Here’s one way to measure a fast-growing company: It runs through four different headquarters in about 18 months just to contain all the employees. That’s the story with Zulily, one of Seattle’s main contenders in the exploding (and crowded) marketplace for digital discount shopping.

Zulily operates a members-only daily deals service targeting moms, bringing discounts in the 50-90 percent range on upscale products for kids and parents. Even though it’s still a toddler age-wise, Zulily has already blown up to about 240 employees and says it just passed the 4 million member mark. When the startup launched publicly early this year, they counted only about 15,000 members.

And as of today, Zulily officially has another $43 million in venture financing in the tank to fuel continued growth, after a round led by Meritech Capital Partners and including previous investors. The new money brings Zulily’s total venture financing so far to $53.6 million.

I chatted with Zulily CEO Darrell Cavens about the company’s wild ride so far and its plans for the future. The interview was a pretty rare occasion, since Cavens and company have been rather quiet in the past several months as they worked on building the startup.

The “daily deals” sector has been a wonder of modern business, both in substance and me-too hopefuls. Groupon, the Chicago-based flagship of online bargain aggregation, has been called the fastest-growing company in history as it steams toward a megabucks IPO. Its knockoffs and followers are legion.

Zulily operates in an offshoot known as the “private sale” realm, which adds an air of exclusivity by requiring membership to get its hot bargains. The business side, however, is pretty old-school retail, as Xconomy’s Greg Huang explored in this piece ahead of the rollout: Zulily helps suppliers offload inventory and takes a piece of the action on the sales it generates.

Cavens and his co-founder, Mark Vadon, worked togethert at Blue Nile (NASDAQ: NILE), the Seattle-based online gem and jewelry seller—Vadon was a founder of Blue Nile, while Cavens was a senior vice president. That company did something similar to what Zulily is attempting, breaking a higher-end product niche out of traditional retail and establishing a strong Web brand.

Cavens pegs the kid-related products market at about $60 billion. “It’s a massive category. I just think it’s underserved,” he says, with mass-market stores like Babies R Us on one hand, and not many bigger standalone retail outlets as you go upmarket.

Cavens wouldn’t talk revenue, but says publicly available site traffic figures help tell the tale of engagement from the members who get daily deal e-mails. Data from Compete.com, for instance, shows Zulily growing from about 1.1 million unique visitors in January to about 3.2 million in May, with a slight setback to about 2.6 million in June.

“They’re coming back again and again and again,” he says. “What we’re seeing is that we have a very deeply engaged audience to the e-mail each morning, and we’ve got hundreds of thousands of moms who are coming back every single day.”

One interesting note that Cavens hit on in discussing how Zulily has built its brand was the idea of aggressive curation, with a boutique feel. He said products offered on the site might not always draw huge numbers—a fancy dollhouse for several hundred dollars was a recent example—but help reinforce the overall experience.

He likened it to publishing a newspaper, where the mix of stories and images is constructed to give people an entire package of (hopefully) compelling content. It’s an idea that Ajay Chopra of Trinity Ventures—a Zulily investor—discussed in this recent Xconomy guest column, calling it “social entertainment shopping” that moves consumers “from a ‘search’ paradigm to find products and services to a ‘discovery and sharing’ paradigm.”

Cavens says the new money from Meritech and others should keep Zulily operating well for some time. The company plans to keep adding to its growing employee roster, particularly with buyers and engineers. “I think this gives us a tremendous amount of runway to go after some pretty aggressive goals and growth,” he says. “The goal here was to raise enough that this could get us to the long term.”

With so many players around in the overall online discounts sector, there’s bound to be some consolidation—and Zulily isn’t the only one targeting moms and kids. Cavens says Zulily isn’t thinking about that much and wants to keep focusing on its own path. But with people who helped Blue Nile eventually go public at the helm, he says Zulily doesn’t see itself getting snapped up, either. “I think we very much view this as a standalone company, long-term,” he says.

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Sparkbuy, a consumer electronics shopping site based in Seattle, has been purchased by Google (NASDAQ: GOOG), the startup announced today on its website. The company, which has been around for less than a year, had raised about $1 million, led by Benaroya Ventures and angel investor Geoff Entress. Terms of the acquisition weren’t disclosed, but this looks like a clear case of talent acquisition by a big company.

“I know, right? We can hardly believe it ourselves,” the company’s leaders wrote on its website, which also said that Sparkbuy is shutting down as the team joins Google. The Mountain View, CA-based search giant added in a statement to All Things D that the Sparkbuy team will work out of Google’s Kirkland, WA, office.

That’s quite a turnaround for a little startup that just came out of stealth mode last November and only started up its service in late March. The idea behind Sparkbuy, led by entrepreneur Dan Shapiro, was to make online electronics shopping more customizable and powerful for consumers. In fact, with features like little sliders that customized search ranges for price and technical specifications, Sparkbuy was directly inspired by online travel sites like Expedia and Kayak.

