Venture Capital Activity: Technorati Buys Personal Bee, Akami Buys Red Swoosh, LinkedIN, Y Combinator

Technorati Buys Personal Bee

Technorati said Wednesday that it has acquired Berkeley-based Personal Bee, an online service which allows people to create their own personal sites using RSS feeds. Financial terms of the deal were not disclosed. Ted Shelton, founder of Personal Bee, will join Technorati as its VP of Business Development.

Akamai Buys Red Swoosh
Akamai Technologies said today that it is acquiring San Mateo-based Red Swoosh, a developer of client side technology for media distribution, in a deal worth $15M. Akamai said it purchased Red Swoosh in an all-stock merger transaction, and that it will use the acquisition to augment its services. Akamai said that Red Swoosh will be integrated into its existing engineering team in California.

LinkedIn Claims 10M Users
Palo Alto-based LinkedIn, the online social networking web site focused on business professionals, said today that it has reached 10 million users for the site. The company said that it is currently growing at the rate of over 130,000 members a week. LinkedIn provides social networking tools targeted at business users, and has received funding from Sequoia Capital, Grelock, Bessemer Venture Partners, and the European Founders Fund.

Y Combinator is Breaking VC Ground!

The Mercury News has a good description of how Y Combinator works:

Here’s how it works: twice a year, Y Combinator invites “hackers,” or programmers, to fill out an online application, outlining who they are and a business idea. One winning batch of teams is funded in winter and the other in summer. With Y Combinator’s help, each becomes a real company - one that is expected to create its product within three months. The amount of money Y Combinator gives each group - $5,000, plus an additional $5,000 per founder - is a pittance for what it asks in return, which is, on average, a 6 percent stake in their start-up. That money has to really stretch. Beyond their living and working expenses, it must also cover relocation costs, as the winter winners must relocate to the Bay Area and the summer winners to the Boston area.

Google to acquire DoubleClick for $3.1B

Seeking to expand its already well-honed ability to sell targeted Internet advertisements, online search leader Google Inc. said it has agreed to pay $3.1 billion in cash to acquire ad-management technology company DoubleClick Inc.

The two companies announced the deal after the markets closed Friday. The boards of both companies have approved the takeover, which is expected to close by the end of the year.

New York-based DoubleClick helps its customers place and track online advertising, including search ads, which Google — more than its nearest search competitors Yahoo Inc. (Nasdaq:YHOO - news) and Microsoft Corp. — has turned into an extremely lucrative business.

Shares of Mountain View-based Google rose 3 cents to $466.32 in after-hours trading. DoubleClick has been privately held since 2005.

The sellers are San Francisco-based private equity firm Hellman & Friedman, along with JMI Equity and DoubleClick management.

Commentary:
From DoubleClick’s announcement of the exchange:

Using the new platform, publishers and other sellers make specific inventory available for purchase. Sellers define a minimum bid value - or “reserve price” - for the inventory and specify rules to restrict certain advertisers, formats and content. In parallel, buyers specify the inventory they wish to purchase, and the associated bid value for that inventory. They can also specify a rule to dynamically control the bid so that the bid price is automatically adjusted in line with inventory performance.

From the New York Times:

DoubleClick, which was founded in 1996, provides display ads on Web sites like MySpace, The Wall Street Journal and America Online as well as software to help those sites maximize ad revenue. The company also helps ad buyers — advertisers and ad agencies — manage and measure the effectiveness of their rich media, search and other online ads.

DoubleClick has also recently introduced a Nasdaq-like exchange for online ads that analysts say could be lucrative for Google.

“Google really wants to get into the display advertising business in a big way, and they don’t have the relationships they need to make it happen,” said Dave Morgan, the chairman of Tacoda, an online advertising network. “But DoubleClick does. It gives them immediate access to those relationships.”

From Bloomberg

`Deep Pockets’

Google declined to give financial details for DoubleClick, whose headquarters are in the same building as its own New York offices. The purchase eclipses the $1.65 billion Google spent to buy video-sharing Web site YouTube in November and was 50 percent more than Hellman & Friedman had wanted. A person with knowledge of the talks said last month the firm may seek about $2 billion.

“The amount is mind-blowing,” said Richard Fetyko, an analyst at Merriman, Curhan and Ford in New York. Fetyko follows DoubleClick rival AQuantive Inc., which he rates buy and doesn’t own. “Apparently there was very competitive bidding. Microsoft has deep pockets, but apparently everything has its limits.”

Get Caught up on Search Marketing & VC

Kontrib Offers a Digg Alternative for Non-English Speakers

One thing that Digg lacks is foreign involvement due to the interface being in purely English. Kontribb offers the solution!

To submit and vote on articles at Kontrib, you first register. After you submit an article, Kontrib’s linguistic machines immediately translate articles into supported languages. These are Arabic, English, French, and Spanish, with more to come later. Kontrib is slick because it translates both the article summary hosted at Kontrib’s site, and the original article linked to. Comments are also translated.

