Canceled TV Shows Get a Digital Afterlife

In the world of television, getting canceled doesn’t mean what it used to. The four major U.S. networks have unveiled 31 shows for the 2012-2013 season that begins this fall. Not all will survive. Among the most recent casualties: In mid-May, the short-lived CBS (CBS) medical drama A Gifted Man got the ax after failing to win viewers. Others such as ABC’s Desperate Housewives made a graceful exit following an eight-season run.

Then there’s the case of Pan Am. The 1960s-retro airline drama that aired on Walt Disney’s (DIS) ABC last fall may yet fly again, thanks to the growing demand from new outlets for original programming. Sony Pictures Television (SNE), the producer, has held talks with pay-TV and streaming services to keep the series going with new episodes, say two people with knowledge of the matter who aren’t authorized to speak on the record.

Subscription services such as Netflix (NFLX) and DirecTV (DTV), which compile vast databases on viewing habits, offer shows a chance for a second life. Investing in new episodes of a defunct network series can make financial sense with the right budget and a dedicated, if small, fan base. “Digital can provide a way to recycle shows that have been canceled, because there’s a lot more pressure on those platforms to go toward original content,” says analyst Tony Wible of brokerage Janney Montgomery Scott.

When Netflix ordered a new season of Arrested Development in November, it knew how popular past seasons of the show were with its 26 million subscribers. Despite accolades from critics, News Corp.’s (NWSA) Fox pulled the plug on the sitcom in 2006 after three seasons. “One of the reasons we were so excited about coming to Netflix is that’s where our fans are,” said Mitch Hurwitz, the show’s creator, at a broadcasters’ convention last month. To hold down costs, Netflix ordered 10 new episodes of the show, whereas Fox aired 22 in its first season.

Netflix is also talking with CBS about resurrecting the drama Jericho, which went off the air in 2008, according to two people with knowledge of the discussions. The network is “always willing to talk with Netflix if they’re interested in one of our shows,” says Kelly Kahl, CBS’s chief scheduler. Netflix declined to comment.

DirecTV, the satellite-TV service, has extended the life of Damages, a legal drama starring Glenn Close that originally aired on News Corp.’s FX, by scheduling the program commercial-free on its Audience Network. It’s ordered a total of 20 new episodes, which will begin airing in July. DirecTV also resurrected the football drama Friday Night Lights, running it for three seasons after it was canceled by Comcast’s (CMCSA) NBC. The network later rebroadcast the DirecTV episodes.

Both shows had received critical acclaim, making them attractive, says Derek Chang, DirecTV’s executive vice president of content strategy and development. DirecTV saved money by sharing costs with producers and distributors. “If a show has an excellent cast and writing, it can be a good fit,” Chang says. DirecTV has no plans to pick up any of this year’s canceled shows.

A potential buyer such as Hulu offers studios another incentive to keep their series alive. While Netflix and DirecTV run programs commercial-free, shows offered by Hulu are ad-supported. Industrywide, ad revenue for online video is up 22 percent, to $2.3 billion, this year in the U.S., according to a recent report from Pivotal Research Group. Meredith Kendall, a spokeswoman for Hulu, declined to comment.

Executives at Apple (AAPL), Google (GOOG), and Yahoo! (YHOO) also may be studying reanimating old series as more advertising dollars move toward streaming video, Wible says. Most network programs come with budgets that make it difficult to be profitable without ad support: Ten hour-long episodes can cost about $30 million. In 2009, Google’s YouTube ran all five episodes of The Beautiful Life, which moved to the online service after just two episodes aired on the CW Network. YouTube, Apple, and Yahoo declined to comment.

These companies may have a harder time gauging potential audiences for a series discarded by a network: “The problem, if you’re a Google or a Yahoo, is you don’t have Netflix’s rich data to know the true interest of a show,” says Wible. “Nielsen (NLSN) only gives you a snapshot. You’d need another data point that proves the show is going to pay for itself.”

The bottom line: Netflix and DirecTV are buying canceled TV shows with built-in audiences. Google’s YouTube, Apple, and Yahoo may follow suit.

Sherman is a reporter for Bloomberg News in New York. Fixmer is a reporter for Bloomberg News in Los Angeles.

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How Your Shoe Can Secretly Help You Text

Technology and etiquette don’t move in lockstep. Just because it’s possible to whip out your smartphone and connect from anywhere doesn’t mean you should. Text during a meeting and you risk offending your boss, e-mail during family dinner and you risk displeasing your spouse, peruse your MP3 collection during church and you risk disappointing your pastor (and any supernatural arbiter whose ear he may have).

A new device being developed by engineers in Germany, however, promises to liberate smartphone addicts from the strictures of social opprobrium, making it easier to work their devices sneakily under the noses of those who might judge them for it. The gadget is called ShoeSense. It’s a motion sensor that, indeed, mounts on a shoe. Facing upward, it allows a user to control his phone through hand gestures performed at midriff level, even when the phone is still stored away in his pocket. Pinch index finger and thumb together and move your hand slightly forward to answer the phone or hang up, touch one hand to the other forearm to send a prewritten text, hold out a number of fingers to communicate whom on your speed-dial list to send it to. A person using ShoeSense looks a bit like a theremin player.

If the ShoeSense user is sitting at a desk, however, or a conference table, he looks as if he’s not doing anything at all and instead paying you his undivided attention—even as, sub rosa, he’s semaphoring his phone to send out a text about happy hour. “It is quite discreet,” says Gilles Bailly, a computer scientist at Technische Universitat Berlin and Deutsche Telekom (DTE) who is one of ShoeSense’s creators. “Say you are in a meeting, you want to indicate that you are going to be late. You’ve already defined the gesture for this, and you perform the gesture under the table. The system on your shoe can recognize it, and nobody at the meeting knows that you performed the gesture.”

ShoeSense is still a long way from showing up in your next pair of Nikes. Bailly’s lab is still tinkering with it. Still, bosses might prepare for its eventual arrival—perhaps by installing glass conference tables or by asking that, during meetings, people keep their hands where everyone can see them.

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An App to Publicly Humiliate 'Parking Douches'

Russia has a lot of problems, what with its recent wave of political unrest, newly reinstated President Vladimir Putin’s crack down on protestors, and, of course, its unforgiving winter. According to Russian online newspaper The Village, the country also suffers from an inordinate number of what it calls “parking douches.” “There is a big infrastructure problem here because our cities are not equipped for parking. There aren’t many ways for people to park legally,” explains Katya Bazilevskaya, marketing director of Moscow-based Look at Media, The Village’s parent company. “People park at the streets everywhere. Some of them are exceptionally impolite. They will park in your yard, in front of your apartment building, right next to other cars.” And so the paper has released a video about a free smart phone app that allows you to photograph these inconsiderate double, triple, and sidewalk parkers and share their information on Facebook (FB).

The goal of the app is to “make such practices socially unacceptable using digital media,” according to The Village‘s explanatory video. After you photograph a car and enter its information—license plate, car model, and color—the app will turn it into a pop-up banner ad that reads “[License plate number] annoys you on here just as he does on [Street name].” The ads are targeted to nearby computer users via their IP addresses so that the only people who receive information about an offending parker are the people who live or work nearby it. To get rid of it, you have to share the car’s information on Facebook.

It’s essentially a crowdsourced version of a public shaming sentence akin to those enacted in certain areas of the U.S. In Putnam County, Fla., and Aberdeen, Wash., people convicted of shoplifting (or in at least one case, embezzlement) have been made to stand outside holding “I stole” signs publicly marking them as criminals. The sentences have had varying levels of success, and it’s likely that the parking app will too. According to Bazilevskaya, more than 4,500 people have downloaded the app since its launch last week, although most of those people are “big activists. They are using it a lot.”

The Village’s app has one flaw: It forces people to suffer through pop-up ads on websites. Still, it’s a pretty ingenious way to solve Russia’s urban parking problem. A savvy policemen could use it to find cars that deserve a ticket. Maybe it could also be expanded to other countries and other products. Who else would you like to shame publicly? Movie talkers? Parents who bring ill-behaved children into fancy restaurants? People who put clothes on their pets? The possibilities for social humiliation are endless.

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Jelani Roy's Game Change

When Jelani Roy, 30, graduated from law school at Temple University in 2009, the sports-law practice at Dewey & LeBoeuf gave him the option to take a year off or start as an associate. He opted for the former. During a trip to Buenos Aires, he got a call from a basketball player named Roy Bright who was looking for legal representation overseas. Roy brokered a deal between Bright and Baerum Basket, a team in Norway. Soon after, other basketball players came knocking, and Roy accumulated a client roster of half a dozen. “I enjoyed it,” he says. “But I was always up in the middle of the night waiting to hear back from e-mails.”

Then a college friend named Mateen Aini told him about his idea for a company called Plyfe that would create games, from trivia to animated challenges, for brands, which would reward players with prizes—a trip to Las Vegas, say, or an iPad. Roy ditched his law career in January and joined the startup as part game developer, part client manager. “I’m dealing with technology,” he says. “I have to know what we’re doing, and how to explain it for the brand. It’s creative. I help the brand make the game.”

