Leo Spiegel says he’s sensing a change in San Diego’s listless venture capital sector.

Spiegel quickly adds that he doesn’t have the data to back it up. It’s just a feeling he has, a sailor’s instinct for a freshening breeze in the horse latitudes. Yet as a managing partner at San Diego’s Mission Ventures, Spiegel’s instincts count for something.

The San Diego venture capital firm, which specializes in early-stage software, IT, and technology-driven service companies, has seen firsthand the harsh effects the economic downturn has had on the region’s technology-based startups. During the first three months of 2009, there was a single $4 million investment in San Diego’s IT sector, according to Dow Jones VentureSource. In the second quarter, four IT startups in the region got a total of $50 million.

Leo Spiegel

“My success in life has been due to the fact that I see the glass as half-full. You have to feel optimistic in this business,” Spiegel tells me. Yet in the economic collapse that began last year, he adds, “I was being challenged to see that, and to feel that. But over the past month or so, it just feels different. I’m cautiously optimistic.”

While Mission Venture’s offices overlook the El Camino Real, the famed “royal road” linking California’s Spanish missions, Spiegel’s view has been shaped chiefly by his experience as a CEO and entrepreneur. Before joining Mission Ventures in early 2001, he was president of Digital Island, a San Francisco-based Web hosting service provider with 1,100 employees. Before that, Spiegel was the CEO of Sandpiper Networks, a Thousand Oaks, CA-based provider of Internet hosting, content delivery, and network services that was acquired by Digital Island in a 1999 stock deal valued at more than $1 billion. (The British telecommunications company Cable & Wireless, in turn, acquired Digital Island for just $340 million in mid-2001.)

When I talked with Spiegel’s partner Robert Kibble a few months ago, San Diego VCs didn’t have much to be optimistic about. But Spiegel attributes …Next Page »

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San Diego wind turbine maker Helix Wind made some more acquisitions, and out-of-business chipmaker Sequoia Communications arranged to sell its equipment in an online auction tomorrow. So it was a good news, bad news week for technology here.

—San Diego’s Sequoia Communications, which gained attention in the wireless chip industry when it introduced a multimode transceiver, has ceased operations. The nine-year-old chipmaker, which raised about $64 million from at least eight venture investors, was unable to secure additional capital.

—San Diego-based Helix Wind (OTC: HLXW), which is developing vertical-axis wind turbines, has agreed to buy the assets of two Oregon wind turbine companies in a bankruptcy case. The non-binding contracts for Abundant Renewable Energy and Renewable Engineering, which have the same owners, could be worth as much as $6.5 million. Helix has been moving to expand its product line of small-scale turbines.

—San Diego video codec developer DivX (NASDAQ: DIVX) and Yahoo (NASDAQ: YHOO) settled a lawsuit that DivX filed after Yahoo backed out of an Internet advertising agreement.

—San Diego-based Platformic, which makes Web development and content management technology, introduced a new mobile blogging tool, which the company says is ideal for journalists and professional bloggers.

—In a two-part “state of venture” quiz that Xconomy’s Bob Buderi put together with help from the Boston office of the Cooley Godward Kronish law firm, contestants learned that company valuations have been rising in the past quarter. The quiz, which is based on nationwide data, also shows that more than half of the Q2 deals were “flat” or “down” rounds. Check out the quiz here. The answers are here.

—Amid the nationwide downturn in venture capital investment activity, I’ve written a fair amount about the evaporation of San Diego’s hometown VCs. Now Connect, the San Diego non-profit group that serves as a catalyst for technology innovation, has proposed a series of initiatives to help fill the gap—including the formation of a seed fund. Connect CEO Duane Roth has said the initiatives will require more than $10 million, which Connect has begun to raise from both private and public sources.

—Xconomy has made it easier for you to get our electronic missives on your mobile phone by going to http://m.xconomy.com for the new mobile-friendly version of our site. But it’s only one of many new developments at Xconomy. And as always, you can sign up for Xconomy’s e-mail newsletters, including specialized newsletters, and our RSS feeds here.

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Technology veteran Jim Moran has joined North Bridge Venture Partners, of Waltham, MA, as a general partner, the venture firm announced today. Moran was previously CEO of Covergence, a Maynard, MA, provider of telecommunications software, which was acquired by Burlington, MA-based software firm Acme Packet (NASDAQ:APKT) in May for a reported $22.8 million. North Bridge, which said it recently closed two funds of $500 million each, reported that Moran will focus on investments in such fields as Internet commerce, Web 2.0, enterprise software, communications, and healthcare.

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In an online photo mini-apocalypse, three Web 2.0-era photo sharing and management services—BubbleShare, Riya, and PicMe—announced late this week that they’re shutting down operations.

The closings aren’t entirely coincidental. Greg Raiz of Raizlabs, the Cambridge, MA-based software development house that built PicMe, says he accelerated plans to mothball and hopefully sell the application after he learned about the other shutdowns. “We had seen a number of other photo companies close shop and felt that if someone was ’shopping’ for technology we should toss our hat in the ring now while the opportunity was hot,” Raiz says.

