VentureBeat

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 »

SocialMedia, a company that lets small Facebook applications get exposure by bidding on ad links within Facebook popular applications, has just raised $3.5 million in financing.

Using the marketplace offered by SocialMedia, a Mill Valley, Calif., company, less popular Facebook applications bid to get ads placed on the pages of more popular Facebook application — thus, increasing their traffic. Advertising one application within another is an increasingly important way of getting Facebook users to try out nascent applications, as more and more applications launch every day.

SocialMedia (see our original coverage) raised the money from Charles River Ventures and angel investors and is poised to enter other social networks. Myspace, for example, announced last night that it would be launching its own platform for developers within the next couple of months. Hi5, Bebo, and other social networks with millions of users, are also planning to launch their own developer platforms.

SocialMedia already owns Trakzor, a popular Myspace application that lets users see who else has viewed their profile pages. Four million Myspace users have installed the Trakzor widget and one million use it per month, giving the company a natural starting point to advertise new Myspace applications — especially as developers without a presence on Myspace look to move in.

SocialMedia’s marketplace on Facebook lets an application owner with many active users — valuable ad space — sell space on its pages to other applications. See screenshot for example: The gray box featuring “Mobile Radar” is the ad.

The company also offers an analytics application on Facebook called Appsaholic, that provides data for app developers on how their ads are performing.

Interestingly, Marc Andreessen is one of the angel investors participating in the round. He also is the co-founder of Ning, the do-it-yourself social network.

Other investors include Jeff Clavier.

[Disclosure: Satisfaction is led by Thor Muller, who is an advisor to VentureBeat. ]

Satisfaction, a San Francisco company that aims to improve online customer service by letting the customers effectively take over the process, has raised $1.3 million seed funding.

VentureBeat reviewed the company two months ago. Satisfaction creates customer support pages for companies and their products. But it goes beyond the standard customer support pages. It gives companies a way to provide answers — but also lets customers answer the questions. The more popular answers get voted to the top of the pile. If a newcomer asks a question that is similar to one already asked, Satisfaction gives the answers already provided.

The funding comes from First Round Capital, O’Reilly Alphatech Ventures, and others including Jeff Clavier, Adaptive Path, Mike Brown, Jason Schultz (EFF)

The company also opened up the site so that anyone can create a customer service site for a company or product (until now it had been in testing, and you had to apply).

The company also has two other new offerings. First, it has released a widget of the customer service page for companies to embed if in their own support pages.

Second, it also lets companies embed a more dynamic FAQ page. Satisfaction assesses the questions that are most frequently asked, and updates the FAQ page in real time — as the issues being asked about change. See below for an example of this being done at a handbag site, Timbuk2.

Ajit Shah, former general partner at Worldview Technology Partners, has put together a different kind of firm to make seed-stage investments in start-ups.

Called Ariva, its model is like a federation of investors — that is, more formal than an angel alliance but less structured than a typical VC firm. The goal is to allow partners to spend more time working with entrepreneurs.

Word has been out since last year that Shah was raising the fund, but his firm came out of “stealth” mode with a piece earlier today at PEHub. Shah has joined with Robert Simon, formerly of Alta Partners, and will raise a $150 million inaugural fund. In some cases, the firm will also make follow-on rounds.

Shah also talked with VentureBeat this morning. Shah is known for his style of avoiding the hectic multiple board-seat style of many larger venture firms. During the boom years, and then after the bust in 2000, he steadfastly refused to carry a cell phone for example. He left the large venture capital firm, Worldview, a few years ago, when that firm began having internal problems. Like many firms, WorldView had raised vast amounts of money, and struggled to find good start-ups to invest it in. Shah said believed the VC model was headed in the wrong direction, and wanted to return to the basics of building companies by working more closely with entrepreneurs.

Reflecting his style, his firm will limit the number of portfolio company board seats per partner to a maximum of three. This will allow partners to be able to spend at least a day a week working with each startup. (Many larger firms have partners holding ten or more board seats).

