Every Time A Chinese Social Network Looks To Ericsson For Content, A Startup Dies
Ericsson announced yesterday morning that they have completed a partnership agreement to bring mobile applications to Kaixin001, a Beijing based social network with 50 million users. The press release mentions that photo sharing, SMS alerts, and location based services will be the first applications. The fact that Kaixin001, a startup itself, has chosen Ericsson as content partner should be interpreted as huge missed opportunity for all startups developing mobile applications in Northern Europe, and I'll tell you why.
The reason that any of the startups in the Nordics and Baltics that could've done this deal, but didn't, is because Ericsson is fully committed to using it's Big Company Sales & BizDev muscles to win work, regardless of whether the services they'll ultimately deliver are best. That's what startups are for, to be the ones creating insanely great products, better than any Big Company© ever can. However, great products and services aren't enough. If they don't get sold and distributed they're just good ideas. This Ericsson/Kaixin001 deal is a wake-up call for every mobile content startup in the region that's waiting to scale up a sales organization or that thinks CTO/Sales Manager is in any way a workable job description.
Creating applications for East Asian users who consume a lot of content on the mobile web, and are more willing to pay for it, is a great win for Ericsson that never should have been.
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As I understand it, Ericsson has been a great partner for startups to resell their solutions across the world. Something the startups could never achieve themselves on such a scale.
Did not have time to search, but here is an old article from Estonian leading mobile positioning and geoinformatics Regio using Ericsson to rule the world: http://noweurope.com/2004/11/06/regio-successful-estonia/
If I remember correctly, Mobi Solutions from Estonia has also been an associated partner of Ericsson.
50 million users is quite a number and already a business - no longer a startup with just an idea. still, I agree with you Nick, there was a window that has been closed. hope the next cooperation will take place with a nordic startup.
BTW: Have you ever thought of a collaboration with other startup-news-companies to bring startups from different countries together/open markets?
Partners such as
germany (www.gruenderszene.de, www.deutsche-startups.de), us (www.venturebeat.com) and HongKong (www.852signal.com).
Good point, unfortunately startups and their investors (specially Nordic ones), find it completely acceptable to invest hundreds of thousands, sometimes millions, in product development, and surprisingly often forget completely about marketing and sales. I have seen it way too often. Just look at the job listings... Then they trust their millions on all sorts of 3rd party distributors, aggregators and agents that don't even provide feedback on market needs and how their products should really be adapted to become more competitive or sell in the first place. Irresponsible investing?
Nevertheless, in this particular case I doubt Ericsson won the deal purely for their sales & bizdev muscle. Muscle was definitely needed, but I am sure they threw in some other spices that startups also way too often lack; good project management, continuous support, local market knowledge.... and my last guess: Ericsson provides this service "for free", as an 'addon' to building and hosting their complete server and network infrastructure. You know, it is in Ericsson's interest to keep their customers happy, help them make more money so they offer this little extra.
A tip for startups: talk to Ericsson, but remember, also that requires a lot of sales footwork... it is not enough to talk to that local Ericsson guy in sweden/Finland, you may want to pay their Chinese salespeople a few visits too.
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