The Startup Ecosystem in Iasi and in Romania in General

Palatul Culturii Iasi
Palatul Culturii Iasi

This will be an easy and short blogpost for today because I’m writing about the startup ecosystem in my hometown, Iasi. It’s easy and short because frankly speaking there are not many things to write about. Even the idea that an ecosystem exists is debatable, because in order to have an ecosystem you need to have various interacting parts that work together as a functional unit.

The most important element missing in this ecosystem is the financial one: the usual mentality in Romania is one of conservation, anti-risk, people are reticent in investing in risky endeavours (and also to take them). There is even a proverb: “Capul plecat sabia nu-l taie”, idiomatic expression that loosely be translated to: “The sword doesn’t cut the bowed head”. I guess that this traditional belief stems from an historical context and a long lasting feudal system that had long lasting consequences. The peasants which were usually poor depended on their master, the boyar, he was the one that actually owned the land, the boyars in exchange were granted land rights from their master, the Voievode, the leader of the “country”. The Voievode in exchange had to rule as a vassal to the strong neighboring empires like the Ottoman Empire, the Polish-Lithuanian Commonwealth, Hungary and later the Austro-Hungarian Empire and so on.

Guess what happened to the peasant, boyar or voievode that had the “entrepreneurial gene” of risk taking, defying the status quo and wanting to be a “disruptive innovator”? He would get very hard times from his peers all the way to the top of the hierarchy.

Let’s take the Voievode Stefan cel Mare (Stephen the Great) for example. He didn’t want to bow his head to the neighboring empires. The result is that he fought all his neighbors, most of the time being outnumbered and outgunned:

“When talking with Muriano in 1502, Stephen mentioned that he had fought 36 battles, only losing two of them. When the enemy forces mostly outnumbered his army, Stephen had to adopt the tactics of “asymmetric warfare”.”

I highly recommend reading more on Stephen the Great, he was one of the greatest military commanders of all times. Unfortunately, he wasn’t the only example, most of the rulers had to be on the defensive for most of Romania’s history, those who were disruptive didn’t last for long.

I’m looking into the past in order to try to understand the present and I think it’s a very good point to start. Looking into the past I can’t say that I see much innovation hubs, progress, Renaissance. We progressed, obviously, but a slower pace than the Western countries. Dimitri Cantemir (1673-1723) is considered to be a Renaissance man but he came a bit late, Renaissance was already happening for a few centuries. The starting point of Rennaisance is considered to be Florence circa 1300. We don’t associate Florence only with great art stored in the Ufizzi Gallery, Michalengelo’s David, Brunelleschi’s architecture, quaint bridges over the river Arno, we also associate Florence with the most powerful family that emerged from it: the Medici family.

The Medici House was well known for it’s wealth and power that were generated by banking. Capital. Capital is the source of innovation and great art. We enjoy a lot of great works of art today due to the patronage of people like Lorenzo de Medici. Even though the Italian cities and the powerful ruling families were engaged in countless wars between them during the period that coincided with the Renaissance,  there still was progress and innovation due to capital and patronage. Leonardo da Vinci.

Anyway, I’m getting carried away and digressing a bit, I’ve always been fascinated by history. The point I’m trying to make is that it takes capital to finance any worthwhile endeavor and to take it to the next level. There is a lack of capital, venture capital, investors, angel investors in Romania, smart money. What is also lacking is the entrepreneurial mentality.

Update: I’ve written a post about Capital-intensive economy vs. Labour-intensive economy as an addendum

Citing from The Start-Up of You by Reid Hoffman:

If the local culture, institutions, and population do not engender an entrepreneurial life, the Start-Up of You strategies yield only a small portion of their real potential. An entrepreneur who is trying to build a business in an unhealthy society is like a seed in a pot that never gets watered: no matter how talented that entrepreneur, his business cannot flourish. As Warren Buffett says, “If you stick me down in the middle of Bangladesh or Peru or someplace, you find out how much this talent is going to produce in the wrong kind of soil.”

