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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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Netequality, a Portland, Oregon-based not-for-profit organization that provides free internet access for low-income communities has hacked together a plug-n-play version of Meraki’s wireless mesh router, that can be plugged right into a power socket, for easy set-up. The wall-plug version is simply a Meraki Mini in a different case - it uses the Meraki Mini PCB - but optimized for ease of use and for easier installation in apartments and other unsecure public locations.

The device that is sold for $79 just went on sale, says Michael Burmeister-Brown, one of the two co-founders of NetEquality. A serial entreprenuer who has sold some of his previous start-ups to the likes of Symantec and Yahoo, says that idea behind the Meraki Mini Repeater in a Wall Plug Enclosure is to ensure an easy set-up, and take away some of the complexity that is typically associated with Wi-Fi. “We are ensuring that the whole thing is pretty simple.”

Burmeister-Brown, who spent nearly five years at Yahoo explains that in low income communities, a single DSL connection can be plugged into a Meraki router, and then one wall plug unit is needed every four homes. At present Netequality has built and deployed networks in six communities, with 6-to-150 units.

Meraki, is a Mountain View, Calif.-based mesh router maker that is backed by Sequoia Capital and Google. The company has developed an ultra lowcost wifi mesh networking router and is currently rolling out a square mile wide test network in San Francisco. (Our previous Meraki coverage.)

While the wall plug hack is unofficial, Burmeister-Brown told us that the folks at Meraki are aware of their twist on the basic Meraki router. In an email, Burmeister-Brown wrote:

we are very close to Meraki - we placed an order for 2,000 originally to help launch the company and we are authorized resellers (see their partners page). I have been working with Sanjit [Biswas, CEO of Meraki] since long before Meraki on the roofnet project while he was at MIT…

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