"This has nothing to do with the economy," Fred Wilson, a partner at Twitter investor Union Square Ventures, told The Deal. True enough — but it does have to do with Dorsey's incompetence. One industry insider says he botched several acquisition offers — one by nattering on about his original idea for Twitter as a messaging service for ambulance drivers and bicycle couriers, an idea he still wanted to pursue after a Twitter acquisition.

Wilson gave a speech last week in Manhattan. In other words, there was no reason to run the story. What's really going on? Wilson himself explains: The Times had this piece in the works for weeks. My theory: Editors there felt it needed to run soon, before the sector Wilson favors — hipsterish Web startups like Twitter and Etsy — suffered some embarrassing disaster.

(Photo by Hiroko Masuike/The New York Times)

It'll be catnip to the bloggers featured on Techmeme, an automated news aggregator which has attracted an obsessive following among tech bloggers, if not actual traffic worth speaking of. Instead of seeking actual pageviews, Techmeme gamers try to collect some ineffable sense of self-importance. And so they'll inevitably start linking to Zemanta-suggested stories out of laziness. Even reporter Anthony Ha admits, "Linking and adding other media can feel like time-consuming distractions when I’m writing VentureBeat posts."

With all the TechMeme pile-on posts drawing from the same pool of Zemanta-planted background links, the feedback loop in tech blogosphere groupthink will be turned up to 11. Honestly, with an algorithm finding your story leads, an algorithm doing your research, and an alogrithm choosing the relevant ads, why do we need human tech bloggers at all?

Twitter is no different from other user-generated content, like Flickr, YouTube, Del.icio.us, Blogger, WordPress, TypePad. Those businesses are good businesses. People who can't wrap their heads around trying to monetize these businesses aren't trying that hard. It would be naive to assume that the management teams of Twitter or FriendFeed or Disqus don't have four or five strategies for monetization in their business plans that they are evaluating.

That youth and inexperience is an asset to many of these startups. We’ve been through why that is before. The founders have low personal burn rates so $25,000 can take them six months. They are largely developers/hackers who know how to build stuff quickly and inexpensively. They create lean, mean, capital efficient companies. They grew up with the web so they have a “native” feel for how web apps and services should work. And of course, they don’t know why they are going to fail so they “just do it”.

Or: "No, honey, that minimal investment doesn't make me look cheap; it's just your exceptionally high burn rate showing." (Photo by Xerostomia)

Victim: NextNewNetworks cofounder Timothy Shea

Victim: Yahoo ad exec Mike Walrath

Victim: Union Square Ventures partner Fred Wilson

It's not that amazing. As CenterNetwork's Allen Stern first pointed out, each time a new user signs up for FriendFeed, the site suggests the new user becomes friends with "Popular FriendFeeders." On the list: Bret Taylor, Fred Wilson, Scott Beale, Michael Arrington, Loic Le Meur, Jason Calacanis, Dave Winer and Leo Laporte — despite, as Stern notes, the fact that many of these "popular" users don't actually use FriendFeed very often. Why? We haven't asked anybody at FriendFeed because the answer is obvious: So that the whole bunch of easily ego-fluffed blog blowhards will blog about how amazing FriendFeed is, without bothering to figure out why, exactly, it seems to be growing so much faster for them than everybody else.

She was recently spotted in New York's startup-laden Flatiron and Chelsea neighborhoods, making the rounds. New York VC Fred Wilsion is an unabashed fan, and the two have already invested alongside his Union Square Ventures in Etsy. Might the pair break hearts in both San Francisco and Vancouver by moving to Manhattan instead? As for New York, all I can say is been there, done that. Head back to Canada for Sonnet's sake, guys. American citizenship ain't what it used to be.

Then Wilson and Jerry Colonna founded Flatiron Partners and turned $150 million into $750 million. Says Wilson:

I don't recommend anyone reading this to try it the way I did it. If you choose to get an MBA, get a real job out of business school. Help to build a few businesses in an industry sector you really like. Become an expert in that industry. Then try your hand at venture capital. You'll be much better at it than I was my first ten years in the business.

The scaling shit only bugs nerds. Most people aren't doing enough messaging volume to notice. The people bitching are the ones who would never leave. Actually, whoever invests in Twitter is getting IP rights to something that solves a whole *class* of scaling problems, i.e. not just what's wrong with Twitter. I mean, I assume Twitter is a feature of everything going forward. Either Twitter proper, or that capability. That means everyone who succeeds will encounter this issue. If there's five non-Google companies in the world who've figured this out, I'd be shocked.

