Ali Davar was in his last year of law school at the University of British Columbia when he had an idea. Excited, he walked across campus to the Laboratory for Computational Intelligence, where he met with an expert in machine learning.
What he pitched to the professor was a different way to search the Internet. His idea was less about searching than it was discovery: While services like Google delivered B when users asked for B, Mr. Davar wanted to put more focus on A and C - the related ideas, topics and products dancing on the periphery.
Soon enough, a start-up emerged, backed by $4-million in angel funding and government grants. But after four years of work, their efforts to establish a niche search engine in a world dominated by Google were going nowhere, and the difficult decision to scrap the project was made.
While the enterprise might have failed, the idea lived on. By early 2010, the decision to drop the search engine was made and the technology was rebuilt. Now, Mr. Davar and his small team of computer scientists are responsible for a popular new app on the iPad: Zite, a "personalized magazine" that over time learns the nuances of a person's reading tastes. The app was an instant hit when it was released in March. Bolstered by positive reviews in tech publications, Zite reached No. 1 in Apple's rankings of free apps in its first two days and was downloaded more than 100,000 times in its first week.
The fortunes of Zite Inc., which is in talks to raise at least $10-million in venture capital this spring, are being closely watched by the technology sector in Vancouver, a city that is hungry for a winner. With its respected universities and attractive surroundings, the coastal city has the potential to draw top talent and become a global tech capital. Vancouver is already strong in video game development and has scored some success in business software, but in the wildly hot realm of consumer websites like Facebook and LinkedIn - whose stock price more than doubled on its first day of trading last week - it has seen few success stories.
In the city's Yaletown neighbourhood, a collection of old brick warehouses near downtown, numerous upstart technology companies have come and gone. Zite, holed up in a small unmarked office cluttered with whiteboards covered in mathematical formulas, was nearly among the failures. But now that it has scored success, it faces even greater challenges. It walks the line of content ownership - Zite's app repackages information owned by others - and has already attracted the legal ire of some of the biggest publishers in the United States. And it faces a hotly competitive market as iPads become ubiquitous and consumers seek new ways to digest a constant barrage of information. Indeed, apps such as Zite are in a race to build what tech commentators call the "Daily Me."
The company is already trailing a larger, better-funded competitor. Palo Alto, Calif.-based Flipboard Inc. raised $50-million in April, valuing the company at $200-million, and it has the backing of some of the biggest names in Silicon Valley and Hollywood: venture capitalists Index Ventures and Kleiner Perkins, Twitter creator Jack Dorsey, Facebook Inc. co-founder Dustin Moskovitz, Oprah Winfrey and Ashton Kutcher.
Flipboard's app - an attractively designed "social magazine" - was a fast winner when it launched in 2010. Apple Inc. named it the iPad app of the year. It has focused on quality of presentation and doesn't rely on algorithms, instead delivering a person content connected to their Facebook and Twitter accounts, as well as from mainstream publishers that pay to be featured.
Nevertheless, Mr. Davar is convinced his product will flourish. The app "gets smarter as you use it" and can parse, for instance, a person's interest in politics by assessing articles they read - and those that go unread - to the point where left- or right-leaning stories, or long pieces or short hits, will be delivered. And the search goes far beyond obvious sources and combs the untold thousands of blogs and rarely visited corners of the Internet.
"There's never been more great information available and every day people are missing most of the best of it," said Mr. Davar, co-founder and president of Zite, whose app's name is an abbreviated play on the word zeitgeist.
But both companies face a threat as bigger tech companies discover there's money to be made in curation of information. Mike McCue, Flipboard chief executive officer, says the company needed to drum up the VC cash last year to fend off incursions. "I see a lot of competition coming down the pike," Mr. McCue told TechCrunch. "There's talk that some people at Google are saying they are building a Flipboard killer and I've heard those rumours."
Far from Silicon Valley, Zite has had to elbow through other battles. In late March, publishers that included The Washington Post, Getty Images, and The Associated Press, issued Zite a cease-and-desist letter. Zite's app, until then, scraped content from websites and presented it to readers in a more attractive format - and free of the original ads. The legal missive called Zite's app "plainly unlawful," said it misused "the hard and sometimes dangerous work of tens of thousands of people," and deprived "our websites of traffic and advertising revenue."
Zite complied with the letter, and it now links directly to the original content's website. Mr. Davar said the company wants to work with publishers, not antagonize them. How Zite will drum up cash - advertising and partnerships are options - is not yet clear. Like Google and Facebook before it, Mr. Davar said the key is to first establish the product before chasing cash flow.
"All we want right now is for users to love us," Mr. Davar said.
The addition of a former Microsoft search executive who worked on Bing will help in financing and leading Zite forward. Mark Johnson in late April signed on as CEO of Zite, after two years as an adviser, which included his instrumental push to give up on search and pursue personalized news.
He likened Zite to the early days of search engines, when people were impressed, even though they worked only half-well.
"Zite's personalization isn't perfect," Mr. Johnson said on his blog after taking the job. "But we've made a breakthrough advance."
Beyond the valley
Zite founder Ali Davar said the Vancouver tech sector's failing has been mediocre marketing of its businesses but believes factors such as cheap computer servers and a long-gestating industry means the city is about to make a mark. "This town's coming into its own."
Mr. Davar offers three tips for making it in technology outside Silicon Valley:
1) Capitalize on avoiding the "Valley premium." All costs in the San Francisco-San Jose region are higher than almost anywhere else. Use this to "do more with less."
2) Recruit Valley ambassadors and visit regularly. Make a connection with key individuals in Silicon Valley, who can help sell your story on your behalf, which can be reinforced during visits for major conferences and events (at least once a quarter).
3) Mine local talent. Away from the hypercompetition for computer scientists in California, technology upstarts can build small, talented teams through local universities, as Mr. Davar did at UBC.