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nowEurope: City by City
A city-by-city look at who's building the European Internet
Thursday, November 9, 2000
FIRST GLANCE
Amsterdam, NL - The Internet grows up
BIRD'S EYE VIEW
With eMarketer
ON THE GROUND
XS4ALL _ Grown up or sold out?
Nerve Wireless - Babble and brilliance
//hot-orange - Troubling signs from another e-tailer
MoneyPenny - The virtual assistant
RealMapping - Where are you?
WHERE'S THE MONEY?
Gorilla Park - Looking for lightning
AD VALUE
24/7 - Being European in Amsterdam
THE GURU
Rop Gonggrijp
LAW & ORDER
Privacy - The not-so liberal Dutch
CONFERENCE BEAT
Upcoming Events in Europe
ACKOWLEDGEMENTS
We value reader tips and contacts
HEARD IN AMSTERDAM
"We were the radical left-wing hackers selling out to the
evil green empire." -Sjoera Nas, XS4All public affairs
officer, on the 1998 sale of Holland's rebel ISP to phone
company KPN.
__________________________________________________________________
FIRST GLANCE
The Internet grows up
Who could be surprised that Amsterdam embraced the Internet so
early? Only about 800,000 people live here, squeezed into so
many doll-house buildings tucked along narrow streets and
quaint canals. Yet it's a town bursting with energy, creativity
and the distinct whiff of counter-culture. This is the city of
dope-dealing "coffee houses," of pirate radio. It's a place
that, despite the ruthless charge of free-market individualism,
seems still to foster the values of communalism. It's no wonder
that in the early 1990s this city so embraced the ownerless and
egalitarian Internet. But that was before the Internet was all
about venture capital, IPOs and burn rates.
Those groovy days are over. The Internet is growing up, and the
growing pains are evident in Amsterdam. Groundbreaking Internet
access provider XS4ALL, the symbol of the free-spirited
Internet in Holland, is now owned by KPN, the big, bad phone
company. University hackers and computer adventurers like Rop
Gonggrijp and Jerome Mol have made millions from their first
hi-tech ventures and have moved on to become serial
entrepreneurs, spreading cash and experience to younger
go-getters. Aside from a few throwbacks, it's all business now.
People are still having fun, but you wouldn't exactly call it a
gritty, cultural scene. So, we ask of Amsterdam, when the
Internet grows up, does it have to sell out?
The answer is, not completely.
__________________________________________________________________
BIRD'S EYE VIEW
with data from eMarketer
"On the European continent," reported Forbes Magazine in
February 1999, "on the Dutch have truly fallen in love with the
Internet."
True enough. By 1995, 44% of households in Holland had their
own PC. That was up to 53% in 1999. One-third of those PCs have
an Internet connection. A quarter of the Dutch population carry
mobile phones.
Research by eMarketer shows 2.51 million "active Internet
users," or 20.3% of the adult population. (Angus Reid Group
reports 4.7 million-38% of adults-while Pro-Active Research
shows 2.3 million-18.6%). By 2003, eMarketer believes 3.46
million adults will be active users.
The market is boosted by a liberalized and highly competitive
telecoms field. There are approximately 60 alternative
providers after market leader KPN, the former state-owned
monopoly. The ISP market is also highly competitive. As a
result, connection costs are relatively low. Based on 20 hours
use, monthly ISP fees average Euro 6, with phone tariffs adding
another Euro 30.
Total e-commerce revenue in the Netherlands in 1999 was Euro
1.56 billion. EMarketer predicts that will rise to Euro 3.12
billion in 2000, and to a more impressive Euro 25.2 billion by
2003.
Curiously, however, the outlook for e-commerce in the
Netherlands may be somewhat mixed. According to Andersen
Consulting, Dutch businesses are more skeptical than other
Europeans regarding the competitive advantages offered by
e-commerce. The Dutch are also less likely than the rest of
Western Europe to believe that e-commerce will create new
revenue sources or more intense competition, leaving them, in
Andersen's opinion, vulnerable to external competition.
