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Guide To Breaking Cell Phone Security REVEALED

December 31st, 2009 admin No comments

FRANKFURT — A German security expert has raised the ire of the cell phone industry after he and a group of researchers posted online a how-to guide for cracking the encryption that keeps the calls of billions of cell phone users secret.

Karsten Nohl, 28, told The Associated Press this week that he, working with others online and around the world, created a codebook containing how to get past the GSM standard encryption used to keep conversations on more than 3 billion mobile phones safe from prying ears.

Nohl said the purpose was to push companies to improve security. The collaborative effort put the information online through file-sharing sites.

“The message is to have better security, not we want to break you,” he said of the move. “The goal is better security. If we created more demand for more security, if any of the network operators could use this as a marketing feature … that would be the best possible outcome.”

GSM, the leading cell phone technology around the world, is used by several wireless carriers in the U.S., with the largest being AT&T Inc. and T-Mobile USA. Verizon Wireless and Sprint Nextel Corp. use a different standard.

The GSM Association, a trade group that represents nearly 800 wireless operators, said it was mystified by Nohl’s rationale.

Claire Cranton, a spokeswoman for the London-based group, said that “this activity is highly illegal in the UK and would be a serious RIPA offense as it probably is in most countries.” RIPA, or the Regulation of Investigatory Powers Act, is a British law governing the interception of user logs and e-mails of suspected criminals by security and intelligence agencies.

It has already been possible to intercept GSM calls, but the equipment is generally only available to law enforcement. Regular wiretapping of cellular calls is also possible, since they travel unencrypted over standard wiring after being picked up by a cell tower. As a result, terrorists or criminals may talk in code and use prepaid phones they then discard.

Even with Nohl’s exploit, expensive and sophisticated radio equipment placed close to the target is required to pull the calls off the air.

Sujeet Shenoi, a professor of computer science at the University of Tulsa in Oklahoma, said that while the code-breaking guide raises privacy issues, his main concern is that organized crime will take advantage of it to make money, perhaps by eavesdropping on transactions between consumers and merchants.

“It’s a shot across the bow” of the wireless industry, he said.

Nohl’s effort undermines the 21-year-old algorithm used to ensure the privacy of phone calls made on GSM (global system for mobile communication) cell phone networks.

That algorithm, dubbed A5/1, is a 64-bit encryption function and was adopted in 1988. Since then 128-bit codes have been implemented to ensure caller privacy on newer, third-generation networks. The GSM Association has developed the A5/3 algorithm, which it says is gradually being phased in to replace A5/1.

“The GSMA heads up a security working group which looks at all issues re: security and this isn’t something that we take lightly at all,” Cranton wrote in an e-mail to the AP. “We have a new security algorithm that is being phased (in), as the protection and privacy of customer communications is at the forefront of operators’ concerns.”

Nohl, who holds a doctorate in computer engineering from the University of Virginia, said that going from a 64-bit code to 128-bit code “makes it some quintillion times more difficult” to crack.

He said the codebook was compiled and posted online not for malicious intent but as a call to the cell phone industry to improve the level of security for those who use GSM phones that are found worldwide and offered through numerous network providers.

“Being security researchers, one thing we can do, and what we choose to do in this case, is to show how it can be done,” he told the AP on Tuesday by telephone.

“We have created a tool, a codebook, that’s used to decrypt GSM packets, or the GSM encryptions,” he added, noting that with the codes phone calls could be recorded using a high-end PC, a radio and some software.

“In GSM this flaw was pointed out 15 years ago, and 15 years seems long enough for the cypher to be replaced with something else. No one uses a phone that is 15 years old,” Nohl said. “If they had taken steps, they could have replaced everything three time times over.”

Nohl made the announcement Sunday at the Chaos Communication Congress in Berlin, a four-day event that ends Wednesday.

While there has been criticism, there is also some faint praise and admiration for the effort.

“We’re familiar with his work. It’s proper stuff,” said Simon Bransfield-Garth, chief executive of London-based Cellcrypt, which sells software to keep mobile phones secure.

“People have been trying to crack GSM for a long time,” Bransfield-Garth told AP. “I think the science behind it is pretty sound,” he added. “Whether putting it in the public domain was wise, is an entirely different debate.”

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Associated Press Technology Writer Peter Svensson in New York contributed to this story.

