As the winter of discontent of content owners and YouTube begins, a certain rumbling is growing. If you look back at the first Blog posts describing the Web 2.0 phenomenon, they often called it an illusion, overrated or a bubble. Very often it is pointed out that while YouTube was sold for $1.6 Billion, it in effect only had $15 Million in revenue last year and now a host of other problems (if you count all litigation issues and tech issues, the costs of YouTube may well be above $1 Billion or so). That is assuming, of course, that Viacom and Co. will manage to convince the courts of their point of view.

However exaggerated this view may be – it has, on a fundamental level, one merit. The YouTube Business Model, as far as it is now established, is based on an unjust usage of copyright and the equity of copyright.

Now I would be the first proponent of the theory that the internet, as John Perry Barlow put it, is “the end of copyright”. In the sense that transmitting, copying and distributing knowledge and information has become so easy through the internet that an author who wants to earn the fruits of his labor is well advised to find new ways of establishing himself as a person and establishing derivative business models off the content he produces, rather than relying on licensing fees alone. Nevertheless, YouTube does not even give that to content producers and content owners. It is like a giant attention lottery, where the very few motivate the very many, through their success stories of 15 minute world fame, to copy their endeavour and try to achieve that kind of world wide recognition. However, who of those authors, even of those who have achieved that kind of short-lived fame, has actually managed to earn money off it?

That is why YouTube lacks the value chain one needs for a viable business model. That is not to say that YouTube did not achieve something very important. It created a platform for ubiquity of video content and facilitated the exchange, commenting and sharing of that kind of content. It taught users an important lesson- that broadcasting is not the prerogative of a few publishers. From there, to a viable business model is a different step.

Google may use the YouTube technology to create Google video ads and to create a platform for viral marketing (which actually may be a sound business from the position that Google has) but, anyone trying to copy the YouTube model must fail if he does not devise a value chain, a sound and profitable value argumentation, and defines what his market is.

In essence, the markets the emerging video platforms target is the advertising market or the market for sharing and licensing content- the latter being a very difficult one. The key to monetizing that kind of tool and achieving success in that kind of market will be to define the value chain and to make it track-able, so as to be able to calculate an operating margin and to devise ways of building a business.

None of the me too(s) and copycat models of YouTube has achieved that yet.

None, except one- sevenload.

sevenload is one of the most exciting business ventures I have ever been a part of, by defining a value chain which, because of its self-reinforcing nature, we call the “value mill”. By devising a technology to track not only usage of content, but also the revenue generated by the individual video stream and by devising a way to create specific audiences that add a lot to the advertising value that a video can have, sevenload has in effect solved the 3 main problems of any video business model.

For now I don’t want to describe, in too much detail, what sevenload does as we still have to establish our market leadership. But stay tuned to see how the first viable video business model on the net will continue to be established.

Share on Facebook

After 15 years of entrepreneurship the realization I come back to more and more, and in these hyped times even more strongly, is that finding the right people is the one determining factor that will decide whether you will have success or not.

On the one hand that seems like a trivial statement and on the other implementing that realization is a continuous challenge. It starts of course, with a founding team – where anyone who has started up a company knows that what seems to be a perfect team at the phase of imagining the product/the service or wrapping up the prototype, may turn out in effect in the next 6 months not to be the right set of talents and personalities. However, the HR topic becomes even more relevant when you’re hiring your first 20 employees- often finding the right person can be very crucial, even in seemingly less decisive functions such as finance or organization, or even some parts of marketing.

In that critical phase where the company is not yet known, and it is hard to find people who are at all willing to work for the company, management often makes a compromise. In essence you may have no choice, but that compromise can be more costly than not hiring a person at all – and it is always much harder and much less fair to get rid of a person who is in the wrong position, perhaps without fault, than to make the necessary effort to take the right decision in the beginning.

I at least have made this mistake over and over again and I still do not feel much smarter. At the same time, having to go through the process of selection and de-selection of the right team can be very critical for the company culture as well, because issues of fairness and the relationship between the HR consequences and your own management mistakes becomes a predominant topic, especially if you have to let people go. This is all the more relevant because in the initial phases of a company, management is bound to make many mistakes, so the issue of fairness becomes even more dominant.

