It’s unclear how Home Depot wants to use Redbeacon, which allows users to get bids on home projects by contractors using Redbeacon’s marketplace. The start-up, which first launched in 2008 and won a number of start-up competitions, said today that it would remain open for business for its users. It was generally well regarded for its ability to bring together consumers who needed services from contractors. Redbeacon uses algorithms that even look at Facebook connections to find the right contractors for a job.

Home Depot didn’t disclose the purchase price but said that the Redbeacon leadership team would remain in place in San Mateo, CA. The company was founded by former Google workers Ethan Anderson, Aaron Lee and Yaron Binur. It has raised .4 million from Mayfield Fund and Venrock.

Redbeacon co-founders Aaron Lee, Ethan Anderson and Yaron Binur

The deal though shows that big retailers are increasingly looking toward Silicon Valley for ideas and inspiration about how to grow their business. By buying Redbeacon, Home Depot can get some lessons on how to tap users through online and mobile channels. And it helps them become more of a resource for people looking to remodel and improve their homes. Home Depot is not simply about being a physical store to sell goods and services but being a brand that people turn to for all their needs, including labor.

Home Depot has also been working closely on PayPal’s first trial of its in-store payment system. PayPal just said today that it expects to roll that out to all of Home Depot’s more than 2,200 stores by March. That’s another example of Home Depot getting with the times. Increasingly, retailers have to think about how to handle the changing needs of consumers, who are buying online and through mobile devices. Partnering with PayPal gives Home Depot a chance to be first with a new form of payment, but it also means it will likely get first crack at many of the other services PayPal plans to roll out, such location-based offers, in-aisle purchases, scanning products for inventory checks and other in-store services.

Big retailers are being forced to look this way. Walmart bought Kosmix and established Walmart Labs to help it evolve as mobile and social change the way people shop. Walmart Labs has turned around and started acquiring start-ups to help it get up to speed. The Gap has done a bunch of deals with mobile and social start-ups to try and get ahead of new buying patterns. Rival Lowe’s equipped its workers with iPhones last year, in response to Home Depot’s deployment of Motorola devices to help answer consumer questions.

As Venky Harinarayan, SVP Wal-Mart Global eCommerce and Head of WalmartLabs told me the RoadMap conference last year that retailers are still trying to understand the implications of social and mobile on commerce. But it’s clear companies need to move forward and embrace the changes in commerce. And that means increasingly partnering with technology companies and sometimes buying them up.

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Here are 10 cloud computing startups that launched in 2011 and that have a chance to make it big in 2012.

1. AppFog 

AppFog is one of a handful of Platform-as-a-Service startups to launch in 2011, but AppFog is unique because it leverages the open-source Cloud Foundry code as its core. The switch to a Cloud Foundry foundation over the summer resulted in a name change from PHP Fog, as the company was immediately able to support numerous new programming languages. Going forward, AppFog can ride Cloud Foundry’s development wave, while focusing its own efforts on building the best user experience.

2. Bromium

Little is known about Bromium other than that is plans to use virtualization technology as a tool for securing the myriad endpoints (e.g., desktops, mobile phones and tablets) that connect to enterprise networks. While securing cloud servers, as other startups such as CloudPassage attempt to do, is important, the advent of consumerization means endpoints need security. Among Bromium’s founders is Simon Crosby, who co-founded XenSource and served as virtualization CTO at Citrix Systems.

3. Cloudability

Cloudability provides a simple service with a lot of value: it monitors customers’ spending on cloud computing resources. It might uncover something as commonplace as cloud-server sprawl because so many employees are spinning up instances, or it might find something nefarious such as hackers using a company’s instances serve boatloads of network traffic. As use of cloud services proliferates, companies will need an easy tool to help them keep track of what they’re spending and where.

4. CloudSigma 

The Infrastructure-as-a-Service space is a tough racket to enter because it means competing with the likes of Amazon Web Services and Rackspace, but CloudSigma has a plan. The company is all about giving customers high performance and lots of control. CloudSigma sits in the impressive SuperNAP data center and offers 10 GbE interconnects as well as solid-state drives, and developers can buy and manage resources with the granular control normally found in co-location.

