It can be pretty dizzying to tally up the scope of Amazon Web Services, a potentially $1 billion business that serves up critical cloud computing infrastructure for a big slice of the digital economy. Even keeping up with the number of individual services the company offers can be a challenge—and Amazon CTO Werner Vogels wants you to know that he’s sorry about that part.

“That might make it seem somewhat chaotic at times, and I apologize for that,” Vogels said last night, prompting chuckles from the crowd at an open house in Seattle. “But as an advantage, you get stuff really fast.”

That rapid-fire release of services is one of the three key elements that, in Vogels’ view, makes Amazon Web Services so successful.

Amazon is not known for releasing meaningful statistics, but you can get a sense of AWS’ reach from the huge reaction to last year’s multi-day crash of some AWS offerings. And, of course, the number of tech companies big and small in the market continues to grow.

Werner Vogels

In that crowded and competitive environment, Vogels said, Amazon hopes to stand apart with a “relentless focus on very fast, iterative innovation.”

“We will not build a thing with the whole kitchen sink, with all features in it,” Vogels said. “We will put something in your hands really quickly with a new feature set, and work very closely with customers to actually iterate really fast in a direction where the customers want the product to go.”

“That’s why you don’t see massive marketing events from us where, in one big thing, we will just announce everything that’s going to happen,” he said. “As soon as we have features ready, teams have the mandate to get it into the hands of their customers as quickly as possible.”

Vogels also said he thinks AWS has found success by being flexible: “You could be on any operating system, any programming language, any interface—whatever you want. We do not lock anybody in,” he said.

And sharing the price-conscious DNA of a retail company doesn’t hurt either. Vogels said a recently announced price cut for Amazon’s Simple Storage Service was the 18th price reduction for AWS offerings, with more to come. “Some of our customers are getting 12 to 13 percent lower bills in February and we’ll continue to focus on that,” he said.

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Earlier this week, Seattle’s Tableau Software announced a big jump in annual sales and major hiring plans—something that’s becoming almost routine for those watching the Stanford-bred data-analysis software company’s growth.

Now entering its tenth year, Tableau recently opened a London office and has started to expand into the Asia-Pacific region. By the end of the year, Tableau’s data-visualization software should be available in nearly a half-dozen more languages, from Portuguese to Korean.

And, after years of offering its products as downloadable software, Tableau is now working on a transition to the software-as-a-service model that has become so prevalent in the industry—its first stab at such a product was Tableau Public, a free-to-use version aimed at journalists, students, and other new categories of users outside of the enterprise customers who traditionally use what’s called business intelligence software.

With revenue bookings of about $72 million in 2011, up some 94 percent from a year earlier, Tableau could be on its way to becoming one of the next generation of publicly traded tech companies from Seattle. “Tableau’s intention as part of its business plan is to be a big, independent, global, publicly traded company. I mean, there’s no doubt about that. This company is not for sale,” CEO and co-founder Christian Chabot says.

Tableau CEO Christian Chabot

But it wasn’t always going gangbusters. In the early years, before big shifts in the ways businesses purchased and used data software, there were some pretty lonely sales calls for the young company. Here’s a story from Chabot that explains how he was banging his head against the wall with an innovative product that was getting started just a little bit ahead of its time—and why sticking with it is so important for entrepreneurs.

“When we started, I would walk into rooms at companies and universities and government agencies—and nonprofits, too, by the way … the same thing would happen in all of them.

“We would finally work ourselves up to a big pitch meeting—one where you did more than open the door, you got all the decision-makers in a room. And the IT guys are there, and the business guys are there, and the CIO’s in the back of the room with his arms crossed with a sour look on his face—I’ve done these meetings so many times!

“And in ’03, ’04, ’05 when I did that meeting, I would stand up in the front of the room and, being the entrepreneurial company, the disruptor company that we are, we would make the following bold claim to try and get people’s attention and try to get them to think different.

“I would say, ‘The technologies you guys are using today to access and understand your data—those technologies are heavy, complicated, inflexible, slow-moving, and expensive. And Tableau can change that for you.’ And in those years, when I made that statement, it didn’t go very well. I would be escorted from the building, so to speak. It just didn’t stick.

“You would not believe what happens when you do that today. When I do that exact same meeting today—exact same line, exact same crowd, exact same room size—and I make the exact same statement, the room is nodding. You know what I mean? I can literally see the sea change that’s occurred.

“And it’s not a Groupon, where it happened overnight. Over the course of those five years, sensibilities changed right underneath us.

“As a startup story, it’s hopefully inspirational for people out there laboring. Because when we founded the company, people did not want to hear our message. We believed it. We just knew it felt good and we were excited about what we’d invented.

“But, boy, when the market sensibilities change under you as you’re working and laboring and they change to your advantage—wow, does that feel good.”

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The amount of venture financing poured into Seattle-area companies didn’t keep pace with strong growth nationally last year—in fact, it was quite the opposite.

