VentureBeat

Here’s the latest round-up of Silicon Valley tech news:

Video launch of the day: Stumble Video — StumbleUpon, the site that lets you “stumble upon” other sites by offering up recommendations based on your perceived interests, has reportedly seen a spike in popularity. So it has launched a video version, Stumble Video. You stay on its home page, and it plays videos for you. You give thumbs up and thumbs down, letting it figure out your tastes. In doing so, you create your own video channel. It lets you click on a button to find people with similar tastes, and see their channels. Right now, it serves videos from YouTube, Google Video, and Myspace, but will expand.

Seven raises $42 million for wireless email product — The wireless email industry is very crowded, and we’re not sure how Seven, a private Redwood City company is doing. Seven says it is the second largest in the sector, behind RIM’s Blackberry, and serves 108 mobile operators. Meanwhile, competitor Motorola has acquired Good, and Visto is losing money but still raising bucketloads ($51M recently). Here is Seven’s statement, which also discloses a CEO chnage.

Yahoo finally opens up Panama to US businesses — It revamps Yahoo’s ad program to be more like Google’s. The platform lets businesses manage their campaigns, test their ads’ potential performance, estimated return on investment and more.

Skype 3.0 has two new features — Trying to keep up with the times, Internet phone company Skype has released the following: 1) Extras, which allows you to play games with your global contacts, share your musical tastes by showing what you’re listening to on LastFM via your “mood message,” and 2) Public Chats, which connects you to others on Skype with perceived similar interests.

MySpace may not have overtaken Yahoo — Lots of media reports about MySpace overtaking Yahoo in overall page views to become biggest on the Web. Comscore figures are cited. However, as we’ve stated, the devil is in the stat details. Sure, Yahoo showed a 9 percent dip in traffic, but that’s partly because Yahoo became more efficient, using AJAX more and so people don’t have to click (VentureBeat has something similar on left side of our homepage), and that deflates page views. By contrast, MySpace’s awful design requires extra page impressions to actually get anything done. Great story on this sort of thing in the NYT, about the tricks played by sites like Concierge.com, ForbesAuto, and Heavy.com (Harvard’s Ben Edelman, pictured here, continues to be a great watchdog).

The Venice Project opens for testing • This is the new Internet TV start-up run by Skype co-founders Niklas Zennstrom and Janus Friis, which seeks to replicate the phone peer-to-peer technology of Skype and apply it to Internet TV. They’re being mean, and forcing you to get an invite. GigaOm has more. An early critique, but this is still early testing, folks.

Bloggers may have to disclose if they are compensated to promote products — The Federal Trade Commission said companies engaging in word-of-mouth marketing, in which bloggers are compensated to promote products, must disclose those relationships.

The poor man’s Silicon Valley holiday party — Venture capital firm Gabriel Ventures is sponsoring a holiday event with Stirr in SF this evening, for 150 start-ups that can’t afford their own bash. Gabriel has rented out the Exploratorium, and is throwing in $22,000 in shwag, including iPods, and their footing the wine bill. We’re told it is sold out. We all love to snark on VCs, but what would life be like in the valley without these sugar daddies?

Sequoia invests $48M into India’s fifth largest carrier — IDEA Cellular plans to raise $560 million in an IPO next year, and Sequoia Capital has scored a 1.5 percent stake.

New alloy may boost memory chips 500-fold, compared to flash chip — That’s the early word from IBM scientists. Details here.

Red 5 Studios, a new start-up formed by the team that built popular online game World of Warcraft (WoW), has raised $18.5 million in venture capital to create online games that integrate more social networking aspects from the outset.

The funding comes from Benchmark and Sierra Ventures. Red 5 Studios is based in Aliso Viejo (southern California), not far from the team’s former employer, World of Warcraft’s parent Blizzard. The new company is led by Mark Kern, team leader on developing WoW, and two other Wow creators. The investment is significant because it comes at a time when gaming has become popular and investors hope to leverage the power provided by social networking on the Web. Last week, we reported that Shawn Fanning is forming Rupture, to form Web communities around games.

The investment is the latest move by Benchmark partner Bill Gurley to invest in interactive entertainment (he is an investor in Jamdat, acquired for $650 million last year, and Second Life, which has become hyped lately). Benchmark Europe is also an investor in Sulake, maker of the popular interactive game Habbo Hotel. Gurley told VentureBeat his interest in the sector began during his travels to China several years ago, when he visted gaming companies Shanda and TenCent, but was unable to invest. He scoured the sector back in the U.S. and became interestng interested in Blizzard’s team, seeing a drive and focus he hadn’t seen in other companies.

Red 5 wants to become the leading studio for popular MMO games (MMO stands for Massivey Multiplayer Online games), where thousands of players play at one time.

Historically, Gurley says, the winners in the gaming space have been publishers, rather than independent studios. Gurley says he thinks Red 5 will change that. Red 5 Studios’ first title is under development; it is financed and will be distributed globally by Webzen, which has given a large sum of money — totaling more than Benchmark’s investment — but it is not an equity investment.

MMOs have so far been a niche sub-sector of the games industry, accounting for less than ten percent of the industry’s developers. But WoW has grabbed the industry’s imagination, Kern said. The Red 5 team will focused on the PC, not the console.

