Category: Op-eds (Page 1 of 2)

Introducing “The Incredible Fish Value Machine”

Þór Sigfússon

Þór Sigfússon

The following drawing is inspired by the “The Incredible Bread Machine”, a text written by R.W Grant in 1966. The book had an accompanying poem entitled “Tom Smith and His Incredible Bread Machine.” The Tom Smith poem is about a man who invents a machine for producing bread very cheaply, and thus the world is fed.

“The Incredible Fish Value Machine” displays how Icelanders have produced “an industry fishing machine” which takes pride in the fact that no other whitefish nation is utilising more of each fish than Icelanders. While in typical North Atlantic fisheries the head, gut and bones of every cod are discarded, in Icelandic fisheries we have become used to making money out of many of these by-products. Analysis done by the Iceland Ocean Cluster indicates that Icelanders utilise 80%+ of each cod while many neighbouring countries make full use of only around 50%. The study indicates over 500 thousand tonnes of cod are discarded into the sea or as waste in the Barents Sea region and across the North Atlantic from Newfoundland to Norway.

fish-value

There is no single explanation for this huge difference in utilisation. Partly it may be explained by the fact that unlike the year-round long fishery in Iceland, many fishing nations have short fishing seasons with massive amounts landed over a few months, making it difficult to process such raw material efficiently. Secondly, the integration between fishing and processing in Iceland through common ownership is not usually the case among other seafood nations. Finally, and maybe most importantly, the seafood industry is often located in marginalized places and is not in touch with R&D, investors, accelerators etc.  Steve Case writes in The Third Wave: “Over the next two decades we will see cities that were once marginalized become entrepreneurial powerhouses.”  Case points out that “there is appeal to putting down roots where industry ecosystems already exist”. But even in areas where R&D, Universities and investors are close to the seafood eco system we still see all the dots connecting.  This lack of ties is probably the most important reason why so much seafood protein is used for landfill in many countries. The key to creating the “incredible fish value machine” is to build the bridge between these important parts of the seafood cluster.

I am confident that it is only a matter of time when fisheries will stop discarding out value and more people join the 100% movement. As more companies join the by-product market and the market develops further, the prices will continue to increase and the incentives for fisheries to get value from their by-products are also set to increases.

Icelanders have long taken pride in their efficient fisheries. There is no one explanation for why Icelandic fisheries have for the most part been more efficient than others. I believe there is, as is often the case, a very pragmatic explanation: Icelanders have never had the luxury of treating their fisheries lightly. As the core industry in Iceland it cannot be government subsidised. The entire cluster of seafood businesses in Iceland has, for a long time, been at the heart of the income tax base for government and not the other way around. The same applies to a great extent when examining Icelandic fish by-products; if there is value to be found in by-products, effective fisheries used to focusing on value will find opportunities to use them.

The Incredible Fish Value Machine is not hypothetical. It is very real. The Icelandic model has proved reliable and this model can be duplicated in seafood industries all around; creating new opportunities in coastal areas.

This is a guest post by Þór Sigfússon, founder and CEO of the Iceland Ocean Cluster.

Image by Chris Davey.

Building bridges with clusters

thor

Þór Sigfússon

In 1973, Mark Granovetter came up with an idea in sociology which would later have a huge influence on the study of relationships in networks. The idea was fairly simple: weak relationship ties can act as important bridges in a network building, and for that purpose, they are sometimes more important than strong relationship ties (family and friends). Granovetter’s research showed that when people think about who might help them in a job search, they tend to make a short list of very close friends and family – the strong ties. However, Granovetter’s research showed that your closest friends are not really your best bet when searching for a job. Why not? The answer is that their network is very much like your own. So, to get to a larger group of people in your job search you are better off tying up with people with whom you have weak ties (you barely know) than by those with whom you have strong ties.

This idea inspired me to study relationship networks in my Ph.D. and later to establish the ocean cluster network.

My first real-world test in Granovetter’s spirit was to bring together seafood technology entrepreneurs from different parts of the seafood value chain in Iceland. Most of them didn’t know each other! It still amazes me to see entrepreneurs and startups meet together in various settings and witness how, despite living in small coastal communities and working in ocean-related industries, these individuals have rarely – or even never – met before. Clearly, an abundance of unused weak ties exist here.  

After our initial networking events in Iceland, where I the witnessed seafood tech entrepreneurs introducing themselves to each other for the very first time, I interviewed the entrepreneurs and asked why they had not met before, given that they could learn a great deal from each other and collaborate on projects important to each of them? Most of them responded by saying they didn’t have time for “socializing.” I always remember one entrepreneur who had doubts about my interpretation. He stated: “I have very strong business links with great customers in the fisheries and I nurture them. With others, such as these tech colleagues, I knew about their existence and if I needed to contact them I would just do so. We are so few on this island, we know everybody!”

These entrepreneurs regarded their networks with an island mentality, in which you think you know everybody and can connect to them whenever needed. The problem with this view is that those connections that could so easily be used in reality seldom if ever occur. For an entrepreneur, it is crucial to be good at extending both your domestic and global network in order to develop a sustainable business, and connecting with people outside of your local market is crucial, particularly if that market is very small. Many of the entrepreneurs I spoke with did not nurture their weak ties and were instead happily focusing on the few strong ties that upheld the status quo and allowed their business to merely survive. The cluster’s mission is to extend the network of entrepreneurs and inspire them to actively use this network to grow their business.

