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TextFlow, the visually stunning collaborative document editor we reviewed last November, just announced a major update today: online editing and back-end file storage offerings to augment its unique and easy to use Adobe AIR application. Prior to this announcement, TextFlow was limited to only being able to work with local files.
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There are several key differences that TextFlow has from its primary competitors such as EtherPad and Google Docs:

TextFlow is still an AIR application. If you were a TextFlow user before, nothing critical has changed in this regard. Most of TextFlow's competitors are online-only.

Although you can invite people to edit a document online, they basically get their own view of the document. Once they are finished editing, they would click share to push those changes back to the master document. In other words, this isn't live collaboration.

Collaborators that you send an email invite to will be able to work on a web-based version of TextFlow that just supports editing the current document.

Going back through the TextFlow blog, it appears that they have addressed our initial complaint of only being able to successfully edit limited document length files, as well as a number of Microsoft Word document compatibility fixes among other changes.

Overall, we think TextFlow is moving in the right direction, and sticking with a workflow idea that works really well with certain people's method of collaborating on documents. TextFlow comes in a business edition at $99 per user/year and a free personal edition.

Apple co-founder Steve Wozniak is joining the advisory board of the research engine DeepDyve, a search engine designed to scour the "deep web." This "deep web" is an area of the internet that isn't currently indexed by modern-day search engines like Google and yet consists of an estimated 99.8% of the Internet. Any company that is able to successfully tap into this data will be the one to introduce the next breakthrough technology in search as we know it. Will that be DeepDyve?
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Wozniak Joins DeepDyve

According to Wozniak, most of the information on the web is "collecting dust because nobody's come up with a way to mine the data in a way that's useful to researchers and consumers." He believes that DeepDyve has the potential to transform Deep Web search and says he's "excited to bring about that transformation."

Wozniak's role at DeepDyve isn't limiting in any way, but the company expects that his contributions will focus on the DeepDvye technology, especially as it relates to the user experience. As a member of the Advisory Board, he will also meet formally with the company twice per year.

DeepDyve is Not Google

DeepDyve is currently known for their KeyPhrase technology which lets you type in anything in their search box from a few words to entire paragraphs that you copy and paste.  The search engine's algorithm itself was developed by two scientists who worked on the Human Genome Project.  As with that project which required using pattern-matching techniques across large amounts of data, there's also a need for search engines that can analyze large amounts of data in the same way. That's precisely what DeepDyve does.

Typically, keyword search on other engines breaks down as queries grow in length - but not on DeepDyve. The more search terms you enter, the more relevant your results. The DeepDyve engine actually encourages longer search queries. This type of search technique certainly comes at a good time, as our query length is growing each year, with 8-plus keyword searches having increased 20% year-over-year as of February, 2009.

Progress and Problems

We looked at DeepDyve back in September when it was still behind a paywall, then reviewed it again in November when they introduced a free version. At the time, we noted that there were still some issues with any "deep web" search engine - most notably that a lot of the information which DeepDyve uncovers is still behind additional paywalls on subscription-based web sites. Today, that issue still remains.

However, the complaints of many of the commenters on the last post were not about the paywalls but about how the site forced you to register before you could do any searches. As one anonymous commenter noted, to paraphrase, "if you're going to launch a search engine, open it up so people can use it."

It seems DeepDyve took that advice. The search box on the homepage is immediately accessible and even the results pages have a more refined look today than they did only a few months prior.

These sorts of complaints highlight the problem with reviewing cutting edge technologies when they're still in such a raw format - people go there expecting Google, find what appears to be a boring research experiment and then become disillusioned. What they fail to see - what they cannot see, in fact - is that a cursory glance can't reveal the technology behind the site or service. The technology in DeepDyve, for instance, involves advanced algorithms that other engines don't even have yet. The usability issues will be addressed in time and the issues with access to content behind paywalls could always eventually be worked out through partnership deals. But that business side of the DeepDyve project isn't anywhere near as interesting as the potential of gaining access to 99.8% more of the Internet!

In this latest installment in our series on recommendation engines, we look at ChoiceStream - a recommendations vendor which counts Overstock, Borders and AT&T among its high profile clients. ChoiceStream has recently turned its attention to using recommendations in online advertising, and in this post we look at how the company is doing this. The ChoiceStream advertising product aims to generate personalized banner ads for each consumer, using data on shopping and buying patterns
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that it collects from the advertiser's website. The company claims that this technology improves click-thru rates, conversion rates and average order size.


