economy - ReadWriteWeb http://www.readwriteweb.com/feeds/tag/economy en Copyright 2012 Richard MacManus readwriteweb@gmail.com Tue, 14 Feb 2012 12:45:00 -0800 http://www.sixapart.com/movabletype/?v=4.35-en http://blogs.law.harvard.edu/tech/rss World Bank Assumes Control of Google Map Data worldbankgoogle.jpgGoogle announced a partnership with the World Bank today to make Google Map Maker data more accessible to government organizations in disaster scenarios. Google Map Maker is the tool for crowd-sourcing the editing and maintenance of Google's world map. Its user-generated data include locations of hospitals, schools, settlements, water sources and minor roads.

Access to these data will help governments, NGOs, researchers and individuals plan without waiting for the changes to be approved and added to the official maps. World Bank partner organizations, such as government and U.N. agencies, can contact World Bank offices to request access to the data. Kenya, South Sudan, Tanzania, Sierra Leone, Ghana, Zambia, Nigeria, Democratic Republic of Congo, Moldova, Mozambique, Nepal and Haiti will pilot the project.

]]> Google's New Gatekeeper

This partnership could improve response time and effectiveness in crises in underserved areas of the world. It's just a shame that Google has decided to compete with Ushahidi and other open-source efforts to solve this problem. Access to Google Map Maker data is privileged, and Google has chosen the mother of all elite gatekeepers, the World Bank, to facilitate this program.

The World Bank has supported much-needed online mapping efforts, such as the April 2011 project in South Sudan that enabled Google to put the new country on the map. It has also financially backed apps supporting economic development in a worldwide contest for software developers. In partnership with academic institutions, the World Bank has also backed a Web-based knowledge platform for urban development.

These are all great efforts, but they establish a familiar pattern for the World Bank. In Web technology, just as in global economic development, the World Bank has positioned itself as an unavoidable, privileged gatekeeper, and this time Google helped.

Community mapper in Kampala, Uganda (via Google LatLong)
googlemapuganda.jpg

No More Open Source

We've reached out to Ushahidi for comment on the news, and we'll update with the response. While Ushahidi's non-profit, open-source efforts carry on, Google is closing off access to its mapping platform upon which great works of software were once built. Having realized the enormous value of Google Maps as a resource, Google decided to start charging for API access last year.

That's Google's commercial prerogative, but its proprietary efforts are now in competition with the open-source community. Today's partnership with the World Bank is a clearer example than the murky history of access to the Google Maps API. Google Map Maker is a moderated Google program, and Google has selected the World Bank as an arbiter of its data.

mapmakerNEW1.jpg

Last December, Google overhauled Map Maker's editing tools to make it easier for any Google Maps user to add new data.

What do you think? Is the World Bank a good choice for Google as a partner? Share your thoughts in the comments.

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http://www.readwriteweb.com/archives/world_bank_assumes_control_of_google_map_data.php http://www.readwriteweb.com/archives/world_bank_assumes_control_of_google_map_data.php Google Mon, 16 Jan 2012 10:08:00 -0800 Jon Mitchell
Cyber Monday Mobile Payments Rise 514%, Overall Sales Up 20% cyber-monday-150.jpgReuters reported that Cyber Monday sales were up 20% versus the same time last year, according to data from IBM. Last year's sales topped $1 billion, and ComScore expects that number to hit a record high of $1.2 billion.

PayPal saw a 514% increase in mobile payment volume on Cyber Monday as of 11am PT. It also noted six percent more in mobile payment volume on Cyber Monday as compared to the same time period on Black Friday.

Unlike Thanksgiving and Black Friday, all Cyber Monday purchases occur online, with online retailers offering deep discounts.

]]> IBM notes that most shopping will come from laptops and PCs during the day. It says that mobile shopping will pick up later. This suggests that employees who were back at work after the long weekend shopped from their work computers during the day, and continued into the evening with their mobile devices.

Did you find big deals on Black Friday? Tell us about your experience in the comments below.

Image via AppAdvice.com.

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http://www.readwriteweb.com/archives/cyber_monday_mobile_payments_rise_514_overall_sales_up_20.php http://www.readwriteweb.com/archives/cyber_monday_mobile_payments_rise_514_overall_sales_up_20.php E-Commerce Mon, 28 Nov 2011 16:45:00 -0800 Alicia Eler
How Internet Shoppers Can Stay Safe On Black Friday black-friday_msp1-150.jpgThe biggest shopping day of the year is upon us. PayPal predicts that Black Friday will start on Thanksgiving with Internet users shopping from their couches right after the turkey feast ends. If you're one of the many who will be shopping online this Black Friday, there are a few things you need to know.

