Spiceworks has. Over four years, the company has evolved from an an ad-supported network mapping tool to something of a Facebook for IT pros. The social networking part happened more or less by accident. Now Spiceworks, based in Austin, Texas, has a community 1.3 million strong, and adding more than 2,000 new members a day, all of them making technology spending decisions for their small to mid-sized companies. Tech advertisers and vendors are naturally lining up to get in.

And so have the venture capitalists. Last year, Spiceworks landed a $16 million C round led by Institutional Venture Partners, known for funding Twitter and Zynga and Netflix. Other investors include Austin Ventures and Shasta Ventures with total funding at $27 million.

Spiceworks co-founder Jay Hallberg was in New York stopped by our offices in New York and we talked about how Spiceworks got started, where it’s going, and why you may hear IT pros asking each other about their “pepper level.”

NewEnterprise: So Spiceworks has been described to me as a sort of Facebook for the IT professional. How did you get to that point?

Jay Hallberg: When we started we had no idea that was what it was going to become. When we launched in early 2006 the idea was to build an application that would let IT professionals manage their networks. In small and medium companies there’s usually one or two guys managing all the IT issues. It was a free download, ad-supported, and it could catalog everything on a local network, anything with an IP address, PCs printers, storage, servers. The idea was that it was going to be ad supported. It turned out to be a wild success. They started downloading it like mad, and they started telling each other about it. Then they started asking each other questions and comparing notes in the forum we had set up. That was really when the spark took off. It was a lot more than a network application, it was a social application. We’re now adding about 2,000 users a day and to put this in some perspective, there are about 5 million IT pros in the world taking care of the needs of some 200 million employees. We have about a quarter of them in Spiceworks, about 1.3 million. Vendors started approaching us so they could set up pages where they could engage these people where they work, and it was natural to take another step and start selling the product.

But it’s still very much a management tool too?

Yes. We tend to think of it as three things. There’s applications, and so we build out just like Facebook has messaging and photos we build things the IT manager needs to get their job done. A help desk, inventory, monitoring, network maps. Secondly we have the community functionality. And finally we have vendors selling products directly within Spiceworks. The easy example is with printers. The Spiceworks app shows you what printers you have and the status of their ink cartridges. If you know the printer ink status why wouldn’t you help them order the ink when it needs to be replaced? Then you can start crowdsourcing information to compare what you spend on ink versus other companies.

And so far you target mainly people in mid-sized and smaller companies. Why not the bigger ones?

It’s used in some enterprises. But our view is that there are about 15,000 companies with more than 1,000 employees. The people who work at those bigger companies get personal attention from the big IT vendors like CA Technologies, and BMC and IBM. But what about the millions of businesses with fewer than 1,000 employees that don’t get that kind of infrastructure and attention from the big vendors? So we started advertising to those people, and then the vendors came to us and said they wanted to build features into Spiceworks. EMC will build a storage advisor. Intel has paid to build a tool to manage their chips better. Because of the reach we have, now these companies want to take their relationship with us all the way through to purchasing. One thing we’re just rolling out is that we’ll take credit cards, but we’re also creating a request-for-quote feature. So when a user says he needs to buy a few servers he can send that to several vendors. And then he can talk it over with his friends in the community and see if he’s getting a good deal.

You’re growing awfully fast. How do expect to maintain that pace? You’re getting fairly close to penetrating about half of your addressable market.

One reason we’re excited as that we certainly see getting to that 50 percent market because we’re starting to see a tipping point where one IT pro goes to another job and when he starts he looks around says ‘You’re not on Spiceworks?’ and soon everyone at his new job has joined too. For them their pepper level starting to become part of their professional identity.

What’s a pepper level?

So when you join you’re a pinmento. And then you move up as your stature grows to habanero and jalapeno. The highest level is pure Capsaicin, which is the molecule itself. There’s about 25 ways to get points. It’s primarily about making the best contributions, the best answers, helping other people solve problems. It turns IT into a bit of a game.

It was a complaint that Sunny Gupta heard often around the time that the company he was working for, Opsware, was being acquired by Hewlett-Packard. “CIOs kept pulling me aside and telling me their jobs were changing,” he said. “A job that used to be about managing technology was quickly becoming one of managing costs.”