Just last month, we reported on Sparkbuy adding products from Best Buy (NYSE: BBY) to its stable, which had already included laptops and other gadgets from Amazon.com and Newegg. That partnership bumped up the product offerings to about 3,000 items.

Shapiro previously co-founded mobile picture site Ontela, which merged with Photobucket in late 2009.

A Seattle-based Sparkbuy competitor, Decide.com, is still in stealth mode. Last month, it raised a $6 million investment round. Decide was co-founded by Internet search expert and University of Washington professor Oren Etzioni.

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Seattle stealth startup Decide.com, which says it’s working on a consumer electronics shopping service, announced a $6 million Series B financing round today. The latest investment was led by Maveron—Starbucks Chairman Howard Schultz’s outfit—along with Madrona Venture Group and angel investors. Decide, led by CEO Mike Fridgen, is also adding some notable names: Dan Levitan of Maveron and former Farecast Chief Executive Hugh Crean are on the board, while founding Google board member Ram Shriram is lined up as an adviser and investor. Former Expedia CEO Erik Blachford also is an investor. Decide previously raised about $2.5 million in venture financing. University of Washington professor and Internet search expert Oren Etzioni is a co-founder. Fridgen said in a news release that Decide “puts the power of shopping for electronics back in consumers’ hands,” whatever that means. It sounds like a possible competitor to Sparkbuy, the Seattle startup led by Ontela (now Photobucket) founder Dan Shapiro.

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Need a little fashion advice? Click onto WingTipIt, a Web site launching this week, and assemble your own virtual closet of clothes you covet—then seek feedback from friends via Facebook. Or if accessories are more your thing, click over to Send the Trend, fill out a quick survey, and you’ll receive a list of jewels, sunglasses, and other accessories tailored to your personal style.

Perhaps you enjoy discovering new designers. No problem: At FashionStake, you can buy the latest offerings from up-and-coming designers, vote for your favorites, and compare notes with other fashionistas.

WingTipIt, Send the Trend, and FashionStake—all based in New York—are just a few of the many shopping sites that have stormed the Web in the last few months. Each has its own twist, but they all share a common goal: to make online shopping way more interactive and personal than the department stores can.

“Retailers are constantly looking for ways to connect with their customers in a meaningful way,” says WingTipIt co-founder Kimberly Skelton, who worked in real estate and marketing before attending Columbia Business School. While a student, she also spent a summer working in the e-commerce group at Tory Burch.

Carla Holtze (left) and Kimberly Skelton of WingTipIt

Skelton’s e-commerce experience infused in her a desire to solve a nagging problem: Retailers can convert browsers into customers much more effectively in bricks-and-mortar stores than they can online. “In stores, customers can speak to sales agents, they can shop with their friends. They can get validation from other people,” she says. “We wanted to bring that online.”

Register on WingTipIt, and you can add a bookmarklet to your toolbar, so when you’re shopping on a retailer’s site and you see something you might want to buy, you can add it to your virtual closet with one click of the bookmarklet.

The site is fully integrated with Facebook and Twitter. So once you amass a collection of clothes, you can tweet about it, or post a link to it on Facebook, and invite your friends to comment. Or, if your birthday is coming up, you can suggest that your friends … Next Page »

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Interesting news in online travel this afternoon, spanning the Boston and Seattle areas—and plenty of destinations in between. Bellevue, WA-based Expedia (NASDAQ: EXPE) said it plans to split into two publicly traded companies—one will be Newton, MA-based TripAdvisor (which has been part of Expedia since 2004), and the other will remain Expedia, which also owns Hotels.com, Hotwire, and a number of other travel brands.

The company said the split will take the form of either distributing TripAdvisor stock to Expedia stockholders or reclassifying Expedia stock (so Expedia stockholders get a proportionate amount of TripAdvisor stock). The deal is expected to be completed in the third quarter of this year, and is subject to final approval from Expedia’s board and stockholders.

TripAdvisor is based around a huge collection of user reviews about hotels, restaurants, and other businesses, which consumers consult when making travel plans. Its main source of revenue comes from collecting fees whenever users click through the TripAdvisor listings to make a reservation.

Reached for comment today, TripAdvisor provided a statement from its co-founder and CEO, Stephen Kaufer: “I’m excited to announce the planned spin-off of TripAdvisor and the TripAdvisor Media Group from Expedia, Inc. to become an independent, publicly traded company. We look forward to this next stage and to our continued growth and innovation in inspiring and helping travelers plan the perfect trip.”

That doesn’t say much, of course, but the move makes sense for both parties—and isn’t all that surprising. TripAdvisor was acquired by IAC (NASDAQ: IACI) in 2004, back when IAC owned Expedia, and was nominally put under Expedia’s charge; Expedia was spun off later that year. But TripAdvisor, which has been raking in the dough for years ($486 million in revenue in 2010), was never really integrated into Expedia; the two entities remained largely separate.

