The Next Net

Liveblogging TechCrunch 40: Day 2

Here are some highlights from Day 2 of TechCrunch 40 (in reverse-order of appearance):

The winner of the $50,000 prize for best demo went to Mint (see below). I caught up with the CEO for a quick chat at the conference, and he explained his business model,which is all lead generation.  Since Mint keeps track of all your spending habits, it can suggest ways to save money by switching services,  Those are leads that it gets paid $20 to $50 apiece for,  In the future, it could suggest products to buy as well. 

Kaltura:  This startup was voted on-stage from the demo pit by the conference attendees.  Slick, collaborative video editing software. It's all Web-based. Lets you collectively create a video with your friends.  A wiki/peer production platform for making videos.

Zivity: User-generated porn. The site shares revenues with the "models"who upload photos.  Just what the world needs: a company that is lowering the bar on porn.  One of the presenters had this weird handlebar mustache.  What's with that?

WooMe: Speed dating site where you spend a minute meeting potential mates via Webcam.  Real-time social networking.  Skype founder Niklas Zennstrom is a backer.

Metaplace: Build your own virtual world that can appear on any site as a 3D virtual-world widget.  The big idea is that every object in the world can be linked to.  "Metaplace is trying to Facebook Second Life," says panelist Loic Le Meur.  Yahoo's Brad Garlinghouse argues Second Life has too much traction to be displaced.

BeFunky:  Turns photos and videos into cartoons.  Sort of makes everything look like A Scanner Darkly.  Also lets you create "uvatars" that look exactly like you.  (They are hand-drawn now, but will soon use the same "Cartoonizer" technology you can already apply to photos and videos).  Startup is from Turkey.  Cool FX.  Panelist MC Hammer thinks its funky.

Wixi: Yet another file sharing site.  As panelist Loic Le Meur says, "Everybody is doing that."

mEgo: Have too many social networks to keep up with?  mEgo lets you cerate a profile once and upload it to 20 social networks and blog sites, including MySpace, Facebook, and even your mobile phone.  The founders are women, which might explain why the customizable profile widget actually looks like something you might want to put on your Facebook page.  Mouse over the mEgo widget, and you can call up your Flickr photo feed, delicious bookmarks, twitter messages, Amazon wish list, or Last.fm playlist.  Panelist Caterina Fake is not sure about the widget business model: "It's all satellite and no planet."

xtr3D: Throw away your computer mouse.  xtr3D uses a Webcam to translate 3D hand motions into a computer peripheral controlling what happens on-screen.  Very cool.  But this will require people to learn an entirely new interface.  It could be good for games, though.  The CEO showed a boxing game where he punched the air and his character did the same.

Angel investor Jeff Clavier, on a panel, just announced that he is starting his own $12 million seed fund to put $100,000 to $500,000 into early-stage startups.

Google Docs Presentations: Google is demoing its online presentation software that it just added to Google Docs and Google Spreadsheets.  Now, Google has finally completed its trifecta, and has a complete Webtop suite to compete with Office.  You can't do everything you can do with PowerPoint, but the value to these types of Web apps is the collaborative aspects. You can invite other people to help you create the slide show and all of you can work on it at the same time.  In response to a question about whether it is important to have offline versions of Google Docs (using Google Gears), the Google employee presenting says, "Yeah."  So maybe we'll get that in the future.

Kerpoof:  A new Website for kids where they can write stories, create art, and make movies.  They pick a scene, grab characters, make them bigger or smaller.  Kids can print them out and make birthday cards or coloring books, and also share their creations digitally.  (This startup secretly wants to teach kids object-oriented programming). Guy Kawasaki likes this one.

Mint :This site will be up later today.  Mint ingests all of your financial information from your bank and credit card accounts, and instantly shows you what you are spending your money on in easy to read pie graphs.  The site looks at your financial history and suggests ways to save money by finding credit cards or bank accounts with lower interest rates, or  alerting you to promotions from your existing financial institutions.  It will also find better deals on phone, cable, and other services.  Esther Dyson (on the expert panel) says she'd use this one. I think of it as LowerMyBills 2.0.

Orgoo: Consolidates all of your e-mail and IM accounts in a single browser pane.  Also lets you send video messages and create chat rooms where you can invite friends or colleagues for a real-time conversation, complete with video streaming.

Breaking: Facebook's Zuckerberg Announces FB Fund

Facebook founder Mark Zuckerberg just announced on stage at the TechCrunch 40 conference that he is creating a $10 million fund, to be called the FB Fund, to give $25,000 to $250,000 grants to software developers creating applications on Facebook.  He is doing this with Peter Thiel of the Founders Fund and Jim Breyer of Accel Ventures.  These will be no-strings-attached grants.  Founders and Accel won't get a stake in the companies, but they will get first rights of refusal to invest later if any of the startups raise a more sizable venture round.

