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Meraki Unwires SF’s Neediest
Even if San Francisco’s high-profile, city-wide Wi-Fi network with EarthLink and Google was a fundamental flop, residents of the city that need it the most could still get some free wireless broadband. Meraki Networks, a San Francisco-based startup that makes mesh networking gear is building an ad-hoc San Francisco Wi-Fi network called “Free the Net.” At a press conference on Wednesday, San Francisco Mayor Gavin Newsom and Meraki CEO Sanjit Biswas plan to announce a project that includes Meraki’s Wi-Fi networks throughout San Francisco’s affordable housing communities.
We’re not sure the extent of Newsom’s announcement, but supporting Meraki is the least the mayor can do after the previously botched San Francisco Wi-Fi network. And in any case, Meraki is actually footing the bill for the entire ad-hoc free Wi-Fi network, including the affordable housing section. Biswas says the cost of the entire network is in the low several millions.
Biswas says Meraki will set up its system of Wi-Fi repeaters and Internet broadband access in “all” of the low-income housing communities in San Francisco, including the Altamont Hotel, where Newsom and Biswas will make the announcement. This is the latest part of the company’s “Free the Net” project and Biswas tells us that the company will have access points in every neighborhood in the entire city by the end of the year.
In the past, EarthLink and Google were both linked to a Wi-Fi effort in San Francisco that really didn’t go anywhere due to political roadblocks. Both companies have backed away from their MuniFi efforts.
Google, however, was one of those who invested in the seed round Meraki raised in November 2006. The mesh gear maker raised $20 million in a Series B round from Sequoia Capital, DAG Ventures and Northgate Capital back in January. Meraki could also be taking a page from Google when it comes to testing out ad-serving to support a free network. Biswas tells us that the company has tested out some contextual ads over the network.
City-wide Wi-Fi networks have been proving to not be viable in many cities and communities, but Meraki’s type of very low-cost, ad-hoc networks seems to be best suited for the technology. For just a few million, a company like Meraki can slowly add localized Wi-Fi hotspots in communities that actively want and will use the technology. Newsom certainly wants to work with the company to close San Francisco’s digital divide. We’ll check out the press conference later today and snap some pics of the mayor’s do — and the unwiring festivities.
Update: ImageShack CEO Hints At His Grander Ambitions
Yesterday, I reported a strong rumor that Sequoia Capital had invested in image-hosting site ImageShack. Today, I spoke with CEO and founder Jack Levin. He would not comment specifically on the funding rumor other than to say that over the past few months he’s been in discussions with a variety of VCs. So he may still be in the late stages of discussions, or he may have closed the round. He really wouldn’t say. But at the very least, he is definitely looking for funding.
He was, however, very forthcoming on other aspects of his business. And outlined a grand ambition befitting an early employee of Google (his claim to fame is the clustering architecture that Google is based on).
Levin did want to correct a few things from the original post, in which I said he has self-funded the startup until now. “I never put a single dime into the company,” he says. Unless you count the $80 for the first month of server hosting back in November, 2003 when he was still working at Google. But that month the company made $200, so it has been profitable from the start. His secret:
We were profitable for the last three years. The most different thing about our company is that it would take 7 to 8 million dollars in opex [operating expenses] per year to run a media hosting company like ours if you were using traditional non-off-the-shelf clustering technology, where we use a tiny fraction of that amount, which allows us to be profitable and take risks other companies can’t.
Because of the way he designed his back-end architecture, he can serve two terabytes of images from a single $1,000, Linux server. So he spends only about $200,000 a year on capital expenditures and now has about 500 servers. He was also able to leverage his industry connections to get really cheap bandwidth rates.
Also, subscriptions make up a tiny portion of revenues. Most of the revenues come from advertising on the site. ImageShack serves about 10 million ads a day, mostly to people who go to the site to upload their images. Although the site also attracts 500,000 brand new visitors every single day. Levin also notes that it is “unlikely we will ever modify the image” with ads because “that would be like spamming the Internet.”
Rather than put ads in or around the images it hosts, Levin is working on harnessing all the data his service generates about content consumption (perhaps to better target advertising on ImageShack or to syndicate that targetting data to ad networks). Like Google and Yahoo, he is deploying the open-source Hadoop software to create a massive distributed supercomputer, but he is using it to analyze all the data he is collecting. Levin is vague about how he plans to make money from this data, but it is clear he is convinced the data is pretty valuable. He explains the opportunity in broad strokes:
We are like a broadcasting company that broadcasts in every country, in every language, on every topic. There are a lot of misconceptions in the Valley hat the Internet is just two or three companies. But that is not true.
