Facebook's initial public offering is shaping up to be one of the largest in history. This morning the company told the Securities and Exchange Commission that it was expanding its offering ... again.

Now Facebook is planning to raise up to $16 billion from investors by taking a small slice of the company to the public. And it will likely be worth more than $100 billion on its opening day of trading. It could easily go higher.

So this week Zoe Chace at Planet Money and I have been poking through Facebook's business. Really trying to answer one pressing question: Can this company be worth this much? Can it live up to its hype?

Anant Sundaram is a valuation expert at Dartmouth's Tuck School of Business. He says for Facebook to justify its stock price over the long term, 10 years from now it will need to attract one of every 10 ad dollars spent anywhere on the planet. That's not just on the Internet — that's the planet.

So do Facebook ads work? Are these ads, in the words of Zoe Chace, "going to become the bomb that explodes the advertising industry?"

 

It's a good question — a $100 billion question. And the answer you get depends who you ask.

General Motors says no, these ads don't work. And the company chose this week to pull all its paid advertisements off of the social network — and GM did it publicly.

But drive across Detroit and you get a radically different answer. Ford loves Facebook.

It used Facebook to unveil the 2011 Ford Explorer. Ford says that campaign yielded better results than a Super Bowl ad — for a fraction of the cost. Part of the problem is that the return on investment for brands that advertise on Facebook is hard to measure.

Zoe and I ran our own little test. We recruited a pizza place in New Orleans called Pizza Delicious and watched as it launched a mini-campaign. And while Facebook delivered the ad to a huge number of New Orleanians in a short time — we may never know if the campaign pays off.

Just like on television, advertisers on Facebook struggle to figure out which ads are leading to which customers, but in the digital world this kind of clear return on investment is what many advertisers have grown to expect.

"Google built a great search experience and then they stumbled upon AdWords which turned into the big cash cow for them," says Rob Leathern, the CEO of Optimal, a social media marketing firm. "I don't know that Facebook has found that yet."

Ultimately it's the amount of information about its users that seems to have entranced Wall Street.

"When Facebook investors and founders rake in billions of dollars on Friday [the first day of public trading], they are making that money by selling little bits of each of us," says Fred Cate, a distinguished professor and director of the Indiana University Center for Applied Cybersecurity Research. "What Facebook is selling is us. They're selling data, but data that more than 900 million of us volunteer on a daily basis."

This may be Facebook's most valuable asset — the information about us it has and its ability to collect more.

Every week, as part of a new tech segment, we'll be digging into our digital sandbox for some fun. New Yorker cartoonist Matthew Diffee is starting things off with a review of Draw Something, a popular app that works a lot like Pictionary: Players pick a word, draw clues and then watch as their opponents guess the answer. But, as Diffee explains, the app's name is a bit misleading.

First of all, I think the name "Draw Something" isn't entirely accurate; it would be more accurate to call it "Scrawl Something," because that's what I did. Or maybe "Draw Something With Your Foot While Bull Riding On A Boat."

I don't know if I have big fingers or not, but I'm playing it on a phone rather than an iPad, so it's like getting to drive a Ferrari on a racquetball court. It's just frustrating and it's not very responsive. I know how to draw well and so, in my mind, I'm making all these intricate little finger moves. And, in my mind, I'm drawing like a Rembrandt, but what's on the screen looks more like the work of Jimmy, the painting chimp.

I sat down for, I thought, 20 minutes, and suddenly I'd been on there an hour. So I would say as a game, it's fantastic — and as a drawing tool, it's pretty terrible.

But it's actually helped me in a way. Even in cartooning, I tend to draw things better than they need to be and it's really fun to just sort of relax and just draw something badly.

You can share a review of your favorite drawing app in the comments below or send your comments to alltech@npr.org.

This week, All Things Considered is hitting refresh on its All Tech Considered segment — taking you into the changing landscape of technology and how it intersects with everyday life. From Silicon Valley to China, we'll feature stories from around the world, stay on top of innovations that matter — and get you the news you need to know. Every Monday, we'll preview the week's big tech stories.

Today, Facebook CEO Mark Zuckerberg turns 28 and gets the ultimate birthday gift: His popular social networking site is expected to go public later this week. The IPO could be valued at nearly $100 billion. Meanwhile, Yahoo, another company that also once had a bright future, continues to undergo upheaval as it struggles to define its mission.

Facebook is expected to start selling stock to the public and begin trading on the Nasdaq Stock Market on Friday. One of the things that are remarkable is how quickly Facebook became so valuable. Can a company started less than a decade ago in a college dorm really be worth that much?

To put this in perspective, when Facebook goes public it will probably be valued at more than Boeing and Ford combined. But Facebook's profits are relatively minuscule.

So to justify its sky-high stock price, Facebook will need to grow like a weed for the next few years. The amount of money it brings in will have to double and then double again for this deal to make sense for long-term investors.

Right now, more than 80 percent of the money Facebook makes comes from advertising. So that piece of its business needs to expand really quickly. But Facebook doesn't want to clutter up its site with too many ads and annoy its users.

