The Globe and Mail

It seems every day a new Web 2.0 service pops up and renders another pre-Internet technology obsolete - from old-fashioned stock listings to the lowly phone book.

But no matter how quickly the Web churns out better, faster and cheaper versions of these services, millions of people still rely on the old, real-life versions. Now several Canadian startups are trying to fuse the old and the new - using the Web to make pre-Web services easier and cheaper. In the process, these startups are also creating a host of innovative new business plans that may change the way small firms make money on the Internet.

Few firms embody the fusion of new and old technology better than Hippopost, a Kitchener-Waterloo startup run by a half-dozen former Research In Motion employees. Hippopost's service is somewhat similar to Skype - except instead of letting users make free phone calls, Hippopost allows them to send free postcards.

Who sends postcards any more? Americans sent two billion of them last year alone, Hippopost head Donal Byrne says. Indeed, the traditional postcard format has been relatively unchanged for 100 years.

Hippopost works by tagging every postcard with an ad. Users pick a photo from a list, or upload their own, write a message, type in the address of the recipient and Hippopost sends the postcard for free. It arrives about five business days later - Hippopost works with several regional distributors across North America - with an advertiser-branded frame around the front side and a small ad on the back.

"From an advertiser perspective, when was the last time your brand ended up on somebody's fridge?" Mr. Byrne asks. "It's almost like smart direct mail."

One of the most interesting aspects of Hippopost's business model is the user-selection system of advertising. Once a user enters the address of the recipient, the website offers them a selection of advertisers who sell their product in that area. The idea is that users are more likely to select an ad that's more relevant to the person they're sending the postcard to, and advertisers are more likely to want to pay for that added relevancy.

"It's user-created content meets user-selected advertising," Mr. Byrne says.

Several big-name advertisers have already signed up, including Expedia and Coca-Cola.

Not surprisingly for a company founded by former RIM employees, Hippopost has already created a BlackBerry application that lets users design and send postcards on the go. The company is working on apps for the iPhone and other platforms too.

"You can be on a ski hill or at a beach, and you can take a picture, write a message and hit send," Mr. Byrne says. "That's it."

And while a five-day wait may seem like an eternity in an instant-messaging age, Mr. Byrne says it does have some advantages for advertisers, allowing them, for example, to extend the marketing lifespan of an event or campaign that would otherwise end much sooner.

While it's still unclear whether Hippopost will be able to drag the 100-year-old medium into the digital age, early customer reviews are positive, driven in large part by a wired generation's fascination with the concept of sending a real-life message, for a change.

Press '1' if you're frustrated

But real life can often be a frustrating place. In Toronto, a small startup is generating big buzz for its work on relieving one of life's biggest headaches - the much-dreaded customer service phone line.

Just about everybody has experienced the futility of navigating a big company's telephone system. More often than not, the sound on the other end of the line isn't the voice of a human being, but a robot or hours of Muzak.

Fonolo, a six-person Toronto startup, wants to change all that. The concept is simple - company CEO Shai Berger calls it "deep dialling." Users go to the Fonolo website and search for the company they're trying to call (the Fonolo database has about 500). Once they've selected the company, Fonolo presents a list of the most popular destinations for users calling that company.

For example, the listing for Dell includes dozens of entries for customer support and technical assistance. Users choose the department or number they're trying to reach, enter their own phone number, and Fonolo does the rest. The website dials the number, and when it gets through to the right department, it calls the user, saving them the hassle of going through the phone menu system manually.

"We wanted to tackle a frustration that somebody understood, something really universal," says Mr. Berger, whose company started with backing from angel investors and is now looking for more. "When we started talking about things that bother us when it comes to using the phone, the concept of phone menus quickly rose to the top."

Fonolo's consumer service is entirely free. This summer, the company rolled out a corporate product that uses the same technology, but provides a revenue source. In effect, it allows companies to embed Fonolo's technology into their websites or mobile applications, thereby improving their own customer experience without doing the expensive and time-consuming work of changing their phone systems.

Much like Hippopost, Fonolo uses a free customer service as a way to attract paying corporate clients.

"The consumer service doesn't generate revenue, but it serves as an excellent demonstration of the technology," Mr. Berger says. "It's a fantastic way to generate awareness and drive potential customers our way, much more effective than me trying to cold call or buy banner ads."