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TechCrunch50 kicks off: Let the games begin

The first round of start-ups--focusing on games and entertainment--includes a magic-trick card app, a storybook service, an e-learning company for grade schoolers, and more.

Comedian Penn Jillette demos his new iPhone app.
CNET / Josh Lowensohn

SAN FRANCISCO--The fall season has officially begun. Starting Monday morning, the annual TechCrunch50 conference took over the San Francisco Design Center for two days of start-up pitches and presentations; the conference's angle, as co-hosts Michael Arrington and Jason Calacanis reiterated, is that all 50 companies on the roster are completely new and launching for the first time.

Start-ups presenting at the conference, which were chosen through a behind-the-scenes elimination process, were grouped into categories. The first of the day was "Youth & Games," with an array of kid-focused and entertainment start-ups.

The day had already begun with some theatrics: the news was broken (unsurprisingly, by TechCrunch) that a previous TechCrunch50 winner, personal finance start-up Mint, had just sold to Intuit for $170 million in cash. Mint CEO Aaron Patzer took the stage on Monday to formally confirm the announcement.

So it was appropriate that the first pitch of the session, kicking off the TechCrunch50 conference as a whole, was pretty far out in left field: an iPhone app created by comedy-magic duo Penn & Teller. At first, their developers came onstage and apologized that the entertainers couldn't actually make it to the conference, and proceeded to demonstrate a text-messaging magic trick app. But then Penn Jillette stepped out to formally demonstrate the app, which has the aim of (ideally) fooling the iPhone user's friends into thinking that they're actually playing a guess-the-card trick with Penn and Teller via text messaging.

"It's not so much a moneymaker for us as a public service to get guys laid," Jillette said when asked if there was a revenue model to the app, which sells for $1.99 and is now in the iTunes Store. "If there's a Nobel prize for getting guys laid we'd definitely be in the running for it."

Jillette also announced that the app's alpha tester is a stripper from Philadelphia who has raked in extra tips by demonstrating the app alongside lap dances. Unfortunately, the array of judges didn't seem terribly impressed at its long-term business prospects.

Child's play for start-ups
The next presentation couldn't have been more different: Story Something, "which makes the personalization of children's stories simple and easy," founder Jim Rose said. The Web company uses Mad Libs-like text fields for a parent to personalize a story with their children's names and other attributes, and new stories can be sent on a schedule--for example, every evening before bedtime--as part of a paid-subscription model. There's also an iPhone app for easy reading to kids.

Most of the questions from the judges pertained to business model and the intellectual-property rights associated with the stories published through StorySomething. Judge Don Dodge called it "a lottery-ticket investment" for an angel investor, given the relatively low overhead costs and likelihood that such a company could scale without much additional investment.

Other judges' questions were a bit sillier.

"How profound is the assumption that parents will continue to make kids?" judge Yossi Vardi asked facetiously.

ClaseMovil lets you wander around a virtual world and spend microcurrency. It's also got an education tools, but is currently for Spanish-speaking users only. CNET / Josh Lowensohn

The third start-up in the round was the Mexico-based Clasemovil, a start-up that offers game- and video-based online educational exercises for kids in areas like math, science, and history. Clasemovil uses a format much like trendy kid-focused virtual-world services--its virtual currency, for example, is used to teach personal-finance lessons. The executives were accompanied by an on-staff teacher who vouched for the company's platform as a classroom tool, demonstrating progress-report tracking features.

It's launching first in Latin America (in the U.S. next year, apparently) but its founders hope that it ultimately will allow elementary-school students from around the world to learn by interacting with one another. ClaseMovil, which hopes to make money from subscription fees from both individual users and educational-institution subscriptions, has already raised seed funding and is looking not just to investors but also grant money from governments and organizations.

When asked by conference host Jason Calacanis whether they'd invest in it, judges said they'd consider it. Veteran investor Ron Conway said that it could benefit from some partnerships with other companies. "I would consider, but I wouldn't write a check until it's in English," Don Dodge said of the currently Spanish-only site. "English is where the money is."

Two judges, investor George Zachary and MySpace exec Jason Hirschhorn, said that they'd turn the investment opportunity down outright, with Zachary citing "so much competition" and "huge brand and marketing challenges" when it comes to making a splash in the education market.

The fourth start-up was another kid-focused one, ToonsTunes, a virtual world focused on teaching kids about making music. Players can record music through a mixer interface, network with other users, and sign up for "concert" spots at virtual "clubs." They can share their creations on social networks like Twitter and MySpace, or download them as ringtones. There is, of course, also a virtual currency involved for micropayments like purchasing samples of pop songs.

Obviously, virtual worlds for kids are hot in the wake of the success of companies like Club Penguin, which sold to Disney for $350 million two years ago. And the graphics-heavy ToonsTunes received a pretty warm reception.

"I like it very much," George Zachary said, calling it "GarageBand meets Club Penguin." Don Dodge said that "the quality is absolutely amazing." Hirschhorn questioned the company's ability to compete with the likes of "Guitar Hero." Vardi called it "very, very impressive," considering especially the fact that the company was privately funded and employs only five people.

Ron Conway said that the makers of Guitar Hero would love a product like this, but Hirschhorn remained the skeptic and said that it would be easy for the likes of a huge player like Electronic Arts to create a similar product with far better resources and connections.

Sealtale lets you claim products or services you use, then stick a logo of them on your blog. CNET / Josh Lowensohn

The Sealtale of approval
The last company of the "Youth & Games" round was a little different: Sealtale, a Korean company that lets users create personalized badges (or "seals") to embed on their blogs to identify themselves and express their affinities--as an iPhone user, a supporter of a certain cause, a fan of a band, for example. Clicking on a "seal" can bring up related blog posts from other bloggers with the same seal. It's one part self-branding service, one part blogroll, and one part Google Friend Connect-like networking service.

Calacanis asked the judges what they thought of Sealtale, which he called "Webring 2.0" in an allusion to the '90s-era blog network start-up. "We'd have to see how the product took off and how the acceptance was in other countries (besides Korea)," Conway said. Hirschhorn said he liked the user interface but wasn't totally sold how it was needed in a world of MySpace pages and Facebook fan pages.

So what did the judges think overall of the "Youth & Games" category at TechCrunch50? Calacanis asked them which of the five companies they'd take an investor meeting with, and it looks like there was a clear winner: Dodge and Vardi both preferred ToonsTunes, and Conway said he'd take a meeting with either ToonsTunes or Story Something but ranked them about even. Zachary, meanwhile, said "I'd put ToonsTunes at the top, Story Something a distant second, and the others are off the map."

Hirschhorn--the lone entertainment-industry member on the panel, it should be noted-- was the dissenter, ranking Story Something at the top and ToonsTunes behind it, sticking to his instinct that it'd be tough to get a music games start-up off the ground when there are already so many big players in the industry.