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On the Net:

A5/1 Cracking Project: http://reflextor.com/trac/a51

GSMA: http://www.gsmworld.com

Cellcrypt: http://www.cellcrypt.com

More on Hackers


Umar Farouk Abdulmutallab, Detroit Bomber, Came From Elite Family, Top Schools

December 28th, 2009 admin No comments

LAGOS, Nigeria — As a member of an uppercrust Nigerian family, Umar Farouk Abdulmutallab received the best schooling, from the elite British International School in West Africa to the vaunted University College London.

But the education he wanted was of a different sort: Nigerian officials say his interest in extremist Islam prompted his father to warn U.S. authorities. As Abdulmutallab was being escorted in handcuffs off the Detroit-bound airliner he attempted to blow up on Christmas Day, he told U.S. officials that he had sought an extremist education at an Islamist hotbed in Yemen.

A portrait emerged Sunday of a serious young man who led a privileged life as the son of a prominent banker, but became estranged from his family as an adult. Devoutly religious, he was nicknamed “The Pope” for his saintly aura and gave few clues in his youth that he would turn radical, friends and family said.

“In all the time I taught him we never had cross words,” said Michael Rimmer, a Briton who taught history at the British International School in Lome, Togo. “Somewhere along the line he must have met some sort of fanatics, and they must have turned his mind.”

Abdulmutallab has been charged with trying to destroy a Northwest flight on Christmas Day with 278 passengers and 11 crew members on board. The detonator on his explosive apparently malfunctioned and he was subdued by other passengers.

Through an official, Abdulmutallab’s father “expressed deep shock and regret over his son’s actions.”

His family home sits in the city of Funtua, in the heart of Nigeria’s Islamic culture. Religion figured into the family’s life: His father, Alhaji Umar Mutallab, who had a successful career in commercial banking, also joined the board of an Islamic bank – one that avoids the kind of interest payments banned by the Quran.

The large house, surrounded by a wall and a metal fence just off the main road running through the city, stood empty, a common occurrence for a jet-set family that sought an education abroad for Abdulmutallab. Family members told The Associated Press they could not comment but expected the family to issue a statement.

Mutallab was working with the FBI and not expected to grant media interviews, Information Minister Dora Akunyili said.

The elder Mutallab was “a responsible and respected Nigerian, with a true Nigerian spirit,” she said. He had been estranged from his son for several months and alerted U.S. officials last month about the youth’s growing hard-line Islamic religious beliefs.

A close neighbor told the AP he believed Abdulmutallab did not get his extremist ideas from his family or from within Nigeria.

Basiru Sani Hamza, 35, said Abdulmutallab was a “very religious” and a “very obedient” to his parents as a boy in the well-to-do banking family.

“I believe he must have been lured where he is schooling to carry out this attack,” Hamza said. “Really, the boy has betrayed his father because he has been taking care of all their needs.”

Rimmer, a teacher at his high school in West Africa, said Abdulmutallab had been well-respected.

“At one stage, his nickname was ‘The Pope,’” Rimmer said from London in a telephone interview. “In one way it’s totally unsuitable because he’s Muslim, but he did have this saintly aura.”

But Abdulmutallab also showed signs of inflexibility, Rimmer said.

In a discussion in 2001, Abdulmutallab was the only one to defend the actions of the Taliban in Afghanistan, Rimmer said. At the time, Rimmer thought the boy was just playing the devil’s advocate.

He also noted that during a school trip to London, Abdulmutallab became upset when the teacher took students to a pub and said it wasn’t right to be in a place where alcohol was served.

Rimmer also remembered the youngster choosing to give 50 pounds to an orphanage rather than spend it on souvenirs in London.

Rimmer described the institution – an elite college preparatory school, attended by children of diplomats and wealthy Africans – as “lovely, lovely environment” where Christians often joined in Islamic feasts and where some of the best Christmas carolers were Muslims.

Abdulmutallab showed no signs of intolerance toward other students, Rimmer said, explaining that “lots of his mates were Christians.”

The Briton noted that he has not seen or heard from his former pupil since 2003 when he was still a teenager.

Abdulmutallab went on to study engineering and business finance at the University College London, where he graduated last year, the college confirmed.

Students at his prestigious university in London, where Abdulmutallab lived in a smart white stone apartment block in an exclusive area of central London, said Abdulmutallab showed no signs of radicalization and painted him as a lax student with deep religious views.

“We worked on projects together,” Fabrizio Cavallo Marincola, a 22-year-old mechanical engineering student at University College, told The Independent newspaper. “He always did the bare minimum of work and would just show up to classes. When we were studying, he always would go off to pray.