Until now, language translation has remained clumsy. There are text translation sites such as BabelFish, or Google’s language tool. The coming Worldwide Lexicon Project promises to help bloggers translate their sites by mobilizing interested readers. Human volunteers will translate sites with higher quality, argues Brian McConnell, the project’s leader, and they’ll translate into any language. Though, we’d argue that human efforts will vary in quality.

What is FaceBook up to?

Recent traffic statistics at social networking site Facebook are impressive and we’re wondering if there’s a wider story here.

Facebook tells us the site is seeing about 1.5 billion page views a day, up from about 1 billion daily views last month — statistics that haven’t been released until now. That’s a huge jump.
Read more over at VentureBeat

So How Did you Learn SEO?
Here’s part of Rand Fishkin’s Story about SEOmoz:

“In 2001, the company that would become SEOmoz (at the time just Gillian, Matt & myself) began taking on some e-commerce development projects. Previously, we had designed static websites in Flash & HTML and done some consulting in usability, but with the addition of Matt to the team, we were ready to take on some beefier projects. We designed and developed several sites for clients and”

Rand over at SEOmoz would like to know how you got your start!

ZoomInfo - The HeadHunter’s Best Friend Expands

ZoomInfo today launched its Business Information Search Engine, a service that offers information on more than 3.5 million companies. Although the company profiles are similar to those offered by Hoovers.com and other subscription-based providers, ZoomInfo business profiles are free. More about Zoominfo at Search Engine Land

Is Your New Brand Taking Away From Your Old Brand’s Loyalty?

Did You Know:

In April 1985, the management of The Coca-Cola Company announced its decision to change the flavour of the company’s flagship brand. This decision was made based on the fact that Pepsi consumer research discovered in blind taste tests that a majority of consumers preferred the taste of Pepsi to that of Coke. The “Pepsi Challenge” campaign made this public knowledge and Coke executives quickly moved to change America’s top brand.

New Coke came in a new can, with updated red and silver graphics replacing the traditional red and white look. Although taste tests of the New Coke had shown that majority of those tested preferred the new product, these tests could not gauge the emotional appeal of the “old” Coke. In other words, consumers want their cake and eat it too. A large public outcry ensued during the 79 days when old Coke was no longer on the shelves. Coca-Cola quickly reintroduced the “old” Coke when they realized market share was falling and christened it Classic Coke. Volume for the classic brand has risen 24 percent since 1984, making it the No. 1 soft drink in the land since 1987. Consumers became even more loyal to the brand after it was temporarily taken away from them.

Are your new products creating a similar situation for some of your older brands?

Zopa backs up the truck with $12.9M in Financing

Lending is the name of the game and Zopa is trying to lead the pack.

Zopa is a marketplace where members can meet up and lend or borrow money from eachother for a small fee. $12.9M has been infused into the company to help it expand and try to dominate the market. The competition is stiff, Prosper already has a strong hold on the “community lending” market.

The company said it appointed a new chief executive, Douglas H. Dolton, formerly CEO of Chela Education Financing.

The financing was led by Bessemer Venture Partners, an existing investor. Benchmark Capital and Wellington Partners also invested in the latest round. Benchmark has also backed competitor Prosper.

Zopa is well on their way, they have already raised about $34 million.

Successfully Measure Venture Capitalist Contribution for a Portfolio Company

Investment for a portfolio company can be very tricky to measure when you want to figure out how much a private equity firm adds value to each portfolio company it invests in. A few ideas from Colin Blaydon, director, and Fred Wainwright were shared at The Center for Private Equity and Entrepreneurship at Dartmouth’s Tuck School of Business and some of the concepts may seem fairly simple, but they’re worth a look at.

There are 3 ways to measure how much value a private equity firm adds to each of its portfolio companies it invests in:

1) Buy Low, Sell High – By buying a large group of assets and breaking those up into smaller, more efficient and higher margin producing companies, you could buy low and sell high.
2) Financial Engineering – If you put a large amount of debt into the company before the value turns south, you will have effectively added assets with an unknown future value that can usually be depreciated in a somewhat inflated nature over time.
3) Improve Cash Flows – If it’s time to sell, growing your top line will yield a large increase in perceived value. Take out costs where you can and focus on high margin business units. If you can pull revenue streams from one area and achieve sales based on higher margin forward-looking multiples, you will have essentially improved cash flows without hurting your current and future bottom line.

If you can quantify any one of these tactics, you will have successfully measured the value that a private equity firm has added to their portfolio companies. Whether that means that the value is real or not, is an entirely different question.

Baidu Has Their Own Click Fraud Problems – Stock Drops

Google has a new friend in the Click Fraud support group.

Baidu, the leader in China for search traffic is experiencing similar problems that Google has seen regarding click fraud, but on an even larger scale. Click-fraud is when people click on an online ad and have no intention of buying anything, thus driving up the cost for the advertiser, who pays on a per-click basis. The fraudsters can be any number of people, including competitors who want to drive up the advertiser’s costs.

The study, conducted by Peter Lu, of the China IntelliConsulting Corp, found that advertisers believe 34 percent of all clicks on Baidu ads are fraudulent, compared to 24 percent on Google.