

Oil and Gas Pose Challenge to Norway’s Tech Startups - martinp
http://blogs.wsj.com/tech-europe/2013/05/30/oil-and-gas-pose-challenge-to-norways-tech-startups/

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Expez
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.

~~~
adventured
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?

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alephnil
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.

~~~
toretore
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.

~~~
alephnil
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.

~~~
toretore
I wasn't going to comment more as I don't have much more to say about the
subject, but I just have to point out the flaw in this statement:

"There is a still a much lower mobility of the workforce in Europe than what
you see in the US, much because of language."

The assumption behind this statement is exactly the kind of mentality I am
referring to. There is little mobility because employers don't hire the
employees because there is little mobility. It's circular reasoning.

With the jobless rate in certain parts of the south skyrocketing, you'd think
this would be an active hunting ground for employers in need of people. You
don't think the many 25-35 year old university educated people living with
their parents wouldn't jump at a chance of a decently paid job in Norway (or
anywhere else for that matter)? It's like a fat man complaining how everyone
is making him fat and nobody is fixing it for him. The only real barrier is
mentality.

The point about language is fair; it is a concern. But if you're a startup
with any sort of vision that extends beyond the narrow world view that I've
spent so many words describing, guess what the language of your business is
going to be? Surprise, it's English! The company founders speak it, their
customers speak it and the excellent but unemployed programmer living with his
parents in Bologna speaks it.

------
sgt
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
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>

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fleitz
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.

~~~
toretore
Tech startup doesn't mean social media startup.

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fiatmoney
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>

~~~
lobster_johnson
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...](https://www.google.com/search?q=the+iraqi+who+saved+norway+from+oil+site%3Aft.com)
(can't link directly due to paywall)

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

------
walshemj
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

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

~~~
Luc
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.

~~~
justincormack
No thats not true. I put the exact number there from the top right and that is
4,182 global/US billions. Long billions are pretty rare now, especially not
for money, and for something in English as both US and UK use short scale
(now, UK used not to).

~~~
Luc
You're quite right! I totally mistook the comma in "4,182" for a decimal mark
while ignoring the rest of the text. Sadly too late to remove my confusing
comment now...

Not that I was insinuating your comment was wrong. I don't know the SEK
exchange rate so I figured that accounted for it. Anyway, mea culpa.

~~~
Luc
(make that the NOK exchange rate)

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

