Startups to watch

Startups to watch

It’s getting crowded on the Web 2.0 frontier, but there are still some startups that truly stand out. Business 2.0 Magazine identifies the ones most likely to strike gold in 2007. Launched in 2002 by three 20-somethings in a Calgary, Alberta, apartment, StumbleUpon
now has 2 million registered users drawn by its knack for finding
websites that match their interests and those of others with similar
tastes as they "stumble" around the Net.

Co-founder Garrett Camp (shown right), who totes around a mid-’80s
Nikon F3 (yes, with actual film), came up with the idea as he was
working on a master’s in software engineering.

Frustrated as he tried to indulge his hobby online – "There wasn’t a
good way to find the best photo sites," Camp says – he tapped his own
background in clustering technology. With coding help from Justin
LaFrance and Geoff Smith, he created an early version of StumbleUpon.
Having nailed the photo problem, the team quickly saw how the
technology could click with all sorts of media.

In the same way that it matches users with like-minded websites,
StumbleUpon’s technology also pairs online ads with targeted
demographics and interests. Now StumbleUpon is attempting to do the
same for online video and video advertising. In December the startup
launched StumbleVideo, a service that offers the closest thing to
channelsurfing that you’ll find on the Web.

Tell us what you think about StumbleUpon’s model: Is it the next MySpace?
Funding: $1.5 million (Ron Conway, Mitch Kapor, Josh Kopelman, Brad O’Neill, Ram Shriram)
Headquarters: San Francisco
Employees: 12
Founded: 2001
Business model: Advertising, subscriptions
Bragging rights: Cash flow positive
Next up: New features like content controls and mobile video recommendations
Slide has developed customizable and easily assembled slide shows of photos that can be embedded in a blog or a MySpace page, sent out in an RSS feed, and streamed to a desktop as a screensaver.

Funding: Not disclosed (Peter Thiel, Vinod Khosla, others)
Founder & CEO: Max Levchin (shown right)
Headquarters: San Francisco
Employees: 45
Founded: 2004
Business model: Advertising, subscription
Bragging rights: Actor Jamie Foxx and Playboy founder Hugh Hefner use Slide on their MySpace pages.
Next up: Doubling staff in 2007; expanding into Asia; adding mobile phone features
Contact: Bebo has built a social network, more than 30 million members strong, that keeps users’ pages private but still allows them to share things like video and drawings made on an online whiteboard.

Founders: Michael Birch (also CEO), Xochi Birch (shown right)
Headquarters: San Francisco
Employees: 28
Founded: 2005
Business model: Advertising
Bragging rights: Profitable; advertisers include Disney, Alltel, Dawn and AOL)
Next up: Promoting new Bebo Authors channel (launched Feb. 22); hiring in-house sales team
Contact: Meebo lets users manage multiple instant-messaging services from one site. Meebo’s killer app is a widget that places an IM window on your blog or webpage.

Funding: $12.5 million (Draper Fisher, Jurvetson, Sequoia Capital)
Founders: Sandy Jen, Seth Sternberg (also CEO), Elaine Wherry (shown right)
Employees: 12
Business model: Advertising
Bragging rights:: 5.3 million unique instant messenger IDs per month
Next up: Doubling staff in 2007
Contact: Daniel Bernstein, Wikia operates a hosting service for ad-supported community sites that use the same software and collaborative content model that made Wikipedia a Web phenomenon.

Launched in 2004, Wikia communities range from fans of 24 to politics junkies. Wikia is also working on an open-source, user-generated search engine.

Funding: $4 million (, Marc Andreessen, Bessemer Venture Partners, others)
Founders: Angela Beesley, Jimmy Wales (shown right)
Headquarters: San Mateo, Calif.
Employees: 33
Founded: 2004
Business model: Advertising
Bragging rights: 500,000 articles in 45 languages
Next up: Hiring; expanding into Japan; adding more languages; developing open-source search engine
Contact: Angie Shelton, Forget the three-minute video blog. The 30-minute, broadcast-quality Web 2.0 TV show is coming in all its full-screen glory. And if serial disrupters Janus Friis and Niklas Zennstrom have their way, neither television nor the Internet will be the same.

