Forbes magazine put out its much-watched Midas List today, which is kind of the Oscars for venture capitalists in tech. (Caveat: Think more khakis and dudes than glitz and glamour.)

On the Top 10 list of 100 of the best-performing and most influential tech investors, Jim Breyer of Accel Partners and Marc Andreessen of Andreessen Horowitz led the list at No. 1 and No. 2, as they did last year. And several others in last year’s list remained on it: Peter Fenton of Benchmark Capital, Greylock Partners’ Reid Hoffman, and also David Sze, Peter Thiel and Bessemer Venture Partners’ Jeremy Levine.

Accel scored well on the rest of the list with nine partners named; Sequoia Capital had six VCs on the list; Benchmark, Greylock and New Enterprise Associates got five slots; Bain Capital Ventures, Bessemer, Kleiner Perkins and Meritech Capital Partners had four; and Andreessen Horowitz, Institutional Venture Partners and Venrock each had three.

As usual, there were few women on the list — only three — reflecting the lack of gender equality in the top tier of the VC business, which solidly remains a boy’s club, despite a lot of noise about changing it (see the pictures here and become depressed once again). Those women who did manage to get on the Midas List were Jenny Lee at GGV Capital, who jumped from No. 94 to No. 36; Kleiner Perkins’s Mary Meeker, who dropped from No. 42 to No. 47; and Theresia Gouw of Accel at No. 82, up from No. 92.

One notable part of the massive Forbes package of VCs on parade was the intense and multipart focus on the travails of Kleiner Perkins and its longtime leader and legendary VC John Doerr. Doerr clocks in at No. 26 on the list, dropping from No. 12 last year, a significant fall.

He does address the nagging issues at the storied firm, including ill-conceived investments in clean tech, a late-to-the-game move into social media, and even its big stake in stock-declining online gaming giant Zynga, in a video (below) and in several pieces, one of which is titled ““John Doerr’s Plan To Reclaim the Venture Capital Throne.”

More like “Game of Thrones” from reading it; there is another, more critical article in the New York Times that appeared yesterday. That piece focused on Kleiner’s investment in the troubled green-car startup, Fisker Automotive, and also the firm’s ongoing sex-discrimination lawsuit with former partner Ellen Pao.

“It was a challenging year, one of my more challenging years in the venture business,” said Doerr to Forbes.

Indeed, although Forbes does hand Kleiner a hey-we-have-some-sharpie-young-folks-here-too! gimme with its focus on “new generation” partners Megan Quinn and Mike Abbott in an interesting Q&A, as well as yet another piece on Kleiner supporters — such as Google’s Eric Schmidt — touting the firm as perhaps down but definitely not out in the “mojo” department.

“John always wins eventually, and the reason he always wins eventually is because he has the processing power and human energy,” Schmidt told Forbes. “Whatever the set of challenges, he will drive the change in the firm. They’ll have a crisis meeting and another crisis meeting, but he will do it. It may be messy but he will get them there.”

Presumably, if Doerr and team can get some mileage out of its Twitter investment next year and somehow turn around Zynga’s moribund stock. (Kleiner has held on to a pile of it, which is why Doerr recently joined the board that already had Kleiner’s Bing Gordon on it.)

On problem for Kleiner, and boon to others like Accel and Greylock, was that the firm was not early in Facebook, whose IPO — as rocky as it was — gave many VCs making the top of the Midas List the needed turbocharge in terms of performance. Other key companies to help VCs look good this year, according to the Forbes report: Workday, LinkedIn and Skype.

Here’s Doerr, who is indeed a legend, even if more bruised and battered this year, talking about it all to Forbes’s Connie Guglielmo, in the video interview:

Speaking of media attention, here’s a more provocative video interview by Forbes with Sequoia’s Doug Leone (No. 4, up from No. 18 last year), in which he takes aim at VC firms that do too much self-promotion — three guesses which pioneering browser inventor he is referring to here, and the first two don’t count. He called it an “embarrassment,” although Sequoia did hire an excellent PR person from Google this year — nonetheless making the point that the focus should be on entrepreneurs and not investors.

Except, of course, when it comes to scoring high on the Midas List.

TV image copyright antpkr

It’s finally happening. The Internet is taking over TV. It’s just happening differently than many of us imagined. There are two major transformations under way:

• The Rise of the Internet Distributors. Led by Netflix, the group of new distributors includes Amazon and Microsoft now, but maybe Apple and Google later. They are largely distributing traditional TV shows in a nontraditional way. All the content is delivered over IP, and usually as part of a paid subscription or per-episode EST (electronic sell-through). Important to note that all of this content contains no advertising and is available entirely on demand. This content falls into the “non-substitutional” content bucket. To watch it, you don’t need to be a cable TV subscriber.
• The Rise of Alternative Content Producers. Thanks to YouTube’s Channel strategy and investment in hundreds of content providers, new producers of content are emerging and offering nontraditional programming, usually in shorter form. This content is marked by dramatically different production economics than traditional TV content, taking advantage of an expanded labor pool and low-cost cameras and computer editing. This alternative content is chipping away at long- and mid-tail viewership on traditional networks (the “filler” and “nice-to-see” buckets).

Both of these transformations are successful to date, and will only become more so. Rich Greenfield has a nice summary of why the TV industry suddenly loves Netflix. (Disclosure: I’ve been a NFLX shareholder for some time.) The first transformation takes advantage of the massive pressure MVPDs place on traditional cable nets to not offer their programming direct to consumers. In this case, the HBOs and AMCs requirement that you authenticate your existing cable subscription in order to watch their programming over IP successfully persuades the cord-nevers to just avoid the programming on those networks until the hit shows are offered through Netflix or EST. Netflix, once again, looks like the hero. Those empty threats by Jeff Bewkes that he will never work with Netflix turned out to be, well, empty. The second transformation will take longer to fully prove out, but I believe it will happen. As more of our viewership takes place over IP, we lose our allegiance to networks as the point of distribution and allow new distributors to guide us toward content choice.

