TechFlash: Seattle's Technology News

With U.S. newspapers cutting staff and turning off the printing presses, Zillow.com is seeing new opportunities to help the battered industry. The Seattle online real estate startup is offering its technology to the Web sites of 180 newspapers, according to The New York Times. “Newspapers have been left for dead by a lot of people,” Zillow Chief Operating Officer Spencer Rascoff tells the Times. “Readying their obituaries is very premature.”

Struggling Seattle biotech Targeted Genetics today reported a fourth quarter loss of $10.8 million, more than double its loss for the same period in 2007. Revenues also declined to $2.2 million, with the company noting that it only has enough cash on the books to fund operations through June. The company said that it expects the stock -- which has traded below $1 for the past year -- to be delisted from the Nasdaq.

AuBeta Networks, a 9-year-old Seattle company that provided wide area network services to restaurants and retailers, has hit hard times and is in the process of selling its assets to Telekenex. In a letter to customers earlier this month, AuBeta CEO Ethan Hernandez apologized for service disruptions and said that the company is transitioning operations to San Francisco-based IP service provider Telekenex.

High-tech workers in Washington state earned an average wage of $95,900, the third highest in the nation, according to the annual CyberStates report from TechAmerica. In the past, the state has ranked first in high-tech wages in part because of the wealth created by Microsoft. The annual report, which ranks wages, employment, research dollars and other factors for every state, also found that Washington has the largest number of people working in the software publishing business. (47,600)

With the dust finally starting to settle in the debacle known as Entellium, one question still remains. How did the fraudulent activities of Parrish Jones and Paul Johnston -- who were sentenced to prison Friday after inflating revenue -- go undetected for four years? 

Shortly after the fraud came to light last October, we reported that audits were never completed at the Seattle software startup. Experts at the time said that a simple review would have uncovered the fraud, causing a debate about the role of the company's primary venture backer: Ignition Partners. At the sentencing hearing Friday afternoon, some interesting details emerged about the audits, the responsibility of the board and why it is important to blow the whistle.

Internet advertising is not growing as fast as it once did, but it is still outpacing some of the more traditional advertising channels like newspapers and television. Advertisers spent $23.4 billion online last year, up 10.6 percent over 2007, according to the 2008 year-end report from the Interactive Advertising Bureau. [PDF-19 pages] That compares to the entire advertising sector, which Nielsen said was down 2.6 percent last year.

Spaltudaq -- which may have had the hardest name to pronounce in the history of Seattle startups -- has changed its name to Theraclone Sciences. More importantly, the biotech company announced today new research that could be used to "reverse engineer" a vaccine for HIV.

Visible Technologies has outgrown its Pioneer Square office space and plans to move to Bellevue's Factoria neighborhood next month. The 82-person company, which helps corporations track discussions on social networking sites and blogs, plans to take about 15,000 square feet of space at 3535 Factoria Blvd. That's office space formally held by F5 Networks.

Four partners from the Bellevue venture capital powerhouse Ignition Partners have set up offices in downtown Seattle, operating under the name of Ignition Capital. The partners -- Jon Anderson, Robert Headley, John Zagula and Rich Tong -- will continue to focus on later-stage investments while the remaining team at Ignition Partners invests in early-stage deals. Ignition Partners' Brad Silverberg said that Ignition Capital is not new, with the growth fund established in 2007 with $275 million as part of the firm's larger fundraising efforts. The office was established several months ago, in part to reduce the commute times for some of the partners, said Silverberg. 

"RIFs." "Cram Downs." "The Zone of Insolvency." 

Those are some of the buzzwords associated with today's harsh economic climate, all of which were addressed at last Thursday's very timely panel at the law firm of Fenwick & West. The 90-minute discussion -- titled "Operating and Financing a Venture-Backed Company in a Down Market" -- offered advice on how entrepreneurs, investors and directors can navigate the tricky morass known as the U.S. economy.

What's happening this week in Seattle tech? Danielle Morrill offers a look at some of the events around town. For more details, check out the Seattle 2.0 and TechFlash events calendars.

Seattle 2.0 Tech Events Rundown - Week of 3/30/09 from Seattle20 on Vimeo.

Microsoft is accustomed to seeing people leave the company. After all, with close to 90,000 employees, workers always are on the move. But The New York Times today contrasts the Microsoft employees who are now leaving because of layoffs with those who took off before to pursue everything from venture capital to charity work to space travel.

It is an interesting read. And it does have implications for the larger technology community in the Northwest. Will these laid off workers start new companies? Will they leave the region? Do they have the entrepreneurial chops to move from a big company mentality to a startup?

Frank Catalano

Frank Catalano: No one should be surprised that Redmond-based photo sharing and greeting company Smilebox is trying something new with advertising and distribution in the --well -- real world. Earlier this month, Smilebox announced that it would experiment with placing an ad on the lower right corner of the front cover of Scholastic Parent & Child. At the same time, it packaged its Web application into boxes to be sold in such bastions of cinder block as Target, Fry's and Office Max.

Long-time industry observers like me could almost imagine the smirks of the high priests of the Digiterati. It's as though the Web-bred-and-borne company risks failing some kind of secret Internet purity test: a business which was spawned and conducts its business online trying innovative marketing offline? Why waste the time and money with traditional marketing media and distribution channels?

Choking back tears in front of a packed courtroom, former Entellium executives Paul Johnston and Parrish Jones were sentenced Friday afternoon to three and two years in federal prison, respectively, for misrepresenting financial figures to the board of the Seattle startup company.[Post updated with remarks from the Jones, Johnston, the judge and attorneys]

TheFunded.com, a Web site that allows entepreneurs to rate the performance of individual venture capitalists, is apparently shutting down on April 2, according to a message on the Web site. But TechCrunch's Michael Arrington is calling it an April Fool's joke, in part because of the message placed on theFunded's Web site. (Full message below) You be the judge, though I am sure there are more than a few VCs who wouldn't mind if it turns out to be true.

Rob Monster

Rob Monster made quite a stir when he entered the Seattle venture capital scene. But nearly two years after establishing Bellevue's Monster Venture Partners, the founder and former CEO of Global Market Insite is pulling the plug. It is not for lack of trying. During his short tenure in the venture game, Monster backed more than 20 early-stage companies, sinking more than $7 million of his personal funds into startups such as Alerts.com, Complaints.com, Demoxi and Wishpot.

He also hired two well known investment professionals in town -- Jeff Schrock and Todd Humphrey -- to scout deals. [Both previously left the firm] So what's going on? Monster, who recently shut down the Bellevue office, said the early-stage investment market "changed dramatically" in 2008.