Web 2.0 Article from the Fort Worth Star Telegram

Fort Worth Star-Telegram (TX) July 23, 2006 Section: Business
Edition: Tarrant Page: F6

Tech companies hope to cash in on Web 2.0
by Aman Batheja, Star-Telegram Staff Writer

Out of a second-floor office in Southlake Town Square, 26-year-old Josh Williams is taking on the likes of Microsoft and Oracle. Williams and his staff of seven at Firewheel Design are making a name for themselves among small-business customers with their online invoicing site, Blinksale.com.

The company is following a growing trend of desktop software making the move to the Web. Known as "software as a service," programs including word processors and spreadsheet makers are now fully available online; users don't have to download or install a thing.

Web-based products are garnering the most interest from small businesses that are attracted to the potentially lower costs, compared with traditional software that must be installed on a computer. Along with the software, information entered by users is saved on the Web site.

And when a company's software and data can be accessed from any computer connected to the Internet, it's easier for employees to work away from the office.

"Particularly for small to midsized businesses, the software as a service model is very attractive," said Judy Sweeney, an analyst with Boston-based AMR Research. "They don't need a large IT staff ... and they're getting products that are very easy to use."

Williams, who grew up in Garland and has a background in print design, started Firewheel in Chicago as a Web-design company in 2001. He moved the company to Southlake in 2003. He also runs IconBuffet.com, which sells icons for software developers.

Last year, Williams decided that the company should create its own invoicing system because he was dissatisfied with others on the market. "I'm frustrated when I have to spend more of my time than necessary on overhead and management-type stuff," Williams said. Blinksale launched last summer. Its name is meant to suggest sales that can be processed "in a blink of an eye," Williams said.

The site has been praised by technology bloggers for its elegant design and ease of use. Blinksale now has thousands of customers, Williams said. Most are not paying customers, as users can send up to three invoices a month on the site for free. The site is already attracting enough paying customers to cover its overhead, Williams said. He expects it to be profitable by the end of the year, he said.

The software-as-a-service model isn't exactly new. In the late 1990s, companies with the concept were called "application service providers." The market leader remains San Francisco-based Salesforce.com, with more than 400,000 customers using its customer relationship management software. As broadband access has increased and computer processors have grown faster, more people are finding software delivered over the Web a viable alternative to traditional software.

Charlie Wood has been in the technology industry for nearly 15 years. Last year, he noticed the increasing number of companies using the software as a service model and launched Spanning Partners, which creates applications that work with those sites.Wood said a major reason for the increase in such online services is that renting servers and other costs related to hosting a Web site have dropped dramatically. "A one-man startup like me can deliver software more effectively and cheaply through a Web site than shipping out CDs," Wood said.

For well over a decade, software handling back-office functions and customer-service management has been big business for companies like Microsoft and Oracle. Now, a growing list of startups has invaded their territory. Which products will ultimately win has become a guessing game in the tech community. For instance, along with Blinksale, sites such as sidejobtrack.com and simplybill.com offer similar products.

"It's very hard to see right now. There's like a flat playing field with a whole lot of players," said Tom Snyder, president of Kirkland, Wash.-based iNetOffice, a provider of Web-based office applications. Also complicating things is Microsoft's announcement this year that it plans to offer all of its major software applications as Web-based products. Some have wondered whether Microsoft, through name recognition alone, could simply crowd out all of the startups. Others say the smart startups are going after markets Microsoft doesn't want.
"The good news for little companies is Microsoft can't afford to go after a million little things," Wood said. "That leaves tons and tons of things they're never going to go after."

Most startups appear to be emulating Google, which has enjoyed wild success with its stripped-down search engine. Similarly, many software-as-service companies are offering what has become known as "light" applications, which are sparer versions of the leading software in that field. The target market audience for these sites has predominantly been small businesses, many of which don't use the more robust functions of popular software.

Small businesses are clearly responding. Jupiter Research recently surveyed software use by very small businesses, which it defined as having fewer than 10 employees. The researchers found that 26 percent of those companies had purchased online software services the previous year. Until now, that niche group has been underserved by mass-market software, Williams said. "In some ways, we meet the needs of a group of people that feel Quickbooks might be overkill," said Williams, referring to a leading accounting software product from Intuit. "Software that meets the masses is the old way of thinking."

