When a company files to go public it has to lay out in black and white the biggest risks that face the firm. What could kill it? What could undermine its business? Wipe out all its investors' money? Executives are required to reveal this by law.

It makes great reading, so I've been flipping through Facebook's IPO filing. And by far my favorite section is labeled "Risk Factors." Sure, there's some gobbledygook, but the part on mobile advertising is fascinating — if you pull it apart.

Roughly half of Facebook's users check in on mobile devices every month, but so far the company isn't making any money on mobile. Not a dime. It doesn't even sell mobile ads.

Turns out these ads are tough to get right.

"Mobile is a very small screen," says Julie Ask, a vice president at Forrester Research who specializes in mobile marketing. "It's not as if I'm on my PC and there can be advertising on the top or on the side and I can ignore it and still do what I want to do. On a small screen it's right in front of my face."

A bad mobile ad can muck up the entire experience. So Ask believes Facebook is smart to go slow.

"I'm glad Facebook isn't making any money selling advertising on their mobile application and their mobile services for Facebook," she says.

 

As a customer Ask might be happy — but as a business this is a problem Facebook will have to solve. The markets where it needs to grow — like India, Russia and Brazil — are dominated by mobile devices.

Last year smartphones outsold PCs for the first time ever. And advertisers see huge potential here.

"The phone knows a lot more about me than my PC does," Ask says.

She says you don't share you phone with anyone. It's in your pocket all the time. It knows which direction you are traveling, how fast you are moving and probably your altitude.

"I use my phone to bank. I use my phone for Facebook. I use my phone to shop, to change the DVR at home. I read books, I listen to music," she adds.

Your phone might know you better than your own mother. If Facebook doesn't figure out how to make money on mobile advertising someone else will. Advertisers are salivating. But, she says, "If you think about all the things Facebook knows about us, I think it can begin to seem a bit creepy." Especially if you consider what else Facebook could learn using our phones.

And that brings us to another big risk facing Facebook's business: privacy.

"Privacy is Facebook's Achilles' heel," says Jeff Chester, a privacy advocate at the Center for Digital Democracy. "Its entire business model is based on selling of user data to advertisers large and small."

And Facebook executives know this could spell trouble. As the company said in its IPO filing:

"Our business is subject to complex and evolving U.S. and foreign laws and regulations regarding privacy, data protection and other matters. Many of these laws and regulations are subject to change."

This week in Europe, Facebook executives were forced into having a meeting with a 24-year-old Austrian law student named Max Schrems. He is spearheading a public relations crusade against Facebook and has persuaded thousands of Facebook users to demand to see their data. "But they [Facebook] are only showing us a small portion of the data they collect," Schrems says.

He argues that when Facebook says it's deleting information about you it actually doesn't delete it — the company just hides the link. Schrems says Facebook refuses to share all the information it collects about users. Schrems' complaints have captured the attention of European regulators. In December, the company said an Irish government audit of its policies "demonstrates how Facebook adheres to European data protection principles."

Chester says "Facebook has to walk a very difficult digital tightrope."

He says that to continue to grow the company needs to keep making all of us comfortable sharing more and more information about ourselves and our friends. And it has to do this while finding new ways to sell that data to advertisers.

"What Facebook is going to have to do is make this seem less like Big Brother — less creepy and more like Big Mother," says Forrester's Julie Ask. "What I mean by Big Mother is somebody or something that is looking out for me that is helping me make good decisions."

Ask says creating products that sell billions of dollars in ads while at the same time inspiring that kind of trust will be an enormous challenge. Pulling it off will require a brilliant team of social engineers working like mad.

And this brings us to perhaps my favorite risk factor in Facebook's 186-page filing:

"We have a number of current employees whose equity ownership in our company gives them a substantial amount of personal wealth. Likewise, we have a number of current employees whose equity awards are fully vested and shortly after the completion of our initial public offering will be entitled to receive substantial amounts of our capital stock. As a result, it may be difficult for us to continue to retain and motivate these employees, and this wealth could affect their decisions about whether or not they continue to work for us."

After the IPO, Facebook's top executives are worried that many of their best and brightest employees will be too rich to want to work.

"These are young kids that we are talking about typically in their early 20s. Suddenly they have more money than they ever dreamed about," says Vivek Wadhwa, a fellow at Stanford's law school and an astute observer of Silicon Valley culture. "When you have so much money to spend, suddenly working day and night becomes less of a priority."

Facebook filed to go public this week, and many analysts expect that it will be valued between $75 billion and $100 billion on the day of its initial public offering. That would make Facebook more valuable than GM, Ford and even Goldman Sachs.

What's most remarkable is that the company has barely 3,000 employees, and many of them are about to become very, very rich.

There's this guy, David Choe. Back in the day, Facebook hired him to paint graffiti murals all over the company's original office space in Palo Alto, Calif. Even Marc Zuckerberg got into the act.

Choe was paid for his work in stock. And according to The New York Times, that stock could soon be worth $200 million.

