I had lunch with one of my favorite Internet entrepreneurs today, Mark Sawyier, the CEO of Off Campus Media. The company provides college students with apartment listings near their schools, and what started out as an idea five years ago is now a multi-million dollar business. Sawyier came to this business without any formal training in computer science, business, management, or other technology training, yet he is a natural when it comes to running a modern-day Internet business. In the short time we spent today, he came up with a few bon mots and wise thoughts that I want to share with those of you that are thinking about starting your own businesses.

1. Know your site demographics. Sawyier checks Google Analytics and other website tools daily and understands how his search rankings and traffic patterns change and what he has to do to keep the page views coming.

2. Know your business plan is wrong and keep tweaking it in real time. Anyone who tells you that they have things figured out right off the bat is just plain lying. Don’t be afraid to make your biz plan a living, breathing entity.
3. Don’t be afraid to leave town to get more money. St. Louis is not the hotbed of VC activity and especially not for Internet firms. Sawyier went to New York City to get investment capital and is most likely to go there for additional rounds.
4. Understand your distribution channel, or how you reach your customers. Sawyier early on hired college students on different campuses to promote his service and get landlords and property owners involved in listing their properties. Having feet on the street was a good complement to gaining market share and attention, especially for an Internet business. Don’t just rely on Facebook friends and other virtual methods in building your channel.
5. Take risks, innovate constantly and learn from your mistakes. You aren’t selling soap or machine tools. If you have an online business, you need to be continually trying out new ideas and seeing how they fail and figure out what the next tweak will be. Think of this as akin to agile management and don’t be afraid to take small risks to learn how to improve your offerings.
6. Organic search is more art than science. But you need to understand how the daily tweaks that Google makes to its algorithm will influence your rankings and what you have to do to adjust your page content accordingly. If you don’t know how to use these tools, watch some videos and learn, and more importantly, figure out what metrics and stats you need to know to be effective. As Mark has told me before, “at the end of the day, the most important thing is having a website that provides the right answers and information to the searchers.”
7. It is all about your content. Moving Off Campus, his major venture, has tons of content – some 80,000 individual pages, let alone hundreds of thousands of apartment listings. But the content is relevant to one particular audience and one only: college students who want to move out of the dorm, and listings for just their immediate geographic area surrounding the campus. And because the firm is so laser-focused on this content and his audience, he can charge a higher premium for his search traffic than general real-estate want-ad listings.
   

That streaming videos makes up a huge percentage of the Internet’s traffic is by now well-known. Netflix alone makes up nearly 30% of all downstream traffic and we’re now accustomed to hearing about the extraordinary amount of bandwidth eaten up by videos streaming during major news events.

For example, during President Obama’s inauguration, content delivery network Akamai delivered 7 million simultaneous streams of video, with traffic surpassing two terabytes per second (Tbps), which broke records. The next year, Akamai’s network traffic peaked at about 3.45 Tbps.

If you think we’re eating up a lot of bandwidth streaming video now, just wait. That 3.45 Tbps figure from last year will be blown out of the water within five years, according to a detailed report put together by Akamai, Harvard University and University of Massachusetts. The researchers suggest that “it is reasonable to expect that throughput requirements for some single video events will reach roughly 50 to 100 Tbps” within two to five years. The low end of that estimate represents an increase of about 1349% from 2010′s peak, at least as far as Akamai’s CDN is concerned.

This growth is not guaranteed to be smooth, either.

“Because of the limited capacity at the Internet’s various bottlenecks, even an extremely well-provisioned and well-connected data center can only expect to have no more than a few hundred Gbps of real throughput to end users,” the report reads. “This means that a CDN or other network with even 50 well-provisioned, highly connected data centers still falls well short of achieving the 100 Tbps needed to support video’s near-term growth.”

Not surprisingly, the paper’s touts Akamai’s technology as a potential solution to any issues this may present. The report, a PDF of which can be viewed here, is rich in technical detail about how Akamai, content delivery and the Internet in general work and makes for a pretty interesting read over all.

via New TeeVee. Photo courtesy of Flickr user Design By Zouny

This is a guest post by Mark Suster, a 2x entrepreneur turned VC with GRP Partners where he focuses on early-stage technology companies. Read more about Suster on his startup blog and on Twitter at @msuster.

Venture Capitalists typically have partners’ meetings on Mondays. Why is that? Who knows. But probably because as a group we travel a lot. So the industry formed around a day of the week when all partners could avoid having company board meetings or traveling.

