Monday, August 31, 2009

Medsphere raises $12 million for electronic health records

Turning the U.S.'s rickety paper-based system of health records into a state-of-the-art electronic one is no pretty task.

But someone's got to do it.

Medsphere Systems Corporation, an open-source electronic health records provider, said it raised $12 million today to meet demand from hospitals racing to keep their eligibility for federal funds by revamping their records systems.

Carlsbad, Calif.-based Medsphere is one of several companies that are adapting VistA, or the Veteran Health Administration's electronic medical records system, for commercial use. For budget-conscious hospitals, taking the open-source route is a cheaper alternative to buying private software. Medsphere's variation, called OpenVista, is used by 20,000 people and 2,500 doctors, according to the company.

The federal government is trying to push hospitals toward adopting electronic records by promising $19 billion stimulus funds to those that make the transition by 2011. If they don't make the leap, they face financial penalties, losing a percentage of their Medicare payments starting in 2015.

Azure Capital Partners, Epic Ventures, Thomas Weisel Venture Partners and Western Technology Investment participated in the round.


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Is it time for the venture capital “two-and-twenty” to end?

Private equity is starting to get the hint. Is it time for venture capital to do the same?

For more than a generation, "two-and-twenty" has been a rule of thumb for management fees in the venture capital industry. It means fund managers get twenty percent of any profits they generate and two percent of total assets under management in fees.

Chris Dixon, who co-founded Hunch with Flickr co-founder Caterina Fake and made early stage investments at Bessemer Venture Partners, published a provocative post last week asking if it's time to end the practice:

The problem is the management fees.  2% made sense back when VC funds were much smaller, but not now that they have gotten so large.  As peHUB said in their email newsletter today, Benchmark had an $85M fund in 1995 but today has a $500M fund.  That seems to be the typical trend for most big VCs.

Let's do a little math.  2% of $85M is $1.7M.   Assuming 8 partners, that means salaries are in the $100-$200K range.  Much higher than national averages but, by the standards of finance, they aren't getting "rich."  2% of $500 is $10M, so each partner is probably getting $1M+ in salaries.   Over the 10 year life of the fund that's $10M.  Even on Wall Street that is considered pretty rich.  And they get that money even if they make only bad investments and don't return a dime to their investors.

The private equity and hedge fund industries are undergoing similar soul-searching (if that's possible) after last year's market crash when they were swamped with redemption requests. Two-and-twenty was also a rule of thumb among hedge funds.

After the Standard & Poor's 500 Index plummeted by the most since 1937 last year, investors questioned why managers should automatically earn a 2 percent cut of $1 billion under management, for example, even if they delivered a loss. Private equity funds are now down to asking for 1.8 percent this year, according to London-based research firm Preqin Ltd. Hedge fund fees have stayed a little firmer than that, although some new funds are charging 1.5 percent, according to Bloomberg News.

As the venture capital industry also contracts, sending investment activity back down to mid-1990s levels, perhaps its time for funds to ask similar questions as they compete for dwindling inflows from long-term investors like university endowments and pension funds. A lower automatic management fee, with the same or more generous profit-sharing arrangement, would place a venture capitalist's mindset more in line with the entrepreneur's experience.

Another plus, Dixon argues, is that venture capitalists won't flood the market with money start-ups don't need, make too many "me-too" investments or raise too large a fund just to capture management fees. Indeed, Bill Gurley, a venture capitalist at Benchmark Partners, argued last week that a contraction may nurse venture capital back to its former health.


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Prefinery helps companies build better beta tests

Beta testing can sometimes seem like a meaningless term, with Google in particular keeping applications in beta for ridiculous periods of time. But it's still an important tool for web testing and development, and one that can get complicated, when you're trying to keep things private. Now a startup called Prefinery says it wants to handle the hassle of beta test management for you.

Even though the main point of a beta is to gather user feedback and improve your product, Prefinery isn't really focused on feedback, but rather on all the other parts of the beta process that can distract you from getting feedback or building the product. Basically, customers create a web page where people can sign up for the beta via a customizable form, then Prefinery takes that form and creates a list of beta testers. As you're ready to bring on more users, Prefinery sends out emails letting them in. Other features include the ability to generate codes so users can access the beta, to take surveys of users when they sign up, and to import that data into customer relationship management (CRM) systems.

This might sound like it's addressing a pretty minor need, but for an early-stage startup, the more you can focus on the product and the business (and therefore the less time you have to spend building duplicating the work every other web developer has done to manage a beta test), the better. Plus, Prefinery notes that your early testers usually include super-users, investors, and press. They're your most important users, so you want to make sure they have a good experience.

Prefinery has itself been in a private beta test (managed by Prefinery technology, natch) until now, with 475 companies signed up to manage more than 4,000 testers. Now that it's launching for everyone, Prefinery says it's adding new features like improved tester analytics, and it's ready to start charging. There's a free plan for up to 50 testers, then pricing starts at $50 a month.

The company is self-funded. Oh, and in case you still think the vision is too small, Prefinery says it's just starting with beta testing, and will expand to other areas of product development hence its blog post encouraging companies to embrace the beta "mindset" forever.

Prefinery Demo from Justin Britten on Vimeo.


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Saturday, August 29, 2009

6rounds wants to add video to all your web activity (invites)

For anyone wanting to have a video chat with their friends, there's no shortage of options. But a startup called Gixoo is hoping there's room for a new service, called 6rounds, which adds new ways to interact with people while chatting.

Right now, you can see the service in action at the 6rounds website, although the company plans to expand the service far beyond the site. It's easy to start a video chat with friends or other people you find, and 6rounds even tries to help the conversation along by suggesting interests you have in common (based on user profiles). More importantly, it isn't just about having conversations. You could play a game together, or watch a YouTube video, or shop on Amazon during a chat activities open in a window in the center of the screen, while the chat windows are pushed to the side.

Eventually, however, chief executive Dany Fishel says, "We hope that 95 percent of the video chats don't occur at 6rounds.com. We don't see it as a destination site."

To that end, there should soon be a 6rounds Facebook application, and after that similar applications for other social networks and websites either built by the company itself or by third-party developers; Fishel and chief operating officer Ilan Leibovich say they plan to give developers access to the 6rounds service through application programming interfaces (APIs). It's also possible to embed your 6rounds profile on other sites (see the sample embeddable profile here).

6rounds is still in a private beta test, but VentureBeat readers can check it out by clicking here (Gixoo gave us 250 invites).

The Israel-based company plans to make money through virtual gifts, personalization, e-commerce, licensing, and advertising. It has raised a total of $1.5 million in venture investment, with backing from Rhodium Investment Group and the Israeli Startup Factory.


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Entrepreneur Corner Roundup: the new Series A. forecasting customer growth and breaking into existing markets

Here's the latest from VentureBeat's Entrepreneur Corner:

Seed is the new Series A for VCs – With the economy in crisis, VCs have been reluctant to put term sheets down on new investments. That's slowly changing, but instead of using the Series A mold, many VCs are using 'seed' money. Caine Moss, corporate and securities partner at Wilson Sonsini Goodrich & Rosati discusses how to protect your company.

Do the math: An easy formula to forecast customer growth - Before you have a shot at a capital injection, you'll first have to provide firmly grounded revenue and customer projections. Loyalty Lab COO Michael Greenberg shows you how to accurately predict those numbers.

Four rules for running with the big dogs – Breaking into an existing market is tough, since many customers are loyal to an established competitor. Serial entrepreneur Steve Blank details four ways to make it easier.

Clarifing direction through strategic process management – Coming up with a great idea is one thing. Executing on it is another. Angel investor Sy Fahimi discusses strategic process management and the dramatic impact it can have on your business.

Emerging trends in the future of technology - While some entrepreneurs fear the tech field is full, Microsoft CEO Steve Ballmer says the field is still wide open, with a lot of areas that still haven't been explored.


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Report: Twitter investor Chris Sacca readying venture fund

Well-known angel investor Chris Sacca is about to launch an early-stage venture fund called Lowercase Capital, according to a report in TechCrunch.

The fund would be pretty small, the report says $5 million in all, with investments of about $50,000 to $150,000 each. Still, it's encouraging to see new figures entering the venture industry at time when so much of the discussion is doom-and-gloom. As a Twitter backer, former Google employee, and someone who's outspoken on political issues (you can read more about his politics in my coverage of a Government 2.0 panel a few months ago) Sacca is a prominent figure in the tech scene there's even a Twitter account devoted to parodying him. Recent investments include web typography startup TypeKit and time management company RescueTime.

In response to my email, Sacca said he can't comment, which suggests there's something afoot (though the details may not necessarily match up with TechCrunch's story). There is also a website up for Lowercase Capital, but it doesn't have any information.


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Non-profits test out new analytics software for social investing

The young field of social venture capital is finally getting some detailed metrics.

A style of investing that takes cues from the traditional venture capital industry while aiming to solve global problems like hunger, poverty and health care, social venture capital sits on a delicate line between seeking financial return and having tangible social impact.

