Archive for March, 2013

March 29, 2013

Promise of Big Data and whats wrong with it

twitter fail image

twitter fail image (Photo credit: Wikipedia)

I like Data as much as the next guy, but I am troubled by all the empty promises of big data. I think data is good but too much data is unwieldy and it becomes hard to separate the noise from signal. It does not matter how sophisticated our data sifting mechanism become it is still ugly. What worries me even more is our inherent ability to see patterns in tea leaves that could lead to hypothesis and theorizing based on Big Data. Nicholas Nassim Taleb in his book on Antifragility talks about this problem:

In business and economic decision making, reliance on data causes severe side effects – data is now plentiful thanks to connectivity, and the proportion of spuriousness in the data increases as one gets more immersed in it. A very rarely discussed property of data: it is toxic in large quantities- even in moderate quantities.

… noise and randomness can also use and take advantage of you, particularly when totally unnatural, as with the data you get on the Web or through the media.

The more frequently you look at data, the more noise you are disproportionally like to get (rather than the valuable part, called the signal); hence the higher the noise-to-signal ratio. And there is a confusion which is not psychological at all, but inherent in the data itself.

The world of Twitter and capturing every search by Google, we are fooling ourselves into believing that more data is better actually it is worse given the frequency of our observation. Maybe if we can spread the time variable out it could elicit some interesting dynamics. Anyways, it has been a lot of fun to read Antifragility the last couple of days… and fortunate to be in a place that is tranquil and peaceful, where inspiration is easy, all I have to do is look outside the window or walk out the door. I am in our summer house in Thingvellir, surrounded by mountains, lakes and glaciers and just pure nature, Icelandic Style.

Here is a troubling consequence of big data: Surveillance

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March 24, 2013

High Risk, Low Data Decision

English: Technology (or solution) adoption pro...

(Photo credit: Wikipedia)

I have been reading the book “Crossing the Chasm” by Geoffrey A. Moore again. I highly recommend the book to anyone in a disruptive business. The book is an easy read and Section 4 sets up the stage for how to really market and sell disruptive technologies. The strategy is simple enough, the author states

The fundamental principle for crossing the chasm as to target a specific niche market as your point of attack and position all your resources on achieving the dominant leadership position in that segment. The approach is first you divide up the universe of possible customers into market segments. Then you evaluate each segment for its attractiveness. After the targets get narrowed down to a very small number, the “finalists”, then you develop estimates of such factors as the market niches’ size, their accessibility to distribution, and the degree to which they are well defended by competitors. Then you pick one and go after it. What’s so hard?

The hard is to the explanation that follows and I agree with that, the action or execution of this strategy is fraught with a low data decision i.e. you don’t know a lot of the prospects of allocating all your resources because you are not sure if this strategy is going to be successful.

Entrepreneurship is a low data decision activity. If the data is obvious and the risk are minimal, I define risk as a loose term, I think the risk is more opportunity cost ie. if you were not doing an entrepreneurial endeavor what else would you be doing and the pay off of that. It is a tough call, and I understand why many people don’t make that choice because we abhor Uncertainty. I used to but not since the financial collapse in 2008, where all my perceptions and biases and epistemological arrogance was turned in its head. Now I cherish uncertainty and randomness, and I wish that everyone gets to experience that feeling it is liberating and exhilarating.

March 22, 2013

Startup Reykjavik 2013

Image representing TechStars as depicted in Cr...

Image via CrunchBase

I started on this journey to build a Startup Community in Iceland right after the Financial Collapse of 2008. What is needed when you need to create a lot of startups is an acceleration platform and I searched tirelessly for it and I bumped into TechStars and the first video I saw of TechStars I knew that is what we needed to have right here in Iceland. Here is that video:

StartupReykjavik-logo-portorateAnd then I started viewing all the videos in the Founders – Techstars – Boulder. I was so inspired 3 years back and I went and met with everyone that I could to get Techstars to Iceland. I was extremely pleased to see that dream come true when Arion Bank took the initiative to launch Startup Reykjavik, which is part of the Global Accelerator Network which is the network of accelerators that is part of the Techstars program. If you have not watched the videos, I really encourage you to check out the TechStars TV channel in YouTube. Go to the videos that were loaded 3 years back. I get really inspired even today when I watch those episodes. What is this got to do with Startup Reykjavik? well there is only 6 more days to apply for Startup Reykjavik. If you are stuck in a dead end job and really don’t enjoy what you do here is a fantastic opportunity to go build a business. It is also for those of us who have always been saying that one day we will be our own boss (actually that never happens because you are always reporting to someone, either your board or investment committee or whatever but thats not the point, its about taking ownership of your destiny).

