Baby Breaker Birth Announcements

Welcome back to Baby Breakerdom! My apologies for the week off. I was attending a gathering of Fools at HQ last week. But now I'm back and ready to continue our quest for budding Rule Breakers. This week we find the wireless movement going global, as well as a potential nightmare for Yahoo! (Nasdaq: YHOO  ) .

First up this week is FON Technology, a Madrid-based start-up that's seeking to establish a global network of wireless Internet hotspots. That might not sound like much, but FON's approach is unique, I think. It depends on network effects -- that is, you help expand the business by downloading the FON software to your wireless router. In return, you get access to any other FON-powered hotspot, anywhere in the world, free.

I think it's a powerful idea, but I have no idea how the firm plans to make money. A check of FON's website may offer a clue. In this blog post, an apparent FON employee writes that the company's strategy is to partner with Internet service providers -- think Earthlink (Nasdaq: ELNK  ) or United Online (Nasdaq: UNTD  ) -- to deliver FON-ready broadband service, which, in turn, would create a revenue-sharing arrangement.

To make that work, FON has to get a lot more people online. Accordingly, the company is aiming to set up -- wait for it -- 1 million Wi-Fi hotspots by 2010. It will have help from some very big-name investors. Skype, which is now part of eBay (Nasdaq: EBAY  ) , is teaming with Google (Nasdaq: GOOG  ) , Sequoia Capital, and Index Ventures to provide FON with $21.7 million in funding.

Next up is TagWorld, a social networking start-up not unlike MySpace (acquired by News Corp. (NYSE: NWS  ) for $580 million last year). Its bravado made headlines at the annual DEMO conference, which features dozens of start-ups vying to bring you the Next Big Thing.

Credit CEO Fred Kreuger. Although of no apparent relation to the infamous movie villain from ANightmare on Elm Street, he wasn't shy about telling the world what he thinks his company will do to competitors. For example, in an interview with VentureWire, he said that he can "take on Yahoo!; I'm not afraid of them." He also said, in reference to MySpace, that TagWorld offers "a better product for the same audience." Oh, really?

I'm usually not much for this kind of hype, but Kreuger may have a point. First, TagWorld combines audio, video, and e-commerce functions that allow users to run their own social networking sites. And second, the business is growing by more than 10,000 new members per day. That's proven appealing to at least one top-shelf venture capitalist, Draper Fisher Jurvetson. Better keep it up, Freddy: Rupert Murdoch isn't likely to be a pushover.

Sadly, there were no Baby Breaker public offerings this week, which means it's time to say good-bye. See you back here next Friday when we continue the quest to find the next ultimate growth stock.

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Fool contributorTim Beyersisn't yet hip enough for social networking sites, but maybe someday. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what else is in his portfolio by checking his Foolprofile. The Motley Fool has an ironcladdisclosure policy.


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