Part of Google’s new social platform Google+ includes a group video chat feature called Google Hangouts, which is great for group video chat and sharing. As my colleague MG Siegler wrote in his initial review of Google+, Google Hangouts attempts to solve the social problem of video chat by making it easy for you to let others know that you're interested in chatting. You can share a piece of content, like a YouTube clip, and everyone in the Hangout can watch it together while talking about it.

The feature is designed to create group chats (of up to ten people) within Circles on Google+. Of course it was only a matter of time before someone tried to add a Chatroulette-type of random functionality to the video chat service. PlusRoulette has launched as a way to create a public Google+ hangout that anyone can join. You simply create a hangout, and list the URL on PlusRoulette. If you are looking for an already public hangout, PlusRoulette will list available hangouts.

GPHangouts also provides a similar function by listing all the public Google+ Hangouts, but you have create hangout on Google+ separately, then add the URL of the hangout to GPHangouts. With PlusRoulette, you can actually create a Google+ hangout through the site’s interface.

Because your name is attached to your Google+ account, the smutty Chatroulette problem is hopefully avoided.

Let the random video chats on Hangouts begin!

When it comes to local commerce, the ultimate prize everyone is going after right now is how to close the redemption loop. The redemption loop starts when a consumer sees an ad or an offer for a local merchant, and is completed when the consumer makes a purchase and that purchase can be tracked back to the offer. If you know who is actually redeeming offers and how much they are spending, you can be much smarter about tweaking and targeting those offers.

Groupon, LivingSocial, and other daily deal sites have created enormous value by pushing the redemption loop the furthest. When someone buys a daily deal, for instance, that translates into cash for the merchant. But for the vast majority of their deals Groupon and LivingSocial do not track whether or not they are ever redeemed, much less the amount each consumer actually spends at the store or restaurant once they show up.

In order to complete the circle and track offers all the way through redemptions, it is necessary to either tap into the payment system or create an alternative way to track redemptions. Different companies are tackling this problem in different ways, but they almost all rely on a shift from emailed coupons to offers delivered through mobile apps.

Next Jump CEO Charlie Kim, who recently partnered with LivingSocial to power daily deals across his commerce network, sees a shift in targeting from broadcasting deals to narrowcasting them. “Blasting out a deal to everyone in New York is not targeting,” he says. “When you broadcast too much in any category, it is just a lot of noise. Email response rates have plummeted for everyone across the industry. What used to be 10% response rates even a year ago, now you are talking the 1% to 2% level.” The constant barrage of emails from Groupon, LivingSocial, and every daily deal copycat is creating user fatigue that is visible in declining response rates.

And that is why mobile is so appealing. If you can send deal notifications to people’s phones based on their exact location and nearby deals, you have the beginnings of narrowcasting. Later on, companies will figure out how to layer on ways to target by income, gender, and other factors as well.

Mobile and local commerce go hand in hand. In a few cities, Groupon is testing out Groupon Now and LivingSocial is offering Instant Deals. In both cases, the deals appear on mobile apps and can be redeemed instantly, rather than having to wait a day for the deal to go live, as is the case with their regular daily deals. The downside of these deals is that Groupon and LivingSocial cannot take advantage of their existing deal inventory and they have to actually provision participating merchants with iPhones and iPads so that they can accept the deals and Groupon/LivingSocial can track them. Yelp is doing something similar where you have to show a redemption code to the merchant from your phone.

Foursquare and Facebook are taking a different approach through their separate partnerships with American Express. Since AmEx is the payment system, it records deal redemptions along with the actual payments. Merchants and consumers don’t have to do anything different from what they normally do. Pay with a credit card and your deal is redeemed. Except it only works if you have an AmEx card and the discount is credited to your account later.

Google is trying to link Google Offers to its Google Wallet, which requires an NFC chip in your phone and an NFC reader at the merchant’s checkout. It has the advantage of working with MasterCard, Citi, and other large payment processors. But it also depends on a brand new technology that will take a long time to become widely available.

