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Volume 08 | January 2012
Social Economy

The partners of Earlybird (from left to right): standing: Wolfgang Seibold, Roland Manger,
Hendrik Bran...

A new kind of socialism

Managing Partner,

Jeremy Rifkin,...

The Facebook
In the Czech Republic, four young guys
have combined their talents to bake up a

From left to right: Martin Homolka, Jan Rezab, Jiri Voves
and Lukas Maixner stand on ...

Socialbakers’ analytical
tools allow companies to diagnose how their social media pages are being used

Socialbakers offers two different subscription services to
its clients...



BORN: September 25, 1984
EDUCATION: Business Adm...

from McDonald’s in Sweden likes the ease of use when it
comes to benchmarking her site...

This year, BlackBerry maker
Research in Motion snapped up
Scoreloop, a gaming company in
Earlybird’s portfolio....


Mary Lisbeth: First of all, how do you define social gaming...
seem to be less about testing one’s skill
operating systems. You see gaming comand more about interacting with others.

Marc: The social component helps to extend the shelf life of
an asset: you can tweak...

Getting your fair share
Whether it’s a desire for a greener lifestyle or greater
social interaction, more and mo...

to engage
in real-world
social interaction.
For example, on the ...

The odds on their side
Will someone win big on Who Wants To Be A Millionaire tonight? Will the Duch...

The desire to bet on things is a very human trait, realized Crowdpark’s Martin Frindt (left),...

pany to Frindt and Hinterding. At this point, the concept was
still evolving, with the team mulling...

2 Mio user

sumers watch TV and simultaneously share information on
what they’re viewing with...

Energizing a new economy
What does it mean to talk of the dawn of the social economy? A new book by
American econo...

life-support. The third industrial revolution brings a conver- Etsy. They’re small, the...

“A life-changing psychological
and physical experience”
Besides investin...
Read “Bird’s-eye view” and find out
why we are among the most active bloggers
in the European venture community:
don‘t be late.
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Earlybird Magazine: Social Economy


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Free magazine by VC company Earlybird about the Social Economy. Includes articles about Socialbakers, Scoreloop, Crowdpark and a Q&A with "Third Industrial Revolution" author Jeremy Rifkin.

Published in: Technology, Business
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Earlybird Magazine: Social Economy

