In a remarkable test of will, I’m going to avoid any Thanksgiving-related puns and just dive straight into this wrapup of the past week in Xconomy Seattle’s tech headlines, covering everything from Black Friday shopping apps to the latest rumblings of possible doom from a local wireless company.

—The crew at Seattle startup Decide made the obvious leap into a full mobile app, released just as bargain-hunters were warming up for the holiday shopping frenzy. Decide is among several sites that help consumers decide whether to buy electronics, or wait for a better price. But the company, co-founded by University of Washington search expert Oren Etzioni, takes things a significant step further by employing a sophisticated price-prediction technology.

—I profiled Avalara, a Bainbridge Island-based company that sells web-based software to help merchants calculate and pay sales taxes. That’s a complicated task, with some 11,000 taxing districts of all shapes and sizes littered around the country. Avalara’s been posting impressive growth numbers, and the trend could continue as Congress, Amazon, and traditional retailers try to hash out a deal over charging sales tax on more online purchases.

—Xconomy’s Greg Huang brought us the scoop on a speech by all-star investor Brad Feld, who told entrepreneurs and angel investors at Microsoft‘s NERD Center in Cambridge, MA, that product and people should be their main focus. Feld is the co-founder of TechStars, a startup bootcamp program with a branch in Seattle. He’s also a board member and investor, through the Foundry Group, in Seattle startups BigDoor Media and Cheezburger Network.

—I looked at a recent tactical shift made by MiNeeds, a Seattle-based site that pairs users up with local service providers who bid for their business. It’s a relatively active area for Web companies to target, but MiNeeds thinks it found a significant edge in the wedding market when it decided to break those services out from the plumbers and carpenters and house painters on the main site. That was something the co-founders resisted—but, as good data geeks, they changed their minds after testing showed it was the right move.

—PaperShare opened up its doors to the public—or at least the cloud computing and virtualization slice of the public. The startup, headed by longtime server computing consultant Doug Brown and former Microsoft virtualization director David Greschler, is a new twist on the sometimes ancient websites that many professionals still use to spread technical info and industry insights.

—And finally, we had some contrasting bits of news: Clearwire, which is trying to simultaneously slow its losses and raise money for a network overhaul, publicly said it would consider delaying a big debt payment. Shares, of course, took a beating. On the other hand, Ignition’s Frank Artale led a $15 million investment in ServiceMesh, a cloud platform company in Santa Monica, CA.

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Looks like Amazon’s pugnacious bet on national sales tax reform is paying off.

The Seattle company (NASDAQ: AMZN) says it is strongly supporting a proposed national law that would force online retailers to collect local taxes on more of their sales, ending a longtime loophole originally meant to help catalog businesses. The National Retail Federation, which has battled with Amazon on the sales tax issue, also is on board with the bipartisan Senate proposal announced today (the federation represents lots of brick-and-mortar retailers).

So how’s that a win? Amazon has gone to some pretty extreme lengths to avoid being deputized as a tax collector for state and local governments, insisting that its shipping centers are different companies and even shutting down entire networks of third-party sellers when state lawmakers pass “Amazon tax” bills.

That behavior has caused a lot of turmoil for the ecosystem of smaller businesses that rely on Amazon. One example is the story of Shopobot, a comparison-shopping startup that relocated from the San Francisco Bay Area to Seattle earlier this year specifically because Amazon axed its affiliate program in California.

But Amazon has said for a long time that it favors a national solution, rather than a hodgepodge of different state rules. Specifically, the company has supported something called the Streamlined Sales Tax project, in which states agree to a common set of sales tax definition and practices.

The common standards are important because each state taxes things differently—sometimes wildly so.

Cue up today’s bipartisan Senate bill, which uses the Streamlined Sales Tax program as a centerpiece of any national tax system for online sales.

So, while any retailer would certainly enjoy the fact that it didn’t have to act as a big tax collector, and could price its products a little better to boot, Amazon clearly knew the days of tax-free Internet sales weren’t going to last forever. It placed its bet on a national system, and made some pretty belligerent moves to reinforce that preference.

And it looks like that strategy is paying off.

There’s no guarantee that this bill will actually become law, of course—the federal lawmaking process is both arcane and volatile, and any tax vote will be a tough one in this economic climate. But it’s got a lot of the hallmarks of something that could pass.

An interesting side note: Shoppers in Washington state already pay sales taxes on Amazon purchases, because the company’s headquarters are here. But the state also says it’s only collecting taxes on about half of the online and mail-order purchases by people living here, and that adds up to some big numbers.

If the new Senate proposal becomes law, Washington officials estimate that state and local government treasuries could raise about $242 million annually. That comes at a time when the state has been cutting billions from spending on education, health care, and other expensive government programs.

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Online real estate company Zillow, which announced a small quarterly loss related to its recent headquarters move, is acquiring Diverse Solutions, a company that provides online marketing tools for real estate agents. The stock-and-cash transaction is worth $7.8 million, Zillow (NASDAQ: Z) said Wednesday.

