Mark Underhill says he was doing Web design and applications development for Clear Channel Communications when the San Antonio, TX-based media company announced plans to sell 448 of its 1,150 radio stations, along with its 42-station TV group. That was in November 2006.

Underhill, who had initially been hired in San Diego six or seven years earlier to run 11 Clear Channel websites, says he remembers thinking at the time, “I’ve learned so much doing this. But I could do better than this. I could build a better mousetrap.”

The following year (just a few months after Clear Channel completed its $1.5 billion sale), Underhill and his longtime friend Claudio Canive started Platformic, a San Diego startup that enables customers to create and manage their own websites. The company, which acquired its first customer by the end of 2007, has targeted the broadcast industry and now counts Comcast, the Tribune Co., and Fox Broadcasting among its biggest customers.

Platformic-based Web design

Platformic’s software-as-a-service model provides simple point-and-click tools that do not require users to learn Adobe’s Dreamweaver Web design software or to write computer code. The company says its hosted system enable customers to “come up with any look and feel” for their own websites by empowering people who know what a website should look like, but who don’t necessarily know how to create it. Websites using Platformic’s technology include Los Angeles TV station KTLA and San Francisco’s AM sports radio station KNBR and its San Mateo sister station, KTCT. Last week, Platformic helped launch 12 Fox regional sports websites throughout the country.

Platformic’s roughly 200 customers also include what Underhill describes as small “mom and pop” businesses operating …Next Page »

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KESDEE calls itself world’s largest eLearning company for money managers. The San Diego company provides state-of-the-art financial education and training for professionals, and it is taking its digital headstart to new levels.

KESDEE plans to move its courses to mLearning—as in mobile learning—which means its 700 accredited eLearning courses on such topics as banking, insurance, and risk management will become available on cell phones. The company is researching and developing this transition to small screens—it’s both a challenge and a great opportunity for the global startup, as the Internet becomes increasingly mobile and hundreds of millions of people will access the Internet only with their mobile devices. “It’s difficult to do, but we want to move fast. We want to become a dominant niche player in this market. We want to be Nike, not Wal-Mart,” says CEO Swarna Jessica Srinivas, a 26-year-old Harvard graduate who uses “Go for the Moon” as her personal motto.

Swarna Srinivas

The company’s all-digital financial courses are fun in a way that few have seen in education. There’s interactive simulations, engaging graphics, and quizzes preparing for real-life situations—even in topics like Anti-Money Laundering or Trading Operation Controls or Asset Liability Management. “We provide eLearning, not eReading. We think eLearning is done by individual choice and so must keep the student interested in the topic,” says Srinivas.

KESDEE is an acronym for Knowledge, Economy, Skills, Development, eLearning, Excellence. It’s an energetic and disciplined company that provides 2,100 hours of e-courses for financial industry professionals. KESDEE went to the Internet right from the start in 2001, when their eLearning platform was developed. “We are purely digital, no bricks and mortar. We want to be in the heart of cyberbusiness, and our advantage is in web-based delivery. Our dream is to see ‘KESDEE Inside’ in all eLearning, just as there was ‘Intel Inside’ earlier in PCs,” says Srinivas.

The company was founded and is completely self-funded from the asset and liability management training programs of chairman S.L. “Sam” Srinivasulu, Srinivas’ father, who has doctorate in financial risk management from the University of Michigan. He prefers to stay in the background and calls himself retired. Daughter Sarwan Srinivas runs the company. She started to promote its services to Spain and Portugal when she was 19 years old.

In addition to its San Diego headquarters, KESDEE currently has a 70-person development center in Bangalore, India, and an office in Mexico City with 25 employees who translate materials into Spanish and localize them. The company is planning to establish customer support centers in China, Vietnam, Brazil, and other countries. “This year’s most significant challenges are scaling up, scaling up, and scaling up,” according to Srinivas.

KESDEE differs from its eLearning competitors like Skillsoft with an all-digital, web-based approach and by focusing only on financial courses. KESDEE customizes and tailors content for various corporate clients, and even allows clients to brand its courses as their own (just as long they remember that small ‘KESDEE Inside’ thing.) The three largest customers are the Federal Reserve Board, Citigroup, and Standard Chartered Bank. Others include PriceWaterhouseCoopers, IBM, and many major international banks. KESDEE uses blue chip clients as an ad for their next prospect and concentrates on producing educational content—they call this their disruptive business strategy and disruptive technology.

