VentureBeat

When I encounter a grainy video of two apparently intoxicated women battling it out on the subway, the last thing I expect to appear is an ad from a major brand. But lo and behold, at Break.com, the flagship site of the video ad network, Break Media, an ad for Honda’s Element SUV popped up.

While most analysts are bullish about its potential, online video advertising is still controversial: in April, the much-discussed and well-funded VideoEgg dropped most of its video ad network to focus on social networks and flash-games, and yesterday, VentureBeat’s Eric Eldon published an article offering reasons to be skeptical of YouTube’s short-to-medium-term revenue potential. Meanwhile, Break Media claims a 200 percent uptick in revenue since Q2 of last year and has attracted brands ranging from Paramount Pictures, Schick and Hershey’s to Anheuser-Busch and Jim Beam. Of course, the company will not disclose its actual figures, so a 200 percent increase might not be as meaningful as it sounds.

But there are reasons to believe that the company’s prospects are good: Like the women-centric Glam, a rapidly-expanding ad network that allegedly turned down a $1.3 billion offer, Break is targeting a sought-after niche. From almost day one of its existence, the company has been focused on appealing to 18-34 year old men. As a result, all of the videos on Break.com and the 60 plus third-party sites in its ad network are tailored to the demographic of which I am proudly a part. (See Break.com’s most-viewed video page for some insight into our minds.)

The company claims that between Break.com and the sites in its network, it reaches around 50 million unique visitors per month. It has also sought to solidify its position with the acquisition of WallStreetFighter, a business and financial news and humor blog. And here, courtesy of Break, is your moment of zen:

Ball Girl Makes Incredible Catch - Watch more free videos

Meebo, the Silicon Valley company that lets you message across multiple IM services from a single Web site, is taking significant pains to make money from its millions of users.

Last month, it launched a way for outside developers to produce games and other content to be offered on the site, allowing them to keep half the revenue. A few weeks later, the Mountain View company gave the developers an option to run their own advertising and keep all the revenue.

Now, there’s a third part to the plan. Meebo has partnered with online video advertising VideoEgg to let third-party application developers run overlay ads from VideoEgg’s advertising network. The ads appear over the bottom part of videos, games and voice applications.

Application owners will keep half the revenue from these ads, while Meebo and VideoEgg will split the other half.

Since its launch, Meebo Platform has attracted more than 300 applications. More than 40 applications can be used by more than two people in real-time. Companies developing apps include TokBox, Mochi Media, Kongregate, ustream.tv and TalkShoe.

VideoEgg said Meebo’s high engagement — one million users spend more than 2.5 hours on the site each day — is a good fit for its so called EggNetwork, which reaches over 50 million users. The more you use an application, the more you’ll see these ads. VideoEgg advertisers include over one hundred Fortune 500 companies, it says.

As reported two weeks ago, Meebo is busy building an ad unit it hopes will be a standard, as recognized by the IAB. The idea is a standardized ad unit makes it easy for advertisers to buy ads across multiple sites.

The ad unit Meebo described — a small icon, a headline, a description, and a link — is different from unit used by VideoEgg.

Meebo’s deal with VideoEgg appears to be an intermediate step: Plug in ads from a proven brand ad player like VideoEgg, then get working on building out Meebo’s own ad solution.

The first screenshot below shows an example of a VideoEgg ad. The second screenshot shows what happens when you click the ad.

Videoegg, a video advertising network, has raised $15 million from Focus Ventures and returning investors.

The San Francisco company offers Web sites technology to help them publish videos, and ways to run advertising within those videos.

It has been in the news recently, and competes with several companies, including Fliqz, a relative newcomer, and several more established players, such as Brightcove. It’s a crucial time for it to grab market share, so the funding makes sense. Fliqz has raised less money, at $2.5 million, but is proving scrappy (see its easy toolbar, for example; scroll down). Brightcove raised $59 million earlier this year, and reportedly won a whopping value of $220 million.

