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Date: Fri, 26 Jan 2001 07:09:22 +1100
To: "fran ilich" <>
Subject: for nettime-lat

nowEurope: City by City
A city-by-city look at who's building the European Internet
Thursday, January 25, 2001

     Not waiting for the little green man

     A laggard

     e-Dreams - Location, location, location
     VilaWeb - Going "glocal"
     iSOCO - Artificial intelligence, real business - Rolling the 3G dice

     Getting squeezed

     Jose Miguel Guardia

     Upcoming Events in Europe

     We value reader tips and contacts

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FIRST GLANCE - Not waiting for the little green man

   Barcelona has that buzz. That confident energy of a city
   where work and play spin furiously round each other in a
   virtuous circle.

   These days, the Catalan capital is rapidly drawing companies
   from around the world. Some have no primary business need to
   be there, they simply want to be where they know they can
   attract dynamic young talent (see ON THE GROUND). And the
   more talent that floods in, the more exciting the city

   But make no mistake, the heart pumping inside Barcelona is
   not an imported one, it is Catalan.

   This is Spain, but the Catalan are different. Forget your
   southern European stereotypes of lethargic days spent napping
   by the Mediterranean. The Catalan are, by every account,
   Spain's most industrious and entrepreneurial people. Stand on
   a street corner in Barcelona and you'll soon note they don't
   wait for the little green man.

   And there is creativity, not only in the audacious
   architecture, but also in education, science and business.
   Consider that the Open University of Catalonia has more then
   15,000 students in its online studies program, reportedly
   more than any other university in the world - and all
   studying in the Catalan language.

   Vicent Partal, owner of the Catalan-language portal Vilaweb,
   thinks Barcelona gets its drive and creativity from never
   having been Spain's capital. While Madrid has prospered under
   the security that a massive government bureaucracy provides,
   Barcelona, he says, has always had to fight to be an
   industrial and cultural center in its own right.

   Of course, Madrid is Spain's financial and communications
   center. Multinationals almost invariably start there when
   coming to Spain, and any Barcelona-based venture with serious
   international aspirations must site an office in Madrid. But
   in terms of business and technical creativity, and as an
   inspiring place to live, Barcelona leaves the capital looking
   like a tired old uncle.

in cooperation with eMarketer

   A laggard

   There's no other way to put it. In Europe, Spain is one of the
   laggards when it comes to Internet penetration, mobile
   penetration and e-commerce turnover.

   eMarketer estimates that at the end of 1999 only 5% of Spain's
   40 million people had Internet access at home - compared to
   10.7% in Great Britain - while an additional 28% had access
   through work or school.

   While the number with access has grown rapidly, in 2000 only
   8.8% of Spaniards surveyed by the Angus Reid Group reported
   using the Internet in the preceding 30 days. Far fewer, 4.4%,
   claim to use the Internet for more than one hour every week,
   eMarketer's threshold for the "regular Internet user."

   Mobile phone penetration in 1999 was 26.3%, according to the
   European Commission, a figure that likely approached 30% in

   E-commerce revenues for 1999 were estimated by eMarketer at
   USD 620 million. That was projected to rise to USD 1.29 billion in
   2000 (USD 2.09 billion, according to IDC) and to USD 16.17 billion by

   So far, according to Andersen Consulting, Spanish executives
   have moved more cautiously than their counterparts in the rest
   of Western Europe. Only 19% of Spanish businesses surveyed by
   Andersen consider their current e-commerce efforts a success.

   Business-to-consumer e-commerce is particularly slow
   developing. Less than 1% of Spaniards reported making an online
   purchase in 1999.

   These figures are low despite one of the lowest average costs
   for telephone and Internet access services in Europe. With 450,000 free
   Internet accounts in Spain, the average monthly ISP cost
   (according to an eMarketer study based on 20 hours online) is a
   mere USD 10. Including phone charges, average monthly access costs
   are USD 23, compared to USD 40 in Germany and USD 32 in the UK.

   Clearly, Spain's relatively low per capita income and high
   unemployment have created a drag on Internet access and
   e-commerce. That said, while there is little regional data
   available, most observers agree certain pockets of Spain,
   particularly Madrid and Barcelona, are significantly ahead of
   national averages in all the above figures.

