Twitter creator wants to give away Square, his credit card payment gadget

Twitter was just the beginning. After dreaming up the innovative communication medium, Jack Dorsey is looking to revolutionize another core aspect of society -- money.

On Tuesday, Dorsey announced his new start-up, Square, which will let anyone with a cellphone or iPod become a merchant and accept credit card payments.

Square is a small plastic device that plugs into a gadget's headphone jack. Buyers swipe their credit cards through the machine, which then transmits the payment data to an application running on a connected iPhone or iPod Touch. (Android and Blackberry apps are in development, and computer software will be available later.)

You don't have to have the Square gadget or app to pay. You just need a credit card and an e-mail address to receive a receipt.

A select few cafes and small vendors are among Square's first beta testers. Intelligentsia Coffee & Tea in Venice will be one of the first in Southern California, starting as early as next week.

Beginning sometime early next year, Dorsey wants everyone to use Square.

"I think we're going to give the Squares away for free," Dorsey said on the phone from San Francisco on Tuesday, "because they're pretty cheap for us to make."

Google bets big on mobile advertising in $750-million acquisition of AdMob

Google Inc. has shown which way it believes the winds are blowing by forking over $750 million for mobile advertising firm AdMob, one of the Web giant's largest acquisitions to date. 

As AdMob itself has described, the volume and effectiveness of mobile advertising has been skyrocketing over the last several years as more advanced smartphones have caught on, making it easier to deliver more kinds of graphical and text-based advertising to phone-toting consumers.

In a recent report, AdMob said that the number of mobile ads it served had increased nearly 540% from September 2007, to 10.2 billion per month from 1.6 billion.  

As mobile phones morph further into pocket Internet devices, and consumers grow accustomed to performing online functions like search, gaming and instant messaging on their handsets, opportunities for advertising companies like Google will grow rapidly, analysts expect. 

Google says the number of searches performed by smartphone users has increased by a factor of five over the last two years, led primarily by iPhone users and owners of Google Android phones. At least a dozen new Google-powered phones, such as last week's launch of Verizon's Droid, are expected to be released in the coming year.  

Google also says that marketer spending on mobile advertising is growing at 30% annually.

AdMob was founded in 2006 by Omar Hamoui, a Web entrepreneur looking to generate traffic for his mobile-based website. The company has taken funding from venture firms such as Sequoia Capital, Accel Partners and Northgate, and the company's clients have included Ford, Coca-Cola, Electronic Arts and Paramount Pictures.

Google, which already owns a major stake in mobile advertising with its DoubleClick Mobile unit, said it expects regulatory scrutiny of the AdMob deal but hopes the pact will be approved within a matter a months.

-- David Sarno

Microsoft partners with Pasadena's OpenX to share online advertising technology

Microsoft Corp. and OpenX Technologies Inc., a Pasadena-based Web advertising firm, have brokered a deal to mutually promote their ad-selling technologies and share customers.

Under the deal, OpenX will offer some of Microsoft's online advertising products to its own customer base of more than 150,000 websites, which collectively serve 300 billion ads per month.  Microsoft will also refer individual business customers to OpenX, which designs custom advertising products for paying clients.

Most of the software offered by 3-year-old OpenX is based on open source technology and has become an attractive option to smaller websites, which can install the OpenX advertising platform for free and begin to make revenue from selling ad space.

Microsoft touted the partnership as an early step into a more diverse and flexible online advertising market.

"Partnering with OpenX for us is emblematic of a desire to accelerate an open ecosystem," said Maggie Finch, manager of Microsoft's business publishing group.  "We want to provide multiple choices and options for publishers of all sizes."

OpenX's technologies allow website owners to efficiently find advertising targeted to their readers. The company's competitors include Google's DoubleClick and Microsoft's aQuantive division, now called Microsoft Advertising.

The companies did not disclose the specific financial terms of the multi-year deal, stressing that it was primarily a way to cross-promote advertising products. Microsoft, however, said there would be no revenue shared as part of the agreement.

