VentureBeat

ChaCha, the search engine company that hires people to answer your questions in real-time as you search for things, said it has raised $10 million in private financing.

The controversial company hasn’t said much about traction. A spokeswoman said merely that traffic “doubled” last quarter, but that’s vague. She didn’t elaborate, but said she is checking with the company about what more she can say.

It’s an odd company, because people powered search is somewhat inefficient. ChaCha offers its services for free. Using humans costs ChaCha much more money to deliver its services than it does for a company like Google. ChaCha lets you use its search engine to find things without a human, but if you get stumped, it provides a human guide who engages with you using a real-time IM chat (see image below)

Although, if it can smart enough people working at sweatshop-labor wages, its conceivable the company may be able to pull it off. However, it its new push to develop a mobile answers application may be what helps it stand apart.

The company is controversial because of it ties with the University of Indiana. The company was founded by two IU alumni, and it was revealed recently that the company used the university’s library and IT staff to work for the search engine for free. University president Michael McRobbie was a board member of ChaCha until May. Moreover, Jack Gill, an investor, was also made a Indiana University trustee without being a full-time resident of the state. The company’s chief executive Scott Jones, has also drawn attention with his high-tech 27,000 sq. ft. house in central Indiana, and with multiple other companies he’s helping run on the side.

We reviewed the company here (scroll down) and the company’s initial round of $6 million in capital here.

The company has now raised a total of $16 million. In the latest round, the Indianapolis company got a $2 million grant from Indiana’s 21st Century Technology Fund. The other $8 million in the second round came from a group of investors including Morton Meyerson, who led the round, and existing investors Bezos Expeditions (Amazon’s Jeff Bezos), Rod Canion, early CEO of Compaq, and Jack Gill, the founder of Vanguard Ventures. It’s not your traditional set of venture investors, and says something about the off-beat nature of the company. Meyerson listed the company’s mobile answers application as one of the reasons he led the investment.

Here’s the latest news on Google stuff:

Google’s 900 millionaires figure out what to do with their money — Recent estimates suggest more than 900 Googlers became millionaires at the initial public offering, and that 100 of the first 300 workers have quietly resigned. Meanwhile, early Google investor David Cheriton (he joined Ram Shriram, Bechtolsheim and others in the first $1 million angel round) turned his $200,000 into more than $1 billion, and yet is still too cheap to pay for parking at Stanford. And when a Canadian University asked him to donate $25M, he at first thought it was ludicrous, but then realized he could afford it without landing in the “poor house.” So Cheriton did much better than we originally thought. Remember the legal tussle, when he was forced to sell early, and reports only referenced $58 million?

Meanwhile — Google has called in a doctorate in organizational psychology who has designed a survey to help Google hire the right people. They’ve got a 300 word questionnaire, and apparently analyze two million data points — all to figure out how best to lure, keep and organize the company’s workers.

Battle of the search toolbars — ChaCha, the search engine that provides human “guides” to help you in your search, is paying its guides $1 per month for every person they get to download the toolbar, and is giving equity to the guides who win the most converts. Meanwhile, Conduit, which provides blog and other Web site owners with a personalized toolbar, has signed a deal with Google, making it the default search engine on the Conduit toolbar. We reviewed the fast-growing Conduit here.

Google’s “Tips” removed — Google has removed its “Tips” feature, after receiving a torrent of criticism. The feature promoted Google’s services, such as its own photo-sharing site Picasa, at the top of the results, and people said that went against Google’s policy of giving unbiased results.

Google fights back in China — As reported earlier, Google invested in Chinese music and video download service Xunlei.com. Various reports from NYT and Pacific Epoch say Google gave $5 million. Google also signed a deal with China Mobile, the company’s leading carrier, to provide search on its mobile phones. These are good moves. Rival Chinese search engine Baidu.com leads in part because of its music download service. Xunlei may help close the gap. It was started in Silicon Valley by two Duke computer science graduates, Zou Shenglong and Cheng Hao, and they moved the company to China in 2003. The NYT says Google now owns 4 percent of Xunlei — valuing the company at $125 million.