“He was pretty quiet and didn’t socialize much or have a girlfriend that I knew of. I didn’t get to talk to him much on a personal level. I was really shocked when I saw the reports. You would never imagine him pulling off something like this.”

Marincola declined further comment when contacted by the AP.

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Associated Press writers Raphael Satter in London and Salisu Rabiu in Funtua, Nigeria, contributed to this report.

More on Yemen


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Nuclear reactor cutaway diagrams

December 21st, 2009 admin No comments


Salim sez, “If only I had some of these amazing cut-away diagram wall-charts of nuclear reactors when I was a kid. BibliOdyssey, curator of the Internet’s finest collection of archival artwork has found this amazing trove of Atomic-era goodness. Please enjoy these fascinating diagrams of a bunch of 1970s nuclear reactors.”

These images are derived from pdf files [UNM CSEL Nuclear Engineering Wall Chart Collection] hosted on New Mexico’s Digital Collections portal for the Centennial Science and Engineering Library at the University of New Mexico on behalf of NEI. Something a bit different, to be sure.

Nuclear Reactor Wall Charts

(Thanks, Sal!)






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Sony Ericsson XPERIA X10 catches FCC on a good day

December 19th, 2009 admin No comments

Oh, to live the life of an FCC certification lab employee: setting up test benches, writing reports, playing with devices that won’t be released for months or years. Instead, we’re stuck enjoying their fun vicariously at an arm’s length through a little portal we know as the FCC Office of Engineering and Technology, where gems like the X10 occasionally pop up complete with pretty in-the-wild pictures, teardowns, and user manuals. What we’re looking at here are test results for EDGE 850 / 1900 plus WCDMA Band IV (that’d be T-Mobile’s and WIND’s spectrum, by the bye), WiFi, and Bluetooth, so even if T-Mobile ultimately chooses not to offer it on contract, you should be able to score it one way or another N900-style. The user’s manual is basically just 40 pages of good stuff plus a bunch of conformity statement mumbo jumbo, but it’s still a good read — so if you think this might be your phone of choice come 2010, have a look.

Sony Ericsson XPERIA X10 catches FCC on a good day originally appeared on Engadget on Fri, 18 Dec 2009 17:35:00 EST. Please see our terms for use of feeds.

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On Financial Engineering and Financial Innovation

July 22nd, 2009 admin No comments

http://rortybomb.wordpress.com submits: Robert Shiller in The New York Times : The subprime mortgage is an example of a recent invention that offered benefits and risks. These mortgages permitted people with bad credit histories to buy homes, without relying on guaranties from government agencies like the Federal Housing Administration. Compared with conventional mortgages, the subprime variety typically involved higher interest rates and stiff prepayment penalties. Complete Story »

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Yahoo’s Revenues Drop 13 Percent In Second Quarter (Conference Call Notes: Bartz Likes Bing!)

July 22nd, 2009 admin No comments

Yahoo just released earnings for the second quarter. Total revenues dropped 13 percent to $1.5 billion. Google, in contrast, saw total revenues rise 3 percent in same quarter. After paying partner sites traffic acquisition costs (TAC), Yahoo’s take-home revenue was $1.1 billion.

Yahoo’s net income rose 8 percent to $141 million. Operating income fell 17 percent to $101 million, and net income fell a whopping 78 percent to $118 million (but much of that difference was due to a $401 million non-cash gain Yahoo took in the first quarter related to its stake in Alibaba, which had an IPO).

Yahoo’s search advertising revenues on Yahoo-owned sites declined 15 percent to $359 million, while display advertising on owned and operated sites declined 14 percent to $393 million. Yahoo announced a deal with AT&T to sell local online ads.

Correction: This post briefly included information about layoffs which was incorrect. My apologies for alarming any Yahoo employees.

During the conference call, CEO Carol Bartz praised Bing (Microsoft’s search effort) and promised to get rid of annoying ads on Yahoo Mail. My live notes are below (bolded parts are for emphasis):

Carol Bartz:

Considering the economy I am pleased with our results, revenues above midpoint of our expectations, upside coming from currency fluctuations.

Less fear from advertisers.

But so much conflicting info form the market, too early to call.

1. great team (hired CFO)
2. great experience (mobile, social, advertising) have to make sure ads are more relevant, less irritating to users.
3. Better business processes. Want to be a better company to work for and with.