Benchmark’s cash will help pay for an extensive back-end infrastructure, including server, database and networking needs. In fact, $18.5 million is not much, Kern says. Movie budgets are getting to the $60 to $100 million range, he noted. “Games aren’t there yet, but they’re expensive to create.”

The team has been together since January, and has been self-funded. Kern said staying at WoW was not an option. He and his team hankered to create something new — namely blend games with Web 2.0 social networking.

So how does he plan to make money, if the game is opened up to the wider Web community, and not controlled like WoW? Kern says continues to think through this question, and has ideas on paper, but asserts that the development process will take years. “It’s really early,” he said.

Moreover, while Napster’s Fanning is creating a company, Rupture, to create social networks around existing games, Kern believes Fanning will get only so far without tight integration with games and help from developers. “They’re too closely guarded, and worried about their value leaking out,” Kern said of publishers.

A total of nine people have joined Red 5 from Blizzard. Gurley calls the new company “the Pixar of online games.”

(Update: Apologies, we’d meant to put a questionmark in the headline, so we’ve fixed. We’re checking on this rumor, but now we’re getting more doubts about this supposed sale)

Here’s the latest in Silicon Valley tech world:

Video site MetaCafe to be sold for $200 million? — That’s what this site says. We reviewed Metacafe, which recently moved to Palo Alto, here.

Common Sense Media, a site where families can review movies, films, TV shows, games, raises $4.25 million — The cash for the San Francisco company comes from the Omidyar Network. Christine Herron, an investor at Omidyar, has spoken highly about this company; the investment comes as little surprise.

Lots of VC deals — If you haven’t kept up with our left column lately, here are links to the venture fundings of PayByTouch, MontaVista (from a couple of days ago), and Pinger (we’ve since confirmed details of this one), respectively. Also Zipcar, largest car-sharing service, raises $25 million. This is the second round of venture backing for the company, and it comes from Greylock Partners, Benchmark Capital and Boston Community Ventures.

Has Google invested in Chinese peer-to-peer company Xunlei? — That’s what the rumor is. Xunlei is reported to have seen between 75 million to 100 million downloads of its software, and has raised previous funding from Morningside and IDG Ventures.

Google’s vanishing click-fraud case — Bizarre story about how Google has apparently dropped a click-fraud case. Michael Bradley, 32, reportedly was caught red-handed while trying to extort money from Google — investigators allegedly taped him across from an office at Google where he’d visited and threatened distribute a click-fraud technology he’d developed, unless Google paid up. The article makes your think Google found the technology so scary that it cut some sort of deal with Bradley, to avoid legal proceedings that would have brought the technology to light.

Yahoo’s woes in china continue — Yahoo China President Xie Wen has left “for personal reasons,” only 42 days after he had joined the company.

Jason Calacanis joins Sequoia Capital as entrepreneur in residence — Calacanis recently resigned from leading AOL’s Netscape property, and said Tuesday he’ll be joining Sequoia Capital, the big-name Silicon Valley venture capital firm. Previously, he founded Silicon Alley Reporter magazine and was a co-founder of Weblogs, a network blogs sold to AOL last year.

AskCity looking pretty good — Last week, we reported IAC and its search property, Ask, were launching a local portal site. It has launched, and it looks very useful. As mentioned, it makes sense for IAC to merge its various properties: Now you can select a restaurant, book a reservation through OpenTable, do a search for nearby events, such as a concert, book a ticket through Ticketmaster, find a map to chart your nights traveling, and do all this during one search session — and all at IAC’s properties.

We’ve put green arrows on the screenshot below to highlight the notable parts. At right is a place you can easily annotate it all for friends (place markers, or draw boxes on a map, and so on). On the left, you’ll see the four categories of search: businesses and services, events, movies, and maps & directions.

Declaring it has “perfected the user experience” for audio and visual search, Seattle start-up Pluggd has raised $1.65 million from Intel and angel investors to help it start distributing its technology.

If you haven’t played with Pluggd, you should. It provides that “wow” experience, giving you what you intuitively want when searching video: a way to skip forward to the exact part of the audio or video file you are looking for. We’ll be hearing more about Pluggd next year, as it begins to cut partnership deals with major publishers, and comes out of the testing phase it launched two months ago.

Let’s take an example.

Take this ESPN radio recording from yesterday. Select the “find” tab, and type in the word “Marlins.” Pluggd will show you in the heat map the places most likely to be interesting to you. Orange shows a very high match. If you move the cursor there, you’ll hear the part about the Marlins. (You can do this by clicking on this image at left. You may be prompted to update your Flash player; go ahead and do so.)

But it gets even better.

Pluggd finds related words. Let’s say you’re looking for anything to do with injury, because you’d heard that Kobe Bryant might be injured. You type in “injury,” and Pluggd locates the part where the radio mentions his sprained ankle, even though the word “injury” is never mentioned in the audio. (Again, you can try this by clicking on image at left.)

This is impressive. Pluggd can do this by analyzing pages and pages of sports articles, and finding the statistical relationships between words. Its crawler finds that sprained ankle is very clearly correlated with the word injury over time. It does this without any sort of human domain experts. No one is doggedly typing in these associations behind the scenes. It is all automated, relying on the great database called the Web. “The Web itself represents mankind’s knowledge,” says Alexander Castro.

Right now, this cool search is only available at Pluggd’s demo site. And in case we’ve lost you, here’s a screencast tour.

