The Mountain View video content management service started by three ex Googlers won the first Amazon Web Service challenge that concluded at a dinner event tonight at the Seattle W Hotel.

Ooyala also has another local connection. Co-founder Sean Knapp, who previously was a UI designer at Google and developer of iGoogle, is from Gig Harbor.

Ooyala and six other finalists endured a daylong series of presentations, first at Amazon HQ on Beacon Hill and then at the hotel with a passel of venture capitalists.

As the winner, it gets $50,000 in cash, $50,000 in Amazon Web Services credits and seed funding - in an amount to be determined - from Amazon.

Best of all, the winners received a gold-painted sledgehammer signed by Jeff Bezos and presented by AWS Senior Vice President Andy Jassy, who told them they "can take a hammer to your servers because you no longer need them using Amazon Web Services."

Then the three founders donned safety goggles and took turns whacking an old server that Jassy set on the dias.

Ooyala was one of the most polished companies and also the most secretive - it was the only finalist that insisted reporters not be allowed to listen to its presentation.

That may be because the company hasn't yet announced its second round of funding. It sounds like its getting around $7.6 million, following its initial $1.5 million. Plus whatever Amazon puts in.

Since they don't really need the $50k, maybe they'll share some with their former intern, Maneesh Sethi, who suggested three months ago that the company participate in the Amazon contest. Sethi's already back at Stanford, co-founder Belsasar Lepe said.

My early guess on the winner was off a bit - you really can't judge a book by the cover. In particular, I was too quick to write off the SEO and insurance companies which both seemed to fare well and turned out to have pretty interesting technologies.

Commerce360 is working with a math professor who earlier worked on Yahoo's search algorithms and Milemeter has submitted something like 50 patents for its pay-by-mile auto insurance concept.

Milemeter President Chris Gay told me the competition was a great opportunity and winning would be worth "millions," factoring in the Amazon investment and credibility it would bring to his company. He was also glad for the chance to pitch to the assembled venture capitalists, even though some of them were familiar.

"Ironically, more than half have already turned me down,'' he said.