CFO Tim Morse:

Pageviews up 7%
Rev: $1.573 billion (down 13%)
Search revenues down 15%
display revenues down 14%
encouraging sign: guaranteed display inventory increased on a sequential basis
growth in health and travel

Affiliate business (primarily search) down
TAC was 28% of total revenue, rising slightly

listings revenue down 21%

OCF (operating cash flow) $385M
free cash flow $266M

savings at the low end of our expectations due to cost savings. Planning on hiring new sales people, invest in branding efforts to seize growth opps that will come as economy recovers.

$365M restructuring charge, real estate related and $25M related to headcount reduction
$67M pretax gain from sale in Gmarket.

Carol Bartz:

Biggest content site. Lead in news, sports, finance, and other categories. Yahoo homepages leads all others.
brags about a single link from Yahoo home page to NYT, creating 9M pageviews.
“We work with publishers, not against them” (subtle dig at Google)

Yahoo mail, open features, improvements in speed and performance and engagement.
Talks about annoying ads, calls them a “detriment,” “cheapening the Yahoo brand.” Will be trying to get rid of blaring ads.

Initiative around improving ad experience

Talks about mobile search deal with cell phone carrier in Taiwan to displace Google [she's digging deep there]

expanded relationship with AT&T to sell Yahoo local inventory by AT&T advertising salesforce. Yahoo’s salesforce with its advertising partners is now 13K strong.

Q&A:

Q: Carol, what is your first impression on Bing? Seeing any user behavior changes?

Carol: I think Bing is actually a good product. Experimentation around search instead of thinking just a standard blue link. only a month in, hard to understand if it is just curiosity or if they will gain share, but I think they have done a nice job.

Q: Search business seems to have deteriorated, display shows sequential improvement. Where is the bets ROI, display or search, since you will prob. have to choose one or the other?

Carol: Search did decline Q over Q, that is not a meaningful trend. Our volume was healthy, more that there was RPS pressure. The whole idea is to keep to optimize and drive relevancy for advertiser’s ROI. Advertisers being smarter, chose less keywords.

At the end of the day, our investment priority is in the user. If we can increase our audience, which we know we can, we can drive both search and display revenues. We can provide both, but what we really need to provide ad partners is an engaged audience.

Tim: CPCs not that different, more a mix in the queries.

Q: Do you get renumerated for links to Facebook or Gmail?

Carol: No, it is really about giving consumers an experience on Yahoo without having to leave Yahoo. To be the center of their online life. Not about money, about helping them organize their online life.

Q: Ebitda margins lowest guidance since 2003. You said you would be ramping spending in Q, how should we think about margins?

Carol: When we gave the guidance last Q we told you we were going to to layoffs to have room to put the same cost into the system to reinvest into the business. Pretty much on target with that. Marketing spend for 3Q is in the additional cost already ($75M?). Adding people into product, engineering, sales people.

Tim: Repositioning cost structure, drained some buckets, now filling up different buckets.

Q: What percentage of ad inventory is guaranteed? How should we think about yearly cost structure?

Tim: We don’t break out between guaranteed and non-guaranteed. We did see strength in guaranteed in high-single digits. Strength in 7 out of 10 categories we track like finance, health, consumer products. In non-guaranteed ads, more steady.

Carol Bartz: It’s like 30 to 40 steps to buy a display ad from us. Want to have a much. much easier way to do business with us. Looking forward to making this better.

Q: How is growth in Q2 breaking down?

Carol Bartz: We don’t actually break this out, but there are those people experimenting more with non-guaranteed and new customers coming in with guaranteed. By moving more into the mid-market that will be a lot more non-guaranteed because that is their first online ad experience.

Tim: We are doing very well with our top advertisers. On Display, revs are up with top ten advertisers. Also in Search, but not quite as good.

Q: O and O search vs. affiliate revs?

Bartz: I don’t see a trend.

Q: U.S. was down, looks like RPS (revenue per search) pressure, is that because of scale vs. Google?

Bartz: Of course scale matters in search. I’d switch positions, that’d be fun. When you have fewer click-throughs and you have a longer tail you get to monetize more. But our search volume is holding fine. We have to convince those buyers to get off the chair and push buy.

Q: Follow up on RPS, you talked about improving relevancy of ads. Can you talk about levers you can pull to improve RPS, how do you view new homepage impact on search

Bartz: Alot of what we are talking about in improving ads is display. You know what an irritating ad is. With RPS, working to drive teh right ad to the right query, better targeting. With how Metro will impact search, we are pleased with search placement on the homepage. improved quality in display, improved relevance in search and make search more prominent will help drive relevancy.

You have to get users to say, I like those. then they tell their friends. You take some of the bad ads off mail, guess what, they stay. All of that is a better experience. All of that will drive advertisers to us.

