In case you have been under the rock or not been following this blog, we are having our Annual Startup and Entrepreneurship Conference in Iceland on June 1-4, 2013. The first two days June 1st in the afternoon to the end of the day on June 2nd, we are organizing a Hackathon. Hackathons are a tradition that we are starting to implement in Iceland, we conducted one last year and found really talented software engineers and developers who created a fantastic solution in a very short period of time. I have gone on record to say that we are very serious about recruiting those who can “Show Us” their skill than “Tell Us” about their skill. Hackathons are a perfect platform for that. GreenQloud sponsored and organized a Hackathon during UT Messan 2013, the annual IT conference in Iceland, the Winner of the hackathon was hired by GreenQloud. The clincher in this is that both the winners are still in high school. I believe very strongly that this is the new interview process of the software industry, no longer are you required to have a piece of paper telling others what skills you have, you can demonstrate it and build something of value that can be launchpad for your career. Startup Iceland Hackathon is that platform, have you made up your mind about participating in it yet? It is free and we provide all the food and drinks during the entire hackathon event. What are you waiting for? contact us and we can get you registered to be a participant in the hackathon.
We are trying a new addition to the original Conference format in Startup Iceland 2013. I was very inspired to participate in an UNConference event that was hosted by Landsbanki last fall and the Facilitator for that event was Joshua Kauffman. It was great to get connected with him and invite him back to participate in Startup Iceland and facilitate the Startup Iceland UNConference this year. I would really encourage everyone to participate in the UNConference, it is a great free flowing atmosphere and gives rise to a lot of new ideas. I wrote about my experience of last event here. The great team
Joshua is a globally active design strategist, facilitator and investor, and principal collaborator in the Quantified Self movement.
With the Quantified Self, he works on the emerging opportunities in personal data and self-tracking that can enhance existing systems and lead to the invention of transformative new products and services.
Joshua also operates a global design practice that consults on projects in technology, innovation and International Development, and has clients ranging from large global companies to governments and foundations.
A good part of his work is in lecturing and leading workshops, including facilitating innovation gatherings, design exercises and unconferences. Some recent venues have included Credit Suisse, GE, the MIT Innovation Lab, the OECD and the Landsbankinn Innovation Unconference.
The cereal box sold by Team AirBnB to raise money to fund the company
You can really pass on a great deal based on how you think. Here is a great post by Fred Wilson with the title “You can do too much Due Diligence“, it is a classic case of mea culpa and analysis paralysis. I really admire Fred for coming out and admitting his mistakes, he did that with AirBnB as well. In the last couple of weeks, there have been many people who have reached out to me and do the same about CLARA. As I have mentioned before, we were very lucky to find Team CLARA and the work that we were able to do get the deal done. That being said, I am sure if me and my partners had put on the hat of figuring out what could go wrong with our investment and done too much due diligence we may have passed on the deal. Here is an excerpt from Fred’s post:
So what did I learn from this lesson? First, trust your gut. I was using Feedburner and knew it was a very useful service. I felt that others would see that too. They did, but it took some time. Second, I learned that a service can get traction with the little guys and in time, the big guys will come along. I have seen that happen quite a bit since then. And finally, I learned that you can do too much due diligence. It’s important to talk to the market and hear what it is saying. But you have to balance that with other things; the quality of the team, the product, the user experience, etc. You cannot rely alone on due diligence, particularly early on in the development of a company and a market.
I can relate to what Fred is talking about, I have really had to change my thinking to trust my gut. Our understanding of the world is very limited, we fool ourselves into talking and thinking ourselves into not following our heart or our gut. These tools have been given to us through the ages, over millennia of evolution. I surprise myself how we use our epistemological arrogance to suppress our primal instincts… there are times we need to do that, but not when it comes to investing in people or ventures. You need to take chance and work to mitigate the risk. All things are risky but the tricky part is no-one knows what is risky … that being said I would not do what Tom Hanks and Shelley Long did either
Magnús Ragnarsson (I really liked this picture, he looks good doesnt he?)