A little over a year ago, TripAdvisor’s Kaufer told my colleague Wade, in an in-depth interview, that Expedia had pretty much left his company alone since the acquisition. “I love the autonomy that Expedia has given TripAdvisor and the whole media group,” Kaufer said then. “I’ve told my boss and I’m happy to tell the public that when the rules of engagement change and Expedia wants to start micromanaging what we do here, it’s their right. They own the company. But I won’t be CEO.”

Sounds like Kaufer isn’t going to be leaving anytime soon (unless there’s another surprise in the works). We’ll continue to monitor this deal, and see if we can’t uncover more details about exactly why the split is happening, and why now.

The online travel world is also bracing for a possible ruling in the case of Google’s contested acquisition of Cambridge, MA-based ITA Software, whose technology organizes data on flight itineraries and powers airfare shopping sites. Reuters and other news outlets have reported that a decision from the U.S. Department of Justice might be just days away.

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Jordy Leiser and his friend John Ernsberger left their jobs in the financial industry in 2008 with an appetite for starting a company around the subject of transparency. But that inspiration didn’t turn itself into a company right away. “We spun our wheels for a long time,” says Leiser.

So they did what any self-respecting mid-twenty-somethings would do when they ran out of money: left their Brooklyn dwellings and went back to their college (Bucknell in Lewisburg, PA) to figure it out. The pair was passionate about online retailers with really great customer service, like Zappos.com. So after months of consulting with academics at Bucknell, they settled on a strategy.

“We put together this idea to create the richest, most extensive robust methodology to evaluate service,” Leiser says.

Anyone can put up a description on their website touting their amazing service, but there was virtually no objective third-party rating system or mark for vetting that, like Zagat (restaurants), or JD Power and Associates (automobiles) Leiser says. So his startup, StellaService, developed a testing method and asked big online retailers if they’d be willing to purchase the data that testing produced. And, to touch back on that transparency theme, online stores that passed the customer service test could display a seal from StellaService—named for the Italian word for “star”—signifying they had been vetted by a third party and were considered tops in customer service.

“The hypothesis was maybe we if launched some website that had bunch of ratings for companies, the guys that did really well would be willing to take a chance to display some kind of signal,” says Leiser, the company’s CEO.

StellaService secured Diapers.com as an early customer. The company collected $250,000 in angel funding in December 2009 from Bucknell alum and LendingTree.com founder Doug Lebda, and a crop of other angel investors who are friends with him, Leiser says. The money got Leiser and Ernsberger back to New York City in early 2010, and allowed them to take the website live that March. StellaService’s website offers a public database of e-tailers its guerilla force has tested, offering its summary of the service experience, service contact information, and basic shipping information. It also lists retailers with the top customer service in a number of categories.

The company’s aim was to test every angle of an online retailer’s customer service, using roughly 300 different metrics on things like shipping time periods, speediness at answering customer questions, product knowledge, and much more. “The beauty is that we don’t need their permission to do it,” Leiser says. “We just go and become customers.”

It’s hired a legion of two dozen people—what Leiser calls “mystery shoppers on steroids” to test websites using StellaService’s methodology, by doing things like sending e-mails in Spanish, and calling morning, noon, and night, to ask questions on the products, delivery methods, return processes, and beyond. It relies on this consistent, ground up approach to rate businesses, beyond the polls and user-submitted reviews that sites like BizRate use to grade online stores.

The startup, based in NYC’s Flatiron district, set out to get 10 to 15 of top 150 retailers it evaluated to display the StellaService seal last year, Leiser says. It pulled in closer to … Next Page »

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[Corrected 3/7/11 10:15 a.m.] Remember shelling out big shipping and handling charges for that rotisserie oven you just had to buy from some infomercial? Small retailers sure do—and they remember it fondly.

In fact, when entrepreneurs Ron Wiener and Josh Leichtung were in the catalog business years ago, shipping and handling could actually account for your entire year’s earnings.

“You looked at your 2-to-4 percent at the end of the year, it was all the profit that you made on shipping,” Wiener said. “Amazon’s changed the game.”

Now, to compete with Amazon.com and others offering free and low-cost shipping, small- and medium-sized retailers have had to trim their old reliable revenue stream. That’s been a big win for consumers—another example of computing power and business minds disrupting an old, opaque, inefficient system that was begging to be turned upside down.

But Wiener—a serial entrepreneur and investor—says smaller retailers have been mostly left out of the positive side of that revolution. The little guys are still using the big carriers like FedEx and UPS for a lot of their shipping, but are unable to command better discounts on their own costs.

“They fight over Amazon. They fight over the big retailers,” Wiener said of the shipping giants. “And they make money on the little guy.”

That’s where Wiener and Leichtung hope to thrive with their new company, Seattle-based ShipSweet, which they’re priming to start operating sometime in the second quarter.

ShipSweet aims to aggregate the front end of package collection, customer service and payments (the “first mile” of parcel travel, in shipping parlance) for small and medium retailers. ShipSweet will take those parcels to the shipping companies—particularly the lesser-known networks of regional and local carriers—and use the economies of scale that come from pooling lots of small orders to deliver both profits for ShipSweet and better rates down the line for small businesses.

