – Notice to be sent to Facebook, Inc.

My guest on Ask a VC this week was Dana Stalder of Matrix Partners, a newbie in the venture world, but a seasoned manager and entrepreneur in Valley Internet circles.

Stalder answered a range of reader questions including basic advice for pitching Matrix and how Google failing to acquire Groupon impacted the social commerce space. (Matrix is an investor in the number three player BuyWithMe and Gilt Groupe.)

Every week I’m getting more tactical questions from entrepreneurs in the trenches, so I wanted to get as many in as possible. We also talk about opportunities to save the doomed media business, the curse of crossing your fingers and hoping for advertising revenues, when to take money from angels vs. VCs, what entrepreneurs should not use venture capital money on, and why– for better or for worse– Stalder says his firm probably would have been the last guys to invest in Twitter’s A or B venture rounds. Towards the end of the video we discuss whether valuations are still climbing or finally coming down to earth as some investors flee towards later stages, and the one thing an entrepreneur can do to turn Stalder off.

Right about now, a lot of us are scratching our heads about what to give people for the holidays. Well, if the person you are looking for uses Twitter a lot, try Hunch’s new Gift-O-Matic. You just plug in their Twitter handle, and Hunch spits out a list of gift suggestions. The Gift-O-Matic is just something a couple Hunch employees threw together to show off the Hunch API (which powers real gift suggestions at Gifts.com based on your Facebook friends). Essentially, Hunch is mapping your social graph to its own taste graph to come up with the recommendations.

So how well does it work? The top suggestion for Hunch CEO Chris Dixon is a railrroad strategy game called Ticket To Ride. He’s always Tweeting about the Carcassonne, so that’s a pretty good suggestion. What to get Foursquare CEO Dennis Crowley? How about an iPod-compatible jukebox. Our own MG Siegler, aka @parislemon? The Gift-O-Matic’s top suggestion is a a Star Trek USB Communicator nerd phone. Perfect!

So far, so good. But when I tried @arrington, the man who has everything, I got mixed results. It came up with some pretty decent ones: a voltaic backpack, the Hurt Locker DVD, a large carry-on satchel, and an expert bocce set. But the first suggestion, a book called Wetlands, was a little off. I may be wrong, but I just don’t think he’d enjoy this book. Here is the description:

With more than one million copies sold in Germany and rights snapped up in twenty-seven countries, Wetlands is the sexually and anatomically explicit novel that is changing the conversation about female identity and sexuality around the world

Yeah, I’m definitely getting him the bocce set.

Every January, world leaders, entrepreneurs, and journalists descend on Davos, Switzerland at the World Economic Forum to mingle and discuss the world’s problems. The guest list is usually limited to world leaders and CEOs (although a few bloggers somehow sneak in every year). But every year, the World Economic Forum partners with YouTube to host the Davos Debates, which broadens the debate by allowing anyone to upload a question for attendees. The YouTube channel is also used to select one lucky person to attend Davos and even be on a panel.

One theme this year is inclusive growth. The global economy is $70 trillion, but 3 billion people live on less than $2 a day. Pitch an idea on how to close that gap, and you could be on your way to Davos in 2011. Pitches must be one minute or less.

Here is a video with previous winners describing this year’s challenge:

In what may be the first high-profile casualty of the location wars, Brightkite, an early player in the space, has today announced they’re officially killing off the check-in functionality of their service.

Brightkite noted back in September that they’d likely be partnering on check-ins with one of the other major location players going forward. At the time, they said: “We pioneered the check-in several years ago, but as we've said believe it is now a commodity. Expect to see less and less emphasis on checking in on Brightkite, and associated streams of user content. Where appropriate, we'll support checking in to third party services like Facebook and Foursquare.“

And now they’ve set a date on the execution: one week from today. And in the latest post, they’re no longer even mentioning any potential check-in partnerships (though they do note that location sharing will be a part of the new app). From their blog:

For the first time this will be a Brightkite app without check-in, posting or stream viewing functionality. Starting from 17th December, you can expect to see the check-in/posting and streams functions start to disappear from our apps and sites. These features were the defining element to our company 2 and 3 years ago, but we no longer believe they are sufficiently unique or defining to be our focus, so we are dropping them.

The service notes that if you’d like to keep all of your old check-in data, you should visit this link before December 31 to get your last 1,000 check-ins (if you need more, you’re supposed to contact them directly).

This pivot follows co-founders Martin May and Brady Becker leaving earlier this year to start a new company (Forkly — more here). We’ve also heard talk of layoffs at the company recently.

“R.I.P. @brightkite :) Now I know what @dens must have felt like when Google shut down Dodgeball,” May tweeted today upon reading the Brightkite blog post announcing the news.

Going forward, the focus for Brightkite will mainly be on the success they’ve had with group texting. Their new ambition is to be “the default text messaging application on all phones,” they note.

Update: Or as one Brightkite user explained via an image:

We ran into Dennis Brulé at LeWeb this week, Brule is a French entrepreneur and part of the team behind the Paris-based Moodstocks, which focuses on products that use image search including Moodstocks Contacts, Moodstocks Shopper and Moodstocks Notes.

Using a smart phone image recognition technology that Brulé and co-founder Cédric Deltheil have been developing for 4 years, the sparse Moodstocks Notes iPhone app allows you to check into objects like books, CDs, posters, flyers and wine labels by taking a photo, like Sticky Bits except without the barcodes. All you have to do is download the app and take a picture of an object in order to both add and see notes that other people have written.

The Moodstocks technology relies on extracting a specific signature for each image and then matches the signatures despite extraneous variables like lighting changes, etc. If you take photos of a DVD, Moodstocks will match the images to pictures other people have taken of the same DVD, even though it’s not the exact same one.

Moodstocks currently has a 500K Euros in angel investment from European investors. You can watch video of Brulé demoing the app below (excuse the quality) and download it here.

