“I think today, we’re still in a world where we have brands telling us what we neeed to know about a brand’s individual products,” she said at the Glimpse social discovery conference in San Francisco on Wednesday. “But that’s not always the truth about the product, nor is it what’s interesting to you about that product. So the future will be reversed, where it’s just about the information that’s relevent to you.”

Wanelo is a small but immensely popular social shopping site where users post, like, collect and re-post images of items that are all for sale — the entire value proposition of the site is that you can click through to purchase any of the items. While the site only had 8 million users in May, Varshavskaya said 70 percent of them are coming back to the site every month, and they’re spending an average of 50 minutes a day on Wanelo. And because all of the items posted to Wanelo are selected by its users to be liked and purchased by others, it creates an interesting discovery engine for goods.

As I’ve written before, it’s actually quite a challenge to define what social shopping is. Does it mean tweeting out your purchase after you buy something? Does it mean adding Facebook Connect on a brand’s site to see which of your friends like it too? Does it mean browsing items on Pinterest posted by your friends, or reading reviews from strangers on a site? Or texting photos of a dress to your friends when you’re in a brick and mortar store?

The definition changes depending who you talk to and what kind of shopping experience you’re talking about. (And can be hard for big brands like Zappos to harness, when often people just want fast shipping and a wealth of products.)

“No one really wants to follow other Zappos users,” said Will Young, director of Zappos Labs.

AngelList founder Naval Ravikant, who is an investor in Wanelo and also spoke at Glimpse, pointed out that social validation around products comes in two broad categories: the power of the crowd to surface the best products (think Amazon reviews or topics upvoted on Reddit), versus the power of your friends to influence your tastes and opinions (think Facebook or Twitter friends).

“If I’m buying a stereo or digital camera, I don’t really care what my friends thought. What the qualitified group thinks is good enough,” he said. “But if I’m buying a piece of clothing, sometihng with taste, maybe I do care. The term social almost changes in meaning depending on the situation.”

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Transcriptic, which was founded earlier this year, has built out a biological testing lab using robotic equipment that researchers use to prepare samples. What’s cool about this is Max Hodak, the company’s founder, is trying to take expensive and proprietary equipment, hack it so people can program the machines via the web and then offer the results as a service to academia.

Building a bio-cloud

In biology labs around the country graduate students spend their days filling test tubes and testing samples. It’s boring work and something that well-funded companies in the pharmaceutical industry automate or outsource. But the equipment used in automating those processes are hundreds of thousands of dollars and generally out of range for biology departments. So are the services of outsourcers that sometimes work on behalf of the industry.

So Hodak created what he calls a cloud for biology, but what is really more of a collaborative consumption model aided by open source software and robotics, than an on-demand cloud. In a Menlo Park, Calif. lab Transcriptics owns several large pieces of used testing equipment such as centrifuges, incubators and high-powered microscopes that it purchased for roughly 10 cents on the dollar whose software it has reverse engineered. The company then wrote new software that controls the machines and can run common biological operations such as closing plasmids with other options coming later.

Customers pay for the process and the materials they use on a pay-as-you-go basis, much like you only pay for an Amazon EC2 instance when you are running it. Hodak’s goal is to continue buying gear and building better software for job scheduling to keep the equipment running as often as possible. Of course, that type of scheduling software is a tough problem, since there are so many variables and an unpredictable number of jobs coming in. But for now, he can’t really over-provision at the costs that Amazon has.

For the researchers who use the service, they spend less time doing hundreds of tests by hand, because they can instead pay Transcriptic to run a synchronous process. And because it’s robotic the idea is that it is more repeatable and less prone to human error. As for the potential customers, Hodak estimates that it gets grad students away from grunt work and into real research. They control the robotics and design their experiments over the Internet.

“We think of ourselves as a very long pipette over the internet,” Hodak told me in an interview earlier this year.

Man, that’s a lot of investors!

As for the relatively rare step of bringing in more than 60 investors for a seed round, Hodak explained that he probably wouldn’t do it for the next round, but it made sense for the current one. In general having a huge number of seed investors can leave an entrepreneur with too many people to appease when negotiating future rounds. Additionally with so many investors it can be hard for someone to take a leadership role in shepherding the company to new opportunities or providing good advice.

Hodak however stressed those investors don’t have the full rights of a larger investor, so can’t cause troubles in later funding rounds. He also said via an email exchange last night that he hasn’t seen a lack of leadership with so many participants. “The major investors (Naval, Google, Founders Fund / FF Angel, etc) are being very helpful already, and the minor investors are dozens of cheerleaders for the company now,” he wrote.

Transcriptic is a really interesting company trying to apply lessons learned from cloud providers and taking advantage of better broadband and cheaper automation to deliver a unique service. Add to that the bold decision to bring on so many angels and I can’t wait to see how this one turns out.

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However when it comes to hiring employees at the early stages of a company, no one really has a clue about how they should be compensated — cash, equity or what combination of both? Why is that? Because a lot of the salary and equity-related data is never really shared by startups, argues Naval Ravikant, co-founder of startup funding market place, AngelList.
The market, he points out is very opaque and as a result you don’t have much consistency in terms of who gets paid how much and more importantly how much equity an early stage employee gets.

AngelList wants to offer up aggregate data to its startups and create more transparency. Angel List offers job listings for its member companies (most of them at early or very early stages of their development cycle) and asks them to list the salary and equity they are going to offer for specific jobs.

Ravikant looked at listings across 60 startups and plotted the salary and equity data on a chart and as you can see it is all over the map. From the data, I saw companies that are offering hefty packages — cash and equity — and others that are being stingy. The compensation for the much in demand iOS developers is worse than the EKG chart of a cardiac patient.