 

One of the guilty pleasures of an IPO filing is getting to peer inside a company as famous as Facebook and get a glimpse of who owns what. Of course there's Zuckerberg.

"Obviously, he should be worth a tidy $25 billion," says Henry Blodget, editor of Business Insider and the bad-boy analyst of the last Internet boom.

This time the bad boys are becoming billionaires — like Sean Parker, Facebook's first president. Before that, he co-founded Napster.

"The man who, in the movie at least, famously said 'a million isn't cool — a billion is cool,' " Blodget says. "And he will have several of them."

In that movie, The Social Network, Dustin Moskowitz had little more than a cameo. He was Zuckerberg's college roommate, but he could soon be worth $7 billion.

"If he had been down the hall, we wouldn't be talking about him," says Michael Stern, who runs the website Who Owns Facebook. He says Moskowitz wasn't the only winner of the roommate lottery. Zuckerberg's prep school roommate will get a couple hundred million.

"A lot of people won the lottery here," Blodget says. And, he says, not all of these future billionaires are men.

After Facebook COO Sheryl Sandberg's options vest, "she's going to be one of the richest self-made women ever," Blodget says.

According to its filings, Facebook has close to 1,100 stockholders. Many more could benefit from restricted stock options. But Robert Frank, who writes the Wealth Report blog at the Wall Street Journal and is the author of the new book The High-Beta Rich, says that doesn't mean all these folks will become instant millionaires.

"More than half of this company is owned by just five large shareholders," he says. "So, like most of America, wealth in Facebook is very top-heavy, concentrated among just a few people at the top."

In Silicon Valley, it's become conventional wisdom that Facebook's IPO will create 1,000 new millionaires. And while that may be true, Frank says it's impossible to know for sure.

"Even those with a lot of shares will see their wealth fluctuate wildly. So the number of millionaires may change," he says.

After all, this is a tech stock, and Frank says all this wealth is just on paper — at least for now.

The number of new American Facebook users is going down, and eventually the same will happen in every other market. Soon, Facebook's growth is going to depend on each user spending more time logged in, playing games, watching movies, planning trips and so on.

If you do the math and divide Facebook's value ($100 billion) by its number of users (845 million), that makes every Facebook account worth about $125 — money the company will get from eyeballs on ads. So the longer you're on Facebook, the more ads you look at and the more money the company makes.

That means Facebook would most likely be happy to hear that Duke University junior Justine Hong uses its iPhone app on walks across campus to keep abreast of the news.

"I can open the app as I walk to class or whatnot and see if there's a campus editorial from the campus website that's been getting a lot of comments or a national news story that my friends have been sharing a lot," Hong says. "It's pretty convenient and quick when I don't have time to actually read a paper."

Facebook also has apps for games, shopping, videos, movies and chatting. Last year, it integrated the music service Spotify, a feature that has kept Facebook user Liam Passmore logged in even longer.

"One of the elements of Spotify that really attracted me is the ticker on the side of Facebook," Passmore says. "You can see what your friends are listening to on Spotify."

For example, the other day, Passmore was at the roller rink when he heard a song he liked. He says he was a little surprised when his friend's 9- and 12-year-old kids told him the singer was Selena Gomez, of Justin Bieber relationship fame, and he wanted to share his amusement.

"I went to Spotify and played it on my Facebook account to let people know I was listening to Selena Gomez so they could comment back," says the 54-year-old.

Passmore's is another story Facebook executives would most likely be happy to hear. He's spending more time on the site, and that is exactly what Facebook needs, says Michael Pachter, a Wedbush analyst who follows the company.

"Ultimately, it's an advertising model; and ultimately, the longer you're on the site, the more information they have about you, the more they can advertise directly to you," Pachter says. "So clearly the more engaged the user, the more profitable that user will be."

Pachter says one strategy the company is starting to use more is to connect with popular websites, so when you sign in to your favorite newspaper site or game site you can use your Facebook username and password.

Justin Smith, the founder of Inside Network, which is dedicated to researching Facebook, says, "Facebook's strategy will be to increase penetration amongst many of the most popular websites where people are spending their time, instead of only being available when people come to Facebook.com."

A lot of people think it would make sense for Facebook to build its own phone or develop its own mobile operating system. The caveat for Facebook's strategy of becoming a portal to everything on the Internet is that many users like Duke student Hong aren't signing up.

"I think it gets a little bit scary when you're sharing a lot of information via your Facebook account," Hong says.

But with new pressures from Wall Street, Facebook is certainly going to try hard to lure Hong and other users deeper into its universe.

The FBI has raised eyebrows in the tech world with a public document that asks for advice on how to harvest information from social networking sites.

According to the document, the bureau is looking for a mapping app — or a "geospatial alert and analysis mapping application" — that, among other things, helps it search "publicly available" sources like Facebook and Twitter for national security threats.

Some other items on the FBI's functionality wish list include:

• "... instant notifications of breaking events, incidents, and emerging threats that have been vetted and meet the defined search parameters."