Yesterday was a Monday. And not a pleasant one.

Rewind. When I first got into the industry it was 2007. Valuations were enormous relative to progress in companies. Web 2.0 was still a term being bandied about. Companies with less than $2 million in revenue were asking for $50-60 million valuations and getting them. My partnership was pretty bearish and scratched our heads a bit at price tags.

It was a great learning time for me. I spent my days meeting companies, figuring out what areas of the market interested me and trying to get a sense for how VCs thought about fair valuations. I thought about things I never had to as an entrepreneur: check size, ownership percentage, deal stage, portfolio construction and risk.

2008

By 2008 I had gotten more serious about championing companies through our investment process. I started showing my partners more deals that I found interesting and doing loads of analysis on the future of markets I thought were ripe for disruption.

I have always believed that TV was ripe for disruption. The parallels to the music industry are too obvious even though the industry players, the medium and the cost structures are different. US TV advertising is $60 billion in its own right. I had found my industry and a deal I really liked in it.

I introduced my partners, we spent weeks with the team and felt good rapport. And just when I thought I had the deal that was worthy of bringing to the investment committee the world changed. It was September 2008. The market had tanked. Lehman Brothers had filed for bankruptcy. It was many events that led to the crash but perhaps this was the pin that pricked the market.

The following is a 2-week graph of the end-of-week price of the Dow Jones Industrial Average (DJIA) in Autumn 2008.

And while the market was off 24% in two weeks, it’s worth remembering 2 other things

• The market was actually off 40% from its Oct ’07 peak
• The market wouldn’t bottom until Mar ’09. On Mar-6 it hit 6,626 or 53% off its peak

We thought the following:

• No new deals close until we figure out WTF is going on with the market. We need some visibility.
• Let’s review all of our existing investments. Let’s make sure each has enough cash. Cut where needed. Finance where needed. Anyone not going to make it?
• Who has deals in process? Let’s help get their funding get finalized or the company sold if it’s already in play.
• Fawk, man. This is really bad. Depressing. Harrumph.

It felt awful. Kind of like you felt as personal investors, no doubt.

My deal got dragged out and eventually never happened. Mostly we got to see the team operate in stressful times and that changed my perspective on the deal. I need leaders who manage in good times and bad. To build a large company you need to manage through economic cycles.

2009

Come 2009 we felt really bullish about the future for startups because the froth was gone and so, too, were wantrapreneurs. The people left standing had a compelling vision to build companies and we backed many in 2009.

When this period was fresh in September  2009, I wrote a very detailed assessment of what I thought had just happened.

tl;dr summary

• Companies raised too much money in 2005-08 and had high burn rates
• VCs were very active in this period
• When the market tanked they had the “triage problem” – which portfolio companies to save, which to kill
• So no new deals got done. Everybody focused inwardly
• And VCs scrambled to raise their own funds. Making even less time for new deals
• VCs hate downrounds to even good companies struggled to raise money

But by late 2009 life had started to return to normal

• Eventually you have to invest. It’s your job. You don’t get paid to sit on the sidelines. So when the market started showing good signs (iPhone, Facebook, Zynga, Twitter, stock market growth) it was happy days again
• M&A returned. For the same reasons. You would think it would be better for M&A to be more active when the markets are down – better prices. But I guess you could say the same about VC.

So I encouraged entrepreneurs to think about raising their funds as quickly as they could because

• Consumer spending 70% of the economy and vulnerable (wealth effect, build up debts)
• Unemployment likely to rise
• Risks of these two factors to the stock market
• Stock market declines would bring back dog days of VC

The full articles are linked below. If you want a comprehensive summary of the industry in this era it’s worth a read:

VC Ice Age Part 1 – What Happens When a Market Comes to a Standstill?
VC Ice Age Part 2 – Why the Market Started Moving Again?
VC Ice Age Part 3 – What The Future Holds

In particular part three talked about what happened if we saw a double dip in 2010-11 or a “lost decade.”

2010

We did not see a double dip or the drying up of VC funding. In fact, fundings boomed as you know. 2010 was the year of the “super angel” and 2011 has to date been the year of unbelievably highly priced B,C & D rounds of venture capital. The so-called “billion dollar club.”