The duo behind peer-to-peer services Kazaa and Skype will officially launch Joost this spring, aiming to merge the best of TV with the best of the Net.

The service provides more of a television-style experience than current online video sites, with channels you can flip through randomly or program yourself. Viewers can also share playlists of their favorite shows with friends or chat with them online while watching the same program.

Joost will be free, supported by highly targeted ads based on people’s actual watching habits, their friends’ viewing patterns, and information they volunteer. Ad revenue will be split between Joost and the content owners.

Joost can offload much of the heavy bandwidth and storage costs borne by Web video companies like YouTube because the service is a partial peer-to-peer system, with content distributed among viewers’ computers. And to reassure Hollywood moguls who watched the music industry get burned by Kazaa’s legions of illegal file sharers, all Joost video is streamed and encrypted.

Tell us what you think about Joost: Will the Skype founders beat YouTube?
Funding: Not disclosed
Founders: Janus Friis, Niklas Zennstrom (shown above)
Headquarters: Luxembourg
Employees: 100
Founded: 2006
Business model: Advertising
Bragging rights: 40,000 beta testers; just beat rival YouTube by signing major content deal with Viacom; other content providers include National Geographic, Warner Music Group, and Dutch TV production company Endemol
Next up: Striking more content deals
Contact: Dabble has designed a tool for organizing videos into playlists of favorites. Users share them across the network, so, say, food lovers can dabble in one another’s video collections.

Funding: $750,000 (Hank Barry, Evan Williams, others)
Founder & CEO: Mary Hodder (shown right)
Headquarters: Berkeley, Calif.
Employees: 11
Founded: 2005
Business model: Advertising
Bragging rights: 12,000 registered users to date; partnerships with MySpace, YouTube, Grouper, Brightcove
Next up: Hiring; a groups feature for users with similar interests to share video
Contact: Metacafe’s service ranks uploaded videos by popularity and feedback from a community of 17 million monthly visitors – and pays the creators for the success of their work. The auteurs get $100 after 20,000 viewings and $5 for every 1,000 subsequent views. Since September, Metacafe has paid a total of $250,000 to 200 contributors.

Funding: $20 million (Accel Partners, Benchmark Capital)
CEO: Erick Hachenburg (shown right)
Headquarters: Palo Alto, Calif.
Employees: 65
Founded: 2003
Business model: Advertising
Bragging rights: 17 million monthly users; revenues doubling each quarter
Next up: Hiring 100 employees in 2007; partnering with movie studios, record labels and producers Revision 3 is a production studio for geek-oriented online shows. Started by Digg founder Kevin Rose and its CEO, Jay Adelson, Revision3 sells sponsorships to companies like Go Daddy, Microsoft, and Sony for as much as $10,000 per episode.

Funding: $1 Million (Adelson, Marc Andreessen, Ron Conway, others)
Cofounder & CEO: Jay Adelson (shown right)
Headquarters: San Francisco
Employees: 7
Founded: 2005
Business model: Advertising
Bragging rights: 1.5 million monthly viewers; advertisers include Sony, IBM and Go Daddy
Next up: Launching up to 4 new shows
Contact: has built a platform for syndicating serialized online shows such as Starring Amanda Congdon and TreeHugger TV. Blip provides producers with software, ads, and distribution to websites and blogs. A deal is already signed with Web TV service Akimbo, which lets producers send their videos to TV sets.

Funding: Not disclosed (Ron Conway, Mark Gerson, Ken Lerer, Peter Thiel)
Cofounders: Dina Kaplan, Mike Hudack (also CEO; shown right with Kaplan)
Headquarters: New York City
Employees: 12
Founded: 2005
Business model: Licensing, advertising
Bragging rights: 45,000 content creators; key advertisers include Dove, Paltalk; licensors include CNN, Oxygen TV
Next up: Doubling staff in 2007
Contact: Mike Hudack, In the freewheeling wireless era, the PC is in your pocket and the network is in the air. No surprise, then, that gadgets from Apple’s iPhone to a SanDisk MP3 player are being built with Wi-Fi inside.