It was a rare opportunity to launch a service that numerous big companies were clamoring for. His response is Apptio, a cloud-based service that tracks IT costs and other metrics for CIOs who are constantly under pressure to justify their budgets to CEOs. Backed by $41 million in venture capital funding from Greylock Partners, Madrona Venture Group, Shasta Ventures and Andreessen Horowitz–the venture firm run buy Gupta’s former Opsware colleagues Marc Andreessen and Ben Horowitz. It’s growing like crazy, and customers include Cisco Systems, Starbucks, Facebook and J.P. Morgan Chase. Cisco liked it so much it joined with the venture firms in a $16.5 $20 million Series C round of funding that closed last November, and it also resells Apptio to its customers.

I caught up with Gupta by phone while he was on a trip to London to talk about Apptio’s business and how it’s shaping up.

NewEnterprise: Sunny, let’s start at the top. What does Apptio do?

Sunny Gupta: IT has a lot of raw materials like labor, hardware and software. A lot of these things are tracked at the company level. But the CIO’s job is managing the IT products. We aim to help the CIO really understand the cost structure of all their IT assets. We do this by producing what we call a Bill of IT. It captures the supply and demand of IT resources to the business. It helps the CIO show what the levels of demand and spending really are. We also help them with planning and budgeting and forecasting. And then we help them make cost-reduction decisions and benchmark their performance against other companies in their industry.

How many customers do you have?

We have about 60 customers, and we are managing more than $50 billion in IT spending.

So every company does a return-on-investment analysis on its IT spending. This sounds like it’s a lot more detailed than that.

You can think about it as a detailed ROI, but the way our customers think about it is as an ongoing management system that tracks the fully loaded cost structure of the products and services they provide to their businesses on a month-to-month basis. It tracks costs, but also utilization, so you can see how the resources are being used, and whether or not it makes sense to, say, consolidate a data center.

You said Facebook is a customer. Can you tell me a little about how it’s used there?

The CIO there uses Apptio to track monthly telecom expenses, and to help understand costs and to make decisions around getting the most out of what they spend.

A lot of companies are struggling with decisions about moving their IT to the cloud or keeping it on-premise, or some mix of the two. How does Apptio fit in a situation like that?

We’re seeing a lot of hybrids. At the large companies, the biggest portion of their costs are still in-house. Without naming names, some of our largest customers have 50,000 or 100,000 servers. These are systems that have been in use for a long time and they’re critical to the business. But we also see large enterprises adopting external cloud services. It may be Amazon Web Services or something from Rackspace, or they may be using a software-as-service like Salesforce.com. The trick is to get a handle on what the costs are and if you think it might be time to move something to an external provider so you can make an objective decision.

A lot of the time a CIO has to decide between something that’s really good and really expensive or something that’s good enough and less expensive. Can you help in cases like that?

That’s one of our prime use cases. If you talk to Rebecca Jacoby, the CIO at Cisco, she says she’s stopped asking “Why not IT?” and started asking “Why IT?” If what you have is good enough based on the cost structure and utilization, you get the granular visibility into all those metrics so you can make decisions. For example, it may be that you don’t need as much storage as you think you do, and so the best move isn’t to switch to the cloud but to stop paying for some of the storage that you’re not using. For the first time, executives are able to make business decisions around technology based on true business metrics. We find on average that customers are able to save 5 to 6 percent of their spend, and over 12 to 18 months they can reduce it by 10 to 15 percent.

What’s involved? If it’s a cloud based service, I presume there’s nothing to install at the customer site.

It’s fully cloud-based, so there’s nothing to install. It takes the financial data from enterprise resource planning software, like SAP or Oracle, and it also takes IT operational data, support tickets and other data. It combines them with the financial data. Once you have all that data you can start working on what-if scenarios and make decisions about what to do–or not do–next. If you want to control or reduce costs, having that detailed visibility is the first step.

The company launched in beta a year ago, and it was fairly rough at the time–its catalog of clips was limited, and navigation was much tougher than it should have been.

