Niklas Zennstrom on Entrepreneurship

I had the opportunity to listen to Niklas Zennstrom this afternoon. He’s currently a Partner at Atomico Ventures (his VC fund) but he’s well-known as the founder of Kazaa, Skype and Joost. I wrote about Joost and Zennstrom recently. He talked about entrepreneurship, his own personal failures and successes and the European scene. As an entrepreneur myself, it was a very inspiring speech.

Niklas Zennstrom LeWeb Paris December 2009

A few excerpts:

  • Entrepreneurship is a lifestyle and takes up all your life. It requires lots of sweat and long hours of work.
  • You need an unshakeable belief in your startup, to be passionate about it, even when people don’t believe it.
  • For Kazaa, they were too early, actually several years early. This was a missed opportunity in terms of business development as their proposal to music companies fell on deaf ears.
  • If something is not working, take a deep breath and start again. In Zennstrom’s case, it became Skype. They went after a large market (phone companies) with fat margins. Skype got a lot of traction really quickly but it was very difficult to raise money. No one wanted to touch the company. VCs thought it was too risky.
  • He believes Loic Le Meur is probably the last European entrepreneur to move to Silicon Valley (Loic moved to San Francisco a few years ago to launch Seesmic, his current startup)
  • Entrepreneurs need to think of Europe as a market (critical mass vs. the US market)
  • Europe has a tendency to stigmatize failure but you cannot have big returns if you don’t have big risks
  • Joost was a misjudged opportunity. They could not strike the right partnerships.
  • Whatever you do, you never know the results in advance.
  • How’s the scene now? We’ve seen more and more companies from Europe being successful with a culture of international startup company. Companies think globally from the get go.
  • We now have European role models: Zennstrom himself, Loic Le Meur, Martin Varsavsky, etc.
  • Do we need an European Silicon Valley (i.e. a physical place)? No, we can meet online and then network at events.
  • Capital is no longer as important for entrepreneurs as a few years ago. Building a startup is more cost efficient and companies are able to reinvent themselves quicker with agile entrepreneurs.
  • It’s exciting to be an entrepreneur in Europe. In recession, you build companies and in peak market, you exit. The next few years will be fantastic. Disfunctional markets means entrepreneurs will enter the market.
  • Atomico Ventures wants to bet on European entrepreneurs that want to build tomorrow’s global companies. It’s all about the people (passionate) and it’s all about the size of the market.

More on Techcrunch.

Did Joost Fail Because They Wanted to Work With Traditional Media Companies?

Seeing Niklas Zennstrom’s name on LeWeb’s list of speakers along with the news that Joost’s assets were being acquired by Adconion Media Group got me thinking about the dynamics of that specific startup. Joost was founded in 2006 to build a online video portal with the core idea that legal video streaming would be more efficient if it was built on peer-to-peer technology. The company signed content licensing agreements with major media companies, they had major funding ($45M), 150 software developers and experienced founders/entrepreneurs (Zennstrom and Janus Friis) who had had major successes with Kazaa and Skype. It seemed they would be successful once again.

It didn’t happen. Why? CNET explains that their technology choice of a downloadable application certainly impaired their chance of success. The arrival of Hulu, a big hit with users, also didn’t help  but I was specifically struck by this other reason: “Some of the big-name content partners seemed to be putting in a halfhearted effort with Joost, offering up reruns and esoteric programs instead of the new programming that people actually wanted to watch”. Hmmm…

Think about Kazaa and Skype. What did Zennstrom and Friis successfully achieve with these new initiatives? They directly attacked major players in large mature markets using industry weak points. Kazaa was an assault on the music industry, Skype took on telcos. They didn’t say “let’s work with these guys”. They just did it and leveraged the fact that these two industries were very profitable and slow to innovate. They foresaw the disruptive impact of technology and created a lot of value for their shareholders. Venture capital firms usually love these startups. When they created Joost, they changed their entrepreneur paradigm and it failed. Zennstrom and Friis’ new startup Rdio is in the online music space and it looks like they’re going to be working with the music industry. Will it impair their chance of success or has the music industry matured enough in the last 10 years to embrace innovation?