There is a third budding area of transformation, but I don’t yet see evidence that a business exists: Trying to repackage cable TV bundles and sell them over IP. Companies like Aereo and Nimble TV offer versions of this. I believe we live in a show-based world. Consumers aren’t looking for networks (with the exception of ESPN and regional sports nets) so much as they are looking for shows. Shows delivered over IP allow for the slow unbundling of television. One of the many challenges about this model for traditional broadcasters is that there is no advertising in this world. The traditional cable-net business model enjoys two great revenue streams — affiliate fees and ad dollars. In IP-delivered shows, there are no ads.

Who are the winners and losers in this model? Well, show creators continue to flourish. The new distributors enjoy great success. Of course, ISPs, who are often the same companies as the MVPDs, do fine in the ISP business, but I believe the decline in total cable subs will continue. In a world where shows do not contain advertising, why do we need Nielsen? They have been a measurement standard for decades, largely because advertisers needed a third-party validator of viewership. You can see why they have a vested interest in insisting TV ad viewership is not on the decline (despite everyone’s experience to the contrary). I don’t think cable nets are in immediate trouble. They enjoy a great business model now, and also get to reap EST or licensing benefits after the shows air. But the Netflix “House of Cards” effort shows that consumers will now expect to be able to watch shows whenever they want, and not be bothered by inconvenient broadcast schedules. The day is coming when the cable nets will have to respond.

For startups, one of the wide-open spaces seems to be in cross-provider discovery. Now that my shows are spread among Netflix, Amazon, YouTube and on my DVR, I would prefer one interface to reach them all. Companies like Dijit’s NextGuide, Peel, Squrl and Telly are taking cracks at this important space.

David Pakman is a partner at Venrock, focusing on ad tech, social/mobile media, consumer services, Web services, e-commerce, big data, SaaS and anything else hugely exciting and disruptive. This post is also live on his blog.

Yes, public investors value Pandora at something like $1.4 billion. And private investors think Spotify is worth at least $3 billion. So presumably you’re chasing something like that.

But even those guys are in a precarious position, because they’ve yet to demonstrate that they can afford the cost of music they’re either selling or giving away. And they’re competing with the likes of Apple and Microsoft, which can afford to lose money on this stuff because they think it can help their real businesses.

And you? You definitely can’t afford it, because you have zero scale. So you’re going to burn a ton of money trying to get there.

Quick reminder: Music licensing is crazily complicated in the U.S., and even more so in the rest of the world, since rights deals vary by country. But in general, if you want to get your hands on digital music, you have a few choices:

• Pay the music labels and owners stiff fees for “on-demand” rights, like the kind Spotify offers.
• Pay them stiff fees via a compulsory license for “Web radio” rights, like the kind Pandora offers.
• Or try to avoid some — but not all — of the fees by only working with musicians who don’t have label deals.

The problem with the first two options: You can’t afford them. The problem with the last one: No one** wants to listen to that music.

Don’t want to hear this from me, a mere typer? Can’t blame you there. Conveniently, you can read a more cogent argument from a real pro, published this morning. Here’s the testimony that Venrock’s David Pakman is delivering to Congress today, at a hearing on music licensing reform.

Pakman used to run a digital music company himself and, like nearly every single person who leaves digital music, he has vowed to never go back until the licensing climate changes.

“Although we have met many great entrepreneurs with great product ideas, we have resisted investing in digital music largely for one reason — the complications and conditions of the state of music licensing.”

You want to be the one who proves him wrong? Good luck.

*I can’t believe you’re out there, but I keep hearing from the PR firms you’ve hired, so I guess you are.

**Okay. Some people want to hear it. Maybe the musicians’ friends and family, for instance. And maybe even a few more. But if you want one of those billion-dollar valuations, you want to demonstrate you can get scale. And you’re not going to get it without working with the big guys.

The razor-blade model has come to mean something in business: Selling something at a loss in order to lock in future sales at a markup.

But that approach doesn’t apply to this Venice, Calif.-based company, which is keeping things simple by creating an online membership service that sells basic razors without any superfluous features. Today, the company has raised $9.8 million in more capital to take the service international, starting with Canada next week.

Since coming out of beta in March, the company has gained a lot of attention for its funny commercials, which feature CEO Michael Dubin hawking the service in the tone of the recently successful Old Spice ads.

It also turns heads with its impressive investor list. The company’s first round was led today by Venrock, but as part of its seed round announced earlier this year, it raised money from Kleiner Perkins Caufield & Byers and Forerunner Ventures. Other contributors included Andreessen Horowitz, Shasta Ventures and Felicis Ventures. The company originally participated in Science, the Santa Monica, Calif.-based incubator founded by former Myspace CEO Mike Jones.

Dollar Shave Club’s service in Canada will offer the same goods as the American version — shavers with two, four or six blades — at a slightly higher price than it charges in the U.S.; the company plans to expand to other countries, as well. It declined to say how many members it had signed up so far.

The company bills itself as a Translation Delivery Network, which is a fancy way of saying it uses the cloud to give Web sites the tools they need to easily serve up their pages in pretty much any language. Customers include Foursquare, Scribd, SurveyMonkey and, as you can see from the short video below, Vimeo.

Today, Smartling debuted a slick new way to work with translations. It’s called the Smartling Translation Management System, and it uses an API to grab content from all kinds of different file formats and display it so that translators can work with it in context. So when you have a slogan or phrase that appears in one place on a site, you can see the translation into another language in the same place on the site as it would appear translated. There are also new features for managing different projects and different sites.

The point of it all is to speed up the deployment of localized sites, which has always been sort of a haphazard and labor-intensive process. Last year, Smartling landed a $10 million Series B funding round from IDG Ventures, with prior investors U.S. Venture Partners, Venrock and First Round Capital also participating, which came on top of a $4 million Series A.

And as I said, Vimeo is a customer, and used Smartling as a way to help its users localize in Spanish. Here’s a short video about that.

