Bits: Who Is Selling Target’s Data?

Selling Secrets of Phone Users to Advertisers

Now, smartphones know everything — where people go, what they search for, what they buy, what they do for fun and when they go to bed. That is why advertisers, and tech companies like Google and Facebook, are finding new, sophisticated ways to track people on their phones and reach them with individualized, hypertargeted ads. And they are doing it without cookies, those tiny bits of code that follow users around the Internet, because cookies don’t work on mobile devices.

Privacy advocates fear that consumers do not realize just how much of their private information is on their phones and how much is made vulnerable simply by downloading and using apps, searching the mobile Web or even just going about daily life with a phone in your pocket. And this new focus on tracking users through their devices and online habits comes against the backdrop of a spirited public debate on privacy and government surveillance.

On Wednesday, the National Security Agency confirmed it had collected data from cellphone towers in 2010 and 2011 to locate Americans’ cellphones, though it said it never used the information.

“People don’t understand tracking, whether it’s on the browser or mobile device, and don’t have any visibility into the practices going on,” said Jennifer King, who studies privacy at the University of California, Berkeley and has advised the Federal Trade Commission on mobile tracking. “Even as a tech professional, it’s often hard to disentangle what’s happening.”

Drawbridge is one of several start-ups that have figured out how to follow people without cookies, and to determine that a cellphone, work computer, home computer and tablet belong to the same person, even if the devices are in no way connected. Before, logging onto a new device presented advertisers with a clean slate.

“We’re observing your behaviors and connecting your profile to mobile devices,” said Eric Rosenblum, chief operating officer at Drawbridge. But don’t call it tracking. “Tracking is a dirty word,” he said.

Drawbridge, founded by a former Google data scientist, says it has matched 1.5 billion devices this way, allowing it to deliver mobile ads based on Web sites the person has visited on a computer. If you research a Hawaiian vacation on your work desktop, you could see a Hawaii ad that night on your personal cellphone.

For advertisers, intimate knowledge of users has long been the promise of mobile phones. But only now are numerous mobile advertising services that most people have never heard of — like Drawbridge, Flurry, Velti and SessionM — exploiting that knowledge, largely based on monitoring the apps we use and the places we go. This makes it ever harder for mobile users to escape the gaze of private companies, whether insurance firms or shoemakers.

Ultimately, the tech giants, whose principal business is selling advertising, stand to gain. Advertisers using the new mobile tracking methods include Ford Motor, American Express, Fidelity, Expedia, Quiznos and Groupon.

“In the old days of ad targeting, we give them a list of sites and we’d say, ‘Women 25 to 45,’ “ said David Katz, the former general manager of mobile at Groupon and now at Fanatics, the sports merchandise online retailer. “In the new age, we basically say, ‘Go get us users.’ “

In those old days — just last year — digital advertisers relied mostly on cookies. But cookies do not attach to apps, which is why they do not work well on mobile phones and tablets. Cookies generally do work on mobile browsers, but do not follow people from a phone browser to a computer browser. The iPhone’s mobile Safari browser blocks third-party cookies altogether.

Even on PCs, cookies have lost much of their usefulness to advertisers, largely because of cookie blockers.

Responding to this problem, the Interactive Advertising Bureau started a group to explore the future of the cookie and alternatives, calling current online advertising “a lose-lose-lose situation for advertisers, consumers, publishers and platforms.” Most recently, Google began considering creating an anonymous identifier tied to its Chrome browser that could help target ads based on user Web browsing history.

For many advertisers, cookies are becoming irrelevant anyway because they want to reach people on their mobile devices.

Yet advertising on phones has its limits.

DealBook: Some in Congress Grow More Wary of Selling Sprint to SoftBank of Japan

Koji Sasahara/Associated PressSoftbank’s president, Masayoshi Son, left, and Dan Hesse, Sprint’s chief executive, last October. The Dish Network has also made an offer for Sprint.

11:09 p.m. | Updated

Congressional concern over the proposed takeover of Sprint Nextel by SoftBank of Japan on national security grounds grew on Thursday as Senator Charles E. Schumer of New York asked government regulators to carefully review the Asian company’s ties to Chinese telecommunications equipment makers.

