VentureBeat

TheFunded, a site where entrepreneurs can rate VCs, has capitulated and is allowing venture capitalists to participate.

Until late yesterday, the site had prohibited venture capitalists from responding. However our post a few days ago about the unfairness of that policy – in light of the ugly, spiteful comments being left about VCs – created a surge of demands for a policy change.

It’s just the latest in a string of controversies where character assassination and hateful comments is causing consternation on the part of Web site owners about how to police their site. Today, another brouhaha broke out over at PEHub, another venture capital site, which we’ll get to shortly.

First, here’s what happened at TheFunded: We reported about the comments by two entrepreneurs left at the site about Draper Richards venture capitalist Howard Hartenbaum, who were apparently upset because he wouldn’t fund their idea. Then, after our post, more than a dozen entrepreneurs who liked Hartenbaum swarmed to the site to support Hartenbaum. Bizarrely, the site tried to shut out those entrepreneurs, saying it was closing comments on Hartenbaum’s profile, to stop gaming of its system. Hartenbaum, upset, called the chief executive, and told no one would take the site seriously if it only provided a single point of view. Simultaneously, comments on our original post showed that many readers supported Hartenbaum’s position. So, TheFunded finally relented late yesterday, and agreed there would be no restrictions. Entrepreneurs have since left favorable comments about Hartenbaum, some of them “over the top, they are so nice,” Hartenbaum tells us. As a result of the controversy, TheFunded is processing a chief executive request a minute, said “Ted,” from TheFunded in an email to us earlier today.

It is the right call. It is fairer. Draper Richards’ report card is now a 4.2 out of 5, up from 2.4 out of 5. The firm didn’t really change much in two days. But its rating rocketed. So is TheFunded more useful? You guys be the judge.

Here’s where VCs can go to submit profiles, and “set the record straight.”

Separate but related: Unfortunately, ugly comments has gotten the better of another VC-related site, PeHub. The site carries news about venture capitalists and private equity, and columnist Alexis Lakes said today she was stepping down because of hostile comments (she has a sense of humor about it, saying she has fired herself). Larry Aragon, an editor of the site, carries a post about it. The negative comments referred to are now locked behind PEHub’s subscription wall. Sometimes, hateful comments are so dispiriting that even the right to respond isn’t enough.

[Full Disclosure: A friend asked me last night whether I feel conflicted on the TheFunded story, because VentureBeat has its "Midas List" feature, where people can leave comments about the top-ranked VCs. I have two answers. One side of me was blind to conflict, because the Midas List, by definition, was for the best VCs only, as ranked by Forbes, and while I was thinking of building out this feature at VentureBeat, it wasn't on my immediate road-map. However, since this incident, I'm indeed thinking about this feature more seriously. I haven't come to any conclusions about how to do this, but yes, as of this post, I'm feeling conflicted. And if anyone has any idea about how to implement a better version of TheFunded, let me know. I'm not going to rule out a partnership with TheFunded, either. If there's a way we can both work together to provide a little more transparency in this secretive world, it'll be for the better.]

(See update here: TheFunded has capitulated, and allowed VCs to respond to these attacks)

The Funded, the Web site that lets people anonymously rate venture capitalists, is causing some concern in venture capital circles about the hatchet jobs on VC firms.

Rejected entrepreneurs are flaming VCs with snide remarks at the site, often with no grounding in reality. The site came up during a talk again today when I spoke before a group of 40 or so venture capital professionals at the National Venture Capital Association in Menlo Park.

Howard Hartenbaum, of Draper Richards, wasn’t at the event, but the early Skype investor also recently pointed out a couple of comments on his firm’s profile at the Funded. Comments call Hartenbaum rude, arrogant, slow and vomit-inducing. Of course, the comments came from an entrepreneur who had sought money from Hartenbaum but was rejected. Hartenbaum had been blunt enough to give them the straight “no,” something he says he tries hard to do — so that he can move on and give them advice about how to improve their idea and take it to the next step.

