The truly inside story of starting the Xbox and Zune businesses at Microsoft was shared in a remarkable lecture Friday by Robbie Bach, the retired president of the company's entertainment and devices business.

Bach shared his unique perspective on why the Xbox was a success and the Zune was not during a presentation on intrapreneurship, or how to operate like a startup and launch new ventures within a large, existing business.

The lecture included advice for companies looking to foster entrepreneurial culture, and for all sorts of entrepreneurs entering competitive new markets. It was a breakfast event held by the Northwest Entrepreneur Network in South Lake Union.

Bach described the corporate retreats where the Xbox business was hatched and how Sony fumbled its lead and gave Microsoft the opportunity to get ahead in the console business.

"When the luck happens, you take advantage of it and run with it," he said.

It also helped that Bach's startup had $5 billion to $7 billion in funding available, he joked.

That wasn't enough to help the Zune, though. Bach admitted that Microsoft quickly realized it was too late to prevail in the portable media player business and in hindsight he would have built a music service rather than devices. Apple executed well and didn't give Microsoft the sort of breaks it had in the console business, he noted.

Bach's now focused on philanthropic organizations, serving on the board of audio gear company Sonos and looking to buy a mid-size family business like the food-service supplies distributor that his father operated in retirement.

Here's a raw video of the event. Apologies for the quality; it was taken with a new smartphone that was supposed to capture high-def video ...:

Apparently not everyone appreciates my sense of humor.

Including a certain major investor in Facebook who is trying to bring an NBA team back to Seattle.

That would be Chris Hansen, the San Francisco hedge-fund manager orchestrating a deal to restore his beloved Seattle Sonics.

Hansen called last week after I wrote a blog post about how Facebook's upcoming IPO may help his basketball venture.

Hansen has a big stake in the outcome of the Facebook stock offering, expected at the end of this week. He's the managing partner of a San Francisco investment company, Valiant Capital, which scored a coup in 2010. It was able to buy 36,335,590 private shares of Facebook for less than $500 million.

If Facebook does well after public trading of its stock begins, Valiant may double its money. At the high end of Facebook's projected offering -- $35 per share -- Valiant's day one gain would be nearly $800 million. Its shares would then be worth $1.27 billion.

Who knows how the stock will fare. It's supposed to break IPO records, but some big investors were reserved last week after Chief Executive Mark Zuckerberg pitched the stock while wearing a hoodie, then disclosed that ad sales aren't growing as fast as site usage.

Maybe Facebook waited too long. Or maybe investors don't fully understand the complex machine that Zuckerberg built. Love it or hate it, Facebook seems to have all sorts of levers and dials to pull and twist and boost sales at will.

As they say, the rich get richer.

Then some of them decide to buy sports teams.

If they ask for public assistance -- especially from cities pleading poverty -- they become fair game for snarky blog posts.

My post joked that the Facebook windfall could enable Hansen to build two arenas without public financing, or refit KeyArena with heated massage chairs and a helicopter shuttle service.

Hansen didn't seem to mind the ribbing. He even read the flurry of online comments it generated.

But he wanted to make it clear that he personally won't pocket that $800 million.

"I would just want people to understand that Facebook is a position of my investment-management company, not a personal investment of Chris Hansen, and therefore the profits are the profits of the fund and the investors that it represents," he said.

As for his effort to build an arena for a Seattle NBA team, Hansen said it's going "great."

"I think we went into it knowing there would be some concerns, some constituencies that would be against it, that negotiations with the city and county wouldn't be easy," he said. "But I think there's very broad-based support, given the thoughtfulness and fairness of the transaction relative to the prior proposals in Seattle and other stadium transactions and arena transactions."

I'm not sure Seattle has decided yet whether it's fully invested in this offering. Yet Hansen, a Roosevelt High School graduate, is hoping his hometown ends up on his side.

"Hopefully people just trust -- really -- I'm trying to do what's right by the city," he said.

In the meantime, this should still be a pretty good week for Hansen, as long as Facebook doesn't face plant.

Firms like Valiant typically charge investors about 2 percent a year to manage their money and take 20 percent of fund profits.

So if Facebook stock does really well and Valiant's gain is $1 billion, the firm would net $200 million.

Most of the gain would go to investors in the fund, such as endowments and foundations. Hansen likely is personally invested in the fund, as well.

Hansen doesn't get all of the firm's profit. Valiant has eight or nine partners who share the firm's profits, although Hansen gets the largest share as managing partner.

This is business as usual, but it's become a sensitive topic for Hansen.

Especially since he asked the city of Seattle and King County to back a $200 million loan to help finance a $490 million arena south of Safeco Field.

Whether Hansen can pay for it all himself doesn't matter too much since local politicians are falling over each other to back the project. They did the same thing for Paul Allen, who is one of the richest men on earth. But it's a good opportunity to look at how these businesses work.

Facebook's the stock du jour, but Valiant invests in all sorts of companies in the U.S. and abroad. Its largest public holdings in the U.S. are $128.1 million worth of Apple stock, $78.6 million worth of Google and $71.2 million worth of cable company Liberty Global, according to a May 10 disclosure report.

I think there's enough there to say Hansen is continuing the Seattle tradition of using technology riches to fund pro sports teams.

Nintendo of America is the majority owner of the Mariners. Co-owners include veterans of Microsoft and RealNetworks.

Microsoft co-founder Allen owns the Seahawks and the Portland Trail Blazers. He's also part owner of the Sounders, whose general manager, Adrian Hanauer, was an early investor in Amazon.com and aQuantive and continues to be involved in Seattle startups.

Hansen hasn't yet disclosed the group of investors in his NBA venture but it's a safe bet that some made their fortunes in tech.

Nor is Hansen talking about his personal wealth, but he's otherwise adjusting to being a public figure.

"If I wasn't involved -- hadn't made a decision to come be involved bringing the Sonics back to Seattle -- I would have continued to enjoy my anonymity, continued to enjoy and value my anonymity," he said.

Hansen knew the spotlight was part of the deal.

"I have to be comfortable with it if I'm going to be successful," he said. "It comes with the territory."

Get ready, Chris. So do cheers and jeers from the cheap seats.

Seattle basketball fans may have a reason to cheer for Facebook's upcoming public stock offering.

One of the early investors who stands to make a quick fortune on the deal is Chris Hansen, the San Francisco hedge fund manager trying to develop a new arena in Seattle and bring an NBA team back to town.

Hansen bought private Facebook stock in 2010 that's worth up to $1.27 billion at the high end of Facebook's IPO plan, according to a Forbes story. It estimates that Hansen paid up to $500 million for the shares.

Altogether his fund, Valiant Capital, has 36,335,590 shares of Facebook, or about 2 percent of the voting shares, according to the social networking giant's stock registration statement. For perspective, Microsoft has just under 2 percent, with 32,784,626 shares.

If the stock prices at $35, that would net Hansen's investment firm nearly $800 million - enough to finance two new basketball arenas without any public assistance.

Or to build one arena and a new shipping terminal for freight traffic farther away from the stadium district. Or to refit KeyArena with heated massage chairs throughout the stands and provide helicopter shuttles to fans from Bellevue, Everett and Federal Way.

That's at Facebook's initial price, at the high end of the projected range. Imagine the possibilities if the stock jumps after the offering.

Forbes notes that Hansen's Valiant Capital was managing $3.26 billion worth of assets as of February, including big stakes in Apple and Google.

It's not clear how much of a personal stake Hansen has in these holdings. Hedge funds typically charge a percentage or two for management and take a share of the funds' returns, perhaps 10 to 25 percent.

At Valiant, he's representing an unnamed group of investors in the fund, similar to the way he's representing a group of unnamed investors pursuing the Seattle basketball venture.

Inspired by our local space explorers, I donned my high-tech prospecting gear and set out to mine precious nuggets of wisdom from a nearby star.

That would be Rich Barton, the startup wunderkind who founded Expedia as a twenty-something Microsoft manager, spun it into the world's largest travel business and became a serial entrepreneur.

Barton went on to co-found Zillow in 2005 and became a venture partner at Benchmark Capital, the Silicon Valley venture-capital firm that owned 20 percent of Instagram before it was sold earlier this month to Facebook for $1 billion.

From Barton's perch, at least, it looks like another tech boom is under way and money's flowing like the old days, back before 2008.

Barton shared this view -- and tips on how to start and build big companies -- last week with the local chapter of The Indus Entrepreneurs. Here's my edited trove from the event.

On today's climate for startups: "It's pretty frothy. It's a great funding environment, great for the entrepreneurs. There is a ton of money chasing good people with big ideas. It's as snap, crackle and poppy as I've seen in more than a decade. There are lots of exits happening, there are lots of companies going public right now, there is a reasonable amount of [merger and acquisition] activity that's going on. If the market holds up, we're about to enter a phase of serious IPO activity.

On demand for new tech stocks: "The public market, buy-side guys -- the guys who run the mutual funds, the technology-oriented mutual funds -- are starving. They've been starving for a decade for product to buy. It's kind of been fashionable, if not convenient, for companies to not go public, and all of a sudden everything's coming public. I think we're going to see a ton of activity."

On making mistakes: "I think the great skill of the entrepreneurial mindset is the ability to forget mistakes. Learn the lessons from the mistakes, but forget them and not obsess on them and not let your mistakes undermine the confidence you have around the dreams you have. I think that's a big thing."

On spreadsheets: "I tell you, the spreadsheets never work out the way the entrepreneurs and the venture capitalists think they're going to work out. We all know that. ... Rarely does the company end up being what the original idea was anyway. So you've got to have people on the boat who can figure out how to change the fly, put something new on there and be creative and figure it out."

Pitching stories, not numbers: "I'm a PowerPoint guy, not an Excel guy, put it that way. I think people that come in with lots of projections and Excel spreadsheets at very early stages doesn't necessarily bode well. ... It's very difficult to plan the unplannable, so I look more for passion around a story and idea than I do around a spreadsheet."

Mobile, mobile, mobile: "If an entrepreneur comes to me these days and gives me a demo of a website and doesn't demo something on a smartphone, I almost out of hand am not even interested in it, because that shows an unbelievable lack of understanding of how people are actually interacting with the Internet now."

Traffic before revenue: "All of my businesses -- I look for getting a mass-engaged audience first and worrying about a business model second. Expedia was that way, Zillow was certainly that way. ... Get the masses in first, then figure out how to monetize."

On changing course: "Pretty much everything I've been involved with had some kind of pivot. Zillow had a really big one. We had raised money -- my guess is, we had raised $20 million -- before we even figured out what the product was going to be. ... We actually thought the way for perfect price discovery in real estate was going to be auctions."

On raising money: "The whole venture-capital business is one that operates a lot on personal networks that have been established. For people who are trying to get plans in front of me, the best way ... is to have somebody who I know really well and think is smart tell me to take a look at something."

Capital in Seattle vs. Silicon Valley: "There's plenty of money up here. There's a lot more down in the Valley. ... I find that the Seattle startup ecosystem is a few steps behind but on the same path as the Silicon Valley ecosystem."

On Gates and Ballmer: "Bill Gates and Steve Ballmer were my venture capitalists at Expedia. I kind of thought of them that way. When I pitched the idea of Expedia to Bill and Steve, I tried to get them to fund me on the outside. Honestly, I said I want to start my own business and said look, this is a travel business, not a Microsoft software business. They kind of laughed at me and said, 'Who are you going to hire?' But what they did say is look, you may be right, let's get this going internally and if it makes sense to spin it out, we'll think about it."

On spinning off Expedia: "You know, huge credit to those guys: When it came time ... I came to them and said, 'Look, Expedia is on the brink of becoming something huge and interesting and important. If we stay at Microsoft, it will not be. If we spin it out, it might be.' And along with that I asked for $100 million to spend in marketing. Steve Ballmer was my boss at the time [early 1999]. ... He said, you're not getting $1 million from me to market. I said, 'Well, you know what, the public markets will give me $100 million, and they'll give it to me really cheaply, so let's go do that -- let's take the public market's money and turn this thing into something real.' And he said OK and we did it. It was a grand experiment for Microsoft.

"Microsoft has not done anything like that since but it obviously worked out -- it worked out quite well. Expedia was half the size of the largest player in the space when we spun out. Within 18 months, it was twice as big as the No. 2 player."

What's needed to take the startup plunge: "Courage. Think of 'The Wizard of Oz.' We've got the Cowardly Lion, the Scarecrow and the Tin Man. My kind of view of great entrepreneurial leaders is courage for the Cowardly Lion, you've got to have brains for the Scarecrow and probably most important is, you've got to have a heart because you cannot attract people or capital without a heart. People respond to passion; people respond to real feelings, real emotion, things that really matter."

His busy schedule: "When you have eight jobs, it turns out nobody knows when you don't show up to work."

For every Mark Zuckerberg, there are thousands of entrepreneurs still waiting for their big prize.

Sometimes it's just the promise of a steady paycheck.

Consider the fate of Seattle's TeachStreet, an online education directory that's shutting down Feb. 15 after five years. Its breakout moment never came, but the company still had an outsized effect on the region's startup community and ended up teaching a few lessons itself.

Chief Executive Dave Schappell, 43, left Amazon.com in 2004 to work for philanthropies and startups. The idea for TeachStreet crystallized over coffee with another Amazon vet, Jason Kilar, who now runs Hulu in Los Angeles.

With less than a dozen employees, TeachStreet built an online version of the community bulletin board for listing instructional services such as piano lessons and language teachers. Its listings grew to more than 400,000 local and online classes, and investors eventually put more than $3 million into the business.

While TeachStreet built up an audience and began expanding beyond Seattle, Schappell became a prominent member of the region's enthusiastic circle of Web entrepreneurs.

Schappell -- who earlier helped lead the humor website JibJab -- is a garrulous rainmaker who stood out in field of polished networkers.

Among his lasting contributions is the monthly "Hops and Chops" startup gathering at a Capitol Hill bar, where Schappell promised to pick up the tab last Thursday, the day TeachStreet announced its fate.

"He's one of those guys who has 40 hours a day somehow ... and he found lots of time to help out," said Scott Jacobson, a partner at Madrona Venture Group, which invested in TeachStreet, along with Kilar, Jeff Bezos and a handful of others from Seattle. "That's the hallmark of a guy who's not just a good entrepreneur, but cares a lot about the startup ecosystem."

Schappell said the turning point came a year ago.

After four years -- and a painful restructuring in 2009 -- TeachStreet became "essentially profitable" in January and February of 2011.

Then it was walloped -- by Google's notorious "Panda" revision to its search ranking system.

Google's goal was to improve the quality of its results and demote sites that used sketchy techniques to boost their search presence, but the casualties included scores of sites like TeachStreet's that were built largely around the flow of customers from Google.

"That was the point where we lost two-thirds of our traffic overnight," Schappell said. "We tried a lot of things to try to recover that traffic."

At that point TeachStreet had to decide whether to raise more money for a renewed push or "find a good transition," he said.

"That's when the expense shortfall or the net losses started piling up," he explained. "We looked at things and felt the better thing was to find a partner who already had a lot of traffic and matched our content."

It turned out the partner was right outside TeachStreet's office in South Lake Union, which is now dominated by Amazon's headquarters.

A month ago Schappell subleased TeachStreet's space to social-gaming startup Massively Fun. Then last Tuesday the TeachStreet team began working in its new offices at Amazon, where it's now part of the AmazonLocal team offering daily deals from local merchants.

At first, I wondered if AmazonLocal was going to draw on TeachStreet's directory to sell discounted lessons, but that apparently wasn't part of the deal. TeachStreet will delete all student and teacher customer data when it shuts down.

Amazon spokeswoman Mary Osako said via email that "the TeachStreet.com team will join us to work as part of the growing AmazonLocal team," but didn't provide more details.

So how did the investment turn out for Madrona?

The firm's "happy with the outcome," according to Jacobson, also an Amazon veteran.

"Dave's a really talented entrepreneur and we certainly enjoyed working with him, and Amazon's getting a great team," he said. "In all those senses, it's a great outcome."

Jacobson wouldn't discuss the terms or what intellectual property Amazon acquired.

But speaking generally, he said that companies wanting to quickly build a team may invest in "experiential IP" -- or an experienced group of developers.

"Sometimes you can accelerate that by having a coherent team that already works well together, has already seen all the challenges, knows what mistakes not to make," he said. "A well-oiled machine that can just hit the ground running and has the background and experience to not make the same mistakes is actually quite valuable."

It didn't get the blockbuster exit, but at least the TeachStreet crew ended up with good jobs at a leading tech company.

The real lesson may be that companies have to be careful about building too much of their business on a single, shifting platform. That's hard for Web startups, given the dominance of Google and Facebook. But Jacobson said new devices and services are giving companies more channels to reach customers now, compared to the early days when startups battled for play on AOL, Yahoo or the "carrier deck" of software that phone companies loaded on earlier cellphones.

"There's a lot of examples -- not just in Web -- where if you're not well-diversified, you run risk as a business," he said. "I don't think anybody says, 'We're going to hitch our wagon to one thing or another,' but in some cases they're more exposed to one source of traffic than others."

He pointed to other companies that did break through, such as Yelp and the Cheezburger network, which built brands strong enough that people navigate directly to their sites.

That may be what TeachStreet clients have to do after the site shuts down next week. One of the first users, Wedgwood art teacher Janet Lia, said TeachStreet was "vital to the growth of my art studio" and brought 90 percent of her students now taking private lessons.

"I'm feeling nervous and tenuous about not having that exposure on the Internet," she said.

Lia started her AWE Studio the same year as TeachStreet and used its free listing service. Later she paid monthly fees for premium services such as marketing templates.

"In this economy, to start a business five years ago and be successful has been pretty miraculous," she said. Now, "I'm going to have to do the work to complete this."

Here's Schappell demonstrating the TeachStreet just before its launch:

LAS VEGAS -- Some companies spend millions building huge booths and producing glitzy stage shows for the Consumer Electronics Show.

Perpetua, a little energy-device company in Corvallis, Ore., sent Jerry Wiant with a laptop and a few gadgets to set on a table.

That's all it took to hook me, though.

Wiant's demonstration of "energy harvesting" gizmos was one of the most intriguing things I saw at the massive event last week.