Kaggle, a crowdsourcing platform for solving big data challenges, is about the hottest thing going in big data right now. The idea behind the service is simple: although not everyone has data scientists in-house, there are plenty of them floating around the world perfectly happy to put their skills to work on a problem for cash prizes and a little bit of credit. It takes a lot of computing power to host hundreds of teams on any given competition, as well as the data sets, which is why Kaggle utilizes Amazon Web Services.

Nebula isn’t the only company pushing a commercial version of the open-source OpenStack cloud computing software — it isn’t even the only one founded by a former NASA employee — but it does have a unique approach and an impeccable pedigree. Nebula ties OpenStack to an optimized hardware platform designed to make building public clouds a plug-and-play experience. Among its founders are former NASA CTO Chris Kemp, and investors include Andy Bechtolsheim, David Cheriton and Ram Shriram.

7. Parse

Parse is trying to become a PaaS specialist for mobile apps, a laudable ambition given how many people now rely on their mobile devices just about everything. It will be difficult to distinguish itself from competitors such as Stackmob, as well as from web-app PaaS offerings such as Heroku and AppFog, but Parse seems to have the right ideas in mind. It has a backend focused on the needs of mobile apps, and a frontend designed for mobile developers that might not have extensive programming chops.

8. ScaleXtreme

What ScaleXtreme lacks in sexiness it makes up for in functionality. Everyone needs server-management software, but not everyone needs the big, expensive software offered from traditional software vendors, or even wants to manage software at all. ScaleXtreme gives users a cloud-based service to manage both physical and cloud-based servers, and, it says, has also garnered a lot of interest from cloud providers thinking it might be a good value-added service to their users who want more control.

9. SolidFire

SolidFire wants nothing less than to revolutionize cloud computing by making it palatable to large enterprises wanting to run mission-critical applications. The company targets cloud providers with SSD-based storage systems that make it possible to store virtual machine images in the cloud and still deliver high performance. Cloud providers utilizing SolidFire gear could find themselves hosting far more relational databases and other applications that presently remain in house.

10. Zillabyte

Zillabyte, still operating in private beta mode, wants to provide users with both data sets and the algorithms needed to process them. Data sets aren’t uncommon on the web, but they usually don’t come with algorithms and a processing backend. The service will initially focus on web data and text-based algorithms, but there’s plenty of room for growth into new types of data and algorithms as the service matures. Zillabyte was co-founded by two former Google software engineers and a former Intel engineer.

Image courtesy of Flickr user JamesWoolley5.

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On Wednesday, LinkedIn announced that the technology behind IndexTank, the search engine startup it acquired back in October, has been released as open source software under the Apache 2.0 license. At the time of the deal, it was pretty clear that the IndexTank buy was motivated largely by talent: The company had 11 employees, nine of whom were engineers, and financial terms of the deal were kept under wraps. The technology IndexTank built was very compelling, but the team behind it was likely the most attractive aspect to LinkedIn.

That’s why it’s good news that IndexTank’s code will live on, and that others will be able to build on top of it. IndexTank essentially build software to help search and query large amounts of data, even on devices with limited processing power such as cell phones. It’ll be interesting to see what people do with this now that it’s open source.

It seems that releasing acquired technology as open source software is a growing trend for acqui-hire deals. Earlier this week, for example, Twitter started releasing the code from recently-acquired mobile security startup Whisper Systems as open source software. Some people may see such open source releases as consolation prizes, but it’s better than the alternative: Historically, a startup’s customers worry about products languishing or being shut down altogether after an acquired by a larger firm. These open source releases mean that technology will live on, regardless of what happens with often unpredictable M&A integrations.

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Some of the other changes in version 2.0 of Nosh include:

• They finally snagged Nosh.com. Yes, when they launched the best they could do was Nosh.me.
• Besides an iOS and Android app, there’s now an interactive web interface for Nosh.
• Nosh is now international, going outside the U.S. for the first stime.

