The News Corp. phone-hacking scandal continues to spiral out of control, sweeping up more and more of the companies employees and executives. In the UK, 8 people were arrested, including five News Corp journalists, in the broadening scandal, which may embroil deputy COO James Murdoch—Rupert’s son and heir-apparent. A paper copy of a deleted email found in a crate ties James Murdoch directly to the events under investigation, which involved the routine and illegal hacking of phone voicemails on behalf of a News Corp publication.

This email evidence would never have been found if it wasn’t printed out because News Corp, like many corporations, regularly deletes archived emails. It is standard practice, but the technical reasons given for deleting emails are usually not the real reason they are eliminated. The only real reason to destroy old emails is to avoid liability and future lawsuits.

Reading the account in the New York Times about this newly discovered email from former News of the World editor Colin Myler to James Murdoch, which dates back to 2008, you get a sense it wasn’t meant to be found.

Mr. Myler’s electronic copy had been lost “in a hardware failure” on March 18, 2010,” while Mr. Murdoch’s electronic copy had been deleted on Jan. 15, 2011 during an “e-mail stabilization and modernization program.”

Big corporations routinely delete old e-mails. Between April 2010 and July 2011, News International discussed e-mail deletion with HCL Technologies, which manages its e-mail system, on nine occasions, according to a letter HCL wrote to Parliament last summer.

Most of the reasons were mundane. But in January 2011, HCL said, News International asked whether HCL was capable of helping “truncate” — meaning delete — “a particular database” in the e-mail system. The question came shortly after disclosures in a civil suit brought by the actress Sienna Miller raised fears that material about widespread phone hacking at The News of the World might become public.

Companies know that incriminating evidence always exists in emails because emails document the conversations and decision-making that goes on in all organizations. But they need a justification other than “We don’t want to get caught.” So that’s how you get corporate doublespeak like “e-mail stabilization and modernization” programs, with its vague suggestion that there is a technical reason to delete old emails, as if a company’s entire email system might crash under the weight of old emails stored on a server.

Let’s just be clear here. By putting in place policies to routinely delete old email archives, companies are protecting themselves from future incrimination. And News Corp isn’t the only company that does this, by any means. It’s a preventative measure. But it only works if they destroy any incriminating emails before they are caught. Once an investigation starts and the prospect of subpoenas arise, destroying emails is no longer a legal option. In this case, that may come back to bite News Corp.

It’s February, which means Toy Fair in New York City. Every year, Mind Candy CEO Michael Acton Smith comes to town to peddle his little monsters. Those would be Moshi Monsters, one of the largest social game sites for kids 6 to 11, with 10 million monthly visitors. It’s huge in the UK, and this year Smith is going to make a major push into the U.S.

And it’s not just online. Moshi Monsters are finding their way into all sorts of kids merchandise, including collectible toy figurines (more than 20 million sold in the UK alone last year), plush dolls, games, the No. 1 kids magazine in the UK, mobile apps, and even temporary tattoos. While we were talking about his plans in the video above, Smith put one of the tattoos of the Snookums “moshling” character on my arm. My kids were pretty impressed when I showed it to them.

Last year, Smith’s goal was to sell $100 million worth of Moshi Monster merchandise, and he exceeded that goal, selling $105 million worth directly and through licensees. Mind Candy’s revenues was a portion of that, but it is profitable with 100 employees and Smith says revenues “tripled” last year.

He is constantly pushing the brand into new areas, including Moshi TV, which is like a YouTube for Kids with a mix of original and curated programming. If you haven’t heard of Moshi Monsters yet, you will. The toys will be in Walmart, JC Penny and pretty much everywhere else this year.

Groupon CEO Andrew Mason just finished his first post-IPO earnings calls with Wall Street analysts. (We covered it live and looked at the numbers). “We believe we are on the cusp of a sea change” in behavior, he noted. “We’re about to see what technology can do for local commerce.”

Listening to the call, I’d say his performance was mixed. He sounded a little nervous at first, but warmed up to the task just as he did during the IPO roadshow, joking with the analysts that one of the most requested features Groupon hears from customers to “stop sending me pole-dancing deals.” (Don’t worry, they’ve got personalization technology to help filter those out).

