Monday, September 24, 2007

Breaking: Online Backup Startup Mozy Acquired By EMC For $76 million

Online storage startup Mozy, headquartered in Utah, has been acquired by EMC Corporation, a public storage company with a nearly $40 billion market cap. EMC paid $76 million for the company, according to two sources close to the deal.

We first covered Mozy in January 2006 as part of an overview of the current generation of online storage solutions. The company has a dead simple way for users to back up their computer hard drives online. Download their software (Mozy supports both Windows and Mac machines) and the backups occur slowly over time. If there is ever a problem, you can restore your hard drive from Mozy's servers.

Mozy's chief competitor is Carbonite, another company we've tracked over the last couple of years. Carbonite has raised $21 million in venture financing.

Mozy, by contrast, raised just $1.9 million in capital. The round, closed in May 2005, was led by Wasatch Ventures, with participation from Tim Draper and Novell co-founder Drew Major.

That's quite an exit for Mozy - $76 million on just $1.9 million raised. It's almost identical to StumbleUpon, which was acquired by eBay earlier this year for $75 million after raising just $1.5 million in venture capital.

Rumors circulated a year ago that Mozy was close to being acquired by Google for significantly less than this. The company eventually passed on the deal, which must have been a tough call. They clearly made the right choice in waiting.

Look for an official announcement of the Mozy acquisition in the next few weeks. Congratulations to Josh Coates, Mozy's CEO (who refuses to comment on the deal), and the rest of the Mozy team.

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10 Universities Paving The Way For Cellulosic Ethanol

The key to cracking the code for cellulosic ethanol — biofuel made from non-food crops and plant byproducts — could be under development in a university lab near you. While researchers have spent years trying to figure out how to effectively produce the alt-fuel, universities across the country have recently been working on moving the ball forward.

Here's our picks for 10 schools making significant strides in cellulosic ethanol research and production:

University of Tennessee (Knoxville, Tenn.): Last week, the executive committee of the University of Tennessee Board of Trustees approved a business partnership with Mascoma Corp. to jointly build and operate a five-million-gallon-per-year cellulosic ethanol biorefinery. The partnership is a result of the UT Biofuels Initiative, an effort to grow the biofuel industry in Tennessee.

University of Florida (Gainesville, Fla.): The University of Florida recently said it will build a cellulosic ethanol plant at a Florida Crystals Corp facility. The plant will be a research and development lab as well as a commercial facility and will produce between one and two million gallons of fuel each year. The plant is financed by a $20 million state grant. The school's Bioprocess Engineering Research Laboratory also has a sustained research program on biogasification of biomass; additional work in cellulosic ethanol is being done through the Florida Center for Renewable Chemicals and Fuels.

Iowa State University (Des Moines, Iowa): DuPont (DD) pledged $1 million to Iowa State University's New Century Farm. For info on other cellulosic ethanol initiatives at the school, check out their Office of Biorenewables Programs.

Purdue University (West Lafayette, Ind.): Chemical engineers from the school are working on a eco-friendly cellulosic ethanol production process that they say is more efficient than traditional methods and also suppresses the formation of carbon dioxide. Separately researchers from the University say they have an insight into the structural changes cornstalks go through in the ethanol-production process, which could "establish a viable method for large-scale production of ethanol from plant matter."

University of California, Davis (Davis, Calif.): Last year, Chevron Corp (CVX) announced that it would fund up to $25 million in research at UC Davis over five years to develop affordable, renewable transportation fuels from farm and forest residues, urban wastes and crops grown specifically for energy. UC Davis is also home to a lot of cleantech activity, including The California Biomass Collaborative, a statewide collaboration of government, industry, environmental groups, and educational institutions.

Georgia Institute of Technology (Atlanta, Ga.): Chevron has also teamed up with the Georgia Institute of Technology with up to $12 million in funding for research to make cellulosic biofuels and "hydrogen viable" transportation fuels. The school has also partnered with Atlanta-based startup C2 Biofuels.

University of Massachusetts Amherst (Amherst, Mass.): Microbiology professor Susan Leschine, a leading authority on cellulose digesting microbes, founded SunEthanol. The company licenses microbe technology Leschine developed at UMass that converts biomass into ethanol using an efficient carbon-neutral process. In August, we chatted with SunEthanol's CEO Jef Sharp about the company's Series A funding.

University of California, Berkeley (Berkeley, Calif.) & the University of Illinois at Urbana-Champaign (Urbana, Ill.): Let's not forget Berkeley and Illinois, which in February jointly received a whopping $500 million from British Petroleum (BP) for biofuels research. The funding is being used for the creation of the Energy Biosciences Institute (EBI), which will initially focus its research on biotechnology to produce biofuels, including ways to turn field waste, switchgrass, and algae into transportation fuels.

University of Minnesota (Minneapolis): Researchers at the University of Minnesota have developed a way to convert sawdust and waste biomass directly into a mixture of gases, called syngas, that either be burned to generate electricity or made into liquid fuels.

