TIME Magazine reports: “For budding internet entrepreneurs, the moral of Google’s $1.65 billion purchase of video start-up YouTube is simple: Build a real, functioning company, then sell it to a bigger one.” Google’s not the only shopper. Yahoo! has spent close to $100 million for start-ups Flickr and Jumpcut, among others. Facebook may be next, with Yahoo! said to be mulling a $1 billion offer. With investors on track to inject $500 million into new Net firms this year–twice last year’s total, according to a Dow Jones VentureOne report–this may be the start of a golden hunting season.
TIME cites the fact that there are more than 1,000 start-ups, but it picks several Seattle companies as the leader of that pack and the next runners-up to YouTube fame. First among them is Farecast.com which “uses fearsome computer power to predict the direction of plane fares.” Farecast was founded by UW professor and infopreneuer Oren Etzioni, who created the Web’s first meta-search site, Meta Crawkler, and first shopping-comparison tool, Jango, which became ShopBot when it was acquired by Excite.
Etzioni originally dubbed the site Hamlet after its To Buy or Not to Buy motto. Net squatters wanted $100,000 for the hamlet.com address, though, so the outfit instead bought the more logical farecast.com for small change. In the Web’s early days, it was SOP to pay millions for addresses like business.com No more. “In the ’90s, start-ups were drinking Kool-Aid,” Etzioni says. “Now we’re drinking coffee.”
The second site on the Next YoutTubes list is Zillow.
Just down the street from Farecast’s Seattle offices, TIME points to Zillow.com as having “generated growing buzz since it debuted last February offering free, instant valuations of 67 million U.S. homes. The site says most of its “Zestimates” are within 10% of the eventual selling price. Of the site’s 3 million– plus monthly visitors, more than half are repeat customers, and 54% plan to buy or sell a home within two years.”
Zillow’s buyers and sellers, on the cusp of a major transaction, would be a gold mine for Yahoo! or Google, either of which could capitalize on the lucrative real estate ad space. Founder and CEO Rich Barton, who made a fortune creating Expedia, concedes that Zillow has had lots of conversations with the big Web players but says he’s not selling.
He can afford not to. “The first millions in seed capital came from myself and the other founders,” Barton says. “We’re in a position to be really patient. Nobody’s come and made us a hard offer because they know I’m not interested in selling and I don’t need the money.” He does takes his work home, though. With guidance from Zillow, he is selling his house; it’s yours for $2.9 million.
Zillow has partnership agreements with Microsoft (for satellite imagery), Yahoo! (for links on the portal’s real estate site) and Google (for ads). That could set the stage for a longer-term deal–or an acquisition–down the road. Meanwhile, to tame the chaos characteristic of early start-ups, Barton has set some limits. “We have foosball and air-hockey tables,” he says, “but we don’t have dogs running around.”
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