Meanwhile, Pluggd has also building an inventory of ESPN and other files — now numbering more than a million — and it is busy indexing them all, so that it can make them available for crawling with its technology. Like Google, it wants to become a destination site. Also like Google, it wants to offer its technology to publishers, too, and Pluggd says it will be announcing various deals next year.

The company has boot-strapped itself until now, and the $1.65 million can be considered a seed round, to be converted into a first VC round sometime next year.

Intel made up a good portion of the investment, but more than half was contributed by a group of angels, including Scott Oki, former senior vice president for sales, marketing and service at Microsoft and Paul Maritz, former Microsoft group vice president of systems and applications. Other angels include:

–Brian Magierski, CEO of Kalivo, former co-founder/CEO of iMark (acquired by Ariba);
–Fraser Black, technology investor
–Bill Bryant, founder and investor in numerous search-focused startups including Netbot, Medio and Singingfish;
–Alex Alben, former executive at Starwave and RealNetworks;
–Barry Newman, venture partner at NeoCarta, former vice chairman of the technology group at Bear Stearns;
–Mark Klebanoff, former chief financial officer at RealNetworks.

There are a multitude of other companies focused on audio and video search (Pixsy, Podzinger and CastTV, for example), but none that are using Pluggd’s heat map approach that takes you directly to where you want to go.

Azureus, a Palo Alto company that delivers a popular application to distribute video files, launched a new service named Zudeo, which it apparently hopes will become the next YouTube for high-quality video.

It has raised $12 million in a second round of capital, led by Redpoint Ventures, which also included Greycroft Partners and previous investors Jarl Mohn, chairman of CNET Networks, BV Capital, Stanford University, UC Berkeley and Wilson Sonsini Goodrich & Rosati.

At Zudeo, users can upload, download and comment on videos in a manner similar to other video sharing sites like YouTube, Metacafe and Revver. However, we tried it, and it wasn’t as simple as those other sites. We downloading the software, a minor hassle. At Zudeo, you then have to click on a browsing tab to view content, and once we got there, we couldn’t play the content, for whatever reason. The problem may be on our end. (Update: Indeed, Nag suggests in comment that we may have misunderstood the purpose; we’re apparently not supposed to view the content, which is befuddling). YouTube succeeded because it was so simple. Perhaps Azureus will make this easier for regular users in future. The other question is why they are taking $12 million to, among other things, develop an embedded video player. We’re not certain how much Azureus has raised in total, but it is a lot given how many players are out there already. BitTorrent, the largest file-sharing distributor, just raised $20M. We’ll follow Azureus as it develops. Azureus does have a different strategy from some of the others, targeting publishers of high-end video. Meantime, we’d like to hear from readers what they think.

More details about Azureus here.

Shawn Fanning, founder of the popular music file sharing company Napster, is back in the game with a new start-up.

This time, Fanning wants to bring social networking to popular online games like World of Warcraft, as BusinessWeek first reported.

Experts say this is a promising area, because millions of gamers have formed communities with each other through playing, but their interactions have been limited by the confines of proprietary software. Why not open up these interactions to the full richness of the Web, let gamers flirt with each other, communicate offline or any number of other things?

Fanning’s new company start-up, Rupture, results from Fanning’s own frustration with WoW, which has 7.5 million players. The more he played, the more of a stake he had in the game, but the more he felt hampered in organizing game playing and learning about others’ identities.

He has raised seed money from investors including Ron Conway and Joi Ito. That makes sense because Conway has backed Fanning in his previous endeavors at Napster, and subsequently at SnoCap, a music store service that recently partnered with MySpace.

There are other services that extract character names, profiles and other data from WoW and other games. But few, if any, have sought to take it to the next level, personalizing it all in other ways. Rupture will create individual and guild rankings and facilitate playing and chat, starting with WoW, but pulling in information from other games, too, according to BusinessWeek.

There are several other stealth start-ups working on this, Susan Wu, venture capitalist at Charles River Ventures, says. She dismisses concerns that they may violate WoW’s terms of service. There’s tension, certainly. The walled garden has benefits — a rich and immersive storyline in a constrained but focused environment. However, players of WoW tend to spend time outside the game interacting with their “guildmates,” but have no easy way to do that. And there are thousands of plugins that have established precedence for how services get layered atop WoW, she points out.

Check out Allakhazam (plugin info here), for example, where you can view people’s WoW characters, guild rosters and quests. There are hosting providers that provide your guild with its own Web site, with ranking, communications, and management tools.

However, most of these other services are run by small grassroots contributors, have lacked a spectacular user experience, and there’s opportunity to offer a more cohesive and more comprehensive networking toolset, Wu says. Allakhazam’s focus on extracting user content (tips, maps, strategy, quests) has, perhaps incidentally, helped bridge communications between in- and out-of-game networks (forums are a bit part of Allakhazam). But social networking, i.e., building relationships, hasn’t driven its experience. That’s apparently what Rupture wants to do. Rupture will launch sometime in the first half of next year; for now, you can request more info at the site.

Below is a screenshot of a Modded Wow interface (with numerous plugins installed):

Compared to other companies its size, Google makes few venture investments, preferring to buy companies outright.

However, it has invested less than $1 million into Mountain View wireless router start-up Meraki Networks, according to GigaOm.

