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Why Does Sweden Have So Many Startups?
- gragas 9y agoThe subtitle is misleading. >How a tiny country with high government spending bred a large number of vibrant young businesses The article then goes on to attribute almost all of Sweden's success to deregulation and anti-monopoly laws---i.e., less government intervention ∝ more startup success.
- noobermin 9y agoHigh government spending and deregulation are not the same thing.
- wnoise 9y agoanti-monopoly laws seem to be the exact opposite of "less government regulation".
- nerfhammer 9y agomaybe pro-competitive market would be a better intended description
- meowface 9y agoThat's still a form of government regulation.
- nerfhammer 9y agocompetition is what all the benefits of markets comes from, not non-intervention.
- deleted 9y ago[deleted]
- Steko 9y agoThe subhead is hilarious considering the size of government in the Bay Area, New York, Boston and Tel Aviv, etc.
- kalleboo 9y agoAs usual it seems to be an issue not of the size of the regulation but the quality. Although in many areas Sweden has a lot less regulation than the U.S. - you don't need a license to be a hairdresser, taxis are mostly deregulated, etc. It seems all the time I hear about things that are micromanaged legally in the US that are just dealt with by common sense in Sweden.
- pokemongoaway 9y agoAnd it shouldn't all be characterized as success. I wonder who in this thread has actually worked in Sweden before... I've had clients there and worked from co-working spaces, and I saw more fucking around and play time and work not getting done than I've ever seen admitted.
- brailsafe 9y agoIt sounds so dismal. I'll stick to my cubicle and continue staring at my screen for 12 hours a day. Thanks but no thanks amirigt?
- pokemongoaway 9y agoSarcasm noted. It is quite a dismal place. Sure, it has great nature and the infrastructure is quite nice. However, the culture is such that most young people you'll meet are trying to escape - still while pumping out lots of overly positive marketing material via news media.
- leksak 9y agoCould you please elaborate?
- m1sta_ 9y agoAnti-monopoly laws = less government intervention?
- nikanj 9y agoCompletely missed one of the most important points: It's easier to take risks, if those risks actualizing will not destroy your life. In the US, there's very little social safety net to catch you. If you get sick before the startup is big enough, it means personal bankruptcy - and no medical treatment. Missing revenue targets can mean missing student loan payments, missing rent, etc. There's real risk you'll end up homeless in the end. In Sweden, you might end up poor, but the poor are still taken care of. You get your medical treatment, the state pays your rent, and you are guaranteed enough income to buy groceries.
- deleted 9y ago[deleted]
- jgamman 9y agoi think one of the interviewees said literally that. down near the end though so tl;dr ?
- djrobstep 9y agoThat can't be right, Paul Graham sez that if you don't treat the poor like garbage you'll get fewer startups.
- deleted 9y ago[deleted]
- fc003153 9y agoIf your startup was venture-backed, wouldn't the risk lie on the VCs instead of you?
- electic 9y agoGetting of the ground is key. Before you can raise VC money, you have to have traction. This increasingly includes seed financing as well. So either way, you have to take a huge risk to start a company where the outcome is uncertain. When you run into a founder or work for one in the US, realize the absolute big risk they are taking. People in Sweden have a safety net to catch them. The result is people are more willing to take risks to start something and you also see more innovative startups that would otherwise be considered high risk in the US by founders.
- deleted 9y ago[deleted]
- skookumchuck 9y agoHere's OMX, the Swedish stock index: https://finance.yahoo.com/quote/%5EOMX?p=%5EOMX https://finance.yahoo.com/quote/%5EOMX?p=%5EOMX vs the S&P 500: https://finance.yahoo.com/quote/SPY/chart?p=SPY https://finance.yahoo.com/quote/SPY/chart?p=SPY SPY still seems to be doing significantly better over the last 5 years.
- dv_dt 9y agoDid someone also inject 4.5T dollars into the finance industry of Sweden?
- hueving 9y agoYes, the 4.5T quantitative programs by the US gov pushed down interest rates across the entire globe. Financial markets don't exist in isolation. It's not like money injected is debt free.
- dv_dt 9y agoBut the effect on stock prices was to return them to pre recession levels (while growth did not). So regardless of what it did to interest rates (or perhaps in some part because of what it did), the QE has likely inflated prices of stocks - particularly US stocks. So the S&P 500 growth vs the Swedish index is hardly indicative of anything re: startups either way. If anything the increased stock prices in the US should have helped buoy the option for a IPO exit strategy in favor of the US.
- skookumchuck 9y agoFeel free to use a different starting year for those charts, whatever you like.