Environment Planning Group Limited, a Gujarat, India-based Acumen Fund investment, aims to provide safe water

Figuring out what those trade-offs should be and how to measure them is the tough part. So New York-based Acumen Fund, a venture philanthropy fund, and a group of Google engineers put together the Pulse software system to give Google-style analytics for returns on both fronts.

The Salesforce application comes out this fall and is being tested by more than 50 non-profits and charities. It tracks what a more conventional investor might look for revenue, return-on-equity and assets and liabilities. But it also follows less traditional metrics that a non-profit user can design, like school drop-out rates for an education program or mosquito bed-net sales. Acumen will offer it for free to non-profits and work out other financial arrangements with some of the larger foundations.

Sensitive to the conflicts that might arise over how to measure social impact, Acumen Fund developed the technical part of the software separately from the qualitative part, said Brad Presner, who managed Google's business analytics team before coming to the fund. (That means that even though Acumen Fund uses it mostly for projects in the developing world, a religious philanthropy could use it to track impact in its community.)

Acumen also wanted to create benchmarks across the entire industry, so that social venture funds like Root Capital or E+Co would have a way to keep track of what works and compare returns. The fund built a wiki and asked other partners like the Rockefeller Foundation to contribute ideas.

Designing metrics encompasses a lot of sticky questions: social venture capitalists have to weigh whether it might be better to fund a project that has a shallow impact on a larger group of people or a very deep effect on a handful of lives. When there are trade-offs between boosting financial returns and benefiting a disadvantaged customer base, they have to figure out what to prioritize.

Venture philanthropy, or philanthrocapitalism, is a young field that was borne out of the successes the venture capital industry saw in the 1990s. Newly wealthy entrepreneurs and investors wanted to donate but needed accountability and a better understanding of how their dollars were having impact. So they started applying some of the metrics and business practices from traditional investing to their charitable work. Returns in this area are not meant to be competitive with private equity- or venture capital-sized returns. Instead, social venture capital is a more disciplined form of charity that requires a self-sustaining business model and some of the listening mechanisms built into a market-based approach.

Acumen Fund, which manages more than $40 million, looks for businesses that can scale up to impact more than 1 million people and operate on their own within five to seven years. It raised money from the Skoll Foundation, which was created by eBay's first president, Jeff Skoll, to develop Pulse. Eventually, Presner said, the fund would like to grow Pulse into an industry standard and spin it off into an independent project.


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Thursday, August 27, 2009

OneRiot Fights Its Way To A New $7 Million Round

OneRiot, the real-time search engine, has just announced a new $7 million Series C funding round led by Appian Ventures, Commonwealth Capital Ventures, and Spark Capital. The company blog has just posted more information.

While the real-time search space is particularly hot at the moment, OneRiot has been focusing on opening up and expanding its APIs to allow others to tap into its data. Partners include Yahoo and Microsoft, who of course, will also soon be much closer in the search space. Meanwhile, search titan Google is said to be very interested in the real-time space and is exploring its own way of doing things. And then of course there is Twitter which currently offers search based on its Summize acquisition, but is also said to have something bigger in the works.

Much of the Twitter Search expansion talk revolves around looking at the link data (something which Twitter was apparently doing the other day before it pulled the test down). That also happens to be what OneRiot specializes in, scouring the real-time space, crawling for links, rather than simply status updates. But they're also clearly aware of the power of Twitter in the real-time space, as they recently launched a RiotFeeds product that breaks down links from Twitter into different categories.

The company last raised a large $15 million round in the summer of 2007, before it was even known as OneRiot. Back then, it was known as Me.dium, and was more of a StumbleUpon-type product. This new round brings the company's total funding to $27 million over three rounds. This new money will be used to improve three key area of the service: Speed, scale and relevance, we're told.

OneRiot's CEO is Kimbal Musk, Elon Musk's younger brother.

CrunchBase Information

OneRiot

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Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.
TechCrunch50 Conference 2009: September 14-15, 2009, San Francisco


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Linksify raises $500K for better contact management

As networking sites like Facebook and LinkedIn evolve, they're becoming more social, more interactive, and more open to third-party developers. But a new startup called Linksify wants to take users in the other direction rather than creating new ways for you to interact with people, it's stripped away most social networking features and instead focuses exclusively on contact management.

The site is launching its public beta test today and also just announced a $500,000 investment from entrepreneur and angel investor Jon Fisher (who worked with Linksify founder Tony Yu when they were chief executive and chief financial officer, respectively, at Bharosa). About a week ago, Fisher sent out an email announcing that's he's quitting LinkedIn for Linksify, because (in his words) he wanted to:
stay connected without invitations
update and sync outlook and PDA address books automatically
show different portions of profile to different people
increase security by encrypting contacts

Basically, Linksify wants to be your online address book, one that gives you a high level of security and control over who sees what information. You divide your contacts into acquaintances, personal contacts, and work contacts, then specify what information you want to provide to each group for example, you might only give your home address and personal cell phone number to your personal contacts.

Linksify updates don't stay trapped in the service, either they synchronize with your Google, Yahoo, or Outlook accounts. You can also pre-approve people to see your contact information by sending them semi-private "passkeys" to your information. And for additional security, your contact information is encrypted.

This approach addresses a lot of my problems with LinkedIn to the extent that I use LinkedIn at all, I use it as a contact service and barely look at the other social features and applications. The service is free, but Linksify will eventually charge for premium options like syncing multiple address books and mobile devices.


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Wednesday, August 26, 2009

Brazen Careerist: LinkedIn for Gen Y

Brazen Careerist, the blog network spearheaded by well-known career advice blogger and columnist Penelope Trunk, launched a professional social network today aimed at connecting employers with prospective Generation Y hires. The new social network juxtaposes features from popular social sites such as Twitter, Facebook and LinkedIn so that it's easy for that demographic to get started on the site and start adding content to it.

Unlike LinkedIn, Monster.com and other career web sites, a person's profile on Brazen Careerist is not centered solely around their resume, but on an "idea feed" where people list their goals, interests and career strengths. As Trunk points out, LinkdedIn's profile content is dedicated to people listing their past work experience something Generation Y-ers don't have much of due to their age. The idea feed on Brazen Careerist, on the other hand, will allow employers find the best Gen Y candidates based on whether their ideas match the company's, rather than the employer judging them solely on their limited work experience.

For Gen Y-ers, Facebook came on the scene when many of us were at the beginning our college careers. It was a site where we could add quirky information about ourselves and connect with our peers over wall posts, photo albums and status updates. But college career counselors were quick to warn us that employers were using Facebook as a proxy for background checks, so many of us modified our Facebook profiles to make our social network identity more HR-friendly. But now, Brazen Careerist offers a way for young adults to finally separate our personal and professional online identities.

Trunk said the Madison, Wisc.-based company plans to monetize the new social network by using a similar revenue model as LinkedIn, except it doesn't plan on charging Gen Y-ers for subscriptions. The revenue model will be a hybrid of a pay-for-hire model, charging companies for posting a job ad and contacting prospective job candidates directly. Brazen Careerist will start charging companies for these services by the end of this year.


http://gigaom.com/2009/08/25/brazen-careerist-linkedin-for-gen-y/

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Tuesday, August 25, 2009

Free Live Clinics for Online Startups

StartupWiz is offering free live clinics for online startups. The clinics are appropriate for entrepreneurs at all levels especially those who have growth-oriented startups. StartupWiz says that these clinics have a format that "is more like a high‐speed brainstorming round table workshop than the typical seminar or lecture".

If you want creative guidance and you want your assumptions challenged, StartupWiz will have business professionals and entrepreneurs who will happily oblige.

Said Rudi Wiedemann, the CEO and founder of StartupWiz: "Chefs try out and reject thousands of new recipes before one ever gets on the guest menu. Similarly, savvy entrepreneurs will question, probe and test every aspect of their business model before they approach investors because first impressions are critical. This format provides a tough‐minded laboratory that prepares you and your business model to meet today's challenges."

At the StartupWiz website, you simply need to complete a short form to register for the free clinics. The next live clinic will be on August 25th and will take place from 6-8 PM at Morrison University.

StartupWiz (Image: StartupWiz.biz)

Post from: Startup Spark

http://www.bizzia.com/startupspark/free-live-clinics-for-online-startups/

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Do the math: An easy formula to forecast customer growth

Venture capitalists don't want to hear about value – at least not initially. Before you have a shot at a capital injection, you'll first have to provide firmly grounded revenue projections. And to do that, you need to know exactly how your customer base in going to grow.

The benefits extend beyond VC interests. Customer forecasting correlates closely with cash forecasting, so the better you are at predicting customer behavior, the better you'll be with cash management. You'll also better be able to identify the tasks that matter, leading to better resource management.