When YouTube began inserting contextually relevant ads into its videos a couple of weeks ago, Videoegg claimed to have been doing the same thing since a year earlier, and pointed to the patents it’d already been granted for its service.

Earlier in August, Videoegg introduced its own Facebook advertising platform, which allows third-party applications on Facebook to insert Videoegg’s video ads and take a cut of revenue from it.

Facebook ads (screenshot below) are bringing in “north of $10″ CPM in many cases, according to Troy Young, Videoegg’s chief marketing officer. The “ad market is broken” and the promise of online banner advertising is “unfulfilled,” with the effectiveness for banners undervalued by advertisers, Young told us. He says Videoegg is aiming to make banner advertising more relevant through more appealing video-based ads, and better targeting.

Previous investors (our coverage) include WPP, Maveron and August.

Here’s the latest action, about 80 percent of it in Silicon Valley:

Introducing Twickr — This is Flickr photos on Twitter, the messaging service that lets you send one-liners to your friends. Web guru Dave Winer came up with it , and Twitter investor Fred Wilson writes more about how it works.

Introducing Yappd — Which is similar. It is a Twitter copycat, also with picture messaging.

VideoEgg unveils EggNetwork — ads for Facebook applications — VideoEgg, which lets publishers serve ads in videos on their Websites, has announced a new ad platform that lets partners place video ads in any Flash video player, widget or Web page. It offers a product designed specifically for Facebook applications. You can see a demo here. It shows an example of a normal text ad, with a video playing inside of it.

Facebook opens its feeds to RSS — The status updates and other posts of your friends are now retrievable by RSS. In other words, you don’t have to go to Facebook to see them. This may not seem like a big deal, but Facebook had been slow to open up this feature. David Winer pointed it out.

Apple launches My iTunes Widgets, a social version of iTunes — Details here. Niall Kennedy had an early look.

Apple’s new software: iMovie - iMovie lets you load video from a camera in a console, and then, as writer Dean Takahashi describes: …Here’s the magic. If you position your mouse arrow at the edge of the video’s cover photo, a vertical red line appears. Move the mouse and slide the red line from left to right. As you do so, the contents of the video are revealed to you on a larger video window. Move the red line to the left or right and you’re “skimming” through video at a high speed. Within a second or two, you can find the exact spot in the video clip that you want to use. Then you can snip it out and use it in your home movie. You can’t do this with a Windows Vista machine. When Jobs showed this at his press conference Tuesday, everyone let out their “oohs and ahhs.” “Isn’t this incredible,” Jobs said…

Classmates.com, the gaudy old school social network, files for IPO — Classmates.com, that site owned by Internet service provider United Online, is being spun off and wants to raise $125 million in an IPO. However, this one smells of desperation. Several social networks have emerged to overtake it in popularity, Facebook foremost among them. So perhaps Classmates sees this as a now or never, especially since markets are looking favorably on social networks right now. Look at its filing, and you’ll see it has been losing money for the last couple of years, including $250,000 on $42 million in revenue for the quarter ending March 30.

Something Simpler buys assets of PubSub — PubSub was the briefly popular service (among geeks, at least) that let you specify keywords of subjects you were interested in following, which directed it to send you news about those keywords via RSS. It was a perfect way to track blog content on subjects you cared about without having to visit the blogs. The service went defunct. Now telecom executive Ian Bell, president and founder of a quiet company Something Simpler, of Vancouver, has bought the technology, but isn’t saying much about his plans other than he’ll launch in about six months. (GigaOm has more).

VMware, the Palo Alto, Calif. virtualization company, surges to $51, or $22 above the initial IPO price of $29 — This makes it the hottest tech IPO since Google’s in 2004. The company raised $900 million in the offering. Early Mercury News story here.

Founders: Time is on your side! — Great post by venture capitalist Fred Wilson, counseling entrepreneurs that time is on your side. Hang in there, if you can.

Cerberus, the self-effacing private equity firm — Portfolio has the story about the firm of Stephen Feinberg, which has the following philosophy: Reveal as little as necessary; be anonymous; be invisible. “We try to hide religiously,” he says. “If anyone at Cerberus has his picture in the paper and a picture of his apartment, we will do more than fire that person. We will kill him. The jail sentence will be worth it.” There are a few nervous laughs…

The “Quant” funds doing terribly, amid liquidity crisis — The Dow keeps getting pummeled. It loses another 200 points Tuesday. It’s notable that the Quant funds are all doing poorly. Makes us wonder how FatKat is doing. Remember FatKat, the Quant fund backed with $2 million from Silicon Valley hotshot investor Vinod Khosla, and Nasdaq chairman Michael Brown, and built on the work of technology futurist, Ray Kurzweil? We wrote about it in March, before its launch. We’ve inquired, and will update if we get a response. Meanwhile, Goldman and others inject $3 billion into a faltering quant hedge fund backed by Goldman.

Tesla Motors replaces CEO — The Silicon Valley electric-car startup has seen number of exec changes over the months. It changed it PR/marketing team several months ago, and now it has replaced Martin Eberhard, its chief executive officer, with Michael Marks. Marks, an early investor in Tesla, is the former CEO of Flextronics. No reason was given.

General Motors’ electric car — GM is building a car that will travel 40 miles a day on a single electric charge, and has signed a contract with battery maker A123Systems to develop lithium ion batteries for the Volt plug-in hybrid vehicle.

That’s what Rolling Stone wants you to believe, in its latest edition. In a story called “Baby Billionaires of Silicon Valley,” Rolling Stone catches up with a group nine entrepreneurs who get together to strategize. This is another hype job, since none of these people are billionaires. (Update: Blake Ross, in comment below, says this is no secret society, and headline is wrong.)

From the piece:

That’s why they’ve gathered here tonight. This is one of the first meetings of a secret society they formed and jokingly called the Young Guns; a more apt moniker might be the Valley Brats. It’s an invite-only cabal of the most powerful under-thirty-year-old mavericks in town. Every few weeks they gather to drink, plot global domination, make friends and, mainly, just act their age. “We got sick of hanging out with older guys,” says the Brats’ gregarious founder, Rob Pazornik, twenty-six-year-old creator of an online shopping startup called LicketyShip. “All they talk about is mortgages and nannies. It’s like hanging out with your dad’s friends.”

Featured in the cover photo, from left to right: Blake Ross (formerly Firefox, now Parakey), Mark Zuckerberg (Facebook), Matt Sanchez (VideoEgg), Robert Pazornik (LicketyShip), Seth Sternberg (Meebo), Todd Masonis (Plaxo). Also featured are Chad Hurley & Steve Chen (YouTube), and Bram Cohen (BitTorrent).

YouTube will contribute to valley’s allure — Two years ago, Google’s buzz, even before its IPO, gave entrepreneurs like Tribe’s founder Mark Pincus inspiration to dream up the social networking revolution. YouTube’s grand sale will also inspire a new wave of entrepreneurs, no doubt. The WSJ has a timely piece — written before YouTube’s sale was announced — about the entrepreneurs still coming to Silicon Valley.

There’s Matt Sanchez, co-founder of video company VideoEgg, who found he was spending more time in Silicon Valley than his home in New Haven, so packed a 12-foot U-Haul van with his servers and other junk, and moved out here. It has paid off. His team of four have since landed venture money, hired 22 more people, and signed lots of deals with Web sites, most of them within an hour’s drive. “There’s a unique set of resources in Silicon Valley that don’t exist in other places,” Sanchez, 25, told the Journal. And then there’s Metacafe, the Israeli video site, which just opened a Palo Alto office, and plans to hire 12 people by the end of the year.

How things change. We still remember the NYT trying to compare Silicon Valley with Detroit, back when it was fashionable to bash this place — and th was as recent as early 2005!

MySpace cleared — The suit filed by Brad Greenspan, the former chief executive of MySpace, against the popular social networking site, has been dismissed.

MeeVee’s logo sign — Meevee, the personal TV and entertainment guide company, is going to some lengths to build branding, putting up a large logo on its building and filming it, reminding some of the bubble era. It has raised $20 million in venture capital.

Microsoft offers mobile ads too –Google and Yahoo offer sponsored ads besides search results on your mobile phone. Now Microsoft has joined them, but offering click-to-call technology too — which is where you see an ad, click on it, and your phone dials the advertiser.

Google and Zoho gunning for online office software leadership — We’ll be moderating a panel tomorrow at the Office 2.0 Conference in San Francisco. We recently wrote about Zoho’s impressive product release schedule, apparently an effort to steal the thunder from Google. Zoho has now incorporated its array of software, including a new calendar and a new email feature, under one roof called Zoho Virtual Office. Meanwhile, Google does its own integration, linking up Writely and Spreadsheets with Docs & Spreadsheets.

Tellme Networks making headway in voice recognition — Speaking of the competition in mobile search, Tellme has been around a long time as a private company, based in Mountain View, and is getting a second wind. Back during the Internet bubble days, it was laying off workers. Now that voice recognition has become hot, it has just signed a deal with Cingular Wireless to offer a 411 information service that will allow Internet searches too. It is now handling more than two billion directory calls a year, 74 percent of which are done without human intervention, according to the NYT.

Netflix’s recommendation technology beat within a week — Netflix, the popular DVD site, offered a prize to anyone who beat its recommendation algorithm. Within a week, a team from WXYZConsulting.com in Los Gatos beat Netflix. The team is led by data mining engineering professor named Yi Zhang, of UC Santa Cruz (pictured here).

Sequoia Capital is almost out of Google — We’ve mentioned venture firm Sequoia’s various conflicts and interests related to its backing of Google. But lately, the venture capital firm’s holdings in Google have dwindled to about 0.1%, according to a filing in April by the SEC. That leaves it with 412,823 shares, worth less than $200 million.

San Francisco photo editing start-up VideoEgg has raised $12 million from a team of investors led by Maveron, the venture capital firm of Starbucks Chairman Howard Schulz.

The funding, reported in BusinessWeek (worth reading, for the background) comes hours after news emerged that Yahoo had acquired Jumpcut, another San Francisco video editing company.

VideoEgg and Jumpcut are part of a crop of sites that have emerged lately — including Eyespot and Motionbox — that offer a range of tools for users to edit video, add sound, insert ads and so on. Another of these sites, Grouper, of Sausalito, was just acquired for $60 million by Sony. With acquisitions still happening, and providing a way for venture capitalists to make money, it is no wonder that VideoEgg is getting more. The difference, of course, is that Jumpcut was lean and low-burn — it hadn’t raised any venture capital, and so could sell to Yahoo without worrying about getting a price that would please investors. VideoEgg is spending money, having acquired a company. VideoEgg may pay the price of this, if its technology becomes a commodity. VideoEgg previously raised an undisclosed amount from August Capital.

At the same time, VideoEgg is going for the bigtime. By working with other sites to make it easy to upload videos, VideoEgg is used to download 15 million videos a day. With recent agreements with more sites, VideoEgg plans to hit 50 million downloads a day by the end of the year.

VideoEgg continues to make strides with its web video publishing service. The company is releasing an integration kit tomorrow that will make it easy for web site owners to add VideoEgg’s video publisher and player into their sites. This will make it easy for publishers to begin accepting video submissions from people - without the associated storage and bandwidth costs, since the video files live on VideoEgg’s servers.

Until now, people could only use VideoEgg, which encodes all video into Flash, with a blogging account such as Typepad or Blogger, or through a special partnership with the San Francisco company.

The VideoEgg service is free for now, though an ad-supported model is in the offing.

VideoEgg also announced the acquisition of the assets of Popcast, a San Francisco start-up that made a downloadable video player. “Several” of Popcast’s top managers will join VideoEgg. Not sure if that will include David Weekly, who created the IM Smarter service we wrote about here and the PeanutButterWiki service.

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VideoEgg, to good reviews, raises cash from August