Even as some are questioning whether free Internet services can survive and dot-coms are dying on the vine for lack of funding, a local leader in free online storage just secured a $45 million “C” round of venture capital.
Xdrive is a Santa Monica-based company, founded last year, offering individuals and businesses a virtual hard drive for storing files online. These files are searchable and organized just like they are on a personal computer’s hard drive.
“We don’t need to raise anymore capital. We’re set as a viable, standalone business,” said Keith Pinter, executive vice president and general manager of business services for Xdrive.
Part of the funding will go to marketing to help Xdrive maintain its growing base of individual users of the site’s free storage service, which is primarily supported by advertising. The company counted 100,000 members in November, and now boasts an amazing 2.5 million registered users, Pinter said.
Xdrive will allocate a significant chunk of the funding to a fairly new endeavor that adds an additional revenue stream to the business model. Xdrive Enterprise is a business-to-business effort targeting large corporations and medium-sized businesses, which pay for additional features.
With Xdrive Enterprise, companies pay $14.95 a month per user for storage with tighter security than the free service, account credit for times when the service goes down or is unavailable, network administration, support, and storage system management.
While there are other online storage companies in the market, Xdrive has made a name for itself with its rapid growth in users. It has also managed to attract some very prominent investors.
Wit SoundView Ventures, the venture capital unit of the Wit Capital Group Inc., led the recent round of funding. Other investors included J. & W. Seligman & Co., eCompanies Venture Group L.P., JUMP Investors and Goldman Sachs Group Inc. In addition to venture firms, two companies with an interest in the storage market, EMC Corp. and Veritas Software Corp., joined in the C round, as did America Online Inc.
Digital Coast Study
More than 500 local new-media and tech companies have participated in a business survey to assess local trends and needs that was spearheaded by the Digital Coast Roundtable. But it may be awhile before the final tallies are available.
The Roundtable, a group founded by the mayor to help unite L.A.’s widespread tech communities, started the 28-question survey at Spring Internet World in early April.
“We’re still in the midst of doing the survey,” said Conchetta Fabares, executive director of the roundtable. “And we figure it’ll take a couple months to analyze.”
The roundtable hopes to get at least 1,000 new-media and tech executives to participate in the survey, available online through the “Study” section on the www.digitalcoast.org Web site. Fabares said that number will likely be reached by the end of June. PricewaterhouseCoopers will then analyze the data, a process that can take a few weeks.
The survey’s questions, some of which contain numerous parts, range from a simple numbers game like projecting the number of employees by year-end 2000 to more qualitative measures, like asking leaders to rank the importance of certain business criteria. The study will reveal how important local tax policies, proximity to other industry participants, and weather (the ultimate Southern California hook) are to new-media businesspeople.
Ouch!
Entertainment Boulevard, which runs the Vidnet.com streaming-video Web site, took a major hit in the first quarter, according to the company’s most recent quarterly report. Entertainment Boulevard’s president attributed the downturn to one-time events.
Revenues for the three months ended March 31 stood at $165,000, while net losses for the quarter were a whopping $41.2 million ($3.64 a share). The losses were primarily attributed to an accounting decision related to stock options and writeoffs.
“That was due to a conversion of financing, that was not an actual cash loss,” said Stephen Brown, president of Entertainment Boulevard. “Something between $5 (million) and $7 million was our cash loss.”
As for the company’s revenues, Brown admitted, “Our earnings were nowhere near what we thought.” The company expected to receive early this year certain technological equipment needed to encode the streaming-video content. Due to a backlog of orders of this equipment, the company was unable to get its encoding division up and running until this month.
Advertising, e-commerce and encoding will comprise future revenue streams. The future will likely hinge on the company’s partnerships, including two recent deals in which Vidnet.com will provide streaming video and music content to Lycos TV and British Telecom. Vidnet also scored a marketing coup with its sponsorship of the most recent KIIS-FM 102.7 Wango Tango concert, a several-hour festival of performances.
“Traffic increased 20 percent over the past week because of the exposure,” Brown said.
Staff Reporter Laura Dunphy can be reached at [email protected].
Site of the Week
www.creativeking.com
You’re not funny? Pay someone to be funny for you. Hey, it’s L.A.
Studio City-based Creativeking.com is a creative services firm offering everything from advertising/copywriting, to joke writing, to song parodies, to developing product names, to punching up that screenplay.
Graphics are virtually nonexistent on the company’s site, www.Creativeking.com, but it otherwise offers a perfect balance of professionalism and wit.
Click on “frequently asked questions” and you get, “Why is the sky blue?” “Where do babies come from?” and “Donde esta la biblioteca?” Almost as an afterthought, it also includes frequently asked questions about the company itself.
Creativeking.com even offers sample slogans for its parent company, Ideatown, such as “Ideatown: Sliced bread? That was ours,” “Big brains at bargain prices” and even the silly “You can’t spell ‘ideatown’ without ‘neato.'”
As for whether the company delivers what it promises, users can listen to sample promo jingles and admire a client roster that includes KROQ-FM 106.7, NBC Television, Nick-at-Nite, and even President Bill Clinton (the company has written jokes for some of the president’s annual dinners, not his testimonies).