Depending on your business, it may be simple to forecast growth, based on search engine marketing, affiliate marketing, site traffic, conversion rates and repeat purchase rates. But an enterprise sales structure may prove more difficult - retention may be easy to forecast but acquisition is hard to estimate.

Don't try to boil the ocean.  Start with a simple model, and improve it as you learn.  What follows is an initial approach that you can tweak to your individual business.
Who will buy and why?

This needs to be crisply defined, even if you think it will change next week.  A good entrepreneur will be open to new markets if that's where there is uptake, but you have to start with some point of view.  Each vertical or customer segment requires a different language, so pick one to start and iterate.

There are fundamental differences between business customers and consumers, but you can start with a similar customer model for each.  Acquire, grow, retain.  That's it.  Have a strategy and a basic plan for each and you'll be able to build a believable growth model.

Customer acquisition is a numbers game

Every business has a different model for acquisition.

While marketing and sales are equated with branding in most people's minds, it's really a numbers game.  The key is to identify your customer sources and build basic processes and metrics around them.

If your marketing plan is "Post cool videos to YouTube and get 10,000 registrations per video," you'd better have a good reason why it's 10,000 and not 1,000.  And if videos make up 95% of your customer acquisition, you're unlikely to get much traction with investors until you have proof that your videos drive 10,000 registrations a pop.

There's no magic (except maybe a good PR agency).  Don't assume.  You have to feed the acquisition beast with whatever works, and put in the time and resources to meet your numbers.  Better to tweak your product or service to the needs of more prospects than vice versa.

Better yet, experiment with other approaches that lead to more prospects, better conversion or more revenue per customer.

This is part one of your forecast: For each lead source, [number of leads/visits/registrations * conversion/close rate] = new clients per month.

Multiply it by average deal size, and you have a "new revenue" forecast.  Draw the population flows on a whiteboard, photograph it, print it out and tape it to your monitor or the side of your laptop. This will be your life going forward.
Ignore existing customers at your own peril

Keep a real close eye on growth from existing customers, as it's your easiest source of revenue.  Monitor any revenue changes from them on a monthly basis and know why it has changed. If you're trending negative, your core customer value is eroding – and that bodes poorly for your revenue forecasts.  Have a couple beers with the team and think of ways to nudge this number up every month.

Focus also on your retention - the percentage of customers returning on a regular basis.  This should be a relatively stable number, with some seasonal influence and external economic influence.  Watch this closely, especially as your business grows.

This is part two of your forecast: [# of existing customers * activity/retention rate] = retained clients per month.  Multiply that by the revenue growth rate, and you have a "recurring revenue" forecast.

Keep a close eye on the activity/retention rate, since it can decline over time. Keeping this metric as high as possible will always deliver your highest ROI.

The world is a tough place, especially now.  Assume there are 10 other companies doing exactly what you do.  You may beat them with speed or neat features, but with a solid revenue plan and defensible growth forecasts, you'll have better access to capital, can spend less time worrying about payroll, will have more time to try new ideas and know where to look if and when you miss your numbers.

Image by Siege N. Gin via Flickr.


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Aboomba tests a new fundraising strategy: Get married

With venture investing still down, and the VC industry likely to shrink even further, what's a cash-strapped startup to do? The soon-to-be-married couple behind stealth-mode web company Aboomba decided to take a fresh approach: Ask their wedding guests for funding.

Drue Kataoka, an artist who co-writes the Valley Zen blog, and Svetlozar Kazanjiev are getting married on August 29, and like any couple, they've created a registry listing their requests for wedding gifts. But rather than including the same boring old household appliances, they have a "Startup Wedding Registry," allowing guests to help get the couple's startup off the ground. The registry includes items like "Feed an Engineer for a Day ($273.97)," "Upgrade from First-Aid Kit to real health insurance for a week ($134.00)," and "Amazon EC2 Cloud web hosting for a week ($134.40)."

Okay, so this doesn't take the place of real investors. Indeed, one of the other items is "Feed a hungry VC lunch." But it's a fun way to get support from friends and family, and to funnel their goodwill (and money) towards something the couple will find genuinely useful. Frankly, when my own friends start getting married, I'll be much more excited about supporting their business than I will about buying them a toaster. On the other hand, I have to wonder whether running a company together will do much for the longevity of the marriage.


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Channels.com centralizes and stores Web video

Channels.com compiles video from around the Web including premium TV shows into a central hub, where you can create playlists and subscribe to the shows you like. The two-year old Palo Alto-based start-up relaunched today with a new design stressing premium content. (The old site was more of a rough RSS service a tool for subscribing to content on the Web, in this case video for early adopters.)

Channels.com reckons itself to be "Your Web Video DVR," but it's actually more like the "Guide" button on your cable TV remote. From the site, you can browse by genre, date or popularity. You can also search through the site's ever-expanding index of over 100,000 shows.

Every show can be added to your playlist, which automatically updates itself when new episodes come in. The videos, delivered through RSS from other sites, take on the interface of whatever portal you're tapping, so content from Fox adopts the same playback interface as what you see on Fox's Web site.

Founder and chief executive Sean Doherty said Channels.com isn't working directly with most content providers (some of them link back to the site in exchange for a little promotion), but it plays by their rules. For instance, when Hulu and Boxee got into a back and forth earlier this year, Channels.com took a proactive step and stopped using Hulu's RSS feeds. It now gets most of Hulu's content directly from RSS feeds on networks' Web sites instead.

Doherty sees competition on several fronts. iTunes has a video subscription service, but it's download based, and doesn't offer as many shows. The bigger threat, I think, comes from set-top boxes, which are integrating more and more online video and offer a more palatable experience for watching full-length content on a television. TiVo, for instance, lets you add your own RSS feeds. Doherty said he'd love for Channels.com to be part of a set-top box, and the company is having discussions with manufacturers. More details, he said, would have to wait until later.

The site, which has seven full-time employees and has raised $3.5 million in funding to date, doesn't plan to monetize until next year. At that point, it plans to seek sponsored search results and promotions from content providers. For now, Channels.com is focusing on getting visitors and adding more RSS feeds. It has a lofty goal of indexing every RSS feed on the Web, which could total 2 million feeds over the next year, Doherty said.


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Financial planning site Green Sherpa launches, tries to nip at Mint’s heels

Green Sherpa, a personal finance site, launched its paid service publicly today to help consumers manage their cash flow and spending habits.

Like competitor Mint, the Santa Barbara-based company syncs data from different bank accounts to give users a picture of their spending and saving habits. However, to distinguish itself, it puts more focus on letting you share your data with a family member or financial planner. For example, that might help in case you're a couple trying to save for a first home or for retirement. If you want to have a discussion with someone else about spending, you can flag items and comment on them within the site.

Instead of monthly budgets, Green Sherpa focuses on cash flows, projecting how your overall wealth might change based on your prior spending habits and future expected expenses. (Mint recently added functionality to analyze how your total wealth and assets evolve over time.)

The site has a few hurdles to clear. It's arriving late to the game. Mint.com has blown past 1.4 million users, and is moving beyond monthly credit and debit card spending into more sophisticated financial products including individual retirement accounts and mortgages. There are also other competitors in the space including Wesabe, which has expressed more openness than Green Sherpa to using its technology to power offerings from banks. There's also BillShrink, which hones in on identifying savings in recurring expenses like gas and phone bills.

Most of all unlike Mint, Wesabe and BillShrink, Green Sherpa is not free. It's $7.95 a month, or $5.95 per month if you sign up for an annual plan.

Here's a talk from CEO Massen Yaffee and founder Erin Lozano at DEMO:


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Monday, August 24, 2009

TheFunded publishes a plain vanilla term sheet for VCs

TheFunded, a site that gives entrepreneurs a way to rate venture capitalists, continues to roll out services to help entrepreneurs in other ways. Today, TheFunded's Founder Institute published a template document for entrepreneurs to use when they're raising money.

Called the "Plain Preferred Term Sheet," the document (embedded below) was inspired by a recent debate sparked by entrepreneur Chris Dixon (co-founder of Hunch) and investor Fred Wilson, who have been seeking a way to simplify the complicated provisions that have crept in to the average term sheet. The term sheet, as its name suggests, is the document that contains all of the terms that govern an investment by a venture capitalist into a company.

TheFunded paid Silicon Valley's top law firm Wilson Sonsini to author a template agreed to by those arguing for simplicity.

TheFunded founder Adeo Ressi says the document compliments the founder-friendly incorporation documents already developed by the Institute, which he said are used by almost 50 start-ups both within and outside of the Institute.

Here are the significant changes being proposed:
The elimination of participation "Participation" lets investors "double dip" by getting both their liquidation preference (in other words, when a company is sold or goes public, they get the money that they invested back before the founders or other employees see their first dime) and their equity allocation.
A 1x liquidation preference The liquidation preference has ranged from 1x to 3x in recent deals, according to TheFunded.com. A "1x liquidation" preference without participation means that investors choose to either (a) get 1 times their money back or (b) convert to equity and get the equity value only. This is a downside protection term.
Single trigger vesting This allows founders to vest all of their equity and make money in an exit. Many investors require "double trigger vesting," which means that the company needs to sell and the founder need to be terminated for his or her shares to vest.