I later discovered that the same lack of connectivity was true for most coastal seafood areas, such as in the United States. The seafood industries in these regions, despite their relative proximity to large and dynamic centers of finance and research, were in essence islands as well: fairly isolated from each other, academia, investors, metropolitan startup hubs, and other various resources.

I know we can change this, and we do that by challenging the startup community and the media to get excited about new companies and opportunities in the ocean industry. 

It’s essential to work closely with the startup community and support its growth. This startup community is very strong in Iceland, and the Ocean Cluster is able to actively support startup events hosted by various industry associations, universities, and private entities. Our role has been to inspire more entrepreneurs to establish startups in ocean-related industries. As soon as these startups have gone through the initial startup process and competitions, we are ready to nurture them further – offering a close community, assistance with business planning and strategy, workspace, networking opportunities in our field, forming connections with investors in ocean businesses, and beyond. We have been quite successful in inspiring and supporting startups in our field: the business value of startups in the Ocean Cluster House in Iceland, which have been in our facilities for the last three years, is approximately USD 100 million.

I was very pleased to learn about the Fish2.0 startup initiative in the US and our vision is to work closely with them and provide the startups coming out of great initiatives like Fish 2.0, a network community to make sure they will not become islands!

Our experience with the early success of the New England Ocean Cluster has taught us that even though fish species are different from one region to the next, many industry characteristics remain the same, and clusters can learn from each other. The early success of the New England cluster is definitely a result of a strong local leadership which had focused on building relationship ties among seafood entrepreneurs and between entrepreneurs and academia – bridging these islands. We are confident in stating that we are continuously learning more but also realizing that all this work is firmly grounded in fairly simple ideas of human interactions.

This is a guest post by Þór Sigfússon, founder and CEO of the Iceland Ocean Cluster.

Image by Tanya Hart.

Nothing is bought, everything is sold

Creating a successful product company is a straightforward three step process:

  1. Create a product
  2. Find customers
  3. Match product and customers

But while straightforward, each of those steps is more complicated than it may seem at first. What follows are a few observations from my four startups and life as a product and strategy person at larger organizations.

1. Create a product

We tend to think of a product as “the thing” that we sell, whether that’s an electronic gadget, subscription service, a piece of software or a candybar. But a product is so much more. In fact you should think about “the product” as every interaction your customer has with “the thing”. From first learning about its existence to the time that they stop using it (or pass it on to the next generation if you’re a Swiss watchmaker).

Pricing and sales model, branding and marketing message, customer service, license and terms, usability and utility, aesthetics and social context are all a part of your product. Even the target audience you choose is a part of the product. And a change in any one of these is likely to impact other parts of the product too.

The product is so much more than what’s in the box

The product is so much more than what’s in the box

Getting all of these factors right will take a lot of thinking and experimentation:

  • How are your target customers going to notice your product?
  • How will you deliver the product to your customers?
  • How will you make sure you are creating value for your customers?
  • How is your product better than competing products or alternative solutions to the need?
  • How are you going to tap into that value in a way that both you and your customers will appreciate?
  • How will customers remember your product the next time they have the same need?

These questions – and others like them – are deeper and harder to answer than they might seem. Understanding and mapping your customers’ journey is a good way to tease them out, and come up with some theories. Observing their actual journey and improving based on what you learn directly is how you will really get to some answers.

2. Find customers

First of all: Sell to people that have money. Or more precisely: sell to people that are willing and able to pay for your product.

Private consumers are typically less likely to add a new subscription service than – even those same – people in a business setting. Adding a $20 monthly subscription is something most consumers will think twice about while a $250 purchase at work is something most office workers will do at a whim if they feel it will help them do their job. However, purchasing in a professional setting may require jumping through more hoops (reimbursement plans, purchase orders, approval processes, not having a corporate credit card, …)

On a similar note, large enterprises typically have a lot more money than small and midsized businesses (SMBs) ones, but they are also a lot slower in their decision making. Budget cycles and corporate politics, as well as deliberate and cultural resistance to change will slow things down beyond what a startup can usually fathom.

Keep in mind that it is very hard to sell to a type of buyer you don’t understand. If you’ve never worked for a large organization, selling an enterprise product is very hard. If you’re not a likely user of your product, you are not going to do a great job at convincing others to buy it. If you don’t speak the customer’s industry lingo or use unrealistic use cases that show lack of domain knowledge, you’re going to have a hard time. Show up at a power company with a healthcare example, and you will get nowhere. A creative person may be amazed at how little ability people can have for leaps of imagination. Don’t expect people to understand why they need your product. Spell it out for them. Learn what kept your champion awake last week, and tell them how your product will solve exactly that problem.

In the corporate world an incredible amount of time is spent on reverse engineering the buyer’s corporate structure, processes and hierarchies:

  • Who is the buyer/decision maker?
  • Who are his or her influencers?
  • What’s the value your product delivers to the buyer?
  • Is a budget already allocated to this purchase?
    • If so: What is it? Whose is it?
    • If not: What is the purchase and budget process? Can you influence it?
Reverse engineer this!

Reverse engineer this!

You will be surprised how many of these questions people are willing to answer if you simply muster the courage to ask.

Who the buyer is will heavily influence every aspect of your product – and of your organization. And the consumer-SMB-enterprise dimension is just one of several you will want to position yourself on. Targeting customers based on their industry, or functions within an organization are two other common dimensions. Often the answer is even a certain function within a certain industry in a company of a certain size. Consumer customers have other dimensions such as age and lifestyle groups, income categories, hobbies, etc.

