This is the kind of story that we would love to cover more often: an innovative european startup gets a successful exit, being acquired by a large player (the latter being Vodafone, a european global player, for a change of the Google, eBay, or Yahoo acquisition stories).

Danish company Zyb started out as a backup service for your mobile addressbook, syncing it up with a repository “in the cloud”. And one must recognize that they have a true expertise in configuring the sync, depending on your mobile phone model among hundreds of makes (although some were very dissatisfied with the service).

Only in the past year did Zyb take advantage of all the contact information thus gathered, to become a social network of its own. Zyb was indeed “smart in how they built their service“: many analysts agree that the closest approximation of our true social network is the contacts we have on our mobile phone (much more than our “friends list” at Facebook or MySpace).

So Zyb introduced the “social phonebook” in February.

Then less than a month ago, Zyb acquired Imity, a three-people startup active in the shorter-range, bluetooth-based social networking, described as a “pocket radar“.

All this apparently makes a lot of sense to Vodafone, who acquired Zyb for €31.5M (all cash), to buy itself a social mobile strategy. The question remains if Zyb has not sold too early, when the social mobile market is barely nascent (a couple of percents of use in 2007, but still expected to grow tenfold to 800 million users over the next five years, according to this eMarketer report)

In any case it probably made sense for Zyb, who had only raised €3M (from Nordic Venture Partners) back in fall 2006. They boasted the 16 million contacts that have been uploaded… by 250.000 users (that number is good for a startup, but small compared to what mobile social networking is poised to become). Anyway, congrats to the team, the investors (and to the amazing Morten Lund, who was there as an early angel).

Because there will be more moves and innovation in this space, we’ll keep watching it closely.

For those who don’t know, Atomico is the investment arm started by Niklas Zennström and Janus Friis (Skype founders), with their payday from the eBay acquisition. Atomico is a new breed of player in the European (and global) investment scene, the kind of player that will step up and fill the void left by 3i.

Atomico has done a few investments so far, in companies that have some disruptive traits that could make them global successes : Last.fm, FON, Joost,…  While last.fm was successfully sold to CBS for $280M, the latter two are still in the growing pains.

Now Atomico is rumored to have raised a new 300 M€ fund. This is excellent news, seen as conquering Europe (from a VC perspective). I like to see it also as a chance for the best European startups to partner with a team that has proven they can scale a project to global ambitions and success.

During the startup presentation at TheNextWeb, founder Scott Rafer introduced Lookery, which allows to monetize applications on social networks.

The company made itself famous for guaranteeing application developers a $0.125 CPM. They have been extremely successful with this, serving 1 billion impressions in less than a year. Recent figures include 630M impressions in February, and 60M a day in March.

Scott came up with a breaking news during his presentation: $0.25 guaranteed for the European traffic.

Even with the sliding value of the dollar, this is great news for European developpers of Facebook apps.

Scott Rafer also insisted that the other side of their business (the targeting of ads using -aggregated- information from users) was compliant with EU privacy laws.

Update : Scott Rafer told Mike Butcher some specifics of the program: firms have to work exclusively with Lookery for this, on social networks such as Facebook or Bebo, and commit for 90 days minimum. They’re seeking another billion impressions from this.

Note : David Verbustel is covering TheNextWeb event in Amsterdam for Europe 2.0. If you are over there, he will always be happy to discuss with fellow entrepreneurs, with bloggers, investors. Contact him : david.verbustel[at]gmail.com. Other coverage of the conference TechCrunch, TechCrunch UK, and at TheNextWeb.

Kevin Rose is the successful founder of Digg.com, the poster child of user-generated news (that has generated an array of clones in Europe, subject for another post). He also (co-)founded Revision3, a webTV production company (producing his Diggnation show), and Pownce (once announced as a Twitter-killer, but more quiet now).

He went on stage at TheNextWeb to share some of his experience with Digg, interviewed by Scott Rafer (another successful serial entrepreneur of MyBlogLog, Mashery, and Lookery fame). Here are some highlights.

To manage several ventures in parallel requires to have the management and board responsabilities right. Digg is Kevin’s main job, about 60 hours a week, but seems to satisfy him :

“I don’t like to work for a huge company [...] I think this is the best job I can have”

“I’m happy to be doing what we are doing [...] Working on digg, is something I enjoy, I love”

The beginning of Digg we fairly easy, because there were not much trafic, it allowed to devote attention to developing the features. Now is a much more complex endeavor, with thousands of servers, code to be rechecked, etc. Fortunately, there are 55 employee on board to help him with the task.