"It's the beginning of a partnership," said OpenX chief executive Tim Cadogan, a former advertising executive at Yahoo Inc., with which Microsoft signed a major search advertising deal earlier this year.  "I think it's a good legitimization of what we're doing and hopefully kicks us up to another level in terms of industry awareness."

Corrected, 3:00 p.m.: An earlier version of this post said the OpenX plaftorm served 3 billion ads per month.  The actual number is 300 billion.

-- David Sarno

ReachLocal, with 146,050% growth in five years, tops Deloitte's Fast 500 list

Zorik Gordon, chief executive and founder of Woodland Hills-based ReachLocal, which topped the list for the fastest-growing technology companies, in a photo from October 2007. Credit: Mel Melcon / Los Angeles Times.

Deloitte's Technology Fast 500 rankings were released today, showing the fastest-growing technology, media telecommunications, life sciences and clean technology companies in the United States.

The top 10 companies on the list posted an average revenue growth rate of 53,798% over a five-year period beginning in 2004, and primarily fell in the biotechnology/pharmaceutical and communications/networking categories.

Topping the list was Woodland Hills-based ReachLocal, whose revenue jumped from $100,000 in 2004 to $146.7 million by end of fiscal 2008, or a 146,050% growth rate. It is the only Internet company to take the top spot since Google received the honor in 2004. (The majority of the companies on the list belong to the software sector.)

ReachLocal "brings order to the fragmented Internet by connecting advertisers, publishers, and creative solutions providers together on one platform," according to the company's website.

Zorik Gordon, 37, founded the company in 2004 after dropping out of dental school and working for two Internet start-up companies. His goal was to "democratize Internet advertising" by disseminating elite technology, marketing and advertising tools to small businesses.

ReachLocal has more than 500 Internet marketing consultants who can track clicks, impressions and phone calls and advise businesses on making marketing improvements. The company then helps place small business on various Web platforms and increase their searchability on major search engines.

"We bring tier one advertising technology that's had been only available to top companies down to a historic group of people that could never access these tools and technologies," Gordon said.

-- Melissa Rohlin

KaChing aims to shake up the mutual fund industry

Venture capitalists love to use the Internet to disrupt traditional businesses. But surely by now no business is left undisturbed.

Not so, says Andy Rachleff, a founder of Silicon Valley’s Benchmark Capital. He thinks he’s found a big one, what he says is “a $10-trillion market that has not had any innovation in the last 25 years and has not been affected by the Internet.”

It’s the mutual fund industry. And some valley heavyweights have joined Rachleff in his bid to rock that world: Netscape co-founder Marc Andreessen, Hewlett-Packard executive Ben Horowitz, Open Table CEO Jeff Jordan, and Kleiner Perkins Caufield and Byers partner Kevin Compton.

This team believes that mutual funds take investors’ money, but only tell them what their holdings are on a quarterly basis. The funds also charge all sorts of hidden fees. The Internet is famous for bringing transparency to a variety of businesses, but mutual funds, Rachleff says, are as opaque as ever.

Enter kaChing, a start-up that Rachleff has not only backed but has joined as its chief executive. KaChing has been around for about 18 months, accumulating 400,000 users with a Facebook application, but is now ready to unveil its business model.

The company offers up a website that any investor can use for free. The investors – some professional, some amateur – state their philosophy and show their stock picks. KaChing will then rate those investors, using a formula akin to the one that Ivy League universities use to evaluate their institutional fund managers, and anyone with a rating of 140 or more will be tabbed as a “genius.”

Any other investor can log onto the site and see what the geniuses are picking. But if you decide you like one of them, you can plunk your money down – minimum $3,000, which Rachleff says is far less than the institutional level typically required for such services – and invest like the genius of your choosing. Every time the genius makes a trade, you make the same trade at the same time, and get an e-mail alerting you to it.