Round-up of the latest action in Silicon Valley:

It’s all about Google — Notable post by Rich Skrenta about how Google is becoming ever more important. Having become the “start page” for the Web, Google makes $90 to $120 for every thousand times its pages get viewed (or CPM), compared to a mere $4-5 for an average page view elsewhere, he calculates. We asked him for his assumptions, and it turns out he mixes a lot of sources, but the high-end of his figure comes from an analysis from Caris & Co.’s Tim Boyd, who uses Comscore data to estimate that Google makes between 19¢ and 21¢ per search (or roughly $200 per thousand searches).

Google boosts its own products in search results — Google continues to find ways to upgrade its own features in search results. Blake Ross has a good piece about the latest, “Google Tips,” which lists Google’s photo-sharing site, Picasa, a tip for users at the top of its results, even though Picasa doesn’ even show up on the front page of its own search results (see image below). That’s just one example among many such self-interested tips. We messaged Google last week to see when they introduced the feature; they didn’t respond.

Too many others chasing Google — Minekey is just the latest search service to appear, with $3 million in funding (see our story here). The NYT follows today with a piece about all the other search engines vying for a slice of the all-pervasive search engine market. We’ve covered most already at VentureBeat. Problem is, their logic doesn’t quite hold. Yes, if you pick up a single percentage of the search market, you’ll get profits, but it no one seems to be pulling this off (explained by Skrenta’s “winner-take-all” analysis above). Among others, the NYT piece mentions ChaCha, the search engine that has live guides help you with search (we’ve used it, and it’s true) has raised $6 million, including from Amazon’s Jeff Bezos. Our previous coverage of ChaCha is here (scroll down). It’s hard to comprehend, though, how the company will cover labor costs. The NYT also mentions the yet-to-launch Hakia, a company reported on elsewhere, but not yet mentioned by VentureBeat — which wants to do something similar to Powerset also promises: a natural language search. Hakia raised $16 million from Noble Grossart Investments, Alexandra Investment Management and a motley group of others, including Polish and Turkish oil, real estate and telecom groups.

WiFi in cars; watch out for accidents later this year — Autonet Mobile, a San Francisco wireless start-up, is expected to announce this week it has partnered with Avis Rent A Car System to “provide a rolling WiFi hotspot to Avis customers by March,” according to the NYT. For $10.95 a day, Avis will give customers a portable device that plugs into a car’s power supply and delivers a high-speed Internet connection. It will use the 3G cellular network and work in all metropolitan areas and “about 95 percent of the country,” says Sterling Pratz, the company’s chief exec. We’ll believe this when we see it, because many parts of the Bay Area have spotty cell network coverage as it is, let alone 3G coverage. There’s an amusing concession in the story. The company has some technology limitations, the Times says, like “bandwidth restrictions.” Meanwhile, Ford is introducing bluetooth systems next year in its cars, allowing people to chat, and check email.

Gmail vulnerable to contact list hijacking – If you visit the wrong Web site, you may be vulnerable to having your Gmail contacts lifted. That’s because Gmail stores its contacts in javascript files. Details here.

Walloped takes a wallop — Sean Uberoi Kelly, CTO, founder and principal inventor of Wallop has left the San Francisco social networking start-up Wallop, according to Gigaom. Chief exec Karl Jacobs says the departure is normal, noting Kelly is going to back to New York, where he has family — and has finished building the product. Fair enough, but it’s a blow nonetheless. We have yet to understand Wallop’s strategy and business model (explained here in detail). It raised a total of $13.6 million from Norwest, Bay Partners and angels.

Gov. Arnold Schwarzenegger’s investment plan for California tech — A hodge-podge of projects comprise the governor’s $95 million proposal for research spending. Summary in Merc: Some $30 million would go toward building a new research building for the Lawrence Berkeley National Laboratory’s Helios Project, which is developing the next generation of efficient solar-energy technology. An additional $40 million would help build an Energy Biosciences Institute facility for research into alternative fuels, at either the University of California-Berkeley or UC-San Diego. Some $5 million would help the University of California’s bid to build a $200 million super-fast “petascale’” computer at the Lawrence Laboratory.

