Who says consumer websites are dead? Maybe you don’t need the ridiculous traffic of, say, Seattle-based Cheezburger Network (LOLcats) to survive on advertising revenues. Maybe user-generated content around a targeted niche, especially where there are purchasing decisions being made, can work well after all.

That’s the sense I got after talking with Tom Seery, the founder and president of Seattle-based RealSelf. Launched in 2006, RealSelf.com provides information about cosmetic treatments in an online community format that includes user reviews, doctor listings, and expert advice from cosmetic surgeons, dentists, and dermatologists. The treatments in question—a multibillion dollar market worldwide—run the gamut from nose jobs and tummy tucks to orthodontic braces and breast implants.

RealSelf is particularly interesting because it sits at the intersection of a number of fast-growing (but also challenging) areas for startups—social and community review sites, health 2.0, and ad-supported media sites. The company has gained some traction, growing 150 percent year over year in Web traffic; it now gets more than 700,000 unique visitors per month, Seery says. In terms of local startups with a similar strategy for capturing niches of Internet content (but these are not competitors), I’d mention Avvo, TeachStreet, Raveable, Redfin, Urbanspoon, and Zillow.

Like most promising startups, the story of RealSelf began with some important personal and business observations. Seery was a longtime employee of Bellevue, WA-based Expedia (NASDAQ: EXPE), and he saw the competing startup TripAdvisor plug away at hotel reviews and other user-generated ratings until 2004, when IAC (which then owned Expedia) had to buy it. “That was the ‘aha,’” Seery says. He thought, “Where else can we take this empowerment of consumers?”

Around the same time, Seery’s wife was researching a laser cosmetic treatment, and was having a hard time finding trustworthy reviews. So he thought, “Let’s create TripAdvisor for the cosmetic space.” The key adjustment he made was to introduce medical experts to the user community. The challenge there, as with most e-health sites like WebMD and Revolution Health, is that doctors are …Next Page »

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Seattle-based Voyager Capital has participated in a $5 million investment in 1020, the San Francisco developer of Placecast, a location-based advertising and marketing platform, according to a report in TechCrunch. Quatrex Capital and Onset Ventures also participated in the Series B funding, which will be used to accelerate Placecast’s technology development. Placecast’s algorithms combine data across the Web, mobile, e-mail, and Wi-Fi to try to maximize relevance for advertisers and publishers. In an interview with Xconomy last year, Voyager co-founder Enrique Godreau mentioned 1020 as an example of an intriguingly mainstream mobile startup.

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Tom Huseby says he’s finally able to go home and not worry about seeing his family’s savings stuffed under his mattress. “The panic is over,” he says. “All of a sudden, things are getting a lot better. It doesn’t feel much better now, but it is.”

Huseby, a noted Seattle-based venture capitalist with SeaPoint Ventures, Oak Investment Partners, Hunt Ventures, and Voyager Capital (and the Godfather of what we’ve been calling the “Qpass mafia”), was giving his 30,000-foot view of the economic landscape and VC market at today’s Mobile Northwest 2009 conference in Seattle. He also drilled down into some of the most pressing challenges in the mobile space, as well as what the startup opportunities are. Just a few highlights here:

“Unemployment is going to slow growth across any consumer business. If you’re in mobile, I hate to tell you, but you’re in the consumer business. I do think there will be liquidity in mobile startups,” Huseby says. “Most startups are going to have to earn it the old-fashioned way, they’ll have to grow over a long time. You’re going to have to survive during a roller coaster ride. Every single company will have to go rushing to the bottom, and then do the slow, clanking ride to the top.”

In terms of startup opportunities, it helps to think in terms of what wireless carriers need. Huseby calls himself “fairly carrier-centric.” As he puts it, they are big customers that are predictable (once you understand them) and they generate huge amounts of cash. He laid out the top three challenges for carriers today—absolutely critical to understand if you’re an entrepreneur trying to get their attention with a new product.

—Bandwidth. There’s “tremendous pressure on carriers” to provide more bandwidth to support people’s exploding need for data connectivity wherever they go, Huseby says.

—Costs of bandwidth. “Oh my God, how are you going to pay for it?” he asks. With such a competitive market, Huseby thinks costs for consumers will actually go down. “I think they’re not going to get the money from us, they’re going to have to get it from advertising. Advertising revenue will absolutely help pay for the bandwidth.” (The problem is that mobile advertising revenue is still relatively small and doesn’t usually go to carriers.)

—Holding onto consumers. “If they’re going to pay for it with advertising, they need to get a much firmer grip on their customers,” Huseby says. He sees this as a crucial issue for the coming decade. “The next viral social network has to work hard to make [ad revenues] accrue to them. Carriers have to be very conscious of the demographics of their customers. They have to get their customers anchored in.”

