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Meeting Som

When traveling the last two month, I lost track on updating my blog frequently and frankly speaking felt uncomfortable, too, about sharing my personal thoughts here. Starting this blog I haven’t really thought thoroughly about whether it is only going to become a business blog or place for sharing my personal life as well. Later on I realized that combining both is harder than imagined and simply didn’t publish any more posts. There is one post however I still feel like sharing here before focusing more on business again. It is about Som, a 26 year old philanthropist I enjoyed meeting in Nepal a few weeks ago:

Som was introduced to me by my friend Danielle who has met his ex-wife in Nepal before. I didn’t know much about him, just that he was born in a small village and wanted to build a school there, which I offered to finance. We first met at noon in my hotel lobby, but it wasn’t until dinner that I really got to know him. As many other kids in Nepal he came from a poor village that only had an elementary school. For further education he had to walk for stunning six hours a day into the next village. When finally arriving in school after walking three hours in the morning he was mostly too tired to concentrate in school and after walking three hours back home of course hasn’t had much time and motivation for his homework either. Although accommodation in the village was not expensive, the problem was that people from those remote villages are mostly self-supporting famers and simply don’t have any money at all.

Although being a bright boy, his grades became worse, his parents more and more disappointed and the teachers impatient with him. After only three months in that school and just being 10 years old, he decided to drop out of school and try his luck in the all-famous capital Kathmandu. Like ten thousands of other kids in Nepal he became child labor, doing the hard and dirty work for greedy bosses who treated them as if they were their slaves. Forced to work for 10 and more hours per day just to sleep next to the toilet at nights. He was doing hard labor in street building, cleaning hotel rooms as a house keeper, carried heavy loads of 50kg and more from one village to another, was chef in a restaurant and finally became tour guide for foreigners. With 18 he married an Australian women and went to study and work in Australia. Never able to forget about his own painful youth, he took three jobs in Australia to save money and send it back home. After working like an ox for several years he eventually managed to save enough money to build a hostel close to the high school he dropped out of as a kid and ever since provides free accommodation for poor village kids like he used to be one. In his opinion most of the kids in Nepal just end up on the street because they drop out of school in the first place. Being unable to afford accommodation close to the schools many hours away from their homes is one reason less in his home area now…

Listening to 26 year old Som was just incredible; there was so much passion and determination in his voice, his eyes filled with tears talking about sad experiences and started sparkling when talking about the young kids he had convinced coming back to school. He has fought against the injustice of his former bosses, saw people loosing their legs by military grenades when demonstrating against the former king or friends of his dying because they didn’t have enough money for decent medication.
I was wondering what a strong character he must have. Not only surviving such a troubled youth but becoming an upright person like this, devoting his life to fighting selflessly for other people’s well being. Simply amazing and very inspiring to me!

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Leaving the comfort zones

The next morning I got woken up the hammering sound of a generator running in close distance to my window. It was only about six o’clock, but life was going to its fullest out there already. As I was trying to locate the source of that annoying sound my eyes got distracted by two kids, a boy and a girl, maybe 10 to 12 years of age, playing a game with tiny stones on a rusty metal box right in the middle of this ugly backyard. I smiled seeing them happily playing out there in the middle of this unreal place. And although I couldn’t help but comparing this scene with the fancy youth me and other kids have had, it was nice seeing them being content with what little they.

My day dreaming behind the second floor window was brought to a sudden end, when I saw a man chasing the two kids for throwing those tiny stones at him in a playful manner. Even being about 50 meters away of the whole scene, his anger and aggressiveness was clearly visible in his body language. When realizing the kids were much faster than him, he picked up a big heavy stick and threw it after the girl who was trying to escape through a heavy metal door locking up this place. Luckily he missed, leaving me – still dazzled – trying to understand what just had happened out there. Meanwhile the poor girl was hiding in fear, waiting for his anger to calm and return to what she must be calling her home.
Sadly this whole scene reminded me more of someone treating a dog, than a human being. I can’t understand what drives a grown up man to treat helpless and innocent children in such a disrespectfully manner.