This past April Epsilon, one of the largest email marketing companies, announced that its database had been breached. Epsilon said that 2% of its clients were affected, including major retailers like Best Buy and Target. This was a phishing attack, the same kind that's bound to appear on Black Friday.

]]> Brendan Ziolo, VP at Kindsight, an Internet security provider, predicts that scammers will be launching spearphishing attacks and sending fake emails from retailers. How will you protect yourself from potential scams? Here are four key tips from Kindsight.
 
Stay alert for phishing emails - Keep a watchful eye on any "deal emails" you receive that appear to be from legitimate retailers. Look for poor grammar or misspellings in the email and unusual URLs. If you open a suspicious email by accident, don't click on any links or open any attachments. Go directly to the retailer's website.

Search safely when seeking deals - Hackers can use SEO techniques or even buy web ads to make their fake sites that distribute malware appear higher in search results for terms that shoppers would be searching on such as "Black Friday deals". Stick to recognized retailers when shopping online this season.

Download apps from trusted app stores - Mobile shopping apps are all the rage these days. When downloading a shopping app to help you on Black Friday or Cyber Monday, bear in mind that Android malware usually comes disguised as legitimate applications. So only download apps from reputable web sites that you trust. Android malware is up 472% since July of this year.

Update your security software and other applications - Hackers can exploit vulnerabilities in outdated security software, operating systems, applications and plug-ins. Before you start your holiday shopping online, make sure all of your software is up-to-date so you can safely surf the Web.

Make sure you update your browser to improve security (and speed!) and only use ultra-secure passwords on your accounts.

Or, you could always leave your house and hit the stores. It might look something like this, though.

black_friday_2011_sales_crowds_4.jpeg

Either way, you've been warned.

Images via MyBlack-Friday.com and DroidDog.com.

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http://www.readwriteweb.com/archives/how_online_shoppers_can_stay_safe_on_black_friday.php http://www.readwriteweb.com/archives/how_online_shoppers_can_stay_safe_on_black_friday.php E-Commerce Thu, 24 Nov 2011 16:00:00 -0800 Alicia Eler
Wealth of Nations 2.0 spice market.jpgThe global economy has existed for at least 5 centuries now. During the 1400s and 1500s, explorers traveled from different parts of the world to establish trade routes and set the first foundations for the global economy. Merchants from Spain, Portugal, France and different parts of Europe began to trade with Asia and China, and vice versa. Many "universal" products today, like chocolate, coffee and potatoes were the result of this very global economy. Indeed, these products were not native to the whole world back then.

From the development of sea routes, all the way up to the industrial era, "products" continued to be at the core of the global economy. However, in the last fifty years, after the World War and later, the fall of communism, services have grown to be equally important. In the 1980s, in developed countries, including America, large sections of jobs shifted from factory or agricultural sectors to services, and this trend was reflected in the global economy.

]]> Preetam Kaushik is a writer, web 2.0 expert and freelance journalist covering the industry trends of business, IT and e-commerce. He is a beat and opinion writer for DailyDeal Media and a regular contributor to The Business Insider and YFS Magazine. However, it was the emergence of technology and the internet that has truly revolutionized the global economy, a revolution after centuries; never has global trade between countries moved, developed and evolved at such a rapid pace. With easy global accessibility to businesses and consumers, technology has created the Digital Economy.

The 20th Century Ends, a New Era Emerges

In the 1980s, Robert Solow, a Nobel-prize winning economist, had joked about how he saw computers everywhere except in productivity statistics. Many wondered, if they were of any use at all. In a few years, out came personal computers, computer networks and intelligent bits of technology and the way for a new economy was paved.

Towards the end of the 20th Century, as internet and technology began to gain precedence in our lives and also businesses, the Digital Economy as we know it today began to evolve.

Nicholas Negroponte, a faculty member at MIT, observed something interesting and new. He saw, like many other thinkers and business leaders, the economy was going to be about "moving bits not atoms," as he described it. Negroponte would go on to create the foremost technology magazine of today, Wired, which would capture the evolving trends of this new economy over a decade and most possibly, beyond.

A quick look through the archives of Wired reflects how the Digital Economy has grown. From the emergence of companies like Microsoft and Google to an era that Negroponte had predicted in his book 'Being Digital', where the information world, entertainment world and the interactive world would merge is all there.