Don’t you think it is ridiculous to see business plans based on how many Facebook widget users you have? We have millions of Websites using our services. It doesn’t matter what Facebook does.
So I am still not sure if Sequoia funded his startup, but I can see why it would want to.
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ImageShack Rumored To Raise Money From Sequoia
Update: See follow-up post here with comments from ImageShack CEo Jack Levin.
If you had to name the top five image-hosting services on the Web, would ImageShack be one of them? It turns out that it is No. 5 in worldwide visitors, with nearly 28 million last March, according to comScore. (Ranked above it are Facebook Photos, Flickr, Picasa, and PhotoBucket). You might be more familiar with ImageShack’s familiar frog logo, which appears on many of the photos it hosts across the Web.
Sequoia Capital is familiar with ImageShack and its frog. Although it hasn’t been disclosed anywhere, a reliable source tells us that Sequoia recently invested in the company. Sequoia’s investment is believed to be in the $10 million range.
Up until now, ImageShack was entirely self-funded by founder Jack Levin, who built the service himself with his brother and a few part-time employees. The company claims it is already turning a profit (it charges an $8 a month subscription fee for unlimited image uploads). Levin was employee No. 25 or 26 at Google. He was the engineer who built Google’s early server clusters and self-healing architecture. At ImageShack, he has taken a similar approach to creating a site that serves 2.5 billion images a day.
Placing ads on just a fraction of those images could become a much more lucrative business than trying to upsell subscriptions, and that apparently is why Sequoia invested. Figuring out how to put ads in or around images on the Web is a big opportunity. It is a problem that Google (another company Sequoia invested in) is working on. Just earlier today at the Google Factory Tour, for instance, the company noted that hundreds of millions of image searches are done on Google every day and that it is experimenting with both display and text ads paired with image search results. But it is having a tough time.
Someone is going to figure out how to serve relevant ads on all those billions of images on the Web. Sequoia is betting that person will be a former Google employee rather than a current one.
Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.
RackSpace IPO Filing Hints at Expansion Plans
Data center and hosting provider RackSpace Inc., has filed to raise up to $400 million in an initial public offering. Its financials seem generally sound (unlike many tech companies it’s actually profitable), although profits did drop by 10 percent in the last year.
However, rapid expansion (including its investment in the cloud) are to blame for the decline in profits. The company made $362 million last year and more details can be gleaned from its S-1 filing with the Securities and Exchange Commission. Some tidbits of interest include RackSpace spending $7.3 million in power used to operate 36,692 servers in 2007.
In the coming year, the company anticipates expanding its data center facilities by a least 72,000 square feet, and may also opt to find a new data center location outside of its existing facilities. It also plans to launch a platform product for customers who want hosted infrastructure but also have the need and skills to customize the hosted infrastructure to a high degree.
The San Antonio company follows in the footsteps of Google and NetSuite with its auction-style offering. Should the offering go well investors Sequoia Capital and Norwest Venture Partners stand to gain. The two firms hold 11.6 percent and 16.2 percent of RackSpace stock respectively.
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Wondering Which Partner at a VC Firm to Pitch? TheFunded Now Breaks Out Individual VC Ratings.
Up until now, if you wanted to see the ratings of individual venture capitalists on TheFunded, you had to be an invited member, which meant that you had to be the CEO or founder of a company (or pay $200 for six months access and prove that you are a senior adviser or consultant). But now anyone who visits the site can see the ratings for 17,000 individual VCs without logging in (before only the ratings for entire VC firms were publicly available). Only members can rate VCs.
Many of the ratings are still spare. Some VCs don’t have any, or only a couple. For instance, John Doerr at Kleiner Perkins (4.5 out of 5), only has two ratings, indicating that perhaps he is not as active as he once were (or that entrepreneurs are too scared to rate him, even anonymously). But for those who have at least three ratings, entrepreneurs can now compare them to the overall rating of their firm. It shouldn’t be any surprise that some of the big hitters in the VC world rate highly, like Sequoia Capital’s Michael Moritz (4.4 out of 5, versus 3.9 for Sequoia) or Roelof Botha (4.1). Dick Kramlich at New Enterprise Associates rates a 4.8, compared to 3.4 for his fund.
But every venture firm has some partners bringing down the average. For instance Mark Kvamme at Sequoia has an abysmal 2.9 rating, a full point below the firm’s average. Other notable VCs and their ratings (out of a maximum of 5):
Bill Tai, Charles River Ventures: 5.0
Joshua Kopelman, First Round Capital: 4.4
Fred Wilson, Union Square Ventures: 4.3
Tim Draper, Draper Fisher Jurvetson: 4.2
Steve Jurvetson, Draper Fisher Jurvetson: 3.0
John Hummer, Hummer Winblad Venture Partners: 1.2
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Few Details On Sequoia-Backed CDN Startup Cotendo
Earlier today some blogs reported that Sequoia Capital had invested in Cotendo, a content delivery company based in Israel. The reports didn’t offer much details in terms of technology and the people involved with the project.
