How to build innovative and impactful startups for 1€?
When can we see a rise of startups, that are created to solve serious global problems, and cost 1 euro to launch?
Currently it costs 100 euros or more to create a company. And most of the companies fail within a few years.
Over the ten years there has been a tremendous technical progress and we have seen the rise of mobile banking in Kenya enabled by smartphones. And the rise of blockchain technology, a radical innovation, that can be compared to the rise of the internet. Because it made not just information, but also assets free and disintermediated.
Some cryptocurrencies eat a lot of energy and are hard to scale, like bitcoin, other experiment with novel ideas like proof of [human] authority, like Oracles Network. Some go even beyond the technology of blockchain to create some weird new things, like the tangle by IOTA.
We need to further improve two things — technology and education, in order to reduce the cost of failure in entrepreneurship. And to reduce the cost of registering startups that have great teams and effectively solve the most pressing global problems.
“1€ startups” would allow us to register quickly any project on a blockchain, collaborate and learn from entrepreneurship.
A vision for technology that launches startups for 1€
I think we would need a 10€ smartphone, a 100€ laptop and a 1000€ digital fabrication factory to achieve that.
10€ smartphone
The smartphone would have a modular design, an open source software and hardware like the Raspberry Pi. And it would have a passionate community that would keep creating hardware modules that could turn the smartphone into a projector, a medical diagnosis tool and a VR headset.
The mobile phone would be able to also connect to other phones without telco providers and create a distributed mesh network that would effectively build connectivity from the bottom up. Especially in the areas where connections are weak.
To create a modular smartphone and for such a low price is a daunting task — even Google with their project ARA gave up on the effort. Maybe the solution lies in some compromise between modularity and ease of use, that is currently achieved by Fairphones and Moto Z phone with its Moto Mods. But both these phones are at least 30x more expensive than the target price of 10€ that would allow almost anyone on the globe to own a smartphone.
100€ laptop
The laptop is currently still an important tool for work. You can have phones and tablets for fun and to receive content. But to create content and to work, for example as a freelancer, you currently still need more than just a phone.
There are many cheap laptops, but we don’t have one that has modular design and costs 100 euro. There is the One Laptop Per Child project and now you have companies like Pi Top, that sell modular Raspberry Pi laptops for 300 euros.
One great value of projects like Raspberry Pi is that it is packed with lots of software for education, some of it is otherwise quite expensive — like Mathematica and Wolfram Language. The disadvantage is that is actually not that cheap and fun to use compared to shiny laptops and phones.
1000€ digital fabricator & personal factory
The digital fabrication factory would be a machine or set of machines that can do things like 3D printing, CNC milling, laser cutting and sawing clothes. Autonomously and with AI. It would be again modular and open source, to allow the community to create ever better tool heads that are interchangeable.
There are a few companies that combine 3D printing with other capabilities, like the Polish company Zmorph, the Italian company Fabtotum or the US company Glowforge or the Chinese robotic company Dobot.
We still need an exponential improvement in various technologies to bring down the total price of the personal and automated digital factory to 1000 euros. Also one needs to constantly recalibrate the expectations — currently it is several times more difficult to learn how to operate and take a good care of these digital fabricators than just to learn to use the computer. But this is improving every year.
Such tools can help to create a new generation of startups that will connect billions to electricity and create vastly cheaper and ecological designs for washing machines, fridges and other appliances that are currently out of reach to most of the population.
The richest one billion of people uses as much energy as the rest 6 billion of humans together. So we need vastly efficient and cheaper appliances. And a maker movement with innovative startups that create them.
1€ startups focused on Effective Altruism through entrepreneurship
We also need a scalable technology that is sustainable both financially and ecologically and registers startups in the very early idea stage for something like 1 euro, not 100 euros. Because this amount is out of reach for most humans. The median global annual income is the price of one iPhone.
Such platform and technology would help entrepreneurs with activities such as learning, project management, accounting and financial transactions, getting feedback from customers, selling online, measuring social impact and cooperating effectively with other startups in an efficient ecosystem with right incentives and ratings.
We need and ecosystem of startups that is actively pursuing something like effective altruism, creates exponential and clean technologies and solves big global problems. An ecosystem of startups that is antifragile and doesn’t fragilize the world further by creating “too big to fail” companies or institutions. And an ecosystem that doesn’t create companies that mislead their customers, or create bad habits in them, or hoard cash in tax havens and behave irresponsibly towards environment or their workers.
The ecosystem that can effectively build and coordinate “teams of teams of teams” from bottom up, and in a decentralized, exponential and fractal fashion.
