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Niklas Zennstrom Documented@Davos Transcript

Niklas Zennstrom Documented@Davos Transcript

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Pete Cashmore of Mashable interviews Niklas Zennstrom at the World Economic Forum 2012.
Pete Cashmore of Mashable interviews Niklas Zennstrom at the World Economic Forum 2012.

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Published by: DocumentedatDavos on Feb 03, 2012
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Niklas  Zennstrom  is  Documented@Davos  Transcript     Documented@Davos  2012     PETE  CASHMORE:  I'm  Pete  Cashmore,  founder  and  CEO  at

 Mashable.  We're  here  at   Documented@Davos  presented  by  Scribd  and  Mashable.  We're  trying  to  find  out   what  technology  leaders  think  about  the  future  of  tech  and  what's  going  on  here  at   Davos.  So  I'm  delighted  to  be  joined  by  Niklas  Zennstrom,  very,  very  long  and   prestigious  buyer.  You're  the  founder  of  Atomico.  It's  a  venture  fund.  Also  co-­‐ founder  of  Skype,  co-­‐founder  of  Kazaa,  co-­‐founder  of  Joost  as  well.  What  else  am  I   missing?  Rdio.  A  great  many  internet  companies,  digital  companies  that  have  really   changed  the  world.  So  I'd  love  to  start  on  Atomico.  What  you're  working  on  right   now,  what  kind  of  investments  are  interesting  to  you?       NIKLAS  ZENNSTROM:  So,  first  of  all,  I  think  that  it's  never  been  as  interesting  time   to  be  in  this  industry  and  to  find  companies  to  invest  in  because  we're  living  in  a   world  where  for  every  day  or  every  year,  there  are  more  and  better  opportunities.   And  these  are  things  that  are  driven  by  a  few  bigger  trends.  There,  obviously,   continues  to  be  more  and  more  people  coming  on  the  internet,  using  the  internet.       But  if  you  think  back  just  a  few  years  ago,  we  did  not  have  the  mobile  internet.  With   iPhone,  and  Android,  and  the  tablets,  the  whole  paradigm  is  shifting.  So  you  have  all   new  set  of  companies  coming  up  with  new  innovative  products.  So  the  speed  of   innovation  is  happening  faster  and  faster.       And  also,  today  it's  much  easier  for  an  entrepreneur  to  build  a  company  because  you   can  utilize  the  cloud,  all  the  stack  of  existing  technologies,  so  it  becomes  more   capital  efficient.       So  for  us,  what  we're  trying  to  do,  we're  trying  to  find  companies  who  take   advantage  of  these  big  trends,  who  try  to  be  global  companies  and  take  advantage  of   some  of  these  technology  trends,  and  try  to  be  big  companies.       PETE  CASHMORE:  Is  there  a  common  thread  to  the  startups  you  invest  in?       NIKLAS  ZENNSTROM:  Yeah,  I  think  there  are.  The  biggest  common  thread  would  be   the  founders  themselves.  Because  at  the  end  of  the  game,  this  is  about  the  people.   It's  always  about  founders  who  are  passionate  about  what  they're  doing  and  have  an   idea  to  change  the  world,  and  want  to  make  something  big.  So  that  I  think  is  most   important  thing.       And  then,  the  other  thing  for  us  is  that  our  focus  would  be-­‐-­‐  your  graphical  focus.   Sometimes  we  joke  and  we  say,  we  are  rest  of  the  world,  i.e.  we're  not  Silicon  Valley.   And  that  is  because  me,  I'm  coming  from  Sweden,  and  we're  based  in  London.  But   what  we  see  now  is  that  there's  so  many  more  opportunities  happening  every  day   outside  of  Silicon  Valley.    

