After music, design, fashion, ad agencies and digital bureaus – say hello to Stockholm’s latest export: the sexy start-up.
It might seem faintly ridiculous now, but Stockholm wasn’t exactly party central during the 1990s. Sure, tennis pros, rock stars, models and other professional party animals were living it up in glamorous spots like Vickan, Café Opera, Ritz and Melody.
But for most people, Stockholm was not much fun at all. First off, you could just barely have a drink. For the large part of the 1900’s you could not order hard liquor or beer with an alcohol percentage of 3,5 or over without ordering food, a law that wasn’t taken away until 1978. Second, there was almost nowhere to go: restaurants were sparse and bars pretty much non-existent. Third, we were on a restricted entertainment diet, drip-fed censored movies at the movie theatre and two state-owned TV channels that were jam-packed with Eastern European children’s shows and not much else. Stockholm was pretty dull at the time.
But around 25 years ago, something began to happen. The TV state monopoly was ditched, and during the following years new exciting channels like ZTV, TV4, TV3 and Kanal 5 emerged – as well as commercials on TV, which meant that advertising suddenly wasn’t looked down upon anymore. In 1996, the right to issue liquor licenses was transferred to a more local level – the very same authorities that wanted to see local businesses thriving – with an explosion in the number of restaurants as a result. A population starved of cultural output and boozy fun suddenly exploded in creativity: clubs popped up like daisies, new ad agencies and graphic design schools were born, school-kid techno was being produced in every bedroom, fashion brands got established, home-grown music labels were set up and obsessed over in Japan. Stockholm got a reputation of being trendy. The floodgates had opened.
As access to the Internet soared, inspiration from – and distribution to – the rest of the world was suddenly possible. Sweden’s long history of technical expertise married with this new input of creativity has created a new field, our latest to excel in: the sexy tech start-up.Spotify, Skype, Mojang, Klarna, iZettle, Wrapp, Mutewatch, Publit, Teenage Engineering and many more have given us a place on the global start-up map. And the rest of the world is watching.
According to a 2011 study from Price Waterhouse Cooper and Partnership for New York City, ranking 26 large cities in 10 different criteria of success, Stockholm was ranked as the world leader of innovation. The latest Global Information Technology Report, published by the World Economic Forum and measuring to what extent 142 economies take advantage of information technology for their growth, found Finland, Singapore and Sweden at the top. In a survey recently made by Organization for Economic Co-Operation and Development, Stockholm was found to be the world’s 8th most inventive city, based on the total number of patent applications for every 10,000 residents in a metropolitan area.
Jesper Kouthoofd is the founder and CEO of Swedish invention house Teenage Engineering, which manufactures the already-iconic portable synthesizer OP-1 and also conducts research and development in areas like electronics, mechanical engineering, design and user interface experience. As one of four co-founders of the 90’s graphic design company Acne, which later turned into one of Sweden’s biggest fashion exports, he has seen the entire transformation of Stockholm from up-close.
“Stockholm and Sweden have a great tradition of inventions and research and have always been innovative,” says Jesper. “But what has happened recently is that people with a different background – in arts, music, design and other aesthetic fields – are teaming up with the tech people to produce stuff that is smarter, cooler and better looking than before.”
During the eight years that Teenage Engineering has been active, Jesper has noticed that the industrial landscape in Sweden has changed. With heavy industries losing ground, manufacturers can no longer afford to decline smaller customers:
“It would have been much harder for us to manufacture OP-1 just ten years ago. The bigger manufacturers are starting to understand that small, idea-driven companies are the future and that’s one thing that makes Stockholm a great place to develop ideas in. I also think that Stockholm has an advantage because it’s small – there’s a high concentration of ideas in a limited area.”
As one of the main players in the 90’s re-birth of Stockholm, Kouthoofd has witnessed several waves of successful Swedes setting up shop in the US – first the ad agencies in the 90’s, spearheaded by Mother and Traktor, and in the following decade the digital agencies like Farfar, Great Works and Your Majesty:
“Every such wave of media development brought back a lot of self-confidence and know-how from those who returned to Stockholm, and I have a sense that people are staying here to a greater extent now – you don’t need to go to New York to reach the full potential of your company anymore. Thanks to the Internet, you can have a company in Stockholm but sell most of your stuff in Tokyo. In Teenage Engineering’s case, 70 percent of our shipments go to California, and we sell more to Japan than to Sweden.”