It got me thinking about newspapers, directory publishers, the movie industry, radio, magazines, and other traditional media companies. At one point or another, all these industries (who generate or used to generate fat profit margins) fought technology and we’re slow to innovate. I think it’s getting better (still not fast enough in my own opinion) but I was reminded it is still very slow in Canada by this blog post (in French) written by Yannick Manuri. He says that 40% of all online advertising spent in the country benefited foreign media companies and anecdotally he doesn’t see the sense of urgency in Canadian media companies. It’s a reality in other countries as well.

Why do we need industry disruptors to stimulate innovation in media? Couldn’t it happen by itself?

Rumor: eBay to Sell Skype to Google?

Techcrunch reports on a rumor this morning that would have Google either buy Skype from eBay or Google partner with Skype.  According to the site,

“Skype, acquired in late 2005 for $3.1 billion, has been a financial albatross around Ebay’s neck. eBay removed Skype co-founder and CEO Niklas Zennstrom in October 2007, reportedly due to frustration at the financial performance of Skype. Ebay also negotiated down the huge earnout due to Skype stockholders and took a $936 million one-time loss around the transaction.  It’s clear that eBay wants to either unload Skype, or significantly drive performance.  Google, by contrast, is just beginning to think about how to dominate the voice space. They have a VOIP service through GTalk, a free 411 service and GrandCentral, a telephone management service they acquired last year for $50 million.”

What it means: I think this potential acquisition/partnership makes complete sense. IMHO, call tracking and pay-per-call represents a large portion of future local search revenues and Google clearly sees that local search is where they will get tremendous growth in the next 5-10 years.  By buying the Skype infrastructure (and user base) and combining it with the GrandCentral technology and expertise, they instantly get core assets to execute that strategy globally.

How Facebook Complements Your Blogging Strategy

I’ve been using Facebook intensively for about 4-5 weeks now and it has become an important staple in my blogging/media strategy. Here’s how it complements what I’m currently doing in the Praized blog:

1) Facebook Status Updates: I use the “status update” function as a micro-blogging tool (a bit like Twitter). It helps me put in words what’s on my mind in that specific moment and it captures my personal zeitgeist. It only takes a few seconds to write but people react to it. I usually receive one message a day from friends/readers reacting to my status update line. Don’t forget it’s a status update that triggered the Save Business 2.0 efforts.

status update Facebook

2) The “Post a Link” function in the Posted Items page: I use that function when I want to share with my friends/readers an interesting article I just discovered that might not be completely within my pre-defined blogging topics in the Praized blog (i.e. social and local). Examples in the last week include the Skype outage and the Google browser rumors. I always comment on the article to add value and I often end up my comment with a question to trigger additional reader comments.

Facebook Post a Link Function

3) I import my blog posts within Facebook Notes using the Import a blog function. You just need to plug-in your RSS feed URL. I’ve tried using the MyBlog app but it does not work well (I have to manually update the RSS feed to get my blog posts within Facebook). My readers get warned I’ve imported a note (in their newsfeed) and they see an excerpt from the post. They can also comment within Facebook or go to the original post.

Facebook Imported Note Notification

One caveat: don’t abuse your friends’ trust by posting too many links or importing too many notes every day. Unless you’re always interesting, they’ll shut you down and change the channel. That’s what happened to Robert Scoble last week with some of his Facebook friends. Tomorrow, I’ll offer five suggestions to improve Facebook. BTW, don’t hesitate to add me as a friend on Facebook if you’re interested in reading/discussing social media.

Industry News: Agendize, Mobivox, ClearSense

A potluck of industry news this morning:

Agendize previewed some usage data in their latest newsletter regarding increased call volume when click-to-call is combined with a click-to-save functionality. According to their release, “a major European online directory publisher who recently added AgendiZe Click-to-Call to the already-implemented Click-to-Save & Share options experienced a 90% call volume increase in the January – March time frame compared to the last three months of 2006”.

