Y Combinator’s Summer 2011 Demo Day: The Definitive Debrief, Part 1

8/24/11Follow @wroush

Y Combinator unleashed its latest class of startups on the world yesterday at its summer Demo Day in Mountain View. The famed venture incubator, which provides mentorship, networking, investor access, and a modest cash stipend in return for an equity stake in each company, admitted a record 63 startups this time around. That’s up from 43 in the winter 2011 batch, and 34 in summer 2010.

To accommodate all those entrepreneurs, Y Combinator has had to expand, literally. For the second time, the organization has moved the signature orange wall in its common room about 30 feet to the west, roughly doubling the amount of space for work tables—and for Demo Day seating for investors and journalists, which is always at a premium.

Summaries of the YC startups’ pitches start below, one paragraph each. But fear not—you won’t have to wade through 63 paragraphs. That’s because a record proportion of this year’s startups, 33 out of the 63, asked to stay off the record, meaning they haven’t launched their services or they’re not ready to have it known that they took part in Y Combinator. Also, I just couldn’t get through all 30 summaries last night, so I’m dividing up this debrief into two parts. Today it’s A through Mo; tomorrow, Mu through Z.

I’m trying something new this time around. As in the past, each listing contains a link to the company’s website, the names of its co-founders, the tag line provided by each company (when there is one), and my summary. What’s new is the final line—my quick personal take on each startup. The presentations were admittedly brief (about three minutes each), so I’m not ready to form final judgments about any of these companies. But as they say, first impressions matter.

Aisle50

Chris Steiner, Riley Scott, George Korsnick

“Groupon for groceries.”

The founders of Aisle50 argue that newspaper circulars are losing their effectiveness and that large food manufacturers are looking for new ways to promote their products, including e-mail and the Web. Whereas the incumbent digital coupon provider, Coupons.com, simply reduces an entire circular to a few Web pages, Aisle50 crafts a single, custom page for each promoted product and features one discount per grocery chain at a time. When a member buys the currently featured product via credit card at the Aisle50 website, a matching credit is applied to his or her store loyalty card. The startup is currently working only with the Lowes Food chain in North Carolina, but will soon add hypermarket chain Meijer. A “giant pot of money” is waiting to migrate from paper coupons to digital platforms, the startups says, and it wants to become “the premier way for food manufacturers to market their product.”

My take: Reminiscent of YC S10 startup Anyleaf, which is also out to kill the supermarket circular, but Aisle50 has the Groupon twist. Y Combinator seems to return to certain themes again and again, as if searching for the right solution.

Bushido

Sean Grove, Kevin Zettler

“An app store for the cloud.”

To get their Web or mobile apps distributed, developers have to worry about lots of things outside their areas of specialty, such as hosting, authentication, and billing. Bushido says it can take an app written using the Rails programming framework and “wrap” it in a software package that takes care all of that, liberating developers to focus on their software. Over time, the startup says it will accumulate “all the apps, all the users, and all the data,” giving it an understanding of a “data graph” that will be as powerful as Facebook’s social graph.

My take: Probably the brashest and most cryptic pitch of the day. The company clearly hopes to bask in the glow of Heroku, the Ruby on Rails hosting service that was part of Y Combinator’s Winter 2008 term.

Can’tWait

Eric Florenzano, Eric Maguire

If the names Eric Florenzano and Eric Maguire sound familiar, it’s because these are the same two Erics who worked with Leah Culver to launch Convore, a YC W11 company that specializes in IRC-style group chat. That probably makes them the first startup founders to participate in two consecutive terms at Y Combinator. This time around, they’re going after the movie business—specifically, trailers. The startup’s iPhone app (coming soon to Android) lets users browse and watch movie trailers, share their favorites with friends, and set reminders so they won’t miss out when the movies hit theaters. Florenzano calls it “the best marketing platform Hollywood could hope for” and predicts studios will pay the startup handsomely to feature their trailers. In the future, the company plans to take on video games, consumer electronics, and other product categories where pre-orders are prevalent.

My take: It will be interesting to see what company Florenzano and Maguire start for YC W12.

Codecademy

Zach Sims, Ryan Bubinski

“The easiest way for beginners to learn how to code.”

Programming is “the only skill that will matter in the future,” the founders of Codecademy argue, yet it’s hard for beginners to learn a new software language from books and videos. Its solution: interactive online exercises that teach coding in short lessons. Early demand seems to indicate the startup is on to something: since launching on August 19, it has amassed 250,000 users who have completed more than 2 million simple Javascript lessons. Already, companies like Microsoft and Groupon have contacted the startup to ask if they can use the platform to teach third-party developers how to use their application programming interfaces. The lessons are free for now, but as the company adds more lessons it will also introduce a pay wall.

My take: If I ever decide to give up journalism, learn Ruby on Rails, and apply to Y Combinator with my Groupon for Medical Marijuana Clinics idea, this sounds like the place I should start.