But the bigger picture, so to speak, may be that a few big players—names like Flickr, Facebook, Photobucket, and Google (with its Picasa application)—have sucked all the oxygen out of the photo management and photo sharing market. “Ultimately it’s very difficult to be in the consumer photo space,” says Raiz. “Google, Flickr, and Facebook essentially set the bar and give away their services for free or close to free. While we still feel certain aspects of our solution are better we can’t compete in a feature war and we can’t out-market them.”

I reviewed PicMe way back in my very first World Wide Wade column in April 2008. The cool, unique thing about the downloadable desktop program is that it shows your digital photos in 3-D stacks, with one stack for each folder on your hard drive. It lets you flip quickly through the photos in each stack, as if you were riffling through a pile of physical photo prints. To quote myself, “It’s a very nice way to browse through a big photo collection, and is a bit reminiscent of other recent interface innovations such as the Cover Flow feature on iPods and iPhones.” The program also offers drag-and-drop photo sharing: to e-mail or post a photo (or a whole stack of them) you can simply drag them onto the right icon in your contact list.

PicMe gained a respectable following through word of mouth, but Raiz was never able to line up the right partner to help spread PicMe more broadly. “As a small company we couldn’t get a desktop application licensed or distributed,” he says. “We talked to all the large desktop software players: Apple, Google, Microsoft, Kodak, Adobe, HP, et cetera, and they just were not interested. Or rather they were interested but not enough.”

At the same time, Raiz says, the company’s focus was shifting toward mobile app development, especially on the iPhone. Raizlabs did key development work on the Runkeeper app from Boston-based FitnessKeeper, for example. Even before Raiz decided to cease support for PicMe, “we had already decided internally that for now we wanted to spend our time working on Mobile apps,” he says. The company might build a mobile photo application at some point in the future, he adds.

“We’ve seen so much more success on the mobile side in just a year that we’d rather focus on what works,” Raiz says. “There are still companies trying to make a play for the consumer desktop such as ILovePhotos so we know it’s a valid opportunity, it’s just a really, really hard one to monetize.”

Both BubbleShare and Riya—which I reviewed in two articles for Technology Review’s website in March 2006—were largely moribund, so the news of their shutdowns does not come as a huge surprise. BubbleShare’s big innovation was an easy way to record an audio clip to go along with each photo you uploaded, then assemble the photos into a narrated slide show. The Toronto startup behind BubbleShare was purchased by Canadian media firm Kaboose in 2007; the BubbleShare technology became part of Disney Online when that company acquired some of Kaboose’s assets this April. Disney posted a note yesterday on the BubbleShare website saying that the service will close down as of November 15. All photos stored on the site will be erased.

Riya, based in San Mateo, CA, was probably a bit better known than BubbleShare, at least among the digerati, for its face recognition capabilities. After a bit of training, the site’s software can identify the faces of people who show up in multiple photos, offering a nice way to organize family albums. Riya founder Munjal Shah sent an e-mail to users this morning (reproduced at TechCrunch) explaining that similar capabilities are now available from Picasa and Apple’s iPhoto software, and that Riya will shut down as of August 21. In any case, Shah and the rest of the team behind Riya had long since shifted their efforts to Like.com, a shopping site based on similar color and pattern matching technology.

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Chelmsford, MA-based OurStage, which runs monthly contests where bands upload their music and videos to its website to compete for cash and other prizes, is among a number of Web startups in the Boston area that cater to music fans and bands. But the company has also managed to attract a paying corporate audience—providing a needed financial boost during the economic recession, CEO Ben Campbell tells Xconomy.

Before the economic meltdown began last September, OurStage had $6 million worth of investment commitments for its second round of financing, Campbell says. But all of those commitments had vanished by October 2008, when investors pulled out amid concerns about the ailing economy. To stay in business, the firm shrank its staff from 38 to 17 people. It also adjusted its strategy to generate more visibility among music fans—not to mention cash flow—through sponsorships and other partnerships with large corporations.

OurStage now has 18 employees and has scraped together $4 million of the $6 million it seeks for its Series B round of equity financing. It names among its corporate sponsors or partners AOL Music, MTV2, JetBlue, and Radio One. (In July, we reported the first $3 million the firm raised in the round. It has now raised $21 million altogether from a combination of angel investors and other backers.) These big names and others have paid OurStage to sponsor the firm’s musical contests, which enable fans to have a say in who becomes the next big stars and gives the sponsors like MTV some insight into which talents will catch on with their target audiences.

Though there’s no shortage of online venues that allow listeners to pick and listen to musical acts they enjoy most, OurStage is worth noting as a local firm that has generated revenue (and perhaps someday profits) from this type of service. The company, which got its start in 2007 to focus on bringing online listeners the best new music and talents, is moving ahead with several approaches to make the site a moneymaker.

“Our approach is to partner with as many [industry] giants as possible,” Campbell says.

This approach serves the company on at least a couple of fronts, according to Campbell. In July, the startup ran separate fan-judged contests sponsored by MTV2 and Radio One. The contests not only generated sponsorship revenue, but both companies promoted the contests to their own viewers and listeners, helping to send more than 3.5 million unique visitors to OurStage.com for the month. Campbell says that the number of visitors to the site has a direct impact on how much money it receives from sponsors and advertisers. And though the company had a good traffic month in July, Campbell says that he won’t be satisfied that his company’s site is reaching a mainstream audience until the audience hits 10 million unique visitors per month.