A rule of thumb is that the more your target customers (including the buyers, influencers, processes, etc.) and the problem you’re solving for them are the same, the more likely you are to succeed in the next step and then scaling up from there.

3. Match product and customers

The customers you target will be the biggest factor in deciding on your sales model.

The table below is a grossly oversimplified representation of the characteristics of customer categories on the size scale above.

Consumer SMB Enterprise
Buying power Low Medium High
Target scope Broad Medium Targeted
Sales cycle Short Medium Long
Sales involvement Automated Low-touch Field sales
Difficulty to start High Medium Low
Scaling potential Exponential Low exponential Near-linear


A consumer product will typically have a low price, require high sales volumes (and thereby broad targeting) and it is difficult to get the sales engine started. Luckily the process lends itself well to be automated, the sales cycles can be short and you can scale quickly and cost-effectively once the engine is running.

On the other end you have enterprise customers who have a lot of buying power and can be well defined as a target group with a sales engine that is relatively easy to start (every founder should be able to find at least a few buyers she can sell to herself). This customer type, however, requires face-to-face meetings (field sales), has long and complicated sales cycles and the cost of sales increases almost linearly with revenue.

Different customer acquisition models, and sample companies (from a blogpost by David Skok on OpenView’s blog)

The models that in reality drive large and well known companies are often surprising. Google’s revenue – for example – is not from customers putting in their credit card info for a few keyword ads to nearly the extent you would think. They have a massive army of account managers and field sales people that do business the “old fashioned way”: Wining, dining and building personal relationships. A large automaker is not going to buy tens of millions of dollars worth of ads from Google through self-service!

Whatever your model, the most important thing to understand is the funnel: The stages buyers go through from first discovering your product to becoming a paying customer; what compels them to move from one stage to the next and the ratios at which they do so.

Testing your business plan assumptions based on these stages and ratios can be a sobering exercise.

Let’s say you are going for a SaaS product aimed at consumers with a freemium model. Of the people that hear about you (ad, press, word-of-mouth, …) 2% will visit your website. Of those, 10% will register as freemium users. Of the freemium users another 10% will become paying customers. If your business plan assumes 100 new customers in a given month, this means that your message will need to reach 500,000 potential customers that month based on these conversion rates (and a very short conversion cycle). All the rates in this example are pretty high, by the way.

Similarly, if you are going for an enterprise model: Assume that 5% of the qualified contacts you have curated respond to your initial outreach and agree to an introductory call. And from those calls 10% show strong interest in your product. And of those, 25% eventually become paying customers. If your business plan assumes 1 new enterprise customer in a given month and a 6 month sales cycle, that means you had to come up with and reach out to 800 curated contacts 6 months ago. And do you have the bandwidth to make the 40 introductory calls per month, as well as engaging heavily with not only 4, but 10-15 buyers with serious intent at a time (as most of the 6 month cycle will be spent here)?

You better hone in on the likely buyers early on in that process and spend your time and energy on them. Qualifying leads at every stage becomes crucial and counter to your instincts you’re actually best of “firing” your unlikely leads or finding ways to put them on low-touch or automated “nurture” campaigns until they show signs of better qualification.

Conclusion

Startups need to understand how much emphasis is needed on the go-to-market side of the house from day one. It is common for tech startups to put a lot of their headcount, effort and energy into the engineering side of operations; there may be good thinking on the business model and target audience, but rarely do you meet a tech startup that truly gets it.

A couple of years ago – to drive this point home in a conversation with a founder friend – I surveyed LinkedIn for the percentage of employees in go-to-market roles at several, then prominent and successfully growing tech companies. The result: Between 24% and 37% with an average at just over 30%.

Hardly a scientific study given the small sample and probably a skewed population with LinkedIn profiles, but still tell-tale. I frequently see startup business plans where the ratio of go-to-market employees is 10% or lower. That is simply not going to cut it.

So, refining the three steps from the top of this post:

  1. Create a Product experience
  2. Find Customers that are willing and able to pay for that experience
  3. Match Product and Customers utilizing the right model and enough people

…or simply revert to the plan of the gnomes from South Park:

Hjálmar Gíslason, Hjalli, is VP of Data at Qlik, Chairman of the Board at Kjarninn, and partner at Investa. You can find him on Twitter.

The Nordics aren’t going to be the next Silicon Valley

But they could be something even more exciting for a new generation.

“Si c’était à refaire, je commencerais par la culture.” Jean Monnet

Let’s get one thing out of the way first. Silicon Valley is great. But every time I hear some one say that the Nordics could be the next Silicon Valley or paint Silicon Valley as the one and only recipe for innovative excellence I’m reminded of a report done by Endeavor Insight in 2014. In that report they tried to find the answer to the question: “what do entrepreneurs want in a city?”

Oddur Sturluson

Oddur Sturluson

And while there’s no question that Silicon Valley is the global tech and startup hub of today, the things we outsiders often do to emulate Silicon Valley don’t reflect the findings about what it actually is that entrepreneurs look for in a city (or even what makes Silicon Valley great for that matter). Above everything else, it’s about talent. And attracting talent is about having a place that’s nice to live and work in. The founders rarely mentioned low taxes or business-friendly regulations as reasons for their choice of location, and yet those factors are some of the most common improvements politicians, journalists and lobbyists call for. And that’s understandable. They’re quantitative, easily manageable and rational.

