Move Over Silicon Valley, Here Come European Start-Ups
MUNICH, Jan. 23 — A technology and media conference being held here this week provided ample evidence that Silicon Valley’s dominance of Internet-style technology innovation is waning.
The gathering, Digital Life Design, has become a showcase for a range of European entrepreneurs who have taken the start-up culture pioneered in Silicon Valley as a template and are successfully transplanting it here.
The star of this year’s event was Niklas Zennstrom, the Swedish co-founder of the file-sharing system Kazaa and the Internet telephony company Skype, which was sold to eBay for $2.6 billion in 2005. Mr. Zennstrom last week took the wraps off a previously secretive start-up, Joost, that intends to provide a peer-to-peer approach to distributing video online.
“We’re trying to take the good things about television and the good things about the Internet and put them together,” he said.
Like many participants here, Mr. Zennstrom voiced the opinion that Internet-based commerce would accelerate in its disruptive effect on traditional businesses. Skype, for example, now says that it carries 4.4 percent of all worldwide long-distance calling.
“We now have a pretty decent Internet infrastructure,” Mr. Zennstrom said, noting in the future that it would give rise to “many, many more disruptive industries.”
The invitation-only conference, which ended Tuesday, attracted 1,000 old- and new-media publishers this year, mixed in with Internet software and service start-ups and a smattering of American dot-com executives. It serves in part as an intelligence-gathering event for its sponsor, Hubert Burda, a German publisher trying to move his more than 250 magazines into the Internet era.
Several organizers noted that Silicon Valley’s original success as an innovation center was largely because of business and social networks developed over several decades in a community of venture capitalists and technologists.
Now, they said, with the Internet supplementing and replacing traditional face-to-face social networks, Silicon Valley might be losing its competitive advantage.
“The epicenter was Silicon Valley, but that has created a wave of innovation that has now reached the entire world,” said Yossi Vardi, an Israeli entrepreneur and investor who financed his son’s development of ICQ, an early Internet chat program later sold to America Online.
Internet start-ups in Europe received a significant boost last month with the initial public offering of Open BC/Xing, a German Web site that is a competitor of the American site LinkedIn for social networking among businesses.
One of the best examples of the diffusion of Internet-style business creation is Tariq Krim, chief executive of Netvibes. His Paris-based company was a pioneer in the design of a Web service that allows users to personalize their start page, shifting the control away from the traditional Internet portal companies.
Netvibes, which received a $15.5 million investment from the Silicon Valley venture capital firm Accel Partners last year, now reports 10 million users. The company was an early practitioner of the so-called Web 2.0 approach, which is based on a system of hooking together Internet services provided by competing companies.
After growing up in Paris, Mr. Krim received practical business schooling in Silicon Valley, first as an intern at Sun Microsystems and then, in the late 1990s, as a reporter for a French business magazine based there.
In founding Netvibes in 2005, he said, he was inspired by the simplicity of Apple’s Macintosh and was trying to offer that same ease of use to Internet users.
“Our digital life is fragmented into a wide number of services,” he said.
Being based in Paris can sometimes be disorienting, he said, noting that when Netvibes began operating two years ago many people assumed that it was in Silicon Valley.
The company was able to use online collaboration among its users to rapidly translate the service into 80 languages, even though the firm had just four employees initially.
Netvibes recently opened a San Francisco office, and Mr. Krim acknowledged that he was fond of the Silicon Valley culture in which everyone seems to live and breathe computing and technology.
“I miss the fact you can start an interesting company just by talking to someone you meet while you are doing your laundry,” he said.
Still, he says that while there are major cultural differences in the way start-up entrepreneurs are viewed in Europe — failure is not viewed as a badge of honor, the way it is in Silicon Valley — a native community is beginning to emerge.
He noted that an early investor in Netvibes was Martin Varsavsky, the Madrid-based investor who recently founded FON, a wireless-networking service based on subsidizing the cost of Wi-Fi modems and building communities of users around the world who freely share wireless access points.
Mr. Varsavsky argues that the new European start-ups are generally more sophisticated than their American competitors.
European Web video sites like Vpod and Sevenload are technically more advanced than YouTube, he said. Sevenload combines the features of Flickr, which allows sharing of still photos, and YouTube, the video sharing site.
Other European start-up companies whose executives attended the conference included Rebtel and Truphone, which are offering low-cost Internet calls to cellphone users. Another European start-up, JaJa, is also pursuing the market.
“We have built Wi-Fi infrastructure at home and in the office and we are still using our cellphones,” said Alexander Straub, a German entrepreneur based in London who founded Truphone last year. He said the roaming charges levied by cellular companies were not sustainable. “It’s pure robbery,” he said.
A number of participants at the conference contended that with the quick spread of ideas in an Internet age, Silicon Valley companies no longer have a first-mover advantage.
Gerald Haag, a former Amazon executive who is a founder of Dropshop, a Munich-based start-up for auction sellers, cited a case in which an idea from Silicon Valley was introduced in Europe. Two weeks later, he said, “there was a German version.”