To me, the most interesting technologies were 3D and a massage chair that took me under for 20 min. The biggest news story, however, was USB 3.0, a sad state of affairs if 2010 is marked by a tiny, soon to be in every computer, plug (no matter how fast that damn thing is).

Ignoring the massage chair, which I can’t recommend enough, 3D was the hot topic, inspired by, of course, Avatar. Everybody, from Nokia to Nvidia, appeared to have something related to 3D. They mostly had excuses for it—Nokia was pimping its high bandwidth infrastructure for 3D content aimed at TV & telephone providers; Nvida was pimping its 3D shutter technology for consumer PCs; Frauenhofer Institut was pimping its glasses-less 3D technology; and more and more and more—but my end-conclusion, also after trying to explore the potential for a revolution that was Avatar, was that 3D is an excellent gimmick that will draw a crowd to your stand or cinema, but will leave you disappointed 2/3 times.

Ironically, Nokia had the most impressive display of 3D, showing it off on a 15,000 euro JVC flatscreen. When asked for details, however, all they could tell me was the price of the TV and that their bandwidth technology was not for sale to the “likes of me.” Very arrogant, those Nokia folk and it wasn’t just the 3D guy either… Nvidia’s shutter glasses also worked well and I see a real potential for 3D gaming. Frauenhofer’s glasses-less 3D-TV… pah! The problem with 3D is that it’s so easy to do it badly and 3D without glasses is far from ready. 3D with glasses is far from ready!

I don’t get the obsession with not wearing glasses either. First of all, they’re roomy, which means that you can wear them over existing glasses, they won’t make the claustrophobic more claustrophobic, and they’re disposable. Putting on glasses in the living room is kind of like turning off the light when watching TV.

Last, but not least, I liked lcReflex, which developed an interesting, if not very portable contraption, that makes applications on a computer screen three-dimensional. It involves something they call a Stereomonitor, two screens joined together at a 90 degree angle (one front-facing, one on top facing down) and a semi-transparent mirror in the middle. Put on glasses and you can manipulate an image of brain in 3 dimensions, which should be very interesting for, eh, brain-scientists and playing 3D Tetris.

What’s fairly clear is that we are very close to having 3D in our living rooms, whether it’s for playing games or for watching (selected) TV-shows and movies. But 3D has the same problem that HD-DVDs and -TVs have, which is that it’s insanely niche. You can’t play everything on it and you need some pretty expensive equipment to play it. That combination doesn’t justify much of an investment in it.

The best chances for success belong to companies like Nvidia, which produce consumer-priced solutions for consuming content. Add to this that it is (relatively speaking) fairly easy to convert digital content from 2D to 3D. I very much see the next stage of gaming to becoming 3D.

I’m much more bearish on video-media. Great that cinemas have found a new revenue stream to subsidise their troubled existence. Great that 7 out of 10 filmmakers are considering to make their next film in 3D. I don’t think cinemas have to worry about living rooms competing with them on that level anytime soon. While the need for a big screen to enjoy 3D is a myth well-worth breaking (and it soon will be in gaming), it is still a powerful way to experience a movie and something you can sell at €/$ 15 a pop. Home-entertainment still has the expensive technology problem and the fact that BluRay DVDs simply aren’t selling to anyone except Playstation 3 owners.

As mentioned, 3D’s gimmick power is strong, but that will wear off after having 3D technology in your living room and hardly any media to consume on it. It’s much better off in cinemas where the growing few pay a few bucks more to see space debris floating above their heads, or on consoles where the price of a 3D add-on is hardly more than buying a Guitar Hero guitar.

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But how good is this wave of mergers and acquisitions for the future? ( By future I mean upcoming innovation and future of Startups which target innovation not business)

Whenever your biggest competitor takes you over, it blunts the competitive spirit that can drive innovations. Thats what concerns me most, the spirit of innovation is somehow compromised because of takeovers.

Not always always a potential Merger or Takeover can be taken as a positive sign of ever increasing competition and globalization. And particularly not right now when it comes to web and social media startups, many of which are still more focused on innovation and building up audiences than on making profits. Rushing them into deals to fulfill long-delayed plans for an exit strategy could derail the evolution of a strong business plan.

From an investment standpoint, founders and venture capitalists have good reasons to cash out now. Market caps of public tech giants are rising — the Nasdaq gaining big time – and so are their cash stockpiles. For Instance Microsoft has a stock pile of about $49 billion in cash; similar is the story of Google with $24 billion. High-profile Multi Billion dollar deals like the ones we had in recent times have a way of spurring on other acquisitions.

TimeWarner buying AOL and eBay buying Skype come to mind. Even snapping up a hot startup for its technology or talent — Google buying Dodgeball or Yahoo buying Flickr – can lead to culture clashes, customer anger and other disappointing results.

I  tried to re-compile the list of some major takeovers which are substantial enough to change the future of computing.   We are talking about some multibillion dollar mergers and acquisitions, where the Big gets even Bigger.

Oracle eclipses the SUN @ $7.4 Billion

This Merger can be coined as “father of all the Tech Mergers” announced last year. If the announced the deal went through, Oracle,  the industry’s largest database software vendor would get an entry into the server and storage markets worldwide.

The acquisition, still pending, was announced in April, and may even be blocked because European regulators are contending that combining Oracle’s technology with Sun’s open source MySQL database would violate competition laws. Lets see if this deal goes through.

Xerox snaps up ACS in $6.4 billion

Another major takeover, Xerox pays about $6.4 billion in cash and stock for Affiliated Computer Services (ACS), a large IT and outsourcing firm. With this merger Xerox hopes it will give it a bigger foothold in the business services space. While the deal will surely boost Xerox, investors wondered whether it overpriced the deal.

Calling the ACS deal “a game-changer” for Xerox, Burns, CEO of the company, said it would help Xerox “expand our business and benefit from stronger revenue and earnings growth.” The deal will triple the service component of Xerox’s revenue to roughly $10 billion annually from $3.5 billion, according to the company.

Dell – Perot Catch-Up Deal worth $ 3.9 Billion

Buying Perot was a part of Dell’s plan to expand its footprint in the IT services market, which was  a necessity in a time when hardware sales were falling. Dell offered a staggering $3.9 billion for Perot Systems, a 68% premium over Perot’s actual stock value. Dell’s purchase can also be seen as a response to rival HP’s $13.9 billion acquisition the previous year of EDS — another services company founded by Perot.

