“The US has 320 million people and has produced Amazon, Facebook, Google, Apple, and Microsoft. It is insane that Europe has a population almost twice as large and doesn’t have one of these companies. Statistically, that’s an anomaly.” This statement is the battle cry of Daniel Ek, the Swedish founder of Spotify, the world leader in music streaming technology.
With a population of only 9.8 million, which is less than half that of Lagos City, Nigeria – using New York Times figures, the country Sweden is the innovation and high technology capital of Europe, and second only to Silicon Valley in the U.S. on a world stage. (Of course, Silicon Valley, in Northern California, is the birthplace of a disproportional number of world’s coolest technologies.) So, Daniel Ek and some of his patriotic Swedes are on a mission to challenge the status-quo, or American technology dominance, undiscouraged by their country’s small population.
Abba, the legendary musical group, has, until recently, been the most memorable export of the Swedish people. Today, in the high tech arena, besides Spotify, we know of Skype, which, though now belongs to Microsoft, was developed in Sweden by Niklas Zennström, before being sold to eBay, who in turn, sold it to Microsoft. Ek didn’t like the idea of selling Skype out of Europe: “Whenever a European company has ever been on the brink of success, it’s sold,” he said to a small group of reporters at the Brilliant Minds conference. “I told Niklas Zennström, you sold too early…. Skype could have been one of the big ones.
A lot of the high tech outfits in Sweden are located in Stockholm, the 900,000-people capital city. Stockholm is where global brands like Skype, Spotify, Minecraft, and Candy Crush Saga started out. The U.S. company eBay bought Swedish telecommunication company Skype for $2.6 billion in 2005 and Microsoft snatched it from eBay for $8.5 billion in 2011. (This was the largest takeover acquisition in Microsoft’s history.) American interactive entertainment firm Activision Blizzard bought the makers of Candy Crush Saga for a reported $5.9 billion. These are events that have irked Mr. Ek; poor Ek, money talks! Well, the Swedish software company MySQL was also bought by Sun Microsystems for $1 billion in 2008 and is now owned by Oracle. Of course, MySQL is the relational database software.
The Wharton School of Business, a College of the University of Pennsylvania, USA, and one of the leading business schools in the world, did an article in November of 2015 on the Unicorn Factory in Stockholm. “The music streaming service is the fifth unicorn, the name given to tech companies founded after 2003 that have reached valuations of at least $1bn, to come out of Sweden. Although the UK is home to more unicorns than Sweden – including Zoopla, Just Eat and Wonga – the Scandinavian country is the second most prolific tech hub in the world on a per capita basis, producing 6.3 billion-dollar companies per million people, compared to Silicon Valley’s 8.1, according to a recent report from the investment firm Atomico.” The Wharton article further pointed out that “Skype became Stockholm’s first unicorn when it was bought by eBay in 2005 – just two years after it launched – and has since been followed by Spotify, Candy Crush parent King, Minecraft maker Mojang and the payments service Klarna.”
“Stockholm is becoming a world leader in technology,” Skype creator Niklas Zennström, who also founded London-based Atomico, was quoted as saying in November 2015 at the inaugural Brilliant Minds conference, the brainchild of music manager Ash Pournouri and Spotify founder Daniel Ek. “We are living in an extraordinary time, and there is no doubt that Sweden is a leader in this proud new world. The dream we had of becoming a tech community 10 to 15 years ago is now becoming a reality.”
According to Lauren Davidson in her 28 June 2015 article in Telegraph (UK) on the same topic: “The Nordic region represents two percent of global GDP but has accounted for almost 10 percent of the world’s billion-dollar exits over the last decade, with more than half of these coming from Sweden, according to a report published in March by the Stockholm-based investment firm Creandum.” The year 2014 marked the best year ever in terms of exit value for Nordic companies, including three $1bn exits and more than $13bn in total exit value.”
Developments like the ones that are re-shaping Sweden do not happen by accident. In the case of Sweden, the global success of popular Swedish brands, government foresights, and infrastructure planning, have certainly promoted the events that led to the establishment of over 20,000 high tech businesses in Stockholm. This is something for other countries to learn from.
This article continues next week.