Maybe that's because the bigger companies were holding back this year, making it hard to find radically new products.

There were lots of improvements on display -- brighter TVs, thinner computers and faster memory cards -- but not many huge breakthroughs apparent on the show floor.

The annual gadget fest suggests that every year we should expect waves of exciting new products, but in reality the cycles of research, development and technological change are longer, and some years bring more iteration than innovation to Las Vegas.

Still, there were plenty of exciting new products and some far-out creations that left me excited about what's still around the corner.

Like Perpetua's technology for powering gadgets with body heat instead of batteries.

Drawing on research from the Pacific Northwest National Laboratory in Richland, Perpetua developed thermoelectric devices that convert temperature differences in dissimilar metals into electricity.

Since 2005 the company has been selling these energy-harvesting systems for industrial use, where they may be attached to warm pipes to power sensor systems, for instance. A number of employees came to the company from Hewlett-Packard's Corvallis printer operation, and Perpetua's devices are built in a way similar to HP's inkjet hardware.

Now Perpetua is working on smaller, wearable versions that generate electricity just from a person's body heat. The National Science Foundation and Department of Homeland Security are helping fund the research. The company also partnered with Texas Instruments to add wireless connectivity to the devices.

Within a few years, Perpetua's wearable devices could be used to power consumer gadgets, starting with fitness sensors and medical devices.

To show the concept at CES, Wiant had a small thermoelectric generator connected to a digital watch. Pressing your finger on the generator provided enough heat to power the device. Also on display was a prototype armband.

Wiant's show booth -- really just a table with a display board -- was in a far corner dedicated to innovative startups.

I didn't realize Wiant's company was just down the road until we started talking. Then I also found out that the company was funded partly from the proceeds of a startup -- Internet marketing company TrafficLeader -- that Wiant sold to Seattle's Marchex in 2003. He was an early investor in Perpetua and became its vice president of marketing in 2008.

Friday, as he packed up, Wiant said he didn't have much time to tour the show because he was busy manning the booth.

But he said it was worthwhile, and Perpetua drew a lot of interest from potential business partners.

"I have a stack of cards about 20 deep that are serious opportunities, which is really good," he said.

If one or two of those contacts come forward with development funding, he said, Perpetua could release the wearable thermoelectric products in 2013 or 2014.

Maybe Wiant will be back in Vegas then with a bigger booth. It shouldn't be hard to miss -- if it can harvest the energy of 150,000 conventioneers looking for the next big thing.

File-sharing startup TappIn is dancing the two-step today after being acquired by San Antonio-based GlobalSCAPE for $9 million.

All eight employees of TappIn will remain in Seattle, working on the company's software for sharing and accessing PC files from mobile phones and tablets.

TappIn shareholders may receive up to $8 million more from the deal if revenue and product development targets are met over the next three years.

The company, formerly known as HomePipe Networks, was started in 2009 by veterans of Aventail. Chief Executive Chris Hopen was formerly Aventail's co-founder and chief technical officer, and TappIn CTO and co-founder Parvez Anandam earlier worked for Aventail, Microsoft and Symantec.

GlobalSCAPE is a publicly traded company offering file transfer software and services to businesses and consumers.

"Combining GlobalSCAPE's leadership in secure information exchange with TappIn's strength in secure digital content mobility allows us to deliver a powerful solution for consumers and businesses," GlobalSCAPE Chief Executive Jim Morris said in the release.

Seattle tech investor Rich Barton has another project, which he tested at his home in the Washington Park neighborhood.

Called Nextdoor, it's a new platform for creating neighborhood Web sites that function as bulletin boards, newsletters and notification systems. Neighborhoods can use Nextdoor sites - which it calls "private social networks" - to do things like post items for sale, look for a babysitter and organize events.

It's kind of like a neighborhood version of Microsoft's SharePoint collaboration suite.

Barton - a Microsoft veteran who led Expedia, co-founded Zillow and is now a venture capitalist - was prompted to try Nextdoor by its founders in San Francisco. They tried "quietly, but I didn't get it," Barton recalled.

Finally Barton and his wife, Sarah, tested the service in Washington Park, Barton was convinced and put his own money into the startup, one of five or six he's involved with now. Also investing in the company was Benchmark Capital, the Menlo Park, Calif., venture firm where he's a partner.

"Seeing it is the greatest way to get sucked into it," Barton said. "It is a truly useful as well as emotionally appealing way to connect with your neighbors."

In one test, Barton used the site to unload a MacBook Pro that he no longer needed after buying a new one. The site connected him with a neighbor who runs a yoga studio in Madrona. They worked out a deal - a year of yoga for the laptop - and they closed it over a glass of wine at his house.

Nextdoor is free to use. It plans to make money eventually by adding offers to the site, such as referrals to contractors or real estate agents.

It's among numerous Web ventures pursuing the market for hyperlocal services and advertising - a space that Zillow staked out with its real estate value and mapping services.

"Local, social and mobile are the three big vectors of innovation right now," Barton said. "Nextdoor really hits the local and the social well. Additionally it'll be used mobile-y as well but it's not primarily a mobile application."

One differentiator is the privacy controls that Nextdoor applies. Information shared on the neighborhood sites isn't broadcast or shared broadly, as on social networking sites - they're mini social networks accessible only to participating neighbors.

The privacy of the neighborhood sites is key to acceptance. Eventually they could be connected somehow to outside services such as Facebook or Craigslist.

"We've talked about it but there's no explicit plans for that right now," Barton said, adding that the company experimented with Facebook Connect but users wanted a separate registration system for their neighborhood sites.

Zillow seems like a natural partner, to add mapping and property information to the sites.

"We've certainly chatted with them about it," Barton said. "There certainly could be some interesting points of intersection going forward."

Barton said neighborhood penetration so far has been "pretty good" with around 25 to 30 percent of neighbors participating in the 150 or so neighborhoods in 25 states where the service was offered in a pilot program.

Today the service is opening up for anyone to use across the country. To start a neighborhood site, someone needs to become the "founding neighbor" and define the boundary. They need to invite at least 10 neighbors to get the site started.

Nextdoor was started in 2010 by tech startup veterans including Chief Executive Nirav Tolia, a Yahoo veteran who co-founded the epinions.com shopping site. It has about 15 employees in San Francisco and backing from Benchmark, Shasta Ventures and private investors. Barton said it's likely to seek another round of funding in about a year.

A few more screenshots:

Seattle's F5 today reported that its sales crossed the $1 billion a year mark, the highlight of a strong earnings report that boosted the stock on what was otherwise a rough day for tech stocks.

Although overall tech spending is suffering from the uncertain economic conditions, F5 and a few other companies found a niche providing software, hardware and services that big corporations are using to modernize their networks and datacenters.

F5's traffic management and security products have been selling especially well
to phone companies upgrading their networks to handle the flood of data traffic from
mobile devices and video services.

"If you're using social networking, if you're doing online banking or booking an airline ticket or sending a text or trading a stock, there's a real high chance you're using us," John McAdam, company president and chief executive officer, said in an interview.

The company also disclosed that it has been hiring like crazy and plans to continue adding jobs.

It hired about 480 people in its fiscal year ending in September - bringing its headcount to 2,490 - and plans to hire at least 100 more by the end of this year. That includes 155 jobs added over the last year in Washington, where it employs 850 in Seattle and 150 in Spokane.

Shares of the networking hardware maker jumped about 8 percent in after-hours trading to around $96 after the earnings were disclosed. Earlier they'd fallen 5 percent to close during regular trading at $88.76.

(UPDATE: The stock's really moving today - Wednesday morning: it's up 13 percent to $100.30 at last check)

Sales were up 24 percent during its last quarter and 31 percent - to $1.15 billion - during its fiscal year ending Sept. 30. Earnings per share were 84 cents during the quarter and $2.96 for the year, up from 77 cents and $1.86 the previous year.

McAdam said there was strong demand for its new Viprion 2400 and Viprion
4400 chassis. The company also released a major update to its operating system during the quarter.

F5 was incorporated in 1996 and went public in 1999.

Although F5 is expecting seasonal slowdowns in the current quarter, the broad upgrade cycle taking place in corporate computing - with companies using virtualization to consolidate servers and shifting applications to internal and external "cloud" networks -is nowhere near over, McAdam said.

"I think there's at least a five-year run rate on this type of architecture and it could easily be longer," he said.

Meanwhile finding enough of the right people to continue expanding the company will be a challenge for F5, McAdam said, but he expects the company will be able to continuing growing in Seattle and its other locations around the world.

There's also enough room at its headquarters along Elliott Way to accommodate
the growth for a few more years, after which it will probably need to find another location in the city, he said.

To celebrate the $1 billion milestone, there's a company meeting Wednesday at which employees will get cake and t-shirts with a rocketship logo.

Reaching $2 billion in annual sales will take a little longer, but McAdam said next year's growth will be a big step in that direction.

"We reckon we can do at least 20 percent," he said.

The company prepared a graphic timeline of its history to mark the occasion:

The startup blog post of the day has to be Rand Fishkin's extraordinary piece detailing how SEOmoz was about to receive $24 million in funding, until the lead venture firm backed out at the last minute.

Fishkin speculates that the deal fell through because of a slight dip in July revenue -- even though SEOmoz is on track to double sales this year to $11.4 million and post its third consecutive year of profits.

Personally, I feel burned. This is the second time in 3 years that I've gotten excited about raising a potential round of capital, and it turned out terribly both times. I'm not sure what I did wrong or what I should do differently next time.

SEOmoz, which offers tools and services for search-engine optimization, was going to use the funding to expand beyond SEO and into new categories such as social and mobile. The capital would also cover the rising cost of its Web infrastructure, increase marketing, pay for a new Seattle office and give Fishkin (pictured) and his mother a cash payout.

Today's post is a bookend to a similar post Fishkin published in January 2010, about his last attempt to raise capital. That one also fell through but resulted in a priceless primer on venture capital for entrepreneurs.

Startup bosses periodically post educational, confessional blogs to help their peers navigate common challenges or learn from their mistakes. But they rarely provide so many details or shine so much light on the gyrations of the funding process.

This time around, Fishkin started the quest in November and had a serious bite in May. Negotiations resulted in a deal that would provide $19 million from the unnamed new investor and $5 million from Bellevue's Ignition Partners, which had invested $1 million in SEOmoz in 2007.

The new deal valued SEOmoz at $89 million after the deal closed and provided a $1.25 million payout to Fishkin, the chief executive, and $4.75 million payout to his mother, Gillian Muessig, who started the predecessor marketing company in 1981.

Before the deal was closed, the market had its August dive and VentureBeat prematurely reported that SEOmoz had completed the financing. Fishkin speculates in the blog that someone may have warned off the VC firm after reading the VentureBeat story, or that the firm became skittish after the market's dip.

The deal fell through last week and Fishkin informed his team on Aug. 24. In the memo, posted in today's blog entry, he said the company will now decide whether to see other investors but he's inclined to go it alone. An excerpt:

"While this is disappointing, there is some upside. We don't want a fair-weather friend for an investor on our board, nor someone who doesn't fully believe in the company's future and potential. We are also free to pursue the course we feel best without having to please a new, outside investor on the board, who might have pushed for us to run fire drills to make up missed revenue targets rather than focus on the long term."

Here's the pitch slide deck that SEOmoz used in the process, to persuade its early backer, Bellevue's Ignition Partners, to participate in the new round. Note that he's pitching SEOmoz as Seattle's next $1 billion company:

Contour - a Seattle maker of wearable video cameras - is one of the nation's fastest growing private companies, according to the new Inc. 500 list.

Contour is ranked seventh on the list, up from 183rd on last year's list.

The company - which emerged from a University of Washington business plan competition- reported 11,663 percent sales growth over the last three years and now employs 57 people.

The stats included with Inc.'s list say Contour's revenue grew to $15.1 million last year from $128,635 in 2007. That's with two products - a 1080p wearable camera (pictured) that lists for $280 and a $350 version that also captures GPS locations - plus a Web site where users share their "adventure sports" videos.

"It's beyond my wildest dreams to evolve Contour from a project bootstrapped out of a garage to the seventh fastest-growing private company in the nation," Chief Executive Marc Barros said in a release.

Here are the top 20 companies on the list from Washington state:

Here are the top 20 companies on the list from the greater Seattle area:

It was supposed to be off the record, but Facebook Chief Executive Mark Zuckerberg decided to share during a meeting with a few reporters Wednesday night and agreed to talk openly about the company's Seattle engineering office.

His extensive answers to a few questions also provided insights into the remarkably successful company's internal culture and hiring strategy.

Zuckerberg is making one of his periodic visits to the Seattle office - its first real satellite development center, which has grown to about 40 people since it opened last summer.

The office is an open space on the upper floor of a tower overlooking Elliott Bay. On Wednesday a bunch of desks were pushed aside and chairs set up to create a sort of meeting room, in which Zuckerberg was speaking to a group of potential employees.

But first he spent a half-hour with a handful of reporters, letting a slice of Pagliacci's Margherita pizza go cold on his plate, while we talked.

He declined to specify how much the Seattle office will grow but he said Facebook is growing its engineering team by about 60 percent a year.

It could grow faster but Zuckerberg doesn't want it to grow so fast that it overwhelms the company's culture.

Seattle's become an important development center for the company, which will be releasing several products developed here, including improvements to Facebook's mobile site.

"The office is going really well," he said.

Rather than focus on a particular project, the Seattle office is integrated with the broader development work at the Palo Alto headquarters, he explained.

"Now we're starting to get to the scale where we're attracting a lot of really good people and we're starting to lead a bunch of projects from out here," he said. "Most notably there's a lot of mobile development."

"There are so many good engineers up here - largely from Microsoft and Amazon traditionally and then Google a bit more recently and there's a good startup scene up here, so it's going really well."

Seattle is the only remote engineering office, aside from two people in Tokyo. "That's more of an apartment," he joked.

The office opened in part because Facebook was increasingly wanting to hire people from Seattle who couldn't or wouldn't move to Palo Alto for various reasons, explained Mike Schroepfer, vice president of engineering.

"It wasn't just a numbers game for us - it was like, these people are really good," Schroepfer said.

At the same time Facebook engineer Ari Steinberg had a "personal situation" that brought him to Seattle - his fiancee landed a teaching job at the University of Washington - and he could open the office and bring his knowledge of the company's culture.

Asked about the career path for employees in Seattle versus Palo Alto, particularly product managers, Zuckerberg replied by explaining how the company has tried to cultivate a culture where people with different skills can lead projects regardless of their title.

"The leaders of a specific project can come from a lot of different disciplines," he said, explaining that that's in contrast to companies that are more heirarchical or led by product managers.

"Here it just depends on the person - there are definitely projects where the engineering manager is leading and there are definitely projects where the PM is leading," he said. "We have as many where the tech lead on the project is leading ... there are even a bunch where a designer is leading. I think that's good, a good diversity."

Zuckerberg then talked about how the company encourages people to "move quickly."

"The saying internally is to move fast and break things - not trying to break things, but it's okay if sometimes you break things because if you don't then you're probably not moving fast enough."

Sometimes this goes a little too far at a company where there's far more work than engineers. A video circulating within the company jokes about an incident with an intern, Zuckerberg said.

"This intern committed a bug on photos, I guess, that made it so you couldn't view any photos on the site for 20 minutes," he said. "This video (says) of course it makes sense that we'd send someone with three weeks of industry experience to fix the biggest photo site ... probably not our best moment."

The point was that it still feels like a small company, which indirectly answered the question about career paths:

"But it is one of the things that's coolest about the culture though is that, we touch so many people using the product - hundreds of millions of people - but the team is small," he continued. "I think that's one of the things that really characterizes working here. That won't be true necessarily forever ... but for now I think that probably is the biggest thing that people feel working at the company, not necessarily the career path."

Asked about Facebook's growth plan for Seattle, Zuckerberg said the plan "is to try to hire really good people," then provided another glimpse into the workings of the company.

"In studying the industry it seems like a bunch of companies - Google, Amazon, Microsoft - had a lot of really quick growth years where they doubled in size, or some companies even tripled," he said. "I really just don't think a culture can sustain that and so we've tried to grow the engineering team around 60 percent. Which is still very fast - it requires a lot of work to be done well - but it's a lot less than 100 percent ... It's like the company has grown so quickly now in terms of revenue and users that 60 percent is actually pretty restrained."

This requires another kind of discipline.

"I think the way you do that is by making sure that every person that you hire is like, really good," he said, then joked about how every company says that kind of thing, but Facebook has a formula.

"One thing you find in engineering is a really good person is like 10 times as productive as pretty good person. I'm not talking about a bad person - I think bad people are negatively productive because of all the externalities of stuff that has to be cleaned up around them - but pretty good people, who would be the best engineer at a lot of companies."

The trick is to find the best of these pretty good people, he said.

"If you make it so your recruiting process is optimized for getting the top 5 or 10 percent of those then you can keep the company small. And I think that that actually is the strategy - it's like, how are you going to scale the company to be larger and still feel good? The best strategy is to not have to scale the company to be massive before you have to and we're doing pretty well on that, with the user base that we have and then the employee base that we have. Obviously we'll hire a lot of really good people here... that's more the plan."

Asked again if there's a particular target, Zuckerberg explained how Facebook does its internal budgeting.

"One of the things that I think that I think is different about how we run Facebook is we try to do our budgeting and all that stuff on like the 50th percentile estimate. A lot of companies when they're doing a board estimate or if you're public, a public estimate, you try to budget toward what you think you will certainly hit, right?

We actually try to build our plans around what we actually think will happen. Then about half the time we're wrong up and half the time we're wrong down."

Although Steinberg may have hiring projections for Seattle, they aren't firm goals and quality is more important than quantity, Zuckerberg said.

"If he doesn't hit it we're not going to be unhappy," he said. "We're going to be unhappy if we're working with (poor) engineers."

Smith & Tinker, a once high-flying Bellevue game startup, is resurfacing this week with a new Marvel superhero game for Apple's iPad, iPhone and iPod Touch.

"Marvel Kapow!" features characters such as Thor, Wolverine, Spider-Man and Captain America. Players uses touchscreen gestures such as flicks to slash enemies with Wolverine's claws or shoot them with Spidey's web.

