By Yi-Wyn Yen

These days, getting a large handout from venture capitalists is rare. It’s even tougher when your startup needs a lot of cash to compete with Google.

Kosmix, however, has defied the odds. In late October, the plucky startup raised $20 million, led by Fortune’s parent company Time Warner (TWX), by assuring investors that Google is not the only way to search on the Web. Kosmix says it takes a new approach to searching by categorizing everything by broad topics for those times when you don’t know exactly what you’re looking for.

“This reflects the fact that Kosmix has a unique technology that’s working well,” said Jonathan Miller, the former chief executive of AOL who is on Kosmix’s board. “No question it’s a difficult period to raise significant amounts of money in a late-stage round.”

A powerhouse of investors are banking on a future where search will evolve beyond typing in specific keyword terms on Google. Former Motorola CEO Ed Zander, who launched the popular Razr mobile phone, recently joined as a private investor and advisor to the company. The Mountain View-based startup, which has raised a total of $55 million in three years, is also backed by Amazon (AMZN) cofounder Jeff Bezos and Legg Mason fund manager Bill Miller.

Miller recently made noise for reportedly raising money from private investors to buy Yahoo (YHOO). Miller, a one-time Yahoo board nominee, refused to talk about Yahoo. He discussed the need for companies like Kosmix to take search to a new level in a way that Google (GOOG) does not. As CEO at AOL, Miller had tried to acquire Kosmix, cofounded by veteran entrepreneurs Venky Harinarayan and Anand Rajaraman. “How do you create breadth and depth in content pages and make it a satisfying user experience is a big and hard problem,” Miller said. “Kosmix has firmly established the lead in how this is going to happen.”

Take the phrase Mount Everest as a topic. Without more search keywords, Google broadly targets what you may be looking for. Google’s first three links include an empty graphics box from Google Maps, a Wikipedia entry, and a well-regarded news site for mountain climbers. The same topic on Kosmix returns a rich summary from Web 2.0 sources. Kosmix includes a short paragraph from Wikipedia along with photos from Flickr, videos from YouTube and video search engine Truveo, forum posts from trekkers seeking climbing partners to Everest, and top mountaineers who’ve climbed Everest.

Rajaraman insists his startup is not another search engine trying to take on the search giant. Google’s competitors – from tiny startup Cuil to software maven Microsoft (MSFT) – are struggling to make a dent in Google’s growing dominance in search despite spending billions. The approach, Rajaraman says, is to deliver relevant results with blogs, videos, pictures and news on a single page.

“We consider ourselves an explore engine. When you don’t know what’s interesting or know enough about a topic, you come to us. We’ve built algorithms based on topics that lead to a very different end point,” he said. “Google’s algorithms are about finding the best Web pages out there. It’s really, really hard to mess with that.”

By Yi-Wyn Yen

There’s a ton of videos to watch on the Web. YouTube uploads 13 hours of video each minute. But finding what to watch isn’t easy.

Video search is one of the biggest challenges on the Internet today. A number of online video companies are trying to figure out how to find and discover content for viewers, but a debate rages on the best method to deliver results.

VideoSurf is the latest startup that claims it has solved the video search problem. Major video search players like Blinkx, Truveo, and Everyzing rely on tagging video clips with descriptions and analyzing the audio portion of clips to make videos searchable through text. Google (GOOG) and Microsoft’s Live Search (MSFT) are also making headway with speech-to-text technology to index videos. VideoSurf cofounder Lior Delgo, a former Yahoo search executive, says his company has made a video search breakthrough by scanning and analyzing the images within videos as a way to organize the content.

Analyzing a video is an incredibly complex problem. VideoSurf does the heavy lifting for web viewers with algorithms that identify people and backgrounds in videos and then converts them into thumbnail frames that summarize sections of the video.

Visual computer scanning means search results will be more relevant, says Delgo. “Before this, there was no way to navigate videos visually. You had to rely on tagging content surrounding the video. But video is not text,” he says. “If you can visually see what a video is about, you can make better decisions about whether you want to watch it or not.”

For example, say you want to watch clips that feature Republican vice president nominee Sarah Palin on The Daily Show. VideoSurf will pull up video results and display frames in which Palin is shown. Viewers can then click on the frames and jump to a particular scene on the video. VideoSurf indexes video content from a number of top news and entertainment sites, including Comedy Central (VIA), Hulu, YouTube, and CNN (owned by Fortune’s parent company, Time Warner.) VideoSurf launched its new product last week and currently requires viewers to sign up to use the service.