  1. 1. Volume 08 | January 2012 Social Economy
  2. 2. WELCOME | CONTENT The partners of Earlybird (from left to right): standing: Wolfgang Seibold, Roland Manger, Hendrik Brandis, Christian Nagel, Matias Collan, Thom Rasche seated: Rolf Mathies, Jason Whitmire “Welcome to EARLYBIRD Magazine. We would like to share our insights on technology segments relevant to our industry. This issue looks at how innovative businesses are tapping into the power of social networks.” 03 _ State of the economy Social networks are changing the economy and business is catching on 04 _ Work in progress Socialbakers gives companies valuable insights into social-media usage 10 _ Done deal Scoreloop has ridden the social-gaming wave straight to Research in Motion 14 _ Panorama Social networks are changing consumer behavior in surprising ways 16 _ New kids on the block Crowdpark taps into our love of the wager, making every player a bookie 20 _ Vision Jeremy Rifkin says we’re on the brink of a new industrial revolution 22 _ Up close and personal Earlybird Partner Ciarán O’Leary 2
  3. 3. STATE OF THE ECONOMY | E D I TO R I A L A new kind of socialism CHRISTIAN NAGEL Managing Partner, Munich Jeremy Rifkin, thinker, economist and political advisor, sat down with us to talk about a new industrial revolution. WHAT WOULD KARL MARX THINK? The 19th-century father of socialist theory was a fierce critic of capitalism. Now, what would he say about the state of affairs in the early 21st century, a period dominated by global capitalism - and yet we’re surrounded by the word “social,” as in social media, social networking or, as this issue is called, social economy. Is it a sign that the old top-down hierarchies in business, publishing and retail are collapsing? It might not be the workers’ utopia Marx had in mind, but it certainly is a sea change from where we were back in his day, or even a decade ago. In this issue, we take a look at how social media – Facebook, Google+, Twitter, etc. – is changing the way business works. While once there were advertisers who told you what you wanted and how it would “change your life,” now there is the “wisdom of the crowd.” Today, friends and strangers can connect over social networks to discuss products and services, give a thumbs up or thumbs down, and sometimes, determine the success or failure of a company. Businesses have realized the power of social media and are trying to harness it. That’s where Socialbakers comes in. The Czech Republicbased company has designed online tools that allow companies to see how their social media pages as well as those of their rivals are being used. The company has caught the eye of a host of Fortune 500 companies, which in turn got Earlybird’s attention (pp. 4-9). Tens of millions of people have discovered social gaming – just look at the popularity of Farmville on Facebook. Experts say the market, which has been growing at a steady clip for several years, is set to explode. We sat down with the CEO of the mobile-gaming company Scoreloop, one of our portfolio companies, as well as Earlybird Managing Partner Roland Manger to talk about the future – how money will be made and who will be on top when the dust settles (pp. 10-13). It’s a short walk from gaming to gambling, and some social media companies are capitalizing on the human love of betting. We profile one young start-up, Crowdpark, which has put a new twist on wagering - the odds are determined by the crowd. You won’t get rich placing your bets on their new platform, Bet Tycoon (the money is virtual), but it looks like it could become addictive, and pretty lucrative for the company (pp. 16-19). And finally, we talk to a man who’s got the ear of business, governments, and just about everyone else interested in where our economy is headed. Jeremy Rifkin, thinker, economist and political advisor, sat down with us to talk about a new industrial revolution. He sees a convergence between renewable energy and the Internet. That will bring about a new collaborative distribution of power and open up new opportunities for small and medium-sized companies (pp 20-21). The future, indeed, is social, including how we buy, sell and play. Were he here now, Marx would likely just be shaking his head in astonishment. 3
  4. 4. WORK IN PROGRESS The Facebook Doctors In the Czech Republic, four young guys have combined their talents to bake up a social media analytics platform that stands out among competitors. Sometimes so many cooks is problematic, but Socialbakers has found the right mix and their client base is expanding faster than a good soufflé. BY BENJAMIN CUNNINGHAM AND THOMAS CLARK THE CZECH CITY OF PLZEN is almost 10,000 kilometers away from the Silicon Valley, where Facebook has its headquarters. Better known for its beer than its burgeoning tech scene, it seems an unlikely birthplace for one of today’s most popular tools to analyze activities on the world’s biggest social network. Yet this is exactly what happened. It was here that the seed which became Socialbakers was first planted – at a coffee shop in October 2008. “We met at Café Fellini on the main square,” says Jan Rezab as he thinks back on his first encounter with Lukas Maixner and Martin Homolka. “I called them because a friend had told me they were incredibly talented developers. I was always looking for people like that, so I drove over from Prague to get to know them.” Rezab was then only 21, but he already had a notorious reputation within the Czech Republic’s startup scene. “We had heard a lot about him, so we were curious,” says Homolka. “He was regularly in the press and a TV show featured him as one of our country’s most promising young entrepreneurs,” adds Maixner. Rezab founded his first start-up at the tender age of 14, needing his father’s signature for all the necessary paper- 4
  5. 5. CASE STUDY | S O C I A L BA K E R S From left to right: Martin Homolka, Jan Rezab, Jiri Voves and Lukas Maixner stand on the banks of the Vitava river in central Prague, minutes away from their new offices. The city’s famous Charles Bridge can be seen in the background. 5
  6. 6. WORK IN PROGRESS Socialbakers’ analytical tools allow companies to diagnose how their social media pages are being used across a variety of platforms. Some services are free, others are available for a fee. Paying customers include Coca-Cola, Nike, Puma, Samsung and Vodafone, to name just a few. work. At 16, he dropped out of school to devote all his time to his business, a gaming platform for smart phones. A few years later, he started a second company devoted to local business searches. Given this track record and his outgoing personality, he quickly rose to fame. However, for Maixner and Homolka, the renown alone was not enough to convince them to partner with him. In fact, all the good PR made them skeptical. “Some people warned us that he was a show-off,” says Maixner, but they wanted to decide for themselves. It was not the best time for Rezab, businesswise. His mobile phone venture had loaded him with about €150,000 in personal debt. While the company started off focusing on the technical side of smart phone games, it moved into game development, and the debts started piling up. “At the meeting, I was very upfront with Martin and Lukas,” says Rezab. JAN REZAB 6 Big plans He then suggested partnering on new projects he envisioned, rattling off a long list of ideas. Maixner and Homolka were both puzzled and fascinated, as Rezab energetically announced that they should no longer “waste time building websites for hundreds of euros and start doing some cool apps for thousands of euros.” Given that he was talking to two very young undergraduate students in a still rather low-wage country, this was quite an announcement. Maixner remembers telling Homolka after the meeting, “This guy is crazy, but I really like him. We should give it a shot and do a follow-up.” In retrospect, Rezab is grateful that the two were willing to work with him. “They were taking a big chance on me. Everybody knew my last company had failed,” he admits. The broad idea was that Rezab, based in BORN: January 12, 1987 NATIONALITY: Czech STATUS: Married, with one child EDUCATION: Left school at age 16 WATCH: iPod CAR: BMW X3 FAVORITE ENTREPRENEUR – ALIVE: Bill Gates FAVORITE ENTREPRENEUR – ALL TIME: Steve Jobs