   In addition, Spain represents great promise as a jumping-off
   point for e-commerce and content provision for the rest of the
   Spanish-speaking world. Spanish is the mother tongue for an
   estimated 360 million worldwide. It is the main language in 28
   countries - chiefly in Latin America - and is the dominant
   second language in the US. eMarketer notes, "With a growing
   internet user base in Mexico and Argentina, and among US
   Latinos, there are opportunities for developing Spanish content
   websites that span the globe."

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
eMarketer -- the world's leading provider of Internet statistics
- makes sense of all the numbers and provides a realistic
overview of the Internet marketplace. <>
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *


eDreams - Location, location, location

   They're young, smart and ambitious with fantastic office space
   overlooking Barcelona from the World Trade Center pier that
   juts into Barcelona's impressive port.

   But eDreams is also just an online travel agency. They make
   their money booking package holidays and taking the normal
   agent's commission. They introduce an interesting twist by
   hooking up prospective travelers with "Dreamguides," objective
   and informed sources who, they claim, can answer detailed
   questions about any particular destination within 48 hours.
   Still, it's going to be a long, uphill struggle to make any
   profit in targeting individual consumers.

   What's interesting about eDreams, however, is why they chose
   Barcelona as their headquarters. It says a lot about this
   magical little city, and even more about smart recruiting
   tactics in the highly competitive market for Internet

   Aside from being in one of the countries eDreams targets for
   customers (also Italy, France and the UK), choosing Barcelona
   had nothing to do with the company's business activity.

   "We just wanted a place that could easily bring people from
   other countries," says PR director Jorge Carulla on why
   Spaniard Javier Perez-Tenessa and American James Hare founded
   e-Dreams here in 1999. "The weather is great. The beaches, the
   mountains, great nightlife. It's secure, cosmopolitan and in

   Add good infrastructure, a lower cost of living than Madrid or
   any prominent northern European city, a local government that
   is surprisingly active in attracting and supporting new
   technology (see Law & Order section) and a local (Catalan)
   culture that is decidedly industrious and extroverted. It's
   hard to think of disadvantages to living and working in
   Barcelona for the IT set.

   Indeed, with cash for fat salaries growing thin and stock
   options proving less attractive these days, lifestyle can be a
   decisive draw for young, mobile and sought-after professionals.

   If eDreams can sell tour packages as smartly as they chose a
   home, perhaps they've got a chance, after all.


VilaWeb - Going "glocal"

   In its early days, the Internet held a hypnotizing lure for
   many news publishers. It offered instant, relatively cheap
   access to a global audience.

   With so much wreckage now strewn along the road to that global
   heaven, it's a pity more online publishers don't have the
   bullshit detector that belongs to Vicent Partal.

   As a journalist, he, too, saw great power in the Internet early
   on. But he also had no time for the hype that demanded a global
   approach. What counted to him was delivering news that was
   relevant. And that meant going local, not global.

   In 1995, Partal and his late business partner Joan Subirats
   launched the Catalan-language site VilaWeb (then called La
   Infopista). At first, it was simply a directory of Catalan
   sites on the web, but it quickly expanded to include a daily
   news roundup. Today it is a true portal, with an extensive news
   section and powerful search engine. VilaWeb has also franchised
   out more than 80 local editions covering cities and towns
   throughout Catalonia as well as Catalan-speaking communities in
   places like New York and Buenos Aires.

   VilaWeb is, however, not simply a collection of local
   newspapers on the web. Indeed, very little of it is original
   reporting. It's more an extensive news round-up with a heavy
   emphasis on links, not only to other online periodicals, but to
   primary sources of information.

   As Partal wrote in a recent column, "The journalists at VilaWeb
   concentrate not so much on reporting the news as on indicating
   where it happens."

   "We're sending people out of the site all the time," Partal
   says. "And that's good."

   Partal calls his formula - thinking local and using the global
   tool that is the Internet - "glocal" journalism. And it's

   In Catalonia, VilaWeb is the third most popular electronic news
   source, with nearly 400,000 original visits every month.
   Vilaweb is outpaced only by web sites published by Catalonia's
   two largest print newspapers, "La Vanguardia" and "El
   Perioódico de Catalunya." But it is the most popular site
   purely in Catalan.

   Admittedly, 400,000 is not huge. But consider that only 10
   million people speak Catalan (it is not close enough to Spanish
   to be easily read by Spanish-only speakers).