The courses are also available for individuals. An accredited risk-management course costs $400.

Beyond that, Srinivasulu is not keen to provide much financial information about KESDEE itself. He says KESDEE is profitable. Thousands of professionals have taken their courses, but only the company knows how many licenses it has sold.

How has the economic crisis affected KESDEE? Characteristically, CEO Srinivas says it’s both a tough time and an opportunity. “Many businesses have realized that they don’t need their own financial-education department. On the other hand, many institutions are cutting down spending, too.”

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Taking a cue from the success of Apple’s App Store, San Diego wireless giant Qualcomm (NASDAQ: QCOM) said today it is opening its own suite of mobile software solutions and expanding its online retail site for mobile subscribers.

Qualcomm says its Plaza Retail, rather than targeting a single platform, gives online publishers and developers the ability to provide mobile applications and content for a variety of platforms. Beyond Qualcomm’s Brew, which maintained strict control of its applications, Retail Plaza will support apps written for Java, Flash, and BlackBerry operating systems. Retail Plaza also plans to support Android, Windows Mobile, Palm’s webOS, Symbian, and LiMo Linux.

Qualcomm says its approach offers a wider range of distribution channels and new opportunities for its Brew community as well as new customers.

In a statement, Arvin Chander, vice president and general manager of Plaza Retail says, “Success in this market will be dictated by delivering mobile retail experiences across multiple platforms and networks, backed by a healthy ecosystem of publishers with an automated, transparent supply chain.”

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There was a lot of discussion about the top trends in energy, biotech, and computing at last week’s technology summit in Seattle hosted by OVP Venture Partners. The afternoon breakout session on information technology, attended by a few dozen IT leaders, focused on the theme of “big data.” This was all about the opportunities and challenges faced by companies, research organizations, and IT departments who need to handle very large amounts of complex data, or sell software and services to do the same.

OVP managing director Mark Ashida kicked things off by talking about how managing data in the Internet cloud fits into OVP’s investment themes. “It has become much easier to link data together at a higher level, and get higher value,” Ashida said. “We’re very excited because big data and biology are converging. Lots of startups are dealing with huge amounts of data.” (By “huge amounts,” think terabytes of data per day, which is roughly the amount of information in a human genome.)

A lively panel discussion ensued, with presentations from a half-dozen tech companies from around the country that are trying to solve different parts of this problem. The list of firms—most of which are not in OVP’s investment portfolio—included Specific Media, Complete Genomics, Cloudera, Vertica Systems, and Aster Data Systems.

Then it was the godfather of cloud services’ turn to speak. Werner Vogels, Amazon’s chief technology officer, gave an overview of where the industry is headed, and what kinds of new problems will be solved. Vogels came to Amazon in 2004 after 10 years as a research scientist in the field of distributed computing at Cornell University, and has led Amazon’s considerable efforts in Web services, among other things.

Vogels first defined “cloud computing” as he sees it—a term that didn’t exist when his company launched Amazon Web Services in 2006. “There is a definition I actually like: cloud computing is a style of computing where you have massively scalable IT-related capabilities that are available as a service, over the Internet, to multiple customers.” He added that the storage and computing resources also …Next Page »

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San Diego-based ID Analytics is launching a free online test that measures the vulnerability of individual consumers to identity theft.  The test, called My ID Score, makes use of the same huge database and analytical software technology that ID Analytics uses to rank the probability that credit card purchases and other transactions are authentic.

The free online service, which the company is announcing today, enables a consumer to quickly get a ranking of just how exposed he or she may be to identity theft. “You can immediately assess the risk of someone else posing as you,” says ID Analytics Chief Marketing Officer Larry McIntosh. My ID Score is the first public test to use the company’s state-of-the-art technology created to prevent a fraudster from usurping someone else’s personal information and credit to make fraudulent purchases.

My ID Score is a three-digit number, a statistical score, between 1 and 999. The higher the number you get, the bigger the risk of becoming a victim of identity theft. Behind the calculation is the company’s network of billions of identity elements. Only approximately two percent of Americans belong to the moderate risk group, but ID theft is nevertheless a great concern. According to a recent survey, the thought of someone stealing their Social Security Number (SSN) concerns people more than getting their laptop or wallet stolen.