Cisco-Tandberg worth  $3.4 billion

Cisco, already a major player in collaboration products with WebEx and TelePresence, signed an agreement in October to purchase videoconferencing vendor Tandberg, which makes both video devices and network infrastructure products. The acquisition, if completed, could have both a direct and indirect impact on Cisco’s bottom line, because expanded use of videoconferencing may increase network traffic, letting Cisco sell more switches and routers.

HP Acquires 3Com For $2.7 Billion

HP launched a straightforward assault on Cisco in their own Game of Networks. HP’s increasing influence in data center networking and convergence markets will have a big boost with its purchase of 3Com, a maker of switches, routers and security products. HP says the acquisition will further its data center strategy “built on the convergence of servers, storage, networking, management, facilities and services.” The acquisition of 3Com also help to expand HP’s Ethernet switching offerings, add routing solutions and significantly strengthen the company’s position in China thanks to 3Com’s strong presence in China. The transaction is expected to close in the first half of 2010.

I have collected the figures and numbers from various sources including PCWorld, Gigaom and Wikipedia. Let me know if you have a suggestion or correction to make. Please forgive me for the grammar, I was always bad in Grammar since school

Article Previosuly mirror-posted by me at Global Thoughtz.

Anand

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Sarah Lacy writes about SMSONE, a ultra-local news provider in India similar to Outside.IN, a Union Square Ventures funded US-only company that provides news updates via the web. SMSONE does it, as the name suggests, via SMS. And it spreads through a franchising model, working with local entrepreneurs that pay a franchise fee and also collect a share of the advertising revenue from locally focussed businesses. It is able to do this because of something that apparently doesn’t exist in the US (but does in Europe): receiving an SMS in India doesn’t cost the recipient anything.

When reading about this, I was immediately reminded of a similar business model employed by a Dutch entrepreneur in Russia, Ms. Annemarie van Gaal, founder of Independent Media, a company that distributed Russian versions of magazines like Cosmopolitan, Marie Claire en Good Housekeeping (source). When she spoke at the Star entrepreneurial seminar in Rotterdam a year ago, she told us about how she differentiated herself from the competition (paraphrased as I haven’t got my notes with me):

The trouble with getting your magazines distributed in Russia was that you had to pay quite a lot of money (some would call it bribes) to companies that would then take care of it… badly. Instead van Gaal decided to do it differently. She would hire street kids to distribute her magazines, similar to the gold days of newspapers: the newspaper boy.

If you read Sarah Lacy’s account on Techcrunch, you’ll see that SMSONE does it similarly, hiring local kids, often without much education, to take care of distribution. Doing it via official channels is likely a nightmare over there, and centralising distribution kind of defeats the purpose of micro-news.

It’s a different way of thinking, which many of us westerners don’t have. I mean, would you entrust your products to a beggar on the street or to a street musician? Not only is it probably against the law (except if the government does it), we pride ourselves on our super-organised infrastructure, where anything from temp-workers to interns are there to provide companies with a flexible workforce, and anything from printing presses to mobile internet exists to produce and distribute your stuff.

Of course, I wouldn’t just leave you with these two examples. In the beginning of 2008, Boston Consulting Group published a study of “local dynamos”— domestically focussed companies, which use creative business models to capture value from emerging markets that are filled with challenges, like lacking infrastructure and low-income consumers. The map below shows how widespread these companies are.

Some very interesting examples are mentioned, like:

• Shanda, a Chinese gaming-company, that, in order to combat software-piracy, focusses on providing interactive services through gaming, services that are impossible to pirate. And to overcome a lack of a financial infrastructure to pay for online services, they work with pre-paid cards.
• Indian CavinKare, which sells cheap sachets of shampoo through small local retailers, while using educational marketing to teach customers how to use their products.
• Goodbaby, which targets the many 1-child families in China, who are both willing to spend more on their child than multi-child families would, but are also in need of education.
• Amul, an Indian food-and-beverage-marketing-organisation, which collects and pays for milk locally, while tracking all operations via satellite and uses ERP solutions to make analysis based on the data and gauge whether future supply needs to be increased or decreased.
• Wimm-Bill-Dann Foods (Russia), which works extensively with local partners, and has devised leasing schemes for expensive machinery to boost their production and is able to serve 280 million consumers nation-wide.

The BCG, of course, takes the stance of its customers, Western companies, and the study is mainly aimed at how multinational companies (MNCs) can replicate 6 of these dynamo’s advantages, in order to compete with them. They are:

1. Customising to local needs – which involves first understanding these needs, and then meeting them.
2. Devising innovative business models that overcome local challenges – a logical follow-up to the last point, how to make money from the info you gained.
3. Leveraging the latest technologies – meaning that these emerging economies are less burdened with traditional infrastructure and quicker on the uptake of more affordable, newer, and easier-to-spread technology, e.g. mobiles.
4. Benefiting from low-cost labor and overcoming shortages of skilled labor – there’s two ways to look at this; a local workforce will be better equipped to interact on a local level, a highly-trained workforce will be better equipped to run a business. Tough call.
5. Scaling up fast – Russia, India, China, Brazil, etc. are all giants with the promise of huge rewards when you capture them. Many of these dynamos grow quickly through both through acquisitions and building up their network of suppliers and distributors.
6. Sustaining long-term hypergrowth without imploding – this kind of follows on to the last point

Some of the Western companies mentioned, which have managed to compete on a local level, include:

• General Motors, which has adapted its luxury-liners to meet the demands of its Chinese customers, who are usually sitting in the back;
• LG, in China, which has learned that the audio-quality of its televisions is more valued by its customers, who often reside in noisy environments;
• Carrefour, which has started to work with local municipal governments in China, as these don’t meddle in their operations like local dept. stores would, and are able to provide access to prime locations;
• Perfetti Van Melle, in India, a candle/chewing-gum manufacturer, which has found local means to advertise, interacts frequently with local partners, and has adapted its products to local tastes;
• and Yum! Brands, which owns Pizza Hut and KFC, and has adapted its menus to meet local Chinese tastes, started a new food-chain aimed specifically at the market, and uses its international expertise to integrate IT, lean supply chains, and a higher level of food standards into their offering.