  So  while  Silicon  Valley  is  and  probably  going  to  be  for  a  considerable  time,  the  most   important  geographical  area  for  tech  companies,  but  every  day  there's  more  and   more  opportunities  elsewhere.  We're  trying  to  find  companies  in  other  locations.   We're  trying  to  help  these  companies  to  expand  internationally.  Because  companies   today,  once  you  got  it  working,  once  you  figure  out  the  product,  it's  important  to   have  international  expansion  pretty  quickly.       PETE  CASHMORE:  Well  you're  famously  an  investor  in  Rovio,  which  launched  Angry   Birds.  Is  there  another  Angry  Birds  sitting  in  Europe  that  we  don't  know  about  that   we're  all  going  to  be  playing  on  our  iPads  and  iPhones  in  the  next  few  years?       NIKLAS  ZENNSTROM:  Rovio  is  an  exciting  company.  They  had  over  600  million   downloads  and  I  think  they  had  a  few  million  downloads  just  over  Christmas  Day.   It's  one  of  the  few  kind  of  app  companies  that  have  really  become  a  global  brand.   And  now  what  they  need  to  do  is  to  take  this  and  to  build  this  much  more  into  a   platform.       But  it's  interesting.  There  are  several  other  companies  that  we'd  see  around  Europe   which  are  pretty  good  game  companies.  So  it  just  happened  to  be  that  the  most   common  activity  on  a  smartphone  is  playing  games.       PETE  CASHMORE:  It's  games.  I  look  at  the  top  10,  it's  game,  game,  game,  games.       NIKLAS  ZENNSTROM:  The  challenge  for  these  companies  is  down  to,  can  they  be  a   sustainable  business?  Because  if  you're  a  network  effect  business,  then  you  have  a   better  chance  to  become  a  sustainable  business.       PETE  CASHMORE:  Is  gaming  going  to  become-­‐-­‐  because  you  do  look  at  the  App  Store   and  everything's  a  game.  Is  that  going  to  become  part  of  other  apps?  Is  that  the  way   to  get  other  content  or  this  whole  gamification  trend?  Or  is  it  just  a  fad?       NIKLAS  ZENNSTROM:  I  don't  think  it's  a  fad.  The  reason  why  games  are  so  popular   is  that,  you  think  about  you're  sitting  waiting  for  your  friend,  for  a  meeting  or  in  a   bus,  in  the  train.  And  either  you  do  your  email,  you  check  your  tweets,  or  whatever.   But  it's  also  been  nice  to  just  play  games  for  a  few  minutes.  So  people  feel  good   about  it.  And  before  you  had  to  go  and  sit  in  front  of  your  computer  or  your  game   console  to  play  games.  Now  you  can  do  it  whenever  you  have  some  minutes  to  kill.   So  I  think  that's  why  games  are  important.       But  what's  also  interesting  to  look  at  now  is  also  companies  which  are  also  part  of   the  transaction  streams,  which  are  a  part  of  monetization.  Because  sometimes  one   of  the  big  challenge  I  see  with  app  companies  is  that  one  of  the  great  opportunities  is   that  you  can  just  put  up  an  app  in  the  Apple  App  Store  and  you  can  charge  $1  for  it.   And  it's  great.  If  you're  developers,  you  can  make  pretty  good  income  on  that.  But   then  to  be  a  sustainable  business,  you  need  to  transform  that  to  have  a  recurring  

revenue  stream  on  your  subscriber  base.  And  that,  I  think,  is  a  challenge  for  a  lot  of   these  app  companies.       PETE  CASHMORE:  What  is  that?  In-­‐app  purchases?  What's  the  model?       NIKLAS  ZENNSTROM:  In-­‐app  purchases,  for  example.  Or  just  being  part  of  a   transaction  stream.  So  we're  looking  at  companies  now  more  and  more  which  are-­‐-­‐   inherently  in  their  business  model  is  also  that  there's  some  kind  of  transactions  in   them.       PETE  CASHMORE:  Understood.  Well,  we've  only  got  a  few  minutes,  so  I  want  to   speak  really  quickly,  and  maybe  get  some  of  your  input  based  on  your  experience  of   launching  all  these  other  companies.  I  mean,  first  off,  I  guess  Skype.  Everyone  loves   it,  uses  it,  one  of  the  most  popular  apps.  What  do  you  think  the  future  is  for  Skype   under  Microsoft?  Are  you  optimistic,  pessimistic?  Think  they're  going  to  be  a  good   parent  to  it?       NIKLAS  ZENNSTROM:  I'm  a  very  happy  Skype  user  these  days,  and  I'm  using  Skype   here.  I'm  using  it  everywhere.  And  I  walk  in  a  conference  and  I  hear  the  Skype  ring   tone.  So  I  think  that  Skype  has  become  part  of  the  fabric  of  what  we're  doing  on  the   internet  because  it  fulfills  such  a  basic  need  for  people  to  have  communications  with   each  other.  But  as  any  other  company  that,  if  you  have  a  network  effect,  as  long  as   you  focus  on  your  product  and  your  customers  and  innovation,  continuously   improving  the  core  of  the  business,  I  think  a  company  like  Skype  is  in  pretty  good   shape.  But  I  cannot  really-­‐-­‐  I  don't  know  what  Microsoft  will  do.  I  hope  they  will   continue  to  do  what's  good  with  Skype.  And  I  think  it's  a  good  home  for  them.       PETE  CASHMORE:  Great.  Well,  you  were  also  obviously,  co-­‐founder  of  Kazaa.  And  I   don't  know  if  you've  been  following  it  too  closely,  but  there's  been  a  great  deal  of,  I'd   say,  controversy  specifically  in  the  US  and  some  of  our  coverage  in  the  past  couple   weeks  about  some  bills.  There  was  one  called  SOPA,  one  called  PIPA.  And  basically,   there's  these  attempts  to  crackdown  on  piracy  through  these  laws.  But  a  lot  of  the   technology  leaders  feel  like  they're  overly  invasive.  That  they're  going  to  be  a  threat   to-­‐-­‐  for  instance,  Google's  come  out  against  it.  Facebook  has  come  out  against  it.  And   also,  last  week  Megaupload  was  taken  down,  which  is  one  of  the  popular  file  sharing   sites.  What's  your  take  on  tackling  these  issues?  Is  there  a  genuine  issue?  And  is  the   technology  industry  doing  enough  to  defend  itself?       NIKLAS  ZENNSTROM:  So  to  me,  it  feels  a  little  bit  like  a  lot  of  this  legislation  is   lacking-­‐-­‐  I'm  sorry.  Not  lacking.  It's  lagging  reality.  I  felt  a  little  bit  like,  we  fought  a   big  battle  with  the  record  companies  and  the  movie  studios  with  Kazaa.  But  we  [?   genuinely  ?]  want  to  create  a  business  model.  We  thought  you  can  have  a   subscription  model.  You  can  have  advertisement.  You  can  have  pay  per  play  and  it   can  be  revenue  shares  and  whatever.  And  at  that  time,  there  was  a  lot  of  push  from   that  industry,  content  industry  to  have  a  lot  of  legislation  and  protection.      