Magnus Ragnarsson was the host of Startup Iceland 2012 and we requested him if he would oblige us the same service this year for Startup Iceland 2013 and he agreed. Yay! Thank you Magnus. Magnus has been part of the media, entertainment and startup scene in Iceland since the very beginning days of OZ and Lazy Town etc and in addition to that he is avid cycler and is organizing the WOW Cyclothon. He pointed me to a new startup in Iceland called Lauf that has designed a shock absorber for bicycles that is 500 grams lighter than the competitors out there and it is all carbon fibre based there is no metal involved. I am no cyclist or know anything about bicycles but the design of this shock absorber is pretty cool. I think this startup has potential, that being said, I always come back to the same notion that it is not the idea or the product or how ingenious the solution is, it all comes back to how well you sell the story, tell the story, in what platform you tell the story and do you get attention from the main stream media to attract potential partners, investors and customers. Talking to Magnus it looks like this startup is going the same route as many startups in Iceland, i.e trying to figure out how to make this thing rather than trying to figure out how to sell this thing. I think Lean Methodology to sell this is best way to build a company. That being said, maybe the founders are doing that and I don’t have enough information to say what they are doing is right or wrong. I believe very strongly that there is a lot more to building startups and companies than a great idea. Anyways, check it out. The global bicycle market is massive multi billion dollar industry and providing parts to that industry is not a bad business.
We are keeping with the theme of Angel investors following yesterday’s post about John Sechrest. I got connected to Angela Jackson through Helga Waage of Mobilitus, a startup from Iceland that is growing at an impressive pace and has an office in Portland, Oregon. Angela brings a decade’s experience placing 30+ angel investments (multiple sectors) and a serial entrepreneur family history to Portland Seed Fund. She has advised hundreds of entrepreneurs and seed‐stage companies across a broad spectrum of industries at AB Jackson Group, and also oversees the Portland State University Business Accelerator, with 25+ resident bio-tech, technology and clean-tech companies. She is current President of the Portland chapter of Keiretsu Forum, the largest angel network in the world, and was Chair of the state’s premier angel investment event, Angel Oregon, in 2010. I am looking forward to hearing her survivability story as an Angel investor and what keeps her doing what she does and also learn about how she got started, or more importantly why she got started as an Angel Investor.
Angela and John, are at the core of building startup communities. There are a bunch of people of Iceland who are doing the same things as what Angela and John do, but they have not followed through in getting the story told. I believe strongly that there are many success stories in Iceland, maybe not Billion $ exits but through Angel and Seed Funding companies reaching a point of self sufficiency where the Entrepreneur has created something of value. There are many local businesses and services that have been around for many decades and they all once were a startup. The city of Reykjavik or Akranes or Akureyri were once startups in their own right.
Coming back to our theme of the conference Building Antifragile Startup Communities, I read a very interesting blog post titled “Antifragile Book Notes” by Taylor Pearson for the “Antifragile” book by Mr. Taleb, who has accepted to be on live broadcast through the Internet during the conference on June 4th provided the technology works and we are able to make the technology work fingers crossed. Anyways, coming back to the book, there are two ideas that falls squarely into Angel investing, Entrepreneurship and Startups, they are:
A dual attitude of playing it safe in some areas (robust to negative Black Swans) and taking a lot of small risks in others (open to positive Black Swans), hence achieving antifragility. That is extreme risk aversion on one side and extreme risk loving on the other, rather than just the “medium” or the beastly “moderate” risk attitude that in fact is a sucker game
Antifragility is the combination aggressiveness plus paranoia— clip your downside, protect yourself from extreme harm, and let the upside, the positive Black Swans, take care of itself. We saw Seneca’s asymmetry: more upside than downside can come simply from the reduction of extreme downside (emotional harm) rather than improving things in the middle.
An example is Mark Cuban’s investment strategy. He keeps most of his assets in cash (robust, not going to crash with the market) and it allows him to move quickly when he sees large opportunities (anti fragile).
Optionality
Options, any options, by allowing you more upside than downside, are vectors of antifragility.
If you “have optionality,” you don’t have much need for what is commonly called intelligence, knowledge, insight, skills, and these complicated things that take place in our brain cells. For you don’t have to be right that often. All you need is the wisdom to not do unintelligent things to hurt yourself (some acts of omission) and recognize favorable outcomes when they occur. (The key is that your assessment doesn’t need to be made beforehand, only after the outcome.)
