Original URL: http://www.theregister.co.uk/2006/05/24/dark_hearted_web/

Six startups from the Web 2.0 swamp

Mistah Kurtz - he's alive!

By Ashlee Vance

Posted in Media, 24th May 2006 23:38 GMT

Last night, in a trendy San Francisco wine bar where you slide Java cards into dispensers to get a drink, Bite Communications hosted an event which allowed the press to swoon over its Web 2.0 clients.

As we suspected, many of these start-ups proved unnervingly full of real-time, socially engineered, text messaging fluff. Conrad's Mistah Kurtz wasn't dead at all. He was wrapped in a bubble and pitching software, and we were deep into the heart of darkness.

So we're going to rank the start-ups on their merits as they appeared to us. Here's a short, tasteful list in order of decreasing plausibility.

1. imeem!

Exclamation points make us nervous and so do social networking applications.

We were pretty up front about these reservations when talking to Imeem! CEO Dalton Caldwell and CTO Jan Jannink. The best part about this pair is that they didn't try and rewire our brains to accept the social networking "movement". While we're cautious about the "movement", we like Imeem's market position and technology. Like it or not, MySpace is the darling of the moment, and "old guard" players like AOL want nothing more than to replicate MySpace's success. As a result, you have AOL pushing AIM Pages against MySpace, and MySpace arming an instant messaging attack against AOL.

In between sits Imeem, which has made, for some time now, a type of instant messaging and MySpace combination application. You can use the Imeem software to chat, share photos, music and videos and to craft your own website to display all that crucial information about dogs you like and people you despise.

We're fond of the Imeem design and technology, which is a heck of a lot better than the visual disaster that is MySpace. More than that, we think the Imeem management team has its head on right. But will people drop AIM or MSN Messenger to use Imeem's software? If the social networking fad shows evidence of producing a long-term revenue stream, then Imeem is well-poised to be gobbled up and thrive.

2. Swaptree

As with most of these companies, there are more questions than answers surrounding their applications. Swaptree, however, seems to be on the right track and is doing something pretty interesting.

Unlike the sites that let you trade just DVDs (Peerflix) or just music CDs (LaLa), Swaptree has set up a mechanism for trading CDs, books, DVDs and video games. In addition, this isn't just a person-to-person swap thing. The company's software can arrange multi-person trades to make sure that you're getting the product you want. At the moment, the company is in a private beta, which does the rest of us plebs little good. But we managed to catch a demo of the software in action, and this is how it works.

Enter a book ISBN or a product UPC number, and the Swaptree software begins searching for what you want. If you request Heart of Darkness, the software tells you who has the book, how far they are away from you, their trading history and what you have to trade to get the product. So, basically, people put up lists of what they want, and what they'll part with, and Swaptree works to find a match.

The company also sends you free envelopes and lets you print postage for the items. It knows the weight of every product, and can help you locate the closest person to cut down on mailing costs. You also get the media mail rate, which is lower than normal.

In the long run, Swaptree expects to make it possible for people in one building, for example, to create a custom swap list. This would eliminate postage altogether as you could just walk upstairs and make a trade.

Swaptree president Greg Boesel told us that customers could choose to meet up at a coffee shop too, although the personal encounter seems like a bad idea. Cynical minds envision old dirties tempting youngsters with video games only to "swap" them into the back of a trunk. We're sure the company can work out those kinks.

Unlike Peerflix or Lala, which have or plan subscription models based on real money, Swaptree reckons it will make money off "highly targeted advertising". It sees what you're trading and knows exactly what you want.

Highly targeted advertising - which translates into "copy Google as best as you can" - has become the buzzword of choice for many start-ups and seems an iffy play to us. And we wonder how tolerant people will be of all the trading, mailing and meeting hassles. Still, we like the idea and the technology and think Swaptree has a fighting chance as a nice eBay-style offshoot.

3. Prosper

With Prosper we have another good idea colored by doubts of long-term potential.

Prosper lets regular folks make loans to other regular folks.

The company conducts background checks on loan applicants to get their credit scores and assigns them a risk factor. People willing to make a loan then bid on the interest rate they're willing to charge given the risk. Prosper spreads the loan across multiple loaners to reduce the overall risk for those handing out their hard-earned cash.

You can make about a seven per cent return on your money with minimal risk, which is better than a lot of low-return investments and not quite as a good as what a decent stock trader will see. Risk takers can make far more by venturing their cash on folks with low credit scores.

The real interweb part of Prosper comes from the stories people write to try and convince you to hand over money.