The key to closing the redemption loop is definitely payments. Investor Chris Sacca recently told Kevin Rose in a video interview the best reason why Twitter should buy Square is because Twitter has the broadest reach to distribute offers and deals, and Square has a built-in way to track redemption. This was just an off the cuff remark in a friendly chat (Twitter isn’t even in this business yet), but it makes sense.

We are moving from a world of online ads that produce impressions and clicks to online and mobile offers that produce real sales. If the deal companies can figure out a way to actually measure those sales, it could open up local commerce in a massive way that makes what they’ve done so far look like child’s play.

The Winklevoss twins had their original case against Facebook dismissed yesterday, causing tech media to write another slew of “The Winklevosses’ Case Against Facebook Is Over But Wait Actually It Isn’t” headlines. The seven-year battle is indeed not over, as the Winklevosses intend to file a motion under Rule 60b, which alleges that the Facebook withheld evidence during the first trial and hopes for a resettlement. The value of the Winklevoss Facebook shares is currently around $200 million (which is about $200 million more than I or probably any of you have).

This news comes shortly after former Harvard president Larry Summers called the twins “assholes” at the Fortune Brainstorm tech conference in Aspen, in response to a question about the veracity of a scene in “The Social Network.”

“One of the things you learn as a college president is that if an undergraduate is wearing a tie and jacket on Thursday afternoon at three o’clock, there are two possibilities. One is that they’re looking for a job and have an interview; the other is that they are an asshole. This was the latter case,”

The twins responded to Summers’ comments by writing an official-looking letter to the current president of Harvard, condemning Summers’ actions, which only reinforced the “asshole” characterization for many.

Because wading through piles of legalese isn’t something that I (or you) can spend most of my time doing, for better or for worse, I don’t understand the ins and outs of the case. But, thanks to “The Social Network” and the simplification engine that is popular culture, the story of the Winklevoss twins versus Mark Zuckerberg is not about the fight over the minutiae of a breach of contract in most people’s minds; It’s about the battle of two archetypes, and the two parties have come to symbolize the two sides of the “execution” (Zuckerberg) versus “ideas” (the Winklevosses) debate.

Any entrepreneur worth their ramen will tell you that ideas are a dime a dozen; “Startup ideas are not million dollar ideas,” wrote Y Combinator founder Paul Graham “and here’s an experiment you can try to prove it: just try to sell one.”

Larry Summers’ comment about the Winklevosses being assholes because they wore suits to a meeting appeals directly to the Silicon Valley myth of a bunch of dudes wearing hoodies and TEVAs drinking Mountain Dew in a house in Palo Alto while they casually build the next billion dollar company. I’m betting that’s no accident; Summers has slowly made inroads into Silicon Valley, is on the board of Square and is an advisor at Andreessen Horowitz. Moreover Summers actually met Marc Andreessen (who is on the board of Facebook) through his protegé, Facebook COO Sheryl Sandberg.

Sorkin’s masterful “If you guys were the inventors of Facebook, you’d have invented Facebook,” line pretty much sums up the collective ethos of an industry that’s seen Friendster replaced by Myspace replaced by Facebook and lived through “RIP Good Times” to only see more good times. Welcome to Northern California, we don’t like old money and we don’t like patent trolls. “Hustle over entitlement” should be our state motto.

Indeed, when I asked why Silicon Valley had such vehement feelings about what the twins symbolize on Twitter and yes Facebook, I was overwhelmed with similar responses, “The valley is filled with people who were misfits in school in a world filled with Winklevosses,” said Redpoint VC Satish Dharmaraj said on Twitter. “The Valley knows that the idea was not ground breaking or new. Execution is everything. + some luck,” he said.

“It really feels like two jock assholes tried to take money from the little nerdy guy,” said valley veteran John Adams, “The right thing for them to do would have been to start-up a competitor to Facebook and not call sour grapes the whole time.”

Menlo Ventures partner Shervin Pishevar gave a longer explanation on Quora,

“If the Winklevii had spent all their time and energy competing with Facebook in the arena of the marketplace rather than in the confines of the courtroom, we here in Silicon Valley would have had more sympathy and respect regardless of whether they had failed or succeeded. If you want our respect, gear up and enter the arena of entrepreneurship and be willing to die and battle for your idea to win the hearts and minds of those in the stands. The users who vote with their time, money and passion count here- nothing else. No court order or settlement can give you the legitimacy and honor that hundreds of millions of users can. Merit matters more. Always.”