Zillow said its net loss for the third quarter was $750,000, including a $1.7 million charge related to the company’s headquarters move. Without the charge, Zillow said it would have earned $1.1 million for the quarter, compared to a loss of $1.5 million a year ago. Revenues for the quarter were $19.1 million, more than double the figure from a year earlier, Zillow said.

This is Zillow’s second quarterly earnings report since it debuted on the public markets earlier this year.

The Diverse Solutions acquisition is an attempt to further beef up Zillow’s “marketplace” revenues, which have driven the company’s revenue growth in recent years.

That income category includes subscription fees for real estate agents and advertising sold to mortgage lenders, along with charges for lenders to participate in the company’s Mortgage Marketplace.

Third-quarter revenue growth illustrated that trend even further: The “marketplace” segment more than tripled year-over-year to $11.8 million, while display advertising revenue grew by 57 percent to $7.2 million, the company said.

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Updated 10:45 am Pacific
After Groupon’s season of woe, a truckload of me-too disappearing acts, and last week’s mass-layoff meltdown at third-place competitor BuyWithMe, it sure isn’t looking like a very bullish time to be operating a daily deals startup.

Martin Tobias would disagree. The Seattle entrepreneur, who been through some notable ups and downs in digital and cleantech ventures over the years, still sees a huge upside in the group-buying dynamic that daily deals services have unleashed. He’s chasing that opportunity with Tippr, a roughly 90-person startup headquartered in Seattle’s University District. [Changed headcount number from 120 to about 90---Tippr halved the number of people working in its marketplace division after this interview.]

The trick, Tobias says, is aiming at the white-label side of the market—providing deals services to other publishers, rather than trying to build a standalone consumer brand, as market leaders Groupon and Living Social have done. Cut out the huge marketing and sales expenses, spread the technology and other costs across a pool of customers, and blammo—you’ve potentially got yourself a pretty nice business.

Tippr CEO Martin Tobias

It also doesn’t hurt to be armed with a trove of patents. Tippr’s were acquired from former Paul Allen company Mercata, and Tobias has not been shy about using the portfolio, employing it in a licensing program, using it to gain at least one acquisition, and more recently opening up a broad federal patent lawsuit that, as we reported last month, has now been quietly settled.

Interestingly, Tippr has thus far gone after other middle-tier or small group-buying companies in the courts, but not market leaders Groupon or Living Social—when asked about that in our interview, Tobias declined to comment.

Tippr is backed by $9 million in venture financing, led by New York-based RRE Ventures (Vulcan Capital also acquired a stake in parent company Kashless in the patent deal). The startup debuted in February 2010, but by that November had announced the white-label provider service that is now the company’s major focus.

That software platform, called PoweredbyTippr, runs daily-deals offerings for other website publishers around the country. A prominent example is Yollar, the daily-deals offering from TV station owner Belo (NYSE: BLC). Tippr provides the technology back-end for the Yollar service, but the local TV stations keep their own branding on the group discounts that are offered to subscribers.

That strategy appears to be paying off. Tobias wouldn’t talk revenue specifics, of course, but left plenty of bread crumbs that point toward a possible multi-million-dollar revenue stream for the startup.

The overall daily deals sector in North America is pegged at $2 billion-$3 billion by such observers as research firm BIA/Kelsey and daily deals aggregator and data provider Yipit.

Yipit also estimates that white-label operators only make up about 10 percent of the daily deals market right now. But white-label providers should have success “working with media companies as a way to monetize existing subscriber bases rather than having to build entire bases from scratch, which is the plight of most smaller daily deal sites,” said Unaiz Kabani, a Yipit data analyst.

Tobias pegs the white-label slice at 5-10 percent of the overall market. And he says Tippr’s the leader of that white-label subsector, with about 35 percent market share. That leads me to a back-of-the-envelope figure of maybe $44 million-$88 million in possible annual revenue.

Tobias says Tippr’s annual revenue growth is “comparable to a Groupon. We are growing at hundreds of percent year over year.”

“Our numbers aren’t the size that they are. But if you actually look at our quarterly growth rate versus the first couple quarters of Groupon, we’re growing faster than they did when they came out,” Tobias says. “I haven’t raised a lot of money and I’ve got 120 guys, so do the math. I’m doing OK. I’ve raised $9 million. Groupon’s raised a billion and a half.”

Continuing that growth, of course, depends on more publishers jumping on the daily deals bandwagon with gusto. That’s a potentially dicey proposition, since a lot of … Next Page »

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When the customer that would transform their business came calling, the entrepreneurs behind Seattle’s EVO Media Group weren’t exactly flying high.

After a $1.5 million fundraising round and a period of rapid hiring, the three-year-old startup was confronting an intractably slow economy and a target market that wasn’t generating enough sales. EVO was forced to cut staff—again—as it looked for a way to wring more money from its flagship website-building service, DevHub.