After his talk, I had a chance to ask Huseby about some other areas of interest, like mobile search. He says he’s generally staying out of that space, but is looking at location-based services from the perspective of retail stores and local advertising.

We’ll have more from the conference soon, so watch this space.

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Bellevue, WA-based BigDoor Media, a developer of software that helps social entertainment sites make money, has rolled out a not-for-profit community website called VirtualCurrencyExperts.com. It is meant to be a resource for online publishers to learn about how to use virtual currencies and goods. The site, along with its first discussion point—a top 10 list of virtual currency bloggers—will be announced at the PubCon 2009 conference in Las Vegas this week.

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I was at the offices of uLocate, a Boston startup with a suite of location-aware information services for mobile phones, when I heard today’s news about Google’s $750 million acquisition of San Mateo, CA-based AdMob, which runs one of the largest mobile advertising networks. “It’s a very good thing,” commented Walt Doyle, uLocate’s CEO, who was clearly impressed by the figures involved. “It’s a very good thing that Google, or any company, is willing to pay close to a billion dollars for a company involved in mobile.”

And that’s the dominant message today from the mobile companies around Boston that I’ve reached about the AdMob deal. No one’s fretting (publicly, anyway) that a Google-AdMob combination will overrun the still-fragile market for mobile advertising, or that there’s one less exit path for other startups, now that Google has already bought itself a mobile ad network. Instead, the consensus in the company’s public statements is that Google’s move offers an important boost for the whole mobile media industry.

“We actually think it’s great for the industry, because it really shows the importance of the mobile advertising market, and how important it is for advertisers and publishers to have access to mobile specialists who know how to make the most of that medium,” says Lynn Tornabene, chief marketing officer at Waltham, MA-based Quattro Wireless. Quattra presents itself, of course, as one of these specialists—it works with major brands such as Ford, Netflix, Procter & Gamble, and Visa to get their ads into the most advantageous mobile venues.

“Google is a sophisticated company with deep resources, and yet they really saw the need to acquire a specialist to gain traction in the space,” Tornabene says. “So that really validates the business model of all the mobile ad networks.” (By the way, when it comes to Google, Tornabene knows what she’s talking about—she used to be head of communications for Google’s DoubleClick division.)

That word “validates” came up a lot today. “The announcement is causing tremendous excitement as it validates the enormous potential of mobile advertising,” says Paran Johar, chief marketing officer at Jumptap, a Cambridge, MA-based provider of targeted mobile ads. “We predicted consolidation in the industry and Admob’s broad high volume business model is highly synergistic for Google.”

The $750 million price tag—making Admob Google’s third largest purchase ever, after the $3.1 billion deal to buy DoubleClick and the $1.65 billion purchase of YouTube—surprised some observers today, including me. (AdMob had raised some $46 million in financing since its founding in 2006 from Silicon Valley venture firms Accel, DFJ Growth Fund, Northgate, and Sequoia Capital, which makes the Google acquisition an extremely lucrative exit by current venture standards.) The odd thing, to me, was that …Next Page »

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There must be some new force pulling West Coast tech CEOs to visit Boston. Last month, Microsoft CEO Steve Ballmer was in town; yesterday it was Google CEO Eric Schmidt.

To mark the unusual occasion, Google invited a raft of journalists to its offices in Cambridge for an open, on-the-record roundtable discussion with Schmidt. Google’s Cambridge site director Steve Vinter served as moderator. Many of the questions tossed Schmidt’s way focused on specific Google projects such as Chrome, Wave, and Android 2.0, and when they’ll evolve into major consumer-facing offerings. While some of that was interesting, I thought Schmidt’s comments on a few of the bigger strategy and policy questions revealed more about the company’s outlook on the world.

Below are some of the high points from the discussion—including Schmidt’s thoughts on strategies for economic recovery, why people fear Google, and what role the company may play in the survival of journalism.

Google is growing fast in Cambridge.

Vinter said Google’s Cambridge office, which handles a variety of projects from Google Friend Connect to Google Book Search, has passed the 200-employee mark and will be “hiring very aggressively” in the coming months. (That’s in stark contrast to Microsoft, which reduced its headcount yesterday by some 800 people, including some here in Cambridge.) “Virtually every project we have is scaling up,” Vinter said. Schmidt (who attended both Princeton and Berkeley) said Google was attracted to Cambridge in the first place because it “likes cities with extremely good technical universities.”

Many more people will be getting a look at Google Wave in the near future.