That’s according to the latest MoneyTree Report, from the National Venture Capital Association and PricewaterhouseCoopers, which shows venture investment in Seattle region dropping to $508 million in 2011. That’s the lowest figure notched in the report’s tracking since 2003, when venture deals reached $359 million, according to data provided by Thomson Reuters.

There’s a pretty clear link between those two periods, of course: In 2011, just as in 2003, the economy at large was still trying to recover from a recent financial meltdown. The average dollar amount of venture deals tracked by the MoneyTree Report was basically identical in both of those years, at just over $4.8 million per financing deal.

(MoneyTree provided Xconomy with data focused on the Seattle area, including the Eastside, to help us track this figure. Venture deals across the entire state were higher, at around $541 million.)

The Seattle area’s dropoff came as national VC investing was on the upswing, increasing by 22 percent over 2010′s figure to post the third-largest investment total in the past decade.

Mark Heesen, president of the NVCA, noted that the number of deals nationally didn’t keep up with the growth in dollars last year, reflecting larger fundraising rounds across most sectors.

“For some, the higher rounds are driven by the challenging exit market which requires venture capitalists to fuel their existing portfolios longer and at greater investment levels than in the past,” Heesen said. “This is particularly acute in the life sciences and clean tech sectors. In other sectors such as Internet, software and media, the higher rounds speak to increasing valuations.”

The number of venture deals in and around Seattle held steady in 2011 at 105, in line with the figures seen in 2009 and 2010.

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More than anything, they should be studying math, including statistics and probability, and programming. No matter what the subject, we will have huge amounts of data about it, and will need these tools to get meaning from the data. The areas I’m thinking of include medicine, genetics, nutrition, and neuroscience; human behavior; energy management and consumption; materials science (so that we can use our personal 3D printers more effectively); aerospace and cosmology (so we can find asteroids, whether to deflect them from an earth-bound path, to mine them of valuable minerals or terraform them for human habitation); and of course biology, so that we can enjoy the company of animals, grow food, and ultimately create human-friendly living conditions on other planets and asteroids. It would also be great to get better at modeling and managing economic fluctuations!

But in the meantime, don’t forget to read world literature so you can understand your place in history and know how to be a human being.

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When the veteran entrepreneurs behind Digital Lifeboat settled on a location for their fledgling company, they weren’t concerned with landing one of the hot tech-startup addresses in South Lake Union or Pioneer Square.

“Our offices are between the cemetery and the trailer park in Redmond,” co-founder and CEO Steve Teglovic says with a laugh. “That’s called being very efficient with our cash.”

Instead, the small Digital Lifeboat team has been pouring its time and resources into developing the software engine for its version of online file backup—including getting patents. Now, it’s a little more ready for primetime.

The startup recently added $1 million in financing to round out a $3 million round that originally was filed with regulators last year. Investors include Mercer Island, WA’s Keeler Investments, San Francisco’s Catamount Ventures, and angel investor Brian Finn. The company just ended its nearly yearlong beta testing phase, and is now open for new paying customers—”Basically, it works now,” Teglovic says.

Digital Lifeboat’s product is an online file backup service, offering consumers a place to securely save copies of their important documents and other digital treasures. Big deal, right? There are plenty of companies offering similar services already, including EMC/VMWare’s Mozy, which is based in Seattle, and Boston-based Carbonite.

The difference is that Digital Lifeboat uses individual computers on its network as nodes in a distributed storage system, rather than requiring a concentrated mass of data centers to store everyone’s files. That’s similar to the idea behind Seattle startup Symform, which is targeting business customers with a distributed storage system.

When users sign up for a Digital Lifeboat account, starting at $30 a year, they get unlimited backup on the system. But by joining the service, users also agree to become a part of the storage network for everyone else, giving up a piece of their unused hard drive space to store someone else’s stuff.

Of course, security is hugely important in this kind of arrangement. All of the files are encrypted and hidden in multiple ways to ensure that private data remains unseen by anyone else, Teglovic says. One of the major features is something called “erasure coding,” which splits files into pieces and distributes them across the network. In layman’s terms, here’s how it works: After each file is encrypted, it’s split into 20 different “chunks.” Those 20 chunks are then split again, this time into 50 chunks, which are sprinkled across different PCs on the storage network.

But the chunks overlap, so to get their file back, a user only needs to access 20 of the 50 chunks at any given time—giving more flexibility for Digital Lifeboat to manage how much space to take up on the network.

The startup’s software and central control server act as the traffic cop this whole time, ensuring that everyone on the network has access to the files they need, but also retains enough room on their hard drives to keep running their computers properly.

The whole thing is designed to be “opaque” to the end user, Teglovic says, and if things ever get too close to affecting performance, Digital Lifeboat scraps that machine as a storage option and moves the pieces of data … Next Page »

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Ah, the good old days of April. Spring was in the air, and bankers were running the numbers on IPOs for Northwest technology companies. It was fun while it lasted.

Here’s the flashback: Real-estate website Zillow filed its paperwork on April 18, and RFID maker Impinj followed suit three days later. I even interviewed Seattle-area investors and entrepreneurs about whether these were the first ripples of a new boom for local tech companies.