Yesterday, Google put up a post on the Chromium Blog to celebrate a year of extensions being available for their Chrome web browser. The main part of the post touts some big numbers that the feature has accumulated in the past 12 months. Those include, over 8,500 extensions, 1,500 themes, a third of Chrome users now having at least one extension installed, and over 70 million extension and theme installs total. But actually, looking at the Extension Gallery, the numbers may be even bigger.

According to the pages in the Extensions Gallery, there are actually now over 10,000 extensions in the gallery. 10,078, to be exact. The “Most Popular“, “Most Recent“, and the “Top Rated” areas point to that number. Each area shows what would appear to be accurate counts for the total number of extensions currently in the Gallery.

It’s not clear why Google wouldn’t tout the 10,000 number instead of the “over 8,500″ while marking their one-year milestone. But unless their Gallery counts are off, the number is into five digits now, just a year after launch. (It is worth noting that the Chrome Web Store does count just over 8,500 extensions. Presumably, the Chrome Web Store will eventually be the official home of extensions, but the standalone area does still exist with its higher count.)

And the number is also significant because Chrome’s chief rival when it comes to extensions (aka add-ons) is, of course, Firefox. So how many add-ons are available on that browser? Mozilla isn’t quite as transparent with the counts (instead, not surprisingly, they focus on cumulative download numbers), but presumably if you add up the totals from all the categories, you’ll get the overall total. As it stands today, that number is 12,739.

The last time we checked the two counts back in March, Chrome stood at just over 3,000 extensions, while Firefox had 11,623. So both are still growing, but Chrome extensions are growing much, much faster. At the current rate, Chrome would surpass Firefox in that regard at some point pretty early next year.

Firefox, which has had extensions for years now, is obviously still destroying Chrome when it comes to total add-on download numbers. But if you look at charts found here, you’ll see that since October, Firefox add-on download numbers have been dropping fairly quickly on a weekly basis. Perhaps this is as some users transition over to Firefox 4, which is currently in beta testing.

When Chrome was first released, users praised its speed, but many said they couldn’t switch from Firefox because of the add-ons. Google fixed that last year, and the numbers show Chrome gaining users at a much more rapid pace than Firefox is now. In fact, Chrome just because the top browser among TechCrunch visitors — ending Firefox’s four year reign.

Now the two are about to battle over web apps. Google just launched their Chrome Web Store earlier this week, and Mozilla is gearing up to counter when the Open Web App Ecosystem. Of course, as they stand right now, Chrome web apps essentially seem to act like either extensions or worse, just links to web pages hosting apps.

Chrome extensions are also an important part of the just soft-launched Chrome OS.

Seeing as Google is such an important part of Mozilla’s revenues, the two downplay this rivalry. But it very much exists.

Groupon CEO Andrew Mason was on Charlie Rose last night. He refused to answer any questions about why Groupon spurned Google’s $6 billion acquisition offer, but he did reveal a few stats and his thinking on what makes Groupon successful. Groupon now boasts 40 million subscribers for its daily deals, and added 3 million last week alone. In the beginning of the year, it was adding only about 100,000 new subscribers a week.

Mason attributes Groupon’s hypergrowth to the fact that it is inherently social and its growth is accelerated by Facebook and Twitter. Deals propagate much faster than they ever could before because “the social graph . . . just allows companies to grow at a rate that is unprecedented.” He explains that Groupon’s success needs to be understood in this context:

When people call us the fastest growing company ever, I think of us as like the ‘N Sync of websites, like we have had good tunes, but we're not The Beatles. It's not like we're the best thing ever. . . . I think that we'll continue to see more companies like us who make us—who put us to shame a couple years from now with their rate of growth.

Mason also describes Groupon’s business model as “pay-for-performance marketing” (something I’ve touched upon before):

Local businesses have never had a great way to
get customers in the door. . . . So what Groupon does is — it's for the first time local businesses get performance-based marketing. They only pay when these customers walk in the door. We get them in the door and then it's up to them to give them an amazing experience.

You can watch the full interview here or read the full transcript below (courtesy of Charlie Rose):

TRANSCRIPT:

CHARLIE ROSE: Andrew Mason is here.  He is one of the founders and

also the CEO of the website Groupon.  Every day it offers deals in local

markets with deep discounts on everything from hotels to yoga to

restaurants.

Since Mason started Groupon in 2008, it has grown exponentially.  It

already has 35 million subscribers in more than 300 cities globally.  It's

also created a lucrative business model that is expected to result in

hundreds of millions of dollars of revenue this year.

He has done this all without losing his sense of humor.  The deals are

announced every day with quirky descriptions written by Groupon's staff of

writers.  Mason once hired a man to walk around the office in a ballerina

outfit with no explanation just to see what kind of reaction he got.

I am pleased to have Andrew Mason at the table for the first time.

Welcome.

ANDREW MASON: Thank you for having me, Charlie.

CHARLIE ROSE: So how would you define all of that I just talked

about?

ANDREW MASON: I think part of what makes Groupon really fun for

consumers is this element of discovery, finding new things, being surprised

every morning what the deal is.  And we try to remain surprising and we try

to do things, whether it's the deal you're getting or whether it's the way

we're writing about the deal or whether it's the brand and the culture of

the company, that's constantly surprising people, because that's kind of

the spice of life.

CHARLIE ROSE: Give us the history of this.

ANDREW MASON: We started Groupon in November 2008, launched it in our

home town of Chicago.

CHARLIE ROSE: Two years ago.

ANDREW MASON: Two years and a month.  We just switched from talking

about ourselves in terms of months where I think two years is when you do

it for a baby, when you do it for a company.

Before that, another site which is a broader application of the idea

of Groupon.  It was called “The Point,” and it was a way for groups of

people to come together and organize action, whether that action is

boycotting a company or organizing a rally or fundraising or organizing

some kind of group discount.

And there was this big idea around trying to solve the world's

unsolvable problems, but it was too abstract and complex.  So we said let's

take one application of that, group buying, and focus on that and see what

happens.  So we started it as this side project.

CHARLIE ROSE: So “group buying” and “coupon” became one word.

ANDREW MASON: Yes.  So the idea is every day we feature one local

business — it could be a restaurant, it could be theater tickets, it could

be a spa — and we offer a big discount — 50 percent off or more.  But in

order to get that discount, a minimum number of people need to join.