Up to now, Google has been carefully parsing out invitations to Google Wave, its experimental real-time e-mail/chat/collaboration/document sharing platform. Schmidt said the company is “getting ready for a broader distribution very soon—weeks, not months.” He said feedback on the software from early users has been positive, but the company has been slow to invite in more users for fear of outages. “So far the experiment has yielded a very innovative model and a lot of buzz, and now we want to see if it can scale,” he said.

Google has very big plans for the Chrome browser and its bigger cousin, Chrome OS.

Adoption of Google’s Chrome Web browser is progressing “very well,” Schmidt said. But for Google, Chrome is “more than a browser,” he said. “It’s a platform for powerful Web-based apps that you can’t really deliver in cloud computing without having a browser that can support cloud apps.” Making Chrome work fast, maintaining a clean separation between applications running in different tabs or windows, and supporting the new HTML 5 standard “are central to making the apps model work,” Schmidt said. “And Chrome’s success is a necessary precondition to the success of Chrome OS,” he said, since the one is derived from the other. “We have a lot riding on Chrome.”

The first public version of Chrome OS will be coming out by the end of 2009, Schmidt said. But the operating system won’t be a serious competitor for Windows, Mac OS, Linux, or other operating systems until …Next Page »

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I caught up yesterday with noted entrepreneur and investor Martin Tobias, after his latest startup, Seattle-based Kashless, announced a partnership with RecycleBank to reward people for recycling items at Kashless.org. The basic idea is a rewards program—redeemable for merchandise at hundreds of retailers—for people who give away things like old clothes, food, bikes, electronics, or other equipment online.

Since I last reported on Kashless last winter, the “recommerce” firm has rolled out its free online marketplace and community website in 122 cities around the U.S. The partnership with RecycleBank, a New York-based firm and fellow RRE Ventures portfolio company, should help Kashless acquire new members. Kashless currently has tens of thousands of members, while RecycleBank has hundreds of thousands. “They’ll promote their members to join Kashless,” Tobias says. “They’re rewarding people for separating their trash, and we’re rewarding people for extending the life of products they’re no longer using.”

Tobias says the deal puts his company “over the top” and should help convince more people to give away their stuff on Kashless.org instead of Craigslist, Freecycle, or Goodwill stores. “We’ve been working hard to make Kashless.org the best place for people to find and give away free things,” he says. The rewards program “adds to the things we’ve already been doing, like driving directions [to available items] and tax deductions. It further differentiates us and makes it more valuable to give things away through us.”

Kashless is now staffed by five full-time employees and a couple of contractors. That’s down from about a dozen earlier this year, during the bulk of the company’s product development work. Tobias says there are more than 500,000 active listings on the website.

The company’s revenue model is a combination of advertising on the consumer site and licensing of the software platform to brands and communities that want to boost their recycling. The latter “private label” portion of the business makes up the majority of Kashless’s revenues, Tobias says.

I asked Tobias for the weirdest thing anyone has given away on the site. He named a couple items off the top of his head: a live monkey in a cage, and a tugboat up on blocks in someone’s yard. “An interesting thing for us is that everything posted on Kashless has been taken by somebody,” he says.

Tobias then remembered that he had once advertised a broken urinal from his old house. (I didn’t ask.) “Some guy said, ‘I’ve been looking for that.’ He thought he could fix it.”

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AudienceScience, the Bellevue, WA-based company that helps advertisers connect with targeted audiences online, has pulled in about $4 million in new equity financing as part of a total deal worth $15.1 million, according to a regulatory filing.

The new cash infusion is actually only one component of the transaction, which includes $10.8 million worth of debt issued last year that’s now been converted into preferred stock. The total value of the deal is $15.1 million, with potential to go as high as $20 million, according to the filing. The document doesn’t say who invested in the company, but Mayfield Fund, Mohr Davidow Ventures, Integral Capital Partners, and Meritech Capital Partners are listed on the company’s website as investors. A spokesperson for the company didn’t immediately respond to a request for comment.

AudienceScience, formerly known as Revenue Science, says on its website that it was started in 2000 and now serves more targeted online ads worldwide than any other company. The company’s technology works by monitoring the sites people visit, the articles they read, and the searches they run, to form a picture of their interests, according to the company’s website. The data is not personally identifiable, the company says, but it is stored in massive data warehouses and segmented for online advertising. The company says it records “billions of behavioral events daily” and reaches more than 385 million unique visitors on the web. AudienceScience counts the Financial Times, New York Times Digital, Reuters.com, and the Wall Street Journal Digital as clients.