Late last week Facebook gave us one hint about where it might be headed. The company has huge amounts of data about each of its users. It knows your likes, your friends — and where you went to school. Right now it uses those data to sell ads aimed at you, but those ads only appear on its own website.

Friday Facebook tweaked its privacy policy, allowing it to use that information to place ads aimed at its users anywhere on the Web.

Managing privacy expectations of its users could become a huge problem for Facebook.

The company has a long history of pushing people to share more than they might otherwise be comfortable sharing. And there is no indication that trend will change. But there is always the risk that at some point millions of people will simply say they've had enough and quit the service. So far, that hasn't happened.

But there's also another risk — that regulators either in the United States or in Europe get tough and really start putting strict limits on what Facebook can do.

So Facebook has to walk this line, while at the same time adding members, selling ads and figuring out how to collect even more information about us.

If Facebook doesn't figure all of this out, it will be very bad news for investors.

Investors who buy Facebook this week and plan to own this stock for the long haul are betting on a kind of crazy, almost unprecedented growth. Because without that, Facebook begins to look a lot like another Silicon Valley company — Yahoo.

Right now, Yahoo and Facebook sell just about the same number of ads. They both have audience measure in the hundreds of millions. But Yahoo stock is worth one-fifth of Facebook's projected value.

Yahoo just pushed out its new CEO, Scott Thompson, who was hired less than six months ago.

Thompson got caught lying about his background. In documents filed with the Securities and Exchange Commission and on his bio, he claimed a degree in computer science when in fact his college degree was in accounting.

When the news first broke, Thompson claimed it was a misunderstanding — he had never lied. But the more folks dug into it, the less credible it looked. Then over the weekend, Thompson reportedly told Yahoo's board of directors he had thyroid cancer and stepped down.

Yahoo has had five or six CEOs in the past five years, depending on how you count it. And actually this is bigger than losing another chief executive. A group of activist investors used the controversy to land three seats on Yahoo's board of directors. And in the past this group, Third Point, has pushed to break Yahoo up or sell it.

So this week as Facebook goes public, it's worth remembering that Yahoo was once valued by Wall Street at more than $100 billion too.

My favorite movie, Days of Heaven, is at the top of my recommendations list on Netflix. But I've never actually watched it on Netflix, so how did they know I like it?

"Every time a Netflix member streams a title from us, we learn a little bit more about what's interesting to them," says John Ciancutti, vice president of engineering at Netflix. Netflix has algorithms that mix customer information with other algorithms that group shows together. So if I enjoy Mad Men, it guesses that I might like other dramas with complicated male leads, like Breaking Bad — and it's right.

If the Industrial Revolution was about extending the power of human muscle with inventions like the car, then the computer revolution is about extending the power of the human mind — and algorithms are the key to its success. These formulas find search results, pick the top story on the news feed of your Facebook page, and determine things like your credit score and trades on Wall Street.

Every day Netflix has dozens of engineers improving its algorithms. A huge whiteboard in the hallway of Netflix headquarters displays numbers in a grid, part of a contest to see who can come up with the best algorithms.

"Just in the last couple of months, we've run tests where we've improved overall streaming hours for members with a new algorithm that's just a little bit better at making recommendations, which means it's so powerful as far as delighting members that they are more likely to stay with the service versus not," Ciancutti says.

Political Potential

For Netflix, it's about keeping customers. But algorithms tailored to figure out individual tastes and interests are also being applied to the political arena. When Mitt Romney is on local TV in Ohio, it's no surprise that he'd talk about local interests, like manufacturing jobs. But it would be even better if he could target his message directly to people who lost those jobs.

In this coming election, that's exactly what Democrats and Republicans will be able to do.

"There's been this explosion of data available over the last decade, frankly, at the individual level from voter files, from consumer sources, from other sources," says Tom Bonier, co-founder of Clarity Campaign Labs, a company that uses algorithms to help Democrats target voters. "You can send one piece of mail about choice to one household, and to their neighbors you can send a piece of mail about the environment."

In other words, there are more computers hoarding more data about us than ever before.

Algorithm As Crystal Ball

Sean Gourley is co-founder and CTO of Quid, a company that gets hired by governments and business to create algorithms. He says, "From an algorithms perspective, this is a great time to be alive. Algorithms are just frolicking in the mountains of data that they can play with."

Gourley uses algorithms to predict insurgencies in Iraq and Afghanistan and help banks map developing markets for new technologies. As an experiment for NPR, he maps the development of the Occupy Wall Street movement. He uses algorithms to sort through about 40,000 blogs and articles written since the movement began and group similar ideas together.

"You can't read all this as a human or even necessarily get what's going on, so you start to apply algorithms to help kind of cluster, sort, put topics around them and ultimately visualize [it]," he says. What Gourley's algorithm helps visualize is how ideas from the initial Occupy Wall Street rallies in New York spread to other groups and other parts of the country.