Also worth reading is the piece we just published by Wilson Sonsini lawyer Caine Moss about how the seed round has become the new Series A.

FFI Plain Preferred Term Sheet -


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Zumbox raises $8M to take on email and the postal service

Zumbox has raised $8 million in the first round of institutional funding for what it describes as "the world's first and only paperless postal system."

The Westlake Village, Calif., company is pitching its service as an alternative to both traditional mail and email. It allows you to digitally mail things you might normally send as physical mail, such as letters and bills. You can scan the object, or if it's an electronic document, just avoid printing-and-scanning completely. Zumbox says it's better than email because it's tied to physical addresses, is more secure, has better multimedia support, and is a closed system, so it can keep out spam.

Zumbox plans to start a national rollout of the service at the end of 2009 and says it will reach 1 million homes through deals with local governments, media companies, and mail senders. However, I'm not sure anyone has really been crying out for an alternative to email. Judging from personal experience, I've found that email handles my letters and bills just fine; I only use physical mail to receive purchases from Amazon and other online retailers. Sure, I whine about email all the time, but not because I want it to be more like old-school mail.

The company previously raised $4 million. Investors include Art Bilger (managing member of Shelter Capital Partners) Rick Braddock (chief executive of Fresh Direct and former CEO of Priceline.com), Michael Eisner (former CEO of The Walt Disney Company), Bill Guthy (founding principal at Guthy-Renker) and Zumbox CEO Donn Rappaport.


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Sunday, August 23, 2009

Fanbase, a web directory of athletes and their teams

A new web directory of sports teams and athletes called Fanbase has launched today, aiming to mobilize fans around pages of any team, from football to golf at any level, from professional to college and high school.

It is co-founded by Nirav Tolia, the entrepreneur who led the fast-growing product review site Epinions during the last Internet boom a company that experienced a wild ride of boom, bust, and then partial redemption all amid substantial controversy, including lawsuits.

"We want to be the definitive source on all athletes," said Tolia. He and his team have been working on Fanbase for 18 months. It is backed with $5 million from Silicon Valley venture capital firm Benchmark.

It is wiki-like site, letting sports fans review and update web pages about their favorite teams and players letting them upload photos, videos and text entries. It is integrating best practices in social media, for example it lets you sign in using Facebook Connect. Once you sign in, you can sell all of your friends on Facebook who were athletes in college or professional sports, and who thus have a profile on Fanbase.

The site contains information on 21,000 teams and more than 1.73 million athletes (1.5 million college athletes, plus all professional athletes from major league baseball through basketball, football, and other sports such as Lacrosse from their founding days). The number of pages will increase over coming months, in part as fans add to them, said Tolia in an interview Sunday. It will eventually include all high school sports athletes and teams, for example.

Fanbase wants to make money by selling advertising, and paraphernalia such as T-shirts, he said.

We've covered Tolia's history at Epinions, including the ugly split with his founders after the last Internet bubble burst, but also his perseverance to go on to sell the company under a different name, Shopping.com to eBay for a profit to investors. He was accused of lying on his resume, for which he has apologized, saying it was a mistake of youth and that he has learned his lesson. Benchmark, for one, has forgiven him. Gurley, an investor from Benchmark Capital who backed Epinions,  and who is now backing Fanbase, has steadfastly defended him.

Tolia (pictured left) and co-foudner Sarah Leary spent a year as an Entrepreneur-in-Residence at Benchmark, until August 2008 when they left to set up offices in San Francisco. They recruited a third co-founder Prakash Janakiraman, an engineering at Google Maps who Tolia and Leary had earlier worked with at Epinions.

Tolia said the trio were looking to build a vibrant community site, and settled on sports, because of the passion of its fans. "Passion is the single most important ingredient in any live community," said Tolia.

He said the sports market is massive, with billions of people interested in it. But it hasn't been dominated by incumbent portals such as Google or Yahoo. ESPN and Yahoo Sports are the leaders in sports online, but they are traditional media web sites, with high-quality editorial, where fans go to get news about their favorite teams. There is no sports equivalent to the Internet Movie Database (IMDb), the popular directory of movies and actors, which Tolia said is the real inspiration for Fanbase. "This is not the ESPN killer," he said. "Like Wikipedia is to the New York Times, Fanbase is to ESPN." Bleacher Report, a sports network for fan-generated content, is really a user-generated competitor of ESPN, but it doesn't cover college sports.

The Fanbase team has spent the last year digitizing, extracting and structuring information from thousands of college media guides something that hasn't been done before. If you were a swimmer in a college swim team, chances are you haven't been able to see your team online until now, let alone a profile about yourself.

The site actually launched publicly at the end of May, and already has had 500,000 unique this month, with no promotion, says Tolia. Users have made 60,000 contributions.


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UpMo.com Offers Uber Personalized Job Searches And Counseling

With unemployment rates still high, the competition among online job boards is heating up. One startup is hoping to take a piece of the pie by offering a highly-personalized job search feature. UpMo.com has launched the Intelligent Job Hunt, a tool that determines a job hunter's ideal career path and job opportunities based on an algorithm.

Intelligent Job Hunt's algorithm identifies and prioritizes job matches based upon certain aspects of a user's career, including past, present and future jobs, network (i.e. LinkedIn) connections, professionals they'd like to emulate and personality attributes. UpMo also attempts to pinpoints the activities you should be doing and the specific job opportunities you should be pursuing to increase your chances of getting the job you want.

Of course, the bells and whistles that accompany UpMo's job search platform aren't free. UpMo's membership fee is $6.99 per month, whereas CareerBuilder and other job search engines are free. The algorithm itself sounds impressive and perhaps could be a powerful tool for those looking to get highly personalized job guidance, but needs to be tested further to prove its success in the space. And it's a competitive space chock full of job search engines, including the fast-growing Indeed, Yahoo's HotJobs (Which Yahoo may be abandoning) and Monster.

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Friday, August 21, 2009

Wanova Receives $13 Million in Funding

Wanova, a startup that is in the field of desktop virtualization, recently announced that it received $13 million in funding. The funding for the San Jose headquartered company comes courtesy of Opus Capital, Carmel Ventures, Greylock Partners.

To address the quickly growing market of desktop virtualization, Wanova has launched Distributed Desktop Virtualization. This innovative architecture aids in managing, supporting and protecting the process.

Ilan Kessler says that Wanova's Distributed Desktop Virtualization is good news for both IT managers and end-users.

Said Kessler: "IT managers face significant challenges to increase control, ensure compliance and reduce the operational costs of their desktop infrastructure. At the same time, they are tasked with optimizing the end-user experience. Wanova redefines distributed desktop management, so IT has the control they need, and end-users have the productivity they want."

A forecast showed that in 2008, there were 300,000 hosted virtual desktop licenses. Within five years, that number could grow to 50 million.

Wanova (Image: Wanova.com)

Post from: Startup Spark

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Amyris takes $24.7M for renewable biofuels

Amyris Biotechnologies, one of the best-funded companies deriving biofuels from synthetic microorganisms, has raised $24.75 million of a targeted $62 million third round of venture financing, according to a regulatory filing with the Securities and Exchange Commission. The Emeryville, Calif. company has raised an impressive $120 million before now.

Both Khosla Ventures and Kleiner Perkins Caufield & Byers have invested in Amyris also setting it apart as one of the companies to watch in the space. These firms have been joined by DAG Ventures and TPG Biotech.

Last year at this time, Amyris had a valuation of $470 million. At that time, it had just raised $91 million in its second round of funding. The company has also teamed up with another biofuel company in Brazil called Crystalsev to convert sugar into biofuels the target is 200 million gallons of fuel a year by 2011, according to Earth2Tech. Its core business is engineering microorganisms to produce compounds from feedstocks that can be processed into analogs of gasoline, diesel and jet fuel. It hopes to commercialize its gasoline technology by 2010 and the jet fuel by 2012.

The company competes with others like LS9, also creating hydrocarbon biofuel out of cellulosic feedstocks; Gevo; Rentech; and Synthetic Genomics, which produces algae-based biofuels. For now, none of these companies have ramped up to commercial scale, and there appears to be plenty of room in the industry for multiple players, especially as the technology continues to evolve.


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FanFeedr Aims to Hit a Home Run With Comments

FanFeedr, a real-time, personalized online sport feed, plans to release a feature this weekend that lets people comment on status updates and user activity posted on its home page. Sports fans visit an average of 4-6 web sites in order to find the news and information they're looking for, according to CEO and founder Ty Ahmad-Taylor. With that in mind, FanFeedr, which quietly launched in beta in June, aims to be a one-stop online destination for sports fans by aggregating news, photos, videos, tweets and scores for a variety of professional sports leagues and college teams they choose to follow.