In addition to sponsorships and advertisements, OurStage is developing two other means of generating revenue: …Next Page »

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Seattle-based Wetpaint has laid off 15 employees, or 27 percent of its staff, according to a report in TechFlash. The startup, which has raised about $40 million in venture capital, focuses on social publishing. The company was not immediately available for comment.

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With the start of real summer weather in the Northwest, we’ve seen some good deal action heating up in Internet software, biotech, and energy in the past week.

—Seattle-based consulting firm R.W. Beck is being acquired by government contractor SAIC (NYSE: SAI) in San Diego for $155 million. It’s one of the Northwest’s bigger tech deals of the past year. R.W. Beck’s 550 employees (125 in Seattle) won’t be relocating, and Beck CEO Russ Stepp says the deal will help his company pursue larger projects in areas like energy and water management, while also helping SAIC take smart grid and modeling technologies into utility markets.

—Bothell, WA-based OncoGenex (NASDAQ: OGXI), a developer of cancer drugs, reached agreements to raise $9.5 million from institutional investors through a registered stock offering, as Luke reported. In May, the company presented data showing its prostate cancer drug, OGX-011, helped men live a median time of about 7 months longer when combined with chemotherapy, as compared to chemo alone.

—Portland, OR-based Internet startup AboutUs closed $1.2 million from Seattle-based Voyager Capital and other investors. This tranche closing rounds out the company’s Series A funding and includes $1 million from Voyager (fulfilling its previous $2.5 million commitment). AboutUs focuses on information discovery and sharing online.

—Seattle-based Blue Marble Energy has raised an undisclosed amount of Series A funding from unnamed investors, as Eric reported. The company is working on ways to convert algae and waste into useful chemicals and renewable fuel. In April, Blue Marble Energy closed approximately $1 million out of a $2 million equity offering, according to a regulatory filing.

—Bio Architecture Lab, a Seattle-based University of Washington spinout, raised $3.4 million in equity funding out of a $6 million offering. The investors were not disclosed. The stealth startup, which raised $1.5 million from X/Seed Capital last year, is using synthetic biology and computational enzyme design to make biofuels and renewable chemicals from relatively cheap, sustainable biomass sources.

—Kirkland, WA-based OVP Venture Partners led a $15 million Series C investment in San Francisco-based Limerick BioPharma. The other investors include Arch Venture Partners, Sevin Rosen Funds, and Altitude Funds. It’s a new portfolio company for OVP, and managing director Chad Waite has joined Limerick’s board.

—Portland, OR-based Blackbox Republic, a niche social network, has raised $1 million in seed funding from angel investors. Blackbox is led by former Jive Software exec Sam Lawrence. The company is targeting the sex positive community, and wants to fill the void between Facebook and Match.com.

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Redmond, WA-based Sampa, a startup that helps people build family websites, announced it is shutting down on August 17, 2009. Sampa founder and former Microsoftie Marcelo Calbucci, who also leads the Seattle 2.0 startup site, says that the company ran out of money and its business models didn’t work out. Calbucci also has an extensive blog post detailing the ideas behind Sampa and the history of the business. In an e-mail, he said he won’t pursue Seattle 2.0 full-time, and will be looking to launch another startup.

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Portland, OR-based AboutUs, an Internet startup focused on information discovery and sharing, has closed $1.2 million in financing, according to an SEC filing. CEO Ray King confirmed the funding, saying it rounds out the company’s Series A. Back in January, AboutUs announced a $2.5 million commitment from Seattle-based Voyager Capital. The latest tranche closing includes $1 million from Voyager, fulfilling its $2.5 million commitment, and $200,000 from other investors. Erik Benson of Voyager and Paul Stahura of Demand Media are listed as directors.

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What the Sam Hill (as my grandpa used to say) is a Daily Grommet? The answer comes in two parts. “Grommet” is the word industrial designer and entrepreneur Jules Pieri has appropriated for the kind of bewitching product that you might discover in an upscale shop in Puerto Vallarta or Tuscany or Vermont—something that’s so unique or beautiful or inventive that you just have to buy one and tell all your friends about it.

And the Daily Grommet is an e-commerce startup in Lexington, MA, that features one new grommet on its website every weekday. Through videos and short articles, Daily Grommet staffers—often Pieri herself—explain what’s so cool about the products they’ve chosen and the companies that make them. They also sell the products, on consignment from their makers. This week’s finds, for example, include an energy bar with ingredients picked by customers, a solar-powered flashlight (no, that’s not a contradiction in terms), and a garlic shredder that looks a little like a little two-wheeled Popemobile.

If you’re thinking that the Daily Grommet sounds like Hammacher Schlemmer meets RocketBoom meets VeryShortList, maybe with a dash of Martha Stewart, you’re not completely wrong. But there’s something stylish, original, and earnest about Pieri’s business that isn’t captured by any of these comparisons.

For one thing, as I can relate after visiting the startup’s office/studio in a quaint clapboard house just off Lexington’s main drag last week, the women who run the company (and they’re all women) are, like Pieri herself, genuinely nice people. They have a visible passion for uncovering little-known new products, testing and investigating them, and telling their stories to the world.

Left to right: Joanne Domeniconi, Jules Pieri, Jen Lockwood, Barbara Gordon, Patti Purcell, Wendy Chandor.