__________________________________________________________________
ON THE GROUND
XS4All - Grown up or sold out?
Since 1993 XS4ALL has been an ISP with an attitude. Founded by
a small rabble of hackers, the company has been a warrior in
the battles to protect privacy and free speech on the Internet.
They have won separate fights against the German government and
the bullying American-based cult Scientology after each sought
to block controversial material posted on sites hosted by
XS4ALL. The company has also constantly stoked the debate over
privacy, jealously guarding the privacy of their own customers
while attacking those who abuse public trust.
Then came the shocker of December 1998, when the founders sold
100% of XS4ALL shares to phone giant KPN. The decision, says
XS4ALL's public affairs officer Sjoera Nas, was based on the
need not for cash, but for broadband access, which XS4ALL could
not adequately provide its growing and profitable list of
corporate clients. The company had also simply outgrown its
organic structure. "The founders were uncomfortable in
management roles. Every decision was made by committee. It was
chaos," Nas recalls.
The sale price is, remarkably, still secret. But KPN did openly
guarantee complete independence for three years. XS4ALL has,
however, tapped KPN's vast resources and business experience.
Help has come in structuring the staff more efficiently,
recruiting new managers, providing management models and
funding a budget for employee education. And the bottom line
has benefited. Revenues and profits rose from Euro 9.1 million
and Euro 910,000 in 1998, to Euro 13.6 million and Euro 1.36
million in 1999. This year's figures are expected to top
Euro 18.2 million and Euro 1.8 million. The company now has
90,000 subscribers and claim to be the leading European
provider of DSL services.
But has XS4ALL lost its heart? Has something of the early
Internet died along the way?
Most of the old founders are gone. The staff size has grown to
almost 140. "It isn't the same," concedes Nas. "It used to be
an elite club." But to its credit XS4ALL has, in many tangible
ways, remained true to its ideals.
The company has continued fighting all government attempts,
even as part of criminal investigations, to gather information
about XS4ALL customers. They have also continued their support
of the dissident Yugoslav radio station B92, hosting the
group's news website and chat forums.
XS4ALL also sparked a major debate over privacy after running a
gutsy ad campaign last December attacking several free-service
ISPs that claimed to protect user privacy. The big poster ads
featured verbatim quotes from the terms and conditions of five
free providers regarding their actual use of subscriber
information. For instance:
"Microsoft does provide certain user information in aggregate
form to third parties, including its advertisers, for
demographics." - MSN Hotmail terms of service, Microsoft
Two of the targeted companies sued, but an extraordinary string
of triumphs followed. XS4ALL won the court cases while drawing
massive public attention to a critical issue and an enormous
amount of free, positive publicity for themselves. In addition,
the Dutch government was moved to investigate the topic of
Internet privacy. Officials ended up issuing a sweeping warning
that user privacy was being trampled at nearly every ISP in
Holland. Only XS4ALL was singled out for praise in the report
for its handling of user privacy.
Sold out? Perhaps not, after all.
<http://www.xs4all.nl>
<http://www.kpn.com>
__________________________________________________________________
NerveWireless - babble and brilliance
When nowEurope sat down with Lippe Oosterhof, 29, the
baby-faced VP for business development at start-up Nerve
Wireless, it took a while to cut through all the jargon and IT
razzmatazz before we figured out what this company actually
did. But after a cup of tea at the Tornado-Insider/Gorilla Park
bar, it started to become clear.
Put simply, Nerve Wireless provides an online space, accessible
via GPRS, filled with little tools for assisting communication
and decision making within cross-company working groups.
Need to share a document? Plop it into the space-with varying
levels of access-and send a message to every member of the
team. One of the team members is traveling and can't get
online? He'll get the message on his phone and can then
instruct the system to zap the document to a nearby fax
machine. The space also contains clever automated helpers for
making quick group decisions, sharing contact details and
synchronizing schedules.
