From Iceland — It's the Innovation. Stupid!

It’s the Innovation. Stupid!

Published December 10, 2008

It’s the Innovation. Stupid!
Photo by
Jói Kjartans

Hjálmar Gíslason is a computer programmer who has launched four start-up companies in the last 11 years, and some of them have even been successful. He has been outspoken about the need to change the prevailing policy in Iceland when it comes to creating business and employment opportunities and the need for innovation and diversity for the Icelandic economy. “The problems for Icelandic start-up companies used to be that they couldn’t get financed and they couldn’t find employees. Now the problem is just that they can’t get financed,” jokes Hjálmar Gíslason. Despite the humorous tone of his remark, it remains completely valid. “The banks and other big companies in Iceland were like a suction for talented people,” he explains. Well-educated and creative people from all professions were attracted by the financial stability of working for large corporations, and as a result, the number of new start-up companies in Iceland has decreased every year since 2000.

“It used to be the that all our economy was based on fish. Then it was fish and aluminium. Tourism has become the third pillar for our economy, and banking was the fourth. We can’t afford to lose any one pillar. We need more diversity in the economy to be able to withstand a blow like this,” Hjálmar says. But how should we approach the daunting task of rebuilding our economy and creating employment for the future? “Let’s look at our resources. We have fish, nature, energy, and then we have people. These are the resources that we to build an economy from,” he explains. “The problem that we need to solve is how do we harvest the manpower. I don’t think we can do that unless we create an environment where talented people with ideas can easily start up and build a company.” Hjálmar maintains that this environment not be mainly driven by government funding, but rather financial incentives for investors who are willing to put their money up for chance of long-term gain from innovative companies.

The Inverted Pyramid of Start-ups
“People will need to realise that not all companies can be successful. That’s not what innovation is about. It is more like a pyramid. 1000 people get an idea, 100 of them turn into companies, ten of them survive, and maybe one of them becomes a superstar.” Hjálmar also points out, that unsuccessful companies are seldom a complete failure. “Founding a start-up is a great learning experience, and as long as that experience is not lost, something is gained. Successful start ups are often on their third or fourth try.”

“Look, right now, there are several promising companies that could very well survive if they somehow find capital to get through this recession. They just need access to temporary financing. It is important that we don’t let the companies that could survive, fail for the wrong reasons. It is much better to help them now and then perhaps let them die on their own terms later if it comes to that.” Hjálmar says. “People must realise that 100 small companies that employ four people each, create the same amount of jobs as one company that employs 400 people like an aluminium smelter. The difference is that creating 100 small companies does not require the same investment as an aluminium smelter, but perhaps one of them could yield just as much return in the long run.”

But despite the gravity of the current economic situation Hjálmar maintains that the current crisis is an opportunity for innovative, talented people. “How often in your lifetime do you get to be a part of rebuilding a whole society both politically and economically? This is a great opportunity and I think people should be excited to be a part of shaping the Next Iceland.”

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