Innovation & Venture

How US Policy is Forcing 5 million Americans to Reconsider US Citizenship

Jay Bhatti — Tue, 13 Sep 2011 13:08:38 +0000

Imagine if both your parents were born citizens of Canada. Now, imagine that they moved to the USA over 30 years ago (before you were born) and became US citizens themselves. You are born in Texas, you have never been to Canada, and don’t have any plans to visit Canada. You are a red blooded American who can run for President. However, you get a letter from the Canada Revenue Department telling you that you are a tax cheat and owe Canada money. If you don’t pay massive penalties and fines for not “paying” your fair share of Canadian taxes over the past dozen years, they will prosecute you as a criminal. Even worse, they will get access to you bank accounts and financial data in the USA. If that happened to you, it would make you hate Canada, would it not? Well guess what. That is really happening. Except, the country doing it is not Canada, it’s the USA!

In the past 6 months, I have seen a high level of fear, apprehension, and outright anger with regards to this US policy amongst not only US citizens living abroad, but also people looking to become US citizens someday. Given really short sighted and poorly thought through decisions by congress and a overzealous IRS, I fear that some of the smartest people living in foreign countries who might have become US citizens will not opt to stay in their home country. Worse yet, many Americans living in foreign countries and in the USA might outright renounce their US citizenship thanks to current policies that are both confusing and fear inspiring.

A little background. The USA is the only country on the planet that taxes your entire worldwide income, regardless of where you live. If you’re a US citizen who has lived in Australia for 20 years, you will still have to file taxes and probably pay taxes to the good old USA every year. Japan used to have this policy as well. But they got rid of it several years ago due to the burden it caused its citizens. Given this US law and a recent crackdown by the IRS called the Offshore Voluntary Disclosure Initiative, many US citizens are going to be unfairly punished over the next several years. The Offshore Voluntary Disclosure Initiative allows “tax cheats” to come clean to the IRS by September 9^th 2011 or face criminal prosecution. The original intent of this program was to get rich people with Swiss bank accounts to come clean and save the IRS the headache of catching them.

However, since the scope now includes everyone and anyone with any foreign ties, this is quickly going to become one big mess. Especially since many of these people and their CPAs probably thought they were doing everything according to law. Many of the laws that the US is using to enforce this policy have been recently created and in most cases, they were old laws that were never enforced and being interpreted by the IRS to their favor. Like the one where anyone born with US citizen parents is a citizen and has to pay taxes, regardless of the fact that they never lived in the USA.

Let’s take a look at how the upcoming September 9^th deadline will affect US citizens.

USA Citizens Living Abroad: 4 to 5 million

Any US citizen living abroad, even those who have become citizens of other countries (and technically renouncing their US citizenship) are scrambling to figure out if they are going to be on Interpol’s most wanted list. If you read some articles like this one in the Vancouver Sun and this one in their editorial, you will see that US citizens living in Canada are really worried. When in fact, they never tried to do anything wrong and thought they were filing all the right forms. Even children of US citizens who were born in Canada are considered US citizens by the IRS and subject to these penalties. Does this even make sense to anyone? I’m all for going after real tax cheats with offshore accounts, but this is a scorched earth policy by the USA. They will cause tremendous harm to honest Americans living in foreign countries. I’m sure we will see the most people renouncing their US citizenship in the next few years ever.

USA Green Card Holders and Those Looking to Move to USA

In the past, it was not too difficult for smart well educated people from other counties to come to the USA for college, stay here, and build a better life for themselves and contribute to the country. However now, in additional to poor immigration visa laws, the new tax laws are making people come here for the education, but then take that skillset and go back home.

If I am a foreign born person who moves to the US and becomes a citizen or green card holder, every asset I had in my original country is subject to US taxation. For example, if you were born and lived in the UK for 25 years, but moved to the USA 10 years ago, you might still have some property in the UK, maybe even a bank account or two. Now, having lived in USA for 10 years and thinking you filed all the correct tax forms, the USA tells you that you evaded taxes by not properly declaring your UK assets and that they will prosecute you as a criminal. That is exactly what is happening to thousands of foreign born US citizens. Take a look at articles like this one by Time of India and you’ll see the gravity of the situation.