From Trade Partners to Outsourcing Hubs

Almost every aspect of our personal and economic lives has been touched with advancements in the digital sphere. The manner in which our children learn things at school and do their assignments has changed from the way we did. Work systems have become far more productive, as networks connect offices in different parts of the globe, so the CEO of an American Company can speak to his Chinese counterpart at the click the mouse. Up until ten years ago this only existed in the realm of our imagination but today, in the Digital Economy, this is very much a business reality.

won.jpgUndoubtedly, a new era of business and businessman has emerged. While creating a new breed of entrepreneurs to establish new companies for the Digital Economy to thrive, innovation has spurred more innovation. If you look at the three biggest companies of the Digital Economy today, Google, Apple and Facebook, they thrive on innovation, and yes, billions of dollars. Gone are the days of orthodox businessmen, reluctant and resistant to change.

The easy accessibility to the rest of the world has made technology-driven international trade the norm of the day. While the West has been trading with Asian countries for centuries in the new Digital Economy, countries like India, China and the Philippines have emerged as outsourcing hubs; helping companies in developed countries with menial tasks, so they can shift their focus almost entirely to innovation and expansion. But even the emerging countries have benefited, as their economies have begun to grow. With their economies growing, their domestic consumption has risen, fuelling further growth in these countries. Many of these countries have also shifted from agrarian economies, like India, to service and digital-focused economies.

The emergence of the Digital Age and Economy does not mean that the industrial or agricultural sector has suffered. In fact, these areas have grown immensely thanks to advancement in digital technology. For instance, agricultural economies are able to sell their produce to other countries and this is much better managed in the Digital Economy where transactions can be carried out at the click of a mouse. Manufacturing technologies have gained a boost, thanks to the technology-oriented digital age, thus making manufacturing more productive.

The New World Media and the Social Web

Although, the rise of the Digital Economy has not been without problems. Billions of dollars were lost in the dot-com burst in the early 2000s, which made many theorize that the New Economy, as it was called back then, was the creation of the then growing, IT industry, and the Wall Street. However, that wasn't true and thanks to the lessons learnt in those years, the sector has been far more cautious.

The emergence of the Digital Age and Economy does not mean that the industrial or agricultural sector has suffered. In fact, these areas have grown immensely thanks to advancement in digital technology. For instance, agricultural economies are able to sell their produce to other countries and this is much better managed in the Digital Economy where transactions can be carried out at the click of a mouse.
The biggest boon of the Digital Age has been the growth of online media, which is why it is also known as the Information Age. Hundreds of thousands of traditional print media outlets, including Negroponte's Wired can now be found online. Needless, to say, many more exclusive online information outlets have emerged. This information revolution in the Digital Age can be likened to the invention of printing technology and its contribution to spreading information, except the web's impact is thousands of times more. This will only benefit the Digital Age and Economy, as knowledge and human intelligence will become its biggest assets.

The Digital Age has give rise to new trends like Social Networking, which has again, not only helped businesses but also people from different parts of the world connect. Thanks to Social Media like Twitter, now it only takes seconds for a product to go viral or ideas to be spread among millions of people. The Arab Revolution is also showing how social and political trends with shape up in the Digital Age, thus again affecting economics and world business.

The most obvious beneficiary of businesses, in the digital economy, has been e-commerce. E-commerce sites enable brick and mortar businesses to reach customers anywhere in the world, while making things far easier for customers, who can shop at the click of a mouse. The e-commerce industry generates billions each year and is an important part of the Digital Economy.

Now, with broadband technologies set to grow e-commerce will go on to be one of the most important ways to do business in the world. In addition to e-commerce, businesses have to adapt to the Digital Age, no matter which industry they belong to, whether it is health, finance, education, food grains or music; if they fail to adapt, they will only be making way for businesses that do. Digital Technologies are not just revamping businesses, but also societies and governments, that reach out to its people on the web now-a-days.

But this is just the beginning of the Digital Economy, and what a beginning it has been! As corporations and governments alike continue to invest billions of dollars into technology and the internet, space jets, teleportation and time travel don't seem too far fetched anymore.

Photo by Frank Kovalchek

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http://www.readwriteweb.com/archives/wealth_of_nations_20.php http://www.readwriteweb.com/archives/wealth_of_nations_20.php Finance Thu, 13 Oct 2011 19:30:00 -0800 Preetam Kaushik
Infographic: Obama Town Hall: LinkedIn's Economic Role LinkedIn_logo-150x150.jpgIn advance of its live event with President Obama today (starting now! 2 p.m. Eastern, 11 a.m. Pacific), LinkedIn has produced this infographic about the swath of the U.S. economy represented by its members. Since 2009, over 7.4 million job changes have been reported on LinkedIn.