Mason warmed up, especially during the Q&A session. He seems most comfortable diving into the details of Groupon’s business, less so during the scripted portion of the earnings calls. After all, he is from Chicago, which is more of an improv town.

Mason did flub a few lines, at one point struggling to find the right word to describe a statistic. “The opposite of ‘only’” was what he was looking for. But he recovered and it was an interesting stat. Citing a recent Lionsgate survey of people who came to see a movie which was being marketed through a Groupon deal, of the 93 percent of respondents who saw the deal, only 7 percent would have gone to see the movie anyway. And 3 out of 4 people who use a Groupon in general bring a friend with them, suggesting that merchants get a lot more value than just the economics of any given deal. Mason also says that “9 out of 10 people spend more than the value of the Groupon.”

Looking past the anxiety of a first earnings call, Mason did communicate Groupon’s focus on delivering longer term value to both merchants and customers, which is exactly what he has to do to take Groupon from version 1.0 to the next stage. “We are transforming our relationships from a one-and-done deal event to something that is longer term,” he concluded. This will be a recurring theme. Expect Mason to hammer that message home any time he can.

Groupon just announced its first earnings report after going public last October (it missed, read our liveblog of the earnings call here.). For the full year, Groupon’s revenues were $1.6 billion, up 419 percent. The daily deal company, however, lost $350 million, most of that attributable to its very aggressive international expansion (7,000 out of its 10,000 employees are overseas). In North America, it turned an operating profit of $22 million, which was counteracted by $137 million in international operating losses.

Gross billings (which is the amount Groupon collects before giving local merchants their cut) was more than $4 billion for the year. Gross billings is a good measure of the Groupon economy in that it is the dollar amount Groupon is bringing in total to local commerce.

For the quarter, revenues were $506 million, up 194 percent. The net loss was $42.7 million, which at least was down from $379 million quarterly net loss the year before. Revenue growth reaccelerated to 18 percent from the third quarter, when quarterly growth had slowed to 9.4 percent.

Also notable is that Groupon is spending significantly less on marketing, $156 million in the quarter versus $170 million in the third quarter and $291 million the year prior. Groupon is also shifting its spending from trying to acquire new customers to get existing customers to spend more. “We are investing more in transactional marketing,” says Groupon CEO Andrew Mason. “It is designed to drive purchases, not just new subscribers.”

Some other stats from the earnings:

Active customer base: 33 million, up 275% from Q4 2010 and up 20% from Q3 2011

Active gross billing per active customer (trailing 12 months): $188, up from $160 in Q4 2010

Mobile downloads: 26 million

Cash: $1.1 billion

Before big data was a hot investing theme, Roger Ehrenberg was one of the first seed investors to focus almost exclusively on startups using data as a competitive edge. His NYC-based fund, IA Ventures, has backed companies such as Billguard, Coursekit, DataSift, Next Big Sound, Simple, ThinkNear, and Yipit. His first fund, raised in 2010, was a $50 million seed fund. Now, IA Ventures just raised $105 million to double down on data plays in Fund II.

The bigger fund will give IA Ventures the ability to make bigger bets, while still sticking to early stage deals. “I think the biggest difference is we now have the firepower to lead seeds, As and also Bs,” says Ehernberg,, “and we can take companies through the growth stage.” Up until now, IA Ventures mostly backed pre-revenue companies somewhere “between a Powerpoint and a prototype,” says Ehrenberg. Those require a lot of hands-on work to help get them to a revenue-producing stage, which IA Ventures will continue to do, but its team can only help so many companies.

With Fund II, IA Ventures will try to achieve a more balanced portfolio made up of both seed and later-stage companies already generating revenues. It is expecting to invest in about two dozen companies over the three-year life of the fund. The first investment from Fund II was the Next Big Sound’s recent $6.5 million series A, which IA Ventures led (writing a check for $4 million, it’s biggest ever).

Ehrenberg is among a new class of VCs with roots as an angel investor. He personally backed Buddy Media, bit.ly, TweetDeck, Invite Media, Clickable, and Stocktwits. In another life he was an investment banker, but he doesn’t like to talk about that now. He turned his angel investing into a real seed firm, which is now moving up the stack. Jeff Clavier’s SoftTech Ventures, which also just raised a new $55 million fund, is a similar angel-turned-VC, but with a different investing style.