Fast forward a year to September 2010 and I wrote my treatise on the 2010 economy. It has some detailed charts you may appreciate if you’re wanting to understand the current economic situation. I show charts on housing, structural unemployment, home equity re-financings that we spent meaning less spending power post crash, new housing sales, debt-to-income ratios, public-sector job problems that will cause crises in cities and states across the US.

Summary version? No chart was good.

At least you can’t accuse me of being inconsistent. My year-over-year summary sounds very similar upon re-reading them.

2011

I have a young entrepreneur friend who IMs me a lot. He was working on a VC round in the early Summer. He pinged me for advice. I told him (verbatim), “close your round by August 2nd. After that, all bets are off.” He’s literally on IM right now in my other browser tab saying, “you called it.” I can’t say his name yet because he hasn’t announced funding. But he got it done. Maybe he’ll reveal our conversation when he announced.

I told another friend the same. He’s still optimizing on price and hasn’t accepted his term sheet. It expires this Friday. I wonder what will happen. I guess in part we’ll see how the stock market plays out this week.

August 2011. What’s happening?

The fundamentals in our economy are mostly not on more solid footing than when I wrote the posts in 2009 and 2010. On the positive side, corporate profits are up, their balance sheets have been repaired and they have recapitalized themselves to have lower amounts of debt relative to equity. Not just tech companies but industrials, too.

But you’d have to be a pretty heads-down coder to not have noticed the past 2+ weeks in the DJIA.

Most of the informed people I know are telling me that the sharp sell-off has more to do with European national debt (PIGS as it is called: Portugal, Italy, Greece & Spain) than the current US dilemma of a S&P downgrade of the US government debt. But it must also be on the minds of investors that perhaps the flu will end up on our shores, too.

I know that investors must also be aware of the civil unrest in the UK. Yes, it seems to largely be thugs. But social unrest is created in harsh economic times and we’ve seen this in Greece before. Expect it to spread. It does weigh on the mind.

And while I cannot tell you for sure what was going on in VC partner meetings across the world today – I’m a data point of exactly one – I think I have a pretty informed guess. And depending on which way that economy heads I can tell you what the story in entrepreneur land *might* be in 60 days, “funding is getting harder, valuations are slipping, companies are running out of cash, M&A is slowing down.”

So let me give you the news 2 months early. If the economy and the stock market continue to languish that’s exactly what’s going to happen.

I’ll bet most partners’ meetings this week consisted of looking just a little bit closer at the cash needs of their portfolio companies – making sure they’re “fully funded.” I’ll bet many of them did a review of their “investment pace” as in – how quickly should we be investing. I’ll bet many did a slow roll on deals that might have gotten approved today. Not a “no” but not yet a “yes.”

It’s impossible to sit in a partners’ meeting on a day like today without having an iPhone on watching the stock market free fall and no matter how much of a public tech cheerleader you are – privately I guarantee there was much concern.

If we do head South it will take a few weeks or months until the memos to portfolio companies get published and the Powerpoint presentations get sent out. But the internal conversation started today – trust me. VCs will take a “wait and see” approach right now. Don’t want to call it either way. It’s too early.

Me? I feel confident telling you to, “Watch your pennies. Raise your money. Don’t spend like it’s 1999. If we’re not heading for a double dip recession at least you’re still being prudent.”

Maybe we’ll bounce right back? Anybody who says they know for sure one way or the other is a bit of a shaman. But I have to imagine the speed and severity of the stock market decline and political instability will likely weigh on investors for some time to come – even if we rebound.

And I’ll tell you what worries me: Jobs, growth & political malaise. And don’t think tech will remain immune.

I guess that’s why I encouraged people to raise money while the getting’s good (PPT slides & video).

My prognosis?

1. Jobs
I’ve been parroting this for 2 years. We have a two-track economy. We have the inability to hire engineering in Silicon Valley or brand sales people in NYC but the country still has very high structural long-term unemployment. Check out the graph below from the Economist magazine. It plots employment changes from the peak GDP quarter of the previous boom. What you’ll see is that it takes about 2 years to recover jobs from the normal recessions of the past 50 years (as if there was a “normal.”)

This recession?  We’re 2.5 years in and still down 5% from the peak.

What gives? I’m guessing many of these jobs ain’t coming back any time soon. The last big recession was in the early 90′s where IT and globalization were in their infancy in terms of impact. We need a plan to replace these jobs long term. That can only come through education, training and investment in regions of the country that are not IT centers.  There’s no band-aid solution and no quick fix.

