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Web 2.0’s bold pioneers

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Web 2.0 is shaping up as the internet’s Next Big Thing, but who are the entrepreneurs blazing the trail? We went looking. By MIKE PRESTON and JACQUI WALKER

By Mike Preston and Jacqui Walker

Who are Australia’s emerging Web 2.0 entrepreneurs, taking on the world with clever new business models for the interactive internet in which users generate the content and site-owners just build the tools?

SmartCompany set out to find the top eight emerging Web 2.0 businesses and their creators. We discovered that most are yet to make a profit. Some haven’t made any revenue and one hasn’t even worked out a business model that will make money!

But their founders are young, technology savvy and globally ambitious. They have managed to convince their investors they have a great idea with potential. Many are hoping to scale up their operations by licensing their technology to others.

But it’s early days. These Web 2.0 companies are relatively cheap to start and venture capital companies with pockets bulging are looking for the next big thing. It is a great time to be starting a new site.

They are all focused on a global market. Just as well. Mike Canon-Brookes is co-founder and CEO of Atlassian, a fast-growing software company that sells wikis to enterprises and turned over about $20 million in 2006-07. Atlassian is one of the few Australian Web 2.0 companies that is making money.

He says Australian Web 2.0 companies must aim to be global to succeed. “You are really going struggle to build a Web 2.0 company in Australia if you’re just going for an Australian audience.”

Some of our Web 2.0 entrepreneurs may be spectacularly successful like YouTube and Facebook but most will sink without a trace. Here are eight emerging Australian Web 2.0 businesses fighting to get ahead.

Minti

Founders: Matthew Macfarlane, Clay Cook and Rachel Cook. They remain controlling shareholders in Minti’s parent company, VibeCapital.

Established: Minti went live in March 2006.

Revenue/profit 2006-07: Not telling, but chief executive Matthew Macfarlane says he expects to be become profitable next year.

What is it? Minti is an advice and discussion forum for parents. Parents who are registered on the site contribute and respond to content, rank advice other parents have posted and meet and talk online with other parents.

Global or local? About 40% of Minti’s 6000 daily unique visitors come from Australia, 40% from the US and 20% from the rest of the world. Macfarlane says Vibe Capital’s outlook and focus is global.

How does it make money? Minti is built on an advertising model, but Macfarlane says the big earner for Vibe Capital will be charging third parties for a license to use its “advice-o-pedia” website engine.

Where is it going? Vibe has sold three licences to its technology and two weeks ago launched its second website, a site for DIY renovators called refurber.com. Macfarlane says they also recently landed their biggest licensing deal to date with a yet-to-be-revealed Silicon Valley company that averages 30 million page views per month.

What are its chances? Macfarlane says Vibe Capital’s ranked advice model does not have any competitors, although sites such as Yahoo Answers and About.com are in that space. Parenting site Minti counts mumspace.net, parentsconnect.com and clubmom.com as competitors.

Booking Angel

Founders: Dean McEvoy and David Watson

Established: Eatability.com, the first restaurant rating website incorporating Booking Angel, went live in early 2005.

Revenue/profit 2006-07: Not telling, but McEvoy says Booking Angel made a small profit in 2006-07.

What is it? Booking Angel enables instant confirmation on online restaurant reservations. Its software, which is hosted on restaurant’s sites and review sites, converts online reservations into an instant voice message that is delivered over the phone to the restaurant. The restaurant can confirm or reject the booking or suggest an alternative time by using the telephone keypad, with the response instantly communicated to the booker.

Global or local? Booking Angel is currently only being used to make bookings in restaurants in Australia but the technology is patented around the world. McEvoy says he is exploring options for overseas expansion.

How does it make money? Booking Angel charges a small fee for embedding its software on restaurant and review sites and then receives a payment for each booking made – $5.90 for bookings through a review site and $1 for bookings through a restaurant’s own site.