Things were about to get better. In October, EVO got an unsolicited lead on not just a new customer, but a whole new line of business, when a major phone directory company contacted the company to ask if DevHub was available as a private-label service.

Uh, yeah, they could handle that. Less than a year later, the private-label business is the primary revenue source—about half of revenues now, and growing every month—and has EVO on the road to sustained growth and higher profit margins.

The customers in DevHub’s sweet spot now are businesses like domain registration sites or yellow pages directories, which can offer website-building services as a way to land more small- and medium-sized business customers of their own. Those bring a lot larger base all at once than DevHubs’s old method of upselling a free product to small website or blog owners.

“We’re really targeting and talking to companies that have these captured bases of probably a minimum of 5,000 small businesses,” co-founder Daniel Rust says. “But we’re flexible, as long as they have a market or a base sort of idea. Right now, we’re working on rolling out a new implementation in New Zealand with a partner that’s going to start doing franchised website building.”

Rust and his co-founder, Mark Michael, sound cautiously optimistic that they’ve hit upon a strong, sustainable business at this point. But they’re also not shying away from the difficult lessons of the past few years, offering a remarkable frankness that might serve as a warning to young entrepreneurs bewitched by tales of swift success and seven-figure checks.

Right now, they say, EVO costs about $20,000 per month to operate. Contrast that with the biggest-spending days, when the company was burning through $120,000 to $150,000 a month. But here’s the rub: All that spending and a staff of about 20 allowed EVO to crank out the … Next Page »

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

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

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

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

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

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

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

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

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Seattle-based social media monitoring startup Buzzlabs, started by former Microsofties Philip Lee and Dou Shen, has been acquired by West Hollywood, CA-based CityGrid Media. Terms of the deal were not disclosed. Buzzlabs’ service helps businesses sort and analyze the cacophony of user-generated content flooding the Web. CityGrid said Buzzlabs’ offering will be added to its existing service over the next three to six months. CityGrid—formerly known as Citysearch—already operates Seattle-bred restaurant search app Urbanspoon. CityGrid is a unit of IAC (NASDAQ: IAC), the Barry Diller-headed company that once owned Expedia.

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Seattle-based online real estate website Zillow has acquired San Francisco-based Postlets, a startup that syndicates property listings across about a dozen sites. Terms of the deal were not disclosed, and Zillow wouldn’t comment on any possible layoffs as part of the acquisition.

Postlets says it has more than 500,000 registered users generating more than 350,000 sale and rental listings nationwide. It operates on a “freemium” model, providing basic services for no charge and collecting fees for pro-level accounts.

Zillow has been reported to be mulling an initial public offering. The company, which has collected close to $90 million in financing, said last year that it was profitable.

“Ask anyone in the industry, and they’ll tell you that Postlets is a great tool for agents looking to promote their listings and manage their online presence, for free,” Zillow CEO Spencer Rascoff wrote in a blog post this morning. He added that Postlets will continue its current partnerships to distribute listings across 13 websites.

Postlets’ co-founders, Asher Matsuda and Raymond Chen, are joining Zillow as full-time employees. Postlets also said in its own blog post that it would retain a free service after the acquisition. The two companies had been working together already— Postlets announced in January that its listings were being syndicated on Zillow.

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I guess this means it’s game on in Seattle for tech-company hiring gimmicks. The folks at Cheezburger Network, fresh off a new acquisition and $30 million in venture financing, put together a quick marketing stunt today outside Key Arena, where Amazon.com was having a big company meeting.

About a half-dozen Cheezburger employees, including CEO Ben Huh, were handing out burgers from Seattle institution Dick’s, along with doughnuts from Top Pot and job fliers, telling the Amazon techies to spread the word to any friends who are looking for a job. Cheezburger, for those who don’t know, maintains a line of quirky entertainment and humor sites, including Fail Blog and I Can Has Cheezburger. The company has about 60 employees now, and is seeking to grow by about a third.

Check out the video for Huh’s rundown on the job categories Cheezburger is looking to fill and where, since they just opened a New York office. (Also note how one person looks pretty puzzled by the business card, but brightens up considerably once the burger is handed over.)

Cheezburger was able to get a hold of about 200 burgers in the roughly half-hour window they gave the people at Dick’s to fill the order, and supplemented it with about 20 dozen doughnuts. The noontime Amazon crowd ran through it pretty quickly.

There’s a bit of seriousness behind the goofball factor in peddling junk food to techies. We’ve previously covered the Seattle area’s tight market for tech talent, a dynamic that’s stoked by a combination of relatively flat college enrollment slots, an expanding tech sector, and the arrival of more companies from Silicon Valley who are looking for talent up north as their own job market heats up.

“It is really hard,” Huh says. “Just because we got a VC round doesn’t mean we’re going to just hire everybody we can find. We still want to keep the quality up.” That highlights another conundrum some commenters on previous stories have mentioned: All these tech companies say it’s increasingly difficult to fill jobs, but they can also sound pretty selective about who they want to hire.

