VentureBeat

Updated

An online site for small communities, BackFence, appears to have shut its doors.

The company, which offered news, blogs, photos, and forums for a handful of medium-sized towns, had been struggling. In early Janaury, BackFence laid off many of its employees and replaced its co-founder and chief executive, Susan DeFife. We wrote about it back then and speculation grew that its days were numbered.

When reached for comment, co-founder and chief executive Mark Potts said the shutdown of the community sites was the just end of the long slide that began back then and that the site has been “pretty much running on autopilot for the last few months.”

This is an intensely competitive industry, and we’ll be writing about it more shortly.

BackFence’s site is still live, but when you visit one of the community pages, like Bethesda for example, there is a note saying that “BackFence Says Goodbye.” This is true on all the community pages.

It had raised at least $3 million from SAS Investors and Omidyar Network. Mark Potts says that the investors are considering a sale or maybe even a new infusion of cash. Josh Grotstein, of SAS, is leading the effort.

Update: Co-founder Mark Potts has responded, changes above.

Updated with full list of names of angel investors

How do you build the perfect local community Web site — with news, events, comments and more?

If you manage to, it will be a grand slam. It becomes the talk of the town, people spend more time going there, and local advertisers spend money there.

A wave of companies have tried, but failed. But Outside.in, a new Brooklyn, NY start-up is looking very good — as good, if not better than any we’ve seen so far. Its visual presentation is nice and simple (see screenshot at bottom). It uses AJAX and other technologies to improve upon efforts preceding it.

Here’s the background: Newspapers have largely dropped the ball. A dozen or so Internet companies have tried to adapt the community concept online, but none have nailed it. There’s Yelp, which specializes in reviews of bars and restaurants. There’s Judysbook, which began with a broader community feel, but has since moved toward shopping. There’s Insiderpages, which is struggling, and focused on business listings. Smalltown focuses on local business, too. Topix gives you community news. Backfence gets closer, as does ePodunk to coverage of wider community events — but their execution and user interfaces have remained unimpressive. Craigslist provides a local marketplace, but stops there.

Outside.in takes both existing content (from local bloggers, city governments, movie listings) and user generated content, and packages them into local sites.

For each town, Outside.in lets you see stories, comments, places and “neighbors,” or registered users. It has one useful, powerful feature we haven’t seen before: You can switch the focus of your region easily — using a map feature at the top left of your region. This lets you zoom in or out to include more or less surrounding regions or cities — and the information, news, events and comments all adjust in real time.

So you can limit a search for crime to Park Slope, a neighborhood in Brooklyn, NY. Then you can search for Italian restaurants across the entire city. Or you can look for poetry readings in Park Slope and surrounding neighborhoods. All by just scrolling within a map.

There’s a lot to look at here. Outside.in provides a URL for each city (it adds a +1 to the URL if you zoom out and see a mile of surrounding area, etc), but also for each place. For example, there’s an entry for the Whole Foods in Brooklyn, which is under development, and creating considerable community debate. People can go to the URL and see the latest stories by local bloggers, and can submit their own comments.

In this way, Outside.in wants to be a Wikipedia for local places. How does it monitor the comments and entries? Well, like Wikipedia, it has the crowd controllers. Of its eight full-time employees, three are chaperoning the site, and 12 more freelancers are helping out.

It is early days, and it is a little buggy. For example, in Palo Alto, Calif., some “top places” are actually based in places like Mountain View (in part, because Outside.in is still figuring out how to deal with regions like the Bay Area where cities merge into each other, and because it wants to show places with buzz within ten miles from you).

Founder Steven Johnson gave us a demo today. He was the co-founder of the online magazine FEED and community site, Plastic.com.

Hollywood producer Andy Karsch, and John Seely Brown seed-funded the company with $200,000. Yesterday, the company announced it raised $900,000 more from Union Square Ventures, Milestone, Village Ventures and individuals Marc Andreessen (Netscape co-founder), Esther Dyson, George Crowley, John Borthwick and Richard Smith.

This will be fun to watch. We’ve been waiting for a decent site to come along. While Outside.in has a long way to go, it is looking very smart.

Despite fallout at social networking and other Web 2.0 companies lately, its clear that the problem isn’t lack of opportunity. Many companies still see strong growth ahead.

Check out social networking veteran Friendster.

The company lost $410,000 in December, according to documents a source just slipped to VentureBeat. Revenue was a decent at $700,000, but overhead was $900,000, and other depreciation costs made up another $200,000 or so. The company’s books project monthly losses until July of this year. But there’s a reason for this: Good side is, at this burn rate, Friendster’s $10 million raised in August should see it through until break even. And David Jones, Friendster’s VP of marketing, says this is all part of the plan. The company is spending more now to grab customers, and its seeing traffic at an all-time high, with six billion page views a money, and nearing 16 million unique users — “We’re a top 30 global web site. We’re doing fine,” he said.

Indeed, shakeups maybe rattling other companies, but in some cases its precisely because the companies don’t want to squander what appears to be significant growth ahead.