Summers’ character in The Social Network also sums it up, “Harvard undergraduates believe that inventing a job is better than finding a job. So I suggest again that the two of you come up with a new project … The two of you being here is wrong! It’s not worthy of Harvard, it’s not what Harvard saw in you. You don’t get special treatment.”

I’m sure hundreds if not thousands of entrepreneurs silently cheered at that part.

Movies are really good at caricatures, but, as the leaked Zuckerberg IMs show, reality has many facets — the Winklevosses are Olympians (which is an accomplishment is it not?) and I’ve met plenty of assholes wearing hoodies. And as we brace ourselves for the second round of Winklevosses’ versus Facebook there’s one thing that’s clear, whatever the fight is about it goes way beyond money, especially for all of us on the sidelines.

For many people, building with Legos brings back fond memories. For Mike Schropp, the memories are still being built. Schropp loves Legos, often incorporating them into technology. For his latest project, Schropp built a 12-core PC tucked into a custom made case he designed using some 2,000 black Lego bricks. The finished product is not only awesome looking, but also energy efficient.

Schropp was interested in building a machine that could contribute some of its computing power to a community grid, helping crunch data to solve medical challenges. He originally intended to build a machine from scratch, but thought adding a fourth computer to his home seemed excessive.

Instead, Schropp challenged himself to optimize and speed up his existing setup by combining the best of his machines into one super box. He hoped to spend no more than $2,000 on parts, and to build a machine that could process 100,000 “points” per day towards the World Community Grid. Since the machine was intended to crunch around the clock, energy efficiency was of particular significance in the design process.

With help from his collection of Lego bricks, Schropp turned three computers into one. The finished product contains a trio of CPUs, coolers, motherboards, SSDs, DDR3 memory and eight fans. The unit runs on only one power supply, which Schropp modified to power all three systems. Schropp designed the Lego case to allow for as much airflow as possible between the CPUs and motherboards.

Through the new, giant box, Schropp’s ‘folding farm’ contributes to humanitarian and medical research using less power than the sum of three boxes running independently.

The three-in-one box consumes approximately 670 watts of power to crunch about 135,000 points per day, as compared to just one of Schropp’s old workstations PCs, which used 350 watts to crunch close to 10,000 points per day. Even so, the power supply is greater than what the system needs, in anticipation of adding another level in the future.

Photos via Mike Schropp’s Total Geekdom

Editor's note: This guest post was written by Dave Chase, the CEO of Avado.com, a health technology company that was a TechCrunch Disrupt finalist. Previously he was a management consultant for Accenture's healthcare practice and was the founder of Microsoft's Health business. You can follow him on Twitter @chasedave.

Healthcare's hyperinflation is driving the transformation of how care gets reimbursed resulting in a massive disruption in healthcare. For example, pharma companies will succeed or fail based not on how much drug they sell, but on how well their market offerings improve outcomes.

As the largest spenders on R&D in healthcare, massive changes in the way pharmaceutical companies operate are going to have a profound effect on health technology while letting pharma adapt to marketplace changes. It is creating opportunity for startup businesses that heretofore have been stymied when trying to make inroads into healthcare.

In the past, I have frequently said that healthcare is where tech startups go to die. A combination of factors ranging from risk aversion to entrenched legacy vendors exerting account control to health IT not being viewed as a source of competitive advantage for healthcare providers has made it difficult for promising new companies to make a dent. In this three-part series, I will lay out the most important dynamics transforming the opportunity for health technology startups.

In Part I, I will highlight how "Pharma 3.0" will drive a shift from traditional Life Science to HealthTech investing. In Part II, I will outline how healthcare providers will use HealthTech to differentiate and produce better outcomes. I'll wrap up the series laying out how many healthcare organizations are on a path to repeat mistakes the newspaper industry made beginning in the mid-90's. There are remarkable parallels that both spell peril for the incumbent healthcare providers if they repeat the newspaper companies' mistakes and create massive new opportunities such as those I outlined earlier in pieces about The Most Important Organization in Silicon Valley No One Has Heard About and Hotwire for Surgery.