Btw, I know this first hand, because Hartenbaum sent some entrepreneurs my way to seek advice about how to think about monetizing a content-driven Web site, for example. So I don’t think I’m being a shill for Hartenbaum here.

So it’s like “Yeah, she is a bitch because she wouldn’t sleep with me.”

The debacle is forcing Hartenbaum to reconsider his policy of a straight rejection. Seeing the comments, he’s thinking about ways to improve. Indeed, it may be safer do what most VCs do: Stall the rejection, lead them on with a permanent “maybe.” Ironically, that’s precisely what drives entrepreneurs batty.

The comments, Hartenbaum tells me, also left out the fact that when he was running late, he asked them if it was OK to run late and then extended the meeting to give the full promised hour.

To top it off, Hartenbaum can’t submit feedback to the comments, because he’s a venture capitalist, and VCs can’t comment on the site. And with only two or three people negative people filling out actual reviews (see below) of the firm, Draper Richards now has a 2.4 rating out of 5.

This is the big drawback to TheFunded, and one we mentioned when we first wrote about it. There has to be a better way. We’ve noticed, with our Midas List profiles, that mainly unsubstantiated negative comments have rolled in. We’ve rejected most of them, because they’re flames without substance. We’ll continue to think about ways to generate a healthy debate. Nothing wrong with negative comments, but they’ve got to be based in fact somehow, and at least open to response from the attacked.

In short, this is turning out to be a useless site. This post will probably drive more traffic to the site, and perhaps even more hateful comments to Howard’s profile. However, I feel it’s important to say something, because my review initially said it’s a “very useful” site. I regret that.

Kyte.tv, the service that wants to be your own interactive TV channel, has finally launched.

We wrote wrote about the company two months ago, after first getting a demo.

You can host your photos, slide-shows, videos all in one place — the Kyte channel — and lets you post the channel player anywhere you want. It also lets you do mashups with things like surveys and music, and is integrated with live chat –distinguishing it from Slide and Rockyou, its closest competitors.

There’s even more to this player, as you’ll see from the example below. We’ve embedded our “VentureBeat channel,” and you’ll see several clips that demonstrate different parts of Kyte. (Click where it says “VentureBeat” underneath the player to see all of the clips). There’s also a brief interview I had Thursday with Draper Richards’ Howard Hartenbaum, the earliest investor in Skype, and also a backer of Kyte. His challenge was to force founder Daniel Graf to release the player — Graf kept holding on to it, to stuff in more features. Once Graf finally agreed to April 23 as launch date, Hartenbaum ordered a stone and had April 23rd etched into it (the stone sits in Daniel’s office).

The challenge for Kyte is whether it can rise above the noise of other players out there. Its multiple features may appeal more to the video/photo aficionado than to the average user.

There are more compelling Kyte channel examples at Kyte.TV itself. See the one at Mashuptown.com, the author of which says he prefers Kyte to YouTube for posting his videos because he can keep them all in one place. Each video within the player has its own URL.

Kyte has made a few changes since we last saw it: While your most recent content shows in the player, there’s a dashboard below giving visitors a glimpse of your earlier content (by clicking on “VentureBeat” in the example above, or easier seen here). If a friend posts to your channel live with a photo from their mobile phone, there’s a red blinking button in the player to show it is real time. Also new: Kyte shows who else is posting your channel on their site, and also trackbacks to show who is viewing your channel (so you can see who on MySpace or Facebook is watching it). The editing tools also let you drag songs over your photos or videos — something that competitors Slide and Rockyou don’t let you do. For now, it doesn’t let you upload music, for legal reasons, but gives you a choice of ten songs it has licensed (more coming) and the option to buy music from from iTunes.

Graf says he’s focused first on growing distribution, but is thinking of ways to make money. One is to take a cut when people purchase music.

At the least, Kyte should be commended for testing the limits of all that we have today — mobile, the Web, music, video and photos and real-time communications — all in one place.

There are a ton of “video player” companies out there, and they’re starting to blur.

It takes a lot to impress these days. A video player in 2007 should be able to upload any video file — from your desktop or from the Web — and then have it run from any Website from a widget.

