Back in early May, developer Joe Hewitt surprised a lot of people when he abruptly announced he was leaving Facebook after nearly four years. Hewitt had been vital to everything from the social network’s iPhone app (the most popular app of all time) to (supposedly) the don’t-call-it-a-phone secret phone project. But he apparently wanted to return closer to his pure web roots (he was an early developer of Firefox and built the still widely-used Firebug dev tool). And today we’re seeing the first fruits of that journey back.

Hewitt has just announced a new site, Up on a Hill, a photo blog he made in collaboration with his girlfriend, Laura Copeland. The site itself looks great, but the real key (at least from the tech perspective) is Hewitt’s use of Scrollability, the native scrolling framework he created for mobile web apps. “Most mobile websites still rely on clicking (actually, tapping) buttons to navigate through sections that should really be using inertial scrolling, like photo galleries. That’s unfortunate, because flicking through pages is a far more comfortable than tapping on small “next” and “previous” buttons,” Hewitt writes.

That’s funny. The first such a photo galleries that come to mind matching that description are on… Facebook.

As Hewitt notes, Up on a Hill was designed to work on desktops, phones, and iPads. And again, it looks great on all three. But Scrollability really shines on the iPad, where you can seamlessly flick up, down, left, or right to navigate the images.  ReadWriteWeb has more details about Scrollability from their initial look at the open source project last month.

“My hope is that Scrollability will encourage mobile web developers to be more like native app developers, and use inertial scrolling when it makes sense, rather than falling back on desktop conventions,” Hewitt ends his post tonight by saying. Remember, this is the guy who once ripped apart the state of web development as compared to native app development. Now he’s trying to do something about it. Bit by bit.

Movie trailers are among the most popular videos on YouTube. A typical movie trailer gets millions of views, but how many of those views are natural and who many are pushed as paid-for ads? Yes, movie trailers are all ads in a sense. But people seek them out just like any other 2-minute video. That is not what I am talking about.

The same movie trailers are also promoted through various means and shown as prerolls before other videos or via paid links and those views can also count towards the total. For instance, this trailer for the new Conan The Barbarian movie has been watched nearly 5.5 million times. If you click on the statistics right next to that number, you will see that 4.98 million of those views come from ads (see also below).

This is not an isolated incident. The trailer for Rise of the Planet of The Apes shows 7 million views, but nearly 5.8 million of those ad views. In this case, the statistics are hidden, but I got my hands on them (see second image below). Same for this X-Men trailer: 2 million out of 2.4 million views are ads (although this one is literally a 15-second teaser, not a full two-minute trailer like the other ones I’ve cited).

Not all ads count towards a view, but many do: Promoted Videos, skippable TrueView ads, homepage ads or search ads that drive traffic to the video page.

I find this practice to be surprising, so I asked YouTube for an explanation. A spokesperson wrote me the following in an email:

When it comes to paid advertising, view count of a video increases only when it’s clear that a viewer has made a choice to watch a video. For example, a viewer might make that intention known by clicking to watch a Promoted Video, opting-in to watch a TrueView in-stream ad, or playing a YouTube video embedded in a homepage ad.

To be clear, with standard in-stream ads where a viewer has no choice in its selection, we do not increase the videos view count.

Not every pre-roll ad counts towards a view, but all of those skippable, opt-in TrueView ads do count, and from the looks of things people are watching a lot of those. Some YouTube purists are up in arms about this practice. One commenter asks, “Remember when you could watch a video without having to sit through a commercial?”

There is nothing wrong with movie studios using their trailers as ads. After all, they are trailers (i.e., ads for movies). But when people search for videos, they tend to click on the ones with the most views. Apparently, those views can be bought.

Earlier this week GRP Parter VC and VC blogger Mark Suster gave the keynote talk at the Founder Institute’s Founder’s Showcase on “Getting Funded In A Frothy Market.” Suster began the keynote with the declarative statement that we’re in a bubble, “We’re in a bubble, you can quote me on that and I generally haven’t been saying that publicly,” he affirmed.