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Newsweek: Tracking largest industrial spill

July 21st, 2009 admin No comments

The largest industrial spill in U.S. history has created an environmental and engineering nightmare. The cleanup effort could cost as much as $1 billion and take years to complete. Meanwhile, the released toxin-packed ash threatens to poison the air and w

Categories: World Tags: ,

Tim Armstrong Prepares AOL For a Fragmenting Web

July 20th, 2009 admin No comments

The days of the Web portal are long gone. Everyone knows this, especially the people who run the largest destination sites on the Web. AOL’s newest CEO, Tim Armstrong, acknowledges this fact. “We think the Web will fragment in the future,” he tells me. “I think you have to be agnostic about where your content goes. If they want to get it on Twitter, you should let them get it on Twitter. If they want to get it on your destination site, then let them do that.”

Last week marked the first 100 days since Armstrong left Google to take over as CEO of AOL
. He’s spent most of that time trying “to figure out what the company does today, what it is strong at, and what it is not strong at.” After digesting all of that information, he is now zeroing in on five areas where he thinks AOL can excel at (and social networking is not one of them, thankfully). The five areas of focus are:

  1. Content
  2. Advertising
  3. Local and Mapping
  4. Communications
  5. AOL Ventures

When he talks about the first two, he talks about “scaled content” and “scaled advertising,” yet he is very much pursuing a niche content strategy married to a highly targeted, brand advertising approach. AOL is already going down this path with its collection of MediaGlow sites (which include, Engadget, TMZ, and Love.com). We’ve called this the “Toyota strategy” because it consists of creating standalone online media properties which appeal to niche audiences much like magazines used to do in the world of print media.

Which is not to say that Armstrong is chucking the AOL brand out the window. He is just being selective about where he uses it. “My guess is that there are places where the AOL brand will be very helpful,” he says: “A good housekeeping seal of approval. In other places, you don’t want it because it means something different.”

On the advertising front, he thinks AOL jumped into the ad network game at the wrong time right as the economic downturn hit. AOL was left with too much generic ad inventory and not enough inventory appealing to brand advertisers. (Hence, the niche content/magazine-like approach).

Another market he is bullish on is localized content and mapping. AOL owns Mapquest, which needs to be reinvigorated. It also just bought local news site Patch and local events listings site Going. (Armstrong was a shareholder in Patch, but didn’t accept any profits from the transaction beyond his initial investment). Local content remains a huge opportunity on the Web.

I asked Armstrong how he feels about the center of attention on the Web moving away from destination sites to personalized streams of data such as what you find on Twitter and Facebook. “Real-time messaging feeds have a wide spectrum of usage,” he replied. “In some places speed is more important than depth. In others, depth is more important than speed.” He is pretty much agnostic about where people find AOL content, as long as they return to AOL to read it (and maybe click on an ad or two while they are there).

At the same time, AOL is trying to leverage AIM to get into the lifestreaming game. Communications (email, IM, SMS) is one of AOL’s core areas Armstrong wants to strengthen. And to the extent that he can combine personal communications with public streams, he can play there as well.

Content, advertising, and communications are the areas where he feels AOL can play to its strengths. When I asked about search and search advertising, he responded, “Search has taken up a lot of oxygen in that space and rightly so, it has performed well for advertisers and funded a lot of other things.” But he thinks display brand advertising is poised for a comeback once we come out of the economic downturn. “There are a bunch of large players kicking the search ball,” he adds. “We probably don’t consider ourselves in that quadrant.”

Finally, Armstrong set up AOL Ventures as a place to invest in early-stage startups, as well as to park businesses which need fixing or outside investment, Bebo being a case in point. It’s been shunted to AOL Ventures. Armstrong is clearly distancing himself from the $850 million Bebo debacle. He describes one of the imperatives for AOL Ventures as “to keep things on track that have not been on track.” On the M&A front, he says AOL will continue to make “smaller acquisitions” to pick up key technology, engineering talent, unique content, or more advertising scale. “Will we do acquisitions the size of Bebo? My plan is No.”

Armstrong is getting AOL ready to be spun off from Time Warner in an IPO. As part of that transaction, the original thinking was that AOL’s legacy dial-up business wouldn’t be a part of that, but Armstrong has changed his mind. It is not only the roughly $1 billion in annual subscription revenues AOL still generates from the dial-up business that convinced him to keep it. That is quickly declining. But just as important is the traffic and distribution which comes from those locked-in customers. “If you were going to try to recreate the access traffic it would be very expensive to recreate,” notes Armstrong. (ComScore estimates that about 19 million of AOL’s 106 million unique U.S. visitors a month still come from AOL’s client app). When you are trying to build an advertising business, every eyeball counts.