As far a monetization is concerned, Kevin is not too worried : ads are there, bringing revenue ; they are kept ‘light’, not to bother the users

“We are profitable, we don’t won’t to be more profitable”

“It’s about the consumer experience, not about the money”

Yahoo’s new Buzz does not seem a dangerous competitor to him (”I haven’t told to my self- wow this one make me freak out”). Digg will keep coming with new features, such as a recommendation engine, based on patterns of how other users have voted on stories.

One warning to keep in mind: “Three years ago it was easier to launch a startup. Now there is too much going on.”

So new startups have better distinguish themselves in this crowded market. We’ll see how the ones from the startup competition fare in that respect.

I had the chance to meet at Plugg with Gary Cige and Thibaud Elziere, the founders of ZiLok, a website where people can rent just about anything (offers and demands of rental), in their area (in a space where we should also mention RentMineOnline.com, a Seedcamp finalist, more focused on the house and appartment rentals). ZiLok will also be on stage at TheNextWeb, and they are certainly one very promising startup .

Thibaud Elziere (who has also founded photo trading platform Fotolia.com, and is seen in the picture below) answered some of my questions.

What elements (technical, marketing, luck ?) played an important role during your launch phase (first 3 months) ? What lessons / advice would you share with entrepreneurs ?
In our opinion, we are still in a launch/preparation phase, at least for the next few months. Our web background and experience helped us a lot to deal with the practical and technical aspects of the launch, so we have enough time and resources to focus on what we really want to achieve, on the big picture.

We have enjoyed a very wide press coverage since the beginning, and the main TV channels, radios and newspapers already covered Zilok. It shows that the concept itself is very “communicative”: people are interested, they get involved, and journalists and media professionals have great material to create compelling stories. Nowadays, it is not that complicated to create a new web service, as technical issues get easier to overcome. Getting visibility and building a community is where the real challenge is, and you really have to focus on communication and marketing to be sure that your wonderful service will be discovered… An easy-to-explain concept is a very good point for your business, you must never forget that! Maintaining a clear, simple and powerful vision and mission statement throughout the development and launch phases is crucial in my opinion. Marketing is also a very important part to reach some visibility. We have been working on this since the beginning, and in the following week, we will roll it out to the next level. Stay tuned!

Can you tell us more about the Business and Consumer orientations of the site ?
With Zilok we focus on both C2C and B2C markets. The B2C market corresponds to the existing rental industry, rental businesses to consumers. This already existing market is an opportunity for us to reach critical mass quickly. Critical mass is always an important issue for marketplaces and internet services, and in our case this critical mass is large since our service is locally based, which means that we must list a critical number of rental items in any local area. The Professional rental market will play a big role in overcoming this challenge.
Peer-to-peer renting, that is the C2C market, is something new that we would like to support and develop. It is the most fun part of our business model but is also the trickiest. We have to evangelize people, and it will take some time even though our first months have been very promising. We already get hundreds of rental listings a day posted by individuals, people.

You are aiming internationally very soon, opening the US, and other national markets. What is your rationale for doing so ?
Six months after opening up Zilok in its beta version, we are already operating in four countries with websites in three languages. We were able to do so because we have been aiming and designing internationally since the beginning. Zilok is offering people a new way of consuming, responding to today’s trends and concerns (scarcity of resources, availability of information, cost of storage, environment). These concerns are shared by people all over the world. That’s the first rationale: the vision and value proposition for Zilok is valid identically in every country we approach.
If you adopt an effective and realistic approach to your international organization, you can do that very early in your development, and we have done just that.
Now, in the business of marketplaces, size matters, and timing is a key factor. That’s eBay 101. Conversations are now global, especially between entrepreneurs and the tech savvy. A local success story related in any country will inspire dozens of similar businesses in the matter of weeks, all over the world. We eventually want to own our success, as far we can reach.

From what I can tell, we have here a focused entrepreneur, driving his startup in a way that changes the rules of the game of a very large (and fragmented) sector. When I see this, I can’t help but recall what a VC such as Danny Rimer from Index Ventures was telling Business 2.0 about why he loves European startups :

[...] the innovations that do arise in Europe tend to be paradigm-shifting, industry-upending, world-changing stuff. Think of Linux. Think of Skype. Hell, think of the Web itself.

Let’s now watch the space for online rental.

Maybe it’s because of the date, but incredible news abound today. Let’s have a look at some of these breaking stories.

Google peeks into the future

There are reports of Google’s new feature: the gDay. Using artificial intelligence ( MATE™ Machine Automated Temporal Extrapolation), Google can give you the results of stories one day in advance.

