Framework to build Great Companies

Source: Good to Great by Jim Collins

A framework is more like a guide, it does not tell you how to walk the path but gives you guideposts on what you should focus on. Building great teams is the bedrock of building great companies. I have mentioned many times that when you are investing in a startup, the team matters a lot. Building great teams that execute is an important necessary condition. All other things you can change but the team dynamics is critical, it is hard to encapsulate and constant changes in team members and structure always leads to confusion and delays progress.

I believe the framework build by Jim Collins in his Good to Great book clearly articulates what I mean. The first stage in all great companies before they became great was the build up of disciplined people. Without disciplined people all other things falls apart, what do I mean by disciplined people? I can sum this up in one sentence, disciplined people are those who Make and Keep Promises. It is as simple as that. If you one can build a discipline to do that one can get disciplined in anything. There are a number of qualities that are required to be disciplined, I like :

  • Relentless
  • Resourceful
  • Resilient
  • Responsible
  • Respects other opinions

This is by no means an exhaustive list of attributes that comprise the winning team, however it is a good start. Paul Graham wrote a very interesting post about being relentlessly resourceful, he was of course referring to startup founders. I think the concept can be applied to anyone. I would like to be in a team that is relentlessly resourceful, that is resilient ie. when adversity hits the plan the team has a way to stand up and keep moving forward. Responsible is another word that I really like Dr.Steven Covey talks about this a lot in his books, the word responsible can be broken into Response-Able ie. have the ability to respond. Respecting others is not a nice to have but a must have quality. No-one knows everything if you want to win in the market place you need to bring people together who can compliment each others weakness. Thats the way winning is done! I wanted to leave this blog post with words of wisdom from a very famous philosopher Rocky Balboa.

The world ain’t all sunshine and rainbows, it is a very mean and nasty place and I don’t care how tough you are it will beat you to your knees and keep you there if you let it. You, me or nobody is going to hit as hard as life… but it ain’t about how hard you hit, its about how hard you can get hit and keep moving forward, how much you can take and keep moving forward… Thats how winning is done!

ORF Genetics – A Startup Profile

I met Dr.Bjorn and Dr.Julius in 2009, while they were trying to launch a subsidiary of Orf Genetics. Orf Genetics is a biotech startup out of Iceland, the company was established in 2001. ORF Genetics is an innovative company in the manufacturing of growth factors and other recombinant proteins in plants. The company’s ISOkine™  human-like growth factors are produced in the company’s proprietary Orfeus™ system in barley, bypassing the use of bacterial or animal cell systems. The company is offering its unique ISOkine™ growth factors for various medical research, cell culture media and diagnostics. The use of the unique Orfeus™ production method in barley seed, ensures that Orf Genetics products are biorisk-free, allowing their customers to enjoy easier regulatory clearance with animal-free, serum-free and endotoxin-free growth factors.

Dr.Bjorn moved from Canada after completing his PhD, he shared his experience yesterday in Startup Reykjavik. I was NOT surprised when Dr.Bjorn mentioned that he knew that he would never start a company being in Canada as his network of people were all academics and there was no entrepreneurial spirit, he said that the entrepreneurial spirit and ease of networking in Iceland is what made him move back to Iceland. However, the journey so far has been very tough with a lot of twists and turns, but it has been most gratifying experience. Orf Genetics is not your typical startup as it has been around for over 11 years, Dr.Bjorn, Dr.Einar and Dr.Julius met in 2001 and decided to form a company that would make human growth factors utilizing plants. There are various reasons for doing that and Dr.Bjorn with his PhD in plant molecular biology can explain very well, however, it is important to see that they had the vision that something like this can be created right here in Iceland and they did faster than most of the typical biotechnology startups. Their first commercial product is a skin care cream solution and it has been selling like hot cakes in the Icelandic as well as in the European market. There were some interesting highlights from Dr.Bjorn’s talk yesterday:

