VentureBeat

Google.org, Google’s philanthropic arm, has taken a number of stakes in solar and wind startups over the past year, most recently joining a $115 million investment in solar thermal firm BrightSource Energy. It now seems to be focusing its attention on the bustling geothermal energy sector, with Google co-founder Sergey Brin recently expressing a strong interest in Ormat, a geothermal startup headquartered in Reno, Nevada.

During an interview with the Israeli newspaper, The Marker, Brin confirmed that his company was in discussions with Ormat to collaborate on several clean energy projects, calling the startup a “great company” and praising it for its potential to turn geothermal energy “into a big business.” Though he wouldn’t say whether Google was in talks to purchase any Israeli cleantech companies, he did say that the conditions were good for his firm to buy companies in 2009. He said there were a lot of interesting companies that worked in renewable energy and electric cars — perhaps a nod to Shai Agassi’s Project Better Place.

According to Haaretz, senior executives at Google have already met with their counterparts from Ormat twice, and Larry Page recently visited one of the company’s plants in Steamboat Hills, Nevada. Ormat chairman Lucien Bronicki said he and Google officials were pushing legislation in the U.S. advocating more R&D for advanced geothermal technology. Ormat announced in February that it would work with the DOE and several geothermal companies — GeothermEx and Pinnacle Technologies — to test Enhanced Geothermal Systems (EGS) technology at its 11 megawatt Desert Peak facility.

The DOE has committed $1.6 million to support the project, which could eventually yield over 50 MW of power. The partnership will test hot fractured rock (HFR) technology to attempt to increase the output of its geothermal wells. Sydney, Australia-based Geodynamics, which I wrote about a few weeks ago, has been on the forefront with this technology and is nearing the completion of a 50 MW demonstration plant to supply up to 75,000 people by 2012.

Ormat has several existing projects in Guatemala, Kenya and Nicaragua is considered the world leader in geothermal energy.

In addition to making a series of high-profile investments in eSolar, BrightSource and Makani Power as part of its RE<C initiative, Google has also donated over $1 million in grants to support plug-in vehicle adoption. The foundation’s RechargeIT initiative recently gave $200,000 to CalCars.org. Page said Google.org’s goal is to produce 1 gigawatt of renewable energy capacity from wind, geothermal and solar thermal sources cheaper than coal, an objective he and Brin are optimistic will be met in years, rather than decades.

(This is a continuation of live blogging from the Web 2.0 Expo at the Moscone West convention center in San Francisco) On the second day of the Web 2.0 keynotes, John Battelle of Federated Media is interviewing Internet wunderkind Marc Andreessen, the CEO of Ning, a maker of social networking platforms. He is, of course, the man behind the original Mosaic web browser and (once upon a time) wildly popular Netscape Navigator browser.

Andreessen recently raised $60 million for Ning, giving the company (which lets people build their own social networks) a valuation of over $500 million.

Battelle noted that the cable companies and other media companies have all piled into the Internet now.

“The good news is the future for most forms of entertainment is now the Internet,” Andreessen said. “By and large, the media companies are still unprepared, which is ironic given how much time they have had to prepare. Newspapers are in absolute freefall from a business standpoint.”

Netscape, he recalled from his own experience at the early browser company, launched several businesses. Free browsers, fee-based versions, and web tools. It took off like a rocket, had a great initial public offering, and then Microsoft came into the browser market. Andreessen noted, “And they used my code from the University of Illinois.” He got a laugh out of that. The company had to sell out to AOL in 1998, largely as a failure. The browser turned into Mozilla, which turned into Firefox and it’s now gaining traction as the alternative to Internet Explorer.

What might have been, Battelle asked? If there was one big surprise, Andreessen said, it was how many early ideas have lasted, like Javascript. Even the “back” and “forward” buttons on browsers and “bookmarks.”

“The surprising has been the persistence of the ideas and the persistence of the browser even as a separate piece of software,” he said.

Before Ning, Andreessen had founded Opsware, which makes it easier for corporations to run their computer networks. He scored again, after scoring with the Netscape IPO, when Hewlett-Packard agreed last year to buy Opsware for $1.6 billion.

Battelle notes that Andreessen blogs and opines. He asked Andreessen to opine on Microsoft. “Wonderful company,” Andreessen quipped. Microsoft has been arguing that it’s not the “bad guy” anymore and that Google is the one to worry about. Is it defanged, Battelle asked. Andreessen said Microsoft is still very powerful but there are certainly a lot of “counterweights” to Microsoft. “There are new kinds of companies,” he said. The landscape is splintered and diverse. He thinks the Yahoo deal would add a lot to Microsoft and both would also be good separate. It’s sad that Yahoo would go away but it is part of the natural evolution.

“Are there opportunities for a lot of new companies?” Andreessen said. “Yes. The underbrush of the valley keeps on growing.”