For employees to understand that the fact that management makes mistakes (and will as shareholding/entrepreneurial management, very probably not be ousted), and at the same time accept that co-workers who were hired on a risky job in a company with an uncertain future, are fired, makes it even more apparently unfair.

There are only 2 ways of avoiding that:

1) be as intransigent (if not more intransigent) with lacking performance on the entrepreneurial or the management’s part (start there). As we say in German “A stairway is always swept from the top”.

2) Secondly, make objectives clear, understandable, quantifiable, but also adjustable and communicate continuously around these objectives, so that the standard of performance is understandable for every employee. This also means that objectives have to relate to the company mission and to the overall goal in a way that every employee understands, shares, commits to and identifies with.

Hiring the right people and finding the right balance between clear objectives, clear leadership, strong enthusiasm and group identification is probably the hardest challenge in setting up a company – this is where companies fail, all other mistakes can often be corrected or adjusted, if need be with fresh capital, but once a company’s corporate culture or the mix of talents and resources is poisoned it’s very hard for a company to overcome that stage, and to then regain enthusiasm, regain momentum and catch up with a market that has probably moved on.

To put it simply, at the end of the day, every company is just a group of people trying to achieve something, set up their own rules and gain success. For that and for the entrepreneur endeavoring to achieve success there is no easy way out, there is no toolbox and there are no simple solutions. It is probably the area where he or she most needs to continuously revise (on a daily basis) what he or she is doing, by which principles and with which success. It is the prime area of self-improvement for an entrepreneur, alongside self-management.

Share on Facebook

After having gone underground with a series of negotiations, I’m back withe the facts and some insights:

- Sevenload (http://www.sevenload.com) got a Financing from Burda Digital Ventures, the venture subsidiary of Burda group, a leading German Media Group

- Oneview (http://www.oneview.com) got a financing from a leading Media group as well, but that is still somewhat in stealth mode.

This introduces an exciting new phase in both ventures. Sevenload has reached new highs in usage. While competitors benefit from integration in TV channels, tend to trick somewhat on their figures, and basically are positioned as “videos generate traffic, traffic generates advertising impressions, ad impressions generate revenue”, sevenload is going for the Long Tail of content, creating a series of specialised audiences and trying to create advertising value there.

We have negotiated for months on the financing deal with a series of Venture Capitalists and strategic investors. We opted for Burda because it gave us a combination of media competence on their part and independence to pursue our own entrepreneurial course.

We closed the deal more than three weeks ago but wanted to gain some time before communicating it. We had carefully crafted a press release – only to discover that an early talk and its misinterpretation has led, a day before the release, to the faulty and undesired headline that we had been acquired. While this certainly serves the purpose of strengthening the positioning of Burda as a digital innovation leader, it is important for us to stress that we remain entirely independent and this is a pure venture financing. Lesson learned: remain on top of any and all first contacts to the press and lock in the main media with exclusives.

The other surprise was that the news generated so much response. The video market remains a very hot spot.

Share on Facebook

These are exciting times indeed… Last week saw me (us) at DLD with a fascinating charge of speakers and attendees – and a historic moment.

Conference host Hubert Burda, Owner of Burda Group, one of Germany’s largest Media Houses, jumped up on stage and delivered a smashing and spontaneuous speech in praise of entrepreneurial creativity, citing “companies such as sevenload and Alexander Straub” that revolutionize markets.

I also noticed that denkwerk has great recognition as the factory of ideas that is its name-giving founding idea. Great recognition on that even from competitor Regine Haschka of ID-Media, and from Paulus Neef, Founder of Pixelpark. We shared war stories on Wildpark back in the 90s. I bonded with Christiane zu Salm, said Alexander Straub and Martin Varsavsky (once more) as well.