Founded in 2006, San Francisco-based SlideShare had only raised $3 million in funding, with its Series A round back in the beginning of 2008. The acquisition is comprised of 45 percent cash and approximately 55 percent stock.

Lead investor Venrock tells me the SlideShare acquisition represents a 15x return for the firm. I’d previously covered SlideShare’s Web conferencing product launch and its move to HTML5 from Flash.

SlideShare hosts 9 million presentations, with 29 million monthly unique visitors to its own site as well as traffic to embedded versions on more than 1.4 million domains. It’s led by the married team of CEO Rashmi Sinha and CTO Jonathan Boutelle.

LinkedIn, meanwhile, now has 161 million members and 107 million unique visitors. It just released an iPad app with calendar integration — along with SlideShare, another natural and overdue move toward helping its members get things done.

Much of what we saw at CES relates to things we’ll be seeing 24 months out. In my mind, it’s all good: we’ll be able to target better, we’ll be able to segment better. The ads will be delivered on screens that are sharper, look better, larger, which ultimately provides more effective communication. There’s one last element: in the role that we [media buyers] play, we have a responsibility to ensure that technology develops in a manner that doesn’t shake up the supply-and-demand equation of our business, doesn’t destroy the content amortization business, isn’t disruptive simply for the sake of being disruptive.

If it does alter the supply-and-demand equation, it needs to do so positively, not negatively. When you have the share of the deal volume that we do, you can’t just be passive about it. You have to try and influence it. The technologies and devices that begin to get manifested at a trade show like this needs to be guided, so that it all works out in the best interests of our clients.

– Irwin Gotlieb, Global CEO, GroupM; originally appeared at TVExchanger

We have a responsibility to ensure that technology develops in a manner that doesn’t shake up the supply-and-demand equation of our business.

A bold statement and, it seems, a common mindset for many incumbent business giants in their respective industries; a mistaken belief that they can somehow coax disrupting forces (be they new companies, or larger macro consumer trends) into conforming to their legacy business models and cost structures. As we have seen countless times, the actions of incumbents when faced with technology disruption often is to turn to litigation, legislation or other non-market strategies (i.e., anti-trust investigations, artificial price barriers) in an attempt to delay or block the challenging technology or companies. This perhaps works as a delaying tactic in the short term (Rio MP3 player case, Napster, book publishing agency pricing model with Amazon) but fails in the long term.

Mr. Gotlieb’s apparent belief that he and other advertising agency leaders can “ensure that technology develops in a manner that doesn’t shake up the supply-and-demand equation of our business” is futile in the long run, but perhaps more pernicious is the implicit arrogance of thinking the market force of the Web can be channeled into their bank accounts by sheer force of will. Of the many problems with this way of thinking, paramount is the ability to rationalize away making the hard choices and decisive actions to ensure the GroupMs of the world play a vital role in the new economy as they have done in the legacy one. (Cue Scotty from Star Trek… “You cannot change the laws of physics.”) For GroupM and other incumbents, it’s difficult to fathom, given how entrenched and advantaged they are, that they could drop the ball. But many will, as history has so often shown in times of market transformation.

Technology forces that bring greater efficiency and transparency to markets simply don’t care about privilege, access and rolodexes. They disrupt predecessor markets because of structural problems like price opacity and false scarcity that no longer “work” in the new market. Look at Google: its entire approach to advertising is to remove the middleman — just as, increasingly, the media-buying side of traditional agencies is reliant on the inefficient middleman, marketing up the cost of media to provide their services. Google is now selling $40B of media every year, the majority of it without a middleman (or at least with a different sort of middleman, and in any case, getting far lower margins than in traditional media bought by agencies.)

We watched as the music industry delayed its demise by suing Rio, Napster and literally hundreds of others, delaying the adoption of new business models not based on scarcity. We listen to Jeff Bewkes decry Netflix as the Albanian Army, as he feverishly works to reduce its influence with his content. We observe the movie industry fight with everything it has to protect the windowing strategy and defend limited access to content instead of moving toward open and immediate paid access to their movies. (Fantastic post on this from Rich Greenfield here, “Innovate Don’t Legislate” — registration required.)

And, as a microcosm of this larger conversation, we watched, over a very short period of time in the SOPA/PIPA debate, as the Web demonstrated the disruptive advantages of network effects and scale, as over a period of weeks, legislation that appeared all but ratified was shuttered, up to and including an implied Presidential veto.

Heady stuff. Granted, if we extend the metaphor and use SOPA/PIPA as a microscope, there are extremes on both sides, and it will be messy and require compromise if the big media incumbents and new technology disruptors are to learn how to co-exist. For big media companies and the service businesses that cater to them, this means recognizing the practical realities of changed business models — probably for the most part that their cost of production needs to drop dramatically and they need fundamentally to re-think distribution and customer relationship management to remain profitable and relevant.

On the tech side, it means recognizing that progress requires some level of institutional engagement and political compromise — because like it or not, this is the way our system of government works and how laws get written. This won’t be easy or natural, as it’s anathema to the culture of how new media tech and the start-ups that encompass it conceptualize and operate in our worlds. Facing reality and then demonstrating a bit more collaboration and compromise, however, would go a long way and be better for the customers who, like our democracy, these industries ultimately serve. Because it’s the customers who are in the driver’s seat, and increasingly they know it.

Perhaps it’s pollyanna-ish, but I bet on technology. Big media has the most to lose, because after decades of the game being rigged in its favor, the tables are turning. Of course it’s difficult and painful for media incumbents to embrace digital markets, considering these markets ultimately are smaller and have less attractive economics. That’s presumably why big media executives are so well compensated — if it were easy, anyone could do it. The alternative, however, is to be disrupted by new entrants that don’t have any allegiance to aging business models, and couldn’t care less how out of whack someone else’s cost structure is.