According to the regulatory filing, the directors of AudienceScience include John Cunningham of Clear Fir Partners; Yogen Dalal of Mayfield Fund; Bill Ericson of Mohr Davidow Ventures; Bill Gossman of Hi5; Rob Ward of Meritech; Rishad Tobaccowala of Denuo; and AudienceScience’s CEO, Jeff Hirsch.

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Despite the fact that “Google it” is now synonymous with “look it up,” Google itself isn’t a primary reference source. It merely aggregates facts and claims from everywhere else. If you wanted to create a genuinely new reference work on the scale of a dictionary or an encyclopedia—even if it lived online—you’d still have to do it the old-fashioned way: by hiring lots of people to do lots of research, writing, and fact-checking.

And that’s exactly what Book of Odds, a startup in downtown Boston, has done. After a remarkable three years in deep-stealth mode, the company is going public today with its website, a compendium of hundreds of thousands of fascinating factoids about the statistics of everyday life, collected and collated by scores of university students from around Boston. Ever wondered what fraction of workplace deaths are caused by flying objects? It’s roughly 1 in 96. And as it happens, 1 in 96 is also the chance that a white woman between 65 and 84 will die of cardiovascular disease in a given year, and the odds that a U.S. male aged 16 or older works in the legal profession.

Amram Shapiro, Book of Odds’ founder and president, talked about the company’s plans for its storehouse of statistics for the first time on September 29 at the Web Innovators Group meeting in Cambridge, MA. His presentation won the audience favorite award, beating out social networking site Epernicus and socially networked customer relationship management portal Batchbook. The official launch party for the free, advertising-supported, privately funded website will be held tomorrow at—where else?—the Boston Museum of Science.

Book of Odds is, it must be said, a profoundly odd site. In an era of mindless, automated search engines, it’s an authoritative, highly curated guide to primary data. On an Internet full of YouTube videos and computer-generated virtual worlds, it’s stodgily text-based. In a world where the conventional wisdom says that people can’t cope with math, it’s obsessed with probabilities. It was originally going to be an actual book—but Shapiro says he changed course after an editor from Oxford University Press, publisher of the venerable Oxford English Dictionary, advised against old-fashioned paper. (”He said ‘If we were publishing the OED today it would go straight to the Web,’” Shapiro explains.)

If you’ve ever seen the Harper’s Index feature of Harper’s Magazine, you’ll be familiar with the curiosity-piquing quantities that predominate at Book of Odds. The core of the site—its equivalent of dictionary entries—are the “odds statements.” For example: “The odds a golfer will be injured while playing golf in a year are 1 in 644 (US, 2006).” Unexpectedly, that’s higher than the odds of being injured while mountain biking, which are only 1 in 839 per year, according to the site.

Each odds statement includes the specific geography and time span to which it pertains, as well as full attribution. The golf-accident data, for example, is from the National Safety Council, whose staff must keep very busy documenting the myriad hazards of everyday life. In fact, there’s a whole section of Book of Odds devoted to Accidents & Death, along with sections on Health & Illness, Daily Life & Activities, and Relationships & Society.

The site is a veritable treasure trove for worry-warts, pessimists, cynics, and paranoiacs. To wit: “The odds Massachusetts will suffer an earthquake with a magnitude of at least 6.0 in a year are …Next Page »

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Seattle-based Pet Holdings, owners of I Can Has Cheezburger and other humor websites, has formed a partnership with Dogster, a San Francisco-based social networking site, whereby Dogster will sell ads for Pet Holdings’ animal-related sites. The news was reported by TechCrunch, which also notes that the Cheezburger network will hit one billion page views this week. Financial details weren’t given, but TechFlash reports it’s the first deal Pet Holdings has done with a premium ad network in a very specific niche. The deal makes sense, as Dogster will benefit from Pet Holdings’ greater traffic, and Pet Holdings will benefit from Dogster’s ad monetization expertise.

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The last official week of summer brought a slew of Northwest deals, to go along with today’s heat wave. Two of the year’s biggest financings happened in tech and life sciences, along with a big acquisition in healthcare, while a host of smaller deals went down in software, digital media, and advertising—and one company inched closer to an IPO.

—Seattle-based Integrative Diagnostics, Leroy Hood’s early cancer detection company, has raised $7.5 million out of a $30 million equity round, as Luke reported. The investors were not disclosed, but we’ll have more on this story soon.

—Seattle-based Free & Clear, which offers phone-based coaching for company employees battling tobacco addiction, obesity, and stress, was acquired by Inverness Medical Innovations (NYSE: IMA) of Waltham, MA, for $100 million in cash plus up to $30 million in follow-on payments, as Wade reported. Free & Clear was backed by Polaris Venture Partners, Three Arch Partners, and Kaiser Permanente Ventures. Inverness offers medical diagnostic tests and other disease management services for consumers.