  7. 7. CASE STUDY | SO C I A L BA K ER S PLANS AND PRICES Socialbakers offers two different subscription services to its clients: “Engagement Analytics PRO” and “Engagement Builder PRO.” Subscribers of the analytics tool can extract data on PDFs that go far beyond the standard tool available to administrators of a Facebook page. To name but one function: it allows one to check the fan growth of any page. Social media managers at Coca-Cola, for example, can compare the growth rate of various pages run by Pepsi, Red Bull or other competitors. The price plan for the analytics tool ranges from $50 (for one account) to $1,000 for 100 accounts. The second service, the engagement builder, tracks responses to promotions and allows more efficient management of a page. One feature enables a user to determine when a posting is published. Posts written on Friday afternoon can be set to appear on Saturday at 3 pm or Sunday at 6 pm. That means new content appears during times many fans are on Facebook (evenings or weekends) and administrators don’t have to work overtime. The use of this tool runs from $250 to $900, depending on the size of the page (number of fans) and user rights. Prague, would pitch concepts to customers and Maixner and Homolka, based 90 kilometers to the west in Plzen, would implement them. Their first project was to optimize a website for a smart-phone display. Soon after that, the trio tackled a project from South Korean carmaker Kia, which was looking for developers to create an online toolbox where people could design their own vehicles and show them to friends. But Rezab and his colleagues realized that a website was not the right medium for Kia’s project. Instead, they proposed launching it on a new social media platform that - at the end of 2008 - had just been introduced in the Czech Republic: Facebook. At the time, few brands were prepared to use social networks to reach customers. On top of that, Homolka - the team’s lead programmer - had to learn how to communicate with Facebook’s interface. But Homolka was a fast learner. “For the first time in my life, MARTIN HOMOLKA there was a team that delivered things as fast as I thought they would,” Rezab says. Besides the technical and business skills that molded their still-loose partnership, the three shared a sense of humor and a good gut feeling about what works in social media. When the trio observed that a deeply unpopular Czech politician was regularly pelted with eggs at public appearances, they created a virtual egg-throwing game on Facebook. It lets users lob eggs at politicians on a special app and post special messages on friends’ walls. The game was a huge hit and shortly after the launch, more than 500,000 Facebook users had installed it. Viral buzzes such as this one grabbed the attention of global agencies like OMD and Ogilvy. Facebook breakthrough By mid-2009, the partnership between business-savvy Rezab and tech-talents Maixner and Homolka had tightened and took up more and more of their time. The Plzen duo decided to put their college careers on hold and and take Jiri Voves, a close friend and recent graduate, on board. The foursome, who started to call their (still informal) firm Candytech, began to spread the word about the potential of social media. “The first meetings with clients were just about explaining what Facebook is,” says Voves. As Maixner recalls, “When we started out, companies used to say to us, ‘It’s another thing for teenagers, like a dating site.’ We said, ‘No, it’s a bit more than that.’” Eventually that legwork would pay off. “When Facebook started getting bigger, they began calling us back,” Voves says. By the middle of 2010, they had developed some 150 Facebook applications - games, polls, quizzes and other applications that brands could use to attract or retain clients. In addition, they passed a milestone that would not only be their first direct link from the Czech Republic to the Silicon Valley, but would prove to be a watershed: They were officially appointed Preferred Developer Consultants by Facebook. It came about after they met two high-ranking executives on Facebook’s European team - Blake Chandlee and Mark Cowan - at a press conference in Prague and started chatting with them. As Vice-President of Global Agencies & BORN: August 23, 1982 NATIONALITY: Czech STATUS: Single EDUCATION: Computer Science (University of West Bohemia) WATCH: HTC smart phone CAR: Ford Focus FAVORITE ENTREPRENEUR – ALIVE: Bill Gates FAVORITE ENTREPRENEUR – ALL TIME: Steve Jobs 7
  8. 8. WORK IN PROGRESS JIRI VOVES 8 BORN: September 25, 1984 NATIONALITY: Czech FAMILY STATUS: Single EDUCATION: Business Administration (University of Economics, Prague) WATCH: Swatch CAR: Ford Fiesta FAVORITE ENTREPRENEUR – ALIVE: Mark Zuckerberg FAVORITE ENTREPRENEUR – ALL TIME: Tomáš Bat'a Photos: Walter Novak Regions, Chandlee was one of FaChange of direction cebook’s most important contact It wasn’t long before the team points for developers. He invited realized that their pet project, inithem to go through the screening tially meant to promote Candytech, process. “We had great case studies might turn into a business model of since we had done applications for its own, and become even more lubig companies like the Czech subcrative than their agency business. sidiaries of Vodafone and GE MonRezab’s vision was to create analytey. We submitted those and that ical tools that would be offered via a was that,” explains Homolka. The website on a subscriber basis. With new status put them a rather exclua base of news around Facebook dasive club; there are a dozen Faceta and free analytics available on the book Preferred Developers in Eusite, they tried to whet users’ apperope and fewer than 90 around the tites for more sophisticated products globe. This prestigious social meavailable for a fee. dia badge was great for PR and Given that billions are now marketing, but it helped them on spent on advertising on Facebook the development side as well. “We and those numbers are growing, the got information about new features need for scalable platforms to anin advance, were invited to particialyze those efforts is increasing as pate in Beta versions and got backwell. “Perhaps the vastness of soup support,” says Maixner. cial networks’ repository of user inThe company has a new loft space in central By fall 2010, things were formation is itself a limiting factor,” Prague (top). Jan Rezab is a frequent attendee of looking very promising for the four notes the consultant firm Deloitte social media conferences, as his extenseive colfounders: Candytech had been regin its latest “Technology, Media & lection of badges indicates (bottom). istered as a limited company (with Telecommunications Predictions” Rezab holding 50 percent and the (2011) and adds: “It remains a chalothers the rest) and was about to close its first financial year lenge to economically extract useful insights from the volwith revenues of more than €650,000 and an astonishing prof- umes of user data that social networks generate.” This is preit margin. The company was ready to enter the social media big cisely the void Socialbakers is trying to fill. league. To prove to potential customers how good Candytech’s There are several other analytical tools and services social networking apps were at attracting fans and buyers, the from Facebook’s own statistical tool (Facebook Insights) to team began to collect analytic data generated by their own prod- Adobe Omniture. Some offer their services for free; others are ucts. As they were doing this, they realized that a lot of the data backed by global companies with good access to potential cusaccumulated on Facebook was accessible to partners and devel- tomers. Yet by combining social media and software as a servopers, starting from the number of users per country to the de- ice (SaaS) to deliver scale, Socialbakers manages to compete velopment of fans on particular sites. The issue was that there with and, often, stands out among big names such as Radian 6, were not enough tools available that allowed users to immedi- Alterian, Brandwatch, Comscore, Wildfire or Buddy Media, to ately see or quickly access the required data in a user-friendly name but a few. way. As Candytech’s crew grew ever-more sophisticated on that Within the first 18 months of its service, Socialbaklevel, they launched a website “in order to promote our agency ers’ website attracted 300,000 unique users. For its paid servbusiness.” ice, the Czech start-up lured over 450 companies worldwide, First, they wanted to call the site Facebakers, but their among them 30 Fortune 500 companies including Coca-Cocontacts at Facebook “made it clear to us that they would not la, Nike, Puma, Samsung, Tesco, Vodafone, Unilever, Kraft, appreciate a name that resembles theirs too much,” says Rezab Peugeot, and Hyundai. “Our client core right now is very, very with a smile. As a consequence, they changed the name to So- strong,” Rezab says. “They are evangelizing it all the way cialbakers. (That later turned out to be a good move since they around.” At the end of 2011, Socialbakers was adding between started offering analytical tools for Twitter, LinkedIn, Goog- 10 and 20 customers per day. le+ and other social media in addition to Facebook.) What makes their tools so attractive? Kajsa Dahlberg
