Passion is more important than money

Terje Christensen is a serial entrepreneur and startup mentor, however he spent last years with creating Smart Cities Norway – Network. It is an open informal network that gathers members from civil society, municipalities, startups, research, businesses and government agencies. It consists of 185 organisations and 1.400 citizens. Terje is rigth person to discuss how a conservative world of municipalities and agile startup spirit can be mixed up right in his Smart Cities Norway – Network.    

Is the Smart Cities concept a good opportunity for startups to succeed?

Yes, I think so, but they should focus on small consumers, not on municipalities. Uber or Airbnb are good examples of that. Startups are very good at creating systems and solutions, that people want. Dealing with municipalities is so time consuming and complicated that is it better to be retail oriented. Municipalities are very slow in decision making process and as a startup you don’t have any money, so you would actually run out of money and to get bankrupt before municipality can make a decision. That’s why only big companies can deal with municipalities. They have enough money and a  time to wait for decison processes to come to an end.

So, there is little chance for startup – municipality partnership?

It is possible. There was mentioned an example from Hungary, where a city needs a counters to find out how many trucks are moving on the roads. When you have system for that, ok, your customer has to be municipality and you have to convince them that you provide the best offer in the tender. That is very tough environment for startup. The hardest thing by creating something is to figure out what you want to create and how should that work. Once you know it, it is easy to produce that. That is a challenge, because startups are good at figuring out what works in reality and what not, they  constantly use the loop: build, measure, learn. And they get to solution. Then, they offer that to municipality, but town has to organise a tender and in greater detail to define what is needed. When they do that, startup will lose their cutting edge and other competitors will adapt their offers, because they know that important thing written in tender documents: what to do.

Is there any other way how to organise tenders and not to kill creativity?

There is one new form of procurement called “innovative procurement“. It means that the municipality in tender documents will say only for example, that they need water sewage system for occasional heavy rains. They don’t give full specifications. Then, municipality waits for the ideas from private firms, analyse them and after that they will go for 5 out of 10 solutions. These proposals proceed to the next round and they get paid little amount for making the prototype. Then, the tender moves to the next level. Municipality will find out that two solutions don’t work and three are ok. Municipality give them litlle bit more money to develop it further and then finally when you have just one solution left, then municipality signs a contract with the winner. Very positive side effect of that is that you have innovation process built in procurement. This is starting to be used in Norway and goverment runs a program which teaches municipalities how to do this. I think this is very good idea.

Is it effective?

Some municipalities are using it and they share their view which is positive, but I didn’t study it to greater detail. It sounds very smart and for me it is a way how smalller companies can also compete.

There is a problem when you specify your tender conditions. For example you need to restore your streets lights, so when you say: i need x pieces of steel poles, that thick, with such painting and lights with such power and so on, that is not good. You actually should say: I need lights in the street and then people from all kinds of different background can help me to put light in the streets. It can be drone with lights maybe, you open up to innovation. We do a training called reverse pitching, normally is for startups when they pitch their solution, this is for municipalities to pitch their problems. They communicate not what exactly they want but what is their problem.

Does it work with them?

We are at the very beginning, so we have done it two times only. It is not easy because it is a new way of thinking. It takes time but it will work, I believe, because that is in line with core needs of startups. Startup normally fails because they created someting that no one wants. They think there is a market, they create their solution, but there is no one interested in the product. When municipality says what they want then it is easy for startup to supply them with exactly what they want. So, we teach municipalities to communicate properly: ,,this the problem, this is the way we do it today, this is a cost of doing it today.“ No conditions how to construct a solution. Then the startup can come and to say: ,,you don’t have to do it that way and it will be this much cheaper.“ Then you get innovation into buying of new systems.

Do you see some promissing smart cities startups in Norway?

Municipalities own many buildings, which are not used in the evenings, nightime, or at the weekends. People go home after 4 pm and there is the whole empty building, which is not being used. And we all pay for this as taxpayers, so it is a problem for all of us. There is startup which try to make it possible to rent that space as a chessclub or conference rooms in the evenings. I know there is one company in our network, which has a system for this. Second idea is also a solution for big buildings, because there is always a problem with management of keys. Their solutions is to install an app on your phone and I can send you a SMS with the key so you can open the door. There is bluetooth on the door so I can send you access code and then you just will be holding a mobile close to the door and the door opens. Administrating all of the keys would be a nightmare, otherwise. I like these two ideas.

For me was a litlle bit surprising that you got to this conservative businness and organise that net with startup spirit….

I think slovak Smart Cities klub is organised in the same way. You are also not funded by government, so are we. We are fuelled by passion, because when you have no money to pay your employees, you have to be nice to the people. And I learned while dealing with startups that there is 90 percent likelihood of failure, so you have to be driven by something stronger than money. And the nice thing is, you know what? There are so many people come and say: ,,I want to work with you on Smart Cities.“ I say:,,I can’t pay you anything.“  Their answer: ,,Fine, I want to work with you, it seems to me, you have a fun.“ There are people that just want to do this. This is crazy.

What is their motivation, or a driver?

We have a couple of students, they are 25-26 years old, there are some Phd. students and some of them are even astrophysicians. They are very skilled and they think this is very intereting idea. We had worked with one woman, a journalist. She hadn’t liked their previous job, because she had got any chance to do what she knows – to write articles. We needed someone with her skills, she has helped us with writing good, readable articles. She have also showed a proved what she capable to do and then she got a new job. They are using our organisation as a stepping stone, so we can provide them the expertise and the passion, some kind of reference and then when they get hire to new job we both celebrate. It is a win – win situation. She left our team but I hope she is will be the ambassador of our Smart Cities group.

The interviewer: Juraj Kantorík