But people aren’t always rational and things that are immensely important to a successful startup ecosystem can often be unquantifiable. Of the 100 descriptive words entrepreneurs used to answer the question “Why did you choose to found your company in the city that you did?”, the words Tax and Girlfriend are side by side. That’s right. Dating plays roughly as important a role as taxation in that regard, and yet I have a hard time seeing local governments opening singles bars for entrepreneurs in an effort to attract talent.

What I imagine a government campaign to attract single, lonely entrepreneurs would be like.

Yet that’s exactly where our focus should be. No, not singles bars. Attracting talent. After all, if our goal really is to try and replicate the Bay Area’s success it’s worth noting that despite California being ranked as the least business-friendly state in the US, it tops them all in job creation. Then again, why are we trying to measure our success by some one else’s metrics? After all, as Adrià Hernández put it, “Imitating any success formula, in the best case scenario, limits you to second place, as you’ll never be able to beat the original playing the same game, with the same rules and less resources.”

The Nordics aren’t Silicon Valley. The culture, history and economy is vastly different. That doesn’t mean we don’t have anything to compete on though. Quite the opposite. A high standard of living, safety, creativity, equality, vibrancy. Things which matter and are only going to become more important in a world where traveling and working remotely becomes easier and spending absurd sums for the privilege of living in cramped quarters competing with millions of others for the same prize seems increasingly ridiculous.

For Scandinavians, trying to replicate the Silicon Valley brand of “startup culture” doesn’t make sense. Scandinavians don’t do 80 hour work weeks and unbridled optimism. We do social responsibility and life-work balance. In a future where access to knowledge and talent is increasingly international, offering entrepreneurs a sustainable lifestyle is going to count for a lot more when it comes to creating a leading startup ecosystem. While the Nordics still face challenges (reforming immigration regulations, access to capital, etc.) the foundation for a truly revolutionary creative and innovative future is already in place. And for us, it won’t look anything like Silicon Valley.

This is a guest post by Oddur Sturluson, project manager at Icelandic Startups. You can find him on Twitter.

Thoughts on Slush Play, 2nd edition

On Friday the second edition of Slush Play came to close, after two days packed with talks and panels about VR and gaming. All in all, it was a great event and the Icelandic Startups team deserves great praise for their work.

Iceland’s VR ambitions

Over the recent months, people and pundits have described Iceland as a (or the) place for VR. Journalists have announced that we’re in a VR boom and we’ve asked whether Iceland can become VR valley (link). There are promising signs. CCP’s big fundraise and launch of both Gunjack and Valkyrie. Sólfar’s Everest and RVX’s decision to focus on VR. Aldin Dynamic’s Waltz of the Wizard and data platform, and Breakroom’s productivity software. All are innovative VR products produced right here in Iceland.

In the Nordics, Iceland is definitely punching above its weight. We learned on Wednesday at the warmup event that Iceland has attracted 35% of the VR investments in the Nordics in the last year. Although CCP’s $30m investment is a big part of that, it’s only one of seven investments in the space over the last two years.

Becoming a hub for VR is possible, or at least people in the industry believe so. In our newest podcast, CCP’s new GM Stefanía G. Halldórsdóttir said she was optimistic for the outlook for VR in Iceland. In his talk, Lawnmower Man director Brett Leonard said that innovation in VR storytelling would happen outside Hollywood. Following that he believed Iceland could become a hub for VR content.

slack-for-ios-upload-2

Icelandic Startups team on stage receiving applause

Where Slush Play fits in

Slush Play, second edition, showed that it’s possible to bring together VR and gaming professionals from all over to Iceland. The schedule was full, interesting, and diverse. In addition to bringing people to Iceland, the event brought together the local industry for a two-day extravaganza. I foresee two important functions for the event going forward.

Firstly, as speakers mentioned, we might very well enter a desert walk in the next years. Fewer investments and less general interest. It’s part of the classic hype cycle, and the Icelandic community should be prepared for it. Continuing the event and growing it all the way through a desert walk is important. That way, when VR is closer to mainstream, one of the most relevant events will be in Iceland. Because when VR gets closer to mainstream, VR events will start popping up all over the world. Having a 5 year-old proven event happening in Iceland competing for attention will be a great asset for the Icelandic community.

Secondly, Slush Play can build interest in the field from both the public and students. Introducing engineering and design students to the world of VR will further the chances of Iceland becoming relevant in the space. As we all know, talent is very important.

Of course, not everything was perfect. The venue, Austurbær, was beautiful and cozy but was on two floors, which hindered the flow of people. It was also a bit cramped during breaks. The lecture hall could have had more attendees (a big part of the seats were behind an “off-limits” tape). In hindsight, filling the room with students by giving away free tickets might have been a good idea. To be fair, both these points were minor and didn’t hurt the experience.

All in all – great event, promising outlook. Excited for next time.

How Icelandic startup Takumi is building a marketplace from scratch

Jökull Sólberg, cofounder Takumi

Jökull Sólberg, cofounder Takumi

Takumi is an Icelandic / British startup founded in May 2015. We launched in October 2015 and have been growing at a healthy rate in the United Kingdom. We feel like we have good momentum and are planning a launch in Germany this year, EU’s second biggest advertiser market. Takumi automates influencer marketing and makes it easy for Instagrammers and brands to work together.