  9. 9. CASE STUDY | S O C I A LBA K E R S from McDonald’s in Sweden likes the ease of use when it comes to benchmarking her site with those in other countries. “This helps us to see what other countries are doing successfully,” she explains. Patrick Hoffstetter, chief digital officer for French automaker Renault, appreciates its ubiquity. “Communication success at Renault is measured according to engagement rate, and by using analytics we can measure not just overall engagement, but drill down into engagement on everything we publish across Facebook, Twitter and more.” Ultimately, the secret of Socialbakers’ success seems to be its clever combination of innovative technology and its tools, which are designed to be easy to use (for a description and prices, see sidebar on p. 7). Growth spurt With fresh money from Earlybird Venture Capital, which invested $2 million on a valuation of $7.5 million in September 2011, Socialbakers now has the financial foundation to gain traction. Looking at the growth rates of social-media marketing (expected to reach at least 10 percent of total online marketing, worth €70 billion in 2013), the interest in the business is obvious. Marketing and campaign measurements are predicted to generate up to 2 percent of this amount. With a market share of only 0.02 percent, Socialbakers would still be able to generate €350 million in revenues. For the Czech founders, all of whom were born during their country’s communist era when entrepreneurship was limited to the other side of the Iron Curtain, a lot has changed since that first coffee shop meeting. The development team in Plzen has grown to more than 30 people. The “Prague bureau,” once just Rezab’s desk, has moved into a modern loft in the center of Prague and houses the sales and business development teams. For dealings with big international clients, a sales rep was hired in London. And now the team has an even more direct link to Silicon Valley, since the new chairman and the vice-president of marketing are based there. Socialbakers and its investors plan to set up a US headquarters, too. “I might soon move there as CEO,” says Rezab. He seems to have found his mission after “worrying quite often about losing focus” in his early days as a serial entrepreneur. Regarding his future goals, Rezab leaves no doubt that he wants Socialbakers to be to the social economy what the rating and audience measure tools of Nielsen or Gfk were in the television era: an indispensable partner for advertisers and content producers. “In two years, it will all be about automated insights,” he predicts. “Our goal is to oust the big analytics guy and give marketers something they can really taste.” It’s a fitting aspiration for a company whose name conjures up images of cookies and cakes. LUKAS MAIXNER Bird’s-eye view JASON WHITMIRE General Partner Munich It’s a huge blue ocean for us and it’s going to do nothing but grow. What drew you to Socialbakers? Jason Whitmire: Brands are investing a lot into advertising on Facebook. They want to monitor return on investment and they need solutions for that. We looked at a lot of players in terms of analytics. Almost no company had the traction and scalable model Socialbakers has. When we invested, they already had a dozen Fortune 500 companies on their client list and have been building out their expansion as a global player. Does talk about a social media market bubble worry you? Whitmire: It’s all relative. More people are spending more time online; that’s not going to change. There is froth and frenzy out there, but most of Socialbaker’s competition is over on the listening side. Socialbakers is about turning it around and allowing companies to measure their Facebook campaigns against their competitors. So you see a lot of potential growth in social network marketing? Whitmire: Only about 10 percent of brands have really figured it out. Most of them are just waking up. It’s a huge blue ocean for us and it’s going to do nothing but grow. Everybody now recognizes you need to invest in scalable analytics. Up until recently, they would sprinkle a team of engineers on the problem. Now, SaaS in social media is where the market is. Will Socialbakers expand to the US? Whitmire: They already have customers there and have launched a headquarters in San Francisco. We are also looking at other markets. Our back end will always be in the Czech Republic, where the cost advantage is better than in the Bay Area. BORN: February 8, 1985 NATIONALITY: Czech STATUS: Single EDUCATION: Economics - incomplete (University of West Bohemia) WATCH: HTC smart phone CAR: Citroën Xsara FAVORITE ENTREPRENEUR – ALIVE: Mark Zuckerberg FAVORITE ENTREPRENEUR – ALL TIME: Richard Branson 9
  10. 10. DONE DEAL This year, BlackBerry maker Research in Motion snapped up Scoreloop, a gaming company in Earlybird’s portfolio. Scoreloop’s Marc Gumpinger (left) and EB Managing Partner Roland Manger (center) talk about where social gaming goes from here. The Future of Social Gaming Games such as Farmville or Sims Social, played over social networks, have not only captured the imagination of millions of users, but also the interest of investors and the entertainment industry. Giants like EA and Disney have acquired the social gaming companies Playfish and Playdom, while games maker Zynga raised a billion going public. But players are fickle, and today’s hot game can be tomorrow’s has-been. Earlybird Magazine contributor Mary Lisbeth D’Amico spoke with Marc Gumpinger, CEO of mobile gaming company Scoreloop, and Earlybird Managing Partner Roland Manger about their take on the future of social gaming. 10
  11. 11. DISCUSSION | S O C I A L G A M I N G BY MARY LISBETH D’AMICO Mary Lisbeth: First of all, how do you define social gaming? What makes it different than any other kind of game? Marc: I see social gaming simply as a game you play with or against someone else. Games have historically always been social activities, played with others. Take a game like table tennis. The only time you play alone is when you practice. With the first computer games, however, people played alone because of technical deficiencies. Games such as PacMan were not designed for real-time interaction because they were designed in an era where those limitations still applied. Now, with the advent of real-time communications via the Internet and mobile networks, gaming has been brought back to its historically social roots. Roland: Of course, there is one major difference. Doing away with the limits of space and time constraints is something very new. Mary Lisbeth: Social games like Farmville - which involves activities such as planting, growing and harvesting crops and raising livestock - or Sims Social - in which users create online characters that interact with their Facebook friends - Like Hollywood, social gaming is a hitdriven business, with a few blockbusters and a lot of flops. The big winners are those who both develop and distribute, but the risks are substantial. Earlybird’s former portfolio company, Scoreloop, took the chance and came out on top. 11
  12. 12. seem to be less about testing one’s skill operating systems. You see gaming comand more about interacting with others. panies going back and forth between naRoland: These particular games are about tive applications designed for a specific showing who you are in the way you use device such as the iPhone, Android, Winyour own sense of aesthetics and virtudows-based phones or the BlackBerry, al self. But there are other social games and web standard HTML5 games that, at where competition is more important. least in theory, should work on all those Mary Lisbeth: Disney recently sold the devices. It’s a very fragmented market. film company Miramax and bought the Mary Lisbeth: According to a chart I social-gaming company Playdom for saw, social gaming is monetized in three $800 million. Is entertainment going in a ways: the sale of virtual goods, banwhole new direction? ner advertising and lead generation. The Marc: Disney has discovered social gamchart predicted that while the first two ing as a relevant form of mass entertainwould remain constant, the latter would “We are witnessing ment and has understood that interacprovide growth. Do you agree? tive television doesn’t work. People used Marc: Lead generation is very promising a huge shift to think the future would be interactive because the power to invite users to downtowards mobile.” TV or movies, but it turns out that peoload another app is very high as long as MARC GUMPINGER ple watching these “lean back” media you do it in the right way. For example, a don’t want to interact with a remote control and decide how player of Game A gets currency to use in Game A if he downthe movie ends. Social games are part of what’s called a “lean loads Game B. The developer of Game B has to pay money forward” medium, where you are at your computer, writing to the developer of Game A for this lead generation, but the emails, looking at websites and interacting. player might actually turn out to be interested in Game B. VirRoland: Disney has understood Schumpeter’s creative de- tual goods and currencies will also remain interesting monstruction. The company sees that the movie business is declin- ey generators in the realm of social gaming, but they are more ing and is therefore embracing something completely new, complex because you have to design each game specifically to despite it threatening its core business. They are taking their make use of them. You have to carefully craft the game to keep traditional assets such as brands, characters and good storylines on motivating people to keep buying more. and trying to transform them into games and, thus, put them in Mary Lisbeth: So I guess the virtual goods market is hit or a new social context. miss depending on the success of a game. Mary Lisbeth: What new directions will It’s like the Hollywood film model. Zynsocial gaming take? ga’s Farmville and Mafia Wars were popMarc: We are witnessing a huge shift toular but its Western-themed Frontierville wards mobile and we have only seen the bombed. tip of the iceberg in this respect. A game Marc: Exactly. It’s a hit-driven business. like Farmville, where you have to harYou can fail if one title you invest a lot of vest your crops here and there, is perfectly money in fails. However, the good thing suited for mobile. You are interacting freabout this model is that social games can quently, but in short sessions. It’s no longbe updated several times a day, whereas er a 20-hour session in front of a console. in the film business, once a movie is out People used to take their laptops to the bar in theaters you can’t change it anymore. to be on time for harvesting. Now they With a game, you can measure and adapt. can do that on mobile devices. Marybeth: In the movie or traditional “I think you have Marybeth : What’s prevented mobile board-game business, very few hits turn to be both a producer gaming from becoming a mass phenomeinto evergreens. Quite often, the majorand a distributor na thus far? ity of the revenues are made in the first to be really Marc: On PCs there is one web browsweeks or even days of the release - and successful.” er, one standard, while on mobile devicthen it nosedives. What is the revenue cyROLAND MANGER es you still have to struggle with a lot of cle in social games like in comparison? THE SOCIAL GAMING MARKET While the social-gaming market has been growing steadily for a while, it is predicted to skyrocket over the next three years. You can expect bumper crops in Farmville. Marketers are realizing the opportunities to promote their brands through social games. 