The top industries on LinkedIn are higher education, marketing and advertising, information technology and health care. Of its 115 million members, almost 5 million are employed by small businesses. The biggest growth industries are renewables and environment, and oil and energy. The infographic also focuses on LinkedIn's use by veterans, as well as the number of users who have attended community college.

]]> It's an interesting slice of the economy, and it shows that the population of professionals using the Web to network is growing more diverse. As you watch the event, think about what these data say about the role the Web can play in rebuilding the economy:

FINAL_lnkd_infographic_520w.png

Do you use LinkedIn for networking? Share your experiences in the comments.

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http://www.readwriteweb.com/archives/obama_town_hall_linkedins_economic_role_infographi.php http://www.readwriteweb.com/archives/obama_town_hall_linkedins_economic_role_infographi.php Social Networks Mon, 26 Sep 2011 11:00:00 -0800 Jon Mitchell
Facebook Apps Ecosystem Gives Economy $15.7B Boost facebook_150_logo.jpgApp developers who launch their projects on the Facebook platform have created 235,644 jobs and contributed $15.7 billion to the economy, says a study released by the University of Maryland.

Using statistical evidence provided by Facebook and apps developers, researchers at the Smith School Center for Digital Innovation, Technology and Strategy show that the boom in games like Farmville and the creation of productivity apps are boosting at least one corner of the economy.

]]> They say that the "Facebook App Economy" created 53,000 jobs just in software companies alone. The study does not cover digital agencies that have launched internal departments to create apps for corporations and brands.

Il-Horn Hann and Siva Viswanathan, co-directors of the center and associate professors of information systems, measured the number of people employed to build, develop and consult on Facebook applications and correlated it to data about apps made available by the company. Using conservative estimates of the data, Hann and Viswanathan judge between 129,000 to more than 182,000 people are employed in jobs supported by the app economy. The more aggressive approach to the data tips the jobs creation number over 230,000.

If the more aggressive number is true and, as we have said before, the app economy is not fully developed, the potential for economic uplift is staggering.

The results of the study are available in a white paper.

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http://www.readwriteweb.com/archives/facebook_apps_ecosystem_gives_economy_157b_boost.php http://www.readwriteweb.com/archives/facebook_apps_ecosystem_gives_economy_157b_boost.php E-Commerce Mon, 19 Sep 2011 11:45:01 -0800 Douglas Crets
Amazon Takes On the US Post Office in Locker Box Test Last Friday, Amazon took on the U.S. Post Office and opened a real world locker box service as a delivery portal for the stuff people buy on Amazon.com.

The lockers, which come in several sizes, are located on a wall in a 7-11 convenience store in Seattle surrounding an ATM-like device that allows a customer to key in a PIN and pick up their Amazon package.


]]> The boxes are a riff on what Amazon is already doing at big box electronic stores like Best Buy. Currently, if you designated a package be sent to a retail store, the products could only be electronics and games sold at those stores.

We don't have Amazon's confirmation, but it is quite possible that by installing these boxes in convenience stores, Amazon will allow customers to pick up anything that Amazon sells, including books or food.

Amazon is the latest online company to offer services usually offered by shrinking government institutions and to create solutions, a trend spotted in the United States and elsewhere.

Email has for years clawed away at real world mail delivered by carriers dressed in blue uniforms. Now, Amazon is jumping into the increasingly large gaps opening in a U.S. Postal Service whose effectiveness continues to be compromised by increased costs and declining tax revenue.

In fact, it is at the brink of default; it is likely the Post Office will miss a payment of $5.5 billion to the U.S. government on Sept. 30, and the Postmaster General has threatened that the service will need to close 3,700 local offices and fire 120,000 employees.

We have put in a request for more information about the locker system in Seattle and what it will mean for the company as a whole. We will update when we know more.

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http://www.readwriteweb.com/archives/amazon_takes_on_the_us_post_office_in_locker_box_test.php http://www.readwriteweb.com/archives/amazon_takes_on_the_us_post_office_in_locker_box_test.php Amazon Tue, 06 Sep 2011 12:30:00 -0800 Douglas Crets
The Cost of Egypt's Internet Blackout: $110 Million+ egyptian_pound.pngThe Organization for Economic Co-operation and Development has come up with a figure of $90 million for the financial cost of the Egyptian Internet blackout. It may be much higher.

Egyptian authorities ordered the country's major ISPs to shut down on January 27th. They turned them back on February 2nd, leaving the country in the informational dark for six days.

]]> 200_EGP_obverse.JPGFor some reason the OECD calculated based on five days at $18 million dollars per day for a total of $90 million in lost wealth due to the shutdown. This figure represents three to four percent of the country's gross domestic product.