Option = asymmetry + rationality
The mechanism of optionlike trial and error (the fail-fast model), a.k.a. convex tinkering. Low-cost mistakes, with known maximum losses, and large potential payoff (unbounded). A central feature of positive Black Swans.
Central to optionality is Taleb’s assertion that prediction in the modern world is impossible. Instead of trying to predict what is going to happen, position yourself in such a way that you have optionality. That way whatever happens, all you have to do is evaluate it once you have all the information and make a rational decision.
If you have not read the book, I highly recommend it as I have done before many time
I got connected to John through Kristjan Freyr Kristjanson, CEO of Innovit+Klak and who runs Startup Weekend in Iceland. I had always felt that what we lacked in Iceland was broader participation of investors and mentors in the Startup community. John has been solving that problem in Seattle and in the greater Washington state. I am excited to hear about how he has been able to get new Angels to invest into the startup companies. I am also really excited by the philosophy that John has put into practice through his Seattle Angels Network. Startup companies need a lot of due diligence and investors need to play a role in actually helping the startup get off the ground. I believe strongly that Investor group has to work as hard as the Entrepreneur to make the startup a success. I have been writing about Brad Feld, Brad Burnham and Fred Wilson, in my opinion the successful venture investors work much harder than any entrepreneur I know. Check out the documentary “Something Ventured“, it is obvious how much effort the early VCs started to invest much like Angel investors and how much effort they put into each of the companies that they invested in. I think the advent of the Investment Management profession has killed the spirit of each and everyone to become an investor and entrepreneur. I think we have some really smart people working in the Investment management and Asset management business but I don’t think Investment is something that we should outsource. By getting involved with early stage companies with the partnership of experienced angel investors and investor mentors I believe anyone and everyone can invest in Startups and be successful. Don’t believe the fear mongering that your Financial Advisor gives you, Risk is misunderstood consistently by everyone so Investment or Fund managers are no different or better than any of us.
Anyways, I have digressed enough. The post was about John, John Sechrest is the founder of the Seattle Angel Conference and the Willamette Angel Conference, each providing a venue for new angel investors to explore the process. He is a co-organizer of the Lean Startup Seattle, helping entrepreneurs get focused on stronger company processes. As a global facilitator for Startup Weekend, he has worked with several communities take a step forward on entrepreneurial ecosystem development. The motivation to get John to visit Iceland and participate in Startup Iceland is to bring some knowledge on how we can create an Effective Angel Investor community here. I want to expand on the idea that John and other successful Angels have created. Maybe we will launch as I had wrote about before an Accelerator for Investors so young and new investors can get started early and participate in building an Antifragile Startup Community in Iceland.
Picking a team to bet on is a tough one. I don’t believe ideas really matter, if you have one that you think is going to be the next best thing to sliced bread, believe me you are not the only one. The more and more I think about Venture Investing which falls in the low data, no metrics decision making category, the one true qualifier is the team and the entrepreneur. I continue to believe that I know very little about investing in ventures and I got lucky with our last exit. But I can tell you that there is a simpler way to increase your odds of success… you just need to look for Grit. Here is a TED talk by Angela Lee Duckworth about that, I think it really shows why this quality is a simpler measure of success. If you are a parent, if you can teach one thing to your child, teach her/him Grit.
I am not as smart as Angela Lee, I don’t know if intelligence is a true qualifier but I use a simpler heuristic, has the entrepreneur run a marathon or done any deed that challenges his/her mental capacity to bear pain… because end of the day being a entrepreneur is about absorbing the pain and continue to move forward. It is hard, it is super tiring but in the end it is worth it. I am starting to use this to build my team at GreenQloud… it is the true measure of someone who will stick around and not give up. This is also one of the main reasons why I believe Women are fantastic entrepreneurs, I wish we had more of them building companies. That is one of the main reason why I want more women in technology and in leadership roles. I believe strongly that women make excellent leaders because they care, they nurture and they can bear unimaginable pain.
