Tonight at 8:30PM, Nuroa and Highgrowth Partners will sponsor TechCrunch Barcelona Meetup with Mike Butcher. We organized the event on very short notice, but it looks like it will be a success, with more than 100 people signed up to attend. Of course, there’s often some variation between the number of people that sign up and the number that actually attend, but in either case, we’ve pretty happy. And nuroa got mentioned in TechCrunch, which is always cool.

The event will be at a cool new hotel, Granados 83, which came highly recommended by my friend and fellow entrepreneur Santiago Porrero, who also helped put us touch with the public relations and reservations department.

All in all, no complaints. They were able to offer us a really cool option on very short notice and at a very good price - an open bar of wine and cava (Spanish champagne), plus some light snacks for 100 on their rooftop terrace with views of the Eixample.

I’m not sure if it’s the open bar, the views, or the chance to network with other entrepreneurs and with Mike, but in any case, the response has been surprisingly encouraging.

I hope to see you there tonight! And if not, I’ll be sure to post pics from the event in tomorrow’s post.

The New York Times has an interesting op-ed piece about bringing hope, confidence — and buyers — back to the US real estate market. The author’s premise is pretty simple: To get home buyers back in the real estate market, it’s not enough to focus on lower prices, because a lot of potential home buyers are simply too scared to buy anything right now. And if they’re not scared, then they’re being very clever — that is, they expect prices to keep decreasing, so they’ll just keep on waiting to get the absolutely lowest price. A good deal is no longer good enough. Many buyers want the very best, cheapest option. After all, it is a buyer’s market.

The result is inertia fueled by a hypercautious speculation and fear, which would spell disaster for large sectors of the economy if left unchecked.

The solution therefore requires returning hope and confidence to real estate buyers. We need to convince them to suspend disbelief despite all they’ve been reading about credit crunches, foreclosures, sub-prime bla bla bla . . . The media is selling papers by selling fear, but it’s clear that a moribund real estate market is not in any country’s mid-term interests.

So the big question is: How do you return confidence to home buyers back in the context of carnage and despair that define current real estate market conditions not just in Spain but in many countries throughout the world?

The author suggests that the best measure would be to give potential buyers rebates to incentivize them to buy property - in this case, the author suggests a 5% tax rebate of up to $25,000.

And he argues that it should be done after the real estate market after the market has sufficiently corrected itself, which the author estimates should be between August to December 2008. Under this approach, the rebate would last for 12 months.

I’m not sure a rebate of €25,000 would be sufficient in the US market, but it might work in Spain, if done in conjunction with other measures. In Spain, the problem is two-fold:

• Buyers need to begin to have faith that now is the right time to buy — that they shouldn’t feel stupid for not waiting a little bit longer, and
• Banks need to be willing to lend people the money to buy property at an affordable price.

It’s clear that the first problem won’t be solved until the second one is addressed. In the last few months of my real estate business, one of the most frustrating experiences was finally getting an interested buyer only to have the bank reject the application or request a double guarantee or some other very stringent requirement that sent the buyer running back to live with Mommy and Daddy.

That being said, the sub-prime crisis is sufficiently scary to make me empathize with banks’ unwillingness to extend credit to risky applicants. Banks really shouldn’t be lending money to people whose only asset is the dream of being a property owner. If you don’t have a steady job, assets or any sort of guarantor, maybe you really don’t need to be a home owner.For me, the essence of the current quandary is stemming the circle of fear. Banks have lost confidence in businesses and in home buyers, and home buyers have lost confidence in ever being able to afford a decent home. And it seems that in large part, it’ll be up to normal economic forces and the government to instill confidence in both parties.

What do you think? Should the Spanish government offer similar incentives to home buyers to get them back? At which point should the rebate be offered? Will it make any difference, or are more fundamental changes in the Spanish real estate market required? If so, what might they be? And in light of the current credit crunch, what, if anything, should the Spanish government do to convince banks to support the real estate industry and potential home buyers, without going in the direction of the sub-prime mortgage debacle?