Smith & Tinker was started in 2007 by Jordan Weisman, a former Microsoft creative director. The company raised more than $29 million from a-list backers including Paul Allen and a group of venture capitalists.

The money was mostly used to develop a line of handheld game players aimed at young boys and built around a sci-fi monster game called Nanovor that launched in 2009.

That project was dropped last year after a restructuring that eventually cut the number of employees from around 55 to under 10. A recent check found Nanovor gear for 99 cents at Amazon.com, although the game's no longer supported.

Weisman remains on the board and contributes to creative work but the company's now led by Disney veteran Joe Lawandus. The company also relocated from Bellevue to space near the downtown Seattle waterfront.

"We've had a pretty interesting ride over the past few years," Lawandus said.

Lawandus said the company still has enough cash to build at least one more game based on Marvel characters. The company last year reached a licensing deal with Disney, Marvel's owner, that enables it to build casual games based on all characters in the Marvel universe.

"We're super excited about what we think tablets can bring to the mobile gaming space," he said, adding that the company is trying to reach big audiences with the brands used in its games.

"Marvel Kapow!" is available through iTunes in free versions with seven levels and advertising, or ad-free versions with 26 levels and additional characters that cost $1.99 for iPhone and iPod or $3.99 for iPads. Later the company may develop versions for Android and perhaps Windows, he said.

Brian Ferris, the creator of the OneBusAway bus arrival application, has a summer job after he finishes his PhD work at the University of Washington.

Ferris will spend a month or two coding for King County, helping it complete and test software for Metro's new bus radio and GPS system. He's already been developing the software that transmits bus location information in a standard format used by transit apps and services, and the temporary job will enable him to finish the project and test it within Metro's firewall.

At the same time, the county and other regional transit agencies have met and begun talking to the UW about ways to continue operating the collection of OneBusAway apps and web services.

I reported in May that Google hired Ferris to join a team in Zurich that works on transit and direction services and the UW and the county were hoping to find a way to continue his project.

In a blog post today, Ferris reiterated his hiring and disclosed that he's starting a temporary job at King County next Thursday.

Separately, transit officials are talking to the UW about ways they can keep the OneBusAway apps and services operating after Ferris leaves. They run on servers in the computer science school, where students and faculty have been working on related projects for decades, and are used for research in different departments at the university.

"We're all interested, we know OneBusAway is a great application, we'd like to see it survive," said Wayne Watanabe, IT service delivery manager for the transportation department.

Watanabe said his agency has been talking to Ferris for years about sustaining his work after he graduates.

Specifically, Ferris will be working on a SIRI repeater. SIRI stands for service interface for real time information, which is an "XML protocol to allow distributed computers to exchange real-time information about public transport services and vehicles," according to a description of the standard hosted at kizoom.com.

Metro's SIRI repeater should be complete this summer but the new radios and GPS systems it draws upon aren't on many buses yet. So far they're on the "rapid ride" fleet and being steadily added to other buses. They should be used throughout the fleet by the end of 2012, Watanabe said.

King County plans to freely share the location information for developers to build applications. If necessary, it will build a location tool for the public itself, Watanabe said.

"We feel that there are certain basic services that the public should have," he said. "Having a good real-time application is one of those, just like timetables."

Kobo today announced a new touchscreen version of its reader that will go on sale for $130 in June.

The device uses an E Ink display like Amazon's Kindle, which has yet to introduce a touchscreen version, and has Kobo's "Reading Life" software with social sharing features and a gamelike reward system.

It has a 6-inch diagonal screen, a software keyboard, a quilted back and a single "home" button a la the iPad. It connects to the Web and Kobo's bookstore via WiFi or a USB cable.

Kobo has been selling e-readers since May 2010 and initially allied itself with Borders. The company has extended its software platform, which is now bundled with tablets from Samsung and Research In Motion. It claims to have 3.6 million users in 100 countries.

Kobo is based in Toronto, Canada, but it established a Seattle presence in 2010 when it hired Todd Humphrey, a former Amazon.com director of business development, as its executive vice president of business development.

The company recently raised $50 million in funding and is now planning to open a full office in Seattle. Humphrey said it should be established by the end of the year.

"Whether it's five or 15 or 20 people, we'll see," he said.

Humphrey said the new Kobo eReader Touch Edition will be a serious competitor to e-reader made by his former co-workers at Amazon and the Barnes & Noble Nook.

"I think this device puts us ahead of them from a device standpoint," he said.

Humphrey said major retailers are very interested in selling the touch reader and it will help the company as it begins an expansion in Europe.

Seattle's Adapx, which produces digital pen technology, announced today that it raised $5 million and now has more than 800 customers

Adapx will use the money to build new products and expand a line of products used by the military for command and control operations. These products help intelligence, surveillance and reconaissance teams input data into digital maps and other systems by sketching on paper or touchscreens or speaking as they sketch on wall displays, the release said.

Altogether the 49-person company has now raised $24 million, including a stake taken by the CIA in 2006.

Venture capitalists are betting that Adapx is getting its stride providing software that enterprise customers use to get notes taken with digital pens into applications such as SharePoint, Office and CRM systems.

Chad Waite, general partner at OVP Venture Partners, said in a release that the company's Capturx line of products has seen "record growth in customers ranging from utilities and oil and gas firms to inspectors and insurance providers."

OVP, Paladin Capital Group and Pelion Venture Partners provided the new funding, upping their previous stake in Adapx.

After launching a string of hit humor Web sites, Ben Huh is turning his attention to online news.

The founder of Seattle-based Cheezburger -- a network of websites, including Icanhascheezburger.com and failblog.org -- detailed his plans in a wide-ranging talk to a group of Seattle journalists Tuesday night.

Long before he became the king of funny cat pictures on the Web, Huh studied journalism at Northwestern University's Medill school. He graduated in 1999 at the peak of the dot-com boom and was recruited into the world of online startups.

Now, having drunk and "thrown up" journalism school Kool-Aid, he wants to apply what he's learned to develop a new way to present and consume news.

His plan is to create an open-source platform that people could use to be "amateur editors," designing and managing their own blend of online news sources and advertising. If there's enough interest he'd like to develop it as a public tool like blogging platform WordPress.org.

The end product sounds like a portal creation tool along the lines of Netvibes.com, a site that lets users customize a personal home page with widgets and news feeds.

Huh floated the project -- and riffed on topics ranging from Fox News to Twitter and democracy -- at a Tuesday meeting of the Online News Association and regional chapter of the Society of Professional Journalists. Afterward he said the news platform is a personal project of his, separate from Cheezburger.

Huh, whose sites draw on material generated by their online audience, believes people are able to develop a "sixth sense" about what's truthful online.

"We are learning to use our emotional brain and our gut to figure out what is and isn't good news," he said.

Huh believes that editors must put more emphasis on topics that appeal to their audience, as opposed to stories that editors deem to be important.

"The role of, I think, the editor tomorrow is going to be more about understanding the tastes of their audience rather than trying to figure out what should and shouldn't be covered based on some arbitrary standard by the media," he said, adding that "a great editor knows how to increase ratings and also keep their integrity."

Social media is one way to figure out audience interests, he said: "Social media gives us a lot of data about what people are looking for."

Sites need more than viral hits that temporarily bring a large number of visitors, he said. They need to consistently provide good content that gets people to return again and again.

Selecting -- or curating -- a mix of news is different than reporting, he said.

"One of the things that I've found out is that people are really, really, really good at curating," he said. "People are really good at filtering and curating, more so than they are at creating content."

Huh continued: "The ability to curate requires that you sit at a computer. The ability to create requires that you get off your computer and go out there. Very, very different things and different people are willing to do that."

Here's a lengthy video that captures most of Huh's presentation Tuesday. He was interviewed by Cory Bergman from MSNBC.com.

The line was out the door Tuesday night at the new Seattle office of Zynga, the red hot San Francisco social games company.

About 175 engineers and game developers crammed into the space in the Washington Shoe Building in Pioneer Square.

Zynga called it a launch party, but it was really a recruiting event, the latest in a series of meet-and-greets hosted by California companies tapping into Seattle's deep reservoir of tech talent. Similar events were held earlier this year by Salesforce.com and Facebook, while Google, Amazon.com and Seattle startups have been talking up their hiring plans.

Tuesday's highlight was an appearance by Zynga founder Mark Pincus, who gave a quick speech and worked the room, shaking hands and getting his picture taken with fans.

Zynga has had amazing growth. Started in 2007, it now has around 250 million players for its games such as "FarmVille" and "CityVille." They're mostly played on Facebook, generating a staggering amount of information about players' activity that Zynga needs help sifting and analyzing.

Pincus, 45, told the crowd - including engineers from Cray, Amazon.com and RealNetworks - that Zynga is tracking 8 billion "neighbor connections" among between users, who generate 5 terabytes of click data per day, up 500 percent from the fall.

Managing this flood is a challenge but "what's more interesting is what you do with it," he said.

Also interesting to the audience is the chance to join Zynga before it goes public. Last month it was reportedly valued at $10 billion by investors and positioned for an IPO in 2012. It has raised more than $360 million and has nearly 2,000 employees.

In Seattle, Zynga set up enough room for 54 employees people initially. So far 10 seats are filled, mostly with early Amazon.com employees like Neil Roseman, who was hired last month as the vice president in charge of the office.

During an interview at the event, Pincus talked about Zynga's relationship with Facebook, its future and what he's looking for in Seattle. Here are edited excerpts:

Q: Why are you so interested in there so many Amazon.com employees here?

A: We are definitely not targeting Amazon or any other company.

It seems like there's a lot of affinity between the cultures of our companies. I have huge respect for Jeff Bezos and the way he builds his company - the idea that he took a simple concept like shopping and made it so much better, and created a vision that makes as much sense now as it did 10 years ago, and you know it will make as much sense in 10 years.

The way that company has built out, it's very technology-centric. It's about APIs and Web services. Really they were way ahead of their time in approaching e-commerce not as a compilation of Web pages, but as something with a much more powerful backend.
That's very similar to the approach that were taking to gaming. We want to have this very powerful backend that we've invested massively in, this real-time data store that may be the biggest in the game industry. I'm sure it's the biggest by the sheer quantity of data, and a culture inside the company that's very decentralized - everything is kind of an API service inside the company.

Q: Is your respect for Amazon why you're in Seattle?

A: No, we've been interested in Seattle for a long, long time. It really was more coincidental that Amazon's here and that we happen to have a bunch of former Amazon people.

It's more likely that the Microsoft influence on Seattle will impact us than Amazon in the sense that we're excited about the level of real hard-core engineering. When I think of the engineering horsepower here, I think in many ways it can be deeper than the Bay Area.

Q: The opening comments by you and Neil suggest Zynga is building a new foundation of services. Is that for running Zynga post-Facebook?

A: There are a couple of focuses where this talent pool will be really key for us. One is broadly in network products - consumer facing products that have value across all of our games - like Zynga message center, which is used by more than half of our players every day as a way to interact and be social with their friends. There's a whole layer that we're excited about, surfacing more social opportunities in any Zynga game.

Q: Independent of the platform?

A: Independent of the platform. That's one area of network products. Another area is game development. If we can find and recruit world-class game entrepreneurs from up here - they exist up here but we don't have them - we would love to build games here.
The third area is on mobile platforms -- going deeper on new technologies whether around HTML, whether it's rendering tools, development tools.

Q: Zynga has figured out ways to keep players around, offering them fresh content. That seems to make you voracious, acquiring talent so you keep getting new ideas.

A: Yeah, because we approach games as a service, it's more like a TV show - it's more like "Lost" or "Seinfeld." The users of those games have a voracious appetite for new content. The games are all about engagement - these are really some of the deepest engagement on the Internet.

If you think about your options to spend time on the Internet, you can look at a bunch of links and text pages or interact in a deeply rich, interactive environment like a game with your friends. Chances are the game is going to be a more compelling experience while you're engaged in it.

But in our kinds of games, as you go up the ladder, there's this always increasing appetite for new content - quests, in Farmville - decorations, new features. We're always trying to innovate around creating new ways for you to interact with your friends. Farmville just launched Farmville England. In Farmville England we came out with things like animal breeding, new kinds of buildings that matter. Cityville has every week or every other week, they just came out with new version of franchises, which is incredibly social.

Q: You also do a lot acquistions, to keep the machine going ...

A: Yeah, the acquisitions have been about bringing in new DNA. We like teams that have worked together for a long time. We love teams that have already brought products to market and have that battle hardened sense of what it takes really to get something out the door and take it to scale.

Q: Had you considered buying a Seattle company to get started here?

A: We've been interested in Seattle for a long time. It's surprising when you think that we're in 13 locations it's taken us this long to come to Seattle.

Q: What do you think about Seattle's Big Fish Games and PopCap?

A: I think they're great companies that are in slightly different businesses than we are. I have huge respect for both of them -- and I play and have been addicted to a bunch of PopCap's games.

Q: Where will you be in two years?

A: I hope that we have made many, many tens of millions of more people into daily social gamers. I hope that we've made "play" as big a verb on the Internet as "search" or "shop" or "share."

Q: What will happen to console networks like Xbox Live and PlayStation Network?

A: I probably have a counterintuitive or contrarian view on that. I actually think you're going to see a surprising upsurge in their business. I think that social gaming is teaching a lot more people about how fun games are and I think there will be people who graduate upwards. I think you'll see the two come closer together in the sense the console games probably will see the value in going more where the Nintendo Wii went or most recently Microsoft Kinect. I think you'll see them see the value in going more casual. It's kind of like movies versus TV - they'll always be in a position to deliver a much higher value, deeper, engaged experience than the web can.

Q: You're following Amazon, Google, Facebook, Salesforce.com and others that recently had big recruiting pushes and events in Seattle.

A: Is it inappropriate to ask if their CEO's came?

Q: No - they didn't.

A: So we're hungrier for Seattle talent.

Q: Is Seattle talent's hungrier for you, because Zynga is in position to go public?

A: I don't know about that but I hope that people wouldn't join us because they were hoping we'd go public. We want people to join us because they're excited about this mission. I think there's probably a great financial opportunity at all of these companies. I'm hopeful people are excited about games and they're excited about the kinds of products we want to build and the ways we want to innovate and they're excited about the kind of data that we're digging into and the kind of problems we're trying to solve. It's a very different environment and experience at our company than any of those companies, public or private.

Ours is more small teams that are more like startups that have their own missions and they're off doing them.

Q: Where will this office be in a few years?

A: I just don't know. If we're able to attract the game talent as well as engineering talent here, then Seattle could be one of our biggest if not second biggest location. It depends on how big social games gets and how big we get with it, but the remote studio model has been very successful for us.

Q: Your Facebook partnership expires in what, 2014 or 2015?

A: Gosh, we don't even think about that. I think the way that Mark [Zuckerberg] and I think about that is both of us hope that that is a partnership that lasts decades.

Q: I keep hearing that a huge amount of money generated on Facebook is by Zynga.

A: Neither company talks about it, but it's definitely a very important business relationship for both.

Q: How will your mix of global vs. U.S. players evolve? (Now 75 percent are outside of the U.S.)

A: I would assume it will eventually look more and more like the Internet. Our view in the future is there will be something like 4 billion devices connected to each other through a combination of the Internet and social networks on top of that, and that half of those people will engage in games.

Q: How many will be Zynga games?

A: Of course I hope the lion's share. We hope that we can be the Google or the Amazon -- what they are to their verbs, we want to be to "play."

Q: Who are your biggest competitors?

A: We don't think about it. We don't spend our time thinking about beating competition. For Google to build out search or Amazon to build out shop, they had to take it direct to the consumers and convince them this had value in their daily lives. So it's a much harder mission than just trying to take out a competitor or beat somebody else.
We have to innovate and prove to you that we're worthy of 15 minutes of your day every day, and we're a better way for you to play and relax and connect. It's probably like you're going to do that instead of TV or a conference call at work - or during a conference call.

I know in traditional media it's "what are you taking away from." Social gaming to me feels additive: I think people have these nooks and crannies of time that we haven't every been able to fill as a society before, and these mobile devices are starting to let us do that. We all want to multitask a little bit - we're really designing our games to fit in those nooks and crannies.

It's funny, we don't want them to be too engaging - they shouldn't compete for your attention too much. They should be just nice, in the background.

Two months after raising $30 million, Seattle-based Cheezburger (the humor network formerly known as Icanhascheezburger.com) spent a chunk of the money buying New York-based Know Your Meme.

Know Your Meme operates a sort of meme-o-pedia - an online reference guide that aggregates and categorizes the ideas or concepts that build up enough online traction to become what's known as a meme.

Started by Rocketboom founder Andrew Baron, Know Your Meme "is dedicated to giving people an accurate inside look at up-and-coming as well as already viral Internet memes," according to the release.

"Since Cheezburger is the playground of choice for millions of Internet culture fans, this acquisition is a natural compliment for our community," Cheezburger Chief Executive Ben Huh said in the release. "Now, in addition to delivering 5 minutes of happiness through I Can Has Cheezburger?, FAIL Blog, Memebase, and The Daily What, we can help the public understand the origins of memes and how content goes viral on the Web."

Huh told me in January that he planned to buy more companies "that work well within our model."

Tubefilter News reported that Know Your Meme sold for a "low seven-figure sum," based on "sources close to the deal."

Cheezburger spokeswoman Deanna Leung Madden said the company "can't confirm" the sale price.

The four employees of Know Your Meme are now part of the company's New York office - "Cheezburger East."

If you're still wondering about memes, here's how the companies define an Internet meme, as opposed to viral content:

An Internet meme is a piece of content or an idea that's passed from person to person, changing and evolving along the way. A piece of content that is passed from person to person, but does not evolve or change during the transmission process is considered viral content.

Seattle communications software company Varolii reached across Lake Washington for its new president and chief executive, hiring David McCann, general manager of Microsoft's Windows Server product management team.

McCann was previously chief executive at Electronic Evidence and CarParts Technologies, and senior vice president at FileNet Software, leading up to its acquisition by IBM in 2006.

"Varolii is at a strategic intersection of cloud computing services and personalized consumer communications, reaching more than 75 million U.S. consumers each year for some of the world's largest corporations," McCann said in a release.