   In addition, Partal has managed to make VilaWeb profitable
   from its inception. In the first 11 months of 2000, VilaWeb
   had earnings of USD 275,000 on USD 830,000 in turnover. In
   earlier years, revenues came largely from contracting out web
   design. But that is fading. Now advertising and local edition
   franchising fees make up the lion's share.

   By why not greatly expand his potential readership and publish
   in Spanish, also?  VilaWeb doesn't actually define itself as a
   Catalan-language site, says Partal. VilaWeb is about news and
   information for Catalonia, where people happen to speak
   Catalan. Until VilaWeb is something more, providing its
   "glocal" approach for people outside Catalonia, Catalan is just


iSOCO - Artificial intelligence, real business

   At a brand new office complex on the grassy outskirts of San
   Cugat, a suburb of Barcelona, a clutch of former university
   researchers are taking the corporate plunge.

   Their company, iSOCO, specializes in applying artificial
   intelligence to make web sites and Internet-related software

   Clearly, these PhDs do not relish the management side of their
   venture. "I prefer to stay focused on the technology," Jesús
   Cerquides Bueno, iSOCO's chief technology officer, admits

   But with the help of hired guns for management and financial
   tasks, as well as a nascent sales staff, these scientists are
   charging ahead.

   And that's a welcome sign when corporate and academic/research
   communities across Europe often still find themselves on
   opposite sides of a massive cultural chasm.

   Indeed, Barcelona's universities, urged on by local and
   regional governments that see them as magnets for investment
   and employment, are positively encouraging the transfer of
   know-how and technology to the private sector.

   Speaking of employment, since springing from a research
   institute connected to the Universidad Autonoma de Barcelona in
   1999, iSOCO has grown from its 10 core founders to 260
   employees, with offices also in Madrid and Valencia.

   iSOCO applies itself to several artificial intelligence tasks,
   most of them commissioned by outside clients, to solve specific
   problems. Their scope is not limited to Internet-related
   projects, but the Internet is proving a huge engine for
   artificial intelligence research. "When you look to the
   Internet in this field, that's where you can find projects and
   financing," says Bueno.

   Current projects range from web site personalization technology
   for General Electric, to smart software that will allow an
   insurance company to customize and price policies sold on the
   web with as few questions for the customer as possible.

   At this point, iSOCO is still attracting clients by word of
   mouth and just starting to build a traditional sales network.
   Yet they were attractive enough along to bag USD 13.8 million in
   September 2000 from investors, including Spain's largest
   banking group, Banco Santander Central Hispano (BSCH).

   There's nothing artificial about that.

<> - Rolling the 3G dice

   Francisco Badia, 30, wants his company to be THE 3G interactive
   content provider in Spain. What that content will be, or how
   exactly it will be used by customers, he has no idea.

   Of course, third generation wireless, technically known as
   Universal Mobile Telecommunications System (UMTS), doesn't yet
   exist. Spain has licensed four providers, who are required to
   begin offering service this August (though, they may miss their

   Yet, no one is quite sure how consumers will react to broadband
   wireless, exactly what they will use it for, how they will use
   it, or, most important, where it might drive commerce. If
   things were easily predictable, we'd all be ordering flowers
   and making dinner reservations on our WAP phones by now.

   So, how to get a step on the field?

   For Badia and, the strategy is as simple as it is
   wishy-washy: Establish your company as the best known brand in
   wireless content, then pounce in whatever direction the
   consumer takes you.

   Latinia have taken a step toward accomplishing the first goal
   by offering services available over Short Messaging Service
   (SMS), the phenomenon no one predicted. In addition to offering
   PC-to-phone and phone-to-PC messaging, Latinia also offers
   information services exclusively through an SMS interface.
   Customers can order up sports scores, weather reports,
   horoscopes, the joke or poem of the day, et cetera.

   After four months on this path (they started as an Internet
   portal), Latinia has 300,000 registered users in Spain. They
   also have services running in Italy and Portugal.

   Revenues? Forget it. Mobile phone companies, like traditional
   phone companies, don't share revenues created by extra traffic
   with content providers. But Badia is betting on a major change
   when it comes to UMTS.

   UMTS operators, he says, are going to have to gather a critical
   mass of content fairly quickly to justify the enormous
   investment in infrastructure and licenses (though, in Spain
   regulators performed a "beauty contest" tender, rather than an

   That means, he hopes, sharing revenues with content providers
   or seeing 3G follow in WAP's dismal footsteps.