12 2008 2009 2010 2011 Photo: Martin Hangen DONE DEAL $ 0.2 billion $ 0.7 billion $ 1.3 billion $ 3.1 billion 2014
  13. 13. DISCUSSION | S O C I A L G A M I N G Marc: The social component helps to extend the shelf life of an asset: you can tweak it and add new features. It’s also harder for players to drop a social game once they have motivated each other to play it, because it conveys an aspect of camaraderie and competition. In the old days, when you developed a game, it was on the shelf in a supermarket, its shelf life was fairly short and soon you had to invent something new to bring in new revenue. Now you are close to the customer all the time via the social network, so you have a better chance of picking the right themes by understanding what’s going on with players. This also helps when you want to introduce a new game. Mary Lisbeth: Who will be the winners in the social gaming field? Roland: I think you have to be both a producer and a distributor to be really successful. An example of that from our portfolio is Peak Games based in Istanbul. They have developed a very effective casual game for Turkey and the Middle East, have gotten lots of users, and now have interest from US developers who want to sell their product in emerging markets as well. So they are turning into both a publisher and a producer. With better content, they get more reach and more users. It’s a virtual circle. Marc: Just like in Hollywood, the successful developers are the big winners, though there is always a lot of risk and reward. The regular winners are those who provide the platform, they are automatically part of the hits. They will be part of the failures too, but by becoming a de facto standard, they automatically participate in the success of the business. Marybeth: Users can be fickle. Does that affect Scoreloop’s business model? Marc: It actually supports our business model, because game developers need to focus on creativity and on measuring how users behave and react to that behavior. We allow them to focus on adapting the game. Company behind BlackBerry acquires Scoreloop It was a surprise exit for Earlybird, triggered by a call from Canada. Keen to beef up its popular BlackBerry devices with mobile gaming opportunities, Research in Motion (RIM) decided to put an offer for Earlybird’s portfolio company Scoreloop on the table after having studied its software for developing social games on mobile platforms. In August 2011, RIM snapped up the Munich-based company, securing Earlybird a multiple of more than five times its investment after less than two years. The total amount of the acquisition prize remains confidential. Scoreloop CEO Marc Gumpinger says the deal is a content play for the BlackBerry maker. “RIM is good at devices and operating systems, but they need compelling content and must attract developers to create that content,” said Gumpinger by way of explaining the attraction of his startup for the Canadian company. Gumpinger and co-founders Dominik Westner and Christian van der Leeden will remain in Munich and continue to head Scoreloop’s team, which has grown to 50 employees. Scoreloop’s development platforms will continue to work on Apple’s iPhone, Google’s Android and other operating systems for smart phones, yet certain features will only be available on BlackBerry in the future. While Gumpinger steadfastly refrains from bragging about the millions he made from the sale of his stake in Scoreloop, Earlybird Magazine could not help noticing one obvious change on the “material front” for this young German entrepreneur. It’s not his clothes, nor his office. It’s his ride. When we first met him in 2009, he told us he didn’t own a car (see EB Magazine on Mobile Devices, page 18). This time around, he was at the wheel of a brand-new Lamborghini. $ 15 billion 13
  14. 14. PANORAMA Getting your fair share Whether it’s a desire for a greener lifestyle or greater social interaction, more and more people are looking to share resources. Peer-to-peer technology and a growing number of Web-based platforms are making it possible. BY MARY LISBETH D’AMICO WHEN PEG POWELL, 76, heard about online room sharing service Airbnb last May in a New York Times article, she decided to give it a try. The Mountain View, California resident’s roommate had moved out and she needed help to keep up with the mortgage payments on her 1940’s-era bungalow. Within a few days of posting her offer – a clean double room for $75 a day near Google headquarters and the Apple shuttle – she had numerous bidders. “I soon realized I could earn more that way than with a single roommate,” says Powell, a former software engineer. “But, also, I met such wonderful people.” Loving the experience, she has since begun offering her car to share by the hour. Internet-based services that allow people to barter, borrow and share are cropping up all over the Web. The sites usually ask users to register, then enable them to access other bidders via their computer, smartphone or other mobile device. While bartering is nothing new, digital platforms are making such transactions possible on a larger and more efficient scale, and in more and more regions. For people who need to be mobile but don’t want the hassle of owning a car, there’s carsharing or ridesharing. Accommodation is another popular niche with platforms devoted to renting rooms or apartments, or finding roommates. Really, the sky’s the limit, with websites catering bikesharing (Oybike), used children’s clothes (ThredUP), restaurant recommendations (Lime + Tonic, Pocketguide), leased solar panels (Solarpower), or that borrowed cup of sugar from next door (Neighborrow). Australian author and consultant Rachel Botsman gave the movement a name with her 2010 book “What’s Mine is Yours: The Rise of Collaborative Consumption,” which detailed how collaboration and sharing via peer-to-peer technologies are changing our economy and society. When Botsman started her research, she identified about 150 such collaborative efforts; by the time the book was finished she had tallied more than 1,500. Experts predict that the sharing ethic will continue to spread. In a recent online study of 547 participants by the research consultancy Latitude and the non-profit online magazine Shareable, 75 percent of respondents said that their own sharing of “physical objects and spaces” would increase over the next five years. Neal Gorenflo, editor of Shareable, says that today’s hard economic realities have something to do with the shift. “There is a limit to growth and productivity, leading to a focus on new distribution forms,” he says. Pundits also see a shift in values and behavior behind the changes, partly created by technology. “The Internet has changed the way we communicate with one another, the way we consume things. We don’t shop or buy, we share with friends,” says Antonin Léonard, a Web communications consultant and editor of, a French blog on collaborative consumption. People are using online interaction The Internet has revolutionized consumer behavior. Today, people look for the best deals online, find out what others think of this product or that store, or share and barter on the Web instead of spending that hard-earned cash. 14 In 1980, Usenet, the first online discussion forum, is started by students of Duke University. User interaction is categorized in newsgroups centered around specific scientific topics. In 1994, Jeff Bezos founds the online bookstore Amazon. He also patents an electronic recommendation system, which becomes one of the key factors of the platform’s success. In 1995, AuctionWeb goes online, later changing its name to eBay. The platform introduces a seller rating system that quickly helps the marketplace gain credibility and skyrocket popularity. In 2004, software guru Tim O’Reilly holds a conference on the growth of user participation on the Internet. In his keynote speech, he introduces the now-ubiquitous term Web 2.0. Illustration: Myriam Heinzel Buying and selling in the social media age