—Portland, OR-based Ensequence raised $20 million, led by Clay Mathile, the CEO of CYMI Technologies (and former owner of Iams, the pet food company sold to Proctor & Gamble for $2.3 billion in 1999). It’s one of the Northwest’s largest tech financings of the year. Ensequence was founded in 2000 and is a leader in the interactive TV business, which lets viewers do things like call up additional information on the screen. There is some question as to whether the firm is moving its headquarters to New York, where its new CEO, Peter Low, is based.

—In the biggest life sciences venture financing of the year, Seattle-based Calypso Medical raised $50 million led by Skyline Ventures and Frazier Healthcare Ventures, with Bay City Capital and InterWest Partners also participating, as Luke reported. The funds will be used to expand Calypso’s worldwide rollout of its radiation pinpointing product, which helps radiation oncologists and technicians better treat prostate cancer. Luke also reported on the story behind the deal here.

—Seattle-based Getty Images, the creator and distributor of photos and other digital media, has made a $4 million strategic investment in Daylife, a New York media and content services company, according to the Wall Street Journal’s All Things Digital blog. The two companies have also formed …Next Page »

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A small Seattle-area company is blazing a trail in the crowded field of mobile marketing. Kirkland, WA-based HipCricket, a company founded in 2004 to do mobile marketing for brands and media companies, has been growing its revenue significantly from quarter to quarter and aims to be profitable for the first time by the end of this year.

It’s a big step for HipCricket, which has been diligently chirping away in a nascent but noisy industry. Mobile marketing essentially just means advertising via mobile devices. The sector has gained in popularity since the rise of text messaging, particularly in Europe and Asia. But marketing firms, at least in the U.S., have largely struggled to make much money in mobile. So HipCricket makes for a compelling case study in how to deliver the goods for big brands—all while helping create a new industry.

On Friday, I spoke with Ivan Braiker, HipCricket’s co-founder and chief executive, after his talk at a Northwest Entrepreneur Network venture breakfast. Braiker previously co-founded Satellite Music Network, the first radio network to distribute live, 24-hour satellite programming. He has extensive experience in building radio networks and in the broadcasting industry.

Things at HipCricket have been very busy, he says. “Even in the down economy, the activity level has been incredible,” Braiker says. “Mobile is getting to be better understood on the brand level.” He didn’t disclose any specific sales numbers.

The company was self-funded in its early days, followed by a friends and family round, and then a round of outside investment. HipCricket went public on London’s Alternative Investment Market in November 2007, only to be de-listed this summer after the markets crashed. The firm, which is now privately held, is backed by some prominent investors, including Joe Schocken from Seattle-based Broadmark Capital.

One of its key advantages is its deep relationships in broadcasting. HipCricket’s customers include some 300 local and national radio and TV stations, including KZOK, KUBE, and KOMO-TV in Seattle, and KIIS-FM in Los Angeles. The company also does marketing for about 50 brands, including Arby’s, Macy’s, Coca-Cola, Rite Aid Pharmacy, and Harley-Davidson. “It’s all about creating engaged communities,” Braiker says.

The technology is important too. HipCricket’s software and services, for which it charges a subscription fee, lets broadcasters and brands track response rates to ads based on keywords, type of media, or time of day—all in real-time. Braiker says this is a key differentiator for his business. “There’s a new vendor every day that gets into this. But they don’t understand the millions of dollars of software we have that parses data and comes up with sophisticated analytics,” he says.

HipCricket, which has just shy of 60 employees (it has added nine so far this year), now seems to be growing steadily. Earlier this year, the company expanded to Mexico and is seeing a fair bit of growth in the Latino advertising community. In the next few months, Braiker says, HipCricket will be pursuing some “new, unique things” in the mobile space, including “mobile coupons integrated with point of sale,” a mobile billing service that bypasses wireless carriers, and other e-commerce applications. “We see HipCricket as a full-service mobile marketing company,” he says.

Asked for his advice to entrepreneurs in the sector, Braiker says, “Understand you’re going to need endless energy. You have to clearly see your vision, you have to understand that vision, and never stop evangelizing. If you believe you’re right, you have to stay with it.” He adds that the most important factor in success is, in a word, “tenaciousness.”

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From architecture to kids’ videos to online animated ads, Ksenia Oustiougova’s path to founder of Seattle online ad company Lilipip has been unusual. To start, the company was funded not by investors, but on credit cards. The good news: after shutting down the kids’ video version of Lilipip and retooling to its current incarnation, Oustiougova is now paying down the debt.