   So far, Latinia is merely being brave with USD 5 million gathered
   from family and friends by the company's founder, 28-year-old
   Marsal Gifra. In February, Latinia will try to tap
   institutional investors for USD 20 million.

   If revenue sharing arrives, then Latinia are positioning
   themselves well. But that's a big "if" when you're looking for
   USD 20 million.



   Barcelona is feeling the great pinch. "It's very difficult to
   raise money," says Alejandro Olabarria, a partner in the
   venture capital firm, Kalonia. "The correction was good, but
   now it's an overcorrection."

   Of course, finding money is hard everywhere, but Barcelona,
   like other secondary cities on the banking map, is suffering
   more than the financial centers. Olabarria's firm, for example,
   hardly makes any investments in Spain, never mind Barcelona.
   Though he tracks the local market, his clients are mainly
   interested in US investment opportunities. Kalonia caters to
   wealthy individual investors and has USD 25 million under
   management. Only one of its investments, (see ON
   THE GROUND section), is in Spain.

   And for investors more actively targeting Spain, Madrid is the
   usual starting point. Local start-ups, like iSOCO (see ON THE
   GROUND section) often establish a Madrid presence, in part, to
   help them obtain financing.

   Not long ago, investors were "trying to cover as many
   geographical areas as possible," says Jordi Vilanova, director
   of Granville Equity Partners Spain, part of a multinational
   group with USD 920 million under management, including USD 32
   million in a Spain-targeted fund. Not any longer. "I wouldn't
   say it's because of anything in particular in Barcelona.
   Investors are refocusing" and drawing back to their core
   markets, he says.

   Vilanova and Olabarria are both still bullish on Catalonian
   talent. Barcelona has no shortage of ambitious, risk-taking
   entrepreneurs. And, they say, it is also home to Spain's finest
   business university (Instituto de Estudios Superiores de la
   Empresa - IESE).

   And with a solid idea and - more importantly - a good
   management team, start-ups can find cash if they know where to
   look. Vilanova says 15% of investments made to date by
   Granville's Spanish fund has been made in and around Barcelona.

   And for investors, while exits are now the problem, finding
   quality start-ups with realistic valuations has become easier.
   Indeed, Olebarria believes some VCs have gone too far in
   pressing valuations down, serving only to discourage
   entrepreneurs. "I don't think it's healthy to squeeze them too
   much, and there are plenty who are doing that."


Jose Miguel Guardia

   Engaging and good-humored, Jose Miguel Guardia does not seem a
   man easily agitated. But there is something that gets under his

   "It's irritating," he says, "to see people with good ideas who
   spoil everything because they don't know how to run a company,
   and don't even cry for help until it's too late."

   If you haven't guessed, Guardia is a consultant, though he also
   dubs himself an Internet, media and new technology analyst, as
   well as author, columnist and commentator. Well respected in
   Barcelona's financial community, Guardia runs his own small
   firm advising Internet and new technology start-ups.

   In many ways, Guardia is a perfect representative of Barcelonan
   business. Though trained as a lawyer, he has roots in one of
   Catalonia's most traditional industries, and is now firmly
   ensconced in the new economy.

   His father owns a successful textile trading company. As a
   youngster, says Guardia, he took business lessons "with my
   glass of milk every morning." When his father fell ill in the
   1980s, Guardia, just 26, took over. The company continued to
   prosper under his leadership, but when his father returned,
   there was only room for one boss.

   So, Guardia struck out on his own in 1990, forming Silver Disc,
   a CD media venture. He sold the company in 1996, seeking even
   more independence. Ever since, he has operated solo, spreading
   his expertise across several local companies.

   He also writes a regular column for the online publication

   Barcelona, he says, has no shortage of young, ambitious
   entrepreneurs. "A lot of people are willing to take risks," he
   says. "It's just that many of them don't know they're reinventing
   gun powder."

   Guardia is also confined to a wheelchair due to a childhood
   bout with polio. But he is clearly far less phased by this fact
   than those around him in public. It is almost not worth
   mentioning his disability, as it does nothing to define him,
   except that it reinforces just how otherwise irrepressible
   Guardia is.



Barcelona Activa

   Something very strange is happening here. Politicians and
   bureaucrats talk about fostering business development and
   growing a knowledge-based local economy. And - here comes the
   weird part - they're actually doing it.