In a letter to the Treasury Department and the Federal Communications Commission on Thursday, Mr. Schumer, Democrat of New York, urged the two to carefully consider the SoftBank deal in the wake of widespread attacks by Chinese hackers.

“The protection of our critical infrastructure is a topic of intense legislative scrutiny,” the Democratic senator from New York wrote in the letter, which was reviewed by a reporter for the The New York Times. He asked the two agencies to take a close look “to ensure that our nation’s security is not placed at risk.”

Mr. Schumer is the latest senior lawmaker in Washington to express wariness over the deal because of SoftBank’s relationships with Chinese telecommunications equipment makers like Huawei and ZTE. Senator John McCain, Republican of Arizona, wrote a separate letter to the F.C.C.’s acting chairwoman, Mignon L. Clyburn, on Thursday, asking the agency to carefully review the proposal.

The letters come as SoftBank cleared another regulatory hurdle on Thursday. A California state regulator approved the proposed takeover, joining 22 other states and the District of Columbia.

Now the Japanese firm needs only clearance from the F.C.C. and a government panel that reviews foreign investments in the country that is led by the Treasury Department. Decisions from both agencies are expected soon.

SoftBank, which announced its agreement to buy a majority stake in Sprint last October, is also competing against Dish Network, which is trying to derail the deal with a rival $25.5 billion takeover bid.

Over the last several months, both SoftBank and Sprint have tried to assuage concerns over national security. The two assured Mike Rogers, Republican of Michigan, the chairman of the House intelligence committee, that they would remove Huawei equipment from their United States network earlier this year.

Mr. Rogers, has offered cautious praise for the pledge. “I am pleased with their mitigation plans, but will continue to look for opportunities to improve the government’s existing authorities to thoroughly review all the national security aspects of proposed transactions,” he said in March.

The two companies have also agreed to give the federal government veto power over one of SoftBank’s representatives on the new Sprint board. That person would be charged with ensuring the company’s compliance on network security.

Dish Network has made national security one of its chief weapons against SoftBank, using a media campaign in Washington that tries to play on fears about a foreign company taking control of a major American telecommunications firm.

A spokesman for SoftBank argued that while it had pledged to remove Huawei equipment from Clearwire’s systems, Dish had not made a similar commitment.

“SoftBank’s proposal improves U.S. national security because only SoftBank has committed to remove equipment already located inside a U.S. network that the government has national security concerns about,” the spokesman said in a statement. “Dish has made no such commitment to remove this network equipment and to do so would require Dish to further increase the amount of debt it will need to complete any transaction.”

Other countries already own significant stakes in American wireless networks: Vodafone of Britain owns 45 percent of Verizon Wireless, the country’s biggest cellphone service provider, while Deutsche Telekom of Germany owns a majority stake in T-Mobile US.

But SoftBank has faced questions about its connections to Huawei and ZTE shortly after its bid. The Japanese firm uses equipment from both companies in its systems outside the United States, primarily through a joint venture.

And Clearwire, a wireless network operator of which Sprint is seeking full control, uses some Huawei products in parts of its network.

Lawmakers have argued that both companies are closely tied to the Chinese government, and that allowing them entry to into critical national infrastructure could leave the country vulnerable to online attacks on vital assets like power grids and dams.

“In light of these facts, I am concerned that critical parts of Sprint’s future network may also become dependent on unsecure Chinese equipment and vulnerable to interference. With Sprint’s ultimate control in foreign hands, there are significant questions as to whether the United States would have sufficient influence and oversight to mitigate these concerns,” Mr. Schumer said in a letter to the F.C.C. and the Treasury.

“The blatant attempt to politicize” the approval process “by Dish and a senior member of the Senate banking committee is inappropriate and threatens to discourage important foreign investment in the United States,” the SoftBank spokesman said.

Mr. Schumer replied in a statement: “There’s nothing political about expressing concerns over national security.”

Mr. Schumer has sought to block takeovers in the past on national security grounds. He fought the proposed sale of six American ports to DP World, a company based in Dubai, arguing that the deal would endanger national security.