So that way, the business knows they're getting a large number of new

customers.  And for that they're willing to offer this big discount.

So we played around with the idea in Chicago for about five or six

months before we launched our second city.  And then we launched a third

city and a fourth city, and before we knew it now we're adding 30 cities a

month or so.  We entered 2010 in one country.  We're now in 35 countries,

adding four more just last week.  And we're up to actually — you said 35

million, but it's actually 40 million subscribers.

CHARLIE ROSE: There's 40 million now, yes.  And how fast are you

growing in terms of subscribers?

ANDREW MASON: We added three million last week.

CHARLIE ROSE: Three million last week.  How many were you adding per

week at the beginning of this year, in 2010, in January and February of

2010?

ANDREW MASON: Maybe 100,000.

CHARLIE ROSE: And you added three million last week, three million

new subscribers.  And the reason is?

ANDREW MASON: Well, it's solving a real problem for lots of different

types of people.

CHARLIE ROSE: Especially local business.

ANDREW MASON: Yes.  Local businesses have never had a great way to

get customers in the door.  There is this term –

CHARLIE ROSE: They've never been crazy about Internet advertising.

ANDREW MASON: No, because they don't know how to make it work.  They

don't know how to make non-Internet advertising work.  They kind of do it

because they feel like they have to.  But 99 out of 100 businesses that put

an ad in the paper end up feeling disappointed about it.  They can't

measure the returns, and to the degree they can they feel like it was a

disappointment.

So what Groupon does is — it's for the first time local businesses

get performance-based marketing.  They only pay when these customers walk

in the door.  We get them in the door and then it's up to them to give them

an amazing experience.

So we've put all these small kind of niche businesses on the map,

whether it's a — whether it's a helicopter club that's offering flying

lessons, and we sell 2,500 coupons –

CHARLIE ROSE: That's an extraordinary story.  Tell the story.  In

terms of the people at the helicopter club who were offering lessons, all

of a sudden they were expecting 20?

ANDREW MASON: They were expecting maybe a couple hundred or so.  And

we always try and prepare them and say this could be huge.  Don't be

surprised if we sell 1,000.

CHARLIE ROSE: And how many did they get?

ANDREW MASON: We sold 2,500.  And in the history of this business

that's been around for two decades — or two-and-a-half decades –

CHARLIE ROSE: Helicopter flying lessons.

ANDREW MASON: Yes.  This business had brought in a total of 5,000

customers.  So in one day we increased their — we did as much as half of

what they did in the previous quarter century.

CHARLIE ROSE: And it happens because there is a thirst for value and

bargains and a sense that –

ANDREW MASON: More than that, I think.  I think it's a thirst for

life.  It's a thirst for experiences.

CHARLIE ROSE: It's a buying experience they like?

ANDREW MASON: They like getting out of the house and flying a

helicopter or going skydiving or whatever it is.

CHARLIE ROSE: Are these things that they might not otherwise have

thought about?  That they didn't know there was this kind of bargain?

ANDREW MASON: Yes.  I think — I think that's what it is.  I think

the discount is this great trick that we're playing on people, because

we're tricking them to get out of the house and live their lives, because

it's there for one day.

It's like “I've always wanted to go skydiving.  If I'm going to do it,

I might as well do it now because it's never going to be cheaper.” So we

finally get people to commit and get off the couch and go out and have fun.

CHARLIE ROSE: And then you split the profits 50-50?

ANDREW MASON: Yes.

CHARLIE ROSE: Are most people happy with the results?

ANDREW MASON: Yes.

CHARLIE ROSE: Like 90 percent or 70 percent?  Or –

ANDREW MASON: We survey all the businesses we feature, and 95 percent

say they want to be featured again.

CHARLIE ROSE: There are also is this advantage.  It's an advertising

model for them, a promotional model.  Even if they don't make any money,

their company is seen in a certain light of attention.

ANDREW MASON: Right.  So we send out free an email the exclusive

subject of which is this business, and we do this fun write-up that people

read even if they're not interested in buying the deal.

And in a city like Chicago that goes out to a million people, which is

larger than the circulation of “The Sun-Times” and “The Tribune” combined,

so it's amazing exposure for these small businesses.  There is this term

“the hidden gem” that we use to refer to small businesses, and I think of

it as a nice way of saying someone who is great at their craft but just

sucks as a marketer.  And we want to squash that whole concept.  We want to

make sure that if there is someone out there –

CHARLIE ROSE: You want to do the marketing for them?  Which is it?

ANDREW MASON: We want to squash the concept of the hidden gem.  If

you have a great business, if you're great at your craft people should be

coming in there.  It shouldn't be this secret.

CHARLIE ROSE: Oh, I see.  We want to expose great ideas.

ANDREW MASON: Right.

CHARLIE ROSE: Or businesses that have something to offer to you.

ANDREW MASON: Right.

CHARLIE ROSE: Competition — everybody says that one of the issues in

terms of your future is that you have already begun to see a whole class of

imitators.  It is a serious form of flattery, but does it worry you?

ANDREW MASON: There has been something like 500 Groupon clones.  And

it's been very strange.  The first one came around in April of 2009 or so,

and I remember seeing it and just being amazed that someone would copy what

we were doing exactly, like the layout of the site, the copyrighting we

were doing.

But getting over that, I think the proof is in the numbers.  We've

just tried to stay focused on building a really great product for people

and now, with 500 clones, 499 of them are relevant.  We still maintain a

really great lead and I think it's because we really focus on creating

great product –

CHARLIE ROSE: But is this the lead of simply experience or is it the

lead of writing code and technology and software?

ANDREW MASON: I think — it's all of those things.  It's having a

consistently great experience for our customers and merchants.

I think that people — at least on the Internet, because I think about

this a lot — these companies that have these huge ramps.  We're not the

first.  Maybe we've done it a little bit faster, but that's largely a side

effect of the world in which we live where there are these social media

channels lying Facebook and Twitter that allow ideas to propagate much

faster.

