29 March 2012 by Pelle Neroth
He thinks hardware is a static market; and the companies able to change the rules of the game are those specialising in online service provision. Examples could be internet-mediated education, and smart phones to monitor the exercise habits and heartbeat rates of an ageing population.
Zennström and his partner Janus Friis sold Skype to Ebay for $3bn in 2005, then bought it back and sold it to Microsoft for $8.5bn in 2011. He is the most successful tech entrepreneur in modern Sweden - but not the only one. Other well known Swedish innovations include MySQL, sold to Sun Microsystems for $1bn in 2009; Spotify, the streaming music service; and DICE games, which developed the successful Battlefield series.
These Swedish successes, in turn, have been a source of inspiration for a new, younger internet entrepreneur generation, now being highlighted in the media at home and abroad. Ten years ago, if you said the words "Sweden", "internet" and "retail", you might have come up with the name Boo.com, the apparel retailer whose three young founders burned through $135m of venture capital in just 18 months. The problem with "one of the greatest busts in internet history" was overstaffing and bandwidth intensive graphics at a time most people were on dial-up. Cofounder Ernst Malmsten later wrote about his experience in a book entitled Boo Hoo.
The new companies have names like IZettle, Wrapp and Soundcloud and are in the process of being launched in the UK and the US. IZettle is a small gadget you attach to your mobile phone that allows card payments to be taken on it. Perfect for small businessmen, couriers, deliverymen. Wrapp is an online gift card service, Facebook based, that enables the voucher sent to your friends' or lover's mobile to be taken to the retailer, who scans it off and permits the purchase.
Sweden has always been a technology-oriented country. Alfred Nobel pioneered dynamite in the 19th century, Ericsson was a leader in phones; today it is one of the world's largest telephone equipment manufacturers. Sweden has produced two volume carmakers, Volvo and Saab. It is sometimes said the long, dark winters turn the Swedish male into a tinkerer. In a small country, entrepreneurs have to think internationally from the start.
Some of the entrepreneurs have benefited from international venture capital from companies like KPCB and Greylock; others, like Scrive, a service that allows contracts to be signed digitally, started out self funding. According to the FT, quoting Thomson Reuters, Stockholm tech firms got nearly $200m in US venture capital funding last year and $308m in 2010, less than London but more than either Paris or Berlin.(1)
All this is important.
David Cameron has talked about Scandinavia and the lessons the region can teach Britain in terms of equality and high living standards coexisting with open economies and technological innovation. A few weeks ago Swedish prime minister Fredrik Reinfeldt brought together UK and Nordic/Baltic leaders in Stockholm for a relaxed, informal two day policy-making seminar.* It was doubtless a morale booster for Cameron after the spectacular snub by the French and Germans in Brussels last December, when he vetoed a new euro pact. Reinfeldt, a fellow conservative, has long been a supportive political friend. Neither France not Germany were invited to the Stockholm meeting.
But Cameron seems genuinely curious about the Scandinavian way (2) - which may make him suspect in traditional Tory circles.
Last year, the same Nordic-UK grouping of prime ministers met in London, and Zennström and other tech leaders attended to help showcase Scandinavian technology and social policy.** At the annual conference of the global elite in Davos a few days later, Cameron used Spotify as an example to describe how big ideas flourish in free societies. (3)
Incidentally, I would not be surprised if issues other than IT technology were discussed, although this was absolutely not on the official agenda. For example, the Arctic, which I wrote about a few weeks ago. A Norwegian military transport plane crashing in Northern Sweden (4), killing five, highlights the fact that a big NATO exercise has just taken place in the region. (5) Sweden, for instance, chairs the Arctic Council (of which Britain is not a member) this year.
When you are jockeying for position in the Arctic, as Britain surely is, it must help to have Scandinavian friends.
*2012 Stockholm seminar http://www.sweden.gov.se/nff
**2011 London seminar http://bit.ly/xJ1cPd
Pelle Neroth -- EU correspondent
Posted By: Pelle Neroth @ 29 March 2012 09:06 AM General
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