The money will be doled out by an advisory board to consist of Thiel, Breyer, Zuckerberg, Josh Koppelman, and Reid Hoffman.  Says Zuckerberg:

Any developer can submit their app. If we think the project is good we will give a grant.

Zuckerberg clearly wants to create as many incentives as he can for developers to create cool apps on Facebook, as do Thiel and Breyer (who are investors in Facebook).

Yahoo Buys Zimbra for $350 Million

Yahoo has agreed to buy Zimbra, a startup that offers Web-based corporate e-mail (and a Next Net 25 company from 2006).  The price is a hefty $350 million—one of the largest for a Web 2.0 startup to date.  Yahoo is right to build up its portfolio of Web-based apps, but Zimbra is an enterprise app.  Yahoo (YHOO) is a consumer company.  So this could end up being a stretch for them (or its entry into a whole new market).

Update: A senior Yahoo executive just told me that the acquisition was more for Zimbra's technology than an attempt to create a wedge into the nascent enterprise Webtop market.  That makes more sense.  So expect to see some of Zimbra's gee-whiz Webtop features appear in Yahoo's consumer e-mail, contact, and calendering apps down the road.

(See my earlier coverage fo Zimbra here, here,and here)

Andreesen and Hurley Reminicse About Their Lemonade-Stand Days

  Lemonade Stand........ 
  Originally uploaded by fleamarketstudio

On a panel at TechCrunch40 with Netscape founder Marc Andreesen, YouTube founder Chad Hurley, and Yahoo founder David Filo (moderated by Sequoia Capital VC Mike Moritz), Andreesen and Hurley trade reminiscences about their first business.  For Hurley, it was selling paintings on his front yard when he was five years old (later, in high school, he tried to sell knives. 

For Andreesen, it was a classic lemonade stand, also when he was in kindergarten in rural Wisconsin.  But he made one critical error:

My strategic miscalculation was that my house was 10 miles out of town at the end of a road.

On what makes a good startup idea, Andreesen says:

For a startup to have a big enough opportunity, it must have an idea sufficiently crazy that a big company won't do it. So it is that one in a thousand that is both crazy and correct.

And Hurley on transitioning from founder to CEO:

You try to make that transition from building the product to building the business. You need to get the right people on board to scale.

Coming from a design background, it was how do you find the right piece?. If you do get the right people in place, you are able to survive.

Liveblogging TechCrunch 40

I'm at the TechCrunch40 conference in San Francisco today and will be liveblogging the event.  Forty startups are launching new Websites/products. 

Here are the standouts (in the reverse-order that they are giving their demos on-stage):

AOL launches Bluestring: It's nice to see some creativity coming out of AOL.  Bluestring is a Web-based application that lets you create a slide show easily by mixing photos, music, and video.  You can then send those sldie shows to your friends and family, and they can add their own photos, music, etc. if you allow it.  Once you are happy with the finished product, you can take an embed code and post it to your blog, MySpace page, or whatnot.  The site just launched a few today.

8080 Publishing: From the makers of JPG magazine (a crowd-sourced photo magazine), this startup is launching a new travel magazine called Everywhere.  Everyday travelers submittheir photos and short travel write-ups online, and the best stuff gets printed on paper.  I like this concept—building a community that creates the magazine—because it is really pushing the bounds of professional-amateur content.  (Disclosure: My former Business 2.0 colleague Todd Lappin is the editor).

MusicShake: The crowd really liked this one.  It's from South Korea, a sophisticated Webtop app that lets you put together a song from over 170,000 tracks that the startup has created—everything from backbeats to vocals sound effects. A 9-year-old in South Korea ended up creating one of the most popular songs on Cyworld using this app. There is a revenue-sharing component, where other people can buy your song for $2, and MusicShake splits that 50/50 with the creator.

TripIt: Takes all of your airline, rental car, and hotel confirmations and creates a master itinerary that you can manage and share easily.

Truetap: Mobile social networking.  Not yet in the U.S.  Nice app, but seems to be coming late to the game.

Ceedo:  The company is introducing Ceedo Mobile, which lets you store photos, files, and applications on the flash memory of your phone.  When you connect to any PC, it recognizes the phone as a USB storage device.  But you can launch your own files and applications.  For example, you can launch your Web browser with your settings and bookmarks from somebody else's PC.  Why carry around a laptop, when you can just carry around your phone?  That's the idea.  Too bad most phones don't have sufficient memory to make this practical (yet).