DP World eventually agreed to sell the American ports assets to an arm of the American International Group.

This post has been revised to reflect the following correction:

Correction: May 25, 2013

Because of an editing error, an article on Friday about Congressional concern over the proposed takeover of Sprint Nextel by SoftBank of Japan misstated, in some editions, the ownership structure of T-Mobile USA. T-Mobile’s owners include Deutsche Telekom — not Deutsche Bank — and Deutsche Telekom owns a majority stake, not the whole company.

F.T.C. Warns Data Firms on Selling Information

WASHINGTON — The Federal Trade Commission said on Tuesday that it had sent warning letters to 10 data brokerage firms, telling them that their practices, which involve gathering and selling consumer information, could violate federal privacy laws.

The companies, most of which market their services online and through toll-free phone numbers, appeared to be offering to sell consumer data for use in screening job candidates, determining eligibility for insurance or making offers of credit, the F.T.C. said.

Such practices could violate the Fair Credit Reporting Act if the sellers are legally considered “consumer reporting agencies” and they fail to verify that customers buying the consumer information have a legitimate purpose for receiving it.

Last month, the F.T.C. similarly warned six companies that they might be violating the act by offering to share tenants’ rental histories with landlords.

The letters issued by the commission are not formal complaints and do not necessarily mean that the companies are subject to the credit reporting act. Rather, the F.T.C. said, “they serve to remind the companies to evaluate their practices to determine whether they are ‘consumer reporting agencies,’ ” and how the act pertains to them.

The 10 companies were part of a group of 45 organizations that were contacted in an undercover test-shopping operation, the F.T.C. said. Members of its staff posed as individuals or company representatives and asked for help in gathering certain types of consumer data.

Six companies were warned by the F.T.C. about their apparent willingness to sell consumer information for employment screening. Those companies are Crimcheck.com of Strongsville, Ohio; 4Nannies of West Hills, Calif.; U.S. Information Search of Pomona, N.Y.; People Search Now of Sacramento, Calif.; Case Breakers, based in Coral Springs, Fla.; and USA People Search of Rocklin, Calif.

The companies either did not respond to a request for comment or could not be reached.

Two companies were found by the F.T.C. investigators to appear to offer consumer data for use in making insurance decisions: the US Data Corporation of Agoura Hills, Calif.; and Brokers Data of Columbia, S.C.

Jennifer Sultan Pleads Guilty to Selling Prescription Drugs

In the years since, that temporary flush of wealth evaporated and Ms. Sultan, 38, developed an addiction to prescription painkillers.

On Friday, she sat handcuffed in a courtroom at State Supreme Court in Manhattan. In exchange for a promise of a four-year prison sentence, she pleaded guilty to selling prescription painkillers and conspiring to sell a firearm.

She was arrested last July and accused of being part of a ring that sold prescription drugs and guns. Four others arrested with Ms. Sultan had already pleaded guilty. One, Nicholas Mina, a former New York City police officer, agreed to serve more than 15 years in prison as part of a plea bargain under which he admitted stealing guns from his colleagues’ precinct house lockers and selling them. Mr. Mina was also addicted to prescription painkillers.

Though Ms. Sultan’s lawyer said she had hoped for less than four years, she faced 15 years to life in prison on the top count against her and the potential for more prison time on other charges. She said little in court but smiled broadly several times as she spoke quietly with her lawyer, Frank Rothman.

“She was happy to be done with it, but she was not happy with the sentence,” Mr. Rothman said afterward.

Ms. Sultan grew up in West Long Branch, N.J., five miles north of Asbury Park, and graduated from New York University in 1996. She and her boyfriend at the time, Adam Cohen, worked at a company, Live Online, that was an early pioneer in live streaming events on the Internet.

After the sale of Live Online, efforts by Ms. Sultan and Mr. Cohen to start other technology companies failed. Ms. Sultan explored other interests, including acupuncture and holistic health.

Early last year, a city narcotics investigator discovered an advertisement Ms. Sultan had placed on Craigslist offering prescription painkillers for sale. She and Mr. Cohen were still living in the penthouse loft near Union Square that they bought after the sale of Live Online.