Gurley points to a computer screen. It's filled with dots that are grouped into color clusters and connected by thin lines. One cluster represents politicians talking about taxing the wealthy. It's far from the cluster that represents protesters.

"When the politicians talk about Occupy Wall Street, they're not really talking in Occupy Wall Street," Gourley says. "They're not talking within the cluster — they're talking separately. And so when they talk about taxes and they talk about inequality it's not really resonating [in the Occupy Wall Street cluster], or at least the language is quite different."

Gourley clicks on another smallish cluster that represents "Bank Transfer Day," an activist initiative that calls for people to move their accounts out of larger banks and into credit unions — you can see that people aren't saying much about it anymore. A more recent cluster represents the issue of the courts using Twitter feeds as evidence in cases against protesters, and yet another tracks the conversation around Occupy Oakland, which is dominated by talk of police violence.

Proceed With Caution

Gourley imagines that information like this might be useful to politicians, police and political activists.

"We can start to think about where it's come from," he says. "We can start to think about how it's evolved and we can start to think about where we want it to go and if we want to change the direction."

But Gourley has concerns about other possible uses of algorithms. Netflix is just trying to keep its customers watching movies, which isn't so bad, but he wonders what would happen if Google Maps knew that you were looking for a new car. Maybe when you looked up directions to a party, it would suggest a route that passes right past a dealership.

"[Has] it got your interest at heart or has it got making money from ads at heart?" Gourley says.

What worries him most is that we humans haven't yet evolved to be as wary of algorithms as we are of used car salesmen.

I'm standing in the Manhattan office of Andrew Farnsworth, a research associate at Cornell University's ornithology lab. Farnsworth is using meteorological data, radar data, crowd-sourced eBird data and acoustic data from the flight calls of migrating birds to predict where birds are going and when they'll be there.

It's all part of BirdCast, a project funded by the National Science Foundation. Eventually, it will be a website and an app, but you can see the posts now on Cornell's eBird site. I tell Farnsworth that I'm going bird watching in Central Park in a few days – what can I expect? He tells me southerly winds will be favorable to migrating birds that day, and there will be no rain.

A Pastoral Pastime Gets Plugged In

Two days later, I am in Central Park with Starr Saphir, who's been an avid birder for more than six decades. She arrived early that morning because, she says, "We knew that this would be an absolutely great day."

But here's the difference technology makes: Twenty years ago, if you saw a good bird, you might tell other people in the park or call someone to tell them about it later that night. Now, with cell phones, text messages and email, you can hear about a bird sighting across the park and be there to see it for yourself in just a few minutes.

Saphir's phone rings. There's a male Cape May warbler just up ahead. Soon our group is walking quickly in the direction of the warbler. Earlier, we were led to a Prothonotary warbler, where we ran into 30 birders — news of the sighting had spread fast.

The Shazam Of Bird Watching

An easy way to find birds is to know their calls. There have long been recordings of bird songs, but what's different now, Farnsworth says, is that apps allow you to carry thousands of those bird songs in your pocket.

"You can bring it into the field and compare it to what you're actually hearing and seeing," he says.

The National Audubon Society app, for example, has seven different calls for a scarlet tanager. In the future, you'll also be able to do the reverse — hear a bird song and identify it with an app, just like people identify music with apps like Shazam.

That's exactly what Mark Berres, a professor at the University of Wisconsin-Madison, is trying to do with WeBird. But Berres says identifying bird calls is much harder than identifying popular songs.

"When I turned it onto bird songs, it just failed miserably," he says. But, after a year of work, Berres expects the app to be ready next spring.

But Does It Make Bird Watching More Accessible?

You can find bar charts on Cornell's eBird website that tell you when a species migrates to your area and when it will arrive. The technology has "lowered the barriers to entry and made it easier for people to quickly get the information that they [want] when they see a bird," says Chris Wood, who runs the eBird project at Cornell's ornithology lab.

He says when he started bird watching in Colorado, he was sure that he had a tricolored blackbird in his backyard because it looked a lot like the bird in the book. It took him three years to realize that there are no records of tricolored blackbirds appearing outside the West Coast. Today, that might only take an hour.

Meanwhile, Farnsworth dreams of the day when the Weather Channel provides a daily bird report. He hopes computer models for forecasting bird migration will one day be so sophisticated that conservationists will be able to tell a city to turn its lights off when a wave of birds is coming through. (City lights can disorient migrating birds.)

Saphir doesn't own a computer, but she says the downside to all this technology is that it puts an inexpensive hobby out of reach for many. "You have to have thousands of dollars worth of equipment," she says, such as cameras, computers and smartphones.

Saphir makes do with very good binoculars and, yes, a cell phone. It rings again — there's been another sighting. "OK, I'll be right there," Shapir says, and off we go.

Harvard University and the Massachusetts Institute of Technology are teaming up in a $60 million venture to provide classes online for free. The move is the latest by top universities to expand their intellectual reach through the Internet — a trend that is changing higher education.