But the one that most impacts how people use the product is this: Integration with Google Places. Places is Google’s Yelp competitor, and clearly Nosh is competing with Yelp too, so that makes this Google marriage very convenient. Places integration means every restaurant, bar, bakery, brasserie, bistro and diner Google knows about is built into Nosh’s database of dining establishments. And that’s very helpful for what Nosh is trying to do, which is have millions of places and their full menus available in its database. With the help of Google, for any place a Nosh user could ever want to walk into, they can instantly see what’s available to order, what is recommended as the best thing to eat, and naturally, what to avoid based on low user ratings.

Another cool thing Nosh is trying has to do has to do with ratings. Recognizing that users can rate a lot of dishes a “5-star” (the highest rating), which eventually can dilute what “best” means, Nosh has added superlative options: If you rate something a five star or a one star, the app will ask you afterward whether it was the best dish you ever had or the worst. That will show up on your profile, and of course, you can continually change the best and worst things you’ve eaten.

Once that data is aggregated, “it makes it a little more interesting information,” Walker said, being deliberately vague about what Nosh would be doing with that. But it seems logical that a restaurant would be keen to know if its dish (or dishes) was the worst or best thing a diner had ever eaten.

Walker, who spoke to me by phone Tuesday, says this is all in preparation for much more to come in Nosh’s quest to use social and mobile tech to flip the restaurant business on its head.

“The reason I got in to this was I was going to put some money in a friend’s restaurant and I realized restaurant owners dont have very many tools. What they’re armed with is not great. How can we provide services that will make that picture a little clearer and how do you get the diner involved?” he asked.

“I don’t want to ask the waiter what’s good, I want to ask the guy who was eating here what’s good [...] We’re looking at Nosh as a perpetual evolution of the entire restaurant and dining experience.”

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Wired Top Stories

Twitter wants to be “the world in your pocket,” according to CEO Dick Costolo — but more than anything, it wants to be the engine of mobile and real-time commerce in your pocket, judging by his comments at the Fortune BrainstormTech conference in Colorado on Tuesday. In addition to downplaying the departure of the company’s two co-founders Ev Williams and Biz Stone, and complaining about the “distraction” that private trading of its shares causes, Twitter’s chief executive said the company sees a future in “removing friction” from e-commerce and allowing companies to target their users directly in real time, something he said “has never existed before.”

In his talk with Fortune writer Adam Lashinsky (video embedded below), Costolo noted that while Twitter took three years to get to one billion tweets, it now sees that many messages posted to the network every five days. He also said that there are more than 200 million registered users of the service (defining “active users” is difficult, if not impossible, he argued) and that third-party analytics show that the Twitter.com website gets more than 400 million unique visitors a month. Costolo added that Twitter is seeing 40-percent growth every quarter in terms of mobile users.

While many media outlets have focused on the recent departures of co-founders Evan Williams and Biz Stone, the Twitter CEO said that the company has been busy building up its senior management team, and that working alongside co-founder Jack Dorsey (who is also CEO of mobile-payment company Square) has been good because he “speaks with the fluency of the inventor of the product.” He said that the private trading of Twitter shares, which has valued the company at close to billion, is a distraction in part because “I worry about people who might be buying through those markets [and] who’s going to get in trouble at the end of the day if it doesn’t work out.”

But Costolo also spent much of his time talking about where Twitter sees future revenue and profit opportunities — in addition to the ongoing rollout of advertising through “promoted tweets” and “promoted trends,” as well as a forthcoming self-serve ad product (how users respond to these efforts remains to be seen). The Twitter CEO said that the company sees a number of opportunities when it comes to enabling — and taking a share of the revenue from — direct e-commerce with users via the service, because “we already see a tremendous amount of commerce taking place on the platform.”