According to the OECD:

"(T)his amount does not include the secondary economic impacts (such as) e-commerce, tourism and call centres. In fact, the IT services and outsourcing sector in Egypt has been a growing part of the economy and relies heavily on the Internet and communications networks. IT outsourcing firms in Egypt made USD 1 billion in revenues in 2010 (or around USD 3 million per working day), servicing overseas customers through call centres, helpdesks, etc."

In its coverage, by Parmy Olson, Forbes added that outsourcing revenue of $3 million per day. Further, they calculated "businesses that simply require the Internet to operate, along with Egypt's e-commerce industry" at an additional $1 million per day.

Given that extra $4 million per day for five days, Forbes' calculations add $20 million to Egypt's loss, for a grand total of $110 million.

Although the Internet came back online fairly quickly, it took people time to discover that fact and boot up. Even when the country was wired again, complaints persisted of exceptionally slow connections, possibly on purpose as a kind of stealth block. That, combined with the fact that five down days is a rather conservative number (as I said, it seemed more like six to me), I wouldn't be surprised to find the ultimate figure to be more along the lines of $135 million.

1_Egyptian_Pound_1924.jpgAs Forbes' Olson points out:

"(T)here's also the long-term effect of the blackout on future business. Foreign companies will hardly be falling over themselves to invest in a telecommunications infrastructure that could be shut down at a moment's notice."

For those in the high-tech industry, the reality of one of their own being snatched off the street may linger when fear for the stability of information access is a thing of the past.

Currency images via Wikipedia.

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http://www.readwriteweb.com/archives/the_cost_of_egypts_internet_blackout_110_million.php http://www.readwriteweb.com/archives/the_cost_of_egypts_internet_blackout_110_million.php News Sun, 06 Feb 2011 11:36:00 -0800 Curt Hopkins
Google's U.S. Economic Impact: $54 Billion for Businesses, Publishers and Non-Profits imgGoogleLogo200902.jpgGoogle plans to hold a number of events across the U.S. this morning where the company will highlight its economic impact on local economies. Ahead of these events, Google just released detailed data about how much economic activity the company generated for local businesses, website publishers and non-profits in the U.S. in 2009. Nationwide, Google estimates that it generated about $54 billion in economic activity last year.

]]> According to Google, the company estimates its economic impact in each state based on "the economic value generated by Google Search and AdWords, Google AdSense and Google Grants in 2009." You can find a detailed description of the company's methodology here. Google did not try to estimate its impact on local consumers.

google_economy_2009_california.jpgWith $14.1 billion, California leads the pack among U.S. states, while Wyoming came in last with $24 million. You can download the full report with detailed numbers for every state here (PDF).

Given that these numbers were generated by Google itself, it's worth taking this data with a grain of salt, though Google's impact on the U.S. economy - and small businesses in particular - is undeniable, no matter how closely the real numbers line up with Google's estimates.

Why Release This Data Now?

We can obviously only speculate, but as the search giant is coming under closer scrutiny from antitrust agencies, it makes sense for Google to present itself as a good neighbor and a driving force behind many local economies.

We will attend the local Google event in Oregon later this morning and update this post once we get more information.

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http://www.readwriteweb.com/archives/googles_impact_on_the_us_economy_54_billion.php http://www.readwriteweb.com/archives/googles_impact_on_the_us_economy_54_billion.php News Tue, 25 May 2010 08:40:30 -0800 Frederic Lardinois
Study: Online Retailers Plan to Focus on Search, Email Marketing & Social Media During Recession slow_economy_logo.jpgWhile the U.S. economy is still puttering through a recession, a new marketing study from the National Retail Federation's Shop.org and Forrester Research found that at least some online retailers have been able to take greater marketshare in the last few months. About 46% of the 117 retailers polled in this study also said that they had no plans to scale back their original budgets for 2009, though 54% of all respondents expect their overall growth to slow during the next 12 months. Over the last few months, shoppers have become increasingly price-sensitive, and this has clearly helped some online retailers to outperform their brick-and-mortar competitors.

]]> While some online retailers might be weathering the economic downturn better than their competitors at the local mall, 30% of the respondents also said that they would cut spending on their web retail operations this year. Among those who are planning to cut costs, 88% say that they will scale back their hiring plans.

Email Marketing a Top Priority

Those companies that are seeing the current downturn as a chance to expand and that are planning to spend more on their online efforts this year, say that they will focus their investments on search (80%), email (65%), and social marketing (60%). According to this report, these businesses see email as one of the most important means to communicate with their customers and most plan to use it to inform customers of new product launches, promotions, and to get customer feedback. 90% of all respondents listed a focus on email marketing as a top priority.