This is great news for sport fans (and bets), newsmakers and indeed for bloggers:

Plus, using language regression analysis, Google can even predict the actual wording of blogs and newspaper columns, 24 hours before they’re written!

TechCrunch sues Facebook

TechCrunch owner Michael Arrington argues in his rather long post (complete with legal references):

So we’ve been increasingly concerned about developments at Facebook over the last few months that allow advertisers to post ads using my picture and name to endorse their products without my explicit permission.

Basically, the use of his name and picture in newsfeed items is seen as an outrageous use of his “personal brand”. As compensation for this damage, Arrington is asking:

At this point we’re prepared to settle the case for $25 million in Facebook stock (priced at the employee option price, not that ridiculous $15 billion Microsoft valuation)

This is where the “attention economy” is leading us to ! This is likely the first high profile legal action in a series to come, as users realize the value of their “personal brand”.

T-Mobile sues Engadget Mobile over the use of the color magenta

Engadget just received a letter from T-Mobile’s legal department (they point out their German legal department) requiring that they cease the use of the color purple in Engadget Mobile. This is very ironic since Engadget themselves underlined this whole color-trademark issue a while ago.

Engadget is already defending themselves by arguing that there can hardly be any confusion: they are not a mobile operator, they don’t have a problem with US 3G, they have more than 5 friends.

Wait… the one on Engadget is NOT an April’s fool.

Update : the Google gDay was first, because of Australia were early risers to April 1st. Using this gDay feature should have allowed us to foresee Google HQ announcement of their joint venture ‘Virgle‘ with Virgin and their plans for a trip to Mars (this has been picked up at many places, with the extra pinch of salt of TheNextWeb people having actually cyber-squatted the Virgle.com domain for some time). In less stellar news, there was also the Google wake-up kit, custom time and paper airplane. It looks like getting ready for April’s fool is a full-time job for several teams at Google.

On the other hand, if you are looking for serious, april fools-less news, breathe and go to RedHerring and CNET: it seems that they sport none.

I recall back around 2005 a string of moves by eBay : they took a 25% stake in Craigslist. A huge success in the US, Craigslist was virtually unknown in Europe besides expat circles. Maybe that international opportunity is why eBay went on a shopping spree, and bought dutch classifieds site Marktplaats.nl (for an astonishing $290M in cash), german classified OpusForum, London-based Gumtree, and Spain’s LoQuo. All this while starting its own classified site Kijiji.com in several languages and countries, which eventually led to eBay competing with Craiglist. (On a side note, I see that several years later, the acquisitions have all kept their original identities, living alongside the Kijiji sites in those countries. It looks like Yahoo is not alone in having a hard time to digest / rebrand its acquisitions).

This has given eBay / Kijiji a serious headstart in the online classifieds business in Europe, with most other competitors being enclosed in national borders (there are exceptions, like VivaStreet, OLX, or Adoos which opened in a number of countries).

In that context, the current announcement by Craigslist (by Craig Newmark himself, actually, also picked up by TechCrunch) to become available in French, German, Italian, and Portuguese is great news, but seems to come a bit late.
But then in the meantime Microsoft’s equivalent offering Expo.Live.com is still limited to the US (and in english only).

Next week the Web 2.0 community will turn its eyes on TheNextWeb conference in Amsterdam. If so many of the right people come there, there must be a good reason : Kevin Rose (Diggnation will be made there), Robert Scoble, Nova Spivack (Twine), Chris Saad (DataPortability.org), Scott Rafer (Mashery, MyBlogLog, Lookery),…

An important part of the event will be the startup competition : 24 companies presenting themselves in 5 minutes (that will be 300 seconds sharp). Currently, 22 companies are known, the last 2 will be choosen by the community early next week. Let’s have a short look at some of these startups (in alphabetical order) :