- hellofunk 9y agoThat would actually imply the point of this article, in my opinion. More startups will inevitably mean more failures due to more risks, which would drag the stock market. But that doesn't matter. You shouldn't gauge the inventiveness and exploratory nature of a country by looking at its stock index. Especially since stock indices are irrational and get inflated for many misleading reasons.
- hack4supper 9y agoHere is a summary of the article https://summarybrew.com/p/why-does-sweden-have-so-many-start-ups https://summarybrew.com/p/why-does-sweden-have-so-many-start...
- ThomPete 9y agoThat summary would apply more or less to any Scandinavian country so those can't be the reason.
- erikbye 9y agoSwedes are very different from, say, Norwegians. Swedes are forthcoming and ambitious; if you succeed in your ambition, you're celebrated by your countrymen (so long what you're doing is in the politically correct sphere). You're allowed to be proud of your achievements. Norwegians keep their head down; most seem content with what little they have. If you do achieve more success than your average countrymen, you're scrutinized, not celebrated. You must have done some immoral stuff along the way, right? All Norwegians know this. Any other Norwegians here who can confirm? Finns are kind of similar to Norwegians, in this aspect, only, drunker and more depressed. Danes are even more content than Norwegians with having even less, giving almost everything back to the state. They just want their "hygge".
- leksak 9y agoAs a Swede I disagree; I find that "Jantelagen" (https://en.wikipedia.org/wiki/Law_of_Jante https://en.wikipedia.org/wiki/Law_of_Jante) is as strong in Sweden as anywhere else that I've been in Scandinavia if not even more so. Although, I live in Northern Sweden: far away from Stockholm. Maybe individual success is viewed more kindly there, I do not know.
- TrickyRick 9y agoStrongly disagree. As a swede I've been taught my entire life not to think I'm special or in any way better at anything than anyone else. It's only in recent years I've come to realize that being good at something does actually give you the right to say you're good at it as long as it's true and not empty bragging. That's not to say Swedes aren't hard working but you'll rarely hear a swede talk about their achievements in the way a person from the US would for instance.
- Loic 9y agoThe most important quote: "Sweden’s impressive start-up record can also be attributed to some broader aspects of how the country is set up. Its social safety net, for instance, helps entrepreneurs feel safe to take risks. In Sweden, university is free, and students can get loans for living expenses, which allows anyone to pursue higher education. Health care is free too, and childcare is heavily subsidized. None of these benefits are contingent on having a job, which means people know that they can take entrepreneurial risks and still know many of their necessities will be covered. “I think if you want to be an innovative country, you have to give people security so they dare to take risks,” Mikael Damberg, Sweden’s minister for enterprise and innovation, told me." The second case, which is not present in the article is that in Sweden, working in a small company is considered a risky proposition and a such small companies are offering higher salary than big companies. It means that they tend to attract the best people too. In most of the rest of Europe (DK, DE, FR from my own experience), if you want the engineer path with good money, you need to get hired by a big company.
- flexie 9y agoOther Scandinavian countries are also doing quite well, way beyond what their size would suggest. But also well beyond other countries with developed welfare systems, such as France. I think these discussions always miss one key factor: Language. If you don't speak English quite well at an early age (already at 10-13 years old) you are much less likely to get into software development at an early age. If you don't get into software development at an early age, you are much less likely to do a software based startup when you are in your twenties. There is a thousand times as much documentation, conferences, tutorials, courses, online fora etc in English as in other languages and this is how new ideas in IT spread. Only months or years afterwards, it's translated to Spanish or Chinese, and only if it has caught on. Just about everything new in IT spreads through English, whether it's AI or web development or anything else. The Scandinavian languages are not that different from English, the countries are small and consume a lot of music, movies, TV etc from the US/UK. Movies and TV have never been dubbed, except for toddlers. So for the last 50-60 years or more, Scandinavians have been quite good at English. Your average 70 year old Scandinavian speaks English better than your average 20 year old Italian. A drunkard on a bench in Scandinavia is likely to speak better English than most academics I've met in Southern or Eastern Europe. We live in an era of software driven startups. It's easy to forget that it was not always like that. There were times when successful businesses were driven by mechanics (GM), electronics (Sony), chemistry (Kodak), trade or other factors. Now it's software, and whether your language, framework, or library of choice is C, C++, Python, Lisp, Java, PHP, JS, HTML, CSS, Tensorflow, React, or almost any other tech that the unicorns are built with, the new developments in that tech will initially have spread from English speakers to English speakers. The fact that the largest software companies in the last two decades have all been American then reinforces that trend.
- z3t4 9y agoSweden have good working morale and extremely high unemployment rates among young people that often have high education. If you start a tech company you will be flooded with applications and you can cherry pick talents. The entry wage for developers are around $25,000 year, yes year, not monthly!
