Ajax Girl

One of the featured events at this week’s Web 2.0 Summit was the Launchpad, a showcase of six companies that were each given 5 minutes to pitch a room full of VC’s, entrepreneurs, and other notables in the tech industry. The companies were judged by a panel of venture capitalists, consisting of: Chris Albinson (Panorama Capital), Patrick Chung (New Enterprise Associates), Michael Goguen (Sequoia Capital), Erik Straser (Mohr Davidow Ventures), and Todor Tashev (Omidyar Networks).

As soon as the presentations were concluded, the audience was asked to vote on its favorite company using an instant-SMS voting system. After only a few minutes GoodGuide, a TechCrunch50 finalist, emerged as the crowd favorite and took the top prize.

Below are profiles of each presenting company, along with some of the input offered by the VC panel.

CarbonNetworks

CarbonNetworks is an emissions management software platform that allows companies to effectively keep track of their emissions and monetize them. The site offers price forecasting so companies can determine if their carbon credits will be financial asset or liabilities, and helps them deal with them accordingly. The site isn’t exclusively involved with carbon offsets, as it also looks at different sources or energy and offers consulting services.

Michael Goguen - I question the timing. One has to wonder if the priorities are shifting. Are companies really going to be spending on this at this point, instead of cutting costs? While SaaS model has lots of appeal, it seems to work best when you can justify paying for it constantly, instead of just upfront once. Once I get my act together would I still want to pay for it?

EveryScape

EveryScape is like a Google Street View for everything, offering 3D interiors of restaurants, salons, salons, retail stores, or any other interior users might be interested in. The site takes ground level photography using what founder Mok Oh called a “highly affordable and scalable technique” (though he didn’t specify how it was any more affordable than the technology that already exists).

Users are presented with an interface that looks much like it would on Google Maps Street View, which they can use to navigate throughout the building. Examples of possible applications include allowing users to point out a specific table in a restaurant where their friends should meet. Eventually the site hopes to bring its technology to mobile devices like the iPhone.

Patrick Chung - My question is, is it a street view add-on? You’re gong to have trucks drive around to assemble the database. The images are going to be 2D, they aren’t going to have physics… If I wanted to see what something looked like at night, summer, winter, you’d have to duplicate by sending a truck out again.

Michael Goguen - People do still go out in the real world. There hasn’t been a good connection between the web and the real world. This could apply to a large number of industries.

GoodGuide

TechCrunch50 runner-up GoodGuide presented its new iPhone application, which takes its database of the safety and “Goodness” of consumer products to the mobile platform. You can read our full review of the application here.

Erik Straser - Terrific job on providing motivational context. My concerns: This is a company where I’m not convinced this is a better startup or a better public service. So one of my questions would be, to what extent could you really build a high velocity transaction model off of this? Also, what’s the ongoing costs of content updating? Also, I wonder about localization, and if what water I buy might depend on where I live.

Todor Tashev- I think the service is very compelling. It seems like you have figured out a way to leverage credible data, helping consumers come to informed decisions. Two-fold values: I can make informed decisions. Also, the informed behavior of individuals could lead to a massive change that changes how a company designs products.

Predictify

Predictify is a prediction platform designed to help users get an extra dimension of interactivity from the news, helping to drive engagement. The site also aggregates demographic information along with votes into a data-set. To ensure accuracy, users can get reputation scores, and can be identified as “experts” in fields.
To generate revenue, the site charges customers a per-answer fee (around $1), which gets split between Predictify and its users, depending on how accurate they are. You can read our initial introduction to the site here.

Chris Albinson - There were some interesting things. I like the engagement, the digg-like rating system. Patrick won’t like me for saying this, I didn’t get there. Challenge for me is that there are so many of these companies. I just don’t know how you build a big business. Facebook has own system on an established platform, but that didn’t have much value.
Patrick Chung - I thought you did fantastic job. I think you have amazing data possibilities. If you can do it better than Reuters… I think you’re eon to something big, I would stick to game models so you aren’t regulated by the SEC.