For another, the Daily Grommet has a common-sense business model that blends old-fashioned retailing with the best of Web 2.0-style interactivity. In addition to the daily videos, which are an easily digested two to three minutes in length, the startup is utilizing the full complement of social media channels, including a Twitter stream, an RSS feed, an e-mail newsletter, a Facebook page, and badges and widgets that fans can embed in their own websites. And every grommet gets its own permanent page on the site where readers can leave comments and even interact with the people who make the products. (The company often singles out companies that are so small or new that a feature on the Daily Grommet can be their first big break.)

It all amounts to a human-centered, high-touch approach that might just help to redefine what consumers expect from e-commerce sites. Whether such a business can be scaled up efficiently is an open question. But clearly, if you had the courage in this age of cloud-based software startups to start from scratch with a business that sells actual stuff, you’d want to take advantage of the media that people are using today for word-of-mouth exchanges, namely Twitter, blogs, online video, and the like.

And ideally, you wouldn’t just dilute these media with empty marketing messages, but you’d tell real stories about the people who make the stuff and what motivated them.

This is the kind of stuff Pieri thinks about. “Social media is not commerce media,” she says. “What travels in social media is news—whether it’s personal or national or just funny videos. I know that the stories around products have that same power, and the potential that people would want to …Next Page »

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Seattle-based WhitePages, the Web and mobile online directory, announced today it has redesigned its website for $2.5 million. The site is meant to help customers across the U.S. connect with each other by phone, text, e-mail, or snail mail. It includes new privacy controls and a user interface intended to improve services for customers and advertisers. WhitePages was founded in 1997 and is led by CEO Alex Algard.

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After a national competition, RunMyErrand was one of 25 companies invited to be part of Facebook’s fbFund Rev 2009 incubator program this summer in Palo Alto, CA. The program will last 10 weeks, and RunMyErrand team members from the engineering and business realm will be participating. We arrived into SFO late the night of Tuesday, June 16, drove to Palo Alto Wednesday morning, and, still on East coast time, eagerly waited outside the Facebook office on Hamilton Avenue for the 1:30 p.m. kickoff event.

I was over dressed in my typical east coast business attire, but quickly settled into the casual and creative style of the other attendees. The event started with an inspiring, off-the-cuff speech by Dave Morin, senior platform manager at Facebook. This is the first year Facebook has run the Rev incubator program. So, he explained, the 25 companies involved are the founding members, and using our feedback and suggestions, Facebook plans to mold the effort into something very special. Dave was genuinely humbled looking at the companies in the room, thinking back to a time when Facebook staffers thought they might have a few thousand developers loosely creating on the platform. Here he was standing before us, looking at all our exciting business models, standing on our own two feet, with the central point of our focus being Facebook. Pretty cool.

Just as a summer camp might start, we also began with a fun icebreaker, called, “Two truths and a lie.” It was fun getting to know the other people and companies in the room, and the goal of the game was to guess which was the lie out of three statements a person made. Mine went something like 1) I am a marketing professional, 2) My favorite food is sushi, and 3) My favorite mode of transportation is a little green Vespa. Can you guess my lie? They could not, although here’s a hint: I was a math and computer science major in college.

On more of a business note, part of the program includes having access to mentors assigned to each company. RunMyErrand received four mentors, and I had the pleasure of meeting one of them during the week—Rob Fan. Rob is the CTO of 750 Industries and hugely impressive. After an intense 45-minute power session, I am absolutely a fan (pun intended). Having access to seasoned entrepreneurs and investors who understand and are excited about this social space is fantastic.

The office space Facebook provided is pretty neat, too. It’s three stories (plus a roof deck) right in the heart of downtown Palo Alto. It is the original Facebook office; the company had just moved out a mere three weeks before we arrived, and impressions of the original group linger in wall graffiti like hieroglyphics written on cave walls, not to mention the whips of Ethernet and power cords descending from the ceiling. We’re told everything is within walking distance, including all the major VC firms on the West Coast. We were also told to be careful of what we said in public, as we never knew who would be listening, or if we would be pitching the same people the following week. Wow, what a mind shift, as I wondered how many people before me suffered through a “foot in my mouth” moment. The energy and buzz in the downtown area is intoxicating and inspiring. It feels like a melting pot of creativity, intensity, and hard work, with a splash of genius.

Besides the amazing space, the mentoring program, and the all access we have to the Facebook team, the most exciting part of the time here is being able to meet, live, and breathe with the 24 other companies participating in the program. I am so impressed by the other teams, and know that we can learn a lot from each of them. There are engineers, designers, artists, and business minds, and what joins us all is the passion we share for what we do, and a vision for taking it to the next level. For me, getting to meet these other incubatees, and hearing about their experiences, trials, and tribulations, is truly inspiring. From iPhone Apps to pure Facebook Platform plays, the variety of companies taking part in the program is impressive. Teams range from one-man-bands to many members, but under the fbFund umbrella we can all act as resources for each other.

Who knows what the summer will hold? There will be engineering help, marketing professionals, and business minds at our disposal. What’s clear is the program is structured with the flexibility to ensure that each team gains the most possible value from being here. The people who put this together are so smart. For us, we are most looking forward to developing our Facebook Connect roadmap and strategy, while continuing to focus on scaling our business of service networking. The West Coast location is exciting for us, and fits in well with our big picture goals. We are absolutely thrilled being here, and this kick-off week has been amazing.

