Even back in January when Microsoft agreed to pay $1.2 billion for enterprise search company Fast Search & Transfer, it was mired in an accounting scandal and trading in its stock had been suspended. Its aggressive accounting for phantom deals that never materialized earned it the moniker the “Enron of Norway.” But more sordid details keep coming out from some tenacious reporting by the Norwegian press.

The latest account comes in the June 28 issue of the Norwegian magazine Dagens Næringsliv. In an article (in Norwegian) by Trond Sundnes, Dagens Næringsliv, Gøran Skaalmo, the magazine details how the Norwegian company booked free software trials as revenues, and how its executives set up shell corporations for allegedly self-dealing purposes. A translated version of the article (embedded below) is making the rounds among Fast’s competitors and inside Microsoft itself.

The problems at Fast were financial in nature and tied to an overly aggressive sales culture, which arguably Microsoft can fix. But it does point to a certain blindness on the part of Microsoft, or at least a willingness to look the other way, in its obsessive quest to become a player in search (see Yahoo and Powerset). It also raises questions about Fast’s underlying search technology. If Fast was having trouble closing deals for its products, how good can its technology really be?

According to the article, Fast had booked $50 million in fake revenue, $20 million in fictional contracts, and former top executives closely linked to CEO Markus Lervik siphoned off $6 million to shell companies they controlled. Lervik continues to lead the business and is currently the vice president for enterprise search at Microsoft.

Some of the details from the article include:

—The company had an aggressive practice of giving enterprise customers free trial periods and marking them down as tentative deals.

—One of these was a large $18 million deal with Australian Telecom company Telstra that the company recognized as revenues in late 2006. But the deal then failed to materialize.

—A second deal for which Fast never got paid was with Accoona, another shady search company.

—An audit uncovered unauthorized payments to a shell company in Fort Myers, Florida called Archtech that is owned by a former Fast VP, Peter Bauert and Fasts’s former CFO Ali Riaz (through yet another company he controls called Bluebird Collabo). That’s Riaz in the Audi pictured above.

Lervik never responded to repeated requests for comment, but Microsoft did. It sent adjusted annual reports for 2006 and 2007 which noted that over 30 million Norwegian Kroner ($6 million) was “irregularly” paid and “wrongly approved” to:

. . . companies owned or controlled by persons who at the time of the transactions were closely related parties.

That is an apparent reference to Archtech and other shell companies that were supposedly reselling Fast software. The problem, according to the the documents Microsoft provided, was that these related companies “purchased” $3.5 million worth of software licenses for which Fast was never actually paid.

I always wondered what the “transfer” part of Fast Search & Transfer referred to.

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In this post, guest author Ryan Carson goes through some of the lessons learned from building a Web app in four days. Carson is the co-founder of Carsonified, a web shop in Bath, UK. They’ve built four web apps, created ThinkVitamin.com and run events like Future of Web Apps. If you’re bored you can follow Ryan on Twitter.

The time it takes to design, build and deploy web applications has been steadily shrinking, especially with frameworks like Django, Rails and Symfony. With that in mind, we decided to push ourselves and attempt to launch a web app in 32 hours. Four crazy days later, Matt was born.

The app we built is a simple tool that allows you to post to multiple Twitter accounts. We learned a ton during the experience so I’d like to share some of those lessons with you.

How we did it

We have a team of nine people which were divided as follows:

• Two developers
• One designer / front-end developer
• Two bloggers
• One copywriter
• Three PR folks

I would say you only need three people if you want to strip it back to the bare minimum, which would look like this:

• One developer
• One designer / front-end developer
• One blogger / PR person

Our app was built in Python using Django and is hosted at WebFaction. It uses the Twitter API, Git and Codebase for version control.

How much did it cost?

On a basic level it cost us a week of salaries (around $10,000). There are some other small costs which I’m not including like rent, electricity, coffee and taxes. We got hosting for free because of a connection we have with the company but if you paid for that you might expect to pay not more than $400 for the first month (for a simple app).

Team building

Building a web app quickly is not only a great idea if you need to get your idea to market fast but it’s also a great way to build team morale.

You don’t need to build a brand new app in order to benefit from this idea. You can actually take time off to work on a new feature or direction for your current app.

