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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:firstname.lastname@example.org>. 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:email@example.com> Tim Lunn, of First Tuesday Amsterdam <mailto:firstname.lastname@example.org> Ardith Rotz <mailto:Ardith.Rotz@bt.com> __________________________________________________________________ MASTHEAD Copyright 2000 nowEurope Publications Published by Steven Carlson <email@example.com> Edited by Christopher Condon <firstname.lastname@example.org> Sponsorship enquires: Buba Dolovac <email@example.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> ______________________________________________________ * Verspreid via nettime-nl. Commercieel gebruik niet * toegestaan zonder toestemming. <nettime-nl> is een * open en ongemodereerde mailinglist over net-kritiek. * Meer info, archief & anderstalige edities: * http://www.nettime.org/. * Contact: Menno Grootveld (firstname.lastname@example.org).