The 2012 program was the first accelerator in Iceland and I was very happy to see to complete and as far as I know many of the companies are still in existence and trying to create  a business some have actually made more progress than others. It is a marathon and not a sprint, so I am looking forward to seeing some of these companies build a sustainable business in the future.

I volunteer as a Mentor in Startup Reykjavik and in every other Startup or Entrepreneurship related activity in Iceland because I have made that my life purpose. I want to help Entrepreneurs no Serve Entrepreneurs… I think that is a pretty good goal. Anyways enough about me. Have you applied yet? if you have been telling yourself you want to do something this is your chance like Nike says Just Do It.

March 18, 2013

Startup Weekend Reykjavik

Startup Weekend Reykjavik happend this last weekend. I volunteered again as a mentor and it was a lot of fun.

Source: iceland.startupweekend.org

Source: iceland.startupweekend.org

This time around the organizing team at Innovit had brought an external facilitator from the UK, and I was also impressed that the organizing team nudged the participants to aggregate around ideas that actually had some meat in the bones. In the previous few Startup Weekend that I have participated in Iceland, the challenge has been that some of the team members were married to their idea but the idea did not have a big enough market or potential of becoming a business. Anyways, the teams that were working on the ideas this time had some programming resources with them and some designers. It was obvious as they could actually develop the websites and have some working apps within the 54 hours of the weekend. There were 13 teams presenting at the end of the day, I met with most of them and talked to all of them and I learnt a lot and I was tempted to write a check to a couple of the teams, but realized that it would be too soon and the teams were not ready for that. I intend to follow up with the teams to see how they are doing and who knows maybe I will invest :)

Here is the coverage of the event in Icelandic, It was great to see a lot more mentors participate in the event.

Source: MBL.is

Source: MBL.is

I think what is missing is if an Angel Investor would show up and write a check at the end of the Weekend to the winning team and get them started on the journey to becoming entrepreneurs. My intention is to be able to do that here and also in Startup Reykjavik. I think we are starting to see the green shoots of yearly activities showing up in Iceland which goes back to the strategy of building a startup community here in Iceland. In my opinion, we are on Year II on the journey to building an Antifragile Startup Ecosystem here in Iceland.

March 6, 2013

Excellence always beats a Bargain

I got to know Brent Beshore, when he participated in Startup Iceland last year and was in the Panel discussion moderated by Matt Wilson. I think Brent is planning to be in Iceland this year as well in June. Have you bought your ticket yet? I am not kidding they run out pretty fast, based on the line up of events and speakers we are starting to see. I tentatively got Nassim Nicholas Taleb to say maybe to Key Note the Conference. Nothing is set in stone yet, but keeping my fingers crossed that he will be able to make it. That would make it incredibly fun, as NNT is one of my all time favorite thinkers, philosophers and authors. Anyways, I digress, Brent is a contributor to Forbes and he wrote a very interesting piece titled “7 bits of wisdom for your life” from Warren Buffett‘s yearly Annual Shareholders Letters to Berkshire Hathaway. I think it is a pretty good piece, one of the bits of wisdom from the Oracle of Omaha is something everyone of us should live by and that ismac_pc

Excellence always beats a bargain: While there are certainly exceptions, in the long run, bargains never outperform solid investments. “More than 50 years ago, Charlie told me that it was far better to buy a wonderful business at a fair price than to buy a fair business at a wonderful price,” Buffett says. This simple, yet powerful, principle can be applied to virtually every area of life. Diets, discounts, dishonesty, bargains, and shortcuts can work well for a while, but they’re never sustainable.

So when you are making a choice between anything really take a closer look and you are buying something for its excellence and not because it is a bargain. I have burnt my fingers many times when I bought something because it was a bargain only to regret the decision. That comes with being brought up in the East where we are always told that life is scarce so you need to look to squeeze a bargain on everything, which is good in some sense but not the best of strategies. The reason I bring this up is the dilemma that I am facing, I plan to get a laptop for my daughter and I have decided to get her a Macbook Pro it is expensive compared to the alternatives ie Windows based machines… my wife is a big fan of the Windows machine because that is what we grew up using so we never experienced Excellence until I switched to the Mac, boy what a difference. I am by no means an Apple Fanboy, as I use a Samsung Galaxy S3 Android phone which I think is also an excellent piece of equipment. Again, I digress, the point I am trying to make is that Excellence is worth paying the top dollars for. Lets now think about the service and product that you are delivering, are you striving for Excellence? if not why not? Over time Excellence always commands a premium not because you are squeezing your customer because your customer values the service more than the alternative. I am big believer that Value trumps everything, the only problem is that not everyone value everything the same so you need to find those customers who strive to buy Excellence. If you followed that strategy you cannot go wrong, it is a harder path but hey no one said it was going to be easy. I bought a Macbook Pro for my daughter!