But I think about what calls these Friendsters or the MySpaces to

collapse.  And it's usually those companies losing to themselves.  They

lose their sense of focus.  Maybe they're too focused on the competition or

they're off doing interviews with Charlie Rose instead of working on

growing their business.

CHARLIE ROSE: Please, do not say that.

(LAUGHTER)

ANDREW MASON: But I think as long as we continue to look at what our

customers and our merchants want and be as fanatical about that as we were

when we started the business, then we'll be in pretty good shape.

CHARLIE ROSE: So focus is what those that don't excel, or those that

lose their meteoric rise, it's focus.  They forget –

ANDREW MASON: What's important.

CHARLIE ROSE: What's important.  They forget why they got to the

place that they are?

ANDREW MASON: Maybe.

CHARLIE ROSE: So what's the future of Groupon, other than countries

that you haven't tapped, cities that you haven't been to?

ANDREW MASON: Self-driving cars.  We're going to get into that.

Beyond that –

CHARLIE ROSE: What's a self-driving car?  Although I know there's

been a little bit of talk about it, but tell us.

ANDREW MASON: That's actually all that I know so far.

(LAUGHTER)

But I know that I want to do it.

Beyond that, we think there is really an opportunity for a company to

come along and change the way that people buy from local businesses in the

same way that sites like Amazon have changed the way people buy products.

CHARLIE ROSE: Right.

ANDREW MASON: And we want to try to be that company.  We think we've

scratched the surface.

CHARLIE ROSE: So you're the savior for small business in the world.

ANDREW MASON: We're the savior for small businesses.  For consumers,

we want to reverse this trend of spending more and more time on the

computer and help people rediscover their cities.

And as far as the company goes, I think we want to build a company

that, as we get bigger, we stay honest to the brand and the corporate

culture that made us a cool place to work and made people like us when we

were small, and hopefully create some examples of how you don't have to be

like every other company even when you're a big one.

CHARLIE ROSE: And so the reputation is such now that merchants, when

they hear you calling, are thrilled.

ANDREW MASON: Yes.

CHARLIE ROSE: And they're lining up calling you as well.

ANDREW MASON: We have backlogs sometimes six months long in our

cities.

CHARLIE ROSE: Saying, “me, me, me”?

ANDREW MASON: Yes, businesses calling us and –

CHARLIE ROSE: Do you shape the deal?

ANDREW MASON: We work with them to shape the deal.  And it's our

biggest problem.  For every business we feature, we have to pass on seven

businesses.  That's how much the demand is, because we the self-imposed

limitation of one deal a day that we think is important.  And that's what's

led to the –

CHARLIE ROSE: Why is that so important, one deal a day?  Why not one

deal an hour?

ANDREW MASON: I don't know.  Maybe one deal an hour would work too.

But the reason that we've stuck with this one deal a day model is the

focus.  It puts the merchant in the spotlight and makes it feel really

special, and it makes a really simple yes-no decision for consumers.

I mean, I think it's one of the things that differentiates us from the

coupon and deal sites that came before where there was just this list of

deals, and it's overwhelming and everything feels cheap.  But we can really

make these really special businesses feel special by making them the

exclusive subject of our site for a day.

CHARLIE ROSE: There is this old idea, and people have spoken to it

for a long time — somebody once asked Bill Gates at the height of

Microsoft's popularity what did he fear most.  And he said, “I don't know,

but it's two people somewhere in a garage working on something I've never

heard of.” That's what he feared.

What is it about this?  Is this the story of that — of you and Eric,

you know, that sort of cofounder and the guy who has been very successful

at backing success?  Is that what it was?  Was it two guys who just had an

idea, or two guys that was right?  Or were you two people who were looking

for the next break?

ANDREW MASON: In terms of fear, I still am most afraid of Freddie

Kruger.

(LAUGHTER)

CHARLIE ROSE: Yes.  Shaped by your childhood, were you?

ANDREW MASON: Yes.  I mean, he's still scary.  But with the company,

I think what we were trying to do is find a way to create a company that

changes the world somehow.

CHARLIE ROSE: Changes the world?

ANDREW MASON: Yes.

CHARLIE ROSE: You really — you had that thought, let's create

something that can change the world, rather than what might work and what

might do some — here is a good idea.  If we can somehow tap into showing a

whole new set of people that small businesses can give them an experience

and a bargain, that's not changing the world, that's sort of saying –

that's a business?

ANDREW MASON: Yes, let me elaborate.  So when I started the point, I

was originally in grad school and I had –

CHARLIE ROSE: That had a different purpose.  That was to raise money

for a social cause.

ANDREW MASON: Yes, that had a purpose.  And that idea and other

things I have done in the past has almost been like a burden.  You feel

compelled, you have this idea, you have the responsibility to go out and do

something with it.  So I think that's what got us started.

And then the pivot to Groupon wasn't expected by anyone, including us.

I mean, I think we started it as a side project, and it was like, here's

this is cool.  We didn't think we were going to start this billion dollar

business.

CHARLIE ROSE: Here is a cool thing we could do for a group of people

who are part of a social network.  And rather than raising money we'll show

them bargains.

ANDREW MASON: Right, exactly.  And for — it seemed great from the

perspective of the consumer.  Here is a way to find cool things to do in

Chicago.

But what took us by surprisingly the positive effect it was having on

businesses, because we didn't come from a background where we knew a lot

about the trials and tribulations of running a brick-and-mortar business.

But it's really hard for them to get new customers and we ended up doing

that better than anybody else in the world.

So when we got our — when we saw that, it allowed us to really dig

in.  And I think that continues to be what drives us, is that we're here to

help.  We're — I mean, remember, our DNA are people who started this

thing, who started a company because we wanted to — because we wanted to

change the world and make it better.

CHARLIE ROSE: What does it say about where the Internet is today and

where social networking is today and where mobile is today?  Tell me.

ANDREW MASON: I think what it says is that there is this plumbing

that's been laid, like within the tubes.

CHARLIE ROSE: Right.