But finding a Wi-Fi signal when you need one can be a problem – and a big opportunity for Fon, a Spanish company that’s building a global community of hotspots one router at a time.

The idea for Fon hit founder Martin Varsavsky in late 2005 while he was strolling through Paris with his PDA in search of a signal. Companies like T-Mobile were spending millions of dollars to build hotspot networks and charging dearly for access.

Varsavsky, however, saw the potential for a worldwide Wi-Fi network in the home broadband connections already in place. All that was needed was a service to tie them together.

Here’s how it works: Fon sells a $30 wireless router to consumers. They hook it up, register their node, and agree to share their broadband with other "Foneros" for free. Those who want to charge outsiders for access can do so, and Fon gets a cut. Likewise, if someone wants to pay $2 or $3 to use the Fon network for a day, Fon takes a share of that revenue. Just over a year old, Fon’s network boasts more than 70,000 hotspots. Initially focused on Europe and Asia, Fon plans a big push in the United States in the coming months.

Tell us what you think about Fon: Is the company a Web 2.0 winner?
Funding: $22 million (Google, Index Ventures, Sequoia Capital, Skype)
Founder: Martin Varsavsky (shown above)
Headquarters: Madrid, Spain
Employees: 90
Founded: 2006
Business model: Subscription, router sales
Bragging rights: 400,000 users (including 40,000 Americans added since October); signed as-yet unannounced deal with first major U.S. broadband service provider
Next up: In deal talks with U.S. cellular service provider
Contact: Faisal Galaria, Loopt offers around-the-clock friend tracking. Cell-phone customers are using Loopt to let their buddies see their locations. It’s already a hit with some 100,000 Boost Mobile subscribers who want to know not just what their posse is up to but where it’s at.

Funding: $5 million (New Enterprise Associates, Sequoia Capital)
Founder & CEO: Sam Altman (shown right)
Headquarters: Palo Alto, Calif.
Employees: 18
Founded: 2005
Business model: Advertising, subscription
Bragging rights: Partnership with Sprint
Next up: Signing up sponsors; in talks with second U.S. carrier
Contact: Mobio offers mobile-phone mashups and widgets that figure out where you are and serve up on-the-go services like movie listings. Other widgets will book a cab or a seat at a restaurant.

Funding: $9 million (InterWest)
Founder & CEO: Ramneek Bhasin (shown right)
Headquarters: Cupertino, Calif.
Employees: 40
Founded: 2005
Business model: Advertising
Bragging rights: Sprint and Cingular customers will be able to download widgets to their phones this spring; working with OpenTable, an online restaurant reservation service.
Next up: Service launches Feb. 26
Contact: It’s Flickr on the fly. Tiny’s Radar service lets you snap photos with cell phones and send them to friends, who can both access and comment on the shots. Radar will be a built-in application on some devices made by Danger, creator of T-Mobile’s Sidekick.

Funding: $2.8 million (Mohr Davidow Ventures)
Founder & CEO: John Poisson (shown right)
Headquarters: San Francisco
Employees: 12
Founded: 2005
Business model: Sales of downloadable client, advertising
Bragging rights: 55 percent monthly user growth; 500,000 videos and pictures swapped on network per month; SunCom Wireless plans to distribute Radar
Next up: To have 1 million users by year-end; sign up more carriers; add premium subscription service
Contact: Amanda Krantz, Access your home or office PC from your mobile phone. SoonR allows you to use your phone to pull up and search data on your desktop – everything from Word docs to Photoshop files.