Coming back to Mr. Gotlieb’s view, I offer these thoughts. First, incumbents won’t be able to meaningfully guide the technology juggernaut of more efficient advertising mechanisms, so it’s perhaps better for them to focus their energies and advantages toward thoughtful reinvention. New technologies are bringing actual measurable performance and more efficient means of buying to a large share of advertisers. The challenge for incumbents is to adapt their enterprises to embrace this chaos and profit from it. The good news is, it’s doable. However, to think they can bluster their way out of this disruption is a fool’s errand.

David Pakman has been an internet digital media entrepreneur since 1997. He co-founded the Apple Music Group in 1995, worked at N2K (one of the first online music companies), co-founded MyPlay (pioneer of digital music locker), and was COO/CEO of eMusic for five years. Pakman is now a Partner at Venrock in NYC, investing in early stage internet and digital media companies.

Klout CEO Joe Fernandez said Kleiner Perkins lead the round, with Chi-Hua Chien joining the Klout board. KP partner Bing Gordon is also staying on the board. Fernandez wouldn’t comment on the price or valuation but called it a “strong round.”

Sources said the funding closed back in November and valued the company at about $200 million.

Other backers who participated included Institutional Venture Partners, Venrock, Greycroft Partners and ff Venture Capital.

Klout’s main product is a scoring system that measures people’s influence and reach on sites like Twitter, Facebook and Google+ — something that social media marketing types pay a lot of attention to. The concept of Klout scores has been somewhat controversial, but that seems natural for a system that quantifies a person’s worth.

Klout’s mission, said Fernandez, is “to empower every person by unlocking their influence.” He said Klout now handles 10 billion API calls per month, up from 100 million per month in January 2010.

Klout last raised $8.5 million a year ago. Its current business model is Klout Perks, where marketers can target influential people with free stuff. Fernandez said Perks are going well, with 300,000 people having received them last year, but “there’s a lot more we can evolve to.”

Whether explicitly or not, everyone has their own answer to this question, and based on the success rates of start-ups, those answers by and large stink. I don’t have a Magic 8 Ball on the topic, but two things make this the issue I wrestle with most:

1. The often-unpredicted success or failure of “nobodies” or “sure things” respectively
2. The outsized rewards for locating great people, juxtaposed with the probability of abject failure when settling for good ones

There is no central casting for these players — many of the A+ entrepreneurs with whom I have partnered have come in unusual packages: a biology post-doc who thought about opening a microbrewery B&B; a large-animal veterinarian who went to business school in his late 30s; and an ex-EMT who was also a nephew of the President. The best VCs seem to show the same diversity of background.

I now focus on these attributes:

• Great talents find a way to win, and are relentlessly driven to do so. They follow through and complete the task at hand — after all, starting is easy, it’s finishing that takes real will. It is not that they think outside of the box, there simply is no box for them. They view ambiguity as opportunity, not risk. When things get uncertain is when they really perk up and start to pay attention, because that is when real change is possible. Most of all, they exceed expectations. They bend the space-time continuum in some fashion, and their accomplishments are extraordinary.
• Experience is overrated. By and large, the world is changed by the young and the hungry. Experience can be enabling or constraining, but it is not even close to the dealbreaker that many believe it to be. If you are seeking a VP marketing or head of sales at a 100+ person company, absolutely, look at a resume. But to find someone with the passion and uniqueness to actually create an early-stage venture, you have to take time: Watch them and see what they do, talk to them and see what they think, ask around and see how well respected they are.
• Balance exploring/driving with learning/listening. Great people have a very clear grasp of their vision, while understanding that the world has a lot to teach them. They are humble students of the game, but are very confident in their abilities, and never “do what they are told.” They don’t avoid conflict and will always bet on themselves rather than shy away from risk. They ask questions and argue on facts, balancing innumerable data streams with a gut feeling to get to what they believe is the right answer.
• Great people are magnetic. They are not only smart and driven, they attract resources when all the data suggests they should not — whether capital, people or partners — and thereby become larger than just their singular efforts.

While it’s a potentially controversial idea today, I have come to believe that great entrepreneurs and great VCs are two sides of the same coin. Both embody these attributes. They are maniacally focused on changing the way we live with innovations that others thought were not possible. They are passionate about building a great company, and put the company before themselves. Their roles are complementary, like looking down opposite ends of a telescope, but those different perspectives on a problem can be extraordinarily synergistic. Great future entrepreneurs can look like great young VCs, and vice versa — in fact, three of my recent investments are stellar companies started by folks who have crossed from one role to the other.

All venture firms are simultaneously never, and always, looking for team additions. I believe this is a direct result of how difficult it is to identify those who will be not only smart, passionate, personable and high integrity, but also successful in this ever-changing, ambiguous entrepreneurial world, in which a strategy that worked the last time is not a recipe for a future win, but more likely charts a path to mediocrity. In fact, my own difficulty in finding great new additions for our firm is what spurred putting these thoughts on paper.

Bryan Roberts is a partner at Venrock and has been the highest-ranking healthcare investor on Forbes Midas List since 2008. You can follow him on Twitter at @brobertsvc and learn more about him at Venrock.com.

Aside from the horror at the events in Norway, the incident gave me new insight into the language chasm that still exists on the Web. For one thing, that there may have been lots of people turning to Norwegian news sites from outside that country, many of them non-Norwegian and probably non-English speakers. Why isn’t it easier, I wondered, to have text written in a language other than your own, more readily available in the language you do speak?

It turns out there’s a company right here in New York that’s doing just that. Smartling describes itself as a Translation Delivery Network, and uses the cloud to give sites the tools they need to easily serve up their pages in pretty much any language. Its customers already include foursquare, Scribd and SurveyMonkey, and it just landed a $10 million Series B funding round from IDG Ventures, with prior investors US Venture Partners, Venrock and First Round Capital also participating. Its Series A was $4 million.