Whatever you think about tax policy, I’m certain that it’s not driver one way or the other to fixing this problem. Anyone who says it is a driver is selling you political malarky.

We gotta fix jobs.

2. Growth
The story here is no different.

My message to entrepreneurs has been, “It’s coming soon to a theater near you.” You know – the “butterfly effect” on a local and tangible basis. Consumers hurting in Detroit or Biloxi will not continue to spend money they don’t have and income they’re not earning. It will impact retail. It will impact brands. These companies advertise. On your tech platforms. These consumers buy iPads, iPhones, Androids. You’re counting on them for up-sells to your app. For buying virtual goods. You need consumers – they’re 70% of the economy.

Trouble is – they don’t have jobs. Those that do still have too much debt. Their 401k ain’t what it once was and it just got whacked again. They still have too much personal debt. And the equity in their house isn’t rising. They’re doing what economists call “de-leveraging,” which means spending less, saving more.

And you don’t see it. You don’t see it because the world you likely live in if you’re reading this has been booming. And even if you’re not physically in a booming tech market you’re likely in the market spiritually, metaphorically. You’re reading TechCrunch, aren’t you?

3. Political Malaise
I think here I’ll just quote myself from my analysis a year ago to avoid sounding like I’m jumping on the bandwagon of this week’s quarterback analysis:

“While there was a momentary unity in the US government for bailouts & stimulus spending that were initiated in the Bush administration (many people conveniently forget this now) and continued under Obama, it is clear that this era of consensus is over.  Keynesians will argue that this is a bad thing and fiscal conservatives will argue that it is a necessary discipline. 

Either way, the gridlock that is now the US congress will prevent any real economic responses and it seems likely that this political malaise will last beyond the 2012 election as the Republicans look to make big gains in the 2010 mid-term elections.”

Maybe the stock market drop will bring some clarity to congress. Maybe it will bring some bi-partisan spirit to solving the nations problems. Maybe. But evidence seems to the contrary. Right now people seem to be angling more around November 2012. And that sure sounds a long way away to me.

What does this mean for the tech and VC markets?

I’m characteristically still bullish on our long-term trends for companies who get through the toughest times. Here’s what I know:

• Television will be consumed dramatically differently in 10 years from now than it is today. Creative destruction will continue to create opportunities for people who understand the deflationary economics of the Internet. I’m long.
• Cash will continue to become less relevant in 10 years as electronic & mobile commerce continue to proliferate and new technologies like NFC drive change. I’m long on payment technologies.
• Computing will be an order of magnitude more mobile 10 years from now, changing the way applications are delivered and the way we interact with our real social networks. I’m long Mobile. And Social.
• Businesses will continue to realize that the Internet is one big information utility and will continue to move operations to the cloud. This will create whole new segments of the tech market for databases, data-as-a-service, real-time information processing, cloud mapping & visualization technology, etc. I’m long the cloud.

Venture capital is an industry best served up from 7-year aged casks. As many people have said, “We over-estimate the impact of technology in 3 years and under-estimate the impact in 10 years.”

Make sure you’re still here in 10 years. Get yours. Then go build your companies.

Top image courtesy of Fotolia.

It was twenty years ago today/ Tim Berners-Lee taught the world to play/ Although 20 years ago he would have sworn/ That there wouldn’t have been so much porn. That’s right – the world’s first website, a placeholder page written by Sir Berners-Lee way back on August 6, 1991 in the then-nascent Hypertext Mark-Up Language, is celebrating its 20th birthday today. And, on this important anniversary, we ask what hath the web wrought?

In the past two decades we’ve been given ecommerce and spam, we’ve torn down the music, news, and publishing industries, and we’ve LOLed at more CATS than we can count. We’ve seen empires rise and fall, the dissolution of the line between public and private, and the end of enforceable copyright. We’ve seen new modes of communication drive out unwanted regimes at home and abroad and we’ve heard the endless howl of a million voices calling out at once, most of them in comments on this site.

We’ve also seen lots of the aforementioned porn.

The original (can there be an original?) page is mirrored here and it’s a fascinating look at the seed crystal that catalyzed change to the world as we knew it in those heady pre-Internet days. Also porn.

Happy birthday, Internet Web. Here’s to another 20 happy, healthy years.

UPDATE – You guys win. Mea culpa.

Mobile app analytics firm Flurry has released a report today that examines the use of mobile dating apps vs. online dating sites. Flurry used data from Compete, comScore and Alexa to measure internet consumption of dating sites and used its own analytics data (which now tracks over 90,000 mobile applications) for mobile tracking. With respect to dating, Flurry tracks a large set of dating apps with more than 2 million total users.