McCann replaces Nicholas Tiliacos, who stepped down after 10 years at the company.

Varolii provides software and services that companies use to deliver automated messages to employees and customers via phone, email, fax or text messages. It has around 250 employees and 450 customers.

Photographer Alan Berner wrote a nice "behind-the-photo" piece today on our Picture This blog, explaining how he ended up with the great portrait of PopCap Games Chief Executive Dave Roberts.

The picture ran with a Feb. 21 column on the company's IPO plans.

Good thing the company's no longer called Sexy Action Cool -- Berner's picture wouldn't have worked then.

Brad Lovering, one of Microsoft's top engineers until he left last year, is heading a new Seattle office for Splunk, according to a report by Mary Jo Foley.

Lovering is now vice president of development platform with the San Francisco-based company, which provides an enterprise IT data management system used by thousands of customers.

During his 24 years at Microsoft, Lovering rose to become one of the company's elite Technical Fellows.

Splunk investors include Bellevue's Ignition Partners, a venture firm led by a number of Microsoft veterans.

UPDATE: Lovering told me he'll be hiring five to 10 developers over the next year to work at Splunk's office, which is going to be in South Lake Union.

Ignition also announced today that Frank Artale is joining the firm as managing director.

Artale worked at Microsoft before joining a series of enterprise startups, including several backed by Ignition. He was chief executive of Consera before it was sold to Hewlett-Packard, and vice president of XenSource before it was sold to Citrix, where he was most recently vice president.

Ignition's release said Artale will focus on core infrastructure, networking and security investments for Ignition Venture Partners IV, a $400 million fund.

In a speech at the University of Washington last night, computer pioneer Carver Mead shared all sorts of anecdotes about early days in the microelectronics industry that led to the PC revolution and today's pocket computers.

Mead - who coined the term Moore's Law - told of having one of his regular dinners with his friend Gordon Moore in 1967 when Moore told him about plans to start Intel.

Mead talked about how he later observed the slow, manual lithography techniques Intel first used to create semiconductors in the 1960s. He then learned a better approach from aerospace companies that were using a computerized approach to produce circuit boards.

Later Mead started a foundry service for researchers to share the cost of manufacturing prototype semiconductors, a program that inspired the UW's new "OpSIS" silicon photonics foundry service. The service will be used by researchers and companies developing chips with lasers that transmit digital signals with light at phenomenal speeds.

Mead spoke at a kickoff event for the OpSIS foundry, which is led by Assistant Professor Michael Hochberg. Hochberg studied at Caltech, where Mead is Gordon and Betty Moore Professor Emeritus of Engineering and Applied Science.

Intel's contributing $250,000 to start OpSIS. Also supporting the effort are the Air Force and BAE Systems, which will produce chips for OpSIS at its semiconductor fabrication facility in Manassas, Va.

Intel Chief Technology Officer Justin Rattner said during the event that OpSIS is "going to train a generation - or several generations - of designers and it's going to catalyze an entire industry to embrace photonics."

Hochberg said OpSIS will produce its first run of chips this summer and should make three or four runs a year going forward.

Researchers can pay for a slice of the production wafer, on which a number of different experimental chips are produced. Instead paying perhaps millions for a full batch of chips, they'll pay $20,000 to $30,000 to have their test chip produced alongside others.

"The idea is to make it accessible for the entire community to make these complex circuits," he said.

Here's a video of Mead's speech, provided by a UW spokeswoman. A professionally produced version will be broadcast later on the UW cable TV channel. In the meantime this one works pretty well as a podcast:

Video streaming by Ustream

(Today's column ...)

With all the lingering angst over bailouts for banks and carmakers, you'd think we'd be taking a closer look at stimulus funds for high-tech companies.

Especially since government isn't recovering from the downturn as quickly as industry, especially in Washington state.

Tech companies have turned the corner. They're growing, hiring and reporting record profits.

It seems like a good time to ease up on their tax breaks and shift some of that money to education and science that fuel the industry's future growth.

But just the opposite is happening.

Here's a fun video of Cheezburger boss Ben Huh teaching how to write captions. It was done by the Times video team, to run with a profile in this Sunday's Pacific Northwest magazine.

Cubeduel's launch was apparently a little too hot for LinkedIn.

A day after it launched a "hot or not" type rating service for users of the business network, the Seattle startup was blocked by LinkedIn today.

But it doesn't sound like a problem with Cubeduel's sassy application. The issue was apparently volume, not tone.

Cubeduel co-founder Tony Wright said it appears to have hit an automated rate limit on accessing LinkedIn.

"We've been throttled by them," he said by email.

Wright said Cubeduel has been exchanging messages with LinkedIn and is "hopeful that we can get things opened back up."

UPDATE: I just heard from LinkedIn's spokesperson, who said the company didn't shut down Cubeduel.

"The application was using our open LinkedIn Developer Platform, which has a daily access limit that is publicly documented. Our developer platform limits are designed to protect our members, and have been in place since the platform program was introduced a year ago."

LinkedIn is communicating with Cubeduel "to discuss how they can move forward. We are always interested in seeing our platform used in creative, innovative new ways by developers."

UPDATE: Wright said Cubeduel is back after LinkedIn "graciously raised the ceiling for us late Friday evening."

Bellevue educational software company GlobalScholar is being acquired by a Texas company that provides online student testing and assessments.

Harland Clarke Holdings, which owns the Scantron education testing company, is paying $140 million in cash for GlobalScholar. It's also offering another $20 million, contingent on GlobalScholar meeting financial goals in 2011. The companies are part of M&F Worldwide Corp.

"There is a growing sense of urgency to provide solutions that will help bring a new level of excellence to education systems. Scantron and GlobalScholar's combined solutions will provide powerful tools for teachers, administrators and parents, in schools and districts of any size, as they work to improve the achievement levels for all students," Bill Hansen, president of Scantron and former U.S. deputy secretary of education, said in the release.

GlobalScholar's software for managing education - with digital gradebooks, analytics and tools for learning management and teacher development - is used by more than 1,000 school districts with a combined student population of more than 5 million.

The company employs 330 people in Bellevue and Chennai, India. That includes about 45 in Bellevue. No layoffs are expected and the company plans to expand in Bellevue next year, a spokeswoman said.

Kal Raman, GlobalScholar's chief executive, was formerly a senior vice president at Amazon.com and chief executive of Drugstore.com. He's staying with the company and will head the education group at GlobalScholar/Scantron.

Raman started Global cholar as InfiLearn in 2006, with backing from Ignition Partners, Michael Milken's Knowledge Universe and Microsoft vice president Peter Neupert, who worked with Raman at Drugstore.com.

The company changed its name to GlobalScholar in 2007, raised more than $42 million and bulked up through the 2008 acquisition of Colorado-based Excelsior Software.

It's the second exit this month for Ignition. The Bellevue-based venture firm also invested in Heroku, a San Francisco-based software tool company that Salesforce.com bought last week for $212 million.

SAN FRANCISCO -- During a demo at Dive Into Mobile, serial entrepreneur Steve Perlman showed off new applications running on the OnLive streaming game network, which debuted in 2009.

In addition to streaming video games from data centers to PCs and TVs, OnLive is using its network to stream a virtualized Windows desktop to devices including Apple's iPad and Samsung's Android-based Galaxy Tab.

That enabled Perlman to show the iPad and the Tab running Internet Explorer and the Windows 7 desktop. He also showed a Microsoft Silverlight application running on the iPad and Apple's Quicktime software running on the Galaxy Tab. (Perlman's holding the iPad; hosts Walt Mossberg and Kara Swisher are at right)

"You have unlimited capability because of the supercomputing" that's happening in data centers and streamed to the mobile devices, Perlman said.

Perlman, a former Apple engineer, co-founded WebTV and sold it to Microsoft. Then he created the Moxi set-top box company and sold it to Paul Allen.

There was no word on whether he's hoping to sell OnLive to someone else from Redmond.

SAN FRANCISCO -- Less than two years after it launched its mobile-social service, Foursquare has sorted out its product development system and grown to 40 employees.

The New York-based startup has 40 employees, 4 million users and $20 million in funding -- enough to make it until the end of 2011, co-founder and Chief Executive Dennis Crowley said at the Dive Into Mobile conference.

Crowley said the game mechanics the service is based upon -- rewarding users with virtual badges for checking into various places -- were initially "designed to keep people enthralled for maybe a month or so," to get users to join the company's social network.

"We didn't think it would blow up into what it is now," he told host Kara Swisher.

Now the company's looking into different game mechanics it can introduce and feeding its data to developers building their own applications, such as a service that sends e-mails when the mix of males to females at a bar or club tilts in the user's favor.

The company's also refining the tools it offers to enterprise customers such as Starbucks and Sports Authority.

"Under the hood it's like a stats engine," Crowley said.

Crowley said the company is also looking at ways to provide users with real-world rewards, creating a digital version of the bartender who recognizes regulars and gives a free drink or the restaurant owner who comes over to shake loyal customers' hands.

"There's an opportunity to reproduce some of that with software," he said.

Foursquare isn't profitable yet. Crowley said the company wants to first sort out how it's going to work with local merchants "and then pull levers" to start making money.

Crowley's probably not in a big rush. He sold his last company, Dodgeball, to Google in 2005.

Swisher suggested that he call his next venture Tetherball.

Google is buying Widevine, a Seattle vendor of digital-rights management software that's widely used by broadcasters to safely transmit video content online.

The move comes as Google is pledging to do a better job protecting copyrighted material and fending off a renewed lawsuit by Viacom over copyright violations.

By acquiring Widevine, Google will instantly become a dominant player in the market for protecting video content broadcast over the Web. The company is already the largest distributor of online video by far but it currently doesn't have its own streaming-video DRM technology other than a "content ID" fingerprinting system developed for YouTube.

A Google spokesman declined to say whether the company will apply Widevine's DRM technology to the vast amount of video the company hosts and distributes. Having a more robust system to track and protect streaming video could help the company if it decides to renew efforts to create pay video services and other content subscription services.

Widevine may also help Google build new relationships with wary broadcasters resentful of the way Google's platforms have been used to distribute unauthorized copies of their material.

Widevine's DRM technology is used in more than 250 million Web-connected devices, including TVs and Blu-ray players made by Samsung, LG and Panasonic. Its DRM technology is also used in GoogleTV devices, the Android operating system, Apple's iOS platform and Nintendo's Wii.

In a blog post announcing the deal, Mario Queiroz, Google's vice president of product management, said Widevine has "worked to provide a better video delivery experience for businesses of all kinds," from studios to cable systems and hardware manufacturers

"By forging partnerships across the entire ecosystem, Widevine has made on demand services more efficient and secure for media companies, and ultimately more available and convenient for users," he wrote.

A price wasn't disclosed but Widevine has raised more than $65 million from investors including Cisco Systems, Samsung, Charter Ventures, Dai Nippon Printing, Constellation Ventures, Liberty Global, PaceSetter Capital, Phoenix Partners and VantagePoint Venture Partners.

Widevine's 60 employees will relocate from the company's offices in downtown Seattle to Google's Kirkland campus.

The release quote from Widevine Chief Executive Brian Baker, who co-founded the company in 1999:

By working with Google, we are even further committed to the consumer Internet video experience and to the needs of content owners. Widevine will continue to supply the industry with leading video optimization and content protection solutions. We are excited to have access to Google's vast resources as we continue to improve our products, support our customers, and meet the future needs of consumers, content owners, service providers and device manufacturers everywhere.

Another co-founder -- who is now teaching in California -- was former Microsoft and AT&T cryptography researcher Jeremy Horwitz.

Google has been negotiating with Widevine for several months as pressure on the search giant grew from copyright holders.

Google announced Thursday that it's stepping up efforts to remove content that infringes on copyright from its sites and will more promptly remove infringing material.

Then earlier today, Viacom resumed its lawsuit over YouTube hosting pirated material from its networks, including Comedy Central and MTV. Viacom is appealing a June ruling in Google's favor, made by the U.S. District Court in New York.

Meanwhile, Google continues to draw millions to its video services. Its sites drew 146.3 million unique viewers who conducted 2 billion viewing sessions -- averaging 271.6 minutes per viewer -- in October, according to comScore.

Here's a way to make a little money off your Facebook friends.

A Seattle startup called OtherPage today is launching "social shopping" application that gives online shoppers cash back if their friends buy the same stuff.

Users will get 1 to 5 percent cash rebates on purchases made via the site, which includes a price comparison tool and coupons.

They have the option of sharing their purchases and information about deals and stores on Facebook. If friends click through the shared information and make a purchase, the user will get an additional 1 to 5 percent back.

OtherPage also provides icons that can be added to show "attitude and feeling" about products.

The service is launching with about 500 participating stores, including Best Buy, Overstock and drugstore.com. It also provides about 10,000 coupons and price comparisons for about 5 million products.

OtherPage won't see users' credit card numbers or address -- the purchasing is between the store and the user -- but the startup will see what's been purchased and where, if users opt to share that information.

Founder Kevin McCarthy previously started SearchMarketing.com, a retail search optimization business sold to ChannelAdvisor in 2005. He also worked at drugstore.com, Kiss.com and Atom Films.

He's funding the business himself and has five employees.

Bellevue home-automation company Lagotek said it has hired Phil Herres as its new chief executive.

Herres joined Lagotek's board a year ago. He's taking the spot of Eugene Luskin, who will remain chairman of Lagotek and serve as chief technology officer of the 19-person company.

Herres studied electrical engineering at Gonzaga and received his MBA from the University of Oregon. He was chief operating officer of Aldus before it merged with Adobe. Later he was president of ST Labs, vice president of networking at Nortel and VP of Avanti Communications.

Also today, marketing company R2integrated announced that it hired former T-Mobile USA product development boss Leslie Grandy as executive vice president of its Seattle office. Grandy launched T-Mobile's G1 and six versions of the Sidekick before starting a consulting business, which will now be folded into R2i.

Earlier she was Apple's online store director for the Americas and a general manager of consumer marketing at RealNetworks.

Bellevue enterprise software startup Apptio is announcing today that it's hooked up with Wipro, the Indian tech giant.

Wipro will use Apptio's IT management system with hundreds of customers. In turn, Apptio will use Wipro consulting services to support its product suite.

"By combining Apptio's solution and Wipro's IT 360 framework, our customers can optimize the quality of their IT services, showcase the value IT delivers to the business and reduce costs," Wipro senior vice president, Deepak Jain Sr., said in the release.

It's a non-exclusive arrangement. Apptio's hoping to make similar partnerships with other companies, a spokeswoman said.

Apptio started in November 2007 and now has 105 employees and $37.5 million in funding.

Video conferencing company Telanetix ranked eighth in Deloitte's new Technology Fast 500 list of the fastest growing tech copmanies in the U.S. and Canada.

The rank is based on percentage revenue growth from 2005 to 2009 for public and private companies.

Telanetix posted a whopping 27,276 percent growth during that period, increasing sales from $103,000 in 2005 to $28.3 million last year, according to Deloitte's report.

The company is run by McCaw Cellular veteran Doug Johnson, who joined in 2002 when it was known as AccessLine Communications, an early player in IP telephony. AccessLine merged in 2007 with San Diego-based Telanetix in a $34.9 million deal in 2007, and the combined company stayed in Bellevue.

Ranked first on Deloitte's list was Hughes Communications of Germantown, Md., which grew sales 164,079%, from $615,000 to $1 billion.

Other high-ranking Washington companies include 27th ranked Visible Technologies, a Bellevue-based online reputation management and marketing service, which grew sales 7,192%, from $134,000 to $9.8 million.

Avalara, a Bainbridge-based sales-tax software company, is 28th on the list with 5,712% growth -- from $187,000 in 2005 to $10.8 million last year.

Seattle biotech Trubion Pharmaceuticals is 30th, with 5,058% growth, from $349,000 to $18 million last year.

In 50th place is IsoRay, a Richland medical equipment company, that grew sales 2,586%, from $202,000 to $5.4 million.

Here's today's column on the robotics venture started by Tandy Trower, a noted former Microsoft employee who left in November to start Hoaloha Robotics.

There's not much to see in Tandy Trower's Pioneer Square office yet, but I'm hoping that will change by the time I retire.

Trower, 57, was one of Microsoft's longest-running employees when he retired last November.

The Washington State University grad joined two months after the first IBM PC was released in 1981.

Over 28 years he was involved with products ranging from Basic to Windows and "Flight Simulator." His grand finale was the Microsoft Robotics platform that he started and launched in 2006.

Trower saw even more potential in robotics and left in November to start a new company, Hoaloha Robotics, to develop "socially assistive" robots that will help older people get by with less help from families and professional caregivers.

So far he's the only employee, but he's working with interns and a professor at the University of Washington and talking to robot manufacturers about collaborating.

His goal is to work with hardware companies to produce assistive robots that could go on sale in three to five years, for $5,000 to $10,000.

Hoaloha - a Hawaiian word for friend - joins a growing field of companies developing new technology for an older population that's expected to more than double in the coming decades.

Marcelo Calbucci, a former Microsoft developer turned startup impresario, has found a new job.

He announced today that he's now "chief startup officer" at Conceivian, a Redmond "startup lab" that's building and operating startups. Led by veterans of Microsoft and other large tech companies, the venture is working with seven startups and hopes to bring 100 to market over the next 10 years.

Calbucci ran a family-oriented social networking service called Sampa from 2007 to 2009 and started the Seattle 2.0 news site for Web startups.

Last year Calbucci began working on an idea for a consumer product but couldn't get funding and shelved the project in April. After he updated his LinkedIn profile, Conceivian Chief Executive Saqib Rasool approached him in June and Calbucci joined in August.

In his announcement, Calbucci said he's "very excited about the opportunity in helping investors and entrepreneurs to make their business a reality."

Here's a new way to get a plum job in the software business: Fly a company founder to space and back, twice.

That's how Eric Anderson, co-founder and chairman of Virginia-based space tourism company Space Adventures, got to know software pioneer and Microsoft veteran Charles Simonyi.

Anderson's venture flew Simonyi to the International Space Station in 2007 and 2009.