Plyfe launched in March with $1 million in seed money. Since then it has expanded from seven to 17 people and works with nearly 10 brands, including Disney (DIS), Gatorade (PEP), and Live Nation (LYV). It now has 51,000 users; Roy says Plyfe aims to reach 1 million in a year and expand to 100 brand partners. Most of all, he doesn’t miss the sports world. “There are deal points to negotiate, but contracts are all the same form,” he says. “Now I’m creating content. It’s a lot more right side of the brain.”
Jelani’s Best Advice:
1. Treat personal data with care
Consumers are giving away tons of personal data about themselves. Reward them in exchange for these data. This will help you keep your most socially active consumers loyal and increase your base.
2. Meet partners halfway
Stay true to your company vision. Partner companies may want you to change your product. Find the middle ground so you can meet their objectives while remaining faithful to your company’s core.

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Technology Vendor Contracting - Breaking the Mold

'Likejacking': Spammers Hit Social Media

Michelle Espinoza thought a single photo was going to ruin her business. It was an image of one of the pearl cuff bracelets she designs that showed up on Pinterest, a site where users create virtual bulletin boards, grouping images in categories—whether it be chocolate desserts or bohemian jewelry. For 10 days in April, anybody who clicked on the photo ended up watching pornography or unwittingly downloading a virus. “I can’t gauge how many customers I lost,” says Espinoza, a resident of Santa Rosa Beach, Fla. “But I did have people messaging me asking, ‘Are you linked to spam?’ I was just distraught.”

When Pinterest debuted two years ago, e-mail was the format of choice for spam peddling diets, sexual enhancement, and get-rich scams. Better filters have since banished many of the unwanted missives from in-boxes. Instead, scammers are turning to social media sites that are often poorly equipped to deal with the influx. “Social spam can be a lot more effective than e-mail spam,” says Mark Risher, chief executive officer of Impermium, which sells anti-spam software. “The bad guys are taking to this with great abandon.”

Spammers create as many as 40 percent of the accounts on social-media sites, according to Risher. About 8 percent of messages sent via social pages are spam, approximately twice the volume of six months ago, he says. Spammers use the sharing features on social sites to spread their messages. Click on a spammer’s link on Facebook (FB), and it may ask you to “like” or “share” a page, or to allow an app to gain access to your profile.

Facebook and Twitter have hired programmers and security specialists to deflect the flotsam. “Tens of millions of dollars are spent on our site-integrity systems, including hundreds of full-time employees,” says Facebook spokesman Frederic Wolens.

In January, Facebook sued advertising network Adscend Media, accusing it of sending unsolicited messages to Facebook users. A typical lure cited in the suit: “You will be SHOCKED when you see this video. Simply “Like” this page to see the video.” By clicking on a link, some users may unwittingly “like” the spam, a practice security experts call “likejacking.” At least 280,214 users were tricked into interacting with spam. About 80 percent of Adscend’s monthly revenue of $1.2 million comes from Facebook scams, according to the suit. Adscend denied the allegations and settled the case this month for $100,000. The company did not respond to e-mailed requests for comment.

Twitter last month sued spam software makers Skootle and JL4 Web Solutions, plus five individuals, claiming that they were responsible for spam that resulted in some users canceling accounts. Twitter, in the suit, said it spent more than $700,000 to combat spam attacks by the defendants. Skootle has denied wrongdoing. JL4 has yet to respond to the complaint.

Pinterest encourages users to form a virtual neighborhood watch and report spam before it spreads. Last month the site put up a blog post urging visitors to use its “Report Pin” button to tag spam.

On Pinterest, spam often lurks in the embedded links attached to photos, making it tricky for users to spot. Espinoza, the jewelry maker, said she contacted the company at least 10 times in as many days before the fraudulent links tied to images of her bracelets were banished. Pinterest declined to make executives available for an interview. “Our engineers are actively working to manage issues as they arise and are revisiting the nature of public feeds on the site to make it harder for fake or harmful content to get into them,” said a spokesperson in an e-mailed statement.

The bottom line: Largely exiled from e-mail, spammers are invading Facebook, Twitter, Pinterest, and other social networks.

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The Challenge of Classing Up Go Daddy

Every month, one standout Go Daddy employee puts on an apron and steps into the “cash machine.” The contraption looks something like a telephone booth, but its only function is to spray money at the person inside. The goal: Stuff as many flying, fluttering bills as possible into the apron pockets in 10 seconds. “Everybody gathers around to watch,” says Elizabeth Driscoll, a spokeswoman at Go Daddy, which helps businesses register domain names and run websites. “It’s pretty exciting.” When the whirlwind ends, participants usually exit with a few hundred bucks.

Wacky moments like this barely merit a mention next to the company’s long, sensational history of stunts. In the 15 years since its founding, Go Daddy has earned more than its fair share of press, much of it acid-tongued. There were the Super Bowl ads full of scantily clad women which brought charges of sexism. In 2011, video surfaced of founder Bob Parsons killing an African elephant, part of a regular series of expeditions he says help protect farmers’ crops from rampaging pachyderms. And late last year the company’s support for an antipiracy bill opposed by Google (GOOG), Twitter, and other Web giants earned the domain-name company the loathing of the Internet’s cognoscenti. Wikipedia founder Jimmy Wales called the stance “unacceptable” and switched his site to a different domain registrar.

Ross D. Franklin/AP PhotoGo Daddy founder Bob Parsons has courted controversy (elephant hunting, sexy ads) while showering his staff with perks

The litany of headline-grabbing moments made Go Daddy a household name in an industry few outside the IT sector care about. It’s been good for business, too: Sales reached $1.14 billion last year, up from $493 million five years ago. Private equity highfliers Kohlberg Kravis Roberts (KKR), Silver Lake, and Technology Crossover Ventures see the potential for even more upside. In July, they paid about $2.25 billion for a majority stake in Go Daddy, a deal that left Parsons fabulously wealthy and made millionaires of 35 employees.

The private equity types believe they can greatly increase the value of Go Daddy by expanding internationally and selling more services, such as data storage, to the companies with which Go Daddy already does business. The financiers, though, also have a reputation for axing people, hiking prices, and slashing costs. That reputation may not sit well with Go Daddy’s employees, patiently waiting for their turn in the cash machine, or its customers, who’ve come to expect high-touch service.

Change is good, says Warren Adelman, a nearly 10-year veteran of the company who took over the chief executive officer position from Parsons in December 2011. “We are synonymous with inexpensive domains and sexy girls,” Adelman says. “I think there is a different message we have to expose people to.”

In the years since Adelman joined, Go Daddy has come to play an important role in maintaining the Internet’s plumbing. More than 53 million domain names have been registered through Go Daddy, and it hosts websites for more than 5 million account holders. Despite its rogue public persona, Go Daddy has achieved a reputation for great service. Three-fifths of its 3,500 employees work in customer care, and it has won several awards for its service. Sign up for a Go Daddy account, and an actual human will call within a day to make sure everything is going smoothly. It’s the type of service you might expect from a company selling a $50,000 car rather than a $12.99 per year domain name.

None of that will change under private-equity ownership, insists Adelman. “We have resisted every attempt and suggestion from a consultant since the dawn of man to outsource customer care,” he says. “We don’t look at it as a cost center” but as a revenue generator, he adds, crediting customer-care reps with $250 million in sales last year from simply answering questions from potential customers. Go Daddy is in the midst of opening an Indian call center that will serve its customers on the subcontinent, and Adelman has a wry response for those who worry the move is a steppingstone to greater reliance on low-wage, overseas labor. “One day a year we might reroute the trunks so that the U.S. centers handle India,” Adelman says.

There will be changes, of course. The company will still air pricey ads during the Super Bowl and the Olympics, but Adelman says Go Daddy’s marketing will be less racy than in the past. “Go Daddy has been rare in its ability to attract attention,” says Adam Clammer, head of the technology group at KKR. “If we can attract attention but also layer in real content so that customers understand the whole package, then even better.”

The most ambitious projects underway at Go Daddy include increasing its international business and offering more sophisticated cloud-computing services. Go Daddy has about a dozen data centers around the globe. It wants to rent some of that storage and computing horsepower to customers. That would put it in competition with more technologically sophisticated companies like Amazon (AMZN), which leases its servers to technology titans such as Netflix (NFLX). Go Daddy sees itself becoming a hub for small to midsize businesses: They’ll buy their domain name from Go Daddy, later tack on some infrastructure services, and, one day, maybe even rent bookkeeping software or other products.

Melanie Posey, an analyst at the technology researcher IDC, credits GoDaddy with offering higher-profit services, but cautions that it’ll be tough to use customer care as a differentiator in these new markets. Cloud users tend to be very tech-savvy and are all about “automation and not really needing to leverage direct customer support,” she says.

Even under private equity’s culture of abstemiousness, the perks won’t disappear, says Adelman. For some all-star customer service reps, the company pays their mortgage for a time or sends them on trips around the world. Others go on holiday shopping sprees at Costco (COST). And yes, the cash machine will continue spitting out bills.

The bottom line: Go Daddy may become more sedate but remains committed to customer service as it focuses on growth overseas and cloud computing.

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What Facebook Will Get Out of Gift-Giving App Karma

On May 18, Facebook (FB) announced it had acquired mobile gift-giving app Karma. There was other Facebook news that day, but lost in the hullabaloo was the fact that the deal was the social network’s second-largest acquisition to date. It totaled more than $80 million, according to two people familiar with the transaction who asked not to be named because the deal’s terms were private.