The new comment feature is intended to encourage virtual cheering and friendly banter among users about the latest happenings in the sports world. The timing of the feature's release couldn't be more perfect as the NFL season is about to start and the MLB World Series is coming up in October, but its success will ultimately depend on whether the young site can increase its traffic.

FanFeedr already incorporates a host of social features, including allowing users to sign up via Facebook Connect and publish status updates uploaded on the site to Facebook and Twitter. Becoming a fan of any of the roughly 55,000 athletes, 4,000 professional teams and 1,700 college teams listed on the site will let a user receive real-time news about those players and teams whenever they visit it. Similar to Twitter's trending topics, FanFeedr also posts to its home page the most popular sports news stories, photos and videos.

Fanfeedr has a free iPhone application available in the iTunes store and its API is open to anyone who wants to build an application with it. Ahmad-Taylor, the former head of product development for MTV Networks, said the bootstrapped company will seek funding in the fall.


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Wednesday, August 19, 2009

Lunch.com Launches Micro Reviews, Reveals Its Quest To Make The World A Better Place

Lunch, a review site that made its debut earlier this year, is launching a new feature it calls micro reviews — highly condensed reviews on just about anything, with a maximum length of 140 characters. You'll be able to see a stream of incoming reviews on the site's homepage, and you can also syndicate the microreviews you write to Twitter and Facebook.

Of course, review sites aren't anything new. Neither are so-called micro reviews' — we've seen a number of sites that invite users to submit condensed reviews rather than the lengthier entries you'll find on sites like Yelp. But there are a few things that make Lunch a little bit different, not the least of which is CEO J.R. Johnson's ultimate goal with the site: to make the world a better place by changing the way people think about each other.

A lofty goal to be sure, and one that's going to be extremely difficult. So how does Lunch plan to do it?

Johnson explains that review sites in general tend to change the way people think about what they're doing — a phenomenon he watched unfold in the travel industry (he founded VirtualTourist in 1999, which sold to Expedia last year). Johnson says that during his time at VirtualTourist, he observed that people who consumed content on the site tended to be more analytical during their own travels, because they had the intent of sharing their thoughts with other members of the site once they got back home. He hopes that Lunch's new microreviews will have the same effect, encouraging people to more analytically observe the world around them as they look for things to relay back to their peers on Lunch.

He says this effect could also be magnified because of the way Lunch's recommendation engine (called a "Similarity Network") works. Based on reviews you've submitted and other actions on the site, Lunch tries to pair you up with other members that it thinks are most similar to you — the idea being you'd rather read a review from one or two very similar people than dozens of reviews from users you know nothing about. Johnson's theory is that if you're going to be sharing your reviews with a highly relevant audience, you're going to be even more analytical in your daily life.

Johnson says that the big picture here is to help people understand eachother better, allowing them to use the Similarity Network to find some common ground where they wouldn't otherwise and encouraging people to approach life with a more critical perspective. And because the site deals with pretty much any topic, running the gamut from ice cream reviews to politics, there's a lot of things for people to potentially connect on. Micro reviews are a start — a "critical thinking onramp" — and more robust features in the future will continue the trend.

This all sounds nice in theory, but Johnson's goals are going to be really hard to see through. For one, the site is still quite small, and there are countless other review sites out there, including both generalized sites like Lunch and niche sites. Making the world a better place is a great long-term goal, but in the short term, Lunch is going to need to find a way to drive people to use the site by offering something its competitors don't. And even if Lunch had an exceptionally large userbase, I have a hard time believing the service would be able to put much of a dent in the prejudices that run throughout the world.

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Olark Is A Dead Simple Chat Widget For Site Owners

The ability to chat live with visitors is an incredibly useful marketing tool for site owners. Whether a site owner operates an e-commerce or consumer or business service site, live chat is increasingly becoming the norm for engaging with visitors in real time. Olark, a Y Combinator-funded startup (re)launching today at Demo Day (it was previously branded hab.la), has made the ability to embed chat into a site incredibly simple.

For free, site owners can embed the widget into their site with just a few lines of javascript. One useful feature that Olark offers is the ability to add one-to-one chat to any website without editing any code. Olark's short link service lets website owners create a link to any site they would like to chat with a visitor about. When a customer/user clicks on the link, the Olark widget will float over to the visited webpage. The site owner can use an existing IM client, such as GChat or AIM, and each customer will show up in the buddy list. So site owners can interact with visitors from their preferred chat program. Visitors show up on a website owner's buddy list as soon as they hit the site (with an anonymous ID like Web User 1), with the name of the page they're on. Basically, you can watch everyone's progress through the site even when they don't talk to you.

While Olark has a free offering, you can add different functionality to the chat widget starting at $5 per month. One paid feature is the ability to hide the widget on the site when the site owner isn't available to chat. You can also implement chat in certain pages while restricting chat on others. While most customers will use the free version of the widget, paid clients have been doubling every month and the startup is in line to hit profitability next month. Olark is already being used already on 4000 sites, including SurveyGizmo.com and HonestIdeas.co.uk.

Of course, there are many competitors to this product out there on the market, including chat offerings by Meebo, Digsby and AOL all with the same functionality. But Olark's co-founder, Ben Congleton says the beauty of Olark's widget and short link service is in its extreme simplicity, allowing even a non-tech savvy site owner to be able to implement live chat on a site easily. Plus, Olark lets owners customize the widgets to resemble the look and feel of the site in which its embedded. Olark, which was originally a side project of its founders before the startup entered Y Combinator's program, was rebranded from hab.la during the program. Congleton says that the decision was based on a few considerations, including confusion around the spelling and pronunciation of "Habla" as well as the advantage of having a .com domain versus the .la domain from Hab.la.

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Immunet kicks off cloud-based antivirus protection

With giant antivirus software vendors such as Symantec and McAfee, we shouldn't expect to see antivirus software startups anymore. But don't tell that to Oliver Friedrichs, founder of Immunet, an antivirus software that is coming out of stealth today.

Friedrichs is a former Symantec research executive. He left the big company a year ago to start Palo Alto, Calif.-based Immunet. He decided to address something that the big vendors hadn't moved quickly enough to address: how to use the combination of cloud computing, collective intelligence and community-based trust networks to fight off the dramatic increase in malware threats.

The solution is clever. It leverages the idea of safety in numbers. Every time someone in the Immunet Protect network encounters a virus, the threat is identified, logged, and blocked on a centralized server platform. Instantaneously, because of the way Immunet works, everyone in the network can be protected from that identified virus.

"It's the idea of using the community to protect yourself and visa versa," Friedrichs said in an interview. "That's an idea that gave us an opportunity to do something better than the big companies. What helps us is that there is a sweeping shift in the nature of threats."

Security software companies are rare birds these days, as I noted after attending the recent Black Hat and Defcon security conferences recently. But Friedrichs assembled a team of antivirus veterans, including engineering executive Alfred Huger, that gave the startup a much better chance.

Friedrichs says the antivirus problem is out of control and that existing antivirus software catches less than 50 percent of today's threats, which often mutate to a slightly different form to avoid detection. Antivirus companies have to collect a virus, identify it, block it, and then distribute the block to all of its clients. But Friedrichs says it can take far too long to finish the process, and that doesn't work in an age of accelerating threats.

With Immunet, a computer is always connected to the Internet-based data center, or cloud, which Immunet leases as needed. The cloud always has updated virus detection. Whenever a computer is about to execute a file, it checks with the cloud to see if it is safe to proceed. You don't have to wait to download updates in order to be protected.

"Instead of pushing protection down to your computer in the form of thousands of files in a software update, we look at the cloud and determine if what you're about to do is dangerous or not," Friedrichs said.

Immunet also has a collective intelligence feature. Its a free product that sits alongside other antivirus protection. It can tap the virus detection of those applications and judge what is safe and what is not safe, based on the accumulated collective wisdom. Those judgements are coalesced in the cloud and, if they prove to be sound, are made available as protections to the rest of the Immunet community. The software thus runs alongside Symantec's Norton, McAfee and AVG brands of software.

The company is kicking off a beta program today at no cost for users. It will develop premium products in the future that will generate revenue, Friedrichs said. He declined to disclose the number of employees and exact funding details. The company has received a round of seed funding from angels. While McAfee and Symantec software is complementary, Friedrichs said his software competes directly with Panda Software, which also has a cloud-based security solution.

Friedrichs co-founded SecurityFocus, which made early-warning software for Internet attacks. Symantec acquired that business in 2002. He was also an executive at Secure Networks, which McAfee bought in 1998.


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Dorthy spending $4 M on “broken” search for dreams

This is an interesting article from VentureBeat. During the first day of orientation for our MBA program we heard a lot about "information overload." It certainly seems like it is getting harder to have the information you want ready at hand. Dorothy is an exciting idea, because unlike typical search algorithms, this service adapts to your interests.