In fact, there seems to be a divide between East Coast and West Coast superangels. “There is a huge ideological argument right now at play,” says Ehrenberg. Investors like Ron Conway, Dave McClure, and even Clavier make a lot of small bets—60, 100, or more per fund—hoping a few of them will pay off massively. They know that somewhere in their portfolios could be the next Google or Facebook. The East Coast seed investors are a little bit more cautious (they would say “disciplined”). Ehrenberg models IA Ventures more like a small Union Square Ventures or Foundry Capital—a more concentrated portfolio where the investors use their contacts or domain expertise to help take some of the risk out of the companies.

“The optimal point on the risk-return frontier,” says Ehrenberg, “is putting small amounts early, being close, and being in a position to put in more money when there is an opportunity to de-risk as opposed to holding a portfolio of lottery tickets and hoping that one of those lottery tickets looks like Google or Facebook.”

His limited partners seem happy with that approach. They know what they are getting and they can invest in a lucrative theme. Although, truth be told, Ehrenberg doesn’t really talk about “big data” that much anymore. “We never use it because it doesn’t mean anything,” he admits. Data is not valuable unless you do something with it. It only means something when you drill down to the specifics. IA Ventures likes to invest in companies that create contributory databases, where consumers give their data in return for something more valuable (like TC Disrupt finalist Billguard which gives you fraud protection in return for your credit card billing data); core enabling data technologies, or applications that leverage large data sets (like Simple, the new banking product still in private beta).

Blip.tv is going through some changes, with founder Mike Hudack gone and a search for a new CEO still ongoing. But the company raised a $6 million C round from its two main investors in December, and now just added to that with another $6 million credit facility from Silicon Valley Bank. There is also a new logo, and the company is now called just Blip.

So how is the indie Web video distribution service doing? “We essentially doubled revenue in 2011,” reports COO Steve Brookstein. He tells me that revenues in 2011 were $10 million, and the company expects to nearly double again this year, although profitability is still being pushed off until 2013. But the new cash should tide it over until then.

With 54 employees, Blip is a decent-sized startup with a long history on the New York scene. Originally, it appealed to independent Web video producers as an upload-once, distribute everywhere platform. Last year it started to try to become more of a destination site promoting its biggest stars, some of with whom it signed distribution deals.

Blip claims 13 million monthly unique viewers across its network of embedded players,and about 70 million “monetizable” views (videos it can sell ads against). Brookstein says the CEO search is going well, and Blip is working on redesigning its dashboard for Web video producers to give them better analytics. But it really all comes down to serving the best Web video producers. “We will work with top producers to build audience and give them additional financial incentives,” he hints, without revealing any more details.

Yahoo has its new CEO, Scott Thompson, and founder Jerry Yang stepped down from the company and the board a few weeks ago. But all along, people have been asking when is the rest of the Yahoo board going to resign?

Well, that day is today for four more directors, including chairman Roy Bostock. He was sticking around to try to oversee the disposition of Yahoo’s Asian assets. It doesn’t look like that is going so well. Today, in his letter to shareholders, Bostock disclosed that he would not be standing for re-election to the board, and neither would 3 other directors. Meanwhile, Yahoo elected two new board members: Maynard Webb and Alfred Amoroso. Webb was the chairman and CEO of LiveOps, and before that a well-regarded eBAy executive.

From the letter:

Finally, the board has concluded that in order to accelerate the Company’s transformation, the combination of a new Chief Executive Officer with an enhanced team of independent directors would provide Yahoo! with the expertise and perspectives necessary to drive innovation and growth going forward. Therefore, Mr. Joshi, Mr. Kern, Mr. Wilson and I have volunteered not to stand for re-election at the next shareholders’ meeting.

Furthermore, the board today elected two highly qualified independent directors, Alfred Amoroso and Maynard Webb, Jr. Mr. Amoroso served as President and CEO of Rovi Corporation until December 2011 and, among other positions, had previously served as the President, CEO and Vice Chairman of META Group, Inc., the President and CEO of CrossWorlds Software, Inc. and as a member of the world-wide management committee of IBM Corporation. Mr. Webb, the Chairman of LiveOps, Inc., served as that company’s CEO until July 2011. Prior to that, Mr. Webb was Chief Operating Officer of eBay and Senior Vice President and Chief Information Officer for Gateway, Inc., in addition to management, leadership and board positions at several other companies spanning his 30-year career

That needed to happen. Now Yahoo can get a fresh start.