To be sure, other companies out there have similar ideas. Other so-called social investing firms include Covestor, Cake Financial and PersonalRIA. Plenty of people have an eye on that mutual fund disruption.

And success is far from guaranteed. KaChing will have to persuade people to put their money behind stock-pickers who, while the site may call them geniuses, don't have the backing, brand names or Morningstar ratings of Fidelity, Pimco, Vanguard or other big funds.

-- Dan Fost

Energy-efficient LED bulbs to light U.S. homes

Would you pay $39.95 for a light bulb?

Didn’t think so. But what if it used 90% less electricity than a standard incandescent bulb, cut greenhouse gas emissions and saved you an estimated $280 over its 25-year lifespan?

That’s the challenge facing Dutch start-up Lemnis Lighting today as it begins selling the American version of what apparently is the world’s first dimmable LED bulb compatible with home light fixtures.

LEDs -- light-emitting diodes -- are semiconductors that glow and are the great light hope for slashing carbon emissions from lighting, which consumes about 19% of energy production worldwide.

Lemnis says its Pharox60 LED lasts six times as long as an energy-efficient compact fluorescent light bulb. But unlike CFLs, LEDS don’t contain toxic mercury.

Most often found in electronics equipment or in commercial lighting, LEDs tend to cast a cold light. Lemnis founder Warner Philips said the start-up spent considerable effort to engineer its 6-watt bulb to give off the warm white glow of a 60-watt incandescent.

“What we’ve been working on is to combine the ability to get a warm white light from an LED along with the energy savings,” said Philips, a great-grandson of the founder of the Philips lighting and electronics conglomerate.

“The final challenge is, how do you get people to understand that $40 for a light bulb is not expensive?” he added. “From Day One, they start to save money. The energy savings over the bulb’s lifetime vastly exceeds its cost.”

Philips said one solution would be for utilities to finance the cost of swapping a home’s incandescent bulbs for LEDs and add a fee to customers’ monthly bills. The utilities would profit if lower electricity demand allows them to avoid the expense of building power plants, he said.

And that $39.95 price? That’s a special offer -- the bulb retails for $49.95 -- good until Dec. 31. But Philips said he hopes sales will allow the price to remain at $39.95.

Lemnis, whose U.S. headquarters is in San Francisco, has sold 2.5 million LED bulbs in Europe and aims to sell 10 million worldwide by the end of 2010.

As production ramps up, Philips expects the price of the bulbs to fall. And the company has found one heavyweight early adopter: Google distributed 25,000 of Lemnis’ 5-watt LED bulbs to its employees on Earth Day this year.

-- Todd Woody

Green technology tops venture capital funding

Tesla Roadster is charged through a power plug at the Frankfurt Auto Show. The maker of the electric car got $82.5 million in venture capital funding in the third quarter. Credit: Frank Augstein/Associated Press

Green technology attracted the largest share of venture capital in the third quarter with global investments rising to $1.59 billion, according to a survey released Wednesday by the Cleantech Group and Deloitte.

That’s a 10% increase from the second quarter but still down 42% from the same period last year.

Dallas Kachan, managing director of the Cleantech Group, said the third-quarter numbers are preliminary and he expects total investment to have risen by 15% to 20% when the final figures are calculated.

“Clean tech continues its recovery despite the lowest level of venture capital investment overall since 1997,” said Kachan. “Clean tech has gone from a niche category to 27% of all venture investment. It eclipses the amount being currently invested in biotech and software.”

In a sign that government policy is driving green tech investment, the biggest deals of the third quarter were for companies that have been beneficiaries of federal loans and grants.

Silicon Valley solar panel maker Solyndra raised $198 million and also scored a $535-million loan guarantee to help finance construction of a solar module factory. Electric carmaker Tesla Motors, meanwhile, both took in $82.5 million in venture capital funding while receiving a $465 million low-interest government loan to help it build a factory to produce its Model S sports sedan.

“Large government grants are opening the floodgates for venture capital,” said Kachan.