Oustiougova said Lilipip’s change of focus in the summer of 2008—from children’s videos to online marketing ads—had a straightforward motivation. “We ran out of money. It was as simple as that,” she said. “Either reinvent or close down. And I’m not a quitter by nature.”

Now, together with more than 150 independent creative contractors around the world and a director of business development, Oustiougova makes one-minute animated videos for small businesses. Her team currently works on about four projects at once, she said, but they hope to get up to their capacity of 20 at a time eventually. Oustiougova and the director of business development are not yet salaried, taking a cut of the proceeds from each project, but Lilipip is bringing on four project managers as Lilipip’s first employees in the next six to 12 months. Now starting to pay off her credit card debt, Oustiougova has no plans to look for outside investment.

Asked why fundraising isn’t part of the plan, Oustiougova gave several reasons, among them: “The entire process takes months, and it takes away focus from sales; second, suddenly you have someone looking over your shoulder telling you what to do—we are breaking a lot of conventional rules, and I want to build a company where people don’t feel like they work, but feel like they play.” She added, “I am not interested in growing huge. I want to build an excellent business, and we won’t be necessarily big. But investors want a certain return at a certain time that might force us to do things faster…Some things just take time to get very good, like good wine—you can’t speed it up.”

Lilipip’s animations are mostly used online, Oustiougova said, on businesses’ websites, Facebook, YouTube, or other social marketing sites. She has also seen them played on TVs at trade shows, or used in presentations to clients or shareholders. Lilipip will encode the videos into any format its clients need for free. Many small businesses like having their ads available on their cell phones to share on the go, she said.

“This is really a tool to tell their story in a uniform way through all the new social media channels,” Oustiougova said.

Oustiougova’s first entrepreneurial steps came when, after leaving a career as an architect, she began making PowerPoint presentations for her son to teach him to read in English and Russian (her native language). Her friends soon started requesting custom videos for their kids, and …Next Page »

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[Updated Aug 27, 11pm PT, with clarification about the list marketing and lead-gen process (see below)]

A stealthy Seattle startup in online marketing is starting to generate some buzz around town. Marketfish, which recently moved into new offices in Pioneer Square, has raised an undisclosed sum from private investors, led by Seattle-based Alliance of Angels and including Bellevue, WA-based Atlas Accelerator. Now it is aggressively putting the money to work, scoring a lot of new customers and hiring staff as it gears up for a beta launch of its Web service early next month.

Marketfish is led by founder and CEO Dave Scott, who was previously chief marketing officer at Seattle-based Entellium, the company that imploded last year in an accounting scandal (which was blamed on executives who were above Scott’s pay grade). Before that, Scott was head of marketing at Intermec and PeopleSoft. In his first media interview about Marketfish, he declined to say how much funding the startup has received, but said, “We think we’ve raised enough to get to break-even.”

Scott founded the company in July of last year. He initially tried to raise money in October, but was unsuccessful. “I liquidated my 401(k), sold my car, and buckled down for six to nine months,” he says.

Here’s the problem Marketfish is solving. Say you’re a big company like Dell, and you want to market yourself to small business owners. Today, as the head of marketing, you’d go out and rent a list of potential customers from Forbes, Fortune, or Inc., say, and get a list broker to represent you. They call all the list managers, at firms like Worldata or InfoUSA, and negotiate a deal. It’s all part of list marketing—using a third-party permission-based list to launch lead-generation campaigns. “The process today is extremely painful,” Scott says. “It’s really hard to measure, and it’s all manual.” He adds that the whole process can take something like 24 days, and is done over the phone. [See Scott's clarification of the process in comments section below---Eds.]

Marketfish is trying to automate all that by creating a Web platform, similar to Google AdWords, that could potentially cut the time down from 24 days to 30 minutes—and make it much easier to measure the performance of an ad campaign. It does this by providing a patent-pending Web interface where marketing agencies can work directly with list owners. “We’re trying to create a marketplace,” Scott says. “We want to create trust between the two.”

Using the Marketfish site, a marketer can directly find the lists he or she wants online, add them to a shopping cart, and be done with it. Marketfish takes a percentage cut of the revenue from each transaction (which Scott didn’t disclose). Scott says the company already has 30 customers—with 20 more on the waiting list—including 19 of the top 20 marketing agencies in the Seattle area.

Previous companies like NextMark and min (Marketing Information Network) tried various approaches in the pre-Google days, Scott says, but they largely failed to solve the list marketing problem. “They wanted to play nice with all the middlemen. We’re going to cut them out,” he says. “It’s a bold strategy.”