As an example, Costolo talked about how Google tweeted a promotion code that people could use for tickets to its recent IO conference, and about 100 tickets sold in a little over 10 minutes. “That’s ,000 with one tweet in 13 minutes,” said the Twitter CEO. In another example, the San Diego Chargers tweeted about tickets that were left for a game, and in a little over half an hour they were gone. The upshot of all of that, he said, is that “there’s a commerce opportunity there for us to take advantage of if we want.” Although he didn’t give any specifics, the Twitter CEO said that the company is asking “how can we remove friction from [that] process?”

And what about Google+? Costolo said that while he believes Google “will leverage their tremendous reach to pull people into this experience,” he isn’t focused on competing with the service, but instead sees Twitter as “offering simplicity in a world of complexity.” The Twitter CEO also confirmed that the company will likely raise money soon to provide funds that it can put into building up its infrastructure (there have been rumors that it is raising a new round of venture financing that will value the company at billion) but he wouldn’t say whether it will be a public offering or a private financing.

Can Twitter manage to make the transformation from being a real-time information network to being a platform for real-time commerce? Costolo seems to be betting the company’s future — and his own — that it can.

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Wired Top Stories

The New York City-based startup, which provides a service that allows users to share their current location with friends, plans to put the money toward hiring more engineers, developing more offerings for merchants, and expanding internationally, co-founders Dennis Crowley (pictured here) and Naveen Selvadurai wrote in a company blog post announcing the new funding. The blog post reads: “The opportunity to build something meaningful in the location space is HUGE [emphasis theirs], and we feel well-positioned to capitalize on it.”

Foursquare has grown by leaps and bounds since its launch in March 2009. The company, which is set to open a new San Francisco office this month, says it currently has more than 10 million users and more than 70 employees. With a growing list of solid competitors in the location-based social networking space — think Facebook and Google, as well as an ever-expanding list of smaller apps such as Trover — the new backing will certainly come in handy as Foursquare works to keep its edge.

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The Knight Foundation, a non-profit entity that is one of the biggest funders of media-related projects in the United States — including the new MIT Center for Civic Media, which we wrote about earlier — announced the winners of its annual .7-million News Challenge on Wednesday. There’s s a theme running through most of the winners: namely, data as journalism. Just as tech companies of all kinds are focusing on what we at GigaOM call “Big Data” as a tool for new services, the media industry is (hopefully) starting to understand that data can be useful for its purposes as well.

The Knight Foundation noted in a blog post announcing the 16 winners that data and the use of it for journalism was a big theme among this year’s contestants. When the Knight competition first started five years ago, the idea of a “hacker/journalist” who developed applications and journalistic tools around data was unfamiliar one, but the foundation noted that this is now an established position at some media outlets.

Among the newspapers and media entities that have been at the forefront of this data-journalism wave is the New York Times, where Aron Pilhofer and a team of developers and programmers have created a number of groundbreaking news features. Not surprisingly, perhaps, Pilhofer is also involved in one of the winning entries in the Knight News Challenge: DocumentCloud, which allows media outlets and journalists to upload and share — and annotate or collaborate on — a variety of documents, won 0,000 and will use the funds to add the ability for anyone to edit or contribute to documents.

The other data-related projects that got Knight funding include:

• SwiftRiver. SwiftRiver, which got 0,000 from the news challenge, was developed by the founders of Ushahidi, an information network designed to allow rescue workers and other volunteers to find and share information during a crisis or disaster like the recent earthquake in Japan. SwiftRiver is a series of tools that allow anyone trying to make sense of that information — including journalists — to filter and determine the accuracy of those real-time reports.
• Overview. Developed by a team of journalists at The Associated Press including Jonathan Stray, this project got 5,000 to develop visualization tools that will help journalists explore large data sets. In one early prototype of what the project hopes to do, Stray created a visualization of all the text in the Iraqi war logs.
• PANDA. Developed by Brian Boyer of the Chicago Tribune — another prototypical “hacker/journalist” — along with a team of other journalists from Chicago and the The Spokesman-Review in Spokane, Wash., the PANDA project plans to use the 0,000 it won to create easy web-based tools that even journalists at smaller newspapers and media outlets can use to analyze data and organize it.
• ScraperWiki. Based in England, this project allows users to create their own custom “scrapers” that go out and automatically aggregate data from websites and web-based services, based on whatever parameters the user defines. The 0,000 grant from the Knight challenge will be used to build a “data on demand” feature that will allow journalists to create their own profiles and be alerted when data related to a specific search or topic changes somewhere online.
• OpenBlock Rural. Developed by the University of North Carolina at Chapel Hill, this project — which received 5,000 — is designed to help rural news outlets aggregate and make sense of local information from government and public records. This approach is very similar to that developed by Chicago-based startup EveryBlock, which was funded by a Knight Foundation grant and later acquired by MSNBC.