Anyone with SSN and credit history can get a My ID Score from the web page. It’s like an online credit application where you need to insert your name, addresses, date of birth and SSN. The network knows if a fraudulent credit card application or consumer transaction is linked to your personal information. My ID Score recognizes you after few additional questions and gives you a score. Since I’m a citizen of Finland without a U.S. credit history, I used my Xconomy colleague Bruce Bigelow as a guinea pig. He scored 52, which means low-risk.

For someone who receives a high-risk score, the website may recommend contacting the San Diego-based Identity Theft Resource Center, a nonprofit organization that provides assistance to victims of identity theft. The center can help consumers take such steps as freezing their credit cards.

ID Analytics’ McIntosh says the test is not intended to replace other necessary security measures that consumers should be doing, such as monitoring their bank accounts and regularly reviewing their credit reports. Still, he expects the site will reveal many identity thefts. “We want to help consumers help themselves. The victims of identity theft will benefit, and it will benefit our client organizations, too,” he says.

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We saw several San Diego innovators making waves last week. Bridgepoint Education defied the recession by going public, Sapphire Energy upped its production estimates due to a technological breakthrough, and a wave war erupted among San Diego’s wave makers. So this is how things looked during the week:

—San Diego’s Bridgepoint Education (NYSE: BPI) priced its initial public offering at $10.50 per share, which netted the online education provider $142 million. Bridgepoint had indicated earlier it hoped to raise as much as $216 million. Bridgepoint’s biggest investor is Warburg Pincus, but the National Venture Capital Association still says Bridgepoint is the first venture-backed IPO of the year.

—San Diego’s Sapphire Energy, which is building a production facility for its algae-to-biofuel technology near Las Cruces, NM, doubled its production estimates for 2011. Sapphire now says it will produce a million gallons of “green crude” in two years, and a billion gallons by 2025. The startup company backed by Bill Gates’ Cascade Investment has participated in successful test flights in recent months that substituted jet fuel made from Sapphire’s “green crude” for conventional jet fuel.

—Philanthropist Gary West told me the West Wireless Health Institute will be fully operational this summer in San Diego’s Torrey Pines Mesa. West, who is the founding chairman, says the institute will be “a catalyst for wireless health” as remote monitoring of vital signs becomes more commonplace in coming years.

—Bruce caught up with EasyTaxFix co-founder Adam Berkson, whose online company helps homeowners lower their property taxes by automating the appeal process. Berkson told Bruce they were successful enough in San Diego in November to expand into other California counties, New Jersey, and the Phoenix, AZ, metro area.

—As the recession has worsened, the four software CEOs who formed San Diego’s DaggerBoard Advisors have seen changes in the type of help that local software startups are seeking. San Diego’s software startups are looking for interim management services, because …Next Page »

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New Atlantic Ventures, a venture firm with offices in Reston, VA, and Cambridge, MA, says it has closed its third fund, NAV III LP, at $115 million, according to a press release published on news website PE Hub. The firm says that it invests in high-growth technology sectors such as wireless, new media, and online services.

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[Updated April 5 with a correction: Google's Mike Repass is based in San Francisco, not Seattle]
On Monday evening, I stopped by a talk on “Google’s world view of cloud computing,” organized by the Washington Technology Industry Association as part of its series of events on this emerging IT trend. The first event we covered, in early March, gave a glimpse into the strategy of Amazon Web Services. This more recent event, held at Google’s Fremont offices in Seattle, drew a packed room of almost 100 people, most of them software developer types. It provided an intriguing inside look at Google’s cloud computing platform and where it’s headed, as compared with other big players in the space. (The final presentation in the WTIA series will be given by Microsoft on April 23—location to be announced soon.)

Brian Bershad, Google’s Seattle site director, kicked off the evening by describing how Google got involved with the series last fall. “[WTIA head] Ken Myer and I were at a baseball game,” Bershad said. “He wouldn’t stop asking me questions…’How would a member of WTIA know which [cloud computing] system they should use?’ After 30 or 40 minutes of this, I don’t really like baseball, but I wanted to watch the baseball game! So I said, ‘Ken, why don’t we put together a multi-part series to get these questions answered? Not in a bakeoff, but let’s bring in the key players to get answers to the community.’” Bershad noted it was a good opportunity for outreach. “I’m really excited,” he said. “This is the kind of thing we can be doing in the Seattle community. We have all the big players here, which makes it a highly leveraged community.”