• "Ability to immediately access geospatial maps" that plot "US Domestic terrorist data"; "global terrorist data"; "US Embassy, consulate and military installations around the world"; weather conditions and forecasts; and "video feeds from traffic cameras."

• "Ability to instantly search and monitor key words and strings in all 'publicly available' tweets across the Twitter Site and any other 'publicly available' social networking sites/forums (i .e. Facebook, MySpace, etc.)."

• "Ability to immediately translate into English, tweets and any other open forum publicly available social media captured in a foreign language."

• "Ability to geo-locate the open source social media 'search' by setting a radius by both miles and kilometers (i.e. 5 miles, 10 miles, 50 miles radius) that will allow the user to quickly narrow the search to a specific area/region/location."

• The ability to "geospatially locate bad actors or groups and analyze their movements, vulnerabilities, limitations, and possible adverse actions"

• The ability to "develop pattern-of-life matrices to support law enforcement planning and enforcement operations"

• "... reference documents such as a dictionary of 'tweet' lingo"

Sean Gourley has worked with defense agencies in the past and now heads the intelligence firm Quid. He gives NPR's Audie Cornish one example for how the agency might use the app to monitor breaking news.

"If there's an attack that's just been carried out in north Afghanistan that they weren't aware of, there might be reports of that on the social media channels that they're watching," Gourley says. "[People] might be tweeting, 'I heard a loud bang,' or someone says, 'Maybe there's a bomb around the corner' or there are these kinds of reports. Now, each of these pieces kind of starts to form a little bit of a mosaic and they start to combine this mosaic back together to say, 'We can be pretty sure that something happened here and here's what we think it is.' "

But the FBI also specifies that it wants to use the app to "predict future actions taken by bad actors." According to Gourley, that involves creating profiles of known bad actors based on their social media presence.

"Then what they can do with that is say, 'Here's the kind of profile of somebody that we'd be potentially interested in, even if we don't know that they're already a bad actor,' " Gourley says. "I should say that this stuff is all very experimental at the moment, and by no means does it exist today."

In an email statement to NPR, the FBI said, "The application will not focus on specific persons or protected groups, but on words that relate to 'events' and 'crisis,' and activities constituting violations of federal criminal law or threats to national security."

Then there's the question of why the FBI — an agency that's usually reluctant when it comes to sharing its social media tactics — would publicly lay out its intelligence-gathering plans and then ask for civilian help in executing them. Gourley theorizes that it has something to do with the fact that these days it's easier to find qualified mathematics Ph.D.'s in Silicon Valley than it is to find them in the federal government.

"What that means is the top solutions to these kinds of problems don't actually lie within the government anymore; they actually start to lie in the startup companies," Gourley says. "So increasingly the government starts to turn to these groups to say, 'Can you help us solve these types of problems?' "

Many investors are expecting Facebook to file papers for an initial public offering sometime later this week. The company, which was founded in a Harvard dorm room less than a decade ago, is expected to be valued at nearly $100 billion by Wall Street.

And if these early reports are true this is shaping up to be the biggest Internet IPO ever.

"It will be larger than the Google IPO — larger than the Amazon IPO — the largest internet IPO in history," says Kathleen Smith. She tracks initial public offerings at Renaissance Capital. "It's rumored that they will seek to raise $10 billion."

The deal could create more than 1,000 Facebook millionaires and is likely to give Facebook's 27-year-old co-founder and CEO, Mark Zuckerberg, a net worth north of $20 billion — at least on paper.

So this all kind of raises the question: Is Facebook worth the price, or is this another Internet bubble in the making?

"This is very expensive company, let's face it," says Sam Hamadeh, who follows the tech industry and Wall Street for the financial research company PrivCo. "At $100 billion you are talking about one of the largest companies in the United States, or the most valuable companies. The upside is reasonably limited."

Hamedeh believes this is one of the reasons that Morgan Stanley may end up leading the IPO instead of Goldman Sachs. Morgan has an enormous network of brokers who sell stock to wealthy individuals like doctors, lawyers and retirees.

"Those are the kind of people who will buy without digging too much into the numbers or being picky about the value of the company," he says. "They tend to buy company names that they recognize."

Hamedeh says these retail investors tend to be less price sensitive than the big institutional investors Goldman Sachs typically deals with.

And Hamedeh says Facebook will have to grow like a weed for years to justify its stock price.

But the reason so many investors seem optimistic is that Facebook has been growing like a weed.

"We forecast that Facebook's revenue in 2010 was about $2 billion," says Debra Aho Williamson, an analyst at eMarketer, which tracks online advertising sold by private companies.

She says this year Facebook brought in more than $4.2 billion in revenue, "so you can see that it more than doubled from 2010 to 2011," she adds.

The year before that Williamson estimates that the company's revenues tripled. Earnings figures won't be available until the company files to go public and releases audited financial statements.

Facebook's Timeline — the long-anticipated overhaul of the site — is rolling out across the world this week.