Brands love marketing across social media, but it is a little like TV advertising in that it is hard to measure how effective it is. Sure, you can count retweets, likes, and Klout scores, but how does that translate into real engagement with a brand or actual spending? SocialFlow is trying to answer these questions, and in the process is growing like crazy.

“I don’t know who put the call out to put money into social media, but it is out there,” says CEO Frank Speiser. A year ago, Socialflow had two employees. Today, it has 34. “We have 5,500 leads active and qualified,” says Speiser. “I just need people to work the phones.”

SocialFlow already supports 2,000 paying accounts, everything from brands to media sites to ecommerce. They use SocialFlow as a dashboard to manage what messages they Tweet or put on their Facebook page and when those messages go out. The betaworks company raised $7 million last summer.

SocialFlow’s algorithms try to figure out when a company’s social audience will be most receptive to a particular message based on the content of that message, and then it automatically Tweets it out or creates a status update on the company’s Facebook page. SocialFlow then ties these messages back into business goals by measuring the conversion rate of each message, such as clicks to a website as measured by Google Analytics.

“We think it is the first product that optimizes for conversion through the funnel,” says Speiser. “It completes the loop. The reason you want a million followers is because you want 10,000 people to do something for you.”

After about a year adding accounts through a limited beta, SocialFlow is launching today to anyone who wants to try it out on a self-serve basis with pricing at $99/month for each account. It supports Twitter, Facebook, Google Analytics, and Omniture. One new feature is an Attention Score between 0 and 100 which attempts to measure how receptive your audience is at any given time to a particular message. The opportunity to engage audiences through social media can be fleeting. SocialFlow helps brands optimize their messages in realtime.

All the major map apps like Google Maps, Bing Maps, and Mapquest have walking directions as a standard feature, but the folks at Lumatic don’t think they are good enough. It is creating mobile maps designed for pedestrians, cyclists, and people who use public transit. Originally a TechStars company called Omniar, serial entrepreneur Scott Rafer (MyBlogLog, Lookery, Mashery) joined as CEO a year ago.

He recently raised a seed round of $800,000 from Joi Ito’s Neoteny Labs, 500 Startups, Chamath Palihapitiya, Allen Morgan, Ted Rheingold, and other angels.

Lumatic has an Android app which works right now only in San Francisco. When it gives you directions, it chooses routes which are optimal for walking, cycling or public transport. As you walk through the streets, the app displays a street-view with photos and arrows pointing in the right direction.

The app is built on top of Open Street Map , but the user experience is centered heavily on using photography, landmarks, and visual cues to help people navigate cities. Fighting Google Maps in this category is going to be a tough slog, but if the app can gain a following there plenty of money in local commerce and advertising to make it a worthwhile pursuit.

Now that Facebook is preparing the biggest tech IPO in history, it is possible to compare its financials and potential market value to Google’s when it went public. At first glance, all of Facebook’s numbers look bigger. Its pre-IPO revenues of $3.7 billion in 2011 are more than two and a half times larger than Google’s 2003 revenues of $1.5 billion (Google’s IPO was in 2004). Facebook’s $1 billion in profits is ten times larger than Google’s pre-IPO profits of $106 million. And its expected market cap of between $85 billion and $100 billion will dwarf Google’s IPO market cap of $23 billion.

Facebook, no doubt, will be emphasizing these differences. But in many ways it is a false comparison. Facebook is going public after 8 years as a private company. Google went public much earlier in its development, after 5 full years. So, yes, Facebook at Year 8 is much bigger than Google was at Year 5 of its trajectory. A better way to see how the two companies stack up is to compare their revenues and profits at the same points in their histories. In 2008, Facebook’s fifth year of existence, its revenues were only $272 million, and it lost $56 million.

If you chart Facebook’s revenues for the past five years and compare them to Google’s for the five-year period preceding its IPO (see below), a truer picture emerges of each company’s size at similar points in time. You need to compare Facebook as a 5-year-old to Google as a 5-year-old.

