US Army discovers Twitter

A report by US Army Intelligence points to Twitter, GPS devices, and voice changing software as potential “terrorist tools.” Friend of CG, Noah Shachtman, posted the report on Danger Room noting that intelligence services have said that everything from MMORPGs to garage door openers could be potentially dangerous to Americas precious bodily fluids. They note:

“Twitter was recently used as a countersurveillance, command and control, and movement tool by activists at the Republican National Convention. The activists would Tweet each other and their Twitter pages to add information on what was happening with Law Enforcement near real time.”

Look: Twitter can’t even keep the Fail Whale at bay most days, let alone create a command and control structure for young men and women with a penchant for Anchor Steam beer and trail mix. As Shachtman notes in his piece, this report is good and bad. It’s good in that explores something most Army Intelligence employees probably know nothing about but bad in that it wastes valuable brain time on tools that are pretty much secondary to terrorist aims. Twitter contains no havok-making tools per se and its functionality could easily be recreated using SMS, carrier pigeons, and smoke signals. But at least now a bunch of US Army Intelligence officials probably have Twitter accounts, exposing them to possible surveillance.

The Smartest Unknown Indian Entrepreneur

Entrepreneur Marc Benioff is afraid of him. Venture king Mike Moritz wants to invest in him.

You have never heard of Sridhar Vembu, founder and CEO of AdventNet, the company behind newly launched productivity suite Zoho.

Vembu is a low-profile guy if there ever was one. He is also cheap as hell. Yet, of course, you know that among entrepreneurs, frugality is a virtue. A tremendous virtue.

Vembu has stretched this virtue to extreme limits, and added layers and layers of creativity upon it. The result? A 100%, bootstrapped, $40-million-a-year revenue business that sends $1 million to the bank every month in profits.

Doing what? you might wonder.

Selling network management tools, to be precise. But with a unique twist. Vembu employs 600 people in Chennai, India, and a mere eight in Silicon Valley. Imagine what that does to his cost structure!

Not only that, in India Vembu's operation does not hire engineers with highflying degrees from one of the prestigious India Institutes of Technology, thereby squeezing his cost advantage.

"We hire young professionals whom others disregard," Vembu says. "We don't look at colleges, degrees or grades. Not everyone in India comes from a socio-economic background to get the opportunity to go to a top-ranking engineering school, but many are really smart regardless.

"We even go to poor high schools, and hire those kids who are bright but are not going to college due to pressure to start making money right away," Vembu continues. "They need to support their families. We train them, and in nine months, they produce at the level of college grads. Their resumes are not as marketable, but I tell you, these kids can code just as well as the rest. Often, better.???

(Read my full interview with Vembu here.)

With that rather unique workforce of 600 engineers, Vembu has not only built an excellent, cash-cow, network tools business, but he recently launched Zoho, which is getting a lot of buzz in the Web 2.0 community.

Why?

Well, Zoho does everything that you would do with Microsoft Office. It also has a hosted customer relationship management service that is free for very small companies and only costs $10 per user per month for larger ones. It competes with Salesforce.com (nyse: CRM - news - people ), which charges $65 per user per month.

Marc Benioff, chief executive of Salesforce.com, has made an offer to buy Zoho for an undisclosed amount. Benioff seems appropriately nervous, since Salesforce.com's sales and administration costs are high, eating up most of his earnings. Can he afford to compete if Zoho undercuts him at such a dramatic scale?

Vembu has turned Benioff down.

Many venture capitalists want to invest. Vembu's situation is one that every entrepreneur dreams of. You don't need money. VCs are chasing you. Freedom is delicious, and Vembu knows it.

Vembu has a very exciting opportunity ahead of him. What the Chinese have done in manufacturing, he is showing that the Indians can do in software: undercut U.S. and European software makers dramatically. Not in information technology services. Not by body shopping. Vembu has done something few Indian entrepreneurs have been able to achieve--build a true "product" company out of India. This is not a head count-based business model.

