The Next Net 25

It's getting crowded on the Web 2.0 frontier, but there are still some startups that truly stand out. Here are the ones most likely to strike gold in 2007.



FOUNDERS: Garrett Camp, Justin LaFrance, Geoff Smith

Launched in 2002 by three 20-somethings in a Calgary, Alberta, apartment, StumbleUpon now has 2 million registered users drawn by its knack for finding websites that match their interests and those of others with similar tastes as they "stumble" around the Net.

Co-founder Garrett Camp, who totes around a mid-'80s Nikon F3 (yes, with actual film), came up with the idea as he was working on a master's in software engineering. Frustrated as he tried to indulge his hobby online--"There wasn't a good way to find the best photo sites," Camp says--he tapped his own background in clustering technology. With coding help from Justin LaFrance and Geoff Smith, he created an early version of StumbleUpon. Having nailed the photo problem, the team quickly saw how the technology could click with all sorts of media.

In the same way that it matches users with like-minded websites, StumbleUpon's technology also pairs online ads with targeted demographics and interests. Now Stumble-Upon is attempting to do the same for online video and video advertising. In December the startup launched StumbleVideo, a service that offers the closest thing to channelsurfing that you'll find on the Web. (See "Make Way for Must-Stream TV")

FUNDING: $1.5 million (Ron Conway, Mitch Kapor, Josh Kopelman, Brad O'Neill, Ram Shriram)


NEXT NET INNOVATION: A social network, more than 30 million members strong, that keeps users' pages private but still allows them to share things like video and drawings made on an online whiteboard.

FUNDING: $15 million (Benchmark Capital)


NEXT NET INNOVATION: Managing multiple instant-messaging services from one site. Meebo's killer app is a widget that places an IM window on your blog or webpage.

FUNDING: $12.5 million (Draper Fisher, Jurvetson, Sequoia Capital)


NEXT NET INNOVATION: Customizable and easily assembled slide shows of photos that can be embedded in a blog or a MySpace page, sent out in an RSS feed, and streamed to a desktop as a screensaver.

FUNDING: Not disclosed (Peter Thiel, Vinod Khosla, others)


NEXT NET INNOVATION: A hosting service for ad-supported community sites that use the same software and collaborative content model that made Wikipedia a Web phenomenon. (See "Building a Wiki World,") Launched in 2004, Wikia communities range from fans of 24 to politics junkies. Wikia is also working on an open-source, user-generated search engine.

FUNDING: $4 million ( (Charts), Marc Andreessen, Bessemer Venture Partners, others)



FOUNDERS: Janus Friis and Niklas Zennström

Forget the three-minute video blog. The 30-minute, broadcast-quality Web 2.0 TV show is coming in all its full-screen glory. And if serial disrupters Janus Friis and Niklas Zennström have their way, neither television nor the Internet will be the same. The duo behind peer-to-peer services Kazaa and Skype will officially launch Joost this spring, aiming to merge the best of TV with the best of the Net. (See "Make Way for Must-Stream TV")

The service provides more of a television-style experience than current online video sites, with channels you can flip through randomly or program yourself. Viewers can also share playlists of their favorite shows with friends or chat with them online while watching the same program. Joost will be free, supported by highly targeted ads based on people's actual watching habits, their friends' viewing patterns, and information they volunteer. Ad revenue will be split between Joost and the content owners.

Joost can offload much of the heavy bandwidth and storage costs borne by Web video companies like YouTube because the service is a partial peer-to-peer system, with content distributed among viewers' computers. And to reassure Hollywood moguls who watched the music industry get burned by Kazaa's legions of illegal file sharers, all Joost video is streamed and encrypted.

FUNDING: Not disclosed

NEXT NET INNOVATION: A platform for syndicating serialized online shows such as Starring Amanda Congdon and TreeHugger TV. Blip provides producers with software, ads, and distribution to websites and blogs. A deal is already signed with Web TV service Akimbo, which lets producers send their videos to TV sets.

FUNDING: Not disclosed (Ron Conway, Mark Gerson, Ken Lerer, Peter Thiel)


NEXT NET INNOVATION: A tool for organizing videos into playlists of favorites. Users share them across the network, so, say, food lovers can dabble in one another's video collections.