March 5, 2013

Where do great ideas come from?

Cover of "Where Good Ideas Come From: The...

I am the first one to reject the notion that Ideas don’t matter, but to a certain degree they do. Usually a problem drives one to think about how to solve the problem. I actually like this video that talks about this, by the author of the book Where Good Ideas come from? Steven Johnson. There is one element of the video that really appeals to me which is connecting with other people, sharing our thoughts and idea actually helps in formulating, incubating and birth of new ideas. It was the basis for me to found Startup Iceland – A Conference where Entrepreneurs from all over the world could meet in person, share ideas, thoughts and take away a great experience and do it a place like Iceland which is inspiring in its own right. I get inspired every time I leave my home and start running in the running trails. What if we could expand on this notion? Would it not be wonderful if we could have a retreat- a place to basically kick back and let our ideas run loose? well, that is the ultimate plan. My partners and I are also in the Hospitality business, ie. we build hotels, invest in hospitality technologies and run hotels as well. Our intention is to build this retreat in Iceland.

I think it is not a bad idea if I say so myself. Now we just need to Execute and make it happen. There are several insights in the video about Ideas. I have not read the book but I think Accelerators and Incubators that I have been writing about are the same things, they put a bunch of motivated, smart people in a single physical space and let them interact and solve different problem. That is the same reason I love Hackathons, and we are promoting the periodic hackathon events by GreenQloud.

March 4, 2013

Startup Risk

Cover of "Fooled by Randomness: The Hidde...

Cover via Amazon

I usually get really worked up when I am speaking with some employees in a bank about Startups and Entrepreneurship, they immediately say that it is Risky. I always ask them could they please tell me why they believe Startups are risky? Their usual answer is well 90% of all startups fail, which is anecdotal evidence because there is no way anyone has documented all the startups in the world and calculated the failure rates. I have written a lot about how we as humans are wired to be fooled by statistics and we just underestimate the risks associated with many things. What is even fascinating is that those same people from the bank were still working in the bank when the entire financial system in Iceland collapsed. I think banks are bigger risks than startups, atleast with Startups you know the risk of failure will only wipe out what you invested, whereas with Banks it can wipe out the entire equity base of Iceland. No wonder, Warren Buffett called Banks sit of Weapons of Mass Destruction. The risk on banks are exasperated by leverage, were as Startups run on equity which means what you put in is what you loose if the company goes under. Typically Startups that I have been pounding the table on require very little capital to validate, build a Minimum Viable Product and get market traction.

I have written about the books that really changed my perspective on Risks and I have Nasim Nicholas Taleb to thank for. I listen to audio books all the time and I think this is the 100th time that I am listening to his classic book “Fooled By Randomness“. There are so many pearls of wisdom in that book that I discover something new every time I listen to it. The only positive aspect of risk taking is in the Startup world because a black swan event ie. the chance of finding a Google or Facebook or Twitter or Amazon is very low but when it does happen it usually results in such a positive impact I don’t know why not everyone invest a small portion of their investment egg in this asset class. The monstrous returns that are possible can only be achieved if one takes enough bets but the size of the bets are usually very small and thats the point of doing this.

March 3, 2013

Build a School in the Cloud

I have not been more excited than after watching this video. Here is proof of something that I have always known, given the tools and the right questions anyone of us can learn complex, difficult and soul searching answers. Here is my vindication. I have been writing about how kids can learn to code, I am going to say kids can learn anything if we provide them the tools, let them collaborate and give them a lot of love and encouragement, then stand back and watch the magic. They don’t need instructions, they don’t need exams or punishment, all they need is someone encouraging their curiosity. Schools as we know them are obsolete.

Here is a brief description of what Dr.Sugata Mitra has been doing for the past decade.

Source: worldchanging.com

Educational researcher Dr. Sugata Mitra’s “Hole in the Wall” experiments have shown that, in the absence of supervision or formal teaching, children can teach themselves and each other, if they’re motivated by curiosity and peer interest. In 1999, Mitra and his colleagues dug a hole in a wall bordering an urban slum in New Delhi, installed an Internet-connected PC, and left it there (with a hidden camera filming the area). What they saw was kids from the slum playing around with the computer and in the process learning how to use it and how to go online, and then teaching each other.