Thanks to some helpful friends in Israel and in the CDN business, we found out that the co-founders of the company are Ronni Zehavi and David Drai. Zehavi is the CEO and Drai is the CTO of the new company. They both worked for anti-spam and security software company, Commtouch Software.
Their profiles on LinkedIn describe Cotendo as a company “developing a sophisticated innovative infrastructure which provides an efficient and low-cost CDN service. Cotendo new approach open the ability for new services which help content providers to get the maximum benefit from content acceleration.” The company has 10 employees, many of them from Commtouch. It is not clear what kind of technology they have developed and how much funding Cotendo has raised.
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Unisfair Nets $10M for Virtual Trade Shows
Virtual meeting company Unisfair has scored $10 million in funding from Sequoia Capital and Norwest Venture Partners after proving that meeting people face-to-face isn’t always necessary or cost effective. As a telecommuter, I’m duty-bound to agree, although I’d rather gouge out my eyes than attend a virtual product launch party.
Still, many people must attend product launches, trade shows and job fairs for a living and doing it online is far cheaper (and greener) than trucking around the world with a trade show booth or the latest company literature. Unisfair doesn’t disclose revenue, but says it grew 350 percent last year after what might be considered a slow start. Founded in 2002, Unisfair decided to go with a virtual-environment product delivered using the software as a service model. Competitors at the time were promoting teleconferencing and online trade shows, but Guy Piekarz, CEO of Unisfair, says now he’s certain his company made the right choice with virtual meetings.
Thanks to the media and corporate attention given to virtual worlds such as Second Life, the idea of virtual trade shows isn’t that far-fetched. But in Unisfair’s secured version of a trade show the avatars can’t fly and the environment isn’t, er, prone to attacks from the air. That’s a plus for Unisfair’s enterprise customers, which include the likes of Cisco Systems, National Instruments and Cognos.
Online Ads Still the New Black as AdBrite Raises $23M
Update: The buzz on Sand Hill Road these days is all about online advertising plays. Never mind the fact that most of the “online ad” business is living on scraps compared with the Godzilla-like Google (GOOG). The latest testimony to this craze: $23 million in new funding for AdBrite, a company started by Phil “Pud” Kaplan, well-known for his escapades and his iconic site, F–kedCompany.
PE Hub reports that the three-year-old AdBrite got cash from Sequoia Capital and their quasi-affiliate hedge fund, Artis Management. With this new infusion, the company has raised a total of $35 million. We suspect there may be more cash coming their way, as this round might not be closed just yet.
Adbrite issued a press release that lists DAG Ventures and Mitsui Ventures as new investors. BritePic, Full Page Ad, and Facebook App Channel – have fueled AdBrite’s rapid growth, Ignacio Fanlo, CEO of AdBrite said and claimed that company was the third largest ad-network behind Google and Advertising.com. The round the company says is closed at $23 million.
Calacanis’ latest, Project X, Kokua?
Jason Calacanis, co-founder of Weblogs Inc., and now an entrepreneur-in-action at Sequoia Capital is working on a new company called, Project X. Valleywag published some details about the company earlier this week, that has the apparent backing of Mark Cuban, Jon Miller (ex-AOL) and Sequoia Capital, amongst others.
An anonymous tipster tells us that the new company could go under the moniker, Kokua. Kokua, apparently means to help or guide in Hawaiian.
When we checked Calacanis does own the domain and we also saw some interesting screen shots of the new company, though it is hard to say if they really are authentic. While Calacanis didn’t deny the fact that he owned the domain, he declined to comment on further speculation about the nature of his business. (Disclosure: I am one of the dozens of advisers for TechCrunch 20, a conference being put together by Jason Calacanis and Michael Arrington)
An unconfirmed outline of the company appears after the fold, and please treat it like that - unconfirmed speculation.
The new company apparently is said to be a blend of Wikipedia and podcasting with a focus on highly lucrative segments like automobiles and video games. Each segment is likely to have a host (compensated perhaps) just like About.com. The host would do a show and build a community that will also help populate the Wiki.
Highly-focused niche content is becoming more valuable these days where Google’s search results leave you clicking in confusion. From a more practical standpoint, the videos and contextual content can generate better AdSense dollars and higher video advertising revenues.