So much for all of that.

Zillow (NASDAQ: Z) did successfully go public, opening trading on July 20. But Impinj has moved slower, not updating its SEC filings since mid-July. And some other Washington state companies that say they have the fundamentals to go public are staying away until the markets improve.

Exhibit A is Inrix, the Kirkland-based provider of traffic data that started as a spinout from Microsoft. Back in late July, Inrix reported a new $37 million financing round, and CEO Bryan Mistele told me that the company was ready to go public “sooner rather than later,” and was doing better than Zillow when it filed.

That was just five days after Zillow started trading, and two weeks before S&P’s downgrade of the federal government sent the stock markets into a tailspin. These days, Inrix is taking a wait-and-see approach, spokesman Jim Bak says.

“Was it in he cards this year? Yes. Are we choosing to play the hand? No,” Bak says.

He points out that Inrix is having another good year—it’s a profitable, cash-flow-positive company that doesn’t need an IPO to sustain its business. So that makes the decision to wait and see even easier.

“We’ll probably have another year under our belt of 100 percent year-over-year cumulative annual revenue growth,” Bak says. “Everything is in place. The numbers are there, the growth curve is there … but the climate really isn’t ready.”

Vancouver, WA-based nLight Photonics, which makes semiconductor lasers, also has been talking up its IPO potential this year. In a series of news reports tied to its $17.5 million financing round in late August, company officials and investors said nLight was poised for an IPO—although they generally declined to put a timeline on taking that step.

But it definitely doesn’t sound like the step will come anytime soon. “When volatility is how we’ve seen, it’s not a good time to go public,” CEO Scott Keeney says.

In the meantime, nLight is profitable and growing 30-40 percent a year, Keeney says.

“It’s hard to speculate on how the current market changes the exact timing of how we’re thinking about the big step,” Keeney says. “I can say we are a fast-growing, strong venture-funded company, and that’s clearly in our plans.”

Impinj couldn’t comment on the timing and particulars of its IPO filing because it’s in the middle of the registration process, but said a public debut is still in its future.

“While the recent volatility in the capital markets has impacted many IPOs, we have no current intention of withdrawing our registration statement,” spokesman Jim Donaldson says. “The timing of Impinj’s IPO by will depend on many factors, including conditions in the capital markets, conditions in the markets for our products, and our financial performance.”

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Financing rounds, acquisitions, and business plan prizes have made up the New England deals news this week.

—Continuing the West-Coast-company-buys-East-Coast-company trend of last week, San Jose, CA-based Cisco Systems announced its purchase of Boxborough, MA-based BNI Video, a developer of software for managing cable content on the back end and improving the browsing experience for viewers. Cisco (NASDAQ: CSCO) bought the startup, which has raised about $17 million in venture funding, for $99 million in cash and retention-based incentives.

—Yale University spinout Hadapt raised a Series A funding round from Norwest Venture Partners and Bessemer Venture Partners. The round was reported at $9.5 million, which potentially included seed funding the startup raised earlier. Hadapt, a maker of software enabling businesses to analyze structured and unstructured data, plans to relocate its headquarters to Boston.

—Venture investments in Massachusetts companies totaled $505 million across 95 deals for third quarter of 2011, just over half of the $1 billion total from the quarter before, according to the MoneyTree report from PricewaterhouseCoopers and the National Venture Capital Association, with data from Thomson Reuters. This year’s third quarter still showed a 10 percent improvement in funding over Q3 2010, though. Check out the deals list and details here.

—MassChallenge awarded a total of $1 million to 17 startups in the second year of its accelerator program and business plan competition. Three companies (one life sciences, one IT, one sanitation) each nabbed $100,000 checks, while the remaining 14—covering the food, Web, window, and shoe spaces (and more)—each won $50,000.

—My colleague Arlene took a look at Lexington, MA-based Cubist Pharmaceuticals’s (NASDAQ: CBST) $190 million cash acquisition of Adolor (NASDAQ: ADLR). The deal comes out to $4.25 a share, plus milestones that are achieved with one of Adolor’s experimental drugs, ADL5945, for treating chronic opioid-induced constipation.

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Big-data company EMC plans to add 200 jobs at its Seattle-based Isilon branch through 2012, filling out spacious new offices in the city’s Pioneer Square neighborhood—and leading to another hunt for office space in the not-too-distant future.

Add those 200 new jobs to the 430 Isilon workers already in Seattle, and some additional people from other divisions of EMC (NYSE: EMC) in the area, and the new 140,000 square-foot offices just north of the Seahawks and Mariners stadiums will fill up fast, EMC Isilon president Sujal Patel said Wednesday.

“Certainly, more space is already on our mind,” Patel said. “Our intention is to build out this facility and our Pioneer Square presence. For us, this is an ideal hub for building great technology and there’s lots of innovative companies in this area. It’s a great place to be.”