An ecosystem of teams that work as effectively as Formula One pit stop workers (They can change tires in 2 seconds and less).
A vision for education that launches startups for 1€
The difference between incomes of typical families in the richest countries and the poorest countries is around 100x. The typical family in the richest world might earn an equivalent of 2500 euros a month. The typical family of farmers in the poorest countries might earn 25 euros a month in cash from the crops they sell, and the rest of the income is in-kind: from the food they produce and eat, and don’t sell.
Therefore, if those farmers need to pay let’s say 100 euros to register a limited company, for them it is as expensive as if a Westerner needed to shell out 10,000 euros just to register a company.
Most of the poor people in the developing countries already are entrepreneurs, mostly out of necessity. They often lack birth certificates, land titles, national ID cards, and bank accounts. This all makes registering a company harder. Therefore, the vast majority is in the informal and unregulated economy with a limited access to capital and a limited job security. And thus formal jobs with fair labor contracts and protection are scarce in those countries.
But most people already have cheap and so called feature mobile phones, and soon will have cheap smartphones. If the price drops to 10 euros. Mobile phones are often prohibited in school classes and thus difficult to use as education tools.
The middle income countries, are mostly in the middle of this 1 -10x -100x income multiplicator — with typical monthly incomes of 250 euros. Often they face so called “middle income trap”.
But currently even the citizens of the richest countries are freaked out by the fast pace of automation that threatens almost half of the jobs — even the most lucrative ones like lawyers, doctors and bankers. Politicians, business people and parents all cry for a radical education reform.
Education everywhere and by everyone
Our education systems and schools are mostly 100-year-old idea that is based on the needs of the agrarian society and teaches kids to be efficient factory workers. Thus schools serve three functions: 1. socializing, 2. child care and 3. education. All of them are important, but let’s focus on education.
There is a concept of Education 3.0 that originates from South Africa and promotes the use of digital technology to create “education anywhere and for anyone”. So the teacher with the projector as a paradigm for the Education 2.0 is upgraded into “anyone with any digital tool and anywhere”.
Another very important concept that originated from another South African called Seymour Papert, is constructivism in education. Kids should learn by constructing things and concepts from bottom up, learning from the process and activities, discovering and debugging their mistakes. And by creating recipes, algorithms and programs. He believed in educational power of exploring big ideas.
Seymour Papert created the Turtle program and wrote a book Mindstorms. Lego named their robotic series Lego Mindstorms in honor of this book.
Another famous South African is Elon Musk….
But back to education. To reform it and upgrade it to better nurture the skills of 21st century, we need the right concepts, tools, technology and mindsets.
We need to create a toolbox with a few simple and understandable core ideas that we can call concepts, mental models or maps. These then can form our knowledge graph, build the right ethical attitudes and inform our decision making. With such toolbox we can evaluate the real world data efficiently and decide to take the right and ethical action.
This holistic approach is quite rare and therefore I suspect there is a lot of low-hanging fruit to be picked. If you search for key words like “model thinking” or “mental models” you get only a handful of relevant sources.
Inspiration for model thinking and writing down “10x Core Concepts”
One such source is Charlie Munger, cofounder of Berkshire Hathaway, the most successful business conglomerate in the history, and Warren Buffet’s business partner and friend. Charlie Munger gave various lectures at universities, for example a lecture at USC Business School in 1994, where he described mental models he uses for decision making. These models are described here at Farnam Street blog — but they are over hundred models and are not prioritized and are too many for secondary school kids to learn.
But still, this is a good pick of 10 rules from his various lectures and interviews. But these rules are more of heuristics — or simple rules for decision making and behavior, than core concepts.
Another great source is the Coursera course called Model Thinking by Scott E. Page, but it counts even more models than Charlie Munger. Scott E. Page in his course calculates everything by hand and makes these models as simple as possible, but still it is a long list of models. Even the adult university student needs tens of hours to process it and connect the dots. But you can binge-watch the course on Youtube here.
There is an active community of rationalists and sceptics around the blog called LessWrong, that produced their set of useful mental models and concepts, but these are scattered in rather long writings, like the Rationality from AI to Zombies tome by Eliezer Yudkowsky. They engage and overlap with the Effective Altruism movement. The drawback is that they are a bit elitist bunch and closed in their jargon that has a long learning curve. But at least they have a wiki of their jargon with more than 50 quite complex concepts. But this rationality community of LessWrong has an offshoot called CFAR, or The Center for Applied Rationality founded by Julia Galef. CFAR tries to bring critical thinking onto a much higher and practical level and teach practical skills and life hacks — not just epistemic rationality (what) but also an instrumental rationality (how). But they focus their expensive trainings predominantly on super-nerds.