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Seattle-based Madrona Venture Group has led a $4.4 million funding round for Animoto, a Web software startup based in New York that lets people automatically create professional-quality videos and slideshows from photos and music. Other investors in the round include Seattle-based Amazon, Palo Alto, CA-based SoftTech VC (run by Jeff Clavier), and Bruce Livingstone, the founder of iStockphoto.

The current round includes an undisclosed amount of financing already announced in May 2008, from Amazon and angel investors. Before that, Animoto had raised a $600,000 seed round from friends and family. So the company has raised an even $5 million since it was founded in 2006.

There’s a lot more to the story. The lead investors in the deal are from Seattle, but that’s only part of the local connection. It turns out that “based in New York” doesn’t really do justice to the roots of Animoto. The company was started by four friends who went to Bellevue High School in the Seattle area: Brad Jefferson, Jason Hsiao, Stevie Clifton, and Tom Clifton (the latter two are brothers). Jefferson, who is now Animoto’s CEO, went on to school at Dartmouth College and got his start as an intern at Bellevue, WA-based Onyx Software, where he began working full-time in 1998, and quickly moved up the ranks.

“He was a rock star,” recalls Onyx founder and Dartmouth alum Brent Frei, now with Bellevue-based Smartsheet. “He’s super smart but very humble. It’s amazing the things he does right naturally.” Frei notes that Stevie Clifton was also a superb Onyx intern. “They have assembled a fantastic team,” he says. (Interesting note: Jefferson was the only one of the four founders who didn’t play in an indie rock band around Seattle—he was more into sports.)

Jefferson got promoted at Onyx in 2000 to run a services team in San Francisco. There, he was roommates with Hsiao when Onyx was acquired by M2M Holdings in 2006. Jefferson opted for the severance package, and the very next day, Hsiao pitched him on the idea of Animoto. The basic concept was an online service to make it easy for people to create “animated photos” to capture the mood of events like weddings and graduations in customized slideshows. Animoto’s software creates moving slideshows that match the beat and feel of the accompanying music you select. A hip-hop track will make the picture movements and transitions fast and edgy like an MTV video, while a classical piece will make the slideshow more staid and elegant.

Animoto finished its first working prototype in December 2006, and started getting user feedback over the next few months. At the time, the company used a traditional hosting provider, but it couldn’t handle huge spikes in traffic. “As I started running the numbers, it was, ‘Oh crap, if we’re successful, we’re gonna fail,’” Jefferson says. So Animoto talked to Amazon Web Services about hosting its applications and data, and spent several months enhancing its product and “pushing everything into AWS,” he says, just in time for public beta trials in August 2007. “It was really a good decision from a capital expenditure perspective. From Day One, we were able to scale to the world.”

Meanwhile, Jefferson was sowing the seeds of future venture investment, even if he didn’t …Next Page »

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I dropped in on AboutUs for a mid-year checkup while I was in Portland, OR, last week. The company announced a $2.5 million Series A funding round from Voyager Capital in January, and has been transitioning from startup mode to strategic execution of its plans to reinvent how people discover and share information on the Web.

Company headquarters is over the Morrison Bridge from downtown Portland, in a bright yellow building visible from across the river. AboutUs founder and CEO Ray King gave me a tour of the digs, which are spacious and open. Almost all of the chairs and furniture are on wheels, and computer monitors are mounted on long, flexible arms—all to encourage collaboration between staff.

Which, on a higher level, is central to the mission of AboutUs. King summarizes the company, saying, “It’s about building human content that describes all content and sites” on the Web. “It’s a discovery tool,” he adds. The basic idea is a collaborative, wiki-style site that has a page for every company and organization out there, with information about that entity (history, management, contacts, customer reviews, and so forth). AboutUs also creates useful lists for communities. So if you’re looking for the hottest tech startups in Portland, say, you can go to an AboutUs page that has editable descriptions of Portland companies, with links to more information.

The whole concept is different from Google, Bing, or any of the search engines currently getting lots of attention. Those other sites give you an impressive list of references when you do a search, but not much direct information about what you’re looking for. “We don’t think of ourselves as search,” King says. Instead, AboutUs is complementary to search engines in that it hosts content about people, companies, and other topics.

It all stems from King’s deeper view of what a website represents—”people acting with intentionality,” he says. That means people set up websites because they want to do something, whether it’s selling a product, blogging their views, or sharing information or media. His company hopes to tap that intentionality in a deep way, by getting people to contribute to descriptions of websites they’re involved with, and eventually helping to create a new mapping of content on the Web.

King says AboutUs envisions three main target users: a “topic researcher” looking for a site she’s never been to before; a “shy maven” who likes using new tools and wants recognition for his expertise; and a “website operator” who wants to improve the visibility of his company or organization. AboutUs seems to have the first and third users pretty well figured out. It’s the middle user that King says he is currently most focused on.

AboutUs was profitable in 2008 and hopes to be profitable again by the end of 2009, King says. The site is getting between 8 and 9 million unique visitors per month. Its revenues come from a combination of advertising and service fees.