Five times from February through June, she sold pills to an undercover officer, according to her indictment. One sale took place at the Starbucks on Union Square. In another, she sold 183 oxycodone tablets to the officer for $4,400 at a Starbucks in the Flatiron district near the school where she was studying acupuncture.

A separate investigation into the ring that sold stolen guns and pain medication picked up Ms. Sultan sending a text message to the man accused of being the ringleader, Ivan Chavez, saying she wanted to sell him a .357 Magnum handgun for $850, according to a separate indictment obtained by the Manhattan district attorney.

Mr. Chavez was sentenced to 20 years in prison.

Ms. Sultan and Mr. Cohen, who was not accused of participating in the drug and guns ring, filed for bankruptcy in 2010. Last August, the bankruptcy judge ordered them to vacate the loft to allow a bankruptcy trustee to sell it. The 5,600-square-foot loft is still listed for sale at just under $6 million.

She has been incarcerated since her arrest in July because she was unable to raise $85,000 for bail. With credit for good behavior and time served since her arrest, Ms. Sultan could be released from prison in about two years.

Bits: A Start-Up Aims to Upend E-Commerce by Selling Nail Polish

Julep designs, produces and sells beauty products.

It is hard to imagine Silicon Valley venture capitalists analyzing nail polish shades. But a number of prominent technology investors are making a big bet on Julep, a start-up that makes nail polish and other beauty products.

On Thursday, Julep announced it had raised $10.3 million in financing from Andreessen Horowitz, a well-known venture capital firm, and Maveron, the investment firm of Howard Schultz, founder of Starbucks. Previous financiers include investment firms affiliated with Will Smith and Jay-Z.

Julep aims to use innovations in e-commerce to upend the beauty industry. It sells paraben-free products including 186 colors of nail polish as well as mascara, lip gloss and face scrub.

“We think the next major beauty brand is not going to be built over the counter, it’s going to be built online,” said Jane Park, a former Starbucks executive who founded Julep five years ago.

Julep designs, produces and sells its products. It works with scientists and manufacturers that develop products for big beauty brands. The streamlined approach means there are no markups for third parties, and it can make available a new nail polish shade soon after it is shown on the runway.

A similar strategy is employed by many e-commerce companies, including Warby Parker, which sells eyeglasses, and others selling products from office supplies to bedding. Though the economics are better than in traditional retailing, the challenge is to persuade consumers to discover the brand when it is not sold by a major company.

Julep dealt with the challenge by selling its products not just in its stores and online, but also places like Sephora and QVC. Ms. Park said she had focused on brand-building, describing Julep as a brand that encourages women to connect over beauty instead of compete.

Julep also taps into other current trends in e-commerce. It asks its customers for ideas about what to sell (think ModCloth), uses social media to build brand loyalty (think Nasty Gal) and sells subscription boxes of products (think Birchbox.) An Instagram feed invites people to share photos of their nails and a blog has tips from professional stylists.

Julep does market research offline, too. It has four parlors in its hometown, Seattle, where women go to have their nails done, socialize and give Julep tips on what they like and dislike, from package design to new colors.

As for pitching tech venture capitalists, most of whom are men, Ms. Park said she had to do some teaching. Men are often interested in how many times a customer could use one bottle of nail polish, like toothpaste. But women rarely finish nail polish, she explained.

“It’s about fashion,” Ms. Park said. “You want access to color for your outfit or your mood, not squeezing every last drop before you buy the next color.”

Gadgetwise Blog: Q&A: Selling Your Own iBooks

If I use the iBooks Author program to create my own e-book, do I have to sell it through Apple’s online bookstore?

Apple’s iBooks Author software for the Mac lets you design your own interactive e-books with templates and built-in widgets. According to its frequently asked questions page, Apple requires that the finished work be sold in its iBookstore only if you keep it in the .ibooks format and want to sell the book for money.

To put a book up for sale in Apple’s online store, sign up for an iTunes Connect account to get the software and information you need to upload your creation to the iBookstore. Apple’s fee for distributing your book in its store is 30 percent of the purchase price.

