VentureBeat

Perhaps you’ve heard of a little film called The Dark Knight. It’s the sequel to Batman Begins and it’s opening this Friday in theaters. As a little treat to our VentureBeat readers we have 20 tickets to give away to a screening of the film the night before it opens, this Thursday, July 17.

The screening is being put on by three startups: Xoopit, Zivity and Powerset. Xoopit makes it easier to find things in your Gmail inbox by way of search. Zivity is an adult-oriented social network focusing on beauty. And Powerset is a semantic search tool. Powerset was recently acquired by Microsoft, a story which VentureBeat broke.

This screening will be at the Metreon theater in San Francisco, Calif, so you’re going to either have to be based here or have some way to get here. The tickets will be dispersed on a first-come first-serve base via the Eventbrite site we’ve set up. Please go here to see if there are any left: http://venturebeat-batman.eventbrite.com

There is a small $1 charge, mostly to ensure that you intend to go to the screening.

The movie will begin at 7pm 6:30pm and will be followed by an after-party at the DNA Lounge from 9:30pm until 2am. To get passes to this party simply email batmanevent@gmail.com.

This event isn’t just fun and games; all three companies are actively hiring qualified developers and hope to find some and partake in general networking. If you’re interested in finding out more and entering yourself for possible prizes at the after party, simply attach your resume or a link to your LinkedIn profile when you send the email to batmatevent@gmail.com. Developers are asked to specify if they have specific interest in learning more about Xoopit, Powerset or Zivity.

Just as in Batman’s world, costumes will be highly encouraged at the movie/after-party.

Watch the trailer for Warner Brothers’ The Dark Knight below:

update: The show apparently starts at 6:30pm, not 7pm as we previously wrote.

Microsoft, the software giant flush with billions of dollars in its warchest, has agreed to buy Silicon Valley semantic search engine Powerset, we’ve learned.

The purchase price is rumored to be slightly more than $100 million. An announcement is expected next month.

Powerset, of San Francisco, has developed a technology that attempts to understand the full meanings of phrases you type in while searching, and it returns results based on that understanding.

By buying Powerset, Microsoft is hoping to close the perceived quality gap with Google’s search engine. The move comes as Microsoft CEO Steve Ballmer continues to argue that improving search is Microsoft’s most important task. Microsoft’s market share in search has steadily declined, dropping further and further behind first-place Google and second place Yahoo.

Google has generally dismissed Powerset’s semantic, or “natural language” approach as being only marginally interesting, even though Google has hired some semantic specialists to work on that approach in limited fashion. Google’s search results are still based primarily on the individual words you type into its search bar, and its approach does very little to understand the possible meaning created by joining two or more words together.

That’s where Powerset sees an opportunity for growth, and perhaps where Microsoft finally sees a chance to get a quality edge. However, Powerset’s technology has remained controversial to people within the industry because, while sexy in theory, the natural language approach is difficult to pull off in practice. Skeptics wonder if the technology can ever be developed enough to be useful within a major search engine. That skepticism abounded during a long secretive stage in Powerset’s development, but the company did launch its service last month to the public, so it’s there for full view. You can use it to search for items within Wikipedia, and we’ve previously outlined various instances where it can be useful.

The Microsoft purchase appears to validate Powerset’s technology, though the amount of the purchase is clearly less than Powerset’s investors had originally hoped for. Powerset was valued at a whopping $42.5 million after the first round of financing two years ago. At the time, investors expected that new technology it was acquiring from PARC would help it make significant breakthroughs. However, the technology has taken longer to develop than expected. Powerset was also burning cash at a fast rate, and so a purchase at $100 million is considered a safe result for an area that is also seeing increasing competition (players such as Hakia, Twine and TextDigger are all using similar approaches).

Rumors of Microsoft’s interest in Powerset first surfaced a month ago in a piece by CNET’s Dan Farber.

The deal does make sense for Microsoft, which has been trying to figure out its strategy in search since the rebuff of its purchase offer by Yahoo. Many analysts saw Yahoo’s advertising platform, not its search technology, as the main reason for Microsoft’s interest. However, Microsoft was left with $50 billion burning a hole in its pocket, and making technology acquisitons makes sense. Also, Yahoo’s search technology is one reason why its ad business is so vibrant. “The most important application for the foreseeable future is search,” Microsoft’s Ballmer said last week. “We don’t have to dominate, but we’d better have a darn good chunk of the search market over time, and we’re working away at it.” Microsoft also recently rolled out a new “Cashback” program that offers cash back to users of its Live Search engine.

Microsoft spokesman Doug Free declined comment, saying the company does “not comment on rumors or speculation.”

Powerset chief executive Barney Pell declined comment. He’s believed to own about a third of the company. The rest is owned by investors, his two cofounders and other employees. Foundation Capital and the Founders Fund are the main investors. A shakeup last year saw one of the founders, Steve Newcomb, leave the company.

In an interview, Pell said the company remains focused on developing its service and is proud of its new application for the iPhone. He said some people have provided feedback that Powerset’s iPhone application is even more useful than the Web version. Things are so broken on the mobile web that improvements in interface such as Powerset’s search are “transformatively better on mobile devices,” he said.

In response to our question about how Google is planning to use semantics, if at all, Google gave a very similar answer to the one Google’s Director of Research Peter Norvig provided last year.

Norvig was on vacation this week, but a spokeswoman reiterated:

1. Search remains at the core of everything Google does and we are always working to improve it. We are more focused on search innovation, and have more engineers working on search than ever before. As Peter said, “We do what’s best for users now, and over the longer-term, we investigate technologies that will help in the future.”

2. I think it’s important to first note that semantic search is very broad and means different things to different people. As Peter mentioned in his interview with you, there are a couple of examples we can point out that incorporate a form of semantic search:

- Fill-in-the-blank search (see here).
- Question answering (see here; it gives a factual answer at the top of the page).

