|Image via Wikipedia|
Iceland has a unique competitive advantage that is not discussed in the main stream media. Iceland can be the experimenting and testing ground for a new wave of cloud software service companies that are going to change the way we use the Internet. The infrastructure for developing these companies have matured: Google, Facebook, Twitter and Amazon are house hold names used by millions of people. Read the post written by Mark Andeerssen on how Sofware is eating the world. I believe cloud based software as service companies are ideally suited to be built out of Iceland because of the following reasons:
- Iceland is small, testing and getting feedback about the product/service is quite fast. In addition, the distribution within Iceland is quite fast and easy as well with more than 80% of the adult population on Facebook and everyone including the President of Iceland is a 1 degree separation to the next Joe.
- Young, Entrepreneurial and web 2.0 savvy demography: Iceland has one of the highest penetrations of broad band and mobile internet in the world. Couple that with over 50% of the population is below the age of 30 makes it an ideal testing ground for the next wave of services and products.
- Excellent infrastructure: Iceland is powered by renewable energy and the energy infrastructure was built to support the aluminium smelters which are notorious for requiring 24-7-365 or 99.999% up time. Iceland built this infrastructure in the last 30 years so it is one of the only places in the world that has a smart grid.
- Cost effective: It is possible to hire good quality software engineers in Iceland for relatively respectable salaries. It would cost twice as much in rest of the world even considering India or the East considering the time it takes to find the good quality software engineers.
- Cloud based software as a service is easy to distribute across the world and it scales quite nicely without much effort. The software infrastructure has matured to a point where it is possible to have a small engineering team in Iceland with a sales and marketing team close to the customer and execute a tangible business growth strategy.
- Island but with incredible connectivity to the rest of the world. I believe the Airlines connect to all major cities in the world almost everyday or every other day. Iceland is only 3 hours from London which makes connecting to any destination possible and easy.
The biggest problem with making things in Iceland is that it needs to be transported to the rest of the world physically, although one can argue given the right profit margins it makes economic sense. For example, the most perishable of foods, Fish is one of the largest exported products out of Iceland. If Fish can be exported why not other manufactured items? the capital expenditure and labor needed to manufacture things makes the process economically non-viable. I don’t think it is impossible, I just think Iceland had never had to think about diversifying their export sector as they are so few and the fishing and aluminium made the rest of the economy function. In order to execute on this vision we need privately funded Venture Capital that bets on this idea… I am betting on it!