The router is being touted as a way to extend municipal WiFi coverage indoors, and appears to be linked to Google’s efforts to create a wireless network in cities like Mountain View and San Francisco.

The router is based on wireless mesh technology developed by co-founder Sanjit Biswas (pictured left, see bio and background) and others at MIT’s Roofnet project3.

Biswas says the funding is a “bridge round,” which refers to funding that helps tide a company over until it can get more cash in a future round of investment. He tells Gigaom that it includes “a few Silicon Valley angels.”

Meanwhile, Google’s talks with San Francisco to implement a city-wide WiFi network drag on, though they appear to be making progress.

We’ve mentioned Meraki before here

Silicon Valley classifieds start-up, Edgeio, has acquired a company that will allow Edgeio’s users to search significant amounts of real estate data.

If you think that is trivial, think again. Online real estate listings face a regulatory mess — related to the legally complicated Multiple Listing Service (MLS) system. The end result is that a Web site must have a direct relationship with an agent or with a regional MLS in order to show detailed data on homes. This has stymied many real estate sites, such as Zillow and Trulia, from getting the data they want. In fact, the Department of Justice is suing the National Association of Realtors, saying it colluded to prevent listings from appearing online, giving established brokers an advantage. The DoJ claims online brokers can deliver services more efficiently at lower prices. But it says the NAR policy of allowing traditional brokers to block listings to online sites inhibits that new technology.

Edgeio seems to be doing an end run around this system, but legally. Chief executive Keith Teare told VentureBeat Wednesday it has acquired the assets of Adaptive Real Estate Services, a company built over the past several years by father and son team Robert and Peter Meyer — and which has patiently built up relationships with brokers and agents in 70 of the top MLS organizations — and equivalent to about 70 percent of the MLS network nationwide. It has about 1.5 million homes listed for sale in the areas it covers. This means Edgeio can show these 1.5 million homes in its search results, and let users drill down to see the data details hosted on Web sites it has relationships with. And going forward, other brokers and dealers can opt into Edgeio’s network.

Says Teare:

The key advance ARES made is that it automates the inclusion of listings via the IDX protocol used by MLS organizations. This is painstaking work as few MLS organizations share common data structures with others.

We last wrote about Edgeio here.

This is another one of those “Why-didn’t-I-think-of-that?” moments.

Last year, entrepreneur Raj Chhiibber poured $1 million of his own money into developing a face-scanning device that not only detects skin-related disorders, but also predicts things like when wrinkles are going to begin and where. It provide tips on how much sun exposure a person can handle, their likelihood of developing acne and much more. There’s a good write-up in the Mercury News today.

Within a year, his San Jose company, BrighTex Bio-Photonics and another company, Moritex (which makes the machine to run BrighTex’s software), say they have sold 40 of the gadgets, which range in price from $20,000 to $50,000. In other words, they’ve already reaped in the amount he invested, or about $1 million. In this great nation of vanity, this could be a big hit.

And lest you write this off as an old-world medical industry company, Chhibber says he’s considering letting someone take a picture of their face with cell-phone and then emailing the data to BrighTex for analysis.

(Updated) roundup of the high-stakes game going on in Silicon Valley:

Brad Garlinghouse’s Peanut Butter memo — The Yahoo executive complained about the company’s “proclivity to repeatedly hire leaders from outside.” This is noteworthy, because he himself was hired from the outside. Before Yahoo, he’d served as chief executive at DialPad, and drove that company into the ground. We reached out to Brad Monday night, and hope to get comment soon.

Larry Sonsini can’t be at fault — Fortune does a long piece about one of Silicon Valley’s most powerful lawyers, Larry Sonsini, and provides good insight into his character. Much of the substance, though, has been covered elsewhere already. Still, a notable quote from entrepreneur TJ Rodgers about why Sonsini is innocent in the options back-dating scandal (reason: he’s too expensive):

“How to give options is well known,” says Rodgers, the Cypress CEO. “You hire outside counsel, they have their word processor kick up a bunch of documents, and they charge you 50,000 bucks. Then you and your HR person give out options according to the plan. You administer it; they’re not involved. You don’t want them [outside counsel] involved, because you don’t want to be sent a bill for $2,000 every time you give out stock options.”

Chris Tate takes back Zooomr sale price — Valleyway says Zooomr, the photo site that likes to think of itself as a competitor to Flickr, turned down a $2 million dollar offer from Google, citing Zooomr’s founder Kristopher Tate as the source: “We’re going to take over the world!” he allegedly told Valleyway, adding that his selling price today would be $15 million. VentureBeat checked with Tate, and he had a different tune. He said he didn’t comment, either way, on the price, but did say he’s going to take over the world.

Reid Hoffman kept out of YouTube by his own VC firm — Reid Hoffman, chief executive of LinkedIn tells the New York Times that he wanted to make an investment in YouTube, but that his own venture backer, Sequoia Capital, edged him out by offering better terms. Sequoia could make nearly $500 million from the Google-YouTube deal. The NYT reporter quotes Hoffman saying he is envious of YouTube. However, Hoffman now says he was quoted out of context, i.e, that he was referring to how other people could be envious, and the Times reporter changed his words. He’s sent a letter of protest to the NYT reporter, a copy of which was slipped to VentureBeat.