  1. As an entrepreneur, you need to switch between being focused on product development to sales and marketing very quickly and have to be fully committed to do it. This was the hardest thing for him to do given his background in Academics and being a scientist. Making the transition is very gratifying as he says the most important thing that is making the company successful is winning in the market place, it totally changes the dynamics of the team and there is a lot more optimism and energy. So lesson #1 focus on Winning in the Market place
  2. Second big lesson, find your niche and partner with others for everything else. You cannot do it all by yourself. He mentioned that the main reason why ORF was able to cut the time to market by 50% is because they outsourced some of the capital expensive activities to other players and they focused on what they did best. In addition, he mentioned you need financial partners as well don’t hold onto your idea as though it is your baby, you need to open your arms and invite investors into the company. Capital makes things possible, he mentioned that once his team was able to attract patient and smart investors into the company the whole company blossomed.

Bio Effect and EGF (Icelandic product) are selling very well, they have been growing at about 300% every year since 2009 and Dr.Bjorn believes that their product is about 3 years ahead of the competitors and hopefully they will be able to fend off other immitators because of the quality of the product and the value people derive from it. I can assure you that this product is incredible, all the women in my family love it. I have to admit I have tried it myself and it makes my skin feel pretty good. Check it out when you are flying Icelandair next or Swissair.

2 reasons why a startup fails

balance sheet in chinese

balance sheet in chinese (Photo credit: Wikipedia)

The first reason is obvious and I am not sure if I have repeated it enough… Startups fail not because they have bad ideas or products or teams although those are some of the reasons but the single most important reason why a startup fails is because it does not have Customers. The second reason why a startup fails is because the team has not built the discipline to mind its business. What do I mean by minding ones business? well Yes, it is the boring stuff but I love it… I love it like I love Ice cream. There is nothing more important than having the discipline to maintain clean accounts of your startup. If you don’t build the discipline when you are small you will never build the discipline. So take the time to learn about how to maintain accounts. There is a difference between Accounting as a book keeping activity and Accounting used for Management decision making. I am a strong believer that you have to manage things and lead people. You have to take the time to manage your accounts. So what am I talking about? it is actually quite simple when you are in the initial phases of your startups development, create a discipline to make sure you record all your financial transactions i.e spending like paying salary, rent, internet access etc and receiving grant payments and investments. This discipline will help you in multiple ways one it will help you plan and budget, second it will allow you to understand your key financial metrics of Cash burn, sales etc. If you are not a finance person, take the time to understand what all the financial statements are about. Fred Wilson had detailed posts on every type of financial statement and what it is used for through his MBA Mondayssection, here are the subsection of the posts that I think are relevant:


Finance (Photo credit: Tax Credits)

  1. Accounting
  2. The Profit And Loss Statement
  3. The Balance Sheet
  4. Cash Flow
  5. Analyzing Financial Statements
  6. Key Business Metrics
  7. Booking vs Revenue vs Collection

Internet Defense League

The Dark Knight Rises

The Dark Knight Rises (Photo credit: Wikipedia)

Want to be a superhero? well, now you have a chance on the eve of the launch of The Dark Knight Rises the third Batman movie from Chris Nolan you can make a difference. Go to and sign up and be part of the Justice league that is planning to defend the Internet. I have written about policy and why it is very important to think about the future while framing policy rather than protecting dying industries or monopolies. The best way to organize is to meet on the Internet and talk about issues that are being discusses in Congress and every legislative body on how to stop all legislation that stops innovation on the Internet. I believe there is storm brewing and it has a lot of power, and this storm is all the incumbant industries that are being disrupted by the Internet based startups that are better organized, move fast and can create tremendous value, so what will the incumbants do? they go running to the lawmakers and cry foul that how dare the new entrants can innovate so fast and kill the incumbant’s business model. The law makers are only as powerful as the resource they have to run for the next election. Internet needs to show its power.