The company has some heavy hitters on its board of advisors, including Clark Kokich, chairman of Seattle-based Razorfish (recently sold to Publicis), startup advisor Janis Machala of UW TechTransfer, and Mike Crill of Atlas Accelerator. Scott says Marketfish is looking to form a partnership with a big company like Google, Microsoft, or Yahoo—none of which has developed a platform to solve this particular online marketing problem (at least not yet).

Scott says Marketfish currently has seven employees, and is looking to hire five more in the next six months or so—everyone from Java software developers to experts in direct marketing and lead-generation marketing. Even while planning to ramp up spending, he notes, “We’re on our path to break-even.”

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Seattle-based Zooppa and Fisher Communications (NASDAQ: FSCI) announced today they have teamed up to host a user-generated video competition for Seattle-area neighborhoods. Community members will submit short videos to Zooppa.com, a user-generated advertising site, and Zooppa will post the videos on KOMO’s new network of 43 neighborhood websites.

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It’s not often in the startup world that you get to build the same company twice, with better technology the second time around. But that’s the basic story behind Extreme Reach, a Needham, MA, company that launched this January with a vision of helping video advertisers and their agencies distribute their ads to cable networks, TV stations, and Web publishers.

The principals at Extreme Reach—CEO John Roland, chief operating officer Tim Conley, chief technology officer Dan Brackett, and vice president of sales Patrick Hanavan—all worked together at FastChannel Network for seven years, until they sold the company to Irving, TX-based DG Systems in 2006. FastChannel helped to pioneer the digital video advertising distribution business, and made $30 million a year at it, Roland told me last week. But at the time, the task required 200 employees, a $15 million centralized data center, and dedicated video servers at 1,200 cable and TV stations across the country.

Extreme Reach, by contrast, has 17 employees and no data center—it stores and serves video ads using cloud-based storage and processing at Amazon and Nirvanix. The startup’s 10,000 clients don’t need any specialized hardware, either.

Roland says when he and his group of fellow FastChannel alums saw what was becoming possible thanks to cloud computing technology and declining bandwidth costs, they couldn’t resist the temptation to build FastChannel over again—but to “completely change the model of how we do it.” They knew they’d be up against their old company, which is now known as DG FastChannel, but Roland says they felt they’d have the advantage, since DG now relies on a satellite-based distribution system and dedicated hardware.

Extreme Reach’s cloud strategy puts it “two generations ahead” technologically, Roland says. Thanks to Amazon and Nirvanix, “I’m able to expand to massive amounts of bandwidth and storage whenever the business demands, and if I don’t have the volume I can go down—so I don’t have any cap-ex [capital expenditure] requirements,” he boasts. “It’s a 100 percent software model, and I can do it for about 20 percent of the cost of …Next Page »

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FLO TV, San Diego-based Qualcomm’s (NASDAQ: QCOM) satellite-based mobile TV service and Portland, OR-based Rentrak Corp. (NASDAQ: RENT) say they are collaborating on a system that will provide comprehensive data on mobile TV viewership and advertising. Using Rentrak’s TV Essentials media measurement system, the partners plan to deliver reports to provide a basis for setting advertising rates on FLO TV and insights into audience viewing patters without “divulging any individual subscriber’s personal information.”

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Investor Jeff Schrock calls Seattle-based EVO Media a “ramen profitable” startup. Co-founder and CEO Geoff Nuval calls it “roast beef sandwich” profitable. Two guys, two spellings of the same first name, two different food analogies. But the message is clear: these guys are hungry.

Call it what you want, EVO Media is turning a profit some six months after launching DevHub—a free Web publishing platform that helps companies and individuals manage and monetize niche websites—and after going through a strategic downsizing. The company, founded in late 2007, had raised money from Monster Venture Partners and prominent angel investors including Alex Algard, John Cunningham, and Geoff Entress.

But early this year, EVO realized it would not be able to raise a favorable round of venture funding. So what did it do? Focused on getting revenue. Schrock, a tech entrepreneur-turned-executive-turned-investor (he co-founded Seattle-based Activate before his time at Yahoo, RealNetworks, Monster Venture Partners, and now Intel Capital), has overseen the company through this formative period as its chairman. (See more on DevHub in this TechFlash piece.)

The story goes back to the fall of 2007, when Nuval, a Stanford grad, moved to Seattle from Silicon Valley, where he had worked at Lehman Brothers Venture Partners, doing mobile and Internet investments. He had been introduced to fellow EVO co-founders Daniel Lee Rust (a tech expert) and Mark Michael (a sales expert) through his assistant at Lehman, a childhood friend of theirs. Rust and Michael were running a Web development shop for startups, but together with Nuval, they conspired to make a Web platform for themselves—one that customers could use to create sites. “The chemistry was awesome, the idea was compelling enough,” Nuval says. “I threw as much stuff as I could into my SUV and drove up here.”