Blackstone places $36 billion bet on real estate — This is the biggest buyout ever. VentureBeat don’t usually write about later stage deals, but this is just the latest example of the huge amount of private money circulating the economy, and it is trickling down to the venture world too. As we’ve said before, great time to raise money.

Cisco’s acquisition strategy defies science — Here’s an amusing 16 minute podcast of an interview of Dan Scheinman, Cisco SVP of corporate development by Wharton management professor Saikat Chaudhuri. Once you get in a bit, Chaudhuri keeps pressing Scheinman on the “science” of Cisco’s acquisition strategy, because he’s teaching a class on it, but Scheinman keeps letting him down — diplomatically, at least — insisting its largely intuition. He says an acquisition’s success is all in the timing, and these days Cisco is almost always better off waiting. Cisco checks blogs and discussion boards for news about the start-ups its looking at, again an apparent surprise of Chaudhuri.

A degree from Stanford without actually attending — Notable story in the Merc today about increasing number of people getting a degree remotely, in places like China.

Two years later, California’s stem-cell institute is still on life-support — It gets loans while it fights of lawsuits. This is getting ugly.

Yahoo buying MyBlogLog? Nah –MyBlogLog is a site that helps bloggers see who their readers are. Yet no one took time to confirm rumors with either company. We looked up Scott Rafer, chief executive of MyBlogLog several days ago, and he said was just out talking to a bunch of people about options; he seemed miffed with the inaccurate reporting. But Yahoo did acquire Swedish mobile company Kenet Works.

Iconix and RockYou have apparently settled — Here’s update story about the suit we wrote about here.

Fenwick’s lawyer says founders may be going too far in this rosy VC environment — Ted Wang, an attorney for several Web 2.0 companies, suggests they may be overreaching in the terms they negotiate with VCs.

Infinera’s 100 Gigabit Ethernet demo — Just recently 10 Gigabit Ethernet had become the cutting-edge technology for optical data transport. Now, Sunnyvale’s Infinera has demonstrated the first ever 100 Gigabit Ethernet network across 4,000 kilometers.

Getting paid enough? — Salaryscout just launched a simple way for you to compare salaries. Downside is, there’s not much there yet to compare. Techcrunch has a review.

YouSendIt and MyFabrik are two of the many companies that let you easily share large files, such as videos or photos. They’ve raised venture capital recently, to help them survive the throng of competitors.

Have you ever had an outgoing or incoming email bounce because you were trying to send a giant attachment?

One trick is to use YouSendIt, a Mountain View start-up. You upload your large file to its site, type in an email address, and YouSendIt sends it to your recipient. It is free for files of 100MB or smaller. You have to pay $4.99 per month for the right to send files of up to 2GB. The recipient gets your email, with your optional note, and sees a URL for downloading the file.

You can use YouSendIt for free without registering, but files will be stored for only a week, and you get maximum of 25 emails. If you register, you get inbox, sent, and contact folders. You pay more for other add-ons.

The company has just raised $4.7 million more in a second part of its first round of venture capital. Backers Alloy Ventures, Cambrian Fund and Sevin Rosen Funds invested the money, according to PE Week.

Next is MyFabrik, a San Mateo start-up that offers a Web service that you can reach from anywhere, to store, manage and share all your files. There are many companies now offering storage and sharing, including Phanfare, Sharpcast, Box.net and Omnidrive, to name just a few. They each have their quirks. Phanfare charges a minimum of $7 a month. Sharpcast additionally lets you store from any device, including mobile phones, and so on. MyFabrik’s advantage is that it has a relationship with Maxtor, which lets you integrate your storage with the high-powered secure $630 box, if you want to pay that. But its free service — up to 1GB — is easy to use, though it is ad-supported. After the 1GB, you pay 49 cents a month per additional GB, even with ads. Or you can pay more to avoid ads altogether. Chief executive Mike Cordano, who came from Maxtor, gave us a demo recently. He said he thinks the company can break even by first quarter of next year.

Today the company announced MyFabrik Lite, another free service that lets you upload your file and send them to others without having to send attachment. The recipient receives an email with a URL link allowing them to download it. It also lets you embed a widget into your blog, so that you can upload files there for people to download. You get 1GB of space. However, you can’t log into the account to edit the media after it is up.

The company has raised $12 million in financing, and close to 90 percent of that is still in the bank, Cardano says. The money came from ComVentures and others, and this hasn’t been reported before, to our knowledge.

(See our update on this story here.)

AGLOCO is a controversial new Stanford-based start-up that wants to pay you to surf the Web, in return for access to your online surfing information. It launches later today (Monday).

It was discovered two weeks ago by Gigaom, which blasted it as a pyramid scheme. It is, Gigaom reported, a reincarnation of the bubble-era AllAdvantage, which PC World at the time said was one the worst sites on the Internet. AllAdvantage folded in 2001, when Web advertising dried up. (Here’s a good description of AllAdvantage.)

Gigaom’s report was based on leaked materials. AGLOCO says Gigaom misunderstood some of its intentions. Its founders sat down with VentureBeat, and explained how its model is different from AllAdvantage.

In short, AGLOCO, which stands for “A Global Community” (the company uses caps to refer to itself, despite its lowercase logo) is really a big AllAdvantage sheep in wolf’s clothing.

