Biz2Peer in the press

The Wall Street Journal, November 17th, 2000

Barcelona Fosters Net Boom And Helps Spain Get Online

By JEANETTE BORZO - WSJ.COM

BARCELONA -- Throbbing with pedestrian traffic nearly 24 hours a day, La Rambla typifies one of the main reasons often cited for lagging Internet use in Spain. In Europe's sunny south, people prefer socializing out-of-doors to almost anything else.

But less than one hour after its grand opening at the harbor end of this grand boulevard last week, the easyEverything's second Barcelona Internet café had more than 200 customers logged on and surfing the Web at high-speed.

La Rambla is crammed with pedestrians, street performers, flower shops and pet stores all the way from Plaça de Catalunya, where easyEverything's first Net Café opened, down to the harbor, where its second now stands.

"Our [other] store on Plaça de Catalunya has been full since we opened it on June first," easyEverything Chief Operating Officer Mike Keefe says of his company's first Spanish Net café.

"In Spain, it is true that we love the street," says Luisa Alemany, an associate with venture-capital firm Europatweb here. "But we also love new technology."

Long pegged as an Internet laggard, Spain is waking up - and nowhere more than in Barcelona, the capital of the region of Catalonia. By 2005, 35% of Spain's population should be online, up from 10% last year, according to Jupiter Media Metrix.

Net penetration in Barcelona exceeds 30%, according to Ernest Maragall, president of civil service affairs and quality at the Barcelona City Council (http://www.bcn.es/), who was talking to an international gathering here at the High-Tech Forum earlier this month. Net penetration in Spain's wealthiest region is two times higher than in the rest of the country, Mr. Maragall said.

Certainly, it's more than sunshine and the local social life that has historically kept Spaniards off the Net. There is little use of broadband technology in Spain and telecom charges are among the highest in Europe. Without taking advantage of the recent flat-rate deals in Spain, one hour of surfing a day could set Spaniards back more than 70 euros ($60.02) a month in phone charges alone.

"Once those two problems are solved, people in Spain will use the Internet whether the weather is sunny or not," says Jesus Romero, chief financial officer at Barcelona's Intelligent Software Components SA (iSOCO).

High-profile Internet successes have already started to boost Spain's Internet market. Terra Networks SA's initial public offering last year is what many here say was the linchpin for Spain's Internet boom.

On a visit to Barcelona in July last year, Ms. Alemany, a recent graduate from Stanford University's Graduate School of Business, found that whenever she mentioned the Internet or the need to check e-mail "People were looking at me like I was sick.

"I came back in December and everybody, including my mom, was talking about the Internet," Ms. Alemany continues. "Terra's IPO was the beginning of everything. Suddenly everybody had a business plan."

Locals take it as an affirmation of Barcelona's Internet superiority that Terra Lycos -- formed when Terra Networks and Lycos Inc. merged in October -- is moving its European headquarters from Madrid to Barcelona. Considering Catalonia's reputation as Spain's entrepreneurial hotbed, it's no surprise that many dot-coms, software companies and venture capitalists are settling here.

"Barcelona is gaining more and more Internet businesses," says Felipe Muntadas, investment executive at 3i Europe PLC in Barcelona.

As the seat of administrative power, Madrid is the country's financial center and is home to most telecommunications companies, but many Net players are choosing this west-coast city over Spain's more traditional business center.

"There are more [financial] resources in Madrid," says Ignacio Estella, strategy director at Madrid's Wamament.com. "But things are happening in Barcelona."

After all, there's a lot of entrepreneurial appeal to a region where "bon profit" is the local Catalan expression for wishing someone a pleasant meal.

"Barcelona is very attractive for a dot-com," says iSOCO's Mr. Romero. "It is similar to Silicon Valley, but cheaper."

Local government has a lot to do with the attraction. Catalonia's government is investing $1 billion in broadband infrastructure and $800 million in electronic-commerce businesses over the next five years. Here in Barcelona, city government is behind a project known as zone 22@, a renovation and rewiring of old industrial space for dot-com offices and BarcelonaNetActiva (http://www.barcelonanetactiva.net/), an incubation and assistance program for local start-ups.

The city's educational affluence helps as well. With two of Spain's three leading business schools located here, Barcelona turns out lots of MBAs who don't want to leave town, says 3i's Mr. Muntadas. Many local entrepreneurs, such as Luis Cortes, founder and chief executive of Biz2Peer Technologies, have set up shop in the city where they completed their studies.

"There's good training, both in business and technology in Barcelona," says Mr. Cortes, who has a master's of business administration from Esade (http://www.esade.es/) and a master's in e-commerce from La Salle (http://www.els.url.es/), both Barcelona campuses.

Research facilities, such as the Artificial Intelligence Research Institute (IIIA), also have spawned their share of promising start-ups.

Five Ph.D.s from IIIA founded iSOCO last year, and this week the software company has landed a 15-million-euro investment from Madrid's BtoBfactory, an incubation and investment firm majority owned by Banco Santander Central Hispano SA (http://www.bsch.es/).

For entrepreneurs who aren't from Spain and didn't study here, the beach and sunshine often act as key motivators to base a company on the coast.

"People get tired of the rain and cold in Holland and the U.K.," says Cuban-born José Suárez, who founded leatherXchange.com SA here last year, knowing that he wouldn't have to work hard to sell the city to new recruits. "The quality of life here is superb. And the creativity and professionalism of the Catalan people is incredible -- it's among the best in Europe."

It all adds up to a mix of old and new, with longstanding Catalan entrepreneurship proving to be fertile ground for New Economy businesses, as evidenced by last week's long line of hopefuls waiting to get into Otto Zutz, a chic dance club in downtown Barcelona.

It wasn't a gathering of Spain's renowned partygoers hoping to enter the exclusive nightclub. They were dot-com entrepreneurs, waiting patiently to pick up their badges for the monthly First Tuesday gathering of Internet executives, analysts, journalists and financiers.

"We haven't seen anything yet," says iSOCO's Mr. Romero about Spain's Internet future.