  15. 15. OVERVIEW | T H E E R A O F S O C I A L E C O N O M I C S to engage in real-world social interaction. For example, on the smallservices platform, currently available in 100 US cities, you can look for works of art, find someone to clean out your garage, or offer massages. People not only want to buy and sell, they want to engage with interesting people along the way. The desire to be green and even change the world is another motivating factor. In the Latitude study, more than three in five users cited “better for the environment” as one benefit of sharing. The French platform (“the hive that says yes”) connects buyers directly to food producers. Natalie Ortiz, 24, a freelance designer and strategic consultant who helped design the company site, says her interest is on “services that can be more human because they are based on peer-to-peer relationships and exchanges that can form and create communities.” While idealism certainly has a role to play, there is also money to be made. San Francisco-based accommodation site Airbnb is one of the most high-profile successes. Founded in August 2008, by mid-2011, the company had over 100,000 listings of rooms and homes in 16,000 cities and 186 countries. Though it doesn’t publish revenues, Airbnb takes a percentage from both the buyer and seller on each transaction conduct- In 2006, TIME magazine elects “You” as its “Person Of The Year.” Referencing the explosion of self-expression on the Web, the cover shows the frame of a YouTube video window. In 2008, US Senator Barack Obama wins the American presidential election, setting a fundraising record of over $750 million by making intense use of social media. ed on its site, and reports that it has earned fees on more than 2 million overnight stays. Another winner is carsharing network Zipcar, which serves around 650,000 members in 14 cities in the US, Canada and the UK with its own fleet. The company recently posted its first quarterly profit and has entered into a partnership with Ford, though it faces increasing competition from peer-to-peer car networks such as Relay Rides and Getaround, where people share their own cars with strangers. Investors are becoming keenly interested in this area, and there is now a US VC fund focused solely on collaborative startups. Although some companies have yet to show how they will make a profit with such platforms, that won’t necessarily scare VCs away. Remember, it took some time before it became clear how Facebook and Twitter would make money. “Most funded companies are focused on growth rather than profit because they want to capture the markets first, then drive towards profitability,” says Shareable editor Gorenflo. Other collaborative efforts will likely remain non-profit organizations. Despite the success stories, challenges remain for this new breed of companies. Many operate in grey areas, free from regulation, but state or national authorities could change all that. A New York state law passed in May cracked down on people renting residential rooms for less than 30 days. Now Zipcar must pay a car rental tax on its fleet. Sometimes regulation is beneficial, though. In California, legislators recently approved crowdfunding, in which companies raise money online from individual investors. Trust is another issue. While, ideally, open ratings and reviews on Web platforms encourage good behavior among members, things can go wrong. In July 2011, Airbnb made headlines when drug-users trashed the apartment of one of the site’s hosts. At first slow to respond, the company has since introduced a $50,000 insurance policy against theft or vandalism. As with any emerging market, there will be a few winners as companies go under or get acquired by more successful players. But however it shakes out, collaborative consumption – which Time magazine recently declared one of 10 ideas that will change the world – looks like it’s here to stay. In 2009, the founding of Foursquare marks a breakthrough in locationbased services. Users get discounts by checking into local venues and make themselves visible in their local network. In 2010, Facebook introduces the “Like” button, enabling users to express their appreciation of a status update, or declare themselves “fans” of a company or brand profile site. In 2011, Groupon, a platform offering subscribers targeted daily group discounts, goes public. Its valuation is $12.7 billion on the day of its IPO, just three years after its founding. 15
  16. 16. NEW KIDS ON THE BLOCK The odds on their side Will someone win big on Who Wants To Be A Millionaire tonight? Will the Duchess of Cambridge have a baby in 2012? If questions like these make you itch to bet your bottom dollar, social gaming company Crowdpark has got you where it wants you. B Y JA N E PAU L I C K “REMEMBER HOW WHEN you were the technology is similar to that used at five years old you’d say to your friend, the stock market to determine the price hey, let’s see who can run to that tree over of shares. “Alex and Sasha already had there fastest?” asks Crowdpark’s Chief a data analysis outsourcing company Operating Officer Christoph Jenke. To called Analyx and had developed meththe 37-year-old, such childhood memods for sales forecasting rooted in a preories underpin their startup’s core idea. diction market algorithm,” says the third “We realized that placing bets is very huco-founder and current CEO of Crowdman so what we did was find a digital expark, Martin Frindt. “They’d realized that pression for this instinct and turn it into this had gaming potential and were looka game.” ing for a young, hungry guy to help them In Crowdpark’s debut product, Bet Their timing couldn’t have been with a prototype. We were introduced by Tycoon, the players are the bookies. better. Set up in 2009, Crowdpark is in my tutor when we were all students at the the vanguard of Berlin’s nascent start-up scene, a hub that’s Dresden University of Technology.” so hot right now observers are talking of the new Silicon ValA passionate gamer, Frindt was no stranger to entreley. And while the company might still be in its infancy, its de- preneurship either, having already flirted with start-ups durbut product, Bet Tycoon, went live as the first-ever social bet- ing a stint with the now defunct mobile virtual network operating game on Facebook in the fall of 2011. It has attracted over tor Youni. He liked their ideas and wasted no time chasing up 2 million registered users in less than 18 months, with an av- a games designer and concept developer. Enter the fourth coerage of 350,000 active users per month at the end of 2012. founder, Ingo Hinterding. The two met at a beach bar in BerIt’s as simple as it is addictive, allowing players to challenge lin and Frindt found out Hinterding was working on a forecastfriends by betting in real time on topics thought up by an in- ing platform project similar to his. “I told him that we could house editorial team. The topics are related to real events, like either spend the next hour having a civil conversation and then soccer, world affairs, entertainment and even user-generated part as rivals, or we could start spending a lot of time in each private topics such as “Will Anna go home with Sven after the other’s company.” By the next day, they had decided to go inparty tonight?” If your bet wins, you could find your account to business together and three months later, Crowdpark came newly flush - even though the credits you get are only virtual. into being. MARTIN FRINDT 16 Creating a brand Sasha Stütze stepped up to the plate as business angel, providing start-up capital of €200,000, and along with Alex and Sasha, left the day-to-day running of the fledgling com- BORN: November 14, 1982 NATIONALITY: German FAMILY STATUS: Single (in a relationship) EDUCATION: Business Administration/Engineering (Technical University, Dresden) WATCH(ES): Festina CAR: TGB Scooter FAVORITE ENTREPRENEUR – ALIVE: Reinhold Würth FAVORITE ENTREPRENEUR – ALL TIME: none Photo: Christian Schmid Putting the game in game-changing The game’s foundation is a technology called “dynamic betting.” Developed by the company’s co-founders Sascha Stürze and Alex Ivanov and now awaiting a patent in the US,
  17. 17. CASE STUDY | C ROW D PA R K The desire to bet on things is a very human trait, realized Crowdpark’s Martin Frindt (left), Ingo Hinterding (center) and Christoph Jenke (right). They came up with a way to turn it into a social game. INGO HINTERDING BORN: July 12, 1974 NATIONALITY: German FAMILY STATUS: Married, one child EDUCATION: Information Design & Architecture (Aachen) WATCH(ES): iPhone CAR: I drive a crappy old Opel Astra FAVORITE ENTREPRENEUR – ALIVE: none FAVORITE ENTREPRENEUR – ALL TIME: Steve Jobs 17