VideoSurf is not the only company that uses visual scanning technology to index videos. Digitalsmiths has been cataloging digital videos for movie and TV studios for the past three years and is now providing its technology for web-based videos.

Last month Warner Bros. (which also is by Time Warner) launched TheWB.com and runs Digitalsmiths’s search technology so that viewers can find every scene, say,  where Joey Tribbiani says “How you doin?” on Friends. TMZ.com (another Time Warner property), a popular celebrity blog, also powers Digitalsmiths to archive its videos.

The top search engines are pushing for more videos to be included in text-based searches. For example, when a search for Jamaican Olympic gold medalist Usain Bolt is entered, at least one video pops up in the first 10 results for Google, Yahoo (YHOO) and Microsoft’s Live Search.

Search engines have the computing power to process the massive amounts of video data, but don’t have the technology, which is why Gartner digital media analyst Allen Weiner predicts VideoSurf and Digitalsmiths will be acquired soon by the one of the major engines. “The search engines have been waiting for the next generation of technology to come alone. You can only do so much by metadata and tags. This is going fuel a lot of interest in acquisitions,” Weiner says.

Both VideoSurf and Digitalsmiths provide similar technology for video search, but their business approach is different. Digitalsmiths partners with media publishers to allow them to customize its video search products. VideoSurf, like YouTube, is essentially a destination site for consumers.  Digitalsmiths CEO Ben Weinberger says, “Nobody should think they’re so powerful that you’ll be the place that everyone wants to come watch videos.”

Online video analysts say both VideoSurf and Digitalsmiths are making video search better, but there’s still a long way to go. “The reality is, when you compare performing a typical [text-based] web search on Google to searching for videos on any of the engines, it’s nowhere near as good,” says Will Richmond, a broadband video analyst for VideoNuze. “You’ve got speech-to-text, facial scanning, and tagging. There’s a real art to figure out which of these will yield the best result. At the end of the day, you can really only measure the approach by the quality of the results.”

By Michal Lev-Ram

While most phonemakers are trying to cram more and more features into one must-have device, newcomer Modu is taking a different approach. The Israeli company is launching a tiny, lightweight cell phone (also called Modu, see left) which will fit inside multiple gadgets — including GPS devices, cameras, and even digital picture frames.

Here’s how it works: Modu, a domino-like GSM cell phone 7.8 millimeters thick, has basic calling functionality, but pop it into one of its “jackets” — a range of consumer electronics devices with a built-in slot for the phone — and it can take on multiple forms. For example, users will be able to put their Modu into a smartphone during the day to send and receive e-mail while on the go, but will then be able slide the small gadget into a more stylish, slim phone for after-work use, keeping the same phone number and single calling plan. Eventually, they’ll even be able to put Modu into navigation devices to access text messages and have calling capabilities straight from their handheld GPS unit. Or you might plug your Modu into a digital photo frame to download pictures from their device and use the frame as a speakerphone.

“We’re not into making one device that works for everyone,” says Dov Moran, the company’s founder. Most other companies have been trying to do just that — fit diverse features on one device. Nokia (NOK) makes a 5-megapixel cameraphone, while Garmin (GRMN) just announced it would launch a GPS device that also functions as a phone. But Moran argues that most of these devices don’t do all things well. And if they do, users usually have to pay a hefty price for them. Nokia’s N95, for example, costs upwards of $800.

Modu says its phone “jackets” will sell in the $40-$50 range. Right now the company has a few of its own prototypes out, but its success will at least partially rely on which consumer electronics makers it gets to sign up to make additional Modu-encasing devices. So far it’s managed to get Magellan and Blaupunkt as launch partners. It’s also signed on a few mobile operators, including Telecom Italia and Israel’s Cellcom, to distribute the phones. Modu phone itself is made by iPhone manufacturer Foxconn, and Moran says its recommended retail price is $300. Of course, if mobile operators decide to sell the phone on contract (which they most likely will), it will be cheaper or possibly even free. The company says Modu will be available in the U.S. in 2009.

Moran, who started Msystems — an Israeli company which was sold to memory card maker SanDisk (SNDK) for $1.6 billion in 2006 — has high hopes for Modu. The company has raised $20 million and Moran says he plans to raise another $100 million this year.

By Josh Quittner 

Want to learn how to make your own sushi? Or how to make an origami bird? Or how to dance without embarrassing yourself? Starting today, Howcast, a New York City-based startup founded by three ex-Googlers, will show you.

The site aims to be a kind of Wikipedia of user-generated videos for people who want to learn how to do just about anything. “We’ll show you how to chop an onion, how to swaddle a baby, how to flirt with a girl,” CEO Jason Liebman told me yesterday. “It’s kind of endless.”