Last month, Stanford, Princeton, Berkeley, the University of Pennsylvania and the University of Michigan announced that they were working with Coursera, a Silicon Valley startup, to put more than a dozen classes online this year in subjects ranging from computer science to public health to poetry.

Earlier this year, Stanford professor Sebastian Thrun, one of the inventors of Google's self-driving car, announced he was leaving the school to start a company called Udacity, which would hire world-class professors from leading universities to create free online classes.

Coursera and Udacity, which are set up as for-profits, said they are committed to keeping their classes free and have each raised millions from venture capitalists.

NPR's Steve Henn tells All Things Considered host Robert Siegel that the companies grew out of an experiment at Stanford last year that allowed anyone to take computer science classes online — and get graded — for free. The classes attracted hundreds of thousands of students from all over the world.

Wednesday's announcement was a bit different. Harvard and MIT are creating a nonprofit called edX; the universities are investing $30 million each — significantly more than what has been raised by their West Coast for-profit competitors.

Henn says Harvard and MIT also pledged to release their software for free when it's fully developed, as an open-source product for anyone to use.

"They're inviting other universities to use the platform and put their own classes online for free," he says.

For now, students can get a grade, but the schools won't count the class toward a degree if a student wants to matriculate.

"None of these universities are offering a degree program unless you pay," Henn says.

He says interest in online courses has exploded because it's become much cheaper and easier to put a class online. "That has combined with using technologies in new ways to make these online classes better."

Interactive quizzes and other tools have made it possible to deliver a class that really has value to hundreds of thousands of students, Henn says.

"In the early days of online education," he says, "basically you had a camera in the back of a lecture hall videotaping a lecture. This is really quite different."

The classes present an opportunity to students who wouldn't otherwise be able to take classes — for health, money or geography reasons.

"Perhaps some day there may be people who never leave their basement," Henn says. "I think at this point, there are many thousands more people around the world [for whom this provides] a window that opens and allows them to see a bigger, broader piece of the world than they could before."

For decades, Olympics fans have loathed two words: "tape" and "delay." But this summer, things will be different: For the first time, NBC will stream live video of the London Games, online and via mobile.

If you think that decision is overdue, you're not alone. Sports Business Daily media reporter John Ourand says he is shocked it has taken this long for the network to put live video of all Olympic events online.

"I'm surprised it didn't happen four years ago, or even eight years ago," Ourand tells Morning Edition co-host Steve Inskeep.

"People are watching video online," he says. "And people also are rejecting tape-delayed broadcasts — which is what NBC had done" in previous years.

For the 2012 London Games, NBC plans to stream video of all 302 Olympic events, allowing online viewers to choose what they want to watch. Fans will have options for watching broad highlights, or following one discipline's events.

The network will also release apps to allow live video and other features on tablets and smartphones. It's a far cry from the years the network spent cloistering the most popular events into a prime-time package that aired hours later.

But that doesn't mean NBC will be giving open access to just anyone who wants to watch the Olympics online. To get full access, you must be a cable or satellite subscriber. And you'll need a user ID and password from your TV provider to log in, according to a guide posted last week on NBC's video site.

That could be bad news for anyone who's gone "off the grid" by rejecting cable and satellite subscriber plans, who may be forced to find other options to watch favorite events live. And the network still plans to save most of its interviews and features for prime time.

Ourand says that for NBC, the lure of advertising revenue is only one reason to try to control access to its online Olympic content. He points to the network's widely available cable channels — USA, CNBC and MSNBC.

"One of the reasons that they're widely distributed is because they carry that Olympic programming," he says. "And cable operators didn't want to do without that programming."

As Ourand tells Inskeep, "TV is still driving the bus here. There's a cliche in the media business: 'Digital dimes for TV dollars.' And that's still in effect here."

Even so, Ourand says that NBC's online coverage, which will be hosted at the network's newly relaunched Olympics site, signals a new approach at the network — and in the sports media.

"What ESPN and other networks have found is that, when you broadcast things live online, it doesn't erode the broadcast at all," he says. "In fact, it draws a lot of people to want to see it on their hi-def TVs in their living rooms."

Ourand says that NBC received a vivid demonstration of how hard it is to keep sports fans from watching an event live online during the 2008 Beijing Olympics, when sprinter Usain Bolt turned in an electrifying world-record performance in the 100-meter dash.

"People watched it online, via foreign websites, via pirated websites — and NBC didn't get any of that," says Ourand, who recalls watching the race on the BBC's website.

Despite that burst of online interest during the event, the network's programming didn't suffer. Ourand says that "the rating for Usain Bolt for NBC on prime time was still very good" — something he attributes to buzz about Bolt's record, as well as fans' desire to watch the race on large high-definition televisions, even if they'd seen it earlier on a computer.

The Bolt race seems to have been a big moment for NBC, which had previously been unwilling to put many high-profile events online as they happened.

"They were so worried," Ourand says. "They wanted to protect their TV rights, and they wanted to protect advertisers who were advertising on TV, and they didn't want to dilute the viewers."