It shows the value of out of the box thinking in terms of reaching people, and I believe that traditional “Western” thinking should long ago have been thrown out the door anyway, particularly in light of the troubles that media-, automotive, and financial industries are going through. We are in the flux of disruptive innovation and only those quickest to grasp new technologies and ways of thinking are able to survive another day.

No shortage of lessons on that from entrepreneurs in emerging economies…

Vincent out

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Reasons why Starbucks bothers me include, most of all, that it is not a coffeeshop with a European target-audience. We Europeans have plenty of choice and tradition in terms of coffee, and I have no problem finding a place of atmosphere with some kickin’ coffee at half the price of one of those Americanos (which, btw. taste terrible). The only attraction of Starbucks is for me as a take-away place, but that was not really the aim of the business, as described in Schultz’s book.

Starbucks was meant to be a “3rd Place,” a place where people can temporarily reside that is not their office or their home, and that is where Starbucks, in my opinion, fails. It should also not seen in isolation from other chains, like McDonalds, Subways, and the many “CloneBucks’s” that have arisen since the writing of Schultz’s book—it is basically a manual for how to start your very own Starbucks and, apart from its partnerships, it’s a low-tech business. Right now, when you enter a Starbucks in say, Cologne, Germany, it will look exactly the same as the one in Paris, France, and that act of replication already devalues the concept in my eyes. All Starbucks Cafés are very clean-looking, unlike a Hard Rock Café for instance, which doesn’t make them all that much better than a McDonalds (Café), which serves coffee equally well.

End complaints about Starbucks, a chain I had all but given up on.

The most depressing part of this business is the ease at which McDonalds managed to replicate its basic features, ……… but let’s not forget that the Starbucks people aren’t stupid and learning goes both ways. Clearly, McDonalds (another business, I’m a fan of) has strong process-advantages, which are also quite apparent to the observer and can be benefitted from by outsiders. Something that, it turns out, Starbucks exploited and will hopefully lead to a more efficient machine of a business, while (hopefully) placing the focus back on the “3rd Place” idea.

And now, it has been revealed, Starbucks is trying to get back into that game with its “community coffeeshops initiative.” While I don’t think that this will drastically improve the Starbucks offering, I do hope that it allows for more creativity and individuality down the road.

That said, there is still a lot of room for “3rd Places,” also in terms of building chains of them, they just need to be better designed to actually be a 3rd place. From books, to music, to zen-gardens, people like me are still looking for the equivalent of what was before probably known as the “gentlemen’s club,” by I mean, in an entirely un-sexist way, a place where you can go and relax, alone or with friends.

Starbucks seems to have gotten lost on the path and retreated down to the level of commoditization. It make me wonder if perhaps these types of qualitative initiatives simply cannot be undertaken quantitatively, without losing too much in the process.

Vincent

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At our financial trust, I’m currently filling out a pretty long survey from the Luxemborg statistical office (STATEC) regarding our level of “internetisation.” It’s not easy being digital in a world where you often deal with highly sensitive data, sometimes coming from individuals who do not like dealing with you through digital means. The very word “Trust” in our company description, already forces you to ask the question: can clients trust us using digital communication?

The answer is in most cases No. Go to any bank and try to get significant things done and they want you to sign for it. Same with notaries (and doehetzelfnotaris.nl does not automatise the signing part). The financial sector is particularly stuck in what I would call “the old world,” though not, I would say, without good reasons.

My question to you is:

• is there such a thing as fool-proof communication, which cannot be falsified by any means?
• Is there a surrogate for being there in person and signing your name?

I don’t know of any, but I always assume that our readers are smarter than me.

Chime in, if you can.

Vincent
(Picture of a Robot Accountant. Waah!?)

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“Blackberry owners will soon be able to download music wireless tracks to an application that will help the smartphone compete with those made by Apple and Nokia. … Most tracks will not have copy protection software, which restricts how many devices the music can be moved to.”

It’s the word “most,” which has triggered today’s rant on PR, technology, media, and more. First of, what kind of statement is that most tracks will not have copy protection? Why not all, why not none?

Looking at the past, we all know that copy protection, aka DRM, has plenty of negative associations attached to it. And, as with most negatively perceived technologies, it has been hacked so often that the word “protected” has just become a PR term. Copy protection is not a feature, it’s a handicap, but clearly most songs on the Blackberry platform will not be handicapped, which is… a feature??

We all know that optimally, no producer (or organisation associated with music production) would allow music to be released DRM-free. But the very fact that protection means Zilch, means that actually there is no point to implementing any kind of DRM-system, except on the request of the owner(s) of particular songs (which probably happened here). So, instead of all or none, we get “most,” which is just BS. I already predict that this new initiative is going to fail, by the sheer indecisiveness of the PR message alone, which is a reflection of how little thought-out the business strategy must be.

My point in all of this, infused by a single expression of vagueness, is that somehow technology has spun out of control. There is a system of checks and balances in place, there is a self-correcting mechanism at play, but no one has the complete overview of how it works and when it will work. In the case of the recession, for example, things will balance themselves out again. And hopefully we will get a system in place, the more open the better, that will regulate what is happening. But there will very likely be many casualties of war.

In the case of media and profiting from it, it looks bad, very bad. The word “most” perfectly reflects the uncertainty of where it is all heading, but anyone can see that with production and distribution becoming cheaper and more decentralised, there is hardly any need for centralised music companies, except to build systems that track what is out there and rate it (e.g. CBS/Last.fm, Hypemachine) or to fund the more expensive part of the formula: getting on TV/radio (which will also disappear at some point) or setting up a concert (which will hopefully never disappear, but is hopefully self-sufficient).

Sadly, the only solution I see to saving “the industry” is to silo everything off, which is arguable already happening when you look at the behaviour of businesses like Pandora, CBS/Last.fm, and Hulu) and sue the crap out of anyone infringing. That would make everything nice and predictable again, but only if you could make it impossible to go from one side to the other. Star wars.

Some systems where this is the case, more or less, would be gaming consoles, and you would need the same for audio and video content. But because the light and the dark side (traditional media vs. new media vs. piracy) are not separated, you will continue to see a shift towards freeing everything until the only thing predictable will be that there is no money to be made from media, just from the products (e.g. merchandising) and services (e.g. concerts) around it.