• Customer data stored by different service providers will be combined to create more intelligent services.
• Oil will have increasing difficulty competing with biofuels made from cheap nonfood crops for transportation.
• Water technology will replace abating global warming as a global priority.
• The mobile device industry's migration to smart phones will produce great disruption for big industry players.
• Booming market for healthy aging technologies.
• Four-fifths of the world population will carry mobile Internet devices within five to 10 years.
• Algorithms will be constructed to develop new industrial chemicals, new biofuels and eventually artificial intelligence.
• The mobile phone is your most important device.
• There is going to be a venture capital shakeout.
• Within five years everything that matters to you will be available on a device that fits on your belt or in your purse

The best advice my old man gave, and the advice he drilled most emphatically and repeatedly was, ASK FOR THE ORDER. You'd be amazed how many people talk to customers forever and never actually say ask for the order.

Before we launched Half.com, we needed inventory. We reached out to stores and shops, sending them our three-page seller agreement. Retailers were either intimidated or didn't want to spend the money to have a lawyer review it. 60% of sellers would drop out. We made a change and asked the seller to agree to our terms of service by clicking a box. We didn't change what we asked for — we just changed the way we asked for it. One of my portfolio companies [was] talking with prospects about a big ad deal, sending out an "Advertising Partnership Agreement." They learned that all nonstandard agreements had to go to legal — which added weeks/months to the process. Instead, they sent over "Ad Insertion Agreement" which had the same terms of our prior agreement, [but] our marketing contact had full authority to sign.

Fred Wilson of Union Square Ventures once described Hype Machine as "the best thing to happen to music since the Rolling Stones!" But for a founder like Volodkin, taking nearly all of a $10 million offer must surely seem more attractive than rolling the dice by taking venture capital and trying to get a smaller slice of a larger jackpot. Some VCs have resorted to bribing founders — buying shares outright, rather than just increasing their paper wealth — to dissuade them from selling, as Automattic's investors did with Matt Mullenweg. VCs like to talk about making entrepreneurs wealthy. But they like to arrange things so they hitch a ride to the payday.

My own loyal Tumblr followers — well, 2 out of 45 — say the unnamed price is right. Union Square Ventures partner Fred Wilson agrees, with a caveat. "It makes a ton of sense," he told me. "They are still in the 'make the service great phase' though."

We agree. For all its impressive growth (9,394.1 percent, year over year), Tumblr can still only claim 510,000 visitors according to Compete.com. Flickr has 24.2 million.

Karp tells us he realizes free feature growth can't stop if he wants Tumblr's userbase to continuing growing so fast. Freeloading users will continue to get new features, too, he said. But they're going to be features that in turn help make Tumblr an ad-supported destination for the wider Web. We're guessing more pages like Tumblr's dashboard-like front page, except broken out into specific subject areas like "autos" and "women" so that ads can be more lucratively targeted.

New features that disproportionately raise Tumblr's hosting costs or require support, however, won't come for hipsters who don't give Karp their parents' credit-card number.

I'm pretty sure, however, that's there's one way to get out of paying fees for Karp's new features. Just a guess: Drive enough traffic to the site and Karp will be happy to comp your subscription and maybe more. Julia Allison new Web content company, for example, will be based on the Tumblr platform. And I bet she won't be paying.

Why? Paid subscriptions could probably pay Karp's bills. Fark.com founder Drew Curtis says TotalFark subscriptions bring in hundreds of thousands of dollars each year for his zany headlines site. But Karp's investors, including Union Square Ventures and Spark Capital, will pressure him to find a much larger revenue stream — something that gets its hands on all the money large advertisers aren't spending on the Web. Proctor & Gamble's annual advertising budget, at $1 billion, can buy a lot of airtime, but it can't get trust-funders who only watch The Office when it's embedded on the Web to change their detergent-purchasing habits.

In my mind, the single most important thing is not revenue in a time like this. The most important thing is cost structure. Thomas Cole says "smart companies are battening down the hatches". That's right.

A "get away from it all" vacation is a romantic notion. This week, for example, I am assisting two portfolio companies on hires, helping with the negotiations, and closing a deal. You can't just disengage. So what do I do? I block out 90 minutes in the morning when my family is asleep for emails and phone calls. Hawaii makes that easy because at 6 a.m. its 9 a.m. in the Bay Area and noon in NYC. I keep my BlackBerry with me but off unless we have some down time. I scan email. I post on the elliptical trainer. A friend listened in to a board call where he is an observer while skiing. He had the call on mute and the headphones under his helmet.