Flurry reports that mobile dating apps command more time compared to online dating sites. On average, 8.4 minutes are spent in mobile dating apps vs. 8.3 minutes online. And a year ago, people spent twice as much time on the Internet for dating as they now do in mobile apps. Mobile dating app usage has grown from 3.7 minutes in June 2010 to 8.4 minutes in June 2011. This is further evidence that supports Flurry’s recent report on mobile app usage dominating web browsing.

In terms of engagement, Flurry says that the frequency of consumers checking mobile dating apps contributes to the growth in time spent per day in mobile dating apps. Last year, the average user opened a dating app 2 times per day, a little under 2 minutes each time. Now consumers open a dating app over 5 times a day, but for shorter periods of time, about 1.5 minutes per session.

In terms of unique users visiting sites v.s mobile apps, Flurry finds more people are using dating apps on smartphones than visiting online dating sites are on the web, proportionally. Flurry measured this by looking at the proportion of unique users of dating services versus the total, per platform. For the Internet, Flurry compared unique visitors of online dating sites versus the total number of people using the Internet, which totaled 12% in June 2010 and 13% in June 2011. For mobile apps, Flurry compared unique users of mobile dating apps versus all apps, which resulted15% in June 2010 and 17% in June 2011.

And the report shows that the number of people using dating apps is growing faster than the number using all apps. Overall, the number of unique users of all applications increased 125%, year-over-year, while the number of unique users using mobile dating apps increased by 150% over the same period.

For background, Flurry found the top dating apps and sites are Match.com, eHarmony, PlentyOfFish, Zoosk, Jazzed Online Dating, Skout, and Grindr.

Considering this data, it seems that there’s a huge market opportunity in mobile dating and incorporating local and location-based functionality. And it’s a trend that startups such as LikeALittle has caught onto.

This week we’re reviewing five trends that have helped define 2011. So far we’ve covered online privacy, group messaging and HTML5. Today we’re looking at a still emerging trend, but one which is (pardon the pun) very much worth watching: second screen apps. By that we mean apps that run on your smartphone or tablet device and complement your television viewing.

Over 2011, second screen apps have continued their push into the living room. Watching TV used to be a passive activity, but now the Web and devices like Android phones and the iPad have made it interactive.

According to a study published in January by Yahoo’s advertising division, 86% of people who use the mobile Internet use their mobile device while watching television. Of those using their mobile device, 25% say they are browsing content related to the program they are watching.

Social TV

Despite the increasing use of time-shifting devices like DVRs and TiVO – which allow you to record and watch TV shows at any time – there has been a lot of growth in synchronous social networking around TV shows.

GetGlue is an app that we’ve tracked closely in this space and in April this year it announced 1 million users. At that time it also had 100 million data points – likes, reviews, check-ins – representing connections between entertainment and people.

With GetGlue, essentially you ‘check in’ to a TV show like you would check in to a venue on Foursquare. This allows you to talk about the show with other people who are also watching it. This activity is becoming increasingly popular, at least according to GetGlue. April turned out to be a high point for the company, with about 4 million check-ins.

Other companies in this space include IntoNow (acquired in April by Yahoo!), Miso and PHILO.

TV Tweeting

When it comes to real-time social networking, Twitter is where a lot of that activity happens. Including around TV shows. In January, Twitter CEO Dick Costolo discussed what he called “the Glee phenomena” at the Consumer Electronics Show.

“The characters on Glee actually tweet and they tweet during the show. When Glee starts, the moment it airs for the first time on the East Coast, the tweets per second for Glee shoot up,” said Costolo. “They stay up there at a super high level at hundreds of [times] what they are before the show comes on until the moment the show ends and then they drop. [...] People feel like they have to watch the show while it’s going on because the community is tweeting about the show and the characters are tweeting as the show’s happening so [they have to] watch it in real time.”

But Wait, There’s More…

Recently we profiled a product called WiO, which enables TV watchers to immediately get information about the products and services they see advertised on screen, both in TV commercials and within the shows themselves.

Through a mobile app running on customers’ phones, marketers can offer a variety of follow-up actions to the TV viewer. These include coupons, reminders, contact info and more. In total, there are 10 follow-up actions offered. The consumer controls which ones, if any, they respond to.