The topic du jour was Google’s cloud platform, which has the certifiably geeky name of “App Engine.” Like all cloud-computing software, its basic idea is to create a common language that allows developers to build new Web applications, create new code, gain access to processing power, and store their data on virtual machines via the Internet. It’s all in the name of helping companies avoid the costs of maintaining internally owned and operated servers, hardware, and teams of people to keep everything running right. App Engine has been publicly available since last April, and boasts about 150,000 developers, 50,000 applications (blogs, online messaging, and so forth), and 100 million page views per day. Just last week, the White House website selected App Engine to handle the processing of questions and votes for President Obama’s online town hall meeting. (The site ended up fielding about 100,000 questions and 3.5 million votes.)

All of these details came from the main speaker of the evening—Mike Repass, a Google product manager who joined the App Engine team in January. Repass is a computer programmer by training, and was a software developer and program manager at Microsoft before joining Google eight months ago. Most of the App Engine team is in San Francisco, and that’s where Repass is based. Although Google’s cloud computing platform has been available for almost a year, it is “still evolving very rapidly,” Repass said.

What App Engine uniquely offers, Repass noted, is a way to “pay as you go” for …Next Page »

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Seattle-based Jott, which provides free voice-to-text services for e-mail and text messaging, announced today it is moving to a paid model effective February 2. Jott Founder and CEO John Pollard cited the economy and ad market as reasons for the move. The startup, which was founded in 2006, is also rolling out a voicemail-to-text tool today.

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Seattle-based Pelago, maker of the Whrrl mobile-networking application, announced it has partnered with Norwich, VT-based Maponics to provide the location-aware service to customers in more than 50,000 neighborhoods in 2,000 cities across the U.S. and Canada. Financial terms of the deal were not disclosed.

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Seattle-based Jobster’s co-founder and former CEO, Jason Goldberg, has sold his new startup, Socialmedian, to Hamburg, Germany-based Xing for about $7.5 million. Socialmedian is a New York-based news-filtering service that works well with social sites like Xing, which is focused on professional networking. Goldberg, who left Jobster a year ago, will be moving to Germany as vice president of Xing’s applications platform division.

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Seattle and Boston, two of Xconomy’s network cities, have something extra to be proud of today—at least when it comes to Internet startups. Each city contributed two companies to a popular list of the year’s best Web applications for improving customers’ real lives.

That’s according to the tech-news blog ReadWriteWeb, which has published its list of the “top 10 real world Web apps of 2008.” These are Web services that help keep people’s offline lives more organized and efficient. The categories were finance, health, education, politics, nonprofits, and travel. Without further ado:

—In Seattle, the teacher/student community site TeachStreet won in the education category, while the airfare-tracking site Yapta won in travel. TeachStreet expanded to the San Francisco Bay Area last month, from Seattle and Portland. Yapta is in the process of closing a funding round of at least $2.7 million.

—In the Boston area, the social-networking sites PatientsLikeMe and Sermo, both based in Cambridge, MA, won in the health category. PatientsLikeMe is an online community for people with life-changing medical conditions like Lou Gehrig’s disease, HIV, and Parkinson’s disease. Sermo is a site where 90,000 doctors exchange information about medical practice. Sermo recently signed a deal to open up access to this network to financial industry experts who subscribe to the Bloomberg Professional information service.

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Seattle-based Amazon Web Services announced today it is providing free access to centralized data sets in the Internet cloud. The Amazon subsidiary will host large data sets from genomics, bioinformatics, economics, U.S. Census information, and other areas, which researchers and developers can access from the Amazon Elastic Compute Cloud software platform. The effort is intended to fuel innovation, accelerate the pace of new discoveries, and, of course, bring more users into Amazon’s cloud computing services.

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Last night, Amazon Web Services announced the winner of its second annual AWS Startup Challenge: Yieldex, based in Colorado, California, and New York, helps advertisers and publishers manage their inventory by predicting how ads will perform on different websites. The company receives $100,000 in cash and Web services credits, plus a potential investment offer. Yieldex was one of seven finalists invited to pitch their startups at Amazon’s Seattle headquarters.

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Does Amazon’s CloudFront announcement today mean a cold front is on the way for Cambridge, MA-based Akamai?

Amazon (NASDAQ: AMZN) said a couple of months ago that it was working on a way to let users of its Amazon Web Services  infrastructure speed delivery of Web graphics, software downloads, audio and video files, and other materials to Web users over its global network of servers. And today, in a direct assault on existing content distribution networks (CDNs) like Akamai, Limelight, and Voxel, it has unveiled the beta version of that service, called CloudFront.