But  what  we  see  today  now  is  that  there's  a  lot  of  really,  really  good  legit  services.   Whether  they  are  subscription  services  or  pay  per  view  or  pay  per  play  service.  So   today  people  can  access  legit  content,  whether  it's  music  or  videos  online.  And  you   will  always  have  people  who  say,  well,  I'm  going  to  be  smart.  And  I'm  just  going  to   kind  of  download  it  from  somewhere.  That's  always  going  to  be  there.  But  in   content,  you  always  have  had  a  set  of  people  which  don't  pay  for  music.  People   listen  to  the  radio.  People  don't  pay  for  the  radio,  you  just  listen  to  it.  People  watch   free  to  air  television.  So  you  always  had  that.  And  on  the  internet,  you're  going  to   have  it  as  well.       But  I  think  what's  important  is  to  look  at  also  all  these  innovative  models  where  you   have  content  being  mashed  up  and  being  recreated  for  something  and  become   something  new.  And,  in  general,  I  think  it's  something  that  adds  value  and  doesn't   destroy  any  value.  So  I  think  that  some  of  these  new  legislations  are  a  little  bit  too   late.       PETE  CASHMORE:  So  am  I  right  in  reading  that  you  actually  would  much  rather   focus  on,  how  do  we  monetize  the  audience  that  is  willing  to  pay?  How  do  we  focus   on  creating  new  business  models  versus  spending  all  our  time  caught  up  in   legislation?       NIKLAS  ZENNSTROM:  I  know  that  as  an  entrepreneur,  having  started  companies   which  were  in  this  space,  and  also  as  an  investor,  one  thing  I  know  is  that  if  you   want  to  build  something  that's  sustainable,  whether  you're  an  entrepreneur  starting   something  or  an  investor,  you  need  to  build  something  that  can  be  sustainable.  So  I   would  be  focused  on  trying  to  find  companies  which  are  working  with   entertainment  industry.  But  you  have  great  services-­‐-­‐       PETE  CASHMORE:  The  media  companies  and  the  entertainment  industry  are   backing  these  bills.  They're  the  greatest  supporters.  Would  your  message  be  then   that  they  should  really  focus  on  doing  deals  with  those  that  are  pursuing  the   legitimate  models,  that  are  pursuing  ways  for  people  to  pay  for  things  rather  than   just-­‐-­‐  certainly  tying  themselves  us  with  all  this  legislation?       NIKLAS  ZENNSTROM:  It's  like  if  you're  playing  a  sport,  either  you  play  defense  or   you  play  offense.  And  usually  the  ones  that  win  the  most  are  ones  who  are  playing   offense.  And  playing  offense  mean  that  you're  trying  to  move  forward  and  move   with  the  flow.  So  I  think  that-­‐-­‐       PETE  CASHMORE:  Do  you  think  ultimately  the  music  or  the  record  companies  and   those  supporting  this  are  going  to  miss  the  ball  if  they  spend  a  lot  of  time  focused  on   this  stuff?  By  which  I  mean  that  we  saw  it  with  the  previous  iteration  of  which  you   were  involved  where  Apple  came  along,  invented  all  the  great  ways  to  monetize  all   this  stuff.  And  ultimately,  the  record  companies  that  didn't  get  in  maybe  lost  out.  Are   they  going  to  miss  the  ball  again?      