Here's the original article:

Let's face it, hunting through Google can be frustrating, especially when searching for advice, so Dorthy.com is working on a remedy.

The project of New York-based startup Saber Seven has raised $4 million to date, and is pushing to release the public alpha of its "dream achievement service" by the end of the summer.

Here's founder Jordan English Gross' favorite example of how Dorthy works: Say you want to run a marathon in Maui. Using a search engine, you'd get a list of Web sites, including the marathon's official site, unofficial sites and a few disparate sources for travel information. You'd then have to hunt through those individual pages for the information you're looking for. Dorthy works more like Wolfram Alpha, pulling relevant data into a single page of information.

More importantly, Dorthy saves that search and evolves it over time based on how the user progresses from there, determining what the person is ultimately interested in. The results blend social features as well, looking at what other people are doing with similar topics and providing even more information. So, in the case of the marathon runner, the user would learn what hotels are popular and how other people are training for the race.

The underpinnings for this idea come from research by MIT (PDF), which found that 40 percent of Yahoo search queries are repeats of older queries, meant to re-find past results. Gross believes this behavior will lead people back to Dorthy to gather more information over time.

Dorthy will be funded in part by advertisements, which Gross says will differ from the usual display ads seen in search results. Instead, they'll come to users as branded information, blended with the other data (though Gross says users will be able to tell what content is ad-supported). Also, the site wants to sell the connection between people's aspirations and content consumed as market research to brands.

Gross doesn't see any direct competitors to Dorthy, as the concept pulls in the personal nature of Google Notebook, the semantic reasoning of AskJeeves (now Ask.com), the collaborative and achievement-based nature of BaseCamp and the filtering effects of RSS. In a situation like this, I think Dorothy's worst enemy will be plain old search engines. Even through the company's chief technical officer, Jim Anderson, derides search as "broken," they're still the go-to source of information. We'll see how compelling an alternative Dorthy is when the public alpha launches.

Saber Seven has almost 20 full-time employees, and plans to hire more this year. The company is close to closing its B round of funding. Gross said he's open to rolling Dorthy into another service, or in having other services rolled into Dorthy.


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YCombinator announces newest class with FlightCaster, Mixpanel aboard

YCombinator, the Silicon Valley start-up incubator, launched its latest class of companies today. I'll update as I learn more, but here is the initial list of companies:

FlightCaster: Predicts flight delays up to six hours before airline notifications (pictured right).

RethinkDB: A database engine optimized for solid-state drives.

DailyBooth: "Twitter for pictures." A social network for documenting your life.

JobPic: A marketplace where service providers auction off what they can do, similar to Elance. What makes JobPic different is that, sellers can suggest services instead of leaving all the power to buyers to define what the market demands.

Mixpanel: A real-time analytics platform that tracks how users engage with web applications.

JobSpice: An online tool for creating a resume.

HighlightCam: Takes long videos and automatically condenses them to the most interesting parts.

Olark: A chat widget that makes it easy to add live chat to a Web site without editing a single Web page.

Bump Technologies: A technology that lets you connect two mobile devices by bumping them together. You can send photos to another phone user with just a bump.

Api.gy: A provider of home safety and automation devices that are accessible via the Web.

RentHop: Tries to beat Craigslist in the apartment rental market with more specific search features and a function that lets you schedule showings.

FanChatter: Enables brands to engage with consumers during sporting events and conferences.

Listia: An auction site for free stuff.

Directed Edge: A real-time recommendations engine.


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The rise of we-commerce

Traditionally, small- and medium-sized businesses (SMBs) and independent merchants have been forced to choose between two unappealing options if they want to take their business online: selling via crowded online marketplaces, or hiring web developers with specialized know-how to build e-commerce sites that could costs thousands of dollars. Over time, these companies have shelled out massive fees to overpriced designers and marketplace sites like eBay.

Now, with the emergence of low-cost, easy-to-use web building tools, sellers and SMBs suddenly have a compelling third option: They can quickly and affordably build professional-looking and search engine-friendly sites no technical skills required. The result is a gradually growing field of website owners ranging from graphic designers and dog breeders to jewelry makers and artists who could not previously afford to build websites. Taking advantage of this new market, a slew of startups has popped up to provide search and email marketing services tailored to SMBs that have only recently found their digital footing.

The we-commerce network

We-commerce, a term used to describe an ecosystem of consumers interacting, buying and trading with each other via their own personal websites, is giving the power back to individual sellers to define their online presence. No longer must they adhere to the strict guidelines enforced by eBay and its ilk.

Until recently, structured marketplaces like eBay were good places to be. They funneled visitors to sellers' product pages in droves albeit at a price. But changes in consumer behavior have made traditional marketplaces less appealing. Now, internet users start their searches for goods and services by typing queries into search engines like Google, not by going directly to e-commerce sites. These engines' search algorithms used to favor results from major marketpaces, but now they're more likely to turn up long-standing small business pages than pages that only exist for five-day auctions.

Only lately have small businesses been able to tap into the power of Google and other search engines to direct customers to their products and services. Not so long ago, maintaining a search engine-friendly website was cost prohibitive for these companies. Now, as more emphasis is placed on local search results, and search engine optimization features are built into free web-building tools, SMBs benefit even more.

But we-commerce is about more than having the freedom to sell things independently. It's about creating virtual networks with other merchants. For example, website owners may want to link to other sites to create an association of interconnected merchants with complementary interests. For example, a graphic designer and a web developer could link to one another to cross-advertise their offerings.

Leveraging the social graph

Merchants can also integrate their websites into their personal and professional social networks to promote their products directly to all of their contacts. This capability fills a major void in the marketplace by allowing sellers to monetize their existing networks of friends and acquaintances. Furthermore, it meets the needs of many buyers who want to purchase goods from sellers they know either directly or through others. Social networks are already epicenters of trust and reputation online. Applying this "social graph" to day-to-day online SMB transactions will add reputation and credibility to the we-commerce model.

The development of tools like Facebook Connect and Google Friend Connect will accelerate the integration of websites into existing social networks, and will greatly assist in building community and trust around small businesses and independent merchants.

Democratization of economic activity

By further democratizing the means of online economic activity, we-commerce will open the playing field to new business models that are only just emerging. Given the current economic climate, tens of millions of unemployed people are looking for easy, feasible ways to make extra money. History has proven that these are the greatest periods of disruption and change to the status quo. Welcome to the age of we-commerce.


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Tuesday, August 18, 2009

FastPencil adds features to make book-writing more social

FastPencil, a Campbell, Calif.-based company that shepherds authors through the book-publishing process, is launching a host of features through Twitter and Facebook to make writing more collaborative.

The features let you send out status updates on both social networks when you update drafts and invite friends to look over your work in progress. The site, which launched a month ago, aims to provide an end-to-end solution for aspiring authors, guiding them through the writing, editing, design and printing process.

"We're building the tool simple enough so that someone like my mom could use it, but complicated enough that a professional really could author books and publish, distribute and promote them," said co-founder and chief technology officer Michael Ashley.

Unlike other vanity publishers, which can require you to submit a final and formatted set of PDFs, FastPencil handles the layout. A standard paperback book of at least 48 pages costs about $10. The price can rise if you decide to make every page full color or if you write a 1,000-page book. There is no minimum run-rate, so you can publish one copy or 1,000 copies, and you're free to sell the books on Amazon.com although FastPencil will take a revenue share. The company also publishes to Kindle if you want to create an e-book rather than a printed copy.

FastPencil isn't necessarily trying to find the next Ernest Hemingway or blockbuster novelist. Ashley came up with the idea for the company after his mom tried to create a children's book for her grandchildren but received multiple rejection letters from publishers.

"She was completely disheartened," Ashley said. "So I said, I'll help you do it."

He got the book published on his own, spurring the idea for FastPencil. Naturally, the company is targeting "momtrepreneurs" who want to create keepsakes or printed records of family vacations. FastPencil is also reaching out to subject experts who want to publish a career or lifetime of knowledge in a specific area. (Say you've accumulated years of bird-watching techniques you want to share: FastPencil is a place you might go if other publishers deem your work too narrow.) The startup is also targeting spiritual writers.

The company has raised under $1 million in angel funding and has six full-time employees. There are a handful of other companies trying to revolutionize self-publishing like Toronto-based WattPad, an e-book sharing company, and San Francisco-based Vook, which tries to blend books and video. There's also Lulu, a Raleigh, North Carolina-based company run by Red Hat founder Bob Young.


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Sequoia Capital reduces its web site . . . to a search bar

Sequoia Capital, one of the most successful Silicon Valley venture capital firms, has redesigned its Web site, reducing it to a simple search bar.

Type in some letters, and the site makes suggestions based on the words it thinks you're typing (image here shows a search for "China").