Suster went on to refer to the uniqueness of this particular period of exuberance, in that it’s localized, “If you’re in Cleveland, Ohio you don’t particularly feel like there’s a bubble,” but right now the usual 3-5 months it takes to raise capital have been distilled down to 3-5 days for startups in Silicon Valley, New York and L.A.

Suster urges these startups to raise money now, so they can survive when the bubble inevitably pops, “When the party’s over the party’s over” he went on, urging entrepreneurs to start raising… “when the Hors d’œuvre tray is passed around take two, and put a third in your pocket,” likening the market froth to a hopping party where everybody is drunk, off of their own Kool Aid in many cases.

Having lived through three previous cycles, Suster knows how the party will end (with a hangover for most), and relays his key takeaway which basically amounts to stocking up on supplies for the winter — So you can live to tell the tale:

“Go get yourself funded, in whatever way shape or form you have to, at whatever price you feel comfortable with, with people you trust like and respect in whatever amount and go build a company. Really in the end it’s kind of a binary outcome; You raise money and give it your all, you give it your college best and sometimes you succeed and sometimes you don’t.

It’s a wonderful experience to go through. I just remember in the last three cycles the companies that didn’t raise money are the ones that weren’t around to tell that story.

And I know how this ends, this is my crystal ball; When the party ends everyone goes home and you can’t hire people, you can’t raise money, the Wall Street Journal isn’t writing articles about you any more, no one returns your phone calls. Honestly that’s the most rewarding time to be a startup entrepreneur, provided you have money.”

Editor’s note: James Altucher is an investor, programmer, author, and entrepreneur. He is Managing Director of Formula Capital and has written 6 books on investing. His latest book he’s giving away free. He built and sold Reset, Inc in 1998 and Stockpickr.com in 2007, among others. You can follow him @jaltucher.

I know through hard experience that I’m one of the dumbest investors I know. Here are two examples: the time I cost Yasser Arafat $2 million (and lost investors another $100 million in the process) and the worst VC decision ever made (of course, it was made by me). Both happened around the same time period (2000-2001) and solidified my reputation in history as possibly the worst investor ever.

However, I learn from my experiences. After a few successful startups following that period (Stockpickr.com notably, which sold to thestreet.com in 2007) I’ve started to do more angel investing and, in doing so, have figured out a check list to help me avoid my prior mistakes. If you follow this checklist I think you can do well as an angel investor.

Everyone trashes angel investors but angels have one critical edge over VC investors: we don’t have to do anything. I don’t have to put any money to work ever if I don’t want to. I can pass on deals all day long. VCs, because its their job, often have a strong financial incentive to eventually (say, over a 5-year period) put money to work since they take fees on the money that’s out there. VCs also have a psychological reason to put money to work. It’s their job. So if they are doing a good job they often feel the need (for better or worse) to put money to work.

