Summertime is the season for traveling circuses and local fairs, so I shouldn't be surprised that this carnival atmosphere has spread to security. A company named Permanent Privacy just announced a $1 million prize to the person who can crack its algorithm and uncover the underlying encryption keys.
Now I realize there is some history here. In January 1999, a group of academics cracked the 56-bit Data Encryption Standard in just over 22 hours and won a prize of $10,000. That said, I am not a big fan of security showmanship like this from unknown security start-ups.
Why? First of all, this "challenge" isn't really a challenge at all. Permanent Privacy technology is based upon the AES (Advanced Encryption Standard) algorithm and since no one has cracked AES, it's highly unlikely that anyone will crack AES with an additional proprietary security wrapper . Furthermore, information security is no longer an academic playground for brainiacs at Berkeley and MIT. Rather, it's serious business that impacts everything we do. Given this level of criticality, I'd rather see things like Common Criteria or FIPS certification than a publicity gimmick.
As a start-up, I understand that Permanent Privacy needs to generate buzz and all PR is good PR. Heck, I did the same thing as VP of marketing at a misguided CLEC during the boom. Security isn't like other technologies however, it's more about law, order, and safety. Oracle was dragged through the mud when it advertised its database as "unbreakable." Perhaps it's just me, but I think Permanent Privacy deserves a similar treatment in the market.
Yahoo's stock price is beating a little stronger these days. And that rise was not necessarily driven by the full onslaught of the company's big, splashy, three-year financial game plan unveiled two weeks ago, say several hedge fund managers.
Rather, the 12 percent share price increase over the past fortnight may stem from Yahoo's quiet notation in that financial game plan that the company's first-quarter performance is expected to fall in line with Wall Street's current assessment.
"Their stock price has risen, not because of their plan, but because they reaffirmed their first-quarter guidance," said one hedge fund manager. "Investors were scared that if they puked on their first-quarter performance, Microsoft would lower its bid or not bump it up."
Microsoft is still biding its time on a buyout offer for Yahoo initially valued at $31 a share.
Yahoo on Monday closed at $28.93, up 12 percent from its closing price the day before it unveiled its financial plan--and first-quarter guidance reconfirmation--two weeks ago. That's a pretty sizable pop, compared with the Nasdaq, which climbed 4.7 percent during the same period.
Another hedge fund manager said rumors on the Street last week were suggesting Microsoft might offer anywhere from $34 to $36 a share for Yahoo, and there was talk that the Redmond giant would be willing to offer an all-cash buyout of $34 a share.
Meanwhile, investment bankers and proxy solicitors say Yahoo is likely done with its intelligence gathering--er, make that investor road show presentations. They note that companies can usually get a good feel within two weeks which way investor sentiment is leaning, be it a hostile merger proposal, an IPO, etc.
"Some investors will be blunt, some will say let me think about it, and some say nothing," said Bruce Goldfarb, chief executive of proxy solicitation firm Okapi Partners. "A company will collect the information and then think about their next step."
Goldfarb and one investment banker said there's a message coming through loud and clear with Yahoo's rising stock price: Investors "expect more money."
For the last four months, Howard Chau has been developing a mobile application that's designed to alert people to their next calendar appointment, factoring in data like the person's physical location and traffic conditions en route to a meeting.
In the next two weeks, Chau plans to submit the GPS-based application, called Mappily, to Google in the hopes of winning its Android Developer Challenge, a developer contest with $10 million in total prize money. Because Chau only stands to win tens of thousands of dollars in the first round of the challenge, the money would just be gravy.
"It's really a way to get seen," said Chau, the 26-year-old president of Cupertino, Calif.-based Mappily, which employs three people.
Chau's plight is part of Silicon Valley's new contest within a contest to create the hottest new mobile technology.
Pulling the strings are Google and Apple, which are in a simmering battle in the handset market with respective new platforms and software development kits. (That could be especially uncomfortable, given that Google CEO Eric Schmidt sits on Apple's board of directors.) Behind the scenes are the venture capitalists, such as Kleiner Perkins Caufield & Byers, which recently established the $100 million iFund to invest in mobile applications for the iPhone. Google's Android Developer Challenge is its own version of the iFund at a 10th the size. But surely other VCs are ruminating on forming the Android Fund to rival KPCB.
Charles River Ventures, for example, has briefly considered the idea, but will likely fund Android applications from its QuickStart seed program, which grants promising upstarts a convertible note worth $250,000 to get their project off the ground, according to one partner.
With all of that money floating around, developers are rushing to build the next big widget, social network, or mapping technology for the mobile phone. Not only are developers lured by the idea of making money on the mobile phone, but they're also drawn by financial incentives coming from both camps that might seal their future.
Google's $10 million will be doled out in chunks to developers with winning mobile apps for its upcoming Android platform. That contest, which will come in two rounds with the first deadline April 14, takes a page from the XPrize Foundation and other incentive-prize competitions that have spawned innovations in flight and rocketry, and potentially, lunar rovers and energy-efficient cars.
Meanwhile, KPCB has dangled a much bigger carrot for developers trying to win big with mobile applications on the Apple iPhone. The venerable VC announced the $100 million fund in early March, when Apple unveiled its software development kit. Developers who land a deal with KPCB will not only be well-funded, they will be well-connected to Apple's platform. Apple executives at the highest levels will be consulting on the deals, according to KPCB iFund lead Matt Murphy.
KPCB has already ported a couple of its own venture-backed start-ups into the iFund, including Pelago, which makes a social-networking application.