[Check out MobileBeat, our mobile conference on July 24. Early bird tickets end tomorrow. Vote for your favorite mobile application or service company.]

Today, natural language search engine Powerset is finally opening its doors to everyone, as well as unveiling a set of tools that have previously been seen by only a handful of people. This marks the end of a long phase for Powerset — since we first outed the stealth-mode company in 2006, it has kept its product under wraps for over a year and a half.

Powerset is, at the moment, essentially a search technology that has been developed into a set of tools that help dig through large amounts of written information (although it’s currently restricted to Wikipedia and Freebase). As I suggested about a month ago, Powerset’s current setup is great for research, giving users the ability to sift through lots of data without reading a great deal more than necessary.

Now I could create more written information of my own about Powerset, but a few screenshots will do a better job of showing the engine’s strengths and weaknesses. First up, here’s a shot of me asking Powerset what the hormone melatonin is. Note the amount of information that’s shown in a compact space: A summary of the hormone, what its effects on the body are, and links to several articles (including an alternate choice, in case you were looking for the music album).

The above example shows Powerset’s greatest strength: When asking it short questions, it generally “gets” what you’re looking for, or at least seems to (in reality, it doesn’t “understand” your query any more than Google would). To show off the middle portion of the page a little more, I’ve done a second query, this time on what Einstein did. Note that the output is arranged by verbs: Einstein published, developed, used, etc. I’ve clicked on “theory” under the “developed” heading, and come up with a list of his most famous theories.

Finally, here’s snippet of a Powerset result page. What Powerset has done is reach into the semantic data storage at Freebase, pull out details about Barack Obama, and arrange them in a list. Wikipedia has more or less the same information, but human editors had to take time to put it together. There’s an obvious advantage to using Powerset here:

For an example of a question that can make Powerset choke, just take a look at this: “Who was in the cast of Breakfast at Tiffany’s?” Here, Powerset can’t yet do any better than Google would, because the question is too long. For an experienced user, that’s not a problem; they’ll know how to ask the right questions. However, assuming a level of proficiency is also a weakness. One of Google’s advantages is its drop-dead simplicity; enter a single term, and it does a decent job of returning information. Most people don’t know that Google has more advanced search tools, and if they did, they likely still wouldn’t take the time to learn them.

But for someone looking for information with an eye toward finding it quickly, Powerset does a good job. Wikipedia and other information portals were built around Google’s weakness in addressing that audience — so when you search for Einstein on Google, instead of really going out and searching for a great answer, Google is likely to just return Wikipedia as the top result, simply because Wikipedia has proved itself reliable. Powerset has more potential to dig through information intelligently, and choose its results based on quality, not just relevance and reliability.

Of course, for now Powerset is returning information almost entirely from Wikipedia, which is already pretty well-structured for finding information — so most people still aren’t likely to switch away from Google. That means the company’s next step is to broaden its sources. It’ll likely start out with well-structured, large websites like the movie database imdb.com, and from there branch out to more smaller sites.

On a broader level, there’s a question of what some dark horse competitors will end up launching. One company to keep an eye on is the stealth startup Cuill, which just raised a $25 million round, bringing its total to $34 million — well over twice Powerset’s $14.5 million. Blekko is another stealth search startup that some are speculating will operate in the same space, while Hakia is busy aiming at search verticals.

However, the profusion of search sites might not be a bad thing, for once. While dozens of companies (at least) have eyed Google’s lofty perch, only to burn out without significant results, an alternate future could involve room for multiple approaches to search. An open platform that returned the results from the most applicable search engine could tie the various competitors together, as I suggested in my article on Viewzi. With several serious, differentiated contenders to Google search, such a platform could open the way for new search offerings, while still keeping Google as the leader.

By the way, there’s a rumor floating that Powerset wants to sell, because it has hired an investment bank to check around. The latest bid, says CNET, is around $100 million, from Microsoft. Here’s the thing: Powerset’s investors probably want a decent return on their money, and $100 million likely won’t cut it (although the company isn’t commenting). Maybe twice that amount would, and Microsoft does have a few extra billions of dollars lying around, but everyone will likely want to sit back and see how Powerset does in the wild first.

It appears 2008 might well be shaping up to be the year that semantic technology kicks off: Semantic search engine Hakia has begun licensing its technology, the intelligent organizer Twine is readying for launch, and now natural language search engine Powerset is also considering a near-term launch, as TechCrunch recently noted.

I’ve met with Powerset twice recently, and their progress even over that short timespan appears to have been considerable. A month ago two of Powerset’s founders, Barney Pell and Lorenzo Thione, were showing me how a new index (the data and rules that determine results for search engines) dramatically improved search results within Wikipedia, which Powerset uses as its testing ground.

They’re now mostly happy with the relevance of their search results and are working to build the features and interfaces that will determine how users interact with the engine. The San Francisco-based company has gone from refining its search indexing abilities to building out some fascinating tools that can parse, chop, mash-up and re-display the sentences and paragraphs that are crawled by its engine.

In our most recent meeting, Pell laid out Powerset’s new unofficial motto: “We’re not a search engine.” That’s not a surprising assertion, considering that all of the semantic startups have been trying to dodge the hyped-up “Google Killer” label since their inception. But it’s worth explaining exactly how Powerset, a company that wants to be used to search for information on the Internet, is not a search engine.

Say you’re searching on Google to learn about naval history. Here’s your problem: When Google returns its thousands of results, you actually have to go to web pages individually to see if they’re what you want. If they are, you then have to search through those pages for the information you want. If you want to know about a particular naval battle but can’t remember its name, the search could quickly become frustrating. A search for naval battles during the Civil War will be helpful, but it requires some effort to hunt through the results (try it yourself).

