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The world's your oyster

Information Age staff, Information Age

10/04/2008 13:13:01

Three Australian Web 2.0 companies are doing things their own way. One has gone to the US, and embraced the venture capital culture of Silicon Valley. Another has decided that staying at home and raising private funds is the best way forward. And the third, Remember the Milk, is run on a shoestring from a home office on Sydney's Northern Beaches.

Bluepulse

When Ben Keighran was 12 years old he built an electronic bulletin board system from the ground up. Today he's the chief executive of a mobile-phone software company with a pre-initial public offering valuation of $100 million that's based in YouTube's old offices in San Mateo, California.

Bluepulse, founded in Australia, is a social networking application for mobile phones. "We are the largest mobile social network in the world," says Keighran. "We launched in December 2006, and that is when I moved to Silicon Valley. It's pretty crazy stuff."

Keighran was recently voted by BusinessWeek as one of America's most promising entrepreneurs under the age of 25. In December, he made a flying visit to Australia to catch up with some of his early seed investors - mainly family and friends.

The idea for Bluepulse came when Keighran got his first Bluetooth-enabled mobile phone. Bluetooth is a technology that allows devices such as phones and cameras to connect wirelessly over short distances.

"Almost five years ago, I was studying computer science at the University of Technology, Sydney, and I got my hands on this phone," he says. "I found a hack that enabled me to write my first mobile-phone program."

That program allowed him to walk into his apartment and have the music playlist that was on his computer automatically pushed to the screen of his mobile. "I could select a song and the computer would automatically start playing it." He showed his friends, and they all wanted a piece of the action. The problem was, and is, that mobile phones might be morphing into powerful handheld computers, but unlike desktop machines, they're all different. It's hard to make a phone program that is written once and runs just about anywhere because of the rival operating systems in the phone market. The main competitors are Microsoft, with its Windows Mobile, Apple's new iPhone, RIM's BlackBerry and Nokia's various operating systems. mobile," he says. "I loved what happened when you put this application in front of people and watched them experience a mobile application for the very first time. But the problem is that phones are like snowflakes. They all look similar, but they are all very different."

Initially, Bluepulse started as a hobby focused on solving the snowflake problem. It wasn't long before Keighran realised the answer lay in using the Internet as the platform and the mobile phone as the access device.

"That was where I started," he says. "The Internet would allow the software to work regardless of the type of phone that you were using." He adds: "The second thing I learned is that the way people interact with their mobiles is different to the way that they interact with their personal computers. Phones are all about applications. They are almost a utility: you pull it out, use it and then put it back."

The concept of creating a business from this hobby came when more and more software developers started getting interested in his ideas and he began to see what does and doesn't work on a mobile phone.

Keighran thinks there's a revolution coming in the way that we use our mobile phones. "It's changing the way people communicate. Instead of sending e-mail or instant messaging they will log into a social network and update all their friends all at once about what they are doing," he says. Using Bluepulse is as easy as logging into the company's Web site and downloading the application for your mobile. The type of phone you have is automatically detected and downloaded.

"Using the Internet as the platform meant that I didn't have to go out and create relationships with carriers," says Keighran.

And it's carriers, as well as the mobile phone as snowflake, that has held up the development of the mobile phone as a powerful personal computing device. Each carrier wants to keep its customers to itself. This is at odds with the trend towards openness that the Internet has created, where you can download and run any application, or visit any Web site without needing the permission of your Internet service provider.

Bluepulse has received investment from VantagePoint venture partners in the US. VantagePoint initially set goals for Bluepulse's performance that had to be met before it would provide any additional investment beyond the money needed to move to the US and set up shop there. "They wanted user engagement, and they wanted us to hit 5 million mobile pages per month by August 2007," says Keighran. "When we hit that mark we would receive $US6 million ($6.85 million) in additional investment."

It took two weeks from the company's December 2006 launch to hit the benchmark. "By August 2007 we were doing 100 million mobile pages," he says.

Making money from the user base is trickier. Like most Internet business models, the Bluepulse model is predicated on advertising and partnerships with media companies. "We are not fully monetising it at the moment, because we are focused on growing the audience," he says. "There is so much scope for mobile advertising, but where we are at is building audience and testing revenue models."