The Angel Checklist

1. Invest with co-investors smarter than you. I don’t invest now unless there is a co-investor going in at the same terms as me who has significantly more experience in the field as well as experience with the entrepreneurs we are investing in. I can’t give examples in each case here but with Buddy Media, for example, I went in with many successful co-investors.
2. Invest in CEOs who have done it before. Buddy Media is another great example. I knew Michael Lazerow because after I started Stockpickr he met with me with the possible idea to become CEO. His lock-up after selling Golf.com to Time Warner was coming to an end and he wanted something new to do. Rather than let him be CEO, I blatantly stole all his ideas and then was lucky enough to back him in the venture he shortly thereafter started, Buddy Media. He had already done at least two successful startups so I was confident he knew what he was doing. Another example is Ticketfly where Andrew Dreskin had basically built and sold the same idea before, improved on it, and started again, and had great co-investors. BAM! I couldn’t ask for anything better.
3. Invest in strong demographic trends. 76 million baby boomers are retiring in the next few years. Other than the Internet (and subsidiary to that, Facebook alone) there’s no bigger demographic tidal wave happening in the United States. Personalized medicine is quickly becoming a standard technique for diagnosing and treating the elderly on illnesses ranging from cancer to depression. I look for companies tapping into this demographic trend and co-invest with several biotech investors who have done it successfully dozens of times over. The only thing I make sure is that I get in at their terms. Else, I get back to my mantra: “I’m too stupid to determine if this is a good value for me to get into.”
4. Get in at a low valuation. 1-3 are often good enough. But I like the added flourish of getting a good deal. I pass on about 19 out of every 20 deals I see. Maybe I pass on more. I should keep track of the statistics, but I don’t. There’s no one way to determine if a valuation was low. Clearly Twitter was low at its first round valuation of $20 million. That didn’t seem low to me and would probably have passed if I had the opportunity. Everything depends on the size of the market, what revenues one gets, etc. Again, though, this is related to (1) above. If I can get in where the best investors are getting in, along with other favorable terms (warrant coverage, full ratchet, favorable comps compared with other valuations in the space) then I feel like I have an edge. These deals are out there. The critical thing is sitting on your hands. Again, being an angel, I don’t have to do anything.

If you have 1-4 you almost don’t have to do anything else. If I’m co-investing with Kleiner Perkins I can usually assume their team of MBAs is hard at work doing all the due diligence for me. But often, to provide an extra layer of safety, I do my own work. And here’s the due-diligence checklist. To be honest, this checklist is often more about giving me comfort that I did something intelligent since I don’t really expect to uncover anything new, but every now and then something pops up.

Due diligence checklist

• Talk to CEO
• Talk to heads of sales in each region
• Talk to customers
• Talk to end users (since sometimes the customers are resellers)
• Do background checks on CEO, CFO, heads of sales
• Talk to all of the other investors

Although my general rule of thumb is, I don’t want to have any meetings. You know the secret to a quick meeting? No chairs and no donuts. Even quicker? Just use the phone and stay at home. That’s my meeting of preference.

With the above checklist I actually think angel investors have a strong edge over “professional” venture capital investors. They have a strong network but good angels have a strong network too (particularly with the rise of companies like AngelList). And if you follow rule No. 1 and piggyback with the best venture capitalists, then it’s the best of every world.

And look, the more VCs who make money, the more I will. On top of that, I hope to God we have a pretty strong bubble. Go Groupon!

Photo credit: Alan Cleaver.

There’s currently something going on in the outskirts of the tech world that’s a bit sensitive, so no one really likes to talk about it: we (journalists, bloggers, etc) are at war with the PR industry.

That sentence alone will throw the PR flacks into a tizzy. “Hyperbole!” “Sexy statement, no substance!” “Don’t believe everything you read!” And all the other bullshit they typically spew to blunt interesting concepts into dull, gray PR-friendly dribble. We are at war.

And no, this isn’t about dumbass embargoes (though that remains a huge problem that the PR industry doesn’t seem to have any real interest in solving). This goes deeper.

The fact of the matter is that the entire PR industry is like a weed growing out of control. Current estimates have PR people now outnumbering journalists 3 to 1. Think about that for a second. And one of the industries in which this infectious growth is most apparent is the tech industry, where it’s boom time. My email inbox is a testament to this. As is my voicemail inbox. I’d bet that at least 75 percent of the messages I get in the day are from PR people. Their campaign strategy in this war is shock and awe.

Now, I don’t mean to suggest that all PR people are evil or have the wrong intentions. Many are very nice people. And some are even very good at what they do. But increasingly what they do is nothing more than attempt to spin or grossly misrepresent what it is we do. For many of them, helping journalists/bloggers/writers get access to accurate information is secondary. It’s all about controlling a narrative — by any means necessary. And that has to stop.

Case in point: Facebook.