As for his outlook for the rest of the year, King says AboutUs is “on plan right now.” He adds that his team is getting more focused on improving technical aspects like the site’s ranking algorithm and its ease of use. Finally, King says he’s looking to “open a few pockets of deep penetration.” Those might come in the medical arena or the technology space, he says. “When you want to see what’s happening in a given area, that’s AboutUs.”

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There are three weeks and one day to go before XSITE—the Xconomy Summit on Innovation, Technology, and Entrepreneurship, which we are holding at Boston University on June 24—and we are pumped. We are finalizing the agenda, and have added a host of fantastic new speakers, including inventor extraordinaire Dean Kamen. We’re also putting the finishing touches on some great panels that uncover some of the incredible strengths (many of them underappreciated) of New England’s innovation community.

We are pleased to be part of Innovation Month in New England, and hope XSITE 2009 will serve as a great anchor for the month by devoting a full day to innovation and bringing together key players from across the innovation spectrum. Speakers at XSITE will include leading executives from EMC, IBM, Microsoft, Alnylam, and Sirtris/GlaxoSmithKline, as well as top entrepreneurs such as Yet-Ming Chiang of MIT and A123Systems; Tillman Gerngross of Dartmouth, GlycoFi, and Adimab; Mick Mountz of Kiva Systems; and Christina Lampe-Onnerud of Boston Power (who just announced ambitions to build a 600-employee battery plant in Massachusetts). And we’re very excited about keynote speakers Juan Enriquez of Excel Medical Ventures, and, of course, Dean Kamen.

And for those of you who want to drill down into one of New England’s most vibrant innovation sectors, XSITE’s afternoon breakout sessions will offer you three to choose from. Our chief correspondent, Wade Roush, will host a session on Boston’s little-known—yet highly influential—assembly of digital entertainment and media firms: The Digital Entertainment Cluster: Boston’s Best-Kept Secret. It’s a topic near and dear to Wade’s heart, and sure to spark some lively discussion. Atlas Venture’s Jeff Fagnan, meanwhile, will provide a tour of what we’re calling The Health 2.0 Hub, the local people, institutions, and companies that are using innovations from IT to transform healthcare, from bench side to bedside and beyond. And energy innovators, executives, and investors will come together in a third session—Getting Energy Innovations to Market—to talk about what it takes to translate and scale new ideas in solar, wind, batteries, grid management, and energy efficiency into market realities.

The up-to-date agenda is here—sign up soon because early bird registration ends tomorrow. Also, when you sign up, please take our quick survey about the economy—we want your views on when it will improve, and which sectors will lead us out of recession. We will be revealing your predictions at XSITE.

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Ceiling fans lolling high overhead, starfish in trawler nettings slung on one wall, funked-out wood floors, bar stools, round tables, comfy couches, a big bowl laden with fruit, huge windows overlooking the pier. No cubicles, just work areas with signs indicating where one company ends and another begins—and sometimes no signs at all. The whole place oozes creativity, hipness, young turks inventing the future.

This is the home of Dog Patch Lab, a startup incubator run by Polaris Venture Partners (Dog Patch occupies only a piece of the space I just described—more on that in a minute). Which itself is surprising, since it’s almost the antithesis of Polaris’s mainstream, East Coast image. If you’ve ever visited Polaris headquarters in Waltham, MA, the best you can say is that it’s just like all the other venture firms in the Bay Colony Corporate Center—modern, spacious, business-like.

You would not call it cool in any way.

But this is a side of Polaris we don’t see in Boston, for the simple reason that it’s in San Francisco—along the famous Embarcadero. I mentioned it briefly in my column about Boston VCs investing in social media. But, as your intrepid reporter out to bring to light new aspects of Boston’s innovation community, I stopped by on a recent West Coast trip to find out more about Dog Patch, how it works, and what its inhabitants are doing.

Polaris general partner Mike Hirshland and executive-in-residence Brian Grey set up my visit—although neither could be present for my tour. My host was Ken Thom, VP of operations for Social Media, which runs an ad network for companies making social applications. Social Media refitted the space on Pier 38, just south of the Bay Bridge, in late 2007—and now controls some 10,000-12,000 square feet. It sublets parts to other companies, mostly startups working on Facebook apps. And to Polaris.

Dog Patch, which got going about a year ago, started with four or six desks, says Thom, and then expanded to 10 desks. “Now Polaris has both of those rooms,” he says, pointing to one wing of the space that looks over the waterfront.

Click on image to see it bigger--and better.

All told, some 70 people occupy Social Media’s space. I’m guessing about 15-20 of them are Dog Patch denizens. Hirshland says Dog Patch currently houses four startups, plus a group run by Ariel Poler, previously of StumbleUpon and other companies, and co-founder of LOLapps, a former Dog Patch puppy (more on LOLapps below, although Poler was out during my visit and so I never connected with him).

I looked in on Threadsy, which seeks to unite consumers’ s e-mail, social networks, and other online messaging services. It occupies its own little room, up a half-level from Dog Patch. It turned out Threadsy was once part of the “kennel,” but had moved to its own space. I wondered if it had been funded by Polaris (that is not a requisite—read on). “Are you guys a Polaris company?” Thom relayed. “Not yet,” was the answering shout.

Next, I stopped by a mannequin wearing an AppJet t-shirt. AppJet, you might recall, was a Y Combinator company a couple of summers ago; it offers an easy-to-use online platform for programming Web applications. Those guys seemed very busy, so I didn’t interrupt, and the mannequin would not reveal other details.