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Hey Big Apple: Ready for some Cheezburger? Seattle-based Cheezburger Network, the holding pen for online humor sites like I Can Has Cheezburger and Fail Blog, has acquired the Internet-culture trackback site Know Your Meme. It’s the first big acquisition move that we’ve seen Cheezburger make since securing $30 million round of venture financing early this year.

Cheezburger CEO Ben Huh notes that the Know Your Meme acquisition represents not just a good fit in terms of content, but an opportunity for his profitable humor-website factory to expand into the biggest media market of them all—New York. The Know Your Meme team is now the “Cheezburger East” office, and the company plans to add staff there, Huh says.

“It’s a great place for Internet culture,” Huh tells Xconomy. “It seems there are a lot of people who are interested in this there—even more so than Seattle, which is kind of odd.” Huh says he might have thought the quirky viral humor behind Cheezburger’s success was a little more West Coast in flavor. But for whatever reason, he says it seems to translate across any major regional differences.

Know Your Meme, which says it reaches about 2.5 million people a month, is based around the idea of treating online pop culture as the subject of a fast-moving anthropology exercise. The site tracks the origins and evolution of all the flotsam, mashups and mini-celebrities churned out by our “Check this out!” online impulses. The appeal of this site is pretty obvious to me. When I wanted to tell my wife about Internet sensation Antoine Dodson’s unlikely path to becoming wildly popular, I directed her to the Know Your Meme page on that topic.

Although the video presentations tracing the lifespan of particular items are pretty tongue-in-cheek—fun background music paired with ironic white lab coats—the documentation process is logical and straightforward, even bordering on serious.

Huh says the deal was effective last Monday. Financial terms weren’t disclosed. Tubefilter, which appears to be the first to report the news, points out that Know Your Meme’s previous owner blogged that it was a “super seven figure deal,” whatever that means.

Know Your Meme was created by Rocketboom, which also feasts on Internet pop culture with TV news anchor-style video reports on a variety of topics. Meme, for those who don’t know, is a neologism that refers to the passed-around bits of content that underlie a lot of the mass-sourced time-waster entertainment online.

Cheezburger’s various sites basically operate as repositories of different types of memes—the prime example being bizarrely captioned cat photos that appear on the namesake site “I Can Has Cheezburger?”

Huh built his his online humor empire partly through shrewd acquisitions, and he says Know Your Meme is another good addition because it can pretty seamlessly provide context to the funny thing you’re looking at for the moment.

“You’ll see something and it has no context. It’s like, why’s this funny?” Huh says. “It’s an area that we’re missing, that can really benefit a lot of the users who want to know more about this stuff.” Huh adds that, in a weird way, this completes a circle. The humor culture of the Internet, he says, does a great job of taking things out of context and rearranging them into something new. Know Your Meme adds back some of the context behind that remixing exercise.

When Xconomy’s Luke Timmerman spoke to Huh in January after Cheezburger’s big Series A round, Huh said quite frankly that one pitfall of taking that much money could be getting “indigestion” from acquiring too many properties and losing focus. Huh says that’s still on his mind. “We don’t expect to do a lot of acquisitions. In fact, we’re not talking to anyone else right now,” he says. “This isn’t something like we have a war chest and we’re going to go spend it.”

Huh also says previously stated hiring plans for the Seattle office are progressing, even though he’s among those who say it’s becoming harder to find enough tech talent to fuel rapid growth. “We are actually hiring pretty actively,” he says. “We’re up to 58 people now.”

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King of the Web, the social gaming startup led by some big names in Seattle tech, is opening up the private beta I speculated about earlier this month. Passwords were doled out to Twitter and Facebook followers today, and I took a peek under the hood.

From what I can see so far, King of the Web is a humor-oriented social networking site that pits everyone against each other in a quest to amass votes for the best profiles. The site says its “election cycles” are on a monthly basis, and the current cash prize right now is $1,000.

Here’s a screengrab from what looks to be the page of co-founder Nick Hanauer, who really does not need another $1,000 (I presume he’s not eligible to collect). Other top names at King of the Web include former Expedia CEO Rich Barton and Hanauer’s former aQuantive colleagues Maggie Finch and Scott Howe.

I’m reminded right away of Funny or Die, the comedy-video ranking site started by Will Ferrell and friends (although that has professional comedy content). There’s also a bit of pop-culture DNA recalling the meme factory over at Cheezburger Network, and even the ratings feature on plain old YouTube videos.

But it’s not just about comedy. The leader when I checked in was “Pwn Star,” who is actually campaigning on a platform of making female characters in video games better—less sexpot cliché, more butt-kicking awesome. Her page gives good and bad examples of what she’s talking about. The previous “king” was someone who posted a ton of puzzles to their page.

Other people are making it more of a straight-up popularity contest by posting videos of themselves doing funny things. That includes someone’s dog chasing a radio-controlled truck. The site is putting an emphasis on video as a means of getting your face and candidacy out there.