While I like many of Facebook’s PR team on an individual basis, as a whole, they are probably the worst in the industry when it comes to manipulation, double-speak, and all around slimeballishness. And while the Burson-Marsteller debacle (you know, the failed smear campaign against Google) showcased this fact to the world, things had been bad long before that. And they’re still bad.

A couple days ago, I wrote a story about a secret Facebook project called “Project Spartan“. I gave Facebook PR the heads up over a day before I published, to see if they wanted to comment, and they declined. So I wrote the story, and immediately the PR machine goes into action.

The basis for my story was that Spartan, as seen from the perspective of developers actually working on the project and from myself (I saw everything), is clearly aimed to be step one in a maneuver against the companies currently controlling the mobile ecosystem, namely Apple and Google. Facebook has been making it very clear over the past two months to these developers that mobile Safari in iOS was the initial target. So yes, as I see it, and as the developers working on the project see it, Facebook is in the beginning phases of going after Apple. But they’re doing so as a wolf in sheep’s clothing.

Obviously, Facebook did not like this angle.

Facebook PR began emailing journalists almost immediately, trying to pitch them stories countering my story. What Facebook PR failed to realize is that the people they’re emailing are far more loyal to their own kind than to some flack. I was immediately alerted to these messages from multiple friends in the industry.

“You guys should remind people that there’s not much new in tonight’s TC story,” began one message. “You guys should” — three words that should never come out of a PR person’s mouth. Ever.

The narrative they tried to spin (all on background, naturally) was basically that Facebook CTO Bret Taylor has long been talking about the importance of HTML5 to the company. No shit. I’ve sat down and spoken with Taylor about this before. And I linked to that interview in my Spartan story. What Facebook PR conveniently did not address at all in their emails to journalists was Project Spartan or the larger ramifications — their own mobile app distribution mechanism and mobile Credits payments scheme. Those are the big elements. And both are very new.

Facebook’s email was trying to make journalists believe this was a total non-story. And yet, at the exact same time, Facebook’s developer relations team began a hunt to find out how this information got to me. How do I know? I have those emails too.

Facebook sent developers working on Spartan (“Team Spartan”) a blunt reminder that all the information about the project was confidential and not to be shared with anyone outside of the project. They also demanded that developers add a new “security feature” to their apps. In other words, a way to track who is seeing what about the project.

So my “non-story” caused Facebook to lock down Project Spartan? Makes total sense.

Meanwhile, Facebook PR shot another email out to journalists. “There’s a bunch of confusion out there right now from the TechCrunch story yesterday, especially in how this is wrongly positioning us against other companies,” is the opening line in this one. Again, the meat of the info sent is all on background — in other words, the journalists can use it, but can’t say it came from Facebook. In other words, Facebook PR are manipulative cowards.

This type of manipulation is nothing new in the industry; companies do this all the time. But that doesn’t make it any less shady. And guess what, it works!

Exhibit A: This GigaOm article from yesterday: Project Spartan isn’t anti-Apple — it’s pro-Facebook. There were four main bullet points in Facebook’s background information from their email, and that article conveniently hits on all of them.

Next, Facebook PR dispatched Bret Taylor to talk to the WSJ to once again counter the Project Spartan notion. To their credit, WSJ did not eat up the company line word-for-word. Instead, it appears they too talked to developers working on Spartan (which they erroneously call “Titan” — Facebook’s old codename for what became Messages) and got the same reaction we did, “Facebook’s underlying motivation is to position itself as an alternative development platform for programmers that now tailor mobile apps specifically for Apple’s iOS operating system or Google Inc.’s Android,” they wrote.

At least one more major publication was ready to publish similar findings about Spartan, but were dissuaded by Facebook PR at the last minute, we’re also told.

Let’s take a step back for a moment. Amid the flurry of bullshit Facebook PR is spewing, let’s just think about this from a common sense perspective.