I have spoken with many people who have moved back to China, India, Europe, and even South America. They all had a few common themes about their reason to leave the USA. The top three reasons were bad economy, immigration laws, and poor tax policy with regards to people like them who might live between the US and their home country. In several talks, people said that even with an expired Green card, the IRS could come after them. In fact, several people I interviewed said they decided to NOT get US citizenship even though they got notices from the INS that they were eligible for it and to come and take the Naturalization Exam. They preferred to stay on a worker visa so that they would not be forced to comply with US policy for the rest of their life they decided to live someplace else later in life.

I’m all for the IRS going after people who hide hundreds of millions of dollars in foreign accounts and increase the burden on the rest of us Americans. But in this case, they are throwing out the baby with the bath water. The USA is still the greatest show on earth, but the cost and headache of admission is becoming high enough that many people prefer to stay home. We are going to get more people renouncing their US citizenship and even more people who were thinking about getting citizenship, instead deciding to go elsewhere.

We need our government to promote policies that incentivize smart, motivated, and hungry people to want to come to America, as opposed to giving them reasons to stay at home or leave altogether. By going after this policy with such vigor, the US will probably lose out on even bigger tax revenue that might have been generated by people who stayed US citizens and created companies and jobs.

Jay Bhatti to Councilwoman: Why did you ask Steve Jobs for Free WiFi?

Jay Bhatti — Mon, 13 Jun 2011 02:50:50 +0000

Cupertino Councilwoman: Here’s Why I Asked Steve Jobs For Free Wifi

When Steve Jobs appeared before the city of Cupertino to pitch Apple’s new HQ, one particular exchange with the city council caught our attention.

Councilwoman Kris Wang asked, “Do we get free wifi or something like that?”

The audience laughed at her question, and Jobs responded with, “See, I’m a simpleton, and I’ve always had this view that we pay taxes and the city should do those things. That’s why we pay taxes. Now, if we can get out of paying taxes, I’ll be glad to put up wifi.”

She then joked that maybe the city could use its tax revenue to buy everyone an iPad, and then Apple would give them free wifi.

Jobs then hinted that maybe he should just take Apple to Mountain View if she was unhappy. He added, “I think we bring a lot more than free wifi.”

It was a humorous, but awkward exchange, and Jay Bhatti, one of our regular contributors, decided to email the councilwoman. Some people on Twitter were mocking her, and saying her request was silly and representative of the problem with local government. He wanted to know why she did it.

Wang wrote back with a nice note explaining that she and Jobs have joked about wifi in the past privately. She was mostly just tossing softballs at Jobs hoping he’d say nice things about Cupertino.

Here’s her response in full:

Thanks for your email and taking the time to ask me about my question to Steve Jobs when he presented at the Cupertino City Council meeting the other night. I’ve had a chance to read through some of the public’s comments, and I think if I provided some context to the situation and explain what I actually intended to ask, it might help clear up some of the confusion. As I’m sure you know, Apple and the City of Cupertino have enjoyed a fruitful, long-term relationship for quite awhile, and I’ve been lucky to have met Steve a number of times through his interactions with the city during my last 7 1/2 years of service on the council. It was just about 5 years ago when he first told us about Apple’s intentions to build a new campus in Cupertino (http://goo.gl/4O0Kc), and only a couple months ago that Mayor Gilbert Wong and I spent time with him privately discussing the company’s plans in further detail.

So, to be clear, I am certainly well aware of the tremendous benefits that Apple provides to our city as the largest tax payer, and I have always expressed my enthusiasm for Apple to choose to remain in Cupertino (http://goo.gl/0alV1, http://goo.gl/hD4e3).

My question about how residents can benefit from the new campus was primarily meant to be a softball question for Steve to talk more about Apple’s long-term relationship with Cupertino and its residents. I was hoping he would talk not only about the fact that they are the city’s largest tax payer, but also that Apple reciprocally enjoys calling Cupertino its home, as our city attracts phenomenally talented individuals and families with our vibrant and diverse community, safe neighborhoods, top-notch education districts, and extremely supportive business environment (as evidenced by numerous other tech companies that call Cupertino their home). Believe me, I know how much our residents benefit from having a $300B company in their backyard, but I was hoping to draw out more dialogue on Cupertino and Apple’s mutually beneficial relationship.