There are some serious benefits to stepping away from your normal work and producing something totally new and creative:

1. The best boost you can give you or your team is to provide the time to be creative. Turning off your phones and email and just focusing on something new and exciting will do wonders for your energy level.
2. It could generate some amazing buzz around you and your company or products.
3. You’ll come back to your current projects with a new perspective and renewed energy.
4. It will push your team to learn new skills. For example, Will, our head of sponsor relationships, spent the whole week doing PR - something new for him.

Tips on working wisely

Here are a few tips that you should keep in mind if you’re focusing on building apps quickly:

1. Limit meetings to one 10 minute chat in the morning and one 10 minute wrap-up at the end of each day. Meetings are the best way to kill productivity and crush creativity so keep ‘em short.
2. Get people away from their machines at lunch. Go for lunch together and maybe throw the frisbee or play Wii. The excitement and creativity will quickly deteriorate if you don’t have a break during the day.
3. Simplify the site and app as much as possible. Try launching with just ‘Home’, ‘Help’ and ‘About’.
4. Make sure to build on a great framework like Rails, Symfony, Django or Objective-J. Part of our experiment was playing with Django and comparing it to Rails and Symfony (a PHP framework). We’ve found that Django lacks the rigor of Rails or Symfony, thus might not be an ideal choice for future projects.
5. Go with the first logo idea and color scheme from your designer. You shouldn’t over-analyze the look and feel of everything as this process can go on indefinitely. Design the logo and move on. This is why you need to hire good designers and trust them to be good at what they do.
6. Be technologically agnostic. If your developers are saying it should be built in a certain language and framework and they have solid reasons, trust them and move on. Again, this is about hiring smart people and getting out of their way.
7. Coordinate how your designers and developers are going to work together. Our designer creates static HTML and then passes it to the developers who use the HTML as a basis for creating templates. These templates are then committed to a Git repository and from then on, the whole team works from that one repository.
8. It’s not enough to just have a designer and a developer. You need a dedicated person who’s focus is solely spreading the word about your application and working to get media coverage. There’s no way we could get the kind of coverage for Matt that we hope to achieve without several of us working full time on it. However, do not hire a PR agency for this - there needs to be an authentic passion for the app that can only come from your team. (For instance, I asked TechCrunch to cover it, and Erick came back with the suggestion to write this post).
9. Get your ‘Creation Environment’ setup correctly.

Building your Creation Environment

If you want to build quickly and creatively, you need to set up an environment that encourages and facilitates that process. If you don’t have the following basics down, your team will be constantly battling annoying issues instead of getting on with building. You’ll need:

1. Good version control. I suggest Git.
2. An easy-to-use source and changeset browser. We use Codebase.
3. Solid server infrastructure. Why not build on Flexiscale, Grid-Service, Mosso or EC2 and let the big boys worry about uptime and server load?
4. A ‘one-click’ deployment system. This means that deploying the code from your repository should take just one click. If it’s any more complex than that, there is potential for complications and downtime. Capistrano is brilliant if you’re using Rails.
5. Printers, chalk boards and meeting space. People need the physical space to throw around ideas. We’ve painted an entire wall with blackboard paint so the team has room to sketch ideas.
6. Coffee, water, music and healthy snacks.

If you really get these right, it makes building and creating so much more enjoyable and fast.

So that’s it …

Thanks for listening to the Matt story. Please share your advice and experience by commenting below. If you want to see a whole day of development squeezed down into four minutes, watch the video below. Enjoy.

Matt Week - Day Two Time Lapse - Music by MGMT

Related reading, ideas and tools

• Contest to build an app in 48 hours: Rails Rumble
• Post about the danger of too much functionality: Features are a one-way street
• Powerful web frameworks: Django, Rails, Symfony, Objective-J
• Version Control: Git and Subversion
• Source and changeset browsers: Codebase and Beanstalk
• Cloud hosting: EC2, Flexiscale, Google App Engine
• Easy deployment: Capistrano

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Google has announced an iPhone version of Google Talk which is simply an iPhone-ized browser-formatted version of the Google’s text chat application. This means you can’t talk over the Interwebs but you can tap out halting messages to your friends on the iPhone’s screen and, thanks to Safari’s tendency to clear pages randomly, you probably won’t enjoy a sustained conversation.

When the App store finally launches expect about 500 VoIP solutions for the iPhone on the first day. Until then, sit back, think of England, and enjoy your browser-based Google Talk while it’s fresh.

