April 25, 2006 9:00 PM PDT

Microsoft licenses new way to make friends

A San Francisco start-up is making friends with Microsoft to create the next great thing in social networking.

Wallop is a 12-person start-up that hopes to take on sites like Friendster and MySpace.com by tapping the technology developed by Microsoft's research unit. Wallop has also tapped noted Silicon Valley prototype-shop Frog Design to create the user interface.

The company says the concept developed in Redmond, Wash., will prove far more useful than the current model in which people go around trying to convince people to be their friends.

"We all did that in elementary school," says Wallop CEO Karl Jacob, a veteran entrepreneur and former Microsoft employee. "But our relationships are a lot more dynamic and complex in the real world."

Much of the Wallop approach will center on trying to help people find ways of expressing themselves online that more closely match the way they interact in the real world. Photos, videos and other user-generated content are a part of the company's approach, Jacob said.

"Consumers are remaking the Internet in their own image," said Jacob, who served as CEO of Keen, among other start-up ventures.

However, Jacob was cagey about just what the company has in mind. The company plans to launch its product later this year.

The Wallop deal is also the latest effort by Microsoft to generate more return from its research labs. As part of the transaction, Microsoft is gaining a minority stake in Wallop, as well as an observer seat on the company's board.

Neither Microsoft nor Wallop would discuss further terms of the deal, including whether the software maker received any additional royalties or compensation.

A year ago, Microsoft licensed out a traffic-monitoring technology to Inrix, a Seattle-based start-up. Last May, it announced a formal program to license technology to start-ups and mentioned 20 technologies that were available for licensing, including Wallop.

"The stars aligned," said Dan'l Lewin, the Microsoft vice president who heads Microsoft's relationship with Silicon Valley entrepreneurs. "Those things--we hope--will happen more in the future."

Jacob said he heard about the technology last spring from, among others, Inrix CEO Bryan Mistele, another former Microsoft employee. A breakfast with Eric Rudder, then Microsoft's server-and-tools boss, convinced Jacob to try to base a new company around the Microsoft technology.

"Eric pushed me over the hump," Jacob said.

After seeing the technology late last summer, Jacob started raising money for the venture in November.

Wallop has landed Series A funding from venture firm Bay Partners, though Jacob declined to say how much money the company has raised. He also wouldn't say whether any of the Microsoft researchers that started the Wallop project are among the company's dozen employees.

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Microsoft IP Ventures licensed Wallop - there are lots more
As often happens with research projects, Microsoft decided not to commercialize the Wallop project and instead offered to license the technology. Microsoft has a new group, Microsoft IP Ventures, established to license LOTS of technology developed by the research labs that for one reason or another will not be commercialized. I encourage you to take a look at the long and growing list of technologies available for license from Microsoft Research.

I wrote a blog on this today with some additional perspective and links to IP Ventures and the list of available technologies.
<a class="jive-link-external" href="http://dondodge.typepad.com/the_next_big_thing/2006/04/wallop_microsof.html" target="_newWindow">http://dondodge.typepad.com/the_next_big_thing/2006/04/wallop_microsof.html</a>
Posted by Don_Dodge (64 comments )
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