- Kiro 9y agoI have no idea why you think that. I can assure you that no developer in Sweden gets paid that little.
- TrickyRick 9y agoWhile I have seen people fresh out of high school making about those numbers as devs most college educated engineers start at around $3000-$3500 monthly. Bear in mind that this includes (nearly) free health care, free education and very low interest student loans, so you normally don't start of with several hundred thousand dollars worth of debt.
- scrdhrt 9y agoAs a former tech recruiter in Stockholm I can assure you that they do. These devs, however, usually do not have a degree from university/college, and are either juniors and/or self taught. If you look at the university/college educated devs the story is different, but not by that much. Entry level median salary for devs without higher education from the year I left recruitment (2013/2014) was 28000 USD per year. Add 3000 USD for entry level devs with university/college education. YMMV but I don't think things have changed that much since then.
- Kiro 9y agoI would still be very surprised if any developer in Stockholm is paid $25k a year as OP says. That's less than 17k SEK a month. I also don't think your numbers are valid anymore. The demand on developers is completely crazy in Stockholm right now. Even with minimum prior experience you shouldn't settle for anything less than 25k a month.
- anovikov 9y agoMany startups and many 'small businesses' are different things; what about value of startup exits in Sweden, vs its nominal GDP? How does that figure compare to the U.S.? Sweden may look tiny, but in fact it has GDP 1/36th of U.S., did it also generate ~$100B of startup worth in 20 years (Silicon Valley made about $2.5-3T in this time and quite a bit - maybe up to $1T - elsewhere in the U.S.)?
- mixedbit 9y agoWith Swedish high cost of living, is it feasible to bootstrap a product company there (a company that needs time to build something to sell) or is an outside investment the only feasible path for such companies?
- henrikschroder 9y agoHigh cost of living compared to... what? Stockholm is much cheaper than Silicon Valley, but it's more expensive than Houston.
- mstade 9y agoHigh cost of living? Where’d you get that idea? It’s true that some things are certainly more expensive – gas, alcohol, dinners in mid to high end restaurants – but other things, notably the big ticket items like rent, are typically cheaper than in many other places I’ve been and especially big cities. No need to pay health insurance or other not-really-optional fees is also relevant. Sweden isn’t perhaps cheap per se, but I wouldn’t say it’s much more expensive than anywhere else. I live in Sweden, and I’ve lived abroad in both the UK and US, and I’d say living in Stockholm is a lot cheaper than London, and certainly a lot cheaper (and much easier, if you can find an apartment that is) than NYC or SF. But of course it depends on your way of life I guess. FWIW I’ve bootstrapped my business, and as someone else suggested in this context the social safety net takes away a lot of the anxiety in doing this. It’s not easy, but I also know if shit hits the fan I won’t be out on the streets the next morning.
- yolio 9y agoI don't think so. It used to be like 10-15 years ago when many of these startups were created, but things have changed since then. Many people are in denial though since they already have their education, apartment and insurance. It used to be possible (or at least not impossible) to rent an fairly cheap apartment close to the city and find a way to do something on your own. Conditions for getting a student loan, leave of absence or unemployment used to be more favorable. Since 10 years ago the government have been actively trying to get more people to work. With the consequence that it is harder to do anything else. Studying, getting unemployment (risking your job) and living (housing costs have doubled) has all become harder to do. Most people these days would risk their job or apartment and do something on their own, because chances are will have a significant reduction in life quality if they fail. Most startup activities these days seem to be running around cocktail parties trying to get (more) investors for you local clone of something else. Which is understandable, people need to pay their mortgage and attain social standing, but it's largely the opposite of what has made some Swedish startups successful in the first place. One could try getting investments. But while Sweden is in generally has high degree of equality, it can also be very insular. Especially in recent times as social status matters a lot. You shouldn't expect to show up and compete based on your ideas. It's very much "who you know".
- JensRantil 9y agoAmerican engineers who are tired of Trump; Feel free to come work with us in Sweden! ;-) Swedish startups are hiring and there's definitely a shortage of engineers at the moment.
- muninn_ 9y agoI feel like I hear this all the time “come to France! Come to New Zealand! Come to Sweden!” But I never hear stories of people doing this successfully. So I have a friend who has 2 years experience as a developer at an average company - mostly Java. Should she move to Sweden? What company will hire her? What companies should she look at?
- Grustaf 9y agoI think more important than the welfare system (potential entrepreneurs probably don't see welfare as their backup solution anyway) is that the quality of life depends so much less on income than in say the US, so people are not that worried about earning less for a few years. You still get the same healthcare and education, the same access to sports (even golf!) and nature (very important for us), and since there is zero stigma associated with public transportation it doesn't matter if you can't afford a car.