Another thing that'll be different about this year's Olympics is the timing of the men's 100-meter sprint final. If Bolt repeats his gold-medal performance of four years ago, he would do so on Aug. 5, a Sunday. That means that here in the U.S., the race would start around 4:50 p.m. EDT.

Computers have been grading multiple-choice tests in schools for years. To the relief of English teachers everywhere, essays have been tougher to gauge. But look out, teachers: A new study finds that software designed to automatically read and grade essays can do as good a job as humans — maybe even better.

The study, conducted at the University of Akron, ran more than 16,000 essays from both middle school and high school tests through automated systems developed by nine companies. The essays, from six different states, had originally been graded by humans.

In a piece in The New York Times, education columnist Michael Winerip described the outcome:

Computer scoring produced "virtually identical levels of accuracy, with the software in some cases proving to be more reliable," according to a University of Akron news release.

"In terms of consistency, the automated readers might have done a little better even," Winerip tells All Things Considered host Melissa Block.

 

The automated systems look for a number of things in order to grade, or rate, an essay, Winerip says. Among them are sentence structure, syntax, word usage and subject-verb agreements.

"[It's] a lot of the same things a human editor or reader would look for," he says.

What the automated readers aren't good at, he says, is comprehension and whether a sentence is factually true or not. They also have a hard time with other forms of writing, like poetry. One example is the software e-rater, by Educational Testing Service.

Les Perelman, a director of writing at the Massachusetts Institute of Technology, was allowed to test e-rater. He told Winerip that the system has biases that can be easily gamed.

E-Rater prefers long essays. A 716-word essay [Perelman] wrote that was padded with more than a dozen nonsensical sentences received a top score of 6; a well-argued, well-written essay of 567 words was scored a 5.

"You could say the War of 1812 started in 1925," Winerip says. "There are all kinds of things you could say that have little or nothing to do in reality that could receive a high score."

Efficiency is where the automated readers excel, Winerip says. The e-rater engine can grade 16,000 essays in about 20 seconds, according to ETS. An average teacher might spend an entire weekend grading 150 essays, he says, and that efficiency is what drives more education companies to create automated systems.

"Virtually every education company has a model, and there's lots of money to be made on this stuff," he says.

A greater focus on standardized testing and homogenized education only serves to increase the development of automated readers to keep up with demand, Winerip says.

Winerip says that what worries him is that if automated readers become the standard way of grading essays, then teachers will begin teaching to them, removing a lot of the "juice" of the English language.

"If you're not allowed to use a sentence fragment ... [or] a short paragraph ... then you're going to get a very homogenized form of writing," he says. "The joy of writing is surprise."

Social networking sites have been at the vanguard of the Arab uprisings over the past year. Egyptians used online pages to organize protests, and Syrian activists have posted frequent YouTube videos showing government forces shelling civilian areas.

The same growing Arab online awareness that made the Internet part of the pro-democracy movements has also created a mini-revolution for Arab technological business.

Due to regulation, limited infrastructure and governments wary of the Internet, the Middle East has not been the easiest place to launch a tech startup.

Omar Christidis founded ArabNet in 2010 to address what he said was a lack of communication among Arab tech entrepreneurs.

"People were not talking to each other, from Egypt from Saudi from Syria, and there were no real online places where you could find out what was going on," he said.

Summit In Lebanon

ArabNet has been hosting a "digital summit" to showcase new ideas and create a networking space for techies. This year, it was held at the Habtoor Hotel just outside Beirut, Lebanon.

Young men and women wearing the unofficial tech entrepreneur uniform – button-down shirt, no tie, jeans, and a blazer – gathered around Christidis and chatted eagerly with investors from Gulf states wearing white robes and head scarves.

There is an enormous opportunity for growth in homegrown digital startups in the Arab world, Christidis explained.

"When we started the conference in 2010 there were about 35 million users [in Arab countries], today there are over 70 million users of the Internet."

Abraham Kamarck, an American working for a tech firm based in Qatar, said ArabNet is "the hot place right now" to meet other techies and investors in the Middle East.

Kamarck is optimistic about the future of the Middle East tech industry. Since tech investors look at the long picture, he said, even a country like Egypt – whose economy has cratered since last year's revolution – is still fertile ground for venture capital firms.

"If you look at the demographics of the youth, if you look at the Internet penetration and the mobile penetration, it's a very attractive market in that sense from a growth standpoint," Kamarck said.

An Incubator Finds Strong Demand

Hany al-Sonbaty, co-founder of a Cairo venture capital firm called Sawari Ventures, agrees.

His firm set up a tech business incubator called Flat6Labs with the hope of making it easier for young entrepreneurs to start tech businesses in Egypt.

Flat6 received 60 applications for just seven spots. The accepted firms got around $12,000 and 12 weeks to hire a staff, start a company, and secure investors.

When Egypt's former president, Hosni Mubarak, stepped down in February 2011 in the face of an uprising, the company held a meeting to discuss the upheaval, but saw no reason to change its plans.