Given that Calacanis has built two studios - one on the left coast and one in New York — our tipster may not be that off the mark.
eBuddy Launches Mobile App
eBuddy, the Amsterdam-based IM aggregator, is turning 3 years old this week — a respectable middle age in the web startup world. And while I wouldn’t go as far as saying there’s a mid-life crisis coming, since the company became profitable and brought in 10.3 million unique monthly visitors to its web service as of March, the company is definitely working hard to grow and differentiate itself — particularly from fast growing Silicon Valley based IM competitor Meebo.
The compay, which raised 5 million euros from European VCs Lowland Capital Partners, thinks it can outshine the competition via mobile. The company just released a new java-based mobile client into private beta. You can try to sign up to be a beta user on their web site, or just wait for them to open up the application to the public in the coming weeks.
Co-founders Jan-Joost Rueb and Onno Bakker took some time off of the AdTech conference last week to show us the java app. The client has a few nice functions - folding long chats to keep them in the frame, and a much more rich experience than is already available on its mobile web service.
In the short run, a mobile client might be more hassle than its worth. The company had to create 60 different software versions for 250 to 300 phones — this is the mobile world, people, not the open Internet! The company says it won’t charge for the application, for now, and being able to monetize the service through mobile ads is still a long ways away. Probably the best near term return eBuddy can expect from it mobile client is increased stickiness for all its services.
In that vein, Meebo co-founder Seth Sternberg says his company thought long and hard about mobile, but decided against it right now. “As such, we don’t have a releasable mobile client at the moment,” says Sternberg. Mountain View-based Meebo is backed by Sequoia Capital and Draper Fisher Jurvetson.
But in the long term, eBuddy’s mobile client plans might be a smarter play, especially if it can convince a couple of carriers to push its offering. Mobile IM is just used by 6.3% of U.S. cell phone subscribers and grew at a rate of 1.2% over the past several months, according to M:Metrics. Mobile web usage and text messaging grew at a rate of 2.0 and 2.5% in comparison. With most new phones now including IM services, awareness of mobile IM will only increase.
eBuddy’s mobile web service is bringing in 1 million unique visitors per month, so a not-so-small portion of its users are already interested in mobile. It might take many years to grow substantially, but the same reason that IM aggregation on the web has brought in users, mobile users will want the same functions.
eBuddy is also hoping a stronger Silicon Valley presence will help it gain some attention and new mobile users. The company is thinking about opening an office (or at least maintaining a presence) in the area and is considering raising local funding. The company already checked out Sand Hill Road for its last fundraising plans, but says it got a better valuation back home. Maybe Silicon Valley will look brighter this time around.
TechCrunch20 Now Live
While the startup-sphere was all knee-deep in DEMO coverage last January, TechCrunch’s Mike Arrington and Sequoia Capital EIA and Weblogs Inc cofounder Jason Calacanis talked up their plans to launch their conference TechCrunch20. Their idea is to bring together 20 new startups, which are chosen on merit alone, and don’t pay to present — “taking the payola out of DEMO-ing,” as Calacanis put it then.
Arrington tells us today that the site just went live, with more details about the event and the process. They are looking to talk to any startup that will be ready to launch or publicly demo by September 17, when the conference will start in San Francisco. The companies will be chosen by a panel of 20 experts, including GigaNet’s biased favorite Om. Arrington says the conference will charge for attendance and for sponsors, but that sponsors are not eligible to present a new startup.
Does the world need another American Idol-style pitch conference for startups? No, but the Valley does need a conference where the presenting companies don’t have to cross a huge financial hurdle to participate, but do have to cross a threshold of quality. Anyone who’s been to any of these launch conferences knows how unproductive they can be — hopefully TechCrunch20’s new model will be a better one. Good luck.
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A mysterious CEO change at Stoke
A few months ago we had heard some rumblings that Stoke CEO Randall Kruep was on his way out of the company. Kruep, whom we got to know well when he was running Procket Networks, assured us himself that he was going nowhere.
A couple of weeks later the networking start-up announced a big round of funding, taking the total to about $50 million from investors like Kleiner Perkins and Sequoia Capital.
A surprise awaited us when we check the Stoke management page, following an anonymous tip. Kruep is listed as a founder, but not as the CEO. Instead, the management page points out that Dennis Barsema, a director is now the acting CEO. We wonder what changed between the time when Kruep gave us his assurance and now. Curious, don’t you think.
Just in case you were wondering what does Stoke make, an excerpt from an old post:
The carrier-closet box, which Stoke says is already in trials, is designed to help service providers better manage subscribers from multiple types of emerging access technologies, including WiMAX and dual-mode Wi-Fi/cellular handsets.
capital
startups
Sequoia
valleywag
Kleiner
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