The idea is not entirely new, but Nerve Wireless raises the
level of sophistication without creating the need for any
shared infrastructure. Thus, Nerve Wireless' target market of
small, independent firms, who tend to work constantly with
other small companies, project by project.
Nerve Wireless will test the beta version of their product on
50-100 WAP-carrying people this month. 'nowEurope: City by
City' readers with WAP-enabled phones can take part in the test
by contacting Nerve Wireless at: <mailt:beta@nervewireless.com>.
A soft launch for the final product is planned for Dec. 1, and
a more trumpeted introduction to the UK, Holland, Scandinavia,
France and Germany, where they reckon there are 1.2 million
potential users, comes in February 2001.
The brainchild of Simon Williams, 30, of the UK, formerly VP in
charge of mobile commerce for ABN AMRO Bank, Nerve Wireless is
wonderful proof the American Internet start-up fever is taking
root in Europe. They are young, smart and bent on two things:
making money and having fun. "We have a no asshole rule here,"
grins Oosterhof.
<http://www.nervewireless.com>
//hot-orange - Not enough like hot cakes
Not everyone has abandoned web retailers.
Roel de Hoop, the tall square-jawed boss of //hot-orange,
Holland's online department store for yuppies, is about close a
Euro 10 million round of funding from yet-unnamed venture
capital funds and strategic investors. That marks the fourth
time since //hot-orange's conception in September 1999 that de
Hoop has raised cash for his company, the Netherland's second
largest e-commerce site.
First came incubator Gorilla Park, headed by de Hoop's old
friend and colleague Jerome Mol (see Where's the Money?
section), which took its standard 25% for Euro 500,000. In
January, the independent VC fund NeSBIC Cte Fund dropped in
Euro 2.7 million. A month later, European voice, data and
Internet broadband services provider Versatel pumped in an
undisclosed amount. One wonders whether de Hoop has any shares
left for himself.
More polished and experienced than many CEOs inside Gorilla
Park, De Hoop remains outwardly confident. Asked if
business-to-consumer e-commerce isn't yesterday's mistake, he
replied with a firm "Bullshit." He adds, "Fundamentally, we're
better than we thought we'd be at this point."
Unfortunately, de Hoop won't back that up. He won't disclose
revenue figures or even say how much traffic his site is
getting. Those are not good signs for a company in electronic
retailing, a field known for its conspicuous ability to lose
wheelbarrows of money.
The retail strategy for //hot-orange is clear enough. It sells
products focused on "the good life." Lots of wine, flowers,
perfume, books, CDs, home and travel accessories and electronic
items. "It's targeted at young professionals for whom money is
not the issue, but time and quality," says de Hoop. One survey
shows brand recognition among Dutch web users to be an
impressive 73%.
But will this Dutch-only site draw enough customers? With no
concrete results made public, we can only guess the answer is,
so far, probably not.
<http://www.hot-orange.com>
<http://www.gorillapark.com>
<http://www.versatel.com>
MoneyPenny - The virtual assistant
Clad in a snake-skin jacket, Marianne Sturman is a petite
bundle of energy running an Internet start-up. But, with a
young child at home, the 36-year-old isn't keen on spending 80
hours a week in the office.
How appropriate that she, along with partner Natasja Fortuin,
runs MoneyPenny, a company that allows Dutch women with
children and work experience a new way to fit work around
family demands.
MoneyPenny (named for the MI6 secretary in James Bond films)
matches employers with at-home secretarial and administrative
workers (they don't have to be women, actually) and provides an
online space for swapping documents and other communication. In
addition to assigning temporary workers for larger companies
like Siemens and Ericsson, MoneyPenny also specializes in
providing so-called virtual assistants for small companies and
freelance professionals.
Virtual assistants are a widespread phenomenon in the US, but
have emerged as a loose network of independent operators.
MoneyPenny is possibly unique in bridging the gap between the
temp agency and the independent virtual assistant. It's
certainly new for women in Holland, where the concept of
flex-time hasn't exactly thrived. "We don't have to advertise
for workers. Women come to us because they are desperate for a
flexible working arrangement," Sturman says.