Lets show that we all work for the Internet and we will not stop until all the laws being considered and proposed by the lobbies are nonsensical without debate and in order for the Internet to participate in the debate the Internet needs to organize. It cannot be a one of effort, we have to be on constant vigilance. All that being said, I am really excited about the Batman movie and cant wait to see it. Go sign up, be a Superhero!

Image Source:

3 Magic tricks to get Marketing and PR right

I have a whole category in the Startup Iceland blog about Marketing and Selling for a reason and that is Entrepreneurs and Startups just suck at telling a story about their value proposition. Not because they don’t want to but because they don’t prioritize how important of a task Marketing is. Fred Wilson wrote a blog post not long about Marketing and his initial post started like this

I believe that marketing is what you do when your product or service sucks or when you make so much profit on every marginal customer that it would be crazy to not spend a bit of that profit acquiring more of them (coke, zynga, bud, viagra).

me and everyone in the community thought that it was wrong and we let him know about that. Fred being fred, wrote a follow up post with the following title “Marketing Post – The Bug Report“, I would encourage everyone to go and read the entire comments section of both those posts. The value in is the quality of people actually commenting in the blog. I believe Marketing, Selling and Public Relations for a Startup are very important strategies, almost as important as product development if not more. Obviously, being a startup you don’t have a lot of resource at your disposal to spend time, money or effort into telling the story, but that is the challenge of being a startup or an entrepreneur. You have to jump off a cliff and build your parachute on the way down and make sure that the entire world knows about how wonderful your parachute is so you can sell them while you are making it.

Image Source:

Coming back to the topic of Marketing, today, we have some of the best tools to tell a story about the value created by companies. As an entrepreneur and a startup, you have a responsibility to ensure that your value proposition and story is told in all the relevant channels. I believe the best stories are told by others about your product or service. If you can convince an influencer to write about you and your company, it is by far the best way to get noticed. I believe taking part in competitions and contests also help you to showcase what you are building, of course you need to win to get the media and story covered.

What are the 3 magic tricks in Marketing, PR and Selling? well, it is actually quite simple, you need to get out there in the world meet people and talk about what you are doing. It is as simple as that. It takes time and it takes a lot of effort but there is no other way. If you believe just buying Google Adwords or Facebook Ads is going to get you coverage you are wrong. You need to do all the channels, ie. you need to CONSISTENTLY

  1. Blog about what you are doing and share it with your network and your extended network
  2. Tweet about things happening in your startup/industry and things related to your startup/industry
  3. Participate in meetups, conferences and trade shows

How do you do this when you are bootstrapping and trying to build a product? I did mention this was a magic trick right? The first 2 tricks are not that hard to do because it is you as an entrepreneur putting your time and effort into words and spending time learning about what is going on in your industry. You cannot afford not to do this. The third one is a little harder given it takes money to participate in Conferences and when you live in an Island you need to spend money on travel, lodging etc but you can always prioritize and pick the most appropriate conferences and budget for it and participate in it. A much easier way is to do local meetup, if there is not one in your neighborhood organize one. Brad Feld wrote about Just Get A Group Together for Coffee, it is not that hard to do.

I see that some of the startup are shy about talking about what they are doing and what value they are creating, this is a BIG FAIL. If you are not passionate about what you are doing that you cannot wait to tell everyone about it then you are doing something wrong. Just stop the pain and go do something else.

Angel and Seed Investor Awards – Guest Post

This is the first post of the “Welcome to Post on Wednesdays!” blog post in Startup Iceland. This post is a follow up post by Ashwin Bhambri and I think he has a point on trying to bring awareness, attention and glamour to the early stage investors. I am seriously thinking of including an award show as part of Startup Iceland 2013… what do you all think?

Image source: From Wikipedia, the free encyclopedia

Isn’t Angel Investing underrated or more so undervalued? The impact it can have on the global economy today is under estimated, as almost every third startup or small business requires to raise pre-revenue finance that banks or other organized institutions would typically not fund. Seed / angel investing is the only alternative left to the entrepreneur.