Take Backfence, the community news and review site. It confirms news of layoffs that have circulated a while, and that chief executive CEO Susan DeFife has resigned. Co-founder Mark Potts tells VentureBeat the board asked him to take over, and implement a “course correction.” The board, and Potts is a board member, wants to grow more quickly, he explained. There are signs advertisers are starting to sign up on community Web sites, and Backfence’s board feared it wasn’t moving aggressively enough — still serving only in 13 communities, when it could serve many more. Also, it hasn’t upgraded its technology quickly enough, still running photo gallery technology it built two years ago, instead of implementing Flickr streaming, for example. They plan to implement more video and social networking aspects, too, Potts said. He wouldn’t confirm the number of layoffs — but said reports (see Paidcontent.org, for example, and The Local Onliner) of the 12 layoffs out of a total of 18 employees is wrong.

Anne Raimondi, vice president of marketing and product, confirmed Insider Pages had cut 20 of its 30 employees. Here too, though, the company is still seeing growth, with traffic up double digit in December and the first days of January — in part because the site has optimized its site better, she said. Costs were too high, when compared to the company’s revenue projections, which is why the cuts were made, she noted.

Orb Networks: Co-founder Joe Costello takes over from Jim Behrens as chief executive of the company, which lets you transfer your TV and other media to any devices while you’re on the go. We spoke to Gary Morgenthaler, an investor in Orb, last week, who told us Costello has experience growing companies through partnership building. He said Orb’s recent second release, already with half a million downloads, is picking up nicely. It works with a mere software download — in contrast to competitor Sling’s requirement of a hardware box — and there’s a free ad-supported version. The company is seeking $30 million in a new round of venture capital.

InterActiveCorp is about to unload a local information and entertainment service, apparently named “Ask City,” and it’s about time.

IAC is an Internet media conglomerate headed by Barry Diller, and it plans to introduce the local site next week, combining Web search, city guides, maps and event listings and tickets, a move that appears to finally combine the company’s assets in a logical way.The new Web-based city guides, scheduled to start Dec. 4, will be followed later in December by a redesign of the Ask.com search service, according to the NYT. This is an obvious thing to do (the company owns Ask.com, CitySearch, Evite and TicketMaster, among others), and we hope it is good. Lots of companies have been biting off little pieces of this strategy (Yelp, Smalltown, JudysBook, BackFence to name a few) but none of them have the same breadth in this area as IAC.

Updated

New start-up Smalltown is going after the local business listings market with an ambitious, focused social network model. It has a charming “smalltown” feel, and seeks to build a community of users around those listings. This company will be one to watch.

It launches today (Tuesday). It has received $3 million in venture capital from Formative Ventures.

Founder and chief exec Hal Rucker gave us a demo of the site. It aims for comprehensive listings of businesses, and has a hyperlocal feel. It is designed to give each community its own look — more so than other local social network/listing sites, such as Yelp, InsiderPages, Judy’s Book or BackFence. (See image at bottom of this article for market positioning).

Smalltown is useful because half of all businesses still don’t have their own Web site. And half of the businesses with Web sites haven’t changed them since creation. Smalltown gives even the tech-phobic business owner easy tools to update their site on the fly — they are handheld by a wizard.

Smalltown is so comprehensive, and so orderly, in fact, that we’re on the fence on deciding whether it will be a spectacular hit, or suffer from requiring too much investment of time, and therefore not reach its full potential.

Smalltown has started out smart, by focusing on one small town in Silicon Valley: San Mateo. It will build out from there.

There are three main features to Smalltown. The best way to follow along is to read these feature descriptions, and then to click on the video image here to see a screencast.

1) Smalltown has designed a so-called Webcard for every business in San Mateo, from the pizza joint to the guitar shop. You can consider Webcards mini-web pages. These Webcards can be searched, so that if you search for guitar shop, the Webcards for guitar shops will come up. These Webcards are essentially company “listings.” They make up the Yellow Pages-like feature of Smalltown. The default is a basic, non-paid Webcard listing. This basic card has lots of company information, such as photo and address. Paid Webcards, where businesses pay Smalltown $40 a month, allow even more information: Businesses can add things like links, menus, galleries of photos and so on. These paid listings are highlighted in gold, so the user can tell.

2) Webcards can also be built for reviews, too. So if a person wants to review a guitar shop, they can create a Webcard to do so. When you search for guitars, you see the listings in a tab, but you also see the reviews in a separate tab.

3) Webcards are also for discussion. You can create a Webcard to talk about anything, such as responding to someone’s request for information about where to buy guitars, or to sell a product, or to mention an event that is happening in your neighborhood. You can attach these reviews to listings or to reviews, or to other people discussing things. You can insert links in them, and create separate tabs in them to hold all kinds of information. They’re searchable in the search bar.

The screencast above will give you a good look and feel for how Smalltown works. You may find the first minute slightly jarring — it takes a while to get used to Smalltown’s unique visuals. About a minute into the screen cast, at the “cheeseburger search,” you’ll start getting it.