That’s the goal anyway. The trick of this venture will be getting users to step up and make the kind of high-quality videos that will attract an audience. That’s a high bar. YouTube (GOOG) succeeded in large part because its founders made the act of uploading videos about as simple as possible.

But garbage in, garbage out. YouTube is having a hard time monetizing its vast library, partly because the content is so bottom-of-the-barrel. If Howcast succeeds, we’re talking about a $1 billion-plus venture here. Why? Because instructional videos, especially those made with decent production values, will fetch much higher rates from advertisers than the junk that predominate on YouTube.

To that end, Howcast offers a video director’s kit, complete with the elements — opening and closing credits, overlays, and so on — that any aspiring Quentin Tarantino will need to create a top-notch how-to video. Daniel Blackman, another co-founder (and an old pal I first met back in the late 1990s, when he was managing Barnes & Nobles’s online store) told me that the startup is working with film students — and will pay them to produce content. “You apply to our program and if you’re accepted, we’ll pay $50 a pop for videos,” he said. Plus, students in the program stand to get a revenue 50% share on pageviews above 40,000 views.

For now, Howcast has been seeded with a few thousand videos, mainly produced by Howcast and its partners, Blackman said.

Howcast’s video player is worth noting: Very cool. When you watch a video in full screen, a series of written steps appears in the right margin as hypertext. Click on, say, Step Five of How To Fake Being Sick, and you can go right to the disquisition on How to Make Fake Vomit. Pretty sweet. Likewise, you can easily zoom in on anything to study it closer.

Aside from videos, the site intends to amass user-generated, how-to wikis. Indeed, the path to creating a specific video starts with a how-to wiki, which becomes a step by step guide that a director can later use as a script.

The company has a list of partners who will be distributing its videos, including Verizon Wireless (VZ) and a Howcast channel on YouTube. Revenue now comes from sponsorships from the likes of JetBlue (JBLU), and Starcom USA. Liebman also told me that Tudor Investment Corp. kicked in $8 million in first-round funding to build out the staff and content library.

By Michael V. Copeland

PALM DESERT, Calif. — Video conferencing, along with 3D monitors and flying cars, is one of those things we’ve been promised for years, but have yet to get our mass-market hands on. At the high-end, Polycom (PLCM), Cisco (CSCO) and other specialty manufacturers offer dedicated video conferencing gear that looks great, but is monstrously expensive, often costing tens of thousands of dollars, if not hundreds of thousands, once the dedicated networking and data equipment is bought and installed. At the low-end are free or mostly free services, like Apple’s (AAPL) iChat, Skype (EBAY) Video, and various flavors of video chat riding on top of instant messaging. The problem with these is not the price, it’s the quality. The video is jerky, the audio doesn’t synch, and sessions either don’t connect at all (this happens to me with iChat all the time) or drop out just when you are about to display a new tattoo or a new grandchild.

At the DEMO startup conference on Tuesday, Hackensack, N.J-based Vidyo offered something in the middle. A high quality video-conferencing system that you can install and get running for $7,000. At the core is a $6,000 Vidyo router that you put in your server rack and connect to a broadband Internet connection. The system adapts to the highest quality the gear at each end point can handle, ranging from high-definition cameras to cheap web cams. So you might have HD in a conference room, and VGA from a home office, for example.Each site, or port as the company refers to it, that you connect to the router costs an additional $1,000 a year. So if you have two offices you need one extra port, but since it’s just a software connection you can add as many ports as you need. All that is required is a broadband connection. The $1,000 subscription is really a pricey seat fee. And it will add up if you decide to connect your dozen regional sales offices. The ports are fluid; they can range from one site to another, one home office to another, say, as needed all via a web-based system.

At a minimum of $7,000, this is clearly aimed at taking on higher-end video systems for corporate users. And Vidyo is a great alternative for small and medium-sized businesses that have been hankering for good quality video conferencing but couldn’t afford it. My guess, however, is that the pricing comes down fast. How long will it take for that Vidyo router (or something reverse engineered in Asia) to get to $1,500 bucks? And with no additional service fees for additional ports? Fast.The reason is Vidyo is also competing with free offerings, which while offering poor quality now, are rapidly approaching “good enough.” Once free, or almost-free services hit that point where they are “good enough” for most things, $7,000 looks like a whole lot of money to pay, never mind hundreds of thousands of dollars. Video-conferencing has long been held out as a $1 billion market poised to explode to a multi-billion-dollar market. It won’t happen until high quality video gets cheap. Vidyo is a big step toward busting the market wide-open, it’s still not cheap enough, but it’s getting close.