Qik

Qik, which we’ve covered extensively, is a mobile video studio for your phone. Users can broadcast video live from their cell phones and stream directly to the Qik website as well as embedded widgets found throughout the web.. The service can also be used to share and also as a one-button camcorder. You can read more of our coverage of Qik here.

Todor Tashev- It’s interesting. My concerns: it’s a very crowded space ,you have startups and then bigger guys like Yahoo. How can you make a long term competitive advantage? I was glad to hear that you’re working on partnerships with carriers. But I’m not sure it’s enough at this stage
Chris Albinson- I was skeptical myself. I was worried about complexity. Monetization of video continues to be a challenge. But I have to say you won me over. I think you have a differentiated platform. I love the extensibility of it. I think the company is on a great path.

Sungevity

Sungevity sells solar panels to consumers using an online platform that can expedite the installation process significantly while also making it much easier. Sungevity uses services like Google Earth and Microsoft Virtual Earth to look at rooftops and give near-instant price quotes. The company also says that it is 10% cheaper than the average solar panel installer in California. The company has been on the market since April 2008, and has projected revenues of $2.5 million. In the future the site hopes to license the technology out to other solar panel installers around the world.

Michael Goguen- This solves a problem because the industry is archaic. My problem is that a lot of companies have the same idea to use google Earth etc to do online quoting. So if you take that away as differentiation, you wonder where this business goes. Right now it’s a rat race.
Chris Albinson- I take the oppostie view. I understand the thesis. If you look at the growth, the growth and execution has been phenomenal. The key thing is that the financial crisis has killed the commercial market for solar. But there’s a huge market for consumers. How do you make it simple enough for consumers?

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One thing’s for sure - the cream rises to the top in a downturn. And San Francisco/Israel based iSkoot, which has built technology that lets mobile users access Skype via normal mobile handsets, look like it’s the cream. The company has raised a third round of financing - $19 million from new investor Vision Opportunity Master Fund. Existing investors Charles River Ventures, Khosla Ventures, Jesselson Capital Corporation and ZG Ventures also participated in the round. Total capital raised by iSkoot is now over $32 million.

iSkoot is best known to U.S. consumers as the company that brought Skype to the Android phone. But their core business to date has been to build technology that lets people use Skype on their mobile handsets in a way that doesn’t threaten carriers and doesn’t overwhelm the handset’s hardware.

iSkoot moves the heavy processing to servers that they or the carrier controls. When a user wants to make a Skype call or chat, they use a thin client on the phone that appears to work the same way as it would on a normal computer. But iSkoot then makes a normal voice call to their servers, and transmits the Skype data over the Internet from there. The result is a great user experience, and the carriers rack up those valuable minutes.

They currently work with the carrier Hutch in eight countries. 300,000 mobile handsets have been purchased that include the iSkoot software and service in Europe and Asia.

The company is now expanding into other businesses that can benefit from their technology, pairing, effectively, a web service with a synchronous communication client. Look for new product rollouts based on their existing technology, plus what they picked up when they acquired Social.im earlier this year.

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MySpace CEO Chris DeWolfe and Warner Music Group’s Edgar Bronfman take the stage with John Battelle at the Web 2.0 Summit this evening. The topic: The Future Of Music.

The time is ripe. MySpace has launched it’s new MySpace Music initiative; Facebook continues to explore its options.

Our live notes are below:

John Battelle starts things off by noting that MySpace Music continues to not have a CEO (they’ll announce it shortly). DeWolfe says they’ll make an announcement shortly - it isn’t coming this evening.

Bronfman on how Warner Music is different than the other labels: Says he came to Warner at the beginning of 2004, and it was clear that they had to innovate to grow, not litigate. Until MySpace Music came along, he says, there was no online ecosystem for music (MySpace Music sells songs, streams songs, sells ringtones and will eventually sell concert tickets and other merchandise).