Karma is a 16-person startup that debuted its first smartphone app in February. But unlike past acquisitions, where Facebook bought small companies mostly for their talented engineers, the social network plans to continue running Karma’s service and regards the purchase as an important step into the business of online commerce, say the sources. It’s also a bet that gift-shopping, a multibillion-dollar industry that still takes place mostly in shopping malls, is about to get shaken up by Silicon Valley.

Karma is one of several new services to apply Web technologies to picking out, purchasing, and delivering presents. Once a user loads the app on a smartphone, Karma connects with Facebook and gleans data from the social network to know when friends’ birthdays, graduations, weddings, and other life events occur. Karma then suggests gifts to the user from its curated catalog—recommending a $30 bottle of Chandon sparkling wine for a recent grad, for instance. Once a purchase is made, the lucky friend receives a message requesting his or her physical address and, in some cases, offering the option to customize the gift, like changing the color or choosing to donate the money instead.

For gifters who have trouble coming up with ideas, Karma and its competitors are an alternative to gift cards, a business which rang up more than $100 billion in the U.S. last year, according to CEB TowerGroup (EXBD). They could also mean new opportunities for brick-and-mortar stores. “Major retailers have been struggling for a while about what to do with gifting as a business opportunity,” says John Poisson, chief executive officer of San Francisco startup Wantful, a Karma competitor. A social-gifting app “can help consumers remember to buy a gift [and] discover products without having to wander through a department store,” Poisson says.

Wantful raised $5.5 million from venture investors in March. Its users answer questions about friends to create a customized catalog of recommended gifts. Wrapp, a startup based in Stockholm, has deals with H&M (HMB), Gap (GPS), and other retailers to create virtual gift cards which users send through social networks. Recipients redeem them using their mobile phones.

Facebook’s entry into social gifting is both a stamp of approval and possible threat. Since many of the apps use Facebook to promote their services and tailor gifts to friends’ likes, some fear the Karma acquisition means they’ll be muscled out. “The $100 billion question now is whether Facebook will remain an open platform that partners and supports companies like Wrapp in social gifting, as it did in social gaming,” says Hjalmar Winbladh, CEO of Wrapp. “Or is it abandoning that strategy and has plans to compete instead?” Reid Hoffman, a partner at Greylock Partners, which has backed Wantful and Wrapp, suggests social-gifting services are potential acquisitions for “a large body of players” including Amazon (AMZN), EBay (EBAY), and Google (GOOG).

Karma is a potential answer to one of the biggest questions posed by Facebook analysts: How will the social network increase its revenues? Advertising is not living up to expectations, especially in mobile. Karma, which buys items from manufacturers and resells them for a profit, gives Facebook a new business line. “This is absolutely an attempt to capture transactions,” says Sucharita Mulpuru, analyst at Forrester Research (FORR). “What remains to be seen is how big of a market this is.”

The bottom line: Facebook’s purchase of Karma represents a new revenue stream but worries other startups that specialize in social gift-giving.

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Twitter, Facebook Join the List of In-Car Distractions

Drivers, start your engines—and log in to your Wi-Fi. Just be sure to put the car in park if you’re going to tweet or update your Facebook status. That’s essentially the auto industry’s response to government warnings that a proliferation of models equipped with Web access and other distractions will cause a spike in accidents.

As Audi (NSU), Nissan (NSANY), General Motors (GM), and Ford (F) make a selling point of in-car Internet and social networks, U.S. Transportation Secretary Ray LaHood is pushing new federal guidelines to discourage their use. The government says carmakers should avoid any feature that would take a driver’s eyes off the road for more than two seconds; interactive devices should only work when the car is stopped. “We don’t have to choose between safety and technology,” LaHood says in an e-mail, “but while these devices may offer consumers new tools and features, automakers have a responsibility to ensure they don’t divert a driver’s attention.”

Photograph by Charles Maraia/Getty Images

The guidelines are just suggestions—they don’t have the force of law and stop short of setting limits on what cars can include. That’s allowed automakers to praise LaHood’s efforts to protect drivers while continuing to develop the features the government is concerned about. The industry’s creative argument: The new gadgets are safer for drivers than fumbling with smartphones while behind the wheel. “They’re going to do those things whether it’s through the vehicle or through a handheld device that they bring with them in the car,” says Wade Newton, a spokesman for the Washington-based Alliance of Automobile Manufacturers, whose members include BMW (BMW) and Volkswagen (VOW), “and those are devices that were never designed to be used while in an auto.”

The new Cadillac XTS sedan will include an iPad-like touchscreen and limited voice commands. “When you look at the average car, and we’re guilty of it and so are all of our competitors, you’ve got too many buttons,” says GM Chief Executive Officer Daniel Akerson. Ford, whose MyFord Touch and MyLincoln Touch infotainment systems were panned by Consumer Reports magazine for being too complicated to use, says it’s devising new, easier ways for drivers to get on their favorite sites—when the car isn’t moving. “Our engineers have?…?been working with Facebook engineers to develop unique and safer ways of integrating the car experience with Facebook,” Jay Cooney, a Ford spokesman, says in an e-mail.

No matter how easy they are to use, features such as these “only serve to feed an already ravenous appetite for distracted driving,” says Rob Reynolds, executive director of FocusDriven, which has pressed for tougher penalties for drivers who text or talk on cell phones while driving and now backs putting restrictions on in-car Internet. That’s not likely to happen. LaHood has said that for now he’s satisfied with the voluntary guidelines and won’t push for federal rules with teeth. Instead, he’s hoping to put pressure on car companies with a series of public-service videos featuring people whose family members were killed in crashes caused by distracted drivers. There are plenty: In 2010, according to the National Highway Traffic Safety Administration, 3,092 people—nearly 10 percent of those killed on the nation’s highways—died in accidents related to drivers who were paying more attention to their screens than to the road.

The bottom line: New federal guidelines ask automakers not to include features that distract drivers—but the industry doesn’t have to follow them.

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Definition of Information Technology

Colleges Woo Tech Millionaires-in-Waiting

Jason Kapalka didn’t give his alma mater much thought after he finished his studies in 1994. The University of Alberta graduate, who has a bachelor’s and a master’s degree in English, moved to San Francisco and didn’t join the alumni association, donate money, or return for reunions. “If I’d stayed in Edmonton, I probably would have,” he says. The university didn’t forget him, though.

Kapalka went on to co-found PopCap Games, where he helped create such addictive games as Bejeweled, Bookworm, and Plants vs. Zombies that collectively have been downloaded more than 1.5 billion times. Electronic Arts (EA) bought the company last year for $750 million. Now the newly rich Kapalka is in talks with his old school about setting up a $100,000 endowment.

Robert Harding World Imagery/Getty Images; Artpartner-Images/Getty Images

As Kapalka’s career started to take off, the university cultivated a relationship with him—inviting him back to campus, honoring him with a special award, and putting him in touch with one of his former professors. “They didn’t ask me for anything,” he says. “It was me who wanted to give to them. Although being in touch with them again definitely made it easier.”

Competition for alumni donations, always intense, has heated up in recent years: Alumni donations rose 10 percent in 2010, to $7.8 billion. Data compiled by the Council for Aid to Education show that one quarter of U.S. colleges netted 86 percent of all donations. The top five fundraisers in 2011 were Stanford, Harvard, Yale, Massachusetts Institute of Technology, and Columbia.

In February, Stanford announced that its five-year drive raised $6.2 billion. The total, which includes donations from organizations and corporations, was 44 percent above the school’s original $4.3 billion goal. Stanford enjoys a big edge, given all the Silicon Valley entrepreneurs it counts as alumni. The founders of Instagram (FB), Yahoo! (YHOO), and LinkedIn (LNKD) are all Stanford grads, as are roughly 5 percent of Google’s (GOOG) employees.

“The alumni list is a huge advantage, obviously,” says Don Fellows, chief executive officer of Marts & Lundy, a philanthropic consulting firm. Not all schools know how to put it to use, though. “I have one client, a school, who didn’t even realize that a famous individual was one of their alumni” until he did a big deal, Fellows says.

“Young entrepreneurs look at philanthropy differently than older donors,” says Michael Simmons, CEO of Empact, which helps universities and other organizations connect with entrepreneurs. “They want to make a difference now, not just decades from now. Schools are going to have to learn to tap into that.”

Babson College, a business school in Wellesley, Mass., found it had a significant number of young alumni who wanted to donate, but “all of their current cash was being put into their new ventures,” writes Wendy Silverman, Babson’s director of corporate, foundation, and government relations, in an e-mail. So it started the Founder’s Fund, in which alumni pledge a portion of their startup’s future earnings. So far 47 people have signed up, and Babson has collected 17 donations totaling close to $3.4 million.

Occasionally universities find future donors through happenstance. Before Joe Essenfeld, a 2001 Cornell University alum, founded the New York-based software company JIBE, he was chief operating officer for Insomniac Cookies, a late-night cookie delivery service. “When we were looking to expand the company, the first campus I wanted to open a location at was Cornell,” says Essenfeld, who soon became acquainted with university officials. Last year, Essenfeld joined the Cornell Entrepreneur Network, a business networking program for alumni, students, and staff, and helped the university prepare its bid to build an applied science campus in New York City. Essenfeld, who says he makes regular contributions, hopes he can be more generous one day: “If they catch me at the right time in the future, and I have the means to give a meaningful donation, I would do it.”