First, the similarities between the two: The AGLOCO team includes some of the same leaders of AllAdvantage. The model is pretty much the same, too: As with AllAdvantage, the user of AGLOCO signs up with the site, and volunteers detailed personal information, including name, email address, age, city, state, country and postal code. AGLOCO promises it won’t be transferred to a third party. The user agrees to surrender information about their traffic patterns to the site. Like AllAdvantage, AGLOCO offers a Viewbar, a browser-based bar at the bottom of your screen. The Viewbar (see below) displays targeted advertisements based on on content you’re viewing and your traffic patterns. Moreover, the user gets shares in the company for surfing the Web, and for referring others — and benefits go up the more that referee uses the Internet. The referral network goes five degrees (you refer a, a refers b, b refers c, c refers d, d refers e). This applies for any users, not just early adopters, and so the company argues this is not a “pyramid scheme.”

This targeting aspect is where AGLOCO’s latest incarnation could prove more powerful than last time (which, we note, was significant; people forget that AllAdvantage ranked among the top twenty Web sites, according to Nielsen/Netratings; it had ten million members). Better targeting technology exists today, and affiliate models are more established. Take a hypothetical example: You’re about to buy a book at Barnes & Nobles. AGLOCO will flash a note that you can get a better price at Amazon.com. That’s because AGLOCO has signed an affiliate relationship with Amazon, giving AGLOC an 8.5 percent discount on purchases. Since you’re a member, AGLOCO will pass on say, at 4.25 percentage points of that discount to you.

You win in another way, too: The other 4.25 percentage points AGLOCO keeps for itself accrues to its bottom line. Since you own AGLOCO stock, you benefit. AGLOCO wants to give its members 100 percent ownership. It is not raising any venture capital like last time (AllAdvantage raised nearly $200 million from various VCs including Alloy Ventures, Partech International, Rustic Canyon, Softbank, Technology Partners and WaldenVC). It will take ten percent of the company’s revenue for a management fee. This is worth it, says Jim Jorgensen, one of AGLOCO’s founding team. He says a group of aggressive Stanford business school graduates are negotiating deals with Amazon and other partners on your behalf.

This AGLOCO team is intriguing. Eight Stanford MBAs have joined, which is unprecedented. Many Stanford MBAs join companies before they graduate, but not a grouping this big, and especially not at a time when VCs and other companies are poaching MBAs more than they have in the past. They’re bringing fresh, eager blood to their wise but chastened forefathers who launched AllAdvantage. Jorgensen was co-founder and chief executive of AllAdvantage and is one of 15 in AGLOCO’s founding team (a formal chief executive hasn’t been appointed yet, and the group is acting like a commune, refusing to appoint a leader, or even hand out “co-founder” titles). AGLOCO has named Ray Everett-Church its chief privacy officer, the same guy who was CPO at AllAdvantage (AllAdvantage was the first company to have a CPO).

But the guys who first conceived of AGLOCO are Carl Anderson, an AllAdvantage co-founder and now a hedge-fund manager, and Dave Pidwell (pictured left), a venture partner at Alloy Partners and an early investor of AllAdvantage. Both have given seed funding to AGLOCO. Anderson posted a notice at the Stanford business school’s career center, saying he was looking for someone to start a company. MBA student Akshay Mavani responded, and helped recruit the others. Other seed investors include 4Info chief executive, Zaw Thet and several others.

Anderson and Pidwell also recruited Jorgensen, a tall slender gregarious character who is always quick with a good story. Have him tell you the one about the pre-IPO April 2000 extravaganza bash at his 5,000 square foot home on the Stanford campus. The fundraiser’s guests included President Bill Clinton, John Doerr, Frank Quattrone, all of whom joined Jorgensen at his private table. Even Clinton’s daughter Chelsea was there, with counter-snipers in the trees for security. Elon Musk, co-founder of PayPal attended. (AllAdvantage was bigger than PayPal at the time. Bank of America reported that AllAdvantage cut more checks at the time than any other company, outside of the federal government. So Musk sat at a side table.) Eric Schmidt was there. Two members of the Grateful Dead played. A few days later, in mid-April, the stock market began its free-fall, and AllAdvantage never recovered. But Jorgensen says the event underscored how the company had gained legitimacy in Washington. (Update: To clarify, the event was a Democratic fundraiser, and was not paid for by AllAdvantage.) The uproar around the company had forced AllAdvantage to seek to explain itself on Capitol Hill, and senators ended up liking it. Senator John Kerry supported AllAdvantage’s privacy model, Jorgensen says.

Even so, AGLOCO will be different in key ways, Jorgensen says. Even though AllAdvantage was at the “forefront of privacy,” Jorgensen explains, “we had no idea what we were doing.” This time, AGLOCO is more conservative, making no promises on cash payment levels. In fact, Jorgensen says it was the VCs who had encouraged large cash payments by AllAdvantage (at 50 cents/hr), which had driven the company into the red. AllAdvantage paid out $100 million to its members; a few members were earning $10,000 to $15,000 a month.

For now, AGLOCO simply says it will give members a share of profits. While AllAdvantage hired 250 engineers, AGLOCO is streamlined. It is built on open source software, with developers in China — and AGLOCO will be launching with a Chinese version of the site too. The funky management structure may become a problem, in VentureBeat’s view, because there’s no single leader taking overall responsibility.

