Boris Veldhuijzen van Zanten
The Next Web

Boris Veldhuijzen van Zanten is a serial internet entrepreneur, a blogger, and a guest speaker. He started his first company, V3 Redirect Services, in 1997 and sold it two years later. In 2003, he started a Wi-Fi hotspot operator, named it HubHop, and sold it just eight months later to KPN.

Veldhuijzen van Zanten is also the founder of Twitter Counter and The Next Web conference and blog. The Next Web blog is among the top, most influential technology blogs in the world.

Pedro Santos: You started your first company, V3 Redirect Services, in ‘97 and sold it two years later. What led you to start the company, and what lessons did you learn from this first experience?

Boris Veldhuijzen van Zanten: I was studying at the Art Academy here in Amsterdam. I found out about the World Wide Web, and I thought it was just very interesting, what was happening. I really felt like it was the beginning of a new era in the world. Because it was new, I thought, “I have to play a role in that.” I didn't know what that role would be, and I thought, “Maybe I can play a role as an artist, or as an entrepreneur, or some other way, but I have to be involved in this.”

Then, one day, I read an article about a company in Iceland, and they had used the domain extension of Iceland, which is .is, and registered a domain named “This.” The domain name was “This.is.” Then they started a re-direct service so you can register “This.is/Bjork,” and re-direct it to Bjork‘s page, or this is “This.is/Boris,” and re-direct it to my page.

I thought it was a very clever use of technology, because it was sort of a mix of poetry and technology. It had never occurred to me to use a domain system like they did, with making actual words. I started looking around and found that there was another country with a great domain extension, and it was Tonga. Tonga had the domain name extension .to. I felt that's even better, because you can register “Come.to,” and “Surf.to,” and “Travel.to,” and “Welcome.to,” and “Go.to.”

I borrowed my father's credit card, and bought my first seven domain names there, and just started with a re-direct service, very simple at first. That's how it got started, so I just wanted to be involved in something, in this new thing that I thought was going to be huge.

Santos: Did you start immediately to think how to make money out of it, or was it just an experiment?

Veldhuijzen van Zanten: Well, yeah, a little bit. One of the first things I did … I had just a homepage at the time and it was popular, had a few visitors a day. I wanted, “This.is/Boris.” So I e-mailed the guy, and I said, “Can I get ‘this.is/Boris?’” He said, “Yes, but it will cost you €1,000 a year.” I felt, “Okay, that's just stupid,” because the internet economy is not about just charging a lot of money. It makes more sense to give something like this away, and then show some advertising when people use the service.” I did see the business potential, but I didn't start it because I thought, “Well, this is going to make a lot of money right from the start.” I thought that this is just a great opportunity to do something and I'm sure there will be a way to make money in the end, but charging €1,000 a year is not the solution.

I did see the potential, but it's not an easy way to make a quick buck.

Santos: Okay, so you sold it two years later to Fortunecity. What did you learn from this experience, from creating the services to actually selling it two years later? What do you think are the main lessons that you took out of it?

Veldhuijzen van Zanten: Well, I learned an awful lot, because, of course, it sounds very straightforward, just starting a company growing it and then selling it. But there was a crisis every day, every week. It was really difficult to keep up the growth. The service demanded more investment all the time.

We had to pay with money that we didn't have. We had issues with scalability. So, it was just a roller coaster for two and a half years. And the company that bought it was the fifth or the sixth company that we were negotiating with. So we had several negotiations where, just at the end, the deal didn't go through, or either we walked away or the other company decided not to buy.

So I think I learned how to negotiate better because, the first negotiations we did, we just had no idea what we were talking about or how you're supposed to sell a company. And then, slowly, as we did more negotiations, we got better at it, less emotionally involved, and it became easier to walk away from a deal.

So I can't begin to say how much I learned in those first two and a half years. It's really hard to isolate one thing that I've learned. It's always a lot harder than you think. Everything is. So I guess, what I picked up on the most was that, from the outside, it always seems simple, straightforward, easy. But then, when you get inside, there's always chaos, stress, tension, and desperation.