Steve, in his answer, joked about moving up to Mountain View – Google’s hometown where they provide the residents there with free wifi. For some background context, I’ve joked with Steve in previous conversations (unrelated to Apple’s new campus) about Apple doing the same for Cupertino. So, my follow-up was admittedly a flat attempt at going along with the same joke, and Steve replied the same way he did previously to me, which was he believes the city should provide those services. It was intended to be a joke and nothing more.

Regarding the iPads – again, another flat follow-up joke that if Apple pays its taxes, Cupertino can use those taxes to buy people free iPads, but they would then need free wifi from Apple to use them, so a win-win for all. Again, it was a joke, and I obviously wasn’t trying to ask Steve for free iPads for residents.

A long-winded response, but hopefully it clears up some of the situation. English is my third language, so I can tell from watching the clip again how viewers might have misunderstood what I said.

Thanks for taking the time to ask me about it.

How Startups Should Deal With Cliff Vesting For Employees

Jay Bhatti — Sat, 07 May 2011 18:00:00 +0000

This article was published on Business Insider, click here to see original post.

One of the most exciting aspects of joining a startup is getting stock options. It gives you ownership in the company and aligns incentives between management and employees. However, one part of the standard options package causes a lot of debate amongst employees and management. It’s the Cliff.

A typical options vesting package spans four years with a one year cliff. A one year cliff means that you will not get any shares vested until the first anniversary of your start date. At the one year anniversary, you will have 25% of your shares vested. After that, vesting occurs monthly. So, if I’m a startup engineer granted 4,800 shares in my options package, at the one year mark, I get 1,200 shares vested (if I quit or am fired before that date, I get zero). After the one year mark, each month I stay with the company, I get another 100 shares vested (1/48th of the options package).

Many startup employees hate the one year cliff. Managers and VCs like it since they think employees will work really hard to make sure that they reach the cliff date. Employees, on the other hand worry that management will let them go just before they reach the cliff. The sad thing is that I have seen this occur at startups. You have an employee who is decent, but not great. Management keeps him or her for nearly a year, but then let’s them go a month before the cliff.

Many managers see this as a way to make sure stock is only going to employees who are worth it. If you’re the employee in this situation, you’re angry. You took the risk of joining a startup and they let you go just weeks or days before the cliff. In most cases, there is not much you can do. It was written in your employment agreement and you signed it.

On the other end of the curve, I have known people who join startups early, but only stay a little over a year and then go join another startup. They call it hedging their bets.They get 25% of their shares vested in the startups they join and hope that one of the startups they worked at makes its big. One person I know worked at Facebook for only a year in 2005 and then quit soon after his cliff date. While he probably made a lot from the shares that had vested, he probably would have made more had he stayed. But these types think like “Why put all your eggs in one basket, right!” The founders at startups get really worked up when an employee does such a thing. It makes them worry about losing other employees who might now be considering the same.

As you approach the cliff date, you notice a lot of interesting things happen. In some cases, before the cliff date, an employee will go out of their way to work harder to show their value, or stay out of sight and not cause attention to themselves. After the cliff date, management is usually looking at their employee and hoping that they are happy and not considering jumping ship. The time right before and after the cliff is interesting to say the least for a lot of startups.

At my first startup, if we let someone go due to performance before their cliff date, we gave them shares in the company equal to the months they were with us. Thus, we made it as if there was no cliff date at all. We did this for a few reasons. First, if we let someone go but they tried their best, yet it was just not a good fit, we saw no reason not to make sure they stay aligned with the interests of the company. In fact, some of the people we let go did help us in other ways once they left. I don’t think they would have done this if we did not give them shares. Second, it sends a good message to your current employees that you’re fair in your dealings with the staff. Furthermore, in some cases where you think the employee is not happy at being let go, you can make the shares conditional on them signing a waiver of some sort. Finally, we just thought it was the right thing to do.

One of the other things we did, and I am sure we were rare in this occasion was to give a 6 month cliff to employees who we really liked and wanted to recruit. It made them feel more comfortable joining us, and gave them the sense that we wanted them long-term. It turned out to be a good recruiting tool to ingrain trust.

In addition to employees, if the founders of a startup raise venture capital, they also go under a vesting schedule imposed by the VCs. For example, if you are two person startup, before venture financing, you each own 50% of the company. After financing, let’s say you get $1m on a $4m pre-money valuation – which means that you gave 20% to VCs, and also create an option pool of 20% for new employees; you now only own 30% of the business. However, you have to earn that 30% over 4 years. Most of the time, if the entrepreneur is experienced in negotiating, they can ask for credit on their vesting for the months they were working in the concept prior to financing, and also waive any cliff in their stock. In this example, by just raising $1m, each founder basically went from owning 50% outright, to owning less than 1% outright and having to earn the rest of it back!