A brief primer would perhaps help put things in perspective. "Product" companies build once and then market and sell the same thing multiple times to multiple customers. "Services" companies that do custom software development have to use "bodies" to do customer-specific development over and over again, with limited leverage. Theirs is a head count-based business model. Recently, popular software-as-a-service companies have come up with the model of "renting" software over the Web, thereby offering "products" as "services" while maintaining the scalability advantage of products.

Vembu has first done a network management product. Then he has done productivity suite Zoho as a software-as-a-service.

True, Vembu is a rare species in India these days. As far as I know, he's one of the very few entrepreneurs who has been able to execute on the premise of building software "products" and/or software-as-a-service out of India. He has a big vision, and so far, he has executed flawlessly.

Eyealike Sets Its Image Recognition Technology On A New Target: Advertising

Eyealike, the startup that lets you use photo recognition to help find your ideal mate, is expanding to apply its image processing technology to a new market: advertising. The company says that the new system will allow businesses to place highly targeted advertising alongside photographs that appear on their site (which have long been difficult to monetize).

For now the image recognition is restricted to identifying physical traits of the people in photographs, with categories including age, gender, hair color, and skin color. In the demo I saw, the results were impressive: photographs with babies in them were paired with products for infants and toddlers, and makeup ads were shown near photos with women in them.

Build Your Sportfolio Of Athletes At OneSeason

Forget the stock market, it’s falling apart. Invest your money in OneSeason instead, a newly launched San Francisco-based startup that lets you invest real money in professional athletes. Alex Rodriguez is a steal at $7.00 per share ($17.6 million total value). I just bought one share of Kobe Bryant for $7.48 (he’s valued at $77.6 million).

The company was founded by CEO Mike Sroka and CTO DJ Burdick with $250,000 in seed funding from investor Phil Drayer.

The market demand for individual athlete stocks, called “synthetic ownership interests,” is determined solely by the market based on “onfield play, off-field behavior, fan opinion and future prospects” says Sroka. Stock is delineated with ticker symbols just like financial securites. So when I bought one share of Kobe Bryant, I really bought one share of KOBE.

This is all done with real money, although the site gives each new user $10 if they register with a credit card (no money has to be put into the account to get the $10, however). Money can be added via PayPal, Google Checkout and via credit card. Funds are redeemed via check.

Since there’s no underlying financial asset that you actually own, it’s unclear how efficient the market will ever really be. In fact, it seems to be ripe for big abuse. Get a few friends together and run up a stock and then cash out. And there’s no risk, at least for now, that the SEC will be coming after you.

But assuming the market is properly regulated, this could be a great site for sports nuts to risk some money outside of the normal betting world. As Kobe hits that dunk, look for his price to spike a little as users log in and BUY.

One Season makes money by taking 1% of each trade off the top, so it’s purely a volume game for them. The company also earns interest on money it holds.

Sroka isn’t being modest about the companies potential, either. He says once the site reaches 3 million users after a few years, revenue “could hit $50 million to $100 million.” He added, “The ultimate potential for the website is far greater than the $800 million fantasy sports industry.”

I’d imagine other companies might join the party if this takes off like he says. Professional leagues may even want to get in on the action.

How 'Generation V' Will Change Your Business

Satisfy Customers' Online Self-Actualization

In 1943, Abraham Maslow proposed in "A Theory of Human Motivation" that people seek to fulfill their instinctive needs according to hierarchy in terms of their potency. The lower the need is on the pyramid, the more powerful it is. The higher the need is on the pyramid, the more-distinctively human it is (see Figure ).
Starting at the bottom are physiological needs — the need to sustain oneself via food, clothing and shelter. Once those needs are met, individuals can concentrate on safety needs — the need for personal security. Next are social needs, such as love and belonging, followed by the need for esteem. Last is self-actualization — the instinctive need for personal growth and fulfillment.

The virtual environment will be a tool to provide all these needs, eventually giving more people access to achieve some of the higher goals in the hierarchy that they wouldn't necessarily have achieved offline. The 40th-level half-elf in World of Warcraft is an example of a person achieving aspects of self-actualization online, including achievement and growth. This path to self-actualization was unobtainable in the real world.

Gartner has developed a four-stage generation model to help companies determine where their value propositions are positioned to satisfy one or more of Maslow's Hierarchy of Needs