The jobs announcement, which also featured comments from EMC CEO Joe Tucci and Seattle Mayor Mike McGinn, also served as a bit of an update to Hopkinton, MA-based EMC’s blockbuster $2.25 billion acquision of Isilon, which was officially announced late last year.

Isilon would have reported about $200 million in revenue last year if it had remained a standalone company, Patel said, and recently doubled in size year-over-year as a unit of EMC.

When the acquisition closed, Patel said, Isilon had just over 500 employees, mostly based in Seattle. Now, Isilon has more than 850 people, with 430 in the Seattle office. And the 200 new jobs on the table for Seattle over the next 15 months “is really just a fraction of the jobs that in the Isilon division we’ll be adding worldwide,” Patel said.

Tucci said the ramp-up of EMC’s Seattle center fits with the company’s strategy of building large tech hubs around the country. It already has major centers in the Boston area, the Research Triangle region of North Carolina, and the San Francisco Bay Area. Seattle will probably be the fastest-growing of those centers, he said.

“Our model is to take the great things that Isilon is doing and invest more cash,” Tucci said. “It’s a terrific city, and you can count on that we’ll continue our expansion here.”

McGinn said the Isilon expansion was emblematic of a makeover of the Pioneer Square area, and the city government’s drive to provide a strong base for high-quality, innovative companies to locate and expand in the city.

On that note, Isilon’s Pioneer Square offices are actually just one floor down from the Seattle headquarters of Nuance Communications, which just announced the acquisition of Seattle touchscreen-input startup Swype. (And Swype itself was also in the neighborhood).

“One of the things that Sujal told me … was he wasn’t the only person with the idea that having new ways to manage large amounts of data was going to be a growth industry. A couple hundred companies had that idea. Not many are left,” McGinn said. “So it’s a highly competitive environment out there.”

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The biggest news out of Xconomy Seattle this past week is the announcement of Mobile Madness NW, our December 6 half-day forum presented with the Washington Technology Industry Association and hosted by F5 Networks.

We’ve got a stellar lineup of speakers, including Wesley Chan from Google Ventures, Tom Alberg from Madrona Venture Group, Bernie Yee from Bungie Aerospace, Giordano Contestabile from PopCap Games, and Mike McSherry from Swype.

There’s tons more to come—we have some killer startup demos lined up, and a few more special things to spice up the program. But the main point is that you have to get your tickets now to get the best rate. Don’t miss the special discounts on offer for startups and students.

Even though event planning is a monster load of work, I still managed to cover some pretty interesting ground in the past week. And just to keep me honest, I’ll even throw in a few things I couldn’t get to.

—I chatted with Kabir Shahani of Appature for the latest Xconomist of the Week, a regular feature where we profile one of our star guest authors. Kabir talked about the challenges of growing a startup beyond its home base for the first time, which Appature’s done recently by adding remote sales and marketing offices near major clients across the country.

—Research firm CB Insights crunched the numbers on third-quarter venture capital financing and found another up quarter, which could point to the biggest year for VC in a decade, if the investors keep the trend going. Washington state companies, of course, still lag way behind the pack leaders—the real action was the New York-Massachusetts dogfight for second place, after California.

—Speaking of Evergreen State fundraising, we caught up with the end-of-summer numbers for companies based here and found, not surprisingly, that Zulily‘s $43 million round was the easy leader for all financings in August. Zulily’s a fast-growing flash-sales service specializing in products for moms and kids—why someone hadn’t jumped all over that vertical before is a mystery to me.

—Luke checked in with Mobisante, a Redmond, WA-based company developing portable ultrasound systems that can be read over smartphones or tablets. No, it’s not ultrasound on an iPhone (yet), since the hardware requires a beefy USB connection to work properly. But this innovation stands to make things a lot easier and cheaper for doctors working in the developing world or budget-strapped clinics.

—Microsoft Research and Carnegie Mellon showed off the OmniTouch system, a prototype projector-sensor device that can recognize “touchscreen” movements and turn all kinds of surfaces, from forearms to walls, into a user interface.

—Name-your-price crowd auction startup Zaarly got on a research kick and came up with this funny infographic tour through Seattleite cliches—which apparently have some grounding in reality. It behooves the fledgling company to do some market research, of course, since they have users and employees here. Plus people like me might re-post it.

And here’s a couple of important things I didn’t have time to fully chase down:

—Clearwire (NASDAQ: CLWR) released some preliminary third-quarter financial results that helped prop up the struggling wireless provider’s stock price. Clearwire had taken a massive hit after majority shareholder Sprint left it out of next-generation network plans, and questions about Clearwire’s future were getting very loud.

—John Cook at GeekWire had a scoop about Brian Bershad, Google‘s Seattle-area head honcho, apparently taking a new assignment for the company somewhere in Russia. Bershad, who is also a University of Washington professor, declined to comment when I reached him asking to follow up on the report. Last I heard (from Brian himself at a UW event), Google was on pace to have about 1,000 people here in the greater Seattle area by year’s end.