In a briefing, the company showed us how its recommendations are influencing ads on AT&T's website, based on what an individual user browses at Overstock.

There would obviously be an affinity with Overstock already for the user, if they had visited Overstock (or similar sites also using ChoiceStream's platform) before and then saw an ad for Overstock on AT&T. Nevertheless, despite this bias it makes sense that conversions would increase if the Overstock ad that a user sees on AT&T's website is personalized based on that user's past shopping or browsing behavior. The company claimed that for this particular campaign, user click-thru rates doubled, conversion "about doubled" and Overstock orders increased by an average of 20-30%. If accurate, then those are compelling figures for Overstock.
It remains to be seen whether this technology can be used generally. Right now it appears to have a relatively limited niche in the retail market and its success is very dependent on users having visited and used participating sites (such as Overstock) before.


Mike Rohde was named the official "sketchnoter" of the South by Southwest Interactive conference this month in Austin and his sketches are the only form of note taking we've ever wanted to spend time going through after an event. Panel discussions at conferences are notoriously disappointing, but Rohde has done the dirty work and made it easy and fun for all of us to learn the lessons that speakers like Zappos CEO Tony Hsieh, web standards guru Jeffr
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ey Zeldman and many other speakers came to Austin to share.

We love this way of learning from sessions we didn't attend and can imagine any conference having people offer visually grounded summaries of talks. Who wants to read through pages and pages of plain text notes? Check out the highlights of SXSW, according to Mike Rohde's pen.

It's really hard to create content while at a conference. Doing it in real time, artistically, is very impressive.

Created with Admarket's flickrSLiDR.


When Gmail failed a few months ago, I tried using Google to find out what was going on. When that did not get me an answer, I tried Twitter and did find some answers. That alerted me to the power of real-time search in one specific usage case. It was a relatively minor problem for me. But what if I ran customer service for a SaaS firm that just had a major outage? How would I find and monitor the conversations going on out there? That is what today's announcement by about Twitter
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integration is all about.

What Is It? has just announced this extension to its Service Cloud, a tool it released back in January. Service Cloud is built on's Force platform and allows customer service people to monitor and manage conversations that are happening about their company on social media such as Facebook, LinkedIn, and Twitter.

When Gmail failed, the idea of calling Google's customer service never occurred to me. That is increasingly normal. We turn to online services because calling customer support call centers is too frustrating. announced that you can now search, monitor, and join conversations specifically on Twitter:

Search: find mentions on Twitter.
Monitor: track subsequent mentions and replies.
Join: become an active participant in the conversation.

These are all things you can already do on Twitter and countless Twitter-specific apps., though, thinks that you want to be able to do this from within your customer service system, and that Twitter is only one of many places where these conversations are happening.

What Does It Look Like?

The screenshot below shows the Service Cloud with the capability of tracking conversations across multiple social media venues:

Why Is This Important?

There are two ways to look at this: is recognizing that a lot of important conversations are happening on Twitter, and it needs to provide this information to its users.

The media is hopelessly infatuated with Twitter, and saw this as a good way to get some attention.

If the latter is true, then one point to Salesforce from this journalist! Our take, though, is that it's a bit of both. presents this as a tool for customer service, but it is equally applicable to sales. Before contacting someone on an important call, a quick check on what is being said about them, about you or your firm, and/or about the subject of your call is simply good preparation.

Today's announcement is important because Twitter is where those conversations are most easily available, for two reasons:

Twitter is up to the minute (unlike Google). This matters in customer service. You cannot say, "Sorry, Google's crawler hasn't yet found this," when speaking to an irate customer.

Twitter's real-time information is more visible and accessible (compared to Facebook and LinkedIn). This is a testament to Twitter's openness. Facebook's March 5th redesign seems motivated, at least in part, by the need to make the real-time news feed more visible.


Last November LinkedIn launched a new feature that would allow members of groups to share and discuss news articles. Last week, the professional social network offered group owners and managers another way to provide relevant news to their group by way of sharing feeds.

Managers can now create customs news feeds by adding an R
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SS feed, an Atom feed, or just a Web site URL.

According to a recent blog post, the idea is to give group members a "comprehensive news digest" on LinkedIn that will potentially help them discover new blogs and sources.

While at first glance the idea of incorporating feeds into the professional networking service doesn't seem particularly interesting - many other networks have already enabled this sharing and communicating option, it may just be a great way to introduce feeds to a more mainstream market.

