It’s official. Highgrowth Partners is the latest investor in migoa. Oriol, Albert, Dennis, Didac and I are obviously quite happy. (Si prefieres leer en Español ya puedes en mi nuevo blog, www.garystew.es.)

As Javier posted in his blog, we met Highgrowth about a year and a half ago when we were making the rounds to Barcelona-based business angels and venture capitalists. With a few years of hindsight, I can honestly admit that at that point we really didn’t have much of a clue about the Internet world or how we’d make our business work. But we were a couple of reasonably intelligent guys who were really hungry to leave our marks on the world. In addition, we had decent CVs, which meant that we were hopeful that the years of education and training at multinational organizations would translate into some possibility of success as entrepreneurs. And though we noted some interpersonal connection with Mercè and Jaume, they told us something equivalent to “keep in touch”, which is what all of the VCs tell you when they’re not really interested in investing in you at the moment but want to keep the doors open just in case you might someday become more investment-ready.

We knew that networking counts, and more than that, we thought Mercè and Jaume were pretty cool (it helps that we’re all more or less the same age), so we kept in touch with them, sending them updates about how the company was evolving, about new prizes won, new business angels who had come on board, etc. The response was always very polite, until one day out of seemingly nowhere they invited us to present our project to a network of business angels in Helsinki. So we went to Finland for 3 days, during which time we were able to confirm that we had good rapport with the Highgrowth team on a personal level. In addition, we were able to explain our ideas about nuroa in a lot more detail, and they were able to see how a group of international business angels responded to Oriol and me as entrepreneurs and to the project itself.

After Helsinki, I can’t say that we had any particular expectations about receiving an investment from Highgrowth. By that point, we’d been meeting with VCs in London, in France, in Germany — basically, any interesting investor who was interested in meeting with us. And then suddenly one day, Oriol told me that he’d received a call from Highgrowth saying that nuroa was now sufficiently mature to be investment-ready.

I guess what they liked was that ever since our initial contact, we’d explained to them our various short-term objectives and we’d accomplished them. Of course, the business model now has evolved a lot since our initial meeting with Highgrowth, which I think is pretty normal. Unless you’re Nostradamus, being an entrepreneur involves a lot of trial and error. But that being said, they saw that were progressing in a positive direction, and I guess they liked that.

Now don’t get me wrong. We’ve made a lot of mistakes in terms of hiring and with regard to our certain aspects of the product. And I’m still not 100% satisfied with where we are with either the product or our marketing efforts. But that being said, it’s not so easy to be selected by elite analysts for prizes and/or recognition from Red Herring, Essential Web, Demo Germany, Global Innovate, etc. or to receive lots of financing from the Spanish and Catalan governments via CIDEM and CDTI (funds reserved for “innovative” technologies), or to convince experienced entrepreneurs like Albert and Dennis that they should invest their hard-earned money in you. So despite some negative commentaries for a distinct minority of  bloggers, I think that we’ve generally shown that we’re not so stupid. In fact, it seems that the funds speak amongst themselves, and the general feedback that I’ve gotten from various sources is that some international investors think that our team is pretty decent and that it’d be the basis of any eventual success that we might someday have. Investors all want to minimize their risks, and one way of doing this to look at what other investors and analysts think about you, and in our case we were greatly helped by the generally favourable feedback.

So how do I feel now? On the one hand, I’m quite happy. It’s a lot of money, so we now have the luxury of a few months of not having to worry about making it to the end of the month, which means that we can really focus on perfecting the product and increasing our profile. And it’s always nice to receive monetary validation from investors. We have it 100% clear that the money that we received was not a gift. VCs have a lot of attractive candidates, and their job is to choose the projects that they view as the most promising. It feels good to know that we were Highgrowth’s first investment in 2008.

At the same time, I guess I’m a little bit more stressed, because we’re no longer in the minor leagues. VCs impose their conditions and set their objectives, which imposes a certain amount of pressure. That being said, negotiating with Highgrowth was a very humane process. I really can’t complain in that sense. I never had the sense that they were trying to take advantage of us. The final contract is pretty fair to both sides.

Nonetheless, it’s pretty clear that I now have a unique opportunity to do something interesting and/or important with my life. All of my studies and experiences (both good and bad) have prepared me for this moment. And if I fail, maybe I’ll never have another chance quite as interesting to realize my dreams and show the world of what I’m truly capable.

But in the end, I’m a pretty confident guy, and I believe fully in our project and in our team, so win or lose, all I’ve got to say is: “Bring it!”

The guys from DEMO Germany just sent us the video of our presentation. As I mentioned before, I think that DEMO is an awesome event. They’ve sent us the press clippings, and the event itself received a lot of good buzz. And as importantly, it was a great opportunity for us to meet a lot of German investors and other entrepreneurs, which wouldn’t have been as easy if we hadn’t attended DEMO.

I hate seeing myself on film, so I haven’t actually seen the video, but I lived it, so I guess that’s good enough. I remember thinking that I did a decent job at explaining the pitch without much notes or a Powerpoint presentation, but you can feel free to judge for yourself.

Kind of like an interesting follow-up/contrast to my last post on the Samwer brothers, The New York Times has an article today focusing on Max Levchin, one of the founders of PayPal who’s worth about $100 million and is now in his second start-up. Levchin says that he will consider the new project, slide.com, a failure unless it’s ultimately worth at least $1.54 billion — the price that eBay paid for PayPal.

The focus of the article is to understand what drives under-35 tech millionaires in Silicon Valley who are already fabulously rich but still feel the need to create the next big thing.

Extraordinary success isn’t enough for them, if it only happens once and if it happens when they are still young. It’s almost like they have nothing left to live for after they’ve realised their dreams. So they dare to dream again.

Levchin explains why he didn’t enjoy his collaboration with Sequoia after he made his fortune. Or more appropriately, why he wasn’t a very good VC.

He explains: “I took this perverse pleasure in seeing if I could make someone cry.”

The thrust of the article is that in Silicon Valley, money isn’t everything. As Robert Sutton, a professor at Sutton explains: “In other parts of the country, things like a great estate are the symbols people most respect. But here, the greatest status symbol is a person’s ability [to] still bring out hot new companies.”

Whew! It’s been a hectic month, which explains the delay since my last post. We’ve been very busy bees since the launch.

I’ll go item by item.

Right after the launch, we got contacted by various Spanish newspaper groups, which meant that we were travelling a bit within Spain to discuss possible collaborations.

Then we flew to Cologne via Frankfurt to meet with a potential investor.

Then we flew to Munich to attend the Demo Pitch Camp, which was cool because I met a lot of interesting German entrepreneurs. It was a challenge, because the basic rules of Demo are: i) no powerpoints; and ii) you have to do a live demonstration of your product. Given Murphy’s law, the result is that the experience can be nerve-wracking, but I had a lot of fun. It was also the last weekend of Oktoberfest, so I got to see people of all ages, races and sizes dressed up in traditional Bavarian costumes with men in Lederhosen and women in Dirndl. They even wore the costumes to the dance clubs! It made for a trippy experience seeing people dance to Rihanna in lederhosen!

After Pitch Camp, we flew to Budapest for ETRE. Without a doubt, I have to say that ETRE is THE best conference that I ever attended. Everything is over the top, but with good taste. All of the dinners were in fabulous, historic buildings in Budapest that were unbelievably beautiful. And on top of that, important people just sit next to you and chat. Simon Cook of DJFEsprit sat down next to me at lunch and we had a cool conversation about how start-ups should grow, and compared the approaches in the US and in Europe. I sat down on the bus to go the last dinner and decided that I’d be social (sometimes I prefer to just listen to my ubiquitous iPod). It turned out that the guy next to me was a general partner at Northzone Ventures and he’s also on the board of Schibsted, the parent company of Anuntis Segundamano. We met so many “important” people that it was unreal. When we were eating dinner, Michael Brehm, the co-founder and COO of StudiVZ came up and started chatting with us. At first, I had no clue who he was — there was no ego involved. And when he mentioned StudiVZ, I told him that I remember reading that they had just sold their social networking site for almost $100 million. He confirmed that and we chatted a bit about running a German start-up.

In addition to the luck we had just bumping into people, Farley and Oliver were great about introducing us to possibly interesting contacts. Since they know everyone, they just very informally introduced us to a lot of great people that we might not otherwise have had access to. And then when they weren’t available, we discussed European entrepreneurship while getting toasted with the Red Herring interns.

The truth is that everyone was relaxed and fun. Even some of the VCs that we’d seen at other conferences seemed more mellow, as they approached us to ask for updates as to how we’d evolved since the last time we met.

And the last night was a ball. We all danced to R&B and pop music in a small club that the people at Red Herring had rented out via a local promotor. The overzealous promotor also recruited about 20-30 young, blond girls whose only job was to make sure that the male guests had fun. Interesting, because unlike most events, ETRE is one in which spouses are usually taken along. And we’d just come from a black-tie event, so the wives were in formal gowns and the men were in tuxedos. And the female “entertainers” were dressed in cut-off tank tops and tight jeans with knee-high boots. A surreal way to end an amazing event.

From ETRE we flew back to Barcelona to recover over the weekend, and then it was off to Munich again for DEMO. It was also a wonderful event. I don’t think that it got the press coverage that it deserved, but it was a great opportunity to meet all of the major German VCs and media investors in one room. All but one of the ones that we wanted to chat with came to visit our booth. Some very interesting conversations have begun. And Stefan Herbert and his staff ran a great event that was on time. The keynote speech was by Oliver Samwer, which was cool since the Samwer brothers are among the coolest story of serial entrepreneurs that is out there. Three young German brothers who got internships in Silicon Valley, then went back to Germany to create an eBay competitor that was bought only 3 months later by eBay for a bit more than $40 million.

Stefan, the executive director of DEMO, in particular was very cool. He’s someone that I’ll definitely stay in touch with, and I highly recommend the event for anyone looking to break into the German market. And I definitely agree that a presentation without a Powerpoint and with a live demo is much more exciting and informative, both for the speaker and the audience. The challenge is definitely worth it if you do it right.

The only negative part was getting escorted out of the P1 Club, which everyone tells me is the most exclusive club in Munich. I asked for Beyoncé, and when the DJ wouldn’t play it (even though it was a private party and he was being paid supposedly to play what the attendees wanted), I told him that I thought the club sucked. I was promptly escorted out. I didn’t like the club anyway! The drinks were €17.50 a piece!

So now we’re back in Barcelona. We’ve met with a bunch of possible investors. Some interesting things should be happening to us within the next few months, if all goes according to plan. And I’ll be sure to write about it all on this blog.

Next week, it’s off to Amsterdam, where I’ve been invited to give a 30-minute presentation to the attendees of the International Classified Media Association’s conference. My task will be to explain why vertical search could be viewed as an opportunity for traditional classifieds players.

And immediately after we’ll be headed to the Web 2.0 conference in Berlin. I’m looking forward to that. We’ve made a lot of friends in Germany, and quite a few of them will attend the event.

The only disappointing thing about the last few weeks is that we were also supposed to attend the FOWA conference. Ryan invited us to present when he did the Roadshow visit to Barcelona. We were all ready to go. We exchanged emails until the Sunday before the conference, which was then followed by . . . dead silence. The last correspondence had been that they would confirm the details of our presentation (how much time we’d have, what slot we’d present, etc.). When no one responded to our emails, we called all the numbers on his business card and website, but no one would answer our emails or phone calls. About a week after the conference, Ryan sent me a brief email telling me that it was unfortunate that things had turned out as they had, but that he simply hadn’t had the time to get back to us. It’s understandable to a certain extent, but it definitely made me appreciate a lot more the professionalism of the DEMO and Red Herring people. I think it’s not so cool to do a roadshow, invite (without any solicitation on our part) entrepreneurs to present, exchange emails confirming the invitation, and then simply fail to respond.

But that might just be me.

One country, one vertical.

That’s what I thought as I read the news that Deutsche Telecom had exercised its right of first refusal to buy Immobilienscout24 for €500 million.

Back in late August, Jesus announced that PBL and Macquarie Bank had formed a joint venture to buy 66% of Immobilienscout24 for €357 million, which would have valued the company at €540 million. PBL is a traditional media company that is apparently trying to enter the online classifieds space more aggressively. They already own Australia’s second most important real estate portal: MyHome.com.au.

Axel Springer, a large German media group, was also in the running, but dropped out when the price got too high.

There’s no doubt that Immobilienscout24 is Germany’s biggest online real estate portal. The company boasts some monster numbers:

• Revenue of €53 million in 2006
• EBITDA of €21 million (meaning that the acquisition price was about 24x EBITDA)
• 1.2 million ads
• 70,000 customers
• 2.5 million visitors per month

Again, this is one vertical, one country.

We will soon launch our property search engine in both Germany (www.nuroa.de) and Spain (www.nuroa.com). As we embark on this journey, Immobilienscout24’s numbers will no doubt serve as both a challenge and an inspiration.

It was also interesting to note that, as Nicole from Blognation points out, the rationale for the transaction was to diversify Deutsche Telecom’s business model. Apparently, the company is losing money from its traditional telephone business and wants to promote a more modern image by focusing more on Internet-based businesses.

It seems that it’s not only the traditional media companies that see the value of online classifieds businesses.

Tornado Insider is reporting that early-stage funding is on track for a record year, suggesting that investors are pretty optimistic about the tech sector. In particular, they report that early-stage investments — both seed and first-round — in tech companies are on the rise, constituting 50% of all VC deals.

These are pre-bubble numbers.

• Most of the activity is occurring in Germany, France and the UK, but Germany shows the highest proportion of early-stage activity: 62%.
• The UK has the highest total number of early-stage rounds, but as a percentage of total funding activity, the UK is only at 42%, which places it behind Germany (62%) and France (46%).
• Of note, 69% of all European Internet deals are early-stage rounds.
• 
  High-Tech Gründerfonds has been the most active investor, with 18 seed and first-rounds investments. Index Ventures and Big Bang Ventures follow with 6 early-stage deals.

There are some bad news and some not-so-bad news if you are a Spanish Internet start-up.

The bad news

Tornado Insider has produced a study of European VC deals in 2007. Blognation has a good analysis of the study, but the bottom line is:

• the UK is still the place to be if you want to get funding. 30.6% of all technology investments targeted UK companies;
• Germany is a distant second to the UK, but it’s getting better. In fact, Germany is now 2nd in Europe, ahead of France, with 16.7% of all deals. (France used to be number 2.)
• France is now 3rd, with 11% of the deals in 2007 – down considerably from its 7-year average of 14.1%.
• The rest of the top 7 includes:
  • Israel — 8.7% in 2007 (average of 8.1% since 2000),
  • The Netherlands — 6.3% in 2007 (average of 5.4% since 2000),
  • Denmark — 4.4% in 2007 (average of 4.1% since 2000), and
  • Sweden — 4.1% in 2007 (average of 6.4% since 2000).

By cities, the distribution of European tech funding is as follows:

For Internet investments, London is clearly the place to be, with 20.8% of all European investments being made there. Paris is second, with 10.7% of all European Internet investments.

Spain is nowhere to be seen on any of these charts. It’s not even mentioned in any of the online summaries, which suggests that it’s largely irrelevant in terms of European VC funding.

The not so bad news

Tornado Insider also reports that there was a lot of VC activity in Spain last month. Spain tends to have an average of 1.5 deals per month, but 5 deals were recorded in July. It’s interesting to note that:

• none of the deals involved first-round financing for an Internet company (there is one second-round financing of an Internet company);
• Biotech and mobile account for 2/3 of the investments;
• The Basque Country and Navarra account for 1/2 of the investments, while Madrid accounts for the other 1/2; and
• There were no investments of any sort in Barcelona, even though 2 of the investors were Catalan.

Following is a summary of the Spanish deals that were reported in July 2007:

• Bilbao-based security software company Panda Security raised €10 million in a new funding round from HarbourVest Partners and Atlantic Bridge Ventures. Previous investors Investindustrial and Gala Capital also participated in this round.
• 3i, the European Founders Fund, angel investor Michael Kleindl and Molins Capital Inversión invested €5.75 million in second-rounding financing for Madrid-based BuyVIP, an invite-only online shopping community.
• Sodena invested €3 million in Navarra-based 3P Biopharmaceuticals.
• Debaeque Venture Capital invested €2million in first-round investment for Kimia Solutions, a Madrid-based media content developer. Kimia aims to develop technology to enable efficient delivery of rich media Internet content to mobile handsets.
• Clave Mayor invested €475,000 in Navarran company Laboratorios OJERpharma, which produces high-quality dermatological pharmacy products.
• Honorable mention goes to Berggi, a US-based developer of mobile messaging services for cell phones, which raised €6.6 million in early August from Avanzit and Adara Ventures. The company has offices in Madrid and is as much Spanish as it is American. Berggi enables consumers to use email, instant messaging, text, alerts and new messaging tools to stay connected with friends, family, and colleagues.

This is admittedly a small sample set that might not be representative of the big picture, but it suggests that pharma continues attracting money, mobile is hot, and investors tend to be cautious about Internet projects.

It also suggests that Barcelona is not the best place to be if you want to get significant first-round financing for an Internet project. It can be done (after all, we got financing from angel investors and from the government). But it’s challenging at best.

One of the great things about going to a lot of international web 2.0 conferences with prominent tech analysts and well-known entrepreneurs is that you can learn a lot from really impressive and experienced people, if you are willing to listen. When you tie that into the fact that the combination of money (from investors and Neotec) and an interesting project helps you recruit top talent and a kick-ass advisory board/group of investors (Didac Giribets, Albert Armengol, Juan Luis Hortelano and Joaquim Calaf), you can start to see how a concept (vertical search) transforms into a real company (migoa).

Case in point. In deciding our launch strategy we had two options that were the cause of intense debates:

• One approach is to launch quickly, all over the world and then hope that the traffic and the advertisers will come to you. Some of our competitors have done this to varying degrees of success.
• The other approach is to launch more deliberately in specific countries with a clear sales and marketing strategy in each market and only after the product has been developed and adapted so that local users will see its obvious value.

In the end, we decided to follow the second approach. After all, as I repeat often on this blog: You only have one chance to make a first impression, so try to look pretty. Both VCs and potential strategic partners want to see that you are able to realise “inspired execution”. (I’m borrowing the term from a blog that I read recently, but I don’t remember which one.) Of course, they want you to dominate the world, but they want you to do it one step at a time, with a clear plan in mind and with an aspiration to excellence. And when you’re working with limited resources, it’s essential to prioritise.

In plain English, this means that in a winner-takes-all environment like the Internet the key is to have a product that demonstrates relatively quickly that it is a potential winner. But please note the emphasis on “relatively”. The goal should not be to push out a rushed, poorly conceived product just to show that you can do it first; the goal should be to create something that’s built to last — something that can justifiably be described as innovative, better than the competition, scaleable, and most importantly, that takes the users’ needs and wants fully into account.

We’ve been lucky that a lot of VCs, tech analysts, traditional media companies and other entrepreneurs have been willing to push us to define the nuances of our strategy. The feedback has really helped us to hone our game plan before launching. I emphasise this point, because after launching it becomes a lot more difficult to change your business plan and product. So while it’s important to be flexible and willing to adapt to changing market conditions and opportunities, it’s also important to have some sort of vision before dedicating substantial resources only to find out later that you’ve gone in the wrong direction.

Some people have complained that we are taking too long to launch migoa. My view is that we should launch when the product is ready, not when the blogging and analyst communities demand it. In my humble opinion, a lot of our competitors launched too early and are so confident that they are already out of public beta. But most of their products don’t inspire me, and it’ll be interesting to see if their users disagree with my assessment. After all, I’m hardly impartial. In fact, I’m sure that a lot of our competitors will only improve their products with time, particularly if they get (more) funding, but the key question is whether they’ll be able to recapture users who were turned off after the first visit. Only time will tell.

In terms of what we’re doing at migoa, we are focused on creating brands for each vertical (we’re focused on three verticals — real estate, jobs and cars). Migoa will continue to be the umbrella brand for all of our vertical search products, but each vertical will have a separate identity. To choose the name for the first vertical that we will launch, we got the entire team involved in the process. Everyone could submit as many names as they wanted, as long as the relevant domain names were available. I was happy to see that the team took the task seriously! For about 24 hours, we were all on godaddy.com testing out our skills as naming experts.

This little exercise helped to demonstrate the good and bad of democracy in action. On the one hand, you get lots of candidates and, if you’re lucky, the active participation of all members of the team. On the other hand, there is the risk that a compromise candidate wins, instead of the most brilliant and original candidate. In the case of our voting process, we saw a lot of varied candidates. Some names were real losers, but then again, each member of our team had very different theories for what makes a good name (hence, the danger of the compromise candidate). I even learned during the process that that are guides and companies specialised in naming that charge enormous sums of money. Who knew? In any case, there was one candidate that blew the competition away in each of the voting rounds, and it will be the name of our first vertical to be launched in September.

Unfortunately, I can only release the selected names once we have bought all the relevant domain names. But I’m guessing that issue should be resolved relatively quickly.

Today I attended a mini-conference sponsored by La Fundació Barcelona Digital called “Inversors en Projectes de Base Tecnológica”. In general, I think of this phrase as an oxymoron–that is, that the concept of “investor” and “technology-related project” seem to be contradictory, at least in Spain (in my experience). We’ve been lucky at migoa in that we’ve obtained money from both the government (Neotec) and from business angels (Albert Armengol and Didac Giribets). But I think that our experience is more the exception than the rule.

Surprisingly, Carlos Blanco was an eloquent defender of this proposition. I say “surprisingly” not because I don’t think that Carlos can be an eloquent defender of Internet projects, but because my very first encounter with him (and with other Internet entrepreneurs in Spain) was at a First Tuesday event where we went excitedly to meet other Internet entrepreneurs and where he ended up trying to convince us that our project didn’t have much merit and/or that we weren’t the adequate people to try to do it and/or that we didn’t know what we were talking about and/or that we should hire someone who did (he recommended Ivan Martinez who, as it would later turn out, is his new partner in Synerquia). Since then Carlos has attacked us publicly on one of Spain’s most-read tech blogs (Loogic) before we even began to be known in the blogosphere. He argued that we were silly because we thought the project would easily attain a lot of traffic, despite the competition of other classifieds portals, and that he WOULDN’T invest in us — the original emphasis was his. Even in the conference today, Carlos mentioned both Properazzi (as an example of a project with an international team) and Trovit (as an example of a project with international aspirations), but for some reason he’s not as generous about offering a kind word about our project. To each his own.

I must admit I find this approach somewhat shocking, because one would assume that the host of an entrepreneurial forum trying to help foment a favourable ecosystem for entrepreneurs would be objective publicly and not attack projects still in early development by young entrepreneurs (particularly if a few months later he’d announce that he’d invested in a potentially competitive project). If he doesn’t want to invest in us, that’s fine. We never asked him to. We’d never even spoken to him before the First Tuesday event. But in my opinion it’s counterproductive to the idea of First Tuesday that he felt the need to attack us publicly in this way, while completely misstating a conversation that developed over a couple of hours.

For the record — it was 4 months ago, so I only write this as an FYI — our view was that marketing is a challenge for any Internet project — even YouTube had trouble garnering initial traffic. But we didn’t feel the need to spell out our entire marketing strategy at a public event with someone who was attacking us and who we weren’t courting as a potential investor. In addition, we admitted publicly at that event that any VC that invested in us would probably want us to hire a senior of VP of sales and marketing–that’s how Ivan’s name came up–and we mentioned that we’d been meeting with potential candidates long BEFORE the First Tuesday event. In fact, the “A” in GOA stands for an initial business partner who in fact is a Marketing Director of a multinational company with a large presence in Barcelona. When the time came to start working full-time in migoa, he decided that he’d prefer to keep his current job. In short, marketing has ALWAYS been one of our priorities.

For our part, we’ve been quite happy with our efforts to date. You always want to do more, and you always feel afterwards that you could have done it better. But more than anything, we believe in ourselves. Plus I think that we’ve done a decent job at getting our message out there. Time will tell who was right, but I really could care less about proving that we were right vis-a-vis an Internet personality. My job is to make migoa.com successful by proving that we offer a better alternative than our competitors.

Anyway, based on his harsh and in my view unwarranted, unprovoked and unjustified public attack of our project, I’m not always so disposed to give Carlos Blanco the benefit of the doubt. But I found myself agreeing with a lot of what he had to say today. Again, I don’t always agree with his personal style (which seems to be to attack rather than to seek the readily available diplomatic alternative), but if nothing else it often makes him the centre of attention (which might be the point) and in any case livens up sometimes monotonous conferences. So we all knew we were in for a treat when he began a comment noting, in not so many words, that VCs (venture capitalists / fondos de capital riesgo) that want patents and other intellectual property protections only do so because they are unaware of how things really function in the Internet world. On the one hand, I could empathise with the target of his comment — Ferran Lemus, board member (consejero delegado) of HighGrowth (one of Catalunya’s most prominent VCs). Ferran seems like a kind, elegant, diplomatic gentleman but it was obvious that he was very, very annoyed by what was perceived by many in the audience as an almost personal attack — you could hear the murmurs, snickers and whispers from the audience members. And I, like Ferran, didn’t enjoy being called “ignorant” or “unaware of how the Internet world works” — or otherwise being targeted –by Carlos in front of the rest of the world and without any obvious provocation.

There is no Internet “God” in Spain, which with few exceptions is still light years behind what’s going on in the US. Even when I’ve met with successful serial entrepreneurs with amazing CVs who are multimillionaires in the US, they’re gracious and helpful, rather than attacking and condescending. They have nothing to prove to me or to anyone else. Their success speaks for itself. For example, we met with David Risher, once Senior VP of Sales and Marketing at Amazon during its start-up and early expansion phase (and before that a senior executive at Microsoft in the early 90s) when he first came to Barcelona, and he agreed to meet with us based solely on an email invitation, invited us to a coffee (at Starbucks, of course), gave us pointers (we admit that we still have a lot to learn, and even more 1 year ago!!) and introduced us to other useful contacts who had years of experience in successful Internet projects and in fact contemplated investing in our project / joining the team as a founder to occupy the role of director of sales and marketing. Suffice it to say that the person we talked with about joining our team is a prominent member of the Spanish Internet community and runs one of Spain’s most successful and international Internet businesses (and has done so for most of its history since the Internet bust in 2000), but he was the kind of person that we went to dinner with him and his wife and spoke about a mix of ITunes, IVideos, American television, Britney Spears, Spanish entrepreneurial culture and racial politics — all over 2 pitchers of cava sangria and with a lot of “buen rollo”. With this person and with David, our conversations focused on how we could and should structure our marketing efforts, and these conversations began long BEFORE we attended the First Tuesday event in which Carlos attacked us. From what I hear, I’m not the only one to receive such treatment from either David or Carlos.

For the sake of full disclosure, I must admit that I am quite fond of HighGrowth. They paid for our trip to Helsinki, where we presented at the Easy Conference. They served as our coach and mentor there. And they have always been very kind and supportive of our project. I think that they are one of the VCs in Spain with which I’d feel most comfortable entering into some sort of agreement. They’re not sharks. They’re real people. And they tend to ask us hard questions that force us to advance our own understanding of our own business, but they find a way to do it without being condescending.

That being said, in my humble opinion, Carlos was right in two points he made with which Ferran disagreed:

• that Spanish VCs still have a huge learning curve, particularly when it comes to the Internet; and
• that Grupo Intercom is a great Spanish success story, but perhaps they shouldn’t be used as a filter for all Internet projects.

As for the first point, many Spanish VCs and business angels with whom I have met DO focus a lot more on intellectual property protections than their foreign counterparts. Most ask many hard questions, but knowledge of the Internet sector is not generally as deep or as experienced in Spain as it might be in London or in other European capitals. It is particularly true that investors without prior experience in the Internet space — or whose experience seems to come mostly from reading horror stories in newspapers about the Internet bust 7 very long years ago — don’t fully take into account that intellectual propery doesn’t need to be an Internet company’s most important asset or key to success. (Note, for example, that Google’s annual statements reveal that Google pays a license fee to Stanford for their search technology and they pay some sort of fee to Overture for their advertising technology. This doesn’t make Google any less of a tech company. Likewise, what patents do YouTube or MySpace or Facebook have that are key to their success?) Moreover, a lot of start-ups simply don’t have excess capital to invest in intellectual property protections.

By contrast, when we meet with foreign VCs, most ask three key questions: i) why is your team better than your competitors; ii) how is your product different and better than your competitors’; and iii) do you have traffic to demonstrate that you might become the market leader in your chosen markets? The focus is on beating the competition by hook or by crook, and intellectual property undoubtedly has a role there. But team, product and traffic/market are the key elements. And while they always ask about our technology, the focus is not so much on intellectual property (what legal protections do you have for your technology?) as it is on product differentiation (why is your technology better?).

Secondly, given their relative lack of comfort with Internet projects a lot of Spanish VCs appear to use their connections with some of the founders of Grupo Intercom as a filter for Internet projects, which might inadvertently serve an incubating function for Grupo Intercom (which in itself is a start-up incubator, with the difference that they often require that they are majority shareholders of the start-up and their initial investment cap is quite limited — less than €500.000 if I remember correctly). Antonio Barros is involved in many ventures related to online classifieds, from Bonsai Venture Capital to Grupo Intercom to connections of varying degrees with various business angel groups, and Antonio is personally one of the nicest people that I’ve met in the Spanish Internet space — he always remembers your name and your last conversation, and he always seems pleasant and willing to share his experience without being condescending. And in all fairness, Infojobs is still arguably the most successful Spanish Internet product, with proven turnover and success. Even Schibsted, the online classifieds giant in Europe, refers to Infojobs as one of their star products in all of their portfolio. And when we went to the First Tuesday event on online classifieds at the beginning of the month (Carlos didn’t invite us to present), most of the speakers had some connection to Intercom and/or Anuntis (Infojob’s parent company) — that is, Intercom and Anuntis have generated a new breed of entrepreneurs who think that they can do it better than their mentors at Intercom.

All of this is wonderful for the Spanish Internet space, particularly with regard to the online classifieds sector.

But Oriol and I were unpleasantly surprised when we first started speaking with business angels and investors, and then found out that many of them were discussing our business plans with their friends at Intercom. OK, it’s well-known that most VCs don’t sign NDAs (non-disclosure agreements), but they shouldn’t speak about our product with a potential competitor (depending on how you define competition) or strategic partner that we hadn’t yet approached. Either they are business angels/investors or they are incubators for Intercom, but there should be full disclosure at the beginning. Intercom should not be converted into the old-Testament “God” (God 1.0??) of Internet. We heard back from a few of these sources that the project was promising but that contacts at Intercom had said that it’d never work, if for no other reason than because Intercom would never allow us to crawl their site. (By the way, a lot of vertical search sites DO in fact crawl Infojobs, and the vertical search sites will generate more traffic for Infojobs — it’s free SEO. In any case, Intercom is no longer in control of Infojobs.) We were also told that the experts’ view was that the project was too ambitious in scope (which to me is a strange argument given that most VCs want you to become the next Google). It was therefore a bit surprising (not really, but . . . ) that we read recently on Loogic that Intercom is planning to launch a vertical search engine for jobs outside of Spain (a fact confirmed to us by Antonio at the recent Investment Forum sponsored by CIDEM).

Makes sense. When you see a potential competitor in the horizon, your first instinct is to kill him, not to help him grow stronger. And a lot of VCs senselessly give that God-like power of start-up life and death to Intercom and other “vanguards” of the Internet establishment who would prefer to kill technological innovation (and thus maintain their current competitive advantages) rather than foment competition and potentially die in the process. I can understand it from the web 1.0 company’s point of view. It makes less sense from the VC’s point of view, given that they are always complaining that they have too much money and not enough good projects. My view is that they should stop relying on outside web 1.0 “experts” with little interest in supporting future competitors (particularly, if these vanguard web 1.0 companies have little or no economic stake in such competitors) and focus on hiring and training internal staff that can be objective in their analyses.

As an aside, I think that La Caixa does a good job of this via Jesus Monleon, who is another experienced entrepreneur who has always been supportive — even defending us along with Walter Kobylanski against Carlos’s attacks on Loogic. Jesus is the entrepreneur’s friend and defender. He’s realistic without being condescending and without ever promising you anything. He just seems genuinely interested in fomenting a favourable ecosytem for entrepreneurs, and he never condescends to us, even as he gently urges us to launch soon.

In any case, I just ask that the business angels and VCs give us this information before they waste our time and give away potentially confidential information.

The other interesting comment from the conference was about the speed with which a start-up should launch. There is a frequent phrase here that “hay que correr” — you’ve gotta move fast, because the Internet world moves fast. I really liked the comment made by one of the entrepreneurs (I think it was Miguel Solá) when he noted that you’ve got to run, but you can only run once you’re fully prepared. The race is a marathon, not a sprint. In my humble opinion, a lot of Spanish Internet projects launch without fully having a product that can generate good word-of-mouth and without any apparent marketing/financing plan. They apparently do it for the pure love of the project, which is great, but not if the project isn’t sufficiently mature, ambitious or “prepared” enough. In my view, you’re only sowing the seeds for your own eventual demise. Most projects need financing if they are to reach their full potential, and access to financing only comes if you meet certain pre-conditions. In the US, there’s an expression that “you only have one chance to make a first impression”, and that’s been our motto. Other vertical search engines have taken different approaches to mixed results. Some still haven’t gotten material financing. Others have launched but have generated little buzz/user satisfaction. In the US, the time between starting a company and launching a public beta (at least in the vertical search space) was often quite significant (more than 1 year in most cases), so we’re not so frightened by the fact that we will launch later than a lot of our competitors. Our goal–and our duty–is simply to create something that will be worth the wait. If we can do that, both the buzz and the financing should come as logical (though not guaranteed) next steps.

June was certainly a very busy and exciting month! I like to travel, but even I am getting a bit tired of (low-cost) airlines. I’ve been to London two times, plus took a trip to Helsinki (the first time I’d been there), and before the week is over, we’ll be going to another European capital to meet with potential investors. At the beginning of June, I traveled to London for 10 days partly for pleasure. When I lived in London from 2000-2001, I found it profoundly lonely, expensive and wet. I’m from NYC, so impressive world capitals didn’t necessarily impress me at that stage of my life, particularly when the city is very cold, very expensive and the people are very insular. So when I got a job with a major UK law firm in their Barcelona office, I didn’t have to think twice. Waiting 10 months for my work visa (it’d taken 3 weeks to get it in London) was a bit ridiculous, but after living the horror of September 11 from London, I decided that life was too short and moved immediately to Barcelona, where I waited for 3 more months before my visa was conceded.

I’d been back to London for an occasional weekend, but not really for any extended period of time. What a difference a little perspective (and about 5 years) makes! This time I found London was really quite awesome. It rained 6/10 days (which counts as “good” weather there), but what most impressed me was the range of things to do. That, and the fact that a lot of my Yale and Harvard friends have since moved to London (friends make a big difference). In Barcelona, the pace of life is great (and relaxed), but London is a fast, exciting city, at least if you are willing to spend a few bucks. I saw Harry Potter (naked) on stage, took in a reinterpretation of Cabaret, had (very expensive) high tea at the Lanesborough Hotel, almost went to a concert with Enrique Iglesias, hung out every night with some of my best friends from high school and college and — best of all — went to see Beyoncé live in concert. That really was the icing on the cake. Her concert was amaaaaaazing (said with the appropriate dumbstruck US accent). And as the FT remarked in their review of her concert, she has the remarkable ability to seem effortlessly beautiful, talented and gracious. In the reporter’s words: “Beyoncé wears her dazzling celebrity with the ease and lack of irony that only the very rich, the very beautiful and the very successful can muster, but she underpins it with a work ethic reminiscent of James Brown.” In any case, London really provided me with so many (English-language) cultural experiences that I haven’t been able to enjoy in Barcelona. It was a great escape to a world capital, despite the crappy weather and extraordinary expenses.

From London, it was off the same day to Helsinki to participate in the Easy Conference from 5-7 June 2007. The official title was “The INTRO Investment Forum, the second transnational EASY event. The event was organised by SITRA, the Finnish Innovation Fund, and we went as the guests of the Catalan VC, Highgrowth. It was a nice gig — all expenses paid and the chance to meet European business angels. We traveled with Mercé Tell and Jaume Solà, who are both young, relaxed and nice. They really tried to help us network and make contacts, and more than that, it was just plain fun to hang out with them. My Catalan-comprehension abilities certainly got a workout — even in Helsinki — but I still had a pretty nice time. We ate reindeer and saw the sun set every night at about midnight before rising again at 3AM. I’m not sure I have immediate plans to go back to Helsinki, but it’s nice to say that I went. As for the EASY conference, I think that it’s moving in the right direction, but I don’t think that it yet rises to the level to the main conferences such as Red Herring, Global Innovate and Essential Web. The key to any conference from an entrepreneur’s perspective is access to finance and generating buzz for your project, and it remains to be seen how effective EASY is in that regard.

Finally, last week, we went to Essential Web in London. The event was amaaaaazing. With all due respect to Red Herring and Global Innovate, Essential Web was a dream from the entrepreneur’s perspective. It was at an IMAX theatre, so the effect of speaking before a huge screen half of which had your presentation and the other half of which had your image was really cool. I literally felt larger than life, my moment to be a superstar like Beyoncé and Jay Z. More than that, the other speakers were a veritable “who’s who” of European start-ups, including such companies like Quintura, Extate, Garlik, Jaiku, ParkatmyHouse, Seatwave, etc. A lot of these companies are already very, very well funded (in some cases with investments of more than 9 million pounds sterling), so it helps to give you a little bit of perspective of what’s possible with a European VC. Sometimes when we meet with a Spanish VC and talk about valuations, they say: “This is not the US. The US is crazy.” It will soon be very difficult to make the same argument, because we are, after all, in Europe, and the major European VCs are already attempting to follow the investment paths of their American VC brothers and sisters, which means realistic valuations taking into account the market potential for a truly international product. In any case, a lot of the buzz was around Jaiku, and it was funny to see how the VCs jumped on the CEO’s bandwagon. For his part, Petteri of Jaiku went to the event dressed as if he had just come back from Sonar — totally relaxed and super “moderno” as we say in Spain — and still seemed a bit surprised that he was receiving so much attention. It worked for him. He seemed totally natural and comfortable with himself, without any ego-tripping or superstar complex. Very unassuming. Very nice. What surprised me most about Essential Web is that it was the first event where it seemed that investors were actively seeking to do deals. In fact, it was rumoured that one of our major competitors was in talks to get a major investment from a major VC. (Sam Sethi said that he might post about it today on his blog). We met the guys at the conference and wish them all the best. They’re very young (early 20s), but their technology is excellent. If they get funding, it will be a good sign for all of us that the vertical search market is about to get moving quickly within Europe. I’ll be the first one excited to see what valuation they’ll be able to get. It should set the benchmark for the rest of us.

All in all, Essential Web was a very concentrated and highly successful effort — 1 day, 28 main pitching companies, high-level executives from Google, Yahoo, News International, Index Ventures, 3i Group, Accel, Advent, etc.; a power-house event with powerhouse people. And unlike some other conferences, it was free for the participating companies! Usually, event sponsors require the winning companies to pay hefty fees to participate, but Library House should be congratulated for running a first-class event without exploiting cash-starved entrepreneurs. For anyone who’s interested in more information about the conference, I’ve uploaded a copy of the delegate booklet to this post.

Almost as successful as Essential Web was the OpenCoffee event the next day. There was a good mix of entrepreneurs, VCs and corporate executives there trying to make things happen. We had a few interesting conversations with Sam Sethi of http://www.vecosys.com/. He came over to congratulate us for us presentation and gave us some inside scoops as to the UK vertical search market. He should know. He used to be the main contact for TechCrunch UK before he had a well-publicised rift with Michael Arrington. We also had a time to chat with some potential strategic partners (of multinational companies) that were impressed by our presentation and wanted to discuss possible ways of working together. If during my first trip to London I’d been impressed by the access to global icons, on my second trip I was impressed by the access to corporate and technological innovators. The truth is that London presents a very, very compelling ecosystem.

Meanwhile, back in Barcelona, we’ve been chugging along with migoa. June was also a good month for us in terms of national press, both offline and online. We’ve been in Expansion, Cinco Dias, Loogic, Error 500, etc. All in all, it’s been a good month of media coverage. Our international exposure and participation in various conferences means that we are in the very fortunate position that major media companies throughout Europe are contacting us to talk about working together and possible investments. It’s still way too early to take any such talks too seriously (or to enter into any more details), but it suggests that we might be doing something right.Essential Web.

Hopefully, I’ll have something more interesting to report after I get back from our next trip, which will take place at the end of this week. And I think the sum of this post is that networking matters and it works! You don’t have a good product if no one knows about it, and it’s funny that at these conferences we keep bumping into the same people. They all tend to be very powerful people from Google, Yahoo, MSN and from the VCs, but the point is that the more they see you, the more you network with them, the easier it should be eventually to make something happen from a funding point-of-view. As we say in the US: You’ve got to be in it to win it!