Angel investing is underrated simply because as a concept it is underutilized. There are just not enough proactive angel investors or money in angel / seed asset class for this activity to be considered mainstream or a serious factor in the building of economies.

Nevertheless, the potential of angel / seed financing and the overall impact it can create is colossal. If Peter Thiel had not to take a chance on Facebook it may not be the Facebook we all know today. Time and time again, those investors who took a leap of faith and invested in Angel rounds dramatically changed the course of history for many rockstar companies today starting from Google to Facebook to Twitter.

To be fair, Investing is also about capitalism and the simple theory if one does not see a return one will not invest applies. Arriving at an ROI from a pre-revenue start-up is not exactly pragmatic and an angel investor takes a huge risk here – What makes them invest is

a. They like the startup team, want to help and give back in the process
b. Their gut feel prevails over logic and tells them to go with a start-up.

Investors who repeatedly make angel / seed investments build the startup ecosystem and should be honoured with recognition and accolades for their contribution. There should be an attempt to glamorize angel investing and this could be the rocket fuel that catalysts more investors to join the angel bandwagon and can lead to more investment activity.

How do we do this?  For starters there can be the Grammy and/or Oscar equivalent for investors or the Angel & Seed Investor Awards where active investors making investments are nominated and awarded,  as investors are the early heroes of any startup ecosystem.
Glamour is also an amazing communication medium to a large audience and could convert traditional investors who typically invest in established listed companies to become angel investors.

Iceland could be the world’s accelerator of this initiative as the time & environment is optimum. Thus far I have not come across any Investor Awards event that is mainstream and it’s about time someone takes the initiative and makes it happen. If it fails it fails, if it succeeds it could do for the rise of angel investing what y-Combinator did for the rise of startup accelerators and that’s definitely a risk worth taking

Remembering Dr.Steven Covey

Dr. Steven Covey passed away yesterday. Dr.Covey has been a big influencer for me personally. I have read most of his books and listened to all his audio books a million times. For those of you who don’t know Dr.Steven Covey, he was the author the book “The 7 Habits of Highly Effective People“, he has written many best sellers and he was one of Time magazine’s 25 most influential people in 1996. I believe his work and legacy will continue given the number of people his seminars, books and audio tapes have touched. I am really sad to see Dr.Covey pass away, I believe he really took some of the most complex psychological tools and disciplines and organized it and made it available to everyone. The best way to remember Dr.Covey is to remind ourselves of the 7th Habit and his latest book the 8th Habit. Washington Post has a very nice way to remember Dr.Covey by sharing his 7 habit through a slide show of current leaders.

Dr. Covey was an entrepreneur himself, who gave up a successful academic career in Harvard University to start his own Personal Development and Leadership Training company Covey Leadership Center. He grew the business and merged it with Franklin Quest in 1997 and FranklinCovey organization has been serving customers ever since on personal development, leadership training and enabling greatness in everyone. I believe if every entrepreneur or a startup company follows Dr.Covey’s teachings in the 7th Habits and 8th Habit, they will be successful. Because I believe success the end result is built into the Principles of his teachings.

The 7 Habits and the 8th Habit defined from the perspective of an entrepreneur:

