Y Combinator’s Winter 2011 Demo Day: The Definitive Debrief

3/24/11Follow @wroush

The Y Combinator venture incubator program, now finishing its sixth year, seems intent on growing until it breaks. And in fact, it may be reaching that point already. There were 43 companies in the Y Combinator Winter 2011 (YC W11) batch; that’s nine more than the Summer 2010 class, and one side effect was that each company at this week’s climactic Demo Day presentations had only 2 minutes and 10 seconds to talk about its business. At the same time, so many investors wanted see the presentations that the startups had to go through them three times, at a Tuesday matinee, a Wednesday matinee, and a Wednesday evening show.

I went to the Wednesday afternoon session, and my summaries of the pitches are below. Reflecting the Y Combinator philosophy, the YC W11 companies are nearly all Web startups trying to disrupt existing markets or industries by finding efficient new ways to connect people or organize information. But within that framework, they run the gamut from charity to gaming, from e-commerce to electronic medical records, and from Web application hosting to telephony. It’s an impressive bunch overall; I’ve already profiled a couple of the YC W11 companies and will be looking at many more over the coming weeks.

After listening to all 43 presentations and then sitting down to write a summary paragraph about each of the on-the-record companies, I can tell you one thing: two minutes isn’t really enough to describe a business in any detail. In fact, anybody who makes an investing decision based on a Demo Day pitch alone deserves to lose his money. To figure out how these companies’ products and businesses really work, in almost every single case I had go to the companies’ websites or talk to the co-founders. So, if you’re thinking about investing in or emulating one of these companies, don’t go by pitches, or even by my writeups below—do some homework of your own.

Some Y Combinator companies choose to present at Demo Day but remain “off the record” because they haven’t formally launched. That was the case with an unusually high number of YC W11 companies—19 out of the 43. This certainly made my job easier, since it meant I only had 24 profiles to write. But it also meant that I can’t tell you yet about some of the most interesting companies in this batch. So stay tuned.

At the top of each summary below, I’m supplying a link to the startup’s website, the names of the co-founders, and, in italics, the company’s one-sentence tagline or self-description, drawn either from their pitches or their websites. (Y Combinator is very big on taglines.)

AppHarbor

Rune Sorenson, Troels Thomsen, Michael Friis

“Heroku for .NET; Azure done right.”

You’d think that it woul be easy for developers to deploy software written in .NET, the Web application framework from Microsoft, on Windows Azure, Microsoft’s the cloud services platform. AppHarbor’s contention is that it isn’t, thanks to a bunch of oddities unique to Azure, such as the requirement that Azure apps use Microsoft’s database system, SQL Server. AppHarbor is an application hosting service for .NET applications that’s designed to “make .NET deployments fun and fast,” according to the company, just as Heroku and EngineYard help builders of Ruby on Rails applications get their sites online quickly and easily. Already, the service claims to be supporting 1,000 active websites.

Beetailer

Laura Valverde, Juan Gallego, Miguel Martinez

“Bring your store to Facebook.”

Beetailer says it helps companies with existing e-commerce sites create Facebook versions of their online storefronts in just minutes. But in the process, said co-founder Laura Valverde, it helps retailers tailor their stores to fit the types of experiences Facebook users expect, and it sets up Facebook-specific analytics and promotional campaigns. “Retailers think selling in Facebook is easy, but it is not,” Valverde said. “We provide tools that solve this problem.” Launched just a few days ago, Beetailer says it is already supporting more than 900 stores within Facebook.

Comprehend Systems

Rick Morrison, Jud Gardner

“Clinical reporting and visualization made simple.”

Founded by two computer-science majors with backgrounds in clinical trial management and the pharmaceutical industry, Comprehend Systems is building a system that aggregates data from multiple, disjointed databases and allows users to visualize it in real time. The company is aiming its product first at the market for managers of drug trials, who often use separate and incompatible databases to track recruitment data, clinical data, safety data, and reporting systems. If it works in the pharmaceutical industry, the startup has plans to apply its reporting and visualization system across many industries.

Convore

Leah Culver, Eric Florenzano, Eric Maguire

“IRC for the rest of us.”