Yap: Speech-to-text-to-IM.  You talk into your phone, and it appears as text on Twitter or your IM. Cld bad txt spllings B a thing of the past?  Can't say.  The demo didn't work because there is no cell phone coverage in the conference hall.  (On the second try, they showed a recorded demo that seemed to work.  Positioning this as a safe way to IM while driving, which seems ridiculous to me since simply talking on your phone while driving is known to be dangerous—although, admittedly not as dangerous as IMing while driving).  Yap also works as a speech-to-text interface to Amazon, eBay, Orbitz, Wikipedia, Google Photos, Flickr, and others.

Cubic Telecom: Irish startup that lets you avoid international roaming fees on your mobile phone.  You go to its Max Roam Website, buy a new SIM card, get it in the mail, stick it in your phone, and then every time you travel to a different country, you can load a local number onto that SIM card.  (When you are backl athome you put back in your regular AT&T, Sprint, or Verizon SIM card).  You manage everything from the Web, and it changes the number automatically.  That way you are only paying for local calls, or you can give your friends in other countries a local number (kind of like Rebtel).  And if you have a WiFi phone, Cubic Telecom routes calls over the Internet to you, so you save further on charges.  Very disruptive to mobile carriers.

Yahoo For Teachers:  Yahoo is not one of the TechCrunch40, but it just demoed a product in the works called Yahoo For Teachers.  This is not a major product, and you've got to wonder: Is this the best new product Yahoo can come up with?  It's pretty niche.  That said, there are some cool features in Yahoo for Teachers that I would not be surprised to see coming out in other Yahoo products in the future.  The service, still in private beta, is a social network for teachers where they can save and share information about lesson plans, homework assignments, and the like.  So a teacher could create a project about Benjamin Franklin, and save not just links but photos, text snippets, and other clips from the Web.  To do this, they use a widget called a Gobbler to collect  stuff while they are surfing the Web.  I could see this being used in other future Yahoo social networks as well (like the nascent Yahoo Mash).  Other teachers can borrow items from each other's projects and rate each other.  Then all of this information gets fed back into Yahoo's search engine because every Web page that gets saved in a project is associated with all the tags and metadata associated with that project.  For instance, a Web page with a picture of Ben Franklin, but without his actual name, saved in a teacher's Ben Franklin project, could later turn up in a general search for Ben Franklin.  Yahoo calls this "implicit tagging," and I suspect it will be seeing a lot more of it across different Yahoo products.

Viewdle:  A facial-recognition video search engine.  In the Viewdle demo, they search for Brittney Spears in Reuters videos, and get video results that take you to that point of the Web video where Brittney appears.  The search results also show how long each person is on-screen.  Google's Marissa Mayer, who is on the expert panel evaluating these startups, seems to like Viewdle.  She also admits (in response to a question about the viability of search startups in general) that at Google, "We actually think the switching costs for search are really low."

Faroo:  Interesting peer-to-peer search engine.  Instead of spending $1 billion on hardware to create a "global-scale" search engine, German-based Faroo wants to get a Web index for free by convincing people to download its P2P software which uses everyone's distributed computers to create the index.  The rank is based on how much attention each user gives to particular Web pages.  The longer they stay on a site or the more sites that are bookmarked, the higher the rank.  So it is more of a user-centric ranking.  (The company  proposes to share search-ad revenues with users as well).  Until the results are actually better than Google, though, this won't fly.

Cast TV:  Yet another cross-Web video-search engine.

Powerset Labs:  Natural-language search-engine startup Powerset is opening its kimono a bit with Powerset Labs, an invite-only beta that will let users play around with Powerset's natural language search engine.  Powerset is creating what it calls a semantic index of the Web that extracts meanings from the Web.   (As opposed to standard keyword search that has a limited ability to recognize relationships between keywords).

The example given in the demo is the query, "What are politicians saying about Iraq"?  The results on the left column are from Powerset that includes quotes from different politicians about Iraq regardless of whether or not the word "politician" is even on the page. On the right hand column are results from "the other guys"  (i.e. Google, Yahoo, etc), that is more of the regular mixed bag.  The demo was impressive, but no word on when this is going to come out of the labs and actually start competing with the big boys in search.

Glide Mobile Lets You Check Out PowerPoint Slide Shows on Your iPhone

While Google (GOOG) is still supposedly fooling with the finishing touches to its Web-based version of PowerPoint, one startup already has it working on a mobile phone.   Transmedia out of New York City is finally bringing PowerPoint presentations to the iPhone and other mobile devices with it's Glide Mobile service. 