A tight labor market doesn't hurt either. After six months and
with no concerted promotional campaign, MoneyPenny is breaking
even with about 50 people assigned to about 40 clients. They
already have 500 more applicants, of which they expect to
contract about half. MoneyPenny aims to build a database of
1,000 workers by the end of 2001.
Sturman and Fortuin hope soon to raise about Euro 1.4 million
to fund expansion, but not from traditional venture capital.
"We don't want to become a multinational," says Sturman. She's
got a home life, after all.
<http://www.moneypenny.nl>
RealMapping - Where are you?
When he ran his own web development shop, Sjoert van Gelderen,
30, learned something about his clients: They didn't know
enough about the people coming to their sites.
So, after he sold out to the US's Webtrends, he knew what he
wanted to do next. Thus was born RealMapping, a company that
provides advanced forms of identifying the location of web
users, allowing site operators to customize their pages to the
user.
For instance, surfers in France and Germany entering the same
URL each end up seeing pages in their own language, with ads
aimed at their market. Users logging in from a university or
school will get versions aimed at students. And soon,
RealMapping will offer the ability to identify users logging on
from corporate addresses.
RealMapping claims a unique method of recording IP addresses
that allows continuous updating of their address database,
which contains 4.25 billion current IP addresses. They also
claim an accuracy rate of 97.5%. One big disadvantage comes
when dealing with customers of larger providers. Every AOL
customer, for instance, can only be located in Dulles,
Virginia, no matter where they actually are.
The company's advantage, however, may prove to be their limited
goals. They don't offer more information about users-names,
real addresses or surfing habits. "And that's the way we want
to keep it," says RealMapping chief commercial officer Mark van
der Linden. That's for marketing-oriented services, says van
der Linden, and that leaves RealMapping to concentrate on its
technology.
So far, so good. Newconomy bought a 15% stake in May, which is
helping RealMapping open offices in New York and Hamburg this
month.
<http://www.realmapping.com>
<http://www.newconomy.com/eng/>
__________________________________________________________________
WHERE'S THE MONEY?
Gorilla Park - Looking for lightning
Lightning already struck Jerome Mol once. In 1997
Hewlett-Packard bought his Amsterdam-based software company,
Prolin Automation, for a cool Euro 60 million. From the comfort
of his California mansion, he then plotted his next two moves.
The first was Tornado-Insider, the magazine that has become one
of the bibles of the Internet economy. But number two, he
reckoned, would be the big one: a network incubators spawning
Internet start-ups.
Inspired by a Geoffrey Moore's best-selling 'Crossing the
Chasm,' which described market-leading companies as "gorillas,"
Mol launched Gorilla Park in October 1999. And now he's nursing
baby gorillas in Amsterdam, London, Paris, Munich and San
Francisco.
Incubators are, indeed, beginning to perform a crucial role in
business development across Europe. Venture capital is still a
relatively new phenomenon on the Continent, and has still not
fully matured. A gap clearly existed for start-ups that need
more help than just cash. Indeed, many small companies need
less cash than the minimum amount most VC funds are interested
in investing.
Trouble is, e-incubators are suddenly a dime a dozen. There are
no fewer than 14 in Holland alone. So, is Gorilla Park the
gorilla in this market?
Well, it's spending gorilla-like. With 14 baby gorillas (one
has died already), the company has quickly burned through the
initial Euro 15.6 million with which it launched, and has
raised an additional Euro 48 million from the likes of Cable &
Wireless, ABN AMRO, Goldman Sachs and Deutsche Bank.
Gorilla Park truly seems to fawn over their start-ups as they
drive them through an eight-step process aimed at making them
"IPO-ready" within 18-24 months. All the small headaches of
arranging basic services and administering a business are taken
care of. Legal, financial and management guidance all come with
the package. And they're not stingy. Gorilla Park has 87
employees serving its 14 babies.
Perhaps most telling, despite the rigorous competition and a
ruthlessly inflexible policy of a taking 25% equity in exchange
for Euro 500,000, start-ups are still lining up to get in.
