Nicolai Wadstrom on Entrepreneurship
A Swedish/European Entrepreneur in Silicon Valley
Time to be in the clouds
Mar 20th
With this week’s announcements from Sun, and recent development in the Cloud computing area, I think one thing is becoming more apparent to me;
The cloud computing is a lot more disruptive than I thought.
And I thought cloud computing was very disruptive and the slow decline of local software and associated license models.
What I am now realising is that cloud computing is also disrupting a IT service industry segments that have so far have been harder to *-source somewhere else. Part of this is in cost-reductions of doing things in larger scale datacenters as well.
Now almost any company can host the majority of the compute power needed remotely. And once they do that, why would they employ local services for assistence when everything is done remotely anyway (on the Internet it’s just as far to Bangalore), but most importantly things are becoming clearly defined and packaged in it’s offerings. This will drive another way of *-sourcing, not only to lower-wage countries, but it will disrupt many service companies in the IT sector.
Some of the online media covered this recently, IDG (Swedish).
MMS for iPhone!
Mar 17th
Mobispine released MMS for iPhone last week, and it is already on the top ten on Apple’s AppStore!
Corruption and capitalism
Mar 17th
I hear people crying for limiting capitalism, due to greed and corrupt behavior in big corporations in these times of global financial crisis.
I think people are making a big mistaking in not realizing that capitalism is not corruption (in fact corruption really flourishes in non-capitalist systems, because there are no legal way to directly act to better your life, so corrupt economic systems emerge), any power can be abused no-matter which political system you live in.
The AIG management is not behaving like capitalists, they are just trying to abuse the power they have had in their position, and get as much cash out and and get out before the house comes down. If they and the company were true capitalists they would have a part in the up-side of the company making money, and share in those profits (and handsomely at that), and perhaps even fund the company in these times.
And if they were true capitalists, they would not take government financial aid in the first place…
I agree with those saying that we can not have capitalism on the up-side of and socialism on the down-side, the current period is a cleansing of many bad companies and bad business practises (and sadly some good business go with it). But the US government (and other western governments) have had a big part in making the current financial crisis a happen, and they too need to step in be part of solving it (as they do, I am not sure they are making the right choices for the long run though).
Governments are busy creating the next financial crisis
Mar 12th
With everything going on in the world’s financial crisis. And with me in the midst of going to Silicon Valley to build my next venture, the only thing that worries my really is the big government “rescue-packages” that many countries are too busy doing.
I am fairly certain that some of these bail-out efforts are necessary, but most are just either making it worse or building up for a major financial crisis in the future (in bigger proportions than we are seeing today), or being a real-world version of Ayn Rands Atlas Shrugged.
Jay at Growthink wrote a good blog-post, about letting America’s Entrepreneurs “breathe again”, this is something that Europe should pick, up, so Entrepreneurs, write your politicians and share your thoughts, I am going to write the one’s I voted for.
Internetworld writes about me (Swedish)
Mar 3rd
InternetWorld published an article about me and my new bootstrapLabs venture today:
http://internetworld.idg.se/2.1006/1.215507/jag-vill-vara-bryggan-mellan-svenska-startups-och-dalen
In Swedish, though Google Translate can (kind of) help.
Seems Index is still going strong
Mar 3rd
Closing a 350M Euro fund is impressive, and I think it’s still a bit tough.
But Sarah at TechCrunch; even though the crisis is global, think about the fact that there is always big volume of funds from Pensions funds, and other sources that are to be invested for returns in the long-term. Part of these big institutional capital goes into VC funds, and to make a return in 5-10 years. Long beyond the current financial crisis, and also what are the alternative investment targets for that institutional capital?
Most of these institutions operate on a model where the capital is placed in to different “baskets” with different risk ratios (or a similair model), and the index venture fund is probabally interesting for one of these risk ranges. Also in these times a lot of alternative investments are quite insecure (even though cash seems secure it is gives an extremely low return, through interest rates, and is quite volatile, just ask people holding Swedish crona, SEK the past few months).
Post-financial crisis investments, where?
Feb 24th
Silicon Valley VC’s have been very focused on investing in Silicon Valley companies. I think it’s because of a simple truth; they have their eco-systems, networks and know how to help companies succeed in the Valley. In the .COM-boom days, the VC wandered outside of the Valley to find additional opportunities not found in Silicon Valley. Techcrunch artcile mentioned this last week:
“One reason I knew Silicon Valley would rise again after the 2000 crash was that it always does. Another was that the percentage of capital going to Valley companies increased, as VCs pulled closer to home and stopped speculating in more nouveau tech hot beds around the U.S. and overseas markets.”
But things are changing, and the are many other hubs around the world. VC’s keep a strong focus on Asia, even in these times of the financial crisis, and that is a shift from previous down-turns in the Silicon Valley. I think Sarah Lacy is right, as well as Rebeccca Fannin (with her book Silicon Dragon, book review is coming shortly!), emerging markets in Asia still represent a huge opportunity for investors. As all market segments are in growth, there is potential high return of business there. And financial crisis or not, China and India still have potential for continued growth. Especially if you are establishing new innovations and products on that market.