Powerset’s technology, however, can provide sets of results based either on entire web pages — as Google does — or on specific sections of those pages, which is helpful if they’re long, like Wikipedia entries. But where the company is headed is toward reading through pages for you and arranging or condensing the information it finds to just tell you an answer.

Read the rest of this entry »

1. Yandex, Russian search engine, grows quickly
2. Opus launches hedge fund in New York
3. Matrix goes to China
4. Dogster takes $400,000 in financing
5. Semantic search engine Powerset raises $2M
6. Pubmatic, draw ads from all networks
7. Boobik, the Twitter clone, but for sex
8. Branson taking global warming to space
9. Oversee.net gets $150M to monetize domains
10. Google’s Palimpsest hosts terabytes of raw data

Yandex, Russian search engine, grows quickly — Yandex did more than a million billion searches last month, which is comparable to AOL and Ask. It is was the ninth largest search property worldwide, according to comScore. Meanwhile, Yandex revenue has doubled for the past five years, and is on target for $140 million in 2007.

PubMatic, the site that helps publishers draw ads from the highest paying networks, expands — Before, it drew ads from a handful of networks. Today, it said it can draw ads from any ad network. We haven’t tested its claim, but that’s quite a move.

Branson might save us from global warming, by taking the warming to space — There’s a great line by Branson in the stories (here and here) covering the vision of the Virgin Galactic project: One day we might be able to use space for energy production. While I believe aviation has to get more carbon efficient, seemingly benign industries like IT have outpaced aviation in carbon output. [One promise of a commercial space industry is] the ability to launch low-earth satellites that could literally take some of the heat out of the planet, by serving as a repository for information technology.

Boobik, the Twitter clone, but for sex — The squeamish shouldn’t click to this site; there’s a large number of people exhibiting themselves in images.. (Don’t go there if you dont’ like explicit images.)

Oversee.net gets $150 million to monetize domains — The Los Angeles company got the money from Oak Hill Capital Partners, a Silicon Valley private equity firm to help it monetize domains for domain owners.

Google’s Palimpsest project to host terabytes of data — Google is accepting the data sets and making them free. Wired has some details.

Opus launches hedge fund in New York — If you’re a Silicon Valley venture capital firm, and seeing all the profits being made by the hedge fund guys, its tough to move into hedge fund or other money management areas because your limited partners preclude you from doing so. So Opus Capital, of Menlo Park, has done it a different way. It has quietly launched a fund in New York, but says it hasn’t devoted any of its resources from its current fund. The firm didn’t want to talk about it, but when pressed, a spokeswoman explained that Opus Select, as the New York operation is called, was “started by two industry veterans whom we have known for many years, have set up their own operations and are making use of our financial and back office infrastructure.” Opus, you’ll remember, has a history of itchy feet. It was the group that split off from Lightspeed Venture Partners.

Matrix goes to China — Another venture capital firm making moves is Matrix, which like other successful firms Sequoia and Kleiner before it, is finally moving to China. It is raising a $250 million for a first China fund, according to a regulatory filing.

Dogster takes $400,000 in financing — Dogster, the social network for dogs and cats, has raised $400,000 in bridge financing. The company has long been around break-even, and with the economy teetering, what better time to take a little cash to keep you out of the dog house.

Semantic search engine Powerset raises $2 million — The bridge loan is designed to tide it over until it officially launches its site in March. The company has been testing searches using the structured online encyclopedia Wikipedia, and Powerset will apparently launch with that limited focus. We’ve covered the company before. Investors were disclosed.

updated
Powerset, the “natural language” search engine company saying it wants to take on Google, has seen a shake up in its management.

The San Francisco company received substantial hype when it emerged last year saying it had found a way to understand the phrases you type into your search queries. However, it has been slow to deliver on the technology, instead dribbling it out in small doses in a “labs” portion of its site.

Steve Newcomb (left), the chief operating officer and one of the founding troika, has left the company. Barney Pell, who was chief executive, is stepping aside and becoming chief technology officer. The company is looking for a chief executive, Pell told VentureBeat in a phone conversation.

The move comes after differences between Newcomb and Pell over the direction of the company, as well as a slip in the company’s delivery date of its product. Initially, it had planned to release its search engine to the public this year. Now, it plans to do that by the second quarter of next year, though it come even later. “This is really hard, what we’re doing,” Pell said, of the company’s ambitious goals. He said one cause of the delay was the time it took for Powerset to license key natural language technology from PARC. Powerset finally got access to PARC’s source code in January this year. The company is now on track, he said.

Pell has published the changes on his blog.

Powerset has also been trying raise money from venture capitalists at a very high valuation, and the shakeup suggests it wasn’t getting very far in its efforts.

This is instructive for founders and entrepreneurs who try to raise money early at stratospheric levels: Powerset last year raised $12.5 million last year from Foundation Capital, the Founders Fund and long list of individuals, giving it a post-money valuation of $42.5 million. Now, in order to raise money again, the company needs to seek a higher valuation, so that Foundation Capital and the other investors feel they are getting their money’s worth. However, that’s hard to do unless you’ve shown you can perform on your plan. We’ve mentioned Powerset’s various product releases, but none show that it is close to prime time — a year after the investment by Foundation et. al.

It isn’t clear to what extent the investor team pushed for the changes. Pell said there was a “fair amount of tension” in the style with which he and Newcomb wanted to run the company. “We were stressing each other out. It was a challenging marriage. That’s very common in start-ups. We were trying to work things out.” That’s when the board recommended to Pell that he bring in some consultants to help on organization, Pell said. Pell indicated he was ready to step aside in order to to position the company for progress. The recommendation was that Newcomb should leave. Newcomb did not respond to a request for comment made several days ago by VentureBeat. Pell said Newcomb has interest in politics, and that a mere “founders” role wasn’t enough to keep him at the company. Pell said other changes were made in the company’s management, to make sure key employees felt increased ownership and responsibility.

It should be noted that this company has continued to show creativity in developing its product. We once called the company a funny farm, but tempered that by observing the company’s resourcefulness. The quixotic nature of its team — embodied by the enthusiastic, relentlessly upbeat Pell — is doing quite a bit in its labs to create interest (see our coverage). It has opened a search box inside its Powerlabs, and offered several use cases such as Powermouse (see coverage). While the shakeup is a blow to the company, it still has substantial technology under its hood, and will not doubt continue to engage the search community. Natural language is a huge challenge, and Powerset is more focused on this problem than any other company.

The company is still not crawling and indexing the entire Web for its search engine. It is still focused mainly on an index Wikipedia, a site that has clear structure and relationships between objects and their definitions. This gives Powerset a nice testing ground for its product. But the wider web is much more complex, and Powerset has yet to tackle it. In part, Powerset has been hampered by limited resources, Pell said. While he said he wants the engine to be ready by second quarter, it might be later than that, he said, possibly even 2009.

Ten companies presented during today’s morning portion of Techcrunch40 conference in San Francisco. If we were able to have stock in these companies, here’s how we’d rank them: CastTV, Cubic Telecom, Yap, Cognitive Code, Viewdle, Powerset, Trutap, Faroo, Ceedo and Loudtalks. Summaries of each company follow.

CastTV, the video search engine — We’ve written about the company before, and it still hasn’t launched publicly. The development today is that it showed live demonstrations for the first time. It showed how a search for someone like “Britney Spears” yielded better results than Yahoo, Google or YouTube. For example, unlike YouTube, which showed primarily dated videos of Britney, CastTV showed more recent videos of Britney, and a mix of things like her in movies, or dancing, or in the news. Even Marissa Mayer, Google’s top product executive, one of the panelists chosen to ask questions of the companies, conceded that its interface, timeliness and clustering were strong. Not that she had any choice. CastTV showed a search for “Colts Titans” on Google video, and it showed a video of last year. CastTV has a game from yesterday. CastTV is different because it searches all sorts of surrounding code on pages to tell it what a video is about. It also indexes videos that may not have unique URLs. This may not become the biggest company of the bunch, but is likely to be bought by one of the bigger players — and so a good bet.

Cubic Telecom, a mobile company for international calling — Essentially, cheap overseas calls from anywhere, or at least cheaper than most calling plans. Their service, MaxRoam, is clearly well planned-out. For a more in-depth analysis, check out VentureBeat’s separate post today on the company. Competing mobile VoIP services are cheap or even free, but are unreliable. Its offering you a chance to take your regular phone oversees, without worrying about hassles.

Yap, speech recognition software for mobile phones — Yap’s application is aimed primarily at people who use text messaging. When the user speaks into their phone, Yap instantly translates what they say into a text message (although, in their demo, the translation was noticeably laggy). Aside from instant messaging, Yap also connects to various services, including Twitter, Digg, Wikipedia and commercial sites like Amazon and Ebay, sparing the user the need to type queries or messages. The text messaging service is monetized through suggestive text ads. For instance, if the user mentions a movie in theaters, Yap will suggest a theater to see it in. Although Yap comes with an all-star cast of developers who have worked on projects for AT&T and Apple, the question is whether the big mobile carriers will be interested enough to include Yap software on their phones, or whether the market will be restricted to people who download it themselves. There are other recognition technologies, so the risk is whether it will be adopted quickly enough.

Cognitive Code, offering conversational artificial intelligence – This company is newly launched. During its brief demo, the company’s executives asked questions of “Sylvia,” an artificial intelligence software that answered in a female voice to questions such as “Please close the Word file.” This is very early, but it was impressive that Sylvia seemed to understand some lengthy conversation questions (she’s doesn’t try to merely understand key words, but also the context provided by various words together). Sylvia worked half the time, but failed the other half. She’d do things like open documents instead of closing them as asked. It’s hard to see how much depth the company has, without someone not related to the company trying it out. The company wants to embed the service in other applications. The company says it wants to target 2009 (during CES conference) for hitting the market, and is aiming to embed the technology in toys and games.

Viewdle, a facial-recognition site for video search engines — This company recognizes images and faces in videos around the Web. It advances on what companies like Polar Rose are doing for images. The demo was notable. If you search for Britney Spears, the engine churns out a list of clips as a results. Select one of the clips, and it will open directly at the point in the video where Britney appears, even if only momentarily. More interestingly, the demo showed that if you searched for well-known models, it would pull up videos where all three appeared. You can then zoom in on one of the models, and search for videos only of her. It also provides names for other people it recognizes in images. The big question, however, is how the engine will recognize anyone who is not a star or famous. It counts on folks like you and me sending video links of ourselves, so that it can put us in the database.

Powerset, the semantic search engine we’ve written about before — The company is developing a way to understand the meaning search queries. So if you type in “What do politicians say about Iraq,” it provides results that don’t necessarily relate to those exact words, such “politicians.” For example, one result is an article with the words “President Clinton explains Iraq strategy.” The only new development today, however, is that Powerset announced three demo sites, including “Quotes,” “Business,” and “Powermouse.” The latter gives you insight into Powerset’s semantic database, so that you can see what things it associates with people or things. President Clinton for example, is a politician, lives in the White House, sets policy, etc. The question is whether people will use Powerset, when Google is so good.