With some 700 million users, Facebook is one of the biggest forces in the tech world today. But their glaring weakness is that they do not ultimately control their own destiny. They have flourished on the desktop-based web, which is mainly open, but mobile is the key to the future. Facebook has been doing pretty well here so far, but because they do not control the platforms they are on, things are likely to get hard for them going forward as rivalries intensify. They already have a robust rivalry with Google, the ones in control of Android. And by all accounts, the relationship with Apple is complicated to say the least. You think it’s an accident Apple went with Twitter for iOS 5 single sign-on? Please.

It’s ridiculous to argue that Facebook should not be making moves to put themselves in control of their own destiny. In other words, of course they should be working on their own mobile app distribution and payments model! They’d be stupid not to. Yet that’s the story Facebook PR is trying to spin. It’s ridiculous.

The explosion of mobile apps as controlled by Apple, Google, and the like is absolutely a threat to Facebook. Facebook is not a non-profit, they need to make money. And they know one of the key ways forward are the apps on their platform and the use of Facebook Credits in those apps. Apple, obviously has other ideas. They want users on their apps, using their in-app payment system. While Facebook having a unified app directory for mobile and the web sounds peachy keen, payments are very much on a collision course. And I’m hardly the first person to bring this up. This is a very real issue for Facebook.

So why not just admit what is painfully obvious? Why go to all this trouble to spin this elaborate tale of peace and harmony in the mobile ecosystem? “Facebook and all of our developers will choose both [HTML5 and native apps]. You want to reach as many people in as many places as possible,” Taylor tells WSJ. Ha. Okay. Tell that to the team of two that barely has the resources to create an app on one platform, let alone two or three or ten. Facebook absolutely wants HTML5 to win here because they want to be the platform that controls the mobile space. Who wouldn’t want to be in that position? It’s totally disingenuous for them to say otherwise.

So again, why not just say it? Because they’re scared shitless of Apple. That’s what this song and dance is really all about. One source familiar with the relationship between both sides compares Apple’s treatment of Facebook to an “abusive spouse”. Facebook has pissed off Apple in the past, and it has had ramifications. They have to tread lightly here.

Here’s where things get more interesting. Apple knows about Project Spartan, and is believed to even be lending some minor support to the project. Why do that for a project that ultimately hopes to usurp the native App Store and Apple payment model? Because Apple is not afraid of it at all, we’ve heard. And based on some of the HTML5-based Spartan apps I’ve seen, I have to agree. The likelihood users would choose these over a native iPhone app right now, is laughable.

So in mildly supporting Facebook’s efforts here, Apple looks benevolent and smart (while shaking their head and laughing). But I also believe Apple doesn’t know the full extent of the project. The Facebook Credits aspect, for example. Again, that’s really the key here, and I believe the main reason Facebook is pissed off about our Spartan story is this part in particular. Apple may not view Spartan as a threat at all right now — and in fact, it sort of helps them because it is moving popular games, like the ones by Zynga, off of Flash and onto HTML5 — but down the road, that is absolutely what Facebook intends it to be.

Still, perhaps Apple is that bearish on HTML5 app development. But others certainly aren’t. Not just Facebook, but many developers, including all the ones working on Spartan. They believe that HTML5 will eventually take down the native model. But perhaps Apple just has the mentality that they’ll deal with that issue when it actually becomes a problem.

We also know that Apple has been working with Facebook on their iPad app, which should finally be available in the next few weeks. Apple has wanted this app since the initial iPad launch just over a year ago. After all, the Facebook iPhone app is the most downloaded app of all time. Like it or not, it’s a selling point for the device. At first, Facebook made it sound as if they weren’t going to do one at all. But they have been working on it for months. And there’s no reason it should have taken that long, unless they were holding it back as some sort of leverage over Apple.

Leverage for what? That we’re not clear about. But recent code changes in Spartan suggest that the project could work inside of Facebook’s iPad app as well. All of this could very well be related.

That story will evolve over the coming weeks. And hopefully we’ll be the ones to bring it to you, and not Facebook PR feeding up bullshit from a cloaked hand.