Alright. I covered the lack of capital in the local ecosystem. What about the other elements? As far as I can tell, we are only at the beginning of a more organized form of entrepreneurship. There are projects such as Startup Weekend Iasi, TBNR Accelerator – the first startup accelerator in Iasi.

What about the informational element? Information is considered power – and rightly so. Information comes from various sources like empirical experience,  mentors, people who dealt with similar situations before: books, podcasts, videos, potential untested information: theories, reasoning, logic.

My hierarchy of the informational pyramid, ordered by importance would be the following. Note: one’s informational pyramid might differ from another’s. For some, social connections are important and learning directly from the source has a bigger weight than reading books for example. For others, reasoning and formulating theories – and testing them using the Scientific Method – has a bigger weight.

Top of the pyramid:

Mentors – they have decades old worth of experience. They went through a lot of situations, life experiences, accumulated knowledge from other mentors and informational pyramids.

Semi-mentors – they don’t have that much general experience or that much life experience but they have condensed experience and success in a particular domain/area of expertise.  They can help you with only a specific problem.

Battle Tested Information: usually generated by the two categories above. Books, podcasts, videos, forum posts, blog posts and so on. You don’t have direct access to the people that created them, you can only shoot a message/phone and hope for the best. You go over the information source and hope that it covers your problem and offers a real solution to it.

Empiric Experience:  The toughest and lengthiest method to acquire knowledge. Can be quite costly in terms of time, energy and money, that’s why this type of information has a lower status in the pyramid. However, the byproduct of this category can be very rewarding and consist more than knowledge: materialized knowledge. You gain knowledge by rolling up your sleeves and taking action, you build, you test hypothesis, you experiment. You learn through trial and error. The experience and knowledge you gain here takes you to the path of becoming a mentor or semi-mentor.

Theories/Hypothesis:  Untested information, potentially generated from other untested information. Can vary considerably and be very subjective. If it’s deceitfully presented as Battle Tested Information by unscrupulous sources and fake mentors and semi-mentors it can lead to a downwards spiral when fed as a source to Empiric Experience – El Dorado.

As far as I can tell, the entrepreneurial ecosystem is lacking the top of the informational hierarchy: mentors with decades long of capitalist experience and even semi-mentors. It’s easy to argument this: Romania adopted the capitalist economic system for less than three decades, most of the “successful entrepreneurs” have “dumb money” and got rich by fraudulent ways and by exploiting the chaos that ensued from the revolution that changed the ruling regime and the economic system.

Also from The Start-up of You:

In healthy societies, people are more likely to share information, join groups, and collaborate on projects together—all activities that eventually magnify career opportunities, both for you and for the people who come after you.

I participated at the fist edition of Startup Weekend Iasi and guess what? Since then a few editions passed, I didn’t participated, but all of the weekend startups albeit judged as winners or not by a jury had the same fate: they materialized to nothing and were disbanded after a while. People drop their enthusiasm, attention and focus as soon as the week-end…ends. Because it’s safer to go the next day to work, isn’t it? Because it’s comfier to have the security of a nice paying job (most of the participants are working in IT and earning better than the average Romanian).

We do outsourcing for other entrepreneurs, the real ones, but we deceive ourselves and say that we too, are entrepreneurs. It’s safer and less risky to sell shovels to the gold miners. It’s true, not a lot of gold miners succeed, but the few ones who take risks and succeed against all odds are rewarded handsomely for their trouble. Can you call yourself a gold miner if what you are really doing is to sell shovels to actual gold miners?

This turned out to be a lengthier post than I was initially intending, wanted to write about the importance of concepts such as the National IQ and others. I will most probably do this in another post or I will update this one.

Update: Why your Nation’s IQ matters more than yours.

La Joie de Vivre with Zorba the Greek

What is Joie de vivre?

Joie de vivre is a French phrase often used in English to express a cheerful enjoyment of life; an exultation of spirit.