One of the sorely missed features of the Apple iPhone is full compatibility with Microsoft Office.  Out of the box, you can read Word documents on it, but you can’t edit them.  And don’t even think about running a PowerPoint slide show. 

But starting later today, Transmedia CEO Donald Leka tells me, Glide members will be able to go over to glidemobile.com on their iPhones (or Blackberries or Treos or Nokias) and show people slide shows that they’ve uploaded to Glide.  They can even edit them or create new ones from their iPhone (assuming they have a lot of time on their hands).  They can also type away on Word documents to their hearts content—a feature that was implemented a few days after the iPhone hit stores.

If a small startup in New York City can make Word docs and PowerPoint slides work on the iPhone, why can’t Apple (AAPL) or Microsoft (MSFT)? 

VCs Keep Throwing Money at Web 2.0 Startups

  Dreams... 
  Originally uploaded by noahwesley

The numbers are out for how much money venture capitalists poured into Web 2.0 startups like Facebook, Zillow, and Netvibes during the first half of this year. Worldwide, counts Dow Jones VentureOne, VCs put $464 million into 101 deals. That’s up from 89 deals worth $432 million during the first half of 2006.  (See the full-year 2006 figures here).   Most of this increase comes from Europe, where early-stage investors are getting the Web 2.0 bug.

Two thirds of those 101 deals were in the U.S., maintaining a steady pace with the activity during the same period last year.  But the $357 million raised in U.S. venture deals represents a mere 1.6 percent up-tick from last year.  And while Web 2.0 deals made up 30 percent of all “information services” deals, that’s actually down from 41 percent last year. 

With all the low-hanging fruit already well picked over in the U.S., VCs here are migrating to later-stage financings and funding startups focused on the enterprise, whereas consumer-oriented deals still dominate overseas.

Sequoia Capital and Draper Fischer Jurvetson lead the charge in Web 2.0 financings, with six and five deals, respectively, But, for the first time, New England beat out the Bay Area in terms of money raised for Web 2.0 companies ($102 million vs. $90 million). 

Soon, it is going to stop making sense to count Web 2.0 deals separately from any other Internet deals.  At this point, any Internet company worth its salt can claim some Web 2.0 karma.

Disruptors Video: One Laptop Per Child

In this week's episode of the New Disruptors, I visit One Laptop Per Child, the non-profit building $176 laptops for children in the developing world.  I think they are disruptive for many reasons, but foremost is that by trying to design a laptop that initially was supposed to be under $100 they had to rethink many things about computers that most of us take for granted, like the display, the networking, the power consumption,  and the durability.  (There's no hard drive in this thing).  It's also one of the greenest computers on the planet. 

CTO Mary Lou Jepsen explains to me in the video how getting the power consumption down to a fraction of what a normal laptop needs was one of the main challenges.  (It turns out they do this by turning things off when they are not in use to a greater degree than conventional computers do).  Don't be surprised if you start seeing many of these features copied in regular laptops soon.

Watch the video.

Disruptors Video: Changing the Face of Business Travel (DayJet)

This week's New Disruptors video is about one of the most promising air taxi startups out there: DayJet.  CEO Ed Iacobucci, the founder of Cytrix Systems, plans to use a fleet of small jets from Eclipse Aviation to offer charter jet service on a per-seat basis for not much more than the cost of a business-class seat on a commercial carrier.  But he's trying to disrupt driving more than commercial air travel, since he is targeting secondary cities on the outer edges of the airline's traditional hub-and-spoke system.

Watch the video. (Full transcript after break).

(For more on air taxis, read the feature I wrote about DayJet and Eclipse last March).

Subscribe to The New Disruptors

Check out my weekly video series on CNNMoney and iTunes where I discover startups with the potential to overturn existing industries or open up new markets.

Disruptors Video: Social Networks for Healthcare (Sermo/PatientsLikeme)

The problem with healthcare is that too often information  does not flow easily between those who need it most: doctors and patients.  In this week's episode of the New Disruptors, I speak with the CEOs of two startups—Ben Heywood of PatientsLikeMe and Daniel Palestrant of Sermo—trying to change all of that.  Both are creating social networks for healthcare. PatientsLikeMe gathers together patients who suffer from the same diseases and compare notes, track their symptoms, and anonymously compare their progress with one another (read our profile here).  On the flip side, Sermo is a social network for physicians to communicate directly with one another about the latest treatments and how they are working with actual patients.  Watch the video.  (Full transcript after the break).

Subscribe to The New Disruptors

Check out my weekly video series on CNNMoney and iTunes where I discover startups with the potential to overturn existing industries or open up new markets.