Timeline allows friends to surf through all your posts going back to the beginning of Facbeook time. Graphically it can be a beautiful thing. Mark Zuckerberg calls it a chance for users to tell the stories of their lives. And over the next few weeks, users across the world will get it on their profile.

But here's the important part — once you get it, you will have just seven days to clean up all your old posts and make it presentable to the world.

The problem with Facebook's Timeline is that the story you chose to tell about your life back in college in 2004 might be considerably different from the story you would like to tell about your life now. But Timeline will make all those old posts and photos documenting things back in the day easily visible to the world.

So unless you take action now and clean up your profile, be prepared to experience the joy of oversharing.

My recommendation — forget that work deadline. Your kids' homework can wait — order pizza for dinner. You have work to do. Facebook, your true corporate master, is calling and it wants you to put in a couple hours right now creating beautiful new content for its site.

Get busy and stop complaining. And if you don't clean up your profile — don't say you were not warned.

What?! You didn't read the terms of service?

OK, to be fair there is still one other option. You can quit Facebook, pull the plug and cancel your account.

Apple has been taking a lot of heat lately for working conditions at plants making its products in China.

There've been stories in The New York Times, an hour was devoted to the subject on This American Life and there are countless blog posts and tweets, like this one from the Times asking, "Would you pay more for an iPhone if it were made in the United States?"

Of course, Apple is not the only electronics giant that manufactures its gadgets in China. And bleak working conditions have been well documented at most of the company's rivals, from Dell and Hewlett-Packard to Nokia and Sony.

Interestingly, some of the best reporting about abuses in Apple's supply chain is done by Apple itself. Each year in January the company publishes its "Supplier Responsibility Progress Report."

It is damning.

In the 2011 report, Apple reported 91 documented incidences of child labor at Apple plants. In this year's report, the company went into detail about what led to explosions at plants owned by Foxconn and Ri-Teng that together injured more than 70 people.

If you are outside of Apple it is difficult to know exactly who the company is dealing with, and what factories are manufacturing its products. You can document a problem at a factory, but proving that factory is making Apple products is another challenge. Until two weeks ago — even the names of Apple's largest suppliers were a closely guarded company secret.

And Apple's relationships with its largest suppliers are complex and tangled. Apple needs these firms. Its enormous financial success depends on them.

But some, like Pegatron and its subsidiaries Ri-Teng and Kaedar are repeat offenders. The explosion at a Ri-Teng plant was featured in the Times Thursday.

Pegatron suspended Kaedar's top executive in 2010 over allegations that Kaedar's representatives were paying kickbacks to an Apple manager in return for business. That manager, Paul Shin Devine, was criminally charged in the case. The case is pending.

Still, Apple kept working with Pegatron and Kaedar. And as recently as this fall a Kaedar plant — allegedly making Apple products — was having environmental problems. Even after the plant was cleaned up there were reports villagers had been threatened by local thugs and told to keep quiet.

Every Apple employee I have ever spoken to about these issues cares deeply about improving working conditions and environmental safety in its supply chain. But perhaps even a company as controlling as Apple can have a hard time managing a supply chain in China.

Engineers from Facebook, Twitter and other social media firms have launched an app that allows social searching on Google to become truly social. And they are calling it Don't Be Evil, a play on Google's fabled motto.

It you don't spend your time reading tech blogs here's the quick back story. Last week Google launched a new search tool. The Googlers call it Search Plus Your World. It integrates photos, posts and videos that have been shared with you. It made sharing social, but here's the thing: It only integrated what was shared using Google+.

Facebook and Twitter and sites like Tumblr went nuts. The effect of Google's social search was to push content on their sites — content that may have been shared with you — well down the page in Google's rankings.

Bloggers who normally want the government to keep their hands off the Internet called for an investigation by the Federal Trade Commission. And Googlers — somewhat disingenuously — implied that Google was sharing all the social information it had access to.

Over the weekend coders at a handful of other companies got busy. These engineers built a simple plug-in called a bookmarklet that you can download at focusontheuser.org.

This app uses only data Google already has to give users a more inclusive social search experience.

Using the app requires a couple of clicks — for each search. But when you click you can see for yourself how Search Plus Your World is favoring Google's own social network. So now the question is what will Google do about this? Will it take the suggestion of its competitors and focus on the user?

Or will it keep trying to use search to make its own social offering more prominent? For now at least, it's up to Google.

Now wasn't that easier than an FTC investigation?

Although, Google co-founder and CEO Larry Page may want to re-read Google's code of conduct, or he may want to amend it. It's up to him.

Google will begin allowing users to add nicknames on Google+, Bradley Horowitz, the vice president of product at Google's social network said Tuesday.

True pseudonyms are still verboten on the network unless you go through an application process. To earn the right not to use your real name on Google+ you will have to prove you already have an online following that knows you that way.

When Google rolled out its social network last year, it had this ironclad rule: no fake names. It didn't matter if you were a Syrian activist and wanted to use Google+ to post about street protests in Damascus or a spammer — you have to use a real name or risk getting kicked off.

Why? Because for Google its social network is not really about competing with Facebook to create a place where you can hang out online. It's about figuring out who you really are.