Trutap, for mobile social networking — We’ve also written a separate post about this company here. It offers social networking over mobile phones. Features include messaging to groups, text messaging, instant messaging, and blogging in a reasonably straightforward phone application. Launches Friday. Although Trutap can rank xx place in this lineup, its future as a company is as hazy as any of the upcoming social networks. It’s looks functional, but the demo didn’t blow me away. Their focus seems distinctly British. During their presentation, the CEO sent a message to a “Friday Night Crew” planning a visit to a pub. Although it’s not an unreasonable scenario for American users, small social differences can mean popularity in one market, but failure when translated to another.

Ceedo, a lightweight visualization platform for mobiles — The term “visualization platform” doesn’t exactly inspire excitement, and neither did the company’s product. The platform transfers self-contained desktop environments from computer to computer; users can, for example, plug their USB dongle into a rented computer at a cafe and have their home software available. Ceedo has offered such software, for enterprise or personal use, for some time. Their product launch at TechCrunch is a similar platform for mobile phones. The software allows users to run their mobile phone platform on their computer, sending messages or downloading music. Or they can run their home desktop environment on a different computer by plugging in their phone. Although Ceedo’s platform appears to run seamlessly, it just doesn’t strike us as a must-have — and since their job is to convince mobile carriers to include their application on cell phones, that may be a problem. It has plenty of competitors, too.

Faroo, offering a peer-to-peer search engine — The service lets people download an application, so that they can contribute their searches and computer power to a shared search engine. Faroo follows what people search for, what result pages they look at, how long they they look at them, and whether they bookmark them. That way, they use people’s actions to rank a page higher in results. The company’s founder says that one million people using it can index 10 billion pages, meaning the entire Web. The big question, is who on earth would use this? How does it seed the engine with results so that they are relevant from the get-go, without forcing the early adopters to wade through painful early steps and making pages relevant? It is based in Erkrath, Germany. Long shot.

Loudtalks, an “internet walkie talkie” — Perhaps it was just bad luck, but Loudtalks’ presentation fell flat, between technical difficulties and the thick accents of its (apparently) Russian founders. The company’s computer software offers a way to instant message your friends with voice, speaking to them just as you would if you were sitting next to them. You can do this whether you’re on a computer or mobile phone. Loudtalks could prove to be a good idea, but numerous pitfalls spring to mind, among them having a hundred buddies simultaneously blabbing at you. It’s notable that while Loudtalks focuses on simply conveying a user’s voice, other services like Yap work to translate speech into text. It’s often most convenient to give the receiver a text message, even if the sender would prefer to speak. Finally, the voice market is crowded. Why would you download a separate program for this, when there are so many alternatives you’re already likely to be using.

(This was co-written with Matt Marshall.)

Here’s the latest action:

Blackberry 8820 announced – It is the first BlackBerry that is dual-mode, letting you use both cellular networks (EDGE/GPRS/GSM) and WiFi. More at ZDNet. This is probably enough for BlackBerry to stave off the iPhone, at least among the BrackBerry-fixated VC crowd.

Ashopfor.com, latest Web 2.0 pyramid scheme — Like Zlio (see our coverage), Ashopfor.com is a company that lets you create an online store, and wants to give you money for sales you drive: “Your shop earns a cash back contribution from the retailers when you or your friends make a purchase through the retailer links on your shop or when you refer a new shop.” However this is like some of the other Web 2.0 schemes we’ve been seeing. When your shop refers new shops, Ashopfor gives you 20 percent of the total amount of the contributions these referees make. This includes contributions from any shops they refer, and the ones they refer, and so on. A classic pyramid.

WipBox helps people sell things on eBay and Craigslist — The new service allows users to text “WipBox” and an item’s name — iPhone, for example — to 44636 to get average and high prices for items listed in their local area, based on eBay and Craigslist data. WipBox is founded by Jason Weiner, founder of early Web 2.0 company Dipsie. Weiner demoed an early version of the site for us several weeks ago, and WipBox does make the cumbersome listing process easier.

Venture capitalists are going later stage — PE Hub reports on the trend. And while venture firms are investing later in a company’s life, valuations have crept higher, reports the Mercury News.

Loomia, a recommendation engine used by online retailers and publishers to suggest related content to users, signs a deal with the WSJ — Its technology is similar to Aggregate Knowledge, which we’ve written about several times.

Aaron Swartz (left), early employee of news-ranking site, Reddit, starts book-to-web free library — Details here.

HBase, a Google Bigtable clone — Google’s Bigtable is a distributed storage system for structured data. HBase appears to be a very early stage open source project to clone Google Bigtable. It will provide Bigtable-like capabilities on top of Hadoop. It’s not surprising to see that folks behind this are from Powerset, a search engine trying to compete with Google (Via Greg Linden).

Economic boom times in BRIC — Brazil, Russia, India, China. See story Fortune.

Google offers search engine to small Web sites for $100 per year — But sites with more than 5,000 Web pages will have to pay more: $500 a year for up to 50,000 Web pages.

Google to offer new mobile service — The company wants to go beyond letting you basic Web search on your cell phone. According to the WSJ, it wants to let you search for things like a ringtones and games, giving you a list of places you can buy them. Eventually, Google would charge companies for high placement in the search results. This, of course, brings it closer to competing with the carriers, which also like to charge for such information. More analysis here.

GetLeaflets, a site launched by design firm Blue Flavor, provides a series of applications designed for the iPhone via its browser — Techcrunch reports: Direct your iPhone browser to Getleaflets.com and you’ll see a menu of application ready for use: Search, Flickr, New York Times, Upcoming, Del.icio.us, for example. There is also a feed reader.

Powerset is a quixotic search engine company here in San Francisco that has convinced itself it can take on Google.

While Powerset gears up to release its search engine publicly later this year, it hopes to nurture an army of 50,0000 early testers, or “Powerlabbers,” to bang on different parts of it beforehand — the idea being that the converts will not only improve the product, but will help push it at launch.

