How Swedish Tech Succeeds Growing Globally
As someone who has been lucky enough to be part of a Swedish tech success story over recent years, last year I had one burning question on my mind. Have others made as many mistakes as me on the way? So started a journey of discovery to find out what Sweden’s leading entrepreneurs, tech executives and investors have learnt over the last 15 years.
This journey of discovery was actually promoted by the fact that as well as leading a high growth Swedish tech company I was also completing a MBA program and wanted to give something useful back to the Swedish tech community. Here are some of the companies that took part in the research.
The Nordics as a region region punches way beyond its weight in terms of tech success. It has been responsible for 10% of BUSD tech exits but only 2% of global GDP. If you take a European perspective the Nordics accounted for 53% of BUSD tech exits but draws only 10% of venture capital investment and represents 7% of the regions GDP.
Sweden is by far the most successful Nordic country in terms of prior success representing over 50% of Nordic exit value, 67% of total investments and now has the largest tech ecosystem in the region with over 22,000 companies and over 18% of the population employed in the tech sector in Stockholm alone.
But forget the numbers for a minute. The question I set out to answer, as well as the mistakes made, was what critical success factors led to these achievements and through indepth interviews with some of Sweden’s leading founders, CEOs, early leadership team members and investors here are success factors that count.
Entrepreneur & Initial Team
Not surprisingly the entrepreneurs and their initial team were identified as the most important success factor. 66% of the successful entrepreneurs interviewed had experienced prior international success and had considerable international experience.
One thing that was identified was the difference between a visionary and an entrepreneur. With visionaries being those that can predict the future but entrepreurs being the ones who actually have the capability to make things happen.
Diversity from day one was identified as a key building block of success. This helps build a global vision and the hiring of your first non Swedish employee to changing to English as the main corporate language within the first two years of operation was identified by all as a key success factor.
A culture of innovation was identified by all as a key element in their success stories. I expected that the focus would be on innovation from a product/service perspective but whilst this is clearly important and there are some standout examples of this type of innovation such as Spotify, Klarna and Tobii it is not the only type of innovation that should be in focus.
Particularly companies that founded with the last 5 years focused on other areas of innovation as a key success factor. This is due to the fact that barriers to entry are now so low that product supremacy cannot be taken for granted however great your product.
Clear focus on other areas such as:
- Process – Innovation / Core
- Offering – Product / Customer Service
- Delivery – Channel /Brand/ Customer Experience
- Finance – Business Model / Value Network
Are important is creating a true scalable success. What is important is that every department in a growing technology company should be challenged to constantly innovate its approach and use the build, measure and learn approach to corporate as well as product development.
In a much smaller and connected world compared to just 10 years ago the importance of an entrepreneur’s and organisation’s network was seen as equally important as innovation.
Both a local network in terms of angel/seed financing and initial talent acquisition as well as an international network in terms of scaling and partnership that can be important as a company grows were identified as important.
The development and nurturing of such networks were seen as vital to a companies success and considered to be very important particulary by the investment community.
Culture deserves a blog post on its own and maybe it will get one but for now it’s important that both national and organisational culture were identified as key success factors of Swedish tech success.
In terms of national culture the fact that a small domestic market forces global thinking combined with high engineering education, high English language literacy and impressive broadband penetration all help Sweden’s tech companies grow. In contrast the preoccupation with “lagom”, a fear of thinking you and your company are any better than anyone else and a focus on work life balance for Swedes are seen by some as a hinderance to global tech success.
Organisational culture however was seen as a key component of success and having a strong value driven company culture which is lived out every day by both the founders and employees is important.
One thing to learn as a company grows and goes beyond its comfortable Swedish or Nordic routes and gets to experience the delights and real challenges of clashing national cultures is the importance of organisational cultural similarities. Developers in Asia, the US and Europe may possess many of the same interests and passions as their colleagues around the world. The same is true of sales people, marketers and product owners. Use these functional cultural similarities to your advantage when you are trying to deal with national cultural difference which if you are successful you will need to overcome.
Of course if you are going to go global then solid financial backing is key. But there seemed to be general consensus from both the investment and entrepreneurial community that it has never been cheaper to build and market a product. You can do a lot more for less today than was the case 10 years ago. Then you had to ensure you attracted enough in both seed and series A to see your product and team properly scale.
Today it seems that with barriers to entry so low and global competition never as intense speed in product /market validation is really what matters from an investor perspective. As ever, more important than the capital that investors provide which is relatively easy to access today are the competencies and networks the investors bring to the table to help their portfolio companies.
The final key success factor in Swedish tech going global are external factors. For some it was market condition but for most the key external factor was timing. Whether timing is a matter of luck or judgement is up for debate but for many who have succeeded they reflect on the fact that their timing was spot on. If they had come to market five years earlier they would not have survived as their market was not ready. Alternatively if they had been founded five years later they would not have stood a chance to being the successes they are today.
But was your original question answered I hear you ask. Had these successful entrepreneurs, executives and investors made as many mistakes as you. The answer is 100% yes. In fact what was striking was the open nature of the leaders in the Swedish technology ecosystem. This embracing of failure and culture of learning and improvement is perhaps the reason why Sweden has and will go on to produce some of Europe and the worlds most successful tech companies.
To find out more about some of the reflections of those who have succeeded take a look at the second blog post in this series.