So let’s count the Internet trends being weaved together here: The social graph, gamification, and user-generated content. I’m not sure where to file the cash prizes part, but that’s really timeless.

As for the business model, we’ll have to see about that later. The people running the site are heavy Facebook and Twitter users, and I would guess this really will rely on lots of integration with those portals.

But you have to like the candor of the top guys: Barton told TechFlash last year that “It’s one of those ideas that’s totally binary. It will be huge or it will be nothing.”

As a side note, it’s interesting to see such a big elections angle from a guy like Hanauer. He lost big-time on his last foray in elections, when he vocally came out in support of Initiative 1098, which sought to establish a Washington state income tax on the rich.

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Seattle-based social wedding software company Nearlyweds said today it has closed a $500,000 equity financing round from Founder’s Co-op, Jon Kelly, Andy Liu, David Niu, and other investors. The startup also announced it has acquired Chicago-based OneWed for an undisclosed amount.

Nearlyweds, founded in 2007, designs personalized wedding websites for couples for a flat rate. The company first popped up on our radar last year when it earned an investment from Founder’s Co-op. According to chief executive John Scrofano, the growing company is diving into the online wedding services market at an interesting point of change in the industry—a turning away from the “traditional American” wedding, and an embracing of the more unique and personalized.

“Couples are asking ‘why’ to many things, including themes, bridal parties, venues, etc. And we are seeing both an inclusion of more ethnic heritage traditions at the same time as things that are not traditional at all, but totally unique to the couple,” Scrofano said via e-mail. “This is bad news for mega-generic wedding industrial complex media outlets who write content aimed at ‘traditional American.’” It’s good news, however, for Nearlyweds, he adds.

Nearlyweds’ small team is competing against the ranks of bigger players like TheKnot. But smaller upstarts like Nearlyweds have an advantage over larger companies, which tend to have more generic offerings, he says. Indeed, Nearlyweds prides itself on its customizable, personalized options for couples planning their big day.

Although the company did not disclose how much revenue it brought in last year, Scrofano did say it doubled from 2008 to 2009, and that Nearlyweds is on pace to do between four and five times that amount in 2010, including the acquisition. With the new financing and acquisition of OneWed, Scrofano says Nearlyweds will be well-placed to blossom in the growing online wedding-planning market. OneWed, which currently gets between 250,000 and 500,000 unique visitors to its website a month, and has a database of 25,000 bridal vendors, will substantially add to the company’s traffic base, he says. “OneWed accelerates our vision dramatically,” he says. “We were not awesome at building a large audience. OneWed is great at building a large audience.”

OneWed’s 10-person staff will stay in their current office in Chicago under the Nearlyweds umbrella. The new deal, according to Scrafano, will allow his company to expand on its current revenue model. Wedding planning companies, he says, generally make money in three ways—advertising with local vendors, advertising with national vendors (such as David’s Bridal, and Crate and Barrel), and selling products and services marketed direct to customers.

“We see lots of opportunity for innovation online in categories one and three. Nearlyweds’ was good at one and three, and getting better,” he says. “OneWed creates a huge opportunity for us in category one (vendors) and a base on which to make some moves quickly.”

Scrofano also plans to capitalize on the cultural shifts he’s noticed in the wedding sector, incorporating even more personalization and social elements to help make wedding planning as easy as possible for couples getting ready to walk the aisle (figuratively, for the less traditional).

“Wedding planning is already inherently social, but there are only anemic online offerings that play to that fundamental core part of the process,” he says, adding that Nearlyweds’ goal is to make that process “simpler, more social, and more fun.”

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Seattle-based search engine optimization (SEO) and social media software startup Optify has raised $6.1 million in a Series B round led by Triangle Peak Partners, the company said today. Seattle-based Madrona Venture Group, and a number of prominent angel investors, including Upstage Ventures founder Mark Wachen, former Microsoftie Bill Baker, Alexrod Capital Management founder Alan Axelrod, and Clear Fir Partners partner John Cunningham, also participated in the round.

Optify was founded in 2008 by Brian Goffman, a former venture partner at Madrona, and Erez Barak, a veteran of Hewlett-Packard and Mercury Interactive. The company, which received $2.75 million from Madrona in July 2009, develops a software system for marketers who want to launch SEO campaigns, use social media for business, track and organize visitors, and analyze results.

Optify rolled out of stealth in March, with a slew of big-name customers, including the Wall Street Journal, LexisNexis, Microsoft, and a number of Seattle-area startups, such as Bocada, Concur, Marchex, and SonoSite, and up-and-comers like AdReady, Smartsheet, and Skytap. The company says it tracks over 100 million pages per month. Optify’s customers, on average, see more than a 300 percent increase in leads and conversion rates, and more than a 100 percent increase in website visits over a four-month period, the company said.

As part of the deal, Triangle Peak Partners co-founder David Pesikoff will join Optify’s board of directors.