Funding: $6 million (Clearstone Venture Partners, Intel Capital)
Cofounder & CEO: Martin Frid-Nielsen (shown right)
Headquarters: Campbell, Calif.
Employees: 30
Founded: 2005
Business model: Subscriptions
Bragging rights: Approx. 250,000 users; partnerships with Swisscom, WebEx
Next up: Premium services
Contact: Abbe Patterson, Led by former AltaVista CEO Jim Barnett, is offering online advertisers something many have craved for years: precise, automated ad targeting combined with a system that requires them to pay only for specific desired results.

Call it pay-per-play.

To get started, advertisers first enter the prices they’re willing to pay for various results – $5 for a sales lead, say, or $50 to $60 for a completed transaction. Next, they upload their text-or graphics-based display ads. Turn’s software then analyzes the ads using more than 60 variables – including content, brand strength, and keywords – and determines the right publishers to serve up the ads. Turn splits the revenue (70-30, on average) with the publisher.

Since launching in beta in November, the company has signed up more than 1,000 advertisers and cranked more than 5 million ads through its analysis engine.

Twenty-five publishers are giving the system a tryout, according to Barnett, including a few large news sites and a big social network (which he declines to name).

As for competitive threats, Google has been rumored to be working on its own version of the pay-per-play model. But Barnett says the $16 billion-a-year online ad industry is growing so fast that he doesn’t worry about Turn’s ability to carve out a lucrative niche: "These days marketers need to use all the targeting approaches they can find."

Tell us what you think: Will Turn’s pay-per-play model succeed?
Funding: $17.5 million (Norwest Venture Partners, Shasta Ventures, Trident Capital)
Cofounders: Jim Barrett (also CEO), John Ellis (shown above)
Headquarters: San Mateo, Calif.
Employees: 26
Founded: 2005
Business model: Advertising
Bragging rights: 25 million unique viewers to date; 1,000 advertisers; 20 publishers
Next up: Signing more publishers
Contact: Adify is an online marketplace for highly targeted ads. Businesses can sell ad space directly to advertisers; advertisers can target specific market niches while Adify handles the back-office work.

Funding: $8 million (Venrock Associates)
Cofounder & CEO: Larry Braitman (shown right)
Headquarters: San Bruno, Calif.
Employees: 40
Founded: 2005
Business model: Advertising
Bragging rights: 4,000 publishers have signed up, including The Washington Post; revenues doubling quarter-over-quarter
Next up: Signing more publishers
Contact: 877-462-3439 AdMob offers a place to buy ads for delivery to cell phones. That market is set to explode, and AdMob – which says it has sent out nearly a billion ads in less than a year – is poised to become its middleman of choice.

Funding: $4 million (Sequoia Capital)
Founder & CEO: Omar Hamoui (shown right)
Headquarters: San Mateo, Calif.
Employees: 22
Founded: 2006
Business model: Advertising
Bragging rights: 800 publishers, 250 advertisers
Next up: Technology to deliver interactive ads to mobile phones
Contact: SpotRunner is a one-stop online shop for low-cost 30-second TV ads. Local businesses can browse a library of premade spots and personalize them for airing in their local markets.

Funding: $60 million (CBS, Interpublic Group, WPP)
Cofounders: Nick Grouf (also CEO), David Waxman (shown right)
Headquarters: Los Angeles
Employees: 150
Founded: 2004
Business model: Advertising
Bragging rights: Clients include Century 21, Coldwell Banker, Mozilla, and Warner Independent Pictures; partners include The Interpublic Group of Companies, WPP, CBS
Next up: Extending the model to other media besides TV, possibly radio and the Internet
Contact: 877-287-2793 ViTrue’s platform lets corporate customers solicit, edit, and upload user-generated videos that promote their products. With companies like General Motors tapping the YouTube generation to virally market their wares, ViTrue is in a sweet spot.

Funding: $5 million (Comcast, Ron Conway, General Catalyst Partners, Turner Broadcasting)
Founder & CEO: Reggie Bradford (shown right)
Headquarters: Atlanta, Ga.
Employees: 38
Founded: 2006
Business model: Advertising
Bragging rights: 100,000 site users; site on
Next up: Developing new sites for youth-oriented media clients
Contact: Maria Sanzone, Even the corporate world is catching on to the promise of Web 2.0 technologies. After all, why can’t enterprise apps be as easy to use as the latest Google mashup?