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Just as The Governator tries to pursue green policies, like keeping Tesla’s electric production car local, you’ll now also be able to hand out full-sized “green” business cards with Flickr images, courtesy of the same guys who brought us those cool little mini-cards, Moo.com. They are launching full-sized business cards with a new partner, LinkedIn, which makes sense in the business space, so maybe that be-suited VC won’t snigger at your tiny Moo cards any more. Moo already has partnerships with Facebook, Flickr, Bebo and LiveJournal so that people can turn their image galleries into cards. Their technology means they can put a unique individual image on every card you order - impossible with other printers. So far they’ve sold over 10m cards to more than 180 countries - even to some people in Afghanistan. They recently released an API, and have a cards designer reward scheme in the works. The new classic business cards are sourced from sustainable forests and the ‘Green’ business cards are 100% recycled, 100% recyclable and 100% biodegradable. Here’s an interview I shot to with CEO Richard Moross.

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What you see above is not a video or a slide show, it is a Flowgram. If you click on it, you will be taken to a full-screen player with what appears to be a screencast with a voiceover. Except that you can control the pages by scrolling up and down, watching any videos that might be on the page, or clicking on the live links (which takes you out of the Flowgram to that Website, but if you hit the back button it picks up where it left off). You can also add comments and share the Flowgram via a widget like the one above, which is muted and requires you to click through for the full experience.

If you want to make your own, we have invites for the first 1,000 readers who register here with the code “TECHCRUNCH”.

It’s an interactive screencast, a way to synthesize the Web by pulling different pieces together The voiceover acts as the glue. It can be used for slide shows, travel guides, tutorials, sales pitches, or just to explain something to a friend.

The best way to understand a Flowgram is simply to watch a few. Here is founder Abhay Parekh explaining what a Flowgram is (above) and another one he made specifically for TechCrunch (below). Flowgram’s are also great for narrated photos slide shows. Investor Joi Ito did one about Google Zeitgesit Europe and another one about an amazing restaurant in Tokyo (also below).

Parekh was previously the co-founder and CEO of FastForward Networks, which sold to Inktomi for a cool $1.3 billion in 2000. (Those were different days). He then did a stint as a VC at Accel. He founded Flowgram in June, 2007 with $10,000 and raised $1.3 million in September from a high-profile group of angel investors, including Reid Hoffman, Josh Kopelman, Caterina Fake, Stewart Butterfield, Bud Colligan, Kevin Lynch, Joi Ito and Rajeev Motwani.

To make it easier to create a Flowgram, Parekh’s team is building a set of importing tools for Flickr, Facebook, RSS feeds, and Powerpoint slides. And as more people create Flowgrams, the service will be able to recommend similar ones. Parekh plans to make money with either ads or a premium subscription version for sales people and marketers.

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The ongoing Google/YouTube-Viacom litigation has now officially spilled over to users with a court order requiring Google to turn over massive amounts of user data to Viacom. If the data is actually released, the consequences could be far more serious than the 2006 AOL Search debacle.

Louis L. Stanton, the senior judge on the United States District Court for the Southern District of New York, issued the opinion and order, which is here (PDF).

That data includes every YouTube username, the associated IP address and the videos that user has watched on YouTube. Google will also be required to hand over copies of every video removed from Youtube for any reason (DMCA notices or user-initiated deletions). Stanton dismissed Google’s argument that the order will violate user privacy, saying such privacy concerns are merely “speculative.”

Meanwhile, the judge denied Viacom’s request that Google turn over YouTube’s source code as it could “cause catastrophic competitive harm to Google by sharing them with others who might create their own programs without making the same investment.”

I can understand why Judge Stanton, who graduated from law school in 1955, may be completely and utterly clueless when it comes to online videos services. But perhaps one of his bright young clerks or interns could have told him that (1) handing over user names and a list of videos they’ve watched to a highly litigious copyright holder is extremely likely to result in lawsuits against those users that have watched copyrighted content on YouTube, and (2) YouTube’s source code is about as valuable as the hard drive it would be delivered on, since the core Flash technology is owned by Adobe and there are countless YouTube clones out there, most of which offer higher quality video.

YouTube’s core value is in it’s network effect - the library of content along with its massive user base.

The privacy fallout of this ruling is spectacular. The EFF has already chimed in, noting that the order is highly likely to be in violation of federal law.