Today Simonyi announced that he's hired Anderson (pictured) as president of Intentional Software, a Bellevue company that Simonyi started in 2002. Intentional is developing a new approach to developing software that presents the designer's intent in the code.

Intentional's release said Anderson, "who pioneered and was the first to monetize the business of human spaceflight, has responsibility for bringing Intentional's transformative technology to the worldwide marketplace."

Simonyi said in the release that Anderson is "one of very few who can take futuristic ideas and make them real." The rest of his quote:

"I founded Intentional Software with the idea of transforming the way software is built and knowledge is used, by allowing the true intentions of today's knowledge workers and business experts to be precisely expressed in the software they need. This remains an audacious goal, and the magnitude of its difficulty is exceeded only by its importance to the future. Software as we know it is the bottleneck in the digital horn of plenty. With Eric joining me in our business, I am confident that Intentional will unstop the bottleneck and change the world."

Anderson, 36, graduated magna cum laude from the University of Virginia with degrees in aerospace engineering and computer science. He was named a 2010 Ernst & Young "entrepreneur of the year."

He's moving from Virginia to the Seattle area, where he'll be leading about 20 employees at Intentional.

Here are the 16 Washington companies on the new Inc 500 list of the fastest-growing companies in the country.

(UPDATE: A few have asked whether these are public companies. Inc. solicited applications from private, independent companies that generated at least $2 million in revenue in 2009.)

A California buyout company is acquiring Daptiv, a Seattle company that provides project and portfolio management software and services. Terms of the deal with Parallax Capital Partners of Laguna Hills, Calif., weren't disclosed.

A spokeswoman said all Daptiv employees will be retained except for Chief Executive Mark Klebanoff, who is being replaced by John Baldwin, a Parallax partner and executive at Artemis International.

Daptiv survived several cycles of the tech industry - and a few major layoffs - since it was founded in 1997 as eProject. The company now has around 90 employees, $20 million in annual sales and more than 500 enterprise customers.

Five startups are presenting today at the state Technology Alliance's Innovation Showcase, an event intended to connect more early stage companies with investors.

Half the companies that have presented originated at the University of Washington, probably because the school's more aware of the program, said Linden Rhoads, the school's vice provost for commercialization.

Here's a rundown of their presentations.

Assay Dynamics: An automated medical testing platform with a special card to analyze fluids and run multiple tests simultaneously on the same fluid sample. A key innovation is that the machines automatically calibrate every time they're used.

"What we're trying to do is allow physicians to do more and more testing in their office," founder Kjell Nelson said.

A Redmond search marketing firm that promised top results to small businesses is toning it down and paying for refunds under a settlement with the state.

The AG's office has received about 160 complaints about Visible.net, which also does business as Captures.com and WebMarketingSource.com. In April a judge ruled that the company violated the state's telemarketing law, leading to a settlement announced today.

The company agreed to pay $250,000, of which $50,000 will reimburse the state's costs and $200,000 will be refunded to customers. Eligible customers will be notified by mail and could receive payments in early 2012.

Visible sells Web site design, search optimization, online payment processing and other marketing services, charging setup fees of $3,750 to $9,750 and monthly fees of $40 to $100, according to the state's release.

It had promised too much. The settlement notes a sample pitch, deemed an unfair and deceptive trade practice:

"Just like my last client, you will be blown away when you can see what having a top search engine ranking can do for your business and pocketbook."

Under the settlement, the company agreed to not:

-- Misrepresent its ability to significantly increase traffic to customer Web sites by achieving top search-engine rankings.

-- Fail to provide refunds or honor cancellation requests.

-- Claim to provide around-the-clock customer support, technical advice or consultations, unless available. The attorney general's office believes the defendants misrepresented customer service representatives could be reached at any time.

-- Fail to register with the Department of Licensing as a commercial telephone solicitor.

-- Charge consumers' credit cards without authorization.

-- Misrepresent its affiliation with other marketers.

UPDATE: The company posted a statement on its blog, asserting that competitors were behind some of the "so called 'consumer complaints.'" It told customers that the settlement "will allow Visible to get back to doing what it does best: providing exceptional products and services to its customers."

Seattle enterpreneur Hadi Partovi, who consults with Facebook and a number of other Web ventures, is touching a different kind of technology company.

Partovi is joining the board of Taser, the Scottsdale, Ariz.-based manufacturer of "personal protection devices."

Believe it or not, Taser's expanding into social media and software, where Partov, a former general manager at MSN, has lots of experience.

From the release issued by Taser:

"Mr. Partovi's extensive experience as an expert in development, software solutions and social media technology will provide added experience as well as a strategic focus to roll out our emerging innovative Evidence.com and Protector driver and mobile technology," Taser Chairman Tom Smith said. "Mr. Partovi is a highly experienced and valuable addition to our board. He will provide insight in our new pioneering technology solutions that provide law enforcement and families with peace of mind with products that protect life as well as the truth."

Don't tase me, Partovi?

A group of engineers who helped create Amazon.com's Elastic Compute Cloud service announced plans today to build a new cloud operating system that could compete with offerings from Microsoft and IBM.

Their company, Nimbula, is based in Menlo Park, Calif.. It has 17 employees and $5.75 million in funding from Sequoia Capital and VMWare.

Chris Pinkham, co-founder and chief executive (below), said Nimbula doesn't compete with his former employer and will actually be "an on ramp for EC2."

"We don't think this is directly competitive," he said. "We think this is complementary.''

Nimbula is developing software that runs within a company's network and directs where applications are run -- in-house or on various cloud services -- based on policies created by administrators. It's installed on top of an open-source hypervisor, and pitched as a way for companies to maintain the security of their information while taking advantage of cloud computing where appropriate.

The software is being tested by a set of unidentified companies in the finance, technology and healthcare fields. A beta version launches next quarter and it will be generally available in Q4.

Pinkham was vice president of Amazon's global infrastructure before managing development of EC2. To be closer to family, he left Seattle in 2005 for his native Cape Town, South Africa, where he set up an Amazon engineering office. He left the company in 2006, shortly before EC2 launched, and then started Nimbula in 2009.

Co-founder Willem van Biljon worked on EC2 product management and marketing. Nimbula's sales vice president, Martin Buhr, previously did EC2 business development and sales and before that worked at Microsoft.

"As the team leaders behind EC2, no one has a greater understanding of this emerging architecture and how to adapt it to enable large organizations to fully benefit from the co-existence of public and private cloud services," Sequoia general partner Roelof Botha said in a release.

Perhaps Botha's also enthusiastic because he, Pinkham and van Biljon all graduated from the University of Cape Town -- as did VMWare Chief Executive Paul Maritz.

A few bits of startup news today:

-- Seattle mobile media analysis firm Ground Truth raised $7 million from Emergence Capital Partners and Openair Ventures, plus its previous investors, Steamboat Ventures and Voyager Capital. The 20-person company, led by former Qpass President Sterling Wilson, has raised $9.6 million. Its service launched in January.

-- Optimum Energy, a Seattle heating, ventilating and air conditioning software company, today launched a Web-based system for managing commercial HVAC systems. It's a companion to Optimum's networked system that it claims will reduce energy consumption by 30 to 60 percent.

-- Google's going to call out the success of Bellevue online project management company Smartsheet, highlighting its success on Google's business application marketplace. Smartsheet's leads spiked after it appeared on Google's Apps Marketplace, according to Chairman Brent Frei, a veteran of Microsoft and Onyx. Frei said the results will be touted on the Google Apps Developer Blog (and on Frei's own blog ...).

Frei said business has been "extremely good" since January with paying customers growing 17 percent month over month. Smartsheet launched in both Google's marketplace and Intuit Workplace, and Google's now one of its four primary sales channels.

A snapshot of Smartsheet's Google stats:

Bellevue's DreamBox Learning struck a chord for Netflix founder Reed Hastings, who partnered with a venture firm to buy the online education software startup today.

After graduating from college, Hastings taught 9th grade math, he explained during a phone interview today. He remembers the challenge of having to figure out a lesson plan for a class with kids at varying levels.

"I never knew what lesson to present to which group of kids," he said. "What this software does is really adapt to put the right lesson in front of each kid at their level. That's why it's really personal for me."

Although Hastings has connections to the Bellevue area -- he's on Microsoft's board of directors -- he discovered DreamBox by chance while visiting a school in San Jose, Calif. A class was using the software and he was "wowed by how kids were engaged because it has some entertainment built into it."

Hastings called to see if DreamBox was open to an investment.

"I got so excited I ended up acquiirng the company,'' he said. "I think it's just got tremendous potential."

In addition to the purchase price, which wasn't disclosed, Hastings and the Charter Fund investment group are investing $10 million to grow DreamBox.

"We'll go in a mode of some significant hiring now," Hastings said.

The vision is that 10 years from now, laptops will be so cheap that every student will have one. Software like DreamBox could then become a core part of class, instead of a supplement used in a lab before or after school.

Asked about DreamBox being a subscription business like Los Gatos, Calif.-based Netflix, Hastings said he's "learned some things from Netflix" about licensing content like movies and TV shows, but DreamBox creates original content.

The business opportunity isn't so much direct to consumers, like Netflix, as it is an enterprise play selling material to schools for classroom use.

So Hastings doesn't plan to stream DreamBox math learning games to the Xbox, PlayStation and Wii?

"Not right away, no."

Watching his 3 year-old daughter nearly get run over by a texting driver inspired a Seattle landscape contractor to jump into the phone application business.

Erik Wood, 43, was walking home from Queen Anne's Coe Elementary with his daughter last fall when a woman in a black Volkswagen shot out of an alley while texting with both hands, passing within a few feet of the girl.

The driver drove on without ever seeing the pedestrians, but Wood was so shook up he started researching safety issues around texting drivers. Then he decided to create an application that could help.

"People live in this false reality that 'I can get away with texting and driving,' " he said. "The problem is they don't know what they're missing, they don't get the wake-up call until it's a T-bone, violent crash."

He and his wife tapped their children's college fund, withdrawing more than the cost of a new truck, and spent seven months working with software developers to produce an application called Otter that was released on the Android phone platform April 5.

"I think we realized that we had survived our first nearly fatal text-and-drive encounter but with two little girls growing up, the statistics proved this wouldn't be our last brush with this," he said. "That's what inspired us to do something about it.''

The Otter application interrupts text message notifications when the phone's GPS radio detects the device is moving at least 10 miles per hour. It doesn't block the messages outright, but sends an automatic reply to the sender, saying,"Otter says BTH (Break the Habit)."

Otter -- which stands for one touch text response -- also has parental controls so parents can activate it on their children's phones.

Wood is joining a growing number of companies producing applications and other systems to block or prevent texting while driving. He said Otter has a cost advantage because it doesn't carry recurring monthly fees like some competing applications. It's a one-time $3.99 download from the Android Market.

Versions for the Windows and BlackBerry phone platforms should be done in three to six months. Wood would like to do an iPhone version but its new software apparently won't provide access he needs to the phones' notifications or SMS services.

It's a moneymaking venture, but Wood said he had to give it a try no matter what.

"You know when you come to those forks in the road where you don't have any other choice?" he said. "This was definitely one of those."

A group of former Expedia executives is dropping bigger hints about a new travel company they're starting in Seattle.

With the buzz they're getting so far, they won't have to spend any of the $9.8 million they've raised on job ads.

Rich Barton first announced the venture with a Tweet in January, saying "Greg Slyngstad & I are cooking up a consumer internet startup. R U our founding CTO? Seeking smart, passionate team-builder."

Barton and Slyngstad worked together on the creation of Expedia within Microsoft in the early 1990s and worked together later when it was a standalone company.

They found a CTO -- former Expedia engineering boss Sunil Shah -- and are now hiring software engineers and managers, including a business development director with travel and advertising experience.

After trickling out hints, the company today filed an SEC report disclosing that "NewTravelco" raised $9.8 million.

A Web site for "New Travelco" lists the team and hints at the business, without providing much detail:

"We believe it is still early days in the Internet travel revolution. The increasing power of transparency, connectivity, and mobility will continue to open new worlds to travelers and new channels for suppliers. We believe that a small, passionate team of people can effect massive change."

Venture firms involved include General Catalyst Partners, Bellevue's Ignition Partners and Benchmark Capital, where Barton is a partner.

Cambridge, Mass.-based General Catalyst also backed travel search site Kayak.com, where Slyngstad is a director.

You'd think another travel company would create conflicts for Slyngstad at least, but maybe the Seattle venture isn't another way to sift through schedules and book trips. Kayak's chief executive told travel business site Tnooz that Slyngstad will remain on its board.

The job listing for its business development director says the job involves building revenue from Google Adwords, so maybe ads are going to be more important to the company than commissions.

I wonder if it's going to be some sort of social-sharing-community site for travelers, maybe a place to share travel videos, photos and messages from mobile devices?

Recommendation systems used by travel sites today are getting long in the tooth and don't take advantage of users' increasing connectivity, mobility and expectations of transparency created by YouTube and social media.

Wouldn't be it nice if you could zoom to a location and see a live discussion of current conditions at a hotel, with pictures and video, instead of wading through the old star reviews from anonymous travelers salted with posts by unscrupulous hotel managers?

Then it would be like Zillow and Glassdoor turned to travel, aggregating user-generated content to create a destination reference and referral site for people researching their next trip.

A few online marketer moves that went down today:

-- Seattle search engine optimization company SEOmoz is backing out of the consulting business so it can focus on developing software for online marketers. SEOmoz passed its $1 million yearly consulting business to British SEO firm Distilled, which is setting up a Seattle office.

The move takes a load off SEOmoz founder Rand Fishkin and clears up any awkwardness caused by SEOmoz's selling software and services to SEO consultants, while doing consulting itself.

Fishkin said in his blog that his company is preparing to release several new tools and a new software platform this summer.

-- BlueKai, a Seattle firm that provides online advertising data to marketers and publishers, raised $21 million in its third funding round from GGV Capital, plus previous investors Redpoint Ventures and Battery Ventures. Its previous two rounds raised a total of $13.7 million.

BlueKai described itself in the release as "the online industry's largest intent-focused, auction-based data exchange."

-- Their moves were perhaps overshadowed by a NSFW blog rant by Silicon Valley startup investor and adviser Dave McClure.

He's the latest pundit to point out that the companies drank too much Google Kool-Aid and spent too much time chasing eyeballs and clicks over the last decade and it's time for them to build businesses based on selling subscriptions.

A few excerpts:

Everyone seems to have assumed that since Yahoo and Google were giants in internet advertising, therefore all internet startups should be using some form of CPM or CPC ad-monetization.

THIS IS A VERY LARGE LEMMING-LIKE ERROR IN LOGIC THAT MUST BE CORRECTED IMMEDIATELY.

We have largely WASTED an entire web decade of time, energy & venture capital on extremely inefficient revenue models.

On subscriptions:

ASSERTION #2: The default startup business model for 2010 & beyond will be subscriptions and transactions (e-commerce, digital goods).

Newsflash folks: The Internet does NOT want to be FREE... It wants to GET PAID on F**** Friday, just like everybody else on the damn planet.

More:

Free is not Forever, unless you never want to be in control of your own fate.

Gradually we are discovering that the default revenue model on the internet should probably be the simplest one -- that is: basic transactions for physical or digital goods, and recurring transactions (aka subscriptions) for repeat usage.

Let me say that one more time so you don't miss it.

Get Dem Bitches to *PAY* You, G.

(Can someone get McClure to speak at the next newspaper industry convention?)

Big companies like Qualcomm and Dell aren't the only ones being highlighted at the Future in Review Conference taking place today at the Seattle Four Seasons Hotel.

FiRe -- the creation of Friday Harbor tech pundit, investor and consultant Mark Anderson -- also presented a handful of small companies with potentially far-reaching innovations.

The eight "FiReStars" billed as changing the world include:

Seattle's Twisted Pair Solutions, which developed technology for connecting various types of radios into a unified communication network. Chief Executive Tom Guthrie described how it helped 48 different agencies in six counties on the Olympic Peninsula have their radios interoperate.

Skyfiber, a Bryan,, Texas-based venture, is using lasers to transmit broadband capacity at up to 1.25 gigabytes per second. Using lasers to handle broadband isn't new technology, but Skyfiber "reduces cost to the point you can actually start widespread use of this technology in an effectual way," President David Achim said.

Vancouver, B.C.-based Sea Breeze is developing renewable energy projects, including a proposed high-voltage, direct current (hvdc) undersea cable between Victoria and Port Angeles.

Serious Materials, a Sunnyvale, Calif. startup with $120 million in funding, is producing green building materials including efficient windows and drywall that's mold- and termite-resistant and generates less dust. Chief Executive Kevin Surace said 12 percent of the world's energy is used to produce bulding materials with largely antiquated technology.

Yet companies such as Serious Materials can't change the multi-billion building products industry by pitching green products. There's a limited market specifically interested in those materials, while the broader market has to be won over by offering more value.

"If you're going to build it you've got to go after the masses. If you're going to go after the masses, you've got to bring real value," he said.

Tesla, the Silicon Valley manufacturer of electric cars, was represented by John Walker, vice president of North American sales. Asked when the company will make models more affordable than its current $100,000 roadster, Walker said the company's (roughly) $50,000 Model S sedan should be on sale in 2 1/2 to 3 years.

Santa Barbara-based CytomX Therapeutics set out to "reinvent the antibody," said Chief Executive Nancy Stagliano.

The company is combining knowledge about drugs such as cancer with drug engineering approaches to make antibodies safer. The products, which are undergoing animal testing for use on cancers, may allow physicians to safely administer higher doses of medicine.

"If they're not limited by toxicity ... the amount of the drug they can give will be much higher," she explained, adding that "we think this is a big idea and a broad play."

Hoana Medical of Honolulu presented a sensor-equipped coverlet that transforms beds at hospitals into "LifeBeds" that track vital signs without anything connected to the patient. They also notify care providers of status and can "speak" to patients who try to get out of bed when they shouldn't.

"Effectively we connect every bed to the Internet," said Patrick Sullivan, chief executive.

InTouch Health of Santa Barbara produces robots that doctors use to remotely check on patients and administer care, providing "remote presence telemedicine." This is especially useful with stroke victims, who need to be seen by specialists within three hours of an incident, explained Chief Executive Yulun Wang. He demonstrated using a laptop in Seattle connected to a robot in Santa Barbara, that unplugged itself, wheeled over to a patient and zoomed in on its pupils and display of vital signs.