Yes, I continue to be very down on traditional media. Feel free to lift my spirits in this area.

Vincent

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What the mailroom made me think about was IBM. I read the autobiography (I think it’s this one) of the founding of IBM around 15 years ago while lounging on the beaches of Cuba. It made a strong impression on me because it was raw. The book was also badly bound, falling apart bit by bit, which no doubt added to the memory. But what made the IBM story so compelling is that it wasn’t about the “consulting biz” it is now, having gotten rid of 95% of its hardware business, but it was about going from typing machines, to calculators, to huge room-filling computers, to the personal computer. Like the Mailroom, the story is maybe a little dated, but both are about dreaming big and thinking about and experiencing the radical steps that life, business, an industry, society can make. As such, still being on page XXII of the Mailroom, I can still say that it is an inspiring read.

The other thing the Mailroom reminded me of is my love for post-1900 history. Nothing like Word War I, II, of the Cold War, I’m not very interested in humanities continuous attempts to destroy themselves. More about the chaos that made lots of adventures possible. Business opportunities like the ones that Ray Croc discovered in plastic cups and McDonalds, crime in the early 20s and 30s which was really entrepreneurism, the development of cinema as discussed in my Hitchcock / Truffaut pieces. The Mailroom, IBM.

When I look at today, (P.S. I’m just lounging in the garden in the burning sun, reading the book and pounding away at this post), it all seems rather dull in comparison. The real opportunities, which often come from unplanned chaos, seem to be more located in emerging economies like China and India, than in European countries like France where when you get fired you get a (scandalous) 50,000 euro “bonus.” Even the Internet, which has attracted a lot of free spirits in the past and present, seems to continue to get more consolidated, structured, encumbered by taxation and the personal interests of national organisations operating in a nationless environment. OK, I’m drifting…

Read the Mailroom! I predict it’s a good read, particularly during the hopefully more chilled out summer days.

Vincent

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I conducted this interview in the summer of 2006, as part of my thesis. It was previously published on my personal blog, but it [the whole blog] has since disappeared into MySQL “does not compute” hell. Here goes.

The Interview

VvW: What is the ESA Incubator all about?

BN: It is actually called ESI, the European Space Incubator. It is part of a network, called ESINET, and consists of 35 incubators, spread across most of ESA member-states and some Eastern European countries (eg Ukraine, Bulgaria).

The ESI business-model, in a large part conceived through Niels Eldering’s thesis [a fellow Rotterdam School of Management graduate] and BN’s Business Plan, could be described as consisting of three dimensions. These are the start-ups, the stakeholders, and the supporting services.

1st Dimension: The start-up

The start-up is seen as a place where fertile (space) technology meets an individual or a team of people. They in turn go through an incubation process (at the ESI) and finally come out as a company to do business.

2nd Dimension: Stakeholders

This doesn’t apply to all incubators in the network, but in the Netherlands, the two main stakeholders are the ESA and the Dutch ministry of economic affairs (EZ). Both naturally want to promote employment, economic growth, and entrepreneurship in the Netherlands. Furthermore, ESA has the objective to improve the image of space in the eyes of the general public, of investors, and of businesses.

The latter is of particular importance, as space is still perceived as expensive, dominated by large players, and generally irrelevant to the lives of Earth’s citizens. What the incubator aims to do is to show to it’s stakeholders and to the general public, that space-technologies and space-systems can be benefited from in everyday life.

3rd Dimension: Support

This happens both through 3rd parties, something called Key Innovation Business Services (KIBS) and in-house. Through this, the aim is to prepare the start-up for doing business in the real world, and to receive further investment. The latter of course depends on the ambitions of the founder. Some are pretty limited in their targets. They only want to set up in their country, or perhaps the Benelux. Others want to go cross-continental or even global.

VvW: Exploring the “Support”-angle further, how does the ESI assist it’s starters in finding private financing?

BN: First, it is necessary to assess the type of start-up. Depending on the type of product/service and the market, an advice is given as to what the growth-strategy should be. This doesn’t always need to be angel or venture financing. In many cases, the advice is to consider a strategic partnership. In this case, there’s a larger company already active in the market/industry that the start-up is targeting, and has an interest in taking a stake in the company, with the option to acquire it at a later stage. This requires there to be a kind of fit between the partners. So far, the ESI has had two start-ups taking that option.

Then there is also the option for a joint venture, an equal partnership between two starters in ESINET, or a starter and an existing company. One ESI start-up has done that.

For private financing, like a business angel or venture capitalist, start-ups usually still have a way to go. Usually, they first attract financing from the 3 F’s: Friends, Fools, and Family. This can happen before or during the incubation-phase. More experienced investors usually require the company and idea to be more mature. With a proof of concept, you can attract a business angel. When you are ready to sell a commercial product, you can approach venture capitalists. There are some exceptions to this of course, but this is the way it usually works.

The aim is to ultimately have a core group of business angels that are allied with the incubator. To a degree, this is already the case with venture capitalists, of which a group is being made aware of the inner proceedings of the incubator-companies. The idea is that the start-up does not need to educate these people on space or their idea, the incubator is already doing that for them. And the incubator will basically give residing start-ups feedback on their stage of development and, depending on that, the availability of pots of business angel- or venture capital.

VvW: What are the advantages of a start-up approaching investors through the incubator, rather than going at it alone?

BN: To start, a venture capitalist can receive thousands of business-plans during a year. The aim is that ESI-plans land on top of that pile. This is because the ESI, and the ESA, provides a quality label to its’ residing startups, which manifests itself in four ways.

For one, there’s the quality of the work done at the ESA, their procedures and methodologies. The incubator tries to pass those on to the start-ups.

Second, there are the favourable statistics for technostarters residing in incubators. A survey from 2004 [which I still have to read] reports that ca. 87 % of start-ups in the incubation process are still alive after three years. For a standalone technostarter, this figure is much lower, between 20-30 %.

Third, there are the networking-aspects of the ESI. Business incubation does not work well as a standalone function, it has to be part of a network. In the case of the ESA, it is present in 17 countries, as well as active in non-member states, such as the US and Russia. This can be useful as a gateway for the start-up to expand or move to another country. It’s also good for cross-fertilisation—between different ESI-start-ups and -graduates, suppliers and customers, investors, and other companies. Through the ESINET-network, it is also easier to conduct international market-studies.