Internet TV Continues to Ramp Up

Finally we should mention the Internet TV efforts of various companies, such as Google TV and set-top boxes like Roku and Boxee. These aren’t second screen apps, but all of them will complement those apps and some will even be development platforms for them (e.g. Google TV). Also it’s worth noting that these services are steadily eroding the audience of cable television, so in that sense they are becoming increasingly important to second screen apps.

The Internet TV ecosystem is growing. To take one example, in May Roku announced that it had reached 15 million channel downloads from more than one million people on its service. The “big four” channels, as Roku calls them, are Netflix, Hulu Plus, Pandora and Amazon Instant Video. What’s more, Roku estimates that 15% to 20% of its users are cutting the cord on cable television.

Let us know in the comments which second screen apps you’ve started to use and your thoughts on them.

Google and Facebook are at war. We’ve known this for a while. Of course, neither side will admit to it, but they are. Winner takes the Internet.

After months of Facebook owning Google in just about every way imaginable (well, except search, of course — but the rise of social is slowly making search less important), Google has finally been able to strike back with Google+. And now a full-on social sharing race is getting underway. It may not be a winner-take-all race, but it will eventually be winner-take-most. We simply can’t share everything across 5 or even 3 networks. Google is fighting an uphill battle in this regard, but at least they finally have a weapon.

But how did we get to this point where the two biggest names on the Internet are involved in a full-scale war? It all goes back to 2007, and perhaps even 2006.

This question was recently posed on Quora: What specific actions led to the massive rift between Facebook and Google? No less than Adam D’Angelo, the co-founder of Quora and very early Facebook employee, chimed in.

“To me, the biggest increase in tension was Google’s launch of OpenSocial in 2007. After seeing the success of Facebook Platform, Google went and got all the other social networks committed to OpenSocial under NDA without telling Facebook, then broke the news to Facebook and tried to force them to participate,” D’Angelo writes, pointing to this TechCrunch post from the time.

Facebook, as you might expect, did not take kindly to that action. “This was particularly offensive to Facebook because Google had no direct interest in social networking at the time and Facebook Platform had no direct impact on Google’s search or ads businesses. They didn’t care about Orkut and they didn’t build any applications,” D’Angelo notes.

A few months later, Facebook banned Google Friend Connect (a part of OpenSocial), further escalating matters. Facebook then went on to dominate social (remember, MySpace was still technically the leader at that time). On top of Platform, we got Connect, Open Graph, the Like button, etc. Facebook seized control, and we began to enter the Age of Facebook.

We’ll see if Google+ can stop that. Certainly, no one talks about OpenSocial or Friend Connect any more.

D’Angelo says that he can’t remember “any adversarial actions of that magnitude” before the OpenSocial announcement. And he says that before that, there was just the regular competition over engineering hires (which continues today). But there may have been something right before OpenSocial that triggered it.

As another Facebook employee (though not at the time), Jinghao Yan, remembers, the Microsoft investment in Facebook may have also contributed heavily to the increase in tensions. While talks had been going on for weeks, if not months, on October 24, 2007 — just a week before the OpenSocial announcement — Facebook formally accepted a $240 million investment from Microsoft for less than 2 percent of the social network.

Humorously, at the time, people were all up-in-arms over the $15 billion valuation this gave Facebook. Now it looks like one of the smarter investments Microsoft has made in recent years — though it was clearly always more about the strategic positioning. And that’s the key. Microsoft outbid Google for the right to secure this investment (and thus, strategic partnership) in the rising social network.

“I feel that this event is what made Google so antagonistic against Facebook–because it actively rejected Google’s embrace for Microsoft’s purse. As a result, it labeled Facebook more as a threat to its online dominance than as a potential partner,” Yan writes.

Below, that another Facebooker, Yishan Wong, points out that the 2006 advertising deal Facebook signed with Microsoft instead of Google may have kicked all of this off. And why did Microsoft go so hard after Facebook for this deal? Because earlier that same month, Google signed a similar $1 billion deal with Fox Interactive Media to run the ads on MySpace.

In other words, Google made a bet — a good one at the time, but one that was potentially very costly long-term.

And now the two sides are giants. At war.

More: How MySpace Tom May Have Inadvertently Triggered The Google/Facebook War

Thanks to a weakening business, painful talent exodus and stagnant stock price, Yahoo is a house divided. And as many great figures have proclaimed before, “a house divided against itself cannot stand.”