A few minutes later I returned to the window finding both kids sitting in front of this slum-like house doing child labor for him. Feeling sad and helpless I realized that having prestigious toys isn’t the only luxury kids in developed countries are having…

Being confident of capturing some more pleasant scenes out there, I grabbed my camera and went out to discover more of this city. Friendly faces and warm smiles greeted me along each way and I slowly started to feel being at this very special place I’d hoped for.

Walking the busy streets on my own, I sat down on fence next to a very noisy street just watching this crazy world passing by in front of me. Being alone and a stranger to anyone around me actually felt pretty good right now. There was a bus full with people waiting to get somewhere, a cow standing next to it passionately licking its nose, a boy cleaning a shop window with an old newspaper and me unnoticed sitting right in the middle. Suddenly I did not only feel very relaxed in this chaos surrounding me, but somehow connected with anyone around me.

Many people have wondered why I am making this trip on my own. Situations like the above are probably the best answer to this question. While traveling alone might not be as comfortable or funny as spending this time together with my friends, it somehow holds the ability of getting connected with myself and learning a great deal along the way.

Having no one to talk to could be considered a very boring thing, but is in fact something I very much enjoy every now and then. Having the silence and freedom to get lost in tiny details or ponder about the most important thing of all is a luxury we sometimes forget in our busy city lives with constant entertainment.
As most people, I too, easily tend to live my life in those well-known circles created around me. And while this is important and probably only healthy for us, I just have to break out of these routines every now and then. Being out of my comfort zones might be such little things as asking someone for the way, not knowing what this strange food is all about or being the only white guy in between 200 Nepalese on the street. Sometimes it means seeing someone without arms or legs begging for your money or little children being thrown at with sticks. The important thing is that it makes you realize how the world does not end with what our brain would like it to.

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Combating prejudices

Although it hasn’t even been 24 hours since my plane arrived in Nepal’s capital,  it feels like so much longer to me already. There are so many impressions, emotions and thoughts in this short time; I have serious troubles starting to write about it.
Arriving at the airport was the usual laid back developing-country-mentality. Going through the security checks is mandatory, but nobody minds if you don’t follow it. In short, just do whatever you want as long as it won’t bother me…
Being not in the mood for big taxi negotiations after flying for half a day, I followed the first best taxi guy into his old, classy silver car. The trunk wouldn’t open, so I had to squeeze with my luggage in the back. The taxi guy was sitting next to the driver in the front. After driving for a few minutes, the streets got narrower and there conditions worse and worse. When we finally drove into a small dark alley that seemed to end at a dumping site and to my surprise the car suddenly stopped in the middle of this shabby road next to a big guy wearing a raincoat and scanning our faces with a torch. I started to have a strange feeling about the whole situation, after all I was in a very poor country, people get robbed like this on daily basis everywhere in the world. So there was no sign of the nice inviting hotel I had booked for my first night, and I really wasn’t sure what to expect when leaving this car, but hoping for the best I reluctantly followed their request to get out of the car.
As it turned out, we were of course standing right in front of a small hidden door, that lead into the patio of the hotel I had booked, the strange man was in fact their security guard and very friendly helping me with carrying my luggage. I remembered how Danielle told me how they are shutting down all electricity at night and I couldn’t help but smiling about my silly thoughts and was simply happy to be arrived after 11 hours on the road.
But giving it some after thought I felt more and more guilty about my thoughts. What is running these kind of processes making me feel this way. How come I judge friendly people by their appearance and have my emotions getting lost in such superficial prejudices as wealth and surrounding?
As a German I always considered myself pretty open minded, and a practicing enemy of any form of prejudices. In school, we got confronted with the second world war several times every year and this helped me a lot in learning not to make any judgments based on ethnicity or religion. But this was different. And I felt guilty about it.
One of my favorite quotes is “the more you travel the more you wise”. I must have been a teenager of maybe 14 years, when hearing it the first time. In fact I didn’t even know the meaning of “wise”, but I sensed some importance in it and somehow this quote made its way through my memory until today. The 14th Dalai Lama said, that one should be the scientist of one’s own body and mind. As I am going to be traveling for more than one month now, this might be the perfect opportunity to start practicing on both of these.

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How we ended up in Shanghai

This post is a translation of an article called Netzwerker (engl. networkers) published in the most widely read weekly German newspaper Zeit in August 2008. It covers the founding story of The Netcircle Shanghai and gives a little bit more insight into David’s, Robby’s and my background. Published nearly a year ago it is not exactly new anymore, but the story is written better than I would be able to tell it, so I felt like sharing it with my English-speaking readers here, too:

The Networkers

Without knowing a word of Chinese three brothers from Bielefeld, Germany, went to Shanghai to start an Internet company. And they succeeded.

Summer 2004 turned out to be far from fantastic. Germany was eliminated from the European Football Championship without much ado or win. This seemed quite appropriate, as there was little which could have made David, Julius and Robert Dreyer stay. Germany, and in particular Bielefeld, felt too small, too narrow and bourgeois. They needed to get away. Travel, see the world. And make a living from the Internet on their way. They were hoping the World Wide Web would allow them to combine a global nomad lifestyle with entrepreneurship. David, 22, and Julius, 20, already had some experiences in the web industry, and now they only had to wait until their youngest brother graduated. So once he did, they snatched him straight from school and boarded a plane to Shanghai.

Monday morning, four years later, about 9,000 kilometers away from Bielefeld. A heat haze fills Shanghai’s streets; the sky is a shapeless off-white; Suzhou Creek follows Yi Chang Road for a bit with a lazy ripple. At the end of the street, where high-rise compounds grow between delicate bamboo scaffolding, there is a small area that seems to resist the city rule number one: “Rise or give way!” These cots have not risen. They have transformed. From having been small warehouses for over 80 years to becoming a center of creativity for young startups, supported by the city council. It is hidden here, in the Warehouse Creative Center, behind a massive fortress-style steel door, the office of three lao wai – “Strangers” – the Chinese term for Non-Chinese people.

On the first floor, Julius Dreyer is sitting behind a large flat screen, in a white t-shirt and shorts. Next to him sits his brother David. Julius talks fast and plenty, David mostly listens and nods every once in a while. “In hindsight”, Julius says regarding the escape from Bielefeld, “you could call it teenage foolishness.” Shanghai was meant to be the first stop of their world business trip. They didn’t speak a word of Chinese; in fact, they “didn’t have much of a clue in general”. A fellow air passenger was nice enough to scribble a few characters on a piece of paper so that they would at least find their hotel. Shanghai turned out to be their final destination. However, this only meant saying goodbye to being a nomad: Today the Dreyer brothers have gathered around 40 employees in their two storey, 1000 sqm office; developers and system administrators, marketing professionals and web designers from more than ten different countries. Their company is called The Netcircle, specializing in niche social communities and developing virtual hubs for schoolmates, for homosexuals or for fans of one-night stands. A lot of them are just half-done test sites but some have took off and generate altogether up to 170 million clicks per month, entertaining two million members. This is making good money through advertising and “premium memberships” turning over seven-figure revenue.

At an age when they could not even buy a beer in the shop (16 in Germany), Julius and David had already earned their first money online. They followed a simple strategy: Buying memorable domains such as www.konzert.de and optimizing the websites to make them easy to find on Google. Having attracted visitors to their sites they would link them to other providers’ pages for a few Euro cents “commission fee”. By 2004 they had made enough money to pay for their trip around the world.

Their father was less excited about his sons’ erratic wanderlust. They should at least be starting a career with their travels. He showed them an article about Shanghai – according to it the “City of the future”.

Once they had arrived in the future, the brothers rented a six bedroom flat. From here, they started their Internet business. They bought domains, started communities, and sold domains again. The sleazy dating site poppen.de was overrun by visitors right from the launch and quickly rose to one of the biggest dating websites in German language. They were working around the clock to keep the site up and running. They invited developers and designers to live and work with them in the flat until it started looking like a breeding place for IT experts.

The council’s offer of the old warehouse at the Suzhou Creek as offices presented a good deal for both sides. The entrepreneurs from Bielefeld restored the old building for four months and in return the council guaranteed a five-year lease and a rent considerably lower than market standards. The brothers also came to terms with the other aspects of the notorious Chinese official machinery. Julius says there were rarely any issues. Indeed, he can only remember one incident. When their rapid company expansions required 17 new work visas for employees, the foreigners’ registration office put their foot down. This would be out of line, they stated: “Seventeen new employees! And not one Chinese!” Julius is telling this story with a relaxed smile demonstrating four years of Shanghai experience. Somehow things will always work out here. You need a laid-back attitude and a talent to improvise – and the customary small attention for the local officials. In the end, all visas were approved.

And therefore, May of 2008 saw the web launch of the newest Netcircle project: gays.com, an international social community for gays and lesbians. The site strives to be a kind of “Gaysbook” – the purpose is not to find a quick date but to connect and manage long-term contacts, just like on the great idol Facebook. Julius thinks that in the long run the investment of a respectable 500,000 US dollar will also show. For the Bielefeld Brothers this social network is their debut on international markets. The brothers seem to get entrepreneurship about right in Shanghai. Now they are planning to become nomads again, “after the four-year pause in Shanghai its time to move on” he finishes the interview.

Where will there travels lead next? Maybe Barcelona. Or Silicon Valley. Who knows? “Internet business has no restrictions to where you are”, Julius says from behind his flat screen.

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Interview on Seedfinance.de

Writing a blog is a new experience for me and i guess it will take some getting used to until I will be comfortable sharing information about my private or business life here. I figured it might be a good start as well as some relevant information about me to simply translate some of the German stuff into English here. There are actually not that many publications worth spreading so this is going to be a rather short series. The first one is an interview I gave some weeks ago on Seedfinance.de, next to the Interview there is also a picture gallery with some photos of our life here in Shanghai. But read yourself:

Julius Dreyer has been living in Shanghai for four years now. Despite his young age he can look back on a rather unusual career that gave reason for the following interview.

Julius (Xing Profile), in Summer 2004 you and your brothers started a trip around the world, just after your youngest brother Robert finished school. Your aim was to cover your costs by making money on the Internet. What were the reasons for this decision? Did you have savings in case making money wouldn’t work out? What did you even know about the Internet back then?

The idea to travel the world came much earlier. I don’t really remember where we got our itchy feet but globetrotters, their adventures and travelogues had fascinated us since we were teenagers. We were dreaming about exploring the world in a Volkswagen campervan and being financially as independent as possible. When I was 15 I discovered the stock exchange as a flexible source of income while travelling.

After a rather mediocre first year as online daytraders we decided to pull the plug and focus on the Internet itself. Before we left we had already started various projects such as konzert.de, hotelsuche.de and also poppen.de which were already generating a modest income.

We were leading a pretty easygoing life being fairly independent just after finishing school but still living at home. But we were running the risk of relying on that success and not make any more effort. Unlike many of our classmates we were not aspiring to further education so on the spur of the moment, we bought a one-way ticket to what then seemed to be the most thriving city in the world. We primarily wanted to learn about language and culture – we didn’t really think about the Chinese Internet back then.

Unfortunately, we barely had any savings. What’s worse, we actually had to pay back sales taxes in Germany. This meant that we had to spend our first months in China in a youth hostel and lived off around 2€ per person and day.

How did your friends and family react to your decision?

At that time hardly anyone believed much in our Internet activities. We were used to tilting at windmills and to get our way without much support. Of course, our parents would have liked for us to go to university. But ultimately, finishing school was an accepted first milestone and eventually our family and friends supported us in our decision. There even was a newspaper article about the three expat brothers trying their luck in China. Originally we were only planning to spend one year in China and to move on after that. Most people didn’t really think we would even last that long.

But you didn’t get very far. Today, more than four and a half years later, you’re still in Shanghai although that was only meant to be the first stop on your trip. What were you up to there in the last years?

That’s right, and we really didn’t imagine staying here for so long. Looking back, there were just always so many things going on – in the first years we were more trying to adjust to the changing life conditions than actively shaping our future. Especially poppen.de was growing so fast that we had to find qualified employees. Starting a company in China is quite expensive and complex so we actually grew to about 30 unofficial staff while processing the company formation. Our lack of management experience also caused some troubles in the venture’s early stages, which then naturally cost even more time and energy.

In addition, we then started to build our own offices and the work finally became more than we could handle. Fortunately we had Claude Ritter (Xing Profile) in our team, a very intelligent and capable project manager who proved to be ideal to take over the role of the CEO. Within just a few months he managed to transform a bunch of talented employees into a properly functioning and most importantly a scalable team. In hindsight this was probably one of the best decisions we made.

In 2006, you paid half a million Dollar for gays.com. Was this purchase completely self-funded? Are you happy with the portal’s progress so far?

Yes, like all of our projects also gays.com is completely self-funded. We had previously tried to raise capital, but banks and business angels were cautious after the burst of the Internet bubble and we were probably too inexperienced. Now we are very happy that we succeeded without any outside financing. It’s possible that the lack of external pressure and input meant things weren’t moving as fast as they could have but also that work was generally more relaxed. For example, after half a year of development we turned the whole project of gays.com around in 2007 to start from scratch.

We had initially planned to grow from private invitations only. A romantic concept in the web 2.0 era that showed to be a lot more difficult in reality. We therefore decided to open the site up to the public this year. These strategic changes could have been problematic with an investor on board.

Currently we are growing steadily by around 500 new members a day. We expect to reach a member base of 400,000 this year – and to grow even quicker from then on. The idea of a niche social network with real names and identities is still unique and very much meets the market’s demands.

With gays.com we wanted to achieve for the LGBT community (lesbian, gay, bisexual and transgender) what Facebook does for the mass market. For this reason we’ll work even closer with our German dating site gays.de this year. We aim to have 100,000 German members in 2009. We believe that we are very well placed with our offer, so we are not only happy with the progress but also very optimistic for the future.

Why did you become stuck in Shanghai? What fascinates you about the city?

China itself is such an impressive country with so much going on every day and things changing constantly that even daily life feels like a movie. Shanghai is the vibrant metropolis of this country. Everything is possible and everyone can achieve anything. This hasn’t really changed in the last couple of years.

What were your biggest challenges in Shanghai? Are you fluent in Chinese now?

Of course, the language was one of the biggest the challenges. However, from day one we were making a lot of effort to learn it because language is a key to the culture, especially in China. We had a couple of hours of Chinese lessons every day since we came here. Although we’re not perfect yet it’s enough for fluent conversation and daily life.

Next to the language, building our first company was of course quite a challenge as well. For example, in the first months any foreign bank transfer required filling out three A4 pages of forms. To anyone who has ever been annoyed by German bureaucracy: It could be a lot worse 😉

Do you think that you could have had the same commercial success with your projects in Germany? If not, what’s most interesting about Shanghai economically and what are the differences to Germany?

To be honest, I believe that we could have achieved a lot more in Germany. Compared to 2004, there is well-developed network of entrepreneurs in Germany today that nurtures efficient interactions. The market is well funded and there are lots of highly qualified people. On the other hand, the distance to Europe and being in China for many years enabled us to focus very much on our own work.

I think that a lot of Internet entrepreneurs spending way too much time at conferences and with networking instead of actually working on their product. A lot of times you find yourself trying to cooperate with everybody instead of simply concentrating on your own core business. Most of our cooperations weren’t really successful considering the amount of time we invested.

Another interesting aspect about Shanghai is that it is a cosmopolitan city; although it’s still developing you can already meet so many interesting people from all corners of the world. Our team consists of people from twelve different nationalities, that makes you more open-minded and you learn to think less locally constrained. Furthermore, the Chinese Internet market, albeit already enormous, is naturally one of the fastest growing markets in the world. In Shanghai we are not only well positioned for China but for the whole Asian market.

What about the startup community in Shanghai? Is there anything like that? Are you part of it? How do you finance a startup company in Shanghai? Is there a venture capital or business angel environment? What impacts does the financial crisis have on startups in China (if these can be noticed yet)?

There certainly is a startup community in Shanghai. However, it is not as transparent in China as it is in Germany. Language barriers could be a reason for this; there is often a differentiation between purely Chinese and startups with international staff. Most of the Western entrepreneurs don’t speak Chinese and lots of Chinese entrepreneurs don’t speak much English so there are little relations.

Nevertheless, there are a number of events and informal meetings that have at least brought the English speaking community closer together in the last couple of years. Overall I would say the community is still quite small. But: If you have something to offer you should have no problems making contacts and raising capital.

There are definitely funds available on the market as many of the renowned venture capital firms have offices here and they seem to have more capital to invest than possibilities to do so. But they often are only interested in Chinese products and management teams. There also are a number of business angels, usually expatriates who have been in China or Asia for a long time and thus are able to offer real support in foreign environments.

Honestly, I can’t really assess the impacts of the financial crisis. Just as everywhere else companies are trying to assemble cash and cut unnecessary costs. A lot of capital was coming from overseas so obviously some supplies have been shut off and capital is withdrawn from the market. That would have affected fonds. However, I’ve not had any experiences of this myself.

What are your and your brothers’ plans for the future? Are you going to continue your trip around the world some day and become “entrepreneurs on road”? Do you think you could also manage your Shanghai employees from any other place in the world?

Our offices have now been completed and our company is doing so well at the moment that we are needed here less and less. We have reached our original goal of learning about language and culture. Indeed, it would be time to move on. Claude is doing a really good job, so we believe that business will continue to be successful with him as sole decision maker. In the meantime, The NetCircle Shanghai has transformed more and more into a startup incubator overseeing a number of independent companies (projects). We are already relatively familiar with our role as external client. We’ll see 😉

Do you have any tips for entrepreneurs and startups in Germany?

There is certainly different advice for different situations and circumstances so I find it difficult to give a satisfactory answer to this. Generally, it is always useful to try and keep costs low. China and other developing countries have great examples of clever ventures on a shoestring budget. If you have a solid business model and low costs you are likely to hang in there for much longer and will also be much more flexible than your inflated competition.

Your first success can result in a arrogance leading you to spend lots of money on useless things or to be more accommodating than necessary. Particularly when capital is scarce you should be considering amortization periods. Of course, it would be so much cooler and impressive to equip the office with designer furniture but do you really need that? Couldn’t you possibly generate growth by investing this money somewhere else in the company? In the end, it is all about calculating with time: If investment X will return more in a certain time period than investment Y, due to a shorter amortization period, than you are likely to generate more growth at the end of the year.

If you compare product cycles of German and Chinese products you will notice that it’s much more likely to start simple but quickly in China. In Germany, companies strive for the perfect product from the beginning on. Both strategies can lead to success but the former delivers faster results and thus minimizes startup risk. Optimization is left for later stages.

Julius, thanks a lot for your great answers! I hope you and your brothers will continue to be successful and I am looking forward to hearing from you in the future!

