VivaBusiness 2.0

Palm (PALM), the 15-year-old company behind the Treo smartphone, just unveiled a new product it says has been five years in the making. Called Foleo, the device is a "mobile companion" — a small, ultra-thin notebook-like Linux computer to be used in conjuction with a smartphone. The Foleo has a large screen and full-size keyboard and snycs with your cell phone’s mobile email and office documents via Bluetooth and built-in Wi-Fi. Any edits made on the Foleo are automatically paired with the phone it’s used with and vice versa. The device weighs less than 2.5 pounds, has an estimated battery life of five hours and can be turned on and off instantly. Sounds great, but if you already have a smartphone and a laptop, why would you want a Foleo?  

"We saw an opportunity for creating an extension or companion to the
smartphone," Palm founder Jeff Hawkins said in a webcast announcing the new product earlier today.
Despite the fact the Foleo looks like a smallish laptop, Hawkins
emphasized that the device is "not designed to be a laptop — it is
targeted for people doing wireless email." 

To Hawkins’ credit, the Foleo is much lighter than your average
laptop and automatically syncs with your phone — two things it does have
going for it.

According to Palm, the Foleo will not only support the Palm OS but also
all Windows Mobile smartphones. Eventually, says the company, they
would like to support RIM, Symbian and even Apple. For business users who just can’t get enough, the Foleo should be
available sometime this summer for a hefty $500 (after a $100 mail-in
rebate).

A stage filled with European angels and VCs (and $1 billion-plus in investment capital at the ready) gave a rundown of the current state of startup investing in Europe. Not surprisingly, the topic of an overheated market in the Internet space came up here at Innovate Europe. "There is froth without a doubt," says Mark Tluszcz,  managing partner with Mangrove Capital Partners,  "and the exit market doesn’t justify it."

Simon Levene, at partner at Accel went so far as to call the Web 2.0 market in Europe (and by extension the U.S) a bubble. Not one driven by public markets, but by the billions in capital that the VC and corporate funding world are throwing around at Internet  companies. So while it may be a tough time to be a VC, it’s a great time to start a company in Europe, Levene says. Here is his advice to would be entrepreneurs in Europe and elsewhere. "If you can deal with the price of failure, capital is very cheap ," he says. "It’s talent that is rare. If you have that talent , you should go for it,  and don’t sell it cheaply. If you have a good idea, capital will find you."

There has been a lot of discussion in the halls here at Innovate Europe, and in restaurants over tapas about how to develop an environment conducive to startups. Europe really jumped into the technology startup world during the bubble, with VC firms and startups cropping up in most European nations. When the bubble burst globally, entrepreneurs in the States licked their wounds like everyone else, but quickly began plotting their next technology innovation and companies. I was talking with Robert Cook at Metaweb recently, and he credits much
of the innovation over the past few years in the U.S. with the bubble bursting. All
of the sudden you had all these smart people, out of work, with time on
their hands and the ever-present question, "Wouldn’t it be cool if we
could do this?"  The technologies that resulted led to the wave of Web 2.0 innovation we are enjoying.

Europe, in contrast, has taken much longer to come back (with the U.K. leading the charge). But there are clearly signs that a wave of innovation is occurring throughout Europe and gathering momentum. "You had almost three years where nothing happened," says Dominik Matyka, CFO of Germany-based hiClip, a European competitor to VideoEgg. "Finally at the end of  2005 you began to see angels and VCs get interested again."  Over the last 18 months, Matyka adds, Germany’s four largest publishing houses have all been making seed investments in Internet startups to get a foothold in the digital media world.

Hermann Hauser, co-founder of London-based Amadeus Capital credits a colleague with the observation that successful startup regions, Silicon Valley (or Cambridge, England in Hauser’s example) are  "low risk environments to do high risk things in." That is to say, where the consequences of failure aren’t disastrous. Much of what has held European entrepreneurs back after the bubble burst has been the consequence of failure.