Matching both companies year-for-year, its is clear that Google grew faster and was always substantially bigger no matter what year you look at. Year 8 for Google was 2006, when its revenues were $10.6 billion and its profits were $3.5 billion. As an 8-year-old, Google’s profits were almost as large as Facebook’s revenues as an 8-year-old. (Google was incorporated in September, 1998, so I am using 1999 as Year 1 for the purposes of this analysis. Facebook started in January, 2004, which I am counting as it’s first full year).

But which company grew faster? It turns out that the 5-year compound annual growth rate for each one’s revenues during these comparable periods (2002-2006 for Google, and 2007-2011 for Facebook) was almost exactly the same: 89 percent a year (Facebook grew a smidgen faster at 89.22 percent a year versus 88.96 percent for Google, but Google started with almost twice the revenue and thus ended up much larger five years later).

Facebook’s growth is astounding, but it is important to keep it in perspective. In many ways, it is still trying to catch up to Google’s past.

Following in the tradition of “Shit Silicon Valley Says” and other Shit ______ Says memes, August Capital’s David Hornick has made “Shit VCs Say.”

There are some gems in here, including:

“Is an 11 good on Klout?”

“What if we put that in the cloud?”

“Have you ever tried Kiteboarding?”

“That is literally the worst Four Seasons in the world.”

Add your own below, maybe we can get David to make another video.

Yammer grew like crazy last year. How crazy? Product VP Jim Patterson just tweeted out the Yammer 2011 Year in Review infographic below with the comment: “Pretty much everything tripled.”

Paid seats went from 300,000 to 800,000, total users went from 1.6 million to 4 million (2.5X growth), and employees went from 80 to 250. Also, all told, 200,000 companies are using Yammer, including 85 percent of the Fortune 500 (and TechCrunch). We just can’t quit you (although we’ve tried).

Some of these stats CEO David Sacks already shared with us earlier, and he also told us that sales tripled. But the 800,000 paid seats number is new.Yammer is in the process of raising a large $40 million round.

We learned a lot of things about Facebook today from its IPO filing. But there is one detail that sticks out for its improbable exactness: The $1.000 billion in profits Facebook reported for 2011.

The number wasn’t $998 million. It wasn’t $1.003 billion. It was $1.000 billion right on the dot.

Is this just a happy coincidence, or did Zuckerberg “manage” earnings to make a statement? Companies have many different accounting levers they can pull to slightly adjust their reported earnings.

With that very precise number Zuckerberg is telling Wall Street that number is completely under his control. Investors like companies with that kind of leeway because it signals predictability. It is also nearly ten times Google’s profits of $106 million the year before its IPO.

I am not sure where it ranks in terms of profits for an IPO, but I would not be surprised if it the highest of any tech company ever.

And, of course, it’s a lesson in what’s really cool. It’s the ultimate comeback to Hollywood’s caricature of Facebook.

Facebook just filed its IPO registration (SEC doc here) and its financials are off the charts. Facebook’s IPO document provides the first peek at its financials.

The company did $3.7 billion in revenues in 2011, and $1 billion in profits. That’s right. Net income was $1 billion. In fact, it was exactly, $1.000 billion (I don’t think that was a coincidence). Profits grew 65 percent last year from $606 million in 2010. And revenues grew 88 percent. Revenues come primarily from advertising (85%), as well as payments for virtual goods (15%) and platform development fees (negligible). Payments alone was a $557 million business last year, a number which our own Eric Eldon nailed in December.

The company has an extremely healthy 27 percent net profit margin (its operating profit margin is 47 percent). That is right in line with Google’s net profit margins of 26 percent. Software margins are a beautiful thing.

Facebook’s business throws off a ton of cash. Net operating cash in 2011 was $1.5 billion, up 122 percent from 2010. Free cash flow (a related measure) was $470 million in 2011. The company ended the year with $3.9 billion in cash.

Here is some of our additional coverage on the filing:

• Facebook’s S-1 Letter From Zuckerberg Urges Understanding Before Investment
• Facebook’s S-1 Reveals: 845 Million Users Every Month, More Than Half Daily, Half Mobile
• Facebook’s S-1 And The Largest Shareholders: Who Owns What?

