One of the risks of trying to find a niche to build a startup is that the big guys can land on your face at any time. That’s why all of these startups are going to be in serious trouble when Adobe releases a free, ad supported online version of Photoshop in six months.

This announcement comes at a time when developers are lavishing attention on Adobe’s Flex platform, particularly in the video editing and sharing space. I think it’s reasonable for startups to question if Adobe will plan on competing with them in areas beyond photo editing. If that’s the case, these startups may not want to spend their time and venture dollars testing out various products, only to have Adobe jump in the middle after all the dirty work is done.

Adobe is both a platform company and an application company. Conflicts are not avoidable.

A new site called Spotplex launched today that arguably sorts news in a better way than Digg does. I’ve been testing the service for the last couple of weeks and like what I’ve seen.

News stories are not submitted by users, as with Digg. Instead, sites that want to participate include some javascript code on their site, which monitors what stories/posts are read. The more times a story is read, the higher it appears in Spotplex. Very popular stories will make it to the Spotplex home page.

The resulting home page on Spotplex looks a lot like Digg, showing very popular content. Popular stories are ranked under the “popular” tag. Upcoming stories (the default view) are under the “latest” tab. Readers can also view stories based on popular current tags being used by publishers, and can view a ranked list of top publishers here.

The service is still very much in beta. For now only a handful of blogs have been included. The site itself is open for anyone to read stories, but only a few blogs are included so far. The company will be bleeding in new blogs over time to avoid strain on their servers. To kick things off they’ve agreed to allow up to 1,000 blogs in to SpotPlex. If you want to be included, just email “signup@spotplex.com.” The first thousand requests will get in right away.

Can Spotplex become as popular as Digg, or more so? I think it can if it evolves properly. Unlike Digg, Spotplex won’t have to deal with voting fraud. Spotplex will have their own unique fraud issues to manage, though. Another problem with Spotplex is the fact that large blogs and publications will dominate it to start just because they have large readerships already. To avoid this “the rich become richer” problem, I’ve suggested to Spotplex that the rankings be based on a publication competing with itself – so only very popular stories on TechCrunch (compared to average TechCrunch traffic) would get to the Spotplex home page. The Spotplex team has said that they’ll be tweaking their algorithm constantly after launch based on real data they get from the beta.

Spotplex is a spinoff of another startup, Opinity. The founding team includes Doyon Kim and Young Jun Pack.

Berkeley, California based Wesabe will announce a $700,000 round of financing tomorrow from O’Reilly AlphaTech Ventures (as well as a couple of individual investors), and Tim O’Reilly will join the company’s board of directors. A good overview video of the service, which launched in December, is below.

Wesabe is best described as a web version of Quicken, but with some fundamental differences that make all the difference in the world. Transactions can be tagged, for example. Also, as individual merchants are renamed by multiple users to make it more definitive (think about the crazy merchant names that appear on credit card statements), this better merchant data is automatically distributed to all other users as well.

One key difference between Wesabe and Quicken is a maniacal obsession with security and privacy. You can download data from up to twelve credit card, bank and other financial accounts. Your account credentials are never stored on Wesabe’s servers, though. You either download the data to your personal computer and then upload to Wesabe, or store your account credentials in an encrypted format on a small piece of Wesabe software on your computer. The result is that hackers can’t access your account credentials by breaking into Wesabe’s servers.

Wesabe has also spent a lot of time making it as easy as possible to leave the service. You can easily export your data and, more importantly, delete it directly from the Wesabe servers.

The service has been live for three months: $300 million in transactions have been recorded from 130,000 distinct merchants, and 1 million tags have been applied.

The company has eight employees.

This is OATV’s third investment (they also put money into Instructables and Chumby).

Seriosity has a solution for over-crowded email inboxes. If you want someone’s attention, you’ll be paying for it.

The company’s hook is that they’ve studied World of Warcraft and other multi-player games and believe they’ve found the right way to get people’s attention – virtual currency. You attach a payment to an email, called a Serio, which is transferred to the recipient. The recipient is able to determine how important an email is based on the size of the payment. When an inbox is overcrowded, presumably the reader will sort through to the higher paying emails.