Still, such specific funds have failed before. For example, during the dot-com boom, KPCB announced the Java Fund, and nothing huge came of that venture. For that reason, many VCs say it's a way to generate buzz more than anything else.
"Any serious VC is going to fund things on the iPhone and Android platform if it's a cool thing. In general, VCs are less excited about applications where the carrier is in control," said George Zachary, a partner at Charles River Ventures.
iPhone already established
For many developers, Apple's iPhone is more alluring as a development platform because of the established customer list. Unlike Android, the iPhone platform has hardware with millions of customers; and as a bonus, Apple-sanctioned applications go on sale in its mobile store.
Craig Hockenberry, chief technology officer at IconFactory and a longtime Mac developer, said the iPhone offers a clear business path. His company is developing a Twitter messaging tool called Twitterific for the iPhone, among other applications. IconFactory will sell Twitterific for a one-time fee of $15 or offer a free advertising-supported version.
"We don't need outside investment, but that iFund is going to be useful for people who have big social-networking programs that need backend infrastructure," Hockenberry said. "We just want to build small, fun apps and leave it at that. Those are the ideal apps for the iPhone."
As for the Android contest, he hasn't been enticed by it because there's no hardware yet. "It's a bit of a gamble. You can maybe make a million dollars, but what if you don't? You have nothing. I think what we have going onto the iPhone, it's going to sell. People are asking for it," Hockenberry said, adding: "Nobody's got Android."
Hank Williams' company Kloudshare aims to enter the Android contest. Having raised $40 million in venture funding for ClickRadio during the dot-com boom, he said that VC money comes with too many strings. Kloudshare, based in New York, is developing an application that will help people manage data on their phone and desktop, but Williams wouldn't get more specific than that.
"The idea that Google's putting $10 million on the table, saying 'we're going to give it to the best companies by this deadline' is more direct in my mind. I would imagine Google will write more checks than the Kleiner folks."
"The money--that's a maraschino cherry," Williams said.
Still, Kloudshare will likely develop an application for the iPhone. "We figured Android was the low-hanging fruit. We want to prove that it worked on the Android platform and then go from there," he said. Williams believes that Android will likely be the operating system for the largest portion of the cell phone market, rekindling the PC vs. Apple fight. "It's going to be like the PC market, with 20 companies selling Android. One is perfect and the other is everywhere," Williams said.
To be sure, developers say Android's platform is easier to create applications for because of built-in mapping intelligence technology and so-called background processing. That's why Chau chose the Android platform, for its in-build mapping technology.
Chau said he's waiting to hear of an Apple update that will include a GPS-sensor so that he can port his application to the iPhone and boost its customer base.
"It's tempting to see that there's a lot of money out there for companies like us," Chau said.
Recent Walt Disney acquisition Club Penguin isn't the only Antarctic waterfowl in the news on the youth social-networking front this week.
Venerable publishing house Penguin Group has just made a tech-savvy move through a partnership with teen-oriented community site Piczo, in which young Piczo users are encouraged to design covers for a selection of classic books and submit them to a competition pool.
The contest, called "Piczo My Penguin," runs for the next four weeks. It offers up six book titles, each one chosen by a trendy music act such as Razorlight, Beck or Goldspot: Alice in Wonderland, Dracula, Steppenwolf, The Great Gatsby, Le Grand Meaulnes and Animal Farm. Piczo members are then invited to submit their own cover designs, and a winner for each one will be chosen by the members of the participating bands.
Piczo has crafted an image for itself as a safer, less cluttered alternative to the ubiquitous MySpace.com, so it's no surprise that it would want to boost its nicest-kids-in-town image with a contest that encourages young people to turn their heads away from their instant-messaging clients and toward classic literature.
Considering the popularity of emo bands like My Chemical Romance and AFI, with their expertly groomed pseudogothic images, Piczo should have no trouble finding plenty of teenagers willing to give Dracula a hot new makeover. But just a tip, kids: I don't think he wore eyeliner.
Start your own new-media company. Lead the next new-media wave. And the Knight Brothers Foundation will pay you to get started.
On Monday, the John S. and James L. Knight Foundation announced the Knight Brothers 21st Century News Challenge, a contest that will award up to $5 million to "news projects that best use the digital world to connect people to the real world."
Here's how the foundation describes its quest: "The Knight Brothers 21st Century News Challenge hopes to recognize transformative ideas, pilot projects, leadership initiatives and investment opportunities that will help improve the flow of journalism, information and news in the public interest."
Specifically, they are "looking to fund new ideas, prototypes, products and leadership initiatives that use innovative news methods to help citizens better connect within their communities."
The charitable organization that grew from the Knight Brothers' newspaper empire has opened the contest to individuals, businesses or organizations with an innovation that helps spread news or community.
The program is not restricted specifically to journalism, but offers different categories of competition: news challenge; pilot project and field test; leadership; commercial products and investment; and an open category for anyone not fitting into the other five.
Those wishing to garner cash for their project can get the online application at Newschallenge.org now through Dec. 31.
And while you're filling out the grant application, savor the irony. This Knight Foundation was funded with the huge profits from the newspaper empire that merged into Knight-Ridder, which itself vanished without a corporate remnant earlier this year. One more old-media victim of the changing news landscape. So those early 20th century newspaper dollars are now going to make new new media.
The Knight Foundation will announce the winners of the 21st Century News Challenge in spring 2007. There are also plans to make the challenge a yearly contest for the next five years.
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