DataMarket - A Startup Profile

DataMarket.com is a startup out of Iceland. I have met with Hjalli a couple of times, spoken to him quite a bit and used DataMarket services on some of the presentations and have been following the company. The company started in June 2008 and Hjalli has been around the block in the startup journey a couple of times, he successfully created and sold a company in Iceland and I believe he is a 3rd time entrepreneur. You can read all about him in his blog, he has a distinct voice within the Icelandic startup culture and he is a big proponent of Transparency and DataMarket was way to address that issue. Although a lot of his opinion and comments are in Icelandic, so I glaze over them :) Initially, I really felt that DataMarket's business model was weak because you don't see the light of the day if you are an intermediary for data and given the advent of new visualization technologies it is quite easy to hack a graph from structured data. The customers of data want data from reliable sources and you had to be a source of data to be able to sell data and typically people buy data from a Credible and Authentic Source like the IMF or the World Bank or The Economist etc. I believe the market for data is big but probably getting smaller with all the publishing tools out there. I could not put my fingers on the Value Proposition of DataMarket.

DataMarket just announced that their portal and services can be utilized by third parties to publish data, I believe that is a very interesting value proposition. In addition, they are getting credible sources to use DataMarket's portal to channel their data. I don't know the financial performance of DataMarket to comment whether they are able to make progress or not but given that they just announced they were able to secure a significant round of funding in Icelandic terms, I presume they are on track. I think breaking into the international market needs a different kind of thinking. The team composition that Hjalli has put together needs work IMHO. I have a big issue with Startups who emphasize to much of their importance on the idea and very little on the team, the strategy for customer acquisition and putting together a truly international team.

IMMI - The best business case for Data Centers in Iceland

[Original Post written@http://startupiceland.wordpress.com]

Many of you know that I don't understand the business case for Data Centers in Iceland. I have written about why Data Centers will not work in Iceland here and here. I was wrong! IMMI or the International Modern Media Initiative is by far the best business case for Data Centers in Iceland. I knew about the initiative but I was not aware of the status of the resolutions that was passed in the Icelandic Parliament. I believe this is one of those rare moments in history where a nation is at a cross road and it chooses to lead the world... Iceland has that opportunity! I am strongly in support of this initiative. I am not political but I believe this initiative is as important as the laws on Human Rights. Freedom of the Internet and information on the Internet has been threatened many times through SOPA, PIPA and ACTA... I am positive there will be future attempts. I believe that Internet Service Providers are similar to those who pave the road, the road should not be shut down just because someone decided to drive at 300 miles/hr and killed someone. That has been the approach so far of every Government in the world. I believe Governments need to provide the proper legal framework to operate in, the Internet is a new paradigm where physical borders don't apply and trying to legislate it just like in the physical world just does not work. We need laws that understands and accommodates how the Internet works. Everyone of us have a role to play in this. The coordinated effort that was demonstrated to protest against SOPA and PIPA is needed to ensure the right kind of laws are passed that protect the freedom of information for the Global Citizen on the Internet.

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Iceland should be proud!

Since I have started blogging, my goal has been to bring the attention of the Global Startup Community and the Global Venture Investing industry to Iceland. Yesterday was the best day of my 2+ years long effort. Here is the quote from Fred Wilson:

If you have not been following the discussions in Fred's blog avc.com, I would urge you to look the post tilted "The Free Internet Act". I think the grass root efforts that started in Iceland right after the collapse is starting to get noticed around the world. I think that is a good thing and we need to push the agenda further. Context for the above image is the post that Fred wrote yesterday, Reddit Community has drafted a Transparent Bill to Free the Internet, Fred blogged that he needs to analyze the document before having an opinion. I commented about the Thjodfundur 2009 effort and how it transpired into the Icelandic Constitution being drafted in a Transparent manner and how that model can be a good starting point to make any and/all bills in all Governments. It was very exciting to see Fred acknowledge that effort in Iceland and endorse that the World needs to take notice of that effort. If you are an Icelander, you should pat yourself in the back and for those that were responsible for the Grass root movement, your recognition is here! 