I talked earlier this week with Smartling’s CEO and founder Jack Welde. He’s a former Air Force pilot who still flies today. He came up with an interesting language problem: In one context, “going into a bank,” means walking into a financial institution; in another it means maneuvering a plane. Most translation engines use a statistical method and so assume that “bank” means the financial building, without allowing for the fact you may be reading an aviation site. Context is kind of a big deal.

Welde tells me there’s a significant opportunity for companies on the Web to reach out to speakers of other languages. Four-fifths of U.S. residents are already on the Web, but only about 30 percent of China’s population is on the Web, to say nothing of other countries like Brazil, India and elsewhere. “The growth in Web users is occurring outside the U.S., and language is a key component to taking advantage of it,” he says.

Welde compares Smartling to Akamai, the Web-caching specialist that caches content to make its delivery more efficient. Smartling serves up on-demand versions of Web content from the cloud. Site owners choose the languages they want their content translated into, and redirect their domain name servers to point to those controlled by Smartling. There are three options for translation: One is machine translation, one is crowdsourced by a network of volunteers, and there’s also an option for professional translation. There are three tiers of service, starting at free and going up to $249 a month.

One advantage over relying on static translations like those delivered by Google Translate, Bing Translator or Yahoo’s Babel Fish is that the content becomes searchable in the translated language. That’s Smartling’s cloud network dynamically serving multilanguage versions of a client’s site, and then discarding them a few hundred times a second. It’s currently serving about 500 million page views a month.

Smartling has also partnered with CloudFlare, the Web security start-up to offer Smartling’s translation service as an optional add-on for its customers.

As product endorsements go, it wasn’t one that CloudFlare CEO Matthew Prince would have sought. Nevertheless, it showed in a very public way that the company was onto something potentially big.

Now we get an idea of how big it might be. CloudFlare has been running so far on a relatively small Series A investment of $2 million from Venrock and Pelion Venture Partners. Today it announced that it has landed a beefy $20 million Series B round, led by New Enterprise Associates, with Venrock and Pelion also participating. Scott Sandell, a general partner at NEA, will join CloudFlare’s board of directors.

NEA has backed companies as varied as Atheros, the wireless chip company now owned by Qualcomm; Fusion-io, the chip-based server storage concern; and Groupon.

So what does CloudFlare do? Webmasters can — for free — point their domain name servers to CloudFlare’s, rather than those operated by their Web hosting provider. The result of that simple change adds the site to CloudFlare’s distributed network, which protects against common attacks by hackers and spammers and makes a site resistant to distributed denial-of-service attacks that typically overwhelm servers and knock sites offline.

CloudFlare evolved out of Project Honey Pot, a nonprofit project that aimed to fight spam by creating a distributed system to find and track spammers and the bots they use to harvest email addresses. Launched in 2004, it was basically a hobby for Prince and the other founders — until the day in 2007 that the Department of Homeland Security called to say it saw real value in the data the project had collected on how fraud is conducted online.

And like Project Honey Pot before it, CloudFlare gets better as more people use it. Hosted in 12 Equinix data centers around the world, it has the computing muscle to keep its customers’ sites online when a server crashes or a hacker with a botnet attacks. Pretty much anyone who operates a Web site can have it up and running in minutes. On top of its free service, CloudFlare offers a Pro account for $20 a month. A more powerful offering aimed at enterprises is coming in the fall, Prince says.

But there’s more to it than just security. It turns out, through an unexpected benefit of programming, that CloudFlare also has a tendency to make sites load faster than they do from their main servers. The initial worry was that adding a layer between the user and the site’s hosting servers would slow things down. Some obsessive attention to the code, intended to prevent that slow-down, had an interesting effect: Sites started loading 30 to 40 percent faster. From these two benefits comes the mantra you’ll hear Prince repeat often: “We help the Internet run faster and safer.”

Did I say CloudFlare is onto something? Prince reckons that about 200 million users visit CloudFlare-protected sites every month. He declined to say exactly how many sites are using CloudFlare, but characterized it as in the tens of thousands. He did say the service is adding roughly 1,000 new customers a day, from small personal sites to huge companies.

So what’s the plan for all that money? To build out CloudFlare’s team and create new services, some aimed at large enterprises, says Prince, who notes that a business-class service is coming soon. “We’ll be adding a lot of new features that our business customers have been asking for,” he says. After that comes the enterprise-class offering.

Beyond that lie some interesting services aimed at making the Web business easier. Case in point: SSL, or Secure Socket Layer, the Web’s primary security technology. “Right now it’s way too hard for Web masters to deploy SSL on their sites, and there are too few sites using it,” Prince says. “We think we can do something important to address that.” Another thing that’s too hard: The looming transition from IPv4 to IPv6. “The solutions that are being provided right now are too complicated, and we can do something about that,” Prince says.

One recent addition was the official election results site for the nation of Turkey, which held its general election on June 12. On the night before the election, its site administrator joined CloudFlare. “The next day we saw a lot of traffic from Turkey,” Prince says. Traffic from 75 million Turkish citizens all hitting “refresh” every few minutes would have brought nearly any Web site down, and at first it looked like a massive new distributed denial-of-service attack coming out of Turkey. “We quickly figured out what it was,” Prince says, “and suddenly we were really proud that we were able to keep that site online while the whole nation was coming through the service.”

With the close of the round, the Durham, N.C.-based company now has investments from each of the major wireless OS-makers — well, sort of.

Here’s how it could argue the case: Venrock is venture capital arm of the Rockefeller family, which was one of the early investors in Apple. Appia’s other investors include Tomorrow Ventures, the investment arm of Google’s outgoing CEO Eric Schmidt, and BlackBerry Partners Fund is associated with Research In Motion.

To date, the company has raised $28.5 million.

The company is aspiring to build the largest independent marketplace of applications and to become a white-label solution for third parties, such as recent customers, like Opera Software and Mexico’s largest operator Telcel.

Appia said it will use the new capital to fund product development and the launch of additional app stores around the world.

In June 2008, PocketGear was spun off from Bellevue-based Motricity, which at the time was also based in North Carolina. It raised $3.2 million from Noro-Moseley Partners and Wakefield Group, which were the original backers of Motricity, and then later acquired long-standing app publisher, Handango.