  18. 18. NEW KIDS ON THE BLOCK pany to Frindt and Hinterding. At this point, the concept was still evolving, with the team mulling the possibility of promoting their product as a market research tool. “When we started out, we wanted to have a product based on social forecasting that was ‘gameified’ but not necessarily a game,” says Frindt. They eventually opted to concentrate their energies on creating a consumer brand, positioning the company between the three flourishing markets of social gaming, mobile gaming and online betting. “We wanted to create a destination site on the Web where people could bet on future outcomes and we realized that we could easily use the Facebook ecosystem because people were already communicating there,” says Jenke, who joined the team in 2010 after the company had secured €700,000 from the Investionsbank Berlin and a further €1 million from Earlybird in additional funding. “So we offered them a way of playing there, too.” The trio was confident about their decision to enter the realm of social gaming. “The gaming industry has become bigger than the movie industry and it’s no longer just a nerd niche,” says Frindt emphatically. “The other day I was watching TV and in a 10-minute block of commercials, five minutes were devoted to gaming-related products. A game that sells ON THE HEELS OF FARMVILLE? Bet Tycoon has a way to go before it catches up to the Facebook game Farmville, which has over 80 million active users. But given the rapid growth of Bet Tycoon’s user base, and predictions about social gaming’s future, it might soon give Farmville a run for its money. 18 CROWDPARK’S BUSINESS MODEL Like with other social games, Bet Tycoon players wager not with cash, but with virtual goods – in this case, Facebook credits: 10 can be bought for $1. Facebook keeps 30 percent of the revenue, while developers get 70 percent from the sale of the credits, which cannot be converted into real money. The virtual currency system allows Crowdpark to sidestep Germany’s and many other European countries’ bans on online gambling. Bet Tycoon players start out with a reserve of free currency, which is usually exhausted after about 30 minutes of betting. Cash-poor players can either buy credits or wait until the game eventually adds currency to their accounts. “In the short run, Crowdpark’s revenue streams will be limited to advertising and maybe service charges,” says Achim Himmelreich, e-commerce expert at Mücke, Sturm & Company Management Consultants, adding that marketing will be key. Analysts have found that, on average, a fifth of all users will pay at least once over the course of a lifetime of social gaming and between 1 and 3 percent will pay in any given month. While that monthy expenditure might only be a few dollars, a 2011 World Bank study found that the global market for social gaming was worth $3 billion. The number of active users per month roughly equals annual revenue. Therefore, a game with 1 million active users per year might earn $1 million. well shifts more copies than a bestselling music album these days.” Part of what makes Bet Tycoon so addictive to users is the fact that the odds are fixed by the crowd. The value of a stake changes continuously depending on what other players are doing. In other words, the users are the bookmakers. “The second someone enters their bet, the odds change,” explains Frindt. “And our underlying prediction market means that with each bet placed, the prices for the stocks behind the bet will also change. You have to look at the platform every day to check what the current value of your bet is, and you can either increase or decrease your stake.” Incorporating real life events gives the game an added frisson lacking in other social games and also lets Bet Tycoon tap into the rapidly growing popularity of “second screen” entertainment, whereby con- 26 registrations 1.9.2010 38.935 registrations 1.12.2010 128.366 registrations 1.4.2011
  19. 19. CASE STUDY | C ROW D PA R K 2 Mio user sumers watch TV and simultaneously share information on what they’re viewing with friends on Facebook and Twitter, chatting, rating shows, or voting in polls. Jenke remembers a recent incident when popular German TV personality Stefan Raab fell off his bike and suffered a concussion on his primetime TV. “You could immediately see the curve of the people betting on him winning go down,” points out Jenke. “It’s just like on the stock market when prices fall. In comparison, a bookmaker only reacts to events much later.” Frindt adds with a smile: “We have the fastest bookies in the world.” A player can cash out his or her stake at any point in the game - in Bet Tycoon’s virtual currency, of course, so the money stays with the house, as it were. “The game has a very high sticky factor,” says Jenke, meaning that users keep logging on to see how their stake is doing. And obviously, the more players return, the easier it is to monetize them. “Right now, our goal is to expand the usership of our products within Facebook,” says Hinterding. He adds that, in the long run, Crowdpark aims to develop “new and innovative betting and casino games, creating and defining a market worth billions.” Increase usership and the money will follow While Crowdpark has already generated some revenues by leveraging its technology, its strategy on the gaming front is currently less on money than on building up reach. The massively popular Facebook game Farmville boasts over 80 million monthly active users and Crowdpark sees no reason why it couldn’t one day match this. The four founders aren’t yet done shaking the dice. With another €4 million from Earlybird and Target Partners in place, Crowdpark now consists of a team of 30 in Berlin and half a dozen freelance programmers based in Poland. An editorial team is constantly looking for ongoing topics to keep the forecasting tasks at Bet Tycoon fresh and attractive. At the same time, there are development teams trying to create what Jenke calls “verticals,” i.e. slicing pieces out of Bet Tycoon to create new games with specific content such as sports in order to target users more efficiently. “We have a whole product line set up, with new games that will launch before the end of 2011,” says Frindt. Crucially, that involves as many platforms as possible, including mobile devices and tablets. It is a challenging leap.“A mobile product has to be much simpler than what’s possible on the Web and Facebook. It’s very hard to transfer one product to another platform. It’s a different product.” “We believe that mobile represents a new social gaming frontier,” said David Ko, head of the mobile division at the world’s leading social game developer Zynga. Care to place a bet that Crowdpark is among the first to cross it? CHRISTOPH JENKE 2 Mio registrations 1.12.2011 Bird’s-eye view CHRISTIAN NAGEL Managing Partner Munich We liked the social aspect and the fact that users can create their own bets based on everyday events. What spoke to you most about Crowdpark and their idea of social betting? Christian Nagel: We thought and still think that their concept could be the next generation of Facebook gaming. We felt that users would get bored of the existing games on Facebook. The difference with Crowdpark is that it’s dynamic and based on live events. We liked the social aspect and the fact that users can create their own bets based on everyday events. The company monetizes with the virtual goods market – what made you sure this is a safe investment? Nagel: When we invested in June 2010, the Facebook gaming market already had momentum. But when we looked at the games played there, they were similar to the first generation of Nintendo games - simple, but very successful. We felt that Crowdpark had a chance of creating the next big success. Will users really get addicted even though they can never cash out? Nagel: It’s like any game where users are dealing with virtual goods. We believe they’re the future. People are used to playing the first level of a game for free, but if they want to level up, they pay for virtual goods. This is where the gaming industry is going – you pay over a longer period of time in micro payments. Did it bother you that the founding team didn’t have much business experience? Nagel: We were convinced by their idea and felt that we could supply the missing parts. Are you are a gamer yourself? Nagel: Not hardcore, but I like to try things out. BORN: November 21, 1974 NATIONALITY: German FAMILY STATUS: Married, one child EDUCATION: M.A. American Studies/Journalism (Leipzig), LL.D. (Hamburg) WATCH: None CAR: VW Polo FAVORITE ENTREPRENEUR – ALIVE: Jeff Bezos FAVORITE ENTREPRENEUR – ALL TIME: Gerd Bucerius 19
  20. 20. VISION Energizing a new economy What does it mean to talk of the dawn of the social economy? A new book by American economist and social critic Jeremy Rifkin, “The Third Industrial Revolution,” sees a combination of renewable energy and Internet communication platforms driving an economic revolution. BY KARSTEN LEMM AND THOMAS CLARK In the second industrial revolution, telegraph and telephone – later radio and television – became the communication tools to manage and market an oil, auto and suburban lifestyle, as well as a mass consumer culture. Why do you see that coming to an end? Rifkin: The second industrial revolution is clearly sun-setting – there’s no doubt about it. Energy prices are going up, technologies like the internal combustion engine are exhausted, the infrastructures made out of carbon deposits are all on Jeremy Rifkin is an American economist, author, public speaker and political advisor. He is the founder and president of the Foundation on Economic Trends, which examines the economic, environmental and social impact of new technologies. Rifkin is an advisor to the European Union as well as several EU heads of state, including German Chancellor Angela Merkel. In that capacity, he is the principal architect of the EU’s long-term economic sustainability plan. Earlybird Magazine met him in his office in Bethesda, Maryland. 20 Photo: Karsten Lemm You see the world at the beginning of a “third industrial revolution” – what’s so new and different to warrant this claim? Jeremy Rifkin: If you look at the great economic revolutions throughout history, they have occurred when energy revolutions converged with communication revolutions. New energy regimes make more complex social arrangements possible, but they require means of communication agile enough to keep up with them and manage them. In the first industrial revolution, print technology became really cheap because of steam power.