Last, but not least, there is the access to the ESA technology and resources (experts, labs, test centre, software tools, facilities, etc.).

VvW: Are there examples of venture capitalists investing in any of the ESI startups?

BN: Sure, there’s ThruVision, which received a substantial amount in two rounds of investment [note: I know the exact sum, but am not sure if I can make this public knowledge: I think it's public since it is mentioned on their web site; perhaps you should have a look (http://www.thruvision.com)]. This company has now graduated, i.e. no longer resides within the ESI.

VvW: From your experience with venture capitalists, how do they feel about the companies that are still in the incubation-/seed-stage?

BN: As was mentioned, they prefer more mature ideas to work with. The key-phrase here is “work with.” Venture capital really means two things, investment + support. Along with the investment, the venture capitalist wants to coach, put people in the right place—on the board, as a CEO. For the latter, most of the start-ups in the ESI-program are founded by someone with an engineering-background. A founder is typically someone that understands the technology and how to build a service or product on top of it.

A venture capitalist, on the other hand, looks at the team, the product/service, the market. He or she will look for people that can run the course, manage the growth. The preference then usually falls to someone with a track-record, who has experience doing that. In the case of ThruVision, the founder is now the technical director, and the CEO is someone with an impressive business-cv.

Another statistic from the European Venture Capital Association (EVCA): In something like 95 % of start-ups invested in by venture capitalists, the founder has been replaced as CEO.

VvW: Do venture capitalists also support the incubator itself in some ways?

BN: Not hands-on, no. They do provide access to a network of companies, investors, and people to work with, which wasn’t there before. There will be more, once the ESINET-fund is started.

VvW: What is the ESInet fund?

BN: First a little background. There is obviously a gap between early stage and growth. This was known from the start of the incubator. This is especially so when you talk about space. Investors look at the space-sector with skeptical eyes. They see it as a market for large players like Alcatel and Astrium. They see it as a niche-market. And when you think about satcom, there’s a lot of international competition from the terrestrial systems. The satcom has already lead to a few big-name and big-investment projects to go bankrupt, example of this are Iridium and GlobalStar.

Furthermore there’s a misunderstanding about what the utilization of space-technologies and -systems really means. Utilization means you are using something that already exits. You only need to adapt it to a non-space sector. This means testing, modification, and validation, something that doesn’t need to take years, rather months. Space-systems refer to satellite-technology, for which you don’t need to build the satellite, you need to be able to receive a signal and use it. For space-technologies, we are talking about transferring and adapting applications and materials used and developed for space to non-space sectors.

First investors need to get this picture. But even if a few of them understand, that doesn’t mean they have the needed expertise. Usually venture capitalists are experienced in certain areas like biotech, meditech, telecoms, etc. Space-related technology does not have that many corresponding VC-experts. So the thought was, if investors will be so hard to find, why not start our own fund?

And this is where the ESINET-fund comes from. Its fund managers don’t need to be convinced on potential business development from space systems and technologies (much) and there is funding for early stage ideas. ESA was convinced to sponsor the fund with 5 million Euros and recently selected a management company from 12 applicants to manage the fund and raise more. The target-size of the fund is 40-50 million Euros in total, to be completed by mid-2006. The ESI is responsible for the deal-flow. This will mostly come from ESI-startups, though if those do not fulfill the needed requirements, investment van occur into other ESA-“ventures.”

The fund-management company will act much like a venture capitalist as far as investing is concerned. It will be present during selection of start-ups and have a supporting role in the development of invested-in companies. And it will take shares in the companies it invests in.

VvW: What do you think the effect will be on other investors, to have this fund running?

BN: It’s always a nicer picture to have a fund tied to an incubator. Having a fund will hopefully attract other investors. Many venture capitalists like to invest in syndicated deals, meaning a group of investors spreading the risks between them. In investments, there’s also usually a leader and followers. It is hoped that the fund can fulfill a leading role in the process.

For business angels and the three F’s, there will always be space. For one, they invest much smaller sums, and second they provide the added value that they bring as people. Like many informal investors, business angels are often interested in a hands-on approach, to be involved in their start-ups, which will benefit entrepreneurs greatly.

VvW: What is the investment climate like in the Netherlands, compared to other European countries?

BN: The Netherlands is not so great for finding private capital, except for subsidies. Both the UK and Germany rank highly for private capital. France and Italy have good governmental support.

VvW: OK, back to your start-ups, what criteria do they need to fulfill to become part of the incubator?

BN: During the course of the incubation-phase, they are asked to prepare financial projections, including parameters like Net Present Value (NPV), Return on Investment (ROI), and other ratios. Templates are provided, if needed, and access to third parties that can help. Over the course of the incubation-phase, the incubator-staff tries to follow the evolution of the NPV. In the future, it is hoped that NPV will be calculated at the application-stage, before the start-up becomes part of the incubator. If that’s possible, of course.

Other than that, the number 1 criteria is the market. If they are not able to define it, they will not be accepted. Similarly, a market-study must be prepared.

VvW: How does the ESI feel about teams starting?

BN: Very supportive. On the whole there are both types, entrepreneurs starting solo and finding partners along the way. Or entrepreneurs that start in a team. Generally the incubator encourages partnerships between technologists and business-people. Investors invest in a team after all. The incubator also has good ties with MBA-programs to find people for start-ups.

VvW: Is the staff able to deal with all the demands of the incubator?

BN: The staff has broad knowledge about issues like legal and intellectual property matters. There are specialists that advise on strategy, market, technology, etc. But it is impossible to know everything in depth. For that the start-up can approach third-party specialists, of which they can get the contacts via the incubator.

VvW: Do you compete with other incubators?

BN: Not at all. In fact, collaboration is encouraged and projects are sent to others as well. Geography is also very important to entrepreneurs, they have a life, etc., so it’s not that feasible to draw them away from a more logical location-choice.

Note: If you have any questions, don’t hesitate to post a comment or mail me. If you are interested in applying to the incubation programme at the ESA also, check out this page and also don’t hesitate to ask me about my experiences of working with two tech-startups in the programme.