In the world of bits and bytes, the above score means a lot. If you have been following my chain of thought, I believe Software is going to run everything we use. I have written about it before, the biggest hurdle in the exciting development is a cog in the wheel called the Patent Trolls ie. companies setup to just acquire the patent rights and basically bulldoze startups or any company trying to innovate by seeking high patent infringement fees. No-one is immune to this problem. If you want to understand how this whole software patent things has become convoluted and how to solve it read the post by Nick Grossman from Union Square Ventures. Brad Feld, Jason Mendelson, Brad Burnham and Fred Wilson have been writing (here, here and here), educating and lobbying for a better way to address this challenge. However, I think New Zealand has shown the way by completely abolishing Software Patents, in my opinion we need something as bold as that in Iceland. I don’t believe Software Patents work. In addition, since the patent process is so structured anyone with enough money and backing could define a problem and a possible solutions and patent it thereby prevent/block anyone else to approach or address the problem. This is silly. I think we need common sense to define laws and not allow laws to trump common sense. IMHO, Software Patents are for loosers! there you go I said it. I have worked in the software business long enough to say that there is nothing patentable in Software, it is like me patenting my thinking what good is that if we cannot create something of value that solves a real world problem? There are many ways to solve a problem using software and I think it behooves us as a community to allow anyone to solve it better and allow the consumers to vote with their feet. Look what happens with Software Patent troll:
Ted is back. After participating in Startup Iceland 2012, he has fallen in love with Iceland and is coming back again with more insights into networks and how they influence startup communities. He has been doing a number of things in his local community like launchchapellhill.com. Ted is an angle investor and has a done a couple of them in Denmark. I am really excited to hear what he has been working on the past year… he promised me that it is more insightful about the Icelandic entrepreneurs and deal makers.
As a senior fellow for the Ewing Marion Kauffman Foundation, Ted Zoller performs research and advises Foundation leaders on entrepreneurship strategies and programs. Most recently, Zoller was director of the Center for Entrepreneurial Studies at the Kenan-Flagler school of business at the University of North Carolina at Chapel Hill., where he oversaw its teaching and outreach programs. He is the founding instructor of UNC’s “Launching the Venture” course, which has increased the number of companies to spin-off from the university.
Zoller also taught in UNC Kenan-Flagler’s GLOBE Program for undergraduate students and the European Summer School of Advanced Management in Denmark. He has developed venture academies in Europe with INITs, the leading new venture accelerator in Austria, and with the Symbion Research Park, the leading research park system in Denmark. He founded CommonWeal Ventures, a venture accelerator and private equity firm, and is a small business owner. He serves on the boards of several entrepreneurial ventures, including Idea Fund Partners, Southeast TechInventures, and CollectiveIQ Private Equity.
Zoller is a former associate dean, high-tech entrepreneur, and a principal of American Management Systems, Inc. He was founding director of economic development at the College of William & Mary, where he developed Jefferson Park, an advanced technology research park. He received his PhD from UNC, his master’s degrees from Syracuse University and the University of Virginia, and a dual bachelor’s degree from the College of William & Mary.
Brad Burnham has been a big supporter of Iceland. He has invested quite a bit of time, influence and effort to push the idea of the Freedom to Innovate and Internet Enterprise Zone in Iceland. There have been many channels of talks, efforts to initiate projects and gather support through a research and development approach. Brad has also been providing a lot of leadership to policy makers on how to look at the internet. Union Square Ventures, which was founded by Brad Burnham and Fred Wilson, is a venture capital firm based in New York City. They are a small collegial partnership that manage $450,000,000 across three funds. Their portfolio companies create services that have the potential to fundamentally transform important markets. They can work with an entrepreneur whether she needs $250,000 to test an idea, or $25,000,000 to buy an undervalued asset. They invest in New York, San Francisco, London, or Berlin and most places in between. Here is Brad talking to RUV last year when he was participating in Startup Iceland 2012.
Here is Brad talking about how Policy matter for Innovation. I am extremely excited to see the developments in Iceland, maybe Iceland call pull it off but I am more excited to see that Brad is still committed to Iceland and has agreed to come back and talk about the Freedom to Innovate. I think everyone is Iceland is going to win big if Iceland become the leader is coming up with policies that foster innovation. We are very fortunate to have access to someone who has been looking at this since for a long time and he believes Iceland is a key player in this transformation.