If you do not plan to charge money for your book, or you export the final version as a PDF document or a text file, you are not limited to sales through the iBookstore and can distribute it elsewhere.

The iBooks Author software is free and works on Mac OS X 10.7.4 or later. More information and a link to download the program are here. Apple’s site offers a guide to using the software as well.

It’s OFFICIALLY OVER!!! 50 Cent Announces That He’s BREAKING UP With Floyd Mayweather!! (Selling Money Team Jacket)

We hoped that it wouldn't come to THIS . . . but rapper 50 Cent announced yesterday that he is NO LONGER partners with Floyd Mayweather. 50 announced that he and a group of his boxers (including SUPERSTAR Yuriorkis Gamboa) would form a NEW company – SMS Promotions.

And he threw a few SHOTS at his ex-BFF Floyd before he left, saying he'd sell his Money Team jacket . . . for $1.

Kodak to Stop Selling Inkjet Printers

As part of its bankruptcy reorganization, Eastman Kodak is planning to wind down sales of consumer inkjet printers next year, products that were once called a crucial part of its turnaround effort.

The company’s announcement, which was made on Friday, said Kodak would focus instead on selling packaging, printing and other services to businesses. Kodak will continue to sell ink for consumer printers and said it expected to “significantly improve cash flow” in the United States in the first half of 2013.

“Kodak is making good progress toward emergence from Chapter 11, taking significant actions to reorganize our core ongoing businesses, reduce costs, sell assets and streamline our organizational structure,” Antonio M. Perez, the company’s chairman and chief executive, said in a statement.

A former Hewlett-Packard executive who joined Kodak in 2003, Mr. Perez had focused on consumer inkjet printers as a cornerstone for Kodak’s turnaround, despite significant skepticism from Wall Street analysts. But the Jan. 19 bankruptcy filing forced major changes at Kodak.

In February, for instance, Kodak announced that it was getting out of the digital camera business, and in May it closed the sale of its online photo-sharing business, Kodak Gallery. In August, Kodak announced that it was also selling its consumer film business, featuring the familiar yellow boxes that made the company a household name.

The company, which is based in Rochester, N.Y., expects to reduce its work force by 3,900 jobs this year, a 23 percent reduction.

Wal-Mart Says It Will Stop Selling Amazon’s Kindle

Target said in May that it would stop selling Kindles, though other stores, including Best Buy, Staples and Office Depot, said Thursday they would continue to carry the devices.

Wal-Mart did not specify why it was discontinuing its Kindle sales, but analysts said it was not hard to decipher, given that the retailer will still sell similar devices from companies like Apple, Google, Barnes & Noble and Samsung.

Physical retailers have been worried about customers who browse in stores and then buy from online competitors instead. Displaying the new Kindles encourages that behavior, analysts said.

While earlier black-and-white Kindles were good only for reading digital books, the newer Kindle Fire, introduced in 2011, can be used for e-books, movies, games, and potentially anything Amazon sells, thanks to a built-in Web browser.

“The Kindle Fire is the Trojan horse,” said Andrew Rhomberg, the chief executive of Jellybooks, an e-book recommendation site. “It’s a shopping platform that covers so many more categories than e-books. It affects Wal-Mart in a different way than the early Kindles and e-readers did.”

Colin Gillis, a technology analyst for BGC Financial, said that by selling Kindles, Wal-Mart was “encouraging its customers to step into that ecosystem.”

“Every time you pick up your Kindle, they’re trying to get you to buy patio furniture” at Amazon, Mr. Gillis said. “If I were Wal-Mart, I certainly would not be encouraging my customers to go down the path of owning a Kindle and buying things from Amazon.”

Moreover, the Kindle line, and most tablets, are only marginally profitable for retailers, said Sarah Rotman Epps, an analyst at Forrester Research.

“A lot of them have had it with tablets other than the iPad,” she said. “They’re not high-margin products, and other than Apple ones, no one is selling these devices in great volumes anyway. For Wal-Mart to drop Amazon is more of a symbolic blow rather than a substantive one.”

However, if more retailers back away from selling the Kindle, Amazon will lose valuable physical display space that it cannot match with a Web site, exposure that becomes especially important during the holiday shopping season.