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The clandestine birth of the true Google Killer

Ever since Google started ruling the Internet many actors on the market have been requesting more competition in search engines. Yet the technological advantage and maturity of the Google algorithm seems overwhelming. When thousands of developers, quality raters and millions of users are improving the index every day even giants such as Microsoft are struggling to get very far. It is now widely agreed that no newbie is going to beat Google in their area of expertise but that innovation is crucial. Sadly, despite numerous attempts there is still no noteworthy competition; market leaders don’t offer enough differentiation and innovative products don’t have enough impact.

May you live in interesting times

An ancient Chinese curse says: “May you live in interesting times”, suggesting that interesting times bear great potential for radical changes in economic and power balances. Indeed, if you are trying to take on Google you will have to first understand how much the world is constantly changing. Phones replaced telegrams, computers are replacing TV sets and Web 2.0 the rigid giants of the first generation Internet. Radical changes yield a fresh start with new power dynamics. This is exactly the reason why companies in fast-paced sectors struggle to maintain success over a long period of time. Growing big means growing too inflexible to react quickly enough to market changes. This inertia opens up opportunities for startups to solve the problems of a generation. So far Google excelled in predicting customer needs. Products such as analytics, maps, gmail, youtube and feedburner are examples of how Google managed to stay strategically placed in new markets or at least kept a foot in the door. Keeping in mind the constantly changing world and looking back to 1999, however, reveals that Google did solve that internet generation’s problem with their PageRank but has mainly focused on manifesting and strategically expanding their market dominance since then. Without a doubt a successful strategy considering that similar or even superior search engines cannot threaten the Google leadership. “To google” has become a common concept and term even in the Oxford Dictionary. The world’s strongest brand is known for simplicity and reliability; why would anyone leave this comfort to experiment with other providers.

What has changed?

Needless to say that a lot has changed since 1999. Weighting of links introduced hierarchy to a hitherto unstructured Internet, which then developed from a one-way consumer medium to an interactive communication cloud. Data is getting more specific and its format more focused; while you had to buy trade journals in the past you can now simply consult a few blog entries. People connect on social networking sites, in shared interest groups and use instant messengers, Facebook and Twitter to share insights, links, achievements and whatever else is on their mind. While these messages can at times appear ludicrous they still represent highly personalized and thus relevant pieces of information. Similarly to Google Reader, the user will only receive information from peers rated as relevant. This constitutes a fundamental turnaround: While you had to search for information in the past, information is now being delivered to you.

Tell me what you like and I’ll tell you what you’re looking for

Google recognized years ago that they would have to constantly increase their acquisition of information. While a link from website 1 to website 2 was a good enough quality criteria at first, there was soon need for more background knowledge. When this stopped to suffice, the outdated PageRank has become more of a TrustRank now, facilitating the Herculean wealth of Google user data to optimize it. Nevertheless, despite collecting, storing and exploiting data Google still remains merely an observer, limited to mathematical conclusions on more or less anonymous user data. Attempts to include Digg and other social media services as a viral component of the algorithm were somewhat successful but still only scratch the surface of this new Internet. A profound insight into the interaction of social networks and interest groups requires not statistical but real, authentic personal data…

How Facebook is going to compete with Twitter

Looking at a preview of the new Facebook layout last week I didn’t immediately realize the consequences the design changes could have. After reading the German Spiegel article “Facebook baut sich zur Webschwatzbude um” (translated: “Facebook transforms into a web gossip hub”) I also remembered Techcrunch’s interview with ex Google Sheryl Sandberg as well as the failed $500m Twitter takeover. It was then that I started to connect the dots. Facebook is not just building a Live Stream but are in fact aiming to become a giant Internet aggregator. The new Pages not only allow me to connect with millions of fans, supporters and customers but also to keep them updated through status messages and other activities – all updates reach my entourage directly per Livefeed. And unlike Twitter, Facebook is no aspiring startup but already a heavyweight network with nearly 200 million members and well on the way to become the world’s most visited website. A David vs. Goliath scenario with Facebook offering far more ways of user representation.