Highlights were also David de Rothschild, fiercely engaged in educating children to ecology, and James Murdoch, who portrayed some really smart strategies to neutralize CO2 emission at BSkyB and earn money at the same time. His key was the climate opportunity as opposed to the climate change.

I will tell more soon…

Share on Facebook

I just spent an exhilarating and exhausting 2 days @ SIME

http://www.sime.nu

invited as a speaker by my friend Ola Ahlvarsson, Co-Founder of Boxman, Founder of result:

http://www.result.com

[btw the first time I see a company with a beta blog as only company representation on the web]

It was exciting to meet and talk to Loic Le Meur (sixapart), Martin Varsavsky (skype, Fon), Tariq Karim (netvibes), the inevitable Andreas Weigend (former CTO of Amazon and feature conference showmaster), Nico Lumma (mabber), and Bob Stumpel (advertising guru from holland). Microsoft was there to present its new Windows Live and how it sees the future of advertising.

A number of new startups out there, and many discussions about the individual gaining the means to become an economic entity on the web.

I had a slot with Tariq and Nico about Everything 2.0. I started off with a video about how

http://www.sevenload.com

was creating new opportunities for the Digital Boheme – in the person of jobless actors – to present themselves, having now, through sevenload, secured a job to present the leading dating platform neu.de as actors in advertising.

Link: sevenload.com

I then tracked the success of sevenload back to its appeal for a broad, real-world audience, fulfilling real (everyday) needs.

All this is gradually – and at a fast pace – changing the was we do business, and more importantly, the way our society works.

Share on Facebook

I had the pleasure to be a speaker at an OpenBC Event in Brussels, on a panel with Eric Archembeau, serial entrepreneur turned VC. The tune I was to play was the answer of the Founder to the VCs – after ING and Eric described requirements for getting a funding. Well, here goes what I said (click on Image to run the presentation).

Share on Facebook

I have been musing about what a recently befriended VC told me about his firm investing in a few “Superfounders” every year, while discarding thousands of Business Plans. First I felt flattered, assuming of course to be meant. When i asked him how he recognized a Superfounder, he said: “well, you know one when you see one”. Aha.

There is of course a very valid point in that a VC Partner known to have invested in some of the great successes in their realm of action does have the experience to recognize success in the budding. But maybe that’s just the point, “when it is [already] budding”.

Picture this:

Niklas Zenström spent some three years being laughed at for Skypester before moving to an unlikely Baltic State to rename it Skype and get rich.

When we got to know the Sevenload team, by all classic criteria of the business and VC scene I know, there was no way their imminent (and yet to be brought to full fruition) success was discernible. But i felt:

- Passion
- Nonconformism
- A dedication to User Value
- Borderless thinking
- and the proven will to bite the bullet in the face of adversity
- very low bullshit factor
- and a keen sense for the value of every single €
- and the ambition to shoot for the moon (even if you miss it, you’ll land among the stars)

…all proven in the biography, especially of Ibrahim Evsan, the Key founder – and as i know see as an observer of http://www.codingnight.de

It’s either viral or another proof that A class people attract A class people, because the whole team shows that dedication. In the myths of our time, it’s the Googleyness of Sevenload.

Which brings me back to “What is a Superfounder?”. I’m not sure there isn’t a fat danger of having a kind of simplistic Belief in the Strong Man. Where I come from,

http://www.denkwerk.com

which we founded as the idea of “A Company of Brilliant People”, dedicated to the above, to innovation, to having the guts to start new things, it is TEAMS that created the greatest success. And Team means that secret combination of personalities, talents, and experiences, that combine to bring the spice and the reality to any Grand Idea. So if being a Superfounder means dreaming that dream and creating that kind of environment, then maybe yes, I do feel like a Superfounder, Ibo certainly is, and Bill Gates, who said success is never achieved alone, damn sure is. [wow, me and Bill in one sentence]

But maybe the lesson of the picture in this blog is different: it is the teams that matter. And the less loud, less salesmany, less obvious secret toilers, the Wozniaks, the Myhrvolds, the Substance Makers are the ones that really count at least as much. In one word:

the Supernerds.