Schrock met the team in early 2008, and was duly impressed. “One of the investment themes of Monster Venture Partners was capital-efficient development of technology businesses,” he says. “The founders here, they had a lot of the attributes I really admire and look for in startups. They were young, aggressive, intelligent, hard-working, and they had this set of tools and a balanced skill set. They figured out a way to turn blank domains into real working websites.”

It was a way to lower the cost of creating websites and content, Schrock says. WordPress had done something similar for blogs, but there was still no built-in way to make money from those sites. So Nuval and his team focused on tools for building and managing commercial sites. They raised …Next Page »

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The big news of the week was Microsoft’s sale of Razorfish to Publicis (see directly below), but there were a few other important deals in software, biotech, and energy.

—Microsoft’s online advertising subsidiary, Seattle-based Razorfish, was bought by French marketing firm Publicis for approximately $530 million, as Bob reported. The payment is expected to include cash and Publicis Groupe treasury shares. In addition, Microsoft and Publicis have entered into a five-year strategic alliance whereby Publicis clients can purchase display and search advertising from Microsoft on favorable terms. Microsoft (NASDAQ: MSFT) originally acquired Razorfish in its 2007 purchase of aQuantive.

—Bellevue, WA-based Confirma, a medical imaging software firm, has been acquired by Merge Healthcare, a Milwaukee, WI-based health IT provider, for about $22 million, as Eric reported. Merge will incorporate Confirma’s MRI software into its IT offerings for doctors.

—Vancouver, BC-based Tekmira (TSX: TKM) formed a two-year partnership with Cambridge, MA-based Alnylam Pharmaceuticals to develop new particles to deliver RNA-interference drugs to diseased cells deep in the body, as Ryan reported. Financial terms of the deal weren’t given. Alnylam is funding the research effort and has exclusive rights to new discoveries, while Tekmira can use the discoveries for some of its own RNAi treatment programs.

—Seattle-based EnerG2 won $21.3 million in federal stimulus funding from the U.S. Department of Energy to build a new manufacturing plant in Albany, OR. The University of Washington energy-storage spinout is developing nano-scale materials to make better ultracapacitors for electric and hybrid vehicles and other applications.

—A few more terms of the Microsoft-Yahoo search deal, in which Yahoo will use Bing as its search engine and will control ad sales for five years, were spelled out in a filing with the SEC. Microsoft (NASDAQ: MSFT) will pay Yahoo $50 million a year for three years to cover transition and implementation costs. It will also hire 400 Yahoo employees, plus another 150 to assist with the transition. Yahoo (NASDAQ: YHOO) can opt out of the deal if it isn’t approved within a year, or if Microsoft and Yahoo’s combined share of the search market dips below an undisclosed percentage.

—Seattle-based Oncothyreon (NASDAQ: ONTY), a developer of cancer drugs, raised $15 million by securing commitments from investors to buy new shares and warrants, as Luke reported. Last week, the company said a small group of lung cancer patients showed long-lasting responses after taking Stimuvax, the immune-boosting vaccine therapy Oncothyreon is co-developing with Germany-based Merck KGaA.

—Seattle-based WatchGuard Technologies, a network security company, acquired Toronto-based BorderWare Technologies, an e-mail and Web security firm, as Eric reported. Financial terms were not given. WatchGuard plans to use BorderWare’s technology to make its security software more comprehensive and competitive.

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Microsoft’s online advertising agency Razorfish has been sold to French advertising company Publicis Groupe for approximately $530 million, the French concern announced today, confirming last week’s reports that it was bidding on Razorfish. The sale had been reported before the confirmation by the Wall Street Journal and PaidContent, and perhaps by others. Publicis said in its announcement that the payment is expected to involve cash and Publicis Groupe treasury shares.

In addition, Microsoft and Publicis announced a five-year strategic alliance agreement through which Publicis clients can purchase display and search advertising from Microsoft “on favorable terms, in exchange for certain minimum guaranteed aggregate purchase levels,” according to the announcement. “The agreement also provides that Razorfish will continue to be a preferred provider to Microsoft for digital strategy, creative and experiential marketing services, and contains a commitment by Microsoft to spend a minimum amount for those services each year during the term of the agreement,” the statement said.

TechFlash quotes an e-mail from Microsoft spokesperson Lou Gellos as saying there are “no plans to displace any Razorfish workers in the Seattle region or elsewhere as a result of this agreement.”

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