<HTML><HEAD><TITLE>New Way To Raise Money: Pass The Hat</TITLE></HEAD>
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<font size="5">New Way To Raise Money: Pass The Hat</font><br>
<font size="2" face="geneva,arial,helvetica">By MITCH WAGNER,  InternetWeek<br>
Jan 5, 2001 (6:31 PM)<br>
URL: <A HREF="http://www.internetwk.com/story/INW20010105S0005">http://www.internetwk.com/story/INW20010105S0005</A></font>
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As investment money for online projects dries up, e-businesses have to get innovative to find new sources of funding. One company is passing the hat.<P>Pyra.com Ltd. makes Blogger, an extremely simple-to-use and robust collaboration service for updating Web and intranet sites. Pyra.com plans to launch an upgraded version of the service within about two weeks, for which it will charge a subscription. Until then, it's been following a version of the Netscape business model: give the service away to consumers, and make money later with a high-end subscription version for power-users, and through corporate licensing.<P>With Blogger, users sign up at the Web site and then use automated tools to generate a template for their Web pages. After that, users can update the Web page using any client that runs a Web browser, even a handheld computer. The pages can run on any standard Web server; after Blogger generates a page, it transfers the page across the Internet to the server where it will run, although Blogger can also host the pages on its own server.<P>The problem is that Blogger has been too successful. After being written up in the New York Times, Wired Magazine and The New Yorker, it's been swamped with traffic. At last count, Blogger had 85,000  registered users, up 21,000  in November and December, with 27,000  accounts having been updated  within the past 30 days.<P>Blogger was a product that worked extremely well--so much so that now it virtually doesn't work at all.<P>Pyra.com needed to add server capacity to keep up with increased demand -- and didn't have the cash to pay for the expansion. Normal investment channels were shut down, and even if the investors had money to give, it would take too long to arrive. What's worse, the subscription plans put the company in a Catch-22: the money from subscriptions could fund the free site, but who would pay for a subscription when the site was so slow as to be virtually inoperable? Blogger's success was putting the whole company at risk of failure. So Pyra.com found another channel for funding:a telethon.<P>"We thought: everyone is really passionate about this, so maybe we can get them to donate to help improve performance," said Meg Hourihan, Pyra.com co-founder and director of development. The company put up a notice on Monday asking that satisfied users send in donations. Within two hours, Blogger received $3,424.85 in donations, and the tally was up to about $7,300  by Friday afternoon. As an additional source of funding, Pyra.com began selling mousepads and coffee mugs.<P>The goal is $10,000  for two new servers, in addition to the three that the company already runs. Pyra.com co-founder Evan Williams was picking up one of the servers on Friday afternoon, Hourihan said, and the company hopes to have it online over the weekend. Pyra.com hopes to have a second server online by Monday, to restore Blogger to usable performance. Blogger runs at a co-location facility of Exodus Communications.<P>Until now, Blogger has been primarily used to generate weblogs, or "blogs," which are online diaries of interesting Web sites, mixed in with details about the personal life of the author, or "blogger." Entries in a blog usually appear as a single column of text and images, in reverse chronological order.<P>Right  now, blogging is a hobby, but Pyra.com hopes to use its subscription service to pique the interest of businesses, who would use it for online publishing, or as a collaboration tool for workgroups. The subscription service will be priced at $10 per month or less, and hosted by Pyra.com. The company also plans to offer a "co-branded" or "private label" version of the service, so that other companies can offer Blogger functionality on public Web sites.<P>Blogger runs on three servers running Windows NT and Linux. Friday night, Pyra.com staff was working to bring the fourth server online. The server was purchased from VA Linux Systems; Pyra.com planned to remove Linux and install Windows 2000. The company plans to deploy a fifth server next week, which it hopes will bring performance of the site back to normal, Williams said. 
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