He says there is no one channel that will replace CD revenues. It will take a whole series of business models, he says, adding that the music industry will look very different in five years. Even download revenue won’t be the most important revenue source.

DeWolfe on iTunes v. MySpace Music: says there has been a lot of friction between labels, artists and users. MySpace wanted to bring everyone together, he says. He talks about how great Napster was for the user, but the artist didn’t get paid. He wanted a service that paid the labels and artists, and gave users a great experience. Says now is the time - 20% of Warner’s revenues are from digital sales.

He says the biggest difference with MySpace Music is the community - that the MySpace community can help users choose what to consumer.

Bronfman on Apple: gives them credit, they pulled off a sexy device combined with a great service.

Bronfman on evolving from packaged goods model to multi-channel digital world: Says they’ve reorganized the company to move from a few large distributor customers and now have 500 or more customer agreements. They also have hundreds of SKUs every time they release a single, whereas they only had 3 per song before.

Distribution is a commodity, he says. The key is owning the master recordings and focusing on editorial and marketing.

DeWolfe on the month since launch: over 1 billion streams in first few days. Over 80 million playlists created. 5 million bands uploading music.

Battelle asks Bronfman how the industry got comfortable with DRM-free music. He says DRM is great in theory but doesn’t work in practice. They are facing reality and adapting to a “very different world than any content industry has ever faced.” Says they are guinea pigs but they are finding their way through it.

DeWolfe says MySpace likely won’t create a device, but will focus on backing original music, live events, etc.

DeWolfe says MySpace Music isn’t competitive with iTunes; rather that MySpace Music will help Apple sell more iPods.

Bronfman says MySpace Music is great way to filter and develop talent. It’s expensive to develop talent, he says, to bring them to their full potential. Says that it takes much more effort to break an artist than it ever did before because people’s attention is so split.

Bronfman on Radiohead’s experiments with their new album this year: he was disappointed that so many users chose to take it for free. Battelle suggests many of the downloads were sampling. Bronfman says it’s important to work with an artist over their career to sometimes give music away to sell tickets, sometimes sell music to promote events, etc.

Bronfman says that every new artist they sign they take rights in every revenue stream. Calls these 360 rights, and that over 1/3 of their artists are under these contracts. He says that they can’t make the investment they need to make unless they have these rights, and their incentives won’t be aligned.

Discussion of Facebook. Battelle says that Facebook overtook MySpace in U.S. traffic this year - DeWolfe corrects him and says MySpace is still much larger than Facebook. He also says 70% of Facebook users are on MySpace too. Says he isn’t worried about Facebook music, they have no artists and there are massive barriers to entry. MySpace has passionate music lovers and a deep sales team.

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Every year at the Web 2.0 Summit, Morgan Stanley Internet analyst Mary Meeker gives her view of the world, the Web, and the technology industry by quickly going through about 50 slides that illustrate the major trends she is tracking. Last year, she zeroed in on the China Bubble. This year, she talks about the root causes of the current economic downturn, the outlook for Web businesses, and where she still sees major growth (mobile and emerging markets).

She singles out the mobile industry as the one where both the most opportunity will be found and disruption will occur over the next five years. Moreover, she suggests that the U.S. is poised to lead the transition in mobile to a Web-centric model. (I totally agree). Interestingly, she points to the introduction of the first Android phone by T-Mobile, not the launch of the iPhone, as the key inflection point for the coming era of the mobile web.

Meeker’s full presentation, which she gave yesterday, is in the video embedded above and her full slide deck is below (thank you, Henry Blodget, for uploading them). The slides are also available here.

A few slides in particular stuck out for me. First, the growth rates for both e-commerce sales and Internet advertising are normalizing much faster than anyone expected they would compared to offline growth rates for retail sales and advertising. No doubt, this steep slowdown in growth is being compounded by the overall economic situation. In the first slide below, the red line is U.S. retail sales growth and the yellow line is e-commerce sales growth. See where the yellow line is headed?

