This weekend Nina and I were in Rome. Original plans were just to hang out and enjoy what possibly is the most beautiful city in the world but a fortuitous encounter led me to give a talk to a group of techies in Trastevere on Sunday. The talk was very interactive, with me presenting but mostly asking questions about the Italian start up scene. The event was organised by Johanna of Frestyl, which is a website that brings fans and amateur bands together. Freestyl is currently under development and it is one of the investments of my friend Joichi Ito.

If you have read my article about creating businesses Europe you can probably imagine what I spoke about. It´s a mixed picture. The European scene for start ups is better because there is less competition, salaries are lower and medical and legal costs are much lower but it is worse because VCs are rare, markets are fragmented by language and labor laws make failure, common in start ups, extremely costly. But what I found in Italy was discouraging because, as opposed to Spain, where I live, labor laws are even worse, VCs are even rarer, Internet success stories are few, and the Italian language market is much smaller than the Spanish language market. After asking many questions about the Italian startup scene I reached the conclusion that, even though Spain’s economy is doing worse than Italy’s in general, our technology startup ecosystem is doing better. When we built, for example, we invested 38 million euros, and sold it for 550 million. Of those 550 million euros, 70 went to 50 employees thanks to our stock option plans. Jazztel was a similar story depending on when employees cashed stock options after IPO, some did very well some didn´t. But out of all of those who did well many new angels emerged. Jon Berrojalbiz is one great example of a successful entrepreneur who came out of He is currently CEO of the very successful Trading Motion and an investor in other strat ups like Isolee. There is also the case of Miguel Salis, who was CFO at Jazztel and is today CEO of Eolia Renovables. Eolia, which was started when Miguel was the MD of my family office in 2004, is now the biggest independent alternative energy company in Spain. Over $1bn was invested, EBITDA is now over $120M and up 110% from a year ago and many jobs were created tons of carbon emissions saved. There are also many cases of companies that were sold successfully in Spain which had nothing to do with me. In Italy, however, I did not hear stories of 70 million euro stock option plans or cases in which wealth was created and distributed in a way that would create an angel network. As a result, the culture for small investors in Italy is lacking and entrepreneurs have to ask their parents or family for money which I consider in general a very bad idea. The only way to do well in VC type investing is to have a diversified portfolio, asking your parents to invest with you is contrary to that.

And then there is the cost of failure. Most start ups fail and that is true anywhere in the world, but in Italy the cost of failure is enormous. If a company shuts down because, for instance, their product had no demand and this company has say 100 employees, the costs for the entrepreneur can be brutal. In Fon, for example, we began with many employees. Unfortunately we had to lay off half of the team at one point and now that we are profitable we have started hiring again. This situation would have ruined us in Italy, because there they have different laws of forced severance payments for companies under 15 employees and over 15 employees. Significant startups can’t exist in this environment since they never know with certainty how many people they are going to need. On top of this, entrepreneurs who fail are seen as crooks. Not as people who tried to create a good product and create jobs but simply failed. Having an entrepreneur president who has barely escaped jail for many years now has given Italian entrepreneurs a bad name and that is not fair. So, on top of everything, I said before up and coming Italian entrepreneurs confront a mood very different to those of say Dutch entrepreneurs, Netherlands being the European country which in my view respects entrepreneurship the most. Now, to end on a positive mood, Italians are still very creative and have many SMEs who thrive on a European and sometimes global basis and hopefully this will soon also be the case of Italian Tech Companies.

And, in closing, here are some pictures of Rome.

Thanks to agreements like BTFon with BT, SFR, Zon and other carriers and to the introduction of the Fonera 2.0n, Fon is now profitable. We now sell in one day what in January of this year we sold in a week. That is great news. But we still don’t have money to spend on advertising. We are only doing some advertising through partners. For example in Spain, we just launched the Fonera 2.0n in the chain PCcity . As a result we are featured in their advertising. But other than piggybacking cases like this Fon grows mostly on word of mouth. And in many cases Fon grows through the word of my mouth. These words are generally spoken on Twitter. It is because of this that I became curious in knowing “the second derivative” of Twitter. I wanted to know not just how many followers I have in Twitter but what is the sum total of the followers of my followers. I nedeed to find this out in order to measure my RT or retweet potential, something I call Twitter Reach. RT it is becoming a way of spreading news that is faster than Digg or other news amplifying sites. It is instantaneous. It is viral. And it is not the same to be followed by followers with very few followers themselves but by extremely popular bloggers. The latter give you more Twitter Reach.

I asked Javier Mares Romero from my team to help me find out, beyond my 7200 followers on Twitter, how many people could I possibly reach if I was retweeted by everyone who follows me. I know this is not realistic but that would set a maximum. I was shocked at the number: it is 12,828,899 people. To give you a sense of what that number means to Fon I share with you that after 3 years of hard labor we are now the largest global WiFi network, but, we only have 650,000 fonspots (T Mobile btw has less than 50K). But I know that almost all my followers and the followers of my followers have WiFi routers. So they are our target. This is the value of Twitter for Fon (how this is the value of Fon for Twitter deserves another post, it is still not clear to me).

Now obtaining this result was not easy because there is a limit on the number of data requests you can make on Twitter. To obtain this data we used a Python script with a Tweepy library functioning on a developer account. But somebody should look into this and come up with a real and easy Twitter Reach or Twitter Power measure. This index should show the number of followers of your followers. It would be also great if clients like Seesmic Desktop color coded followers according to the number of followers that they themselves have. I know you may think this is elitist but that is what Google does giving sites Google Rank. There clearly is a Google intellectocracy. We now have a Twitter one as well. It is just not that easy to rank and find with color codes. It would also be interesting to be able to send Tweets that go to groups of followers or at least to be able to sort them by language.

Here is a spreadsheet showing who my followers are and the number of followers of my followers. I was surprised when I saw the results not only because of the absolute total but because I had 79 followers with more followers than myself. I guess in Twitter it´s like in Tennis. You look better when you play with a pro, or in this case, when a pro listens to you.

Before ending I would like to say that in my Twitter history less than 10% of my tweets relate to Fon. Or if they do, like this post, they don´t directly relate to promoting Fon but to share with my followers, as I do with the readers of this blog, what I go through as an entrepreneur.

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