In our blog series called “My Biggest Mistake”, Startupbootcamp is featuring mentors and their advice for startups. What better way to showcase advice, than to talk about the biggest mistakes and how they overcame them. This third post comes from Startupbootcamp Berlin mentor, Stefan Wolpers.
My Biggest Mistake: Never trust a smiling DAX30 company
Founder at ebookmakr.com
A totally cool concept in our eyes
Back in 2007/2008 I was busy working with my friend and co-founder on a new market-place for services – think of Yellow Pages meets Craigslist meets dating-site. Susuh – as it was called – allowed users to anonymously post service demands (e.g. paint my living-room), then receive offers from service-providers via an internal messaging-system and finally choose the preferred bidder without being annoyed by pushy sales-men. Totally cool concept in our eyes. (With a lot of nerdy feature, too, such as using Twitter as a mobile client to post ads.) To get more organic search-traffic, we decide to add a public directory of services providers, built on licensed address-data and pre-fabricated company profiles. Susuh had a cool design, very efficient onsite SEO (we built the category tree, for example, based on the popularity of search terms and not ISO classifications) and was well received by service-providers. In the end, we had about 4 million profiles indexed in Google.
What went wrong
Due to an earlier decision of a regulatory body (Bundesnetzagentur) based on a ruling of the European High-Court, our license-fees were very favorable and we could generate revenue and a margin based on traffic arbitrage (-> AdSense). But the provider of the addresses wasn’t content with the pricing-decision of the Bundesnetzagentur, challenging it in court. While the first two instances confirmed the pricing-decision of the Bundesnetzagentur, the highest German court, the Bundesverwaltungsgericht, however, partly accepted this lawsuit in late 2008. Unfortunately, the licensing contract contained a clause, that would allow the addresses-provider to raise license-fees tenfold back to the moment each license-contract became effective if the former decision of the Bundesnetzagentur would be overruled by a German court. No one of the licensees–next to us about 60 other companies and startups–was expecting that as the ruling of the European High-Court was considered to be solid. In September 2009, we received a simple letter of the address-provider, claiming outstanding license-fees north of 200,000 € – and coolest market-place for services the world has ever seen ceased to operate – we simply could not afford the cost of the legal battle ahead, although chances were supposedly not bad…
What’s the morale of this story? Never trust a smiling DAX30 company, offering a part of its core business to you at an unbeatable price…
Founder of ebookmakr, a service which lets you create, publish & market e-books online, berlinup, twittwoch.de, ec_berlin & Startup Camp Berlin. Mentor of Startupbootcamp. Specializes in digital publishing, ebooks, software, productmanagement, lean startup, agile methodologies, scrum, kanban and – startups in general.