I have seen the founder of one very well know startup get kicked out by the VCs with only a year of vesting under his belt. He went from owning 100% of the company when he started to being fired and only owning about 1% after dilution from other rounds of funding and the fact that he did not get through his vesting cycle. As more people look to join startups or do startups, it’s important for both founders and employees to understand the various triggers in their stock options agreement.

One thing I do recommend to founders who do not plan to raise VC capital, is to put yourselves on a self-imposed vesting schedule. How many stories have you heard about one founder leaving early but getting the rewards of the other founders work and effort. Only because they both signed up as equal partners from the beginning. A good recent example is Paul Allen, where in his new book he talks about how Bill Gates tried to take away his stake in the company, since Gates thought Allen was no longer worthy of those shares due to lack of time in the office (a result of illness and other interests). If each founder of a self-funded startup has to earn their equity, it can save a lot of potential issues down the road, and also give each founder the feeling that everyone is motivated to earn their equity. In closing:

To people looking to join a startup – Remember that joining a startup is a lot about trust and relationship. You’ll have to be at the startup for some time in order to get all your shares. It’s important that you join a company that not only has great potential as a business, but one that also has a management team you can trust and get along with for the long haul.

To founders taking venture capital – Almost all VCs will ask you to go on a vesting schedule. Their biggest fear is writing you a big check and then one of the founders jumping ship early with a lot of equity. Make sure that the VCs vision of your company is aligned with your vision. If you have doubts about your VC at the honeymoon phase (when they give you capital), imagine what might occur when things are not going so well! If you have been working on your start-up for some time before raising a round of capital, then make sure to ask for credit on the months you have already put into the business.

To Founders NOT raising venture capital – If two people are coming together to form a company and they are lucky enough to not need outside financing, it’s still important to make sure all the founders feel that everyone earned their fair share. Put yourselves on a vesting schedule. For example, each founder would earn 1/48th of their equity in the company over a 4 year period. This makes sense to a lot of founder and helps align long-term interests.

THE FUTURE OF BING: Microsoft’s Next Big Partnerships

Jay Bhatti — Thu, 10 Mar 2011 01:13:59 +0000

This article was written by Jay Bhatti and published on Business Insider – Click here to view.

My last article regarding Bing’s partnership with Kayak resulted in several emails asking who Bing might partner with next. It’s an interesting question and one that merits thoughtful consideration.

Let’s go back a few years, when Bing was officially launched. On May 28, 2009, Microsoft launched Bing and Steve Ballmer declared it the decision engine. In the press release, Microsoft specifically called out Travel, Shopping, Local and Health as verticals where they wanted to simplify the task for consumers.

When placed in this context, Bing wants to help you make a decision (a purchase decision), and not just browse through multiple links like Google. Given Bing’s recent deal with Kayak, it looks like Bing’s new strategy may be to partner with best of breed third party vertical search engines that give consumers more choices, better curtailed results, and revenue for Microsoft.

In this context, the Kayak deal makes sense. Microsoft focuses on price predictor, while giving consumers a greater diversity of travel options via Kayak. One of the key reasons Microsoft quoted working with Kayak is the ability for Kayak to search more places than available on Bing, hence providing more answers to Bing users.

Microsoft seems to have realized that its internal efforts are best focused on core search improvements, improving user experience, and monetization. It has therefore chosen to stop or at least defer work in vertical search experiences and instead establish business and technical integrations with leading edge companies in these verticals.

Given Google’s ITA acquisition, Bing probably had to do a deal in the travel vertical soon. So, the travel vertical is covered for Bing via the Kayak partnership. What about shopping, local, and health?

Shopping

Shopping is bigger online than travel, and growing faster online, which makes me assume that it’s a key focus for Microsoft now.

In shopping, Bing started off by applying considerable technical and marketing effort behind Microsoft Cashback, including acquiring a startup, JellyFish. However, this effort proved costly and did not drive the user loyalty Microsoft had been hoping for and ultimately it was shut down during the summer of 2010.