Convore co-founder Leah Culver is best known as the co-founder of Pownce, a Twitter competitor that allowed users to share messages, files, and links, and to track discussions. Six Apart acquired and shut down Pownce in 2008. Now Culver is back with a new instant messaging platform inspired heavily by Internet Relay Chat (IRC), a group discussion platform where users gather within interest-based channels. On Convore, a free service accessed via the Web or a native iPhone app, users can start or join conversations, post links to images, and review conversations they missed while offline. Launched last month, the service already claims 24,000 users, including the founders of most of the YC W11 startups.

Custora

Corey Pierson, Jon Pospischil

“Google brings them in, we keep them coming back.”

Acquiring a new customer costs five times as much as retaining an existing one—so website owners should do more to keep their existing customers happy, the founders of Custora argue. That can be as simple as sending them an offer, message, or coupon by e-mail. But knowing whom should be eligible and when is the trick. Custora says it has developed Bayesian algorithems to predict the lifetime value of each e-commerce customer, so e-retailers can send specific enticements to people known to be big spenders. “If you know what your customers are going to do, you can go about marketing more intelligently,” the startup says.

Curebit

Allan Grant, Nori Yoshida, Jeff Yee

“Get your customers to refer their friends.”

Curebit is all about what happens after a customer has completed an e-retail transaction. The Twitter or Facebook “share” buttons that pop up after many transactions work only 3 percent of the time, Curebit’s founders say. By providing customers with a small incentive to make a referral, Curebit says it can increase that conversion rate to 30 percent. A typical incentive might be a $5 rebate for both the customer and his or her friends when friends pursue offers the customer shares on Facebook. Curebit’s technology enables the rebate offer and helps e-retailers track conversions by demogaphic group. The service is already in use at e-commerce sites like Dodocase, Americanmuscle.com, and Artisanalcheese.com.

DrChrono

Daniel Kivatinos, Michael Nusimow

“Bring your iPad into the exam room.”

Could the solution to the American healthcare system’s digitization challenge be sitting in the iTunes App Store? DrChrono thinks so. The company has spent two and a half years developing an electronic medical record system that runs solely on the Apple iPad and iPhone. The company says the app includes everything a small medical practice needs to run its practice on the iPad, including a clinical note-taking system, support for viewing X-rays and other test results, electronic prescriptions, drug interaction warnings, speech-to-text technology for note dictation, and paperless billing connections with insurance companies. Given that adoption of such as system can qualify a small practice for $44,000 in incentive payments under the 2009 stimulus bill, it may not be surprising that DrChrono already has 1,700 users and has made $200,000 in sales.

Earbits Radio

Joey Flores, Yotam Rosenbaum, Benjamin Bryant

“Google AdWords for the music industry.”

From a listener’s perspective, Earbits is much like Pandora—it’s an Internet-based streaming music system that lets users listen to specific channels depending on their preferences. But behind the scenes, it’s completely different. On Earbits, bands and musicians bid for airtime with the specific demographics they want to target. Bands make their money back by selling albums, merchandise, and concert tickets, and, ideally, through word-of-mouth promotion on Facebook and Twitter, to which Earbits connects. The company says it has agreements with 90 record labels and 1,300 bands, from indie artists to Grammy winners.

FitFu

Jof Arnold, Benjie Gillam

“Fitness for lazy people.”

FitFu is a motion-based fitness game for the iPhone that counts reps for common exercises such as situp and lunges. To keep users engaged, the app offers social elements that let users share achievements with friends and game elements such as badges. “If you are a fitness enthusiast, there are lots of products to provide you with a service, but nothing at the casual end,” says FitFu co-founder Jof Arnold. “We think this is an opportunity to become the default brand when it comes to casual exercise.” Previous apps from the FitFu founders, such as CrunchFu, have sold more than 140,000 paid copies at the iTunes App Store.

Five Stars

Victor Ho, Conway Teng, Matt Doka

“A million loyalty cards in one.”

Five Stars offers retailers a loyalty-card system without the loyalty cards. By checking in at retailers using just their phone numbers, Five Stars members can earn rewards that are delivered electronically via e-mail or Facebook, where customers are more likely to spread the word about their favorite merchants. The company’s Web-based platform lets retailers monitor customer rewards and target the best customers with special offers. The Five Stars system is already popular with eateries like EBaja Fesh Mexican Grill, Johnny Rockets, Red Berry Coffee Bar, Verde Teacafe, and Greencup Frozen Yogurt.