“We’ll be competitive in most cases for shippers who are under 150 packages a day,” Leichtung said. “But under 50 packages a day, no one will be able to touch us in terms of price.”

Although I know basically nothing about the mechanics of the shipping industry, I was skeptical after hearing the pitch that a small startup could quickly get in front of enough retailers … Next Page »

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A quick update from one of the darlings of the Boston consumer tech scene. Lexington, MA-based Daily Grommet says it has raised just over $475,000 in financing as an extension to its $3.4 million Series A round last April. The new money came from the company’s existing angel investors, including John Landry, Nancy Peretsman, LaunchCapital, and Race Point Capital.

What’s more interesting is where Daily Grommet seems to be heading. Founder and CEO Jules Pieri says the company, which scouts out consumer products from relatively unknown manufacturers and promotes one such “grommet” each day through online videos, had a “pretty explosive” fourth quarter of 2010. The startup rolled out a revamped website with new social shopping features in October and increased its subscriber base to 130,000 in December—up from 3,000 at the end of 2009. Total revenue in 2010 was 10 times the previous year’s, Pieri says. “We worked hard at acquiring customers, and figured out our economics,” she says.

She adds that she’s looking to raise another financing round fairly soon as the company focuses on growth and acquiring more customers this year—partly by pursuing more partnerships with big media publishers. Daily Grommet’s role there, she says, is to “take inspiring stories and make them portable traveling assets across the Web.”

One point surprised me a little bit: The explosion of group-buying sites and the Google-Groupon near-acquisition directly affects Daily Grommet, Pieri says, because now “people are paying attention to our space”—broadly speaking, she means the intersection of online content, community, products, and marketing. Of course, Daily Grommet’s “deals” are national instead of local, as Groupon’s are, and evergreen instead of daily or weekly, but the basic idea of using Web marketing to help businesses get new customers is the same.

“We’ve proven the economics,” Pieri says. “It’s ‘pour fuel on the fire’ time now.”

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There’s certainly no shortage of intriguing new tech startups around town. One stealthy company that has come to light in the past week is CQuotient, a Belmont, MA-based developer of analytics software for retailers. The startup confirmed it recently raised $3 million in Series A financing from Bain Capital Ventures.

Founder and CEO Rama Ramakrishnan is a veteran of analytics as applied to business and retail. He was formerly chief scientist and vice president of research and development for ProfitLogic, a price-optimization software company that Oracle acquired in 2005. Joining Ramakrishnan at CQuotient is chief operating officer Graeme Grant, who was most recently the CEO of Allurent, the now-defunct online shopping firm. Grant and Ramakrishnan previously worked together at ProfitLogic (and then Oracle).

CQuotient just started in July, so the company isn’t giving too many specifics about its technology or business strategy. What’s interesting is that it’s riding some big trends in consumer tech, such as personalized shopping and recommendations, more targeted and mobile advertising, and increasing amounts of data on exactly which items people buy, and when and where they buy them. A company that can help retail stores make sense of all those details—and translate them into selling more stuff—stands to do pretty well.

Here’s a transcript of an e-mail chat I had with Ramakrishnan:

Xconomy: Can you describe the genesis of CQuotient?

Rama Ramakrishnan: During my tenure at ProfitLogic, and later in my analytics consulting work with retailers, I became increasingly convinced that looking at the world through a “customer lens” was the answer to a number of challenges retailers face.

While “looking at things from a customer’s point of view” sounds obvious, in reality retailers rarely do it. Instead, they look at high-level product sales and inventory data (e.g., we sold 100 units of Product Y in December) to make decisions. They rarely look at what their individual customers are doing (e.g., those 100 units were sold to 40 customers who each bought one unit and never again, and 20 customers who bought one unit and then returned to buy it twice more on future trips).

I was blown away by what I saw as the untapped value in customer data and started CQuotient in July 2010 with the idea of helping retailers infuse customer insight into every … Next Page »

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It was no secret that stealthy Web startup Krush had raised some money—but now we know how much. The Cambridge, MA-based company, led by co-founder and CEO Gina Ashe, has closed $2 million in Series A equity financing, according to a regulatory filing. News of Krush’s financing round (but not the amount) was first reported by Mass High Tech earlier this month.

The investors weren’t disclosed, but the SEC form lists Nashville, TN-based investor Eric Satz as a director of the company alongside the co-founders, and says there are a total of 16 investors. Ashe has said that Boston angel investors and outside institutional investors participated in the round. She pitched the company at the Open Angel Forum in Cambridge in October—and apparently that’s all she needed to start the ball rolling and get some Boston-area buy-in.

I argued last week that sometimes it doesn’t matter how much money you raise, or even what you’re building, so long as you’re alive. That’s because Ashe survived a horrific car accident back in August that killed one person and injured four. She is lucky to be alive. After surgery and months of rehab, she has been walking without crutches for a couple of weeks, and stands as an inspiration to many entrepreneurs in the community.