Ever since the word hipster started to emerge in the media vocabulary, it has been used as a derogatory term for neurotic early adopters of everything from the latest music genres to the current street fashion to riding bikes without brakes and spending a day making chilli from scratch – infecting the cities with cheesy nostalgia and forcing up house prices in the process. It might be an unpopular stance, but Jesper Kouthoofd wants to defend the much-maligned hipsters.
“The hipster is one of Stockholm’s biggest assets, because hipsters are doers – they don’t sit around and complain, they open shops and bars and cafés and clubs. The predecessors of today’s hipsters were the ones who transformed Södermalm into something they’ve seen in Williamsburg and started calling it Sofo, and you can think what you want about that, but to make a city a fun place to live in, you got to roll up your sleeves and make things happen. I see this happening all over Stockholm now, young creative people taking things into their own hands and accomplishing great things, whether it’s a club like Trädgården or a small electronic start-up. I love hipsters.”
A Stockholm tech start-up that has got a lot of international attention is Mutewatch, who launched the world’s first silent touchscreen watch in July 2011 during Berlin Fashion Week. The Collette concept store in Paris secured the exclusive retail rights for two months before the product was shipped to stores such as MoMA in New York, Maxfield in LA and Selfridges in London. Founded in 2008 by Mai-Li Hammargren, Oscar Ritzén Praglowiski and Gustaf Hammargren, Mutewatch has been hyped by no less than Apple founder Steve Wozniak, describing it as “a masterpiece of combining material in ways I’ve never before seen” and it is currently on a world tour as part of a Swedish Institute exhibition, showcasing the hottest new innovations from Sweden.
Says Mai-Li Hammargren: “I remember one thing they said about entrepreneurial nations when I studied at Stockholm School of Economics. There were two types: the nations that have to be entrepreneurial because they have no other choice, like people in Uruguay selling bananas on the street, and nations where people feel so secure that they can afford to be entrepreneurial, like Sweden. We were still at school when we founded Mutewatch and that was important for us, to have that peace of mind; we could develop our product for three years before we had to start selling.”
Another key factor to Stockholm’s current tech centre status is the cluster of lifestyle brands and their helpful and encouraging attitude towards newcomers, says Mai-Li Hammargren:
“We’ve been extremely fortunate in having a number of great companies helping us out, from Teenage Engineering and Zound Industries to WeSC, Cheap Monday and Acne. The company culture in Stockholm is definitely one where you help each other out, and the bar scene is the platform for that.”
It might have been conceived in Stockholm, but Mutewatch was born global. With worldwide shipping offered from the start, Mutewatch was sold to 40 countries within hours of the web launch. In Mutewatch’s eyes, markets don’t really exist anymore. You can find their watches in 150 stores in 27 countries, but they’re thinking in hubs, not markets:
“I have more friends in New York than I have in Malmö. We’re not available in the US; we’re available in New York, San Francisco and Chicago. And we chose to have our launch parties in Berlin and in Amsterdam, not in Stockholm. Stockholmers are hard to charm, and they tend to overlook things that are happening too close. They will always think what some dude in Tokyo is up to is more exciting than what their next-door neighbour is doing. They want to discover things themselves, not have things thrown in their face. And I like that they’re difficult like that.”
Mutewatch perfectly fits the description of the new type of Stockholm tech start-up, that team consists of people of different backgrounds and expertise:
“I have a strong belief in interdisciplinary teams. I started Mutewatch with people from The Royal Institute of Technology, and people went, ‘why don’t you start it with someone from Stockholm School of Economics? Why are you working with that artist, what does she know about business?’ For me it was a prerequisite to work with people who know what’s cool and have the right connections, which was just as important as technical know-how. You have to understand what you’re good at and be humble about the rest.“
In the evolution of Stockholm cool, companies from the previous waves of talent explosion are indeed helping the newcomers. The digital brand consultancy Great Works was founded in 2002 by Ted Persson and David Sundin and quickly became one of Sweden’s most sought-after digital talents. Today they have 92 employees in offices in Stockholm, New York, Tokyo and Shanghai, and are currently looking at expanding their business to encompass an incubator for new tech start-ups, where they would develop both their own and other’s ideas.
“What’s happening right now in Stockholm is that a start-up scene is emerging – events are being arranged with speakers and panels and networking: there are actually places being formed where entrepreneurs can meet like-minded people and share ideas. STHLM Tech Meetup has been arranged a few times, and the event guide Vamos is hosting tech nights. Before we had isolated islands like Skype, Klarna and Spotify, but now we’re starting to connect the dots and build bridges”, says Ted Persson.