Gorilla Park has gained a reputation for delivering a lot more
value than the relatively small pot of cash they hand out.
"Our first reaction to [the offer] was, 'Hey guys, that's not
fair'," says Lippe Oosterhof of baby gorilla Nerve Wireless
(see On the Ground section). But it was a take-it-or-leave-it
deal, and Nerve Wireless took it. "It proved, after all, to be
a good decision," says Oosterhof.
It's too early for Gorilla Park's first exit, so it's also too
early to say whether lightning will strike again for Jerome
Mol. But he's got a few kites up in a storm.
<http://www.gorillapark.com>
<http://www.tornado-insider.com>
__________________________________________________________________
THE GURU
Rop Gonggrijp
When Rop Gonggrijp and partners founded XS4ALL in 1993, the
first consideration was staying out of prison. In those early
days, the only opportunity for Gonggrijp and his
technically-savvy friends to access the Internet was through
"borrowed" university accounts. When Holland passed a computer
crime law that year, the group decided starting an ISP was a
better option than jail.
Holland's rogue ISP (see ON THE GROUND section) also had a
mission, defiantly proclaimed in the name of the company:
access for all. What's more, Gonggrijp and friends were
determined to demystify the Internet, and to defend it from any
power that threatened to dominate, subvert or censor the
medium. But XS4ALL's attitude actually has its roots in an
earlier vision, that of the hacker movement.
In late 1980s, Gonggrijp began publishing the widely-circulated
hacker newsletter, 'Hack-Tic', which proved a lightning rod to
the Dutch hacking scene. It printed essays on software hacks,
computer viruses, telephone hacking, magnetic cards, and lock
picking. They also exposed security weaknesses at the Dutch
phone company, KPN, and other prominent Dutch companies. These
pranks earned the group notoriety in Holland and abroad,
bringing important issues to the public awareness. And at the
center of this media circus, Gonggrijp amused himself as
ringmaster, rabble-rouser, and digital dilettante.
1993 was a magical year for Gonggrijp and friends. Following
the launch of X4ALL on May 1, Gonggrijp organized a three-day
summer hacking conference on a campsite at Larsenbos, called
Hacking at the End of the Universe. Hackers brought their
computers to the campground to assemble what was later billed
as "the largest non-military network to be set up in the open
air."
By 1996, Gonggrijp had decided to remove himself from the
public eye. The Internet was now front-page news. XS4ALL was an
early success, and Holland's colorful, anarcho-hippy hacker was
obvious bait for a voracious press. "The problem with
overexposure is that you start to become your media
personality," Gonggrijp says.
In 1997, Gonggrijp left XS4ALL to start an Internet security
consultancy, ITSX. Also that year, Gonggrijp and friends
organized a follow-up to the HEU event, Hacking in Progress,
which attracted 2,500 hackers to a campground outside Amsterdam
served by a microwave IP connection and a glass-fiber network.
Success seems to suit Gonggrijp. He hasn't changed his values,
or his friends, but then many of his old hacker buddies are
also Internet millionaires. Gonggrijp luxuriates in spending
time with his long-time partner, Carla van Rijsbergen, and
their twin toddler sons. He's using his new wealth to renovate
a five-story Amsterdam house - two floors for the family, one
floor as an office, another floor for visiting friends, and the
ground floor as space for events, parties and happenings.
Also in the works: a hacker retreat in Costa Rica (he's already
bought an option on the land), and an open-air hacker
gathering, Hacking At Large, tentatively scheduled for Summer
2001, in Enschede, Holland.
<http://www.xs4all.nl>
<http://www.hacktic.nl>
<http://www.itsx.nl>
<http://www.hip97.nl>
<http://www.hal2001.org>
__________________________________________________________________
AD VALUE
24/7 - Being European in Amsterdam
When it came to tapping the European market, for online
advertising and marketing specialists 24/7, that meant being
European. And that meant being based in London wasn't good
enough.