Companies Won't Scale Back Social Media Campaigns

Interestingly, the study also found that those companies that are growing faster than expected during this downturn are also more likely to embrace social media. Even those companies that are planning to scale back their online operations this year still plan to experiment with social media campaigns.

Imaged used courtesy of Flickr user jakerome.

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http://www.readwriteweb.com/archives/slow_economy_is_a_boon_for_e-commerce.php http://www.readwriteweb.com/archives/slow_economy_is_a_boon_for_e-commerce.php News Tue, 05 May 2009 09:29:26 -0800 Frederic Lardinois
Who's Getting Hired in Tech? Q1 Numbers from ReadWriteHire readwritehirelogomarch.jpgRapleaf's Auren Hoffman says that hiring is harder in a downturn because the noise goes up but the quality stays the same. That's a pretty strong statement to make, but if it's true then it's all the more remarkable to see which companies are making hires now.

Our site ReadWriteHire covers new hires in tech and new media. Today we're publishing our aggregate numbers for the first 3 months of 2009. Who's hiring? Software and IT companies, social media and social networking companies and marketing and advertising firms.

]]> Leading Sectors

We've reported on a total of 420 hires since the first of January. The top 10 sector categories have been:
marchhires.jpg

  1. Software/IT (24%)
  2. Social Media/Social Networking (15%)
  3. Marketing/Advertising (11%)
  4. Publishing/New Media (7%)
  5. Hardware (6%)
  6. Mobile (4%)
  7. Gaming/Entertainment (3%)
  8. Search (3%)
  9. Government (2%)
  10. Security (2%)

These numbers are quite similar to the trends we identified in the final months of 2008. The "other" category includes sectors like research and testing, VOIP and tech consulting companies.

News of those positions getting filled came from press releases and personal tips, but also from mentions of new jobs on Twitter and blog posts. We scour the web daily for cool news about people getting cool new jobs.

There are far more hires going on in total than we can currently report on, but we're working on expanding our capacity and we believe that this is a valuable data point as a semi-representative snapshot at least. We hope that the particular hires reported on ReadWriteHire will also be of interest to companies in each of these sectors. Knowing who your competitors have hired is valuable information.

If you've made a new hire or gotten a new job recently, drop us a line to let us know! You can reach us by email at jobwire@readwriteweb.com.

Congratulations to everyone who secured these increasingly difficult positions to land. Join us over at ReadWriteHire for more stories of exciting new hires every day of the week.

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http://www.readwriteweb.com/archives/whos_getting_hired_in_tech_q1_numbers_from_readwritehire.php http://www.readwriteweb.com/archives/whos_getting_hired_in_tech_q1_numbers_from_readwritehire.php News Wed, 01 Apr 2009 12:19:25 -0800 Marshall Kirkpatrick
eBay: Good in Parts At the Accel Symposium, we heard John Donahoe, eBay CEO, admit that there was little synergy between core eBay, PayPal, and Skype. He lauded PayPal, showed some false modesty around Skype, and talked about core eBay in a way that indicated a clear understanding of its limitations and challenges. If that sounds a tad negative, that was not what I took away. What I did take away was that eBay is a great collection of parts, a really great collection of parts, that would be more valuable as independent entities.

]]> Core eBay in a Fix

John Donahoe made the very reasonable point that online e-commerce will look like offline commerce: fragmented. Consumers will buy from eBay, Amazon, Walmart.com, Zappos, whatever gets their attention and has the right product at the right price. That rings of common sense.

To illustrate this fragmentation, he told us that the mighty Walmart has only 4% of the market.

For a more extensive discussion of the problems facing eBay's core service, read this very well-reasoned (but long) post on SeekingAlpha.

When queried on these issues, Donahoe simply indicated that the problems did not originate on his watch, that he was aware of them, and that they were complex to solve. That does not seem enough. The bits of insight above may be great, but eBay needs to fix its core service to regain its stature as a leader and give investors a good return. You don't transform a company without fixing the core, and investors clearly feel that eBay needs transforming; that is the message behind a stock price that in the last 12 months trails the NASDAQ and peers like Google and Amazon. eBay is actually in the rather miserable club with Yahoo, as perceived by investors.

PayPal: Jewel in the Crown?

Donahoe contrasted the fragmented e-commerce business with the highly consolidated payments business. Clearly, the latter has greater appeal. One can see why. The payments business is global and dominated by a few players: Visa, MasterCard, and Amex. As the low-cost player best suited to the web, PayPal has enormous potential.