Debteye

John Sun, Paul Zhang, Kevin Yu

“Automated credit counseling—Turbotax for debt relief.”

Every year 10 million people in the U.S. shell out $200 or more for credit counseling from a human advisor. But many of the tasks involved in credit counseling—especially gathering and analyzing financial data—can be reduced to software, Debteye’s founders say. They’ve built a self-service platform where users can input their account data, balances, payment schedules, and the like, and get back recommendations about how to pay off their bills, negotiate with creditors, and set up debt management plans.

My take: Highly reminiscent of a YC S10 startup called Ready for Zero, which-wait for it— uses the Web to automate the credit management process. But the business models appear to be different: Debteye charges (unspecified) fees, while ReadyForZero makes money on commissions when it refers customers for debt-consolidation loan or other financial services.

Double Recall

Robert Farazin, Rok Gregoric, Rok Krulec

“A new form of brand advertising for the Web and mobile.”

You’ve no doubt run into CAPTCHAs, the hard-to-read images that test whether you’re a human or a bot before admitting you to a website. You can think of Double Recall’s technology as CAPTCHAs for online publishers, but with two twists: the images are actually advertisements, and they function in place of pay walls. Before readers can proceed to a publication’s content, they have to prove they read and understood the text in the ads, by retyping two highlighted words. This process results in greater recall of an ad’s message, according to the startup—and that means advertisers are willing to pay more for Double Recall ads than for classic Web ads. Up to 12 times more, in fact. The company already has deals with publishers like Forbes and Conde Nast.

My take: As a writer, I’m in favor of anything that helps the publishing industry recapture some of the ad revenue it’s lost over the years. As a reader, I worry that complying with Double Recall’s demands will become tedious and intrusive, but it beats paying.

Envolve

James Tampin, Andrew Lee

“A customizable chat system for your website.”

Site visitors who can chat in real time with other visitors stay four times longer on average, according to Envolve. Web publishers can go to Envolve’s site to design a real-time chat widget with a customized color scheme and branding, then embed the widget in their sites with a couple of lines of Javascript. Since going into business a year ago, Envolve has served four million users and now handles 300,000 messages a day. Service starts out free, but involves a monthly subscription fee that goes up with the number of simultaneous chatters; Envolve says its largest customers are paying it thousands of dollars per month. “We are becoming the default way for businesses to add chat to their web or mobile offerings,” the company says.

My take: Reminds me of Meebo, but with more customizability and without the ads.

Interstate

Simon Fletcher, Greg Cooper

“Basecamp done right.”

Interstate takes the “product roadmap” metaphor to extremes. Arguing that project management tools should be beautiful, the company has built a tool that lets groups such as software development teams build attractive Web pages that show which projects (“routes”) and sub-projects (“roads”) have been proposed or begun, who owns them, and how close they are to completion. The maps can be shared internally or published for the world to see, as Virb and Interstate itself have done. Dailybooth, Seesmic, and Squarespace are also users.

My take: I agree that Basecamp is ugly—or rather, so minimalist that I don’t want to spend more time using it than I absolutely have to. But I’m skeptical about whether better project management tools are a venture-scale business—this seems like a case of Silicon Valley programmers solving a problem that only afflicts other Silicon Valley programmers.

Interviewstreet

Vivek Ravisankar, Hari Shankaran

“Helps companies find the best programmers.”

Silicon Valley is in the midst of a huge talent crunch—everyone wants to hire great programmers, and there simply aren’t enough to go around. Still, companies have to know that the people they’re hiring can actually code. Interviewstreet clients with open engineering positions can invite candidates to take programming challenges that demonstrate their skills. The system is already used by Dropbox, Airbnb, Justin.tv, Posterous, Scribd, and Bump (which are all YC alums), as well as Amazon, Zynga, and Facebook (which aren’t).

My take: See Interstate—this is another case of a Silicon Valley startup solving a problem that is virtually unique to Silicon Valley. But that doesn’t mean it’s not an important problem. Also, Interviewstreet is similar to CodeEval, a company at rival incubator I/O Ventures.

Kicksend

Pradeep Elankumaran, Brendan Lim

“The easiest way to send files to the people you know and care about.”

Kicksend’s premise is there’s no good option for personal file sharing on the Internet. E-mail systems like Gmail have attachment size limits that are too small; instant messaging systems are clunky and unreliable; cloud folder systems like Dropbox are difficult for non-technical users. The startup’s alternative: desktop, Web, and mobile apps that make sending files as simple as specifying the recipient’s e-mail address and dragging and dropping an icon into a window. Users can send up to 1 gigabyte free, and earn bonus bandwidth for completing challenges such as liking Kicksend on Facebook. After that, they can upgrade to “Kicksend Plus” for $8 per month. It’s the “only solution that solves all of the problems that non-technical consumers face, in a beautiful and simple way,” the company says.

My take: Promising; the Kicksend desktop apps are Apple-esque in their simplicity and elegance. But the service is too new to have many registered users, so to use it you’ll have to get your friends on board.