Remember the Milk

Late last year, Omar Kilani quit his job as an IT consultant to focus full-time on three-year-old start-up Remember the Milk. Kilani started the Web 2.0 venture - a high-end task management tool that has about half a million users - as a university research project with partner Emily Boyd when both were at the University of Technology, Sydney.

"I am very excited about it," he said. "It's very hard to do a nine or 10-hour day [at a regular job] and then you come home and you have this other job to do. And it's not just the time, it's also the brain space that's required."

Based in Dee Why, on Sydney's Northern Beaches, the pair has eschewed investors and external funding in favour of independence. "Finding funding takes a lot of time," Boyd said. "People have contacted us in the past, but it wasn't a good fit and it took months of going backwards and forwards."

Kilani added: "We don't have months to play with. We need to keep developing the product, and it's kind of hard to balance that with the need to look for funding."

Remember the Milk is integrated with Google's Gmail product. It is also available on Apple's iPhone, and was one of Apple's "star picks" for iPhone applications several months ago, resulting in a big spike in traffic for the site, which is hosted in the United States.

The venture pioneered the use of Google Gears, a set of software tools that allows Web applications to function without an Internet connection. The Gmail integration, and Remember the Milk's experience with Google Gears, raises the question of whether it is an acquisition target for Google or another big Web company.

Gmail lacks high-end task management facilities, and Remember the Milk has built in those features despite Google's lack of documentation for the service. "Maybe tasks are a niche product," Kilani said, speaking of whether the venture had been approached by companies wanting to buy the technology. "It's just not a big focus for us right now. We are happy with the independent revenue."

Remember The Milk's revenue model follows that of other high-profile Web 2.0 ventures such as US-based photo sharing site Flickr. There's a basic level of service that's free, and for many that's enough. There's also a pro-level account for customers who want iPhone integration, as well as to synchronise Windows mobile handheld devices with the task management service.

"When we started doing this we didn't plan for it to become a business, but it just took off," Boyd said. "It grew to the point where we were spending all our time on it, and so we made the decision to add the pro accounts."

The pair won't disclose how many of their users have opted for the $25 a year pro accounts.

Boyd handles design for Remember the Milk, while Kilani does the programming and server support. They work from home.

"You wake up in the middle of the night and find yourself checking e-mail - as well as making sure that the site is still up and running," Boyd said. "It's a full-time job."

Atlassian

Privately held software developer Atlassian, which has about 9000 customers for its Jira product across the US and Asia, hasn't ruled out a public offering in the future.

"We are sometimes portrayed as saying that it will never happen," co-founder Mike Cannon-Brookes said. "But when the time is right we will make a pragmatic decision. Staying private is not a religious issue with us."

Cannon-Brookes said going public was not in the business's short-term plans.

"Software requires a lot of upfront investment, but after that you can bootstrap yourself quite well," he said. "Throwing a large amount of money at things doesn't always help."

Despite this, Atlassian has recently applied for government grants to build a software as a service (SaaS) version of its project management suite, Jira. "The grant is about scaling, because the SaaS offering requires large amounts of funds. The product, Jira Studio, will be a second string to our bow."

Software as a service is an arrangement in which a company makes its software products available over the Internet, instead of as a packaged product that a company installs on its own servers.

Atlassian recently opened an office in Poland, and wants to double its overall staff this year in all its offices, including its key San Francisco outlet, which has 35 staff. "We are on track to double staff again this year," he said.

The skills shortage had made it difficult to find good local staff. This was especially so because Australia had a relatively small software development sector.

"There are not many software companies in Australia that ship packaged software," he said. "That makes it hard to find product managers and engineers. For people that don't have the skills, we have to assess whether they can come up to speed."

He uses the example of an engineer who comes from a consulting background to work for Atlassian. "His experience in how software is used is different to that of our customers," he said.

"We have added 70 people in the last seven months, and that has its own challenges, to make sure they're inducted, to make sure that the culture is maintained and that they fit in to the company."

Cannon-Brookes still makes a point of having lunch with every new employee to ensure the staff feel they have access to him and other senior management.

"If they are comfortable approaching me, they will be comfortable approaching anyone in the organisation. That's why we have lunch with every new employee. I also like to get to know something about them."