Competitors include native app stores, such as Apple’s App Store and Google’s Android Market. But it also competes against independent stores, like GetJar and Amazon’s AppStore, which launched last week.

Of course, all of these players are trying to piggy back on the rise of the smartphone.

A research report by Frost & Sullivan predicts that total downloads from smartphone app stores are expected to increase from 9.6 billion in 2010 to more than 120 billion by 2015 around the world.

So use that context to think about this news: Media6Degrees, a behavioral advertising technology start-up, has raised a $17 million funding round led by Menlo Ventures.

Earlier investors U.S. Venture Partners and Venrock, which had helped the 2-year-old company raise another $12 million before the new B round, are re-upping.

The money is targeted for general expansion, not M&A, says CEO Tom Phillips, who joined the company in 2009 after a three-year stint at Google.

Phillips says his company will end up booking $20 million in revenue in 2010. And he says that by Q4 it had ramped up to a $30 million annual run rate–that is, it will do about $7.5 million in the last three months of the year.

Media6 describes what it does as “Social Targeting,” which sounds as if it’s trying to find links between your various social networks. But the company’s work has nothing to do with your Facebook or Twitter profiles. While it doesn’t like the term “behavioral targeting,” that’s essentially what it’s doing.

In a nutshell, Media6 Web marketers track the surfing behavior of their existing customers, then try to find similar behavior patterns–a matching “social signature”–for other surfers, so they can show them ads.

Depending on your perspective, that’s either creepy or a common-sense strategy to help advertisers spend their money more efficiently. If it does weird you out, you can go ahead and opt out. But Phillips and his company would like you to know that the company never tracks individuals–only their anonymized browsers.

Still don’t want any part of this stuff? In theory, companies like Media6 will be in trouble if lots of surfers really do start opting out of data collection. They can do that by telling individual Web sites and ad networks not to track them–or, more ominously, by using browsers with “do not track” filters built into them.

But we’re a very long way from that kind of change. And the start-up’s investors seem to be betting that it’s never going to come.

But besides valuations, perhaps a more severe symptom of a brewing bubble is the recklessness by which venture capitalists are making their investment decisions.

Speaking Wednesday at the Digital Hollywood conference in New York, Venrock’s David Pakman tossed out an observation that makes the investment game sound like the Wild West.

“We are seeing what I would call bad behavior with investors looking at these hot spaces,” Pakman said, speaking specifically about ventures in social media and mobile. “Deals are getting done with little to no due diligence.”

Read the rest of this post on the original site

Top-tier funds like Union Square Ventures, Spark and First Round Capital are showing up at AOL’s (AOL) New York headquarters in a couple weeks for what they’re dubbing a “VC Demo Day,” aimed at start-ups looking for seed money. The signup page for the event explains the conceit efficiently: “This will be just like every other Demo Day, only the VCs will be pitching their funds to entrepreneurs looking to raise capital. We’ll have a keg of beer and food available.”

What to make of this? We’re certainly not back in 2000, when Kurt Andersen famously declared that raising money is as “easy as getting laid in 1969.”

But the event, hosted by AOL Ventures and Betaworks, is a good reminder that we’re well past Sequoia’s 2008 “Good Times RIP” admonition. For a certain kind of start-up, there’s a long list of early round investors now clamoring to give you money. Another less visible sign: The prevalence of convertible debt in early round deals, which is supposed to favor entrepreneurs at the expense of investors.

Other VC Demo Day participants: RRE Ventures; Metamorphic Ventures; True Ventures; Venrock; IA Capital Partners; Lerer Ventures; DFJ Gotham.

Not entirely on topic, but this is my favorite pitch scene of all time:

Earlier this week at Twitter’s Chirp conference, Venrock’s David Pakman seemed to strike a chord by coining a new buzzword that deserves to gain some level of acceptance.

On a panel BoomTown moderated, in answer to my question about what kinds of investments and trends he is looking for in the social networking space, Pakman said:

“The ‘right-time’ Web is more valuable in some cases than the real-time Web. Real-time data is only interesting when I’m actually looking for that information. There’s no service today that’s giving information when it’s really needed. If your company is doing that…I brought my checkbook.”

While the checkbook was a nice touch, Pakman is actually making a good point, as much as I hate the proclivity of techies to coin new and often silly terms to wow the general public.

But one of the key issues being raised of late about making all these status update data streams helpful is that they are super-useless 98 percent of the time, resembling a raging flooded river more than a way to navigate to any place that is actually useful.

Someone does have to significantly drop the signal-to-noise ratio on all this blather, cutting through to find the really valuable information we all know has to be there.

Until someone does, please enjoy the Mighty Diamonds, singing their classic song, “Right Time”:

Here’s a video BoomTown did yesterday at the Twitter Chirp conference, where a lot of noise was made about a lot of things.

Like: Twitter has a Google (GOOG) Android app; Twitter has a link shortener; Twitter does more searches than you think; Twitter has 105.8 million registered users and is adding 300,000 a day; Twitter users write 55 million posts a day; Twitter is being archived at the Library of Congress.

Also more blah-blah-blah on geolocation, metadata called Annotations and, of course, @anywhere, which is essentially Facebook Connect for Twitter.

And–oh, yes–making money. That.

Apparently, according to the execs in attendance, I will have to stop making fun of Twitter co-founder Biz Stone’s name, calling him things like: No-Biz-Here Stone, Ain’t-Nobody’s-Biz-Ness-If-We-Don’t-Have-a-Business-Plan Stone and Biz Stone-Cold-Profits.

Now, given that the San Francisco microblogging service is introducing a number of advertising-related efforts in a quest to make some bank, I will have to change the name to Hey-Zuckerberg-We-Have-a-Biz-Too Stone.

Or, given some of the tensions with third-party developers over Twitter moving into their space in core development areas: Pardon-Us-While-We-Stomp-on-Your-Biz Stone.