Santos: If you didn't start it by generating revenue, how did you pay the bills for the two and a half years? Did you get investment, or was it self-funded and you were holding yourself up with the other things you had going on?

Veldhuijzen van Zanten: It was self-funded. And for the first two years, I think, we just paid everything ourselves and used the little revenue we had to just pay for servers and everything. And just near the end, I think, about a month before we sold the company, we had an investor who agreed to invest. But then, we sold the company and we essentially bought off the investment with the money from the exit.

And I still believe that it's really smart to start companies that don't really need funding. And a lot of the companies don't need funding. There are a lot of companies that raise funding. But usually, it's just so much better if you can raise funding to grow an existing company instead of raising money to start a company.

So I fundamentally believe that most companies are sort of started in one weekend. Right? Maybe a week. But the basic idea is that you don't take a lot of time to get from nothing to something that you can show people, that it's viable. That shouldn't take more than a week. Even if it's a really complex problem. And once you have that, and you can show a little bit of success in just one detail of your plan, then you can expand on that.

So a lot of people think we should raise money and do it just exactly right the first time and build the whole system with a lot of features because you need everything to be perfect or else you can't sell. But that's not the way I do business. I like to build something small and see if people like it. And if they like it, you expand based on what you think is the next logical step for the company.

And if you look closely at other companies—even Google, right? Because they have a million servers. But they started off with just a simple thing, and they worked on it together, just two developers, to see if it would work. And when they saw that something worked, they spent more time and energy on it. And it took a few years before they got their first funding, because they just were working together and you don't need a lot of money when you're students and just working on your own stuff.

Santos: Since then, you've created several companies. What were, in your view, your biggest successes of those companies?

Veldhuijzen van Zanten: There are two ways of looking at it. You could say, “What are the companies that you sold, or which ones are successful?” But that's the short list and also not the most interesting thing to talk about. So I think what's more interesting is that I'm in a position to continuously try new things and find out what works and what doesn't work. So I'm equally proud of the projects that we set up and then found out that they didn't work, because at least we successfully tried them and showed that they were unsuccessful. But we still had a chance to try them.

I set up a Dutch Wi-Fi hotspot service [HubHop], and we sold it to Royal KPN, the mobile operator of the Netherlands. From start to sale, that took less than eight months. That was a record, setting up the company, growing it really fast. And then, before we almost got started, we'd already sold it. That was very successful.

I once started a company called Twitter Counter, which is the biggest statistics provider for Twitter. I came up with the basic idea on a Thursday and started coding on it on Friday. Worked the whole weekend, showed it to my partners on Monday, and then we worked on it on Tuesday and Wednes-day. And Thursday morning, just exactly a week later, we launched it and it was really successful. It's an independent company now. We're very profitable, with a few people who work full-time. So I'm really proud of that company too.

Then there's The Next Web blog, which is a top-ten blog in the world. We've got twenty-five people who work there, and they're all over the world. That's a very successful project too. I am very proud that it's become so much bigger than just the sum of the founders.

Santos: What do you consider to be your biggest failures, not necessarily the companies?

Veldhuijzen van Zanten: I think as an entrepreneur you fail all the time. You've got failure built into your business. Right? So you don't really keep track of failure. You never really fail. It's like if you would ask a scientist, “What's your biggest failure?” They wouldn't really understand the question. Because if you were doing experiments, you get results and that's either positive or negative. But the result is always interesting and you're always glad that you did the experiment, even if the outcome is unexpected. It's the same here. We do projects all the time. There's one joke that I tell, that we once raised some money and we started an anti-spam company. Usually, anti-spam companies are judged by the amount of spam they stop. So a not-so-effective spam company might perform ninety-six percent, and a really good one does ninety-nine percent. I think Gmail does 99.9 percent. They stop spam.

We built a solution, we launched it. Pretty quickly, we found out that we stopped, like, one hundred and thirty percent of all spam, meaning all spam and one third of your real mail just all disappears. Then after six months, we went back to the investors and we said, “Well, this is not going to work. We can either just keep doing this, or stop the whole thing, give you back half your money, and then we'll just call it a day.”