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Google Says Mobile Web Apps Will Win In The Long Haul

July 18th, 2009 admin No comments

Native Apps, or Web Apps? It’s the great debate of the mobile world right now, essentially fueling the platform wars from behind the scenes. Palm took the Web App route with the Pre and webOS, though with the SDK just now available to all its a bit too early to gauge that decision. The Apple’s Iphone began its life with Web Apps, only to later open up native support and become the apotheosis of how app development and distribution can be done. Even Google, who will try to jam just about anything into the cloud, is putting a lot of weight behind running things locally on their Android platform.

Still, Google VP of Engineering Vic Gundotra says Web Apps are the way.


Categories: Technology Tags: , , , , , ,

Twitter’s Internal Strategy Laid Bare: To Be “The Pulse Of The Planet”

July 17th, 2009 admin No comments

On Tuesday evening more than 300 confidential Twitter documents and screenshots landed in our inbox. We said we were going to post a handful of them only, and we’ve spent much of the last 36 hours talking directly to Twitter about the right way to go about doing that. We’ll have more to say on that process in a couple of days.

The documents include employment agreements, calendars of the founders, new employee interview schedules, phone logs and bills, alarm settings, a financial forecast, a pitch for a Twitter TV show, confidentiality agreements with companies such as AOL, Dell, Ericsson, and Nokia, a list of employee dietary restrictions, credit card numbers, Paypal and Gmail screen shots, and much more.

These are the last two documents we are going to share: a subset of the detailed notes from a set of executive meetings that took place between February 12 and June 9, 2009. Much of the information in these notes is either personal in nature (new hires, etc.) or too sensitive to share. What’s interesting of the rest we are posting here with our commentary. These notes include never-before revealed discussions between Twitter and Google, Microsoft, and others, as well as details of product planning, company goals, employee retention, and new proposed terms of service and APIs. Even acquisition targets such as CoTweet and Twitpic are discussed (and sometimes dismissed). It’s important to note that we have been given the green light by Twitter to post this information – They aren’t happy about it, but they are able to live with it, they say (more on why they did that in our later post).

One other caveat – as we’ve said before, these documents are rough meeting notes, not polished documents meant for broad consumption. There are lots of typos and outdated information. But on the plus side, the rawness of it shows the dedication and deep commitment of this team to making Twitter into a world-class company.

Finally, there are some details about partner discussions, particularly around Google and Microsoft, that we are just not going to publish. Twitter has been in negotiations with both companies around a broad set of transactions for months. But we aren’t going to go into great detail about exactly what has been discussed, or Twitter’s strategies toward those negotiations. So while it looks like there is a lot of detail around those discussions below, the most sensitive stuff has been removed.

Let’s start with a key strategy meeting which took place on February 25, 2009. One of the audacious goals laid out in the notes of the strategy meeting is for Twitter to become the first Web service to reach one billion users. The notes are laid out in bullet points with each one reading like a Tweet: “If we had a billion users, that will be the pulse of the planet.” In the meeting itself, Stone tries to put his finger on what Twitter is by calling it more of a “nervous system” than an alert system.

A lot has happened since February. Twitter’s site has gone from an estimated 4 million visitors in the U.S to 20 million, and nearly double that worldwide. However, the notes provide a rare view into the strategic thinking of the company just before it entered its current phase of hypergrowth.

13Dealing With Google: Much of the discussion at Twitter meetings throughout the past six months revolved around dealing with Google and Facebook. In a March 13, 2009 management meeting, for example, during a discussion of a search deal with Google, the fear is expressed that “Google would kick our ass at finding the good tweet.” But almost immediately afterwards, someone asks, “Can we do to google what google has done to others?”

In a May 7 management meeting, Twitter’s search syndication strategy with Google is discussed, as is the desire of “every tech company” to gain access to “Hosebird,” an API Twitter is working on to deliver its full stream of Tweets to search partners and others. The attitude towards Google is cautious: “Playing with fire here where we know that Google is building the competitive product.”