In the end, data and the tools to manipulate it are the modern equivalent of the microfiche libraries and envelopes full of newspaper clippings that used to make up the research arm of most media outlets. They are just tools, but as some of the winners of the Knight News Challenge have already shown, these new tools can produce information that might never have been found before through traditional means. We hope some mainstream media players are paying attention, and/or getting ideas of their own.

Post and thumbnail photos courtesy of Flickr user David Reece

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According to the Stanford University researchers behind the new Startup Genome Project, the biggest difference between the simply good and the absolutely fabulous lies in how each group assesses startups. After interviewing venture capitalists of all stripes over the last five months, the Genome team — Max Marmer, Ron Berman and Bjoern Lasse Herrmann — found most investors rely on a limited snapshot of a few data points (such as team, traction and market).

But after matching that strategy up with investors’ deal lists and track records, they found that practice often led to nowheresville, especially early on:

While these can be good validators that entrepreneurs are onto something, a snapshot of the team and traction can often be misleading. A great set of resumes can’t tell you how well the team actually works together. And traction was often measured in absolute numbers of users and revenue, but those metrics are second- and third-order effects of progress for an early-stage startup. In the early stages of a startup’s conversion, funnel is a much better indicator of future growth than revenue.

The VCs with the largest track record of hits operated under the principle that startups themselves are actually just the process of searching for product-market fit and a scalable business model.

The result: these investors drew conclusions based on “more subtle” data points like the founding team’s pace of learning, the reason the team made certain pivots or major changes in the business, stage-specific metrics and even the body language between the founders.

Here are four other lessons VCs can learn from the report:

1. Don’t get too pen happy. A big check doesn’t help. According to the Genome Report, the average seed round hovered around 0,000, yet the findings suggest a seed round of just ,000-50,000 reduces the risk for investors and has no negative impact on startups.

The basic idea is that investors should not place a large bet on most types of startups until they see them find problem-solution fit and produce something that at least solves a piece of the problem. This can help prevent investors from betting on teams that look great on paper but ultimately have no chemistry and fail to execute. The constraint of having less than K probably even positively influences first-time entrepreneurs, helping them to not get too far ahead of themselves.

2. Analyze the team based on type. Different types of startups require different kinds of teams to make them work, and investors can get into trouble when they fail to account for these subtleties. Startups were categorized as technology-heavy, business-heavy or balanced. The analysis found business-heavy founding teams are 6.2 times more likely to successfully scale with sales-driven startups than with product-centric startups. However, technical-heavy founding teams are 3.3 times more likely to successfully scale with product-centric startups with no network effects than with product-centric startups that have network effects.

3. Count the founders at the table. According to the data, investors over-invest in solo founders and founding teams without technical cofounders, both of which have a much lower probability of success that other combinations. In fact, solo founders take an average of a whopping nearly 70 months to reach scale while teams with two founders are the fastest at around 20 months.

4. Resist the urge to rush. It’s not too surprising, but actually acquiring customers was one of the most often reported challenges that startups cited in this report. The authors believe many startups fail to get customers at the speed they would like because they either “build too many features or they overcompensate for a non-functional product by creating lots of buzz.” Investors need to watch out for these warning signs.

Image courtesy of Flickr user Rob Lee.

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