Joe Gebbia, co-founder and chief product officer of online vacation rental marketplace Airbnb, is a Rhode Island School of Design (RISD) alum who never cut the cord. The 2005 grad has served on alumni boards, helped recruit applicants, and returned to campus to speak to students. Airbnb was valued at over $1 billion in 2011, but with the company yet to go public, Gebbia is a millionaire in name only. “I donate some money [to RISD] off and on,” he says. Nonetheless, the school recently named him to its board of trustees. Gebbia still wears his class ring and it’s a good bet he’ll remember his alma mater if he strikes it rich. Says Gebbia: “It reminds me of what I went through and who I owe credit to for where I am today.”

The bottom line: More universities are investing time and care in building relationships with startup founders in the hopes of turning them into donors.

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What It's Like to Photograph Mark Zuckerberg's Wedding

Mark Zuckerberg announced his wedding exactly as you’d expect: with a Facebook (FB) status update. The post-nuptial snapshot of him and his longtime girlfriend, Priscilla Chan, instantly went viral, with more than 1 million likes and hundreds of comments. Details of the wedding trickled out over the next few hours, including the identity of the photographer behind the iconic shot: 31-year-old Brooklyn-based artist Noah Kalina.

“We shot immediately after the ceremony,” Kalina explains by e-mail. “I wanted an image that would show something clean, beautiful, and free of contrivance.”

Although not a wedding photographer, Kalina is a professional artist and no stranger to the world of viral sensations. In 2006 he gained Internet celebrity status when his “Everyday” video—time-lapse footage showing one photo of Kalina every day over the previous six years—went viral. It inspired an iPhone app that helps others do the same thing and was even parodied on The Simpsons.

Zuckerberg and Chan met Kalina the old-fashioned way: at the wedding of a mutual friend. “Mark and I played ping-pong. He is really good,” says Kalina, who joined Facebook in 2007. Chan called him up on Friday, the day of Facebook’s $16 billion initial public offering. “I was on a plane the following morning,” he says. “I arrived just a few hours before the wedding started.”

Kalina shot the couple with a Canon 5D Mark II and a 24-70 mm lens, a professional-level but fairly standard camera. He spent about 15 minutes editing the photos (and no, he didn’t use Instagram, the Facebook-owned photo-filter app). “Then I watched as they updated their Facebook timelines,” says Kalina.

As for the rest of the wedding album, it’s unlikely it’ll be uploaded to Facebook. “I shot additional portraits over the course of the evening, but those photographs will remain private and will just be for Mark and Priscilla to enjoy.” Apparently not everything should be shared, even when you’re the founder of Facebook.

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How the Deal for AMC Entertainment Furthers China's Culture Agenda

In China Inc.’s biggest move yet into the U.S., Dalian Wanda, the largest entertainment group in China, yesterday announced a $2.6 billion purchase of AMC Entertainment Holdings, the second-largest operator of American movie theaters. The deal is much larger than the previous record for a U.S. purchase by a Chinese company, the $1.8 billion acquisition of IBM’s (IBM) PC business by Lenovo (992:HK) in 2005.

The purchase might invigorate a campaign by the Chinese government to boost the country’s “soft power,” or cultural influence, in the U.S. and other countries. Communist Party leaders have expressed worry about what they consider to be the outsized influence of foreign culture inside China. Why, they ask, should filmmakers, musicians, and other artists from the world’s second-largest economy attract so little attention around the world? Last October, party leaders vowed to build up China’s soft power and maintain what the official Xinhua news agency called “cultural security.” According to Xinhua, the party’s Central Committee said “China is facing a difficult task in protecting ‘cultural security’ and feeling the urgency of enhancing its soft power and the international influence of its own culture.”

Taking control of AMC helps Wanda move closer to that government goal. But relax: You shouldn’t expect the multiplex at your nearby mall to take down The Avengers to show Chinese propaganda such as The Beginning of a Great Revival, last year’s government-approved celebration of the party’s 90th anniversary. China’s leaders aren’t naive enough to expect results overnight.

More likely, the AMC deal will provide a building block to develop China’s film industry, with Wanda using its American acquisition to gain expertise in operating the kind of large, nationwide cinema chains the nation needs. For all its growth, China remains far behind the U.S. in movie infrastructure. For instance, Wanda has only 86 locations in China, compared with AMC’s 346 in the U.S. The Chinese company can learn how AMC manages that kind of scale. And unlike the Lenovo-IBM deal, Wanda is unlikely to face challenges from critics worried about national security. “Movie theaters aren’t politically sensitive assets, so this deal probably won’t encounter as much regulatory oversight as others,” Ronald Wan, managing director at China Merchants Securities in Hong Kong, told Bloomberg News.

Some of Hollywood’s biggest names figure they can capitalize on China’s soft-power obsession. Eager to gain greater access to Chinese consumers, studios are making deals with local partners. In Shanghai, a barren stretch of land on the western bank of the Huangpu River now houses abandoned warehouses and large oil tanks. If all goes according to plan, the area will become a new cultural district, with theaters, clubs, and a studio that will be the home of Oriental DreamWorks, a joint venture DreamWorks Animation SKG (DWA) formed in February with three government-backed companies, China Media Capital, Shanghai Alliance Investment, and Shanghai Media Group (SMG).

The DreamWorks deal is one of several recent breakthroughs for Hollywood in China. In February, at the end of Vice President Xi Jinping’s trip to the U.S., the Chinese government agreed to allow improved market access for Hollywood movies. The government also agreed last year to give the studios a bigger take of China’s $2.1 billion box office receipts—ranking third in the world, behind the U.S. and Japan. News Corp. (NWSA) this month bought a stake in Beijing-based Bona Film Group (BONA), a movie producer and distributor. In April, Disney (DIS) teamed up with Tencent (700:HK), the giant Chinese gaming and instant messaging company, to develop animation content; Disney also announced plans to work with Beijing-based DMG Entertainment to co-produce the latest installment in Robert Downey Jr.’s series, Iron Man 3.

Hollywood’s goal is to gain greater access to Chinese consumers. China’s leaders, however, have another objective in mind. The riverfront area where DreamWorks will have its studio is also to include a special zone targeting international recording companies that can help make China’s music industry more global, says Bill Zang, an executive with Shanghai Synergy Culture & Entertainment Group, an SMG subsidiary. Zang, a Shanghai Synergy vice president, wants to make Chinese musicians more popular worldwide. “China is an economic superpower, China is a manufacturing superpower. But the international influence of China’s culture is very small,” says Zang. “We have a lot of good things that laowai [foreigners] don’t know about.”

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Microphones for the Stars Go Mass Market

For more than a decade, Blue Microphones focused on a rarefied market. The Westlake Village (Calif.) audio equipment manufacturer made expensive analog microphones for professional recording studios and renowned artists such as Bruce Springsteen, Coldplay, and Jay-Z.

Then, in 2005, it introduced a retro-looking digital microphone for $99, about one-third the price of its analog models, hoping to appeal to musicians editing and distributing their songs themselves. The new microphone’s big breakthrough: its USB plug.

Being able to connect to a computer’s USB port meant users didn’t have to rely on built-in mics, which aren’t designed for recording. Without advertising, word of mouth exploded, and Blue Microphones released a similar model for $150. The microphones, available at Apple (AAPL) stores, Best Buy (BBY), and other retailers, have helped drive the total number of devices sold to 750,000, says John Maier, Blue’s chief executive officer and a 20-year veteran of the music hardware industry. Sales remain strong as “the way people communicate and create content becomes more and more democratized,” he says.

To maintain growth, the 38-employee company is trying to distinguish its popular digital consumer microphones, called the Snowball and the Yeti, from about 40 others unveiled over the past three years by competitors such as AKG, Sennheiser, Shure, and Samson Technologies. Samson last year introduced three mics with similar retro aesthetics and playful names: the Meteor Mic, the GoMic, and the G-Track. “Kudos to them,” says Maier. “They didn’t copy us directly, but they saw what was going on.”

This summer, Blue Microphones plans to introduce the Tiki, the first USB mic with software that mimics human hearing. The idea is to make it easier to hear people talking during conversations on Skype and Apple’s FaceTime. For them, “built-in mics and speaker systems on laptops and desktops increasingly don’t seem to fit the bill,” says Deloitte’s U.S. technology, media, and telecommunications leader Eric Openshaw. External “mic alternatives seem to be a better proposition for many,” he says.

Rather than build a “dumb mic” that can’t determine what is human voice and what isn’t, and write software for a computer to control it, Maier says his engineers used artificial intelligence to distinguish human sound from background noise. That means it won’t record typing or traffic, for example. Another first: When the user stops speaking or singing, the mic mutes itself. When the user resumes talking, the mic transmits audio within 20 milliseconds, a gap so small most humans can’t recognize it, so it doesn’t cause lags or pauses the way other microphones do, which can result in voice overlap and interruptions.

At this year’s International Consumer Electronics Show, a handful of brands came by asking about using Tiki for built-ins for cars and computers, says Maier. Blue Microphones may for the first time license its technology, he says, aping Intel’s (INTC) lucrative “Intel Inside” campaign to build awareness of its brand with “Blue Mic Tech Inside” labels on the equipment.