The investors were so happy that we were honest about the whole thing and that they even got half their money back—that most of these investors then again invested in new projects that we did. When I look back at that project, I'm still very proud of the way we handled it. I'm glad that we got the chance to find out if it would work. Then, when we found out it didn't work, we were able to quickly damage-control the whole thing and even ended up with a better relationship with the investors than we had before we started the company.

If you talk to other people, they're like, “Wow, but it was a huge failure, right? It didn't work at all. You lost a lot of money.” Still, I have a very positive feeling when I think about the company, and even the investors have a positive feeling about the company.

I think that's essential when you're an entrepreneur, that you're not afraid of failure. You embrace failure. Your whole business is based on trying out stuff, being ready for stuff to fail and just taking the next step as soon as you fail.

Santos: Going a bit back, you mentioned HubHop, which is the Wi-Fi service. Was it designed to be sold so quickly? How did you come to actually create the service and eight months later, sell it one of the biggest giants in the Netherlands?

Veldhuijzen van Zanten: When we pitched it to the investors, and we had a few informal investors, we didn't have a lot of money, and they asked us, “What's going to be the exit? Is this just going to be a great company, or are you going to sell it? Is it going to be an IPO? If you're going to sell it, who are you going to sell it to?”

We said, “Well, we are certainly going to sell it, and probably to a mobile operator.” Our strategy is to just compete with 3G networks, and they weren't deployed yet then. We said, “This is going to be so hugely expensive, and Wi-Fi's going to be a lot cheaper, so we're to scream everywhere where people will listen to us that Wi-Fi is the future, UMTS or 3G is never going to be deployed. And that's going to be so annoying for the mobile operators that they will eventually buy us.” So that was the whole strategy.

And we just started doing that, and I think six months into the company, I met a guy at a birthday party, and I asked him what he did. And he said, “I work at KPN.” And then I told him, “Could you ask around and find out who is responsible for the Wi-Fi strategy at KPN, because I want to buy a license to put Wi-Fi antennas on all the payphones in the Netherlands that are owned by KPN.” And he said, “Yeah, sure. I'll find out.”

This was just one hundred percent bluff, because we had no funding at all. I knew we wouldn't be able to afford the license, even if they would offer it. And I knew they would never offer it, because it's a major asset to them to have those locations. So they would never sell access to that to a third party.

But the reason I asked was because I thought it's a great way to find out if they have a Wi-Fi strategy at all. And if they do, then we'll have a major competitor. And it's a great way for them to get to know us. Because it will mean at a corporate level they'll say there's this company that wants to buy a license. What do they do and what's the strategy? So I knew at least they would talk about it.

Within two weeks, we got a call from KPN, and they said, “Could you come over and could we have a talk about your business?” And we went over and they just said, “This is very interesting what you want to do. And would you consider selling?” And we said, “Well, no. But what are you thinking about?” And we started talking about money, and eventually we sold.

Santos: Was there a time where you thought of creating a bigger company and not sell it?

Veldhuijzen van Zanten: Yes, in this case, we said, “We are going to build a one hundred million-dollar company, and it's going to take four years. And we're going to do a few rounds. And the first round is just an informal round, and then we're going to do a bigger round later, maybe after a year.” So that's how we set up the company. But then, when KPN started talking to us after eight months, we had some conversations with the investors, and we said this is just such a great opportunity. And it's not the exit that we were dreaming about in four years, but on the other hand, it is an exit and it is now and it's real money. So we were all in favor.

And some of the investors agreed, and they said, “It's a great return on the investment. Let's just do it.” And some said, “I am just as willing to wait four years and build a real company.”

And then, one of the investors said, “You should also look at just what it means for you personally. There's the money, which is important, but also what it means because it will be the second company you sell, which will make you a successful serial entrepreneur, which is very valuable for the rest of your career, too. You did it once, which is cool, but it might have been an accident. But if you did it twice, you showed the world that you're capable of doing this.”

