Web's New Field of Dreams Emerges in D.C.

By Zachary A. Goldfarb
Washington Post Staff Writer
Monday, November 5, 2007

The wave of social networking and interactive content companies that has washed over Silicon Valley, promising to upend Internet business models, has reached the Washington area.

A modest community of about a dozen such companies, with names like Mixx, Searchles and Qloud, has emerged in the region in recent months. These start-ups hope to build on the success of YouTube, MySpace, Facebook and other interactive media sites by creating applications that piggyback on -- or replicate -- the goliaths.

It's all part of a frenzy for Web 2.0, a seldom-defined term for Internet products that allow users to generate content and interact with each other on the Internet.

The local efforts face the same challenge as those on the West Coast: how to turn users into dollars. But for now, many of these start-ups claim not to care, putting faith in the idea that if they become popular enough, advertising dollars will follow.

"If you have a large enough audience, you can monetize it," said Chris McGill, founder of the McLean-based social news site Mixx.

The mentality is risky.

"Over the last year or two there's been a bubble. There's been a tremendous amount of investment in Web 2.0," said Phil Bronner, a general partner at Novak Biddle Venture Partners in Bethesda. "As in any new market which receives too much funding, there's going to be a lot of carnage. A lot of companies are not going to be successful."

Novak Biddle has invested in two Web 2.0 companies, each only a few years old, that are now considered the region's pioneers: Silver Spring-based Freewebs and McLean-based Clearspring. Both are makers of mini applications such as slide shows and simple games that sit on Web sites. Each has raised millions in venture capital and their widgets have reached millions of users.

Other newcomers are building their own versions of YouTube or Yahoo, offering new twists on sharing videos, photos and news. Some are hoping to fashion applications for MySpace or Facebook that allow users to share book reviews, music tastes or other interests.

Several factors have fueled the growth of the area's Web 2.0 community. Layoffs at companies such as AOL have unleashed a flood of talent into the area, many of whom have gone on to found or join Internet companies. The sector also has attracted increased attention from venture capitalists and prominent investors such as former AOL chief Steve Case.

Perhaps most important, the emergence of a few successful Web 2.0 companies has spurred others to start up. "You can have lunch with people. You can have events with people, and people can get together and share stuff they've learned in the industry," said Freewebs co-founder Haroon Mokhtarzada.

Qloud, a music sharing company founded by former AOL employees, lives in Freewebs' office and has received money from Case. The company produces a social network plug-in, currently on Facebook, that allows people to upload a list of songs to their profile page. Visitors can browse the list and play the songs on demand, fetched for free by Qloud software.

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