I would like to find an approach that efficiently and cheaply develops AQ — the adaptability quotient, rather than just builds from a high IQ.
Another very different and exotic approach is put forward by the eccentric physicist and founder of the Mathematica software, Stephen Wolfram, in his book A New Kind of Science. His approach is to “mine the computational universe” for simple programs, like cellular automata, that can be used to solve problems or create seemingly random or complex patterns that we observe in nature.
My idea is to simplify 10x, so we have not one hundred but only 10 core “model thinking” concepts that can help us to quickly learn and connect to other concepts. These 10 core concepts would make it much easier and faster to acquire 100 or more other mental models and big idea concepts from various disciplines. These would allow people or machines to take a deep dive into various disciplines. But the good knowledge of this ten core concepts would keep them from falling into too much detail and losing the bigger picture and the overall bird-eye perspective.
So I would like to create a powerful toolbox of 10 core mental models that a young person from a rural high school can learn in 20 hours and use with ease.
The ultimate difficulty then is to simplify it another 10x into something that a 5-year-old could understand. People do it for ages through proverbs. These proverbs are often contradictory, so one needs to decide which one to use, depending on the situation and an ever changing context of the real world territory. But they represent powerful heuristics to be used in various contexts.
For example, Scott E. Page mentions two opposite proverbs: “Two heads are better than one.” And “Too many cooks spoil the broth”.
[One of core concepts I mention tries to give a guide in this situations: Among the 10x Core Concepts I mention as a 4th concept “Garden versus Machine” — this is a powerful and simple metaphor mentioned by Eric Liu and Nick Hanauer for understanding complexity and the need to take a good measure. Gardens are very different from machines. If you pour too much water on your flowers they might die, if you pour too little or too seldom they might die as well. So maybe two heads are better than one, but 10 people brainstorming at once can be already counterproductive. To pursue innovations as a group, Isaac Asimov suggests to limit the number to five.]
Also I would like to create an engaging content that could summarize these concepts in one tweet, then in paragraph, and then in one lecture and finally a max 20-hour course. So for example to have a 1-minute video, 12-minute TED like video, 2-hour lecture with practical problem solving, and finally a 20-hour course.
The following 10 Core Concepts is the first draft and I built it from my lecture on Model Thinking that I prepared for our members at Sote Hub in Kenya. I am still analyzing the above mentioned lists of concepts to map them onto these 10 core concepts, or to add, remove and update them.
Use these core concepts to create an Effective Innovation Canvas
These 10x Core Concepts can be applied immediately into Effective Innovation Canvas that we created at Sote Hub and that aims to build on top of tools like Lean Startup Canvas or Business Model Canvas. We wanted to simplify them and add the aspect of effective altruism, and creation of startups that solve for the biggest global problems.
We are creating an ecosystem of startups in Kenya with Sote Hub and Sote Talent
I am part of the Sote Hub team that grows startups from rural secondary schools in Kenya, around the town of Voi. We developed our program thanks to support from Pontis Foundation and SlovakAid.
We first educate kids in our Sote ICT Clubs at 12 rural secondary schools, let them create their own training companies and compete at trade fairs and online competitions. We also let them come up and compete with startup ideas in smaller teams of max 5 members. After graduation, students can join our Sote Hub and get further training and seed funding for their startups. So far we financially supported the creation of 8 startups. Most of them use technology, like ReAfrika that builds motorbike trackers that aim to reduce theft and irresponsible driving by moto — taxi drivers. But next year we want to find and fund 10x more startups and so we need to improve our ability to scale.
Part of our motivation to innovate is fear — SlovakAid didn’t support our expansion to another region, because they argue that we are not financially sustainable enough. So currently we are boot-strapping and commercializing some of our trainings and services and reducing costs and overhead. And changing a strategy to the leaner and meaner one.
Obviously there is a threat that we will end up in some sub-optimal trap through mission drift — if we stop focusing on equality, and will start picking only the low-hanging fruit of serving customers that already have money (and prioritize them from cash strapped entrepreneurs).
But on the other hand, commercializing some of our trainings and certification can make us scale much quicker. In order to achieve that we are developing a Sote Talent platform for training, collaboration and registering projects and startups — for project-based education, such as training companies. But also for idea stage startups that have the least options to get financing through equity and quasi-equity.
We hope that more such initiatives to “build 1€ startups” can arise globally and increase the chances that we will see such startups by 2020, and thus propel the global economic development and decrease rural poverty and youth unemployment.