If it’s anything like its predecessor, though, AGLOCO will be a company to watch. At launch, AllAdvantage had aimed to sign up 30,000 members within four months. But it hit that number in two days. AllAdvantage’s IPO was going to value the company at $1.2 to $1.4 billion, but it never got there. This time, AGLOCO is already working to list on the London AIM stock exchange.

Is it evil? You decide. We’re betting many people will hold their nose, and take the cash ;)

Below is screen shot of how Viewbar rests at bottom of your page:

Yahoo has acquired Bix, the Palo Alto start-up that lets people compete in online karaoke, hot or not and other contests.

The amount was undisclosed, but this acquisition was fast; Bix launched barely three months ago.

It is the latest sign of focus by Yahoo in its acquisition strategy. Its purchases have slowed to a trickle, but the deals it has completed concern community, user-generated sites (Flickr, del.icio.us, Upcoming.org and Jumpcut), which stands in contrast with Google, which has focused on applications.

Bix raised $6.77 million in a first round of funding from Sutter Hill Ventures, Trinity Ventures and Stanford. It is yet another win for angel investor Amidzad, the separate venture fund created by the Palo Alto rug merchants who, aside from various international investments, also own lots of office property in Palo Alto. They invested in Bix when it moved into their property on Florence Street, and saw a nice profit on this investment, we’re told.

The idea behind Bix was to let companies sponsor the competitions online, handing out gifts to the winners. Bix is also planning to let users embed a widget on their own Web sites featuring the Bix contests.

We note the rather overt reference to its mature content on its home page (see below).

Real Girls Media, a new San Francisco start-up that wants to publish content for women, has raised $6 million in a first round of funding.

We reported earlier how another company, Sugar, had raised $5 million, led by Silicon Valley high-profile venture firm Sequoia Capital, after that blog site for women showed considerable traction. So this effort by Real Girls comes is somewhat predictable: You have to raise more than your competitor to lure talent, and because Web 2.0 is bubbly right now, you can do it pretty easily.

The company hasn’t launched yet. Rather, it is constructed in the opposite way to Sugar: top down. This should be a great case study of two polar strategies: Sugar was launched with the grit of a founder’s own money; Real Girls is formed from the comfort of a venture capital firm’s arm-chair: It is founded by Kate Everett Thorp (pictured below), who was a venture partner at San Francisco venture firm Walden VC. Her job was to look for ideas, and so formed a vision on an entirely reasonable idea in this environment — of targeting women of all age groups, offering them ways to submit and publish their views and stories.

Thorp is accomplished, so we don’t want to judge this company until it launches next year. She comes from the advertising side. She launched and sold Lot21 Interactive Advertising Group for a profit — and so her project at Real Girls will likely be advertising driven, as opposed to content driven.

The backing comes from WaldenVC, and another firm, 3i.

The first Web site, DivineCaroline.com, is due to launch in early 2007, is targeted for women aged 25 to 54. Additional sites aimed at other age groups will follow in 2007, and so the multi-blog format is also similar to Sugar’s.

If you detect a note of skepticism here, it’s because we moderated a panel last night at the East Bay SVASE, in which some VCs expressed excitement about online advertising, even though we’ve seen so much activity in this area lately. Sure online ads are roaring, but the hype is causing a bevy of me-too start-ups. See the chart below (via Battelle) for why there’s something real going on. But remember, 1999 was real too.

Every day, new ad-based network start-ups are sprouting up. Did you see our piece on SeeSaw, of San Francisco, which wants to put ads in monitors in train stations? Maybe there really are people sitting around in train stations with nothing better to do than peer at ads.

Final tip to RGM: Might want to replace the grey/beige acronym logo.

Qihoo, a fast-growing but controversial Chinese search engine for Web 2.0 content, has raised $25 million more in a second round of venture capital from credible U.S investors.

This is significant because Qihoo has launched a new kind of search engine, dedicated to Web 2.0 content — focused on blogs and forums, for example — that has seen its traffic spike in China. Page views have grown from tens of millions of page views a day, to a hundred million page views by the end of this year, the company says. If true, after a mere year’s operation, Qihoo is about a third the size of Chinese industry leader Baidu. The funding brings Qihoo’s total to a whopping $45 million, a significant amount of capital for a Chinese company.

This is a victory for Qihoo’s chief executive and founder, Hongyi Zhou (pictured left), who has come under fierce personal attack from Jack Ma (pictured below), chief executive of rival, Alibaba. We reported on the controversy here, and many people told us Zhou’s fight with the Ma would tarnish his reputation — because of Ma’s clout. Alibaba operates its own search property, Yahoo China, which has sued Qihoo, and has been readying a suit against Zhou directly.

However, U.S. venture capital firm Highland Capital Partners has braced itself and taken the lead to invest in the company. Also investing are Redpoint Ventures and existing investors Sequoia Capital China, CDH, Matrix Partners and IDG Ventures. Sequoia and Matrix have historically been among the best performing venture capital firms. As reported, Alibaba and Yahoo exerted pressure on investors, including Sequoia, to avoid backing Qihoo. VentureBeat reported that Yahoo’s co-founder Jerry Yang and Sequoia’s Michael Moritz were even forced to a meeting over the dispute.