Just when we thought innovation was running out, we hear about Kyte, a video player that allows live video and chat communication over the Web and mobile phones, and is quite unlike anything we’ve seen before.

It is the latest investment by Howard Hartenbaum (pictured left), the early investor in Skype (see our blog about him here, and Mercury News story here). Hartenbaum has been on a tear recently. We mentioned his investment in the new behavior advertising engine, Wunderloop, yesterday. He’s also an investor in DimDim, the new open source competitor to WebEx, which we’ll get to in a sec.

We first heard of Kyte a couple of weeks ago. We followed up with Daniel Graf, founder and chief executive of Decentral.TV, which owns Kyte.

Graf, who is jealously guarding Kyte’s distribution, until public launch sometime this quarter, has delayed release. The product is in closed testing, so we haven’t gotten our hands on it. You get an idea, though, by perusing examples on the Web (click on image below, for example. There are others here, here and here.)

These Web examples are just half of it. The other half is mobile.

Here’s how it works: The Kyte player is your own interactive TV channel. You can distribute it on the web, or through the mobile phone. On it, you can host videos and photo slide-shows — uploaded from your computer, or elsewhere on the Web, such as YouTube. The most recent content shows in the player, but you can use a back arrow to see earlier content. The example above is player of MySpacer Justin, 26, of San Francisco, and his videos are interesting.

Ok, so what? Well, Kyte appears to do everything. It lets you brand the player as your own. It gives you drag and drop tools to make uploading files easy. You can overlay questionnaires on the player’s screen. Friends can follow your channel on their phone. There’s an IM mashup, too, so friends can respond with messages instantly, and other people watching the video see those messages in real time and can respond. Photos are transferred real-time, says Graf. In other words, if I have Jason’s player on my phone, and he has it on his phone, we can not only live chat about it — more significantly, if Jason turns on camera and takes photos, I can see his surroundings live. “If you see a hot girl on the beach, boom, you can ask him take more shots,” says Graf. [Clarification: He wants to make videos live, too, but that will take some time]

Graf stresses the significance of Kyte as a “full-blown interactive application on the phone.” While Skype, and IM work real-time on the web, this is a real-time, or live video and chat over the phone and the Web. The players get their own URL. You can also open your player channel, so that others can load information too.

Kyte has just signed a deal with a major European carrier, which makes this easier; but it can work without a carrier. The big question remaining for Graf is whether he can actually get this product out of the door!

For now, Kyte supports Java-enabled phones. The product is developed on Flex2 and the latest versions of Flash.

We’ve talked about other mobile video players, including Radar, which transfer mobile videos and photos on mobile phones, but none do this live.

Graf raised $2.3 million from Draper Fisher Jurvetson, Hartenbaum’s firm Draper Richards, Skype co-founder Niklas Zennström and several others.

DimDim, meanwhile, is an open-source version of Web conferencing software WebEx.

It is Hartenbaum’s other investment. DimDim is free, and so plans to disrupt WebEx — just as Skype undercut telecom providers. WebEx charges a significant $39 a month, which is out of reach for many cost-conscious companies. DimDim is still mulling its business model, but plans to place ads in the video, and/or offer premium services. (If you’re an employee being forced to watch a boring training video by your company, perhaps ads might break the monotony?) There are other competitors in this area, but DimDim is the first to go open-source.

It is the second startup of CEO Deb Dutta Ganguly. He founded Advanced Internet, which he sold to Computer Associates in 2001, and built a team of 1,000 people. DimDim is ready for use now, though your firewall may get in the way (DimDim is fine-tuning some of these compatibility issues). This month, downloads are reportedly hitting 2,000 downloads a day.

DimDim has raised $2.4 million in a first round from Hartenbaum’s Draper Richards, along with Index Ventures and Nexus India Capital. The DimDim financing was first reported by PE Week. WebEx controls more than a third of the Web conferencing market, according to research by Goldman Sachs cited by PE Week. Microsoft follows, with 13 percent.

The company is based in Burlington Mass. Our big question for this company is, how do you make money?