Vincent

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Jeff Hawking is also the author of “On Intelligence,” and describes his development-path of creating neuro-scientific solutions towards interfacing with technologies (which is, I think, the right perspective towards interface-design). He’s doing some pretty interesting things in the field, also through his foundation called Numenta, but I expect also through future hardware coming out (I’m not sure if he’s involved in the Palm Pre, but he was in the Foleo). He describes some crisis-moments in Palm’s past, including how to compete with Microsoft (the irony!). Very worth checking out and I love the title: “Inside the mind of a reluctant entrepreneur.”

Steve Balmer, what a character! I found him to be thoughtful and concise, whilst never forgetting to pimp the universe that is Microsoft and how that is important for startups… He shares a bunch of stories, like why he decided to drop out of Stanford and join Microsoft as employee no. 30, the current economy and its opportunities, the future of computing, and even makes a few jokes about (not mentioning) Vista.

I thoroughly enjoyed both lectures and think you will too.
Vincent

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After the financial marble that the Indian company Tata Motors has produced, a car that costs between $2,200 and $3,800, and having seen several other concept cars in that price-range from companies like Volkswagen, is it possible that we will approach a time where cars will essentially be free?

I’m more sceptical, I think it’s a sign of the times, a recession + oil-prices and availability + the rise of emerging economies + more abstractly, that whole global warming thing, and the resulting desperation, which is causing businesses to come up with alternative business models around personal transportation.

And if given a choice, I would prefer for a system like Vel’oh!, here in Luxembourg, where you simply borrow a bike and bring it back at a pre-determined parking-zone after you’re finished with it. That said, I do hear that they get stolen a lot over there in France…

Thoughts?
Vincent

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Just briefly, before I go on to a more pleasurable topic. Wired Magazine last month had an article on what they identified as the cause this whole crisis: the gaussian copula function (depicted above), invented by a man named David X. Li, which made it possible to model risk down to a simple number, allowing for any idiot out there to label an investment as an affordable risk. As the article states, Mr. Li won’t be getting a Nobel anytime soon, but it only serves to illustrate a simple point: money makes the world go round, and more specifically, money makes the world of finance go round. Banks, until recently, had a nice little formula that allowed them to make money. Now they don’t. Will that formula be found in increased customer-focus, I don’t know. But I do think that we need a better understanding of the complex variables that play a part in our globalised economy, and customer focus alone won’t do the trick.

OK, rant over. My stance for this recession remains: work harder and smarter… and don’t watch the news.

In Hitchcock / Truffaut, Hitchcock tells the story of One-Round Jack, a character in an early film of his, The Ring (1927). Here’s an excerpt from the interview:

A.H. In those days we were very keen on the little visual touches, sometimes so subtle that they weren’t even noticed by the public. You remember that picture started on the fairgrounds. There was a fighter, played by Carl Brisson, and he was called One-Round Jack.

F.T. Because he knocked out his opponents in the first round?

A.H. That’s right. And in the crowd, watching the barker, there was an Australian, played by Ian Hunter. As the barker in front of the tent urged the crowd to go in, he had a little flap and could look back over his shoulders to see how the match was progressing. He used a sign to indicate the round number to the people standing outside. We showed volunteer fighters going into the tent and then coming out holding their jaw. Until Ian Hunter goes in. The seconds were sort of laughing at him and they didn’t even bother to hang up his coat. They just held it, thinking that he would never last more than one round. The match started and I showed the expressions of the seconds changing. Then we showed the barker looking in at the match. And at the end of the first round the barker took out the card indicating the round number, which was old and shabby, and they put up number two. It was brand-new! One-Round Jack was so good that they’d never got around to using it before! I think this touch was lost on the audience.

We all know that Alfred Hitchcock went on to become a great filmmaker, but even he started small, experimenting with different effects, like the glass ceiling I wrote of last, until he understood the effectiveness of his medium. It’s an attitude that I greatly respect, and try to implement both in blogging and my work. You can’t achieve great things without breaking a few eggs.

There’s a pretty entertaining TED video here with the stereotypical mad scientist, Cliffort Stoll, in which he says:

“The first time you do something, it’s science. The second time, it’s engineering. The third time, you’re a technician. I’m a scientist, once I’ve done something, I do something else.”

That’s a philosophy I can also respect.

Back to banking. I think that what is customer focus has changed much over the generations. According to my father, customer focus is having a bank outlet + friendly smile in every neighbourhood. More deeply, back in his day, a bank would contribute more significantly to buying a house, funding well over 50% of the purchase price. I’m not sure how the latter has changed now, but I do now that what is called “customer service” has simply moved online. I haven’t seen the inside of a bank in months and I don’t miss it. To me, customer service is having more payment options, much more innovation, as well as for all transactions, no matter how small or large, to be free, instantaneous, and unencumbered by national borders or currency. I want to see the day where all transactions go via a single device in our pocket. I’d also like to see more funding for things like housing and startups, of course, but I know that a certain measure of reality needs to be in place for that, i.e. how credit worthy is your customer.

I think that won’t be able to count on banks much until they replace the faulty mechanism that was either the gaussian copula function or another one, allowing for banks to regain their profitability. I think that this will entail making mistakes and that room needs to be allowed for that. That banks are supposed to be customer friendly, goes without saying, but that banks are businesses that need a solid balance sheet, goes without saying too.

Went a little overboard there on the text. Sorry about that. Hope it’s readable / entertaining.

Vincent

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So how was today? I wasn’t really top-fit as it feels like I’m doing a 101 things and am a little overwhelmed, i.e. stressed out. So I didn’t come with high expectations, mostly to check out the competition and perhaps meet some people. The event was presented by Roland Koopman, a Dutch TV-presentor, and the awards were handed out by Pim Batist, founder of SellaBand.

Two “insider”-stories were presented, one was SellaBand and other was Taniq, a rubber-company, for lack of a better word—the company makes it so that rubber hoses and similar are more stable, while using less materials and no metal. You should check out the film their site, it’s very well-made. Most important insight from Taniq: the importance of coaches/mentors, which appear to be abundant if you take part in the competition, for bouncing off ideas & solving problems. But also on the hiring process—when the three young founders decided to look for some “grey haired” commercial talent, they found out, the hard way, that big-company sales-talent is not the same as small-company talent. In the end, if you can’t sell your own products as an entrepreneur, you’re probably in trouble!