At the same time, all through 2009 and 2010, Google has been relentlessly pulling ahead in the shopping vertical. Google’s efforts now include a very comprehensive product index of several hundred million product offers though an expanded merchant center receiving data feeds from hundreds of thousands of retailers. In contrast Bing shopping has just a few thousand retailers (100 times less) submitting data feeds and only tens of millions (10 to 20 times less) of product offers.

To see how serious Google is about the shopping vertical. Take a look at their recent activity.

1 – They buy like.com for visual search
2 – Google Shopper App rolled out on the iPhone and Android
3 – Integration deals with PowerReviews and BazaarVoice to get data feeds for aggregating product reviews from merchant web sites
4 – Organic web search results now show product images and prices through product feeds submitted to Google Product Search merchant center.
5 – Google launches Boutiques.com. Focused on apparel/fashion market with visual search and soft goods shopping search technology acquired from Like.com and run by team from Like.com

To say that Google is serious about shopping is an understatement!

To top it off, they just recently bought UK startup BeatThatQuote (a price comparison site), to increase their international shopping footprint.

It’s fair to assume that Bing will have to do something in shopping soon. But what?

To keep from falling out of the race entirely, Microsoft should quickly extend its vertical business relationships to include shopping to keep up or even pull ahead of Google…
With Microsoft’s equity/search relationship with Facebook and integration of Facebook social graph in Bing’s search results, finding a shopping search partner that can leverage this would be significant differentiation vs. Google.

A company called TheFind.com offers the most comprehensive shopping index rivaling and maybe even exceeding Google Product Search, with over 450 million product offers from over 500,000 stores.
In addition, TheFind has developed a sophisticated integration with Facebook using Facebook Connect and the open graph. TheFind includes local shopping capability that is really useful on the Web and even more useful for fast growing smart phone using offline shoppers. TheFind also shows matching coupons, and free shipping offers by pulling in data from all of the leading coupon sites over the Web like Retail Me Not, Savings.com and others.

Similar to how Bing wants to use Kayak in order to show more options to users, thefind.com can do the same for Bing on the shopping side – finding every product Bing shoppers may be looking for and from all of the stores that sell them, along with deals and coupons, and showing you the local places to buy them.

Besides thefind.com, I always like milo.com. However, eBay recently bought the company and I wish Microsoft would have gotten into that deal. Their product is compelling and unique and would have been a nice addition to Bing. However, there are other shopping companies that Microsoft can still look at for a deal. For example:

PowerReviews – provides consumer reviews (Google has already done a deal with them)
Polyvore – helps pull together user content around fashion (great way to deal with BOUTIQUES from Google)
Twenga – International, especially for fast growing economies like Brazil and Eastern Europe. This could offset Google’s international shopping ambitions.

What about Local?

Again, Google has been doing a lot of work in Local. From trying to buy Yelp, Groupon, and then deciding to launch their own version of Groupon, and doing more work on aggregating reviews from Yelp and other review sites.

The obvious company that comes to mind here is a Yelp. However, I don’t see that much value for Microsoft doing a deal with Yelp. Will it really help consumers make the right decision? If Yelp was exclusive on Bing, I would prefer Google for local since I know they have combined reviews from multiple review sites. Furthermore, Yelp is not a cash cow like Groupon. There is not much in terms of financial gain for Microsoft in this play. From the Kayak deal, Microsoft not only wants a better experience for consumers, but also a partner that can bring significant revenue for Microsoft.

At the same time. I would not do a deal with Groupon or any other deal site – that’s not search. Instead, I think a partnership with a company like Yipit or another deal aggregator makes more sense.

What would be better than being able to go to Bing to final all the local deals in your area from dozens of deal sites and deciding which one you want. Now, that’s a decision engine.

Yipit is the clear leader in this space today. They have a broad reach of partnerships with deal sites, and have done the best job of creating a slick UI. Yipit is still young, so I would not be surprised if Microsoft decided to buy Yipit and quickly integrate it into their local search product. It’s a smart acquisition that could give Bing a nice shot in the arm. Not only would it create a valuable user experience for Bing users, but the economics of Yipit (they get paid every time a sale is made on the deal site) make it possible for Microsoft to have revenue coming in day one from such a deal.

Health

Health is a tough one to say the least. It feels like people have been trying one thing or another on the web in health since 1996, and with no serious traction.