Apart from the opaque market, Ravikant believes that Google and Facebook are paying top dollar for engineering talent and as a result, salaries are all over the map. Startups, today, have to compete not only on salary but also on equity. The problem is only going to get worse as 2012 progresses. As I wrote earlier, the Facebook IPO could act like a spark for further startup creation activity which in turn would overheat the job market.

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Multiple presenting startups showed off cool ways to visualize and interpret data, and only a couple were focused on YC’s cash crop to date, productivity apps. More than a third of the presentations were designated off the record (grrr…), in most cases because the presenting companies haven’t launched products yet. At least eight teams touted their credentials as MIT graduates.

The most interesting trend I noticed was the funding status of many presenting companies. Ten weeks into the program, many YC startups already have money in the bank. Of the startups that have already raised funding, many have had success hitting up the same core clique of angel investors. I conducted an informal survey of investors at the event to ask how many of the summer Y Combinator class they’d already funded. I would’ve guessed archangel Ron Conway with his SV Angel outfit would be leading the pack, but so far that’s not the case.

Keith Rabois, the new general manager of Square after his company Slide was sold to Google, is actually the fastest on the draw, with five investments in summer 2010 Y Combinator startups as of Demo Day. Five out of 36 companies is a stunning proportion. Rabois’ picks include private and ad hoc social networking site The Fridge. (See our recent video interview with Rabois embedded below.) Update: Rabois tells us that as of Monday (less than a week after Demo Day), he has invested in six startups from the class.

Another update: Paul Buchheit of Gmail and FriendFeed fame says he also had five investments as of Demo Day, and is now up to six as of Monday.

Naval Ravikant is close behind with four. (We also recently captured him on camera.)

Conway’s SV Angel has three also had four at the time of Demo Day, including Hipmunk, and partner David Lee said he’s also interested in one of the off-the-record startups. Update: Lee says that as of Monday, SV Angel’s count is up also to six.

Dave McClure of 500 Startups, who’s been on a deal-making rampage lately, has three, including Ginzametrics and Rapportive. (GigaOM video here.)

First Round Capital has two.

Mike Maples and Ann Miura-Ko of Floodgate, who recently raised $73.5 million to invest in young startups, said they have yet to fund any summer 2010 YC companies. Josh Felser of Freestyle Capital also has zero under his belt.

To be fair, I didn’t talk to every angel investor (and I only attended the first of three Demo Day sessions). Plus, there may well have been additional deals completed over the weekend. (Update: Per Lee’s, Rabois’ and Buchheit’s additional information today, that definitely was the case!)

Y Combinator head honcho Paul Graham was careful to announce that all participants in the summer class are currently raising money. That includes companies that have already announced completed rounds, like Rapportive, whose CEO Rahul Vohra said he would still take more money on the right terms. Because Y Combinator hosts Demo Day as a sort of coming-out party to introduce its startups to angels and early-stage investors, that’s an important distinction, even if it’s only semantic. Graham doesn’t want the hundreds of attending investors to feel like they’re out of the game.

In related news, after Y Combinator announced a partnership with Facebook last week for social startups in its upcoming classes, the always-provocative angel investor Jason Calacanis took the opportunity to warn entrepreneurs to stay far away. “If you tell Facebook about your startup before you reach critical mass, you are an idiot,” he said. “It’s a trap.” Calacanis was apparently referring to recent Facebook acquisitions of small companies that were effectively “acq-hires” of their young founders, with limited returns to investors.

Meanwhile, on the issue of the conflicted relationship between angels and venture capitalists, after his portfolio company Etsy announced a fifth round of funding, consumer Internet VC Fred Wilson noted on his blog that the transaction gave angel backers in the company an opportunity to sell their shares for cash, with VCs taking over more of the now-large company’s equity. He said he hoped that model of “angel liquidity” would help smooth out the (increasingly longer) path of a startup through angel to VC to sale or IPO.

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If you have aspirations to start your own business, watch the video as Ravikant discusses:

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The most common question we hear from entrepreneurs is, “Can you introduce me to investors?” Yes we can. We’re going to recommend startups on Venture Hacks. Investors are invited to subscribe to our recommendations. And everyone is welcome to recommend startups here. Request an invite if you want to help test the Recommended feature before we open it up—it’s also open for browsing in the meantime.

“It is really straightforward, simple and stupid. It’s like RSS for deal flow,” Nivi told us this morning. Think Twitter meets LinkedIn.

Here’s how it works… The VH community is made up of smart people who are themselves typically serial founders or connectors like Nivi and Naval (they cofounded Epinions). Some are investors. You get the people you know in the community to recommend your company, and then anyone who subscribes to your recommenders’ feed will hear about you.

“All startup deal flow is done by email and phone now — a push model. This is like a pull model,” Nivi explained. “Investors can pull deal flow from whom they like. I don’t know if investors are interested in the ideas I want to share with them, but now I don’t have to call and bug them. They get my recommendation(s) feed and decide for themselves.”

“Simple and stupid” maybe, but this will be a great accelerator for both sides of the startup market.

* Investors are always competing for good deal flow from great middlemen.
* Founders no longer need to spend weeks or days lining up reference calls for potential investors: just hand over the url of your Venture Hacks profile, and voila!.

Nivi thinks this will democratize the middleman layer, “which is really ad hoc now. There are a few people who have access to good startups and good investors, but [we] believe that the judgement of finding good startups is everywhere. Our job is to find those good [recommenders] and bring them to the top.”

You can still read Venture Hacks for Nivi and Naval’s funding advice, under Hacks. For more, read Nivi’s early Found|READ series on Vesting Hacks:
Vesting Hacks: Part I


Vesting Hacks: Part II
Vesting Hacks: Part 3
Vesting Hacks: Part 4

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