In the second slide, the top green line is Internet advertising growth. At least it is still above all the other kinds of advertising and not yet in negative territory, but the trend does not look good.

In fact, as ad budgets decline and Web pages keep growing, the bigger problem is that the supply of ad slots on the Web is becoming greater than the demand to fill them. The only way to fill those slots is to lower the price of each spot. As the slide below illustrates, ad impressions keep growing, but the cost per thousand (CPM) keeps dropping (on average, to about $1.50 for banner ads and to just above $20 for rich media ads):

On the bright side, compared to the overall spending on other forms of advertising such as TV, print, and direct mail, Internet advertising still has a lot of share to gain, and will likely continue to do so.

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We’ve just gotten a sneak peek at Chess With Friends, a new iPhone application that is due to appear on the App Store within the next few days (pending Apple’s approval process). There are already a number of chess games available on the App Store, but most of these require that games be played out in one long session, or are played through Email with strangers. Chess With Friends is taking a different approach, offering turn-based asynchronous sessions with people in your contact list that will likely appeal to a much broader user base by more effectively leveraging the iPhone’s untapped network effect.

Chess is a hugely popular game but most people don’t have time to play it for hours at a time - a fact that is especially apparent when you’re trying to find a friend who has long enough to play a match. To deal with this, Chess With Friends just asks you to make a move at a time at your leisure, which your friend can respond to hours or even days later. You can also keep multiple games going at the same time (visible in a scrollable list). The result is reminiscent of the massively popular Scrabulous Facebook app (now called Lexulous) that allowed users to play multiple turn-based Scrabble games at the same time, choosing new moves at their convenience.

Unfortunately the app has one serious flaw: there currently isn’t any easy way to figure out if it’s your move - you’ll need to periodically open the app yourself. This would be a non-issue if Apple had made good on its promise to release a background Push Notification system by September, but the company missed the target date and has been mum about the feature’s launch. After the MobileMe fiasco it’s clear that Apple wants any future cloud-based features to be perfect, but the lack of Push is proving to be a severe handicap to both networked games and social networks.

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Facebook CEO Mark Zuckerberg takes the stage with John Battelle at the Web 2.0 Summit in San Francisco this afternoon, at about 2 pm.

Like Jerry Yang yesterday, Zuckerberg has a lot to talk about regarding the state of Facebook, and its future.

Our real time notes from the interview are below.

Battelle is talking about how much Facebook has changed over the years, joking that Zuckerberg now wears tennis shoes, not just sandals.

First question, Battelle ask Zuckerberg about new financing rumors and trips to Dubai. Zuckerberg remains silent. In response to the question “Do you need money?” Zuckerberg says “no.”

Battelle digs deeper, asking if Facebook might run out of money sooner than they thought a year ago. Mark says that the site has grown much faster than they anticipated, but that international growth via user-translated sites is an efficient way to go. Mark also says the company has two very strong revenue lines - direct sales and online sales. Battelle asks him to break down the two streams, Zuckerberg won’t comment. He also brings up Microsoft revenue, but only says it represents a decreasing percentage of overall revenue.

Zuckerberg commenting on the Microsoft investment: “A lot of people focus on the price Microsoft paid.” Battelle asks how Facebook can ever grow into that valuation. Zuckerberg says they took the best valuation they could get and it made sense for them to do the deal. They aren’t going public for a few years, he says. “We don’t feel any pressure to live up to the $15 billion [valuation],” he says.

Mark confirms that “something more than 700″ people work at Facebook, and says they continue to hire, particularly engineers. He also says they are building international sales offices. Mark says 7% of the population of France is now on Facebook, and that he wouldn’t be surprised if it was 30% next year. They may open a sales office there, he says.

Regarding Facebook Connect, Mark says that anyone can now apply to join.

In response to a question about how closed Facebook is, he says that over time they may open up, but that users prefer using Facebook’s interface for now. He says that systems tend to move towards openness over time, uses the PC industry as an example.

Mark says their goal today is to get people onto Facebook and get them comfortable putting their personal information online to share with friends.