To lure those volunteers, Powerset seeks to produce a hail of fun projects for them to work on — more on this below.

As reported, Powerset is significant because its search engine aims to understand phrases — not merely words, as Google does. Powerset’s approach is potentially powerful. However, it requires significant mass education before people change the keyword-like search habits.

Earlier this week, we spent another hour and a half with Powerset to learn about their latest progress. It is still secretive, but it is planning to open considerably over coming weeks.

For the testing phase, Powerset aims to stick volunteer testers on bite-sized pieces of its search problem. It is homing in on sixteen different topical areas – ranging from entertainment to travel and porn – and in each of these areas wants users to provide feedback on its results.

So for example, in the area of entertainment, if a user asks: “Who won an academy award in 2001?” Powerset finds that easy. It will produce answers like Halle Berry, who won the award for Monster’s Ball (see image below). But if you ask “What is the most recent movie Halle Berry started in?” the engine may break down. Powerset tracks the range of questions posed by users, which creates feedback about what is and isn’t working. That way, Powerset hopes to prepare in key, popular topical areas before launch.

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Take another example, travel. See below for the topical page. Volunteers suggest ideas for useful search themes, and they vote to push the best ideas to the top.

A sign of Powerset’s readiness to think differently is its approach to Web architecture. Powerset will base its site on Ruby on Rails, a new, edgy framework liked by engineers for its nimbleness. But Ruby is controversial because some say it can’t handle vast amounts of traffic efficiently. Few big-traffic sites have built upon it.

The company which released the framework, 37Signals, has used it for four applications, including its popular Basecamp. CNET’s Chow and Chowhound – and most recently by popular messaging site, Twitter, are also built on it.

Powerset chose the framework after considerable research. Nine of Powerset’s team of 66 are working on it (Kevin Clark, the project leader, posted about the decision here).

This is not a company led by one or two brilliant co-founders. Rather, it is a team of now dozens of engineers — who to the outsider seem to share a single quality, a sort of wide-eyed, ebullient confidence, embodied by the relentlessly upbeat chief executive himself, Barney Pell. His two co-founders, Steve Newcomb and Lorenzo Thione, share the same trait. Or, if they have doubts, they try not to show it. That’s why they may pull something off.

Natural language search, as Powerset’s approach is called, faces an enormous challenge. The sheer number of phrases and semantic senses that can be intended by searchers is overwhelming.

Breaking it off in bits makes sense.

Powerlabs, the name given for the topical test features, launches in September, and is taking sign-ups now.

Powerset will specifically target high-school teachers for training on how to use its search engine. If they are recruited, they’ll impart their knowledge to students.

In return, Powerset hopes to get feedback on its main search engine. See below for example of a query: “Who proved Fermat’s last theorem?” Powerset provides a big blue feedback box. This way, if Powerset provides a poor result, testers can alert Powerset’s engine to the shortcoming.

Powerset is also working with databases to fill its result pages with more information. We’ve been told Powerset has partnered with MetaWeb’s Freebase (first reported by Techcrunch, which misspelled the name), though Powerset wouldn’t comment. In the entertainment example above, it pulls the “meta” information stored in Metaweb about Halle Berry into a widget. The widgets are useful, even if they’re not part of the main search engine technology. Powerset hopes to let bloggers embed the widgets into their blogs when they write about related material.

Another example of meta-data being used is on the result below about Steve Jobs and the iPod — you’ll see it pulls bio information and videos.

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Here’s the latest action:

Ooyala, secretive ex-Google company, about to launch — The Mountain View, Calif. company, founded by ex-Google engineers and product managers, is secretive but says it delivers a high-quality, interactive, video experience, and is a couple of months away from launch. Sean Knapp, a co-founder, formerly led Google’s user interface team for web and image search. Bismarck Lepe, also from Google, and another of the three co-founders, told VentureBeat the company wants to stay quiet on details, but that it is a “new interaction and monetization platform for online and offline video,” and that it raised a large round of funding from the “typical folks in the valley and the not-so-typical guys in Hollywood” earlier this month. It has launched a closed testing version. It will open office in New York and Los Angeles.

Google buys online application security company, GreenBorder Technologies — The Mountain View, Calif. company, founded in 2001, boasts it’s the industry’s first desktop “DMZ” software for Windows, saying that it keeps internet invaders out and enterprise data in, allowing users to “safely connect anywhere, go to any website, open any Internet email or attachment, and use any downloaded files without worry.” (Via Googlified)

AMP’d CEO is still in charge, but company is indeed in turmoil — The mobile network provider is rumored to be desperate for more cash. But see latest from PE Week, which has talked with CEO, who contends he is still at the helm despite rumors that he is out. However, if it is true that the board has 20 people, no wonder the company is having trouble with direction. Here is our latest coverage of its whopper financing round.

Yahoo opening up — Until now, the portals have all tried to promote their own traffic on their home page. However, they’re experimenting with testing links to outside sites.

Ambient Sound Investments invests in Chinese virtual world, Frenzoo — Ambient, you’ll recall, is the firm run by former Skype co-founders. It has made an undisclosed investment in the Hong Kong 3D social networking company which has been likened to Second Life. There are other virtual world competitors in China, such as HiPihi, and Shanda’s coming version.

Odd story — VeriSign’s board announced the surprise resignation of Chief Executive Stratton Sclavos, saying the company “has reached a point in its evolution where it can benefit from new leadership.” (WSJ) No explanation?

Google losing the employee hiring game — There are increasing reports that start-ups are being able to hire employees that Google also sought to hire. This is because they offer the upside reward of a potential IPO. Google’s advantage is that it did most of its initial spurt of hiring during the downturn. The hires these days are specifically mentioning potential riches as one reason why they’re joining start-ups which, while understandable, may also point to motivation challenges for these start-ups down the line. See the NYT story, including a quote from Powerset employee, Nitay Joffe (pictured here), who was wooed by Google, but joined Powerset because it had the one thing Google didn’t offer: “When you get a stock option at 5 cents and it goes to $50 …,” Mr. Joffe said, before his voice trailed off.