You can't invite via MySpace.You can't notify via MySpace. So these apps are spreading by less effective means than the Facebook apps did.

• Avoid "big names."
• Select people who will attend and pay attention
• Select people who understand your challenges and opportunities
• Avoid someone you can control.
• Don't let conflicts get in the way.
• Have an experienced accountant/auditor
• Have at least two or three CEOs
• Select people who have the time
• Select people who are friendly
• Look for great judgment and ethics.

• AT&T or Comcast buy Yahoo instead AT&T just signed a display-advertising deal with Yahoo. Last year, Yahoo inked a similar one with Comcast that Mark Cuban hailed as the "Deal of the Year." But neither one has the cash for a bidding war with Microsoft. AT&T executives have already said they encouraged Microsoft to make the bid.

• Yahoo sells the Yahoo Media Group to NBC Universal Sources tell us Yahoo is considering selling its media group — news, finance, sports, entertainment, and so on — to NBC Universal. A sale would let Yahoo double down on search and display advertising, essentially "throwing the kitchen sink" into beating Google. Won't happen. Shareholders lack the patience to let Yahoo carry out such a slow-moving recovery strategy. And the media operation gets most of its audience from Yahoo's big portals, like search, mail, and My Yahoo.

• Yahoo sells the Yahoo Media Group to NBC Universal and advertising businesses to FacebookThis is the most ludicrously elaborate scenario. TechCrunch reports former Yahoo COO Dan Rosensweig — yes, the guy Decker forced out — now of private equity firm Quadrangle Group, is working on a deal. His goal is to sell the Yahoo Media Group to NBC and combine the remaining search and advertising business with Facebook. In other news, Rosensweig thinks the New England Patriots should have traded for David Tyree during halftime last night.

• Apple to buy Yahoo One time, Apple CEO Steve Jobs spoke at a Yahoo event. Another time, Yahoo CEO Jerry Yang expressed admiration for Jobs. According to reports, these facts provide conclusive evidence that Apple is considering buying Yahoo. Right. This is as likely as a purple iPod.

• Rupert Murdoch is Jerry Yang's white knight Last summer, rumors circulated that News Corp. wanted to swap MySpace for a piece of Yahoo. This does not mean News Corp. will join in the bidding for Yahoo now. The company already told the New York Times it would not submit a bid. One reason why? With a $60 billion market cap and far less cash than Microsoft, it wouldn't be able to match Microsoft's half-stock, half-cash offer anyway.

• Outsource search to Google. That will provide a 25 percent boost to cash flow according to Citigroup analyst Mark Mahaney. I have heard that this is worth about $10/share in Yahoo!'s stock price.
• Dividend out to shareholders the interests in Yahoo Japan and Alibaba. They are worth $12/share according to the WSJ.
• Split up the remaining company into several businesses which can be independent public or private companies. I would put Yahoo home page, search, My Yahoo, and email into one company and let that be new Yahoo. The other assets could be sold off or assembled into additional private or public companies.

Le Meur has already snagged $6 million in venture capital for Seesmic, a site which is a bit like YouTube, a bit like Twitter, and a bit like Justin.tv. His new investors include Reid Hoffman, the hyperconnected chairman of LinkedIn; Skype founders Niklas Zennström and Janus Friis, and angel investor Ron Conway, the startup ATM of Silicon Valley.

So why is Wilson in town? Here's where it gets interesting. Brad Feld of Foundry Group, a frequent coinvestor with Wilson's Union Square Ventures, announced on Twitter yesterday that he was in San Francisco to meet with the New York-based Wilson, who had just flown in on a delayed flight. Shortly after he landed, Wilson posted a video to Seesmic. Feld then posted that he had just attended an unnamed startup's board meeting, which planned to announce his investment on Monday.

Not Seesmic, though — that company plans to launch, officially, at Demo at the end of this month. Announcing the company on Monday would be a breach of etiquette, at the very least, for a participant in the prestigious startup conference. And Le Meur is too French to be so blatantly impolite.

So what are Wilson and Feld up to? Given Feld's and Wilson's Twitters, it doesn't seem like there would have been time for them to meet yesterday, except at the unnamed startup's board meeting. It makes sense that they'd be in cahoots on another deal. The other clues in Feld's blog post: The company is headed by a "star" with previous startup successes, has about 20 employees, and is hiring another 20, including two software product managers. Any ideas? Leave them in the comments, or drop us a line.