I'm pretty sure I even heard Donahoe say, "PayPal should be bigger than eBay." As he spoke about the global payments system, one could see why.

He described the national banking regulatory challenges, a major barrier to entry. Taking money online is the easy bit, he said. Moving that money in and out of the traditional banking system is hard, because the banking system has to adhere to a maze of local regulations. Donahoe told us that eBay works on penetrating something like 5 to 15 new countries each year. Some, like Japan, remain a challenge.

This is clearly a huge opportunity, but these local regulations are a big barrier to entry. Anyone who has done a lot of international business can attest to how archaic some of the processes are. Wiring money is bad enough, but the processes around letters of credit seem positively arcane, almost 19th-century.

Oh, and a $500 million High-Growth Skype Business

Skype is the eBay business I am most familiar with as a user. We use it all the time here at ReadWriteWeb. It is a core tool for running a small business in which colleagues, clients, audience, partners, and everybody else in the community are all over the world. For entirely selfish reasons, I evangelize Skype to everybody. Now, I want Skype on my cell phone to cut my mobile bills; it is definitely ready for prime-time.

And yes, Skype is a real business. Donahoe told us that Skype generated $500 million in revenue last year, with "high-teen margins" and growth rates of 30% to 40%. Saying "That's not a bad business" got a wry laugh from the audience (all of whom would consider it a totally amazing business). In any other market, that would be a red-hot IPO.

Skype is perfectly positioned for a long recession, too. That already shows in the numbers. In the last quarter, Donahoe told us that Skype-to-Skype grew 73% and Skype Out grew 63%. I can personally attest to seeing many smart people, who had not used Skype previously, see it and say, "OMG, it's amazing."

$500 million was only 6% of eBay's total $8.5 billion revenue in 2008. But with Skype growing at 30% to 40% and eBay's core service hurt by a slow-down in consumer spending, this percentage could change significantly in 2009.

How much could eBay get for Skype, a business that already has scale, good revenue growth, decent margins, and a model and technology that are disrupting the massive telecom market globally? It is not entirely outrageous to think that Skype could become the biggest telecom company in the world at some not-too-distant point in the future. At some point, the IPO market will come back. All of eBay (including PayPal and Skype) is currently valued by the market at $15 billion. How much would the market value of Skype as an independent entity be? More than 6% of $15 billion? I think so.

eBay spinning off Skype was one of the three web-tech market events that I wished for (not predicted) for 2009. It looks possible. Methinks it is simply a matter of timing and market conditions.

The VC Portfolio

As well as being a collection of great but unrelated businesses, a kind of online conglomerate, eBay also looks like a VC with a strange but interesting mix of minority stakes. The most interesting and oft-discussed is its 28% stake in Craigslist. It is clearly not a happy relationship. But that 28% must be worth something.

The Economic Question

The underlying question for everybody at the Accel Symposium was, "What about the effect of the economy on your business?" Donahoe pointed out that they saw the downturn in their PayPal and eBay lines as early as May. Signals from millions of small buyers and sellers are far more reliable than any GDP numbers. So they were able to take corrective action early.

eBay's biggest action was to offer coupons to buyers, to help sellers. As he pointed out, small sellers have weak balance sheets, so a downturn can make them vanish quickly. eBay moved quickly to support its sellers.

Asked if eBay was recession-proof, Donahoe pointed to Skype as being perfectly positioned, but he noted that if consumer spending slows, then even e-commerce is affected. And e-commerce is down.

Time to Fix E-Commerce While it's Down

eBay needs to have a compelling core proposition for e-commerce that unites auction, fixed price, and classified ads. Donahoe pointed out that search is the obvious unifier. But it is not clear how eBay can use this to its advantage.

E-commerce still makes up only 7% of retail. Given the amount of time we spend online and the obvious opportunities, this could grow to 15% to 20%. A big prize awaits here when the economy turns around. eBay has the financial strength to build through the downturn.

Donahoe also painted a vision of mobile e-commerce. It is one that others have painted before: you go into a real-world retail store; see an item you like; scan the barcode to get the price; find a better price online; then decide whether to buy it in the store or online, depending on whether you prefer convenience or lower price.

As he pointed out, this could encounter a bit of resistance. I can envision videos popping up on YouTube of irate shopkeepers throwing out barcode-swiping bargain hunters! Physical retailers will have to adapt, but online folks such as eBay will have to be sensitive to their needs. This will be interesting to watch.