So in the end, just everybody was happy to do this exit.

Santos: So, on to The Next Web. As you said, it's one of the top blogs in the world, and it also has a conference that's very well-known in Europe. But the less well-known part is that it has an incubator. What led you to design The Next Web with these three components all in one?

Veldhuijzen van Zanten: I could give you a bullshit story about the whole strategy of the thing, but really it's all one big happy accident. So we once had a company, just a separate start-up that we wanted to launch, but we couldn't afford to go to a conference and sponsor it. We just didn't have the funding for that. So then we felt well, let's have our own conference. We can be the main sponsor. And then even if we lose money, it's still cheaper than sponsoring somebody else's conference. So we did, and we broke even, so we didn't lose money, and we had a great event. But by the time we had the event, the start-up wasn't ready to launch yet.

In that sense, it was a failure, but we loved the conference. The start-up didn't really work out, and we started doing other things. And the conference was the binding factor that kept it all together. So you could say that the incubator was the first thing that we had, and then the conference was to promote what was a start-up in the incubator.

And then we had the conference and we thought it's always so hard to promote a conference, as you've got to persuade the other journalists to write about it. Maybe we should just have our own blog so we can write about technology all year. And use that as our media channel.

We always had a blog to promote the conference and right about that time, we looked at how the blog was doing, because we started writing just two or three months before the conference. It was really just a conference blog. But then we looked at the traffic of some of the biggest conferences in the world, and we noticed that our blog was so well read that we had five times the traffic of the biggest internet conference in the world.

So we thought, “Okay, apparently we were doing something right with the tone of voice, or there is something that attracts people to the blog.” So we hired an editor. We said, “You've just got to write four posts a day the rest of the year and we'll pay you for that.” And then traffic started growing.

And I remember very well the first day when we had more people visiting the blog in one day than we had visitors to the conference, which was easy because we only had one thousand visitors at conference, of course. But still, for us, it was just an amazing thought that we had so many people visiting the blog.

So we started investing more and hiring more editors, and so now we've got twenty-five editors, and they're all over the world. And only two percent of our traffic is from the Netherlands. The rest is just the rest of the world. And I remember maybe a year ago when our editor in chief, Zee, in London, said, “I want to be in the top one hundred on Technorati.”

I think we were at forty thousand at that time, and I just thought that was just so unrealistic. I would like that too, but there's just so many blogs in the world. And then, within two months, we entered the top one hundred. Then, I think a few months later, we broke into the top ten. And now, every day it's sometimes we're eight, sometimes we're twelve, but we're always around the number ten in the world.

Santos: Do you see a big difference between Europe or the US in readership? In Europe it's a very well-read blog.

Veldhuijzen van Zanten: Yeah, in the US, even more. So most of our readers are in the US, and then the rest of the world. London is very big. Canada, too. Australia. But also Asia. And there's not a country in the world where people don't read The Next Web. So that's even at the North Pole and the South Pole, people are reading The Next Web. We had an article a while ago where we showed all the visitors over twenty-four hours on the map, and there was one dot on Antarctica, and then we got an e-mail from somebody, and he said, “Hey, I can see myself!” And we're like, “What?” “Yeah, because I'm at the research facility on Antarctica.” And I saw a blip, and that's got to be me. So, yeah, there's not a country in the world where they don't read it.

Santos: That's very funny. All the companies that you started are based in Amsterdam, and some that we didn't talk about, like feestje.nl, which is completely focused for the local market. But for the others, you have a clear target, it's worldwide. For instance, Twitter Counter. How hard is it to create a global company from a country like the Netherlands?

Veldhuijzen van Zanten: Well, I think it's actually easier to start an international company than a local company. The World Wide Web is worldwide, by definition. So it feels strange to limit a web site to just one geographical region. And I definitely prefer to have companies that have a worldwide potential, and don't restrict themselves to just a local area. So feestje is an example where we did look at local, because it's basically the local version of Foursquare, where I thought if it's location-based, it makes sense to focus on the location. But I have more affinity, more interest in the start-ups that are simply technology. Basic stuff that people can understand and that potentially can reach the whole world.