A few months ago, some real estate agencies were still claiming that there is no crisis currently facing the real estate sector in Spain.

But those people are probably either living in The Twilight Zone and/or out of business by now.

Even the New York Times has been running a series of stories about the Spanish real estate market, noting that the Spanish housing market is in even worse danger than the US market! That’s saying quite a bit.

In my last post, I looked at the announcement that Expofinques was seeking bankruptcy protection. Out of curiosity, I searched for headlines related to the other two franchises that I investigated back when I entered real estate in 2005: Don Piso and Tecnocasa.

Here’s what I found:

• La red de venta de pisos Expofincas suspende de pagos: I already examined this story in my last blog post.
• El Grupo Tecnocasa reduce un 39,3% su beneficio en 2007 y cerro 387 oficinas en España: Tecnocasa, another of the major Spanish real estate agencies, earned €8.8 million less in profit than in 2007, which is a 39.3% decrease relative to 2006. The group’s turnover was €51 million in 2007, 10% less than in 2006. In 2007, the group closed one-third of their franchisees (387 of 1052 offices). The franchisees overall earned €215.56 million in 2007, which was 30.9% less than in 2006. Tecnocasa sold 16,760 homes in 2007, which was 27.1% less than in 2006.
• Efectos del frenazo inmobiliario: Don Piso ajusta plantilla y cierra 26 oficinas comerciales: Don Piso, probably the strongest national brand, supported by one of Spain’s most blue-chip companies, Grupo Ferrovial, has 136 internal offices and 227 franchised offices. They note that the franchisees have been the worst hit, given that they have to pay a fixed monthly royalty payment of €1200 to €1500 (in Expofincas, for example, the royalty was variable, dependent on sales). In total, the Company had closed or expected to close 36 offices as of October 2007.

So what can we learn from the current crisis?

• It’s the banks’ (and Alan Greenspan’s) fault: Whether fairly or not, everyone blames the banks, which aren’t being very flexible in terms of lending money either to potential buyers or to agencies in need of refinancing their debts. Everyone’s been burned by the US sub-prime mortgage crisis and the resulting world-wide credit crunch (which some people are blaming on Alan Greenspan), and banks are no longer willing to take risks.
• A buyer’s market: If you are a relatively “risk-free” home buyer (meaning that you have your finances more or less in order — that you’re the kind of low-risk client that banks now like), then now is the time to begin your search. If not now, then in the near future, as both real estate agents and sellers are desperate to sell — in some cases, their very survival might depend on their capacity to get a few sales done. Agents and sellers no longer have the luxury of being chulo (arrogant), as pretty much everyone was a couple of years ago when buyers were fungible. Now the buyer is the queen!
• Internet is the cheapest option for sellers, and the most convenient option for buyers: Despite the crisis, people are still searching for properties, and when they do search, more are searching online. So even if the overall number of real estate purchases decrease, the percentage that is searching online is increasing. In addition, agencies are now more willing to try new, cheaper options that might allow them to reach interested buyers. For that reason, the newspapers will lose big as more agencies go under, because fewer agencies will be able to pay the exorbitant price of placing their ads in even 1 major newspaper. By contrast, Idealista is a lot cheaper, and nuroa.es, our Spanish property search engine, is free for agencies.

There’s an expression in English that “when the going gets tough, the tough get going”, which means basically that the only way to overcome a difficult situation is to work harder and better. The real estate crisis will no doubt shake up the Spanish real estate market, and there will be a few winners and lots of losers. But that’s life, and instead of looking at the glass as half-empty, I prefer to think that current market conditions provide a unique opportunity for disruptive Internet products that can help a troubled real estate sector buy a little bit more time in order to survive the current downturn. And it’s clear, of course, that I think that nuroa is such a product.

With all of the commotion about Expofinques’s seeking bankruptcy protection and continuing signs of a real estate crisis, I almost forgot to mention that nuroa has reached an agreement with Spain’s leading real estate group, Metrovacesa, to open up a new homes section to our property search engine.