However, I do believe that there will still be a innovation hub in Silicon Valley, and for me as an entrepreneur and angel investor it makes sense to use Silicon Valley as a hub, and a launching pad for future Asia-based ventures. Besides if you are looking for lower risk model, with a early revenue focus (as I am doing with many of my startup ventures at this time), the US is still a primary market, if you want to reach consumers and corporations to sell your services and products, with 30% of the world GDP, and being in Silicon Valley, California alone being the 5th’s biggest economy in the world. So for more mature prodcuts/services/innovations and for a bit less risk prone ventures the US market still holds an very attractive position for me as an Entrepreneur.
With the combination of the worlds biggest local economy with a risk willingness to explore and try new innovations I think Silicon Valley will continue to thrive. And it will continue to be fueled by the Silicon Valley investors and VC’s.
But I wonder how Europe will do? The Venture Capital and angel investment industry is still very young in Europe, and I think I can name the few European VC’s that could “compete” in terms of approach, risk-willingness, focus and knowledge with the Silicon Valley based VC’s on one hand. And the US based investors are not looking as much at Europe as on Asia, and I think in the after-math of this financial crisis, we will again see the US and Asia as the most appealing places for Entrepreneurship. Europe will linger behind I think.
Next emerging market. I wonder when we will see the African boom? When some or more African countries are getting a stable enough economical and political climate to see real growth in their economies. Maybe this already started, but we in the western world might be too busy ignoring Africa as a development continent on subsidies, to see that this already started? South Africa seem to hold a lot of promise for the future for sure. And I would guess there are others around the corner.
Excellent product development guide
Feb 22nd
The people behind the iPhone app PhotoKast, created an step-by-step guide and story about how they developed their application.
It’s an excellent read with wisdom’s, tips and pointers for anybody developing any type of internet based service or product, not just for developing an iPhone application.
The guide is here.
There are banks and there are banks
Feb 12th
Today I received an e-mail from the CEO of my US bank.
Sometimes it seems like I collect banks, and you might need to when you are a parallel entrepreneur with companies in different parts of the world. So to say the least I have some experience with banks and how they work with your personal finances as an entrepreneur and as a entrepreneur or CEO of a early stage company.
I will not quote the complete e-mail (because it was probably not intended for wider distribution), but a short excerpt shows SVB’s focus:
We remain focused on our mission to help entrepreneurial companies succeed and have taken the necessary steps to ensure we are able to continue to do so. ….. We see it both as our responsibility, and our opportunity.
In these challenging economic times, know that we are here for you and will do our best to help you succeed. I believe open and frequent communication is hugely important, particularly in times like these, so please don’t hesitate to let us know how we can help your company and we will keep you updated on our perspective as well. We thank you for your business and continued support.
If any of you early-stage entrepreneurs reading this have dealt with UK or Swedish banks for your company, you know that this is not the message they will send you. Especially in these times.
The bank is Silicon Valley Bank, which is committed to working with entrepreneurial companies, and have built a successful business around this for the past 25 years.
This is just one part of the entrepreneurial eco-system that is Silicon Valley, and I am glad to soon be part of it full-time (move is planned for beginning of March!), with my new bootstrapLabs venture, where I will continue my serial and parallel entrepreneurship to create new companies, and bring new products and innovations to the market.
Fiat currencies and the credit crunch
Feb 10th
The US government lending Spree that started in the beginning of the 1990 were the US government created Fanny/Freddie (among others), is deemed by many as economists as a root cause of our current economic crisis.
I would say that Alan Greenspans actions in the 2000′s is aftermath that kept it racing in the wrong direction, but this crisis was not created during the past 10 years, but rather in the past 20 years.
Fiat currencies, they have been around since the first wave of globalisation (the colonial powers created them), and the real big change was when Bretton Woods was abandoned (-71), and was part in creating the very volatile gold markets in the 70-ies.
What would be the alternative? All currencies that are freely convertible/traded are by definition fiat currencies, and an effect of global trade.
They are traded against each other, so if you increase circulation, you will loose comparative purchasing power against the other global currencies, thus keeping a balance in the global markets (there is one exception though, see below). They makes the fiat currency a commodity with scarisy as any other (as increasing circulation/printing more money will be costly).
If you would describe a closed economic system (with a restricted/non-convertible currency) such as the Soviet Union was or some countries in the world today, scarcity would not be as balanced.
There is hardly any alternative, but fiat currencies is harder to value than currencies that are convertible to gold (as for example the US dollar was until 1971, when Bretton Woods were abandoned) as with a majority of the things traded on markets today, you never know if it’s lemon….
Which is the problem with fiat currencies, a fiat currency can be very sound, with-out a large reserve, but it’s hard to assess if it’s sound or a lemon.
The US Dollar have had a development were it was kept very low for a long period of the 2000′s, the odd thing is that the international purchasing power in the US have been very competitive (the same new Japaneese car would cost more than twice as much in Sweden compared to the US), so the US enjoyed the benefit of the low dollar, but not the loss in purchasing power (for some things yes, but for many not at all). I think this is due to the fact that the US economy constitutes 30% of the wold GDP, and many currencies are pegged to it and a majority of trade agreements have been dominated in US Dollars.
This fact have tilted the market dynamics in the favor of the US, but now we are seeing a backlash, were the US Dollar has been pressed up in value, and other lost in comparative value. This is probably a sound reaction. I would not bet my money on the US dollar being as strong as today, but it will not go back to mid 2008 levels either I think.
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