7But by June 9, things seem to have progressed with Google. After an earlier two hour meeting with Google executives, the Twitter leadership had decided that an “agreement for some period of time makes sense – with our parameters.” But at the same time, they resolved to that Twitter’s own “search results page needs to be great – better than the landing pages on Google.”9Company Goals and New TOS/APIs: In that same June 9 meeting, Twitter execs talked about their end of year goals, including a “next gen search results page” and a (much-needed) reputation system which internally is being called “Tweet rank.” The company is also hard at work defining a new Terms of Service agreement which will launch in conjunction with new APIs. These will determine what kind of commercial messages Twitter will have rights to monetize via ads. Twitter wants to “take a far reaching license to the content, with two exceptions (endorsement, content profit), and no opt-out.” Twitter also talked about making its API license “more throttled than ToS.”

9192

Diddy, Marissa, and Microsoft: Another thing that comes through from the notes is just how much everyone has been courting Twitter. The agenda topics for a Twitter management meeting on April 16, 2009 reads like a who’s who of Hollywood and Silicon Valley: Diddy, Oprah, Marissa Mayer, Microsoft, 4Chan. They discuss giving “advisor shares” to entertainer Diddy, a big Tweeter, but also see him as a distraction. “Diddy values his contribution higher than we do,” read the meeting minutes. In an earlier meeting on April 2, other potential advisors discussed included Shaq and Al Gore (presumably both would receive advisor shares as well).

If Diddy was a distraction, Google product chief Marissa Mayer was a “huge distraction” who kept asking for stats on Twitter’s growth. Twitter management decided to give her “a constrained version of growth.” Finally, Microsoft wanted to talk about a deep infrastructure deal (”we don’t want to talk about this right now”) and a “secret project with the x-box.”

16-diddy-oprah16

Despite the interest and attention, all the Twitter management really seemed to want was to be left alone, even by its own board members. In a May 7 meeting, they talk about how to put off informational meetings in a nice way: “How do we communicate to the Board (and investors) to back off.”

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Exchanging Favors With Investment Bankers: On May 26, the Twitter management team discussed choosing investment bankers with the idea that they would engage them “for a year and a half – exchange favors, then use them for the transaction.” It is not clear what “the transaction” is, but it can only be an IPO or an acquisition.
26

Managing the Message: The minutes of that May 26th meeting also shed some light on how Twitter manages the media. Word had gotten out that a Twitter TV show was in the works, and Twitter decided it needed to “kill the story that “twitter is coming out with a TV show.” The message: there are “many users of Twitter – none are officially blessed.”
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Identity Crisis: Let’s return to that key strategy meeting on February 25 (from here on out I’ll try to go chronologically). It is clear from the notes that the company was still struggling to define itself: Some stabs at defining the company’s mission included “Twitter is for discovering and sharing what is happening right now,” and “Twitter makes you smarter, faster, more efficient and more powerful.” Below are excerpts taken from throughout the document.

tw-strat-intro

Acquisition Angst: The meeting took place after acquisition talks with Facebook fell apart last fall, and before similar talks with Google also went nowhere this spring. A lot of the meeting dealt with Twitter’s acquisition angst and trying to decide “What do we want to be when we grow up?” The company has an “IPO Bias,” yet realizes it will “always have to be open to Exits.” The “only type of acquisition we are interested in are ones where we stay in charge.” Perhaps that is what killed the Facebook deal. Twitter management felt that the “Facebook sell always seemed wrong,” that it was “the wrong destiny for Twitter.”

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The Facebook Threat: The Facebook threat keeps coming back up. In one portion of the meeting devoted to discussing “How could Facebook kill us?” they list threats such as Facebook adopting real-time search, changing the opt-in options to make status messages public, emphasizing its SMS features, and generally copying Twitter’s functionality and user-interface (all of which have started to happen).

tw-strat-fb-kill-us-2

Defensive Strategy: The company also considered how best to defend against Facebook. “Make sure people are happy” is at the top of the list, followed by “cult” and “get more and better developers.” Doing a better job and getting “twitter everywhere” seems to be its best defense.

tw-strat-defense-against-facebook

Real-Time Search: Twitter is clearly concerned about positioning itself against its two main rivals and potential acquirers. In contrast to finding out “what is happening right now” on Twitter, “Google is old news.” Yet during the meeting, the company is clearly preoccupied with search: “Twitter the product is a vehicle for twitter search;” “People don’t use twitter for search; and “Twitter should tell me stuff without me searching for that.”