I have to say that I really admire Metrovacesa’s approach. We first got in touch with them, when they invited Victor (the author of our Spanish blog “Sin Techo“) to a meeting to talk about their aggressive new Internet strategy. A lot of real estate groups are just starting to bet aggressively on advertising online, but Metrovacesa is already one step ahead; they’re not just trying to advertise properties, they want to complete the transaction online.

They’ve got cojones, and we admire that. And since we like to think that we also have cojones, we figured they’d make ideal partners.

I’d like to think that this is just the first of many such deals. After all, Metrovacesa is Spain’s leading real estate group, so convincing them was a pretty big test for us. Metrovacesa is one of the only listed Spanish real estate companies whose share price continues to increase, even as all of the other real estate groups struggle to withstand very brutal attacks on their share prices, or simply struggle to stay out of bankruptcy court.

They obviously have a clue as to what they’re doing. And it’s always exciting to know that market-leading companies have confidence in our project.

By the way, thanks to all of the journalists, bloggers and press services that wrote about the story, including:

• Javier Martín from Loogic
• Carmen López from OjoInternet
• Cinco Dias
• Yahoo Finanzas
• El Economista
• Finanzas.com,
• Carlos Mantero,
• Victor Aloi (Sin Techo), and
• Europa Press.

In our effort to stay cutting edge and try out new things, we’ve launched our own video channel at nuroa.es and nuroa.de called “NuroaTV“. I think that this makes us the property search engine to delve seriously into videos.

And no, we’re not trying to be YouTube II, but we do think that video is just another format for presenting our users with relevant information and feedback from other consumers. I think that the results — that is, the video below — speaks for itself!

In any case, last weekend a bunch of us (along with our young video director, Xesc Estapé and his production team) hung out in the centre of Barcelona to see what average people thought about various issues, one of which was the effect of the real estate “crisis” on the Spanish elections, which will take place this Sunday. We thought that it was timely given that even the New York Times had written a story about real estate and the Spanish elections.

Our series is called: “¿y tú qué piensas? (so what do you think?)“, and it fits into our strategy of offering hyperlocal content that keeps real estate consumers well informed about current market conditions. For the moment, the video is on a separate page on Nuroa’s website, but we will soon integrate our videos directly into the search results page.

For this first video, we went to the streets of Barcelona to see what the Spanish public really thought about José Luis Rodríguez Zapatero, the Socialist prime minister, and his conservative rival, Mariano Rajoy in the context of the housing crisis. Let’s just say that people were generally pissed about the current situation.

But don’t take my word for it. Take a look for yourself! And please let me know what you think about the video. (Warning: The video is in Spanish, but there are still quite a few very funny images that can be understood no matter what language you speak!)

Don’t call it a comeback, she’s been her for years!

I still hadn’t recovered from my 4 hours of sleep last night, but it’s now 6AM, I haven’t slept a wink tonight and I’m still energized by these elections. I guess I didn’t realize how much they mattered to me. Last night, everyone was predicting that Obama was going to win by at least 5 - 10 points today and that Hillary was effectively out of the race. Apparently, even though she’d raised $100 million and still has $20 million in cash to spend - and even though fewer than 1% of the US population have actually voted, even including New Hampshire’s voters — her investors were also buying into the Obama coronation.

And then Hillary became female again. Her voice broke on national TV. She reminded people that Obama was black, but she was a woman, and it’d be a huge “change” if Americans elected the first female president. Her breakdown was apparently one of the most viewed clips on YouTube today. Male political analysts are noting that “as men” the moment touched them. And Obama’s analysts are saying that women saved Hillary since her moment of weakness — and the reminder that she is a woman — made them feel sorry for and identify with her, resulting in a tsunami of support from the female community.