Pharma 3.0 Will Drive Shift from Life Science to HealthTech Investing

E&Y has produced industry reports for the Pharmaceutical industry that provide a comprehensive look at pharma's history to outline its present condition. E&Y interviewed scores of innovators and senior executives to outline out a vision for what they call "Pharma 3.0."

The following is an excerpt from their nearly 100 page report entitled "Progressions – Building Pharma 3.0" (read the full report here):

The Progressions report identifies several industry trends driving nontraditional companies into the sector, including health reform, health IT, comparative effectiveness, and the rising confidence in consumer power. These factors and others are prompting pharmaceutical companies to broaden their focus from producing new medicines to delivering "healthy outcomes" – a shift that will be driven through creative partnerships and business model innovation.

The Progressions report describes the rapid transition from the industry's long-standing vertically integrated blockbuster-driven model, defined in the study as pharma 1.0, to today's pharma 2.0 business model. Under this business model, companies have adopted a number of changes to improve productivity and financial performance, from pursuing more targeted therapies, broadening their portfolio of products and capabilities, to establishing more independent and flexible R&D units, to boosting partnerships with biotech firms, and universities and outsourcing many non-core functions.

The report finds that even as pharmaceutical companies continue to implement strategies to prosper in pharma 2.0, these efforts may be overtaken by a pharma 3.0 "ecosystem" comprised of established industry members, nontraditional companies and an increasingly informed data-empowered consumer.

During my years working in health systems and hospitals, I rarely crossed paths with the pharma industry even though we were ostensibly serving the same organization. The only time I saw pharma reps was noticing well-dressed folks in the cafeteria that were clearly the pharma reps. My time was spent in the IT and Patient Accounting departments where much of Health IT was relegated. Whereas Health IT was viewed as a cost item to be minimized, pharma and Medical Device products represented revenue generation and differentiation opportunities for healthcare providers.

In the flawed fee-for-service model that has driven healthcare's hyperinflation, financial rewards incentivized activity (order a test, prescribe a drug, do a procedure, etc.) rather than positive health outcomes. For example, there are 60MM CT Scans done per year in the U.S. despite the fact that there isn't a radiologist in the world who believes anywhere near that volume is required. Nonetheless, we incur that high cost and excess radiation in the fee-for-service that is the underpinning of the legacy reimbursement model. Fortunately, there's a sea change to change reimbursement to reward positive health outcomes over mere activity. In addition, electronic medical records are helping reduce duplicate tests.

Based on my past (non)experience with pharma, it has been remarkable the number of pharma companies that are now proactively reaching out to software companies who can help them enter with new services focused on outcomes that have little or nothing to do with what I would traditionally associate with pharma. Their strategies are varied and dynamic but they aren't sitting on their hands. For example, one shared how they recently entered into a 10-year agreement to be responsible for the end-to-end health of a population of individuals with a particular disease. As I will touch on in the 3rd part of the series, this will have a profound effect on the competitive landscape for traditional health providers. Not many healthcare providers are prepared for this type of competitor.

Like it or not, healthcare is like most arenas – revenue (aka reimbursement) drives behavior. pharma has been extremely adept at maximizing revenue in the fee-for-service environment. As one pharma exec said to me, "We have spent billions on developing and marketing our product but $0 on ensuring it is properly used."

As pharma companies strive to be a "health outcomes" industry, the focus on outcomes will radically alter their behavior. They recognize the competitive threat. As the E&Y report stated, "Pharma companies have expanded the number of pharma 3.0 initiatives by 78% since 2010. Yet non-traditional players have invested even more in Pharma 3.0." The sense of urgency with the pharma organizations I've met with is remarkable.

To date, IT investment in healthcare has been mostly limited to the administrative/reimbursement facets of healthcare (e.g., claims processing). The primary exception is the software that has been embedded into medical devices with little or no ability for the clinician to interact with the device. There's a contrast with where money is actually spent in healthcare – i.e., healthcare delivery versus therapeutics as outlined in a piece by angel investor and life science veteran Don Ross in his piece "Investor: Health tech is the next big opportunity".