1. andUnite : a German startup with the powerful idea of connecting people that do similar searches on search engines
2. Backbase : the providers of a robust Ajax framework (3 million copies in 80+ countries)
3. Bemba : Dutch startup, providing a button allowing to share any content with your network
4. Beezbox : out of Paris, they enable companies to engage with their communities on social networks
5. ConfNetwork : a tool to facilitate networking at conferences (premiering at TheNextWeb)
6. CoComment : a strong swiss startup that materialized the “commentosphere”, an underlooked component of the blogosphere
7. eBuddy : based in Amsterdam, their browser based chat & messaging service allows millions to connect to MSN, AOL, on the web or on the mobile (recently raised €6.5M funding)
8. Empressr : Ajax/Flash based web presentation company out of New York (they’ve been out for a while)
9. Fav.or.it : plays in the RSS aggregator category, with a twist (or two), allowing to post comments without leaving the window, and to cut ’slices’ of what is of interest to you
10. Fleck : based in Amsterdam (and with an overlap with TheNextWeb people), brought the social dimension into the browser
11. Goojet : manages your mobile “spaces” ; has won LeWeb3 startup competition and raised a €2.3M ’seed-round’ (now this starts to sound US-style)
12. Hoera : under construction at the time of going to (word)press
13. Introniche : facilitates cross-promotion between niche sites
14. Lookery : an ad network for Facebook and social networks, using (anonymized) profiling data ; has raised $900K seed round (and more) from prominent investors
15. Netlog : this belgium-based company would be a heavyweight by European standards : >30 million registered users, it is sometimes compared to a “european facebook”
16. Radionomy : french and belgian team, wants to revolutionize the online radio, by allowing anyone to setup one
17. Symbaloo : with a name that sounds crafted by Kipling, this startup is a new iteration on the “personalized home page” trick
18. Twingly : this links the blogosphere to traditional media (and back)
19. uberVU : a Romanian startup that aims nothing less than “manage all your content and all your conversations in one place”
20. Wakoopa : tracks and shares application usage on your desktop, has been compared to Last.fm and Alexa for desktop apps
21. Wauw.fm : allows to transfer and process the media files of your PC to make them available on your mobile
22. Webnode : web-based website builder and manager
23. ZiLok : last but not least, winner of the public award at Plugg, this company pitches itself as the “eBay of rental”

So it looks like it will be a hot and contrasted show among all those startups, demonstrating that the European web 2.0 scene is alive and kicking. We will profile some of them in more detail.

And also wait anxiously for the last 2 candidates…

Crunch times indeed : Mike Butcher of TechCrunch UK had said it, again, and again, now it’s confirmed by the Financial Times. London-based investment powerhouse 3i is exiting the early stage venture capital scene.

This is certainly disappointing news for startups, but can be better understood by looking back at how 3i’s investments in early stage fared since 2000. Back then, it had more than 700 tech investments, and was on a par with some Silicon Valley VC firms. But while the US has been able to breed a string of tremendous successes (Yahoo, Google, eBay come to mind, but many others such as DoubleClick would make the average European VC happy), Europe has had less stellar exits (the usual Skype, Last.fm stories spring to mind, but they were acquired, and there is no European internet ‘giant’). As a consequence, investors such as 3i had to write-off large shares of their portfolio. Here’s not the time to complain, but to try and understand the dynamics of this market (expect more thinking and commentary on this subject).

As Philip Yea, 3i’s chief executive told the Financial Times :

Early-stage has not been an easy place.
[...]
It is a statement about us, not about the markets.

Note that 3i will still fund later-stage companies in telecoms, digital media. Looking at 3i’s website, I see that they intend to be investing between €1M to €75M… So there’s still hope for startups… if and when they reach a ‘later stage’. The fact that (3i portfolio company) Peerflix is exiting its main business is probably a coincidence. Or is it ?

In the meantime, who will fill this void in funding for startup companies ? Will business angels step up to the plate ? Will other VCs increase their reach for startups, or will they follow 3i in shifting to larger deals ?

Let’s remain confident : in an industry that’s all about opportunity, I’m sure that some will find that this move by 3i clears the space, and will give more visibility to “up and coming” funders such as Atomico, TAG (despite the recent controversy), European Founders (Samwer brothers).

Those who had listened to Rudy De Waele’s presentation on mobile 2.0 at Plugg learned about many promising startups in the mobile world, not the least of which is : Modu.

Modu was founded by Dov Moran, a successful israeli entrepreneur (who’s sold his previous business, M-Systems, to SanDisk for $1.6B). Dov now wants to take on the mobile phone market. Modu is a modular concept where the ‘core’ system can be fitted into a number of ’skins’ that provide additional functionality.

Modu had already raised $20M (from SanDisk, Genesis Partners, and Gemini Israel Funds), but this time is said to be about to raise $100M on a reported pre-money valuation of $150M. Michael Arrington at TechCrunch comments that this is a large dilution for such amounts. But then of course it is a very tough business to enter, where you can count your competitor on your fingers, and they are called Nokia, SonyEricsson, Motorola, etc.

The very concept of ’skins’ is already popular (to some extent) for spectacles, or some mobile phones, but Modu goes much further : some skins will bring completely different screen, keyboard, user interface and features (from music player to PDA), to the extent that one could wonder whether bringing the ‘core’ from one to another even makes much sense from an economic point of view (the GSM module itself is not an outrageously expensive part).

This will be a very interesting game to follow : if Modu succeeds in changing consumer habits, it might well become the ‘Swatch’ of the mobile business.