We pay out around £10k to Instagram users every week for their work on our platform. Influencers don’t lend out rooms like on Airbnb, or give people rides like on Uber. What they get paid for is their creativity and voice on social media. Takumi has some features of a platform marketplace, but buyers are sold in by a traditional sales team. Now that we have some experience running a part SaaS, part platform company we thought we’d share some lessons.

One particularly challenging day, my co-founder Marc Andreessen said to me: “Do you know the best thing about starting a company?” I looked at him in disbelief as if to say: “there is a ‘best’ part?” He replied: “You only ever experience two emotions: euphoria and terror. And I find that lack of sleep enhances them both.”

The Hard Thing About Hard Things (which is as good as everyone says it is)

Startup culture has too much hyperbole. Quotes like the one above, as good as it is, make it sound like starting your own company isn’t basically a privilege of people in rich countries. That being said, we related to the part about euphoria and terror. I’ve had days where I didn’t just have crippling doubts about our idea, but was convinced we were about to lay everyone off within three months. Those moments are not just scary but depressing. Recovering from those lows is not a process but a flip of a switch. Often this happens within 24 hours. It can be intense.

At Takumi we define success by having sustained marketplace traction. That challenge repeats itself in every geography we enter however. Uber has recently called it quits in China because of fierce competition. Many on-demand startups have surrendered to grueling economics and a tightrope of worker regulation. Setting economics, regulation and geographies aside the core challenge of marketplaces is traction; increased supply and demand in lockstep.

Components of Traction

The main challenge of a marketplace startup isn’t so much the technology but making sure demand and supply are increasing over time and that buyers and sellers are coming back to transact again. We separated the problem into three distinct areas to tackle:

  • Minimum viable supply (“A good start”): before you open the doors you have to decide what the minimum viable offering looks like. Is it better to start with a list of suppliers (like Uber launching with drivers ready) or buyers? We decided to launch with buyers lined up. For us it meant shipping our app with a selection of brand campaigns so when Instagrammers signed up they had a good first impression.
  • Retained and vetted suppliers: Giving the good suppliers a good experience is important so you don’t churn out suppliers too quickly. Most marketplace platforms have varying supplier quality. We had this experience too, and to this date we still block the majority of “influencers” because of fake followers or related issues which would erode buyer trust. Getting that process right can take a while and depends on your access to quality data. A key to standardised pricing is having quality guarantees instead of letting suppliers set their own prices. In this regard we are closer to Uber than Airbnb.
  • Buyer pipeline: Building a pipeline of buyers takes time and is the result of effective sales and marketing, managing their expectations and getting the pricing right. We knew our product wasn’t going to sell itself and we’d need a good presence close to our buyers.

This was the route we chose for bootstrapping our supply and demand relationship. The details may differ for each industry or segment, but the core problem of traction remains the same: a functioning marketplace needs both supply and demand.

Pricing

We didn’t get pricing right on day one. We began by selling what is essentially campaign reach; the aggregate number of Instagram users reached by the influencers that get offered and choose to participate in a campaign. Because of the way we match influencers with brands on a first-come-first-serve basis we could not predict the total number of influencers participating in campaigns and budgets would yield an unknown number of photos, but a more or less predictable reach. Reach would still fluctuate somewhat because we would guarantee at least £40 in payments to each influencers. All in all; brands didn’t fully know what they were getting for their money.

To explain how we changed our pricing it’s important to understand what we are changing in the influencer marketing industry. Influencer marketing has historically been encumbered with laborious negotiations with each influencer. Takumi eschews this step with standard pricing based on influencer performance and reach. We would pitch brands on great influencers and powerful impressions but quickly get into complicated discussions about minimum guarantees and average reach. We needed to simplify our offering. We started rethinking our pricing and ended up with a model where brands pay a fee per post. We could not have done this ahead of time because per-image prices are based on averages we had observed by running lots of campaigns on the reach model. So in hindsight we probably could not have offered the simpler unit pricing to begin with, but goes to show how tricky pricing can be in marketplaces.

Sales

Clients don’t show up to your site with a credit card unless you’re one of very few established companies (“self-serve”). We acknowledged this on day one. Without any of the founders having any sales experience we set out to build a sales function in London. What we failed to acknowledge is just how impossible it is to sell without referenceable clients. Because of our decision to open doors with buyers lined up, we had pulled a neat trick. Those first buyers were brought in at a net loss to the company just to kickstart traction. Those clients turned into our first referenceable clients. Lesson learned: get referenceable clients at any cost! As our client roster has gotten bigger and better we’ve seen sales become smoother over the past months. Every logo helps.

Before our sales process benefitted from the referenceable clients we experienced considerably supply:demand disparity. Great influencers who had an excellent experience in the beginning due to our pre-loaded buyer pipeline suddenly experienced gig drought. Our challenge to keep our marketplace alive depended on our ability to keep our users engaged while having more supply than demand. We started to stress out a bit, but we also started to nurture our community and our relationship with influencers outside the monetary function of our platform. We hosted events, spoke directly with our core suppliers, frequently updated our app, talked about upcoming campaigns and made sure our social media was responsive. The hard work paid off and we now have a reliable group of influencers with significant revenue on our platform, producing content with consistent quality.

We started Takumi in the image of a marketplace but over the past months we’ve seen that what we have is a SaaS/platform hybrid. We acquire buyers very much like a SaaS company, targeting a recurring business pain point. On the other side that demand gets automatically matched in on-demand fashion. For this reason we’ve had to pick and choose our growth metrics and strategic thinking. I believe identity is crazy important in the early days. Figuring out what kind of company you have helps you communicate internally and externally.