Judge Stanton doesn’t seem to care much about that law, for now. And he clearly doesn’t understand that far more data is being transferred than is necessary to comply with Viacom’s core stated concern, which is to understand the popularity of copyright infringing v. non-infringing material. Viacom has asked for far more data than that, and there’s only one use for that data: to sue individual users (or shake them down via the threat of lawsuit, which has been perfected by the RIAA) who have watched a few music videos or television shows on YouTube.

I say this with the utmost respect, but Judge Stanton is a moron. And Google simply cannot hand this data over without facing a class action lawsuit of staggering proportions.

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Europe is a hotbed of mobile startups right now, so appropriately enough the Mobile 2.0 event which started in San Francisco is putting on a one-day international event tomorrow in Barcelona which focuses on mobile startups, dubbed Mobile 2.0 Europe. I’ll be moderating a panel there, hosting a TechCrunch networking party and we now have the exclusive on the early stage start-ups selected for the competition:

aka-aki (from Germany) focuses on Proximity Networking, as in mobile social networking with Bluetooth-sensing capabilities which are pretty interesting. For instance, it will build a network of encounters with other Aka-Aki members even before you sign up, populating your network automatically. We’ve written a lot about them here.

Dial2Do (from Ireland) lets you do common tasks by calling a number and speaking. You can send email or SMS and post to Twitter for instance. It asks you two or three questions like “Do what?”, “To who?”. You say what you want, it recognises what you said and completes the task. That would probably make it pretty handy for those tasks you’d like to do while driving but now can’t due to the increasing number of laws which band people from talking on the phone while driving.

Shout’Em (from Croatia) is a “roll your own” hosted mobile social network which has an Android client already. The video looks slick at least, but it will be interesting to hear more about them at the conference.

youlinx (from Spain) is a social media network, not unlike a mobile YouTube, but you can send pictures as well. It would be good to see if they have any plans to extend this idea as currently its a fairly simple video sharing site for mobile content.

Zipipop (from Finland) is a start-up that is developing Zipiko, a mobile service for sorting your social life on the go, as in, broadcast where you’ll be at a certain time in the day. Think Dopplr, but on a much more granular level perhaps.

Rummble (from UK) is a location based discovery tool and social search platform we wrote about here and here. Rummble’s idea is that location will soon be a “given” (via FireEagle, Google or GPS) on the mobile, as will social networking, so the value lies in filtering all this data to make it relevant in the mobile experience.

Via Mobility (from France) is a mobile widgets and applications startup with a Mobile Widget Player. France seems to have a penchant for mobile widgets as another startups called Goojet launched there recently.

And if you’re free in the evening, come over to the TechCrunch / Mobile 2.0 Europe Party at Shoko Club near the beach with speakers, organizers, startups. Check out details for the party and the sponsors after the jump.

So if you want to come to the party let us know why in the comments below and we’ll try to get you in.

TechCrunch Mobile 2.0 Party Sponsors

Nimbuzz offers a social interaction service combining presence, IM, and VoIP. The free application is available on the mobile, PC and Web, for (group)calling, instant messaging, (group)chat, file sharing across popular IM communities, including Skype, MSN, GTalk, Yahoo!, AIM, ICQ, plus 23 social networks including Facebook and MySpace. Nimbuzz works on over 600 mobile phones worldwide. The free genuine VoIP works worldwide on Symbian S60, and Windows Mobile devices over 3G/Wifi. Users on GPRS connections, or using Java devices, make international calls at local dial-in cost – in 50 countries. Social networks can incorporate the application, to offer their users fully integrated real-time communication services like voice calls, chat, file sharing and access to friends in the most popular IM communities. The users’ online social networking experience can even be extended to the mobile phone, to become completely connected. Nimbuzz has positioned itself to become the largest global communications platform for seamless IP-based communication among mobile devices and social media platforms.
Nimbuzz is headquartered in the Netherlands, with offices in Argentina and Brazil. The company, founded in 2006, received VC and strategic funding by Mangrove Capital Partners (Skype), Naspers/MIH (Tencent, Mail.ru, Gadu-Gadu, Mweb, Sanook, Tradus) and Holtzbrinck (StudiVZ).