Battelle congratulated Andreessen on his funding, which Batelle said was uncovered by a “blogger.” That would be Anthony Ha of VentureBeat. Writing afterward on his own blog, Andreessen said it’s nice to have money for the coming “nuclear winter.” He said he meant the financial woes in the stock market, which can cause a spiral down.

Ning, a platform for setting up new social networks, is adding 1,500 networks a day and millions of users. “We built Ning to be a general-purpose, programmable platform,” he said.

Regarding Google’s challenge to Facebook, OpenSocial, Andreessen said Facebook did an amazing thing of rolling out the social-networking platform for third-part applications to run it. We are at the early days of understanding the implications for advertising, he said. That spurred OpenSocial, he said. Facebook is Read the rest of this entry »

Nurien Software, a Korean social networking and online gaming company, has raised $15 million in a first round of venture capital from investors in the U.S. and China.

The company lets users create their own avatars and then socialize in a variety of topic areas. Its service has been in development for three years. Investors include Beijing-based Northern Light Venture Capital, Globespan Capital Partners, New Enterprise Associates, and QiMing Venture Partners.

The company is a closed beta in Korea this month. It is launching its service in China and Korea at the end of 2008 and in the U.S. in early 2009. Users can play online games such as MStar, an online dance game; Runway, a fashion show application; and QuizStar, a casual online game. I suppose if I saw those pictures above, I’d throw $15 million into this too.

For the first time, the Chinese government has exempted a U.S. venture firm from having to pay a hefty 10 percent withholding tax for repatriating profits, in a major move that could spur another major wave of U.S. investment in China.

Patrick McGovern (pictured here), head of IDG Ventures, the venture arm of major publishing group International Data Group (IDG), disclosed the Chinese move in a recent interview with VentureBeat. He said the Chinese government made the exemption for his firm last month. It’s too early to tell whether the favor will be extended to other U.S. venture firms soon, he said. McGovern was favored, he said, because of his early commitment to China beginning more than a decade ago.

McGovern said the move is a big deal, because it makes his Chinese investments — already profitable — even more lucrative. He said the exemption by Beijing is why he recently pledged to increase his investments in China to a whopping $60 billion by 2020.

That goal, which McGovern first stated several weeks ago, was so ambitious I had a difficult time believing him when he first mentioned it. After I inquired about it at the time, McGovern agreed to drop by my office here in Silicon Valley to explain why he was doing it. That’s when he dropped word about the exemption. Turns, out, he’d been pushing for the exemption for some time. Now that it’s in place, the advantages of investing in China are manifold.

Here are more details about the accord, based on my interview with McGovern: IDG Ventures in China becomes the first foreign investor with permission to invest from a renminbi (Chinese currency)-denominated fund. It means IDG can take their Chinese companies public on local Chinese stock markets without paying a tax. That means IDG Venture no longer needs to set up a shell company in the Cayman Islands, convert dollars into renminbi and then invest it into a mirror IDG start-up company in China — the standard procedure that it and most other venture capital firms have had to use. Until now, IDG and other firms did all this in order to take Chinese companies public on foreign exchanges, such as in Hong Kong or the Nasdaq. If VCs wanted to take a company public on a local market, they were forced to pay a 10 percent withholding tax for taking money out of China. All this is no longer needed for IDG.

McGovern’s IDG Ventures was the first VC firm to begin investing in China back in 1993. Since then, it has plowed $450 million into 180 companies. The value of that investment is now $1.6 billion (counting exits, sales, and value of other holdings), with the average investment being about four years old, McGovern said. Based on this, the firm has seen an internal rate of return of 41 percent (for the uninitiated, this means a net return each year of 41 percent).

Going forward, the opportunity in China is huge, McGovern says. The Chinese have $2.4 trillion stuck away in savings accounts, with only 15 percent of that in the stock market. The small amount in stocks is because of China’s traditionally weak stock market. However, that’s changing as the Chinese warm to investing and tire of the 3 percent or so they’re used to getting from banks. Increasingly, as domestic money cascades into stocks, companies are going public on China’s domestic stock market in Shanghai and elsewhere, instead of waiting to become big enough to go public in Hong Kong or in New York on the Nasdaq. Between $400 billion and $800 billion more may cascade into Chinese stocks over the next two to three years, McGovern said.

While IDG and other investors previously avoided the local stock market, preferring instead to simply sell their investments, that is now changing. With money sloshing around, it’s far better to go public locally in China, because you can get a better valuation, specifically up to a “20 percent premium,” McGovern says, compared to a sale.

In that light, it’s easy to understand why IDG decided to not reinvest in Boston’s Flybridge Capital Partners, the firm previously known as IDG Boston. With China returning a 41 percent IRR, it didn’t make sense to invest in New England, where IDG was generating only 10 to 12 percent IRR, he said. (Flybridge declined comment.)
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With more than 35 million monthly active users around the world, Hi5 is one of the largest social networks behind social network leaders MySpace and Facebook. It never seems to get much attention in the tech press, for whatever reason, but that may change if the San Francisco company’s developer platform continues growing like it has been since it launched three weeks ago.

