How Much is a Picture Worth?

Company: Fotolog

HQ: New York, NY

Founded: 2002

Management: None to speak of. Three guys with day jobs have run the company. They are: software consultant Adam Seifer who built the user interface, Scott Heiferman who seems to pay the bills (he sold his ad agency i-traffic and also founded and runs Meetup.org), and some dude named Spike who runs the back-end. However, now that the company has received funding, we expect the team will expand.

Investors: The company was bootstrapped, but in March 2005, it raised a modest $2.4 million from BV Capital.

Business Model: Fotolog does for photos what LiveJournal or Blogger have done for text blogging. The company built a platform that allows photographers to post their work, have visitors comment, and create a photo-based community. Fotolog currently has over one million users, with many millions more visiting, and nearly 39 million posted photographs.

Competitors: HeyPix (CNET), Snapfish (HP), Picasa (Google), Flickr (Yahoo)

Dirt: Despite the large marketing efforts of Ofoto, Shutterfly, and others, Fotolog is easily the most popular photo site on the Web. We detect Scott Heiferman’s hand in the low-key, anti-commercial stance of Fotolog.

His other site, Meetup is structured much more like the grassroots Craigslist, than the monetize-your-audience approach of Friendster. Given the buy-out frenzy that is occurring in the online photo space, we suspect that Fotolog has received offers, and has rejected them. Because Fotolog’s technology is fairly basic, and others could replicate it, we think Fotolog is smart to continue to please the grassroots legions that have made it a sensation, rather than to seeking to milk the audience with pop-ups and paid services.

Sources:

• Salon blog
• Newsweek story
• Startup funding

Low Profile

Internet start-ups are staying under the radar to get noticed – and other alarm:clock news from the land of private venture funding. A mini-surge of merger and acquisition activity has been enlivening the Internet space lately, with the likes of Google, Yahoo, CNET snapping up young companies.

The current strategy seems to favor low profile, low price tag deals, allowing quick integration of the newly acquired company on the cheap. And if the go-go days of the late ‘90s were characterized by the lack of a business model, customers, and revenues, many post-crash acquisition targets are, at the very least, getting products out the door, establishing popular platforms, and developing loyal user bases.

At one extreme are companies like del.icio.us, which offers a Web-based service where you create a personal collection of links that can be shared not only between your own browsers and computers, but also with others. This shared bookmarks/links concept provides an ongoing snapshot of what people find popular and interesting on the Web.

Founder Joshua Schachter was running del.icio.us as a side project, with no stated intention of making money, but saw his site’s popularity begin to blossom. He wisely took an infusion of cash to formalize the operation, perhaps recognizing that a little investment can go a long way in the current market, as can a loyal user base.

Another company with a solidly grassroots vibe is EVDB, the events and venues database. Still in Beta, EVDB is a collaborative, searchable database and Web services platform for event and venue data worldwide. It is both a search engine and a wiki, and claims blogging will become a part of its offering once the platform gains a head of steam with users. EVDB enables people to find relevant events along with detailed venue information, and to save that information to personal calendars on their desktop or mobile devices. Because the company relies on outsiders to fill out event listings, it can’t make the service work without free help and broad interest from event organizers.

Back in the complex world of network infrastructure, we came across Fortinet, a company that develops network security devices that prevent denial-of-service attacks and offer intrusion detection and prevention. The company’s approach is to bake a host of security capabilities into its own ASICs chips. Company execs have revealed that Fortinet is preparing for an IPO in 2005.

“They have more revenue than any other privately held information-security startup and incredible traction in a number of different markets,” according to a report from W.R. Hambrecht & Co.

On the communications front, Atrica sells carrier-grade optical Ethernet platforms, also known as metropolitan-area Ethernet or wide-area Ethernet. Its systems are intended to help communications carriers increase the data capacity of their networks.

As with many networking innovations, Atrica’s selling points are reduced costs over prior-generation technologies and better quality. The company’s biggest sales wins to date have been in Europe with France Telecom and Deutsche Telekom, but an investment from SBC and a recent deployment with Cox Communications bode well.