But now Movieclips is much easier to get around, and the catalog seems much more substantial, at least from the outside. In any case it’s enough to convince investors, led by Shasta Ventures and First Round Capital, to put in $3 million in a Series A round.

The big question is whether Movieclips can train users to visit when they want to find a movie clip, instead of looking on Hulu or Google’s YouTube.

Because at Hulu, for instance, you can watch not only this scene from “Fast Times at Ridgemont High” but you can see the entire film–which is still great nearly 30 (!) years later.

Still, worth playing around with. It’s our time, as Spicoli would say.

Movie Videos & Movie Scenes at MOVIECLIPS.com

Chas Edwards (pictured here), the publisher and chief revenue officer for Digg, the social news discovery service, is leaving the San Francisco company, according to sources.

The exec, who came to Digg in May of 2009 from Federated Media, will move to a start-up called Pixazza, a photo-tagging site for advertising, “by enabling consumers to simply mouse over images to learn more and see related products.”

Edwards’ title at Pixazza–which confirmed the move–will be as Chief Revenue Officer and Publisher Development.

The Mountain View, Calif.-based company has garnered almost $18 million in funding from Google Ventures, CMEA Ventures, August Capital, Foundation Capital and Shasta Ventures, as well as from angel investors Ron Conway, Gideon Yu and Maynard Webb.

The departure from Digg, sources said, is amicable, and Edwards will remain an adviser to the company, which has been undergoing some turmoil of late.

That’s been due to a much-criticized new version of the once-hot service, as well as some management upheaval.

Digg recently appointed Matt Williams as its new CEO. He quickly apologized for the bungled relaunch of the news aggregator and has promised to fix its problems.

The AdSense comparison is a nice hook for the Mountain View-based company, particularly because Google (GOOG) Ventures is one of its investors. But perhaps a more accurate analogy would be a company like Vibrant, which lets publishers turn text on their pages into clickable ads.

In this case, the images Pixazza works with become hyperlinked to e-commerce opportunities: Want to buy the boots in this photo? Click here. Etc.

In any case, you can read more about Pixazza here. For the record, the company says its publisher network now attracts 25 million unique visitors a month and serves up 8 billion image impressions a year.

The biggest hit so far: An ambitious novelty called “I Am T-Pain,” which allows users to record songs using the rapper’s sort-of-trademark “autotune” voice processor. If you don’t know what that means, best to check it out here. (Or check out the demo clips of T-Pain and other Smule apps at the bottom of this post.)

All this success has translated into real money–more than four million paid downloads, at something like $2.50 a pop. And this has allowed Smule to quickly raise $13.5 million in venture money from the likes of Shasta Ventures and Bessemer Venture Partners.

I assumed that some of that money would be earmarked for moving apps to other mobile operating systems, particularly Google’s (GOOG) Android OS. Nope, says Smith–he’s working exclusively through Apple (AAPL).

Smith is part of a small but vocal chorus of app developers who say they don’t want to move to Android, even though it is growing quickly. His complaints: He doesn’t like the way the store merchandises its wares, and he doesn’t want to have to create different apps for each handset Android supports.

In fairness, Apple has its share of vocal app developer critics as well, and that group got louder this month during the iPorn imbroglio.

And if you wanted to be overly cynical, you could point out that Smule has been a featured Apple partner for some time. Smule’s products have gotten stage time during Apple product announcements and have been highlighted in the company’s press releases.

But Smith isn’t betting the future on Apple, either. His business plan involves generating revenue from other places besides the iTunes app store. I’ll let him explain in this interview, which we taped during Billboard’s Music & Money event yesterday.

]]> http://allthingsd.com/20100305/an-apple-app-star-explains-why-he-wont-work-with-android/feed/ 0 http://allthingsd.com/20090908/former-yahoo-tech-star-eric-boyd-to-microsoft-via-mochi-media/ http://allthingsd.com/20090908/former-yahoo-tech-star-eric-boyd-to-microsoft-via-mochi-media/#comments Tue, 08 Sep 2009 19:44:52 +0000 Kara Swisher http://kara.allthingsd.com/?p=18243

Eric Boyd (pictured here), a high-profile techie from Yahoo who left the company for a start-up last year, is now headed to Microsoft to work for its digital group, now run by another ex-Yahoo, Qi Lu.