AppJet mannequin

Mr. Tweet was a bit more chatty. CEO Ming Yeow Ng and chief engineer Yu-Shan Fung were out—so I spoke with Hamilton Ulmer, who claimed his title was village idiot. Mr. Tweet, he explained, is a people recommendation engine for Twitter. “We analyze who you follow and talk to, and from that we make recommendations about other people that you might be interested in following, people with your interests,” he says.

Across the aisle from Ulmer was Vikas Gupta, CEO of Jambool and former head of Amazon’s payments platform and flexible payments web service. He and three colleagues were all berthed at one table, two on each side. Five other employees work in Seattle. Jambool is best-known for its product, Social Gold, a currency/payment platform for social communities such as online games, virtual worlds, and social media sites. “Payments for the next generation of users online,” sums up Gupta.

He says Social Gold is already one of largest payment providers on Facebook and MySpace, but he declined to give any numbers. The company launched two years ago, but only raised its Series A round—roughly $1 million—about eight months ago, Gupta says. Polaris was not part of that round, which included Hit Forge, Charles River Ventures, and Bay Partners.

The last company I spoke with also had Seattle ties. I’d tell you the name, but …Next Page »

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It’s a good day for Vivek Bhaskaran. The co-founder of Seattle-based Survey Analytics, a marketing and customer relations startup that has been bootstrapped since 2004, has just scored a big win with the White House. The company’s software platform for hosting and managing feedback communities (engaging customers and gathering unsolicited feedback), called IdeaScale, is being used to power the U.S. government’s Open Government Dialogue site. Financial terms of the partnership were not announced.

Today, the National Academy of Public Administration, White House Office of Science and Technology Policy, and IdeaScale launched the site to solicit ideas from the public on how the federal government can become more transparent, participatory, and collaborative. This online brainstorming session will enable the White House to hear people’s most important ideas on open government—including innovative approaches to policy, specific project suggestions (including government-wide or agency-specific ideas), and any examples and stories relating to law, policy, technology, culture, and practice.

Using this Web platform, people can share their ideas and recommendations for how to make government more open, as well as vote on others’ proposed ideas. Originally designed for companies to engage with their customers, IdeaScale has gotten “a ton of traction,” Bhaskaran says. “With collaboration feedback, people and customers can hear each other while they give feedback.”

Back on January 21, President Obama issued the Memorandum on Transparency and Open Government, stating his goal of implementing sweeping changes in the level of participation and openness in government.

Last July, IdeaScale powered AskTheSpeaker.org, a crowdsourcing application used at a political conference in Austin, TX, where House Speaker Nancy Pelosi was presenting. That led to the White House contacting Survey Analytics about using IdeaScale to help with the open government directive. “Their job is to come up with directives to be more open and transparent,” Bhaskaran says.

The current brainstorming session will provide ideas for two more stages of collaboration, Bhaskaran says. Next, a discussion phase will occur where the top-rated ideas will be explored further. Finally, a draft phase will be started, where anyone in the public can help edit the language for the final recommendations.

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By some estimates, some 40,000 software applications have been developed for the Apple iPhone. But with a few notable exceptions, such as Apperian, the Boston startup that Wade profiled earlier this year, not many companies are working on business apps for the versatile mobile phone.

So today’s introduction of a new iPhone app by MeLLmo, a startup based in Del Mar, CA, is more noteworthy than the run-of-the-mill apps that enable iPhone users to toss a figurative coin or to visualize guzzling a mug of beer. MeLLmo says its RoamBi application enables users to transform data from spreadsheets, tables, and other business software into interactive graphics that can be displayed on the iPhone. Users can view, analyze, and share the information.

The iPhone application is free, although the company says it plans to introduce a premium version in 90 days. MeLLmo says it also is offering a Software-as-a-Service version of RoamBi online so that new data can be transformed into a pie chart, for example, and transmitted to a company’s entire sales force. In fact, MeLLmo says it is working with San Francisco-based SaaS provider Salesforce.com to provide such enhanced mobile access to information stored by Salesforce users.

“It would be very useful for sales reps,” but they are not the only business user MeLLmo is targeting, co-founder, chairman, and CEO Santiago Becerra says. The goal is to provide a quick and easy way of presenting any kind of business information in a graphical display, including financial, production, and human resources data.

As part of today’s announcement, MeLLmo also unveiled RoamBi Enterprise, a server that allows both small and large organizations to transform business data and reports into visual analytics delivered to the iPhone. “We  give them the option of licensing the software and loading it on their own enterprise server behind a firewall,” Becerra says.

MeLLmo says RoamBi offers four views, or user interface templates, that have been formatted for the iPhone. The templates are specialized for viewing tabular data, catalog data, pie charts, and in a card-like format.

Becerra previously founded two software companies (he sold one to Oracle and the other to Business Objects) and is a former Booz Allen consultant and Harvard MBA. In a statement, Becerra says, “With RoamBi, we have introduced an entirely new format that unlocks the true value of accessing content on mobile devices and empowers users to publish dynamic and interactive information directly to their iPhones.”

Oh, and what does MeLLmo stand for? A spokeswoman for the company says it has no specific meaning. It’s just a name that Becerra’s grandson provided.