Blue Microphones is also trying to crank up sales in foreign markets by establishing individual partnerships with distributors in Europe and Asia rather than one main distributor, with which Maier says it parted ways this March. Last year, Blue’s international business increased 38 percent, and revenue hit $19.5 million, says Maier. This year he estimates about $27 million in revenue, with about 20 percent from overseas sales.

The expansion from steady, small manufacturer to growth venture isn’t a fluke. In 2008 the Transom Capital Group, a private equity firm launched by former McKinsey consultants, bought a majority stake in Blue Microphones. It rebuilt the manufacturer’s supply chain in China and the U.S., put a new accounting system in place, and broadened marketing strategy. “When I arrived, the company couldn’t produce enough product to fill demand,” says Russ Roenick, a Transom managing partner who acted as Blue’s CEO until it hired Maier. Roenick pushed through the changes because “we didn’t want to collapse under the weight of our own growth.”

Of course, its growth is dependent to a large extent on the behemoths making computers and other devices with internal microphones that their customers find lacking. If Apple, for example, introduces a new laptop with a better mic, or “changes something, like a connector … we do have to move fast,” says Maier, “but so do our competitors.”

He’s pushing to keep Blue Microphones agile. Since its inception, the company has built all its professional equipment at its California factory and used contract manufacturers in Shanghai and Shenzhen for its consumer models. Maier says he has recently been looking for alternatives, including making its consumer lines in California. “We’re great at hand-built, custom high-end [manufacturing], but not at mass manufacturing,” he says. “We bolster and reinvest where we’re strong—product development and marketing. We find partners to help us with manufacturing and logistics.”

Frenkel is a Bloomberg Businessweek contributor.

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TechShop: Paradise for Tinkerers

On March 5, 2010, Patrick Buckley was overcome with the desire to build something. Apple (AAPL) had just announced the iPad, and he had an idea: a retro case for the tablet that had the look and feel of a hard-bound book. “In my mind, I needed to have a product and a website ready to go for that launch day,” he says. Buckley, 31, is a serial entrepreneur. He has built add-ons for Web browsers and co-wrote The Hungry Scientist Handbook, which is something like a cookbook for geeks. He’s done a Facebook (FB) app focused on high school sports, an early photo-sharing service, and “a mobile analytics platform.” Making an iPad case wasn’t like building a Web app, though. He needed tools. So he did what a lot of Silicon Valley geeks do: He went to a TechShop.

The TechShop chain is a paradise for people who like to make things. The average facility runs about 17,000 square feet and has all manner of apparatus, from Industrial Age staples such as sewing machines, metal lathes, and mills to $200,000 computer-controlled contraptions that can cut precise patterns out of slabs of metal. For about $100 a month, you can become a TechShop member and use all this equipment. For a few bucks more, you can attend classes that vary from Welding 101 to drawing 3D models on a computer.

Square Reader: Jin Lee/Bloomberg; Jet Pack: Joseph Schell; Engine: Brian SorgAt the original TechShop in Menlo Park, Calif., Buckley learned how to slice up large sheets of bamboo into smaller pieces and how to fasten them together and smooth them down to make a retro case for the iPad. The result was the DODOcase. Buckley sold about $4 million worth of the cases in his first year and has expanded since. He now employs 25 people and has a factory in San Francisco. “President Obama has a DODOcase,” Buckley says. “You can see it in the Oval Office. I’ve actually never seen a photo of him using an iPad without it.”
The Menlo Park TechShop opened in 2006, part of a boomlet in so-called hacker spaces. Lacking garage workshops, city dwellers created places where they can write software code or build robots, while socializing and sharing their expertise. They’re part of what’s known as the maker movement: DIY enthusiasts who argue that they’re fulfilling a fundamental human need to make things with our hands.

TechShop stands as the retail embodiment of this movement. It’s a maker franchise. Jim Newton, a veteran of the Valley’s computer hardware scene and a former science adviser to the MythBusters television series, founded TechShop after getting hooked on building BattleBots, the warrior robots that fight each other. He ended up taking a machine class at a local college to get access to better tools. Newton proved so good at building the robots and working with the machines that he was asked to teach a class. “Then people kept e-mailing me to see if they could use the machine shop for their own projects, and it showed me that people would pay for access to a shop,” he says.

Newton announced his plans in 2006 at the Maker Faire, an annual gathering in the Bay Area that celebrates handmade creations, and people began handing him membership dues on the spot. More people offered to invest $25,000 each to get the TechShop going, and soon Newton had the $350,000 needed to open in Menlo Park. More TechShops were started in a similar fashion. The company has since found that it can get each site to profitability more quickly with corporate sponsorships. It expects to break even at all the stores this year. There are now about 3,300 TechShop members.

Three TechShops are in the Bay Area and another is in Raleigh, N.C. Earlier this year, a TechShop opened in Detroit via a partnership with Ford Motor (F) meant to provide makers at the company and in the city with a creative outlet. “The crisis we went through in Detroit has driven the rise of a more entrepreneurial spirit,” says Paul Mascarenas, the chief technical officer at Ford. “This is part of an opportunity to bring out some of the innovation.” Other companies—none of which have been named yet—are in negotiations to back TechShops in Austin, Phoenix, and New York (Brooklyn) this year, with Los Angeles, Chicago, Boston, Seattle, and San Diego on the agenda for next year.

In Washington, a very big partner has stepped up. In an interview, the Defense Department revealed it will spend $3.5 million to fund two TechShops near Washington, D.C., and Pittsburgh. Regular members will work in the facility by day, and then employees of Darpa, or the Defense Advanced Research Projects Agency, will arrive at midnight to conduct after-hours work. Their mission: to design factories that can be reconfigured on the fly. The project is called iFab. For a month, a given factory might use dozens of machines to make parts for helicopters. Then you reboot the software controlling the machines, and out come the parts for the drive train system in a tank. The Darpa workers at TechShop will try to figure out which tools and methods can be used to rewire factories in this fashion. “They are not there to interact with the general public or look at the ideas people have,” says Nathan Wiedenman, the program manager of Darpa’s tactical technology office. “They are there to work on iFab.”

Despite the secrecy, Darpa has worked over the past 10 years to harness the creative resources of the public. It has used contests and prize money to spur innovation in such areas as robotic cars and artificial intelligence algorithms. And it’s looking to flood high schools with 3D printers, design software, and computer-controlled machines. Darpa has invested in TechShop as part of a broad mission to see if regular citizens can outinvent military contractors on some of its weirder projects. (The Department of Veterans Affairs, meanwhile, will be giving 1-year TechShop memberships to 2,000 veterans.) “We are pretty in tune with the maker movement,” says Wiedenman. “We want to reach out to a much broader section of society, a much broader collection of brains.”
Walk into the three-story TechShop located south of Market Street in San Francisco, and you’re greeted by a dream consultant—yes, that’s an official title—like Danny Garcia. He studied architecture for five years, then got stir-crazy and completed metal and woodworking apprenticeships. Members can give their dream consultants an idea of what they’d like to make and receive advice on how best to achieve the goal and what classes to take. Garcia, like many TechShop employees, often works from 9 a.m. until the location closes at midnight. He goes home with his pants covered in sawdust and loves it. “I volunteered here until they hired me,” he says.

TechShop members are a mix of hobbyists, artists, retired engineers, and budding entrepreneurs. The first prototype of the Square, a device that turns smartphones and tablets into credit-card readers, came out of TechShop, as did Lightning Motorcycles, maker of the world’s fastest electric motorcycle, and Embrace, which built a cheap infant warmer now distributed worldwide by GE Healthcare.

Each TechShop is divided up into sections. There are large, cordoned-off areas for bulky and dangerous equipment such as sheet metal rollers and chop saws and handheld plasma cutters. There are special areas for tasks that make a lot of noise and a lot of mess like the sand-blasting cabinet and spray-painting studio. Most of the people, though, end up in shared common spaces that are filled with workbenches. There’s free coffee and popcorn.

On a Wednesday afternoon in March, about 50 people are in full maker mode at the TechShop in San Francisco. Anton Willis is building an origami kayak, which works like it sounds. Before a hiking trip, you fold the kayak up and stuff it in your backpack and then unfurl it at the waterside. While made out of corrugated plastic, the kayak has proved sturdy enough to support Willis on dozens of trips. “It’s perfect for the Bay,” he says.

The people consuming the most space in the shared area are Adam Ellsworth and Bryan Duxbury, who have a full-on manufacturing operation. They created a lamp that looks like one of the question mark cubes from Super Mario Bros. You know, the ones that spit out gold coins when hit by a character. Similarly, you punch the 6x6x6-inch lamp to turn it on and off, and every now and then it makes a noise just like the cube in the video game. “I think the sound is what keeps people coming back,” says Ellsworth. “It really touches on their nostalgia.”

They’ve sold hundreds of the lamps for about $75 each and take up three large tables to perform the assembly. Plastic squares stamped with yellow question marks and white backgrounds sit in stacks with bins full of electronics nearby. “We have one full-time worker now and two people that work 30 hours a week,” says Ellsworth. “USPS comes here every day and takes a cart of them away.” He estimates that the amount of equipment they use to make the lamps—laser cutters, screen printers, and the like—would cost more than $150,000, meaning they would never have even tried had TechShop not been around.