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http://www.readwriteweb.com/archives/ebay_good_in_parts.php http://www.readwriteweb.com/archives/ebay_good_in_parts.php Analysis Thu, 26 Feb 2009 11:20:30 -0800 Bernard Lunn
A-Team Update: Series A Funding Growth Is Strong We first reported on VC Series A deals in the web-tech sector in October 2008, following the financial meltdown, and we updated our coverage in November, reporting some improvement. Now it is time for the good news from December and January. The amount invested by VCs in Series A deals for web-tech ventures went up from $19.1 million in November to $28.8 million in December, and up another notch to $30.3 million in January. Looking very good.

]]> What Trends Do the Data Show?
  1. The average deal size is increasing. The average went from $2.12 million in November to $4.11 million in December to $6.06 million in January.
  2. California still rules, but global investment is happening. In the US, venture capital is still dominated by Silicon Valley, but we are seeing a few more global deals, specifically in the UK, Canada, and English-speaking India.
  3. Total diversity was apparent, without any market-segment bias. This is a good sign that ventures are being evaluated on the fundamentals rather than on what's hot.

Which Ventures Received Money?

December:

January:

Which VCs Wired the Money?

December:

January:

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http://www.readwriteweb.com/archives/a_team_update_a_series_funding.php http://www.readwriteweb.com/archives/a_team_update_a_series_funding.php Thu, 12 Feb 2009 05:00:00 -0800 Bernard Lunn
Update on Blurb: VC-Backed Startup Is Profitable "VC-Backed Startup Is Profitable" should not be a headline worth making. But far too many Web 2.0 ventures don't bring in enough revenue, let alone profits, and some don't even have a revenue model. We see a lot of gritty entrepreneurs with profitable bootstrapped SaaS ventures. But the number of VC-backed startups less than 5 years old that are profitable is sadly low. That's why we wrote about Blurb back in October 2008.

]]> The Update

Like an increasing number of private companies, Blurb is starting to report its financial results publicly, almost as if it were a public company. This presumably serves the purpose of both reassuring customers that the business is healthy and attracting potential acquirers.

Allow us to quote shamelessly from Blurb's press release (at least it prevents errors):

"Blurb, the creative publishing platform, today reported a year of record growth in 2008 with revenues approaching $30 million. The company reached profitability and achieved nearly 200% year-over-year revenue growth in 2008."

Quiz: which would you prefer: a company with $200 million in advertising revenue that is burning cash, or a business with $30 million in subscription revenue that is profitable? The first describes Facebook, the second describes Blurb. Yes, it is almost absurd to make the comparison. But the point is that old business maxim: revenue is vanity, and profit is sanity.

What Does this Tell Us About the Economy?

On the face of it, not much. Blurb's business is partly seasonal; people buy more during the holiday season. We asked Eileen Gittins, the company's CEO. She sounded almost surprised, not at all triumphant, and generally cautious. Which is a reasonable reaction of anybody doing fairly well in today's economy. Eileen confirmed that January is also looking good: 30% over projections. So this is not just a holiday buying story; it's more about what specifically Blurb offers.

What Does this Tell Us About Blurb's Market?

Eileen attributed the good results to three factors:

  1. Pent-up demand to write books. Who doesn't have a book they have always wanted to write? It is now easier than ever to publish (if not write) a book.
  2. The cultural shift of people becoming more active contributors to media, as writers as well as readers.
  3. The forced leisure that layoffs create, and the desire to do something that one has some control over and can point to as an achievement. This may be exacerbated by the bad times: get laid off from a big job, take three months to write a book about what you know, do it well and you'll be back in demand pretty soon.

There is one simpler explanation that we see. In tough times, affordable luxuries that provide a high level of emotional satisfaction do well: think movies, roses, and booze.

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http://www.readwriteweb.com/archives/blurb_vc_backed_startup_is_profitable.php http://www.readwriteweb.com/archives/blurb_vc_backed_startup_is_profitable.php Fri, 30 Jan 2009 13:00:00 -0800 Bernard Lunn
Cartoon: Under the Financial Microscope So apparently we've walked through the Foyer of Financial Fiasco and plunked ourselves down right in the centre of the Living Room of Economic Doom (settling into the Sofa of Slowdown, with our feet on a comfy bear market rug).

What's it like at your end? Are a lot of your budgets and projects that seemed like slam-dunks a few months ago suddenly coming under scrutiny? Or are you finding there's still room to experiment and innovate, even - or, with some particularly visionary organizations, especially - in a recession?

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More Noise to Signal.

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http://www.readwriteweb.com/archives/cartoon_financial_microscope.php http://www.readwriteweb.com/archives/cartoon_financial_microscope.php Cartoons Sun, 25 Jan 2009 16:47:41 -0800 Rob Cottingham