The best example of this was perhaps Pim Betist; what a magnetic personality! SellaBand is a crowdfunding mechanism for bands, who, instead of walking to a record-company (for whatever reason), can place themselves on the site, after which fans can vote—with their wallets!—for the band they like. And with that a music-cd, etc. can be produced… He came up with the idea in 2001, residing in New York. Then, for reasons unexplained, he decided to take on a 3-year job at Shell, until he finally quit that job, sold his car, moved into some (illegally) free housing and focussed all his energy on working out the idea. He recruited a guy from Sony BMG as co-founder, by posing as a student wanting to write a thesis and holding several meetings with the company under that subterfuge—a side-note: recruiting people from Sony should never be hard, these guys, from my experience, are all chronically made unhappy by the politics in that company. I’m a little more into music over rubber, as you can tell, but that’s maybe also because the presentation was excellent. Not that Taniq didn’t have a nice movie either, definitely to be watched on their site!

So what about the winners? If there was a definite theme to the evening, apart from innovation, it was that pretty much all of the prize-winnars had a sustainable idea. It wasn’t necessary green, but more efficient, more ethical, more social, etc. What I remembered was:

• a one-handed fire-extinguisher for handicapped people
• a crowd-funded electrical cart for people in third world countries
• a way to make fuel consumption more efficient in cars
• a sensor that measures how people sleep

On the off-chance that you are planning to take part in round 2 (send me a mail, if interested), that should give you a hint of where to direct some energy at! Looking at the credit crisis now, it should perhaps not be a surprise that attention is being drawn towards both efficiency, but also more sustainable ways of doing things—that is, incidentally, one the conditions that will probably be imposed on the car-companies, if they receive financial aid: to become more green.

That’s it from me on this subject! It’s not too far a leap for me to write a feasibility study, but I’ll only know for certain if I’ll take part a few months from now. So, let’s hope for a part 3, 4, and beyond!

Have a nice weekend!
Vincent

The opinions expressed within this blog are those of the authors alone. ©2011 Tech IT Easy. All Rights Reserved.

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Off the bat, nicest stands were the ones by MVO Nederland (socially responsible entrepreneurship) and, for novelty’s sake, the IKEA business stand. I first thought/hoped that IKEA (which I’m a big fan of), was going to start branching out like Amazon (again a fan) did, but it was just to attract new entrepreneurs to fill up their offices with IKEA-stuff. They did give me some nice chocolates though, and MVO gave me a box full of environmentally-friendly goodies (incl. coffee: the way to my heart).

Talks I listened too, were:

• Starting an import/export business (KVK)
• A business-plan according to the bank (Rabobank)
• Setting up your administration (NOvAA)
• Upgrading your accounting (Exact Online)
• Going freelance (FNV)
• Selling via the internet (Preij Software)

Talks I should’ve listened to, but missed, were:

• How to start (well duh!) (KVK)
• A good start with the taxation-office (Belastingdienst (taxation office))

If someone here happens to have been there, and published some notes about them, I would appreciate a link.

Some brief notes for each talk.

Starting an import/export business
The essential thing I took away from it is that the risk is unevenly distributed. The importer pays for products beforehand and is also responsible to his customers if something were to go wrong. The only thing you can do is:

• Visit: more can be seen and negotiated face-to-face
• Make a deal to only pay a certain percentage upon proper delivery.

Other things to bear in mind is that there are added costs, beyond the buying price: e.g. taxes and added charges for things like alcohol. And to check beforehand if there is anything like a copyright-limitation for your products. E.g. you apparently cannot just import Apple stuff from the US into the Netherlands, because importers already have an exclusivity arrangement.

A business plan according to the bank
First off, I’ve been hearing great stuff about Rabobank, while writing my thesis and talking to startups. It is the most progressive Dutch consumer-bank in that area. It should also be mentioned that the bank is still standing during the credit crisis, a good thing. I chose not to attend the same meetings, hosted by the ABN Amro and by ING bank.

Now, the meeting started with some BS (I thought), the bank would first look at “Who you are as an entrepreneur.” Not that this isn’t logical, but when I went outside and talked to a different banker about starting with multiple jobs, the guy’s eyes lit up green and he wanted to talk shop straightaway. No mention of whether I would actually have time to run a business and hold down multiple jobs. I also heard a new thing for me: creating a personal SWOT for your CV.

Financially, the bank looks at:

• Own input: expects the entrepreneur to provide at least 20-25% of the total needed sum
• A liquidity prognosis: how you will pay for stuff down the line
• A profit & loss statement
• And, if your starting a limited company (a BV in the Netherlands), €18,000: that is a legal requirement to start under such a legal form

.
What is left over is: profit + deductions – withdrawals – investments.

I would love to hear how this differs in your country!

Setting up your administration
Key-lessons I took away from it: set it up from day 1, set it up professionally (if needed, by a consultant), a good administration is the key to solid decision-making. And it’s also a legal requirement to keep some kind of administration as a business! Essentially, I got the idea that it’s just a matter of getting good accounting-software. On to my next point.

Upgrading your accounting
Exact Online (and Software, I believe), is a Dutch company that has been creating accounting software for about a decade. It’s in the top-3 in the Netherlands for online bookkeeping software, next to Twinfield and Reeleezee (pronounced Real Easy).

I don’t actually have that much to say about it. Many of the questions from the audience were interesting though. People wondered about virusses, back-ups, total cost of ownership (it’s subscription-fee based), etc. The idea of online bookkeeping is that you can do it from everywhere, which is relevant mostly to the entrepreneur with the four-hour workweek. Also subscriptions are meant to reduced the financial burden up front. What I care most about is whether there is an integration with the taxation-form, which is, I hear, a very unpleasant activity here in the Netherlands, which was the case with Exact.

Going freelance
The presentation was a total snore-fest. Key-lesson was that if you quit your job, but keep doing that same job for your previous employer as a freelancer, it doesn’t actually count as being an entrepreneur. You have to hand in some kind of description of your activities when you register at the chamber of commerce, and based on that you get assigned a status. It all seems very bureaucratic.

Some things about contracts:

• verbal agreements are legal, except that there isn’t any proof
• parties involved must see and agree to the general conditions of the transaction.
• signature is the deciding factor
• watch out for changes that are made between the verbal agreement and the signing.