  21. 21. INTERVIEW | J ER E MY R I F K I N life-support. The third industrial revolution brings a conver- Etsy. They’re small, they don’t have a lot of overhead costs. At gence of the Internet and renewable energy, where collabora- Etsy, where thousands of craftspeople around the world meet tive communication will merge with new ways to manage and up with millions of potential customers, they don’t even have any marketing or transaction cost except for shipping the final distribute energy. product and selling it. How will big furniture companies like Are you talking about a smart grid meeting green energy? Rifkin: It’s more than that. The first and second industrial rev- Ikea compete? They’re going to have a hard time. olutions scaled vertically, because they were based on elite But can we really expect everybody to become creative and sources. Coal, oil, gas, and uranium are only found in a few participate in new ways? places, and require huge investments. In the past, everything Rifkin: Some will be entrepreneurs, some will work in small in the economic system, whether capitalist or socialist, had to companies. Remember, the heart of the developed economies scale from top down. In contrast, the economy of the future is still the small and medium-sized enterprises. The problem in the past was that they were dependent on large, will scale laterally. That changes everything. global companies that scale vertically. Now, In your new book, you suggest that Europe is Young people it’s going to be the other way around. the region best equipped to cope with the chalAre you saying the age of the global giants is lenges of the “third industrial revolution.” are redefining coming to an end? Rifkin: If there’s any place in the world where property. For many Rifkin: Yes. You’re still going to see global new ideas about the future of the human race companies but even their operations will be are currently operable, it’s Europe. There is of them, access is more distributed. They will be in continental also a greater level of comfort with the conthe new right. markets, regionally, and they’ll be almost like cept of distributed, collaborative, lateral power executive education centers. But a lot of the in Europe than in the United States, certainly among big companies, but even the ones in Silicon Valley are power and control is going to be put in the companies and the more happy with the centralized model. In green tech, Europe networks. For sure. is currently the world’s idea factory. Will it succeed? I don’t Where are we in this transition? Rifkin: Young people are redefining property. For many of know, but I’m guardedly hopeful. them, access is the new right and it’s far more important than Where in this transition do you see opportunities for start-ups? Rifkin: The opportunities are in coming up with new process- property. We’re moving from transactions of physical goods es, programs or technologies that increase efficiencies. This and markets to exchange of services based on time elements – revolution rests on five pillars: renewable energy generation, rentals, leases, time shares. Whether it’s automobiles, second converting buildings to individual power plants, creating an homes, you name it. intelligent energy grid, finding new ways to store energy, and What about making money? plug-in transports. Entrepreneurs who find value in optimizing Rifkin: It’s going to be tough, because the kids are increasingly used to getting things for free. There is a need for new the synergies between the five pillars stand to benefit. models of making money. Musicians, for example, are now Does the Internet-based communication revolution bring latmaking less money on physically selling music and more on eral power to other sectors as well, besides energy? Rifkin: It certainly does. Internet models are going to expand concerts. There will be all sorts of new, more service-orientto the whole economy. Take 3D printing. You can now manu- ed ways to generate income in what I call a “distributed capifacture things like an airplane part or a piece of jewelry by lit- talism world.” erally printing it out. It’s called “additive manufacturing,” lay- Are the existing rules of intellectual property sufficient? er by layer, and the result is a physical product, right then and Rifkin: Trademarks are likely to stay, but I think patents and there in your room. As that scales laterally, you save energy, copyrights are probably history. They’re too slow. Are you goyou lower material cost and you save on shipping. Margins are ing to keep a patent for 20 years when everything moves so very high. And if you go into networks where you set up mar- quickly in a 24/7, speed-of-light environment? Are you going keting relationships across the value-added chains, then small to keep a copyright for a hundred years when information likes and medium-sized companies can compete with multination- to run free and it’s instantaneously on Twitter? What strategy do you see for winning in the social economy? als – it’s an entirely different model. It’s really a revolution. Rifkin: What you need now is to be the first in show. First on How far will this revolution spread across the economy? Rifkin: This is the beginning of a general phenomenon. You practice, first online, first in the networks. And that’s how you can see it in a car-sharing company like Zipcar or a website like stay abreast of it. That’s how you make money. 21
  22. 22. UP CLOSE AND PERSONAL | C I A R Á N O ’ L E A RY “A life-changing psychological and physical experience” Besides investing, Earlybird Partner Ciarán O’Leary loves several things: adventure, personal challenges and, perhaps near the top of the list, soccer club Bayern Munich. It’s no wonder, since he attended his first Bayern game at the tender age of four. Tell us your life’s motto in one sentence. Ciarán O’Leary: I hate mottos! Life is too complicated and chaotic to be defined by one sentence. See, I’ve already written three sentences. Which talent would you most like to have? Ciarán O’Leary: I’d love to be a great investor… OK, just kidding. ;) I’d love to be a fighter pilot without having to kill anyone – the adrenaline! What is the most memorable thing you ever did or received that didn’t cost any money? Ciarán O’Leary: Storming onto the streets of Munich and partying there with a million people when (soccer team) Bayern Munich last won the European Champions League (in 2001). Beer was free, too. If you could be reborn as an animal, what would you be and why? Ciarán O’Leary: An eagle – nature’s fighter pilots. An Irishman brought up in Munich, O’Leary later moved to Hamburg and then Berlin. But in this photo taken at a BBQ in Northern Germany, his loyalties are clear. If you could take one year off to help solve one of the globe’s major problems, which cause would you devote your time to? Ciarán O’Leary: If we don’t seriously smarten up we are doomed – so education, especially in Western societies. Think Sarah Palin. If you could have one day without any private or professional obligations, what would you do? Ciarán O’Leary: I would love to be parachuted onto a boat in the Volvo Ocean Race crashing through the Southern Ocean, working as a team in the most extreme survivable conditions. It’s probably a life-changing psychological and physical experience. CIARÁN O’LEARY 22 BORN: July 12, 1980 NATIONALITY: Irish (and, mentally, Bavarian) FAMILY STATUS: In a relationship, but no kids yet (despite being Irish) EDUCATION: Business and Economics (Leipzig and Singapore) WATCH: Ice CAR: None (ask me again when I’ve got four kids and live in the country) FAVORITE ENTREPRENEUR – ALIVE: Richard Branson FAVORITE ENTREPRENEUR – ALL TIME: Richard Branson
  23. 23. Read “Bird’s-eye view” and find out why we are among the most active bloggers in the European venture community: Foto: FOTO Earlybird Magazine Editors-in-Chief: Christian Nagel, Thomas Clark; Earlybird Project Team: Christine Höfer Editorial & Design: Ambo Media Ltd.; Managing Editor: Kyle James, Deanne Corbett; Contributing Authors: Mary Lisbeth D’Amico, Jane Paulick, Benjamin Cunningham, Karsten Lemm; Art Directors: Andreas Volleritsch, Michaela Pernegger, Neubau Editorial Design, Litho 4mat media Print: Druckerei Kriechbaumer Earlybird Venture Capital GmbH & Co. KG; Van-der-Smissen-Str. 3; 22767 Hamburg, Germany Tel: +49-40-43 29 41-0; Fax: +49-40-43 29 41-29, E-Mail: (responsible for the editorial content: Christian Nagel) 23
  24. 24. don‘t be late.