Smalltown is designed to allow you to discover things in your local community; it has designed a balance of free and commercial. There are no paid-for-placement features, and no traditional banner ads. It is family friendly. It is entirely Flash based, and has a quick but insulated feel to it. But each Webcard has a unique URL, and so they can be searched from outside, and linked to. One unanswered question is how much control Smalltown will give to the local administrators it will hire to run local sites. This is important because that person can choose what pages are featured on the front page. Rucker says he’s also still thinking about how much to open local sites to national advertisers who may want to create their own Webcards in a community.

There are other features, such as the ability to drag Webcards to your favorites.

Smalltown has a patent on Webcards. Rucker has a background in user interface design, having run his own company Rucker Design Group. He designed parts of the WebTV, Placeware and Ariba sites. The company has eight employees.

PicksPal.com, a Mountain View start-up that lets sports fans show their prowess at calling sport event outcomes, has raised $6 million from two Silicon Valley venture capital firms.

PicksPal wants to be the “American Idol” of sports games. It is just the lastest online sports site to offer fans a way to compete against each other — or against themselves — in a powerful online medium where thousands, potentially millions, of fans oogle at each other’s success, or failure. We have a lot of guy friends who bet on sports and are addicted to fantasy leagues, and this could be a hit if it spreads virally.

Here’s how it works. It is free, and users compete in a weekly game, earning points by correctly picking event outcomes from real events based on real odds. The results are tabulated on Sunday evening, and winners are announced.

It gives winners coupons for $200 to spend at Ticketsnow.com, on things like concerns or sports events. The main incentive, however, is that reliable male competitive spirit, where office mates and fraternity brothers want to prove they are the best, says founder Tom Jessiman. And he’s unveiling another product next Tuesday, called “Genius Picks” where regular fans can pay for access to the collective wisdom of the site’s 30 best pickers over the last 5 weeks for $19.95. This is where it could get interesting.

There are small group of guys — a dozen or so — who just keep winning, said Jessiman. The site is nearing 100,000 registered users, and the small cadre of winners is proving better than most Sunday morning sports pundits on ESPN, Jessiman said. “I’d put Pickspal guys up against those guys and destroy them nine out of 10 days in a row,” he said.

Take Crackilack, pictured above. He has won three of the last five weeks, and last Sunday got 31 correct picks out of 32. He’s also making some heavy bets on some longshots, forcing Jessiman to check the Pickspal security to see if Crackilack was hacking the system. “I don’t know what planet this guy is from,” he said.

The top players apply the same techniques as top stock-pickers, says Jessiman. They diversify, they research and are frequent players — and they trust their instincts. He compared it to the real investment world, where plenty of hedge funds claim success, but only a few like Warren Buffett stand out. He’s thinking of applying PicksPal’s model to other sites, one on Hollywood picking and another on stocks.

Jessiman is a veteran sports site guy, having helped run CBS SportsLine, and later a sports portal in Europe called Sports.com. He then built Oneup.com, a social networking site for Ziff-Davis. Combined, these companies spent hundreds of millions of dollars on marketing and editorial teams, he said, and he’s felt the pain when advertising dollars dried up. So he’s looking for a cheaper model, and one that relies on advertising and premium offerings (such as Genius Picks).

Jessiman spent a year bootstrapping the company, while working on other projects. Then he approached some VC firms in June 2005. Canaan Partners invested $2 million. In February, Canaan and Bay Partners invested another $4 million. He has 12 people, based in Mountain View, right next to Google on Landings Drive.

Techcrunch also has a piece on PicksPal today.

As for competitors, there is San Mateo’s Protrade, which turns athletes in stocks, which you can bet on. There’s Sportingo, in Europe.

There are a number of other new blogging sports sites. One valley start-up is Emeryville’s Yardbarker, a Web 2.0 way of delivering news. Techcrunch had a review of them a while ago here. We talked with founder co-founder Peter Vlastelica, 28, recently.

The site aggregates content from sports bloggers. It then lets users rank the news they like — with the best news floating to the top. Yardbarker is getting buy-in from big sports bloggers, who see Yardbarker as way to juice their traffic.

Meanwhile, Yardbarker benefits because fans come to see the best news about teams and players they like. The news can be ranked by player, group of players or teams — something that local newspapers or sports channels don’t often give. With the advent of fantasy sports and sites like Pickspal, fans are generating loyalties that extend beyond their geographic location. You can create watchlists based on RSS.

Yardbarker embarked on a clever grassroots campaign. It researched top 2,000 bloggers before launching, and encouraged them to put links on their blogs allowing people to vote for articles on the blogs be submitted to Yardbarker. Competition broke out, and now all bloggers want the link, says Vlastelica.

Vlastelica is a Stanford undergrad, and worked for Walt Disney in London, and worked briefly in New York’s Silicon Alley. Mark Johns, Ophoto.com, and Jack and Jeffrey Kloster, of Berkeley, fill out the team.

They got 15,000 visits a week after launch last month, but it’s still early days. They got a small seed round from friends to kick them off, and they’re considering a larger round, either a large seed, or small venture round, Vlastelica said.