VentureBeat just spoke with Dan Nova (below) of Highland, who will be joining Qihoo’s board. Nova is experienced in search, having co-founded Lycos and invested in Ask Jeeves. His firm has traveled frequently to China and met with more than a hundred companies there, Nova said.

He said ironically, the media attention generated by the Ma-Zhou fight has not hurt Qihoo, rather helped it.

“This is a classic David versus Goliath story,” he said. “The more press we continue to get, the more traffic we get — the traffic is through the roof.”

He hopes the legal disputes can be resolved, he said. “They didn’t serve the purpose they’d intended, which was to make investors nervous about investing in Qihoo,” he said of Alibaba’s legal moves and other threats.

Nova said he is not concerned about potential lawsuits. Zhou is not a liability, he said, noting that Zhou has demonstrated his prowess and integrity by founding search company 3721 (later bought by Yahoo), and by the fact that his backers at 3721 (IDG, for example) are backing him again at Qihoo. “He’s a rock-star among Chinese entrepreneurs,” Nova said.

He said Qihoo is pioneering a new kind of search, focused on unstructured, user-generated content of the type found on blogs and Chinese online bulletin boards, which is more dynamic, and something Google’s Blog Search has been patchy at, he said. He said Qihoo’s architecture is its secret sauce, but that it takes the best of Digg, Google and Technorati and rolls them up into one. He said Qihoo is not trying to duplicate Google’s main engine search, but that the Chinese users are interested in lighter subjects, such as lifestyle and entertainment — a strength of Qihoo, he said. (Politics is avoided for obvious reasons).

Updated

Phonezoo is a new Silicon Valley start-up that makes downloading ringtones a fun activity, even for us at VentureBeat who have so far snubbed the trend.

Phonezoo, of Sunnyvale, has been in testing mode until now, but today launched publicly. We’ve tried it. You go through an easy registration process, where you list your phone, so Phonezoo knows how to best transcode ringtones for your particular phone.

Once enter the Phonezoo site, you can explore ringtones that other members have created and submitted to the site. You can see the most recent ringtones or top-rated ones, and rate them yourself. Each ringtone is titled with the name of songs if playz (see partial screenshot below). You find “Clocks” from ColdPlay, for example, and download it.

The great part, it’s free. Other services charge an average of $2.50 per ringtone and limit options to audio prepackaged segments, sold typically by wireless carriers.

But there’s one more step before you can download “Clocks.” Phonezoo puts a green button beside the ringtones ready for download immediately. It puts an orange button next to copyrighted songs, such as “Clocks.” Selecting the Clocks ringtone prompts you to upload the music file from your desktop or other drive — thus ensuring you have rights to it. Once you upload it, Phonezoo automatically scans it and pulls the relevant snippet to match the ringtone you’ve chosen.

It doesn’t stop there. Phonezoo gives you a way to edit the ringtone. It gives you a cool graphic to show which part of the full song you’ve got as your ringtone (see image below). If the “Clocks” ringtone you’ve chosen is defaulted to begins at eight seconds into the song, you move sliders on the graphic to change it so that it starts at the beginning. Moreover, you can change how long the snippet plays, say from ten seconds to 20 seconds.

Phonezoo plans to make money down the line, it says, by inserting advertising that is relevant to the songs you’re looking at — or profiling sponsored content. Phonezoo has a person’s phone data, and so knows where members are located, and thus serve locally relevant concern information, for example. It will let users buy full songs related to the ringtones they’ve selected, and Phonezoo will take a cut in the process — say five cents from an overall price of 45 cents. Phonezoo wants to move into video, chief executive Ram Ramkumar told VentureBeat. It’s also building a way for users to place a widget on MySpace, listing their ringtones, he said.

The company says 69 percent of ringtones are downloaded by women. So the company’s target customer is a 20-year-old college female student, who has more than 100 friends in MySpace and/or Facebook listed in their phones and IM buddy lists.

The U.S. ringtone market is expected to exceed $600 million in sales this year, up from $500 million last year,” according to BMI, a performing rights organization. There’s a plethora of players in the ringtones market, but none that offer a community service for free, Phonezoo’s Ramkumar says.

The company has raised an angel round of $560,000, led by venture capitalist Tim Draper, who invested $300,000 of that. It is now looking to raise $5 million.

Slide, the San Francisco start-up that lets you create slide shows from your photos or other content, has raised a large third round of funding from Khosla Ventures and Mayfield Fund.

The amount remains undisclosed, but we’ve heard it is more than the company got for its second round, which was $8 million. That gives the company near or north of $20 million in total funding, putting it comfortably on the list of best-funded Web 2.0 companies in Silicon Valley — and apparently making it the biggest of any of the latest generations of photo-related sites.

The site lets you push slideshows, onto your blog for example, or to share your favorite photos with friends and family. But it also lets you pull them, accepting a slideshow of images fed from your friends or from your favorite Web sites. It is the latter feature, where people might pull slideshows of products from their favorite retailers, for example, where Slide sees a business model. Slide also lets eBay sellers feature their wares in slideshows. It’s unclear whether Slide has made progress in making money.

Here is our previous story about Slide.

Levchin (pictured above) said he hit it off with Vinod Khosla, the well-known venture capitalist who runs Khosla Ventures. Khosla grasped Levchin’s vision for slides more quickly than others, Levchin said.

The funding also included previous investors, BlueRun Ventures and Founders Fund.