It’s no secret that Yahoo is struggling. The company hasn’t staged the dramatic turnaround that its investors envisioned CEO Carol Bartz would lead. Almost half of its market value is derived from its 40% stake in Alibaba, the China Internet giant with a market cap of approximately $8 billion. Most importantly, Yahoo hasn’t been able to create growth or articulate a clear vision for substantive growth.

The result has been turmoil. Yahoo is fighting with Alibaba over online payment system Alipay (the two sides have yet to settle) and the former Internet giant has been experiencing a massive talent drain (Yahoo ranks as the worst in terms of talent retention when compared to other tech giants).

The calls for Bartz’s head have been rising as well, and that has created more headaches for a company that already has a migraine. And it’s not just from the media; investors are publicly and privately questioning the former Autodesk CEO’s leadership. At Yahoo’s annual shareholder meeting on Thursday, one investor took the microphone and made scathing remarks about Yahoo’s chief executive:

“The last thing Yahoo needs right now is a lame-duck CEO. The buyout talks over your contract need to start today and a search needs to be accelerated,” investor Steve Landry said. After railing into Bartz for several minutes, the meeting was brought to an abrupt close.

For their part, the board is giving Bartz its full public support. And to Bartz’s credit, Yahoo’s stock price is up a respectable 30% since her arrival (the company’s share price was 11.59 the day before her appointment was announced). Still, an argument can be made that much of Yahoo’s growth comes from Alibaba and not Yahoo’s core businesses.

The Battle for Yahoo

“The hard-won progress that we have made is why this board is very supportive of Carol and the management team,” Yahoo Chairman Roy Bostock stated at Thursday’s investor meeting. “I want to make it very clear about that support. We are confident that Yahoo is headed in the right direction.”

It’s no surprise that Bostock came out strongly in favor of his company’s CEO, especially given the rumors that Yahoo is quietly looking at replacements. He really can’t say anything else if he wants to keep the confidence of Yahoo’s employees, executives and shareholders intact.

Two factions are beginning to form at Yahoo though, despite Bostock and Bartz’s upbeat tone at Thursday’s investor meeting. One side advocates staying the course (or at least not changing captains in the middle of a voyage). The other demands an immediate change at the top so that new ideas can be infused into the momentum-less company.

Let’s be clear: unless Yahoo suddenly collapses, Bartz’s job is safe. She’s approaching the fourth year of a four-year contract, giving Yahoo’s board the opportune time to either retain the often-bombastic CEO or give her the boot. Multiple reports confirm that Bartz is probably safe for now.

Yet as long as Bartz is in charge, there will be two camps battling for the future of Yahoo: the group that wants to give Bartz a chance, and the faction that wants change now. This internal battle will only create more friction and distractions for the company, unless Bartz can find a dramatic way to silence the growing chorus of critics.

Neither side seems to have an answer to a more fundamental question, though: how Yahoo becomes “the world’s premier digital media company,” the company’s recently stated goal? Bartz had better find an answer to that question soon, before Yahoo’s shareholders start looking to someone else for the answer.

LinkedIn is valued at $8.79 billion after its first day as a public company. Founder and chairman Reid Hoffman and friends are drinking champagne tonight, that is for sure. It is the highest valuation after an IPO of a tech company since Google astonished the world in 2004.

It is mildly amazing for a social network that has never been profitable and never made more than $250 million in a year. What are investors seeing that the rest of us cannot? In a word … Jobs. This is what Job Board 2.0 has become — data rich and interactive across a social graph.

It may seem like it, but the word “social” and a couple talented engineers do not a $9 billion company make. LinkedIn is valuable for the same reason that Facebook is valuable – it has oodles of data. Where LinkedIn’s assets lay are in the specificity of its data. Jobs are what power a capitalist economy and when it comes to employment hunting, there are not many places on the Internet that have more data than LinkedIn.

Data is like the gasoline of the Internet. Data comes from users. The Internet has matured to a point in the Western world where companies are now seeing huge growth in a short period of time in terms of users. LinkedIn has 100 million users that at one point or another have uploaded their basic employment information to the site. Most have uploaded full resumes, teaming with data like phone numbers and addresses, employment and education history.LinkedIn’s primary revenue comes from its hiring solutions and premium accounts, both of which are steps to uncover more data on the service.