• The Web's top 10 top 10 lists
• 10. Wired's "The 10 Best Gadget Ads of 2007" makes our list because it points out why everyone wants an iPhone. Apple's genius ads.
  
  
• 9.The New York Times' "Buzzwords 2007" can has number 9.
  
• 8. eMarketer's Predictions for 2008 makes our list because we're so handy with their charts.
  
• 
  
• 7. Tumblr founder David Karp's 2008 Tech Predictions.

  Google will launch the Web Service competitors GStorage, GCompute, and GAmazonFlexiblePaymentService.

  
  
• 6.Your Best Shot 2007 Samplr, collected by Flickr, features the most interestingness of any list in our top ten.
  
• 5.Silicon Alley VC blogger Fred Wilson sure can pick 'em. No, not startups. Rock bands. Like the ones in his Top Ten Records 2007.
  
  
• 4.The second Wired entry — out of nearly a dozen folks, so there's real competition here! — to make our list has to be The Top 10 New Organisms of 2007 because it reviews how we did playing God last year.

  Cancer-fighting Clostridium bacteria Surgery, chemotherapy and radiation treatment mean that a cancer diagnosis is no longer always a death sentence. But certain oxygen-starved parts of tumors are still difficult to reach with the old methods. Enter the Clostridium family of bacteria. Injected into the body, they grow and multiply only in the oxygen-poor parts of cancer tumors. In September, scientists in the Netherlands showed they could arm Clostridium bacteria with therapeutic protein genes, essentially creating search-and-destroy tumor missiles.

  
  
• 3.We're not going to pretend we understand the Large Hadron Collider, which comes online in 2008, according to Ars Technica'spredictions for 2008. "The Higgs boson, supersymmetric particles, and dark matter candidates all beckon," Chris Lee writes. We'll just show you this neat video.

  
  

• 
  
• 2.Tech CEOs say the darndest things, don't they? Like remember when Zuck said media changes every 100 years? Wired's editors do, and they bring it all back in their 2007 Foot-in-Mouth Awards.

  There's no chance that the iPhone is going to get any significant market share. No chance. It's a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I'd prefer to have our software in 60 percent or 70 percent or 80 percent of them than I would to have 2 percent or 3 percent, which is what Apple might get. — Microsoft CEO Steve Ballmer on the iPhone, which is outselling all Windows Mobile phones combined.

  
  
  
• 
  
• 1. How's this for meta? We're going to declare Valleywag's own "The Web's top 10 top 10 lists" the winner. Meta FTW!

(Photo by andrer69)

I didn't see Mike Moritz on the list. Or partners from Accel, Benchmark, Kleiner Perkins, Sequoia, Matrix, Greylock, Venrock. What I saw [was] a list of someday superstars. If TheFunded is going to be a resource we can rely on, Adeo needs to have two tiers of voters: people with real knowledge and others. Categorize the commenters so readers can judge the source, and not display poll results until the sample size is large enough.

Venture investments fail for two primary reasons.

• It was a dumb idea and we realized it early on and killed the investment.
  
• It was a decent idea but directionally incorrect, it was hugely overfunded, the burn rate was taken to levels way beyond reason, and it became impossible to adapt the business in a financially viable manner.

Most venture backed investments fail because the venture capital is used to scale the business before the correct business plan is discovered.

"My brand image of Apple these days is fear and loathing," Wilson writes:

I am afraid to upgrade to a new version of iTunes because it might make my music and video unusable or it might brick my iPhone. I am afraid to upgrade to Leopard because it might brick my MacBook. I have a brand new iPhone sitting right next to me on my desk that I can't figure out how to unlock and jailbreak now that it comes preloaded with 1.1.2 firmware. So it just sits there on my desk making me hate Apple more every day.

When I come into contact with media, I want to do something with it. Tag it, post it, reply to it, comment on it, favorite it, share it, gift it, quote it, whatever.

Fred, Fred, Fred. I hate to break it to you, but just because media puts on a pretty skirt doesn't mean you get to do whatever you want to it. Maybe media doesn't want to be shared. Maybe media isn't that excited that it's your "favorite." Hey, Fred, here's a thought: What if media isn't into you, y'know, that way? Personally, I like my content (newspapers, magazines, television, movies, music) passive. Just sit back and relax, baby, I'm going to read you, watch you, and really listen to you. That's all you want, right, media?