Each TechShop location has a different look and vibe. The Menlo Park site remains gritty and has an experimental air. The new site near Detroit shows what practice and some corporate backing can do. It’s a gleaming 38,000-sq.-ft. facility in a modified Ford building in Allen Park, Mich., just a few miles from the company’s main offices. Executives from TechShop and Ford performed the grand opening in early May by slicing through a thick metal “ribbon” with a plasma torch.

Ford’s executives heard about TechShop and hit on it as a way to pull more innovations out of the company. Ford’s employees were always thinking about new gizmos and needed a place where they could mock up prototypes quickly and test out their concepts. Instead of waiting to reserve equipment through Ford’s official channels, the employees can hop in their cars and drive three minutes over to TechShop. Ford employees that submit invention ideas that management deems patentable now receive free TechShop memberships.

Bill Coughlin, the chief executive officer at Ford Global Technologies, which handles intellectual property matters for the carmaker, expects Ford executives to greenlight more ideas when they can hold actual prototypes in their hands, rather than just see the early form of an idea on paper. He’s taken classes on 3D design software and laser printing; about 1,000 Ford workers have been given access to TechShop to date. The facility has a large showroom that will soon be filled with dozens of exhibit stations so that other TechShop members can demonstrate their technologies to car industry executives. “My hope is that this lets us connect to the maker community out there,” Coughlin says.

Mark Hatch, the CEO of TechShop, has tried to fund each site with local investors. It’s a time-consuming approach that has slowed the growth of the company. Through Ford, though, Hatch has hit on a new model. Ford guarantees a certain number of members and, through its sponsorship, ensures that TechShop will at least break even for a few years. “Anyone with a heart could feel what went on here through the last downturn,” Hatch says. “To come here and provide this kind of resource is awesome.”

The size of the Detroit facility has Hatch dreaming up extensions to the TechShop business. “We’ll add services desks, so that we’re not all DIY,” he says. “Someone can send us a file, and we will 3D print the object for you or laser cut it, and you can pick it up.” In this scenario, TechShop turns into the equivalent of the Kinko’s of the maker movement.

For Luciano Golia, the current setup at the Detroit facility is just fine. He’s a luthier from Italy who has made basses for professional musicians for 25 years. During a trip to Michigan for a conference, Golia fell in love with an American woman and recently moved to Allen Park so their daughter could be born in the U.S. He gave up his studio in Turin and $20,000 of equipment and had no idea what he’d do until his wife heard about TechShop. “When I found out about this place, it was just a beautiful gift,” says Golia. He now spends about eight hours a day at TechShop.
For some, TechShop represents a raised fist in the age of Made In China—and an opportunity to opt out of mass-market consumption and unleash their own creativity. They are tinkering at TechShop, testing out ideas at a rapid pace, and getting help from the other makers around them. “Specific movements come and go, but the basic phenomenon is big and growing,” says Eric von Hippel, a professor of technological innovation at the MIT Sloan School of Management. “People are not finding what they want on the market and are choosing to create what they want.”

Tamim Hamid has felt the benefits of TechShop on a visceral level. For years he watched as male pattern baldness set in and started eating away at his wavy black hair. A Silicon Valley biomedical engineer, Hamid dreamed up a helmet outfitted with dozens of lasers that would fire on the scalp and stimulate hair follicles. He developed the science behind the machine and then went to TechShop to find industrial designers who could develop the helmet and others to create the packaging for the device. “The folks who hang out here are good,” he says. “They’re always getting a lot of work.”

Later this month, Hamid will begin selling the Theradome. It started out as a crude 3D-printed plastic model and was then milled out of foam with a carrying case produced on industrial sewing machines. Now it’s a superslick blue-and-white helmet that has an industrial design reminiscent of an Apple laptop. The Food and Drug Administration has approved the device, which people are expected to wear three times a week for 20 minutes. “We’ve tested it on hundreds of people to show that it’s safe,” Hamid says, running his hand through a now-thick mat of salt-and-pepper hair. “It works on anyone.”

Buckley, meanwhile, plans to expand way beyond the DODOcase to fashion all types of accessories for gadgets. In each case, he wants to marry Old World manufacturing techniques with high-tech devices. TechShop served Buckley well once again when he took his girlfriend for a welding class to see if she had the mettle to be a maker. “It was a test, and she passed,” says Buckley. “She’s my wife now.”

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Office Upgrade: The 37-Year LED Desk Lamp

What it is: an LED lamp that extends bulbs’ life to 37 years

Cost: $899

Personal desk lamps are a great way to customize your workspace and give your eyes a rest—when they work. But once those taken-for-granted bulbs go out, workers are left temporarily squinting in the dull haze of overhead fluorescents.

Designer Jake Dyson, son of famed industrial designer James Dyson, has a solution: a superlamp. These $899 CSYS lamps redirect damaging heat away from the LED bulbs so they last 160,000 hours, or about 37 years if used 12 hours per day, he says. (We sadly don’t have time to put this claim to the test.) The arm glides up and down along the neck, as well as back and forth, and can also spin around. It stays in position when released. The light is dimmable, and moving it up and down adjusts the spread of the light.

“CSYS technology was designed to address these problems in existing LEDs—poor heat management, weak light distribution, color erosion, and the lack of a comfortable shade of warm white,” Dyson says in a press release.

The CSYS desk lamp is available on jakedyson.com, lumens.com, luminaire.com, and DDC in New York. A floor lamp model will be introduced later this year.

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David Holz's Leap Motion Wants to Kill the Mouse

Growing up in southern Florida, David Holz was a tinkerer. “I had a large pile of all sorts of electronics,” he says. “I was trying to figure out how things worked.” In high school, he built a system that uses several microphones to pinpoint where a noise originates; the U.S. military now uses similar tools to locate snipers. Holz’s project took him to the Intel International Science and Engineering Fair, but he didn’t win a prize. “I lost to somebody who cured a disease,” he says.

Holz, now 23, has moved on from sound-mapping. His new startup, Leap Motion, is dedicated to changing the way people interact with computers. Holz and his co-founder, Michael Buckwald, have built a device about the size of a cigarette lighter that contains three tiny cameras inside. It attaches to a computer and turns any PC or Mac into a gesture-recognition device. The idea is similar to the one behind Microsoft’s (MSFT) Kinect, an Xbox add-on that lets people play games just by moving their hands and body. At $70, the Leap Motion is about half the price of a Kinect. It’s also far more accurate, says Holz. The software that analyzes the images from the three cameras can track all 10 of a user’s fingers and detect movements of less than one-hundredth of a millimeter. “It’s so precise that it tracks down to the tendon,” says Andy Miller, a former Apple (AAPL) executive and now a partner at Highland Capital Partners, which has contributed to Leap Motion’s $14.5 million in funding.

Computer users have been primed for gestural interfaces thanks to Apple’s touch-based devices. Holtz envisions legions of office workers and gamers swiping, flicking, and pinching the air in front of them to interact with their machines. Such gesturing will replace the mouse, which is “a needless layer of technological complexity,” says Holz. Gesture-based computing will be particularly helpful for professionals who work with three-dimensional images, such as scientists examining molecules or energy experts studying oil-exploration maps.

Leap Motion plans to begin selling its devices within a year. They’ve also created software for third-party developers to add gesture recognition to their applications, and the duo expect roboticists, medical imagers, and gamers to take advantage of it. Holz has also been talking with consumer electronics companies about building Leap Motion technology directly into future laptops and tablets. “The end goal is to fundamentally change how people interact with their computers,” Holz says.

Even in the precocious world of startup founders, Holz stands out. He read Stephen Hawking’s A Brief History of Time in eighth grade and then devised a simple way to test the theory of general relativity. By the time he was in college, studying math at the University of North Carolina at Chapel Hill, he was doing contract work with NASA. Bill Warner, founder of video-editing software company Avid Technology (AVID), invested in Leap after being impressed by Holz’s wide-ranging intellect. Talking to him “feels like meeting Einstein when he was young,” says Warner.

Tested the theory of relativity with a ham radio and a clock

Worked part-time for NASA before dropping out of a Ph.D. program

To replace the mouse—"a needless layer"—with gestures

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Iran Gets Flamed in a New Cyberattack

Iran is once again in the crosshairs of an international cyberattack. On May 28, almost two years after a sophisticated virus known as Stuxnet wrecked some of the country’s uranium enrichment equipment, Tehran asked international security researchers for help fighting off an infection targeting computers in the energy sector. Experts have just begun to analyze the oversized virus’s 650,000 lines of code. McAfee’s (INTC) Dave Marcus notes that big pieces of malware are often called “100-meter dashes”—the length of the code if printed out. “This one is 1.5 miles in printed paper,” he says.

One thing that’s already apparent is that the virus, known as Flame, is hungry for information. It can orchestrate a number of furtive actions that usually don’t all appear in a single virus. Flame can monitor keystrokes, steal passwords, turn on victims’ microphones to record conversations, and take screenshots of Internet sessions. It’s able to send the captured information to so-called command-and-control servers around the world and receive software updates from them. It’s essentially a permanent desktop spy.