NIKLAS  ZENNSTROM:  I  think  that  any  company  who  is  focusing  on  what  their   customers  want  to  have  and  working  with  the  technology  is  going  to  be  successful.   And  I  think  that  the  focus  needs  to  be  on  that  end  of  the  spectrum.  Having  said  that,  I   think  it's  important  for  anyone  to  protect  IP  rights  and  respect  copyright.  But  I  don't   think  you're  going  to  win  that  by  passing  a  lot  of  bills.  I  think  you  win  that  by  making   sure  there  are  great,  legit  services.  Because  the  population  of  the  internet  is   basically  everyone.  And  these  people  are  not  pirates.  This  is  normal  people  who   want  to  enjoy  content.       And  if  you  provide  services  which  are  attractive  and  charge  for  them,  whether   they're  direct  payments  bundled  with  your,  maybe,  mobile  phone  bill,  or  by   advertisement,  people  won't,  in  general,  have  a  problem  with  it.  So  I  think  that   should  be  the  focus.  But  that  doesn't  give  people  the  right  to  go  out  and  violate   intellectual  property  laws.  And  you  have  property  laws  in  place  already.  So  I  don't   think  you  need  to  put  a  lot  of  additional  legislation  in  place.       PETE  CASHMORE:  Got  it.  We're  getting  told  we're  about  time.  But  I  want  to  cram  in   one  question  if  you  will  be  really  quick.  And  I  know  you're  involved  in  the  start  of   online  TV  with  Joost.  There's  a  lot  of  new  TV  startups  bringing  up-­‐-­‐  and  I  know   Google  is  getting  into  TV  with  Google  TV.  It  hasn't  quite  seen  much  pick  up.  Do  you   think  any  of  that  stuff  is  going  to  take  off?  What's  the  future  of  online  TV  and  what   did  you  learn  at  Joost?       NIKLAS  ZENNSTROM:  We  decided  to  start  Joost  in  2006,  and  our  conviction  was   that  this  whole  linear  television  that  you  have  to  sit  down  and  watch  TV  and  see   whatever's  there  based  on  a  broadcasting  schedule,  that's  something  that's  going  to   be  gone.  Because  today,  people  have  so  much  choices  what  to  do-­‐-­‐  watch  TV,  go  on   the  web,  and  play  games  on  their  mobile  phones.  So  television  needs  to  be  there  for   when  the  people  want  to  watch  it.  So  that  for  sure  is  going  to  happen.  And  it  just   takes  a  little  bit  longer  time.  But  I  mean,  at  least  look  at  myself.       When  I  watch  TV,  I  don't-­‐-­‐  well,  sometimes  I  watch  TV  on  the  news  and  I  just  turn  on   BBC,  or  CNET,  or  whatever  it  is.  But  if  I  want  to  watch  a  program,  I  either  go  to  a   video  service,  maybe  iTunes,  or  something  else,  and  I  watch  something  on  my  terms.   When  I  want  to  do  it.  So  that's  for  sure-­‐-­‐  that's  happening.       PETE  CASHMORE:  So  it's  the  future,  but  it's  still  in  transition.       NIKLAS  ZENNSTROM:  It's  still  in  transition.  And  also  I  think  what's  interesting  is   that,  actually  a  lot  of  the  existing  TV  companies  have  been  quite  good  in   transitioning  to  the  online  world.       PETE  CASHMORE:  So  they're  getting  it?       NIKLAS  ZENNSTROM:  They're  for  sure  getting  it.      

PETE  CASHMORE:  Fantastic.  OK,  so  we're  about  time.  But  Niklas  Zennstrom,  thanks   for  talking  to  us  here  at  Documented@Davos.  Thanks  everyone  for  joining  us.  We   have  more  interviews  from  Mashable  and  Scribd.  Hashtag  is  #DavosDocs.  Thanks  so   much,  Nik.       NIKLAS  ZENNSTROM:  Thank  you.  

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