Stockholm has sailed up the charts to become one of Europe’s top three tech centres alongside Berlin and London, and although it doesn’t have London’s financial muscle or Berlin’s dirt-cheap rent, what we do have is a great digital infrastructure with high internet usage and a lot of early adopters. But we do need more capital.
“Traditionally, you have to have started your company to get investors in Sweden interested; nobody has been willing to invest in just an idea. That has got to change, and it is changing – more investors are understanding that it’s smarter to give smaller amounts of capital to more ideas than to put all your eggs in one basket. But we have to get a lot better at that, and I also think we need to build more bridges between London, Berlin and Stockholm, and exchange capital and ideas across the borders to a greater extent.”
Tyler Crowley is known from the noted Los Angeles-based podcast This week’s start-up and is CEO of Skweal, an app that connects customers and business privately rather than dealing with negative comments or reviews online. He has become a key player in the Stockholm start-up scene of late, producing events like the monthly STHLM Tech Meetup and helping other key initiatives to build up the tech community as a consultant with Stockholm Business Region.
What makes Stockholm great for start-ups?
An awesome talent pool to draw from, and you don’t have to worry about them leaving your start-up to join Facebook, Twitter and Google. In the past year several event groups have started and lots of meet-ups are taking shape which has given birth to a growing community of helpful entrepreneurs. Also, multiple people are making moves to fill in the business angel void. The biggest problem right now is finding apartments for new employees which is why some leave for Berlin.
What advice would you want to give to someone who has an idea for a start-up?
Test it. Learn about Lean Startup methodologies and test your idea before you risk time and money building it.
Nille Svensson is co-founder and creative director at Publit, a one-stop shop for producing, publishing, managing, selling and distributing books; both physical and electronic.
What makes Stockholm great for start-ups?
Sweden and Stockholm are still characterized by a Scandinavian, egalitarian society. Studies show that people are making decisions based on what they could possibly lose rather than what they might win, which is why stable and socially secure societies always will be the best platform to encourage individuals to realise their ideas. Also, our egalitarian values make us less prone to build hierarchies, and this makes people at powerful positions more accessible. The last couple of years, start-ups have become more prestigious in Sweden. Before, working on your own idea was considered a bit weird and most people wanted to work for big international companies. Now it’s considered cool to start your own company and that makes for a better climate too.
What advice would you want to give to someone who has an idea for a start-up?
Don’t fall prey to thinking that all successful business ideas are based on great innovation – sometimes a great idea is the result of solving a problem in a quite conventional way.
Caroline Walerud is CEO for Volumental, the world’s first cloud-based 3D scanning solution that lets anyone create 3D models of people, objects and rooms through recording a short film that is converted into a 3D model within minutes:
What makes Stockholm great for start-ups?
Swedes are educated, tech-savvy early adopters, meaning that we have a great test market at our doorstep. Because of the small market, our start-ups quickly learn to go global. Also, the start-up community has grown massively in the last few years thanks to a “Björn Borg effect” where some success stories such as Mojang, Spotify and Klarna have made entrepreneurship more popular. This has provided Stockholm with a great and growing ecosystem for start-ups, with meet-ups, start-up hubs and incubators.
What advice would you want to give to someone who has an idea for a start-up?
Start going to start-up events like STHLM Tech Meetup and the ones that Stockholm School of Entrepreneurship are hosting. You’ll be inspired, find your co-founders, and get valuable feedback on your idea before you’ve wasted time heading in the wrong direction.
Other notable Stockholm start-ups:
Wrapp lets you give free gifts and paid gift cards to your Facebook friends.
Tictail is a free online shop solution that helps you create a beautiful online store within minutes and helps you run it.
Magine gives you web access to all programs from your favourite channels, live and recorded.
With Instabridge you’ll never ever have to ask for a friend’s Wi-Fi password again and can easily sync passwords between your tablet and phone.
Degoo lets you back up online and with Plotagon you can create your own animated movies.
Want to know more?
Blog: Tracking the latest news in the Stockholm start-up scene: http://swedishstartupspace.com/
Business Accelerator: STING, Stockholm Innovation and Growth
Film: The Startup Kids is a documentary about young web entrepreneurs in the U.S. and Europe.