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Unemployment in Iceland

Unemployment in Iceland stands at 7.2% as reported by mbl.is. I wrote about the challenges related to company bankruptcies. What is troubling in these numbers is that age groups between 16-24, it peaked at 16.2% in 2010 and it is still at a very high and stubborn 14.6%.
Why is the unemployment level in Iceland still so high inspite of the GDP growth that has been touted by the Central Bank of Iceland, the Icelandic Government and the IMF? I have been asking the same question, if everything is fine and dandy, why are there not more jobs being created? What is another troubling trend is the number of people who have been unemployed for more than 6 months. That number is persistent and quite high 26% in 2011. I think the overall number is important but what is more important are the above numbers the unemployment of young people which tells me the labor market is does not employ people with limited skills and those who have not been employed are not able to find work. How should we be creating jobs? You know where I am going with this if you have been reading this blog... Entrepreneurs of course! I also believe there is a mis allocation of capital in the economy, a lot of the capital is NOT being allocated i.e it is sitting in banks. The capital that has been freed is being allocated to speculate on Real Estate, which is evident in the prices of housing in Iceland. I wrote about it yesterday, here are the numbers and graphs to support the argument... notice the clear upward trend.

If one takes only the month of January and see the trend it is quite evident that there is a huge capital push into the Housing sector. This is not a healthy trend. I think there is significant relationship between the unemployment level and what is happening in the price levels of housing. Capital is being deployed in speculating on Real Estate but not on productive entreprises that need capital. We have seen this movie before and we know how it ends and I am not the only one saying this.

3 Great Global Challenges

I have been a fan of Thomas L. Friedman since I started reading the New York Times and then his books, The Lexus and the Olive Tree, The World is Flat, Hot, Flat and Crowded etc He has a knack to say the things that matter in the simplest of words and gets your brain working. His latest opinion with title "We Need a Second Party" is a classic. Although the message of the article is geared towards the Republican Presidential Candidate run-off, the take away for the rest of us is the challenges that he outlines. These challenges are not America's challenges these are Global challenges, every country, every citizen needs to be thinking about how they are being impacted by these challenges. No longer can we be complacent about our job, or position or title or education thinking that is going to save your future. The challenges are here and you better have a strategy to tackle them. Let me outline what those are:

"The first is responding to the challenges and opportunities of an era in which globalization and the information technology revolution have dramatically intensified, creating a hyperconnected world. This is a world in which education, innovation and talent will be rewarded more than ever. This is a world in which there will be no more “developed” and “developing countries,” but only HIEs (high-imagination-enabling countries) and LIEs (low-imagination-enabling countries)"


Wow! could he be more direct? where do you think Iceland ranks in this HIE vs LIE world? are we really making Iceland ready for the onslaught? believe me the competition is coming whether you like it or not, a billion people in India and China are raring to go, they are more motivated, they work harder and they want to win so badly that their lives depends on it. How can Iceland compete with that?


"The second of our great long-term challenges are our huge debt and entitlement obligations. They can’t be fixed without raising and reforming taxes and trimming entitlements and defense. We absolutely cannot just cut entitlements and defense. That would imperil the personal security and national security of every American. We must also reform taxes to raise more revenues."


I cannot emphasize enough the problem of entitlement, this is an epidemic and it is cancerous. There is only one way to solve this problem, arm every citizen with the tools to create their own wealth and their own future then they stop asking where's my beef. Entrepreneurs and sustainable entrepreneurial ecosystems enable that, are we creating a sustainable entrepreneurial ecosystem here in Iceland? I will follow up with the post on the Icelandic entitlement cost and I have written about the perception challenges in Iceland and Icelandic Governmental Resource Allocation problem. Of course Iceland does not have the problem of a huge defense spending but we have the challenge of very high levels of public debt. That in itself can suck the entire country and the standard living down.


"Our third great challenge is how we power our future — without dangerously polluting and warming the earth — as the global population grows from 7 billion to 9 billion people by 2050, and more and more of them want to drive, eat and live like Americans. Two billion more people who want to live like us? We can’t drill our way out of that challenge, which is why energy efficiency and clean power will be the next great global industry. Real conservatives — like Richard Nixon, the father of the Environmental Protection Agency, and George H.W. Bush, the author of the first cap-and-trade deal to curb acid rain — believe in conserving. The current Republican candidates are so captured by the oil and coal lobbies that they can’t think seriously about this huge opportunity for energy innovation."