GiftRocket

Nick Baum, Kapil Kale, Jonathan Pines

“A completely new type of gift card.”

With GiftRocket, you can send a friend or employee a cash gift which they can only redeem by checking in with their mobile device at a specific location, such as a restaurant or retail store. When the GPS coordinates on the recipient’s smartphone verify that they’re at the location, GiftRocket releases the cash to their PayPal account. It boils down to a way giving someone a gift card even for businesses that don’t offer their own gift cards, and/or to avoid the hassle of buying a physical gift card or gift certificate. GiftRocket says every business on Yelp is listed in its directory.

GrubWithUs

Eddy Lu, Daishin Sugano

“We build friendships over group dinners.”

It’s either an introvert’s worst nightmare, or just the thing to get you out of your shell: a group meal at a restaurant with a bunch of people you’ve never met. GrubWithUs lets users sign up for group meals at specific restaurants in their cities (so far, the startup covers Chicago, DC, Los Angeles, New York, and San Francisco). Prospective diners can start out by picking a restaurant they want to eat at, or by finding a person they want to meet and signing up to attend the same dinner. Users pre-pay for their dinners through the site. “Restaurants tell us we’re better than Groupon because they can actually make money,” the company says.

HelloFax

Joseph Walla, Neal O’Mara

“Throw away your fax machine.”

HelloFax—which I’ll be profiling at more length shortly—is an e-signature startup masquerading as an e-faxing startup. The truth about fax machines, argues co-founder Joseph Walla, is that the only reason anyone ever uses them anymore is to transmit signed documents. HelloFax has built a simple Web-based system that lets users create electronic signatures and paste them into a digital simulacrum of any document, then transmit that signed document to any fax machine or e-mail address. Over 6,000 people are using the app just five weeks after its launch, and HelloFax’s member base is growing 30 percent per week, Walla says.

Lanyrd

Simon Willison, Natalie Downe

“IMDB for conferences.”

Lanyrd is building a giant database of professional events and the people who speak at them. After signing in using your Twitter credentials, you can see which conferences your Twitter contacts are attending or speaking at. For each conference, there’s a detail page with the date, information links, and lists of speakers and attendees. For past events, speakers or organizers can upload PowerPoint decks and other materials from individual speakers. “What Khan Academy is doing for education, we want to do for professional development,” says co-founder Simon Willison, who was the co-creator of the Django Python Web framework for rapid development. The company hopes to earn money on lead generation for conference-related travel services.

Like.fm

Chris Chen

“The social network that connects people across music services.”

Like.fm founder Chris Chen argues that Last.fm, the popular service that tracks what you listen to and recommends music and concerts based on your taste, has stagnated since CBS bought the company in 2007. “Their users are itching for a new service,” Chen says. Like.fm does roughly the same thing as Last.fm, tracking plays on every service from YouTube to Pandora, but with added social features that show users what songs and groups are trending. “Rdio and Spotify are making a push into social features like this, but Like.fm has two advantages,” Chen says. “We are the only service that works across all these other services, and we’re the only one that’s free and accessible to everyone. We’re in the best position to control the social element of all these services, and whoever is the company that controls [that] controls the future of online music.”

MinoMonsters

Josh Buckley, Tyler Diaz

“Pokemon for 2011.”

At age 19 and 17, respectively, Mino-Monsters co-founders Josh Buckley and Tyler Diaz are the youngest co-founders ever admitted to Y Combinator. They’ve created a social game spanning Facebook, the Web, and the iPhone in which players train pet monsters for battle. “Think of it as Pokemon if it started today,” says Buckley. The company argues that Zynga, while very good at building social games, doesn’t understand the importance of emotional engagement—hence the pet monster angle. “We are the best of both worlds,” Buckley says. Just four weeks after launch, he says the company’s game already has 120,000 active players on Facebook and is growing at 10 percent per day.

Moki.tv

Matt Huang, Sandy Spicer

“A personalized TV Guide for streaming online video.”

More and more people are giving up cable and satellite TV for Internet-delivered shows, but that content is split across dozens of sources with varying prices and constantly changing availability, points out Moki.tv founder Matt Huang. The startup aggregates video listings from Netflix, Amazon, iTunes, Hulu, and other sources, helping users find the cheapest or most convenient source for thousands of movies and TV shows. It also tracks what they watch and recommends new content. Huang and co-founder Spicer are both MIT graduates with math and computer science training. “Neither of us have actually owned a TV in over five years but we love movies and TV, and we are trying to make online TV actually work,” says Huang.