In fact, that issue was the main focus of a panel I moderated yesterday afternoon at Twitter’s Chirp, titled “Investing in the Ecosystem.”

My dudes-only panelists included Polaris Ventures’ Mike Hirshland, Venrock’s David Pakman, Bijan Sabet of Spark Capital, and Benchmark Capital’s Peter Fenton.

Mostly, they took my guff about the state of the Twitterverse, in what turned out to be a lively discussion.

While yesterday was all talk, from COO Dick Costolo (who mistakenly thinks he is as funny as I am), Twitter CEO and co-founder Evan Williams, Stone and others, Chirp today is 24-hour hackathon.

Here’s a video I did of interviews with a wide range of Twitter staff, investors and advisers–and blogger Robert Scoble, of course, who is as inevitable at an event like this as air:

]]> http://allthingsd.com/20100415/some-twits-chirp-from-twitter-conference-ev-biz-and-more/feed/ 3 http://allthingsd.com/20100414/what-shall-boomtown-ask-the-twits-oops-i-mean-twitter-loving-vcs-at-chirp-today/ http://allthingsd.com/20100414/what-shall-boomtown-ask-the-twits-oops-i-mean-twitter-loving-vcs-at-chirp-today/#comments Wed, 14 Apr 2010 15:21:08 +0000 Kara Swisher http://kara.allthingsd.com/?p=26701

Later today at Twitter’s Chirp conference in San Francisco, BoomTown is moderating a panel titled “Investing in the Ecosystem.”

Or as I like to call it, “How Do You VCs Come Up With Those Crazy Valuations: Magic 8 Ball? Ouiji Board? Darts?”

I have a choice group of dudes–of course, they are all dudes–for the panel, all of whom have invested in a range of start-ups, including Twitter.

They include: Polaris Ventures’ Mike Hirshland, Venrock’s David Pakman, Bijan Sabet of Spark Capital, and Benchmark Capital’s Peter Fenton.

Presumably, the group of venture capitalists will give the audience the 411 on what goes into finding, feeding and nurturing the many innovative start-ups that populate the Twitterverse.

That is, until you actually try to compete with Twitter or make some dough without its sanction, wherein all the nice Whos-down-in-Whoville sweetness of the folks who run Twitter turns into the backroom at the Bada Bing with Tony Soprano and the boys.

(You can see Twitter COO Dick Costolo here, in fact, giving us his best Don Corleone in this video interview with MediaMemo’s Peter Kafka.)

The tensions of late between Twitter and the many third-party developers circling it are perhaps going to add some frisson to the two-day event at the Palace of Fine Arts, which costs $469 to attend. Twitter also just announced its advertising platform plan.

The first day is all talk, from Costolo, Twitter CEO and co-founder Evan Williams, co-founder Biz Stone and others. The second day is 24-hour hackathon.

For those not there, Twitter will be streaming the event live with the help of Justin.tv.

And, of course, there will be tweets–lots and lots of tweets.

[Sticker image courtesy of Zazzle.com]

]]> http://allthingsd.com/20100414/what-shall-boomtown-ask-the-twits-oops-i-mean-twitter-loving-vcs-at-chirp-today/feed/ 0 http://allthingsd.com/20100225/apple-billions-of-songs-billions-of-apps-not-much-profit/ http://allthingsd.com/20100225/apple-billions-of-songs-billions-of-apps-not-much-profit/#comments Thu, 25 Feb 2010 12:53:05 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=16713 Apple is patting itself on the back for delivering 10 billion songs from its iTunes Store. And it frequently boasts about the number of apps customers download from iTunes, as well–the tally is now past three billion.

But you won’t hear Apple boast about how much money it’s making from iTunes. Because there’s not much to boast about.

Even at today’s hyper volume, the digital store is still running at “a bit over break-even,” the company reminded analysts during its earnings call last month.

Here’s the relevant excerpt from that call, via Seeking Alpha (thanks to Venrock’s David Pakman for pointing this out yesterday at the Digital Music Forum East):

Maynard Um–UBS
We have seen a number of industry revenue forecasts for applications and just given kind of the expected explosive growth there I am just wondering if that is still a break-evenish type of business as you look forward over the next couple of years?…

[Apple CFO] Peter Oppenheimer
…Regarding the App Store and the iTunes stores, we are running those a bit over break even and that hasn’t changed. We are very excited to be providing our developers with a fabulous opportunity and we think that is helping us a lot with the iPhone and the iPod touch platform.

As Oppenheimer says, this isn’t a new development. Apple (AAPL) has always maintained that iTunes wasn’t a real money maker. It’s supposed to help sell iPods, iPhones, and soon, iPads.

For years, industry observers figured that as the iTunes business scaled, this would change. An alternate theory, held by some of Apple’s media partners–the company was being overly modest about its success.

Apple doesn’t break out iTunes sales, but lumps them into a category called “Other music related products and services,” which generated net sales of $4 billion last year. That’s an increase of 21 percent over 2008, and the company attributed this growth to “increased net sales of third-party digital content and applications from the iTunes Store.”

]]> http://allthingsd.com/20100225/apple-billions-of-songs-billions-of-apps-not-much-profit/feed/ 0 http://allthingsd.com/20091110/more-money-for-real-time-ad-tech-appnexus-raises-5-million/ http://allthingsd.com/20091110/more-money-for-real-time-ad-tech-appnexus-raises-5-million/#comments Tue, 10 Nov 2009 13:11:16 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=12866 More money for ad technology: AppNexus, an ad-buying “platform,” has raised $5 million in a round led by Kodiak Venture Partners, along with Venrock and First Round Capital. The company is one of many trying to take advantage of “real-time” bidding for Web display ad inventory.

The funding is an “inside round”–only existing investors participated in the funding–which sometimes, but not always, raises a red flag. In this case, AppNexus says the funding is also an “up round”–its existing investors now think the start-up is worth more than they did the last time they bought in–but didn’t disclose a valuation.