Most venture capital firms have web sites that show off a bunch of partners standing in a profile shot, with blue shirts. Sequoia's site had always been different, because it was full of images of the successful entrepreneurs it had backed (see image at bottom for how it looked before). However, this latest move doesn't come that much as a surprise. Sequoia has prided itself on bucking the trend. It is quiet, media shy, and somewhat Spartan: Its partners work extremely hard, are successful, yet "don't have a celebratory culture," as one partner put it to me once.

Also, the firm always seemed to be drawing controversy with its Web site. Sequoia backed PayPal, and there have long been rumors that PayPal chief executive Peter Thiel had a tension-filled relationship with the firm. So when images appeared of PayPal's various co-founders on Sequoia's site a few years ago, people wondered why Thiel and his co-founders Max Levchin and Elon Musk weren't given equal treatment. Sequoia then rejigged the site so that there was no apparent snub. And just last week, we wrote about Sequoia's increasing activities in China and India and remarked on how its site mainly still celebrated the entrepreneurs it had backed in Silicon Valley (though, true, the firm does have subsidiary regional funds and is giving them more editorial freedom with their sites: See Israel, India, and China sites. Aside from a search bar, those regional sites also sport images of local entrepreneurs). Finally, the firm had even slapped another firm with a lawsuit, accusing it off copying the site. That, even though Sequoia's site has never really looked that good: The garish green and blocky interface made it seem outdated.

So perhaps it all became too much. Rather than continue to draw scrutiny, and petty misunderstandings, why not take it all down and start again with a search bar that looks just like Google? After all, Sequoia backed Google, and that is success enough.


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EveryBlock Purchased by MSNBC.com

EveryBlock, a startup company that takes hyperlocal content to a whole new level, has been purchased by MSNBC.com. Although no price has been announced, most industry experts believe the deal is worth less than $10 million.

With hyperlocal news coverage being very hot right now, EveryBlock does what its name suggests gives news about every block. Available in 15 cities right now, EveryBlock mixes civic information (such as restaurant inspections and the crime blotter), news articles (both blogs and mainstream media) and various other local information including pictures from Flickr and info from Craigslist.

Charlie Tillinghast, MSNBC.com's President, sounds excited about the possibilities.

"What Everyblock represents is true local content in the form of substantive data," said Tillinghast. "It adds something to the mix that nobody else does."

With newspapers struggling, hyperlocal content should continue to grow in value over the next few years. If you are considering an online startup, anything hyperlocal is a very hot market right now.

MSNBC (Image: Flickr)

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Monday, August 17, 2009

OpSource lands $4M for cloud operations

Companies are turning quickly to cloud computing services, which run their websites for them from remote locations. Cloud computing means never having to buy servers or maintain them again. That becomes someone else's problem. OpSource, a Santa Clara based company, not only serves up companies' websites for them, but also "includes the application management, compliance, and business services that are necessary for on-demand business success," says their press release. A typical customer: Star_Base School Suite, an online academic records service that delivers academic records management online.

OpSource has secured $4 million from ATEL Ventures, a San Francisco firm that claims to be America's largest private and closely held independent leasing company in the United States, with approximately $2 billion in asset-secured transactions under management.


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TechCrunch: Zendesk Raises $6 Million In B Round, Benchmark’s Peter Fenton Joins Board

Benchmark Capital is investing in Danish startup Zendesk, and led a $6 million B round of funding. Benchmark's rock star partner Peter Fenton is joining the board.

Zendesk just raised money in May in an A round from Charles River Partners, which also participated in this latest funding.

The company offers Web-based help desk services for companies to offer support to their customers. It is an online ticketing system for customer support, which ranges in price from $9 to $39 per support agent per month, after a one-month free trial. Corporate customers include Rackspace, Condé Nast, Twitter, MSNBC and Scribd.

Crunch Network: CrunchBoard because it's time for you to find a new Job2.0


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TechCrunch: MSNBC Picks Up Hyperlocal News Aggregator EveryBlock

Even though they haven't really found a big audience yet, hyperlocal news sites are becoming a hot commodity. In June, AOL bought Patch for $7 million, and today MSNBC acquired EveryBlock. EveryBlock was previously funded by a grant from the Knight Foundation, which ended in June. The five employees will now work at MSNBC.

The price was not disclosed, but like the Patch acquisition, it is not an audience acquisition. Rather it is a hyperlocal platform play which MSNBC can now plug into its site and push in a major way. EveryBlock is a hyperlocal news aggregator, bringing in geo-specific feeds from neighborhood blogs, Flickr, Yelp, Craigslist, and elsewhere to give readers a picture of what is going on in their town or neighborhood.

EveryBlock currently covers only about 15 cities in the U.S. and comScore estimates its U.S. audience to be only 143,000 unique visitors a month (July, 2009). In contrast, competitor Outside.in attracts 800,000 unique visitors in the U.S. These are relatively small numbers, but these services do a good job of collecting neighborhood news without the expense of actually reporting it.

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Startup Spark: RockMelt – A Facebook Powered Browser?

While there isn't much information known as of yet, RockMelt is reportedly a browser that is underdevelopment that hopes to use Facebook's popularity to tempt internet users into making the switch. And according to the New York Times, the legendary Marc Andreessen is a main investor.

Andreessen, who rose to fame after founding Netscape, knows a thing or two about building a popular browser. This startup browser will undoubtedly face struggles to gain popularity but Andreessen's presence is already creating a buzz.

With millions of internet users hooked on Facebook, it does make a lot of sense to build a browser that focuses on Facebook. A browser that makes social networking even easier could quickly grow in popularity by riding the wave of social media marketing.

For a startup, the browser industry is one of the most difficult online industries to have success in. With Internet Explorer and Firefox having great success, there's not much room for anyone else. Even Google with their billions haven't been able to make a dent with Chrome. It'll be interesting if RockMelt and its Facebook powered interface will be able to make noise.

Facebook (Image: Flickr)

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Sunday, August 16, 2009

Y Combinator Starts Seeding Ideas To Startups

Y Combinator sees no shortage of startups that apply to be a part of their funding cycles. But they don't always see all the ideas they'd like to see come out of the classes. So starting with the upcoming Winter 2010 cycle, they have a new idea called RFS, Requests For Startups. Basically, Y Combinator will issue some ideas of what they're looking for in any cycle, and will accept the ones that pitch the best way to do the idea.

Now, to be clear, Y Combinator will not be forgoing its usual method of combing over any and all startup pitches outside of the ones they lay out. "We don't expect responses to RFSes will ever be more than a fraction of the applications we accept. We wouldn't want them to be. Most good ideas should be ones that surprise us, not ones we're waiting for," Paul Graham writes on the site today. The hope is that this will help guide some new startups without solid ideas in the direction of something that is missing in the market. Or encourage ones that already have a similar idea to apply.

Y Combinator's RFSes won't describe exactly what Y Combinator is looking for, but rather will give a general idea, with the hopes that the startups can come up with even better plans than Y Combinator is thinking of, Graham says.

So what is the first RFS? Well, it's something near and dear to our hearts: The Future Of Journalism. Y Combinator is wondering what the online content sites will look like in the future when print publications are gone. Certainly some, like TechCrunch, have gotten large enough to support themselves now, but most content sites are still built on the notion of content first, monetization later. Y Combinator notes that in the heyday of print media, the approach was often the opposite, there was a business plan in place before the launch. It believes that approach can still work, and has laid out a rough outline of what it's looking for from startups that want to do this:

Groups applying to work on this idea should include at least one writer who can write well and rapidly about any topic, one or more programmers who are good at statistics, data mining, and making sites scale, and someone who's reasonably competent at graphic design. These functions can of course be combined, and in fact it's even better if they are. Xooglers would be particularly well suited to this project.

This RFS is just the first of 3 to 5 that Y Combinator hopes to get out there before the October 26 Winter 2010 class application deadline, Graham tells us. Startups applying specifically for these RFS ideas will be able to indicate that on their applications.

Graham notes that Y Combinator has sort of passively given ideas to startups in the past, like this, but thinks this new explicit call will lead to some interesting things.

We asked Graham if this new approach means these types of startups will get different financial deals from Y Combinator. "Not significantly," Graham says. "Execution matters so much more than the idea that even if we supplied the entire idea we wouldn't be entitled to more than 10% of the company," he notes. On his post he gives a bit more:

We might ask for a little more equity from startups responding to an RFS, because we'd expect to contribute more to them. But at most a percent or two, and often nothing. Ideas count for something, but execution matters far more.

[photo: flickr/eran finkle]

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Startup Advice at Start Up Donut

Developed with entrepreneurs in mind, Start Up Donut is a recently launched source of advice, information and resources for startup businesses. It's from the same maker of Marketing Donut, which has become a highly rated website.

On the Start Up Donut website, you can find categories on everything from business planning to tax and finance to formation. Mick Dickinson, from BHP Information Solutions, operates the website and says that Start Up Donut is suitable for anyone of any experience level.

Said Dickinson: "Just like Marketing Donut, Start Up Donut is all about practical advice that people can actually use. There's plenty of theory out there, but our conversations with people in business tell us that what they really want is for an expert to say: ok, here's what you need to understand, and these are the steps you need to take.'"