ANDREW MASON: That's the social graph that exists through tools like

Facebook and Twitter, and it just allows companies to grow at a rate that

is unprecedented.

And I think when people call us the fastest growing company ever, I

think of us as like the N-Sync of websites, like we have had good tunes,

but we're not The Beatles.  It's not like we're the best thing ever.  But

our success and the amount of money we've made is largely because of the

environment that we're growing companies in.

So I think that we'll continue to see more companies like us who make

us — who put us to shame a couple years from now with their rate of

growth.

CHARLIE ROSE: What might be happening in five years?

ANDREW MASON: I mean, I think we'll feel like we have been successful

if five years from now, you don't have the same experience that you have

today where you walk down Main Street and 80 percent of the businesses are

empty.  If we can do a better job at managing — managing supply for small

businesses so that there are more people out there and less kind of

inventory going to waste constantly, so if we can bring that same kind of

really smart inventory management that exists with — for Amazon or for

Wal-Mart to every mom-and-pop shop, then that's an exciting thing to be

working toward.

CHARLIE ROSE: And so what does Facebook and Twitter mean to you?

ANDREW MASON: It's a great way to — well, first of all, Groupon is

an inherently social service because the content is social.  It's

restaurants.  It's theater.  It's stuff that you do with friends.

CHARLIE ROSE: Today in New York it's yoga lessons.

ANDREW MASON: Yoga lessons, which people do with friends.  I'm sure

you do yoga with friends.  And when people get that yoga deal, they send it

to somebody else and they say “Let's both get this and let's go together.”

So Facebook and Twitter are ways for people to spread the word on

these things that never existed before and they make it easy for companies

like us to exist.

CHARLIE ROSE: So if someone listens to this and says, man, I want to

try this, what do they do?

ANDREW MASON: “I want to try Groupon”?  Go to www.Groupon.com.  You

type in your email address and then you start getting the daily deal every

morning.  And then if it looks like something awesome that you want to do,

you buy it.  If it looks stupid, then you delete it, if it looks stupid for

like three or four days in a row, then you unsubscribe.

CHARLIE ROSE: And say Groupon is not for me.

ANDREW MASON: Yes, it's not for you.  But hopefully that won't

happen.  One of the great things about Groupon is that every day we're

featuring businesses that have never — not only have they never run a

discount before, they've never advertised before, like world renowned art

museums, James Beard award-winning restaurants.  We found a way to make the

coupon cool.

CHARLIE ROSE: Tell me the museum story.

ANDREW MASON: We featured — the first museum we ever featured was

the Art Institute of Chicago.

CHARLIE ROSE: Right.

ANDREW MASON: We did half-off memberships.  So normally $80.

CHARLIE ROSE: They got, like, 5,000 new members?

ANDREW MASON: Yes, 5,000 new memberships and that increased their

overall membership base by — I forget the number.  It was like six, seven,

eight percent.

CHARLIE ROSE: What was the offer?

ANDREW MASON: The offer was half off a membership.

CHARLIE ROSE: And then where did you cut that off?  Everybody that

wanted that got it?

ANDREW MASON: Everybody that wanted it got it.

CHARLIE ROSE: And so therefore every art organization in Chicago

wants a Groupon experience?

ANDREW MASON: We did memberships to the Joffrey Ballet in Chicago

recently and increased their membership base by 30 percent or something.

CHARLIE ROSE: So Google comes along.

ANDREW MASON: I mean, there has been a lot of stuff written in the

press about it.  Unfortunately, I can't speak to it in any way.

CHARLIE ROSE: Suppose you had made that deal.  Suppose a deal like

that — what would you do?  What would be the advantage for you to make a

deal like that?  Not Google, not the deal that was there offered, whatever

it was, $6 billion or whatever it might have been, what would have been the

advantage?

ANDREW MASON: Here is what I can say.  I think every choice we make

in the company comes down to a core of this idea we have of what Groupon

could be and the place it could play in the world and in the rest of the

21st century.

And every choice we make is which option will it make it more possible

for us to get there?  So I think whatever we decide to do with the company,

the people that we hire, the deals we run, every itty-bitty choices, how do

we build this company into something that transforms the way people buy

from local businesses.

CHARLIE ROSE: So the only question you would have whether you accept

an attractive offer from someone, or you continue doing it like you are, or

whether you would go public and raise money is, which means would help us

get to where we want to be?  That's it?

ANDREW MASON: That's it.

CHARLIE ROSE: So therefore, why did you choose to eliminate a Google-

like proposition and incline yourself toward other propositions?

ANDREW MASON: It has to do with whether or not I would beat my wife.

CHARLIE ROSE: No, it doesn't.  This is a thing you use.  I know about

this tactic, so I'm prepared for it.  So — you know what I'm asking.

ANDREW MASON: I know what I'm asking.  You know I can't answer.

(LAUGHTER)

CHARLIE ROSE: A boy can try, can't he?

ANDREW MASON: It is amusing.

CHARLIE ROSE: It is amusing.  But here is another take at this.  Were

you influenced by decisions that Facebook had made?

(LAUGHTER)

ANDREW MASON: I can't talk about this, Charlie.

CHARLIE ROSE: But I don't understand why you can't talk about it.

ANDREW MASON: You can't talk about all kinds of things, largely

because — for the same reason that every person you go on a date with, you

don't bring them home to your parents right away.

(LAUGHTER)

CHARLIE ROSE: That's a perfect answer.  That's all I'm looking for.

It's great to have you here.  Thank you very much.

ANDREW MASON: Thank you for having me.

CHARLIE ROSE: Groupon is just a great story.

ANDREW MASON: It's great to be part of it.

CHARLIE ROSE: Yes.  Thank you.

ANDREW MASON: Thanks for having me.

When the first iPod Nano watch straps appeared on the scene in September, I was non-plussed. I’ve seen plenty of wrist-mounted MP3 players, phones, and other junk to understand that anything you wear on your wrist and still have to connect a pair of headphones to is bad news. In general, you look goofy and feel goofier.