After raising a decent $12.5 million in cash last year, Powerset, the secretive search engine company that wants to take on Google by using “natural language” technology, is going to raise a larger round this year.

This and other gossip about Powerset spilled out Saturday evening during a lively party the company held at Frisson restaurant in San Francisco. Powerset investor, Charles Moldow, mentioned the funding plans to us, and asserted that this time, investors may be skeptical about pushing Powerset’s already high valuation even higher.

In an unfortunate video taken by PartyCrashers of the party, Pell also confirmed the plans, saying once you raise money, you start raising money over again. Troubling was a part at the end of the video (worth watching; see below, it is short), where one Powerset guy, clearly looking as if he had too much to drink, doesn’t express much confidence in the company’s abilities — or at least, it comes across that way.

Techcrunch’s Michael Arrington said earlier today that I gush about Powerset everytime I write about it. That’s the second time in four days he’s claimed that. Clearly, he’s upset that we continue to break news about Powerset, including its launch and sky-high funding last year. In fact, I’ve tried to be pretty even-handed, each time making sure to solicit input from Powerset’s biggest critics like Danny Sullivan or Google’s Peter Norvig. Our first story suggested the investment valuation was “crazy.” Powerset has a very long way to go, and we should make that absolutely clear. If Powerset hones its natural language technology into something usable — and it just may — it will become an acquisition candidate, if not for Google, then for Yahoo and for MSN. As a stand alone company, it is a still a very long shot.

Powerset, a San Francisco search engine company, will announce Friday it has won exclusive rights to significant search engine technology it says may help propel it past Google.

The technology, developed at Palo Alto Research Center (PARC) in Silicon Valley, seeks to understand the meanings between words, akin to the way humans understand language — and is thus called “natural language.” It has been thirty years in the works.

The deal is significant because practical use of linguistic technology has eluded Google. The giant search engine has said it wants to implement language-understanding technology one day. However, tests of linguistic approaches haven’t made any difference in Google’s results so far, it says (see our Q&A with Google Director of Research Peter Norvig below; also see his speech last year about this at Berkeley). Google has shunned reliance on word meanings, instead focusing on finding the most popular pages that contain the keywords. As for relationships between words, Google relies on statistical relationships, such as frequency they appear together, but not on linguistic relationships.

The deal with PARC, which is owned by Xerox, is Powerset’s answer to its critics, such as search expert Danny Sullivan, who all but heaped scorn on Powerset’s ambitions when we first wrote about them. At the time, Sullivan didn’t know the degree to which Powerset has focused on this.

The move is significant because Google’s own technology, based on “page rank,” has been virtually replicated by other search engines like Yahoo and MSN, and so isn’t as difficult to emulate as it was a few years ago. Powerset could possibly steal a lead if it improves search results by a significant measure with natural language and simultaneously incorporates a near-equivalent to Google’s existing capabilities. Powerset has been hiring lots of Yahoo search experts and others, to help it do that.

We’d be surprised if Google doesn’t scrutinize Powerset closely, perhaps even consider an acquisition (although in our Q&A today with Norvig, below, he says Google is now working on natural language after all). Until now, though, Google’s disciplined focus on a statistical approach may have blinded it to the possibilities of a linguistic approach, Powerset’s executives say. Powerset plans to launch the search engine publicly this year.

Powerset’s initial talks with PARC last year were enough to convince two well-known Silicon Valley venture capital firms Foundation Capital and the Founders Fund to invest in Powerset at a very high price. The firms and other individuals invested $12.5 million, and own less than a third of the company in return.

The venture capitalists made the investment based on an assumption that Powerset would complete the licensing deal. Negotiations on the deal, just completed, were so secretive that Powerset’s executives hid a Xerox PARC scientist, Ron Kaplan, in a back room when VentureBeat stopped by for an interview last year. Kaplan, who has led the “natural language” group for several years, joined Powerset as chief technology officer in July. This is a coup for Powerset, because Kaplan did not respond to some early probes from Google. In an interview, Kaplan said he didn’t believe Google took natural language seriously enough. “Deep analysis is not what they’re doing. Their orientation is toward shallow relevance, and they do it well.” Powerset, however, “is much deeper, much more exciting. It really is the whole kit and caboodle.” While natural language has been a vexing problem for decades, Kaplan said he believes it is ready for prime-time.

Chief executive Barney Pell approached Kaplan in Sept. 2005, and convinced Kaplan to help make a prototype search engine. Over time, Pell negotiated with Kaplan to bring his entire PARC research unit to bear on the problem.

Powerset’s license of PARC’s technology covers the broad areas of consumer search and published content. In return, Powerset will pay PARC a royalty fee, which is capped at an undisclosed level, and other compensation to PARC for the employment of its researchers on the Powerset project. PARC also gets an equity stake in Powerset. Powerset has the right to offer jobs to the PARC employees, if it wants.

Powerset has picked off a dozen high-profile search experts from Yahoo and elsewhere. Unfortunately, it revealed their names to VentureBeat only on condition we not publish them. One name now public is Tim Converse, a Yahoo Web spam expert. Powerset now has around 40 employees.