Because of the target and the malware’s complexity, Flame is suspected of being the work of a government, possibly spy agencies in the U.S. and Israel. Both countries have deflected questions about their involvement. When asked by Israel’s Army Radio, Israeli Vice Prime Minister Moshe Yaalon said it is “reasonable whoever sees the Iranian threat as significant would use various measures, including this, in order to hurt it.” He added that Israel is “blessed as a country rich in advanced technology” and that the tools “open to us all sorts of possibilities.” The U.S. Department of Homeland Security has no comment.

Kaspersky Lab, a Moscow-based security company, says that Flame is among the most powerful cyber “super-weapons” used in the Middle East, putting it on par with the Stuxnet attack, which reportedly set back Iran’s nuclear program by several months. Stuxnet impressed security researchers in part because it attacked computers using four “zero-day” exploits, which are essentially passageways into a computer’s operating system unknown to anyone but the attackers—and therefore unguarded. Flame is different, and targets vulnerabilities that are well known to technologists at this point, including two of the same ones exploited by Stuxnet. Security patches have been created to protect against them, but many users don’t update their software regularly.

That doesn’t mean Flame is any less sophisticated or effective, however. “Good attackers know their victims,” says Marcus, who heads McAfee’s Advanced Research and Threat Intelligence division. Whoever wrote Flame may have done reconnaissance, analyzing the operating systems on target computers in Iran and noting which patches they lacked and how best to infiltrate them. If the machines didn’t have the latest software updates, it would have been unnecessary to use a Stuxnet-style zero-day exploit, which are extremely difficult to find and sell for hundreds of thousands of dollars on underground markets. “You don’t waste your zero-days on low-hanging fruit,” says Marcus.

It’s also possible Flame predates Stuxnet but was just now discovered. There is evidence in the virus’s code that it has been active since 2007, though Marcus warns such signs can be faked or interpreted incorrectly. Despite the possibility that it’s been spreading for years, the virus has been highly selective and is on only a few hundred machines, according to Kaspersky. The low profile may have helped Flame stay hidden. “This is the classic case of a targeted threat,” says Joe Jaroch, a security researcher at Webroot, a security firm. “The most effective way to get around security measures is to send to only a handful of users.”

In the few days security researchers have had to unravel the virus, they’ve been able to pinpoint and shut down dozens of the command-and-control servers used to relay instructions to infected machines, according to McAfee’s Marcus. Flame can also communicate wirelessly, via a Bluetooth signal—a rare capability for malware. That means that even if all the command-and-control servers are cut off, a person with a mobile device walking or driving near any of the infected machines could still communicate with them.

Dave Aitel, a former computer scientist with the National Security Agency and now CEO of Immunity Inc., a security firm, says that “once a hacker gets into your system, it’s almost impossible to get them out. They know everything about you. It’s sort of like pulling an ex-wife out of your system.”

The bottom line: Security experts have shut down many of the remote servers controlling a virus targeting Iran’s energy sector.

Robertson is a reporter for Bloomberg News in San Francisco. Sheridan is a senior editor for Bloomberg Businessweek in New York.

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Rocket Man: Should Elon Musk Doubters Think Again?

Elon Musk leads a life worthy of Dos Equis’s “Most Interesting Man in the World” ad campaign. His tweets are about rockets he just launched. Action heroes model themselves on him. His warm-up was founding PayPal. Stanford held his interest for two days. His other job is reinventing the car. Making $2 billion is what he calls an afterthought.

Musk is clearly a man of gargantuan ambitions and abilities. And his ventures make great stories. But do they also make good investments?

Two years ago, Ironfire Capital founder Eric Jackson didn’t think so, at least regarding Tesla. In August 2010 he announced on TheStreet.com that he was shorting Musk’s electric car company, which he dubbed “the next Webvan.” Jackson cited both Musk’s perceived narcissism and the breadth of his ambitions as problems for the company. “If he wants to fiddle around with a space company,” he wrote, “then he should go do that.” Since Musk’s rocket fiddling just put the first commercial cargo on route to the International Space Station, and Tesla says it will be delivering its first Model S sedans ahead of schedule, we called Jackson to ask if he’d changed his thinking.

“What he’s done at Tesla and SpaceX, I have to say, it’s phenomenal,” says Jackson. “I have to tip my hat to him because both ventures are very exciting.” Jackson says he got out of his short bet on Tesla—at a small loss—a few months after writing the Street piece. He held Tesla shares for a while after that but hasn’t had an interest in the company for about eight months. What changed his mind? “I guess I realized that [Musk] being an egomaniac doesn’t necessarily mean [Tesla] won’t be a great stock return in the next 6, 12, or 18 months,” he says. Jackson saw that investors were not swayed by quarterly losses at the company and decided Tesla was a “story stock,” meaning operational problems took a back seat to future potential.

Yet Jackson has no plans to buy a piece of privately held SpaceX if it comes on the market. “[Musk's] healthy self-regard could prove to be an Achilles’ heel, but that’s probably going to be still a couple years from now rather than immediately.” But aren’t some egomaniacs as good as they think they are? How many rockets does Musk have to launch, or how many cars does he have to deliver, before Jackson is a believer? “He’s been dead right so far, and these kinds of fears have been dead wrong,” he says. “I can’t really say when I would … want to get behind him.” Wall Street can be a tough crowd.

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A Cloud for Hipsters

There’s an awful lot of choice out there for people looking into file-syncing and -storage services. Folks used to Google’s world will glom onto Drive, while Windows bigots—such as exist—will end up on SkyDrive. Then there are the “cool kids” on Dropbox or Box. But say for a moment that you’re not a “drive” or a “box” type. You’re a cloud hipster, and you need to store and sync files in an unconventional way. What to do?

Well, the hardcore types out there do have options—namely ownCloud and Cubby. They offer a bit more freedom than the mainstream services around how and where you store information. That said, it’s early days for both services, so you will be living on the edge.

With ownCloud, you get to do exactly what the name says, which is build your own, private cloud. Courageous types can download the open-source software onto a PC and turn the machine into a type of command-and control center. The PC, acting as a server, will coordinate the syncing of files between different computers and mobile devices.

“That sounds like an awful lot of work,” you say.

True, but with ownCloud you own your data. Your information is not living on servers managed by Dropbox or Google (GOOG) or Microsoft (MSFT). It’s living on your computers, which are now helpfully synced together. And, if you really want, you can link the ownCloud server to the other cloud services so that your files get saved on your private cloud and in a public cloud for extra protection. What’s more, you can use ownCloud to link together multiple file syncing services such as Dropbox and Google Drive, so ownCloud becomes a type of glue for the cloud world.

This ownCloud software will likely appeal most to businesses that want to keep their data in their hands and to technically adept people that want more independence. And hipsters.

If this all sounds too tough, you can sign up for Cubby.com.

This service is for cloud hipsters because it’s still in beta, and you need to get invited to use it. LogMeIn, which makes very popular remote log-in applications, created Cubby as a competitor to things like Dropbox and Google Drive. The upside of Cubby is that you can bestow any folder—rather than just one, as demanded by Dropbox—with file syncing powers.

LogMeIn is late to the game with this type of service, but it represents a formidable competitor to Dropbox and even the big boys, Google and Microsoft. Over the past few years, LogMeIn has developed technology that specializes in moving lots of data between PCs and data centers at a low, low cost. It also already has its log-in software running on about 125 million devices, which is a big footprint to leverage.

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It's Official: Google Is Now a Hardware Company

Last August, Google (GOOG) Chief Executive Officer Larry Page fulfilled a pledge made to one of his senior executives, a square-jawed former attorney named Dennis Woodside. Apple (AAPL) CEO Tim Cook had been trying to poach Woodside to make him Apple’s head of sales, but Google had convinced Woodside to stay, in part by promising him greater responsibility at the search company, according to two people with knowledge of the matter, who asked not to be named because the discussions were private. Now it was time to make good. Woodside says he was speaking with board member Ram Shriram when Page asked him to run Motorola Mobility, the company Google had just acquired for $12.5 billion. “He said, ‘I know you’ve been looking for a challenge,’” Woodside recalls. “’I want you to run Motorola. I think you’d be great at it. Can you let me know by tonight?’”

Woodside agreed and is now the leader of one of the most storied names in technology. Motorola, founded 85 years ago, invented the cell phone in the 1980s, made it ubiquitous in the ‘90s with the StarTAC, and ushered in the era of stylish feature phones in 2004 with the RAZR. Then it utterly lost its way in the age of versatile touch-screen devices like the iPhone. When Google first came calling, it was mostly interested in getting Motorola’s trove of 17,000-plus patents to help defend the Android operating system against lawsuits by Oracle (ORCL), Microsoft (MSFT), Apple, and others. Woodside’s mission has since become more ambitious. In an interview with Bloomberg Businessweek before the deal formally closed on May 22, Woodside said Google also plans to use the Motorola division to produce smartphones and tablet computers that can help Google set the pace of innovation in the mobile business. “This is a huge opportunity to really show what Android can do in a well-designed, well-packaged, and well-marketed product,” he says.