Here Iceland has a clear lead, because Iceland is endowed with the gift of natural energy. We need to take the lead on policies that enhance this rather than build walls and stop progress. I am not saying not to take the Environment into consideration, there has to be a balance and we can make policies that enable investments in the Renewable Energy field that does not hamper the environment and leaves it in a better shape than when we found it. It can be done.


What do you think?

Startup Iceland in KickStarter

So, I want to create a documentary of the journey of Startup Iceland. Who would want to see this documentary? I don't know and I don't know if I can get anyone to fund this either. I have been a big fan of KickStarter, thats when the idea broke out hey why don't I use KickStarter to fund the documentary? It is not new, it has been done before but I am sure anyone who wants to create a Startup Community would want to see this documentary. Never the less, I created the project and submitted my proposal... I am just having my fingers crossed to hear back from the KickStarter team. The documentary will basically be built around the startup community here in Iceland and the run up to the Conference that I have written to you all about, if you have not signed up yet... PLEASE DO, I promise you it would be spectacular success or an Epic failure either way you can see the journey through this documentary. I know exactly the right people to bring on board to do this. What do you think? will I get funded to get this documentary on the road?

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Icelandic Institute for Intelligent Machines

Had lunch with Dr. Kristinn R. Thórisson, and learnt a lot about the Icelandic Institute for Intelligent Machines (IIIM), fascinating stuff. The institutes mission is to accelerate adoption of academic work into the industry as it relates to Artificial Intelligence (A), Machine Learning (ML) etc. The institute is currently funded by Rannis, Reykjavik University and CCP Games. The institute is trying to enable a closer link between innovation and industry. The way it works is that if you are a sponsor of the institute you could technically "outsource" your R&D project to the institute, which in turn will assemble the required resources i.e team and run the project. This is quite interesting because it enables better management of R&D budget for companies and also makes for the institute to work on tangible real world problems that need solution. I think the biggest challenge facing this institute is that there are no large innovation companies in Iceland that can support or partner with this effort. I can see many startups that can participate in this effort but then again the startups are running on fumes anyways so they may not be able to sponsor or support the institute. We have a catch 22 situation here but I am confident there are very smart people and they will figure out a way to make this work. As a concept I think it is great, adds a lot of value and can facilitate innovation and make innovation sustainable. I want to push the envelop in looking at this institue and see if the Lean Principles can be applied in the modus operandi of the institute. I think similar institues have been successful in MIT, Stanford, UC Berkley and the like. I think the most prominent one is the Media Lab at MIT. Given the Dr. Kristinn used to be part of the MIT Media Lab, it is a good thing. We need to bring those big companies or capital to foster the relationship between Universities and Commercial Enterprises. This makes the partnership sustainable.

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Is Icelandic economy really growing?

I have been hearing a lot about how the Icelandic economy is showing signs of GDP growth and the new projections of the Central Bank of Iceland and the Government of Iceland are based on that growth projection. I have written about what I think about projections and forecasts... bottom line I DONT BUY IT. Lets look at the number of new companies registered in Iceland vs the number of companies filing for insolvency. If you look at the trend since 2008, the number of insolvencies have been rising dramatically and the number of new companies being formed has been dropping dramatically this is a double whammy. I wonder where is this growth that everyone is talking about is coming from? It could be the existing companies are growing but where? the fishing industry cannot grow because of the quotas, the energy industry cannot grow because there have been no capital investment in any manufacturing industry, tourism is probably the only industry that is growing. I am not sure what is the path forward? which sectors should Iceland focus on growing? I think I know where resources should be devoted, but then again is that where the resources are being devoted? I don't think it is quite clear looking at the data. I am almost certain that all the new startup companies that have started in the last couple of years are going to suffocate without new investment and capital.
If you are interested in the data you can find it here, the source of the data is Statistics Iceland it is an excellent resource if you have not used it already.

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Taleb goes to Congressional committee hearing

Image via Wikipedia

Nicholas Nassim Taleb discussing the Financial Crisis causes and solutions with the US Congress. His advice is quite simple:

1. De-leverage the system
2. Stop transferring debt from private sector to public sector through bailouts
3. Do not do deficit spending i.e. Stop printing money
4. Reduce the size of banks, have many banks and remove the Too Big To Fail syndrome
5. Do not pass laws thinking you understand or stop Risks to the system, because we don't understand Risk as we live in a Complex world. Putting rules to stop bad behavior in this complex world is naive thinking.