Coming from an engineering background I have a couple of things that are specifically targeted to founders with an engineering background:

  • Like human resources or team management, you should not innovate with the sales function of the company. Read some books on sales and learn from the best. Startups are experiments, and just like in scientific experiments you want to test just one variable, which is your core business idea. Do yourself a favor and make everything else boring and efficient.
  • Coming from an engineering background, I enjoyed experiencing other kinds of victories. Landing deals is to sales what shipping is to engineers. Learn to celebrate both and in unison.
  • Bridge gaps. Engineers should act on the assumption sales knows more about the product then they do and sales should work on the assumption engineers know more than they do. The founders job is to facilitate empathic exchanges and base the product roadmap and development off that.
  • Slack killed the flatscreen dashboard. Bake stats and events into Slack directly and use TV’s for something else. More actionable and visible. Especially if you have two locations like we do.

Further reading

Jökull is co-founder and leads product development at Takumi in Reykjavík. You can find him on Twitter.

Iceland may punch above its weight, but let’s keep the facts straight

Yesterday, the web journal Red Herring posted an article titled Iceland’s Startup Scene Punches Above its Weight, which discusses the Icelandic Startup scene. While it’s good for the Icelandic scene to receive coverage like this, we feel it’s important that what publications write accurately reflects the ecosystem. There were several issues with the article, some of which we have highlighted below. We’ve also sent the publication Red Herring a message, in regards to this article.

The article starts with an overview of Iceland, and then turns to discuss the Icelandic startup scene. The discussion starts with singing the praises of Bala Kamallakharan, founder of Startup Iceland, and his efforts. While Bala deserves much praise for his diligent and generous work, we think it’s important to note that the Icelandic startup scene and community is not built by one man, but by a big group of people.

Below, we’ve highlighted some of the factual errors or misleading paragraphs, and explained in better detail.

[Bala] added that before Startup Iceland there was no VC network in the country, but that now there are four groups looking to invest in local talent including NSA Ventures and Frumtak. Now, says Khamallakharan, foreign investors are taking notice.

While it’s true that we have four active VC funds (Brunnur, Eyrir Sprotar, Frumtak 2, and NSA Ventures), the statement that “before Startup Iceland there was no VC network” in Iceland is not true.

Frumtak was founded on December 23rd, 2008 and its investment period started on January 1st 2009. NSA Ventures have been active since 1997, when it was founded. Investment funds like Brú Venture Capital and Brú II were active in the mid 2000’s.

A recent freeze on foreign investment – Iceland’s attempts to stave off the boom-and-bust culture that caused its economy to cave in eight years ago – might put off some of those VCs.

There’s absolutely no freeze on foreign investment in Iceland. What we do have, are restrictions on the outflow of capital from Iceland. These measures, that are called capital controls, are also not recent. They’re from late 2008 / early 2009.

VC’s that want to invest in companies in Iceland have bypassed these regulations by investing in parent companies that are located outside the restrictions. Thus, the investors own a company, for example, in Delaware. That company owns all IP that is produced. Production is in a subsidiary that is located in Iceland.

The government limits the flow of the Icelandic króna overseas and has strict rules on how foreign currency is to be used, and that has literally forced some of our biggest successes to move their HQ overseas, so they can circumvent some of these restrictions,” Jonsson said.

While the capital controls are bad, we don’t know of any of our biggest successes that moved their HQ abroad. The only company that comes to mind is CCP, which is relocating their top management team to London, because they have an international operation. However, CCP is still investing heavily in Iceland.

What is lacking, added Gould, is a network of experienced mentors: “Startups that have grown beyond Iceland can contribute back to the ecosystem by joining boards of younger startups, mentoring less experienced entrepreneurs and extending their experience and international network back to the community which fostered their initial success.

It’s true that Iceland doesn’t have a big network of experienced mentors. We mainly don’t like the phrasing in this paragraph, because although the network of experienced founders isn’t big, it’s there, and they are very generous and active in helping startups in Iceland.

Attracting talent, however, is not a problem in a country whose dramatic landscape, liveable towns and work-life balance – “one of the best in the world” according to Kamallakharan – are putting it on the map.

We have a dramatic landscape, true, but asserting that attracting talent in Iceland is not a problem is a stretch. Just recently, the government was lobbied by IGI (Icelandic Gaming Industry) to give foreign specialists a special tax discount because the companies in IGI had a difficult time attracting talent.

While we appreciate coverage of the Icelandic scene, we think articles should be fact-checked. Feel free to reach out to us, we’re happy to!

 

Why did we create the Nordic Startup Awards?

Kim Balle, Co-Founder & CEO, Global Startup Awards

Kim Balle, Co-Founder Global Startup Awards

People often ask us why we created a Nordic Startup Awards show. My own family and friends often ask why I spend so many hours on an award show which is surely not a high income project for me. The answer is simple: it is important.

Put your ‘big picture’ glasses on for a minute. We live in a unique time where entrepreneurship and innovation have never been more important. It is a time where technology-, hardware- and software-driven companies change our world in all aspects of our lives. The development is now moving so fast that our societal institutions have a hard time keeping up. This is only the beginning. We have entered the era where an entrepreneur can decide what direction the future will go.

The Nordics should take a leadership role in determining this future. We already have a history of creating amazing innovation not only in terms of technology, but also through organization at the societal level. This is something that is admired around the world. It should be our aim to maintain this status and improve it in the future.