This strongly reminds me of beenz, a Web 1.0 currency that would be handed out for doing various things, like visiting web sites, that users otherwise wouldn’t be bothered to do. The company fell apart just after the Nasdaq tanked earlier this millennium.

What isn’t clear is what people can do with the currency other than send emails. Let me convert this into cash or frequent flyer miles or something else, and I’m in (beenz did this). Otherwise, what’s the point, other than to amass a stunningly large number of Serio and then spend it on…sending emails.

The company, founded in 2004, is based in Palo Alto and is using $6 million in venture capital to feed 27 hungry employees. See CNET for more.

There were a bunch of product demos today at Adobe’s Engage event, but there were a few that stood out and should have a big impact on the startup world. They also happened to be some of the best demos of the day.

Virtual Ubiquity – Rick Treitman demoed their word processor application, BuzzWord, which was built entirely in Flex 2 and looks like it could be a direct competitor to Google Docs. The team focused heavily on making sure pagination and typeography were first class, something Flash has been bad at. They’ve created a great UI around the document workflow and have features like ruler tooltips when embedding assets that help people work with their documents. They are focusing on the collaborative document space so that users can be designated as reviewers, read-only, or actual authors and discuss the document. They are aiming for a public beta later this summer.

Scrybe – Faizan Budar presented Scrybe and showed the features that were in the video that generated so much buzz. He demoed all three major features live and made a point of saying that everything in the video is now working in the application. He showed off the calendar portion of the application, which has a great UI, the “PaperVision” which allows you to print your information into special pocket size chunks, and the option to save content to your Scrybe account from any website. The user interface is clean, useful, and it all works offline. They’ve opened up the beta to a limited number of people and hope to open it up to the general public after their next round of features are complete.

yourminis – Alex Bard, the CEO of Goowy Media , demoed what yourminis is working on. A lot of it has been covered by TechCrunch, but they really dug into Apollo and the API that they plan to release next week. With Apollo, they are building out a widget platform that will touch the web, embeddable properties, and the desktop. Alex took a yourmini widget and dragged it to the desktop straight from the browser which made for a poweful demo. Their API is going to enable developers to create their own widgets on the yourminis platform. They built a Twitter widget using the API that is great, so I think content providers are going to be excited about the freedom that the API allows.

Intelisea – One application that didn’t fall into the category of web startup but demonstrated how far the Flash application has come was an app from Intelisea. The application, built in Flex 2, is the front end for controlling a yacht. It runs on a touch screen interface and allows the user to look at engine stats, fuel levels, weather and GPS coordinates. There’s also a security feature that uses RFID tags to track the people on the boat and sounds an alarm when someone falls overboard. It displays a red dot on a schematic of the ship to indicate where the person fell off. It’s something that will never be seen on Web 2.0, but makes for a fun story when it comes to the Flash Platform.

Engage did a good job of showing how diverse the Flash platform is. There were a lot of great questions about the role Adobe needs to play in the design community and what makes web apps better (it’s not gratuitous animation or UI). And there are a lot of interesting startups using the Flash platform. Luckily we got a look at some of those today.

Later today music social network iLike will report that they’ve reached half a million registered users in the first four months since launching. What won’t be disclosed, but I’m hearing from insiders, is that around 20,000 new users are joining daily.

The company, along with MOG, will present at the Digital Music Forum East conference in New York tomorrow. Together the two companies are America’s best answer to the Last.fm viral machine, which sees 15 million unique visitors per month and dominates the social music space. Last.fm is headquartered in London.

The backbone of all three companies (iLike, MOG and Last.fm) is the gathering of meta data on users listening habits – all three have software that monitors what users listen to – and then integrating that data into their respective social networks. When I met with the Last.fm executive team last week in London, they told me they’ve collected over 6 billion pieces of user data to date, which they call “scrobbels” (they are gathering something like 175 new scrobbels per second). Last.fm is the MySpace of the music based social networks.

After developing their product on their own for six months, New York based Outside.in received financing from angels and three venture firms: Union Square Ventures, Milestone Venture Partners, and Village Ventures. Fred Wilson of Union Square Ventures discusses the financing here.