FUNDING: $750,000 (Hank Barry, Evan Williams, others)


NEXT NET INNOVATION: A service that ranks uploaded videos by popularity and feedback from a community of 17 million monthly visitors--and pays the creators for the success of their work. The auteurs get $100 after 20,000 viewings and $5 for every 1,000 subsequent views. Since September, Metacafe has paid a total of $250,000 to 200 contributors.

FUNDING: $20 million (Accel Partners, Benchmark Capital)


NEXT NET INNOVATION: A production studio for geek-oriented online shows. Started by Digg founder Kevin Rose and its CEO, Jay Adelson, Revision3 sells sponsorships to companies like Go Daddy, Microsoft (Charts), and Sony (Charts) for as much as $10,000 per episode.

FUNDING: $1 million (Adelson, Marc Andreessen, Ron Conway, others)



FOUNDER: Martin Varsavsky

In the freewheeling wireless era, the PC is in your pocket and the network is in the air. No surprise, then, that gadgets from Apple's (Charts) iPhone to a SanDisk MP3 player are being built with Wi-Fi inside. But finding a Wi-Fi signal when you need one can be a problem--and a big opportunity for Fon, a Spanish company that's building a global community of hotspots one router at a time.

The idea for Fon hit founder Martin Varsavsky in late 2005 while he was strolling through Paris with his PDA in search of a signal. Companies like T-Mobile were spending millions of dollars to build hotspot networks and charging dearly for access. Varsavsky, however, saw the potential for a worldwide Wi-Fi network in the home broadband connections already in place. All that was needed was a service to tie them together.

Here's how it works: Fon sells a $30 wireless router to consumers. They hook it up, register their node, and agree to share their broadband with other "Foneros" for free. Those who want to charge outsiders for access can do so, and Fon gets a cut. Likewise, if someone wants to pay $2 or $3 to use the Fon network for a day, Fon takes a share of that revenue. Just over a year old, Fon's network boasts more than 70,000 hotspots. Initially focused on Europe and Asia, Fon plans a big push in the United States in the coming months.

FUNDING: $22 million (Google, Index Ventures, Sequoia Capital, Skype)


NEXT NET INNOVATION: Around-the-clock friend tracking. Cell-phone customers are using Loopt to let their buddies see their locations. It's already a hit with some 100,000 Boost Mobile subscribers who want to know not just what their posse is up to but where it's at.

FUNDING: $5 million (New Enterprise Associates, Sequoia Capital)


NEXT NET INNOVATION: Mobile-phone mashups and widgets that figure out where you are and serve up on-the-go services like movie listings. Other widgets will book a cab or a seat at a restaurant.

FUNDING: $9 million (InterWest)



Home or office PC access from your mobile phone. SoonR allows you to use your phone to pull up and search data on your desktop--everything from Word docs to Photoshop files.

FUNDING: $6 million (Clearstone Venture Partners, Intel Capital)


NEXT NET INNOVATION: Flickr on the fly. Tiny's Radar service lets you snap photos with cell phones and send them to friends, who can both access and comment on the shots. Radar will soon be a built-in application on some devices made by Danger, creator of T-Mobile's Sidekick.

FUNDING: $2.8 million (Mohr Davidow Ventures)



FOUNDERS: Jim Barnett and John Ellis

Led by former AltaVista CEO Jim Barnett, is offering online advertisers something many have craved for years: precise, automated ad targeting combined with a system that requires them to pay only for specific desired results. Call it pay-per-play.

To get started, advertisers first enter the prices they're willing to pay for various results--$5 for a sales lead, say, or $50 to $60 for a completed transaction. Next, they upload their text-or graphics-based display ads. Turn's software then analyzes the ads using more than 60 variables--including content, brand strength, and keywords--and determines the right publishers to serve up the ads. Turn splits the revenue (70-30, on average) with the publisher.