How big is the healthtech opportunity? Data from the Centers for Medicare & Medicaid Services (CMS) show that the U.S. spent $2.5 trillion on health care in 2009. Of this, 84 percent was spent on healthcare delivery, which includes costs associated with clinicians and insurance companies. In contrast, only 16 percent was spent on therapeutics, including medical devices and drugs. Although venture investors traditionally have put their money into therapeutics rather than delivery, the balance is shifting.

As Pharma companies recast themselves as "health outcomes" companies in response to anticipated reimbursement shifts, one can expect that venture capitalists and Pharma/Biotech will shift their investment focus from almost exclusively Life Sciences to integrated approach with Health Tech and an outcomes. Areas such as decision support, care coordination, patient engagement, etc. become paramount if one is going to address outcomes versus simply encouraging more activities that the legacy reimbursement model have incentivized.

Increasingly the very survival of the pharmaceutical industry is predicated on creative alliances with nontraditional players such as IT companies. No longer will healthcare be where tech companies go to die for the startups with transformative products that may have languished in the past. The very survival of one of the most profitable industries in the world depends on it.

Microsoft had one hell of a year. Their best ever, in fact, from a revenue perspective. They’re no Apple, but hey, who is? Nearly $70 billion in revenue for what is primarily a software company is amazing. But the great numbers continue to mask one thing: the gaping, blood-soaked wound that is the Online Services Division.

Reading Microsoft’s press release on their earnings, you’d think everything is fantastic in the division. “Online Services Division revenue grew 17% for the fourth quarter and 15% for the full year, primarily driven by increases in search revenue.” Big growth! Awesome!

Wait a minute…

What Microsoft once again conveniently left out is any talk of how profitable the division is. That’s because it’s not profitable. Oh boy is it ever not profitable. The division lost $728 million for quarter. Remarkably, that’s the second-worst loss they’ve ever reported — only $4 million shy of the record $732 million loss in Q4 2009.

After I pointed out the loss last quarter, apologists were quick to jump on the “they just need more time” argument. Well, unbelievably, they continue moving the wrong way. Last quarter’s loss was an astounding $726 million. They somehow lost $2 million more this past quarter.

Even crazier, this is the 22nd consecutive quarter that Microsoft has reported an overall loss in the Online Services Division. There hasn’t been a profit reported since 2005.

Think about that for a second. 22nd consecutive quarters of losses. Revenues are increasing, but the losses are increasing faster. They’re spending well over two dollars for every dollar they earn.

And then there is the biggest number of all. For the year, the Online Services Division lost $2.557 billion.

Yes, Microsoft can afford these losses thanks to their other wildly profitable businesses. But at what point do they start to reconsider their online strategy?

Spending more than they’re earning has worked for them in the past with the Entertainment and Devices division, which is now increasingly profitable. But again, Online Services has been losing money for almost 6 straight years now. And this was the worst year yet. Things are getting worse, not better.

Windows, Business (Office), and Servers are essentially subsidizing Online Services (Entertainment still doesn’t come close to covering the loses Online Services is seeing). And while Business and Servers had strong years with good growth, the Windows business actually shrank from last year. What happens if the other businesses start to shrink too? Will Microsoft be able to continue to justify the Online loses?

For their part, Microsoft mainly blames the loses on the Yahoo deal:

OSD operating loss increased due to higher operating expenses, offset in part by increased revenue. Cost of revenue grew $641 million driven by costs associated with the Yahoo! search agreement and increased traffic acquisition costs. General and administrative expenses decreased $157 million or 60% due mainly to transition expenses in the prior year associated with the inception of the Yahoo! Commercial Agreement. Research and development increased $117 million or 11% due to increased headcount-related costs.

Don’t overlook another crazy stat: Microsoft was able to decrease general and administrative expenses by 60 percent for the year, and still lost more than ever.

The next few quarters will be interesting to watch. Microsoft paid $8.5 billion in May to buy Skype — another online business with a history of losing money. It’s Microsoft’s largest acquisition ever. And while the deal closed in late June in the U.S., it still has to be approved in Europe, which may take until October. Also interesting, Skype will not actually be a part of OSD, and will instead be its own division. Still, as an online-based division, everyone will be watching it alongside OSD.