But there was something about the Nano watch. Maybe it was because Apple made it abundantly clear that this wasn’t a watch. They made it hard to read the time – you have to press a button every time you want to see the clock – and they added a clip to suggest you should strap this to your jacket and not your wrist. But by gum I wanted to try the Nano watch.

Read more…

As WikiLeaks founder Julian Assange stews in a British jail, with a U.S. indictment reportedly imminent on top of the alleged Swedish sex crimes he was arrested for in the first place, some of his former staffers are already preparing to launch a competing site for whistleblowers called OpenLeaks. The new site will be headed up by Daniel Domscheit-Berg, Assange’s former right-hand man who left last September, after bristling under Assange’s autocratic ways.

OpenLeaks will be structured a bit differently than WikiLeaks. It will be designed to accept leaks in a secure and anonymous manner, but won’t publish them itself. Instead, OpenLeaks will work with other publishers, including newspapers and websites around the world, which will asses the newsworthiness of any leaked documents, and edit and redact them as appropriate before releasing them.

In this way, OpenLeaks hopes to address one of the biggest early criticisms against WikiLeaks: that it publishes sensitive documents indiscriminately without regard for the safety of people who may be mentioned in those documents. This was certainly the case with the Afghanistan war documents, and is one of the main reason why the WikiLeaks defectors set up OpenLeaks. In an online chat at the time, in reference to the way Assange handled the first leak of Afghanistan war documents, Domscheit-Berg accused him of behaving “like some kind of emperor or slave trader.”

Although the same charge of recklessness is being slung at WikiLeaks over the current Cablegate documents, it seems to have learned from its first mistake. All the Cablegate documents so far have been released piecemeal in partnership with newspapers around the world, whose editorial staff vets and redacts names from them as appropriate.

More than anything, what the existence of OpenLeaks shows is that even if WikiLeaks gets shut down, other services are waiting in the sidelines to pop up to and take its place. Thanks to the Internet, the leakers cannot be stopped.

Photo credit: Flickr/andygee1

Idosyncratic Rovio, the company behind the smash hit Angry Birds game, likes to do things differently. Today they live streamed a press announcement about the game’s latest achievements, which featured an indie band, The Ran.

The main announcement was about “Bad Piggy Bank”. This is an in-game payment model for Angry Birds on Android which lets users either remove the ad on the free version of the game or buy the Mighty Eagle update that’s on its way.

Bad Piggy Bank will not require credit card details, and downloads purchases instantly. It does this by charging in-app purchases to your mobile phone bill. But that’s not all.

The Internet vigilante group Anonymous has been thrust into the spotlight this week as the WikiLeaks story continues to erupt like a media volcano. So like any group at center of a story would do, Anonymous has put out (yes) a press release outlining the motivations behind the attacks on PayPal, Mastercard and Visa and implying a change in strategy after attacks on Amazon never materialized.

“We do not want to steal your personal information or credit card numbers. We also do not seek to attack critical infrastructure of companies such as Mastercard, Visa, PayPal or Amazon. Our current goal is to raise awareness about WikiLeaks and the underhanded methods employed by the above companies to impair WikiLeaks’ ability to function.”

Thus far Operation Payback has orchestrated DDoS attacks on the corporate sites of companies deemed enemies of WikiLeaks after it started releasing thousands of diplomatic cables over Thanksgiving weekend.

The Anonymous hacktivist group behind Operation Payback had its main Twitter account and Facebook pages taken away on Wednesday and has since the been decentralized in its social media efforts. This however didn’t stop one of the splinter accounts from tweeting out the below release, stating that the group essentially did not want to injure the companies targeted, but in fact wanted to “raise awareness.”

“While it is indeed possible that Anonymous may not have been able to take Amazon.com down in aDDoS attack, this is not the only reason the attack never occured. After the attack was so advertised in the media,  we felt that it would affect people such as consumers in a negative way and make them feel threatened by Anonymous. Simply put, attacking a major online retailer when people are buying presents for their loved ones, would be in bad taste.

The continuing attacks on PayPal are already tested and preferable: while not damaging their ability to process payments, they are successful in slowing their network down just enough for people tonotice and thus, we achieve our goal of raising awareness.”

While the logic here is inconsistent (don’t people also use Paypal and Mastercard to buy presents for their loved ones?) the release hints at a kinder gentler Anonymous afraid of (yes) bad press. If so that would explain this further evidence of a more positive pivot, a mission statement asking group members to cull the most interesting parts of the WikiLeaks cables and republish — An action which, granted, does spread more awareness than the firing of a LOIC cannon.

Image via: BoingBoing

Katie Goldman is a cute little first grader who lives in Evanston, Illinois. She’s 7 years old and loves Star Wars. For a while she carried her Star Wars water bottle to school and then, one morning, she asked for the pink one instead. She told her mother that some kids at school had bullied her, telling her that Star Wars was for boys. Heartbroken, she resolved to fix the problem by backing down instead of calling them womp rats.

Read more…

From the folks that brought you Google Wave Cinema comes Google Zeitgeist 2010: The Video. As a poignant reminder that the year is almost over, the video highlights the searches that changed our lives or at least the topics of our dinner conversations; From the Gulf Oil Spill to the Thai political crisis to Bed Intruder this was 2010, with some Vuvuzelas thrown in for good measure.

You can read more about Google Zeitgeist here.

Want to check out WikiLeaks on one of its thousands of mirrors hosted around the globe? You might have to click around quite a bit to find one that’s available and fully up-to-date.

Opinion site Antiwar.com has now launched a tool that automagically directs visitors of the site wikileaks.antiwar.com to the best WikiLeaks mirror site in his or her area.

It takes the guesswork out of finding a reliable mirror site when you wish to check out tens of thousands of leaked diplomatic cables but you’re actually in too much of a hurry to spend a couple of seconds clicking about.

Or you can just go to WikiLeaks.ch, I guess.

Just in case you had any doubts about the fact we live in the age of Facebook, just check out Vincenzo Cosenza’s latest edition of the World Map Of Social Networks.

Based on this month’s Alexa & Google Trends for Websites traffic data, Cosenza posits that Facebook has managed to overtake some local incumbent social networks in the past few months, particularly in Europe.