Powerset let VentureBeat see a limited demo of the Powerset technology this week, and we were impressed: To recap, VentureBeat’s earlier descriptions of Powerset’s technology here and here used the example of search “Who acquired IBM?” Google will give you lots of results about companies that IBM acquired, even though that’s not what you asked. Powerset, on the other hand, will give results of the companies that acquired IBM units, including Lenovo, and AT&T. Moreover in our demo this week, Powerset showed it can answer more complex questions, such as “Who did IBM acquire in 1996?” Here, Google completely breaks down. Better, the technology appears to learn over time. Powerset can use abstractions. For example, it scans the Web and finds that Hillary Clinton is associated with words like “liberal” and “democrat” and “leader.” So later, when you ask Powerset “What do liberal democrats say about healthcare policy?,” it will be smart enough to include what Hillary Clinton has said about healthcare policy, among other liberal democrats.

Clearly, Powerset faces challenges. Even if its technology does prove to be useful, it isn’t clear how long it will keep any lead (in natural language) in the face of an onslaught from Google. Another challenge is changing peoples’ search behavior, which is used to keyword searches. [Update: For a healthy dose of skepticism, see the NYT story too].

[Update and response to Techcrunch criticism here.]

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Q&A with Peter Norvig, Director of Research, Google

(Note: This interview is based on an email exchange Thursday afternoon, before Powerset’s announcement. Peter did not know the specifics of Powerset’s announcement, because Powerset had requested we not disclose it until Thurs. evening. Google’s policy is not to comment on competitors).

VentureBeat: Peter, you’ve been been critical of linguistic approaches to search (semantics search), and VentureBeat pointed to your speech at Berkeley about this in a past post. I’m wondering whether there’s been any change recently in your thinking?

Norvig: I would characterize my opinion on semantics search as realistic. My position is: we do what’s best for the users now, and over the longer-term, we investigate technologies that will help in the future. It would be great if we understood every word of every document and every query, but that’s a long way off. In the meantime, we develop technologies that provide the best overall user experience.

For example, fill-in-the-blank search (see here). You mentioned the query [Who shot Cheney] and said the answer should be “nobody” but I think our answer to [* shot Cheney], where the * means fill-in-the-blank, is better (see here). These results tell you about “an incident when another hunter shot Cheney - years ago” as well as speculation about “Suppose this 78-year-old man accidentally shot Cheney?” We think that the level of understanding we get from things like fill-in-the-blank today is useful, and we will keep doing things like that. We will also do more with question answering (see here; it gives a factual answer at the top of the page).

I have always believed (well, at least for the past 15 years) that the way to get better understanding of text is through statistics rather than through hand-crafted grammars and lexicons. The statistical approach is cheaper, faster, more robust, easier to internationalize, and so far more effective.

VentureBeat: On what basis did you decide that natural language wasn’t going to help? I.E. what sort of help did you get to make that determination? Were these conversations with natural language experts? If so, who?

Norvig: This wasn’t a decision I made, I was just reporting on results of what has worked so far. I have no theoretical stance on this.

VentureBeat: Has Google hired anyone yet to focus on the possibility of using symbolic/deep approaches?

Norvig: Google has several teams focused on natural language and dozens of Googlers with a PhD in the field, including myself.

VentureBeat: Have you ever talked with the natural search folks at PARC, i.e., Ron
Kaplan, to see whether anything his team has developed is worth integrating into Google?

Norvig: I know Ron and the other natural language people at PARC very well. I worked for a summer with PARC’s Martin Kay and co-authored a book with him.

There are a handful of people at Google who worked at PARC on natural language in the past. And Barney worked for me at my previous job at NASA, so we talk often as well.

VentureBeat: What if a competitor (Powerset/Hakia) were to license that PARC technology out from under Google’s nose? Realize you don’t comment on competitors, so asking generically (about any company). What if this company acquired full and exclusive rights to PARC’s technology. Would that concern you?

Norvig: We feel there is a lot to do in the field of search, with many ways to approach it. Search remains at the core of everything Google does and we are always working to improve it.

TextDigger is the latest company seeking that Holy Grail: Improving on Google’s results by understanding the sense of the words you’re looking for.

TextDigger’s search engine is called Digger, and it just launched at the DEMO conference.

First, some context: Digger, of San Jose, joins Powerset, the San Francisco start-up, and Hakia, of New York, and others which are trying to do something similar. Our piece on Powerset sparked debate within the search industry, namely because some experts believe automated search engines can never understand words the same way we humans do. Google, many think, is doing about as good a job as is possible. Google doesn’t try to assign meaning to your search term. It merely ranks the pages it thinks are the most popular that contain those words. Powerset still hasn’t launched. Hakia has, sort of, which we’ll get to in a minute.

TextDigger addresses the semantics problem by asking users to help it. If you search for “hotel with a view of the golden gate bridge,” it will tell you what it assumes about your intended meaning, and then asks you to modify. “View,” it tells you, means panoramic view, as opposed to personal belief. That might be fine, but what if you want personal belief?

By clicking on “refine keywords,” you can tell it you want “view” to mean personal belief (see screenshot below), or both panoramic view and personal belief. In other words, it is a classic Web 2.0 company, getting the masses to work on its behalf, and in turn improve results for everyone. This is significant, because Digger launches ahead of Wikipedia founder Jimmy Wales’ effort to do something similar. Digger relies on what people tell it about semantics. Powerset, by contrast, relies on smart grammar interpretation, which is very different.

Whether Textdigger can pull this off is another question.

It is in a closed testing period. You need an invite. Chief executive Tim Musgrove says it gets better the more people use it. It’s not ready for the masses.

We played with Digger. Our conclusion: We think this is useful tool, and we’d be surprised if Google didn’t implement something like this soon — especially if Digger gets any traction. It should be easy to do.

We should note, with Digger, you can choose to refine the word meaning for only yourself, or for the community at large. And there are shortcomings. Digger dissects meanings of individual words only, so it can’t assess the meaning of two or three words together, like Powerset is trying to do. The other shortcoming is that depends on you logging on at the site, to personalize results for you. It will have a hard time opening up to non-registered access.

TextDigger has