Almost three years ago I was finishing reading Zorba the Greek by Nikos Kazantzakis. I started reading quite a lot during that period, reading non-fiction especially and trying to better understand the world around me.  Three years later it’s still an influential book for me because it’s important to read, learn each day and expand your horizon but it’s also important to get out there and explore, discover, see with your own eyes and apply what you have learned in the real world.

“How could I, who loved life so intensely, have let myself be entangled for so long in that balderdash of books and paper blackened with ink!”

Is empiricism better than being an arm chair intellectual? The philosophical debate between empiricism and rationalism has been going for a while now, some believe that knowledge comes from universal, innate ideas and reason, others believe that knowledge comes from your senses, that that idea formulated by the rationalists it’s not true/nonexistent until they can test it/see it with their own eyes.

“That’s what liberty is, I thought. To have a passion, to amass pieces of gold and suddenly to conquer one’s passion and throw the treasure to the four winds. Free yourself from one passion to be dominated by another and nobler one. But is not that, too, a form of slavery? To sacrifice oneself to an idea, to a race, to God?”

I won’t take a side in this philosophical debate because I think that you can discover and better understand the world through both ways. Reading a business book written by someone with a lot of experience and who went through a lot of challenges in order to prepare myself and know how to solve similar problems is a very wise thing to do. You can assimilate someone’s decades long experience by reading/listening a few hundred pages or you can decide that the only way to find out is to do it and go through a trial and error process.

Obviously, the best solution here is the middle ground, you can read and rationalize as much as you want but if you don’t take action you won’t make things happen or you can go roll up your sleeves and go through a lengthy trial and error process that most probably someone else has already gone through it.

“I was a long time getting to sleep. My life is wasted, I thought. If only I could take a cloth and wipe out all I have learnt, all I have seen and heard, and go to Zorba’s school and start the great, the real alphabet! What a different road I would choose. I should keep my five senses perfectly trained, and my whole body, too, so that it would enjoy and understand. I should learn to run, to wrestle, to swim, to ride horses, to row, to drive a car, to fire a rifle. I should fill my soul with flesh. I should fill my flesh with soul. In fact, I should reconcile at last within me the two eternal antagonists.”

Reading the quotes you have probably guessed by now that the main character is an intellectual with a suitcase full of books that meets a very worldly and interesting man named Zorba. Zorba is a hard worker by day and an entertainer and a joie de vivre student by night.

“For in his mind our profits underwent marvellous transformations: they became travels, women and new adventures. He was waiting impatiently for the day when he would earn a fortune, when his wings would be sufficiently big – ‘wings’ was the name he gave to money – for him to fly away.”

In Zorba the Greek, the balance is obviously skewed towards empiricism because the main character is mesmerized by Zorba’s life story and by his lifestyle and character.

“I read slowly and at random. I closed the book, opened it again, and finally threw it down. For the first time in my life it all seemed bloodless, odourless, void of any human substance. Pale-blue, hollow words in a vacuum. Perfectly clear distilled water without any bacteria, but also without any nutritive substances.”

“I didn’t answer. I was envious of the man. He had lived with his flesh and blood – fighting, killing, kissing – all that I had tried to learn through pen and ink alone. All the problems I was trying to solve point by point in my solitude and glued to my chair, this man had solved up in the pure air of the mountains with his sword.”

The author realizes that when you have nothing more to lose is when freedom starts, that everything is an illusion, that we don’t have control over the exterior and nothing to lose, that everything is a challenge, that it’s the road that counts and not the destination.

“This time I had lost everything – my money, my men, the line, the trucks; we had constructed a small port and now we had nothing to export. It was all lost. Well, it was precisely at that moment that I felt an unexpected sense of deliverance. As if in the hard, sombre labyrinth of necessity I had discovered liberty herself playing happily in a corner. And I played with her. When everything goes wrong, what a joy to test your soul and see if it has endurance and courage! An invisible and all-powerful enemy – some call him God, others the Devil, seems to rush upon us to destroy us; but we are not destroyed. Each time that within ourselves we are the conquerors, although externally utterly defeated, we human beings feel an indescribable pride and joy. Outward calamity is transformed into a supreme and unshakable felicity.”