"What we do with our robotics is project the physician there," he said.

Enough about sharing music. How about sharing proteomics software?

Seattle life-sciences software company Insilicos and the Institute for Systems Biology today announced the release of Trans-Proteomic Pipeline version 4.3.0. The open-source software includes a new tool called "Mayu" for computing the false-discovery rate of proteomics analyses, new features for analyzing electron-transfer dissociation data, and a "more robust build system" making it easier to run on more platforms.

The institute's work on the software is funded by the National Heart, Lung, and Blood Institute and Insilicos' work on it is funded by the National Human Genome Research Institute.

A few Eastside inventors shared some news on the patent front this week.

Conor Myhrvold, son of Intellectual Ventures boss Nathan, e-mailed to say his human air bag system received a patent recently.

Myhrvold, a Princeton sophomore, co-invented the system with a few others, including his brother, father and Edward Jung, who co-founded Intellectual Ventures in Bellevue.

The "wearable/portable protection system for a body" is envisioned as a system with sensors that trigger the inflation of protective bags with a gas.

An image in the patent:

From the explanation:

"In an embodiment, system 100 may be worn by a locomotion-challenged person to cushion against prospective falls or collisions with environmental objects. In another embodiment, system 100 may be worn by athletes in lieu of traditional body-padding, helmets, and/or guards. In another embodiment, system 100 may be worn by people riding bicycles, skate-boarding, skating, skiing, snow-boarding, sledding and/or while engaged in various other sports or activities."

Meanwhile, Steve Leytus, president of Redmond's Nuts About Nets, said the company has applied for patents on a new Wi-Fi diagnostic technology.

The "indirect measurement of microwave interference" technology -- or IMMI -- enables standard 802.11 devices to be used as RF analyzers, to quantify the performance of 802.11 channels.

Leytus said in the announcement that IMMI could also be used on Wi-Fi chips to provide real-time monitoring of channel performance, perhaps enabling them to dynamically change to the optimum channel.

Talk about a nice debut: Fremont software development shop Rogue Sheep won an Apple Design Award for its very first iPhone App.

Rogue Sheep started working on its "Postage" app a few months ago and finished just in time to enter the design contest, which concluded at this week's Apple Worldwide Developer Conference.

"Postage" is a $4.99 application $4.99 (but on sale at $2.99 until June 17) for turning photos into post cards before they're sent from an iPhone. Apple's award site said "Postage sets a new standard for attractiveness and ease of use in an iPhone app."

Rogue Sheep was started five years ago as an Adobe development shop by former Adobe engineers Christopher Parrish, Daniel Guenther, Matt Joss and Jeff Argast.

Parrish said they're hoping to consult with companies looking to develop iPhone apps and build more apps on their own. They've already seen a surge of traffic since the award was announced Tuesday night.

"It definitely looks like it's going to be one of the bigger bumps we've had,'' he said.

If you'd like more details about the Tesla Motors Seattle store reported this morning, here's a bigger picture story about Tesla's success in Seattle from September, a bit about the location at 425 Westlake, a story about the Daimler investment in Tesla and a video from the demo event in Bellevue last fall:

Bangalore-based outsourcing giant Infosys is hiring - in Bellevue.

After landing more than 500 government and enterprise customers over the last 18 months, Seattle-based Adapx was able to raise another $9 million to expand its business.

The company produces a digital pen that's used with specially printed forms to capture and upload writing and text input done with the system. Customers include Holland America, NASA and the Port of Seattle.

Salt Lake City-based UV Partners led the series B financing announced today, joining previous investors OVP Venture Partners and Paladin Capital Group. It received $10 million in venture funding in late 2007, plus a strategic investment last July from In-Q-Tel, an investment firm affiliated with the CIA.

UV Partners' general partner, Jim Dreyfous, is joining the Adapx board.

"The vast majority of field workers still rely on paper for collecting and sharing information, avoiding the expense and complexity of mobile computers and PDAs," he said in the funding announcement release. "Today's leaner workforces are facing increased pressure to improve productivity. Teams participating in new infrastructure projects funded by the economic stimulus plan are preparing for greater amounts of paperwork and accountability. Adapx is uniquely positioned to grow with those trends and we're looking forward to fueling their expansion."

Apparently there's still financing to be had - if you're a promising cloud-computing startup with more than 50 customers.

That's the case with Skytap, a Pioneer Square company commercializing University of Washington research. Today it's announcing that it received $7 million in its second round of funding, adding to $6 million raised in 2007.

Adding to the pot are Madrona Venture Group, Ignition Partners and Washington Research Foundation.

Skytap provides cloud-based "virtual labs" for software projects, using an on-demand, pay-as-you-go approach.

Chief Executive Scott Roza said the company should grow to more than 30 people by the end of the year, up from about 20 now.

It's not as easy as you'd think to hire good people in the current environment, Roza said, explaining top candidates leaving startups are still finding good jobs and those at big companies are reluctant to give up their job security.

"People always say this has got to be a great mraket to hire in,'' he said. "I actually believe it's a challenging market still to hire in."

Roza said the new funding is evidence that Skytap is among the startups that venture investors have deemed likely to succeed.

"We're all very bullish about our prospects, our ability to create more capital and create more value with that,'' he said.

In the funding announcement, Madrona Managing Director Matt McIlwain said "Skytap has a compelling offering that is well positioned in a growing, high potential market."

Ignition partner Brad Silverberg concurred.

"Since Skytap has been in the market they have met or exceeded every customer, bookings and revenue goal and they are off to a great start in 2009,'' he said in the release.

Cam Ferroni, a founding member of the Xbox team and creator of Xbox Live at Microsoft, is cooking up a new business.

Nandan Nilekani, co-chairman of Infosys and one of the founding tycoons of India's technology outsourcing industry, will speak in Seattle at a World Affairs Council event in Seattle on April 2.

Nilekani periodically comes to the area -- he's a regular at Bill Gates' CEO Summit -- but this visit comes shortly after the release of his new book, "Imagining India: The Idea of a Renewed Nation." The book calls for India to emphasize innovation and reforms to continue its economic growth.

Nilekani's April 2 lecture, sponsored by the Museum of History & Industry and the University of Washington Center for Information and Society, will "address India's place in the burgeoning technology and business markets of the 21st Century we well as how technological innovation factors into India's entrepreneurial growth. India's growth in the IT sector will also be examined in the content of its international relationships," according to today's announcement.

The event costs $15 and begins at 7 p.m. at the Museum of History and Industry.

Seattle's Marchex is the latest target of Barry Minkow, a reformed stock scammer who now trolls corporate biographies, looking for false information to expose after he's shorted the stock.

This, according to the latest piece by Al Lewis, a Dow Jones columnist who raised Minkow's profile last month.

In a followup piece today, Lewis shares a new tip from Minkow: the Marchex official biography of Peter Christothoulou, co-founder and chief operating officer, said he received a bachelor's in economics from the University of Washington but he never graduated.

From the column:

Christothoulou responded to my questions in an e-mail and promised to fix his corporate bio.

"I attended the University of Washington from 1991 to 1995 with Economics as my declared major," he wrote. "Because of my father's battle with cancer and subsequent death, I was forced to take a leave ... and despite returning and doubling up on my classes, I ended up one quarter shy of the degree. ... I have always intended to complete the remaining classes, but with work and family obligations, I have not yet been able to do so."

Christothoulou's bio has indeed been edited - the UW reference in the last line, visible in the Google cache, is now gone. He's not alone: All the education references for the executive team are gone today.

Christothoulou wouldn't discuss the situation when I called this afternoon. He referred me to a spokeswoman, Leigh McMillan.

"We frankly think there's not that much to say,'' she said. "We're aware of the situation. We made the appropriate corrections to his bio and now we're getting back to business. He's a co-founder of the company and he has everyone here's full support."

If Minkow was trying to make a few bucks shorting Marchex, he should have bought before its Feb. 19 earnings report.

The company said it lost $128 million in the fourth quarter, when it wrote down $176.7 million worth of goodwill and assets. It also declined to provide guidance on 2009 earnings.

After the report, the stock fell from $5.03 to $3.95 the next day, going as low as $3 on Monday.

Maybe in addition to printing newspapers, media barons should try printing 3-D figurines of newsmakers.

Business is thriving for Redmond startup FigurePrints, a company that began producing hand-sized 3-D figures of World of Warcraft characters in 2007.

Founder Ed Fries, former head of Microsoft Game Studios, didn't share dollar volume but said FigurePrints exceeded last year's target of 10,000 figurines. The company is based in Redmond but manufacturing is done with advanced 3-D printers in Canada.

Today the company is announcing that it's expanding to Europe, beyond its original market of the U.S. and Canada. About a quarter of the 11 million Warcraft players are in North America; expanding to Europe adds another quarter or so, Fries said.

Asia's next for the company, which would then be able to reach most players.

FigurePrints is also looking to extend its product line with higher- and lower-end products.

In Europe, it is selling the figurines for 129.95 Euros, plus shipping and duties.

Fries is hoping that Warcraft players will keep buying the figures, despite the economic situation.

"I think that when times are tough people tend to stay close to the home and so that's generally good for video games,'' he said. "Our product is certainly something optional on top of that, so how much it will be impacted, we'll see."

Avvo is continuing its march across the country. It announced today that it's extending its online legal directory and referral service to eight more states, bringing the total to 30, plus Washington, D.C.

Chief Executive Mark Britton said it's now covering about 85 percent of the lawyers in the U.S.

Avvo's new states - now in beta - are Louisiana, Indiana, Kansas, Iowa, South Carolina, Nevada, Maine and Wyoming.

Around the time American Idol finishes tonight, Seattle TV fan site BuddyTV will launch a major upgrade of its site.

The company's adding a fantasy league for reality TV fans, similar to sports fantasy leagues, except you pick a roster of reality show contestants. Leagues can be public or you can set up a private league with friends, all free on the ad-supported site.

BuddyTV is offering leagues for American Idol, Survivor, The Amazing Race, America's Next Top Model, Hell's Kitchen, Rock of Love, Make Me a Supermodel and Dancing with the Stars.

BuddyTV isn't the first to offer a reality show fantasy league but co-founder and chief executive, Andy Liu, thinks its big audience - 6 million visitors viewing 90 million pages a month - will give it an edge.

"There's nobody that's really dominant,'' he said. "Because we have such a large community we think we can come out of the gate with a pretty strong offering."

Fantasy leagues should make the site stickier, drawing fans back to check on standings before and after shows and to research their picks, Liu said.

A few screenshots:

The 20-person company started in October 2005 and has about $9 million in funding. Liu said it could be profitable immediately if it shifted from investment mode.

"Ad rates have fallen a bit but it's still holding fairly steady because we've been growing - people are spending more time at home,'' he said.

Following Alex St. John's disclosure on Wednesday that he's going to become an "entrepreneur in residence" at the University of Washington, the schools' Tech Transfer office today announced that he's actually one of three local tech executives joining the school's new EIR program.

Bothell-based Winshuttle, which provides data entry and download tools for SAP users, named Lewis Carpenter its new chief executive officer.

Carpenter, formerly president and chief operating officer, succeeds Winsuttle co-founder Vikram Chalana, who is becoming chief technology officer and remains chairman.

Earlier, Carpenter was chief operating officer at Aventail and before that, a senior executive at FileNet.

Winshuttle also reported impressive growth for 2008: Sales doubled over 2007, including a 34 perent gain from the third to fourth quarter, when it closed 215 deals and added 38 new accounts. It also established a Paris office with the acquisition of data-management tools distributor ADAR.

The University of Washington didn't have to look far for two tech veterans to lead its TechTransfer unit that licenses its research.

Today the school announced that it hired former RealNetworks associate general counsel and chief privacy officer, Todd Alberstone, as director of IP management.

It also hired Microsot product management director, Ed Cummings, as a licensing officer to work with computer science and engineering researchers.

The IP portfolio managed by UW TechTransfer has more than 2,200 issued or pending patents and last year generated more than $47 million in revenue, the release said. The technology also contributed the creation of 240 companies.

"Their recruitment represents a critical step toward an increasingly translational research culture, and UW’s ability to make a significant contribution to the local economy and job creation, especially at this critical time, through the formation of start-up companies," Linden Rhoads, vice provost of UW TechTransfer since August, said in the release.

Zillow's just holding onto the top position in Marcelo Calbucci's monthly ranking of Seattle Web startups.

Picnik jumped to number three - maybe people are using the browser-based photo editing tools to touch up their Christmas cards?

Calbucci noted that BigOven and WidgetBucks are now int he top 10, bumping out PayScale and ActiveRain. Athelon was up 37 spots to number 75, and Visible.net moved up 24 spots to 72nd.

The top 10:

1. Zillow

2. Pet Holdings, Inc.

3. Picnik

4. iLike

5. Wetpaint

6. Robot Co-Op

7. Smilebox

8. BuddyTV

9. BigOven

10. WidgetBucks

Marcelo Calbucci dramatically overhauled his Seatle 2.0 blog today, remaking it as a sort of community resource for Web startups.

It's no longer just Calbucci's blog; it's an aggregator of feeds from startup-oriented blogs around the area.

Calbucci also assembled friends from the startup community to create an editorial team producing content for the blog. To start, Alyssa Royse is editor, Matt Hulett will contribute pieces on entrepreneurship, Rebecca Lovell will post on angel investing, Danielle Morrill will write on events and Keven Leneway will contribute product reviews.

The site has also moved from Sampa, Calbucci's family Web site creation service, to www.seattle20.com.

It also has a great list of links to local startup blogs, including dozens of startup corporate and founder blogs.

I wonder if he's reserved seattle30, to prepare for the next cycle.

The timing could be better for "Seattle's Largest Entrepreneur Bash," what with the economy in a tailspin.

But the "Company Picnic" still sounds like a fun.

Organizer Crave Company describes the event as "the ultimate meeting of innovative minds, celebrating the imagination, creativity, and tenacity that unite all entrepreneurs."

It's aimed at everyone "from back-of-the-napkin brainstormers to persevering business owners and founders of big ideas gone public" - and open to anyone willing to pay the $39 cover charge.

Activities include a salmon barbecue, schmoozing at the "Connection Cafe" and a dunk tank. The event's organized by Crave Company and will benefit the Crooked Trails nonprofit.

A panel of out-of-town venture capitalists had a good discussion about investing trends Tuesday night at the Red Herring conference in Seattle. Too bad there were only about a dozen people in the audience.

Here are some highlights from the discussion with Paul Hsu of NeoCarta Ventures, Daniel Ahn of Woodside Fund, Rob Ketterson of Fidelity Ventures and Paul Matteucci of U.S. Venture Partners.

In healthcare, "we're seeing a lot less interest in drug discovery, a lot more in medical devices," particularly those going after big market opportunities such as diabetes and heart disease, Matteucci said.

Healthcare-related Web services are interesting but unlikely to get funded until their services covered by insurance, he said. That's a key threshold for his firm.

"We do deals that we think insurance companies are ready to pay for,'' he explained. "Insurance companies typically don't pay for information services."

Regarding information technology, Matteucci said "security is waning," but there's big opportunity in network storage infrastructure as virtualization, falling storage costs and energy consumption push companies to upgrade their networks and reduce operating costs.

Microsoft, Google and other may be investing in these services, but Matteucci said "they're one-offs -- it's not a trend."

Ahn said there's "waning interest in nanotechnology and materials." In nanotechnology, "people are realizing the task of manufacturing the stuff you're trying to sell is really hard, especially in the U.S."

Despite the promise of thin film materials and photovoltaics, investors are seeing that they're also a "pretty big challenge, not necessarily a venture opportunity."

Ketterson said there's "money still pouring into cleantech," but he wonders if they're really venture deals if it takes $200 million to $300 million to get the new technologies commercialized.

Matteucci talked up a shift in cleantech investing to vertical categories, where entrepreneurs are taking energy-intensive businesses such as concrete production and remaking them to be more energy efficient.

Hsu said VCs like capital efficient businesses and "biotech and solar can get very capital intensive."

Telecom, communications and networking are no longer the new thing, but the opportunity "hasn't gone away -- if you want to be a contrarian, do that,'' Ketterson said.

As for software, the old model "is on its last legs,'' he said, and Matteucci commented that its hard to build the software as a service model.

Ahn noted that semiconductors are the one area that's consistently attracted investment over the past 25 years.

In response to a question about whether automotive startups will start being acquired, Matteucci said he expects struggling old manufacturers like Ford may try to buy startups such as Tesla Motors.

"We're looking at a car deal right now,'' he said.

Looking forward, Ahn's interested in mobile phones emerging as the "platform of choice" in India and China and other places where people won't have multiple PCs but may have several mobile devices.

Hsu said he's interested U.S. companies selling abroad and opportunities in virtual currencies, either on mobile phones or related to online gaming. He's also looking into opportunities to invest in location-based services.

That would be Adriana Neagu, co-founder and CTO at Formotus, who was named "Technology Innovator of the Year" in the Stevie Awards for Women in Business.

She's one of several winners in the region.

Neagu was called out for inventing FormoPublish services, a simplified system for non-technical business users to deploy custom mobile applications.

Formotus, in its release, noted that Neagu was also a finalist in InfoWorld's CTO 25 Awards this year.

Christine Vernier, co-founder and CFO of Vernier Software & Technology in Portland, won the Lifetime Achievement Award.

Up north, Karen Radford, executive vice president at Telus Corp. in Vancouver, B.C., was named Best Canadian Executive.

Some highlights from the WSA's 2008 predictions dinner, with outlook provided by a panel including venture capitalists Enrique Godreau III, Matt McIlwain and Kelly Smith; analyst Steve Lidberg, and Jonathan Sposato, a serial entrepreneur and veteran of Microsoft and Google.

What sort of company would they start if they had $1 million?

Godreau: Develop self-charging batteries that recharge using mechanical motion, similar to the way pedometers work and tidal energy is being harvested.

Lidberg: A Chinese-to-English translation company, or a company involved in digital mapping.

McIlwain: A "personal shopper" that aggregates and communicates things he intends to buy.