It’s the latest step in the expansion of the Seattle e-retail giant’s cloud computing infrastructure, which allows other companies large and small to rent as much external processing power or storage as they need. As with its processing utility (the Elastic Compute Cloud, or EC2) and its storage utility (the Simple Storage Service, or S3), Amazon will sell access to CloudFront on a self-service, pay-as-you-go basis.

The service seems aimed at least in part at customers who currently have fixed, long-term contracts with the likes of Akamai (NASDAQ: AKAM) and Limelight, or who don’t generate enough traffic to qualify for discounted rates with the established CDNs.

“Traditionally, to secure scalable, reliable, low latency content delivery, businesses have been required to negotiate upfront or long-term commitments,” Amazon’s CloudFront announcement states. “Even then, only customers with significant scale have been able to negotiate inexpensive rates. With CloudFront, there are no upfront costs or commitments required—all developers are able to benefit from Amazon’s scale to enjoy low prices.”

Pundits have speculated that Amazon’s new service will put pressure on existing CDNs to introduce lower or more flexible prices. When I put that point to Jeff Young, Akamai’s director of corporate communications, he declined to comment.

Young did say, however, that he thought Akamai’s network—which was built specifically to support transfers of large or frequently requested files such as e-commerce Web pages and high-definition videos—will continue to be a better choice for most large online publishers. “Akamai provides comprehensive content and application acceleration services for powering the online businesses of today’s leading global enterprises, helping our customers to monetize their content,” Young said.

For existing Amazon Web Services customers, CloudFront makes it easy to copy original files already stored on S3 and replicate them across CloudFront “edge servers” around the Internet, where they’re closer to the users requesting them and can therefore be delivered faster. That’s the same idea behind all CDNs—the difference with CloudFront being that users pay only for actual data transfers, at rates that vary between $0.09 and $0.22 per gigabyte, depending on the geographic area. (Transfers from Amazon’s edge servers in Hong Kong and Japan are more expensive than those from servers in North America and Europe.)

Amazon identified two early users of CloudFront: Dallas, TX-based online retailer Woot, which highlights one product per day and is using the service to deliver product photos to shoppers, and London, UK-based casual games company PlayFish, which uses CloudFront to speed downloads of its games.

But CloudFront isn’t the first pay-as-you-go CDN: that title may belong to New York-based Voxel, which introduced technology back in April that allows customers to pull content into its network from Amazon S3. Tech blogs such as ReadWriteWeb have described CloudFront as a preemptive move by Amazon to keep services like Voxel from overtaking the market for cloud-based content distribution.

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The first thing that popped into my brain when San Diego’s Active Network said it has acquired three more companies was kudzu—also known as “mile-a-minute vine” and “the vine that ate the South.”

Just a year and a half ago, the online business officially known as The Active Network had 730 employees, including 265 at its San Diego headquarters. With the purchase of three companies that provide hunting and fishing licensing technology, spokeswoman Tina Wilmott says they now have 1,965 employees around the world—including 421 in San Diego.

The company was founded in 1998 as a classic dot-com play. The idea was to use the Internet to enable athletes to register for marathons and other sporting events. Event organizers would pay for use of the Web-based software, which would help them coordinate league schedules, collect tournament fees, promote and manage events, and send information to competitors.

After the dot-com bubble popped in the spring of 2000, The Active Network found itself enrolled in an endurance contest comparable to the 135-mile Badwater Ultramarathon, California’s notorious run from Death Valley to the Mount Whitney Portal. To make matters worse, CEO Dave Alberga was hospitalized in the fall of 2000 with ulcertative colitis, an inflammatory bowel disease that causes sores in the colon’s lining.

The Active Network survived by cutting nearly 60 percent of its workforce and focusing the business on software and other products that would drive short-term revenue. Alberga eventually returned to work after undergoing a full colectomy, the total removal of his colon. The entire management team showed its commitment by writing personal checks to fund the company’s payroll at the end of 2001.

Now the privately held company is growing like, well, kuzdu.

The Active Network raised $80 million just three months ago in a “Series F” round led by ESPN. It has raised an estimated $275 million since 1999, with other investors including Canaan Partners and North Bridge Venture Partners.

