Oil and Gas Pose Challenge to Norway’s Tech Startups

http://blogs.wsj.com/tech-europe/2013/05/30/oil-and-gas-pose-challenge-to-norways-tech-startups/

by martinp • 13 years ago

27 26 13 years ago

blogs.wsj.com

sgt• 13 years ago

I would love to see more startups from Norway - unfortunately a lot of Norwegians don't seem to have an entrepreneurial mindset, so in reality there's only a tiny minority of youth that grows up wanting to start their own business.

hucker• 13 years ago

It might have been repeated ad nauseam for ever (at least in Norway), but I think there's some truth to the suggestion that we just have it too good. As someone graduating university with a masters degree in CS soon, and seeing the ridiculous amount of relatively well paid jobs out there waiting for us -- along with the pressure from recruiters that inevitably follows -- I can see why people take the easy way out. This, coupled with the Law of Jante[0] deeply ingrained in our culture, i think explains a lot.

On the other hand, the amazing safety net of the norwegian welfare state should push people to be more entrepreneurial and take more chances if you ask me.

[0] http://en.wikipedia.org/wiki/Law_of_Jante

doktrin• 13 years ago

This is something I've wondered about. With exceptions, entrepreneurship and risk taking in business is not generally something Norwegians are renown for.

While certainly a lot of it stems from a cultural heritage that still attaches a certain stigma to failure (bankruptcy, for instance, is a bigger deal than in the US). However, there's some chicken and egg going on in that the relatively small size of the investment capital pool means you end up with fewer chances at success. This in turn encourages caution, and so on.

Nonetheless, I think Norway has a lot of potential in this regard. I also suspect things will improve over the next two decades, but can't really quantify that statement.

fleitz• 13 years ago

Oil and Gas is a vastly more important portion of the economy than social media. The startups mentioned in other countries are essentially irrelevant.

I've read so many articles about startups solving non-problems. The oil and gas sector has some very real problems that need solving, good on Norway for putting solid money behind solid businesses rather than chase the latest social media fad.

toretore3• 13 years ago

Tech startup doesn't mean social media startup.

walshemj2• 13 years ago

But oil and gas will run out eventually. Norway should be planning/investing for the transition now - Not waste the oil revenues like the UK did

petermonsson• 13 years ago

They do. They have a fund.

walshemj2• 13 years ago

Yes I know they do handled it much better than the uk did I was responding to the post that said the oil and gas sector was the be all and end all of job creation in Norway.

justincormack3• 13 years ago

http://www.nbim.no/ current value is NOK 4 312 663 342 713... about $734bn for a population of 5m people.

Luc3• 13 years ago

Note e.g. at http://www.nbim.no/en/Investments/Market-Value/ the billions they talk about ( '4,182 billion kroner' ) are European long scale billions, so US short scale trillions.

The number of $734 billion you give would be milliards (or thousands of millions) in the long scale version.

Journalists often don't bother making the conversion, causing a 10^6 error when talking about trillions, for example.

gwern• 13 years ago

The expertise they are building isn't going to simply disappear. The incredibly huge Norwegian sovereign wealth fund aside, even once the North Sea is completely used up, they can export their knowledge & skills to other countries with hydrocarbons.

Expez• 13 years ago

The law of jante is slightly esoteric and so everyone feels the need to bring it up when the Scandinavian tech scene is discussed, just to show they are in the know. Nobody in a position to do a startup gives a shit about the law of jante. Neither is an investor going to turn away from a pile of money while muttering under his breath 'who does he think he is?'

Of all the people I know that could have done a startup, the main reason they did not is because the alternative is so good. Everyone in my class (5 years of computer engineering) who bothered with early interviews, had a job lined up 9 months prior to graduation. Even my mediocre classmates were being courted by multiple companies. Starting salary in Oslo is $80k, about 60k more than what a typical student lives off in Norway.

lobster_johnson2• 13 years ago

Absolutely. Diametrically opposed to the law of Jante is the fact that Norway has had, for many years, a strong entrepreneurial spirit; being a founder (gründer) of a small business is seen as a point of pride, whether it's a novel scientific invention or a "mom and pop" store selling hand-made goods. I think it's something that resonates with the self-image/myth of Norwegians being hardy pioneers, going back to Amundsen racing Scott to the North Pole and so on. (The book mentioned in the article refers to Vikings, so there is that, too.)

adventured• 13 years ago

Most entrepreneurs I know, myself included, aren't attracted first by money. The ability to make money is a follow-on consequence. $80k isn't even remotely enough to coax away a serious entrepreneur these days. Silicon Valley engineers can make that trivially, and it has done nothing to slow down the formation of startups.