According to his analysis, the site is now market leader in 115 out of 132 countries.

Other social networks on the rise: LinkedIn and Twitter.

Going back to Facebook, things get even more interesting when you look at how and where the site has made strides over time, starting in June 2009.

Can Anything Stop The Facebook Juggernaut, indeed.

As you've probably heard, earlier this week Google held a major event to launch the Chrome Web Store and Chrome OS, its new operating system that revolves almost entirely around web apps and browser extensions. There aren't currently any consumer laptops that support Chrome OS  — and there won't be until the middle of next year — but Google is running a test program by distributing some unknown quantity of unbranded 'test hardware' codenamed Cr-48 to press and select early adopters across the US. We got our hands on one of these devices earlier today, and I've been using it as my primary computer since then. Here are my initial thoughts.

Doing a thorough critique of the hardware at this point doesn't really make sense, given that OEMs like Asus will be announcing their own products over the coming months and you can’t actually buy the Cr-48. But here are the basics: the computer is small but isn't nearly as light as ultra-portables like the MacBook Air (I find it to be more comparable to the 12 Inch PowerBook G4, circa 2005). There's a USB port that currently has limited driver support, an SD card slot, and a VGA port.

The keyboard is full-sized and feels a lot like the ones found on modern Apple computers. The mouse trackpad — or at least, the software running the trackpad — is a complete turd. It works well enough for basic pointing and clicking, but anything beyond that has issues. The 'right click' feature, which involves tapping two fingers on the trackpad, only seems to register around ⅔ of the time. Trying to select text or drag anything anywhere is an exercise in frustration.

Is it fast? Sort of, but it's not universally snappy. Click on a tab and you'll notice a slight lag before the content is displayed — it's not that noticeable, but it's the sort of thing that keeps the experience from feeling fluid. Likewise, scrolling around content-rich web pages sometimes leads to a few jitters, and occasionally things slow down for a few moments for no apparent reason.

But all of these things — from hardware to software issues — are sure to improve in the five or six months before we start seeing consumers get their hands on the first production Chrome OS notebooks. The fact that Flash is painfully slow doesn't really matter, because ninety-something percent of the people reading about those problems will never even have the opportunity to use the Cr-48. By the times these things hit store shelves, all of these issues will be fixed.

But the big question remains: what about actually living in the cloud – are people going to be able to forsake their traditional computers in favor of a lightweight Chrome OS machine?

The answer is “probably”, but, as I'll get to later, it will be partially out of Google's hands.

Navigating around an OS that is essentially a browser feels a little weird at first. Your music application is a browser tab. Your email is a browser tab. Your documents are browser tabs. Sure, you've probably used some or maybe even all of these in web-based apps before now, but it's hard to kick the feeling that the application you're looking for is behind your browser, or minimized in a taskbar, or… something. I know it doesn't sound rational, but after a decade (or two) of using operating systems with layered windows, this system will take a bit of getting used to.  You know that feeling when you start driving a car you've never driven before, and everything feels a little out of place? It's sort of like that.

Fortunately the learning curve doesn't seem very steep. The key, for me at least, is the 'Pinned Tab' feature. This has always been nice on the ‘normal’ version of Chrome, but I've found it indispensible in Chrome OS. If you fail to organize your apps you'll find yourselves sifting through a dozen tabs every few minutes, which is very frustrating. But if you keep the apps and web sites you use most open as pinned tabs — I've got Gmail, MOG, Twitter, and TechCrunch for now — suddenly things make a lot more sense.

Chrome OS has a few other tricks up its sleeve to make you feel more at home, the biggest of which is its Panels feature (which is actually pretty slick by Google UI standards).  Here's how they're described by the Chromium Projects site:

Panels in Chromium OS are used as containers that allow a user to multitask without leaving the view of their current application. For example, with a music player and chat in panels, a user can control the playback of their music and chat with a friend while watching a video or reading a long document in their main view.

In practice these are small widgets that rest toward the bottom of the screen, peeking up just enough that you can point your mouse at them, but taking up very little real estate when you aren’t actually using them. Move your mouse down toward these panels, and they'll slide up a bit further to reveal their titles; click one and it will slide all the way to reveal your IM conversation, notepad, or whatever you've got open. You can adjust both the height and width of these panels, and they're quite handy for anything that you need quick, frequent access to. My only problem with these so far: for the life of me I can't find a section for apps on the Chrome Web Store that support panels; apparently you've got to find them yourself for now.

My current suite of Chrome extensions also helps make me feel at home (I used the sync feature to port over my desktop’s current setup automatically). My Google Voice notifier, Chrome-to-Phone, and Dictionary extensions all work like a charm.

I'll have more to write in a few days once I've gotten a chance to weed through the array of web apps I've installed. So far though, I've got a few early favorites. MOG's music application (which requires a subscription after a trial period) serves as good iTunes replacement. MOG actually redid its UI for this web app to make it look more like the full-screen music browsers you're used to, and it's working well for me so far.

I'm also pretty sure — though I'm hedging a bit — that I can rely on Aviary's image editors as a suitable replacement for Skitch and (in some cases) Photoshop. Image editing in general feels weird on Chrome OS because I'm so used to tossing around these files locally. And Aviary's apps can be a little disorienting because you’re thrown into another window, then have to deal with various sharing options to actually get the image you just edited. I believe you can save content to the computer’s disk, but the file manager doesn’t seem done yet.

Once today I came across Chrome OS's file browser. If you've never done a deep dive into your OS's file system, this will probably scare you. There aren't any friendly folders like 'My Photos' or ‘Desktop’ – instead, you'll find myriad directories with names that will probably only make sense to Linux users. I'm hoping that Google streamlines this significantly before Chrome OS hits production, because any ‘normal’ person who hits this screen is going to be helpless.

More important has been the lack of 1Password support. 1Password is a great password manager (there are others, of course) and while it has a Chrome extension, it doesn’t seem to work with Chrome OS. Unfortunately this means I wind up having to pull out my phone to look up passwords as I need them, which is a pain.