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You could say that her love of jewelry brought Deborah Besemer out of early retirement. But while that might have a certain, shall we say, ring of truth to it, it’s really only one facet of the story. There were other, more important factors, such as the opportunity to challenge herself in a new arena and to revolutionize how people buy and sell jewelry, a $60 billion market in the U.S. alone.

Oh, and then there was the chance to mentor a 23-year-old entrepreneur whom she paints as the next great entrepreneur in New England. As she boldly puts it, “I’m going to be a part of helping make Matt the most successful entrepreneur ever to hit the software industry.”

Matt is Matt Lauzon, the co-founder of Paragon Lake, a startup housed in incubator space at Highland Capital Partners’ headquarters off Route 2 in Lexington, MA. I guess you could call him a diamond in the rough, only he seems pretty polished. Lauzon recently gave me a quick tour of his already impressive operation. And when I heard that Besemer—who sold the last startup she ran, BrassRing, for $115 million and previously headed worldwide field operations for Lotus—was coming on board as the new CEO, I dove in to learn more about Paragon Lake.

The company was founded in August 2006 by Lauzon (who moved from CEO to COO with Besemer’s arrival) and Jason Reuben (who’s no longer with the company), when they were undergraduate students at Babson College. They chose “Paragon” for the company name because it “means the perfect embodiment of a concept,” says Lauzon. “Admittedly, there was not a lot of science behind ‘Lake.’” In 2007, the startup became part of the Summer@Highland incubator program—and hasn’t strayed from the Highland fold since. Last July, the company received $5.8 million in Series A funding, led by Highland and Canaan Partners in Westport, CT.

Lauzon’s gem of an idea is to bring a new era of customization and personalization to jewelry shopping. And the first step toward doing this is the Virtual Display Case, which launched with the company’s first retail partner this March.

The case is essentially a computer interface that allows customers to browse thousands of pieces of jewelry from up-and-coming designers. Think of it as a virtual inventory—and this is important, because as Besemer points out, the jewelry market “is still predominantly small, locally owned businesses.” These businesses are largely clueless about using the Internet to boost sales, she says, and “their inventory carrying costs are huge.”

The case, though, goes way beyond allowing store owners to display more items for sale. Paragon Lake’s proprietary platform involves digitally rendering each design so realistically it is difficult to tell them from a photo. This digitization allows customers to easily play with designs and switch key parameters around. As Lauzon explains, a customer might see a platinum ring embedded with diamonds that he liked but couldn’t afford. But imagine if the shopper could replace the diamonds with his daughter’s birthstone and change the platinum to sterling, personally designing “that ring for that special someone.”

Both Besemer and Lauzon call this a “wow” experience. “The consumer sees …Next Page »

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The X Factor, which debuted last week without yet having a name, is a mostly weekly column featuring conversations with local innovators, entrepreneurs, and investors.

It’s a legendary story of doom here in Boston (folks around here kind of like gloomy stories)—how the local VCs passed on this idea called Facebook, the kids from Harvard moved west, and…the friggin’ Valley beat us again. It’s safe to say this story is trotted out dozens of times each year to show how Boston VCs don’t take risks, don’t do early stage, don’t understand consumer Internet businesses. In short, it’s the poster child for how New England missed the social media revolution.

But let me say here and now that this hackneyed story is passé, as old and behind the times as analog dialup.

I’ve felt this way for some time, but it was driven home to me during the recent Twitter craze. For one thing, although Twitter is based in San Francisco, its first venture investors were from the East Coast—and Bijan Sabet, a general partner at Boston-based Spark Capital, is nicely perched on its board.

But the presence of Boston-based VCs on the social Internet and new media scene hardly ends with Twitter. Depending on how you define the field, you can find Boston VCs behind a host of such investments, both in East Coast firms like Eons and Hunch (General Catalyst), and in West Coast companies such as social news site Digg (Highland led the Series C round last fall) or Metacafe (also Highland), and even Facebook (Greylock Partners, albeit out of its San Mateo office with partner David Sze, who also invested in Digg and LinkedIn). And that’s a quickly culled, very short list.

Among local firms, Spark, Polaris Venture Partners, and (to a slightly lesser extent) General Catalyst Partners, which has just brought in Facebook co-founder Chris Hughes as entrepreneur-in-residence, are leading the way in social media. I profiled Hughes in his new role at GC in last week’s debut column. So this week I am going to look at Spark and Polaris (I promise Web/media investments are not the focus of this column—I just want to get us beyond this Facebook meme once and for all). Between them, the two have amassed an array of new media investments that run from tweeting to blogging to Internet TV. (See my still-incomplete lists at the end of this article.)

The two most prominent social media investments by these firms are Twitter, in Spark’s case, and, for Polaris, Automattic (the company behind WordPress, the leading blogging platform). So I sought out the partners who made these investments—Sabet and Polaris general partner Mike Hirshland—for their take on my premise that it’s time to put the Boston-Facebook story behind us. I also asked them how their social media/consumer Internet deals came about, where they think Boston stands now in this arena, and whether New England could ever hope to compete with California in grooming social media companies (there is some reason for optimism on this front—read on).

Here’s my report.

Both Sabet and Hirshland agree that the center of gravity for social media companies is clearly on the West Coast—no surprise there—and tell how it takes a concentrated effort on …Next Page »

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