Basically tracking the real identity of real people and collecting their online preferences is the heart of Google+ mission. Just ask Eric Schmidt.

(Sounds an awful lot like a liking something on Facebook doesn't it? Facebook's getting great data — and by the way it requires you to use real names too.)

But to understand why Google cares about this you have to go back to the beginning. When Larry Page built his first search engine he basically copied an academic system for weighting the impact of journal articles. The more time the article was cited by other papers, the more influential it was.

Page decided that links on Web pages were analogous to academic journal citations. So the more links your site had to it — the more important it was and the higher it would rank in Google's search results. Page was really just harnessing the wisdom of the crowd. In the early days of the Web, real people made those links and they were real endorsements of the content they were linking to.

The problem with Page's system was that Google became powerful and spammers decided to flood the Web with fake links to try to game the results. Sorting out real links from fake ones takes enormous effort. Basically Google's search engine engineers are in a non-stop battle with spammers — and are desperate to find a better way — or better, clearer data.

And that's where Google+ comes in. If the people on Google+ are real people and they are expressing real preferences, then their likes are real. If you sign into your Google+ account and search and browse the Web, Google can be a bit more certain there is a human being back there behind the keystrokes. It knows it's getting better data.

And for now, at least, better data is more important to Google than figuring out a way to help dissidents use its social network safely and anonymously.

Last year, Stanford University computer science professor Sebastian Thrun — also known as the fellow who helped build Google's self-driving car — got together with a small group of Stanford colleagues and they impulsively decided to open their classes to the world.

They would allow anyone, anywhere to attend online, take quizzes, ask questions and even get grades for free. They made the announcement with almost no fanfare by sending out a single email to a professional group.

"Within hours, we had 5,000 students signed up," Thrun says. "That was on a Saturday morning. On Sunday night, we had 10,000 students. And Monday morning, Stanford — who we didn't really inform — learned about this and we had a number of meetings."

You can only imagine what those meetings must have been like, with professors telling the school they wanted to teach free, graded online classes for which students could receive a certificate of completion. And, oh by the way, tens of thousands have already signed up to participate.

For decades, technology has promised to remake education — and it may finally be about to deliver. Apple's moving into the textbook market, startups and nonprofits are re-imaging what K-12 education could look like, and now some in Silicon Valley are eager for technology and the Internet to transform education's more elite institutions.

Thrun's colleague Andrew Ng taught a free, online machine learning class that ultimately attracted more than 100,000 students. When I ask Ng how Stanford's administration reacted to their proposition, he's silent for a second. "Oh boy," he says, "I think there was a strong sense that we were all suddenly in a brave new world."

Ng says there were long conversations about whether or not to give online students a certificate bearing the university's name. But Stanford balked and ultimately the school settled on giving students a letter of accomplishment from the professors that did not mention the university's name.

"We are still having conversations about that," says James Plummer, dean of Stanford's School of Engineering. "I think it will actually be a long time — maybe never — when actual Stanford degrees would be given for fully online work by anyone who wishes to register for the courses."

 

'Uncharted Territory'

Thrun's online class on artificial intelligence or A.I., which he co-taught with Google's Peter Norvig, eventually drew more than 160,000 students who received detailed grades and a class ranking.

"We reached many more students, Peter and I, with this one class than all other A.I. professors combined reached in the last year," Thrun says.

Thrun believes a class that size creates a valuable credential — even if Stanford doesn't recognize it. Students hailed from 190 different countries, including Australia, China, Ukraine and the U.S. They included high school students, women with disabilities, teachers and retirees — and they were all taking the same class Stanford students took, grades and all. But the online participants didn't get credit.

"I think we all realized we were in uncharted territory," Thrun says. "As we move forward, it is my real goal to invent an education platform that has high quality to it, [that] prevents cheating, that really enables students to go through it to be empowered to find better jobs."

Widespread Impact

Stanford does award degrees for online work, but only to students who get through the admissions process and pay sometimes $40,000 or $50,000 for a master's degree. Technology could push prices down.

Dean Plummer believes low-cost, high-quality online education will have a profound impact in high education, even at institutions as august as Stanford. He doesn't think it will diminish demand for undergraduate degrees or Ph.D.s, but he says the impact on master's programs could be profound.

"What it will look like in 10 years or 20 years or 30 years — your guess is as good as mine," he says. "But I think the impact will be large and it will be widespread."

Online education and distance learning have been going on at Stanford and other schools for years, but Plummer believes the technology has reached an inflection point.

Videos stored online let students build course work into their schedules anywhere in the world. Embedded quizzes let students monitor their own progress and give professors much richer data to improve their teaching.

Ng noticed that 5,000 students made the identical mistake in an online quiz. Within minutes, teachers were able to respond and clarify the issue that had led a large fraction of the class down a dead-end path.

Global Benefits

Daphne Koller is a computer science professor at Stanford, and a MacArthur "Genius" Fellow. She has been working for years to make online education more engaging and interactive.