SlimDevices to release latest Squeezebox — The come-out-of-nowhere Mountain View start-up sells a device that lets you play your music anywhere in the house, and hooks up with all kinds of services, from Pandora to Rhapsody. Its latest one will sell for $2,000 device; the NYT has the scoop. This scrappy company is run by 20-somthing Sean Adams, and to our knowledge he has made do with a mere $330,000 from angels (though he may have raised more without us knowing).

ChaCha a new search engine, with guides — That’s right. This company is just like Google, only it pays its employees or contractors to help you refine your search. On the good side, this a really useful service, and we hope ChaCha will stay in business. But that is the mind-boggling part for us. Read the story in the Mercury News. Maybe we’re missing something, but if this service is really for free, how is the company going to make money? Yes, there may be search result advertising (including vidoes while you wait), but we don’t see how that will cover the costs. We tried it out, but got tired waiting for a response (ChaCha is supposed to average about a minute, but we gave up after five minutes waiting for answer we posed about how much venture money start-up Rojo had raised; it was listed on both VentureBeat and Gigaom, but ChaCha didn’t find it). And we were annoyed by the site, which made regular “swooshing” sounds, though don’t understand why (was it the ads?). Don’t want to be quick to criticize; we’re just raising these questions given the prominent coverage in media articles where the cost question isn’t really dealt with.

Band of Angels for India — The Band of Angels in Silicon Valley, a network of individuals who band together to invest in start-ups, has been fixture for years. They told us a few years ago they had no plans to go international. So now there is a Band of Angels in India, led by the same guy Alok Mittal, who also happens to run the new office in India for Silicon Valley venture firm Canaan Partners. See more at Gigaom.

Digg to respond to criticism about clique influence — Responding to criticism that a small group of influential “Diggers” are controlling what news gets to the site’s home page, Digg chief exec Kevin Rose says he’s found a way to counterbalance their influence. He said a new algorithm will “look at the unique digging diversity of the individuals digging the story. Users that follow a gaming pattern will have less promotion weight. This doesn’t mean that the story won’t be promoted, it just means that a more diverse pool of individuals will be [needed] to deem the story homepage-worthy.”

Has eBay become the investment bank for Web 2.0? — With Web calendar company Kiko being bought on eBay for $250,000 by another company Tucows, this is a question being posed lately about eBay being posed lately. Om first joked about eBay setting a new floor on investment banking fees about a few days ago. Now Techcrunch is talking about it as a serious way for Web 2.0 companies to be bought. There are more showing up. Indeed, why don’t companies place a permanent listing at eBay, disclosing the lowest price they’d agree to be sold for — even if they aren’t desperate for a sale yet? They can keep changing the offer price, depending on their own assessment of their promise. In Kiko’s case, of course, the company had run out of steam, and wanted to make whatever it could from a sale of its assets. And Tucows, which wanted a basic calendar company for its own use, made the move. Tucows probably wouldn’t have found out about Kiko without eBay. Conclusion: The risks associated with starting a Web company, already reduced because of the very low costs involved, have just gotten even lower. Maybe that’s why you see even more Web calendars still launching (the company hassome differentiating features such as voice-enabled entries, and new ways of synching.)

Woz’s book, and Steve Jobs’ change of heart — Valleyway runs with some news that it concedes might be a tad old; but we hadn’t seen it. It is about Woz’s book, and why the Apple co-founder couldn’t get his former colleague, Apple chief executive Steve Jobs, to write a foreward. Perhaps no one saw news about the book until now because the latest, from the DailyNews, has a much more colorful quote from Wozniak:

“We wanted him to do a foreword, but he declined,” Wozniak tells Jacob Bernstein this week in WWDScoop, the new magazine from Women’s Wear Daily. “He felt the book sort of portrayed me as a good guy and him as an a-hole.”

Among other anti-Jobs anecdotes, Wozniak recalls in the book that when he invented a universal remote control and sent it to Jobs, he threw it against a wall, stuck it in a box, and mailed it back. “Steve had a fit about it,” Wozniak tells Bernstein. “He was under the impression that I’d left Apple in a very negative mode.”