  1. Be proactive – Entrepreneurship is about being active, in addition an entrepreneur should take responsibility for her actions and the mere act of being responsible for one’s business and employees and stakeholders is definition of being proactive
  2. Begin with the end in mind – The vision of a startup or entrepreneur is nothing but this habit, if a startup does every aspect of its development with the end in mind the actions leading to that end will be obvious.
  3. Put first things first – This in my opinion is the most important habit for entrepreneurs, this habit should help one prioritize ones activities. This is such a simple statement but it is very hard to do when there are a million things to do while starting a company and building a team.
  4. Think Win-Win – This habit is very dear to me because this is the best way to structure agreements with anyone, if one starts thinking about the win for the other party, it automatically leads to a fruitful agreement. I have used it many times and it always works. Every entrepreneur should think Win-Win.
  5. First seek to understand then to be understood – Hardest of the habits, we have never been taught to listen but as an entrepreneur if you don’t stop and listen to your employees, customers, stakeholders it is bound to lead you to a sub-optimal result. Listening is one of the most important life skills that we just have not been taught. This habit forces us to think about first trying to understand what the other person is feeling before talking about our own feelings.
  6. Synergize – From a entrepreneurs perspective this is team building, bringing people with different strengths and aligning them to produce things of exponential value. The successful companies do this. What do you think is the per employee Revenue or Profit of Apple or Google? That is synergy, that one employee cannot possibly make that value without the help of all the other team members
  7. Sharpen the saw – This is an important habit of self renewal. Everyone of us has to take time to sharpen our skills whether it is constant education, reading or physical training.
  8. Find your voice and help others find their voice – This is the habit of inspiring others to pursue their own passion. The only way to do this is by finding our own voices first and then with that strength encourage others to do the same. Easier said than done. Dr.Covey is an excellent example of this habit, he found his voice and has inspired millions of people including myself to find our voices.
Dr.Steven R. Covey was a modern age Guru, his teaching embodied the works of many people and he was the first one to acknowledge that. He constantly mentions in his book that he takes no credit for the Principles and his humility really inspired me. I hope you get a chance to read his book or listen to his audiobooks, it will be one of the best gifts you give yourself. Rest in peace Dr.Covey, your legacy will continue.

Excuse department is closed

As I have mentioned before, guest posts are welcome on the Startup Iceland Blog. We did our first post about a week back. I plan to create a calendar of posts. Every wednesday we will have a guest post, those wednesdays we don’t have a post I will fill the gap. I have been slacking on the blog because of various reasons but as I tell everyone the “Excuse Department is Closed!“, starting this monday we will have a blog post everyday. The title for the blog post is stolen from Mark Suster, he was referring to the sales teams trying to find excuses for not selling products. Anyways, I digress… the blog is going to get back on track. This coming wednesday we have another blog post by Ashwin, who wrote the first blog post. The topic for wednesday is about Angel Investors and how that cohort can dramatically change the landscape of Startups and Entrepreneurship. I attended the open pitch session last thursday in Startup Reykjavik, all the teams are improving dramatically in their elevator pitches, however we need to hit this one out of the park. IMHO, getting the local angel network to participate and invest in the group is the key. I will be working diligently to get everyone who is interested to participate in the demo day.

While I write this blog post my brain keeps coming back to the saying Excuse department is closed. I have been thinking about Annie Thorisdottir, the 2012 Crossfit World Champion from Iceland. She is a huge role model for Iceland and what can be achieved if one is disciplined and trains with a goal in mind. I have not met her or know her but she has put Iceland back on the map for the right reasons. Imagine the odds, the same ones that gets thrown at me when ever I bring the notion that world class startups can be built from Iceland. She was a nobody before last years event, and she was only 22 years old… impressive to be a world champion at that age. I am wondering what excuses she gave herself for training so hard.

Startup Reykjavik – A Perspective of a founder from India participating in the program

We have a guest post from Ashwin Bhambri, founder of StartupVille and one of the teams accepted into the Startup Reykjavik 2012 program. I have offered to open up the Startup Iceland Blogging platform to the community in Iceland. This is the first post and I would encourage all the startups to reach out to me if you would like to use the Startup Iceland Blog to promote a message. The requirement is very simple, it has to be something to do with Startup ecosystem or Entrepreneurship or Startup Community here in Iceland or anything that you feel would help Entrepreneurs and Startups.