Now in its second cycle, Flat6 is humming with the clicks of keyboards and excited conversation. Carved out of an ornate old apartment building beside the Nile River, the incubator is intended to be like a second home for the entrepreneurs, who may find that long days at the keyboard turn into a night of sleeping on one of the bright red and white couches.

A Range Of Ideas

The company ideas are diverse.

One in the current Flat6 class is Nefham. Founders Hashem Aly and Mostafa Farahat hope to set up an online video learning database for Egyptian students.

Another, GyroLabs, sees a future for interactive television in the Middle East. Ahmad Fathalla's company is trying to develop apps for smart televisions.

AskNative, founded by Abdelmoniem Ragab and Seif Sallam, is developing a mobile phone application that uses Twitter, online translation, and crowd sourcing to connect tourists with locals to answer questions while traveling.

Sonbaty says, "there's a big difference between somebody who's clever at doing a product and somebody who's running a company. This is where they learn it."

Egyptians are uncertain about what their country's future holds. But Sonbaty sees one way the revolution changed this class of entrepreneurial techies.

"It emboldened them," he said. "Some of them said, 'You know what? Let's just do this.'"

Internet surfers have long worried that they have insufficient control over their online privacy — despite the privacy policies many people agree to when they visit websites or use online services.

There are data to support the surfers' feelings: Online privacy policies are so cumbersome and onerous that it would take the average person about 250 working hours every year — about 30 full working days — to actually read the privacy policies of the websites they visit in a year, according to an analysis by researchers Aleecia M. McDonald and Lorrie Faith Cranor.

The Federal Trade Commission has recently announced it is exploring whether to give consumers greater control over their online privacy. Online privacy is currently not regulated in the United States. Authorities have encouraged companies to disclose information to users, based on the idea that users will then read the policies and make enlightened decisions about which companies to trust with their information.

But the proliferation of long, onerous and often difficult-to-follow privacy policies has led to a situation where most people consent to privacy policies without reading or understanding them, Cranor says.

"If people were to actually stop and read all of them for every website that they visited, they could spend on the order of 200 to 250 hours a year — about a month of time at work each year that you could spend reading privacy policies," she says. "It's insane."

 

Privacy policies are so onerous that Cranor's graduate students moan in protest when she asks them to read three policies for class.

Cranor said most Americans do not understand the full extent to which their personal information is being captured and mined.

"When you go into a shopping mall, there's nobody following you around," she says. "Imagine that as you go around your shopping mall, you have someone who is not only looking and commenting — but actually recording everything that you look at, every time you hesitate, every time you remark about something. And then, after you leave the shopping mall, and you go to your dentist's office, you go to the doctor's, you go to pick your kids up from school, they continue to follow you around, and everything is being recorded. I think that is what you have on the Internet."

If people actually were to read the policies placed before them, Cranor says, the total cost — in time alone — would be around $781 billion a year.

Last year when Andrew Ng, a computer science professor at Stanford University, put his machine-learning class online and opened enrollment to the world, more than 100,000 students signed up.

"I think all of us were surprised," he says.

Ng had posted lectures online before, but this class was different.

"This was actually a class where you can participate as a student and get homework and assessments," he said.

The class was interactive. There were quizzes and online forums where teaching assistants, fellow students and Ng answered questions. In the end, tens of thousands of students did all the same work and took the same tests that Stanford students took; thousands passed.

 

"Stanford has always been a place where we were not afraid to try bold new things, often without knowing exactly what the consequences were going to be," said Jim Plummer, the dean of engineering. "And this is an instance of that."

Now Ng and Daphne Koller, a Stanford colleague, are launching a company called Coursera to bring more classes from elite universities to students around the world for free online.

"By providing what is a truly high-quality educational experience to so many students for free, I think we can really change many, many people's lives," Koller says.

Princeton, the University of Pennsylvania and the University of Michigan will join Stanford. Two Venture capitalists are investing more than $15 million in the company.

Koller says she believes online classes could bring university classes to millions of people who are now effectively cut off.

But to do this, these classes have to be effective at teaching more than just computer science. How will they teach hundreds of thousands of students to write?

"You've asked the right question," asks Al Filreis, a poetry professor at the University of Pennsylvania, "which is: You are really going to try to do a poetry course?"

They are. In fact, Filreis is the guy they have roped into doing just that. He will teach modern and contemporary American poetry online for free starting in the fall. He says he knows he's not going to be able to grade thousands of essays.

But "I am really, really game and open to other ways of understanding whether people are getting it because my university has decided to let me free," he says.

Filreis isn't looking for correct answers. He wants people to think about the poems he's teaching and engage one another.

"Poetry is really good in this setting because you can read it alone and get so much out of it, and be perfectly fine with it, but the next step was [to] hang out with some intuitively smart people and collectively — together, collaboratively — let's read the poem together," he says.

In his class this fall, Filreis will discuss poetry with a small group of students while potentially thousands make comments online. Coursera is building a system like Yelp that will let these students value each others comments; the most valued and respected will rise to the top.