Now $2 million in financing is a good start, but early next year we’ll see what Krush is really about. From what I understand, it is an online platform that mixes elements of social shopping, recommendations, crowdsourcing, and gaming. The broad idea seems to be that young people who’ve grown up on the Web can change the way products are designed, manufactured, shared, and sold—all through their own social influence.

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As an entrepreneur, sometimes it doesn’t matter how much money you raised, from whom, or even what your company is building. Sometimes it just matters that you’re alive.

Meet Gina Ashe, the co-founder and CEO of stealthy Internet startup Krush, based in Cambridge, MA. She isn’t talking much about her new business yet, but a report in Mass High Tech said the company recently raised a Series A round from Boston-area angel investors and outside institutions, and it put the firm’s pre-funding valuation at more than $6 million. Previously, Ashe was part of the founding team at Sermo, the online physician community, and she has senior executive experience in marketing and finance at a number of firms.

But the most important thing about Ashe is that she is a survivor. On the afternoon of August 19, 2010, she had just left an investor meeting and was driving home on Route 2 west of Boston, when an oncoming car crossed the median and smashed into her head-on at 85 mph. The driver of that car, Shannon Gwiazda, died in the crash. Four other people including Ashe were injured in the four-car pileup, which closed the highway for several hours.

Ashe survived—in part because she was driving a Cadillac CTS 4, a car that people had teased her about (who drives a Cadillac?); the mid-size luxury sedan had a huge engine up front and extensive airbags. “It truly saved my life,” she says.

But she sustained serious injuries, including a smashed heel and ankle, four broken ribs, and cuts and burns over much of her body. She spent weeks in the hospital and was told she wouldn’t walk again. But with help from Daniel Palestrant, Sermo’s CEO, she found a surgeon at Brigham & Women’s Hospital who performed a new procedure that she says accelerated her recovery by six months. The surgery involved putting a plate and seven screws in her leg.

Ashe was bedridden for weeks, but progressed to using a wheelchair and then crutches—on which she delivered her financing pitch at the Open Angel Forum in Cambridge in October (which won her some Boston-area investors). Meanwhile, her Krush co-founders, Alexis Kopikis and Alan Osman from Propel Consulting, stood by her and kept the project moving. The site was two weeks away from launching beta trials when the accident happened. “There were days I thought I couldn’t go on, but they said, ‘No you have to think about this [or that],’” she says.

The local business community also provided a lot of support. “Women CEOs rallied … Next Page »

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Cambridge, MA-based Allurent, an online-shopping software startup, has closed down sometime in the past month, according to a report in the Boston Globe. The article says the company was in discussions with a potential acquirer until the end. Xconomy first reported on Allurent back in 2007, when the startup had just closed financing from Polaris Venture Partners. Last year, Allurent co-founder Joe Chung passed the CEO baton to Graeme Grant and became executive chairman of the firm. More recently, Chung and fellow Art Technology Group founder Jeet Singh have started working on a stealthy startup code-named Redstar. Allurent has been shrinking over the past few months as Polaris’s Dogpatch Labs incubator has expanded within its office space near Kendall Square.

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Online shopping—and rewards programs in particular—seem to be on the rise. Mall Networks, a promoter of online customer loyalty programs, has closed a new $6.6 million round of venture funding, according to a regulatory filing with the SEC. Attempts to reach the company, which is headquartered in Lexington, MA, and has an office in Silicon Valley, were unsuccessful yesterday.

The investors in the new round weren’t named, but Mall Networks’ existing investors from Dace Ventures, Flybridge Capital Partners, Venture Capital Fund of New England, and LBO Enterprises are listed as directors on the SEC form. According to a report in Mass High Tech, all of these firms participated in the new funding round, which is being called a Series C.

As its name suggests, Mall Networks has created a network of online malls—collections of products from more than 700 name-brand merchants such as Verizon, Best Buy, and Shop.org—where people like Chase credit card holders or Delta frequent flyers can earn rewards points or miles for every dollar they spend. The company raised a $7 million Series B round in August 2008, when Wade reported on its strategy of tying together consumers, brands, and stores with banks, credit card companies, and airlines—all in the name of promoting customer loyalty programs, so that everyone makes more money.

Mall Networks was co-founded in 2005 by its former chief executive Dave Andre. The company is now led by CEO and president Tom Beecher, according to its website. Beecher is the former CEO of Imagitas, a private-label marketing services company, and previously was a managing partner at Biltmore Capital Partners, a private investment fund. As of August 2008, Mall Networks had some 40 employees and was planning to expand its software platform and hire about 10 more staff in sales, marketing, and service areas.

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Cambridge, MA-based thredUP‘s mission is simple: to be “the place where America’s busiest families exchange clothing for kids,” says co-founder and CEO James Reinhart.

The idea came to him in November 2008, when he was staring at a closet full of clothes that he no longer wanted to wear, he says. Last October, the company launched an e-commerce site for peer-to-peer exchanges of men’s and women’s shirts, but it has quickly evolved to focus on more miniature clothing consumers.

