KEY POINTS:
Last year's technology headlines may have been dominated by the likes of web giants Google and Yahoo! but New Zealand software start-ups took some promising steps towards international success.
And underpinning all of them lies the internet. The pace of innovative software development has ramped up in this
country as business incubators, the universities and established IT companies produce young entrepreneurs who understand the opportunity the web offers Kiwi companies seeking a global audience.
"There are a number of next-generation entrepreneurs kicking it on the international stage," says Wellington entrepreneur and Xero founder Rod Drury.
"They're typically in their late twenties or early thirties.
"They're at the perfect stage in life to go out and try and make a name for themselves."
In exactly that position are David ten Have and Derek Elley, founders of Ponoko.com, an online marketplace for people who want to buy one-off, custom-designed products.
After winning a coveted slot at the TechCrunch conference in San Francisco in September, where 40 software start-ups got to pitch to Silicon Valley venture capitalists and some of the best minds in the US start-up scene, Ponoko has been riding a wave of interest, culminating last month in a profile on the company published in the New York Times.
"That conference has opened a lot of doors for us," says ten Have, who runs Ponoko out of a cramped office in central Wellington.
In the back room is a piece of technology crucial to the Ponoko model - an industrial laser cutter.
The idea is that web users design their own products, from furniture to toys, using off-the-shelf computer design packages, then connect with manufacturers who laser cut the materials based on the designs and ship them to the buyer.
"In the simplest case they're using it to produce jewellery, buttons, iPhone stands and keyrings," says ten Have.
"More experienced people are able to produce quite complex products like tables, sci-fi boomerangs, and lamp shades."
It goes against the pervading trend of one-size-fits-all manufacturing, but takes advantage of the forces of globalisation. Ponoko will either partner with companies or run its own laser cutting labs around the world to ensure there is a manufacturing facility close to its customers.
Most of New Zealand's tech start-ups are privately funded, but there is a growing appetite for public listings in this space.
"We feel a big responsibility to be successful," says Drury of Xero, which raised $15 million in a public float on the NZX in March, making it the best-funded dotcom start-up in the country.
"We're now raising our own money onshore. It will take another year or two to take off," he says of the local appetite for funding software start-ups.
Xero is seeking to unseat traditional computer accounting packages with its online system for book-keeping that plugs into banking records and allows greater interaction with accountants.
Five more intriguing dotcoms to watch out for this year
PlanHQ
Wellington entrepreneur Tim Norton has had a successful year with his software start-up PlanHQ creating a buzz among the US venture capital set as well as sales to this deep-pocketed and influential group.
PlanHQ is an online service that allows companies to track the progress of investments and projects. It is a useful tool for venture capital (VC) companies wanting to track their investment portfolios.
In October, Norton took PlanHQ to the Demo conference in San Diego when a conversation Norton had with Michael Arrington, founder of influential tech website Techcrunch, led to PlanHQ being featured in an article on the TechCrunch blog site.
"We were covered with VCs interested in using PlanHQ to track their portfolio just like our first well-known VC was doing. Almost everyone had seen us on Techcrunch that morning."
His first US sales came after a news story about PlanHQ featured on the website of the Wall Street Journal and caught the eye of Josh Kopelman, who got in touch.
Norton recognised the name - Kopelman is a founding partner of high-profile venture capital firm First Round Capital. He built Half.com and sold it to eBay in 2000 for around US$350 million.
"He thought PlanHQ was just what they needed to track their portfolio companies, and asked if we could customise it a little to make it a perfect fit for his VC firm. He said he would help circulate us around the US VC market," says Norton.
Kopelman quickly signed up for PlanHQ with his credit card.
Says Norton: "We sucked out our first chunk of US dollars over the Pacific." Sales have been climbing ever since.
Eurekster
If 2007 was the year the wiki - online articles that can be amended and expanded by a community of users - hit the mainstream then 2008 may turn out to be the year of the "swicki".
Christchurch-based Eurekster is a pioneer of swickis - customised search engines that are designed to throw up results tailored to the interests of website visitors.
There are already 100,000 swickis in existence, generating 9 million unique visitors per month, says Eurekster founder Grant Ryan.
"The main theme that has been emerging is the realisation that social networks really will be a significant long-term part of the internet, things like Facebook and OpenSocial," he says. "There's lots of discussion on how to integrate search into these social networks but no significant products yet."
Swickis are still largely the domain of small websites and bloggers but social search is one of the potentially more lucrative areas of web development getting attention. Meanwhile, Ryan is honing Eurekster, introducing video to swickis.
Sonar6
Talent management software maker Sonar6 won some sizeable international deals in 2007 as well as some welcome funding from the Foundation for Research Science & Technology. Its software is used by companies to better manage the tricky area of human resources.
"Our proposition is simple and visual technology support helps managers make better decisions about their people," says Sonar6 chief executive, John Holt.
"It turns data into information visually and based on that visual approach allows managers to collaborate and communicate people information with human resources and other business managers and executives."
The software is already paying dividends for a host of local companies, with Fletcher Building, ING New Zealand, Intergen and Random House among its users.
Sonar6 has completed a second round of fundraising which is expected to see it through to the end of 2009.
SmallWorlds
A web service that combines social network with a 3D virtual world, SmallWorlds was developed within internet application development company Outsmart, which has worked on venture-capital-funded websites, such as Scrapblog.com and Vayama.com, to tap the burgeoning market for real-time, online virtual worlds.
"It enables you to build your own room, house, or even your own world, and fill it with a wide variety of items and activities for you and your friends to enjoy together," says SmallWorlds co-creator, Darren Green.
"We see the strength of SmallWorlds, as compared to download and install virtual worlds like Second Life and Kaneva, as being the instant accessibility due to being developed upon the ubiquitous Adobe Flash player." Currently in closed public beta release, the SmallWorlds platform will be capable of supporting millions of users and allow plug-ins from popular web services.
"The YouTube TV widget is a good example," says Green.
"It allows everyone to add to the active playlist, and synchronises so they are all watching the same thing. Someone holds the remote, videos can be voted off. The same applies to the multiplayer games, and other widgets where applicable - Flickr, last.fm or Graffiti Wall."
SmallWorlds' business model rests on making promotional content available in the virtual world through plug-in widgets for paying content owners.
Green has the US and European markets in his sights, but also wants to target Asia with a version of SmallWorlds next year. A moderated version of the virtual world for kids is also in the works. The official SmallWorlds launch is slated for March.
Madeit.com
Parties are the bread and butter of social networking start-up Madeit.com, which is an online community where party invitations can be made and partygoers can congregate after the event to trade pictures and gossip.
Founder Stephen Weir is targeting web surfers in their early 20s to early 30s and focusing on the US market, where the space is dominated by Evite.com and other rivals such as Socializr and Skobee.
"People are very dissatisfied with Evite as they have hardly changed in the last five years and not adopted any of the 2.0 features which we have," says Weir.
Rather than provide a platform to simply share photos, Madeit.com adds video, widgets, music and slideshows and a social networking element that allows partygoers to connect online following the event. "After a party you get swamped with links from different photo-sharing sites which you have to register for each one to view the photos.
"We wanted that all in one place as well as being able to comment in a forum, and upload videos," says Weir, who created the website with fellow Kiwi Jonny Hendriksen, the founder and former chairman of Value Click Japan.