LinkedIn’s growth and that of other social networks is not just a matter of having user data for the sake of having data. Numbers without context are useless. What LinkedIn has is personally identifiable data. Corporations and investors want to be able to track the consumer market as closely as possible to signal trends that will inform their next product launches. LinkedIn is a trove of data not just about people, but how people are making their money and what industries they are working in and how they connect to each other.

Big User Base + Jobs = Big Market Opportunity

Tech companies are taking longer to reach IPO than they were a decade ago when the industry bubble popped. LinkedIn was founded in 2003 and has been creating its user base for the better part of a decade. Companies are growing faster than they ever have before. LinkedIn user base has nearly doubled its user base since 2008. Twitter has certainly eclipsed 200 million accounts and possibly 300 million. Social gaming company Zynga jumped to near 100 million users in a matter of months. Investors are eyeing these big numbers and eagerly awaiting their public debuts. LinkedIn was the first and benefitted from that market sentiment.

“Tech is back,” said Matt Barrie, CEO of Freelancer.com. “I think we are back to the golden age in a big way.”

Freelancer is a LinkedIn competitor and could not be happier for the spark that LinkedIn has ignited; “I think the doors have been kicked down and a freight train driven right through it, Barrie said.

The affect of LinkedIn’s IPO to the Internet is subtle and Barrie believes that jobs are a big part of the professional social networks success.

“Look at the United States, Australia, Canada, New Zealand and the U.K.,” said Barrie referencing the English-speaking Internet base. “With [the Western world] coming online, paying $10 a day, the first thing they are going to want are jobs.”

LinkedIn has the most traction and the most data in the professional social network environment, but it is not a standout and future monopoly, the way Google was when it debuted to the public. Google’s technology was above and beyond what came before. That is not the same for LinkedIn. The traditional jobs sites – Monster, CareerBuilder – remain strong players in employment data and there are niche job boards across the Internet like JournalismJobs.com that are go-to destinations for certain industries.

There are other startups looking to gain traction by using employment data. BranchOut is a professional social network that extrapolates employment data from Facebook’s 700 million or so users and recently raised $18 million in series. Like LinkedIn, BranchOut understands the meaning of data, interaction and connections when it comes to employment. With today’s rousing success by LinkedIn, there will be more players in the employment connection space coming down the pipe.

Microsoft is acquiring Skype for a reported $8.5 billion in cash. There has been a lot of speculation about what this might mean for Skype, the leading Internet telephone and chat service with around 663 million registered users. For consumers, there are two key aspects to this deal which will potentially take Skype to the next level: Microsoft’s mobile expertise (in collaboration with its mobile partner Nokia) and its enormously popular gestural interface system Kinect.

Microsoft has a competitive mobile offering now in Windows Phone 7. In addition, as Todd Bishop from GeekWire noted, there are over 10 million "Microsoft cameras connected to television screens in homes around the world" – thanks to Xbox 360 Kinect sensors. This is the future of Skype, now that it's been acquired by Microsoft: Skype will be much more widely used on your mobile and in your home.

Skype has 145 million average monthly connected users, most of whom use the service through their PC. However, in case it’s not obvious by now, the future of Internet services lies in mobile devices and real world objects (such as televisions).

Skype must make that jump to non-PC devices. And Microsoft is actually a great partner for that, despite deserved skepticism about its track record with pricey acquisitions and leaving aside the cynicism about Microsoft buying Skype as a defensive strategy against Google. It has Windows Phone 7, an impressive new smartphone platform. Plus it has Kinect, perhaps the key to the next version of Windows OS.

Skype has made some in-roads into the mobile market, with an iPhone and Android app – among other mobile services. It’s also released Skype enabled TVs and TV compatible webcams. But those services for mobile and the home are not yet widely used. Microsoft offers a way for Skype to extend beyond the PC and into mainstream mobile devices and millions of family televisions.

This isn’t merely audio, of course. Kinect had its origin in the Xbox 360 gaming device. Video is where the future of Skype lies, which again plays right into Microsoft’s hands with Kinect. Take a look at this Microsoft promotional video (found via Gigaom) about video chat. It shows a demo of two people not just chatting by video, but doing social things like watching a movie together. Also Kinect can track you as you move around, which would be very handy for a video Skype call – you’d be able to walk around the room and the camera would follow you.

It remains to be seen how well Microsoft implements Skype into its mobile and Kinect offerings, but this is undeniably a huge opportunity in the consumer communications market for Microsoft. It can take Skype to the next level, but will it? Let us know in the comments whether you think Microsoft will pull it off.