Share on Facebook

Rumour has it VCs are downbeat again. Well, on the one hand I can’t blame them, and on the other it brings me back the structural problem of assessing innovation as an investor. I have been observing a very fashion-driven, impressionable and cyclical focus of VCs on The Things That Exit Well (TTTEW), coupled with a regularly disdainful disregard of Never Heard of That (NHoT) and Don’t Believe It Works (DBIW).

Interestingly, most acclaimed hot shots, like skype, or Social Bookmarking, or even Apple in the beginning, went through year-long phases of NHoT and DBIW before sparking real Oh God I Hope We’ll Get a Deal in That Space Epidemic (OGIHWGaDiTSE).

Now as a proponent of a few Startups That Earn Actual Money (STEAM) – I like to think of our company as having a STEAM-Engine, being STEAM-Driven, or believing in STEAM-Power, if that is not too much self-E-STEAM – I keep wondering why it is much harder for VCs to see the merits of Social Commerce models vs. simple Social Network models.

There is no logical explanation for this. And if you think of it, copying something that just exited well is about the stupidest thing you can do:

1. It has already been done
2. It has become big enough to just exit
3. It has become so big everybody actually knows about it
4. There are at least 100 other boy group founding teams and greedy-panicky Vijays (see Dilbert for who that is) funding them who are trying to do the latest GooTube thing

…doesn’t strike you as smart? It’s being done. All the time. Again. And it’s sooo 1990s, ain’t it?

So, dear entrepreneurs, stick to your guns on real innovation, don’t foray into the OGIHWGaDiTSE, avoid the Vijays, and remember MIT’s secret formula for success, as transmitted by Prof. Ken Morse:

CFIMITYM

(Cash Flow is More Important Than your Mother)

Cheers

Rocketrabbit

PS: I’m known for being a real Punster…

Share on Facebook

Robert Shiller identified a number of reasons why this time around, exuberence is more rational than when he wrote his landmark “irrational exuberence”. In short:

- founders are smarter
- costs for it and marketing are lower
- market demand is 10x greater

I buy that. Totally. We’ve been saying it too B). The only thing that worries me is that the GooTube deal creates valuation hyperventilation – and building an organisation that actually sustains a business that is worth more than 9 digits is a cartload of LONG HARD WORK. Let nobody forget that.

The other interesting phenomenon is that bankers and consultants are flocking back to the troughs of get-reach-fast-with-dotcom-web2.0 – and they still often need to learn to go operative – Find the shortest distance between a powerpoint slide and the real world.

Share on Facebook

Exit phantasies, commercialisation discussion, is blogging worth the trouble – there are many signs that euphoria and passion, the web 2.0 sense of mission etc.. are giving way to the same kind of frenetic and less frenetic division of the spoils that we had in 2000.

That holds an important lesson for all entrepreneurs, especially since this time around, there will be no big bust – just failures and successes distributed along the bell curve.

Lesson #1:
Even if everyone is focussing on other metrics, make sure you’re earning money. It’s better to be smaller and profitable, i.e. independent, than growing and growing and going nowhere in terms of being a viable business.

MIT’s secret formula for success is CFIMITYM (Cash Flow is More Important Than Your Mother) – brutal, but to the point.

Lesson #2:
Focus on proving the business model, or, more likely, finding it in the first place. chances are, that gets you more and stickier users than pure play community building. Business Models tend to evolve where there is long term value.

Lesson #3:
Try to identify the basic need you are adressing – the more basic it is, the more chances you have. Poeple have eaten, slept, mated, vyed for attention and recognition, thirsted for knowledge etc.. for centuries… that’s where the money is.

Lesson #4
Look for the right people. Rotten Ideas have made it because of world class teams. And be honest to yourself about your won ability. Your abilities do not expand as you grow older, they diminish and gnarl like old roots. That makes you experienced and savvy in your field of expertise – and less and less of a generalist in others. Get Good people. Kennedy did (“A good manager hires better staff than he is”).

When the going gets tough, the tough get going…

Share on Facebook