And besides, there's no salary you could ever make that will pay off better than a successful startup will. Know how long it takes to save just $3 million at $100k per year, accounting for taxes?

fiatmoney• 13 years ago

In economics this is known as the "Dutch Disease". Surprised it wasn't called by that name in the WSJ. http://en.wikipedia.org/wiki/Dutch_disease

justincormack3• 13 years ago

Norway has avoided some of the Dutch disease issues by investing much of the revenues in a huge fund that is largely invested offshore, reducing some of the pressure on the currency. http://www.nbim.no/

lobster_johnson2• 13 years ago

It's not quite the Dutch disease, though. Norway was, at the time, aware of the problem, and thanks to some talented minds (not least Farouk al-Kasim, whose story is fascinating [1]), worked around it by ensuring that the private sector was involved in the process of building up the petroleum business. Also, the oil fund [2] was created to manage the revenue and invest in the future of the population.

The fact that the tech startup scene has lagged behind as a result is an unfortunate side effect, but it's nowhere as bad as the Dutch disease, I think.

[1] https://www.google.com/search?q=the+iraqi+who+saved+norway+f... (can't link directly due to paywall)

[2] http://en.wikipedia.org/wiki/The_Government_Pension_Fund_of_...

alephnil2• 13 years ago

Norway have plenty of tech startups. It is just that most of them are in the oil technology and oil services, and very few are in the IT business. In fact, the oil technology business is the second largest industry in Norway after oil production itself, and I think that is the case even when only the part that is exported is counted. Besides that, Norway only import about 15% of the equipment needed for oil production and exploration, while many other oil producing Nations import most equipment.

The problem for Norwegian startup founders is that they have to compete with the oil industry as well as said oil service industry for the best people. Since both of these are insanely lucrative, it is hard for web and other IT-related startup to afford the salaries the oil related companies can pay. In Oslo you have less of that kind of industry, but on the other hand, bloated administrations of the government and said oil companies that makes it similary lucrative to get into IT consulting rather than doing startups.

The result is that there is little incentive for an engineer to start a web and other IT-related startups in Norway.

toretore3• 13 years ago

This conclusion assumes that employees have to also be from Norway, which is emblematic of the insular and narrow mindset that is the real cause of the problem.

alephnil2• 13 years ago

I disagree. There are plenty of foreign workers in most Norwegian tech companies I know about, but the problem still exists. Norwegian employers could be more actively recruiting abroad, and can freely do that inside the EU. I doubt that will change that much.

Say you are a young Norwegian engineer. The incentive for doing a startup is not there, because the oil industry are there and offer you high income risk-free. You may of cause make much more if you succeed with a startup, but most will not.

For a non-Norwegian, if you are going to Norway, you will also go to the places that pay best and have the most secure jobs, so to go to Norway to join or (especially) start a new new IT-business in an area that is by no means a hub for that makes less sense than joining an oil company. If you want to do a Web startup, it will probably make more sense, even for a Norwegian, to do that outside of Norway.

In Norway there has been a considerable immigration of workers the later years. There is a still a much lower mobility of the workforce in Europe than what you see in the US, much because of language.

marvin• 13 years ago

The thing is, Norway's oil and gas industry vacuums the labor market for both national and foreign workers. The oil service companies have enough trouble attracting skilled foreign workers with salaries above 100,000 USD a year. I don't think it would be very easy for a random startup to attract good foreign talent when competing with this.

yekko• 13 years ago

People go to where the money is, doh. If oil and gas doubles my salary, I'll gladly switch professions.

Oil and Gas Pose Challenge to Norway’s Tech Startups

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