The moral of the story is that Facebook PR can talk until they’re blue in the face about how their secret project now on lockdown is neither new nor interesting, but consider who is talking. I’m not going to go so far as to say they’re outright lying, but they are being extremely disingenuous and manipulative. (How do I know when Facebook PR is full of shit? Their mouths are moving.) From now on, that’s to be expected. We are at war, after all.

Recently I sat down with a well-connected Silicon Valley CEO who just raised a ton of money, and who knew of other startups raising even more. There is a new startup club of younger companies raising money right now at $1 billion valuations. I already knew a couple of them, but I started asking a few venture capitalists and now I have a pretty good list of who is in that club and who is trying to get in (see below).

As we all watch the established Web companies go public (LinkedIn, Pandora) or prepare for an IPO (Groupon, Zynga, Facebook), there is this new class of younger, but fast-growing, startups rising up right behind them. A lot of them are out raising money right now at $1 billion valuations. These are $50 to $100 million rounds, and they are generally going to companies showing incredible growth rates in both users and revenues, at least according to investors who have looked at these deals.

So who is in the new billion dollar valuation club?

Airbnb is definitely in the club. The crowdsourced marketplace for turning your apartment into a hotel for a night grew 800 percent last year in nights booked to 800,000. There are currently 60,000 listings, and bookings keep growing by 40 to 50 percent a month. Sublets are next. This is going to be one of the biggest companies to come out of Y Combinator.

Square is also in the club. It is raising at least $50 million. Square passed 500,000 card readers and 1 million transactions in May, and is processing more than $3 million a day in mobile payments. COO Keith Rabois told us at Disrupt NYC that Square will do $1 billion in transactions this year, and he thinks it could ultimately do better financially than Paypal (where he was an early executive). Vinod Khosla recently joined the board.

Spotify is finally closing its $1 billion round that’s been in the works since at least February, with DST, Kleiner, and Accel participating. The $100 million or so it is expected to raise will help the music streaming service enter the U.S. market. Finally. Maybe. We’ve been waiting for you.

Dropbox, the Y Combinator file-sharing startup that only ever raised $7.2 million might end up with the largest valuation in the club, perhaps as high as $1.5 billion or $2 billion. It’s just growing like crazy, with 25 million users saving 200 million files daily. That’s up from 4 million users 18 months ago. But this deal is the one that keeps getting pushed out (it is growing so fast that the longer it waits to take money, the higher the valuation).

Gilt Groupe is already in the club. It closed a $138 million round at about a $1 billion valuation last May. One of the first companies to introduce online flash sales in the U.S., Gilt is on track to do $500 million in revenues this year and has expanded from fashion to food, travel, local deals, and more.

FourSquare is also rumored to be out raising another round, but it might not quite make it into the $1 billion club because its revenues don’t justify that kind of valuation. Unless, that is, it pulls a Twitter.

Just above this group, is Pandora (which just went public with a $2 billion market cap), LivingSocial (with a $3 billion valuation), LinkedIn (already public, with a $6.3 billion market cap), Twitter (which is worth anywhere from $3.7 billion to $10 billion), Zynga (which will be worth north of $10 billion when it goes public), Groupon (which could be worth more than $25 billion) and Facebook (which is already worth $50 billion and could go as high as $100 billion by the time it IPOs).

Image credit: John Talbot

The leaking of Facebook continues. Following our stories yesterday about their new Photos mobile app and “Project Spartan” (a new mobile app platform), Nick Bilton of The New York Times reports that Facebook will soon release an iPad app. Yes, finally.

We had also heard in recent weeks that despite Facebook’s seemingly anti-iPad stance, such an app does exist internally, and has for some time. But we hadn’t been able to find anyone who had actually seen it. Well, until right now. We can now confirm the app’s existence with someone who has actually seen it.

“It looks pretty slick. Photos are fullscreen & really nice UI,” says a person who has played with the app.

