Gizmoz - Nee Zapa - Gets Cash

SAN FRANCISCO (03/07/2000) - Zapa Digital Arts announced today that it has received $14 million in financing. In addition, it has changed its name to Gizmoz to reflect its core streaming-media product. Chase Equity Associates and Polaris Venture Capital led the investment in the viral marketing company, while America Online, Giza GE Venture Fund and 1-800-Flowers.com also took stakes.

Gizmoz, whose chairman is former Pepsi and Apple Computer exec John Sculley, had received $10 million in earlier rounds. Most of that money went for research and development at the company's headquarters in Tel Aviv. That office has 60 employees, but the recently opened New York office has the other 20, underscoring the company's commitment to marketing and sales in the U.S.

Gizmoz are packets of topical information that customers select and download to their desktop. The "gizmoz" appear on the desktop as thumbnails, and use streaming media technology to update themselves automatically. The company creates and distributes specialized Gizmoz for media and marketing companies, and can also license the technology to a particular company that wants to make its own Gizmoz. Currently, the company generates less than $10 million in revenues; it declines the opportunity to name clients other than 1-800-Flowers.com.

Gizmoz plans to use the most recent investment to market itself to a wider audience of pop culture and media businesses, according to CEO Eyal Gever. "We have to be aggressive in moving this platform to the market," he says. "So it's mainly for sales activity, marketing and bringing the product to the market this year." Viral marketing seeks to take advantage of the human tendency to pass on interesting images or items to friends and relatives. Examples include humorous e-mail and eye-catching photographs.

The company collects a fee for developing particular Gizmoz for a client, and another fee each time a customer downloads and views the Gizmoz. In the near future, the company wants to distribute its devices to set-top boxes, PDAs and cell phones. For 1-800-Flowers.com, the company set up a greeting-card and astrology Gizmoz that visitors could personalize and forward to friends and family. Gever says that Gizmoz first began testing its product with consumers several months ago, when it induced several hundred thousand people to create their own content and distribute it to family and friends.

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