Sites like Twitter, Digg, Facebook, etc., have always relied on participation from a tech savvy audience; those who are already familiar with feeds, and who for the most part have already created their own customized feeds, so that the content, more than the technology is the most important component.

LinkedIn however is a little different. Its audience doesn't comprise solely of the tech or Web savvy; many are just ordinary folk wanting to find other like minded folk for professional purposes. With this new feature, it just may be that LinkedIn will bring the feed to the masses.

You can find this feature under news tab in 'Latest News' if your group manager has enabled it.

While most developers are proficient in several languages, today's economic climate coupled with advances in technology has meant that oftentimes developers need to pick up a new language quickly. And although most developers are typically fluent in the security issues surrounding their specific languages and do their best to ensure that the code they produce is secure, security vulnerabilities in new language environments may not be as well understood.

Enter Fortify, a software security company that has organized security issues by both vulner
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ability category and by language so developers can easily ascertain the types of errors that have an impact on security.

"By better understanding how systems fail, developers will better analyze the systems they create, more readily identify and address security problems when they see them, and generally avoid repeating the same mistakes in the future," the company explains.

A Taxonomy of Coding Errors that Affect Security borrows terminology from biology: vulnerability categories (for instance, Cross Site Scripting and Buffer Overflow) are referred to as phyla, and collections of vulnerability categories that share the same theme are referred to as kingdoms (for instance, Input Validation and Representation).

According to the site, vulnerability phyla are classified into "seven plus one" pernicious kingdoms presented in the order of importance to software security:

Input Validation and RepresentationAPI AbuseSecurity FeaturesTime and StateErrorsCode QualityEncapsulation*. Environment

Important to note, issues 1 - 7 are associated with security defects in source code, while 8 describes security issues outside the actual code.

Languages covered include Cold Fusion, C/C++, C#/VB.NET/ASP.NET, HTML, Java/JSP, Javascript, PHP, PLSQL/TSQL, Visual Basic/VB Script/ASP, Webservices, and XML.

A Taxonomy of Coding Errors that Affect Security was developed by the Fortify Software Security Research Group and Dr. Gary McGraw, and complete descriptions with source code examples can be found here.

Yesterday, Microsoft's Internet Explorer 8 finally came out of beta, but according to the latest data from StatCounter's GlobalStats, users are not exactly in a rush to update their browsers to IE8 just yet. Even though IE8 had been in public beta testing for a year, its market share only rose from 1.3
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9% on its launch day to 1.56% today.

In contrast, by the end of its beta testing period, Firefox 3 already had 7.8% market share, which then doubled to 18.9% over the next three days after the launch of the final version (though with the help of quite a bit of hype). Of course, Firefox users are probably a bit more willing to experiment with new browser versions than IE7 users. The numbers for IE8 could change very quickly if Microsoft decides to push it out as an update through the Windows Update service, but Microsoft has not announced whether it plans to do so anytime soon.

Source: StatCounter Global Stats - Browser Version Market Share

The fact that as of today almost 23% of all Internet surfers are still using IE6, however, leads us to believe that it will take a while before a larger number of IE7 and IE6 users will switch to IE8. While it's a major update, IE8 does not include a lot of new 'must-have' features for most users who just use their browser to get around on the net, and who probably don't care much about accelerators and web slices.

Dave McClure has fingerprints all over the social media map, so you have probably seen him on his blog, his Twitter account (which has 15,880 followers as of this writing), or Facebook. Dave is an angel investor who recently joined a VC fund (the Founders Fund).The accepted wisdom today is that angels have b
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uried their wallets and run for the hills. So it seemed like a good time to interview an investor who is very active at the seed level.

The bad news: we could not do this interview via Skype, so there is no MP3 audio. The good news: the reason we couldn't do it is that Dave is too busy running around town doing seed level investments. Good news trumps bad news.

Seed Stage Investing

You know that line, "Come back when you have more traction"? It is usually (but not always) VC code for, "We think you and/or your product and/or your market sucks, but in case we're wrong, we want you to come back when all the risk is off the table."

So who invests at this early stage? The answer is usually angels. Actually, there are two types of angels: amateur and professional. The amateur has a day job and puts small amounts into startups. You need a lot of them, and they are busy. When times are tough -- when their investable capital has been decimated by markets and Madoff and their own job might be at risk -- they bury their wallets. That is true today, and may be true for a while.

