Month: April 2022

In our readings we learned about the importance of curiosity for start-up thinking. This is something I agree very much with.  Of course, there is also a lot of focus on curiosity in innovation research that supports this view. Often in research curiosity is considered most important in the earlier stages of innovation but I believe it is as important in every single stage.

In fact, I believe curiosity is necessary for a lot of other stuff than innovation. It is a positive to have curiosity in all parts of living life. Research has shown that being curious increases intelligence. I find personally that keeping up a curious nature has improved my enjoyment of life. There are of course many definitions of curiosity. The one I like best is by George Loewenstein the co-founder of the theory of “neuroeconomics”. In his seminal 1994 paper he stated that creativity is “a cognitive induced deprivation that arises from the perception of a gap in knowledge and understanding”. So, like hunger a lack of knowledge of a problem stimulates curiosity. Then when you get a morsel of information this only drives up your hunger for more information until satiation is reached and you move on to different things. I like this theory and find it agrees with my personal outlook. 

As curiosity can be taught, I have always found it very strange it in the Icelandic school curriculum it is only mentioned as a subset of creativity but not as a thing of its own. I find this very sad. I believe that for the future it is very important to foster an innovative mindset in our young people. They are the innovators and founders of the future. To do this we need to encourage them to be curious from an early age. In this the school system often fails and in fact in my experiences is much better at stifling curiosity than enabling it. This needs to change and teaching innovative thinking from an early age is one way of doing this. 

For my personally curiosity it the main reason I am moving into innovation at this stage in my career. I am curious if I still can be curious. I am curious if I still can think contrarian. I am curious to find out where curiosity can take me.

Of the many books I read for the course Innovation in Context the one I found most interesting was Antifragile by Nassim Nicholas Taleb. In it he develops the theory of things that become stronger with shock. He calls it antifragile. A good example would be bones which grow stronger the more shock you put them through with exercise. Up to a point at least. He makes a good case which is helped by the fact he has some knowledge of mathematics to back him up so it not just hot air blowing out. Too be honest his writing style is atrocious but if you persevere you will find some nuggets of wisdom.

The biggest nugget for me was how he discussed “skin in the game”, or when somebody incurres risk by being involved in achieving a goal. The problem is of course that too often people in positions of power do not have skin in the game. A good example would be the bank crash in Iceland in 2008 where a whole group of people, bank managers, politicians and investors had isolated themselves from repercussions from their actions. This meant that they took huge risks for others and but hid them very efficiently, When the whole system came crashing down it did not affect them much while the rest of society went broke. Thus, it is very important when founding and running a company for the people who make the decisions to have “skin in the game”. I think this is especially important also for start-ups which usually are playing with other people´s money and the temptation can be great to just take them for a ride if things do not work out. The example of Theranos springs to mind though in the end after many years of fraud it turned out Elizabeth Holmes really did have skin in the game when she was convicted for fraud. Many people in a similar position have gotten away scotch free though.

When I move forward with my startup I will make sure I have personally skin in the game.

One of the most famous quotes from start-up theories is Peter Thiel’s 10x better rule. It is used as a foundation in many start-up courses and workshops. I feel it is often pushed too hard and quoted without context and can in fact discourage inventors and founders. How to really be 10x better than everybody else? That sounds very tricky. And what does even 10x better mean? Why not 9x or 12x. Of course, it is just a random choice of a number to suggest a jump in magnitude in our decimal system. There is no way to measure a 10x improvement in any rational way. Was Google ten times better than Yahoo? Not at all. In some ways it was worse in the beginning. It had no news nor entertainment content and it was very easy to game the PageRank in the beginning. It took me personally just two nights to be top in about 40 keywords when I started out with Google. What Google had was simplicity. It was in no way 10x better than other offerings at the time, just different in a way that people appreciated. Was the first Tesla 10x better than other cars. Not really. In many ways it was a lot worse, especially in quality control. But they had the correct hunch to where the market would go and that the future would be different from the past. 10x better? Not at all.  So, it is very important to not take the 10x rule literally. And it is important to read the whole quote:

“As a good rule of thumb, proprietary technology must be at least 10 times better than its closest substitute in some important dimension to lead to a real monopolistic advantage.” 

The key word here is monopolistic advantage. Excellent if you can get it and be the next Facebook but realistically most start-ups will achieve much more modest goals. That is fine and they can still be a valuable and interesting businesses. Does Nordic Wasabi make 10x better wasabi than anybody else? Of course not. Still, I think they are one of the most interesting Icelandic start-ups and are contributing much to the discussion on sustainability, food-safety, and the environment. What about Jarðgerðarfélagið? 10x better technology? Of course not. Still, they are doing a wonderful job and encouraging a circular economy on the local level. So, don´t let it stop you if you are not 10x better. Don´t let a silly quote stop your dream of a better world. I know some of my ideas for a startup are not 10x better than what is here before. But if I can improve the world just a little bit I will be happy.

A very interesting article in the reading material is Legal and Accounting Basics for Start-ups. It throws some light on the legal and accounting procedures for starting you own company. This is something that is sadly very much lacking in the Innovation Management program at HR. This needs to be rectified soon as these are foundations on which everything else is built when starting a company. Of course, you can hire experts to do this, but I believe the founders should have at least elementary knowledge of these subjects. 

How do you really found a company? What is the procedure? How much does it cost? What type should you select:  Einstaklingsfyrirtæki? Sameignarfélag? Einkahlutfélag? Hlutafélag? These are very important decisions that will greatly impact the future of your start-up. How do you make legal contracts with staff, suppliers and customers? Do you need a business licence? Do you need a health and safety one? What about regulations for things like pollution, labour, and food safety? What about imports and exports? Do you need a permission? The list goes on.

This is something every founder should know about. I would go even further and say this information is something that every person in society should know about not just founders and business people. This should be taught much more aggressively in school. That would facilitate more people realising their innovative dreams and founding companies. 

In our reading material for the course, I found the interview with Stanley Tang founder of Doordash very interesting. He discusses doing things that do not scale. Doordash is now the biggest food delivery company in the USA. In the beginning however it was just a landing page created in an afternoon for their idea of home food delivery. When the phones began to ring, they did not have any infrastructure, so they just went and bought the food and drove it themselves. They used Google Doc to track the orders. They were really just testing the idea if it was feasible and if there would be demand.

If they had waited until they had all the infrastructure in place it is very possible their start-up would never taken off. Tang talks about how doing it like this also made them experts in the delivery busines because they went through the whole process themselves. It was not just theoretical they really have done all the parts of the delivery themselves. They talked  to the restaurants and the customers buying the food. He says the three most important things they learned from founding Doordash were:

 “First, test your hypothesis. You want to treat your start-up ideas like experiments. The second thing is, launch fast. We launched in less than an hour with a really simple landing page. And finally, it’s okay to do things that don’t scale. Doing things that don’t scale is one of your biggest competitive advantages when you’re starting out, and you can figure out how to scale once you have your demand.”

I believe for a start-up which we are developing, which grows fruits and vegetables locally in an environmentally friendly and sustainable way, this can be a good model. We already have a webpage and some fruits growing. The next step is just to open the page to potential customers and see what happens.