However, I recently came across a vertical search in health that actually made sense! Take a look at www.zocdoc.com when you get a chance. If you’re ever in a position to have to find a new doctor, dentist or other medical provider, you know how stressful the process can be. First you have to know if they are covered by your plan. Then, how do you know if they are any good? ZocDoc covers both of these pain points. I went to it last night, found a dentist that was in my network who had the best community reviews on ZocDoc. I made an appointment right on the site and today I went in for a cleaning! How easy is that! And the dentist was as good as billed on the site. To me, this is a great example of a vertical search engine that solves a problem that lots of consumers have. ZocDoc gets a referral fee / subscription from every doctor they are able to successfully book an appointment for. I can see this being a great tool within Bing.

Image: Associated Press

In conclusion

Microsoft’s deal with Kayak shows three things.

1 – Bing wants to partner with best of breed vertical search engines
2 – Bing wants partners who can increase choice and user experience for consumers
3 – Bing wants partners who can bring revenue to the table (Kayak will probably pay Microsoft a decent penny for every conversion that happens via Bing Travel)

If that is the criteria, I think TheFind, Yipit, and ZocDoc make a lot of sense for Bing to go after next.

5 Things The Kayak Deal Tells Us About Bing

Jay Bhatti — Tue, 08 Mar 2011 03:53:11 +0000

This article was written by Jay Bhatti and appeared on businessinsider.com – click here to see full version.

On Friday, Microsoft announced apartnership with Kayak to provide travel results. Jay Bhatti is a former Microsoft employee who founded the people-search engine Spock. Here’s what he sees in the deal:

1. Microsoft purchased Farecast a few years ago for more than $100 million. It’s safe to assume that it was another waste of money for Microsoft. The Farecast team combined with Microsoft’s resources could not build a compelling enough product to compete with Kayak. Heck, two years ago, Kayak complained to Microsoft that Bing’s travel product looked identical to Kayak. Looks like $100 million gets you a team that at least knows how to copy and paste.

2. Microsoft is again switching strategies. Less than 2 years ago, Bing was all about internal innovation and buying companies (Farecast, Powerset, etc) that would help it accelerate product development. Now, with this deal, Microsoft is admitting that it’s better for them to outsource innovation to vertical search engines like Kayak, as opposed to trying to build them internally. Not surprising about this change in direction since Satya Nadella has now been promoted at Microsoft to run the Server and Tools Division. In my opinion, it’s a great win for the server division and a huge loss for the Bing group. Satya is one of those executives at Microsoft who “gets it.” He did a good job of trying to unify the search efforts of Microsoft around Bing and then trying to create compelling experiences around Bing. The unfortunate thing is that the culture of Microsoft is all about doing good in your current role so that you can move onto greener pastures in another group within the company. Satya did a good job at the technical side of Bing and was rewarded with the Server and Tools group. If I were Steve Ballmer, I would have kept Satya in that role for a lot longer.

3. Forget vertical. It’s more fun being horizontal. A few years ago, Microsoft thought that they could compete with Google by chipping away one vertical at a time. For example, they bought Farecast to do travel, they did the awful cash back promotion to chip away on shopping search, and then they made a lot of noise in the marketplace about how their maps and pictures were delivering better results then Google. Now it looks like Microsoft is going to focus again on general search.

4. I use Kayak all the time and respect the product the Kayak team has built. This deal just further demonstrates their product leadership. Kayak will get more revenue, more profit, and more customers via greater distribution through Bing. In the end, this deal will help Kayak make a better showing at their eventual IPO. Given that Microsoft did this deal with Kayak, the new leadership at Bing is probably looking at other vertical search providers to power parts of their search.

5. If I am on the Bing team, this is a demoralizing deal. Management is telling the Bing Travel team that they are not rock stars from Mars, that that they cannot innovate, and that it’s better to use someone else’s technology. The only Bi-Winning happening here is for Kayak and Google. A few friends of mine at Google are quite amused at Microsoft outsourcing this part of their search. Yahoo outsourced search to Bing. Bing then outsources travel search to Kayak. Talk about passing the buck.

Jay Bhatti in Yahoo News

Jay Bhatti — Tue, 09 Nov 2010 15:27:15 +0000

Jay Bhatti was covered in Yahoo News. See here for link to article. PDF of article here.

Why Did Google Breakup With My Website?

Jay Bhatti — Wed, 03 Nov 2010 20:16:00 +0000

When it comes to relationships on the web, there are none as one sided as the one between Google and your website. Google can decide at anytime to rank your site higher, lower, or remove it all together from its entire index.