Smith: An operating system for email that lets users drag and drop applications such as widgets and autopublish applications into an email platform.

Sposato: "Zeromeout.com," a consumer focused site to help people evaluate their carbon footprint and purchase offsets, and "howtobeagentleman.com," a site providing advice for young men how to be polite and conduct business.

Where would they not invest now?

Godreau: Said he's concerned about less attention being paid to sales and revenues and more to "eyeballs and eardrums."

McIlwain: " I think cleantech is completely overhyped."

Smith: Said there are plenty of options now for people to consume high-def video, and he wouldn't invest in a maker of Facebook applications any more.

Sposato: "Any company that's creating a social networking application on Facebook." Also overhyped are tools for pulling together messaging and social networking accounts.

Lidberg: Mobile gaming. While casual gaming is seeing interesting new models, the "mobile arena seems way overhyped and overcrowded."

Where will Google's stock be at the end of 2008?

Lidberg: "We have an 850 target price on it right now."

Godreau: $874 - said they'll hit four figures after a blowout quarter, but will have a quarterly miss due to the macroeconomic environment. "As you start to see a crack in the armor you end up at $874."

Sposado: "Low sevens by the end of 2008."

Smith: "I'm going to say $901 and the reason is because I think it's extremely rare in a person's lifetime when you see a company with the characteristics of Google."

McIlwain: Said Microsoft and the aQuantive team shouldn't be "so heavily discounted" so he expects Google to be at $725.

The next big Microsoft acquisition?

McIlwain: Virtualization - perhaps Citrix - and on the wireless side perhaps RIM. Also vertical search companies.

Smith: Eyeball acquisitions, perhaps a photo sharing or video sharing site or a social networking platform like Beebo.

Goudreau: Virtualization infrastructure.

Naveen Jain was on a roll Tuesday night at The Indus Entrepreneurs annual funding forum, needling venture capitalists at every turn.

More than 100 startup types, investors and big-company employees attended the event, sponsored by the Harvard and Wharton business schools. Companies pitched their businesses to a panel that awarded prizes of cash and services.

Everyone at TiE knows Jain, who left Microsoft to start and run InfoSpace during its turbulent years before founding Intellius in 2003.

So Jain had some fun when he was introduced by moderator Todd Dean of the Keiretsu Forum.

Jain said he thanks God "for keeping me away from VCs," drawing a roar from the capacity crowd at the Courtyard by Marriott.

Jain turned to the audience, flashed a big smile and kept on going.

"They are probably the antichrist of entrepreneurship,'' he said, adding that "they like early stage investing because they can take the most of it."

He also suggested that TiE consider having a "No-funding forum for entrepreneurs" and later said that "anybody who takes $120 million -- they're fat pigs and they deserve to be slaughtered."

A colorful caution, but remember that Jain made buckets at Microsoft and was worth $8 billion before InfoSpace tumbled in the dot-com crash.

Jain was sitting across from panelists Mark Ashida, managing director of OVP Venture Partners; Greg Gottesman, managing director of Madrona Venture Group; and Andy Dale, managing partner of Buerk Dale Victor.

Next to Jain was Raghav Kher, who also left Microsoft to start successful companies -- Rendition Networks and Seventymm, a Netflix-like service in India.

Kher gamely came to the defense of venture financing, saying it made sense for him.

Finally, the venture capitalists responded, with Gottesman taking the lead.

Gottesman objected to the antichrist reference, but said he agreed with some of what Jain was saying. Venture capital isn't for everyone, he explained, especially if an entrepreneur can go it alone and doesn't need cash flow.

"This is not something you go into lightly,'' he said.

Venture capital should be more for companies that need to really grow and pursue big markets, he said:

"Most companies shouldn't take venture capital," he said. "Our capital is expensive. It's preferred stock. We get it out first."

Gottesman's final advice: people should ask around for advice, since a lot of TiE members had worked with Madrona and other venture firms, but, "Please, don't call Naveen."

Here's one of the explanatory videos shared by Rand Fishkin, chief executive of SEOmoz, a Seattle search-optimization company I wrote about in today's column.

I'll post more from an interview with Fishkin shortly.

Bill Virgin and I were part of the CNBC roadshow that came to town this morning to report on the Seattle-area economy. Also interviewed on the Space Needle's observation deck was a passel of chief executives and the governor.

Here's our chat and Blue Nile Chief Executive Mark Vadon's segment.

Rustic Canyon partner Jon Staenberg will also be celebrating his birthday on July 7, 2007.

It sounds like Staenberg will be celebrating his 47th somewhere in the 707 area code -- the California wine country that includes Napa Valley -- while Mike Slade rocks out at the Showbox.

What I want to know is if there are any Boeing folks with 777 birthdays.

I'm not talking about today's sale of Rivals.com, an online sports service that the Seattle venture capitalist advised before it crashed in the downturn.

No, I'm talking about July 7, 2007, the upcoming date that has numerologists and the superstitious in a tizzy.

There's a rush of nuptials planned that day since it's supposed to be lucky -- for everyone but those trying to find an available hotel room or party venue.

But Slade beat the rush and rented the Showbox concert hall on 7-7-7, which happens to be his 50th birthday.

Seattle tech consulting and services provider isoutsource.com today announced that it has acquired PC Help of Bellevue.

Terms weren't disclosed, but spokeswoman Cathy Chang said there were no layoffs -- all six PC Help employees were retained, bringing the size of isoutsource.com's team to about 50.

Formed in 1992, isoutsource.com provides services such as support desk and system monitoring to small and medium size businesses in the Northwest.

UW/ekagon

Women in South India's Madurai region using Parikh's technology, developed at the UW, to record the day's transactions on a mobile phone.

The University of Washington today called out an interesting project by doctoral student Tapan Parikh, who developed technology to use cellphones as simple, low-cost accounting computers.

He's already started a company in India, called ekgaon, that's providing phones to more than 700 microfinance cooperatives through a contract with CARE India.

Microfinance groups typically use paper ledgers, and it's been difficult to shift their accounting to computers because they typically don't have the space, electricity or expertise to run them, the UW news release said.

Using open-source software, Parikh customized Nokia phones so they can be used for accounting. Here's how the release described the technology:

"The phone's camera first takes a picture of a bookkeeping form to identify the document. Then the phone prompts the user in the local language, Tamil, to enter the relevant numbers. Once the last keystroke is entered the information is sent by text message to a central server in India."

Rural farmers in India began using the phones in January. Parikh said in the release:

"Broadly speaking, what I'm trying to do is look at ways that information technology can have an impact on important social, political and economic issues."

Parikh's research was funded by Microsoft Reseach, Ricoh and Intel, and he was advised by Ed Lazowska, the Bill & Melinda Gates Endowed Professor of Computer Science.

The project also highlights the UW's new emphasis on global health and technology for developing countries, influenced by the Gates Foundation and its expanding relationship with the school.

EntrepreneurWeek USA, a nationwide event geared largely at younger people aspiring to start businesses, will have a big presence locally. It seems like it will have plenty of interesting events for older entrepreneurs, as well.

A list of activities is available at the event's Web site (you have to search by state to get the local listings). Here are a few that I pulled and some that were noted by the event's publicists:

Feb. 27, 3:30 to 5 p.m.: "From invention to startup" seminar at the UW's Mary Gates Hall, room 271. James Molocco of Klir Technologies and Sunny Gupta of iConclude will talk about how they've continually revised their original business plans to adapt to new conditions and opportunities. Free; no registration required.

Feb. 27, 7-9 p.m.: The secrets of the Early Stage Investment Forum seminar at Seattle University, Piggott room 104. A free "how to" session providing information and advice about applying to make a presentation to angel and venture investors at the forum taking place April 19.

March 1, 7:30 a.m. to noon: Essentials of angel financing for early-stage companies, Perkins Coie offices in Seattle. Angel investors, experienced entrepreneurs and lawyers address the how-to's of angel funding for start-ups. The event costs $115, or $65 for members of the Northwest Entrepreneurs Network, where you can register online.

March 1 from 6-7:30 p.m.: Business plan competition resource night "What do investors look for? UW Campus, HUB 200. Speakers Rebecca Lovell from Alliance of Angels and Mike Crill from Atlas Acclerator will discuss how investors decide to invest in early-stage companies. Free.

March 2 from 11 a.m. to 7 p.m.: The Entrepreneur Resource Fair at Edmonds Community College will offer training and resources for young entrepreneurs, plus information for starting businesses and running mature businesses.

On Monday I asked, indirectly, who will follow Steve Jobs and become the industry's next thought leader?

Eastside reader Jean-Jacques Dubray, who has met both Jobs and Bill Gates, predicts it will be the Google guys, Larry Page and Sergey Brin. He said they're the logical choice since Web 2.0 has moved the center of gravity from clients to the servers, where the content lies.

AP

The Google guys: Larry Page, left, and Sergey Brin.

"We have entered another area, the next 20 years will see giants emerge and eclipse the desktop boys,'' Dubray said.

That's a pretty good guess.

I was wondering if we'd see a superstar rise out of Korea, China or India, or maybe even Scandinavia, but that may take another generation or two.

Any other predictions?

Energy, life sciences, nanotech and wireless are the focus of the Washington Technology Center's upcoming conference at Bellevue's Meydenbauer Center.

Keynotes will be delivered by Gov. Gregoire and Peter Andrews, chief scientist for Queensland, Australia.

Here's the agenda.

In advance of his space flight -- which has been delayed from March to April -- Charles Simonyi was profiled in MIT's Technology Review and the New York Times.

Dave Winer noted that the NYT piece was written by the Technology Review's editor and the pieces are similar. They both describe Simonyi as man who became a billionaire from writing code, as opposed to building companies. Both also used a similar "horn of plenty" quote.

In the Technology Review:

Simonyi shares much of the common dissatisfaction with software. "Software as we know it is the bottleneck on the digital horn of plenty," he says. "It takes up tremendous resources in talent and time. It's disappointing and hard to change. It blocks innovation in many organizations."

In the NYT:

"Software is truly the bottleneck in the high-tech horn of plenty," he said.

What's most interesting though how well both stories explain what Simonyi is up to with his Bellevue startup, Intentional Software.

Both stories gush about the potential of the new programming approach that Intentional is developing, and both used plenty of space to explain the technology (no pun intended.)

It's been awhile since there was a must-read Valleywag piece -- the rehash of ancient Martin Taylor gossip didn't count -- but today there's a contender: Elon Musk firing off an amazing essay to clarify his role at PayPal.

Musk's rant is great reading for tech entrepreneurs. It includes all sorts of details about the people and processes that PayPal added to make the transition into a big player, and it costs much less than a book.

An interactive "virtual assistant" on the U.S. Army's recruiting page was created by Spokane software company Next IT.

Dubbed "Sgt. Star," the feature uses natural language conversation to answer questions from visitors. In addition to the common chat window, Next IT's "ActiveAgent" software displays an avatar who speaks the answers that are also displayed in text.

Next IT's press release quoted IDC analyst Sue Feldman saying that the ActiveAgent technology "goes far beyond the typical search engine. People speak in words, not numbers. They need to carry on a dialog in order to find things out."

Since August Sgt. Star has received more than 500,000 questions and answered with a 92 percent accuracy rate, the company said.

Time for a Celebrity Deathmatch with Clippy and Jeeves.

So much for high-touch. In a quest to become profitable this year, the 3-year-old recruiting firm is cutting 60 of its 144 employees.

Ending lots of online speculation about the future of one of Seattle's best-funded Web 2.0 startups, founder Jason Goldberg today announced the company is cutting its in-person enterprise sales organization and focusing instead on improving its online services and Web site.

Goldberg said the company saw growth in 2006, signing up more than 500 customers, but it hasn't done as well as expected with big corporate customers, so it's trying to be more of a technology company and less of an enterprise consulting business.

"It was really meant to focus the business in 2007 and focus our finite resourses toward the biggest bang for the buck efforts," he said.

Tricia Duryee is posting a story and Goldberg's providing details on his blog.

Goldberg said enterprise human-resources is a tough market.

"The more that we are a self-service Web based company ... the better for us,'' he said.

UPDATE: Here's Tricia's story on today's moves.

Bre Pettis from Make magazine just told me that another Seattle "geek night" conference is now scheduled for Feb. 13, and four others are likely in 2007.

I mentioned the previous conference in Monday's column on tinkering.

February's event will include another building contest, but organizers aren't sharing details yet. An egg drop perhaps?

Those were the most optimistic estimates by a group of techies who made 2007 predictions during a WSA dinner event Tuesday night.

Five of the six panelists expect Microsoft shares to rise 10 percent or more, reaching $35 to $37. The sixth, Sun Microsystems principal engineer Fulup Ar Soll, said he has "no idea" where the stock will go next year.

Soll was also the skeptic about Google, which he said is valued at much more than it would cost to rebuild the company. "I don't think it's logical,'' he said.

Ray Wang, a Forrester Research analyst who predicted Microsoft will hit $55, expects Google to reach $550.

Local futurist Glenn Hiemstra predicts Google will reach $650. Accenture consultant Robin Murdoch said it will go "well over $600, maybe even $650" by the end of 2007.

IBM Linux architect Gerrit Huizenga said $620 to $650 because "the growth to me is obviously there."

Even former Microsoft strategist T.A. McCann expects Google to hit $620. "They'll just continue to take share of advertising dollars that come online, and more are coming online," he said.

There was a consensus that Microsoft's not going to produce another operating system like Vista, but they had different takes. Huizenga said another five-year deployment won't work, and pointed to open source projects like Apache, Linux and Eclipse where people get features they want faster. "We have to be able to deliver it on a frequent and regular schedule in terms of advancements,'' he said.

Wang predicted a shift to a more distributed development approach, similar to the way Boeing dispersed 787 development. "People are going to build these things off social networking sites, code's going to be created, shared,'' he said.

What's overhyped and likely to decline in 2007?

Wang: Software as a service. It will morph, so you'll see software delivered as a service, but you won't hear as much about SAAS.

Hiemstra and Huizenga: Blogs and other user generated content. "The vast majority of people will get worn out ... and say I can't keep up, I can't do that anymore,'' Hiemstra said.

Foll: Proprietary technologies, including Skype and Microsoft's Word format.

Murdoch: Wireless streaming of TV to cellphones.

McCann: AOL.

Opportunities for new energy businesses in Washington and healthcare technologies will be the main focus of SST 2006, a daylong event at the University of Washington Tacoma campus hosted by U.S. Rep. Adam Smith.

Here's the agenda and list of speakers.

Craig McCallum, a former venture capitalist and executive at Seattle area Internet companies, plead guilty on Monday to shorting his children and ex-wife of more than $129,000 in child and spousal support.

He'll be sentenced in February by a federal judge in St. Louis, where he was recently working for network security company VistaWiz, according to his personal Web page.

In 1995 McCallum was one of several "instant millionaires" in a Seattle Times story about the sale Spry, a local Internet company sold to CompuServe for $40 million cash and $60 million in stock.

McCallum was Spry's chief financial officer. A year later he was promoted from vice president to general manager of CompuServe's Internet business division. He also worked at Starwave and as managing director of Encompass Ventures.

By late 2004, he was making $23,333 a month and was ordered to pay $2,435 a month in child support plus health care costs, half of college costs and $5,500 in monthly maintenance, according to a St. Louis Post Dispatch story on his case.

"McCallum stopped paying, and Missouri started garnisheeing his wages," the story said. "He owed $129,961.31 in June, and his debt was growing at a rate of $7,385 per month, documents show. But what the state could retrieve fell to as little as $32 per month because McCallum was working for much lower pay as a part-time golf club bartender in Taos, N.M."

McCallum, a former Ernst & Young accountant, moved money to avoid paying his ex, according to the Post-Dispatch story:

In 2005, a St. Louis County Circuit Court found that McCallum was denying his former wife money by liquidating or concealing assets, including taking thousands of dollars from his children's bank accounts, court documents show.

A relative bought McCallum a Harley-Davidson motorcycle and a Jeep and placed them in his father's name, documents say. McCallum admitted forging his eldest child's name on a health insurance check and depositing it in his girlfriend's account, documents show.

McCallum, 48, agreed Monday to pay the full amount he owes. He also agreed to get and keep a job "at a level commensurate with his education and experience.

Joel Schwartz, the lawyer representing McCallum, said his client suffered from effects of a computer industry downturn and had trouble getting a job paying as much as he once made.

Schwartz told me that McCallum, who now lives in Everett, faces a maximum sentence of six months in prison.

Fierce Wireless today reported that Ontela received $4.5 million from Hunt Ventures, Oak Investment Partners and Voyager Capital.

Ontela, a Pioneer Square startup led by former RealNetworks veteran Dan Shapiro, is developing technology for sharing photos taken with camera phones.

Its "PicDeck" service can automatically transfer photos from phones to a PC or to online photo services. One of its big selling points is that it installs on a phone in less than a minute.

The funding "will support the company's efforts as it moves from closed service trials to market deployment of its PicDeck mobile imaging platform in 2007,'' the announcement said.

When I finally caught up with Mika Salmi last week, he shared a great anecdote about an encounter with YouTube boss Chad Hurley.

I typed it up as a blog entry but just before pushing the "post" button, I decided instead to use it in today's column looking at the evolution of online video.

Maybe I'm too old school. I could have posted the anecdote, then used it again as a column. But that doesn't feel right, especially since the column has a lot more readers than the blog.

On the other hand, the blog always needs fresh, strong material. What goes where and when is an ongoing question as we explore different ways to provide both online and offline news. It's a little inside baseball, but I'd love to hear feedback and suggestions about the approaches I'm taking here.

If you're starting a business and missed the great presentations by local execs and financiers at yesterday's Entrepreneur University at the Sheraton, spokeswoman Renee Gastineau me they'll be posting audio recordings (call them podcasts if you want ...) of the sessions on the Northwest Entrepreneur Network's Web site in a few weeks.

I wanted to spend more time at the event, trolling for column ideas and hearing about startups in the pipeline, but I had to get back for the Microsoft-Linux announcement.

Forbes is running a fun story about how companies are giving themselves odd names with missing vowels, because the domain names for normal words are too expensive to acquire.