So I think that there are at least 4 important lessons to be learned here:

• Politics are at least as much about emotion as they are about issues. Hillary learned that the hard way. Her ability to win will depend on her ability to adapt to that political reality. And like any good performer, sometimes you have to be able to dig deep and gut out a convincing performance if it isn’t coming naturally.
• Bill and Hillary Clinton are political maestros. He was labelled the Comeback Kid when he ran in 1992, and she’s now being labelled the Comeback Gal. What does that make Chelsea?
• The political pundits don’t know shit! Hindsight is often 20-20, but it’s a lot more difficult to predict the future, even with clever pollsters. The big question tonight is: How did all of these “experts” get it so wrong? And more importantly, why should we trust them going forward? CNN’s host unwittingly betrayed the arrogance of political pundits when he noted: ““The actual voters can surprise people.” It’s almost as if, the pollsters and analysts believe that they are the bearers of political truth and the voters are the pests who sometimes get in the way.
• As I mentioned in yesterday’s post, the big fear of the African-American community is that we can’t allow ourselves to believe the Barack hype, because what white people might say to a pollster — “Oh, I love Barack Obama! Of course I’m voting for him.” — might not reflect what they do when they are alone in the voting booth. It’d be sad if that factor — that is, race — had any significant role in explaining Hillary’s comeback and the exaggerated poll numbers in favour of Obama.

For me the ideal would be Hillary in 2008 and Obama in 2012 or 2016. He has time to gain the relevant experience to transform his poetry to prose, as Hillary suggests in her revised stump speech.

It’s been a while since my last post, and I guess I have a bit of stuff to catch up on. It’s hard to get back into the swing of things. I’m happy that 2007 is over. It was great but tiring. We went from just me and Oriol with little more than a business plan to recruiting and working with a well-trained, international staff. We attended conferences in Budapest, Helsinki, Amsterdam, Berlin, Munich, Madrid, London and Paris. VCs went from being a theory to a likely reality. We did two angel rounds, got money from the Spanish government, launched the website and began planning the revised version of the web.

Whew! I’m tired just thinking about it.

Let’s hope that 2008 is even busier and more tiring! I’ve still got a lot more I have to accomplish!

Anyway, one of the last and most exciting things that I did in December 2008 was fly directly from Paris to Madrid right after Le Web 3 (thanks Loic for commenting on my blog! That was exciting!) to attend the American Chamber of Commerce’s in Spain’s 90th Anniversary. International commerce is cool and all, but the real draw was that Prince Felipe and Princess Leticia of Spain attended the event, and Prince Felipe gave the keynote.

Since I am a cheap entrepreneur, I used my Facebook account to reconnect with old friends who just so happened to be living in Madrid. Paco Polo, now a famed blogger, author and expert on international diplomacy, generously agreed to host me. Through Paco and Facebook, I also had the chance to re-connect with Pep Buades, who I met when I still a lawyer at Freshfields, but who has left the law and now is a banker at HSBC.

But back to the good stuff. Before going, it seemed that most of my female friends were more concerned about my confirming their fascination with royal gossip: “Tell me if Leticia’s really as skinny as everyone says.” (The answer is a resounding yes. She really looks borderline anorexic, and I say this with no ill will towards her. She’s had a tough year. I’m not sure if it’s the stress, the fact that her sister committed suicide or the pressure of being a royal, but that girl needs to eat a cheeseburger and some Doritos.)

Her secret service people — and there were like 20 of them that formed a barricade around her and the Prince even though I ended up less than 1 feet from them in the reception area — prevented me from taking any pictures. They stepped right in front of me when I tried to sneak a paparazzi shot. Luckily, I improvised and took a picture of her half-uneaten dessert instead.

My other impression was that the Prince is actually very tall and very good-looking. That surprised me, since I’m more familiar with the British royals who generally are not in contention to win any beauty awards any time soon. Leticia would be pretty if she weren’t so skinny. Her lack of weight makes her features a bit too extreme and birdlike.

At the dinner, I also made some interesting new contacts. Each table was given a name of a US state or landmark, with “The White House” being the central table at which the Prince and Leticia were seated. I was in Nebraska. Someone asked me at the table if I knew where Nebraska was, and my honest answer was: “I have no freaking clue.” I generally suck at geography, and being stuck at some no-name state/table took away from the overall experience. My goal is to be at least in New York (and hopefully the White House!) when the Chamber hosts its 100th Anniversary.

