VentureBeat

Shawn Fanning, who gained fame after launching early music file sharing company Napster, is in advanced stages of talks to sell his most recent social gaming start-up, Rupture, for $30 million.

The buyer would be Electronic Arts, but unlike first reported by Techcrunch, the deal hasn’t gone through. I reached someone very close to the deal but who requested anonymity, who said “nothing has been signed, but it’s getting close.”

“Is it likely to go through?,” the source continued. “Yes.”

Finally, it looks like Fanning will hit paydirt. Napster went bankrupt after facing insurmountable legal challenges, and Fanning’s second music start-up SnoCap didn’t do very well either, and was reportedly sold for very little to imeem.

We reported on Fanning’s Rupture a year and a half ago, when it first emerged with a goal to bring social networking to popular online multiplayer games like World of Warcraft. It has stayed in a private testing mode since then, having delayed its launch, so Electronic Arts is obviously buying the company for its technology and potential. The area of online social gaming is promising because millions of gamers have formed communities with each other through playing, but their interactions have been limited by the confines of proprietary software.

With social networking and online gaming all the rage (with $1 billion in subscription sales alone), it’s no surprise that Electronic Arts, the giant game maker, which has been struggling to find itself in recent years, would be interested. EA is working on a variety of online games. The company’s Mythic division has been at work on “Warhammer Online” for four years and it expects to launch the fantasy-role playing game in the fall. Spore, another single-player game with online elements, will launch in September. But it isn’t immediately obvious whether those games could use the Rupture technology. Sometimes the technology behind a game on a major title is written in stone years before its launch.

Fanning and co-founder Jon Baudanza will both join Electronic Arts under the planned agreement.

Rupture raised about $3 million last year from Ron Conway’s Baseline Ventures, Joi Ito and Reid Hoffman among others. (Dean Takahashi contributed to this post).

Chirp offers a screensaver that you download, then sync with Facebook, Flickr and soon, other sites. It displays status messages, photos and more from your friends. If you see a photo or update on Chirp that you want to look at, you click on it to go to the source site. (Demo here.)

It reminds me of the SETI screensaver – you know, the one that uses your computer to analyze radio telescope data collected by researchers, trying to find signs of intelligent, extraterrestrial communication. The difference is, Chirp is a screensaver that helps you see intelligent communication from your friends.

I fully accept that the screensaver is “a medium of distribution” for many people, as Eve Phillips, the company’s chief executive, describes it to me. Personally, I’m not in the demographic that would find a product like this useful. I’m a laptop user (on a Mac; Chirp only works on Windows, for now). I close the lid when I’m not using it. I don’t really need a screensaver to keep my power on, even at low power.

However, two-thirds of social network users also use the screensaver, according to the company’s studies.

Chirp is based in San Francisco and has raised seed funding from Greylock Partners, Jeff Clavier’s SoftTech VC, and angel investors Reid Hoffman, Jay Adelson, and Dave Samuel. It’s screensaver is currently in beta.

Dopplr, a Helsinki, Finland company that lets frequent travelers share their trips with friends and so that they make notes on each other’s itineraries, has raised an undisclosed amount of financing from individual investors.

Sharing travel plans isn’t new.  A plethora of sites offers ways to consult with others on travel plans, from MyTripbook, to RealTravel to Tripwiser. The difference is, most other travel sites offer trip-sharing as part of a much larger palette of offerings.

Dopplr does it with laser focus. The company has not launched yet, but is inviting people to test it. It is straight-forward and very simple. You sign up, and then are taken to a profile page where you can add your trips — it prompts you for your destinations and dates. You can add notes for each trip, and then invite others to see and correspond. Dan Gillmor, a former Mercury News columnist who has dabbled in several investments recently, is a co-founder, and invited us to share his travels. See a screenshot below.

I like the service’s simplicity. On the other hand, it’s clearly a service designed only for frequent fliers (the rest of us won’t need to use it).
It works well on the mobile number. You register your phone, and then you can SMS someone’s email address to Doppler’s London number +44 7797 806 170 to invite them to see your schedule (there’s no U.S. number, so it won’t work locally yet, but that’s coming).

Investors include Martin Varsavsky, Joichi Ito, Reid Hoffman and The Accelerator Group led by Saul Klein — all of whom use Dopplr, and are well-known for their investments in Internet companies (including Last.fm, Joost, Flickr, Stardoll, and Netvibes to name a few).

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

Reid Hoffman, one of the earliest and most prolific players in the early years of the social network revolution, has stepped down as chief executive of LinkedIn.

LinkedIn, the online site for professional networkers, last week announced it had raised $12.8 million in fresh venture capital, which may be connected to the executive change.

Hoffman notified VentureBeat of the change earlier today in an email. He did not state the reasons for the change, but did say he’d appointed Dan Nye (pictured left) to take his place.

Nye was previously an executive at Advent Software, and before that was head of Intuit’s small business division. Hoffman remains Chairman and President.

Hoffman’s move also follows the recent departure of his co-founder, Konstantin Guericke, to launch another company, Jaxtr. Sometimes, venture capitalists agree to invest only on certain terms, and they may have done so last month only on condition of a change in executive — but we aren’t certain of this.

Hoffman was an early player in social networking, active in the area with early player Socialnet even before the phenomenon become popular in 2003 with the emergence of Friendster. Hoffman was an investor in Friendster and another early player Tribe, and has since invested in a multitude of other social networking companies. He is known as one of the most networked people in the valley (see his activities here)

We’ll update if and when we hear back from LinkedIn, Hoffman or Nye.

[Update: Spokeswoman Kay Luo and co-founder Konstantin Guericke have since responded. Both said the change had nothing to do with the financing. Hoffman hired a recruiter almost four months ago, and interviewed 72 candidates. Hoffman wants to build LinkedIn into a multi-billion dollar company, they said, and realized LinkedIn needed to scale, which means giving more attention to management issues, something that isn't his strength. "His passion is in the product," said Guericke, "rather than in sorting out management stuff." Nye is a protege of Intuit Chairman Bill Campbell, someone Hoffman respects, Luo said.]

(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.

GigaOm has a noteworthy piece about Reid Hoffman, chief executive of LinkedIn, and how he almost decided to sit out of investing in the crowded media space, but the decided to invest anyway — but only after adjusting his strategy.

Hoffman was in from the beginning of the fad, and has been known to speedily round up $250,000 seed rounds from among his friends for projects he likes. Obviously, with LinkedIn, he might be using his Web 2.0 contact tools to do this ;)

The investor in Digg, Facebook, Flickr, Friendster, Ironport Systems, Last.fm, Nanosolar, Ning, Six Apart, Socialtext, Tagged, Technorati, Tiny Pictures, Wikia, and more, said his requirements are as follows:

First, customer acquisition: data, or a really good plan, on how to get to the first million users, then a good growth rate thereafter. Second: good pricing power and margins, for economics. Third: an ability to protect the business once you’ve created it through innovation.