While Start Up Donut is mostly focused on startup businesses located in the United Kingdom, it has useful information for startups based anywhere in the world.

What is your startup idea? (Image: Flickr)

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BusinessWeek: RockMelt Web Browser Faces Uphill Climb

Hi,

I read an interesting article on the BusinessWeek mobile application that I thought would interest you. To get the BusinessWeek free application for your BlackBerry or iPhone, point your mobile browser to http://m.businessweek.com

View the article here:

http://www.businessweek.com/the_thread/techbeat/archives/2009/08/rockmelt_web_br.html
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Saturday, August 15, 2009

Entrepreneur Corner roundup: Marketing priorities, angel investor secrets and more

Here's what you might have missed:

Five key marketing priorities for a startup – The key points of startup marketing aren't all that different from the key points of launching a successful startup. Serial entrepreneur Scott Olson runs down the five things you need to consider as you put together a marketing plan.

11 things an angel investor will never say – Getting the unfiltered truth from an Angel Investor isn't easy. Dharmesh Shah, an angel investor himself, pulls back the curtain and lets you in on the inner-thought patterns of the VC world. They may not be what you expected, though.

A eulogy for the click-through rate – While the click-through rate has long been heralded as the best barometer of marketing success, Adam Toren, co-founder of YoungEntrepreneur.com argues that it's a metric that has outlived its usefulness.

Touching the hot stove – Despite the slew of experts and entrepreneurial programs telling start-ups to test their products with real customers from day one, the advice often goes unheeded. Serial entrepreneur Steve Blank notes that sometimes the only way to learn is the hard way.

Moving product at unprecedented scale – Facebook COO Sheryl Sandberg reflects on how the web has dramatically altered scale for entrepreneurs. It's no longer just about making a product that people want, she says, it's also being able to know how to distribute it in a smart way that also lets your business make a profit.


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Mint.com Receives $14 Million in Funding

Mint.com, a free online budgeting and personal finance startup, recently announced that they have received $14 million in Series C funding. This funding round was led by DAG Ventures. In total, Mint.com has received more than $30 million in funding since launching in 2007.

Mint.com Screen Cap

With more than 1.4 million registered users, Mint.com has quickly become an indispensable service for many individuals and families across the nation. In total, the service tracks more than $45 billion in assets and more than $175 billion in revenue.

Aaron Patzer, Mint.com's CEO, says that their large user base has allowed the company to better understand the population as a whole.

Patzer: "To be approached with funding in this climate is acknowledgment of our progress and potential in helping Americans to save and do more with their money. Now that we have a sampling of about 2% of the nation's online households, we can see some interesting economic trends, and are establishing ourselves as a source of close to real-time insights into the US economy."

With Mint.com, it's easy to download your financial information into the service. Once your account is set up, you can easily track your money in real-time using graphical charts. Mint.com will also help you set a monthly budget and points out ways you can save money.

Overall, Mint.com definitely looks like an online startup success story.

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The Evolution of Blogging

Dave Winer's ability to peer into the future is uncanny. He was talking about a river of news long before the current activity streams became popular. He was evangelizing RSS long before there were blogs. I could go on and on about his prescient observations, but it's his warnings that are especially prophetic.

For as long as I can remember, he's been warning that users of new social web technologies need to be in control of their own destiny. He sounded the alarm about Feedburner and how it was hijacking an open standard, RSS, and inserting itself between content creators and consumers. And he's long cited the need for open social communication platforms, often voicing his displeasure with newer services such as Twitter.

People have ignored Winer at their own peril, as two events over the last week have made clear. First was the shutdown drama around a little-known URL-shortening service called Tr.im. While it's since been resurrected, the incident showed me how by championing these URL-shortening services, we're essentially putting the entire link economy in the hands of companies that are skating on thin ice during the peak of summer.

Second was FriendFeed becoming a Mark Zuckerberg Production thanks to a $50 million buyout by Facebook. The likelihood of Zuckerberg & Co. shutting down the upstart social aggregation service has brought into the spotlight the misalignment between the needs of online communities and the companies that provide them.

The cynical me believes that it's foolish for any of us to expect that Web 2.0 companies be in the business of providing services for charity. They are, after all, for-profit entities and when opportunity arises, everyone looks out for themselves. That's just the way of the world. But somewhere between my cynicism and people's Utopian desires lies a happy place. It's called the blog.

Blogging: The Evolution

Late last year, following the Bombay terrorist attacks, I wrote about Twitter's growing influence as a source of breaking news and how, in order to make sense of it all, we need more context. The best place to provide that context is now in blogs. To be sure, most people view Twitter as a microblogging service, but I've always seen it as micromessaging service and the more I used it, the more I realized what a disjointed conversation it can produce.

As Twitter has become increasingly ingrained in our everyday lives, its value as as source of information tidbits has become clear. Think of it like that plate of chips and salsa you get before the entree arrives: tasty spicy, even but not entirely satisfying. Meanwhile, blogging has become the main course the source of context. And the evolution into that role has injected new life into the blogosphere.

Earlier this week, while at dinner with Matt Mullenweg (Disclosure: Matt, a close friend of mine, started Automattic, whose WordPress platform powers our network. Both Automattic and the GigaOM Network are backed by True Ventures, where I am also a venture partner.), we talked about how many amazing blog posts we've read in just the past month alone, such as:
Anil Dash's post about the Pushbutton web.
John Gruber's piece about the censoring of the iPhone app, Ninja Words, by Apple.
Danah Boyd's post about Twitter and teens.
John Borthwick's essay about the real-time web and new distribution networks.
Robert Scoble's post about the shortcomings of the Twitter platform.

And these are just the ones that I hastily jotted down on the back of the dinner receipt. Now it would be easy for "blogging" to be satisfied with this information-sharing role. But that won't be enough. Blogs need to evolve even further.

Why? Because the nature of content sharing (call it publishing) and content consumption is changing.

Blogging needs to be social. There are many reasons for this, but the most important one in my mind is the changing nature of content. "We will all be streaming life moments as more and more bandwidth is available both at home and on the go," I wrote two years ago. It's already happening. Today most of us walk around with newfangled smartphones that are nothing short of multitasking computers, essentially content creation points. And they're networked, which means creating and sharing content is becoming absurdly simple to do. With the increased number of content creation points –- phones, camera, Flip video cameras, Twitter -– we are publishing more and more content.

Most of this content is disjointed, like random atoms. In the past, I (and others) have referred to this as the atomization of content. These atoms need to be brought together in order to make sense. But while many have argued that self-hosted Facebook- or FriendFeed-styled services could fill this role, I disagree. As I've said in the past, "We have two choices in order to consolidate these — either opt for all-purpose services such as Facebook (as tens of millions have done) or use our blogs as the aggregation point or hub for all these various services."

The Next Step

Millions of Facebook users will have no reason to use any other service for the foreseeable future. And even when they decide to leave, they'll realize they can't, for they'll have stored their photos and videos into the service, which has no visible way of exporting such data. It's the ultimate lock-in: control consumers' data and you control everything.

For others whom I would loosely define as "power users" today's blogging software and services are the best option for becoming a repository of our digital creations, because they are more open, more extensible and at the end of the day, give us more control. Chris Messina, a technology evangelist, has been promoting this vision for nearly two and a half years, including starting a project dedicated to it called DiSo.

What Facebook and FriendFeed have shown is that people want to consume and publish content in a more dynamic fashion more in real time, so to speak.

At the risk of repeating myself, I will quote from a previous post. "As a society, we are entering an increasingly narcissistic phase, enabled by web technologiesThe evolution of blogging platforms needs to match these societal and demographic changes." What I meant was that blogging platforms need to evolve from the hierarchical content-management systems of today to more fluid, free-flowing, more socially relevant and real-time lifestreaming systems.

Two services Posterous and Tumblr are taking a shot at this. WordPress, with its P2 theme, has showed that it's thinking along these lines as well; we tried it out with the GigaOM Daily plugin. But these are not enough. There needs to be more real-time collaboration built into these systems. They need to become socially relevant. They need to take into account that today, consumption and creation happen not just on traditional computing systems like a laptop, but also on highly mobile devices. Imagine the volume of information we're going to create and consume when we have broadband speeds on our on-the-go devices.

The next generation of blogging systems needs to account for the fact that information and most importantly, conversations flow via email, Twitter, instant messages and other formats. In order to do that, the innards of blogging systems need to be rethought. Perhaps the older, relational database models will need to be replaced by more nimble data stores. We may see XMPP become the layer that facilitates collaboration and real-time communications. But these are complex topics for my more esteemed colleagues to tackle, the ones who are builders and creators. I am merely a thinker, who is firm in his belief that this real-time social collaboration is a powerful force, and blogging, if it wants to move further forward, needs to embrace it.

http://gigaom.com/2009/08/13/the-evolution-of-blogging/

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