ThredUP seeks to get apparel that kids have outgrown in the hands of others it would fit. The average U.S. family spends about $1,000 a year outfitting their rapidly growing tots, says Reinhart. “Our goal is to supplement that experience to save parents money,” he says.

Setting up an exchange on thredUP is designed to take about 10 minutes from start to finish. Users can browse boxes containing 10 to 18 children’s clothing items, based on factors such as gender, size, season, or clothing items. Once a user selects a box they’d like, the thredUP site automatically sends the box’s creator an e-mail instructing them to ship it.

Once a user has picked a box, it’s expected they’ll put together a box themselves; a process the site walks them through. They select the child’s age, gender, and size from dropdown menus. Next they choose exactly how many of each clothing item they’re packing, and further qualify that by selecting the season of the clothing, at least three brands the box includes, the most prominent colors in the collection, and any additional descriptions.

The site even automatically generates a shipping label for the exchange, which users can print out on their home computer, and stick on free postal boxes.ThredUP helps users order the postal boxes, and schedules the time when the clothes can be picked up right from their home.

“The whole thing has been designed for super ease of use,” says Reinhart, who’s expecting his first child this summer. “We think so many websites don’t button it up the full way.”

At this point users can build kids’ boxes on the site, but the exchanges won’t go live until early next week. The kids’ site has accrued more than 1,000 users in the two weeks it’s been up, Reinhart says.

Shoppers pay $13 to send and receive one box, which mainly goes to shipping costs of the exchange. ThredUP makes … Next Page »

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Paragon Lake, a jewelry virtualization and customization company, is looking to add a new layer of sparkle to its business. It’s renaming itself Gemvara and revamping its business model to to focus on allowing customers to personalize jewelry pieces directly from their own computers and not from computer stations inside retail stores as it had done originally.

The new Gemvara website (set to launch later today) looks to enhance the company’s “the-world-is-your-oyster” approach to jewelry design and customization. Customers will be able to browse designs from roughly 30 designers worldwide, and personalize their selections on the spot by swapping out a different gemstone or changing the metal.

“The focus for us is really about providing a consumer experience where shoppers have fun and get exactly what they want,” says Matt Lauzon, founder and president, who helps CEO Deborah Besemer run the company out of incubator space at Lexington, MA’s Highland Capital Partners.

Paragon Lake’s previous model hinged on the Virtual Display Case, an interface installed on computers in jewelry stores that allows customers to browse and customize inventory from different designers. They would then order their selection through the retailer, and Paragon Lake would take a cut. The company’s virtual display cases, launched with the first retail partner last March, were intended to lessen the physical inventory burden on jewelry stores and also allowed retailers to feature up-and-coming designers more prominently. The company had hoped to get its system into 50 retailers by the end of 2009, a target it hit by fall, Lauzon says. Now about 45 stores still have the computerized display cases, as some of the retailer partners are looking to adopt the online model that Gemvara will offer, he explained.

The new model pursued by Gemvara, a name that combines “gem” with the Sanskrit word for wish, furthers the customization concept, and adds a greater bit of convenience. Customers can do all their shopping and modifications directly on the Gemvara website. “It allows us to speak directly with the consumer,” Lauzon says.

Customers looking for advice as they’re about to personalize a certain piece of jewelry can contact Gemvara’s version of personal shoppers for feedback on their customization ideas. Initially this will be done on the phone, but future plans are to offer chat windows, and bring licensed gemologists into the mix to offer their perspectives. In the coming months, Gemvara plans to enlist more designers to showcase on the website, and even connect those designers with customers in the same way it seeks to connect them with the personal shoppers, Lauzon says.

Reflecting its enhanced focus on customer service, direct retail sales, and the Web, Gemvara has hired heads of merchandising, product management, and online marketing, bringing the office staff to just over 20. When Bob spoke with Lauzon and Besemer in May, they had already been planning to eventually shift the business model to Internet-based customizations for jewelry shoppers (what Besemer referred to as the Web 2.0 of online jewelry shopping), but they’ve actually done it sooner than their original target (which at that time was Mother’s Day of this year). The new site will also feature more affordable pieces than Paragon Lake’s store-based virtual display cases did. Jewelry in the previous model usually ran upwards of $1,000, but Gemvara will feature some designs as low as $250, Lauzon says.

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Just a quick recap of the venture deals in Washington state from the last month of 2009. Things really slowed down heading into the dead of winter, with just four venture financings, all in software and Internet, worth a total of $21.7 million (see table below). That’s less than half the money invested in November, when Washington-based companies saw $44.4 million put into 10 venture deals across healthcare, energy, and software.

That’s the official tally from ChubbyBrain, the New York-based maker of tools for investors, startups, and entrepreneurs. The figures include only companies headquartered in Washington state.

The good news, in my view, is that the December deals were all Series A or Series B financings of up-and-coming tech companies, all of whom we’ve been tracking at Xconomy. They ranged from LiveMocha, a Bellevue, WA, startup developing online language-learning software, to the brand new online-shopping startup Zulily in Seattle (both companies are backed by Seattle-based VC firm Maveron).