I’ve long complained about Facebook’s lack of an iPad app. While their regular site works pretty well on the iPad, even Facebook CTO Bret Taylor recognized the need for a UI more custom-tailored for big touch screens.

More importantly, third-party Facebook apps have been flying off the virtual shelves since day one of the iPad (including a few that have tricked people into thinking they were official apps). Facebook needed to get on top of this situation, to ensure that they own their own brand on the device, not some third party. And now they are.

We have not heard a specific date the app will be released, but NYT says that it will hit the App Store in the “coming weeks”.

One interesting tidbit we did hear was that the app has been done for some time, but that Facebook may have been holding it back as a bit of leverage over Apple. Those two companies have been in the news a bunch recently following Apple’s inclusion of Twitter in iOS 5, despite talking about a similar deal with Facebook previously.

And then there was our story yesterday about Project Spartan. We heard (and have seen) indications that Facebook was targeting mobile Safari with the mobile platform. HTML5-based apps as well as Facebook Credits are the key parts of the plan.

Since our story, Facebook PR has gone on the offensive, trying to spin this to other journalists as not being a move against Apple, but rather a way to “complement” their devices (while at the same time declining to admit the project even exists — heh). That’s a bunch of horseshit, and they know it.

But honestly, does anyone expect them to say anything else? It’s not like they’re going to declare war on Apple (or anyone else) publicly. You don’t announce to someone that you’re going to punch them in the face before you punch them in the face. That would be madness. (Madness?! This. Is. Sparta[n]!)

Again, developers actually working on this new platform say it’s very clear that Project Spartan is step one in an attempt to gain control over the mobile space. That means getting on the devices currently controlled by Apple and Google, and doing so without fear of restrictions (hence, HTML5). And it means disrupting the current mobile distribution channels (App Store, Android Market, etc) which are controlled by the gatekeepers. Facebook has to do this because they do not have their own devices. At least not yet.

But now we’re getting too far into the weeds. I’m just happy Facebook is finally releasing an iPad app. Send pics if you got em!

“Let’s be clear – it is one thing to be inspired by Zynga games, but it is entirely different to copy all of our key product features, product strategy, branding, mission statement and employee benefits lock, stock and barrel. We welcome Vostu into the arena of social games, but blatant infringement of our creative works is not an acceptable business strategy—it is a violation of the law.” -Reggie Davis, General Counsel

That’s Zynga’s statement about a lawsuit they just filed against a well funded Brazilian startup – Vostu – for copyright infringement. Vostu has raised $45.9 million from Intel Capital, General Catalyst, Accel and others.

What did Vostu do? According to the lawsuit, they exist almost solely to copy Zynga games. Not just the idea, but nearly every game mechanic, virtual item, and storyline. From the complaint filed today in the Northern District of California federal court: “Vostu has brazenly appropriated the copyright-protected aspects of Zynga’s games(as well as almost every other aspect of Zynga’s business) – with scant effort to mask their strategy– and then offered games virtually identical to Zynga’s games to prospective players in the United States and elsewhere.”

Zynga even included a side by side video comparison of a number of the games in the lawsuit as an exhibit:

The copying is so pervasive, says Zynga in the lawsuit, that Vostu even copied the errors contained in Zynga games (like the fact that government buildings in CityVille don’t have to connect to roads: “Remarkably, Vostu’s copying includes “mistakes” in Zynga’s games. For example, in CityVille, the Zynga developers forgot to add the requirement that Community Buildings be connected to a road in order to function within the game – a requirement for all other buildings in the game. The game was released without that requirement, and the bug was never fixed in Zynga’s game. Vostu’s MegaCity replicated this “mistake.”

Zynga’s walking a fine line here, as they’ve been accused of stealing game ideas in multple lawsuits (all settled). See, for example, this 2009 lawsuit from the original creator of the Mob Wars game. The difference here, Zynga seems to be arguing (see the first statement at top of this post) is that “inspiration” is fine, but copying every detail of a game crosses a line.