But as everyone knows, hard times are the best times to invest. Investing and building in hard times and then launching into a recovery and exiting in a boom is a well-proven cycle.

But, sadly, while lots of people talk this game, very few people walk it. When both angels and VCs run from early-stage risk, the wealth-creating engine of innovation stalls.

This is why the second type of angel, the professional angel, is so important. The professional angel is like a one-person VC fund. They do it for a living and love what they're doing. Think Mike Maples, Ron Conway, Paul Graham... and Dave McClure.

In this context, Dave's move to the Founders Fund is significant.

Seed at a VC Fund?

Dave has a mission to invest in the range $50,000 to $250,000 in about 10 deals. He is doing this with the Founders Fund, which has deep pockets for later rounds if needed.

Large VC funds have a problem. They have too much money. Sure, we all want that problem. But it is a real problem. If you have $1 billion to invest, you have to put it to work. That is what you are being paid 2% of funds under management to do; that is why the Limited Partners (LPs) invested in the fund. The General Partners (the guys who entrepreneurs meet with) can live quite well on that 2%. Ahem, 2% of $1 billion is $20 million, which should be enough for a coupla Partner Ferraris. Seriously, though, the next time a VC tells you that you need to pick up the legal tab on a deal, just remember it is because they want you to, not because they need you to.

But getting really big returns on a sum as big as $1 billion is pretty hard. It is the law of big numbers. A 30% return (the minimum needed to give LPs a return commensurate with venture risk after the GPs have taken a 20% performance cut) on $1 million is $300,000. A 30% return on $1 billion is $300 million. Basically, unless you land a Google-like winner, it is very, very hard to get a $300 million return.

Also, the really hot deals, the ones that give those outsized returns, often don't need a lot of money to get to the point where a lot of investors can see that they are hot. So an investor has to get in early, when the venture needs more money, to get a seat at the table.

That is why the Founders Fund has brought in Dave McClure: to do the early seed-stage deals. The Founders Fund is a mid-sized fund ($220 million) that already has a reputation for doing things differently and shaking up the VC status quo.

What is encouraging is seeing the competition for seed-stage deals. Last week we interviewed True Ventures, a small VC startup doing small Series A deals. We are seeing other VCs take different approaches to the same issue.

Dave's Takeaway from PayPal

Question: "You worked at PayPal, one of the all-time great startups. If you had to select one lesson you learned there to pass on to other entrepreneurs, what would it be?"

Dave: "That which does not kill you makes you stronger. Lots of entities wanted to kill PayPal because we threatened the status quo. Just don't give up, iterate, be resourceful."

Dave believes that the culture of PayPal was one reason it could do this: it was a meritocratic and diverse culture where the best ideas got executed. There was a "tolerance for strong voices," because it hired "off-center people" who did not all look at problems the same way.

Staying True to Consumer Markets?

Question: "The Founders Fund is clearly positioned in the consumer markets and has done very well there. But we are now in a deep consumer recession. Does this lead to any change in focus or approach?"

Dave: "This country and the whole world are in recession, but we don't see the Internet consumer market contracting." In Dave's view, more people are going online, and companies that play to that well, like Amazon, are doing well.

When I asked him about eBay's problems, which eBay attributes to the economy, Dave suggested these were execution problems and not market problems. "Look at how Craigslist is doing compared to eBay."

Aligning Investor and Founder Interests

Question: "The Founders Fund has a stated mission to give a better deal to founders and to better align investor and founder interests. Can you give some examples of this in practice?"

Dave: "Look at 'Series FF stock.' This is a new class of stock pioneered by Founders Fund (the 'FF' in Series FF) that sits in the middle between common and preferred. FF stock can convert into preferred under certain circumstances; for example, when the VC wants to take a more aggressive bet and turn down an acquisition offer."

Interestingly, True Ventures, which we interviewed earlier, takes a slightly different approach to the same issue. It is good to see creativity being applied to a problem that has been around for a while.

Talking the Book

Question: Finally, here is a chance to "talk up your book." What one or two ventures do you want to tell our readers about?

Dave told us that he has done four deals, but only one has been announced. Watch this space for news of the other three. The announced one, though, is Twilio. Check it out and tell us what you think. Has Dave got a winner here?

In the Founders Fund portfolio, Dave mentioned Quantcast. At ReadWriteWeb, we know Quantcast well, as does any online publisher that sells advertising.

Pirate, Then?

Question: Are you an angel, VC, or pirate?

Dave: "Pirate." And here is why.

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