“We’ve made over 30 acquisitions of varying sizes since the company was founded in 1998 and 14 since the beginning of 2007,” Wilmott says. She cited LaxPower.com, a top lacrosse Web site and campground reservation provider InfoSpherix among recent standouts.

The Active Network says its three latest acquisitions provide technology to 24 state governments for processing hunting and fishing licenses. The three companies are Automated Licensing Systems, the Central Trust Bank of Missouri’s Conservation Licensing Division and its subsidiary, Outdoor Central. Automated Licensing Systems has more than 200 employees in Nashville, TN. Central Trust Bank’s two divisions have 26 employees in Jefferson City and 52 in Nashville.

Financial terms of the deals were not disclosed.

The three companies will become part of The Active Network’s ActiveOutdoors division, which is also responsible for software that manages such things as park and campground reservations.

Oh, and one more thing: With these acquisitions, The Active Network says it now ranks as the nation’s largest provider of hunting and fishing licensing technology.

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Atlanta-based Ebix announced yesterday that it signed a deal to buy San Diego’s ConfirmNet, the latest in a series of acquisitions in the certificate of insurance tracking industry.

Ebix, which develops software and e-commerce capabilities for the insurance industry, said it signed a deal to purchase ConfirmNet on Nov. 1.

In a later filing with the Securities and Exchange Commission, Ebix says it completed its purchase of Jenquest of Hemet, CA, a year ago for $11.25 million in cash.

ConfirmNet, founded in 1999, provides software-as-a service for issuing and tracking certificates of insurance. Jenquest also specializes in the certificate of insurance tracking industry.

Ebix, which acquired Michigan’s Periculum Services Group in April, says its BPO division already has the largest market share in the U.S. certificate tracking industry. The purchase of ConfirmNet, which ranks second, only strengthens its hand. Ebix counts AON, Marsh and Wachovia Insurance Services among its customers.

If shareholders approve the deal, Ebix says it expects to pay between $10 million and $11 million in cash for ConfirmNet, based on ConfirmNet’s fourth-quarter revenue performance.

The acquisition is expected to close by Nov. 22.

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Conditions today in Boston: increasing clouds. Cloud-computing startups, that is.

Out of the seven companies named Friday as finalists in Amazon’s latest AWS Start-Up Challenge—designed to reward the most innovative companies using the cloud-based Amazon Web Services infrastructure to deliver their products or services—three are based right here in the Boston area. (Sorry, Seattle.)

Each of the companies—Watertown, MA-based MedCommons, Waltham, MA-based Pixily, and Dedham, MA-based Sonian—has turned to the Seattle-based e-retail giant for all or part of the computing power, storage, and other services they need to support their own customers. In that sense, they belong to a new breed of startups: nearly virtual ventures whose Web-based services free other companies from having to buy, install, and maintain their own software, but who pass along most of their own computing chores to Amazon.

Using Amazon’s cloud computing infrastructure is a great way for any startup to reduce costs. If you don’t have to spend hundreds of thousands of dollars of your investors’ money buying servers, after all, you can spend more on hiring smart people, or just keep a larger war chest on hand. But the executives I interviewed at the three local Amazon finalists say there are plenty of other reasons to go the cloud-computing route. In fact, it’s likely that these three companies—who will compete in Seattle on November 20 for a $100,000 grand prize—made it to the finals at least in part because they’re putting Amazon’s services to such unique uses, with a variety of benefits for themselves and their customers.

Sonian, for instance, provides business customers with a hosted e-mail archiving system, so that companies trying to comply with Sarbanes-Oxley requirements and other regulations don’t have to worry about manually backing up the data in their corporate e-mail systems from Microsoft, Novell, IBM, Google, or other vendors. The company has never stored any of its customers’ data on its own premises: it all gets shipped off to S3, Amazon’s storage service.

“Some of our investors, back in 2006, were skeptical of our ability to launch this service from the cloud, but we made the right bet,” says Greg Arnette, Sonian’s CTO. “Cloud was the way to go. It’s allowed our company to adopt the same philosophy that Amazon Web Services adopts around the pay-as-you-go model, so you’re not paying for hardware you’re not using. Also, even though we’re a new company in the space, our customers know their data lives on the infrastructure of a well-known, trusted brand.”

