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Six best start-ups from Y Combinator demo day

Rafe Needleman spends a day listening to young entrepreneurs and lists their most promising ideas, from a real-time energy monitoring system to the Etsy of food.

The Y Combinator incubator hosted its ninth open demo meet-up today. Fifteen companies presented, most showing off not just strong technologies and concepts, but realistic business models. Here are the highlights of the six best companies (in my opinion), as well as two with good technologies but troubling business models.

Probably the most popular demo company at the event was Wattvision (site not live yet), which is making a whole-house real-time energy-monitoring system. The key is its hardware: a gizmo you literally stick on to your electricity meter that watches the little wheel turn around. The data is transmitted to a computer in your home, or via Wi-Fi to your router and then back to the Wattvision servers, where it's then packaged and delivered to you every 15 seconds, via a Web page or iPhone app. You can see your momentary energy cost with this service, and that's cool. Wattvision doesn't give you granular data: it's whole-house only. There are other issues with this service, but it looks like something that people will instantly understand and want--because you can see in a heartbeat that it will help you save money.

Get your boutique chocolate fix from Foodoro. Screenshot by Rafe Needleman/CNET

Foodoro is launching an "Etsy of food:" a marketplace that helps consumers and boutique food sellers connect to each other. The market for food and for food gifts is strong, and supports a large community of small specialty food manufacturers. However, the traditional multi-tier distribution channels absorb a lot of the manufacturers' revenues, as well as separating them from their end consumers. Foodoro, while it's a middleman for the transaction part of the sale, does not ship food itself nor hide the customer from the vendor, enabling, the founders believe, better relationships where they count. The company also has a smart widget strategy: There are affiliate widgets that bloggers can put on their sites to promote the food items they like. They get a cut of the sales that Foodoro then manages, but again, Foodoro connects the manufacturer and the consumer directly for delivery of the items. Foodoro could potentially impact the traditional food catalog businesses.

Voxli is a super-simple voice chat product for games that works via a browser plug-in (with a push-to-talk hot key that punches through to whatever game you're using). If you want to set up a team chat room, you just go to the site, name your room, get a URL, and send it to your teammates. Pricing will be $60 per account per year, and an account holder will be able to invite up to 200 people into a room. It's in free beta right now. I think the proposed price is a bit high, but the potential market is very large.

Cloudkick is a management console for cloud services. At the moment, it will let you set up and control on-demand virtual servers from Amazon or Rackspace's Slicehost. The presenter said 40 Y Combinator companies are using the tool to manage their servers. Theoretically, Cloudkick could make it easier for companies to move their apps among different hosting companies. The founders are considering working on an open-source API spec for managing cloud services to make it easier for companies like Cloudkick (and its customers) to control said services. As one of the company reps told me, a widely-used cloud service API would commoditize the services themselves, driving down prices. So what's not to like?

Divvyshot is making a group photo sharing site. The demo showed an impressively easy to use service that lets you quickly create a central location for group photos (for a wedding, a reunion, a group trip, or presumably a sporting or music event). Attendees can drag their photos to a desktop dropbox, or just e-mail them to a central location. Then everyone who was at the event can see all the photos, and download them all if they want in a big zip file. This solves a real-world problem and there's a decent economy of potential partner sites (wedding organizers, cruise ships, travel coordinators) who could market the service.

TheSixtyOne is a new music rating service. It's Digg-like. Users vote tracks up or down by "hearting" them. But there's a game element to the service too: You only get so many hearts a day, although you can increase your allotment by leveling up when enough other users like the songs you've previously hearted. You can also be rewarded for quests, such as rating a certain number of songs in a category that needs input. You can buy tracks for download, and purchased tracks appear in your profile page. It may sound convoluted, but the design and interface look highly functional and fast to use. I wanted to use the site to find music after I saw the demo.

I also want to highlight two companies with very attractive technologies, but whose business prospects I worry about:

Dan Gackle demos SkySheet. Rafe Needleman/CNET

Skysheet (site not live yet) is an online spreadsheet. Which means it's a long-shot as a business (competitors include Google, Zoho, etc). But the demo showed a few very compelling features, such as the capability to reference (and embed) values from other spreadsheets just by using hyperlinks, impressive performance, and the capability to make a spreadsheet itself into a named function. I'm an old spreadsheet jockey, so I think this is very cool.

Echodio synchronizes iTunes libraries across computers. I want this. But I wonder how many people will be willing to pay for this service (which should be free and from Apple), even at the proposed low rate of $4.99 a year. The company is planning more interesting extensions to its music sync technology, though, including Boxee integration and a Web-based player for the music you own that you choose to sync through the service. I'd watch this company; I like the technology and think their business model will evolve.