Where is it going? McEvoy has raised some capital from unnamed investors to back expansion into the US, and says he has received offers to license the technology in Croatia and China. They are also looking at expanding into other appointment based industries such as health care. McEvoy says he wants to have a third of the Australian restaurant market signed up in two years, an achievement that he says would provide Booking Angel with a revenue stream of more than $3 million.

What are its chances? Booking Angel seated over 20,000 people in Australian restaurants last year and, according to McEvoy, has no direct competitors. A somewhat similar technology that may emerge as a competitor to Booking Angel is Google Click-to-Call.

Tangler

Founder: Martin Wells, the current chief executive and part owner with investors from Europe, the US and Hong Kong.

Established: A beta version of Tangler went live in April 2007.

Revenue/profit 2006-07: Tangler is still in its development phase and is yet to earn revenue.

What is it? Tangler hosts networked and searchable discussion forums on a huge range of topics that readers can use in real time or by delayed posts. Readers can incorporate audio and video in their posts and use an instant notification function to be immediately informed of new contributions to nominated forums. “We try to make online forums that are sexy, fast, colourful and networked to enable discussion to take place in a much richer way,” Tangler’s Mick Liubinskas says.

Global or local? Global focus – Tangler has offices in Sydney and Mountain View, the home of Google in California.

How does it make money? Tangler plans to operate on a mixed business model combining contextual advertising in its forums and partnerships with big companies that will use their technology to facilitate discussion within their own businesses.

Where is it going? Tangler plans to release a widget early next month that will allow people to access and participate in Tangler discussion groups from online platforms such as MySpace and Facebook.

What are its chances? Although it is still in beta, Tangler has 1000 individual discussion groups. But Tangler faces fierce competition from many thousands of topic or identity based discussion forums already online.

RedBubble.com

Founders: Peter Styles, Martin Hosking and Paul Vanzella, who continue hold a majority interest.

Established: Went online for private viewing in November 2006 and live to the public on 2 February 2007.

Revenue/profit 2006-07: Not telling. Styles says the business should become cash flow positive in 2008.

Global or local? “Absolutely global from day one,” Styles says. RedBubble recently launched multi-currency purchase facility to better enable international transactions.

What is it? RedBubble is an online art gallery and sales portal and a networking and discussion site for artists and designers. When visitors to the site purchase an image or design, RedBubble arranges for the manufacture of the physical product by printing on to a variety of media from framed canvases to greeting cards.

How does it make money? RedBubble charges artists a base price for each image sold, which varies depending on the cost of the materials required to make the physical artwork, and then forwards to remaining proceeds to the artist.

Where is it going? Aspires to be the leading online art gallery of its kind in the world. “We are determined to create an Australian brand that is known around the world,” Styles says.

What are its chances? RedBubble currently has close to 7000 registered member artists, has about 60,000 images for sale, and is growing both at the rate of 75% a month, according to Styles. However, the site has a major competitor in its niche, the slightly more youth-oriented deviantart.com.

PerthNorg

Founder: Bronwen Clune, chief executive.

Established: PerthNorg went live in August 2006.

Revenue/profit 2006-07: Clune won’t talk about PerthNorg’s revenue or that of its parent company NorgMedia. “Our focus at the moment is growing our community and getting the platform right,” Clune says.

What is it? PerthNorg (‘Norg’ is a contraction of News Organisation) is a community-driven news site for people in Perth. Registered users to the site, called Cit Js, contribute content and respond to stories. The more popular the story, the higher its profile on PerthNorg.

Global or local? “We consider ourselves a global company working in local news markets,” Clune says. Norg Media has plans for community news sites in other Australian cities and overseas cities “where we think we can add something,” she says.

How does it make money? NorgMedia plans to earn income through advertising and by building commercial sites for companies interested in using its website model as an internal communications tool. Clune says the local focus of sites such as PerthNorg means it can charge a premium to advertisers seeking to access particular geographical markets.