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Market meltdowns, international turmoil, stubborn unemployment—none of the lingering macro-economic troubles seem to be holding back the momentum for venture investing in 2011, according to a report on third-quarter investments from research firm CB Insights.

The latest tally from the firm’s venture capital database shows venture investments reaching $7.9 billion in the quarter across 790 individual deals, setting a pace to possibly register the biggest year for VC in a decade.

That holds true even with a pretty major correction: CB Insights’ researchers didn’t count half of Twitter’s enormous $800 million financing round, reasoning that a reported half of the money went to cashing out stockholders.

Of course, the pace might not hold up in the last quarter of the year, particularly since VCs are reporting some difficulty raising funds from limited partners. But if the current momentum holds, “we are looking at a $30 billion+ year for VCs,” the report says.

Check out the full report for even more numbers. Two more methodological notes: CB Insights only counts investment rounds where a VC participated, so any rounds made up solely by mutual funds, hedge funds, or other non-venture investors also aren’t added to the tally. And state-level activity is determined by the headquarters of companies getting investments, not the home base of the VC firms involved.

BIGGER APPLE
California companies continue to lead the way in venture investments, accounting for about half (48 percent) of the national third-quarter VC dollars in CB Insights’ report.

The notable change is the rise of investments in New York companies, which accounted for 10 percent of venture dollars—doubling their position from a year earlier and virtually tying with Massachusetts, which had 9 percent of the total in the third quarter.

Taking the head-to-head a little further, CB Insights says New York pulled ahead of Massachusetts in both the number of deals and dollars invested “for the first time ever,” with New York registering $831 million on 86 deals for the quarter, compared with Massachusetts’ $710 million on 83 deals.

Washington state companies, meanwhile, maintained their small share of VC financing overall with just 2 percent of the national take—half of Texas’ 4 percent share.

UPS AND DOWNS
Healthcare-related VC investments continued to contract, showing year-over-year declines in both dollars invested and the number of deals, with $1.67 billion spread over 143 deals. CB Insights noted uncertainty around exit opportunities and the regulatory landscape for this sector—public policy for healthcare in particular will continue to look uncertain until the 2012 national elections are decided.

The number of individual mobile investments hit a high point at 13 percent of the total deals tracked, up from 7 percent a year earlier—although in terms of dollars, the share of mobile investments was only two percentage points higher than the third quarter of 2010.

Cleantech saw notable improvement, with funding levels topping $1.2 billion nationally—up from $790 million a year ago and $781 million in the second quarter of 2011.

PLANTING SEEDS
CB Insights’ report also sees an ongoing increase in the number of seed-stage deals by VCs over the past year, rising from 11 percent of all deals in the third quarter of 2010 to 15 percent of deals in this year’s third quarter. “While primarily a tech VC tool, healthcare investors increasingly used seed VC investments in Q3 2011 as well,” CB Insights noted.

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Are you a highly educated, salmon-eating, coffee-swilling tech worker who likes soccer? Congratulations! You fit pretty easily into the profile of a Seattle consumer, as detailed by this infographic from Zaarly.

The startup, which lets people crowdsource their needs by putting a price on specific goods or services, is based in San Francisco and Kansas City but has strong Seattle ties—it was hatched at a Startup Weekend, and co-founder Eric Koester splits his time between the Emerald City and the “other” Washington.

The piece contains some familiar chestnuts, like our degree of over-caffeination. Ten times more coffee shops per 100,000 residents than the national average? After a recent trip to Boston, where I was constantly hunting for a non-Dunkin’ Donuts fix, I’d say that’s probably about right. (Seriously, how do people function?)

But there’s also some stuff you might not have known, such as the still-dominant footprint of the aerospace industry in a post-manufacturing economy. Yep, even with Microsoft and Amazon, Boeing is still easily the state’s largest private employer.

One thing I’ll take issue with is the image of the lady carrying the umbrella. Everyone knows that, from September to mid-June, real Seattleites just pull up the hood on their North Face jacket and keep it moving.

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Cambridge, MA-based Backupify, a provider of technology for backing up data stored in e-mail and social media applications, is announcing it has nabbed a $5 million Series B financing, led by existing investor Avalon Ventures. Return investors General Catalyst Partners and Lowercase Capital also participated in the deal, which brings Backupify’s total funding pot to $10.4 million. Avalon managing director Brady Bohrmann joins Avalon general partner Rich Levandov on the Backupify board.

The money will go to product development for Backupify’s software that helps companies using Google Apps back up, search, and restore their data. CEO Rob May says that many of those clients have requested that the Backupify technology be applied to other office productivity tools that store things like financial data or customer related information.

Backupify started in 2008, providing a free consumer-facing backup service, but introduced the Google Apps service last year to focus on gaining small- and medium-sized businesses as customers. The company says it has signed on more than 5,000 Google Apps domains and grown that portion of its business by 4,000 percent since raising its Series A round of funding last September.