 --Todd Woody

TechCrunch50: SeatGeek advises you when to buy tickets to the big game

It's the ticket-scalping conundrum: Will it be cheaper to buy seats in advance of the event or will prices drop as it gets closer to game time and the sellers want to unload their wares?

SeatGeek, a new company that showed its stuff at the TechCrunch50 conference in San Francisco, aims to take the guesswork out of that decision.

"We have an algorithm that can forecast ticket prices," said Jack Groetzinger, co-founder of the company. He compared it to Bing's FareCast, which does something similar with airline tickets.

SeatGeek aggregates tickets on sale from most of the major re-sellers, like StubHub, RazorGator, TicketsNow and others.

Say you're interested in getting tickets to Oct. 4's showdown between the Dodgers and the Colorado Rockies. (See the screen grab at right.)  SeatGeek searches available seats, and says you can get cheap seats for below face value, but you should wait -- the price will probably go even lower. But if you want the medium or expensive seats, buy them now, as those prices will probably rise. (Perhaps the conclusion is that if Dodger fans can't get close to the action, they'd rather stay home.)

Groetzinger, 25, and co-founder Russ D'Souza, 24, sold their earlier company, Scribnia (which D'Souza called "Yelp for authors and bloggers") four months ago, and immediately started SeatGeek. They were living in Boston at the time, where Red Sox tickets are hard to come by and only available on the secondary market.

"We see this as a huge opportunity for a change-the-world type of business," D'Souza said.

-- Dan Fost

TechCrunch50: Women get short shrift

At TechCrunch50 . Credit: magerleagues / Flickr.

It's a common refrain, but it always bears repeating: Why aren't women better represented at technology conferences?

TechCrunch50 is no exception. "It's like a 20 to 1 ratio of men to women at this conference," said Stella Yu, a personal brand advisor from San Francisco. And that ratio manifests itself, she believes, in what happens on the stage.

"Last year, they dissed Closet Couture. They said, 'It's not going to work. Nobody wants to see what's in your closet.' It's because everyone on the panel was male." Yet Closet Couture had a favorable write-up in Vogue and continues to do well.

Yu said the same thing happened this year with LearnVest, a personal finance site for women. Judges Kevin Rose and Bradley Horowitz said they were skeptical. "This didn't resonate with me," Horowitz said.

The conference does feature some women trying to rectify the situation. In "the pit" -- the area where start-ups have tables, corralling people and demonstrating their wizardry, the Girls in Tech table is raising money to support Girls Inc.

"We're trying to promote and educate the younger generation about careers in technology," volunteer Tonia Dinh said. "A lot of girls may be interested in the field, but it's predominantly men."

-- Dan Fost

TechCrunch50: MySpace looks for friends

It's the sad fact of life for MySpace, a sponsor of this week's TechCrunch50 conference in San Francisco: Silicon Valley loves Facebook and Twitter. MySpace? Not so much.

Yet that doesn't stop Rupert Murdoch's favorite social network from trying. Chad Russell, who runs MySpace's OpenSocial team, is at the conference, trying to persuade developers to create apps for the one-time social networking leader. MySpace, he points out, still has 170 million users -- dwarfed by Facebook's 250 million, but still a significant population.

"It's almost like we're back to square one," Russell said. "We're pitching again, like we were a few years ago."

"This is a Facebook crowd," he said, noting that Facebook and Twitter get a lot of positive coverage on the TechCrunch website, which covers Silicon Valley and is hosting the conference. "They take their leanings from on high."

OpenSocial, which Russell works on, is an effort launched by Google two years ago to get developers to build applications that can run across a number of social networks, including MySpace, LinkedIn and Google's Orkut. Facebook has its own system and has not signed on to OpenSocial. "They're anti-open standards," Russell said. "All of Facebook has closed protocols."

As for MySpace's newfound role as underdog and Web 2.0 whipping boy, Russell said, "Some of it we deserve. Some of it we don't."

-- Dan Fost