The fear is that, as the effects of the recession reverberate, venture firms will stay in triage mode and devote less of their energy to new startups and new ideas. So far, 2010 is looking a little more promising, but it’s still early.

Here is the recap of December 2009 venture deals in Washington:

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—Personalization based on predicted intent instead of past behavior (based on cookie).

—More robust “universal search:” Better results for text and descriptive searches on videos, pictures, inside games, and applications.

—GPS-based hyper-targeting of search results and advertising on smartphones.

—Ubiquitous and non-text search: Search as an integrated activity rather than a separate activity into videos, music, etc. Search on images, tones, smells, and not just text-based phrases and descriptions.

—3-D search: Search will have new display and navigation metaphors beyond text and html links on a flat white background.

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It was another pretty busy week for deals in the Northwest, as everyone scrambled to beat the holiday rush. Lots of action in biotech, Internet, and mobile.

—Seattle-based ZymoGenetics (NASDAQ: ZGEN) is getting back the full rights to its drug for surgical bleeding in the U.S. and every other country except Canada, under a restructured partnership with German giant Bayer, as Luke reported. Bayer will no longer have to pay ZymoGenetics as much as $16 million in milestone payments for regulatory approvals around the world, while ZymoGenetics will have to pay Bayer as much as $12 million in commissions over the next two years, about half of what it could have owed Bayer under the old agreement, which was made in June 2007.

—Bothell, WA-based OncoGenex Pharmaceuticals (NASDAQ: OGXI) has clinched $60 million in upfront payments from Israel-based Teva Pharmaceutical for the right to co-develop an experimental prostate cancer drug, as Luke reported. Teva will pay $10 million to buy stock in OncoGenex, provide $20 million in upfront cash, and make a $30 million prepayment on development costs for OncoGenex’s drug, OGX-011, in addition to future milestone payments and royalties on product sales. But OncoGenex’s stock took a dive as investors saw how much of the future royalties will end up going to Carlsbad, CA-based Isis Pharmaceuticals.

—Seattle-based Zulily emerged from stealth mode, having raised a $4.6 million Series A round led by Maveron, the venture firm founded by Howard Schultz and Dan Levitan. Zulily, which is led by ex-Blue Nilers Darrell Cavens (CEO) and Mark Vadon (chairman), is building a “private sale,” members-only shopping website focused on kids and baby products.

—Bothell, WA-based Seattle Genetics (NASDAQ: SGEN) secured $12 million in upfront payments from GlaxoSmithKline in exchange for its technology that links antibodies to toxins that make them more potent, as Luke reported. Seattle Genetics is also in line for up to $390 million in milestone payments, plus royalties on worldwide product sales.

—Seattle-based Ontela, a mobile-imaging startup focused on helping consumers get pictures off their camera phones, merged with Denver, CO-based Photobucket, the photo-sharing website. Financial details weren’t given. The new entity goes by Photobucket, and Ontela’s venture backers—including Voyager Capital, Steamboat Ventures, Oak Investment Partners, and Covera Ventures—are putting new cash into it. Photobucket was previously owned by News Corporation (Fox).

—Seattle-based AltAir Fuels inked agreements with 14 major airlines to negotiate the purchase of up to 750 million gallons of camelina-based jet fuel and diesel. AltAir was formed in 2008 and plans to produce biofuels at a new facility in Anacortes, WA, slated to open in 2012.

—Lastly, the seed-stage investment fund and startup boot camp TechStars is coming to Seattle next fall, with the weight (and resources) of virtually every local tech investment firm behind it. I talked with entrepreneur and investor Andy Sack, who will head the Seattle effort, and Madrona Venture Group’s Greg Gottesman, who helped bring the program here, about the significance to the local tech startup scene.

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Max Ciccotosto has entrepreneurship in his blood. A native of Italy, his parents ran a business in the old country. While in college at the University of Bologna, Ciccotosto ran a “junior enterprise” company (the system no longer exists in Italy) that handled networking and IT for small companies. He came to Seattle in 1999 to do his master’s in electrical engineering at the University of Washington. Microsoft offered him a job the day after he graduated, to work in the Microsoft Exchange Server division, which develops messaging and collaborative software products.

After six and a half years at Microsoft, the last three in mobile technologies, Ciccotosto decided to go back to his entrepreneurial roots. His eureka moment happened at a Barnes & Noble. He was browsing a book and thought, “This looks good, but can I get it cheaper? And is it the right book [on the topic]?” He realized this sort of thing happens frequently—he calls it “transient wishes,” when you see or hear about something interesting but don’t close the deal then and there, and end up forgetting about it. (I won’t let that happen with Ciccotosto’s recommendation for best Italian food in town, Pian Pianino.) He thought, why not set up a service that keeps track of things you like and might want to buy, and make it social, so your friends and family can be part of it and see what’s on other people’s wish lists?