Santos: And what would you say are the advantages and disadvantages of being based in the Netherlands, in this respect?

Veldhuijzen van Zanten: So if you're looking for advertising dollars, ninety percent of that market is still in the US. And as with the blog here, you're very dependent on advertising. So it makes total sense to do business in the US. All the international markets are very underdeveloped, clearly. On the other hand, if I go to the Valley and I e-mail people and I say, “I'm from Amsterdam. I'm only here for a week,” it's just a lot easier for me to get appointments than it is for people who live there. And just being from Amsterdam gives you sort of an edge. I think the Netherlands is a very stable country. It's got a nice little economy. It's safe and it's good living here. But you've definitely got to look beyond the borders. Because it's so small, it's sort of in our genes to look at the rest of the world and do business internationally.

So I wouldn't tell people and say, “Oh, if you want to be an international entrepreneur, you should live in the Netherlands.” But I happen to live in the Netherlands, and as an international entrepreneur, I think it's great to be here.

On the other hand, two weeks ago we rented an apartment in Spain. And we just all got in a plane and went to Spain, and worked from Spain for a week. Excellent swimming pool. And we can, because everyone works from a laptop. So if you want to work somewhere else, it's just perfectly possible.

So I think it's the interesting thing about the time that we live in, and the technology we use, and the kind of country we are, that we can just say, without blinking an eye, we are an international company. We have people working for us that we've never seen before. I wouldn't recognize them in the street, but they've been working for us for the past two years in places I've never been to. And there's no problem at all, there's no challenge. It just works.

Santos: And will you continue to start this small, fast experiment in your company all the time, or do you think one day you'll just focus on integrating one big, large corporation?

Veldhuijzen van Zanten: Well, we think of The Next Web as an umbrella company under which we can do whatever we want. So it's very exciting to have a blog that reaches the whole world, and being able to use that to promote your own stuff, to host events, to visit people everywhere in the world. And it's great to have the TNW labs, which is the name of the incubator, where we can just start our own projects. And if one weekend I think we should really do this, I'm in a position where I can build my own prototype. And if it works, I'll launch it on the next web blog and get the developers in pretty quickly.

So I don't think I'll ever work on just one thing. I really like that we're able to do more than one thing in this one big company.

Santos: How do you manage to keep so many balls in the air? Because there's always so much things going on.

Veldhuijzen van Zanten: Well, the trick is to have great people who manage everything. The one big misconception with starting entrepreneurs is that they sometimes think, “We're going to start our own company, we're going to hire a lot of people, we'll be successful.” But the whole thing is that hiring great people is the biggest challenge. And every person you hire has a huge impact on the direction of the company and the atmosphere of the company, and how innovative you're going to be. So I think the thing that makes great companies is just hiring great people. So we're always looking for new people who are entrepreneurial, who fit our company profile, and then we build companies based on these people.

Coming up with new ideas is really simple, and building something that works is a bit simple too. But then finding someone who can make this company big, that's the real challenge.

Santos: What advice would you give to a new entrepreneur?

Veldhuijzen van Zanten: I would say “just do it.” And that's a simple thing to say, but it's the biggest challenge for a lot of people. Most people say that they want to be an entrepreneur, but don't actually start and they're stuck with just wanting to be an entrepreneur. And if you think about being an entrepreneur and things you want to work on, then usually you've got a whole bunch of reasons why you cannot start today. Because you'll say “I first need funding.” Why do you need funding? Because I want to build the whole thing. Why do you want to build the whole thing? Because I want to make a great first impression. And then you think that's a whole bunch of reasons, just excuses, not to start today.

But if you bring your idea down to the essence of the idea, and start learning to program today, then you can be a good enough programmer within a month to build a simple version of your service, and then you can see if your friends like it. And if your friends like it, they'll tell their friends, and within forty-eight hours you've got more users than you could have hoped for. Because that's how viral growth works.

So I always try to get people, to persuade people to just get started, and don't think about how it could be better. Just take away all the limits that keep you from starting today.