"On the long term, I think the potential for this to revolutionize education is just tremendous," Koller says. "There are millions of people around the world that have access only to the poorest quality of education or sometimes nothing at all."

Technology could change that by making it possible to teach classes with 100,000 students as easily and as cheaply as a class with just 100. And if you look around the world, demand for education in places like South Africa is enormous.

Almost two weeks ago, at the University of Johannesburg, more than 20 people were injured and one woman was killed trying register for a limited number of openings. Thousands had camped out overnight hoping to snag one of the few available places and when the gates opened, there was a stampede.

Koller hopes that in the future, technology will help prevent these kinds of tragedies.

Trying 'Bold New Things'

Over the past six months, Thrun has spent roughly $200,000 of his own money and lined up venture capital to create Udacity, a new online institution of higher learning independent of Stanford. "We are committed to free online education for everybody."

Udacity is announcing two new classes on Monday. One will teach students to build their own search engine and the other how to program a self-driving car. Eventually, the founders hope to offer a full slate of classes in computer science.

Thrun says Stanford's mission is to attract the top 1 percent of students from all over in the world and bring them to campus, but Udacity's mission is different. He's striving for free, quality education for all, anywhere.

Koller agrees, but she says Stanford and its professors will adapt.

"How it all is going to pan out is something that I don't think anyone has a very clear idea of," she says. "But what I think is clear is that this change is coming and it's coming whether we like it or not. So I think the right strategy is to embrace that change."

Over the years, Stanford has launched dozens of disruptive technologies into the world, but now administrators and professors seem to agree that the school may be about to disrupt itself. This semester Stanford will put 17 interactive courses online for free.

"Stanford has always been a place where we were will to try bold new things," Plummer says. "Even if we don't know what the consequences would be."

More than 3,100 companies flocked to the Consumer Electronics Show this year to hawk their wares. The show's host, the Consumer Electronics Association, estimates that roughly 20,000 products were launched at the show this year. And chances are good that many — maybe even most — will fail.

The show will close its doors Friday, and many of the little companies and entrepreneurs that are packing up may not make it back next year. Still, their hustle is infectious. And with luck, a few startups launched here this year could go on to become huge.

 

David Barnett, a philosophy professor at the University of Colorado, hopes his company PopSocket might be one of them.

But the formula for hitting it big at CES is one part great product, one part hustle, and one part luck.

Before I came out to Las Vegas for this year's show, a friend told me about this tiny little company that had a new way of waterproofing gadgets.

I was intrigued, but by the time I made my way to HzO's booth, this little company had become a media sensation.

HzO uses a vacuum to coat the interior circuits of things like iPhones and BlackBerrys with a waterproof sealant. After it's been treated, you can drop your iPad in a pool and it will still work — even if it fills up with water. A cellphone sitting at the bottom of a pitcher of lemonade can still receive calls. And a report on ABC's Good Morning America featured the company.

It created a bit of a sensation. That TV spot at 2:45 a.m. PST on Monday ran the day before CES even started.

"It's fantastic for us — we've had such an outpouring of interest," said HzO President Paul Clayton.

Those 22 seconds of TV time were like rocket fuel. By Tuesday morning, every major electronics manufacturer was talking to Clayton's company. By Thursday, a Google search for "HzO and CES" turned up 199,000 hits.

"CES is really a launching pad," says Jason Oxman, senior vice president of industry affairs at the CEA. "From the VCR to DVD player to Blu-Ray to HDTV, from 3-D to satellite radio to the xBox, they have all been unveiled at CES. What's interesting about that is by the time the technology is first unveiled, nobody knows that it is going to be a game changer."

Oxman says each year something like 20,000 new products debut at the show. But with so many debuts, not everything can be a hit.

Take the Computer Companion. It's a giant blinking eyeball on a stick. But that's not all. It also blinks and reacts when you type. If you type "sorry," it squeaks and falls to the ground. Type "happy" and it blinks coyingly.

There is the Pleo RB, a plastic dinosaur robot. It can be yours for just $469. But really, that's not much — as a woman behind the booth explained.

"It's actually like a real pet," she said. "Without the poo-poo and wee-wee."

What? That's ridiculous! For $469, poo-poo is not included? An outrage.

"Among those 20,000 products, there are a lot of them that are not going to make it," Oxman said. "No question about that."

But Oxman steadfastly refused to answer my next question. So I asked Bill Bain, out on the show floor, instead: What's the worst product you've seen this year?

His answer: "Probably 8 million versions of iPhone 4 cases."

Nonetheless, Barnett, the professor, was undaunted. He is completely convinced that what the world really needs is just one more iPhone case.

Barnett's business plan is to raise money on Kickstarter.com, and then start manufacturing his special case. He spells it all out in his video.

Barnett didn't even have a booth. But there he was cruising up and down the aisles — with a prototype in one hand and a pile of business cards in the other.

And yes, he really is a philosophy professor. You know — philosophy informs this work. The design process "was a circle rotating from prototype to rejection and then start again — it was Hegelian cycle."