Backupify formerly operated out of the Kendall Square building that also houses Xconomy’s headquarters, but has since moved to space in Central Square formerly occupied by Performable, a marketing automation startup acquired by HubSpot in June. May says Backupify has gone from the eight or nine employees it had when it raised its Series A funding to about 21 now. He expects the head count will grow another 40 percent or 50 percent next year, with the new hires split among sales and marketing staff.

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Ryan Wuerch is out as CEO of Motricity (NASDAQ: MOTR) and is no longer on the board, the company announced today. Motricity said Wuerch’s termination was “mutually agreed,” but it gave no reason for the change. President and chief operating officer Jim Smith was named interim CEO, and is being considered for the permanent position while the company conducts a broader search. Motricity, a mobile software service company, moved to the Seattle area in late 2007 when it acquired the mobile division of Infospace for $135 million. The company completed a disappointing IPO in 2009. Shares were down more than 7 percent on news of the CEO change.

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Saving money on a flight to visit your sick grandma is pretty easy these days. Finding out whether her doctor is using the latest treatment is another thing entirely. And piercing that veil in the healthcare delivery system is exactly what Seattle startup Medify is trying to do.

The airfare comparison is no accident, by the way—Medify has strong roots in Farecast, the travel price-predicting startup that was gobbled up by Microsoft in 2008 for a reported $115 million and incorporated into Bing’s travel search. Medify co-founder and technology chief Jay Bartot was an early employee at Farecast, and most of Medify’s development team came from Farecast as well, CEO and co-founder Derek Streat says.

Previously incubated at Seattle’s Voyager Capital, which is the company’s main investor, Medify has spent the past year digging deep into big sets of healthcare data. The fledgling company thinks it has a serious chance to make a difference in the market for health search, which the Pew Internet & American Life Project pegs as the third most popular online activity, behind only e-mail and general search.

“A year ago it was literally, ‘We’ve decided to work together, we’ve got some money, and we have a whiteboard,” Streat says. “Now, we think we’re on to something.”

That something is building a huge database of medical information that patients can tap through Medify’s website to search for treatments, experts, and hospitals that fit their own health needs. Medify is getting its data from Medline, an enormous collection of health information managed by the National Institutes of Health.

As you’d expect, there’s a ton of useful descriptions of diseases, conditions, and treatments there. But it’s not structured in a searchable way for consumers, and perhaps worse, it’s mostly rendered in technical language that your average person might not be able to decipher.

Medify’s data-mining process collects the studies and also culls them for useful top-line indicators—what kind of drug or treatment was used, how effective it was, the number of patients in the study, whether it targeted younger or older people, and more. Patients can search through the data to find useful trends, dive deep into the results, and display them in custom data visualizations.

Medify’s data plans don’t end with research papers. Eventually, the company plans to add anonymous data from insurance claims systems and electronic medical records, which will give a better picture on how patients move through the system over time. The company has raised $1.8 million overall in venture financing, and plans to open a new fundraising round next month.

As we wrote in an early profile last summer, Medify’s focus on healthcare data was driven by Streat’s own experience with his daughter, who was diagnosed with a life-threatening kidney disease.

Medify hasn’t started collecting revenue yet, working instead with a small test pool to refine its user product. If Medify can attract a large base of engaged patients, there’s certainly money … Next Page »

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[Updated at 2:10 pm] Traffic data provider Inrix, born out of the team that developed Microsoft’s SYNC in-car software system with Ford, plans an aggressive global expansion and a public-market debut “sooner rather than later” after landing a $37 million round of investment led by top Silicon Valley venture capitalists.

That’s the word today from Inrix CEO Bryan Mistele, who was understandably buoyant about the news of his seven-year-old company’s oversubscribed Series D round—the largest we’ve seen this year for a tech company in Washington state, topping the $30 million hauls notched by humor website operator Cheezburger Network and gamified social network startup Lockerz.

Kirkland, WA-based Inrix says it has been profitable for about two years and would have been just fine without the extra cash, saying its annual revenue growth rate over the past three years has been about 85 percent. So why take the money while claiming you don’t need it? Mistele says it allows Inrix to get big faster, and take advantage of some acquisition targets in a sector that increasingly prizes global reach.

“As you look at the market, our customers—folks like Ford and Toyota and companies like MapQuest and mobile application companies—they want traffic data everywhere,” Mistele says. Major competitors include Nokia’s Navteq in the US and Europe, and GPS company TomTom in Europe, Mistele says.

Inrix provides those companies and others with real-time traffic data culled from its “hundreds of public and private sources,” particularly its own network of more than 10 million GPS-connected vehicles and cellular phones. Inrix partners with commercial fleets such as taxis and delivery trucks to cull data, and also gets some information from government road-sensor networks.

The data is used by a long list of customers, including state transportation departments, automakers Audi, Ford, and Toyota, and consumer brands like MapQuest and Inrix’s own consumer smartphone apps. Overall, Inrix says its information is used by 150 companies and more than 100 million people worldwide, in more than 20 countries in Europe and North America.

