Monday, March 10, 2008

Wunderkind Kaufman back with startup Kluster

By Christopher Calnan

A Vermont entrepreneur barely 21 years old is rapidly approaching the designation "serial entrepreneur" by merging the concepts of user-generated content and online collaboration into his new business, focused on web-based communities generating ideas for new products.

Ben Kaufman returned this week from Monterey, Calif., where he publicly launched Kluster Inc. at the three-day Technology, Entertainment and Design, or TED, conference.

The nascent business is using the same strategy to commercialize the collaboration process that Kaufman used to develop an iPod accessory for the previous company he founded, Mophie Inc. In 2006, he gathered suggestions from attendees at the MacWorld Expo for Mophie's next iPod accessory. The product turned out to be an iPod case that was also a key ring and a bottle opener -- and Mophie sold 40,000 of them.

Employing what Kluster calls "open source decision making," 2,700 people at the TED conference contributed suggestions to generate an educational board game that is designed to expand players' cultural awareness. Back home in Burlington, Vt., Kaufman said he plans to refine the game, called "Over There," and produce it.

"It was exactly what we wanted," said Kaufman, "We plan on getting it out to the world."

Kluster plans to generate revenue with a fee equal to 33 percent of reward pools (as high as $50,000) customers offer to project contributors.

Last September, Kaufman sold Mophie to Michigan-based mStation Corp. for an undisclosed amount. Kaufman started Kluster with $3 million from Williamstown-based Village Ventures and FreshTracks Capital.

Kluster isn't the first web company to get people to collaborate on ideas. Watertown-based Communispace Corp. hosts and manages such communities. And Mzinga Inc. of Burlington, Mass., this week closed a $32.5 million round of VC funding and said it would acquire Littleton-based Prospero Technologies LLC .

But Kluster's approach is different, said investor Lee Bouyea, managing director of FreshTracks Capital, a Shelburne, Vt.-based VC firm, because it's not as limited and "allows for more innovation."

However, all of them use a distributed work-force model that's also similar to the online software testing model launched last month by uTest Inc. of Ashland.

Kaufman handed over Mophie's top position to former Burton snowboard executive Dave Schmidt after Village Ventures financed his first startup. But the eight-employee Kluster could be different because it's not a retail business like Mophie, Village Ventures co-founder and managing general partner Bo Peabody said, adding that Kaufman's lack of experience and fresh perspective may prove to be helpful in operating the new venture.

"This is a situation where he's definitely in a new (technology) category," Peabody said. "Experience might be considered baggage. He's making a name for himself in outsourcing innovation."

Kaufman said he has no plans to return to Champlain College, where he was studying business before dropping out his freshman year to operate Mophie.

"I have learned more in an hour business meeting here than in six months at business school," he said. "No one would dispute that."