ClearSense, a subsidiary of World Directories, announced a strategic alliance with LocalLaunch!, a subsidiary of RHD, to help World Directories sell SEM products to their SMEs.

Mobivox, a Montreal-based mobile application company, announced the beta launch of its hosted service that allows people to bring Skype to any mobile device without downloads. The service is now available in 23 countries.

Skype Releases Find a Business Function and Merchant Reviews

From the Skype blog:

Although only a minor increase in the version number, from 3.0 to 3.1, this release contains a major new feature called SkypeFind. SkypeFind is one of the most interesting features that we’ve done in quite a while now. We call it “Local businesses you like”, and that’s what it is – a collection of businesses, with reviews and comments, built by everyone using Skype. There are three main things you can do in SkypeFind and some hidden tricks as well.

Adding and editing listings

To help build SkypeFind, you may want to add your own listings of businesses that are not yet on SkypeFind. Just click the “Add listing” button on the SkypeFind tab, or click “Edit this listing” when viewing a listing, and fill in the form.

skypefind_addlisting.jpg

Adding a review or comment

The next thing you may want to do is add a review or comment for a listing. In the search results view, you will see the “Add a review” button. You can add a review, picking one of the rating options. You can also add an optional text comment. You can add one comment per listing. If your opinion changes, you can always come back to this listing and edit your comment later. This might be useful if you were initially impressed by a business and so added a comment but service went down hill on additional visits.

skypefind_reviews.jpg

Find a business, any business

If you just want to search for a business, there’s nothing easier than simply going to the SkypeFind tab and entering your search details. As you typically want to find a business that is close to you, we automatically search for business in the country you listed in your profile, but you can choose a different country if you want. You also need to indicate what you are looking for, such as a “restaurant”, “pizza place”, “pet shop” or “florist”, and possibly a city or region name, although this is not mandatory.

client_skypefind.jpg

You then click “Search” and see the results.

skypefind_results.jpg

As you’ll notice, there’s a “Call” button right there. When you click it, you make a SkypeOut call to the phone number that is in this listing. But wait, there’s more… There’s a cool trick you can use when you are not sure what you’re looking for exactly. Throughout the SkypeFind interface, you see the “Ask your friends” link. You can post a question to your friends there, such as “What’s a good hotel in London?” Your mood message is then automatically set to this question, but with a twist: there’s a link to a public chat that’s automatically created.

skypefind_recommendations.jpg

Now, when your contacts see your mood message and click on it, they are automatically added to this public chat. You can then chat about hotels in London together.

skypefind_publicchat.jpg

GigaOM has additional information: “In the first few hours after Skype made the new beta client available, it already had 372 SkypeFind listings in 53 countries, Tamkivi said. He added that while there is no commercial advertising yet, the service may accept ads in the future. In terms of editorial control, Tamkivi says the SkypeFind pages will use a Wiki-like functionality so that the user community can change and correct entries. There will also be a direct link from each rating to Skype, where people can report abuses or malicious postings, Tamkivi said. There are no plans to make the SkypeFind ratings available to non-Skype users, he added.”

What it means: as Skype is all about calls and they have a tremendous installed base (they reached 500M downloads this week and they usally have 3.5 to 9 million users connected at any one time), this is potentially disruptive to any directory publisher or local search site. But it really depends on user adoption. We’ll have to see if Skype users are interested in doing other things than communicating with their main contacts. Main weakness: there is no data in the system. It needs to be built from scratch. As Download Squad says: “Right now, if you type restaurant into Skypefind, you get only 11 listings. And if you want to find a restaurant in Philadelphia, you’re out of luck. Personally, I would have been happier if Skype had first acquired a large database of businesses and then let users rank those services. Having a Skype411 button would be a lot more useful to me than Skypefind.” But in any case, this is to be followed very closely!

Meta-Praized: ComScore & Privacy, TV Networks Discuss YouTube Rival, Four Google Improvements, LiveDeal.com, Yahoo & FaceBook, Skype Reorg, BidNearby

Meta-Praized is a collection of links & stories we’ve “dugg” on Digg.com in the last 7 days. Feel free to add us as a friend: PraizedDotCom .