Inrix’s Microsoft legacy doesn’t stop with Mistele and co-founder Craig Chapman, who is still a board member. The company also uses technology developed at Microsoft Research, although Mistele says the licensing deal is set to expire next year when Inrix hits the cap on royalties … Next Page »

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[Corrected 7/19/11, 5:45 pm. See below.] Last month, Beverly, MA-based Eliza took in its first-ever outside investment, with an undisclosed equity financing from Parthenon Capital Partners, a private equity firm with offices in Boston and San Francisco.

Founded in 1999, Eliza offers speech recognition technology that powers automated phone calls to patients on behalf of accountable care organizations, employers, and hospitals, to cull qualitative information on patient health and offer actionable steps for improving wellness. [An earlier version of this paragraph incorrectly stated Eliza was founded in 2002. We regret the error.]

This whole time Eliza has been keeping a low profile and bootstrapping as it built out its technology to serve more customers, in the meantime accruing data from more than 450 million interactions with patients, says Eliza co-founder and president Alexandra Drane.

Things have started to heat up in the last couple of years surrounding national health reform, Drane told me when I caught up on the phone with her and fellow co-founder and CEO Lucas Merrow last week. “We started to consider a financial partner to help the organization go through opportunities for inorganic growth,” Drane says. “There may be an opportunity for us to think differently, more aggressively, in more intense ways in some areas.”

Eliza still has every intention of focusing on healthcare, but it’s looking to use the financing to build out new capabilities based on needs that have been revealed from the data in patient calls. The Eliza technology is designed to help patients tackle things like diabetes and high blood pressure that are already classified as health problems, but other issues that aren’t as concretely defined have come up in loads of calls with patients, Drane says. Patients talk to the system about issues like caring for elderly parents or financial stress, for example, that have interfered with patients’ ability to care for themselves properly, Drane says.

“Our hypothesis is understanding, A, how to establish a relationship with somebody to help them to understand issues, and B, that these issues in and of themselves have health consequences,” she says. “That is a big focuse for us right now at Eliza. It all relates to having the most accurate pictures of who people are and what they care about.”

Eliza could potentially be eyeing other acquisitions in the healthcare sector, as well as increasing its headcount, which is now at about 170 people, Merrow says. “We already planned on doing some pretty strong hiring prior to the investment. As part of this we’ll be beefing up,” he says.

Ultimately, the company hopes to get its technology in the hands of many more firms focusing on healthcare. Things are just beginning on this front, both Drane and Merrow say.

“A lot of customers don’t use this technology yet,” Merrow says. “It’s still an early lifecycle for what we do. We definitely needed expertise and capital to help us address that.”

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Waltham, MA-based Polaris Venture Partners announced yesterday that it had invested in its first set of companies from its $375 million sixth fund, including two Massachusetts companies. Biff Labs is a Cambridge, MA-based stealthy startup that is focusing on structuring social data. Xtuit, which the Boston Business Journal reported as also located in the Boston area, is working on technology designed to better translate cancer drugs from animal models to human studies. Exact sizes of the individual deals were not disclosed in the Polaris press release.

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How does one of the world’s hottest web properties keep up with insane user growth, continue adding features, and still keep the whole thing held together? To hear the head honchos of Facebook tell it, the answer isn’t to just vacuum up all the engineers you can find. Instead, founder and CEO Mark Zuckerberg and engineering head Mike Schroepfer say they want to maintain a healthy growth rate of about 60 percent, and spread the work around to everybody—including summer interns.

That was one of the highlights of Zuckerberg’s visit last week to the Facebook Seattle office, a team of about 40 coders who represent the social networking giant’s only significant engineering hub outside of California. The reason for Zuckerberg’s visit was a Q&A with developers, which was quickly decoded as a recruiting event for the growing Seattle outpost. He also told reporters that the company would be rolling out an “awesome” new feature this week, one developed out of Seattle.

Rumors chased down by TechCrunch and Mashable say the update is Skype-based video chat—something that could make the Internet phone company’s acquisition by Microsoft look once again like a better deal than it seemed at first blush.

Also making headlines in the past week or so at Xconomy Seattle:

—Coincidentally, I also had this profile of Seattle startup Likester, which is culling Facebook data to provide a look at how the social network’s “Like” button correlates to social trends in the outside world. Founder Kevin McCarthy got some fun publicity for using that data to successfully predict the winner of “American Idol,” and he’s also hoping the 2012 presidential election cycle will draw some eyeballs and users. But McCarthy also sees tons more sophisticated uses down the road, including serious e-commerce applications.

—RevenueLoan, the Seattle-based alternative financing startup for entrepreneurs, is rejiggering its name and overall mission to have a wider footprint. Founder and CEO Andy Sack says the company’s new name, Lighter Capital, reflects both the less-starchy attitude of the principals and its hope to make raising money easier for small companies. RevenueLoans, in which lenders get a share of future profits, will remain a product, but Sack hints that more offerings are ahead for his startup.