StartupReykjavik is Iceland’s first startup accelerator program however quite different from the run of the mill accelerator programs. First of all the investor is institutional, Arion Bank who is also a chief sponsor of the program. Secondly, the program has the right mix of mentoring and coaching with mentors from varied industries across Iceland and in-house coaches from the Innovit Entrepreneurship Centre and Klak an innovation catalyst initiative. The coaches are actively involved in setting deliverables for each startup and helping them achieve the deliverables within the timeline and towards the end of the program lead mentors take over who have repeated sessions with start-ups they feel they can help

It is interesting that the start-ups in this program are not the ‘usual suspects’ and are quite different from the lot you would generally find at accelerators, all have well defined revenue streams and some are even making money. The diversity here includes a hardware device startup, enterprise applications, subscription based services, search technology and social gaming.

The accelerator here also offers the Icelandic advantage – it’s a flat society here so getting an appointment with say the Director of a Large Airlines and pitching your product is relatively easy and fast also you get a ‘Yes’ or ‘No’ quickly. It’s a small place so you can cover ground fast, just amazing for business development and most of all it’s about the people here who are very enthusiastic about the place becoming a startup hub. Also, the accelerator is open to applicants from all over the world

Here’s a look at the start-ups,

  1. Mymxlog – Mymxlog enables the management of licences, certificates, training and experience necessary to comply with European Aviation regulations.
  2. Cloud Engineering – Cloud Engineering provides data extraction technology. We create tools which will revolutionize the way you gather content from the web
  3. Guitar Party – GuitarParty provides music enthusiasts with a way to learn their favorite songs using a unique user interface,  songbooks and video lessons
  4. Live Shuttle – Live Shuttle is a free service for smart phone users where they share their experience Live with their friends, family and the world.
  5. StartupVille – StartupVille is a place for investors and start-ups to play. A social game where investors make virtual investments in start-ups
  6. Stream Tags – Watch movies online with friends via webcam. Now, you can get information on anything onscreen you see or hear and buy it.
  7. Automatic 3D – Creation of high accuracy three-dimensional models using standard two-dimensional photographs and computer vision.
  8. Heilsufar – internet health-bank for individuals. All your health related data in one place including diet and fitness
  9. When Gone – WhenGone is a web based tool to record messages where people leave their last words/advice to their loved ones, to be viewed after passing.
  10. Eski Tech – We are developing RemindMe, an automatic medicine dispenser. Many people struggle with their medicine intake and RemindMe is aimed at making that process easier.

Startup Revolution

Brad Feld is working on 4 books this summer, he has structured his new blog based on those themes. I think he is spot on in identifying the themes that are relevant to the startup ecosystem around the world. The themes are:

  1. Startup Communities
  2. Startup Life
  3. Startup Boards
  4. Startup Metrics

I am looking forward to getting to read all those book. I think there is a revolution starting to happen around the world, some places more so than others. I think the global socio-economic shifts are starting to influence how communities structure themselves and find purpose. There is a struggle starting to happen, Brad Burnham wrote about the Freedom to Innovate, a paragraph in that succinctly describes what I mean by the socio-economic shifts:

For the last 130 years the economy has been dominated by firms structured as bureaucratic hierarchies. That model worked well to mass produce products for mass consumption, but the inefficiency of communicating customer needs up through the hierarchy and management decisions back down, and the natural tendency of any organization to protect its current organization structure makes it difficult if not impossible for bureaucratic hierarchies to innovate as quickly as the emerging network-based model of decentralized innovation.

The above shift is happening whether one likes it or not, Brad Feld‘s work on defining a structured approach to build communities, companies and markets is in my perspective a good roadmap or guide to counter this shift. I think Iceland is a great experiment in this change, there was no other country that was harder hit than Iceland due to the 2008 Financial Collapse. It would be interesting to see how Iceland is responding to the shift, we have started on an interesting path with Startup Iceland, Startup Reykjavik and a Number of Startups being formed in Iceland and Infrastructure being aligned to help startups. I think it is a good start and only time will tell if this experiment is going to give the right results but so far I like the path.