The Nordic Startup Awards are not only about trophies and events. They are about something much bigger. I see the Nordic Startup Awards as a platform or a vessel which can be used to positively impact the regional startup ecosystem by connecting the national ecosystems and showcasing role models and success stories among ourselves and the rest of the world. The end goal is to become such a strong and relevant platform that we can go far beyond the “startup bubble” and into people’s living rooms. (Similar to Eurovision, just more relevant and without the corny music.) With such a strong platform, we can influence and inspire the Nordic people to keep innovating. With interest on such a high level, we can also connect all the stakeholders with politicians and ensure that we, in the Nordics, will have the right conditions to bridge possible gaps between startups and innovation.

The impact of recognition and success stories

In addition to the importance of creating a platform to showcase Nordic entrepreneurship, recognition is the core fuel for the Nordic Startup Awards. I know from my own experience how hard it can be to build a company. When you are working in a startup, you are driven by a passion which can be compared with a wild fire. It is almost impossible to put it out. But every single founder, lead developer, community builder and investor has hit the wall. That dark place where you almost forgot the “why” and the fire is reduced to a small flickering flame.

From Nordic Startup Awards 2014. Image courtesy of Nordic Startup Awards

From Nordic Startup Awards Grand Finale 2014. Image courtesy of Nordic Startup Awards

I know what a big difference a simple pat on the shoulder from someone of esteem can make when building a company. Recognition can lift you up to go that extra mile. It can be an inspiration for others to see that it is possible to succeed even with the most difficult odds. I have no doubt that the effort demanded to build a startup can be compared to the effort needed to win an Olympic discipline. We need to celebrate it.

This is also why quality and high standards is so important for integrity of the Nordic Startup Awards. The trophies need to mean something.

Part of something bigger

Finally I want to mention that Nordic Startup Awards is also part of a growing network. Since we launched Nordic Startup Awards back in 2012, we have expanded to Central Europe with Central European Startup Awards and to South East Asia with Asean Rice Bowl Startup Awards. And after this summer, we will launch Startup Awards India.

From Nordic Startup Awards Grand Finale 2014. Image courtesy of Nordic Startup Awards

From Nordic Startup Awards Grand Finale 2014. Image courtesy of Nordic Startup Awards

Our global expansion means we will be able to connect Startup Awards alumni from across the worlds. The winners of each regional competition will represent the best startups in their region. We plan to launch this initiative in  the coming year under a umbrella we call the Global Startup Awards.

From this work, we have already learned the strength of the Nordic region and the strong brand it has worldwide. We can be a role model for these rapid growing ecosystems. The Nordic Startup Awards will help connect Nordic startups to new markets, talents and technologies, and position the Nordics become a global leader in technology and innovation.

Join us for the Grand Finale

Back in 2014, Iceland won Startup of the Year with Plain Vanilla, which elevated Iceland to a heavyweight in the Nordic startup scene. People were wondering who Plain Vanilla was, since the name was not as well known in the other Nordic countries back then. But the numbers spoke for themselves, and Plain Vanilla was a sure winner. (Here is recent interview we did the the founder, Thor Fridriksson).

Since 2014, the startup ecosystem in Iceland has grown even stronger with the help from community building organisations such as Icelandic Startups. It became clear to me when I visited Icelandic Startups during their Golden Egg competition. I was blown away with the high startup activity on Iceland.

This is why it is also super exciting to invite everyone to Iceland for the Grand Finale. On the 31st of May at the Nordic Startup Awards Grand Finale, hosted by our amazing country partner (Icelandic Startups), we will bring together talent from across the Nordic startup scene to the Harpa Concert Hall in Reykjavik, where companies will compete to be the best among the Nordics. The winners were selected through an rigourous process and announced at the national events (you can see a list of the national winners here).

We can’t wait to announce the winners in the beautiful surroundings of Harpa. 

Then event is fully paid by the amazing local sponsors and it is free of charge.

Signup here.

Kim Balle is Co-founder of Global Startup Awards / Nordic Startup Awards, Owner of DROBE and founding member of IoTPeople 

 

Why we’re doing a hackathon: to increase FinTech innovation

Einar Gunnar Guðmundsson. Corporate Entrepreneur at Arion Bank.

The Icelandic banking infrastructure is unique. This statement may sound awkward in light of a total collapse of the Icelandic banking system in 2008, yet what I mean is from a standpoint of something else. Most banks globally today are highly focused on payments, trying to improve speed where individuals and companies transfer money. Money transfer may take up to three banking days between banks even within the same country or city. The US still heavily relies on checks for money exchange. In Iceland it happens instantly and has done so for almost 20 years. If I transfer money to my wife who has an account at a different Icelandic bank than I do, she only has to push F5 on her keyboard immediately after I make the transfer, and the transfer amount is visible on her bank account. How is that possible? Well, it’s simple. There is a common core banking platform for all the Icelandic banks (jointly owned by the commercial banks).

Good infrastructure may have slowed innovation down in Iceland

For the above mentioned reason, Icelanders have had little need to improve payments. Only in the past year has Iceland seen new money transfer products like Aur and Kass, where you only need a mobile number and registered debet or credit card within the app to transfer money between individuals, regardless of who your commercial bank is. It’s like Danske Bank’s Mobilepay, the Swedish Swish or the Norwegian Vipps.

My point is that, until now, there has been relatively little urgency in developing either great Icelandic consumer or business financial applications.