I agree with Mr.Taleb...

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The Healthcare debat in the US

Image by Getty Images via Daylife

I saw a very interesting status posting request in Facebook by couple of my friends. It read :

" No one should die because they cannot afford health care, and no one should go broke because they get sick. If you agree, please post this as your status for the rest of the day."

I agree with the message... I don't believe anyone will disagree, let me rephrase that majority will agree. I am seriously confused about the debate. I think we are mixing the overall goal with the process and method. I don't think even the cold hearted Insurance Companies, Big Pharma or AMA will disagree with the above statement. I don't think it is a fair argument that Big Pharma, insurance companies etc are there only to make money. 

I think many of them actually have Good Vision statements that drive them. Just to clarify I went to their websites to see what they set out as their vision, here are some excerpts:

Pfizer: We dedicate ourselves to humanity's quest for longer, healthier, happier lives through innovation in pharmaceutical and consumer health products.

Our Mission
       
We will become the world's most valued company to patients, customers, colleagues, investors, business partners and the communities where we work and live.

Eli Lilly: Lilly makes medicines that help people live longer, healthier, more active lives

Three long established core values guide Eli Lilly and Company in all that we do:

Integrity

We conduct our business consistent with all applicable laws and are honest in our dealings with customers, employees, shareholders, partners, suppliers, competitors, and the community.

Excellence

We pursue pharmaceutical innovation, provide high-quality products, and strive to deliver superior business results. We continually search for new ways to improve everything we do.

Respect for People

We maintain an environment built on mutual respect, openness, and individual integrity. Respect for people includes our concern for all people who touch or are touched by our company: customers, employees, shareholders, partners, suppliers, and communities.

Ok with that said, yes, mistakes are made by Pharma companies of course it is exasperated because of the sector they are part of. I don't believe the Government can solve anything, it all comes down to the people. Government should GOVERN, not OWN, MANAGE or CONTROL businesses. I would say set parameters for the Insurance companies and pharmaceutical companies to work under. You don´t have to do that by launching a Governmental Insurance Company! If the issue is Insurance companies need to cover people with pre-existing conditions make that  a law, let the market decide what should be the price for such a service. Artificially subsidizing all the case through a pseudo government insurance plan makes the quality of health care go down.

I want to see the entire plan proposed by the White house because I see a lot of chatter and not much facts. Will post my finding after I read the proposal.

Policy implications if we use Power Law distribution

I have been working on my first paper with the title "Can Power Law help us avoid highly improbable tail events?" the premise of the argument is that if some economic variables fall in the Power Law distribution then policies associated with those economic variables need to be handled differently. For example, I am taking the problem of the Icelandic Krona, I have written about the Icelandic Krona before and I am convinced that it follows a Power Law distribution.

If we know that ISK follows a power law distribution and future fluctuations in ISK are going to follow the Power Law distribution should the Icelandic state still use the currency in its current form? or should it switch over to a more stable currency say the Euro? this debate is on-going in Iceland and I am afraid people are viewing this decision with their political lense and not the economic lense.

Just a simple switch in the probability distribution of the ISK has some serious policy implications. Lets do a simple thought experiment: The Financial Supervisory Authority of Iceland used a 20% devaluation of the ISK as a basis to stress test the banks in Iceland, why did they choose 20% because they thought ISK followed a Gaussian Normal Distribution and a 20% devaluation is a 2 or 3 sigma event or a very low probability of occurance, however if we change the distribution to Power Law a 20% devaluation of the ISK has a much higher probability therefore they would have chosen a much higher deviation for the stress test say 50% this would have shown the true color of the Icelandic banks capital adequacy and vulnerability to wholesale funding. The question is if the stress test had been done in 2006 when Iceland had a mini crisis, the FSA could have put a stop to the aggressive borrowing by the Icelandic banks which in turn would have reduced the leverage of the companies in Iceland and the citizens.

So choosing the right probability distribution matters! atleast that is the basis for my PhD thesis lets hope the thesis could influence some policy choices.