“This round of funding validates Optify’s opportunity and will fuel our continued growth,” said Goffman, Optify’s CEO, in a statement.

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DataSphere Technologies is riding the hyperlocal wave. The Bellevue, WA-based Web technology and ad sales company has raised another $10 million in a Series C venture round led by Kirkland, WA-based OVP Venture Partners. The financing will back DataSphere’s further expansion into the $100 billion U.S. local advertising market, the company said in a statement today.

Founded in 2006 under the name SecondSpace, DataSphere’s online platform helps media organizations, businesses, and real estate firms easily manage websites, track audience behavior, and implement search and information discovery.

Besides OVP, DataSphere is also backed by local venture firm Ignition Partners and a number of media organizations (both private and publicly traded) including the Northwest’s own Fisher Communications (NASDAQ:FSCI). The company raised a $6.5 million Series A in July 2006, followed by an additional $10.8 million Series B scored in January, meaning it has now raised a grand total of $27.3 million in its three venture rounds.

To date DataSphere has used its technology to build out over 750 hyperlocal (neighborhood-based news) websites for media companies like Cowles California Media, Gannett (NYSE:GCI), Raycom Media, LocalTV, Fisher Communications, and Hubbard Broadcasting. Fisher alone operates 54 DataSphere-powered sites in and around Seattle at KOMOnews.com.

Over the past year the company has seen dramatic growth. DataSphere reached over 12 million unique visitors across its advertising network in August alone. And with expansion in mind, the company says it is inking partnerships with media organizations nationwide, which will enable neighborhood news sites to 40 percent of the U.S. population. When Greg spoke with chief executive Satbir Khanuja, a seven-year Amazon.com veteran who holds a PhD in ceramics engineering from MIT, in January, the company had around 70 employees. Just nine months later, it has more than tripled in size, with 220 employees, the company says. And DataSphere expects to keep hiring another 150 people before the end of the year. DataSphere vice president of products Gary Cowan says this trend is consistent with the company’s plans for rapid expansion over the next year and beyond.

“Having launched over 300 neighborhood websites over the last 60 days, we’re on track to provide neighborhood news to more than 1,200 communities by the end of the year,” Khanuja said in a statement.

The $10 million in new financing will be used to expand Datasphere’s business capabilities, escalate the build-out of hyperlocal community websites, and enhance its products and services.

“We’ve experienced a tremendous demand for our services and this additional funding will ensure we’re able to accelerate our growth rate to meet the requirements of our rapidly expanding client base,” Khanuja said in a statement.

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Wetpaint has long been considered one of the Northwest’s top young tech startups. The Seattle-based company, founded in 2005, has raised $40 million from venture capitalists, including one who backed Facebook. Wetpaint has been heralded by Jude O’Reilley (then at online-health startup Trusera, now at Amazon) as “stars in the consumer wiki space,” and a “power to the people.” But the star of wiki is now building on that success in a new and fascinating way, aiming to become a star of online entertainment media.

Wetpaint’s scalable Web-publishing content platform boasts over 1.3 million user-built sites, and gets 10 million unique pageviews a month. The hope is that user base will give Wetpaint a running start with its latest venture, Wetpaint Entertainment, today, in which it is diving into the entertainment media space face-first. The idea, co-founder and chief executive Ben Elowitz says, is to turn the traditional publishing industry on its ear.

“Publishing is going through a massive transformation right now, and it really needs to find a new model—the audience has become so fragmented, so we really need to find a model,” he says. “Our goal is to revolutionize media by cracking the code on a profitable, scalable model for the publishing industry.”

At first glance, Wetpaint Entertainment sounds like a glorified network of TV fan sites—in the same vein as the sites driven by another Seattle-based startup, BuddyTV and the thousands of independent blogs and entertainment news sites. In fact, the creation is something very different. Wetpaint Entertainment’s 15 ‘channel’ sites, each dedicated to a different popular TV show, are the product of the intersection of multimedia videos and images, active social networks, and a team of professional editorial staff. It’s sort of a cross between social wiki technology, a Web-analytics company, and a magazine.

“We started with the social wiki by Wetpaint platform, and as we did that we realized that there was a big opportunity around entertainment,” Elowitz says.

The result, he says, are topical sites chock full of content specifically tailored for the reader—or user, rather. It’s supposed to maximize the resources of the web, and integrating new technologies, to create a more efficient, comprehensive, and more interactive and content-rich site at a fraction of the cost of other mainstream media outlets, like People magazine or US Weekly.

Wetpaint homepage

“If we were People magazine trying to do this, it would take hundreds of people,” Elowitz says. “We are able to publish content at about a fifth of the cost, because we’re using technology to be more efficient.”

Much of the technology he’s referring to stems from Wetpaint’s original Web-based tool for creating wikis that were both easy to use, and powered with social networking tools. By developing a publishing platform heavily mired in technology, Elowitz says his team of 35-full time staff (the company laid off 15 employees in July 2009) has found a more interactive, faster, customizable, and more advertiser-primed way of publishing.