—Seattle’s PressPlane landed a nearly $3.5 million investment for Zapd, its smartphone-based website creating software. PressPlane also runs Inkd, an online design service. The whole thing is helmed by Kelly Smith of Curious Office, who says Zapd is hoping to thrive in a world where websites are “impulsive, alive, social and easy.” The round was led by Madrona Venture Group and included RealNetworks founder Rob Glaser.

—Rounding out the news, we saw digital puzzle startup Puzzazz raise about $400,000 in angel investment; California IT security company BeyondTrust buying software from Likewise Software of Bellevue, WA; and Madrona and Amazon returning as investors for New York-based video production startup Animoto’s $25 million C round.

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Could a startup best known for predicting the winner of “American Idol” be poised to capitalize on the next wave of e-commerce? When you’re talking about the ever-expanding world of Facebook—and the mountains of data it churns out—that kind of evolution starts to sound a lot less crazy.

At least, that’s the impression you might get after talking with Kevin McCarthy, founder of Likester, a Seattle-based social-data startup. Likester is among a wave of consumer web companies that use Facebook data-mining to power their own standalone websites, rather than staying inside the social network’s walls as an application.

Likester’s tagline, “the Global Popularity Engine,” gets to the point of what the service offers now: A big dashboard that lets users see how popular various places, businesses, people, and pop culture tidbits are among their friends and the wider world. Likester does that by accessing data about what its users, and their friends, have flagged in Facebook by clicking the Like button—the friendly little thumbs-up icon that Facebook introduced about a year ago.

If that sounds somewhat like a glorified Facebook application, it is. Likester actually started out as an app called “What do My Friends Like?” before McCarthy spun it out into a standalone service. The site went live in April, and quickly tied its marketing strategy to “Idol” by predicting the eventual winner, Scotty McCreery, who wouldn’t be crowned for more than a month.

Likester already has more than 10,000 users, McCarthy says, with a surprising level of international adoption that seems to be building off of press coverage—”We’re big in Iran,” he says with a laugh. Revenue comes through advertising right now, with the possibility of a tiered-membership model later that lets consumers in for free and charges marketers, researchers and other professionals to access more powerful number-crunching.

But McCarthy sees the potential for even bigger things in the untapped rivers of information that Facebook generates, and the disruption it could cause in sectors like retail by tapping into the power of high-quality recommendations.

McCarthy, who sold the SEO startup SearchMarketing.com to ChannelAdvisor in 2005, actually started working with the data Facebook provides to outside developers for a previous startup called OtherPage, which focused on comparison shopping. OtherPage didn’t make the cut, but the experience gave McCarthy a much deeper understanding of what could be possible by working with Facebook’s data, he says.

“There’s a lot of kind of silly, single-function applications that are incredibly successful on the Facebook platform, but there’s not a lot of examples of data-intensive, potentially high-reward … Next Page »

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Let’s count the juicy consumer-Internet trends piled up in Seattle startup Lockerz: Social networking, photo sharing, gamification, deals, and original content. That’s a mouthful, and investors apparently like what they see—Lockerz’s $30 million venture round is by far the biggest equity deal in Washington state for the month of April, according to data compiled by research firm CB Insights.

Lockerz is led by Kathy Savitt, a veteran of Amazon.com. Also in April, Lockerz added another former Amazonian, Mark Stabingas, as chief operating officer. The site claims 18 million users, who earn points for watching videos, uploading photos (Lockerz previously acquired Plixi) and other social-networking interactions. The aim is to redeem those points for deals on consumer products. Lockerz is very well-financed for a Seattle tech startup—it previously had raised $30 million.

There was a tie for second-largest equity financing in April, with two companies raising $6 million each. One was Decide.com, a stealth-mode startup that says it is focusing on online consumer electronics shopping. The company was co-founded by University of Washington professor and Internet search expert Oren Etzioni. It’s led by CEO Mike Fridgen. The pair worked together on Farecast, the airfare-prediction startup that was acquired by Microsoft.

The other $6 million startup in April was Spokane-based ReliOn, which makes commercial and industrial fuel cells based on “proton exchange membrane” technology. The company has been around since 1995, but went through a name change in 2004, according to the corporate website. ReliOn says it has about 3,500 kilowatts’ worth of cells worldwide, and serves public and private customers.

Coming in fourth was Xeround, which raised $4 million. Xeround, based in Bellevue, WA, offers cloud-computing software to help businesses, primarily in the telecommunications industry, to help them manage their data. The company says it has developed an “intelligent data grid” that allows customers to put all their information in one place instead of having it scattered across multiple databases.

Rounding out April’s top five was Mpire, a Seattle-based advertising company that raised $3 million. That wasn’t the end of the company’s news last month: Mpire also named a new CEO, and changed its name, switching over to AdXpose—adopting the moniker of its marquee product. That was the completion of a switchover that the company started about a year ago, when it announced it was ditching its previous Widgetbucks advertising network to focus on the AdXpose technology, which is dedicated to “optimizing” ad spending online.

Check out the table for the rest of the month’s Washington equity deals, and a few debt financings to boot.

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