They can. And when they actually work, watch out. SuccessFactors, a profitable five-year-old startup in San Mateo, Calif., takes in an estimated $100 million in annual revenue by selling a suite of simple Web-based tools that automate important but previously paper-driven management chores – performance reviews, succession planning, and compensation.

Ultimately the service helps to match employee skills with company objectives. North Carolina-based Quintiles, a pharmaceutical services firm with 17,000 employees, deployed SuccessFactors last year to better pair worker aptitudes with jobs; its annual employee churn rate subsequently fell by nearly a third.

CEO Lars Dalgaard claims that SuccessFactors has some 2 million users and more than doubled sales last year. Its customers, which pay an annual fee of $50 per user, range from small tech companies to corporate giants like ConAgra Foods. That kind of growth has not gone unnoticed among investment bankers, prompting talk of an IPO this year.

Tell us what you think of SuccessFactors: Has the company created the ideal corporate tool?
Funding: $45 million (Canaan Partners, Cardinal Venture Capital, Emergence Capital, others)
Founder & CEO: Lars Dalgaard (shown above)
Headquarters: San Mateo, Calif.
Employees: Approx. 400
Founded: 2001
Business model: Subscriptions
Bragging rights: 1,200 customers, including Wachovia, MasterCard, and Kimberly-Clark; 2 million users
Next up: Expanding into Asia and Europe; developing web services tailored to specific industries, such as health care and retail
Contact: JanRain has developed a single sign-on service for multiple passwords that lets people hop freely from site to site. Business demand for JanRain’s services is expected to grow as Web 2.0 entertainment and social-networking sites proliferate.

Funding: $1 million (founders)
Cofounder & CEO: Scott Kveton (shown right)
Headquarters: Portland, Ore.
Employees: 11
Founded: 2006
Business model: Advertising, subscriptions
Bragging rights: 50,000 users (nearly double the number in December)
Next up: Partnerships with bigger websites; new product rollout by summer
Contact: Scott Kveton, Logoworks automates the design of logos, business cards, and stationery. Proprietary software helps Logoworks streamline the process and charge less than old-line competitors.

Funding: $16.8 million (Benchmark Capital, Highway 12, Shasta Ventures)
Founder: Morgan Lynch (shown near right)
CEO: Paul Brockbank (shown far right)
Headquarters: Lindon, Utah
Employees: 120
Founded: 2001
Business model: Fee-for-service
Bragging rights: 65,000 customers to date, including Toyota and Pfizer
Next up: Selling services to small businesses through big box retailers
Contact: Rearden Commerce sells a Web-based "virtual personal assistant" application that smoothly integrates hotel and flight reservations, meetings, and other events into your daily agenda. Some 150 companies and 500,000 employees use Rearden’s software.

Funding: $100 million (American Express, Foundation Capital, Vinod Khosla, Burt McMurtry, Oak Investment Partners)
Founder & CEO: Patrick Grady (shown right)
Headquarters: Foster City, Calif.
Employees: 155
Founded: 2000
Business model: Subscriptions
Bragging rights: Approx. 200 customers; new partnership with American Express
Next up: Expanding into the mobile market
Contact: 877-778-2763 Finally, an effective way to convert voice-mail into scannable text. SimulScribe transcribes voice-mail messages and shoots them to your mobile device as text or e-mail messages. Targeting corporate customers, SimulScribe will integrate the service into company voicemail systems.

Funding: $5 million (Tom Iovino, Claude and Jan Nahum)
Founder & CEO: James Siminoff (shown right)
Headquarters: New York City
Employees: 8
Founded: 2003
Business model: Subscriptions
Bragging rights: 5,000 users
Next up: Deal with major national carrier to be announced in April


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