Will all this work? Is this a way to teach poetry or anything else? Filreis isn't sure, but he's excited to give it a try. And it's possible this fall he could reach more students with poetry than he has in his entire career.

Greenpeace released its latest report today asking, "How clean is your cloud?"

The annual report examines the server farms built by the largest Internet companies — including Amazon, Apple, Facebook, Google, Microsoft and Yahoo — and ranks them according to how efficient their cloud facilities are, and where they get their electricity.

Yahoo — which has struggled to please investors in recent years — was the only major Internet company in the study to get most of its electricity from renewable or clean energy sources, according to the report.

Many server farms can consume as much electricity as a small city. Some of the largest consume as much electricity as 180,000 homes.

Google and Yahoo historically have led the pack in trying to move more cloud computing toward renewable sources of energy. Now, they have some company in Facebook — which is building a server farm in Sweden that can be powered by renewable sources.

Amazon, Apple and Microsoft continue to rapidly add server capacity, but according to Greenpeace, don't seem to care where their electricity comes from.

All three rely heavily on coal, which Greenpeace calls a dirty and polluting source of power. On Greenpeace's report card, Amazon gets three F's and a D. Apple gets three D's and an F.

"When people around the world share their music or photos on the cloud, they want to know that the cloud is powered by clean, safe energy," said Gary Cook, Greenpeace International senior policy analyst. "Yet highly innovative and profitable companies like Apple, Amazon and Microsoft are building data centers powered by coal, and acting like their customers won't know or won't care. They're wrong."

According to Greenpeace's estimates, these three firms get roughly 85 percent of their power from coal on nuclear plants. The report doesn't break out natural gas as a source of power in the U.S.

These firms' servers use only about 15 percent or less of their power from renewable and other clean sources, according to the group. This puts them in the middle of the pack compared with other tech firms. Yahoo and Dell both get most of their power from renewable and clean sources.

However, some tech giants took issue with Greenpeace's numbers.

Greenpeace says it shared its findings with both Apple and Amazon. Both companies told the group the estimates were not accurate, but according to Greenpeace, they refused to provide more accurate information about their power usage.

Apple issued a statement in response to the report, arguing that Greenpeace grossly overestimated the energy usage at its data center in North Carolina and discounted efforts the company is making to use renewable energy.

"Our data center in North Carolina will draw about 20 megawatts at full capacity, and we are on track to supply more than 60 percent of that power on-site from renewable sources including a solar farm and fuel cell installation which will each be the largest of their kind in the country," said Kristin Huguet, an Apple spokesperson. "We believe this industry-leading project will make Maiden the greenest data center ever built, and it will be joined next year by our new facility in Oregon running on 100 percent renewable energy."

Amazon refused to discuss any details about energy consumption at its data centers, but called the report "inaccurate."

"Amazon Web Services believes that cloud computing is inherently more environmentally friendly than traditional computing," wrote Tera Randall, an Amazon spokesperson. "Instead of each company having their own datacenter that serves just them, AWS makes it possible for hundreds of thousands of companies to consolidate their datacenter use into a handful of datacenters in the AWS Cloud, resulting in much higher utilization rates and eliminating the waste that occurs when datacenters don't operate near their capacity.

"The cloud enables a combined smaller carbon footprint that significantly reduces overall consumption."

It's beginning to feel frothy in Silicon Valley. Here are a few numbers:

On the first day of its initial public offering LinkedIn was valued at nearly $9 billion; today the social networking site is worth more than $10 billion. Instagram, a company with no profits, no revenue and no plan to make money, was just bought for a cool billion. The buyer was Facebook, a firm in the process of going public.

And those values are nothing compared with what Facebook may be worth itself. That company is expected to be valued at between $80 billion and $100 billion after its IPO later this spring.

But is this a bubble? Is the considerable exuberance in this part of the world irrational?

Here in Silicon Valley you hear some version of this statement all the time: "This is different. I was here in the 1990s and these companies are not Pets.com."

Investors and entrepreneurs have been saying this to each other for years, in part because it is true. Facebook generated $1 billion in profit last year. It's still almost doubling its revenue and profit year to year and it's doing all of that with a relatively small workforce.

Instagram created a social network of 30 million people with just over a dozen employees. These companies have created ways to connect millions and build enormous audiences incredibly efficiently. That is worth something. The question is, what?

 

Jean-Paul Rodrigue, a professor at Hofstra University, published an influential chart just before the financial bubble burst in 2008. He broke bubbles down into four stages:

Steve Blank is a serial entrepreneur in Silicon Valley and an adjunct professor at Columbia Business School. He says we have sailed through the stealth phase of the current technology investment cycle. We are past the point where big investors are aware of the opportunities in mobile and social companies and we're rapidly entering into a period of manic excitement of the next wave of Internet companies.

But Blank says not all bubbles are created equal — not all bubbles are bad. "Bubbles built the railroads," he says. "Bubbles built the steel industry." He believes many of the technologies that are attracting so much excitement right now have the potential to change the way we live and how the economy works.