Outside.in aims to aggregate posts from local bloggers (placebloggers) into one tagged and searchable directory. According to Fred Wilson, they hope to do for blogging, what Google local search has done for the web. Sites like Yelp, InsiderPages, and Smalltown are also building local communities, but based around reviews, with discussions and blogs playing a supporting role. An example of the directory in action: the latest blog posts for Palo Alto, CA. Each post is given context by presenting the user with a map of the location the post is coded to, and other blogs in the area with similar tags.

A blog’s whole feed is added to a local blogroll by user submission, but not all bloggers blog only about their local town. For blogs that occasionally write about an area, Outside.in has a bookmarklet for users to suggest individual stories, and a “Feedburner flare” option that adds a “geotag this” option to the bottom of your posts.

I’m at the Adobe Engage event with a bunch of other bloggers including David Berlind, Tim O’Reilly, Robert Scoble and James Governor. We’re getting demos from Adobe customers (and in some cases products the company is working on) which I’m covering over on my ZDNet blog, The Universal Desktop. The big highlight so far has been Adobe senior vice president and chief software architect Kevin Lynch’s keynote covering Apollo (You can listen to recent a podcast interview with Kevin Lynch, Steve Gillmor and Michael Arrington here).

Having a lot of inquisitive bloggers in the room meant a lot of good questions as Kevin gave his presentation. Kevin talked about how widespread the Adobe Engagement Platform has become with 700 million PCs and 200 million devices. In describing Apollo’s place in the ecosystem, he showed a slide charting richness and reach. Up to now, Adobe has focused on cross platform web based experiences, but with Apollo they’re hoping to move into richer desktop experiences as well as richer mobile integration.

A lot of the basic information on Apollo has been covered pretty extensively, including here on TechCrunch, so I’ll focus on the things that got the most discussion amongst the bloggers here. Security, which has been a concern of a lot of people in the community, seemed secondary to this audience. There’s a lot of talk about whether Apollo is going to be used for spyware or malicious software, but at the end of the day, Adobe is of the opinion that users have final control over what’s installed on their machines. They’re making sure that Apollo can’t wreak havoc (it won’t be
able to write to or delete system folders and each Apollo application is sandboxed so that Apollo applications can’t steal data from other Apollo applications).

The installation experience for Apollo goes through the Flash Player, so it bypasses Microsoft’s controls which results in a better experience, and one that Adobe controls. Kevin showed how quickly and easily it is to install individual Apollo applications and it’s a pretty good user experience. The one thing that seems to disappoint people here is that there are no plans to allow Apollo to access native applications on the OS. Adobe wants the Apollo experience to maintain its cross platform portability and they are aiming to keep up with developer needs without opening up OS-specific possibilities. The other thing that is becoming clearer is how Apollo applications will store data. Kevin said right now they’re looking at XML-based storage along with the possibility of advanced file-system caching that developers could tie into via an API. That’s all doable by developers now, but they’re talking about making it easier.

There is a lot of excitement here about Apollo. There are concerns about how viable it and how people are actually going to use it. A persistent question for the presenters has been “how does Apollo help you” and the main answer seems to be file system access. There aren’t a lot of people pushing the boundaries.

Second Life has had music, but has otherwise been rather mute. That’s all soon to change when Linden Lab rolls out a beta test for person-to-person speech. Like a lot of other in-game speech systems, you’ll need a headset, but Second Life will provide a different peer-to-peer chat experience than those World of Warcraft conversational gems.

The new system will mimic speech in the real world, adjusting the volume of voices relative to you based on the distance and direction of speaker. Like other products, voice will only be active on certain digital geographies, but private island owners will have the option to enable voice on their own land, depending on the terms of their subscription. Up to 100 people will be able to chat on the same connection at a time. If talking to everyone or just anyone is too much to handle, you can hold group conferences across geographical boundaries or talk one-to-one as well.

The whole system is powered by a technological collaboration between the voice chat technologies of Vivox and 3D voice tech from DiamondWare. The initial beta will be for 1,000 residents (apply by emailing 3dvoice@lindenlab.com), broader beta in March, with a formal launch virtual world wide scheduled for Q2, 2007.

The NY-based team at Clipmarks just launched 2.0 of their product, a unique web clipping system that allows you to take just the paragraphs, sentences, or multimedia you want from a page while maintaining a link to the original document.