Last week I wrote that applications built by leading widget company RockYou were showing an early dominant performance on the site, but the larger story here is that the whole platform seems to be doing well. More than one million applications are being installed by users each day, with about half of the site’s active users engaging with installed apps on a daily basis; more than 300 apps are now live on the site; and more than 9,000 developers are building applications for Hi5.

Does Hi5 have a market-leading platform?

Platforms offered by MySpace, Orkut and other social networks have failed to yield growth and engagement for apps in the same way. Hi5 offers a more compelling platform, at least for now, for the following reasons. It has a large, international audience, a number of missing features that its letting outside developers fill in (like events calendars), and viral channels for growth.

Most of Hi5’s users are in non-English speaking countries, and around 75 percent don’t use any other social network, according to the company. So far, the most popular applications on the site tend to have elements of cultural expression. One popular application lets users display an image of their favorite soccer star on their profile page, Hi5 chief executive Ramu Yalamanchi tells me — this is a good fit with the site’s large Latin American, soccer-loving audience. Other popular applications let users include their country’s flag or other information on their profile page.

Hi5 itself has only offered fairly basic features to its users up until now. One of the most strikingly popular new apps on this front is called TheVerb, a basic events planning calendar developed by a student at Arizona State University. It’s had around 800,000 installs, maybe because it includes Spanish translations, maybe because it lets people invite each other to do certain activities by clicking on icons (like a soccer ball, to send to a friend you want to play soccer with) — and probably because Hi5 didn’t previously offer an events planning feature.

Read the rest of this entry »

Updated with commentary from RockYou

It’s a tale of two social network developer platforms. Hi5, a site popular in some Spanish-speaking Latin American countries and other regions around the world, launched its platform at the beginning of this month — and the third parties that have applications on the site are reporting impressive growth.

Leading widget company RockYou, for example, says its “SuperFive” application has already been installed two million times in the last couple of weeks. Why? Hi5 specifically offers ways for users to contact each other through third-party applications.

Meanwhile, applications on market leader MySpace’s platform have been seeing insignificant growth since it launched in mid-March — because MySpace has yet to introduce effective ways for applications to contact users. However, one top developer tells us that MySpace will soon be offering notifications, email messages, and other so-called “viral channels” already available on Hi5.

So MySpace may soon become the hot spot for applications that third parties have long hoped for. Meanwhile, Hi5 may have done a better job of addressing the spam problem.

Does “viral growth” = spam?

To get an idea of what I mean by “viral growth,” here’s a closer look at RockYou’s “SuperFive” application, which lets users send action messages like a “hug,” “tickle,” etc. to Hi5 friends. If this sounds familiar, it’s because 1) Hi5 already has a feature called “five” which is basically a copy of Facebook’s “poke” feature and 2) RockYou and competitors already offer Facebook applications where you can hug/tickle/poke your Facebook friends

I’ve been hearing that this messaging feature is actually useful for companies that want branded contact with users, like being able to “throw a Coke” at a friend (I made that example up, but you get my drift). Many developers have made good money from selling branded pokes/hugs/tickles.

Update: While this sort of application may seem silly to me, and to many VentureBeat readers, RockYou points out that many, many users find it meaningful — and who are we to judge that? RockYou also makes another interesting point.

Facebook, the first social network to offer a developer platform, has spent much of the past year shutting down ways that applications spam users — and trying to placate users who don’t want to use applications.

Hi5 has instead come out with a new notification system specifically for applications (see the bottom of the screenshot). This means that there is little risk of users feeling spammed by applications messages, because they can just ignore invites, etc. if they don’t want to deal with it.

RockYou says it has been working hard with Hi5 and other social networks to make sure that its user experience is non-intrusive.

The bigger picture

Another other story here is that Hi5 — and MySpace — allow applications built in the OpenSocial application standard to run on their platforms. OpenSocial lets a developer quickly modify an application so it can work on any site that conforms to OpenSocial’s specifications. RockYou and many other developers say that Open Social is saving them time writing code, even though each member social network requires some customization to fit its particular feature set.

It looks like Hi5 is going to stay at the center of developer attention, at least for awhile. As the San Francisco company bragged when it launched its platform, there’s only a 25 percent overlap between its 35 million monthly active worldwide users, and users on rival social networks: The average Hi5 user isn’t on MySpace or Facebook. This means that it is especially important for developers to build applications in languages besides English, top application developer Blake Commagere tells me. Hi5 even offered free language translation services to the first 100 apps submitted.

While still in its early days, Hi5 may have found a good balance between growth and spam-control.