And wherever that line is, Vostu clearly crosses it. The complaint, embedded below, also contains numerous screenshots of the games side by side, with almost identical game play. The top image in this post is one example, but there are many others.

This should be entertaining. Also, I’m looking forward to seeing Vostu’s ripoff version of Empires & Allies. Hopefully this lawsuit won’t shut that project down.

Update: Vostu responds.

Eventbrite, the company that lets anyone organize online events and sell tickets to those events, was founded by the husband and wife team of Kevin and Julia Hartz. Chris Dixon sat down with the power couple to discuss the early days of Eventbrite and some of the disruption that Kevin created along the way. Check it all out in this episode of Founder Stories.

In the first clip, Hartz takes us back to the late 90′s when he created and sold his first company (which provided hotels with high speed internet access) to LodgeNet.  Then, drawing upon the business blueprint and success of PayPal, where he was an early investor, Hartz built Xoom, a service he says is a “better, cheaper, faster” Western Union that services immigrants and their overseas families.

Riding the ups and downs of being a “first time CEO” while fending off “massive fraud attacks” at Xoom wasn’t easy. Hartz eventually turned Xoom over to a new management team and launched Eventbrite; yet another company that quenched his thirst to challenge “large incumbents.”

In the below segment, Co-founder Julia Hartz jumps in and expands upon Eventbrite’s origins, saying, “we looked at the industry of event ticketing as something that was ripe for disruption because there was no solution for anybody to sell tickets online.” In agreement, Kevin compared the situation to a “pyramid” with Ticketmaster catering to “big complex events” while leaving room for other companies to swoop in and service smaller events. Recognizing opportunity, Kevin and Julia swung the doors wide open. This year, Eventbrite is on track to sell $400 million worth of tickets.

Full exchange is below—check it out.

Past Founder Stories episodes with Fred Wilson, Soraya Darbi, Dennis Crowley and Kevin Ryan are here

AOL’s advertising platforms, which are grouped under the Advertising.com business, is now a $500 million business, the company revealed today at its Investor Day in New York City. The Advertising.com Group is a new business unit inside AOL, which includes six separate products: The Advertising.com ad-serving network (which AOl acquired in 2004) and AdTech, along with more recent acquisitions 5Min (now AOL Video), Pictela, GoViral, and the internally built Seed product. (AOL also owns TechCrunch, but we are part of the Huffington Post Media Group).

All of that, all together is a $500 million business, which is about a quarter of AOL’s total revenue. And it’s clear that AOL thinks it can become a $1 billion business. Today was the first time AOL broke out these numbers.

AOL is trying to position itself as the best place for brands to advertise next to premium content. It is trying to do this first on its own sites, primarily with its Project Devil ads. But the bigger play is to become the ad network for premium brands across the Web by extending Project Devil ads and other new ad formats to the 26,000 publishers on AOL’s ad network.

And in fact, through Pictela, AOL is going to expand its highly engaging Project Devil Ads out across what it is calling the Devil Network. Devil Ads are larger-format ads that can include video or photo galleries, maps, or other interactive elements. AOL is seeing very high engagement rates with these ads, sometimes as high as 10 percent. Devil ads are just one format. Expect AOl to move into mobile ads and other formats as well.

AOL’s entire focus is to create branded experiences for big brand marketers. That includes putting those ads next to great content, but it also means rethinking the boring, old banner ad. Ned Brody, who runs the Advertising.com group, sees the opportunity this way: “There is $50 billion sitting in a locked vault, television and print. It is hard to convince advertisers to take that to a market where they get 0.2% clickthrough rates.”

In order for this plan to work, however, other sites will have to change their designs to be able to accept the bigger Devil ads. If they in fact do perform better, they might do that. But adoption will be a challenge. (Other Devil ads fit into standard 300X250 and 300X600 ad units).