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SEPTEMBER 25, 2007

AOL Echo Boom



Cardinal Bank

UMD Executive MBA

Houlihan Lokey


The AOL brass are moving to NYC, but is it all gloom and doom for the region’s Internet tekkies? No, says former AOL Service COO Jay Rappaport who, like many former AOLers, has remained here and moved on to the next generation of Web ventures. He’s COO of start-up Clearspring that’s backed by an impressive roster of AOL alums and has adopted the old Dulles strategy: Take a cutting-edge concept, simplify it, and push it out to the mass market.

“General” Rappaport directs a staff of 45, up from only six when the company launched in late ‘06. You won’t find Army green in their McLean war room though. Much like the mid–‘90s, t-shirts, jeans and flip flops rule. And office kitchens stocked with energy drinks and candy bars. Every employee signed this Patton poster as a sign of their commitment to the team.

Launched in late 2006 and backed by former AOL patriarchs Steve Case, Ted Leonsis and Miles Gilburne, Clearspring’s business is Internet widgets, an emerging technology that allows online users to transfer almost any Web content to a personalized page on web sites, social networks, start pages, or blogs.

Huh? Say you live in Cleveland and your favorite NBA player is LeBron James. You could grab a LeBron player card widget from the NBA website and place it on your iGoogle personal homepage, your blog, or in Facebook. Then go to Weatherbug and do the same for Cleveland weather. Your personal page would receive real-time information feeds on LeBron’s stats and Cleveland weather. Add a few more and, presto, you have a personalized web experience and constant streams of relevant information. Click for an example.

Even though all the balls appear safely resting in his hands, trust us, Jay can juggle. And in real life too: After leaving AOL in late 2002, he served as president of Vonage and commuted weekly to New Jersey from Virginia. He later commuted to Boston to work with ChoiceStream, another Web 2.0 enterprise. Jay’s home base remained here, which is why he thinks that despite the AOL move, most of his tekkie peers will be happy to stay and build the next generation of companies.

To drive adoption and use of widgets, Clearspring has formed partnerships with major publishers like CBS, Disney, Turner Broadcasting and NBC Universal. They have served 11 billion widgets to date and are growing at a rate of 10-15% widgets served per month. They also partner with MySpace, Netvibes, and Facebook, where widgets can be pasted. The technology is monetized by ads around the widgets, which can be highly targeted since the marketers know which widgets you have.

Jay says he’s putting in 15-17 hour days, and so is much of his team. Many sleep under their desks. When we came in with the camera mid-afternoon, the blinds were still drawn but most everyone appeared to be awake and working.

Jay admits the AOL move is a symbolic blow to the region and demoralizing to the remaining Dulles employees. But he thinks people on the inside saw this coming since the senior management team had been spending much of its time in New York. The silver lining Jays sees is the potential exodus of talent that will create new enterprises in the region and fuel the next wave of local tech successes. Maybe wishful thinking, but like General Patton, he knows how to rouse the troops.


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