It’s also a huge gamble, certainly the biggest since Page retook the title of CEO at Google a year ago. The search giant became a household name and one of the most profitable businesses ever by sticking to online services and software. Now it will have to figure out the cutthroat, low-margin world of hardware. That means production lines, supply chains, and 1-800 customer help numbers. (Try finding one of those for Google search, Gmail, or Youtube.) The deal could even slow the remarkable rise of Android. One reason that this mobile operating system powers more than half the world’s smart phones is that device makers such as Samsung (005930:KS) and HTC (2498:TT) have felt safe licensing it because Google had no dog in the hardware hunt. If Google helps Woodside make Motorola’s phones superior, Android’s other licensees might seek additional OS options.

Woodside vows that there will be a “firewall” inside Google and that he will not ask for or receive special treatment from Andy Rubin, the senior vice president who runs Google’s Android division. “Andy’s job is to maximize the number of devices running Android,” he says. “My job is to make Motorola as successful as possible and deliver innovative hardware as a licensee of Android.” Big licensees with billions of dollars in Android device sales will be watching carefully, says Michael Cusumano, a professor at MIT’s Sloan School of Management. “Suspicions of Google will be there until there’s evidence that they don’t need to be,” he says.

Internet usage over smartphones is exploding, and nearly every technology company from Google to Facebook (FB) is trying to figure out how to extend its business onto the next wave of devices. Google’s decision to give Android away for free has won it market share, if not much in the way of profits. Horace Dediu, founder of equity research firm Asymco, figures that Google’s Android profits were around $600 million in 2011. Compare that to Apple’s earnings of $33 billion, mostly on iPhones and iPads.

Producing devices—Google says it will keep Motorola’s iconic “M” logo—may allow some Apple-like control over Android hardware. Woodside says he has three goals for Motorola. He wants to get the division to profitability, use Google’s ample engineering resources to pursue ambitious technical goals such as extending battery life and improving digital photography, and then get those innovations into Motorola devices as fast as possible. “It’s actually easier to make tremendous progress sometimes the more ambitious you are,” Larry Page told Motorola employees in a town hall meeting last August. “If you’re trying to do something kind of incremental, like a little bit similar to what you did before, it’s actually hard to get people excited about it.”

Prolonged antitrust review hasn’t made Woodside’s job any easier. Regulators in China approved the deal on May 19 only after eliciting a promise from Google that Android would remain open and free for the next five years. During the wait, Woodside couldn’t legally coordinate with Motorola executives or share plans with his soon-to-be employees at Motorola.

During the review process, Woodside quietly assembled a new senior team, which will be primarily based at Motorola’s offices in Sunnyvale, Calif., a few miles from the Googleplex. Mark Randall, who worked at Amazon.com (AMZN) on the Kindle, will lead supply chain and logistics. Gary Briggs, the Google exec who helped promote the Chrome browser, will take over marketing at Motorola. And Vanessa Wittman, formerly chief financial officer of Marsh & McLennan (MMC), will become its CFO. Such old Motorola names as Iqbal Arshad, Motorola’s senior vice president in charge of hardware development, and lead designer Jim Wicks will stick around, while Sanjay Jha, Motorola’s former CEO, and many other senior executives will leave the company.

Eric Schmidt, Google’s chairman, also helped to recruit some new firepower: Regina Dugan, former head of Defense Advanced Research Projects Agency, will run a new Motorola research and development lab called the Advanced Technology and Projects Group. ATAP will be modeled on DARPA and will seek to identify, invest in, and develop breakthrough mobile technologies that can be quickly integrated into Motorola products. “We are going to build a small, lean, Skunkworks-like group that is not afraid of failure,” says Dugan, an expert at developing technologies to detect land mines.

Motorola, which has been reducing headcount since 2008, now has about 20,000 employees, compared to Google’s 32,000. Woodside won’t comment as to whether he’s planning further job cuts at Motorola, though they seem inevitable. He does say he’ll focus first on cutting products, not people. Motorola released around 20 smartphones last year, which Woodside argues is too many. He plans to focus on trying to make a few great devices and then concentrate on marketing resources to sell as many of them as possible. “Can they build a ‘let’s call a press conference’ product that blows away Apple?” asks former Motorola CEO Edward J. Zander. “That’s got to be the play.”

Woodside, 43, is an Iron Man triathlete with a law degree from Stanford and little experience at building hardware or software. He admits to catching up only recently on such underlying technologies as mobile-phone processors. He started his career clerking for a federal judge in New York, helping decide cases that stemmed from the terrorist bombing of Pan Am Flight 103 and the first attack on the World Trade Center. After a five-year stint as a management consultant at McKinsey, he joined Google as a director of business operations in 2003. His new employer sent him overseas to open offices in Russia, Turkey, and the Middle East. In 2009, Woodside returned home to take over the U.S. sales operation, whose revenue rose from $10.8 billion to $17.5 billion on his watch. “He’s had Google’s ad business running as smoothly and tightly as I’ve ever seen that kind of media business run,” says Penry Price, a former Google colleague who is now at M6D, a marketing company in New York.

For all those accomplishments, none compares to Woodside’s task at Motorola.

In 2008, when Jha left Qualcomm (QCOM) to take the CEO job at Motorola, the company’s handset business had just lost $1.2 billion. In one of his first reviews of the company’s product plans, Jha says he was surprised to see more than two-dozen feature phones. “There was not a single smartphone, at least not the way we define it now,” he says.

Motorola had little expertise with the seamless software and services that were drawing users to phones like the BlackBerry and later the iPhone. Under intense pressure from shareholder activist Carl Icahn, Jha placed a series of risky bets, canceling numerous projects and spinning out the phone business as a separate entity called Motorola Mobility. (Motorola Solutions (MOT), which makes business products—barcode scanners, police radios, the headphones worn by NFL coaches—remains independent.) Jha had to persuade his board of directors not to shut down the phone unit altogether, an internal battle he calls “the darkest hour for our business.” Without the in-house talent to build its own operating system, or the money to support more than one, he bet big on Android. In 2009, Motorola introduced its Droid line of smartphones and rode it to a 4.8 percent share of the market in 2010. As Samsung in particular came out with popular Android devices, Moto’s share then fell back to 3.3 percent in 2011.

Jha knew he had an ace in the hole: that stockpile of 17,000 patents. With few patents of its own, Google’s Android success was vulnerable to legal challenges from Apple, Microsoft, and others. Through early 2011, Jha hoped to persuade Google to license Motorola’s patents in exchange for access to the latest Android updates ahead of other licensees, according to a former Motorola board member.

Google wouldn’t bite. In July, though, the company was badly outbid in the auction for the patent portfolio of telecom equipment maker Nortel (NRTLQ) by a consortium of rivals that included Apple, Microsoft, Research in Motion (RIM), and Sony (SNE). Less than a month later, Google’s Andy Rubin called Motorola to inquire about its patents, but Jha said they weren’t for sale. The next day, Jha called Larry Page and suggested Google acquire Motorola outright, according to a person familiar with the details of the negotiations, who was not authorized to speak on the record. Famed investment banker Frank Quattrone was hired and given a day to come up to speed. The $12.5 billion deal, says the person, was done in five days.

Google has little to show for its previous halfway forays into the difficult business of making hardware. It teamed with hardware companies to create three Nexus phones—the Nexus Prime, Nexus S, and Galaxy Nexus—meant to showcase the slickest features of each upgrade of Android. None have sold nearly as well as the iPhone. The company’s Chrome laptops have drawn scant attention since they first went on sale last year. Its Google TV set-top boxes and HDTVs, produced in partnership with Sony and LG Electronics (066570:KS), have received lackluster reviews and an even cooler reception from customers.

That the company keeps trying is a natural response to the runaway success of Apple, whose revenue growth alone in 2011 exceeded Google’s total for the year—$43 billion to $38 billion. The secretive Google X lab, run by co-founder Sergey Brin, is working on products such as Internet-connected glasses and self-driving cars. Google also recently acquired a San Francisco-based industrial design firm, Mike and Maaike, which worked on the first Google Nexus phone, Bloomberg Businessweek has learned. “Google has always been interested in hardware,” Woodside says. “The natural next step is for us to get even more serious and to really go for it.”

One of Woodside’s most closely watched decisions will be what he does in the tablet market, aka the iPad market. Motorola has sold nearly a million Android-running Xoom tablets, yet barely cracked Apple’s dominance. Unless Google comes up with some hits, Android will have only about a 9 percent market share in tablets three years from now, says Asymco’s Dediu. “It’s hard to believe this market will only go to one player, as much as it might appear that way right now,” Woodside says. “Motorola is going to be there and it’s going to be a player.” He also says Google has yet to figure out what to do with other pieces of Motorola Mobility, such as the set-top boxes it sells to cable companies and other gadgets like baby monitors.

In the near term, Motorola is unlikely to significantly affect Google’s bottom line. Even if he can’t improve on Motorola Mobility’s $250 million loss in 2011, that’s tiny next to Google’s $14 billion in profits. But Motorola could have an outsized impact on the future of Google—and on Larry Page’s legacy. “It may not be make-or-break in a financial sense,” Woodside says, “but clearly it’s very important for us to make this successful.” If it can’t make a major shift into the mobile devices that are an increasing part of people’s lives, Google could one day find itself as reliant on an aging desktop-centric business as another once-feared power. “They could end up like Microsoft,” says Zander. “Just milking the cow.”

Stone is a senior writer for Bloomberg Businessweek. Burrows is a senior writer for Bloomberg Businessweek, based in San Francisco.

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