That may be. But prices are high enough now that many wonder whether companies like Facebook can justify their own hype. When investors talk about bubbles, typically they end up comparing a company's profits with its share price. The price-to-earnings ratio is a staple of evaluating a stock. ExxonMobil's P/E ratio hovers around 10. That means the company is valued at something like 10 times its annual profit.

Apple has a P/E ratio of 17. That's high compared with historical averages, but Apple's earnings have been growing incredibly fast and the company is sitting on $100 billion in cash. And its stock looks positively cheap in comparison with the latest crop of social media companies that are going public.

If after Facebook's initial public offering it's valued at more than $100 billion it will have a P/E ratio of 100 to 1. And that's a bargain compared with LinkedIn, which is trading at a ratio of between 800 and 900 to 1. These are bubblicious prices.

To justify its projected IPO price to more conventional investors, Facebook will need to double its earnings every year for the next three or four years. Those who sell now may realize windfalls and those who buy have to hope for years of exceptional growth or they will be left holding the bag.

But Blank says this may not be bad news for the economy as a whole.

"Unlike other bubbles — housing bubbles and financial bubbles — nerds don't buy yachts. They seem to reinvest in their own domain," he says.

Technology entrepreneurs who strike it rich often end up pouring a significant amount of their wealth back into new companies founded by friends and colleagues.

The most famous example is the PayPal mafia. The original investors and founders of PayPal have helped launch dozens of companies, seeding them with money and expertise. Those firms included LinkedIn, Zynga, Facebook, SpaceX and Tesla, to name just a few.

Younger generations of entrepreneurs reinvest this way as well. Rather than turning over their newfound fortunes to Goldman Sachs, entrepreneurs here tend to look around for other technology ideas that seem clever and entrepreneurs who remind them of themselves.

Take Aaron Patzer. He founded Mint.com in his early 20s and sold it to Intuit a few years later for $170 million. Patzer then invested a bit of his windfall in Milo, whose founder, Jack Abraham, was also young and hungry. Within months Abraham sold his business to eBay for $75 million. Abraham then invested in Pinterest, which now is one of the hottest social startups in the country.

Stories like this repeat again and again and again. And Blank believes that makes a tech bubble — at least this tech bubble — more productive than others where investors in effect take their winnings off the table. Each new windfall leads to a new round of investment. Maybe some firms are sold for too much, but in the end much of the money is reinvested in innovation.

"The last 10 years have taught us a ton about what the next 10 years are going to be," Blank says. "We are much smarter, much better, much more efficient at building early-stage ventures."

As more technology entrepreneurs experience big paydays, Blank is optimistic about what the next wave of investment could bring.

"We actually think we have found a way to take the most advanced research in our labs and insert it into our economy," he says.

Days after it was acquired by Facebook for $1 billion, reports have emerged that Instagram now has more than 40 million users in its photo-sharing community. The gain, which was derived from the service's API, represents a spike of 10 million Instagram users added in the past 10 days, according to Venture Beat.

Much of the gain can probably be attributed to Instagram's new Android app, which it released on April 3. But the free smartphone app also gained headlines and new interest when the Facebook acquisition was announced.

As we reported earlier this week, Instagram's new ties to Android and Facebook have not been universally popular. The Facebook deal, in particular, led some users to announce that they would be leaving the photo-sharing community and deleting the app from their phones.

Instagram has not confirmed hitting the new mark in its number of users.

Jack Tramiel, the man behind the Commodore 64 computer, died Sunday, according to reports. Tramiel, who was 83, came to America after World War II. He was a survivor of the Auschwitz concentration camp in his native Poland.

Update: This post has been updated to reflect Tramiel's liberation from the Ahlem work camp, after his time in Auschwitz.

Eventually, Tramiel was freed from the Ahlem labor camp in Hanover, Germany, by American troops. In a 2007 interview, Tramiel explained what effect that experience had on him.

"When I came to the United States, I definitely felt I owed something to this country," he said.

So, Tramiel joined the U.S. Army a year after arriving in New York in 1947. And after his service, he turned to working with typewriters, then calculators — and finally, personal computers.

From Computer World:

"Tramiel's Commodore International in 1982 released the Commodore 64, a home computer that became one of the most popular models of all time, selling close to 17 million units between 1982 and 1994."

In 1984, Tramiel was forced out at Commodore. Soon after, he purchased Atari Corp., which he ran for more than 10 years.

The news of his death brought an outpouring of tweets and comments on technology sites, among them, Atari Age, where one user, bennybingo, posted this comment:

"Truly saddened by this news...he was just one of the many technology pioneers who shaped a large part of my childhood. He certainly left a very positive mark in the history books. Rest in peace."

As NPR's Susan Stamberg reported in 2007, Tramiel was a founder of the Holocaust Museum in Washington, D.C. He made certain that the name of the U.S. serviceman who helped to liberate him, Vernon W. Tott, was etched into the memorial wall.