Noteleaf

Jake Klamka, Wil Chung

“Mobile meeting profiles pushed to your phone.”

When you sign up at Noteleaf, you supply your smartphone number and your Google Calendar and LinkedIn credentials. For every upcoming meeting in your calendar, the service figures out who you’re meeting with, and sends you a text message 10 minutes before the meeting with a link to a mobile dossier on that person. For the full scoop on Noteleaf, see my March 22 profile of the company.

Sendoid

John Egan, Zac Morris

“The fast, private way to share any file.”

Moving large files between computers is still pretty difficult, unless you want to physically carry them on a thumb drive. Sendoid has built an in-browser tool that lets PC users specify which file on their hard drive they want to share. The service creates a one-time link to the file (in an obfuscated format such as http://Sendoid.com/w43x9) that the originator of the file can send to a recipient, who can then grab the file directly over the Internet. The service is inherently viral, points out co-founder Zac Morris, since file recipients see the Sendoid link and have the opportunity to send their own files. In the future, the company hopes to charge businesses for features such as advanced security. Since launching early this week, he says the company has already moved nearly a quarter of a million files amounting to more than 5 terabytes of data.

SwipeGood

Steli Efti, Anthony Nemitz, Thomas Steinacher

“The easiest way to give to charity.”

If you’re a Bank of America customer, you’ve probably heard of the bank’s “Keep the Change” program, which rounds up debit card purchases to the nearest dollar and transfers the difference into your savings account. SwipeGood does something similar with any credit or debit card, but it sends the money to members’ favorite charities. With users donating an average of $20 per month to causes such as the American Cancer Society and Kiva Networks, “We’re changing how philanthropy is financed,” says co-founder Steli Efti. The company keeps a 5 percent cut of every transaction, meaning it’s earning $1 per user per month.

Taskforce

Nic Pantucci, Courtland Allen

“The way you work is broken.”

Most people use their e-mail inbox as a de facto to-do list, but that’s not very effective for people who get lots of e-mail. Taskforce is a Gmail add-on that lets users empty their inboxes by quickly turning e-mail messages into items on a to-do list. I profiled Taskforce on March 21, so put reading that article on your list.

TellFi

Jason Corwin, Conor Lee

“Google Voice for business.”

Like home landlines, hardware PBX systems for workplaces are disappearing, and TellFi offers one way for small businesses to set up a virtual business phone systems with all the standard features of office phones, like call forwarding, extensions, voicemail, and voicemail transcription. There’s a $10 per month plan for individual freelancers with 100 minutes of talk time, a $24 per month plan with up to five extensions and 450 minutes of talk time, and a $70 per month plan for up to 10 extensions and 1000 minutes. The company says it has 1,200 active accounts, including many Y Combinator companies, and its revenue and user base are doubling every week. I’ve interviewed TellFi and plan to write up a full profile soon.

Tutorspree

Aaron Harris, Josh Abrams, Ryan Bednar

“AirBnB for tutoring.”

Parents of high school students spend $5 billion to $7 billion per year on private tutoring, according to Tutorspree co-founder Aaron Harris, but it’s an inefficient market, since there’s no way to compare tutors’ reputations to find out who’s best and who’s overpriced. That’s where Tutorspree comes in. The company is building a tutor “discovery engine” that handles booking, payment, and community feedback and reviews for tutors. The company collectes 50 percent of the fee for the first session scheduled on its platform, and $5 per session after that. So far, most of the company’s tutor listings are in New York City and San Francisco, but the company thinks its total addressable market nationwide exceeds $1 billion.

YouGotListings

Gorden Chen, John Li

“Salesforce.com for real estate.”

YouGotListings aims to replace the mish-mash of custom listings databases used by most real estate offices with a single, Web-based system that helps brokers organize their listings, share them with each other, and distribute them to sites such as Trulia. Launched in Boston, where it already has an 80 percent market share, the company has expanded to San Francisco, Chicago, DC, and Florida. The co-founders are both computer science majors from the University of Rochester who spent an entire year as working real estate brokers before starting the company as a way to study the market.

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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