1) After years toiling in the uber-geek trenches, semantics just got uber-interesting. As I wrote late last week, the days of GoogleKiller.com – an ultimate destination search site to rule them all – are behind us. The next wave of semantics lies in plugging into already existing sites and products that desperately need a smarter framework behind them.

It’s now time to focus on the niggling details: how to identify and amass relevant information, present it to users in an easily consumable yet rich visual format, and, perhaps most importantly, establish a user base that will consistently turn to your product as a valued information resource.

Powerset just landed (speculatively of course) the largest user base in the world. Which brings me to point number two.

2) That massive user base won’t amount to much if users are faced with a complex, hard-to-parse interface. Though some disagreed, I viewed Powerset’s Wikipedia search as a changing of the game in search.

Once you’ve dug into the meat of a Wikipedia article with just a couple of clicks, zeroing in on precise actions and entities and going directly to their citations in the article, paging through flat hyperlinks just ain’t going to cut it.

Many viewed the Wikipedia search product as a disappointing launch from Powerset, after so many months of hype. They were focused on the wrong angle though, fixating on the language used to search rather than the results produced. (And I do blame Powerset for some of this, as previous messaging from the company fixated on search phrasing.) Asking Wikipedia where you should go for dinner tonight is barking up the wrong tree, no matter what engine you use. But what if you applied those same Powerset algorithms to your email? Or to Live Search listings? Or to the documents on your hard drive? Microsoft – or any other company wanting to throw its hat in at this point – sees the potential in Powerset’s algorithms, yes. But more importantly, that intuitive little UI the company threw on top of Wikipedia opens up a wide realm of consumer possibilities.

3) The talk of whether this is an over-valued deal is valid but, in one sense, it would be more than a deal between two companies. It would be an acknowledgement by the business sector at large that semantics’ time has come. That it’s time to take it out of the university labs and hands of the rocket scientists and put it in front of consumers for true vetting. Is semantics ready for that stage? I think it is. Will it look and sound the same after going through the billion-dollar-behemoth ringer? Probably not. But that’s the most exciting part of all.

When the proposed deal was announced 11 days ago, I wrote – assuming Yahoo! to be a willing recipient of the offer – that getting the deal past regulators would be a challenge and one that could demoralize an already struggling Yahoo!

Now, Yahoo!’s decision to reject the offer could have the opposite affect on the company and it’s employees.

From the press release issued by Yahoo this morning:

After careful evaluation, the Board believes that Microsoft’s proposal substantially undervalues Yahoo! including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as our substantial unconsolidated investments.

Roughly translated: “Microsoft is out of its friggin’ mind if it thinks for a minute we’re some kind of cheap date.”

And therein lies the motivation. Nothing energizes an organization and galvanizes employees quite like righteous indignation.  Now, Yahoo! has something to prove, damn it!

Sure, Yahoo! left the door ajar for counter offers and other “strategic options,”  but the Microsoft bid – and its rejection – might be the best thing to happen to Yahoo! in a very long time.

Nexo Systems takes group collaboration one step closer to consumer-friendliness with an extremely intuitive, couldn’t-be-simpler, module-based site builder.  Nexo’s founders recognized the positive sin the current group leader, Yahoo!Groups, and worked to integrate similar technology into their product. But they removed any limitations, added all manner of fun widgets to drag and drop,. and most interestingly, game the pages an open architecture for those users with a bit of savvy.

Clearly, the company  not only stood apart, but it stood out and captured the eye of Shutterfly.  Earlier this month, the  online photo site acquired Nexo Sytems, in a cash and stock deal totaling less than $15 million.  Nexo Systems was privately funded by angel investors.

Nexo Systems’ founders Craig Jorach and Tom McGannon will join Shutterfly’s technology team, giving Shutterfly a talent-boost, as well as a “next-generation sharing platform,” according to a statement by Shutterfly CEO Jeffrey Housenbold.

By most measures, a $15 million acquisition is a modest outcome for a Silicon Valley startup, and certainly not the payday an institutional investor would want.   Still, it’s not a bad pay day for a small team.  Assuming typical seed investment and cap tables, the deal provides the capital and experience that will fuel future ambitions.

It’s also most certainly the prototype deal for the army of capital efficient Web 2.0 companies who have developed some decent technology framework, attracted a respectable user base, and who will likely run out of steam before they run into additional venture capital.   We’ll see more of these M&A deals through the remainder of the year as established companies jump start their next-generation offerings, capture Web 2.0-savvy engineering talent, and take some noise out of the market.  

First, it’s further evidence that open source plus services business models can work, and that is no doubt as important to Sun as is the position MySQL gives Sun in the $15 billion enterprise database market. Sun demonstrated its commitment to free and open software when it turned the foundations of Solaris, Java, StarOffice, and other component technologies over to Open Source. But somehow, the acquisition of MySQL is a grander “money where your mouth is” gesture and solidifies Sun’s commitment to Open Source in the enterprise.

Here’s what CEO Jonathan Schwartz wrote in his blog this morning:

The good news is Sun is already committed to the business model at the heart of MySQL’s success – first investing to grow communities of users and developers, and only then creating commercial services that attract (rather than lock in) paying customers. Over the past few years, we’ve distributed hundreds of millions of licenses and invested to build some of the free software world’s largest communities. . . . Free and open software has become a way of life at Sun.

. . . With this acquisition, we will have . . . positioned Sun at the center of the web, as the definitive provider of high performance platforms for the web economy. . . This creates enormous potential for Sun, for the global free software community, and for our partners and customers across the globe. (Read the entire post here.)

There’s a second and more subtle — but extremely important — impact of the MySQL acquisition and that is the impact the announcement may have on European technology startup communities. Throughout Europe, technology entrepreneurship remains an oddity, and success stories are relatively rare. We’ve worked within the European technology community for nearly a decade and can still count on our available digits the number of grand-slam exits for tech startups there, and the social and cultural risk of entrepreneurship remains high.

Perhaps, Mårten put it best during a keynote speech at Guidewire Group’s Innovate!Europe 2005 conference, as he accepted the award as Entrepreneur of the Year. Society’s values, he said, are reflected in the heroes it chooses. “We must celebrate entrepreneurs and turn them into heroes in order to build a society that values and honors technology and business innovation.”

Mårten and MySQL have become heroes.