DJs of T's

The logo for innerTee.com sports a serious-looking monk with a white T-shirt poking out from beneath his traditional robe. Jamie Fisher and Miles Sims say the image speaks to the heart of the online community they're creating around T-shirts. "It's almost a religious experience about people with their T-shirts and the design," Sims said. "People are passionate about the fit and how it looks." Earlier this year, Sims and Fisher launched innerTee.com, which they call a "remixable design community." The Austin duo has spent the past few months contacting artists and designers to submit images to the site. Some designs are simple — a cloud or a tree. Others are more involved, like depictions of deformed robots and cute monsters.

With hundreds of design elements collected, innerTee will fully launch this summer. Visitors to the site will be able to take any of the images and position and play with them to create their own original T-shirts, which will be available for purchase. The designers will receive a royalty payment every time one of their design elements is used on a printed shirt. "The best analogy is a DJ mixing a song," Sims says. "You can use art and mix your own apparel."
As with many recent tech startups, innerTee.com is expanding on a pre-existing idea. The site won't be the first online community of T-shirt lovers. On the popular Threadless.com, run by Chicago-based Skinny Corp., artists submit T-shirt designs and users vote on which ones should be produced. And sites such as Cafepress.com and ArtApart.com have offered on-demand production of personalized shirts and other apparel for years. InnerTee.com will merge the two ideas, allowing users to access a library of images, design their own T-shirts, which will be printed as they are ordered. The company will print the shirts at a facility in Austin. "In theory ... we could produce thousands of shirts each month and never produce the same one twice," Fisher said. Fisher and Sims met in 2001 when both began working for AT&T, then SBC, helping manage the telecommunication company's Internet-related products. Three years ago, they started a T-shirt printing business called Scribe Graphics in north Austin as a side project. That eventually evolved into their own label, called Red Army Surplus Co., that they sell through Amazon.com. Last summer, the idea of a do-it-yourself T-shirt design site came about. The venture is being funded by profits from the Red Army label, Sims said.
The pair is betting on the passion of teenagers and young adults who crave original fashion and want clothes that reflect their personalities. "It's almost a backlash from these big-box stores selling the same old same old," Sims said. InnerTee is just the latest entry in the arena of user-generated content, a concept that's part of a new excitement around the tech industry that's being called Web 2.0.

Photo-sharing site Flickr, video-sharing community YouTube and online encyclopedia Wikipedia have become the standard-bearers for user-generated content. As the thinking goes, why should anyone pay professional writers, photographers and artists to fill up a site with words or images when fervent amateurs will do it for free?

Millions are certainly showing interest in both creating and consuming user-generated content. Flickr, Wikipedia and YouTube all rank among the top 25 most-visited Web sites in the U.S., according to Web tracking firm Alexa.

Donna Bogatin advises companies on how to develop Web-based businesses and blogs about the Web 2.0 phenomenon on the tech site ZDNET.com. She noted that incorporating a sense of collaboration and sharing has become standard fare for startup Web 2.0 companies, and most plan to build their businesses around advertising. The guys behind innerTee.com are taking a different route by selling a product under the guise of creating a community, she said. "The goal may be as prosaic as hawking T-shirts, but the currency in play is Web 2.0 'respect,'" Bogatin wrote in an email. Chris Shipley, a technology analyst who specializes in emerging companies, said the most-popular sites for creative people may change, but that user-generated content as a successful draw for Web sites is here to stay. "We've taken the tools of creation and made them very, very accessible, and people are going to resist having those tools taken away from them," she said.

Networking everywhere

Charles Ribaudo's business card lists no address. Just his name, e-mail address and cellphone number. Ribaudo and partner Jim Young, co-founders of Jambo Networks, are looking for office space in Dallas. In the meantime, they hold most of their meetings at the nearest Starbucks."We have 4,200 offices," Ribaudo joked. Without a physical address, their business exists wherever they are. Their software just might do the same thing for online communities like MySpace. Jambo's software turns laptops and other Wi-Fi-enabled devices into a radar for nearby people who share common interests. Swahili for "hello," Jambo Networks is one of many companies trying to stand out in the increasingly crowded world of online social networking. Rather than creating their own networking site that would have to steal users from competitors like MySpace and LinkedIn, Jambo.net is working on partnering with those sites and sharing in the revenue. "Our goal is to basically lock up that whole market," Ribaudo said. "The faster we can move, the better." Young and Ribaudo got the idea for technology that encouraged chance encounters after a chance encounter of their own. They met in 1993 during a trip to Kenya they both took through a leadership program. Young had just graduated from Southern Methodist University. Ribaudo was a senior at the University of Richmond in Virginia. Ten years later, they met again by a fluke in Dallas. They eventually talked about starting a company together and discussed using technology that would, as Ribaudo puts it, "lock up the market on serendipity." The pair spent two years developing their software. Relying on funding from friends and family, the company has grown to five full-time and six part-time employees.