For gays.com we put a lot of effort into our Twitter account but also created a Facebook page that we now use to promote blog entries, plan events and distribute newsletters to our 18,000 fans. Twitter can’t match that.
Contemplating the $1m revenue Dell claims to have generated through Twitter only and that Obama’s winning strategy was partly based on their excellent communication with almost 6 million Facebook supporters and 400,000 Twitter followers, the tremendous potential which lies in connecting to users starts to materialize. Already including a fifth of the Internet population and still growing at double-digit rate in the populous Asian countries will soon make Facebook the number one connector for products, companies, celebrities and everyone else on the planet. My experience of running one of Germany’s biggest dating websites Poppen.de had always made me wonder why Facebook didn’t simply switch to a Freemium model; a modest estimate of 1% premium account holders could certainly cover most of their expenses. It is now that I realize they are planning to generate revenue somewhere else entirely…

Facebook Connect as social aggregator

Furthermore, Facebook Connect and the social applications are now enabled to feed activities from external sites directly into my Livefeed. You could call this Beacon 2.0 but with the critical difference that websites no longer choose to link into Facebook for advertising purposes but will soon have to connect to Facebook to get a piece of the (traffic) action. According to my privacy settings, the final result could be a universal feed for web activities of my friends, products and business partners. Using the option to separate my Facebook friends into individual groups will enable me to easily distinguish Livefeeds of friends and family from business partners. I can even imagine my beloved Google Reader soon becoming obsolete, as more and more bloggers are linking their RSS feeds with their Facebook accounts.

The information is coming to me

Looking at the new Facebook homepage again I also notice how “Share” is becoming the central element of their new home page. Facebook has realized that there is no more need to google for the most relevant information when “Shares” of my digital social network deliver that exact information to me organically. For example, I can absolutely imagine researchers not only grouping family and friends (see groups left on the screenshot) but also including “researchers”, “government agencies” and “businesses” in their future Facebook stream. This way, news about Procter&Gamble, the WHO and fellow researchers are just a click away.

Maybe you don’t have to improve Google but simply have to realize today’s needs and deliver the according products and services?

Facebook as the Google Killer

Of course, it is risky to make such a blunt statement. But if there is any company that could compete with Google it has to be Facebook. Arguably not because of but definitely thanks to Microsoft’s generous evaluation of $15bn, Facebook had a lot more options and time to develop themselves while Microsoft-competitve offers on an even higher evaluation are much less likely.

It’s still a wild guess if Microsoft will at some point want to integrate their Live.com search into Facebook. But it’s a fact that a lot of skilled Google employees are joining the Facebook work force. It is also certain that by now, Facebook’s intelligent Adserver features functionality to group users thematically and to track user behavior.

Knowledge about what information and links specific user groups on Facebook share and how sub groups perceive these (“I like this”/”I don’t like this”) can absolutely develop into an alternative to the Google TrustRank. If you then track these sub user groups’ click behavior in SERPS and use that data plus my social network to optimize my search results, Google better prepare themselves for tough times.

Whatever the future holdes, there will be exciting changes and I am looking forward to it.

Please don’t hesitate – your comments are welcome and even very much appreciated 😉

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About me

My name is Julius Dreyer, I am professionally working in the Internet since I am 16 years old, or for about 10 years now. My brothers David Dreyer, Robert Dreyer and me have started with building simple website and search engine optimization, but quickly moved on to the more reliable domain name business. During the years we have bought a good number of domain names like gays.com or seo.de and focused more on sustainable project development rather than domain name marketing. In Summer 2004 and soon after founding Germany’s biggest adult dating website Poppen.de (Wikipedia), the three of us moved to Shanghai / China where we started a development company called The Netcircle which has grown to a team size of nearly 50 extraordinary skilled individuals now.

Besides a passion for business I like to play pool, read books about philosophy and continuously work on my chinese level. Last but not least I hope to be calling blogging one of my hobbies at the end of this year 😉