   The city's business promotion agency, Barcelona Activa, is an
   impressive venture, drawing a regular stream of investment to
   the city. It is also involved in planning two substantial
   projects that could cement Barcelona's place as one of the most
   dynamic and forward-looking cities in Europe.

   It wasn't always that way. According to Oriol Balaguer, 42, the
   decidedly energetic director for promotion of economic activity
   and employment at Barcelona Activa, the city's great wake-up
   call came with the 1992 Summer Olympics.

   Barcelona's politicians, says Balaguer, realized that the
   Olympics were "a very nice excuse to rebuild the city," and
   made sure investment created by the games would serve the city
   long after the Olympics closed.

   When the torch moved on, Barcelona was left not only with new
   sports facilities but vastly improved infrastructure, a vibrant
   international image, and, perhaps most important, sky-high
   self-confidence. The city has never looked back.

   Barcelona Activa plays a crucial role in running a long list of
   business support services and promotional activities. They
   include subsidized office space (within the Activa business
   incubator) for local start-ups, but also for international
   companies testing the Barcelona waters.

   Other services include a range of consulting and training
   options for small and medium-sized ventures, a stake in a
   private venture capital firm and employment services for
   companies and job-seekers. There is also Barcelona NetActiva,
   an online extension of services for small and medium-sized
   companies not under the Activa roof.

   Two grand projects, meanwhile, are in the works. In 2004,
   Barcelona will host the United Nations Conference on Peace,
   Culture and Sustainability, a six-month extravaganza of
   meetings and celebrations on a scale only the UN could get away

   Barcelona, following the Olympic example, will use it to
   attract investment for an enormous river reclamation and
   development project.

   The second project is 22@ (22 is the number of an
   administrative categorization referring to existing industrial
   activity). 22@ will rejuvenate an industrial quarter just north
   of the city center, transforming 117 blocks, many of them now
   vacant and dilapidated, and creating 3 million square meters of
   new commercial and industrial space. Builders will be allowed
   to exceed existing height restrictions so long as the companies
   they contract to move in are the type Barcelona Activa wants to
   attract, i.e. hi-tech and info-tech.

   Not to be forgotten (though Activa is not directly involved)
   are two additional infrastructure projects. First is a new
   logistics port planned for a site between the airport and the
   marine port. Next are two TGV stations that will position
   Barcelona along an extension of France's high-speed rail that
   will end in Madrid.

   What is it, then, about Barcelona, about these Catalans? To
   Balaguer, it's simple, Barcelonans are prouder of their city
   than they are of their country, and willing to work for it. "We
   have a passionate team here at Barcelona Activa," he says with
   a proud smile. "In the private sector we could earn more money.
   But here we have the possibility to create something, to invent
   things for our city."

   That would sound like PR fluff somewhere else. But here, in
   Barcelona's electric atmosphere, it somehow has the ring of


We welcome reader recommendations
for upcoming European conferences

   Feb 10-14, 2001: Milia 2001, Cannes, FR; MILIA attracts new
   media decision makers from over 50 countries. In partnership
   with Forrester Research, the Think.Tank Summit Conferences
   put today's content business into perspective. Register
   before 12 Jan: FFR 5,245 (EUR 799,60) + 19.6% VAT.

   March 13-14, 2001: Internet Content Europe 2001, Monaco.
   Featuring all the European content industry big hitters,
   innovators and venture capitalists, this event will provide a
   forum where the future of European Internet Content Provision
   will be defined. Cost: EUR 1,345 (+ 19.6% VAT)

   Upstart Power Days: BARCELONA, March 13; MILAN, March; 20,
   Hosted by Tornado-Insider, Power Days feature startup and
   investor workshops, panel discussions, and networking
   opportunities for the key players in Europe's high-tech
   entrepreneurial environment. (No price listed)

   May 7-9, 2001, Disneyland Paris, FR. Tornado-Insider's 2nd
   annual premier event for entrepreneurs, venture capitalists
   and investment bankers in Europe. The event is a three-day
   entrepreneur conference, featuring specialized startup and
   investor workshops and networking events. (No price listed)


    nowEurope would like to thank the following people for their
    help in preparing this issue:

    Jose Miguel Guardia <>
    and the First Tuesday Barcelona team


Copyright 2001 nowEurope Publications

Published by Steven Carlson <>
Edited by Christopher Condon <>
Sponsorship enquires: Buba Dolovac <>

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