Launchpad Toys

Andy Russell, Thushan Amarashiriwardena

“The Lego of digital play.”

The three “toys” most requested by kids last Christmas, according to a Duracell survey, were the iPad, the iPhone, and the iPod touch. So much for Lincoln Logs. But Launchpad Toys thinks that digital toys can also be great tools for creativity. Its first product, a $1.99 iPad app called Toontastic, has already made it into Apple’s App Store Hall of Fame; it helps kids make animated cartoons by manipulating puppet-like characters and recording voices. But “we are just getting started,” the company says; it projects that mobile games will take a $15 billion chunk of the $80 billion toy market. “What mobile has done to GPS and point-and-shoot cameras, it is also going to do to creative play, and we are building the creative suite of toys that will take the lead,” the company says.

My take: Toontastic is nifty, and Launchpad has already solved the biggest problem in the mobile app world—getting noticed. But mobile games have a short shelf-life; the company will need to grow into a bona fide game studio if it intends to keep churning out hits.

MarketBrief

Jason Zucchetto, Chris Auer, Mike Shafrir

“Instant financial news.”

When a public company sneezes, it has to report it to the SEC. So jokes the MarketBrief team, which has devised a way to make the treasure trove of SEC documents—a collection that grows by 8.5 million pages a year—more accessible. The company’s software scans the SEC database for new filings on 4,000 public companies; grabs quarterly and annual reports, IPO filings, and other documents the moment they’re published; and transforms them into easy-to-understand news articles. It all happens in under a second, which means MarketBrief can scoop Bloomberg, Thomson Reuters, Dow Jones, and all the other usual suspects in financial news. The company plans to partner with news organizations and also sell the information to investment banks, law firms, and other interested parties.

My take: I want this. Xconomy likes to inform readers when local startups raise money, so I spend part of every weekday scanning and rewriting the information in Form Ds, the SEC disclosures that private companies must file when they sell equity.  I’d be elated to turn this part of my job over to software.

MixRank

Scott Milliken, Ilya Lichtenstein

“Helping advertisers spy on competitors.”

If Company X decides to test the content of their online display ads in the real world before settling on the most effective ad copy or design, as many companies do, then its competitor Company Y could theoretically watch, learn what’s working best, and copy it. MixRank is turning theory into practice. Its software watches display ads running on Google’s AdSense platform across 93,000 sites. “As an advertiser, you can know exactly what’s working in the marketplace, and use that data to make more money, take over traffic, and steal campaigns,” says MixRank co-founder Ilya Lichtenstein. More than 2,200 businesses, including some big ad agencies, are already using the tool, he says.

My take: Disturbingly devious, yet completely legal and, in retrospect, obvious. But if everyone is running around stealing data about each other’s campaigns, who will be left to actually test and run them?

MobileWorks

Anand Kulkarni, David Rolnitzky, Philipp Gutheim

“Better than Mechanical Turk.”

Amazon Mechanical Turk is the online crowdsourcing system that lets Amazon and its customers assign tasks such as speech recognition and image recognition that are too hard for computers to a pool of humans. It was revolutionary when it debuted, but Amazon has left a lot of room for improvement, according to the co-founders of MobileWorks. By imposing some “crowd curation” techniques such as analyzing users’ reputations and steering jobs away from users with high error rates, MobileWorks claims it can get higher accuracy rates on crowdsourced jobs. The company, which got its start as project for a technology-and-development course at UC Berkeley, is putting its platform to work in India and Pakistan, which have millions of highly educated but underemployed workers. Today’s Web companies have access to software, storage, and computation as a service, but they don’t have access to human intelligence, the company argues; “Mobile Works will be the place software goes to meet people.”

My take: Mechanical Turk is an amazing platform, but Amazon doesn’t have much incentive to improve it. It’s great to see a dedicated startup like MobileWorks rethinking the concept and applying it in the part of the world where it can do the most good.

MongoHQ

Jason McCay, Ben Wyrosdick

“A fast and powerful hosting platform for MongoDB.”

MongoDB, in case you’re not up to speed on the world of databases, is the most popular “noSQL” database these days among Web developers. It’s an open source, non-relational database that’s considered to be cloud-friendly since it can be distributed across many hosts. MongoHQ calls itself a “Database as a Service,” meaning it specializes in running instances of MongoDB on cloud-based servers on behalf of other companies, so that they don’t have to manage their own database software. It’s proving popular; the service is already home to 14,000 databases owned by companies like Gilt Groupe, Second Life, Snapjoy, Grubwithus, and Earbits, and the company says it’s already profitable.

My take: Destined for success—in other words, a lucrative acquisition by some larger SaaS company such as 10gen or Salesforce.com.

Now Continue to Part 2, including Opez, PageLever, Paperlinks, Parse, Picplum, Proxino, Quartzy, Science Exchange, Snapjoy, Stypi, Tagstand, Verbling, Vidyard, Vimessa, and ZigFu.

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

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