Here is a mashup of three ideas that prompted me to write this post. First, I was part of the group that participated in UnConference organized by Landsbankinn a conference without an agenda but the group present decides the agenda and goes on to discuss and get a wrap up at the end of the day. It was very interesting and I also took some office hours during the conference as I volunteered to be a Mentor. Two ideas that I was interested in and we discussed in a small group and maybe we will launch two companies to solve these problems. Let me start with the two ideas that I was interested in:
- Building Sustainable and Resilient Startup Ecosystems
- Solving the talent problem
The first one I have written about extensively, but the discussion yesterday was centered around how to free up capital tied up in Iceland so we can invest in new and innovative companies to create more value and better community here in Iceland. It is close to my heart as I believe there needs to be an efficient mechanism for investors to exit their successful investments to reinvest their capital. Icelandic capital market is dead and the stock exchange is a very inefficient and archaic model for today’s world. The rules and policy choices of the current capital markets were discussed and I have to say, it is quite obvious it has been made to keep the small investors out. In addition, it only makes sense to go to the Stock Market if one needs to raise substantial amount of capital, which is not needed in the current world. For example, there are companies that are profitable with 15 to 30 team members and are able to grow the business without adding more and more people due the economies of scale offered by the Internet and Software. However, adding more people to adhere to the rules of the stock market will only slow the small and nimble organization. This is a current problem and solving this would enable more fluid flow of capital back into the new and innovative startup companiesthat are creating more value in Iceland.
The second problem was little different, Frosti Sigurjonsson led this discussion… the problem was those unskilled people who are not educated, dropped out of school but could still possess some talent that could be utilized by someone to create value. The example that was suggested was, if there was an entrepreneur who wanted to go and collect 10 tonnes of Blue Berries in the mountains in Iceland and sell them to the WholeFoods market in the US. The entrepreneur needs 100 people to help him, it is not easy to get or gather enough people who can facilitate that. What if we had a database that was simple to use, runs on the Internet and does not have the same metrics ie. education, background, university degree etc but more rudimentary skills? i.e I have strength in my legs, and arms, I can do household chores etc Currently, the Unemployment Agency in Iceland has 7000 unemployed people who are on Unemployment benefit but no employer is using that to find the talent they need because the system is unusable and to make minor modifications to it costs the state an arm and a leg. This system was build for the past and has not be brought up to the 21st century. The idea was to create a Internet based system that allows for easy and simple search for talent kind of like a talent search engine. I think there is merit to solving this problem, we could use this in Iceland and given the level of unemployment in mainland Europe, it is bound to have broad appeal. The group decided that we would meet again to discuss how to take this forward.
What is the above two got to do with the Capitalist’s Dilemma and Return of the Capital Intensive Startup? well, the first one is an article that I read in New York Times by Clay Christensen and second is a blog post by Albert Wenger. Both of them from different perspectives are more or less talking about the two ideas that we discussed yesterday. The Global Economy has a problem, we have transformed the challenges but we are still using the same tools and policies to solve them. I quote Einstein generously, and I think the most profound quotes of his is this
The significant problems we face can not be solved at the same level of thinking we were at when we created them
- 3 Ideas for a better Iceland (startupiceland.com)
- Why build a Startup Community? (startupiceland.com)
- Arkansas Best: Don’t Trust The Cash Flow, Or Its Capital Intensive Peers (seekingalpha.com)
- Iceland Did It Right … And Everyone Else Is Doing It Wrong (ritholtz.com)
- What Really Makes Venture Capitalists Invest in Your Startup (forbes.com)