Where is it going? The next steps for NorgMedia are SydneyNorg and MelbourneNorg, which, Clune says, will be launched within three months. There are also plans for a vertically integrated site, focused on a product or idea rather than a geographical location, using the Norg web model in the near future. Clune is currently looking to raise about $500,000 to grow faster.

What are its chances? PerthNorg has almost 1000 registered Cit Js, and has grown purely from word-of-mouth referrals. It faces competition from conventional media and must show that geographically defined communities can work online.

3eep

Founders: Rob Antulov and Nic Gronios

Established: Went live in March 2007

Revenue/profit 2006-07: Not telling, but co-founder Antulov says 3eep is still in beta mode and is not currently profitable.

What is it? 3eep is a sport-oriented social network that sports players, fans and administrators can use to chat, post content, share audio or video, organise events and send team messages about things such as fixtures and training times.

Global or local? Sydney-based but with global aspirations. “We know for a Web 2.0 company to be successful you have to go global very quickly,” Antulov says. 3eep’s user base is overwhelmingly Australian but Antulov says they are very close to signing a deal to licence the technology behind the 3eep platform internationally.

How does it make money? The 3eep business model is advertising and sponsorship-based, but down the track they are looking at offering premium services that users would pay for, classified advertising and content syndication.

Where is it going? Still early days, but growth in Australian and internationally is the key. Antulov says rapid expansion will be important so that 3eep is as close to first mover in its target markets as possible.

What are its chances? In Australia, Antulov says 3eep’s key competitors are team management software packages and text messages, which is the method most teams currently use to communicate. Internationally, 3eep faces competition from the likes of tackle.com in the US and isporty.com in the UK.

Remember the milk

Founders: Emily Boyd and Omar Kilani

Established: October 2005

Revenue/profit 200607: No revenue in 2006-07

What is it? Web based task management software – in simple terms, an online to-do list that can be integrated a variety of platforms such as Google and that can be tailored to send the user reminder messages through SMS, email or instant messenger.

Global or local? Global – co-founder Kilani says Remember the Milk has users around the world and is particularly popular in Japan.

How does it make money? Kilani says Remember the Milk doesn’t have a business model at the moment and says while they intend to monetise the site, they do not have a concrete plan about how they will do that at this stage. In the meantime, Remember the Milk is being funded by Kilani and Boyd.

Where is it going? At the moment Remember the Milk is focused on expanding the user base and making the software compatible with as many different interfaces as possible – Twitter.com is a recent addition. Kilani says there is only one main competitor for Remember the Milk, but it is a doozy – Microsoft, through the task management functions in Outlook and Word.

What are its chances? Remember the Milk already has more than 250,000 users and has established a genuinely global user base. But it is not making any money. The challenge will be to concoct and implement a business model that works.

Scouta

Founders: Richard Giles and Graeme Sutherland

Established: Site went live in February 2007

Revenue/profit 2006-07: No revenue yet, but plans to have some revenue by the end of 2007 and become profitable within three years.

What is it? Scouta is a content aggregation and recommendation site. Users can post and recommend their favourite online content from the written word to YouTube and MySpace videos and podcasts.

Global or local? Global – it is all about recommending online content, which itself is global in nature.

How does it make money? Scouta will try to license its content to businesses who wish to include recommendations on their site. Scouta chief executive Richard Giles says companies will be able to choose to have recommendations relating to products in their category on their site or just in relation to products they sell. Advertising will provide a secondary revenue stream.

Where is it going? Scouta is about to launch an iTunes client, which allow Scouta users to interact through the iPod, Appletv and iPhone. As the line between online content and television/radio blurs, Scouta plans to become a comprehensive media recommendation site.

What are its chances? Scouta has competitors in particular content niches and also from the well-known aggregators such as Digg and De.lic.ious, although they differ in their ability to embed video or facilitate user interaction. Established recommendation based music services such as iLike and Last.fm loom as key competitors.

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