Which brings me to my final point.

I doubt Google was happy about delaying the consumer launch of Chrome until next year, but this window of testing and feedback will likely prove quite valuable.  And it isn't the improvements that Google will be making over the next few months that will matter so much as the creation of third party software optimized for the platform.

The more I think about it, the more I believe Chrome's lack of driver support, its UI glitches, and Google's stated desire to "test the software" are all sort of red herrings. Equally important, or perhaps more-so, is the fact that Chrome OS is going to rely heavily on third parties to fill in its functionality gaps.  And at this point, third-party support has a long way to go.

Plenty of applications would work very well as Chrome OS Panels, but their developers still need to build them. Web apps (and not just Google Docs) badly need to support offline storage. And some apps like 1Password don’t have Chrome OS support at all.

Now, for the next six months or so, Google will have thousands of users toting around Cr-48, and you can be sure this crowd – which consists largely of early adopters and developers – will be very vocal when they encounter a pain point. And by the time these things (or their more polished brethren) start shipping, I suspect that most of these gaps will be filled.

In case it wasn't clear, Chrome OS is going to be a big deal. It isn't just for the early adopters, and, provided Google and third-party developers can fill the remaining feature gaps and add some polish,  it isn't going to be steamrolled by the rise of tablets either.  No, this won’t appeal to the sort of person who can use an iPad as their primary computer, but it could eventually become a viable alternative to Microsoft Windows in the workplace, and may even start eating away at Mac OS X for home use.

Stay tuned. We'll have much more to say on this in the coming days.

Note: You may also want to check out Danny Sullivan’s recap of his first day with Chrome OS — he had similar issues with a password manager as well.

In the last twenty minutes we’ve gotten a slew of tips that indicate that something is off at popular video streaming portal Hulu. According to our tipsters, and numerous reports on Twitter, Hulu users are logging onto the site to find that their playlist queues have been replaced with another user’s.

That’s strange in and of itself, but, in a bizarre twist, the majority of these reports seem to indicate that the same mysterious user profiles keep popping up in place of their own. I’ve seen at least ten reports of Scott Gibson; Joel Nesbit’s account is similarly pervasive.

We’ve reached out to Hulu to ask what the problem is. Clearly there’s some serious glitching going on; hopefully users are simply seeing a few test accounts. Obviously Hulu’s content isn’t as private as, say, Facebook or Google’s. But it’s still unnerving to log in and see someone else’s name.
Update: Here’s a statement from a Hulu spokesperson:

The bug was the result of an incorrect cache header sent to Hulu's CDN, and was identified and fixed within 5 minutes. No more than 14 users may have been affected. We deeply regret the error, and have taken precautions to ensure this will not happen again.

In the wake of recent high-profile leaks, some branches of the US military have taken a step that may be end up being as controversial as its cause. Ironically, the news comes via a leaked memo obtained by Wired’s Danger Room that insists that everyone from grunts to techs “immediately cease use of removable media on all systems, servers, and stand alone machines residing on SIPRNET,” under pain of court-martial.

SIPRNet would be the military’s internal network internet-like network used by the Department of Defense for some secure communications, cordoned off from the rest of the world by, I have assume, the most sophisticated firewalls and electronic countermeasures available. Otherwise, how could they think that a simple and unenforceable ban on removable media could possibly stop leaks? But I am facetious. The flip side of this TSA-like response to profound hemorrhaging of information is that perhaps we’ll see some interesting developments in cloud and connective services.

Sometimes it takes a bull in a china shop to effect a change in inventory. That’s not an actual saying, but I think there’s some wisdom to it. The military is a strange combination of cutting-edge tech and fossil systems, being upgraded as-needed from the tape drives and command-line interfaces of the 80s. A catastrophic change in connectivity requirements might just be the thing that brings the fragmented military systems into harmony.

Try completely removing paper from an office, for instance, and you soon find exactly where and how you needed it. That particular step is usually taken as peremptorily as the military’s was, and with as little preparation. If this ban sticks (though physical media have been banned before, only to be restored), the result would be interesting to observe if it weren’t classified. In the field, especially, I can see this injunction wreaking havoc, though to be sure, a medic probably isn’t using SIPRNet to transfer patient information.

I watched a nature documentary the other day in which a group of ants took down a well-armored grasshopper, or at least drove it off, by biting it all over until they found the soft joints. The military, like all organizations, has those joints, and was apparently unaware of this one in particular until a private loaded a few hundred megs of classified text onto a disc (labeled “Lady Gaga,” I just learned, how entertaining) and passed it on. Very well, the military says, we’ll close that gap. But I think they will find that their sense of security is built on shifting sands.

Burning data to a disc and passing it on is literally the crudest form of leaking I can think of, unless you count calling someone from within a base and dictating the classified info. And banning physical media is almost as crude a response, though understandable. Although I’m sure that SIPRNET and its associated networks are reasonably well-protected, I suspect that a little creative thinking by the best minds in the business would (and will) produce more leaks.

At all events, the ban is in place and the guys on the ground are already complaining. Sure, the military has a lot of great plans for battlefield communication, secure transfer of rich data, and so on, but a more comprehensive and imaginative approach to preventing leaks may be in order. Perhaps they should consult Apple.

Actually, they should probably consult Google or Facebook. The creation from the ground up of a secure yet inherently “social” system like that of a world-spanning military data network has a lot of similarities with what those world-spanning networks have been doing for some time. And they’ve already learned from mistakes that the military can’t afford to make. Either way, the Wikileaks affair seems to have been kindling for quite a pile of internet- and tech-related issues, mainly with the wages of inactive defense against an active and fast-moving online world.

I should add that the reason I think this worth posting, aside from its simply being interesting, is that the modernization on a system like this will almost certainly bear fruit relevant to daily internet life. In time, anyway, as defense research often results in civilian gain, if at a few years’ remove. The challenges they face are similar to those faced by internet giants, and the development of systems to accommodate a worldwide secure network should be of interest to anyone in the business.

[image: Life/Paula Bronstein]