Largely because of the rapid rise of MySpace.com, social networking has become the most successful concept to come out of Web 2.0. Earlier this month, Web-tracking firm Hitwise announced that MySpace.com, recently acquired by Rupert Murdoch's News Corp., had become the most-visited site in America, nabbing 4.46 percent of all Internet visits for the first week of July. Sites like Sixdegrees, Ryze and Friendster started the innovative idea of connecting people by their common friends and interests back in the late 1990s. The industry is now dominated by MySpace and Facebook, a networking site targeting college students and alumni. A growing crop of sites aimed at niche groups like the business community and pre-teens are also garnering attention. Several sites are expanding their networks to mobile devices. MySpace has made a mobile version of its site available exclusively through cellphone provider Helio. Cellphone providers have become increasingly interested in offering customers more than just games and ringtones, according to Doug Ortega, chief executive of Handango, a Hurst-based provider of downloadable software and content for mobile devices.
"It's certainly aligned with the direction that the mobile market is going, which is more-sophisticated applications," Ortega said. In 2005, Jambo got its debut at DEMO, an annual conference that offers a handpicked group of emerging tech companies a chance to show their stuff to venture capitalists and industry leaders.

Chris Shipley, executive producer of the DEMO conferences, said Jambo was well-received, but investors expressed concern about the practicality of the concept. Did people really want to use their mobile devices to meet complete strangers around them? "We always want information about other people, but we don't always want to give up information about ourselves," Shipley said. Investors are "still trying to fully embrace the advantages of location-based applications."
Jambo isn't the first company to try to take social networking mobile. New York-based Dodgeball.com caught some buzz for a social network based on text messaging in 2000. It was acquired by Google last year but has yet to gain the huge following some of the company's other offerings have. Other location-based social networks include Meetro.com and Plazes.com. Ribaudo and Young have spent recent months raising Jambo's profile by offering its service at conventions, most notably this year at MacWorld in San Francisco and South by Southwest Interactive in Austin. Those who downloaded Jambo's software were asked to single out their interests and the type of people they wanted to meet. That created a kind of wireless matchmaker for people at the convention. At South by Southwest, for example, people hooked into Jambo were able to find like-minded attendees even when outside the Austin Convention Center. That allowed the convention to thrive across the whole city, Young said. But convention work is just a part of Jambo's strategy. The company is focused on being the mobile counterpart for networking sites. Young said the company has been in talks with several sites but declined to name which ones. A couple of deals will probably be announced this summer, he said. "We're basically taking their databases and their networks and notifying their members when other members are near them," Young said. The company is raising venture funding and preparing to expand Jambo's capability to Bluetooth-enabled gadgets. Ribaudo said the company would succeed because most people don't want to be connected globally at the expense of missing those special people around them. "This is a way to bring people back together," he said.

Aman Batheja, 817-390-7695 abatheja@star-telegram.com


Charles Ribaudo, left, and Jim Young, co-founders of Jambo Networks, don't have an office yet. They usually meet at Starbucks. Jambo helps Wi-Fi users find others in their area with similar interests.

SPECIAL TO THE STAR-TELEGRAM/MIKE FUENTES

Josh Williams runs Firewheel Design, a tech startup in Southlake that offers Blinksale.com, an online invoicing system for small businesses. The company is part of the software-as-a-service trend.

STAR-TELEGRAM/JEFFERY WASHINGTON

InnerTee founder Miles Sims edits shirt designs on the startup business's Web site in Austin. Users will be able to design and create their own shirts with art on the site.

SPECIAL TO THE STAR-TELEGRAM/JACK PLUNKETT

Copyright (c) 2006 Fort Worth Star-Telegram