“One of the themes that we’re attacking in entertainment, is there’s this bridge between Hollywood and the real life, and we’re able to cross that bridge,” he says. “Traditionally, top publishers have had a really high consumer experience, but at a really high cost, and that cost isn’t sustainable.”

Wetpaint Entertianment is launching today with 15 sites centered around TV shows that are popular with young women: “The Vampire Diaries,” “Grey’s Anatomy,” “America’s Next Top Model,” “Castle,” “Hellcats,” “Nikita,” “Glee,” “Dancing With The Stars,” “Top Chef,” “Pretty Little Liar,” “Bachelorette,” “The Bachelor,” “Gossip Girl,” “Jersey Shore” and “The Real Housewives of DC.” On each site there are as many as 200 updates daily on topics surrounding each fan base—show news, spoilers, gossip, fashion worn by the stars (an easy in for high-end advertisers, Elowitz notes), top 10 lists, music from the show, and pictures and video both aggregated from syndication partners—which he could not name—and created in-house.

“We have original video productions where we recap a week in TV, or take people off the street and re-enact scenes from episodes,” Elowitz says.” This is all really about completing that … Next Page »

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Score another one for the “gamification” of websites. Seattle-based BigDoor Media said today it has raised $5 million in Series B funding led by new investor Foundry Group, the Boulder, CO-based venture firm co-founded by Brad Feld. Feld led his firm’s investment in this financing round, and is joining BigDoor’s board of directors.

What do techies mean when they talk about gamification? In BigDoor’s case, the company has developed a software platform that helps website publishers and developers build videogame-like mechanics into their sites and mobile applications. That means adding things like virtual currencies, virtual goods, points, badges, and leader boards—all with the goal of driving more people and visits to a website, and strengthening a company’s bond with its customers.

The idea is that by rewarding loyal consumers who contribute comments to a site, say, or upload content such as photos, websites can create “virtual economies” that to this point have been seen mostly in video games (Café World by Zynga) and game-like applications (Foursquare). What’s more, when people are more tightly connected to a site, the thinking goes, they are more likely to buy something from it.

It’s part of a growing trend that seems to be sweeping the tech startup and VC land. Some companies, like Seattle’s Bobber Interactive, are “gamifying” a particular niche sector like financial services for teens. Other companies, like BigDoor, are trying to become the general platform on which game-like mechanics get built across different kinds of websites. “There is big opportunity for gamification delivered as a platform. It’s especially interesting coming from a team so focused on the customer experience,” says Scott Dodson, a game design expert and co-founder of Bobber Interactive.

The deeper idea here is to add a layer of social competition to any given website. This is being tried by fan sites, humor blogs, user-generated content networks, and more traditional media sites. By spending more time on a site, individual consumers can earn rewards, like virtual gifts and access to premium content. “Users have a track record of what they’ve done. We all like to keep score, we like to know how we’re doing,” says Keith Smith, the co-founder and CEO of BigDoor.

Some of BigDoor’s early customers include BuddyTV and Cheezburger Network, a couple of popular Internet companies in Seattle. But already, some 40-odd Web publishers and developers are in the process of implementing BigDoor’s platform, or building applications on top of it, Smith says.

BigDoor previously raised more than $700,000 in seed funding from Seattle-based Founder’s Co-op and angel investors last year, Smith says. The company has a half-dozen employees, and is looking to double in size (or a little more) in the next couple of months. “BigDoor should become the standard platform used by companies to implement game mechanics,” said Foundry Group’s Feld … Next Page »

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Seattle 2.0′s monthly startup index reports that Cheezburger Network and Zillow still lead the pack of local Internet startups in terms of traffic estimates. Feedjit, Survey Analytics, SEOmoz, and Smilebox moved up the ranks in the top 10, while Sporcle, Entertonement, AppStoreHQ, Evri, Zulily, and Onehub made strong upward moves in the top 50. Seattle 2.0 CEO Jennifer Cabala noted that April was a good month for entertainment sites and information discovery services.

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Bruce D’Ambrosio wants to change the way content and services are distributed on the Web—and how people make money from them. His new startup, Seattle-based DigitalScirocco, is emerging from pseudo-stealth mode today at the semi-annual DEMO conference in Palm Desert, CA. The company’s service has been live for a couple of months, but has been kept pretty quiet.

It’s a big vision, and here’s how it works. Right now, if you’re a publisher or website owner and you want to post outside content on your site—an article, photo, or song, say—you have to go to a source like Getty Images, or a media organization, and either buy the content manually, arrange to pay them through a business development process, or agree on some other deal. DigitalScirocco has set up an automated marketplace for connecting these website owners with content owners. Through an online auction process, websites can pay for the kinds of content they want—and discover the kinds of prices they want—while DigitalScirocco gets a piece of each sale.