Actually, Barnett worked with Speck Design to come up with the pop-out pivoting stand.

But if Barnett's little business doesn't pan out, he'll will survive. After all, he has tenure — and, actually, those cases are pretty cool.

I just got my first smartphone a few weeks ago. And one of the first things I downloaded, after the NPR app of course, was Words With Friends. That's the popular Scrabble-style for-your-phone interactive game that recently got some attention after Alec Baldwin was kicked off an American Airlines flight when he couldn't tear himself away.

So when I got the app, I immediately invited my younger brother to a match.

"I've never lost a game," my brother bragged over Gchat after he got the invite. I was undaunted about the prospect of sparring with my brother, who is studying engineering, in a game that tests word knowledge and spelling.

But, to my surprise, it didn't take long for him to achieve a comfortable lead on my score.

"I won't play with you if you cheat," I messaged him.

"I'm not cheating," he replied.

As the point spread exceeded 100 points, it made me think: Is there more to Words With Friends than the ability to string words together with letter tiles? Turns out, there definitely is. After browsing YouTube, I came across several strategy videos by William Spaniel, a political science doctoral student at the University of Rochester who studies game theory. He also authored Game Theory 101: The Basics.

One of his big tips: Think about trying to limit how many points your opponent scores on you.

"When you play random games against players, you see a huge separation between bad players and average players," he says.

The bad players, he says, aim to make the longest words and score a lot of points. But better players try to restrict their opponent's access to big-money bonus spaces, particularly triple letter and triple word score spots.

"If you make a bad mistake about that, that can be the end of the game right there," he says. In one of his YouTube videos, he says that 80 percent of the game revolves around the triple letter and triple word spots — and the spaces connecting them.

Another pointer?

"You should definitely know all the two-letter words to play across another word," he says. For example, if the word "candy" is on the board, a player could put the word "broom" parallel to the "y" in "candy." The move creates two words: broom and by. And if that "b" is on a bonus spot, that means mega points.

After implementing some of Spaniel's tips, I've definitely seen an improvement in my own Words With Friends performance. But that — and learning that players can try out several different letter combinations on the board without losing a turn — still hasn't been enough to catch up to my brother.

Computer chips and technology are invading all sorts of previously dumb devices. Phones are now smart. Cars are becoming connected computers on wheels. Call it the computerization of everything. But how we interact with these machines is bound to evolve.

At this year's Consumer Electronics Show in Las Vegas, touch pads are everywhere — in phones, in tablets and laptop screens. And Brad Feld has had enough.

"The whole idea that it is socially acceptable or functionally acceptable to have a whole mass of humanity that is staring down at a piece of glass and pounding on it with their thumbs is kind of absurd," says Feld, a venture capitalist at the Foundry Group. His firm is investing aggressively in startups that are creating new ways for humans and computers to interact.

"Twenty years from now the way we interact with computing will be unrecognizable to us today," he says.

But judging from the displays at CES, the touch pad craze hasn't crested — yet. Just inside Microsoft's enormous booth here there's a giant touch pad the size of a tabletop. It looks like the love child of an iPad and a flat-screen TV.

But Microsoft's Steve Clayton says it's a little bit different. This table doesn't just respond to touch, he says, it's actually watching us, paying attention to where we are — where we're standing.

"If I click on one of these images or I tap on one, the image rotates to me," Clayton explains. "This device can see, it can see the orientation of my finger and it can present the image towards me."

More and more computers are doing just that — paying attention, watching and listening to us.

Microsoft's Kinect responds to gestures. Apple's Siri listens to our voice. And observant little machines are popping up in places you might not expect.

Matt Rodgers is a founder at Nest, which has developed what it calls the first "learning thermostat." It observes patterns in your house, then programs itself.

"Use it like any non-programmable thermostat. Turn it up, turn it down and make yourself comfortable and Nest will learn your patterns," Rodgers says.

If you turn up the heat and then leave the house, Nest has sensors that will notice you are out and turn the heat down. You end up programming the computer inside this thermostat without even realizing you've done it.

John Underkoffler envisions a day where machines all around us that respond to how we move and what we want. He's best known as the brains behind the futuristic computers in Steven Spielberg's film Minority Report.

Spielberg didn't want Tom Cruise to mess around with keyboards or touch screens in a film set in the future.

"When I proposed to Steven that it could be a gestural interface that it could be body centered — human centered — and that you could literally point at the screens and command the pixels and sift data using your hands at a distance. I think Steven loved that idea," Underkoffler says.

So, in the 2002 film, Cruise stands in front of a screen and conducts his computer like Mickey Mouse in Fantasia.

Underkoffler built a working model at MIT and after the movie he refined it and started a company called Oblong. The full Oblong system can cost up to half a million dollars, but eventually he hopes it will control all sorts of machines "like laptops and desktops, but also computers that you don't think about — the front of your microwave oven, the dashboard of your car, the TV set in your living room."

And Oblong executives at CES this week say they see more and more signs that this transformation is on its way.