That’s the idea behind Wishpot, a Seattle-based startup founded by Ciccotosto and fellow Microsoftie Alexis Campailla. Their social-shopping service is coming out of beta in the next few weeks, and is currently available as a browser plug-in and a Facebook application. They already have many thousands of users, says Ciccotosto. Yesterday, I stopped by the new Wishpot digs near Pioneer Square (they moved this summer from Lower Queen Anne) to get more of the company’s story from him.

In terms of getting off the ground, Ciccotosto recalls a pivotal lunch meeting with Seattle-based Alliance of Angels in 2006. Although Wishpot didn’t get capital then, he says, they got “fundamentally solid feedback” and after that their pitch was “20 times better.” “We were two guys from Microsoft, nobody knew us, so they weren’t going to throw money at us,” says Ciccotosto. By early 2007, the startup had a prototype, and in March 2007, they were able to secure seed money from angels. They followed that up earlier this year with a $1 million round led by Monster Venture Partners, with Curious Office Partners and the Italian “startup designer” H-Farm also participating (more on the latter soon).

Ciccotosto showed me a demo of the latest Wishpot features and how it works. The service helps you “discover, save, and share the stuff you want” in an easier way, he says. Going to Nordstrom’s website and browsing some fashionable suits, a Wishpot window pops up, stores a particular suit in his wish list, and allows him to set up an alert when the price drops by a certain amount, or when another store has it for cheaper. But the most popular applications so far, he says, are baby and wedding-gift registries. The business model is based on transactions—Wishpot has relationships with vendors (like Nordstrom) so that when users buy items, Wishpot gets paid.

Wishpot competes with Amazon’s product wish lists—which Ciccotosto points out are not social or interactive—and a slew of startups (mostly from the San Francisco Bay Area) like Kaboodle, StyleHive, and ThisNext. Time will tell which comes out on top, but Wishpot is now up to seven employees and is gearing up for marketing promotions, a full product launch, and international expansion. “With the holiday season coming, we want to make sure we have the right content and the right product in place,” says Ciccotosto.

“I love working on products, that’s my thing,” he says. “Once you’re an engineer, it’s hard not to go back and build things.”

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Last week, we reported that Amazon is acquiring Seattle-based Shelfari, a literary social networking site. We also noted that Cambridge, MA-based LibraryThing (which Amazon also owns 40 percent of) had some harsh words for its West Coast rival. John Cook of the Seattle P-I provided some useful insights and comments here (e.g., the deal is less than $10M, not a home run). But the acquisition left me wondering about more than just the future of these two startups, and whether it was a good exit for Shelfari. It made me think about Amazon’s strategy, and how the deal fits into the larger context of social sites built around books and other consumer goods.

For starters, some of the technology in the deal sounded similar to a new feature of Borders’ online bookstore that we profiled a few months ago. In June, I reported on Borders breaking away from its competitor Amazon’s services and launching its own “magic shelf” user interface—a “virtual” bookshelf, designed by Cambridge, MA-based Allurent, that lets you browse book covers as if you were in a real store. My first thought when I looked at the Shelfari site was that, superficially at least, it resembled Borders’ magic shelf. So I wondered: did Amazon’s acquisition of Shelfari have anything to do with the Borders move?

I first contacted Shelfari to get its side of the story, and was met only by world-class PR-speak, in an e-mail from an Amazon official: “Shelfari and Amazon’s common goal has been and will continue to be to deliver the best product and services to customers. Both companies are dedicated to building great communities that celebrate books and will work together to create enhanced experiences for members. As always, our joint focus is on customers not the competition.” (This is what happens when you get bought.)

Not surprisingly, the co-founder and CEO of Allurent, Joe Chung (an Xconomist), sees things a bit differently. “I think Amazon probably is responding at least somewhat to the magic shelf,” Chung says. But he explains that Amazon is “probably buying the innovation and team more than the specific property and they probably figure they are better off picking these things up to keep them out of competitors’ hands.” Fumi Matsumoto, Allurent’s co-founder and chief technology officer, adds, “It’s just really great for us to see these rich user experiences going mainstream.”

I also reached Tim Spalding, founder and CEO of LibraryThing, but he declined to be quoted. He did point me to his blog, in which he highlighted Zoomii, another online bookstore with a novel cover-browsing interface, and also an older post about Borders’ magic shelf (which got mixed reviews from the commenters). About the most recent Amazon deal, Spalding writes that he has “the greatest contempt” for Shelfari, and that “once the Amazon/Shelfari deal goes through, we are competing against Amazon.” Which is a challenge he seems to be taking on with gusto. “The good news from the Shelfari deal,” he writes, “is that when startups get acquired, they tend to stagnate.”

Given that Amazon owns a good portion of LibraryThing as well, this would seem to be a thorny situation for Spalding, to say the least. But whether his company or Shelfari ends up on top, the Amazon deal appears to bode well for the business of online communities built around books and other products. After all, a big player getting involved—and a little bad blood between competitors—never hurt innovation.

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