Software will disrupt the Electricity Industry

Another example of how Software based companies are starting to squeeze more value out of traditional industries was highlighted by this Bloomberg article titled "Energy-Saving Software Turns Factories into Power Plants" to me. I have written about how Software is going to be the basis for every industry here and how Iceland can take a lead on this here and my vision for Iceland here. All the engineering principles today will be implemented by Software. No wonder the Mayor of New York City wants to learn to code. If you have not signed up to learn how the software systems work, I highly recommend that you do. There are many startups that make it very easy to learn to code like www.codeacademy.com. 

Coming back to the article the summary of it is "Viridity Energy make software used by dozens of large facilities in the U.S., including commercial buildings and factories, to manage their energy and Viridity is the first in the U.S. that also lets power guzzlers sell their energy back to the grid". There is a company in Iceland called ReMake Electric, which is focused on the same problem and has a hardware component that goes with the software and enable households or commercial buildings to optimize their energy use. I know the founder and have met with the team. I advised them to focus more on the software side rather than the hardware side of the business which they have done. They are starting to make in-roads into big commercial enterprises.

If Iceland wants to be a leader in Renewable Energy it is obviously driven by the abundant geothermal energy that is available here but more importantly renewable energy should be govern by smart software that efficiently supplies, utilizes and reuses the energy that we tap from natural sources. Leadership in energy is not driven by abundance, it is driven by smart and sustainable use of Energy.

Related articles

• Schneider Electric Buys Viridity's DCIM Software (datacenterknowledge.com)
• More Chinese interest in Icelandic tourism sector (icenews.is)
• Five Quick Home Energy Saving Tips (txu.com)
• Putting consumers in control of Europe's smart grid (smartgridwatch.wordpress.com)
• How to Cut Energy Costs (openforum.com)

Software is eating fish and aluminium in exports in Iceland

Software exports out of Iceland has been growing steadily over the past decade although it is not categorized in the data collected. Software gets tagged under "Other ICT goods" which is a shame because it is easily the fastest growing item in the total goods and services out of Iceland. Another important graph is the Current Account Deficit of Other ICT goods ie. Imports - Exports. This is showing a clear downward trend as well. The downward trend can be explained by my original hypothesis built on the Carlota Perez's work on technology bubbles and their transformative effect on the underlying infrastructure. The deficit increases when there is a bubble formation ie excess capacity of infrastructure build up, then the new wave of companies build things on top of this infrastructure and create value thereby reducing the deficit. Perez's Technologcial Surge Cycle explains the build up of excess capacity. 

Related articles

• Required Reading For The Carlota Perez Interview (avc.com)
• Iceland and Ireland Models Help to Guide Greece's Path (antiworldnews.wordpress.com)
• World Needs More Canada latest (Nordic dep't) (macleans.ca)
• Enomaly Buy to Fuel New Virtustream Exchange (pcworld.com)
• Capacity Concerns in doing Daily Deals (iterativepath.wordpress.com)

My vision for Iceland

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:

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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!