Click the charts below to enlarge:

Nothing is made in this country anymore. In terms of actual manufacturing, America is increasingly at a disadvantage. The logic of the global economy moves jobs overseas. Get used to it, we are told. Well, Bayard Winthrop thinks the conventional wisdom is wrong. He wants to bring manufacturing back to America, in the apparel industry, no less! His clothing startup, American Giant (gotta love the name), launches today.

American Giant is starting small, with a line of basic sweatshirts made in Brisbane, CA. American Giant doesn’t have any stores. It sells its sweatshirts only on the web, and soon will expand to other men’s basics such as T-shirts, polos, and button-downs. While the cost of materials and labor would be cheaper in Asia, a much bigger portion of the cost of a shirt is distribution.

By eliminating stores and going direct to consumer, American Giant can cut out a lot of the costs in the apparel industry and pass the savings onto consumers while still making better quality clothing. By controlling manufacturing, Winthrop also expects to be able to reduce his production cycles to 3 months or less instead of the 18 to 24-month cycles typical in the industry. By reducing cycle times, American Giant will be able to experiment more with styles and products and then increase production for the products which generate the most demand.

American Giant is a startup with 10 people and less than $5 million in funding, but the little giant is going after the Gap, J.Crew, and Old Navy. There is “no brand affinity” to those stores among men, argues Winthrop. “They don’t have a reason to live.”

How does he hope to compete? Simple: with better quality. “I feel like in the apparel sector the whole idea of quality has gone way,” says Winthrop, who has spent the past two decades in the apparel industry, most recently as CEO of Chrome, a chain of urban men’s clothing stores.

Winthrop wanted to make an “old-school navy sweatshirt” like the one his father used to wear that lasted 40 years, not the kind you buy at Old Navy. His first line of sweatshirts will be priced at a reasonable $59, but they are made with heavyweight cotton, double- and triple-needle stitching, thick ribbing at the waist, additional panels along the side for a better fit, and other construction details such as metal snaps designed in-house.

But can a Web-only clothing brand work? “Consumers are moving more online and spending more money online,” notes Winthrop. “Consumers’ expectations of value and quality are changing. The days of us walking into Macy’s and paying full retail for a shirt are basically going away.”

Watch the video above, in which Winthrop shows off his new sweatshirts and talks about his approach to American manufacturing.

Andreessen Horowitz is definitely killing it these days. The unconventional VC firm founded by Marc Andreessen and Ben Horowitz is less than three years old, but just raised its third fund. The amount raised: $1.5 billion. That puts Andreessen Horowitz in the rarified realm of only a handful of VC firms with funds of that size.

And how long did it take to raise all that money? “It took about 3 weeks of actual fundraisng activity,” Horowitz tells me. It took longer to do the actual paperwork—another 6 weeks.

Almost overnight, Andreessen Horowitz has become one of the premier VC firms in Silicon Valley. It’s already exited from its big bet in Skype, and has backed every hot startup from Airbnb, Groupon, Zynga to Foursquare, Pinterest, and Fab.

Part of Andreessen Horowitz’s success comes from making smart bets, but part of it is the way they approach venture capital, which Horowitz addresses in a blog post this morning. It is almost run as an operating company in that he it helps portfolio companies with recruiting, deals, PR, and other functions.

“If there is one thing that is different,” says Horowitz, “the way we operate the firm in some cases does give us superior knowledge. We do get a lot of knowledge from those functions. We know where the best engineers want to go in ways other firms don’t—where executives want to go, what big companie want to buy—because we are in those meetings.”

It also doesn’t hurt that Andreessen sits on the boards of Facebook and Hewlett-Packard, which gives him a unique perch from which to view the goings-on in Silicon Valley.

Last year, Hulu brought in $420 million in revenues, with was 60 percent above the year before. The news, however, was seen as a miss because Hulu earlier in the year suggested that it would make $500 million.

Today at the D: Dive Into Media conference, CEO Jason Kilar defended his record, revealing that “our board plan was $408 million.” So Hulu came in above the internal goal it had set for its board.