But the story gets better when it morphs into a profile of Pluggd, a Seattle podcasting venture started by former Microsoftie Alex Castro. He shares his perspective on starting a company on the cheap, outsourcing development to Ukraine and riding the bus to work.

Castro said he's rejected top-tier job candidates who expect Microsoft-grade perks. Instead he hires employees willing to get by on small salaries while the company gets off the ground.

"A lot of these guys went to the best schools, got into Microsoft or Google, and they think they should be rewarded for their intelligence," he said. "But those who get rewarded are the ones who really take the risk. You've got to eat ramen."

I had such a good conversation with Charles Simonyi at last week's space tourism press conference, I used it for today's column.

Highlights include his comments on the simple but robust engineering of the Soyuz TMA10 he'll ride to the International Space Station in March.

Today's column is here.

Last week's story on his space plans is here.

Charles is also going to chronicle his adventure at this Web site.

More information about his Bellevue company, Intentional Software, is here.

Charles Simonyi said he floated his space trip plans past a few of his friends, including Martha Stewart and Bill Gates.

I asked Bill about his pal's adventure and just heard back:

Charles is a good friend. He did share his plans to fly in space with me. Charles is a real pioneer. He made a huge contribution to Microsoft not only with his amazing work but also with his vision.

There is a story of how Charles was such a good student he got to visit Russia as part of a cosmonaut contest. I don't remember the specifics but you should ask him.

There is a certain irony to Charles now being a U.S. citizen who is getting flown into space by Russia.

I am hoping this all goes well for him.

Mark Michael reports that 2,500 people have signed up to use SynapseLife since it launched Oct. 5.

SynapseLife is Web application for creating personal homepages where you can manage contacts, email, tags, favorites and RSS feeds, among other things.

Here's a profile of the company that we published in May.

Rob Dickerson was named president and chief executive of Sampa, a year-old Redmond startup that offers Web site creation and hosting services.

From 2001 to 2005, Dickerson was president and chief executive of Bellevue's Pacific Edge software, a project portfolio management company that was sold last week to San Mateo, Calif.-based Serena Software.

Earlier, Dickerson was a senior vice president at Rational Software. Sampa simultaneously hired another Rational veteran, Daniel Kerns, as vice president of engineering. Kerns previously founded Pure Networks.

Former Seattle biotech investor Steve Johnson is pitching the third humor book he's written since downshifting to country life on a farm near Walla Walla.

Blue Walla includes "humorous stories about how to live life slow" according to a press release from his PR firm. He writes under the pen name Sam McLeod.

Johnson co-founded Altitude Life Science Ventures and was managing partner and president of Tradegar Investments and Perennial Ventures from 1992 to 2003. Among his major investments were Caliper, Rosetta Inpharmatics and Illumina.

When I heard the name of Johnson's Web site - LettersfromWallaWalla.com - I thought it may have something to do with the penitentiary, but that landmark doesn't appear on the site's nifty interactive map.

Another sign that relations between Redmond and Silicon Valley have thawed: Microsoft is hosting next month's gathering of the Silicon Valley Association of Startup Entrepreneurs at its Mountain View, Calif., offices.

Not only that, the startup group is looking for Northwest companies that want to participate and pitch their businesses to Valley VCs. The deadline to apply is Oct. 6, and more details are here.

The Computer History Museum is hosting an interesting event Thursday night to mark the 30th anniversary of the first Cray supercomputer, the Cray 1 that was delivered to the Los Alamos National Laboratory in 1976.

A talk will cover the history of founder Seymour Cray, his company and the supercomputer.

Cray is now a Seattle company, but the talk is likely to focus on its pre-Seattle days. Cray merged with Silicon Graphics in 1996, then the SGI division merged with Seattle-based Tera Computer in 2000. Tera renamed itself Cray, and now Cray is Seattle's most prominent manufacturer of computer hardware.

Moderating the talk will be Burton Smith, Tera's founder and chief scientist until last year, when he became a technical fellow at Microsoft.

The museum is in Mountain View near Microsoft's Silicon Valley campus. If the Cray event is a hit, they ought to have an encore here in Seattle.

It's still in beta, but Buyersvine.com has 33 wineries signed up so far, according to Mark Michael, co-founder of Synapse Corporate Solutions, a Web software and design firm that created the site.

Michael said the project is a way to supplement marketing work that Synapse does for its winery clients.

The terrorist attack in Mumbai on Tuesday didn't directly affect MAQ Software, a Redmond-based company with a big office in the Indian financial center.

"It seems that all of our people are fine as far as we know. We will lose part of the day tomorrow because trains will be disrupted,'' Rajeev Agarwal, managing consultant, said via email.

MAQ now has a redundant setup in India. It has opened another office in Hyderabad, where a number of Seattle tech companies have outposts.

Hyderabad doesn't have the density and mass transit of Mumbai, which is India's equivalent of New York City, but the smaller city is not immune to violent flareups by rebel groups. When I was there a few years ago the guidebooks warned visitors about rebels operating in a nearby tiger preserve.

Another good reason for Bill Gates and Warren Buffett to give their fortunes to charity, instead of their children: it may prevent their descendents from ending up in court, squabbling over the money.

Just look at what's happening to the estate of a previous World's Richest Man, the Nizam of Hyderabad, whose divorce settlement won't let him sell any of his palaces, according to a story in the Guardian.

Warren Buffett's plans to give most of his fortune to the Bill & Melinda Gates Foundation is just amazing.

It hasn't come up in all the coverage, but it's looking like the foundation will have at least a $100 billion endowment. It already has $29 billion. Bill Gates has pledged his remaining $50 billion or so, and now his pal Buffett's adding $31 billion to the pot.

You can't buy friends like that.

Ex-Microsoft guru Charles Simonyi's Bellevue startup, Intentional Software, hired Francois Steiger to run its international group and Budapest research operations.

Steiger was previously Verisign's senior VP and general manager for Europe, the Middle East and Africa. He'll work out of Intentional's new international HQ in Lausanne, Switzerland.

Back in 1991, while at Oracle, Steiger received a "most valuable player" award from Larry Ellison.

Is Intentional ready for funding? Steiger also has experience working as a venture capitalist in London, and he helped take BroadVision public in 1996.

Jobster founder Jason Goldberg has been doing some shopping.

Today he announced the acquisition of GoJobby.com, a small Anchorage startup that will merge into Jobster's Pioneer Square headquarters.

"After watching these guys make rapid progress on their ajaxy tagged-based online recruiting service, we met gojobby's founders brian and tony and well, we just clicked,'' Goldberg said on his blog.

I had dinner last night with Goldberg and his posse, who mentioned that another acquisition is also close to being announced, further taking advantage of the $30 million that Jobster has raised since it was founded in 2004.

After a glass or two of Domaine Drouhin Laurene, he also let slip that he bought himself a townhouse in Fremont not far from Google's new marketing office.

Look for a resurgence of small business ventures that shoot for $5 million to $10 million sales, and fewer venture capital-backed startups aiming for bigger scale and quicker liquidity, Seattle investor Dan Rosen said at FiRe today.

Until three weeks ago Rosen was general partner at Frazier Technology Ventures. Before that he was a manager at Microsoft and AT&T.

Now an independent angel investor, he's focusing on wireless projects, including several working on provisioning, customer support "and things that enable new categories of applications, not necessary the applications themselves," he said.

He's also interested in projects "that make the so-called Web 2.0 more efficient."

Look for a resurgence of small business ventures that shoot for $5 million to $10 million sales, and fewer venture capital-backed startups aiming for bigger scale and quicker liquidity, Seattle investor Dan Rosen said at FiRe today.

Until three weeks ago Rosen was general partner at Frazier Technology Ventures. Before that he was a manager at Microsoft and AT&T.

Now an independent angel investor, he's focusing on wireless projects, including several working on provisioning, customer support "and things that enable new categories of applications, not necessary the applications themselves," he said.

He's also interested in projects "that make the so-called Web 2.0 more efficient."

SAN DIEGO -- Talk of saving energy ended abruptly when Elon Musk and Chris Faranetta came on stage at FiRe to discuss their businesses -- sending people and materials into space on privately funded rocketships.

Musk, who made a fortune as a founder of PayPal, now runs a company called Space Exploration Technologies, which is competing with Boeing and Lockheed for government launch contracts. Today he showed video shot from inside his first launch in March, which ended shortly after takeoff when the motor shut off and the unmanned ship crashed into a coral reef off the remote Pacific island where it was launched.

The payload, a U.S. military satellite, survived. Musk said it shot out like a cannonball, flew 500 feet and went through the roof of a machine shop on the island. It ended up 50 feet from its shipping container "more or less intact."

"I think it was trying to get home one way or another,'' he said. "At least we can say we never lost a satellite.''

Musk is preparing to launch another satellite in September or October, and preparing a much larger rocket for launch in 2007 or 2008. He has bigger ambitions than delivering hardware.

"By 2020 I'd like to see us take somebody to another planet,'' he said.

Musk is one of several tech tycoons investing in space travel. Others include Microsoft co-founder Paul Allen and Amazon.com founder Jeff Bezos. They're also capitalizing on new opportunities for companies to provide space services that are getting less funding in the U.S.

"The only way we're going to become a multiplanet species is through private enterprise,'' Musk said, in complete seriousness.

Space Adventures is a travel company that's already flying people to the International Space Station. Two customers have made the trip, and former Microsoft executive Charles Simonyi is signed up for an upcoming flight.

The company is now preparing to send wealthy tourists on a lengthier trip that includes 16 days at the space station and a side trip to within 60 miles of the moon, using a spaceship developed for a Russian lunar mission. There are two seats available at $100 million apiece.

Next, the company hopes to actually land tourists on the moon.

"We believe we can go back to the moon for under $2 billion,'' Faranetta said.

Faranetta said there's a market for that sort of adventure.

"We have at least a dozen people in line for that, we get more credible inquiries every day," he said. "We've identified about 1,500 people worldwide who are financially qualified to do a lunar mission. We have some solid leads there."

SAN DIEGO -- Talk of saving energy ended abruptly when Elon Musk and Chris Faranetta came on stage at FiRe to discuss their businesses -- sending people and materials into space on privately funded rocketships.

Musk, who made a fortune as a founder of PayPal, now runs a company called Space Exploration Technologies, which is competing with Boeing and Lockheed for government launch contracts. Today he showed video shot from inside his first launch in March, which ended shortly after takeoff when the motor shut off and the unmanned ship crashed into a coral reef off the remote Pacific island where it was launched.

The payload, a U.S. military satellite, survived. Musk said it shot out like a cannonball, flew 500 feet and went through the roof of a machine shop on the island. It ended up 50 feet from its shipping container "more or less intact."

"I think it was trying to get home one way or another,'' he said. "At least we can say we never lost a satellite.''

Musk is preparing to launch another satellite in September or October, and preparing a much larger rocket for launch in 2007 or 2008. He has bigger ambitions than delivering hardware.

"By 2020 I'd like to see us take somebody to another planet,'' he said.

Musk is one of several tech tycoons investing in space travel. Others include Microsoft co-founder Paul Allen and Amazon.com founder Jeff Bezos. They're also capitalizing on new opportunities for companies to provide space services that are getting less funding in the U.S.

"The only way we're going to become a multiplanet species is through private enterprise,'' Musk said, in complete seriousness.

Space Adventures is a travel company that's already flying people to the International Space Station. Two customers have made the trip, and former Microsoft executive Charles Simonyi is signed up for an upcoming flight.

The company is now preparing to send wealthy tourists on a lengthier trip that includes 16 days at the space station and a side trip to within 60 miles of the moon, using a spaceship developed for a Russian lunar mission. There are two seats available at $100 million apiece.

Next, the company hopes to actually land tourists on the moon.

"We believe we can go back to the moon for under $2 billion,'' Faranetta said.

Faranetta said there's a market for that sort of adventure.

"We have at least a dozen people in line for that, we get more credible inquiries every day," he said. "We've identified about 1,500 people worldwide who are financially qualified to do a lunar mission. We have some solid leads there."

SAN DIEGO -- It took some refocusing, but FiRe turned its attention today from supercomputers and massive networks to nanotechnology ventures developing products at the molecular level.

Larry Bock, founder and chairman of Nanosys in Palo Alto, Calif., provided some gee-whiz demos. He dropped water onto a plastic sheet covered with tiny nanofibers each one 150th the width of a human hair. The drops literally bounced around on the surface, repelled by the fibers. An obvious application is coating windshields so they don't need wipers, but Bock has other ideas.

"Imagine coating a heart valve or a stent with this,'' he said.

SAN DIEGO -- Tech entrepreneurs and venture capitalists are intrigued by energy ventures like biofuel production, but that's just part of the picture. At FiRe today, Goldman Sachs Vice Chairman Robert Hormats, a former assistant secretary of state, pointed out some of the geopolitical issues to keep in mind.

Rather than seeing environmental protections as a handicap, Hormats suggested the U.S. could capitalize on its leadership in this area in its dealings with developing countries like India and China that are hungry for energy but increasingly concerned about environmental damage.

"It's a great opportunity for us if we take the lead, which pitifully we have not done," he said.

Hormats said President Bush missed a huge opportunity to develop an energy partnership with China when he met with China President Hu Jintao recently in Washington, D.C. The discussion could have started with the U.S. offering its technology for cleaner coal usage, helping China reduce emissions and its dependence on oil.

"Now in Seattle it might have worked, but it was not done in Seattle and it didn't work,'' Hormats said.

Hormats compared the current opportunities in energy to the technology market opportunities in the 1990s. One likely area of growth is nuclear power, which is relatively clean to produce and safer to generate nowadays.

"A lot of bright people who developed their expertise in one area are trying to transfer that to energy,'' he said.

In the meantime, new technologies are driving huge advances in-oil drilling technologies. With current seismic modeling, oil companies can use a football field-size room to drill angled wells covering an area of 20 to 30 miles, said Randy Foutch, former chief executive of Latigo Petroleum.

"We can bridge the gap between where we are today and where we need to be with alternative fuels," he said. "It's going to take some resolve and political effort but we can get there.''

SAN DIEGO -- Some bits of wisdom from Friday Harbor technology commentator Mark Anderson's Future In Review Conference (FiRe) in San Diego that I'm attending this week:

-- "The technology is now there to make distances disappear, to make it seem the world is wormhole connected. How are we going to live and work in that environment?" said San Diego supercomputer researcher Larry Smarr, director of the California Institute of Telecommunications and Information Technology.

Smarr predicted genome research will lead to another industrial revolution as entrepreneurs capitalize on the research and experimentation done by nature over the ages and stored in DNA.

Smarr used to think supercomputing was for things like simulating supernovas before "these biologists came along." "We thought "biology is squishy stuff, why would they want a supercomputer?""

-- India's intellectual property protections have upgraded over the past two years and are now nearly 80 percent to 90 percent as strong as they are in the U.S., according to Wipro Chairman Azim Premji: Now Premji's nervous about the relative lack of IP protection in China, where Wipro has offices. "When an abuse would take place we are not sure the government would move to our support quickly and the laws of the government would support us,'' he said.

-- Telstra Chief Executive Sol Trujillo told attendees to be prepared because "shift happens." His 30-second rule for new technologies: "Can I explain to you how to use it in 30 seconds or less? If not, it's not going to get funded."

-- Blog pioneer Dave Winer said there would have been "a different outcome" for Dan Rather if he'd had his own blog. Winer said he started blogging because he wanted to spread the word about Macintosh software he was trying to sell and he wasn't getting any press.

"In this case we routed around the news media and quite effectively, and in the process defined a new medium that will always be routed-aroundable," Winer said, explaining that if bloggers try to become gatekeepers, other bloggers will find away around those gates.

If I waited to run today's column on local tech deals, I could have added these tidbits as well:

Seattle-based aQuantive considered merging with competitor ValueClick, based in Westlake Village, Calif., but the deal fell through over the past few days, according to the Wall Street Journal. Would Microsoft be interested in aQuantive?

Aventail today hooked up with AttachmateWRQ, adding the latter's terminal emulation software to its SSL VPN product.

The Journal also reported how Berkshire Hathaway Chairman Warren Buffett and Vice Chairman Charlie Munger pooh-poohed private equity wheeling and dealing at their company's shareholder meeting Saturday:

Munger on the current climate: "We have so many deal flippers in the game I think they're going to get in each others' way."

Buffett on private equity firms: "They invariably auction the business and are looking for strategic buyers," he said, adding that "a strategic buyer is just someone who pays too much."

Munger on privaty equity borrowing: "In the real estate market in the 1930s you could borrow more money against some real estate assets than you could sell them for. That's happening now in some parts of the private-equity world and it's weird."

It's a sad day for tech journalists who could always count on Scott McNealy for zingy quotes, but Sun Microsystems investors seem ready for a change after watching the stock idle under $6 for four years. McNealy is giving up the chief executive position to Jonathan Schwartz, the company president.

McNealy was Microsoft's most vocal antagonist in the late 1990s, notably referring to Windows as a "giant hairball," but the rhetoric cooled off after Sun settled its Microsoft antitrust claims for $2 billion in 2004. He's also part of an amazing generation of tech entrepreneurs (others include Steve Ballmer and Bill Gates) now entering their 50s.

Just last week McNealy brushed off rumors that he'd step down, but he apparently changed his mind. He told me in 2002 that he'd never work with Microsoft, but a few years later he was on stage with Steve Ballmer announcing the settlement and plans for their two companies to cooperate, so you never know.

China and Microsoft are getting all the attention, but the Seattle tech story of the day so far is the $275 million sale of Qpass to Amdocs, a St. Louis-based customer service software company.

Qpass is a quiet success story. After reworking its business a few times, the company is now has deals with most major wireless carriers to provide services helping them sell content to subscribers. Tricia Duryee reported in Tech Tracks that rumors of a Qpass sale have been floating around recently.

Now the question is what will happen to the Seattle operation. Qpass lately has been putting a lot of effort into recruiting. Will it continue growing in Seattle, where there's more wireless talent but higher costs, or shift to Missouri?

I'm also wondering whether Chase Franklin, Qpass founder and chief executive, will change his QPASS vanity license plates. (That last link is to a 2002 story I did on tech license plates; it's still available if you've done the free registration at seattletimes.com.)