UPDATE: Microsoft confirmed the hiring, although declined to provide further details.

Boyd, who is well-known for his card-counting team exploits while at MIT (which were later made into the movie, “21”) had been VP of platform engineering at Yahoo (YHOO) and worked on a variety of projects there.

With the addition of Boyd, sources said, Microsoft has acquired a huge swath of the top tech talent of Yahoo, many of whom came to the software giant because of Lu and to escape the turmoil at Yahoo.

At a recent tech offsite at Microsoft held by Satya Nadella, SVP of Research and Development at its Online Services division, in fact, one person remarked that a full 10 percent of the techies were former Yahoo execs.

There will be more to come, up to 400 or more, if the search partnership the pair recently struck passes regulatory muster, although Boyd is not part of that deal.

He had worked at Yahoo for a decade, but left last spring to take over as VP of engineering at Mochi Media, a San Francisco-based gaming-related start-up backed $14 million in funding by Shasta Ventures and Accel Partners.

He will be working for Microsoft (MSFT) in Silicon Valley, in its group related to search and advertising, sources said.

]]> http://allthingsd.com/20090908/former-yahoo-tech-star-eric-boyd-to-microsoft-via-mochi-media/feed/ 0 http://allthingsd.com/20080110/mint-guy-aaron-patzer-speaks/ http://allthingsd.com/20080110/mint-guy-aaron-patzer-speaks/#comments Thu, 10 Jan 2008 08:03:26 +0000 Kara Swisher http://kara.allthingsd.com/20080110/mint-guy-aaron-patzer-speaks/ OK, we’ll admit it–we just like the steady and non-hypey persona of Aaron Patzer, whom BoomTown has officially and forever dubbed “Mint Guy.”

While he is not exactly minty fresh–in fact, the founder and CEO of Mint is much more circumspect and cool than any 26-year-old I have met recently–Patzer does stand out in a sea of over-touting Web 2.0 entrepreneurs as someone who might actually have created a business with some substance to it.

Rather than offering dopey widgets that let you throw food at each other or yet another version of a social network or the umpteenth music download-share-compare whatever, Mint feels different.

The free Web-based service is aimed at a younger demographic interested in finding a way to manage money better, in learning about their spending habits, in being alerted to unusual activity and even in saving some cash by finding better rates on things like bank accounts and credit cards.

It might sound crazy in these frothy Web times, but the Mountain View, Calif.-based start-up certainly has the potential to be actually useful and relevant to consumers and has a doesn’t-make-me-scoff-out-loud business plan that focuses on lead generation for sponsors.

Mint now claims 100,000 users since its launch last fall and is expanding its features to allow users to track investments, student loans and mortgages soon too.

Mint has not escaped the bubble, of course, having received about $5 million in funding from Shasta Ventures, First Round Capital and a number of prominent angel investors, such as Ron Conway and former Yahoo exec Geoff Ralston. That’s a lot of money for a company with a lot of possible pitfalls.

While there are a few Web competitors, such as Wesabe, the biggest challenge is that Patzer is taking aim at desktop software packages like Intuit’s Quicken and Microsoft’s Money. The pluses of those solutions is that users feel more secure when financial data lives locally than they might loading it up to the Web.

More significantly, giants like Intuit are moving services online too, as with the recent Quicken Online, which makes for a mighty foe to Mint.

Still, Intuit has been woefully slow online and Patzer is obviously nimbler. And he counters that he is using heavy-duty encryption, as well as a number of methods to keep data anonymous, which make the information safe.

Well, we’ll see how it all turns out, as everyone is going to have to battle security concerns and convince people to trust them with important financial information on the Internet. But, it is clear that it is an interesting space to watch.

And, better still, it is–thank you, thank you–not a food fight.

Here is the video I shot with “Mint Guy” Patzer during lunch this past week at the Consumer Electronics Show in Las Vegas, where Mint was showing off its service a bit:

[ See post to watch video ]

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