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Summary:

Earlier this week, I got a tip from one of my reliable sources that Riya, a San Mateo, Calif.-based startup, was looking to either sell or license its core technology and instead focus solely on Like.com, its visual shopping search business. The money raised from the […]

Earlier this week, I got a tip from one of my reliable sources that Riya, a San Mateo, Calif.-based startup, was looking to either sell or license its core technology and instead focus solely on Like.com, its visual shopping search business. The money raised from the sale could then be put towards new business efforts without having to raise fresh VC capital. The company has raised over $15 million thus far from the likes of Blue Run Ventures, Leapfrog Ventures and Bay Partners. It raised an undisclosed amount of debt in November 2007.

It seemed like a radical idea for a company that debuted back in May 2006 to much fanfare and, at one point, was close to being acquired by Google. That deal fell through, however, and Google settled for Neven Vision.

But Riya’s story line then took a notable turn. In November 2006, Riya launched Like.com, a visual search engine that focused on goods such as fashion accessories, clothing and shoes.

I followed up on my tip, and spoke with CEO & founder Munjal Shah earlier today. He confirmed that indeed, they are shopping their technology around, but he didn’t offer any further details on the sale or who might be interested. My source says that there are some parties sniffing around. When asked if Like.com would license the technology from the buyer of the “tech”, Shah said. Like.com is only using bits of the Riya technology, and the company won’t sell those bits. He said that many of the issues will be resolved, when and if a sale does happen.

During the course of our conversation Shah also said that the company will officially change its name to Like.com and focus entirely on its visual shopping service. “We have fully transformed to Like.com,” he said. When I asked Shah about the sale of Riya’s technology, he pointed out that Riya was a different company and didn’t really have a need for what it had developed. “We spent money on it, so why not try and recoup some of that money,” he said.

Matt Marshall reported on the state of Riya back in February, pointing out good growth. In our chat, Shah claimed his company will breakeven sometime in the second half of 2008. Looking beyond Riya, I wonder if licensing or selling your IP following a shift in your business model is really a good idea. And if it is, do you guys think other startups should follow Riya’s lead? [Update: I had incorrectly indicated that they were already breaking even. That is not the case, and the company will be breaking even in the second half of 2008.]

By Om Malik

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  1. The idea of selling their technology is a bit flawed.

    1. They’ll likely want to keep the personnel that developed Riya, leaving the new owner without the best people to improve the technology – those who created it originally.

    2. They invested a lot of money and failed to succeed. (They changed strategy because recognizing faces was more difficult than they thought!)

    Whoever buys their technology, even if it’s cheap, will end up having to invest a whole lot of additional money but has to hire the right people for that, first.

    Only one of the big corporations could do that, realistically: Yahoo, Microsoft or Google
    Google already owns Neven Vision. This leaves Yahoo and Microsoft.

    I have a possible model for using Riya, though. Microsoft could buy the company and open up the technology. They could give away the technology (via an API) for free and restricted (maximum 100 calls free per day) to developers and sell “recognition-appliances” to developers and companies that need more.

    Facebook could be enhanced a lot through that, and Microsoft could buy a lot of fans in the technology-crowd!

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  2. i read this story as munjal desperately trying to get some hits to like.com. it is nothing more then his game of trying to create his usual hype. WTF is like.com? why would somebody fund it? and why would somebody use it?

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  3. Munjal spends cash like Paris Hilton. I agree with bbub – he’s hyping Like and trying to “raise money” by selling the Riya turd because VCs won’t invest any more in Like.

    12-18 months, Like will be on the ash heap. Why do people keep giving this guy money?

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  4. You can get the technology from a Visual Search Company called PIXSTA (www.pixsta.com), no need to buy Riya. Having successfully build a publisher network, they offer Product Level Advertisement via the Pixsta AdImage application. Pixsta looks much more like true visual search, versus just another e-commerce like.com page. Pixsta offers true algorithmic results. Inputs are images, outputs are images. Very fast navigation with millions of images. I have always liked the innovative interface the guys have developed.

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  5. Take a look at this job posting from Like.com:
    http://sfbay.craigslist.org/pen/bus/650846429.html

    My favorite:
    If someone breaks the process, you go and find them and kick their ass to make sure that it does not happen again.

    This manager is a real winner. Nobody with any self-respect would work there.

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  6. This guy has no idea how to operate a successful business. Munjahl is egotistical, and while the site is driving some traffic, I doubt it will have success given his approach. Successful cse’s thrive not only on their underlying technology and algorithms, but on their ability to listen to their clients and customers. Like.com management sorely lacks this.

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