Since launching in beta in November, the company has signed up more than 1,000 advertisers and cranked more than 5 million ads through its analysis engine. Twenty-five publishers are giving the system a tryout, according to Barnett, including a few large news sites and a big social network (which he declines to name). As for competitive threats, Google has been rumored to be working on its own version of the pay-per-play model. But Barnett says the $16 billion-a-year online ad industry is growing so fast that he doesn't worry about Turn's ability to carve out a lucrative niche: "These days marketers need to use all the targeting approaches they can find."

FUNDING: $17.5 million (Norwest Venture Partners, Shasta Ventures, Trident Capital)


NEXT NET INNOVATION: An online marketplace for highly targeted ads. Businesses can sell ad space directly to advertisers; advertisers can target specific market niches while Adify handles the backoffice work.

FUNDING: $8 million (Venrock Associates)


NEXT NET INNOVATION: A place to buy ads for delivery to cell phones. That market is set to explode, and AdMob--which says it has sent out nearly a billion ads in less than a year--is poised to become its middleman of choice.

FUNDING: $4 million (Sequoia Capital)

Spot Runner

NEXT NET INNOVATION: A one-stop online shop for low-cost 30-second TV ads. Local businesses can browse a library of premade spots and personalize them for airing in their local markets.

FUNDING: $60 million (CBS (Charts), Interpublic Group (Charts), WPP (Charts))


NEXT NET INNOVATION: A platform that lets corporate customers solicit, edit, and upload user-generated videos that promote their products. With companies like General Motors (Charts) tapping the YouTube generation to virally market their wares, ViTrue is in a sweet spot.

FUNDING: $5 million (Comcast (Charts), Ron Conway, General Catalyst Partners, Turner Broadcasting)


Success Factors

FOUNDER: Lars Dalgaard

Even the corporate world is catching on to the promise of Web 2.0 technologies. After all, why can't enterprise apps be as easy to use as the latest Google mashup?

They can. And when they actually work, watch out. SuccessFactors, a profitable five-year-old startup in San Mateo, Calif., takes in an estimated $100 million in annual revenue by selling a suite of simple Web-based tools that automate important but previously paper-driven management chores--performance reviews, succession planning, and compensation. Ultimately the service helps to match employee skills with company objectives. North Carolina-based Quintiles, a pharmaceutical services firm with 17,000 employees, deployed SuccessFactors last year to better pair worker aptitudes with jobs; its annual employee churn rate subsequently fell by nearly a third.

CEO Lars Dalgaard claims that SuccessFactors has some 2 million users and more than doubled sales last year. Its customers, which pay an annual fee of $50 per user, range from small tech companies to corporate giants like ConAgra Foods. That kind of growth has not gone unnoticed among investment bankers, prompting talk of an IPO this year.

FUNDING: $45 million (Canaan Partners, Cardinal Venture Capital, Emergence Capital, others)


NEXT NET INNOVATION: A single sign-on service for multiple passwords that lets people hop freely from site to site. Business demand for JanRain's services is expected to grow as Web 2.0 entertainment and social-networking sites proliferate.

FUNDING: $1 million (Founders)


NEXT NET INNOVATION: Automated design of logos, business cards, and stationery. Proprietary software helps Logoworks streamline the process and charge less than old-line competitors.

FUNDING: $16.8 million (Benchmark Capital, Highway 12, Shasta Ventures)

Rearden Commerce

NEXT NET INNOVATION: Web-based "virtual personal assistant" application that smoothly integrates hotel and flight reservations, meetings, and other events into your daily agenda. Some 150 companies and 500,000 employees use Rearden's software.

FUNDING: $100 million (American Express (Charts), Foundational Capital, Vinod Khosla, Burt McMurtry, Oak Investment Partners)


NEXT NET INNOVATION: Voice-mail rendered as scannable text. SimulScribe transcribes voice-mail messages and shoots them to your mobile device as text or e-mail messages. Targeting corporate customers, SimulScribe will integrate the service into company voicemail systems.

FUNDING: $5 million (Tom Iovino, Claude and Jan Nahum)

Reported by: Michael V. Copeland, Erick Schonfeld, Saheli Datta, Khari Johnson, Sidra Durst, Michal Lev-Ram and Tom McNichol contributed to this article. Top of page

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