More radically, however, it has introduced a sort of federation of investors, a group that will invest on behalf of the fund, but will have fewer duties in its day-to-day management. Ariva will split the “carry,” or profits, in half with these associated investors, who will be more independent and spend more time with companies than is typical at most venture capital firms. That’s different from the 1 percent or so that bigger venture firms give to “venture partners” who don’t have fund management responsibilities.

Shah and Simon have recruited six such venture partners, each with a mandate to coach entrepreneurs, helping them with a mixture of company founding experience, industry knowledge relevant to the specific entrepreneur, and operating background. Each partner will invest between $15 million to $20 million. Ariva will cover their expenses, but will not pay partners a salary. They are the following:

–Andy Ludwick, former CEO of Bay Networks,
–Mike Pliner, co-founder of software developer Verity,
–Kumar Ganapathy co-founder of VxTel,
–Jeff Clavier, a software venture capitalist,
–Sass Somekh, former president of semiconductor equipment maker Novellus,
–Teddy Shalon, founder of drug developers Synteni and Neosil.

Ariva has already invested in Virident Systems, which makes low-power servers for Internet applications, and Osteogenix, a bone therapy company.

Here is a one-page overview of the firm’s strategy.

Some readers took issue with VentureBeat’s recent assessment that Y Combinator had successfully “nailed” the start-up incubator model. There’s one particular critique we should address.

In return for its advice and money, Y Combinator does take its pound of flesh, in the form of six percent of a company’s stock, on average, which some people think is excessive. In our earlier, favorable assessment of Y Combinator, we were referring mainly to the vibrancy of the start-ups emerging from the group — a sure sign that something is right. But let’s look a bit closer at this six percent policy.

We asked Y Combinator partner, Jessica Livingston, more about Y Combinator’s stock policy. Turns out, Y Combinator takes ordinary common stock, she told us.

That makes Y Combinator look better than some critics have made it out to be.

“I have a real problem with Y Combinator,” said Jeff Clavier of seed capital firm SofttechVC at the Web 2.0 Expo yesterday. “Y Combinator is a rip off. They give you $6k per founder for six percent of the company. I’d be happy to double that [$6k] and I’d still be getting my stock for cheaper than I usually invest.”

What Clavier failed to mention until later, when pressed by VentureBeat, is that his firm only takes preferred stock when it does its angel rounds.

VentureBeat thus believes Y Combinator’s approach offers an advantage to entrepreneurs because they’re not held hostage by the often onerous privileged rights that preferred shareholders often demand, such as minimum payouts upon acquisition or dissolution, rights to receive compensation before common, or anti-dilution rights. Common stock aligns the interests of Y Combinator with the interests of the founders and employees, who also hold common.

And while six percent is high everything equal, these companies are often very early stage companies — often little more than an idea — and so carry significant risk. They usually require more hands-on help.

(Most of the reporting for this story was done by contributing author, Mark Coker)

Updated

Kongregate, of San Francisco, launches tomorrow with a host of Web games targeted at young males with social networking components pushing new bounds.

Kongregate is signifiacant because it targets a group that until now hasn’t been served by online social games. Social gaming has been the domain of women, especially older women (served by companies like Club Pogo, owned by Electronics Arts). Young males searching social action games have had to download large software programs to their computer, such as World of Warcraft. Or they’ve played on Xbox Live, where games cost in the millions of dollars to develop — they have social components, but users have little input into the development of those games, and features.

Kongregate calls itself the YouTube of game platforms. It is entirely Web-based, and users provide input. Kongregate lets gamers chat with each other, and even chat with the developers of the games. Anyone can submit a game to Kongregate to be licensed. Kongregate lets gamers comment on and rate the games; hot games climb to the top of the home page. Kongregate’s management then offers contests, giving users who perform points and cards they can use to enter elite play-offs. Developers, meanwhile, get a cut of any profits, which come from advertising.

