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Pounded by the stock markets after a poor showing in its recent earnings report, Sun Microsystems now has another thing to worry about: Co-founder Andy Bechtolsheim, who most recently served as chief architect for its systems group, is leaving [update: A Sun spokesperson notes than Bectolsheim will continue to do part-time work at Sun] [second update: the NYT has more detail; Bechtolsheim will spend at most one day a week at Sun] to help run a startup called Arista that will reportedly make networking equipment for a growing industry segment.

Aside from helping to found Sun in 1982 with Scott McNealy, Vinod Khosla and Bill Joy (the latter two are now venture capitalists), Bechtolsheim is famous for being one of the very first investors in Google and also co-founded a company called Granite Systems in 1995, which later sold to Cisco for $220 million. So he has serious startup cred — moreso than many others who are considered Silicon Valley gurus.

Arista is planning to build 10 gigabit switches, which are used for extremely high-speed networks typically seen in laboratories and data centers. Such switches, many times faster than today’s standard, are expected to become much more popular in years ahead; some startups, like content delivery network BitGravity, already use them. Arista hopes to corner the market early on.

It’s hardly the first to look at 10GB switches. Startup Woven Systems recently launched its second-generation product, mid-sized players Force10 and Foundry Networks also have them, and networking heavyweight Cisco is likely trying to figure out how it can dominate, as it does in similar areas. However, Arista will be well prepared; it has also recruited former Cisco exec Jayshree Ullal as its CEO, according to the New York Times, which broke the story.

Arista was funded by Bechtolsheim before he joined the company, as well as Stanford professor David Cheriton, who will become its chief scientist. The company is based in Menlo Park, Calif.

Tapulous, a new Silicon Valley startup, embodies the craze that’s going on right now around the iPhone.

Tucked inside a ground-floor office on Hamilton Ave. in Palo Alto, Calif., a stone’s throw from social network comany Facebook, the company’s eight employees are feverishly building applications solely to work on the iPhone.

Never mind that the Apple has sold a mere six million iPhones to date, compared to Nokia’s 400 million handsets. Tapulous’ chief executive Bart Decrem believes the iPhone’s interface –featuring a multi-touch full screen and now 3G speed — is sparking a revolution akin to what Microsoft Windows did to DOS on the PC.

He’s pulled together a team of developers to build out a slew of applications designed to be social at their core, believing this will help “viral” distribution. He’s vague on the details, but says he wants applications to feature personal profiles that will allow for social networking across the applications.

Just as RockYou and Slide exploited the Facebook platform by producing scores of applications to see what would stick, Tapulous wants to be the equivalent for the iPhone. It has developed three applications to launch in time for the opening of the iPhone App Store, scheduled for tomorrow, and has scores more apps in waiting.

The iPhone App Store is where people can download applications for their phones — these apps will work on the new iPhones, old iPhones and iPod Touches. Tapulous aims to offer developers a home to help them build applications and monetize them, Decrem says. One intern asked for a room to sleep in as the only condition to build applications for Tapulous.

Decrem (pictured below, left) is a great salesman. Previously, he cofounded Flock, the browser, and he pitched it so well in the Valley that it became over hyped and never lived up to its promise. Flock is still alive and kicking, but Decrem has moved on. He’s trying to dampen his salesmanship this time around, he concedes, but it’s only minutes into the conversation before his enthusiasm picks up and he speaks in superlatives: “This will be bigger than the PC revolution,” he says of the iPhone, citing a statement made by John Doerr, a partner at venture firm Kleiner Perkins. He also cites a Piper Jaffray analyst prediction that there will be 90 million Apple smartphones in use by the end of 2009. He cofounded the company with Andrew Lacy and Mike Lee. He’s hired developers like Sean Heber, who became a legend of sorts when he built 30 applications for the iPhone in 30 days.

On the surface, Twinkle (screenshot above, and more at bottom) is the most intriguing of Tapulous’ applications. It’s a Twitter client, meaning users access the popular micro-messaging product Twitter on the app, pulling and pushing in tweets (Twitter messages) just like they would on Twitter. But Twinkle will support photos, and it’s more flexible than rival Twitter client Twitteriffic because it lets people message with other services besides Twitter. Twinkle also lets people see which users are located close to them (by tapping into the iPhone’s location technology).

Since launching in March (for “jailbroken” iPhones — phones where users have bypassed carrier restrictions to downloaded applications), Twinkle has had 80,000 people download it, Decrem says. To be sure, a lot of other startups also aim to become the location-based social networking application of choice for the iPhone. These include Loopt Read the rest of this entry »

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Sabio Labs raises second round — Sabio is a secretive Palo Alto, Calif. start-up building a new design process for analog chips. It’s likely up to something significant, because Andy Bechtolsheim, the brilliant engineer and co-founder of Sun Microsystems has led a round of investment into the company. Investors in the earlier, first round include individuals like Art Reidel (CEO Scintera – on the board ), Bill Unger (of Mayfield), Barr Dolan (of Charter Ventures), Rajeev Madhawan (CEO Magma), Carl Showalter (of Lightspeed Ventures), Marc Friend (USVP and Summit Partners), Bobby Yazdani (CEO SABA), Amidzad (Palo Alto investors) and Harry Cheung. We plan to follow up with the company’s chief executive, Mar Hershenson.

The blog search engine Technorati has bought PersonalBee — PersonalBee (see our coverage) lets experts and others create their own news page for others to follow along. See Technorati’s statement here. Meanwhile, Technorati continues its search for a chief executive, something we’ve heard started several months ago. Technorati could have moved into providing blog and stat features, but the nimble MyBlogLog moved more quickly (our coverage). After more than $14 million in venture capital, Technorati appears still to be searching for a business model.

Is Photobucket in negotiations with Fox Interactive Media, owner of MySpace? — That’s what we’ve heard from a source, who says the two are working through Lehman Brothers in talks. Even if true, it’s another thing to speculate whether the recent scuffle between MySpace and Photobucket is related to deal jockeying. Apparently, Diller’s IAC is also interested in Photobucket. (See our update here)

Competitious has raised an angel round — Competitious is a start-up company that gives users tools to compare themselves against competing companies, using a number of variables, such as Web traffic, feature lists and news articles. Paul Colton, the founder and CEO of Aptana, which recently took over the RadRails project, is one investor. The company is still early, and has yet to release its main product. (See our earlier coverage).

Traits of successful entrepreneurs — Venture capitalist Ryan Floyd reports on the qualities of the best entrepreneurs he has funded.

Aggregate Knowledge raises cash, but ChoiceStream raises more — Following our report yesterday about Aggregate Knowledge, a behavioral search company raising $20 million, we learned competitor ChoiceStream, of Cambridge, Mass. has raised more, $25.79 million. The company hasn’t responded to requests for comment. Dan Primack has more details and speculates the company’s valuation exceeds $250 million. Rumor we’ve heard is ChoiceStream rejected a $150 million or so buyout offer, so Dan’s reasoning is sound, though SEC filings can also be misleading. Investors are General Catalyst, Sutter Hill Ventures and a family trust affiliated with ChoiceStream CEO Stephen Johnson. The company has more than 100 employees, and so is burning $1 million a month.