Will the worst online startup in history finally be able to turn things around in the coming year? Or will they continue to bathe in blood?

The charts below by BusinessInsider really drive the point home.

Rick: “How can you close me up? On what grounds?”
Captain Renault: “I’m shocked – shocked! – to find that gambling is going on in here!”
Croupier: “Your winnings, sir.”
Captain Renault: “Oh, thank you very much.”

One has to mourn such a collective loss of innocence. The innocence of the British parliament tearfully quizzing News Corp executives over revelations that phone hacking was used in the pursuit of tabloid scoops. The innocence of those same executives who were “shocked, appalled and ashamed” at the means used by their staff to keep delivering front page gold. The innocence of senior Metropolitan Police officers on learning that underpaid colleagues routinely sold information to tabloid reporters.

And most of all the innocence of the Great British Public — the same public who made books like Evelyn Waugh’s novel ‘Scoop‘ into a 1938 best-seller, and did the same to Piers Morgan’s The Insider: The Private Diaries of a Scandalous Decade two generations later. How shocked — shocked! — they all are to learn that tabloid journalists are, at heart, scumbags.

America too is shocked by the revelations — and with only slightly more justification. US journalists have trended towards higher moral ground than their Fleet Street counterparts, but only in recent years — as Paul Collins explains in this fascinating piece for Slate.

Really, anyone who has ever picked up a Murdoch newspaper, read a book about Fleet Street or laughed at any of the myriad movie characters based on News Corp executives (Elliot Carver in Tomorrow Never Dies is a perfect, and representative example) has to ask themselves whether they’re really shocked, or even surprised, by the revelations of wrong-doing at the company or whether this is all just a very convenient opportunity to bring about the downfall of a man that almost everyone in the public eye has a reason to hate.

In this week’s year’s episode of Why Is This News we ask exactly that question; with Paul offering a spirit defense of the most hated man in media, and Sarah wondering whether such a blasé attitude to corruption and criminality means he’s on the Murdoch payroll too. At one point in the show (which was taped yesterday), Paul suggests that it’s only a matter of time before non-Murdoch newspapers are accused of phone hacking — and worse. And what’s this in today’s Independent?

“Hacking was endemic at the ‘Mirror’, says former reporter“

Shocked!

Video below…

No, the heat isn’t playing tricks on you: it’s time for another new episode of OMG/JK!

In this episode we take a look at Mac OS X Lion, the latest release of Apple’s operating system that introduces some key new features: Mission Control, Launchpad, and inverted scrolling. Tune in to hear how often MG attempts to touch the screen of his Macbook because he’s so used to the iPad. Yup.

Next, we turn to Spotify, the all-you-can-eat music streaming startup that finally launched in the United States after scoring record deals with the major US labels (there had been rumors about an impending US launch for well over a year). Was it worth the wait?

We also revisit Google+, Google’s promising social network that keeps making headlines (both good and bad).

Here are some recent stories relevant to this week’s topics:

• Sean Parker On Spotify U.S. Launch: “The Realization Of A Dream”, “The Answer To Piracy”
• With OS X Lion, Apple Touches Upon The Next Decade Of The OS
• Nine Things You Should Do After Installing OS X Lion
• Google+ iPhone App Now Live In The App Store (Screenshots)

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The Gillmor Gang — Robert Scoble, Andrew Keen, Kevin Marks, and Steve Gillmor — convened for yet another G+ conversation. This one, however, was noted for its evenhandedness as @ajkeen and @scobleizer traded social blows over the new Google service. As someone in the Friendfeed chat on the livecast noted, @stevegillmor seems surprisingly positive about the new service. As Keen observed, that’s because I think the new service is Friendfeed revisited.

Of course, it is. But it’s also Twitter without the 140 character limit, Facebook without the unseen authority algorithm, and the Gillmor Gang without a human director (Hangouts). @kevinmarks says it a little differently, seeing G+ growth gaining on Club Penguin. And that’s the fundamental reason Google has a winner, by underlining the best parts of each of these services and floating all boats on a rising tide.