Archive for October, 2012

October 19, 2012

3 Ideas for a better Iceland

Original post was written for the Asbru Blog.

Idea #1: Invest in yourself and your local community

Source: Inspiration Monkey

I believe every Icelander can invest in their local community and in local entrepreneurs and in themselves. It takes very little to create an impact in a small community. I believe if 20 people get-together with ISK 2.000.000 each and invest in 5 entrepreneurial companies it can transform not only the entrepreneur but the investor as well. Investing is a lot of work, but that is the only way to grow value and wealth. I am not talking about investing in the Stock Market or Buying Government Bonds, which are perfectly acceptable methods to invest, but picking smaller companies and entrepreneurs in areas that each and everyone of us is familiar in and investing in them will transform Iceland. My partners and I did just that when we invested in Clara (http://clarahq.com), when I met with the founders they had a good idea and they were going places but lacked the mentoring and money to take their ideas to market. The business was in a field that I was very comfortable in (software, internet and computer systems), we decided to invest in the company. Today Clara is a 14 member team serving Gaming companies like Sony Online, CCP and many other companies. We achieved the team growth and value growth in about 2 years and my belief is that we could have done it faster if we had invested more money, the biggest challenge we faced was the lack of faith of Icelander in their own abilities and ideas. I think changing that would go a long way. I am not talking about some esoteric ideas, the concept of Angel Investor Networks and Angel Investing is starting to make a real impact all around the world.

Idea #2: Volunteer to be a mentor, helper or give something without expecting anything back
If you don’t have the capital to be an angel investor, you can volunteer to be a mentor or give something to the community to enable knowledge sharing or network sharing. I am not talking about charity, though charity and social work have a place in a society. I mean time and effort where you contribute something without expecting anything back. A mentor is that kind of a person, without spewing ideas but listening to a young entrepreneur or practitioner in your field of expertise. There are many avenues to do that Asbru Incubator, Klak, Innovit and more recently Startup Reykjavik provide the platform for everyone to participate and contribute to building a sustainable startup ecosystem.

Idea #3: Learn a new skill using a new technology
This idea comes back to the first idea, of investing in ourselves. Learning a new skill using the current or new technologies. The world of technology changes rapidly and there could be a point in time where everyone of us can be left behind if we don’t keep up. I would encourage everyone to take an hour a day to pick up one skill, whether it is blogging, tweeting or coding in HTML or reading about technology or learning how technology works. This is important not just for those in the technology field but for everyone. To quote my favorite mentor Brad Feld, “The machines have taken over, now they are patiently waiting to learn everything about us by asking us to input everything about ourselves into them”, don’t you think it is time we should learn how the machines work? not because any sinister agenda but just to be curious and asking questions.

My dream is that in 10 years we have a thriving entrepreneurial ecosystem in Iceland that provides sufficient resources for anyone to start fresh, create value and make a living. I think Entrepreneurship is life, one of my favorite blogs is written by Jerry Colona, I could not have said this better so I am quoting Jerry:

“Those who seek to create their own startup do so more often out of the desires for freedom, dignity, validation and, ultimately, self-actualization (in the full Maslow-vian sense) than for riches. (Indeed, those who seek riches most often fail.) For them, and despite what most politicians and government officials blather on about, it’s not about jobs. It’s about life.”

October 12, 2012

Volunteering your Heart and your Mind

University of South Carolina playing football ...