Kongregate launched a test version in October, but already has licensed 300 games, many of them compelling, such as Fancy Pants. If you haven’t played Fancy Pants, try to find a few minutes to do so. It’s liberating (your character jumps all over the place), and addictive. You can play Fancy Pants at other sites, but its developer is about to release a sequel, and that will be exclusive to Kongregate.

The company has won seed funding from a number of investors, including Reid Hoffman, LinkedIn co-founder Joe Kraus, co-founder of Excite and JotSpot, Joi Ito, an investor in Technorati, and Jeff Clavier, another angel investment with prior social networking investments.

Founder Jim Greer was previously technical director at Club Pogo, where he watched that company grow to have 1.4 million subscribers paying $6 month or $40 a year. Along with premium features, ads and downloadable game sales, Club Pogo is making roughly $70 million a year, he said.

Greer has the game chops, and knows how to build community. The platform looks spiff for just nine months of work. The trick is whether Greer’s team, mainly engineers, will be able to cut the distribution deals they need with large portals, to win traffic. They’ve picked some investors with good contacts. Kongregate faces two of tough competitors, neither of which offers as many social and open sourced features. But they’re also unlikely to stand still. They are Miniclip.com, which has significant traffic and has several years’ head start, and Shockwave, now part of Viacom, and boasting tens of millions of monthly unique users.

See screenshot of FancyPants page below. Arrows pointing to the right show the social areas, such as avatars of your friends, and the place for chat, and comments; the arrow pointing left shows a contest under way. (Note: The social areas are devoid of friends/avatars and chat in this image, but that’s because we got a sneak peak of the version to be released tomorrow, and nobody was playing yet).

[Update: The seed funding was $1 million, Techcrunch has since reported]

updated

Maya’s Mom, a start-up based in a Palo Alto garage, has launched the latest site for parents to trade tips about how to care for their kids.

There are numerous other sites doing very similar things. Minti.com launched last year, and got $1.19M in venture capital earlier this year. It appears to have stolen an early lead, and has found all kinds of ways to integrate with other popular Internet sites. There’s Mommybuzz, which is very difficult to look at because its color is jarring, and requests an immediate login.

Maya’s Mom is one of two Silicon Valley newcomers. The other is San Francisco’s MothersClick, which emerged this month, founded by a first-time mom. They’ve both decided to focus on what they see as the three main features popular among parental advice sites.

These are: (1) A forum for questions and commentary from parents, which is the Maya’s Moms’ central feature, (2) a listing of kids activities, and (3) a place to look up “groups”

The main difference between these two is on the homepage. Maya’s Mom presents you with its main features from the outset. It is open, without registration required. MothersClick, meanwhile, requires you to register, and requests you to choose a geographical area before you select a group. It is too early to tell whether these extra steps will help or hamper MothersClick — since some will presumably like the registration requirement, and others won’t.

We talked with Maya’s Mom founder and chief executive Ann Crady a few days ago. She just finished raising an angel round yesterday from a group including Flickr co-founder Caterina Fake, Yahoo exec Jeff Ralston, Tickle founder James Currier, Presto’s Raymond Stern, Wink’s Michael Tanne, angel investor Jeff Clavier and True Ventures.

She describes it as a cross between Yahoo Answers and Facebook. It is centered around the asking and answering of questions related to parenting. Lower on the site, it lists kids’ activities. If it can guess your location, or if you give your location to the site, it will show you activities in your region. Right now, its strength is in the Bay Area, and it plans to build from there.

While generally open to anyone, it does give parents the option of sending questions privately to trusted friends.

Investor Jeff Clavier said he invested in the site because, like his other investment in Dogster, it has the potential to be a “passion centric community” site. He calls it the “Dogster for moms.”

Crady previously ran business development at Yahoo’s Search and Marketplace Group, and before that was at 1stUp. She was also a corporate securities lawyer at Wilson Sonsini. She has a daughter named Maya (they are pictured above), and she is a member of various parental groups in the Bay area.

A partial screenshot of the homepage is below: