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.