Louisiana State University. (Photo credit: Wikipedia)

I have been part of the recruiting process from very early on in my professional career. I started working for Ernst & Young in 1999 and every year a recruiting team went back to Louisiana State University (LSU Geaux Tigers!) and we were one of the many companies that were recruiting talented students. It was a fantastic learning experience and I thoroughly enjoyed it. We always recruited someone for their potential and not always for their “skill set”. Potential, Attitude and Team Dynamics were the main attributes that we looked for, the strategy was if we got those attributes right the individual should be able to learn any skill. I still think that strategy works. I believe that the opportunity to be part of a team in its own right is rewarding, but there are several attributes that we all can cultivate and bring to the table. I am also a strong believer that we cannot manage people, we can only manage things, everyone has the ability to lead starting with ourselves. While we go into the recruiting process, the elephant always in the room is the Compensation, Benefits, Stock Option etc, I think they are all very important, but I also strongly feel that all those things are for people to just show up, in order to be part of a winning team and to build a winning team every team member needs to Volunteer their Hearts and their Minds. Nobody can force anyone to be motivated, we need to create an environment that fosters self motivation.

So what is this environment? I have some thoughts, I believe if you can create an environment where everyone in the team has the freedom to express their ideas and are allowed to execute those that are in the strategic interest of the team and there is team camaraderie where everyone steps in to help anyone who is struggling is a good start. I think the saying from the Three MusketeersOne for all and All for One” is an attribute of a winning team. And the leadership is not a position but more an attribute of the contribution one makes to the the team. I currently play the role of a CEO of GreenQloud and I model my leadership style based on a philosophy and concept of a Servant Leadership. I am at the service of every team member, I am my team’s servant. I do not take the definition of a servant lightly, it is the most noble of roles, it takes a lot of courage, love and respect to be a loyal servant. I have always believed it is a humbling attribute that inspires each and everyone of us and I believe it takes more courage and leadership to be humble. It easy to be a master with a whip, because all you need to do is crack the whip and some will respond and most will not. I have never believed fear of someone can be a Motivator in anything especially in an environment where everyone needs to volunteer their Hearts and Mind to survive and to Win.

October 7, 2012

Prospect Theory and Entrepreneurship

Daniel Kahneman

Daniel Kahneman (Photo credit: Wikipedia)

Source: Thinking Fast and Slow, Daniel Kahneman

It fascinating to read Daniel Kahneman’s writing on Risk and Heuristics and human psychology. I have recommended his book “Thinking Fast and Slow”, the picture to the right is from the book on how we react to Gains vs. Losses and how our decision making is influenced based on the baseline from where we start. Prospect Theory was an improvement on a previous model developed by Bernoulli, in which states of wealth are the carriers of value, whereas Prospect Theory has psychological value of gains and losses. The graph basically depicts the “Loss Aversion” and diminishing sensitivity for both gains and losses. The two curves are not symmetrical ie the slope of the curves change abruptly at the reference point, which indicates the responses to losses is stronger than the responses to corresponding gains. This could explain the heard behavior we have in the stock market when the market starts going down everyone runs to the exit at the same time thereby causing a collapse.

There are a number of fallacies and pitfalls that is outlined in the book and most of them can be lessons for Entrepreneurs. I really like this passage

When forecasting the outcomes of risky projects, executives too easily fall victim to the planning fallacy. In its grip, they make decisions based on delusional optimism rather than on a rational weighting of gains, losses, and probabilities. They overestimate benefits and underestimate costs. They spin scenarios of success while overlooking the potential for mistakes and miscalculations. As a result, they pursue initiatives that are unlikely to come in on budget or on time or to deliver the expected returns- or even to be completed. In this view, people often (but not always) take on risky projects because tehy are overly optimistic about the odds they face. It probably contributes to an explanation on why people litigate, why they start wars, and why they open small businesses.

Pretty grim analysis, but it is not a big deviation from what Fred Wilson told me when I asked him what should I look out for embarking on the trail of Venture Investing and Entrepreneurship:

You have to be very patient and stockpile your capital. It always takes longer and more money

The best way to solve the above fallacy is to dedicate oneself to the truth, I wrote about it and I have also written about the motivation for being an entrepreneur. Most of the successful entrepreneurs who I have met, typically are not doing this with economic benefits in mind and this goes for the successful VCs as well. Being optimistic and pushing forward when all the odds are stacked up against you is the hallmark of Entrepreneurship but that should not lead to telling lies to yourself.

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