"I am a single, independent, reliable, responsible woman," writes one person. "My problem?  I've overextended myself."

"I have two daughters that are graduation from college this year," writes another. "I need to pay off the outstanding balances at the schools in order for them to receive their diploma's in the mail."

We talked to a few people about Prosper, and everyone agreed that there's heart-warming, practical aspect to the company. Can it compete with more than happy to lend credit card companies and far more traditional loaners? We have our concerns.

The next part of our journey takes us far deeper into the heart of darkness. We're talking heads on sticks by the river now.

4. Limbo

This site puts a Hummer, for example, up for bid in a reverse auction. Your goal is to have the lowest, unique price for the Hummer at the time the auction closes. You send in bids via text messages and take a premium - say $1 - charge for each message.

In the past, Limbo has given away a Hummer for $30 and an iPod for about $2. It and the phone companies make money via the text messages being sent. The company claims that thousands upon thousands of bids are made for each product and even boasts that it could one day get up to 1m bids for an item.

On the surface, this seems like a win-win for everyone involved. The consumer gets a Hummer for $30, while the companies backing the technology make tons of cash, literally, out of the air. Every time you bid, you generate points as well. So, if you don't win the Hummer, you can go to the Limbo store and buy a DVD with your Limbo points at something close to market value.

The whole idea makes us pretty uncomfortable, and others felt the same way.

Beyond the unease, we can't understand why anyone would bid until the moments right before the auction closes, which translates into much fewer bids than Limbo imagines. Also, how many people will stick around over the long-term when they've never been able to win one of the items?

Need we point to this note on the Limbo site? "To enter for free, call 1-877-771-9257."

Limbo is governed by sweepstakes laws, and it's little more than a dressed up lotto. Proceed with serious caution.

5. Inkling

Inkling is like the Total Information Awareness project in a sea of colored balls.

The company doesn't have the dark undertones of a Poindexter, but it does dabble in betting on markets. What kinds of markets? Well, just about anything you can think of really.

The folks at Inkling tell us that companies can set up markets and have workers bid on what types of features a product should have or when the product will actually ship. The "market" tends to get closer to reality than product managers and will divine the truth. More on the consumer side, you can bid on who will win the Super Bowl next year or where hurricanes will hit.

We have such serious doubts about this technology that it's hard to know where to begin.

Can the "market" really tell where a hurricane will hit? We wouldn't bet New Orleans on it, but Inkling insists that the market is right about 75 to 80 per cent of the time, and claims to have data to support the premise. [ Chimps produce similar results - but you don't hear about the Wisdom of Chimps - ed ]. Veterans also have their doubts.

We asked one of the company founders what happens when bullies at a school start betting on how long it will take for a nerd to have his head beat in, and were told that Inkling plans to introduce a type of self-policing mechanism.

Of course.

The company quotes the Japanese proverb "none of us is as smart as all of us..." We prefer Despair.com's version:

Despair.com's definition of Idiocy

Enough said.

6. Browster

At the very bottom of the list, we come to Browster, which earns the dubious Kurtz Award.

This company has come up with software that lets you hover over a link and quickly see the entire web page without actually clicking your mouse button.

Instead of dealing with the rigors of tabbed browsing, users can now glance at hundreds upon hundreds of web pages at, erm, mouse-over speed. Browster claims that the average user will look at about 10 times as many web pages as a result of its technology. This potentially means more money for the likes of Yahoo! and Google. You can see Browster CEO Scott Milener try and explain the great browsing gains here.

If this technology took off, Google or Yahoo would be able to create their own version of the code over a long weekend and knock Browster flat. Milener, however, insists that making an extra browser window is "harder than it looks" and assured us that the company has patents on the technology. He also reckons that people get addicted to surfing with an extra browser window.

Time magazine apparently dubbed Browster "one of the year's coolest innovations", which speaks volumes about the mainstream media's attachment to reality.

Milener has basically taken a mouse gesture and created an entire company around it. We can't believe people fund this.

(Also present was OQO, which isn't a Web 2.0 company, but it might as well be. OQO makes a teeny, full-fledged PC. It's not a PDA, it's not a laptop and that's the problem. Without doubt, the company has impressed by cramming a full computer into something about as big as two or three or even four cellphones. But, if we wanted to carry around a warm brick in our pants, we'd work at brick factory, and sure as hell wouldn't pay $2,000 for the honor.)

The verdict?

An enlightened PR company, Bite is streets ahead when it comes to showing off its clients. We just hope these companies have enough cash to pay their fees before they expire. ®