So why the discrepancy? “Earlier in the year we were pacing higher than that,” says Kilar. Then in the third quarter the ad market softened and the “pacing changed.” But he insists that there was a rebound in the fourth quarter and so far in 2012.

Nevertheless, Hulu’s subscription business, Hulu Plus, “is our fastest growing business,” says Kilar. He ended last year with 1.5 million subscribers and expects subscription revenue to become the majority of revenues this year. Those subscription dollars “allows us to pay the content business more than anyone else,” he says.

He plans on spending $500 million this year on licensing more content and creating original shows. He thinks it will be important to have a mix of exclusive shows on Hulu and a broad library in order to create some differentiation from other online video services such as Netflix, Amazon, and Apple.

Asked specifically about the auction last year for Hulu and why they didn’t sell, Kilar quipped: “Things changed.” In retrospect, he now says, “The strategic value of something like Hulu you can see dwarfing some very considerable economic considerations.”

That sounds like a post-facto justification for why Hulu didn’t attract higher bids, but Kilar is philosophical about what he is doing with Hulu and the dance he must do with the traditional media companies, some of whom are his biggest investors.

“In the late 1940s,” he notes, “everyone in California thought the television was the devil incarnate. It had to be destroyed. Walt Disney was one of the first to go to New York to find out what was this devil incarnate.” As everybody knows, TV “was one of the best things to happen to the content industry.”

Online video, he argues, will have a similar effect. “It is not different than the introduction of television when there were movie houses everywhere and people used to go to them three times a week. That is how they used to get premium content.” Now with online video, you are going from video in one room of the house to “getting premium content 24/7 wherever you may be.”

Photo via AllThingsD

We measure every last click when it comes to the Web, but there remains a gulf between online and the real world. Yet the online world increasingly drives behavior offline, especially when it comes to purchasing habits. How many times have you researched something online or on your mobile phone before buying it? Yet when you go to a store to buy it, everything you did online might as well disappear as far as the merchant is concerned.

It doesn’t have to be that way. The last mile in local commerce is really only the last few inches between the credit card in your outstretched hand and the card swipe at the register. That terminal is the gateway to the payment network, which today isn’t really connected to the Internet for most practical purposes. The payment networks is archaic and operates based on its own closed standards. But what if it was as easy to connect to the payment network as it is to develop an application on the Web?

That is the question a group of former Netscape engineers and executives are trying to answer with a new startup called CardSpring launching in private beta today. Cardspring is creating an application platform that will allow Web and mobile developers to write applications for credit cards and other types of payments. Cardspring attaches itself to the payment network in a secure fashion on one side, and on the other it presents itself as a platform for developers to create payment apps via Web-standard APIs. It is a bridge between the two networks.

These applications could include things like electronic coupons, loyalty cards, virtual currencies, or yet-to-be-imagined commerce apps. For example, you could get a $10 off coupon online, enter your credit card number, and then when you go to a store and pay with that card, the payment network would recognize the card and give you the $10 credit. Or you could swipe your card and it could email you the receipt. Or it could check in for you. Swiping the card would trigger an application. What you see is a piece of plastic. What the network sees is an application.

If this sounds a little bit like what Groupon, LivingSocial, Foursquare, Square or Google are trying to do, it is because they’ve all been trying to crack this nut in different ways. They all want to close the redemption loop between digital offers and in-store payments. “Groupon threaded the needle with coupons,” says CEO Eckart Walther, but in his eyes daily deals are no more than a “wonderful one-off solution—We are literally inside the payment network.”

Walther once ran Netscape’s platform group. He later went to TellMe Networks, Yahoo search, LiveOps, and ended up as an EIR at Accel. The company’s CTO is Jeff Winner, who was the head crypto guy at Netscape. He is helped come up with SSL (the standard security layer in the browser), among other things. Cardspring already raised $10 million from Accel and Greylock in a Series A (Andrew Braccia from Accel and James Slavet from Greylock are the partners on the deal). Other investors include SV Angel (which is a big believer in the Online2Offline trend), Morado Ventures, Felicis Ventures, and Maynard Webb’s investment vehicle, WIN.