The other guests at my table were pretty cool, and I was extra happy to bump into a few folks from Barcelona (David Avilés and his girlfriend), who turned out to be friends of Oriol and Sophie and business partners with Jaime Mailet, who’s the current President of the American Chamber of Commerce. It’s such a small world! Everyone was pretty normal, if not a little star struck. It was a good beginning to the Christmas season.

Above I’ve attached some pics of my new friends Victor Alió and his wife Nieves, and below we took a picture with famed flamenco singer Antonio Carmona (not exactly a friend, but he was the entertainment — he sang a few songs to “Leti” and then agreed to take a picture with me and a few of my new friends).

This last picture of me shows me in the tuxedo I wore to the event. It was a black-tie event, so I had no choice.

Le Web 3 is now over. It was an awesome conference, about which I’ll write later.

The one comment that you get a lot at these conferences, however, is: “Wow! There certainly seems to be a lot going on in Barcelona these days.” I hung out a bit with Nicole Simon, formerly of Blognation Germany, and she told me that she thought it’d be cool to do a conference in Barcelona, given that Germans and French bloggers want to know more about what’s going on in the Spanish tech scene (and I suppose, in Spain more generally).

Well, now that should be a lot easier. Javier of Loogic has just launched Loogic in English. Loogic is kind of like Spain’s TechCrunch. I try to read it every day to see what’s going on in the Spanish tech scence. Javier is also a really nice guy and often willing to give you useful product feedback. His advice definitely helped make nuroa into a better product.

And Loogic is one of the most read Spanish tech blogs, so if you have a product that you’d like to launch, there’s no better place to do it.

Congrats, Javier! I think this is a great iniative and sign that the Spanish tech scene is going global!

I was surprised to read Michael Arrington’s TechCrunch post on Friday that Edgeio was going to be shut down. On the one hand, it’s kind of scary, my being in the vertical search space and all.

There’s always that moment of initial fear when you read something like that. Maybe nuroa really isn’t going to work? WTF have I gotten myself into? And HTF did they burn through $5 million in less than a year without being able to generate any revenue or relevant traffic or enter into any significant strategic alliances? This is perhaps the biggest question in most people’s minds. (It still amazes me that a start-up that launched in Feb. 2006 could receive a cheque for $ 5 million from a VC only 7 months later! I’m assuming the valuation at that point must have been somewhere between $15 and $20 million?)

But upon closer analysis, it’s clear that Edgeio’s problems had less to do with being a vertical search engine and more to do with being more of a concept than a business. To me, Edgeio’s failure reflects the danger of creating a tech-geek project with very little appeal or applicability in the real world.

Following are the four main lessons that I think can be learned from Edgeio’s demise.

Not All Vertical Search Engines Are Created Equal: Whereas the majority of vertical search engines crawl classifieds portals like Idealista and ImmobilienScout 24, or have a direct relationship with real estate agencies like Sasi or Engel & Völkers, Edgeio’s model was to operate — as the name suggests — on the “edge”. Cutting through the PR jargon, this means that they only looked for classifieds listings on blogs or other RSS-enabled sources — this explains Michael Arrington’s involvement and value-added to the project. TechCrunch was the ideal platform from which to launch a blog-focused vertical search engine. As TechCrunch explained when Edgeio launched: “The Edgeio ethos is that content belongs on the edges, and that is where the name originates from (Edge input/output). Content on the edges means the content on the millions of blogs and other sites out there which Edgeio does a good job of aggregating and organizing.” So whereas property search engines like nuroa aim to disrupt the traditional classifieds space by crawling mainstream classifieds sites, Edgeio chose instead to bet that sellers would be willing to create blogs on which they listed their properties or other classifieds, and Edgeio would then aggregate those blogged classified listings. The basic problem is that a business focused only on classifieds in blogs is not currently very scalable, as the majority of people still use more traditional offline and online options (e.g., classifieds portals and newspapers) to advertise classifieds goods.