Google’s rankings have helped some small e-commerce merchants grow to heights they never imagined, and in other cases, it has caused businesses to go bankrupt!

Many website owners understand that Google is always changing their algorithm. Thus, it’s expected to see your website change ranking for certain keywords over time. However, when your site see’s a massive change on its Google ranking, most of the time, it is due to your site violating a certain spam policy.

Google has not overtly or officially announced their penalties besides applying filters to sites that demonstrate certain behaviors. The information below was collected via multiple discussions between webmasters, SEO specialists, and bloggers. Many SEO experts have a scorecard like this they to determine what penalty a website has fallen into.

When it comes to understanding the penalty that Google gives in the charts below, let’s use the -60 Google penalty as an example. The -60 penalty is given to websites that become too aggressive in getting links pointing to their site. The more links (high quality links) you have pointing to your site, the higher you will rank on Google. However, many website owners hire outside firms who promise them 500 new inbound links every month. This sounds great in theory. Except when the firm gets these links from poor quality sites and spam websites. If Google finds that you are aggressively buying links from poor ranking websites to increase your ranking, it might give you a -60 penalty. Which means that your site will drop by 60 places on Google. If your site was on page one, it will now be on page 6! This can spell disaster for e-commerce vendors who rely on Google.

In short, before hiring anyone to help you with SEO, or before doing SEO yourself, make sure you are not doing anything to get Google to break up with you. Use the below as a quiz to give to any SEO expert before hiring them.

New Beginnings

Jay Bhatti — Mon, 01 Nov 2010 22:32:11 +0000

Well, after selling Spock.com and spending a year with the acquiring company, I am now ready to embark on my next venture. I moved to NYC this time. Decided that one startup in the valley was enough. Today, we got office space:)

Lets see what happens this time around.

5 Things Microsoft Should Do To Improve Search

Jay Bhatti — Tue, 15 Jun 2010 15:21:18 +0000

I really want Microsoft to do well in search, because the overall search experience for consumers would be improved if Google had a viable competitor.

(Also, I have friends there, and I want to see them do well.)

Having built Spock.com, a vertical search engine company, and having worked with both Google and Microsoft on various partnerships during that time, I think I can share a few simple things that Microsoft can do to improve search.

None of this is rocket science. It’s computer science. Which is why it’s so surprising to see Bing not pushing harder on these things that would decrease the gap between them and Google.

Improve Bing Crawling for the Long Tail

Image: Wikimedia

Google’s crawlers are impressive to say the least. If you launch a site tomorrow that has over 1,000 pages, within 2 days, Google will discover your site and crawl all those pages. Now, it might not put them in the index if the pages do not meet Google’s quality standards, but at least Google found and crawled your site.

With Bing, I don’t see that same level of execution. Heck, some popular sites that have thousands of pages indexed on Google are not to even be found on Bing (except for the home page). Bing likes to say that they are on par with Google when it comes to search experience. That may be true for the head terms like “credit cards”. But, when you type in long-tail terms like “freehold township credit union” the results from Google and Bing are drastically different. With Google’s being more relevant to the user.

If Microsoft really wants to compete with Google, then it needs to improve long-tail search. The only way to do that is to crawl faster, deeper, and with a lot more scale. Google has over 200,000 servers. I am sure Microsoft can match Google dollar to dollar on spending for servers. But if Steve Ballmer wants to really win, then get the right engineers in the crawling group working on the right set of challenges, like building crawlers that can crawl at least 50% of the web. That would be a good start.

Get AdCenter on Par With Adwords

This one is not hard. Microsoft should just copy what AdWords does and stop confusing advertisers.

Several months ago, I was invited to give the AdCenter team advice on how to improve its experience for advertisers. While I was there, a group of researchers walked us through some advanced thinking on AdCenter. It made no sense to any of the advertisers in the room.

We told Microsoft that they should just work to get AdCenter on par with Adwords from a user experience point of view. We showed them the features that Adwords had for years that AdCenter still lacked. Some of us were surprised when it seemed that we knew more about the feature to feature comparison of AdCenter to Adwords than the AdCenter team.

Stop using AdWords!

The only team that should be using Adwords at Microsoft is the AdCenter team, and that only to learn from it. Why give free revenue to Google?