Adrian Gropper, chief scientific officer at MedCommons, says working with Amazon also eases fears about scalability. MedCommons allows healthcare consumers to create a central, online storehouse for their medical records; selected caregivers can download or upload records to this storehouse, including big image files like CT and MRI scans. “A lot of people can go into the health-record business and say they have a system that scales to 10,000 patients, but having it scale to a million patients is not …Next Page »

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Today, Amazon announced the seven finalists in its Amazon Web Services (AWS) startup challenge. These are young companies that are using the Seattle giant’s cloud-computing platform to build their businesses, and Amazon is rewarding the ones it thinks are the most promising. The grand prize is $50K in cash and $50K in AWS credits and a “potential investment offer from Amazon,” according to its website.

The finalists are: Encoding, Knewton, MedCommons, Sonian, Pixily, Yieldex, and Zephyr. They represent a really wide range of products, from video encoding to email and document management to Health 2.0. What they don’t represent is the Seattle area. What gives?

Tons of tech companies use Amazon Web Services as a resource, and to help grow their businesses. Last year’s contest drew some 900 entrants, and this year’s pool was probably even larger. You’d think there would be more, not fewer, innovative startups building on Amazon’s platform in Seattle, as compared to other places, if only because of local familiarity, experience, contacts, and so forth.

I asked a few ex-Amazon entrepreneurs whether today’s list says anything about local startups’ desire to build on the cloud platform. “My hunch is that the main reason for the lower participation levels in Seattle is probably related to a reduced amount of marketing outreach they did here for the startup challenge,” says Dave Schappell, founder and CEO of TeachStreet. This makes sense to me, given that Amazon probably wants to reach out to entrepreneurs in other geographic regions where it has less inherent influence.

Indeed, some prominent locals, including Jeff Lawson, the founder of telephony startup Twilio, see Amazon Web Services as a crucial tool for young companies around here. “We’re big consumers of AWS for critical, real-time systems, and I think it was a great decision despite the few, highly publicized outages they’ve had,” he says.

Lawson points out the advantages of having Amazon manage the hardware, and paying only for what you need. “Whatever Amazon’s downtime is, if we manage the hardware ourselves, it will be more,” he says. “Compare [AWS] to buying hardware to meet your spike demand, and wasting thousands of dollars on hardware and hosting those machines that mostly sit idle.”

Kevin Flaherty, co-founder and vice president of marketing for Wetpaint, chimed in as well. “We use AWS and have found it to be a fantastic resource,” he says. “From a startup perspective, AWS needs to be in the consideration set when it comes to scaling a business.”

So, why there are no finalists from the area remains anyone’s guess. Maybe it’s an artifact of the outreach and selection process, but maybe not. In any case, the startup finalists are presenting their ideas to Amazon’s judges at Seattle headquarters this month. There will be an Amazon event on November 20, where the winner will be announced.

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Updated Nov. 6, 2:45 PST; See below for details about Veoh

San Diego’s Veoh, one of the top Web-based providers of video and TV programming, has laid off 20 people, or 18 percent of its 110-employee payroll.

The cutbacks, reported by PaidContent, TechCrunch, and others, apparently are intended to help the startup survive hard times expected in the months ahead.

Veoh aims to deliver full-screen, high-quality video over the Web, bypassing traditional broadcasting systems and regulatory restrictions. Investor Todd Dagres of Boston’s Spark Capital talked about his interest in Veoh in September with Xconomy’s Bob Buderi.

Veoh has about 60 employees at its San Diego headquarters, mostly in engineering and product development, spokeswoman Gaude Paez told me this afternoon. Another 25 work in business development and marketing in Los Angeles, mostly to interact with Hollywood studios, TV networks and other video developers. A handful of others work in New York and Chicago.

Veoh generates revenue by selling advertising throughout the videos it offers, and through conventional online advertisings, including banner and display ads. Paez says Veoh’s video content is free to its estimated 25 to 28 million users around the world.

“It’s very hard to predict how soft the advertising market may get,” the spokeswoman said. “It just makes more sense to make the tough decisions now rather than later.”

Last month, PaidContent reported that Veoh laid off employees and shut down its Russian office in St. Petersburg. Veoh described the cutback in Russia as a strategic decision rather than a financial one, saying it wanted to move its development staff to San Diego.

Veoh CEO Steve Mitang told TechCrunch this move is financial and reflects the new economic reality. The company insists it is still strong, financially. Veoh has raised $70 million from investors that include Goldman Sachs, Spark Capital, and Time Warner Investments, including $30 million last June from Intel Capital, Adobe Systems, and several prominent private investors.

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