In Silicon Valley, as long as you go down fighting,  failure is a badge of honor. "You’ve got the scars on your back to prove it," says Technorati founder David Sifry.  You also have the option to go work at another startup down the street or get another round of funding for your next idea. That safety net hasn’t existed outside of a very few pockets in Europe, and it a very hard thing to establish (which is why a distributed Silicon Valley hasn’t really happened). You fail here in Europe, and you fail hard.

What is happening in Europe that is enabling regions to start becoming low risk environments to do high risk things in, is the ascension of a class of entrepreneurs that have had success. The Skype guys are only the most obvious, but says Hans Peter Brondmo, founder and CEO of San Francisco-based Plum (and a native of Norway) "There is at least one generation now of technology  entrepreneurs in Europe, and some very visible successes. That helps show other entrepreneurs and the European capital markets that you can have success if you take a risk, and starts creating the right environment for startups."

Extend that to China, India, Brazil and other places around the globe that are starting to see some successes in the technology world, and it’s only a matter of time before the giant startup flywheel that is Silicon Valley has some new competition from entrepreneurs but also from investors looking to buy into the next great ideas and teams. Whether it is lasting competition will depend on what happens when some number of this latest wave of companies go belly-up, and investors walk away with nothing.

I am in Spain at the moment, sussing out a bunch of European startups at Innovate Europe. This morning at the University of Zaragoza Business School (located in perhaps the windiest city on earth), Technorati Founder David Sifry and August Capital VC David Hornik held forth on what it takes to build a global tech company.

Much of what they said  you will have already read in Business 2.o stories. One interesting topic though, was how do you build a tech startup if you are not an entrepreneur in Silicon Valley? More specifically, if you are an entrepreneur in Zaragoza,Spain - a city of 700,000 or so, that is not a particular hotbed of startup activity. The answer both men gave could be applied to any place that doesn’t have the deep ecosystem of people and funding that exists in Silicon Valley.

One option, of course, is to move yourself and your company to Silicon Valley, Boston, London or some other locale that has a strong startup ecosystem in place. "You can do that," Hornik says, "but you always run the risk of destroying the company when you move."

If you decide to stay in a place where there is less of a startup ecosystem, the main focus of your planning and execution, Hornik says, ought to be on building a business that can sustain itself on its own as quickly as possible - rather than waiting for some funding to come ahead of your product development. If you are in a conservative funding environment, and if you are outside Silicon Valley or a handful of other places you are, it will take longer to get a term sheet in hand. Building a company that doesn’t depend on getting a fast infusion of cash for survival is your best shot at building a company that has a chance at getting big. "And the thing that VCs love more than anything, is funding a company that doesn’t need our money," Hornik says.

That doesn’t mean a little funding doesn’t help. If you can’t get the money you need close to home, you need to develop relationships with VCs and entrepreneurs in places where they can help you. Hornik gave the example of Feedburner, whose CEO is a rabid networker in Silicon Valley, even though he and his company are based in Chicago. His connections in the Valley made it easy for him to raise money for his company in Chicago.

There is also the big fish/small pond dynamic. If you build this successful startup outside of a place where 1,000 other startups are blooming, you become The Man or The Woman. "Once you become the best, most focused startup in an area you will find that all of the sudden funding sources, other entrepreneurs and the local press want to help,"  Hornik says.

Technorati’s Sifry agrees that there are advantages to building a company outside of the usual places. "You need to find a way to build a startup in whatever environment you find yourself," he says.  That means looking at all kinds of funding options, other than straight-up venture capital. It might be local angels, or some sort of public/private partnerships. But find a way to make it work.

"Focus on solving a really important problem, and something you are passionate about," Sifry says. "And make sure you keep your integrity. You will find this is a very small world, and if you cut corners or do something that is less than ethical word gets around. You may start five or six companies in a lifetime, but you only have one reputation."