Their CEO, Eric Goldstein, was a lawyer who was fed up with cutting and pasting citations into a Word file only to discover that the 100 page mess became unreadable and unusable. He and his team launched a first iteration of the product, which Marshall looked at months ago, but the latest version is considerably more fully-featured and quite interesting.

The product is a Mozilla/Firefox or IE plugin that brings up an interactive clipping menu. When you scroll over text, Clipmarks highlights it and allows you to clip it to an email, to a blog — many CMSes are supported including Wordpress and Blogger — to print, or just save. The clips are stored on the Clipmarks server and can be “popped” to the front page to share with other readers.

These popped stories allow voting and there is a running tally of popular stories on the homepage. Goldstein mentioned that there is no way to vote against a story so stories can only rise in the ranks or peter out, not be demoted by nefarious popularity gamers.

This social aspect is second to the actual usefulness of being able to grab snippets of text, store them, and even use them in blog postings. There are a number of Javascript things that perform similar tasks, but the formatting choices and methods afforded by Clipmarks is inconspicuous and potentially addicting.

In the brief time that I used it, I was able to grab videos, individual sentences, and even whole posts and drag them to a number of locations. There is a huge Clipmarks button that appears next to the menu bar in Firefox and things get really annoying if you hit it accidentally and start seeing blocks appear over everything on a page, but this is a small price to pay for the functionality afforded.

Clipmarks

If you haven’t taken the time to try out the new Ning today, Robert Scoble has filmed an excellent demo of the product (basically the same demo I saw yesterday) from CEO Gina Bianchini. There’s a lot of coverage from other bloggers as well.

I have to hand it to Ning – it took them well over a year after their initial beta launch to fulfill their promise of allowing “anyone” to create social applications, but they’ve done it. Ning relaunches tonight with new functionality and an interface that allows even the most novice of web users to create their own highly customized social network in moments. The site has been down most of the day – the new stuff should be online around 10 pm PST.

Until today, creating new applications in Ning required at least some programming knowledge, unless you simply cloned an existing application. For the first few months after it initially launched it was so hard to use that basically no one was – I called it a dead application. I’ve softened on the company since then, giving them their requested time to fully bake the service. After seeing a demo earlier this afternoon, I’m now willing to offer a full mea culpa. The new Ning is an impressive and useful service.

The New Ning

Ning can be used to create a fully functional and customized social network in minutes (click on image to right for larger view).

There are some screen shots included at the end of the post showing the app creation interface. The first step after naming and describing the new application is drag and drop desired modules- such as text boxes, RSS feeds photos, forums, blogs and videos – into the application in the area you want them. Adding the “members” module, for example, shows a list of the networks most popular members within that module.

Customizable themes and templates can then be applied (again, by clicking and dragging, no coding), a logo uploaded, etc. The creator decides if it is a public or private network, and member profile questions can then be added.

For users who want to do more customizing, CSS and HTML files can be uploaded. Very few aspects of the application are not customizable.

The application is then ready to launch. It’s completely free, and Ning offers a la carte upgrades like the ability to add your own Google Adsense code for $20/month, and domain name aliasing for $5/month.

Even before today’s launch, Ning CEO Gina Bianchini says growth has been strong and steady. Nearly 30,000 applications have been created to date, up from less than 5,000 a year ago. Page views have been spiking, reaching 20 million per month, 20x traffic a year ago. Unique visitors have reached nearly 5 million per month as well, 10x a year ago.

The company remains privately financed, mostly from Marc Andreessen, who’s put $9 million or so into Ning to date. The company has 27 employees and is headquartered in Palo Alto.

Screen Shots of the creation interface:

MySpace PR has replied to our request for comment on the Imeem blockage that we reported over the weekend. Julie Henderson, SVP Corporate Communications at Fox Interactive (MySpace’s parent company), says:

If a widget violates our TOS, we block them. Breaches would include any person, widget or software that violates copyright, poses security risks, distributes pornography or engages in commercial activity. Commercial activity includes selling ads on a MySpace page through their widget or software.

In the instance of Revver specifically, we told them we were going to block them if they continued to sell ads on our pages. They refused to stop selling ads on our pages – so we blocked them. No mystery there.