Google won’t let employees use Windows based computers in the future, which means 20,000 less Windows license fees for Microsoft. If Google wants to do that, maybe Microsoft should stop giving Google so much revenue with all the AdWords accounts that are being used across Microsoft.

Yes, Microsoft marketing teams across the company use AdWords like crazy to market their products. Several people at Microsoft have told me that there are over 50 Adwords accounts at Microsoft. Let’s make that zero.

No more gimmicks

Gimmicks like slideshows and xrank need to go. They are artificial and do not result in real growth, When Google came out in 1999, they focused on core search experience, while other search engines offered prizes to people for using their engines. Guess who won! Microsoft needs to end all gimmicks and only focus on core search and nothing else.

No more MSN.

Microsoft should focus on building utility web products like Bing search, Office Online, and SkyDrive. See what happened to Yahoo when it tried to be both a search company and a content company?

Microsoft should learn from them and cut all content related products. It’ll be a tough pill to swallow. Especially given all the people who work in MSN. But if Microsoft wants to win in search, online documents, and the cloud, then it cannot be spending all those resources on content related activities. Focus on utility products. That is where the money and future reside.

Does the iPad deliver?

Jay Bhatti — Wed, 10 Feb 2010 19:51:50 +0000

As one of the more anticipated events in the tech community, Apple’s latest invention did not disappoint. In officially unveiling the new iPad, Steve Jobs took on the Amazon Kindle and once again raised the bar for its competitors. While pundits have criticized the iPad for lacking a true identity (and they are certainly right to an extent), similar to the iPhone, the iPad should encourage further innovation and will impact multiple industries. Taking a closer look at the iPad strictly as an e-reader, it is an interesting product that has advantages and disadvantages over the Kindle.

iPad Advantages:

Is a multi media device that can play movies, tv, and games, and allows for color screen web browsing
9.7” touch screen is larger than the Kindle’s 7.5”
Standard 16GB flash storage is larger than the Kindle
iPad is compatible with all iPhone apps
iBooks store and deals with top publishers will ensure content will be available
Excellent for newspapers and text books, the iPad can show high resolution images, video and take notes

Kindle Advantages:

At $259 the Kindle is cheaper than the $499 iPad – which does not include a wireless plan
Free Wifi on the Kindle ensures that you can purchase and download books anywhere
eLink screen is better for reading
Books on the Kindle cost under $10, whereas the iBooks store will have variable pricing
iPad will be using ATT for its wireless service which is notoriously poor in cities such as New York and San Francisco
The Kindle has a significantly better battery life of 1-3 weeks, while the iPad is around 10 hours

For those looking strictly for an e-reader, the Kindle is probably the better choice. With a cheaper price, longer battery life, eLink screen, free wifi, and less expensive books, the Kindle is by far the better option for an avid reader. However for those (and I can imagine this represents the majority) looking for something that services newspapers, magazines, and text books, the iPad represents a significant upgrade. Not only is the color touch screen a substantial improvement, but the option to take notes, and store data, along with the multimedia capability, make the Kindle appear wildly outdated.

While my gut tells me that similar to the iPod, the iPad will win out; its success will be based on the outcome of three different things:

Will the iPad distinguish itself enough from the iPhone/iPod touch – As many critics have pointed out, the iPad is too big to replace your iPhone and not powerful enough to replace your laptop or even Mac Mini. Should an improved version come out with the ability to take pictures, run excel and word, and support Adobe Flash, it could start to take off very quickly. The lack of a USB Port is likely to drive consumers’ nuts as well.
What the Kindle does with its pricing model– Should the Kindle lower its current price to the $100-$200 range, consumers will be more inclined to look past the Kindle’s shortcomings. While the iPad is likely to come down in price as well, the need to purchase a data package and the prevalence of smart phones will drive customers away.
Can the iPad replace text books – While the iPad’s appeal is based on its ability to be more than just an e-reader, if it does a good job at marketing itself as an alternative to text books or work documents, Apple will have created something special. Given how iTunes has put a significant dent in illegally downloaded music, the iBook store could be something publishers aggressively embrace which would in turn help make the iPad a more common alternative.

While Apple has missed on products in the past, the public’s love affair with its products will likely ensure the iPad’s success. Even if pundits who criticized the iPad are correct, at the very least it should encourage the Kindle and the highly anticipated HP Slate to step up their game.