Peter Kafka

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Pay Wall Operator Tinypass Grows, Raises $3 Million

Tinypass, a startup that’s trying to help online publishers make money by selling their stuff on the Web, has new money of its own.

The New York-based company has raised a $3 million round led by Cascabel Management, a hedge fund with ties to Julian Robertson’s Tiger Management. Last year, the company raised a $1.25 million seed round.

The Tinypass pitch is straightforward: It sells/rents software that helps publishers — most famously, uber-blogger Andrew Sullivan — sell their stuff. Tinypass comes in two flavors: A pay wall that gates stuff off to nonsubscribers, and a version that lets everyone see everything, and sets up what amounts to a very fancy tip jar.

The last time we checked in with Tinypass CEO Trevor Kaufman, in January, he had 45 paying clients. That number is now up to 250, he said. That growth helped him raise the round, along with investors’ increasing confidence in the idea that not all information wants to be free, after all.

“Up until recently, I don’t think VCs were interested in it,” Kaufman said. “But now we’re seeing conversion rates averaging 2.7 percent, and it’s getting easier.”

Tinypass is one of several companies selling pay-wall services. Press+, the largest and best-known, is now reportedly on the block, so it will be interesting to see what the market says about that.

In the meantime, Kaufman said Tinypass is learning more about how to sell bits and bytes that used to be given away. For instance: It looks as though readers are more likely to pay on the weekend. Kaufman said his clients’ sales volume shoots up 50 percent on Saturday and Sunday.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik