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Looking for the Web's Next Star

I had the unusual opportunity to emcee Silicon Valley's first Technology Policy Summit last week in San Jose, an awesome collection of policymakers, investors, CEOs, nonprofit reps and academics. But one of the most fascinating panels included the co-founders of three of the web's most exciting start-ups. And I had the chance to interview them exclusively about the potential of their sites, and the prospects for a bigtime payday.

It's true that CNBC tends to focus only on publicly traded companies. To wit, investors may want to keep an eye on these three companies to see who, if anyone, snaps them up, giving that big company a key leg-up in some of the hottest growth opportunities online.

And venture capitalists are, flocking to the scene, which may be a sign that the trend is peaking. Nonetheless, VCs have poured a staggering $500 million into 79 internet startups in 2006, double the pace from a year earlier.

MySpace
MySpace

Why focus on these companies now? Remember that mySpacewent from nothing to a $600 million payday in under a year when

it was gobbled up by News Corp . YouTube did much the same thing in 18 months with a nearly $1.6 billion dollar buy-out by Google. And rumors are the up-and-coming Facebook has already turned down a $1 billion buy-out offer from Yahoo.

So now, as the social networking craze continues to rage (look no further than Cisco Systems and its curious stamp of approval of the trend by buying Tribe.com, which follows its recent acquisition of Five Across, a social networking design firm), three startups may be the next card-carrying members of the Web Winners' Club!

Digg
CNBC.com
Digg

They are digg.com (as in digging a hole) whose CEO Jay Adelson (the co-founder of Equinix which carries a $2.39 billion marketcap on Nasdaq) tells me, "Our front page of our newspaper looks different every time you see it." Digg, started by a former colleague of mine at TechTV Kevin Rose (but it's not like we ever hung out together -- which is really too bad, for me!) is a kind of hybrid site of social networking meets the news business with community members ranking, and then determining, which news stories the rest of the community gets to read.

"Right now we are about 15 million unique visitors a month which is a strong number for the internet," says Adelson. "As the user becomes more accepting, digg becomes an even more popular site for them."

There's LinkedIn.com from pioneer Reid Hoffman who made his initial fortune as an early

Linked In
Linked In

PayPal employee, and has since become one of Silicon Valley's most prolific angel investors (sinking his money into social networking sites including Facebook, Friendster, Digg, Flickr and so many others. He tells me he's got extremely high hopes for LinkedIn since, "We are the largest english speaking network by a very long margin." Kind of like the business community meets mySpace. And with 9 million registered users already, LinkedIn is quickly hitting the critical mass necessary that could make it exceedingly attractive to the likes of Google , Yahoo , even Salesforce.com and Microsoft . By the way, as a key investor in Facebook, he confided in me that he "totally supported" the company's decision not to sell out to Yahoo.

"If we get every professional using us as their way they manage their key relationships and solve key problems, there are tons of applications that we can build on it," says Hoffman. "Now the internet is much more penetrated into people's lives. So if you build services on the web, they actually pertain to lots more people. A lot more people have broadband penetration, Lots more people use e-mail and have access to it. That allows you to build applications and change people's lives."

Socializr.com comes from well known entrepreneur Jonathan Abrams who first brought us Friendster and is determined not to make the same mistakes he made with that startup. There was a social networking pioneer that couldn't handle the huge interest it generated, failed to scale up enough infrastructure, and then stalled. But don't count Friendster out yet. Both Abrams and Hoffman still remain very optimistic that its future may be brighter than most people think.

"When you have a site that people want to use and it is too slow and too buggy, and people can't get on, there's no question that alternatives are going to arise," says Abrams. "That is really the number one, number two and number three problem that Friendster had, that people can't get on the site."

Meantime, socializr.com continues to generate the buzz with Abrams telling me: "Social networking sites are more popular than ever." Socializr is a kind of one-stop shop of planning, scheduling, meeting, communicating and otherwise just keeping in touch and enjoys millions of regular users.

"Lets recognize that there is a social context in the real world and bring that online," says Abrams.

All three guys who survived -- even thrived -- during the first boom and bust -- say they're determined not to make the same mistakes they and so many of their colleagues made the first time around. This time, it's all about real growth, real profits and real trends that matter to their customers.

"These people are veterans of the early dot com era. They are not going to get burned again," says Adelson.

So keep an eye on digg, linkedin and socializr, either as the next big star that commands that big-time Silicon Valley payday, or ushers in a new era of dot-com IPOs.

Questions? Comments? TechCheck@cnbc.com

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