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Financials: The company talks about its financial model, which boils down to generating “$1 per user per year” and going from 25 million users at the end of 2009 to one billion in 2013, with a user being defined as a “unique individual having a conscious twitter experience in a given week.”

tw-strat-financial-model

Revenue Model: The strategy meeting also covered future revenue models, starting with verified commercial accounts, which is described as the “fastest way to make money without putting a whole organization behind it.” Another benefit to targeting corporate and celebrity users: “Charging more to fewer users is a good model.”

But it is the next business models down the list which start to become interesting. These include Search/Content Ads (with heavy users of the search API being required to run ads), Sponsored Tweets, “Adsense Widgets” (presumably Twitter ads which can run on other sites like Google’s AdSense, and in other apps) and payments.

tw-strat-revenue-plans

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Getting To One Billion Users: The key to most of these business models is to keep attracting more users, and the company has some creative thoughts on how to acquire them. These include: “Free phones preloaded with twitter,” “TV twitter,” “Kindle,” “Radio,” “Dell, build it into,” videogame consoles, Website widgets, IM networks, and PCs. They also realize the “cost would kill us if we had a billion users tomorrow.”

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RSS Is The Enemy: The other expense they are worried about is supporting all of the RSS feeds that are migrating to Twitter. The people who run Twitter definitely don’t like RSS, and who can blame them? The big concerns expressed at the meeting were, “What if all feeds went through twitter: would be expensive,” and “feeds are not unique content.” (They are also too slow, but that is another issue).
tw-strat-feeds

March 12, 2009 Meeting (Getting Back to Google): Moving forward to a regular management meeting on March 12, the subject of Google comes up again. Google’s blog search team was scraping Twitter’s site and getting only “60-70% of updates.” They wanted Twitter to hurry up with its Hosebird API so that they could start indexing every Tweet. The plan was to “include microblog content on blogsearch.google.com (which gets less than twitter search).” Already, Twitter made up “90% of the content” on Google Blog Search. As the minutes put it: “We are this product.” There was also talk of including microblog results on the main search page, which would be “the biggest change to google search in years.”

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In that same March 12th meeting, Twitter also wrestled with a proposed search advertising partnership with Microsoft. The team was “not ready” and considered this yet another “Distraction.” Worries were expressed that it would strain Twitter’s engineering resources and that any partnership with Microsoft would raise branding issues: “There is going to be a perception that we are dating.” The board was also worried about Twitter “getting into bed with Microsoft.” By the end of the discussion, someone asks, “Why did we start talking to Microsoft in the first place”?

123124Twitpic, Photobucket, Tweetie: At the same time that Twitter was putting off Microsoft and Google, it was cultivating smaller startups. During that same March 12th meeting, one agenda item was “Twitpic- To buy or not to buy (1).” They decided not to, and the next week in a meeting on March 19, they decided to “bless” a competing Photobucket app called Twitgoo. Twitter also decided “we like Tweetie,” the popular mobile Twitter client in a meeting on March 26th.
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Another Acquisition target: CoTweet. More recently, in a June 2 meeting where CoTweet and the need to support commercial accounts came up, the need to partner, buy, or hire came up, as it had in the past. And CoTweet seems to be identified as “another acquisition target.”

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Mogees, R.I.P: You can also see what happens to startups that don’t get Twitter’s blessing. Twitter CEO Evan Williams was “not blown away” by micro-payment startup Mogees in a May 7 meeting because “Paypal and Amazon can do this.” Mogees doesn’t seem to be in service anymore.
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April 30, 2009, Employee Retention (”Happiness Committee”): Twitter’s management meetings also dealt a lot with how to keep employees engaged. The minutes for an April 30 management meeting talk about recruiting from Facebook and note: “People don’t leave jobs they leave managers,” they “leave situations that are making them sad.” To prevent that from happening at Twitter someone proposed forming a “happiness committee.” That should work.
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Nothing Is Free Forever: In that same April 30 meeting, the team talked about licensing Tweets to partners: “We can give people stuff for free but not forever.” There was also a fascinating discussion about how users should be able to opt out of having their Tweets syndicated by other media properties such as TV shows. One idea put forward was that your Tweets can only be syndicated by other people or entities who already have a relationship with you.
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Search as Discovery: Another interesting discussion on April 30 had to do with search as discovery and the work of a visiting Stanford professor. The notion of charging per follower is contemplated.
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Retweeting (A “Disturbance In the Force): Finally, everyone’s favorite subject, retweeting, was brought up in that June 2 meeting. It looks like Twitter is going to adopt it as a formal feature, but Evan Williams is concerned that retweets are “broken” because it becomes “hard to read who authored, people edit what was actually said.” Well, yeah. There’s only 140 characters, you know.

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