Classifieds Are Local: Given that their main market is the blogosphere, Edgeio was never focused on any one geographical market. If you take a look at their website (which is very well-designed by the way), the tagline is “search the world’s listings”. Their value proposition was that they granted you access to over 100 million listings in 1,484,953 cities and 166 countries What does this mean in practice? If I’m looking for an apartment in Barcelona, why would I care that there are lots of listings in 1,484,952 other cities? Also, I don’t really see why local advertisers would choose to advertise on an “international” website, particularly if this international website isn’t one of the leaders in its local classifieds space. In other words, if I am Expofinques and I want to strengthen my market position in Madrid where I’m not as strong as I am in Barcelona, why would I advertise on Edgeio as opposed to the other sites that are more focused on Madrid? And if I’m a property buyer in Barcelona why would I be more interested in searching “the world’s listings” than in searching “the most complete set of listings in Barcelona”? Start-ups have to focus on a market, or a product, or on something in particular. Being focused on “the world’s listings” is largely meaningless, other than as a concept.

Keep Your Burn Rate Down Until You Have Some Indice of Possible Success: Edgeio’s hype always had more to do with the connection to Michael Arrington and TechCrunch than anything else. Whereas companies like Trulia, Simply Hired and Indeed have generated significant traffic, marquee-name investors (Sequioa, News Corp. and The New York Times) and are growing nicely (e.g., Trulia’s U.S. traffic is up 130 percent in 2007, to 1.2 million unique visitors per month, according to Comscore), Oodle’s vanguardist and diffuse approach never seemed to catch on. Nonetheless, it seems that they were determined to buy their success and hoped to convince investors to continue investing in them, even though they had no material revenues, traffic or partnerships. Michael Arrington is pretty direct in explaining why Edgeio had to close down: “The company burned through [$5 million] according to plan, meaning they ran out this month. The product roadmap was fulfilled, meaning development lags didn’t hurt the company. But the revenues didn’t come in and user/partner milestones weren’t met. And that meant no one else was going to put more money into the company.” In the comments section, he’s even more reflective and frank: “In general I’ll say this - it is unwise for a company to spend a lot of money building out infrastructure before a product proves itself.”

This is just further proof of what Fred Wilson of Union Square Ventures noted in a recent post entitled “Why Early Stage Venture Investments Fail“: “[I]t’s pretty clear to me that most venture backed investments don’t fail because the business plan was flawed. In my experience at least 2/3 of all business plans we back are flawed. Most venture backed investments fail because the venture capital is used to scale the business before the correct business plan is discovered. That scale/burn rate becomes the cancer that kills the business.”

It’s Easier to Criticize than to Do It Yourself: I can’t help but note a certain irony in noting that one of tech’s most noted and sometimes more hyper-critical bloggers — he created the Dead Pool with a certain glee — is the co-founder of the most prominent vertical search engine to enter the Dead Pool, despite all of the natural advantages that he has given his access to financing and marketing. Most of us would give our left arm to appear prominently in TechCrunch, but Edgeio is proof that expensive marketing can’t make up for an ill-conceived product.

And it also shows that like the old saying goes: “Opinions are like assholes. Everyone has one.” It’s a lot easier to criticize others than to create a successful product yourself.

The best we can do is hope to learn from Edgeio’s mistakes so as not to end up like they did.

In keeping with my lessons learned from Loïc Le Meur, I’m now going to promote nuroa a bit and ask for your help.

We are trying to get 1 month’s free publicity on a new website for start-ups. As a start-up with limited resources, you can’t imagine how important that word is — “free!”

All you need to do is go to this link — http://www.europeanstartups.com/company-index-european-startups — and click on the “vote” button next to our name “Nuroa.” It should take less than 5 seconds of your time, but you can’t imagine how important it would be for us.

Please remember that you can vote once per day.

Sorry in advance for this shameless plug!