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Sunday, September 23, 2007

Why knockoffs are good for fashion

James Surowiecki (author of the great book The Wisdom of Crowds) has a fantastic, tight little article about copyright and fashion in this week's New Yorker. Fashion designs aren't covered by copyright, and this means that couture designs are knocked off and sold at huge discounts in department stores and shops like H&M within seconds of appearing on the runway. This upsets many designers, but there's plenty of evidence that it's good for the industry as a whole -- the knockoffs sell to people who'd never buy the couture originals, so they don't really cannibalize sales; what's more, by making a hot new look ubiquitous, the knockoffs contribute to making it look tired and boring, which creates the market for next season's clothes.

This reminds me of the story of database copyrights, which exist in Europe and not the in the USA. Advocates for these monopolies argue that a copyright spurs investment and makes the industry bigger. But the fact is that the European database industry has stagnated over the past 25 years, while the US industry has grown 25-fold, and the biggest difference between the two is that European firms can prevent competition by using the database right.

Even though the evidence is that a database right has retarded the industry and limited growth, European database firms still profess a great love for their regulatory monopoly, and American firms still bemoan its absence.

The recipients of regulatory monopolies are like kids getting candy: they all believe that they need more, and nothing will convince them otherwise. But monopolies end up costing the public and the next generation of creators: by limiting competition in databases, Europe has created a smaller and less useful database industry. By encouraging competition in fashion, the world has created an easy means for all of us to get cheap clothes, while creating a huge amount of investment in the "next thing," making it easier for new designers to break into the field.

Designers' frustration at seeing their ideas mimicked is understandable. But this is a classic case where the cure may be worse than the disease. There's little evidence that knockoffs are damaging the business. Fashion sales have remained more than healthy--estimates value the global luxury-fashion sector at a hundred and thirty billion dollars-- and the high-end firms that so often see their designs copied have become stronger. More striking, a recent paper by the law professors Kal Raustiala and Christopher Sprigman suggests that weak intellectual-property rules, far from hurting the fashion industry, have instead been integral to its success. The professors call this effect "the piracy paradox."

The paradox stems from the basic dilemma that underpins the economics of fashion: for the industry to keep growing, customers must like this year's designs, but they must also become dissatisfied with them, so that they'll buy next year's. Many other consumer businesses face a similar problem, but fashion--unlike, say, the technology industry--can't rely on improvements in power and performance to make old products obsolete. Raustiala and Sprigman argue persuasively that, in fashion, it's copying that serves this function, bringing about what they call "induced obsolescence." Copying enables designs and styles to move quickly from early adopters to the masses. And since no one cool wants to keep wearing something after everybody else is wearing it, the copying of designs helps fuel the incessant demand for something new.

Link (Thanks, Scott!)

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Saturday, September 22, 2007

Citigroup Data Leaked on Limewire; Will There Be Jail Time?

eWeek is reporting that a Citigroup employee running p2p software Limewire has potentially been used to find over 5,000 customer records including Social Security Numbers, names, credit information and mortgage types. eWeek notes:

Tiversa found over 10,000 files, deduplication revealed only 5,208 unique Social Security numbers, along with names and what type of mortgage each customer had: conventional, 30-year or conforming, for example.

The information is likely to have been exposed to millions of LimeWire users, given that there are at least 10 million nodes online in a P2P file-sharing network at any point in time, said Chris Gormley, Tiversa's chief operating officer.

If this information is proven to be accurate, should the employee or the Citigroup execs face jail time? The monetary fines are obviously not working, would a stint in jail start to wake up companies that our data is the most important piece to their ability to generate revenue.

I raised my concerns earlier this week with Mint and their "bank-level" security. What I would like to see from them (and the other apps in this sector) is their plan for when data is breached. How will they handle the breach in both communications to customers and in monetization to those who were affected.

And while many wrote about Facebook blocking in corporations, one of the issues no one (including me) seemed to touch on is security. How far are we from a malicious Facebook app?

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MySpace News Is Stealing Your Search Results

ms3.jpgWe’ve wondered previously who was going to use MySpace News (if ever), and now we’ve found the traffic source: Google.

Framed pages of blogs and news sites, complete with MySpace News branding and MySpace URL, are being indexed by Google as original content, stealing search engine placement and direct links from content creators.

A search of Google found thousands of MySpace News pages presenting story headlines with a MySpace url that led directly to a framed page that uses content from other sites.

The legality of passing off content as your own is questionable. The case most frequently cited in content framing cases is Washington Post vs Total News where the Washington Post argued that this was unfair and harmful use of their trademark and there was a danger that the user would be confused concerning whose content was being displayed. Unfortunately that case was settled out of court; notably MySpace today is framing content from the Washington Post as well (example here). Some refer to the practice as stealing, and even Chilling Effects notes that the legality of serving framed content is questionable.

The practice may also be in breach of Google’s TOS; MySpace is leveraging its position of strength to promote your content branded as their content in the Google search results, a practice that looks like search engine manipulation from a distance.

No matter what the legalities and moral dimension, if you’re a publisher and MySpace is hijacking your search results and throwing up a frame with their branding around your content, it’s not a good thing. Given what little traffic MySpace News is doing on their main site, there is little new traffic benefits from the service, instead the traffic from the MySpace News pages on Google cannibalizes existing search traffic.

Here’s hoping the Washington Post and the other big media outlets who are having their content framed and presented as MySpace News content take the matter further.

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Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

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