Fjord is a strategic design consultancy based in Berlin, Helsinki and London. We think about convergence, mobility and the future of digital touch points. We are working with clients like the BBC, Nokia, Orange and Nokia to create transforming solutions. Our passion and goal is to deliver elegant simplicity.

my247.mobi: The guys at my247.mobi officially launch the Global Guide to Going Out on July 4th. The free service available online, on mobile and on facebook allows you to share your favourites’ and help find new restaurants, bars, clubs, plan gigs, events, catch-ups with friends 24 hours a day, 7 days a week! preview today @ www.my247.mobi - on your pc or mobile.

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Many of the startups we come across are “beta” in name only - they’re feature complete, with thousands of users and only a few (if any) bugs. Combo, a new startup that is looking to offer users a central hub for communication across their social networks, isn’t any of these things.

Combo is a beta in the truest sense, and frankly, it needs work. Services update at random intervals, many of the links don’t seem to be working properly, and the interface itself is badly in need of a redesign. But the site is still in private beta, so it’s too soon to count it out. If you’d like to try it out for yourself, you can grab one of 500 invites here.

Combo’s current shortcomings are frustrating, because the site seems to have a lot of potential. Combo monitors and pulls recent activity from a plethora of services that include Facebook, MySpace, Flickr, Digg, and over thirty others. Your activities are all aggregated as part of a “ComboStream”, while the “Watchbox” lets you monitor the activities of your friends.

The site also offers a strong mobile version that features all of the same functionality as the main site. For now the site supports the iPhone, with planned support for more mobile platforms in the near future. Using the site on my iPhone was painless, and I was able to send out a mass status-update to Facebook and Twitter without much trouble. At least, the site said it was updating these services - no update was ever sent.

Co-founder Aaron Raskin says that Combo isn’t just about activity streaming - instead, the focus is on becoming a communication and publishing tool. Key to this idea is the site’s universal address book, which compiles contacts from all of your social networks (and even your phone), allowing you to share content without needing to manually login to each social network.

Combo has a good idea, but its execution is flawed. Unless it can reinvent itself with a more intuitive interface, few people will turn to it instead of the social networks they’ve become accustomed to. The site will also see stiff competition from FriendFeed, which released an iPhone version earlier this week.

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Massively Me, a stealth gaming company, has announced the upcoming launch of it’s MMOG for kids and young teenagers, Kiwi Heroes.

Scheduled for release later this year, Kiwi Heroes will be a Flash-based game that attempts to strike a balance between a virtual world and a traditional MMOG (like WOW). Massively Me claims that the intention behind Kiwi Heroes is to promote social awareness and responsibility to children by addressing environmental issues and global concerns in the game. It also plans on establishing the “Every Kid’s A Hero Foundation,” to support charitable global causes.

Kids’ virtual worlds and online games have a proven track record of major success. TechCrunch analyzed several of the most popular virtual worlds last August. Club Penguin sold to Disney for $350 million and Neopets sold to Viacom for $160 million. The space is potentially very profitable, with a lot of user attention ripe for the right kind of monetization.

With so many potential users and advertising attention, the space is heavily competitive with many competitors, and even some major media corporations. Mattel has their Barbie Girls site, Disney has Club Penguin, and Ganz has Webkinz. Webkinz is the current leader with almost 7 million monthly U.S. uniques, up 148% from last year (via Compete).

Another challenge that children’s online gaming networks run into is finding an effective way to advertise. Neopets used immersive advertising by selling advertising on various aspects of gameplay. For example, players could earn “Neopoints” by playing advergames and taking part in marketing surveys. Similar businesses have monetized through providing offline goods like toys, DVDs, video game partnerships, TV programs, and clothing.

Massively Me has been completely self-funded so far, and claims to be currently pursuing several partnerships and offline tie-ins. If these offline attempts prove successful, Kiwi Heroes may have what it takes to be a contender.

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It turns out the battle for control of Twitter rests almost exclusively in the unique value proposition of XMPP-served track. As Twitter strips away various features of its service to rebuild a scalable fail-whale -proof version, the one remaining hurdle is restoration of a fully-functional Track over IM.

For the last two weeks, a one-way IM service via Gchat inside Gmail or Gtalk standalone has provided a stream of tweets but not the previously enabled ability to post back to Twitter via the IM window. In addition, there is no support for the Track function, which interweaves Tweets from any endpoint on the Twitter network that correspond to the keywords you “track” on. Track was briefly available over SMS several weeks ago, but was then withdrawn.

Continue reading on TechcrunchIT >>

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