The next iteration of platform, he says, is Facebook Connect, which gives people Facebook tools on third party websites. “As time goes on, we’ll see this very natural fanning out and decentralization,” he said.

Mark says a flaw in the early implementation of Facebook platform is that application developers focused way too much just on getting users to add it, which moved them up the top list. Now Facebook promotes applications that actually have user engagement. Four examples: Causes, which is growing by “hundreds of thousands of people per day.”

Facebook Connect is a further evolution, he says. He says they slowed down the launch of Facebook Connect to minimize the need for painful changes later.

Regarding Twitter, Battelle asks “Is Twitter just a feature of Facebook?”

Battelle turns the conversation to online ads. Mark says they have a second iteration of social ads, which let users pass along gifts or pieces of content along with the ad unit.

Battelle ask about Facebook being banned by companies, noting that the army sees Facebook as a problem. Mark says they’re seeing the opposite trend. He says companies that used to block Facebook are now letting them use it.

Mark stresses that its still very early on the platform side, and doesn’t rule out working with Google on OpenSocial.

Mark mentions that 50% of Facebook users are active every day on the site.

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At the O’Reilly Web 2.0 Summit conference in San Francisco, a context switch from Web 2.0 to cloud computing is well under way. Wired’s Kevin Kelly suggested a variation of the Semantic Web where pages give way to the data on the pages, with each of those chunks representing real objects in physical space, or a Kelly said, anything that can hold an electric charge.

AT&T’s Ralph de la Vega told Mike Arrington that he foresaw a world where phones controlled TVs, coffee machines, cars, and every other device along the way to and from work. The notion of a universal remote or mouse as Microsoft Research defined it years ago is now becoming an economic reality, one that de la Vega suggests is recession-immune as of now. The presence of a keyboard, whether physical as per the Blackberry Bold or virtual on the iPhone, is the new dividing line, with AT&T deriving north of $95 a month revenue versus $58 per month for the average user.

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For all the startups making customizable stationary and business cards available on the web, we really haven’t seen much in terms of innovation: most sites have almost the same options and features, and there isn’t much you can do beyond what you can find in traditional print stores. Today that changes with the public launch of Snapily, an online store for user-customized paper goods that can add moving effects to 2D images (and they’re really cool). TechCrunch readers can get a 20% discount on Snapily products by entering the code ‘TechCrunch_Snapily’.

Upon choosing a product type (which include business cards, greeting cards, notebooks, and invitations) users can choose to either let Snapily use pre-generated templates to enhance their 2D images, or they can manually modify their images for more advanced effects. At launch available options include a pseudo-3D effect that separates the backdrop from the foreground and a morph effect that can switch between two photos. In the near future the site will also be launching a ‘mini-movie’ effect, allowing you to put a 2 second clip on a card that plays as you rotate it (Harry Potter fans rejoice). For a better idea of what the cards look like, check out the video below.

The cards use a technique called lenticular printing, which displays a new image depending on what angle they’re viewed from (we recently covered a set of maps that use the same technology). And while you can find similar products elsewhere on the web, Snapily says that nearly all of these require bulk purchases - you couldn’t just buy a handful of greeting cards or a single notebook. Snapily says it will allow users to buy products in these small one-off quantities for a price that is still in the range of traditional paper products.

Snapily is a spinoff from HumanEyes, which has offered similar products to the business market for a number of years (the company says that the lenticular printing technology has now been in development for a total of seven years).

Earlier this week we saw another innovation in the customer-designed product space, when Zazzle launched custom embroidery.

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If you’re curious about the talk that spurred such negative coverage of Yahoo CEO Jerry Yang yesterday, here it is. From our perspective he’s out of gas. And needs to step aside for a new leader.

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Don’t mistype “wordpress.org” because you could end up downloading compromised code. Some hackers have set up www.wordpresz.org. The code sends cookie contents to a hacked program hosted on wordpresz.org and could expose passwords and other identifying information.

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