Arion is hosting a hackathon to speed up innovation

Arion Bank is the first bank in Iceland to host a hackathon. Arion Bank’s FinTech Party is the first hackathon where hackers from established IT companies, the startup community or universities can work on several APIs to hack and develop new financial services.

While hosting a hackathon is no news in itself, the Arion’s FinTech Party is Iceland‘s first FinTech hackathon and several APIs will be available (see below) to participants, who can hack away for 30 hours on June 3-4 2016 in Arion Bank headquarters.

Who should participate and why?

Participants are likely to be established IT companies, startup companies and university students (computer science, engineering, business)

There are three primary reasons for participation:

  1. Products developed may lead to a revenue generating business opportunity for participants
  2. Code / IP and therefore potential revenues belong to the participants
  3. Meeting new people and guidance from the API providers is valuable. And fun.

Arion’s FinTech Party offers several APIs

We at Arion Bank have been working a great deal with with Icelandic startup ecosystem since 2012 since the bank owns two business accelerators, Startup Reykjavik and Startup Energy Reykjavik, where the bank invests seed money in exchange for an ownership stake. Understanding how startups approach problem solving, along with international digitalisation trend/changes in banking, has lead us to hosting the hackathon. We have also offered several companies to offer their financial APIs in our hackathon. They are:

  • API Arion Bank –
    • Transactions on debet and credit cards
    • Claims – initiate a claim to a unique personal ID number that shows in that person’s / company’s internet bank
    • National registry – Lookup in the national registry by their unique ID number
    • Currency valuations
    • Links to Arion Bank‘s sandbox and Github
  • API Valitor
    • Payments – Send and receive a payment with a virtual credit card
  • API Meniga
    • Datadump on the fast food industry. All transactions over a 12 month period in Meniga’s database related to the Icelandic fast food industry. Data is non-personalized.
  • API RB
    • Mobile banking services
  • API Kodi
    • Market Data – closing day price of listed equities on the Nordic equities listed on the Nasdaq OMX
    • Link to API Kodi descriptions
  • API Advania
    • eSignature

All APIs in the hackathon are open REST APIs.

We are quite enthusiastic about these different APIs, since a combination of them, or seperate ones, gives the hackers vast opportunities in developing great products. Real products or features for real customers, consumer or business ones.

Intellectual Property belongs fully to participants, not to the bank

Different banks may take a various approach on hackathons. Some decide that whatever code is written is theirs but give the participants some perks to sweeten the deal. We understand that for most developers, the right motivators need to be in place. That‘s why any code written will belong to the participant teams, i.e. the Intellectual Property belongs to those who write the code. Arion bank will have a non-exclusive right to use the applications for twelve months and a first right of refusal to buy or use should they be commercialized. Those are fair terms for both sides.

Let’s hope all of the above leads to growth hacking post hackathon. Happy hacking!

The author is a Corporate Entrepreneur at Arion Bank. He occasionally blogs at http://einargunnar.com. Find him on Twitter: @einargunnar

Stripe Atlas is Huge, and Even More So for Iceland

This week was the week of Stripe Atlas, the new service offered by payment company Stripe that allows companies all over the world to (1) incorporate a Delaware C-Corp, (2) open a U.S. bank account with the Silicon Valley Bank and (3) immediately start using Stripe for payment processing. In addition, I’ve learned through our Slack community that AWS will be giving a $15,000 credit to all Stripe Atlas beta users. Talk about a great deal.

From the Nordurskaut Slack Community

From the Nordurskaut Slack Community

Stripe has also partnered with a number of startup incubators and accelerators, and I do hope, Startup Reykjavik will be one of them soon.

However big of a deal this is in general, the game changing effect this can have on Iceland is even bigger.

While under the capital restrictions, people are not allowed to found companies outside Iceland. However, the Central Bank has been known to grant retroactive exemptions to the restrictions, when people have done so. There are several notable Icelandic startups that have done this, often tied to investment from non-Icelandic investors who (obviously) don’t want to lock their cash in here.

Now, with the incorporation of a Delaware C-Corp, and a U.S. bank account both “one click away” creating a U.S. company will become much easier for Icelandic entrepreneurs.

That makes it easier for an Icelandic founder to incorporate in the U.S. than in Iceland. You need 500,000 ISK (~$3,800) in equity to start a limited liability company in Iceland. Of those 500,000 ISK, around 130,000 ($1,000) is just paying for the paperwork being processed. Stripe Atlas beta users will pay a $500 one-time fee, in addition to the filing fees needed for incorporation.

The Minster for Industry and Innovation announced last year that there were plans to make this easier and cheaper, but one could argue that it’s too late. Why incorporate in Iceland when you can incorporate in the U.S?

Obviously, it isn’t that easy. There’s paperwork in the U.S. just as in Iceland, and while Stripe Atlas has been announced, it still has the “too good to be true” ring about it. Norðurskautið will in the coming weeks look into if and how Stripe Atlas will truly be available to Icelanders, and try to gauge the bureaucratic effort needed to sustain a C-Corp from Iceland.

This development will hopefully lead to pressure on the Central Bank, in clarifying and communicating its strategy in regards to startups and the capital restrictions as well.

Norðurskautið covers the Icelandic Startup and Tech scene. Follow us on Twitter or sign up for our mailing list to keep up to date. You can also join our Slack community – http://bit.ly/slack-is

Page 1 of 2

Nortstack – Reporting and analysis of the Icelandic startup scene