“Amazon still needs a way to get the hardware into people’s hands,” Mr. Gillis said.

Amazon declined to comment on Wal-Mart’s decision.

The low profit from Kindle sales and the threat of competition from Amazon raise the question of why retailers wanted to sell the device in the first place.

One reason is that technology companies and retailers tend to have relationships that quickly turn from cooperative to competitive.

“A lot of these technology companies look like they’re great friends in the beginning, and as they grow and add products, they move from friend to foe,” said Fiona Dias, chief strategy officer of ShopRunner, an online-shopping service, and the former chief marketing officer of Circuit City.

She said that Amazon was a clear example of this, and Google, with its Wallet mobile-checkout product and its recent decision to charge retailers to be included in product searches, was another. Even Apple, with its Passbook system that allows mobile payments, and the expanding list of items sold via iTunes, should unnerve retailers that sell its products, Ms. Dias said.

Analysts also say that early on there were few alternatives to the Kindle. It was one of the first widely available e-book readers when it was introduced in 2007 for $399. Now, consumers can choose from dozens of basic black-and-white e-readers, some of them for less than $70, and a wide range of color tablets.

Wal-Mart will not order any more Kindles after its stock runs out, and Kindles will no longer be available at its Sam’s Club and walmart.com divisions along with Walmart stores, said Sarah Spencer, a spokeswoman. Wal-Mart’s decision, sent in a memo to employees, was first reported by Reuters.

Other big retailers, however, said they planned to continue carrying Kindles.

“We’ve seen good customer demand in our stores for those products,” said Jeff Haydock, a Best Buy spokesman. “Because we stand for choice, we look to bring in any of the latest technology and put it in our stores so customers can look at things, compare things and find the products that are best for them.”

At Office Depot, which added the Kindle Fire last winter, Mindy Kramer, a spokeswoman, said, “we saw this as the opportunity to really enhance our portfolio of e-readers and become a destination for these high-profile products.” Ms. Kramer added that the line’s wide range of prices appeals to shoppers.

Carrie McElwee, a Staples spokeswoman, declined to give specifics on Kindle sales or the company’s strategy with the products, but said that the store had expanded its selection as the offerings grew.

The items are also for sale at Radio Shack and at Tesco and Waterstones in Britain.

Ms. Rotman Epps said carrying Kindles fit into some retailers’ strategies, citing Best Buy’s efforts to market itself as tablet central. Ms. Dias, though, called those decisions “shortsighted.”

“They’re thinking about today’s sales,” she said. “Why support the guy that’s trying to put you out of business?”

Wii U Pre-orders Selling Out Across U.S.

Nintendo recently unveiled the launch dates and prices for its new Wii U system, and many retailers' pre-order stock is now fast disappearing. At the time of publishing, GameStop has sold out of Deluxe units, but still has Basic left to pre-order, Best Buy is sold out of both, as is Sears, while Toys R Us has a 'check back soon to pre-order' message. Walmart is still taking pre-orders for both.

Overwhelming demand? Limited stock? Both?

In Australia, EB Games and JB Hi-Fi are still taking pre-orders for both models, as is Game in the U.K.

While we can't read too much into pre-orders selling out in North America, it's going to be fascinating to see how the system sells at launch, and also how much stock Nintendo will be able to get into stores for what is - effectively - a global launch. Back in August there were rumours about manufacturing issues for the GamePad, while Nintendo's Reggie Fils-Aime recently told IGN the company will not be selling the GamePad separately in North America in order to get as much console stock into stores as possible.

Can Tumblr’s David Karp Embrace Ads Without Selling Out?

The design of Tumblr, the blogging tool and social network, is guided by feeling. In particular, the feelings of David Karp, the company’s 26-year-old founder, whose instincts tend to run counter to current Web conventions. Tumblr does not display “follower” counts, for example, or other numerical markers of popularity that are viewed as crucial social-media features, because Karp finds them “really gross.” The culture of public friend-and-follow reciprocity that theoretically expands a social networking service can, in his view, “really poison a whole community.”