Groupon isn’t the only attempt at a one-off solution. Foursquare links its merchant specials to American Express card purchases, but not every card. Google Wallet is trying to put payment apps into your phone.  It’s too fragmented. “Every day, a mini-platform is trying to launch.” he says. Instead, CardSpring is attacking the problem just like you’d expect a bunch of Netscape engineers would: at the network level. “What if we could bring the browser platform to the payment network?’ asks Walther.

Try to wrap your brain around that for a second. Your plastic credit card can trigger different applications—coupons, loyalty rewards, reminders, check-ins, you name it. All of it is secure and based on permissions you allowed each application to have (in return for some benefit). “One of the Internet’s fundamental challenges is its inability to effectively capture the economic value it creates for business in the physical world,” notes Braccia. “CardSpring’s platform enables offline stores to easily measure the impact of the web on their business.”

There is a huge need for this type of payments platform. Groupon could use it to finally track redemptions of its coupons without having to ship iPads with special software to bars and restaurants. Foursquare could tie it into its specials and actually capture the purchase data and then show that to merchants in their dashboards. So could LivingSocial.

And that’s just for starters. Imagine cost-per-action ads where the action is an in-store purchase. The possibilities are endless. Not only that, but any website or mobile app that takes credit card information will now have the opportunity to append data to those purchases, and to read and write data to the payment network. It is not just about moving money, but moving payment-related data. In the end, the data may turn out to be more valuable.

The difficult part will be to convince consumers to hand over their credit card numbers in order for these applications to work. To the extent that the initial websites and apps already hold consumers’ credit card information, like Groupon or LivingSocial do, that shouldn’t be an issue. But when unknown sites or businesses start asking for that information, it might not be as forthcoming.

Still, there is a lot of low-hanging fruit here and Cardspring brings a clever approach to a difficult problem. It is not asking much of consumers or merchants. They do not need any new technology or fancy NFC-powered phones or terminals. All they need is their credit card. The network will do the rest.

The series C round brings TrialPay’s total funding to $56 million.

Visa’s involvement in the round is significant in that it’s other major venture investment is in Square. As alternative forms of payment appear and gain traction, Visa wants to keep tabs on them.

TrialPay’s offers reach 70 million active users a month around the world, and the amount of transactions flowing through its platform increased sevenfold last year (although the company does not say from what base). It is one of the partners that powers offers for Facebook Credits.

Does Twitter need Google or does Google need Twitter? It’s a question complicated by recent events, such as the two companies not coming to an agreement to extend their previous partnership through which Google showed Tweets in search results. That deal wasn’t renewed,and then Google decided to promote its own Google+ results in search, which didn’t go over well with Twitter at all.

Asked about this at by Peter Kafka at the D: Dive Into Media conference this evening, Twitter CEO Dick Costolo responded: “All of us look to Google as the shining light on the hill, a mission-driven company. We think when people are searching for things like a hashtag on a billboard, people will go to Google to look for them and we think Google should return the results they are looking for.”

Costolo was visibly fuming. (Or maybe that was just his regular intense demeanor). But then asked whether Twitter can be successful without Google and all that lost search traffic, Costolo insisted: “We’re growing faster than we have ever grown before, irrespective of whatever Google or Facebook is doing. All of these services can co-exist.”

Later on during the conversation, Costolo reported that Twitter’s advertising business is growing and engagement rates on promoted Tweets, trends, and profiles is high. “We’ve figured out the business,” he says. “The advertising model is working, we just have to scale it.”

Costolo wouldn’t discuss whether or not the company could turn a profit this year or other financials. He did mention a few stats, however. The company now has “about 900 people,” some advertisers such as Volkswagen and Barclays are seeing better than 50 percent engagement rates on Twitter ads, and “40% of our active users don’t tweet” (meaning that they just consume other people’s tweets and don’t tweet themselves).

In terms of politics, he predicted: “2012 is going to be the Twitter election.” Campaigns will be forced to respond in realtime. “Candidates who don’t participate on Twitter while the debates are going on will be left behind because the next morning is too late to respond.”

Asked to comment about his role in board changes last year in which VCs and board observers lost their seats, he says: “People like to ascribe this palace intrigue to tactical changes in the organization. It is just not that compelling. It just so happens we had new people coming in . . . we were able to create a leaner board with more independent directors. It is nice to say that I did some kind of crazy ninja move. The reality is much more boring than that.”