Also, we have no plans – current or future – to charge a “toll.” Third party widget providers just need to follow our terms of service…

There is still the matter of that statement made by Peter Chernin, COO of News Corp, last year: “If you look at virtually any Web 2.0 application, whether its YouTube, whether it’s Flickr, whether it’s Photobucket or any of the next-generation Web applications, almost all of them are really driven off the back of MySpace.” For now, MySpace is saying they have no plans to charge widget providers for distribution rights on their site. But it is clear that if they can find an excuse to ban them, they will.

Some of the top jobs this week from Crunchboard:

• Interaction Designer at Piczo Inc. in San Francisco, CA
• Blog Writer / Managing Editor at Briggs Media PTY LTD in Anywhere USA
• Sr. Software Engineer -Video Search Engine at Truveo in San Francisco, CA
• Web Developer at Warner Bros. Records in Burbank, CA
• Web Designer at NYTimes.com in New York, NY
• Information Architect at NYTimes.com in New York, NY
• Sr. Software Integration at NBC Universal in ENGLEWOOD
• Dir. Online Marketing at Blockbuster, Inc. in Dallas, TX
• Marketing Manager at BustedTees.com in New York, NY
• Web Developer at Paltalk.com in New York City
• Direct Marketers – Online at Blockbuster, Inc. in Dallas, TX
• Senior Database Software at Pandora Media in Oakland, CA

Further Update: This deal is now confirmed.

Update:TellMe is saying that they have not been acquired by Microsoft, adding only “conversations are happening across the board.” More on this as it develops. Acquisition discussions are clearly occuring.

Take TellMe off the IPO list for this year – We have multiple sources saying that Microsoft has acquired the company. We’re trying to find the price now. More details to follow. See our recent coverage of the company here.

The company has raised a whopping $239 million in capital over four venture rounds, although the most recent round was back in 2001. The company is both profitable and cash flow positive – two years ago they were generating a reported $100 million plus in revenue.

Seeking Alpha has a long story outlining Yahoo CEO Terry Semel’s failings since his hiring in 2001, and basically calls for his head on a platter. The bottom line: Google has grown its shareholder value 21 times more efficiently than Yahoo during the time Semel has been at the company. Semel supporters point out the Yahoo did buy Overture, keeping them in the game, but others note that Semel had the opportunity to buy Google instead for $3 billion or so in 2002 (Yahoo also didn’t buy YouTube or MySpace when the opportunity came up). The article also mentions Semel’s total compensation over the last 5 years – $550 million.

Panama is off to a brisk and surprisingly strong start (more on this in an upcoming post). Forgetting Semel for a moment, it may be the single most important factor keeping Yahoo an independent company in the near term. It also might be the product that allows Semel to keep his job, or at least make a graceful exit later this year.

At around 8 AM PST this morning, Moscow-based search engine Quintura will relaunch its visual search engine with a new user interface (if it looks like the screen shot below, it’s launched).

The company, which is backed by Mangrove Capital Partners (Skype, AllPeers, Piczo, Nimbuzz) and OpenView Venture Partners, has developed technology that clusters related search terms to the initial query and presents those terms as a tag cloud. Users can refine their searches by clicking on any word in the cloud – words that are closer and bigger than other words are more correlated to the initial query than other terms. Mousing over any word in the cloud shows related terms to that as well.

The company wisely moved away from a downloadable search application last year to a pure online service. The new interface moves the tag cloud to the left and search results to the right – previously the search results were below the cloud and seemed somewhat crowded.The site also has decent image and video search, and child-safe search.

If I’m looking for a specific website, Google or Yahoo is perfect. Like Clusty, I find Quintura to be useful for research or browsing based search where I am trying to find more information on a given topic. After testing it, I find that I’ve been back a few times to use the service.

A new online dictionary and thesaurus launches today called WordSource. It’s main benefit over sites like Dictionary.com is the fact that the site is very cleanly designed and contains no advertisements. You can also look up a word by simply adding it to the URL (so word.sc/example will pull up the definition of “example”).

The site also has a number of social features, allowing users to upload photos that are relevant to the word, add tags, rate words, etc. Seems like a bit of overkill to bolt a social network onto an online dictionary, but there you go. If they hadn’t built it, someone else probably would have.