Possibly such a view of Internet culture could be arrived at by way of deliberate study of online group behavior. But that’s not how Tumblr was made. “David built it for himself,” John Maloney, until recently the company’s president, told me. Marco Arment, Karp’s first employee, who participated directly in the service’s creation, put it even more succinctly: “Tumblr is David.”

I met Karp in Tumblr’s offices in the Flatiron district in New York. In his standard uniform of Jack Purcell sneakers, dark pants and a hoodie over a patterned shirt, Karp was polite, upbeat, inclusive and big on eye contact. Asked a question about competitors, he answered: “The last thing we want to do is compete with someone. That’s for bankers.” Karp likes to talk about Tumblr less as a business than as a “platform for creativity.” And indeed, it has been used to make more than 60 million blogs — among them a visual scrapbook kept by Michael Stipe; silly meme-blogs like Hey Girl, It’s Paul Ryan; and the clever graphic analysis that became the recent book “I Love Charts” — drawing a combined 17.5 billion page views a month.

The trick is making page views equal money. “Pretty much every large tech company today,” Karp said, is essentially “metrics driven.” Google, Twitter, Facebook: they’re obsessed with “optimizing” services, design, functionality and aesthetics through constant testing and tweaking. That ability to optimize and (not incidentally) monetize user experiences by reacting to microlevel data is the essence of Web-business magic, as it is generally understood.

Karp chose not to operate that way. Rather than monetizing clicks, he wants advertisers to view Tumblr as a place to promote particularly creative campaigns to an audience whose attention is worth paying for. It’s an approach that may or may not guide Tumblr into the black. But Karp isn’t worried. His nice-young-man aspect makes it easy to miss the brashness of what he is saying: he isn’t interested in competing, but not because he doesn’t like competition. He just feels that he sees something everyone else has missed.

Trying to blog at first made David Karp feel bad: that big, empty text box seemed to demand a lot of carefully constructed words, an intimidating sight for a nonwriter. The first iteration of Tumblr was a tool for “tumblelogging” (a short-form variation on blogging) designed to make it easier and less off-putting. It was released in 2007, and Tech Crunch promptly praised its simplicity: “There is absolutely no learning curve.”

Like any blogging tool, Tumblr allows users to design a site from a behind-the-scenes “dashboard,” where you type a post or upload a photo, and choose a visual “theme.” Tumblr’s dashboard incorporates some familiar elements of social Web services: in addition to making your own posts, you can “follow” or appreciate those of other Tumblr users. You can repost images and other content onto your own blog easily, and this helped Tumblr develop a reputation as a more visually oriented, multimedia version of Twitter.

In the beginning, most traffic came to Tumblr from without; but now more than 70 percent of the traffic on Tumblr occurs in the dashboard zone, where users read, react to and repurpose one another’s posts. The upshot is “the mullet theory of social software design,” summarizes Chris Muscarella, a tech-entrepreneur friend of Karp’s. “It’s all business in the front: you have your blog that looks like any other blog, although usually prettier. And then the real party is in the back, through the social interaction on the dashboard.”

The features Tumblr eliminates are as important to the way it feels as those it adopts. Bijan Sabet of Spark Capital, an early Tumblr investor who sits on its board, says that it is “normal behavior” for a founder to be excited about adding new bells and whistles, but Karp seems excited about doing the opposite: “He’ll tell us, ‘Hey, got a new version coming up — and I took four features out!’ ”

Karp’s thinking about the comments section, which is generally assumed to be a core blog feature, helps illustrate his broader ideas about how design shapes behavior online. Typically, a YouTube video or blog post or article on a newspaper’s site is the dominant object, with comments strewed below it, buried like so much garbage. Thus many commenters feel they must scream to be noticed, and do so in all caps, profanely and with maximum hyperbole. This, Karp argues, brings out the worst in people, so Tumblr’s design does not include a comments section.

Can Tumblr’s David Karp Embrace Ads Without Selling Out?

