REFILE-UPDATE 2-Comcast buys social network pioneer Plaxo

Thu May 15, 2008 11:23am EDT

(Refiling with no changes to text or headline) (Adds Plaxo CEO comments, details)

By Yinka Adegoke and Eric Auchard

NEW YORK/SAN FRANCISCO May 14 (Reuters) - Comcast Corp (CMCSA.O) has agreed to acquire pioneering Web start-up Plaxo Inc, which was first to turn address books into social networks and laid the foundation for Friendster and Facebook.

Terms were not disclosed. But a source close to the deal said Comcast, the top U.S. cable TV company and No. 2 broadband Internet supplier, is paying from $145 million to $175 million, based on meeting performance targets in the next few years.

Plaxo is famous in Silicon Valley for being early to see a business opportunity in users' e-mail address books, but only belatedly joining the social network craze that followed.

Comcast will use Plaxo to offer social network links across Comcast-connected devices from TVs to digital video recorders to, eventually, wireless devices, thanks to a new partnership with Sprint (S.N), Clearwire CLWR.O and Google (GOOG.O).

Plaxo joins the fast-growing Comcast unit that includes Comcast.net, video entertainment site Fancast, movie site Fandango and video publishing company thePlatform.

"Every social network is better the more end points you can connect with," said Sam Schwartz, executive vice president of Comcast Interactive Media. "Plaxo will offer users the ability to share with friends on all Comcast screens going forward."

To foster loyalty, Comcast is seeking ways to connect its 24 million users across its TV, phone and Internet platforms. It has worked with Plaxo for a year on integrating its e-mail and voicemail via a service called SmartZone for Comcast's 14 million-plus high-speed Internet subscribers and more than 4 million digital phone subscribers.

Plaxo Chief Executive Ben Golub said joining Comcast would bring the virtues of social networks not just to existing Web users but to television viewers, who might decide what shows to watch based on what their friends on Plaxo recommend.

"We intend to deliver on a vision of making "social media" a natural part of the lives of regular people, not just early-adopters," Golub said.

CALL IT A COMEBACK

Plaxo was founded in 2001 by two Stanford engineering students, Todd Masonis and Cameron Ring, and Napster co-founder Sean Parker, who was pushed out in 2004 by Plaxo's financial backers, only to become the founding president of Facebook.

Plaxo kept users in touch by automatically sharing data between their address books. But it irritated its fanatical early users with notifications whenever friends updated details -- giving Plaxo a reputation as an accidental spammer.

In the last three years, Plaxo made a comeback by focusing on partnerships with big Internet companies to help synchronize address books and calendars with other Internet services.

Besides Comcast, it works with Microsoft (MSFT.O) Outlook, Google and Yahoo (YHOO.O) services, Apple (AAPL.O) Macintosh computers, Mozilla Thunderbird e-mail and many mobile phones.

"Being first, the pioneers sometimes get the arrows," said Venky Ganesan, a managing director of Globespan Capital Partners and a member of Plaxo's board of directors since 2003. "I think of Plaxo as a great redemption story."

The company changed course a year ago to introduce its own full-scale social network akin to Facebook. Rather than linking address books, Plaxo Pulse links users via shared interests based on what they write or the photos and video they share.

Plaxo was once a lone voice for opening up social networks so users could share data from site to site, assuming they had permission. Google, MySpace and others have since followed.

"We went from being derided by Internet users to becoming the champion of what the Internet community wants in terms of openness and data portability between sites," Ganesan said.

The company now counts 20 million members of the Plaxo network, up from 5 million three years ago. About a third of those members came through a partnership with AOL.

Plaxo says it has 30 million more potential accounts from Comcast, which offers online address books as part of its Web mail service. Plaxo Pulse has signed up "several million users" in the past year.

The company had early funding from Sequoia Capital's Mike Moritz and investor Ram Shriram. Over the years, Plaxo took in a total of about $28 million in venture capital funding from Sequoia, Globespan, Cisco (CSCO.O) and DAG Ventures. (Additional reporting by Anupreeta Das in Chicago; Editing by Louise Ireland)

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