Not too long ago Nokia was the largest tech company in Europe. Its market cap rivaled Microsoft's. It helped create the mobile phone industry as we know it. But the emergence of a new generation of smartphones — led by Apple's iPhone and Android-based offerings from Samsung, HTC and others — left Nokia behind.

Now Nokia, with the help of Microsoft, is trying to force its way back into the North American smartphone market. At the Consumer Electronics show in Las Vegas, Nokia said it will begin selling a new Microsoft Windows phone on T-Mobile on Wednesday — and is unveiling the high-speed Lumia 900 this week.

The Lumia 900 will be launched exclusively on AT&T and will take advantage of that carrier's new high-speed 4G LTE network. Executives at Nokia have to hope this represents a turning point for the company.

Nokia spent billions on research. Just a decade ago Nokia's dominance seemed unassailable, but the last five years have not been kind to the Finnish mobile phone icon.

As Nokia struggled to catch up with consumer tastes, the company's research and partnerships with other giants like Intel failed to bear fruit. And in late 2010 the company's board hired a former Microsoft executive, Stephen Elop, to try to turn the firm around.

Elop decided last year to abandon Nokia's own smartphone operating system, comparing it to a burning oil platform in the North Sea. He said the company's predicament reminded him of an oil worker trapped in a disaster:

"In mere moments, he was surrounded by flames. Through the smoke and heat, he barely made his way out of the chaos to the platform's edge. When he looked down over the edge, all he could see were the dark, cold, foreboding Atlantic waters.

"As the fire approached him, the man had mere seconds to react. He could stand on the platform, and inevitably be consumed by the burning flames. Or, he could plunge 30 meters in to the freezing waters. The man was standing upon a 'burning platform,' and he needed to make a choice."

So Nokia jumped. It decided to commit the company to building new phones based on Microsoft's Windows operating system. Microsoft — like Nokia — had been left behind in the smartphone market after a series of false starts. Microsoft's market share was virtually non-existent.

After announcing the switch to Windows, sales of existing Nokia smartphones collapsed. It has taken nearly a year to bring new Microsoft-powered phones to market in the United States. In the meantime Nokia has been stuck — metaphorically at least — struggling to keep its head above water in the frigid North Atlantic.

Education has .edu, .gov belongs to the government, and now, adult entertainment has .xxx.

Since last week, anyone can go online and buy a domain name ending in .xxx — but it's not all adult entertainment companies that are rushing to purchase the new addresses.

Colleges and other institutions have purchased .xxx domains pre-emptively to prevent others from doing so and associating their names with adult content. And many big names in the adult entertainment industry are opposed to the possibility of censorship by places that could block the entire .xxx domain.

Stuart Lawley, chief executive officer of ICM Registry, the company that owns .xxx, has been fighting for approval to add the adult domain to the Web for the past 10 years. He says the domain acknowledges adult entertainment exists: People can then identify the content, he says, and either select it or avoid it as they see fit.

So far, more than 100,000 new domains have been registered for .xxx addresses — and some of those are quite specific.

"We've had requests for like 62-character-long names, and I have to admit, [for] some of them I've had to go look them up in the Urban Dictionary to find out what they mean," Lawley says.

 

These new websites are advertised as virus-free, and they'll be harder for kids to get to. Lawley says every .xxx site is automatically given a child protection label, and browsers can be set to automatically filter those sites out.

It sounds like a win-win for the adult entertainment industry and for people worried about child safety on the Web, but not all agree.

"We don't see it as a silver bullet," says Stephen Balkam, the CEO of the Family Online Safety Institute, which advocates keeping online adult entertainment away from kids. At most, Balkam says, the group sees .xxx as a modest filtering tool.

"It's not a quick and easy way to avoid porn, because there are many other sites, of course, that use the .com space that probably won't be using .xxx," Balkam says.

And that's the problem: Some of the largest online adult entertainment companies hate the new domain.

"We're not a believer of .xxx," says Michael Klein, president of Hustler. "We don't think it should be out there, nor have we registered any .xxx domains."

Klein argues that if the adult entertainment industry moved over to .xxx, adult sites would be too easy to censor, because all a country or a locality would have to do to block those sites would be to block .xxx.

And he says it's too expensive to bring all of Hustler's .com domains over to .xxx. The company owns thousands and thousands of domains, and at $60 to $80 each, it would be too much to spend every year on another set, he says.

Those views are shared by some of the biggest adult companies on the Internet. They say .xxx is too expensive and too restrictive, and they're staying away from it completely.

But so far there are thousands of .xxx domain names registered, so who's buying them? Some have been purchased by adult companies, but others are bought by institutions looking to protect their names.

Schools like Indiana University, Illinois State University and the University of North Carolina, Chapel Hill, just to name a few, all bought up combinations of their names back in September — so addresses like UNC.xxx are off the market.

Even NPR has bought up NPR.xxx. If you go there, you'll see a message telling you, "This domain has been reserved from registration." And in case you were wondering, there aren't plans to develop it anytime soon.