The design of Tumblr, the blogging tool and social network, is guided by feeling. In particular, the feelings of David Karp, the company’s 26-year-old founder, whose instincts tend to run counter to current Web conventions. Tumblr does not display “follower” counts, for example, or other numerical markers of popularity that are viewed as crucial social-media features, because Karp finds them “really gross.” The culture of public friend-and-follow reciprocity that theoretically expands a social networking service can, in his view, “really poison a whole community.”

Possibly such a view of Internet culture could be arrived at by way of deliberate study of online group behavior. But that’s not how Tumblr was made. “David built it for himself,” John Maloney, until recently the company’s president, told me. Marco Arment, Karp’s first employee, who participated directly in the service’s creation, put it even more succinctly: “Tumblr is David.”

I met Karp in Tumblr’s offices in the Flatiron district in New York. In his standard uniform of Jack Purcell sneakers, dark pants and a hoodie over a patterned shirt, Karp was polite, upbeat, inclusive and big on eye contact. Asked a question about competitors, he answered: “The last thing we want to do is compete with someone. That’s for bankers.” Karp likes to talk about Tumblr less as a business than as a “platform for creativity.” And indeed, it has been used to make more than 60 million blogs — among them a visual scrapbook kept by Michael Stipe; silly meme-blogs like Hey Girl, It’s Paul Ryan; and the clever graphic analysis that became the recent book “I Love Charts” — drawing a combined 17.5 billion page views a month.

The trick is making page views equal money. “Pretty much every large tech company today,” Karp said, is essentially “metrics driven.” Google, Twitter, Facebook: they’re obsessed with “optimizing” services, design, functionality and aesthetics through constant testing and tweaking. That ability to optimize and (not incidentally) monetize user experiences by reacting to microlevel data is the essence of Web-business magic, as it is generally understood.

Karp chose not to operate that way. Rather than monetizing clicks, he wants advertisers to view Tumblr as a place to promote particularly creative campaigns to an audience whose attention is worth paying for. It’s an approach that may or may not guide Tumblr into the black. But Karp isn’t worried. His nice-young-man aspect makes it easy to miss the brashness of what he is saying: he isn’t interested in competing, but not because he doesn’t like competition. He just feels that he sees something everyone else has missed.

Trying to blog at first made David Karp feel bad: that big, empty text box seemed to demand a lot of carefully constructed words, an intimidating sight for a nonwriter. The first iteration of Tumblr was a tool for “tumblelogging” (a short-form variation on blogging) designed to make it easier and less off-putting. It was released in 2007, and Tech Crunch promptly praised its simplicity: “There is absolutely no learning curve.”

Like any blogging tool, Tumblr allows users to design a site from a behind-the-scenes “dashboard,” where you type a post or upload a photo, and choose a visual “theme.” Tumblr’s dashboard incorporates some familiar elements of social Web services: in addition to making your own posts, you can “follow” or appreciate those of other Tumblr users. You can repost images and other content onto your own blog easily, and this helped Tumblr develop a reputation as a more visually oriented, multimedia version of Twitter.

In the beginning, most traffic came to Tumblr from without; but now more than 70 percent of the traffic on Tumblr occurs in the dashboard zone, where users read, react to and repurpose one another’s posts. The upshot is “the mullet theory of social software design,” summarizes Chris Muscarella, a tech-entrepreneur friend of Karp’s. “It’s all business in the front: you have your blog that looks like any other blog, although usually prettier. And then the real party is in the back, through the social interaction on the dashboard.”

The features Tumblr eliminates are as important to the way it feels as those it adopts. Bijan Sabet of Spark Capital, an early Tumblr investor who sits on its board, says that it is “normal behavior” for a founder to be excited about adding new bells and whistles, but Karp seems excited about doing the opposite: “He’ll tell us, ‘Hey, got a new version coming up — and I took four features out!’ ”

Karp’s thinking about the comments section, which is generally assumed to be a core blog feature, helps illustrate his broader ideas about how design shapes behavior online. Typically, a YouTube video or blog post or article on a newspaper’s site is the dominant object, with comments strewed below it, buried like so much garbage. Thus many commenters feel they must scream to be noticed, and do so in all caps, profanely and with maximum hyperbole. This, Karp argues, brings out the worst in people, so Tumblr’s design does not include a comments section.