I tend to use Google to define words (just type your query as “define: example“), and many people use this Firefox plugin as well.

We reported last month that Seattle-based ImageKind, where artists can upload their work and sell custom framed prints to others, was in acquisition discussions with Amazon. ImageKind competes with Art.com’s new Sistino project – rumor had it that Art.com was also looking at the company late last year for a possible acquisition.

At the time of our post, ImageKind President Kevin Saliba said all discussions were around a financing, not an acquisition (and he only confirmed that he was talking to “large online retailers” and wouldn’t confirm the Amazon discussions specifically). From what we are hearing, the company has closed that round of financing, but Amazon was noticeably absent from the list of investors.

The round was a total of $2.6 million, and included investments from Holtzbrinck Ventures, Crosslink Capital, Erik Blachford (former CEO of Expedia), Tom Hughes, the Samwer Brothers, Nick Hanuaer, and Bill Trimarko.

There are also rumors that ImageKind has closed a deal with a large search portal, and that the partner required ImageKind to do a round of financing to prove itself financially viable over the near term.

Google has a hefty lead in getting small publishers to put Google-powered ads on their websites. There is no negotiated deal – advertisers agree to take whatever Google decides to give them. Revenue share terms are not disclosed to these small publishers. The publisher simply places a piece of JavaScript code in the code of their website, the ads appear, and a check comes in the mail. For some, this is easy — for most, they don’t know the first thing about getting code into other code; so they likely hire someone to do this for them, then just leave it alone.

So there’s a large base of small (and some not so small) websites out there that now use Google AdSense to make some money. Plus, Google has a stranglehold on the pay-per-click (PPC) text ad market (just look at their earnings), which means increased advertiser competition, which drives cost-per-click (CPC) up on ads, which provides publishers with maximum revenue potential — well, assuming the rev-share % Google provides is the same as Yahoo!, Microsoft, or AdBrite. But no one really knows how much Google provides (99% of) the publishers using Google AdSense, which is really kind of a shocker — we’re all just trusting that Google is compensating us well, when really they could be taking 70% of the ad revenue and only giving publishers 30%. Google doesn’t disclose the rev-share to publishers.

Yahoo! was slow to the contextual ad game, but they are here now. They finally rolled out Yahoo Publisher Network (YPN), but it’s still in beta — you can’t actually get an account immediately, but rather only be considered for the program. Publishers have been using Google AdSense — why would they switch? Plus, publishers don’t want to mess with their code — removing Google and replacing with Yahoo code.

One way Yahoo can compete is on price and transparency. Simply giving publishers a higher percentage of the total pie, and actually disclosing what that percentage is, would convince many publishers to switch. But not all – the fact is that Google’s AdSense code is embedded on many websites and the switching costs are enough that they just won’t change to Yahoo.

Enter MyBlogLog

However, many publishers are finding the value in MyBlogLog — a distributed social networking platform that allows readers of blogs to learn more about each other and communicate with each other. Publishers — mostly bloggers — have been adding this code to their websites. Once you can get a publisher to add code to their website for your widget, they typically aren’t going to take it down.

I’m sure Yahoo! has plans for taking advantage of having this MyBlogLog widget code on many websites, to somehow edge their YPN code on to these websites — or simply integrate YPN into the MyBlogLog widget that already exists, so that publishers wouldn’t have to touch a thing. Coincidentally, MyBlogLog (Yahoo) is also tracking information on Google AdSense — how many clicks Google AdSense ads are receiving (on webpages that have both MyBlogLog and AdSense installed), the ad unit size, and what webpage those clicks occurred. Yahoo doesn’t know the CPC for each of Google’s ads, but they do know the click-through rate (CTR) — and can specifically target high CTR publishers first, with their YPN offering.

But even with the MyBlogLog widget access, publishers are looking for more money at the end of the day — the YPN offering would have to practically guarantee much more money to the publisher, in order to spur adoption and convert AdSense customers. Considering Yahoo doesn’t have as many advertisers as Google does, I imagine that 9 times out of 10, Google is able to compensate publishers more per click (once again, depending on the rev-share percentage back to the publisher).

Editor’s Note: Post by Steve Poland, whose blog Techquila Shots brainstorms web start-up ideas.