A dress designer, for example, might want to automatically post some relevant articles from Vogue on its site to make it stickier and help drive traffic. The idea is that DigitalScirocco would help the designer get a good price on fresh content, and also would help Vogue make more money from its articles—all by connecting Web publishers with content owners in a new way.

“The issue right now is, those connections are broken, in part because everyone has lost their way in the illusions that [website] locations are content and monetization is about advertising,” says D’Ambrosio, the company’s founder and CEO.

He stresses that DigitalScirocco is not directly interested in the advertising part of the equation. It’s not an ad network. Rather, the company is trying to help enhance websites so they can give consumers a better experience, while helping content producers—media organizations, entertainment sites, finance sites—make more money. From a consumer’s point of view, it’s an alternative to … Next Page »

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Back in December, we reported that Seattle mobile imaging startup Ontela merged with Photobucket, the Denver-based photo sharing site previously owned by News Corporation. Financial terms of the deal weren’t released, but News Corp. ceded some control of Photobucket to Ontela’s investors while retaining an equity stake in the merged company, which retains the Photobucket name.

Yet the full story, and its significance, never really came out. Before the companies announced the merger, rumors were swirling that Ontela was buying Photobucket. Well, I’ve done a little sleuthing, and can now confirm those rumors were accurate. Ontela did in fact acquire Photobucket, according to a Form 10-Q that News Corp. (NASDAQ: NWS) filed with the SEC yesterday.

The statement in the form (on page 9) reads: “In December 2009, the Company [News Corp.] entered into an agreement to sell its Photobucket subsidiary, a web-based provider of photo- and video-sharing services, to a mobile photo uploading platform in exchange for an equity interest in the acquirer. A loss of approximately $29 million on this transaction was included in other, net in the unaudited consolidated statements of operations for the three and six months ended December 31, 2009. As a result of this transaction, the Company’s interest in the acquirer, which is not material, was recorded at fair value and is now accounted for under the equity method of accounting.”

In any merger, of course, one company holds more cards than the other. In this case, it was Ontela, which is a bit surprising. The significance here is that a small Seattle startup has acquired a top-50 website (according to comScore) at what sounds like a pretty good price. TechCrunch reported the sale would be worth $60 million; News Corp. originally acquired Photobucket in 2007 for $250 million plus a $50 million earnout. Whatever the price for Ontela’s investors—which include Steamboat Ventures, Oak Investment Partners, Covera Ventures, and Voyager Capital—it was apparently $29 million less than what News Corp. had valued the subsidiary at. So maybe it’s time to call Photobucket a Seattle company.

As of December, Ontela had 23 employees. The company was formed in 2005 and was backed by about $15 million in venture funding. Earlier this week, Ontela co-founder and former CEO Dan Shapiro said he is leaving his role as chief technology officer of Photobucket in the next month, but will remain an advisor to the company. Photobucket went through a round of layoffs last June, leaving it with about 85 employees at that time.

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It’s been hard to keep a company like Ground Truth under wraps for this long. The secretive Seattle startup, led by prominent entrepreneurs Sterling Wilson and Michael “Luni” Libes, is emerging from stealth mode today, after raising $2.6 million in venture funding from Voyager Capital and Steamboat Ventures last summer. Although many in the startup community already know (or think they know) what Ground Truth is building, the company has just released some interesting details—while withholding many others.

The problem Ground Truth is solving is a big one. Everyone from marketers to media companies to wireless carriers wants information about things like how many mobile users are accessing which websites on their smartphones. The mobile Web has long been considered the next frontier for advertising and publishing, but nobody has had access to reliable and complete data on mobile users’ behavior. That’s because measurement methods from companies like comScore, Nielsen, Hitwise, and Google, while useful for the traditional Web, are limited for the mobile Web in terms of their scope, detail, and timeliness.

“The market needs a precise map of the landscape and a reliable route to navigate, and Ground Truth’s reliable, actionable data provides it,” said Wilson, the company’s CEO (and former president of Seattle mobile commerce firm Qpass), in a statement.

“The only data source that can provide precise measures of mobile media usage is the mobile network itself,” added Libes, Ground Truth’s founder and chief technology officer, also in a statement. Libes started building the patent-pending technology while at the mobile search firm he previously co-founded, Medio Systems.

Using extensive data from mobile operators and other providers, Ground Truth has analyzed the weekly mobile Internet usage of 2.5 million subscribers in the U.S. It has what it thinks is the most accurate and complete dataset so far on mobile Web use—including mobile traffic estimates for a large number of sites (unique visitors, pageviews), length of browsing sessions, and where a given site’s traffic comes from and where else it goes. In doing so, the company apparently has solved some difficult technical problems while keeping individual mobile subscribers’ privacy intact.

Ground Truth’s timing certainly seems good. The field of mobile Web metrics looks wide open, even as more and more people use their iPhones, BlackBerries, and other mobile devices to access the Internet. And with giants like Amazon, Apple, Google, AT&T, and Verizon (just to name a few) increasing their focus on mobile content and advertising, a company that makes tools that help … Next Page »

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