There’s also a bit of fuzziness, still, about what exactly AppNexus does. The company says it provides a “gateway” to ad buyers who want access to ad exchanges like the ones operated by Google (GOOG) and Yahoo (YHOO)–Microsoft (MSFT) will launch its exchange next year–though many industry types think that AppNexus is itself an ad exchange.

The company certainly boasts lots of ad exchange bona fides. Co-founders Brian O’Kelley and Mike Nolet are both veterans of Right Media, the ad exchange Yahoo bought in 2007. And in September, the company brought on Michael Rubenstein, who had been running Google’s exchange.

]]> http://allthingsd.com/20091110/more-money-for-real-time-ad-tech-appnexus-raises-5-million/feed/ 0 http://allthingsd.com/20090602/emusics-new-boss-is-the-same-as-the-old-boss/ http://allthingsd.com/20090602/emusics-new-boss-is-the-same-as-the-old-boss/#comments Tue, 02 Jun 2009 17:34:24 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=7851 The eMusic subscription music service site, which specializes in nichey tunes for the “High Fidelity” set, has signed a deal to start carrying Sony’s (SNE) back catalog.

But I have a question: Whatever happened to eMusic’s search for a new CEO?

David Pakman, who ran the company since 2005, left last fall to join Venrock, the Rockefeller family’s venture capital arm. Last I heard, in late October, the company was “looking at a handful of very qualified candidates” to replace him. And in the meantime, eMusic Chairman Danny Stein–who runs the investment company that owns eMusic and who ran eMusic himself prior to Pakman–was serving as interim CEO.

So who’s the new boss? Same as the old boss. It’s also old news.

Stein says that’s he’s going to run the company for the foreseeable future, and that he figured that out way back in December: He just never announced it. “It was an easy decision to make”, he says.

Stein says he saw plenty of “very capable people”  but figures, a la Dick Cheney, that he was the right man for the job. He also says that the various headhunting companies who say they’re helping eMusic find a new CEO are doing so without his knowledge (or dollars).

Fair enough! The bigger question, as it has been for many years, is how eMusic fits into the larger digital music ecosystem. It sells DRM-free MP3 downloads, which some consumers like, via a subscription service, which most consumers don’t enjoy. Stein says the company has around 400,000 subscribers, and that that number has remained stready for a while. But he says his topline revenue still grew 40 percent last year, to $70 million. (No word on profits or lack thereof).

That’s a pittance compared to Apple’s iTunes (AAPL)  store, which moves about $2 billion worth of songs every year. And while eMusic was once a couple of signatures away from selling to Amazon (AMZN), that window looks like it’s closed, as the retailer launched its own MP3 store a year ago.

But perhaps there’s still an M&A opportunity for eMusic for a different retailer that wants to get into digital goods; Best Buy (BBY) did something similar when it bought up Napster last year.

]]> http://allthingsd.com/20090602/emusics-new-boss-is-the-same-as-the-old-boss/feed/ 0 http://allthingsd.com/20090513/exclusive-blogher-nabs-7-million-in-new-funding/ http://allthingsd.com/20090513/exclusive-blogher-nabs-7-million-in-new-funding/#comments Wed, 13 May 2009 11:00:10 +0000 Kara Swisher http://kara.allthingsd.com/?p=13421

BlogHer, which bills itself as “the community for women who blog,” has gotten $7 million more in a Series C funding, which will bring the total investment in the site to about $15.5 million.

The new round includes a return by two existing investors, Venrock and Peacock Equity, a fund run by GE (GE) and its NBC Universal unit. Azure Capital is joining as a new investor.

In an interview with BoomTown, BlogHer CEO Lisa Stone said the site’s recent fast growth was the impetus for the new round, in order to improve tools offered to its 2,500 vetted bloggers as well as investing in better research and advertising technology.

“This is a true grassroots effort that shows the growing influence of women in social media,” said Stone. “We want to focus on taking advantage of that growth and momentum with this new funding.”

According to the start-up–which was founded in 2005 by Stone, Elisa Camahort Page and Jory Des Jardins and now has 30 employees, located mostly in Silicon Valley–the BlogHer Network reaches more than 14 million unique visitors a month.

Besides the site, BlogHer also runs a popular conference and is hoping to expand its suite of social-networking tools as well as its publishing and advertising network.

“We have been trying to create a place for women to participate in social media with civil respect and also to engage readers,” said Stone.

While it is not yet profitable, Stone added, BlogHer is ahead of its internal financial projections, and “I hope next year I can raise a glass of champagne to meeting that goal.”

]]> http://allthingsd.com/20090513/exclusive-blogher-nabs-7-million-in-new-funding/feed/ 0 http://allthingsd.com/20090318/viacom-ceo-dauman-yep-were-still-suing-google/ http://allthingsd.com/20090318/viacom-ceo-dauman-yep-were-still-suing-google/#comments Wed, 18 Mar 2009 21:10:35 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=5439 Viacom (VIA) CEO Philippe Dauman just spent more than an hour giving the most detail-free answers he could possibly deliver to BusinessWeek’s Ron Grover, who was interviewing him at an industry conference.

So no surprise that Dauman had little to say about his company’s giant, glacial lawsuit–two years and counting–against Google (GOOG) over copyright infringement at YouTube. But for the record, Dauman still thinks… something will happen, someday.

“We’re in U.S. litigation-land. We are in discovery. A lot of documents have been produced. One thing about technology, there’s so many more documents now,” Dauman noted, accurately. And so what does that mean? “We continue to be confident in our position. There’s not much more we can say, and there will be an outcome.”

So there you have it.

Dauman did say that his suit helped push Google to install a filtering system that susses out videos that shouldn’t be on the site (more on that soon). And he did say that his son, Philippe Jr., continues to enjoy working at Google–a hire that Dauman says both he and Google CEO Eric Schmidt signed off on. “He’s doing very well there. He loves it, it’s a great company.”

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