The “Hole in the Wall” project demonstrates that, even in the absence of any direct input from a teacher, an environment that stimulates curiosity can cause learning through self-instruction and peer-shared knowledge. Mitra, who’s now a professor of educational technology at Newcastle University (UK), calls it “minimally invasive education.”

At TED2013, Sugata Mitra made a bold TED Prize wish: Help me build a place where children can explore and learn on their own — and teach one another — using resouces from the worldwide cloud.

Download the Self Organized Learning Environment (SOLE) Toolkit >>

“Education-as-usual assumes that kids are empty vessels who need to be sat down in a room and filled with curricular content. Dr. Mitra’s experiments prove that wrong.”

Linux Journal

March 2, 2013

Women in Technology

Marissa Mayer

Marissa Mayer (Photo credit: Wikipedia)

Image representing Sheryl Sandberg as depicted...

Image via CrunchBase

There is a lot of coverage and tweets about Sheryl Sandberg‘s new book “Lean In” and for the decision Marissa Mayer made to stop Telecommuting at Yahoo. If only there was this much coverage for all the decisions made by CEO’s of the Fortune 500 companies or for the books written by others? I am really happy to see them both getting good media coverage because as one of old saying goes in Hollywood “Does not matter what you write about me just get my name right!”, maybe it does not apply to these cases. I am big proponent and supporter of getting more women in the workplace, equal rights or actually increase the benefits, rewards and compensation primarily because they are a lot more committed to focusing on Work and Family, which is a very important requirement because without a proper balance anyone can burn out in the world of entrepreneurship.  There are a number of women leaders today in many large organizations like IBM, HP, Xerox etc so I am pretty sure the Glass ceiling that people talk about is not as prevalent as it was a decade ago.

I actually want more women to participate in Software development and DevOps, because I think they are excellent in it. We are running an experiment in GreenQloud, where any student especially women who are able to take a couple of hours in a week and are willing to spend that time in our office, will be paired with our Development and Operations team members so they can teach the students what we do. We now have 4 interns like that… all women! learning about running Cloud Computing Infrastructure and Software development in the real world and being part of a startup. I wish more companies would be open minded about taking on interns this way as it would really solve the skills challenge that IT and Software companies always seem to complain about. And I also believe it will solve the gender diversity problem, more opportunity for women to participate then there is no bias.

March 1, 2013

Bootstrapping vs Raising capital

Ben & Jerry's

Ben & Jerry’s (Photo credit: Wikipedia)

I had planned to do a meetup this week and discuss the above topic. Never got around to it, but I thought the least I could do is write about it. Here is a Kauffman Sketchbook with the title “Where do Entrepreneurs get their money?”

Here are a couple of references on fund raising from some smart people who have done this before:

Brad FeldDont Forget to Bootstrap

Fred Wilson – Dont take the money

My 2 cents is that try to bootstrap as much as you can to eliminate most of the risks in your startup. Think of it this way, every risk you eliminate to build a business is value you are building into your company that is your equity. The equation becomes simpler when you don’t take money to eliminate or reduce the risk of starting a new venture. The biggest risk that startups have, I have said this many times and it is worth repeating, startups don’t fail because they have a bad idea… startups fail because they don’t have customers. Eliminate that risk first ie. go and get your customers first, solve their problem, get paid something for it then you have a product/service to market fit. Eliminating that risk really increases the value of your effort, even if you have to raise money the discussion is much different than when you talk to an investor when you have no customers and no revenue.

Obviously there are businesses that need capital to acquire customers or start out for example manufacturing businesses need machines, labor etc those cannot be bootstrapped, however software companies can be easily bootstrapped these days, all you need is a laptop a coffee shop that has WiFi and knowledge to use Cloud Computing infrastructure like GreenQloud or AWS or Rackspace or Azure. I encourage every entrepreneur to delay the fund raising exercise until the Product to Market fit has been achieved. Once you solve the Product/Service to market problem, raise capital if you are in the Land grab business. I wrote about organic growth vs grow fast a while back based on a talk by Joel Spolsky. The most important decision point for a startup to raise capital is based on deciding where is the business. If you are in a Ben&Jerry’s kind of business raising capital is a bad idea. If you are in Amazon Web Service kind of business then you need capital to do a land grab as fast as you can so not raising capital will spell certain doom.

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