Conduit Builds on the Power of the Web Toolbar

Get ready to add a new instrument to your Web 2.0 toolbox. It's the Web browser toolbar.

We're not talking about a toolbar from Google ( GOOG), Yahoo! ( YHOO), MSN, AOL, Wikipedia, Windows Live or any other Internet giant. We're talking about your toolbar. San Mateo, Calif.-based Conduit allows Web publishers to build their very own toolbar for free.

Conduit was founded by Ronen Shilo, Dror Erez and Gaby Bilczyk in 2005 to allow publishers to build their own toolbar using a WYSIWYG setup. Publishers are able to use their brand and include features such as chat, video, podcasts, RSS feeds and tickers, social networking and more.

"What it does is it provides publishers the ability to take over, permanently, a number of pixels on a user's browser and they can put anything they like there," says Adam Boyden, president of Conduit. "The toolbar always brings up connotations of search companies, but Conduit really is in a different game."

Boyden says Conduit was founded to help publishers solve the problem of visitor retention and frequency. The wave continues to grow for Web surfers, and getting noticed and being remembered gets more difficult with each Web site built. It's likely that your "favorite" bookmarks are probably littered with Web sites long forgotten.

With a toolbar, however, publishers have the ability to grab prime real estate on the Web browser with their logo constantly in view. If users don't want to ditch the convenience of their Google search, no problem. Conduit-built toolbars include a search box powered by Google.

Google also powers Conduit's revenue. "That has turned out to be a significant revenue driver for the company," says Boyden, 40. "Conduit has a very good relationship with Google, and are able to provide our publishers a Google search feed and the end users then click on sponsored links and Conduit generates revenue."

In the future, Conduit plans to leverage the 38 million users and 180,000-plus publishers using the Conduit platform to facilitate the distribution of content between publishers on the toolbar where Conduit would then reap a percentage of the exchanged fees for content used through the relationship. Boyden says Conduit is already doing this with some select publishers, but the company plans to roll out the content marketplace feature to all publishers before the end of 2009.

The founders launched Conduit by charging their credit cards and later raising $2 million through angel investors and a small Israeli venture capital firm, Yozma. At the beginning of 2008, Conduit landed another round of $8 million from venture capital firm Benchmark Capital.

Boyden wouldn't reveal revenue for Conduit, but says when he joined Conduit just a few months ago the company had 60 employees and was already cash-flow positive. The company has since only grown five employees, but has doubled its revenue in that time and has not touched the $8 million it raised at the beginning of the year.

Going forward, the challenge for Conduit is to educate publishers on the power of the toolbar and the usefulness that it provides, according to Boyden. For example, Major League Baseball, one of the publishers using Conduit, can take advantage of the alert feature by letting users know of last-minute tickets that are available.

Another challenge is to build and grow the trust of publishers as a third-party distributor of their content. Finally, Conduit, which has done a solid job of scaling their technology to this point, will need to continue to work on scalability as it adds more publishers and users in the future.

For other small businesses working to grow their business, Boyden having launched a few successful ventures of his own prior to joining Conduit offers some advice. "You spend no money unless by not spending the money you damage the business." He adds, "Worry about making the end customer happy. If you make the end customer happy, you usually find other things happen."

Steve Cooper was most recently managing editor of Entrepreneur.com and research editor at Entrepreneur magazine. He runs his own business, Hitched Media Inc. (www.hitchedmag.com).

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