- yolio 9y agoI think that's true. But it's also that he Swedish concept of welfare has traditionally included the broader concept of "the welfare state". Meaning that welfare doesn't just apply to social security as such but the availability and quality of housing, education, care, transport and, as you say, even recreational activities. It's not that sport organizations in Sweden are open to everyone out of the goodness of their hearts (though I think many people support it). It's because they are required to if they want to be registered as non-profits, receive government funding, rent subsidized facilities owned by the state etc.
- Grustaf 9y agoRegarding sports there is nothing stopping anyone from starting an entirely profit driven club, like most gyms for example, as far as I know. I think it's mostly a matter of tradition. And the financial support you get for that type of broadly run organisation, not just sport. But that too speaks to the egalitarian traditions.
- yolio 9y agoWhat's stopping them is of course that they can't compete with non-profits that are being subsidized by the state. (Which I don't disagree with). Sure, it is a tradition, but like many things it's enabled by the laws on the books. For instance the school system isn't very egalitarian, at least not in Stockholm, these days (nor is the housing market for that matter). The school system is quite different compared to e.g. Finland. The laws changed and so did the quality of different school. "Grade inflation" is very common etc.
- johankmagnusson 9y agoI've considered launching a start-up of my own here in Sweden so I've given the pros and cons some thought, and it is virtually risk free. To summarise, compared with other countries, we may have even more of the upside but the downside is capped at a very anxiety free level. These are a few of the reasons: - highly skilled labour is cheap in absolute terms and the cost to performance ratio for such workers is probably amongst the absolute best in the world. Good for a start-up! - For the individual worker a job as a highly competent senior developer on average in my 20 years of experience is pretty much just double that of a garbage collector. Salaried men don't get ahead much but start-up workers do to a similar extent as they do in other start-up hubs in the world. Good for the early employees getting shares or stock options. - Social security systems would still leave me able to stay in my nice home in my nice suburb even without a job. It would not affect the healthcare or education for me and my family at all. I would have to cut down on my intercontinental vacations with my family though. It feels like bet I could make without too much anxiety. -Sweden has had, and still have to some extent, lots and lots of world leading large tech companies in pretty much every industry like automotive, telecom, different types of processing industries etc. Lots of skills, knowledge and ideas has spun off these large companies or started as suppliers to these. I think this ecosystem is one of the more critical factors which the other Scandinavian countries lack. I cannot come to think of even one Scandinavian unicorn-ish type of company from another Scandinavian country than Sweden. Finnish Rovio is close though, but I cannot come to think of any other non-Swedish company. Sorry but please fill me in here Norwegians, Danes and Finns! - Stockholm specifically, where all the companies mentioned in the article are from, is a tech hub with lots of skilled and nice people living and working here and lots of good tech companies which makes it start-up friendly for the same reasons it would anywhere else in the world. - The Swedish society, compared with most other I've experienced, is pretty well oiled and modern (not saying there isn't room for lots of improvement) where infrastructure like transportation, administration of personal and company affairs etc work quite well. More time and energy to focus on stuff that matters like your business and your family. - The weather sucks for at least 6 months of the year. No I'm serious here. Having pretty much nothing else to do than to work and watch Netflix frees up lots of time and energy for work. My five cents…
- KozmoNau7 9y ago
- zurn 9y agoSounds like the whole discussion is kind of blurred by the definition of what a start-up is. IMO the article misrepresents the cited study[1], which doesn't talk about "start-ups". It could just as well be represented as: in weak state countries lacking a stable operating environment for large businesses, companies are short-lived and the only option for many people is self-employment. Also, the size of state sector vs private sector just tells you how the activity in the country is organised: you can have public healthcare or private healthcare, and of course the private healthcare means more private sector activity. It doesn't mean that the private sector healthcare is a better outcome. [1] PDF link: https://www.aeaweb.org/aea/2011conference/program/retrieve.php?pdfid=347 https://www.aeaweb.org/aea/2011conference/program/retrieve.p...
- james1071 9y agoSuspect the reasons are: 1 very good free secondary and university education system 2 good English language skills 3 social safety net
- Jommi 9y agoThose same things apply to other Nordic countries, yet they are not as succesful.
- chimeracoder 9y agoNobody's really mentioning it, but taxes are a huge consideration. For US companies, acquiring an overseas company provides an easy way to repatriate cash without having to pay the higher levels of tax on it. Note that a number of successful Swedish startups were acquired either by US companies or by international conglomerates with a strong US presence. That's not a coincidence.
- Jommi 9y agoThis is a good point. Especially with Sweden being pretty easy on the taxes on acquisitions, compared to other Nordic countries.