Selling via the internet
Even though I use the internet plenty, I know fairly little about the commercial aspects of it. The talk was mostly about designing websites, though, which wasn’t that interesting. Some key-points there: if you’re going to hire a third-party for a website, have him do it in a framework that can easily be adapted later on. The guy mentioned Google sites for very basic stuff and Joomla for ecommerce/dynamic sites. The costs of creating a website, hosting it, and setting up shop are crazy-cheap!

That’s all folks!
Vincent

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As readers of this blog are mostly non-Dutch, most of these names will mean very little to you, and I won’t go into their individual companies here. Rather, I’ll focus on individual points that came forth.

The most interesting speaker to me was Marc Cornelissen, who spoke mainly of his expeditions into the Antarctic and the North Pole and is also active in combating global warming.

3 main points:

• Terrain: When you’re operating on ice, there are different kinds of terrain and they also change dynamically. Sometimes everything is stable, sometimes you can walk on it, but can’t stand still, and sometimes you should avoid it. Traversing such terrain requires attention to detail, improvisation, teamwork, and speedy reactions.
• People: people’s motivation can change during the journey. Sometimes you find that you have to turn back at the beginning because for some reality was different than expected. It’s affected by the management-style certainly—sometimes putting too much pressure on someone can produce favourable results in the short-term, but cause burn-outs after a while—and it’s affected by what Marc called the iceberg: you see two parts of a person. The tip, which is the human resource with a certain skill-set, and the much larger part underneath, which is the personality, the motivation, the passion, the ownership of an idea. Getting to know that bottom-part requires interacting in an environment where it becomes visible.
• Choices: There are macro- and micro-choices. Macro-choices are the big ones you make, e.g. start a business, relocate your operations, etc. Micro-choices are the ones you make within each macro-choice and can affect your motivation. If you’re in hell and you have a choice to turn back, you will more often than not turn back. If you have no choice, you finish or die. Creating “no-option choices” may be scary, but they are sometimes what is needed to succeed.

These points resonated with me throughout the whole day, and hopefully for longer.

Annemarie van Gaal also mentioned three success-factors that were critical for starting her media-business in Russia.

• Have a flat organisation with no HQ to speed up decision-making and minimise overhead.
• Unlearn past behaviours, especially if the reality of where you are requires out of the box thinking.
• And immerse yourself in an environment and give yourself little choice to pull out. Find motivation in what you do and don’t give up.

Again the points of preparing for uncertain terrain, managing people well, and no-option choices was present in all of these.

Dirk Scheringa of DSB Bank was probably the best way to end the day. DSB Bank is a bank that has managed to avoid most of the pitfalls undermining current financial institutions. It focussed on simplicity, transparent & solid decision making, and growing stably, rather than explosively. Well, I can’t pretend to know enough about banking to give a good explanation.

His key-lesson for me: surrounding yourself with smart people, means that you grow with them. It seems like a simple thing, but it often requires reducing your ego to work with people that are (as) smarter than you.

That’s all folks!
Vincent

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More banally, should we be paying 50% of our income to regulators in the form of taxes, as it is common in my country, the Netherlands, and several more, or should we minimise that spending to a much lower figure, again betting that everything will sort itself out without expensive regulation? I think that anyone who’s ever had to fork out 30% or more of their hard-earned cash, wished that there was no government at one time or other.

The fallacy of “freedom”
Getting back to free markets and the perfect distribution of information required to make rational decisions. I think it is clear that the latter is not the case. For information to be available to all, there should be no barriers to entry, everyone should be sufficiently sound of mind to process information and everyone should have access to it, either because it is “free” (paid for by taxes), or because they are wealthy enough to afford commercially collected information.

In other words, we are talking about at least middle-class income levels on a massive scale here, which correlates with education and job-prospects. We are also talking about basic education for everyone, the ability to make decisions based on accumulated intelligence. This is not the case in the US, nor any other country that endorses the “free market w/o government intervention” philosophy.

The Credit Crunch and aftermath
More complex is the matter of the credit crunch, which hasn’t been happening on a level that you and me typically frequent; it has been going on between businesses, banks, and ultimately those taking out mortgages and those being shareholders of one of the companies involved. What happened here is 100% a free market problem on a global scale; the belief that investing in housing is a safe bet and the laissez-faire attitude of regulators towards the businesses involved. And the aftermath, which is that banks are being quasi-nationalised on a massive scale.

We are seeing the return of Rhine Capitalism, which has been waging a losing war since the Second World War.

Rhine Capitalism automatically comes with higher taxes. It comes with a re-empowerment of the government and the popular belief that, once again, the government is our parent with all the answers. Both the increase in taxes and the added income from the acquired banks also has another effect, that governments will be richer, will be able to, once again, afford to better provide for the general population, something that we have left to commercial parties in the last years, some of which has been good and some of which bad. This will hopefully lead to better education and perhaps even an alternative solution towards the masses of greying populations that we’ve all be told to fear.

Will it be good for business, the strongest voice opposed to Rhine Capitalism? No, certainly not.

Rhine Capitalism isn’t the solution either
Yes, as my words show, I’m a firm believer in education for everyone, in lowering the barriers to entry for those of low income. I believe in empowerment of people and hope that it will lead to better decision-making on all sides. But I think that going back to the government being daddy is devolution, not evolution.

These last decades, we have seen plenty of progress, particularly on a technological scale, but also accompanied by plenty of others, facilitated by technology. We’ve seen massive developments in science, in logistics, in productivity. We’ve seen a greater awareness in people of global issues and the exchange of information, which has exploded. We’re half-way towards a world, where regulation is an automatic consequence of the fact that everything is becoming transparent.

Eventually, we will also see that issues like the credit crunch will no longer arise, because barriers to national data, to local data, to individual data will fall, allowing individuals and businesses managing their money, to make truly rational decisions.

What happened these last 15 months or so (perhaps even longer) is a warning shot, telling us that we’re not there yet. What happened this last week and the coming weeks is a consequence of exponential decisions based on negative emotions (mainly greed, fear, and ignorance). What should happen today and tomorrow is for people to use this as a lesson to shape our future world and build technology and systems that are designed to overcome these problems and replace the need for the current devolution towards an inefficient, but necessary system of regulation.

There is still a place for the government, as long as large portions of the global population are being suppressed. But, hopefully, it will actually do what it’s meant to meant to do, which is taking care of the people, instead of markets and businesses. But that is certainly something that will have to wait for several more years, until this current mess sorts itself out.

Vincent

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