"We didn't want to be Anglo-centric. We wanted a European
focus," says Gordon Simpson, CEO of 24/7 Europe.
Simpson, a 48-year-old Scotsman whose company, Interactive
Holding, was bought out by 24/7 last year, chose Amsterdam. It
makes sense. The tax and regulatory regimes are friendly,
Schipol Airport is a fantastic transport hub, Dutch is nearly a
second language in Amsterdam and Holland is at the forefront of
the Internet revolution on the Continent.
Of the Euro 1.2 billion expected to be spent on online
advertising this year in Europe, the burgeoning Dutch market
should account for about Euro 54 million, more than double the
Euro 24 million spent in 1999.
Most of that, 60%-70% according to Govert van Eerde, 24/7's
Benelux regional director, comes from dot-coms. The financial
and auto sectors are also beginning to spend more heavily.
As elsewhere, however, 24/7 is seeing a shift in focus from
straight online advertising to more targeted electronic
marketing campaigns. 24/7 Europe still draws 80% of its
revenues from selling online ad space. But the 20% from online
marketing techniques is up from zero just two years ago. Most
of that is spent on targeted emails sent on an opt-in basis,
only. In other words, the recipient has ticked a box giving
permission to send marketing information.
"More companies are moving toward customer management and
loyalty programs," says Simpson. "Some of them will never sell
much online, but they can retain their customers that way."
And that means huge savings compared to direct mail for
promotions and green numbers for customer management.
The next step is part of the great European gamble on mobile
technology. In addition to sending ads via SMS, 24/7 has
started the first WAP ad server in Europe, which delivers ads
via GPRS. Yet another company crossing their fingers over WAP.
<http://www.247europe.com>
__________________________________________________________________
LAW & ORDER
Privacy - The not-so liberal Dutch
The Dutch take their civil rights pretty seriously. You won't
catch many in Amsterdam crying, "What Holland needs is a strong
leader. Someone to make order." Moscow it isn't.
But are you ready for this? Dutch law enforcement authorities
last year received judicial approval to tap more than 10,000
phone lines in 1998. That's one for every 1,600 citizens and
more in absolute numbers than in Germany or the US. Maybe it's
not such a liberal state after all.
And now, as elsewhere, Dutch cops want access to Internet
traffic. In December 1998, the Dutch parliament passed a new
telecommunications law that, among other things, required ISPs
to make user accounts accessible to the authorities with a few
keystrokes and a judge's order. That would make it far easier
to read someone's email and check their surfing habits.
Previously, authorities had to bring in additional equipment
and rig it up themselves.
ISP XS4ALL (see ON THE GROUND section) is refusing to
cooperate. And, so far, the authorities aren't pushing the
little company that has a history of winning legal battles.
"They don't want to use us as a test case," chuckles XS4ALL
public affairs officer Sjoera Nas.
That may mean that, in Holland, law-abiding privacy lovers and
criminals have a safe place to surf and send email (unless
their email traffic travels through the US, but that's another
story). And if XS4ALL is eventually forced to submit to the new
order, both will suffer.
<http://www.xs4all.nl>
<http://www.minjust.nl:8080/>
__________________________________________________________________
nowEurope would like to thank the following people for their
help in preparing this issue:
Monique van Dusseldorp, with van Dusseldorp and Partners
<mailto:monique@vandusseldorp.com>
Tim Lunn, of First Tuesday Amsterdam
<mailto:tim@lunn.com>
Ardith Rotz
<mailto:Ardith.Rotz@bt.com>
__________________________________________________________________
MASTHEAD
Copyright 2000 nowEurope Publications
Published by Steven Carlson <steve@noweurope.com>
Edited by Christopher Condon <chris@noweurope.com>
Sponsorship enquires: Buba Dolovac <buba@noweurope.com>
nowEurope: City by City is a sister publication of the nowEurope
discussion forum, serving European Internet professionals since
1995. The nowEurope archives are located at:
<http://www.topica.com/noweurope-digest/read>
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