
Why Does Sweden Have So Many Startups? - henrik_w
https://www.theatlantic.com/business/archive/2017/09/sweden-startups/541413/?single_page=true
======
Loic
The 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
Other 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.

~~~
mlevental
>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.

china and russia beg to differ?

~~~
flexie
There are many great Russian and Chinese developers but little Russian or
Chinese software has spread outside those countries. Except viruses, maybe

~~~
thrownblown
vue.js

~~~
flexie
Yes, that's one. A good one :-)

------
Grustaf
I 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
I 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
Regarding 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
What'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.

~~~
Grustaf
Ah, but they would be able to compete with the subsidised, volunteer run
organisations if there was greater willingness to pay for a more
professionally run club, with better facilities etc. This does happen for some
sports, such as gyms where there is a market for upscale clubs, but not for
football for example, to my knowledge. People would just feel weird about
putting their children in a luxury football club.

Every year when it's time to sign the children up for ballet, football,
gymnastics etc it's the same thing, extremely high pressure on all clubs,
places fill up within hours. I'm sure that if it wasn't for Jante, there would
be a huge market for more expensive clubs with shorter queues.

In what sense is the school system not egalitarian? It's not very good
anymore, true, but that has other causes. I mean all schools cost the same,
i.e. nothing, and anyone can apply to any school. It's even forbidden to
charge for school lunch, or even ask children to bring fruits because "some
people may not be able to afford that" (though this is going way too far in my
opinion).

I agree that housing has changed, and prices are getting pretty crazy in
places. But regardless of the price differentials between areas, which still
are far from as extreme as in the US, my point is more that it doesn't matter
as much which area you live in, your quality of life will be pretty similar.
Building standards are extremely high in Sweden so even the cheapest places
are pretty robustly made at least. And the houses on the most expensive
addresses are still relatively modest, there are no doormen or valets or crazy
things like that. The differences are more subtle, and there is less showing
off.

------
anovikov
Many 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.)?

------
chimeracoder
Nobody'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
This is a good point. Especially with Sweden being pretty easy on the taxes on
acquisitions, compared to other Nordic countries.

------
zurn
Sounds 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.p...](https://www.aeaweb.org/aea/2011conference/program/retrieve.php?pdfid=347)

------
z3t4
Sweden 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
I have no idea why you think that. I can assure you that no developer in
Sweden gets paid that little.

~~~
scrdhrt
As 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
I 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.

~~~
scrdhrt
While I think you are right in saying the salaries probably has gone up, I am
very hesitant to believe that they are more than 25-30% higher. There were
boatloads of devs coming out of these 12-14 week bootcamps or vocational 80
week programs (KY) with promises of work, and the market was flooded. This
kept salaries down. I don't think it has become any better.

I had a look at some old notes and stats from 2012-2013. Knowledge in JS, Php,
Java, Python or C/C++ were required for all of the positions.

14 recruits in the 18-20 yr, no edu bracket (high school dropouts/just
graduated), mean salary 24451 USD (199200 SEK)

24 recruits in the 18-20 yr, bootcamp/vocational edu bracket (high school
dropouts/just graduated), mean salary 27249 USD (222000 SEK)

17 recruits in the 20-22 yr, bootcamp/vocational edu bracket, mean salary
28869 USD (235200 SEK)

29 recruits in the 20-26 yr, higher edu bracket, mean salary 34467 USD (280800
SEK)

These were placed with employers, startups and established companies, in the
tech sector. Mainly in central Stockholm and Kista (tech hub outside of
Stockholm).

Make what you will of this, the amount of job seekers with bootcamp/vocational
education hasn't gotten less than in 2012/2013\. I believe this keeps the
salaries in Stockholm down, and makes you settle for less if you want the job
at all. Entry level salaries for devs in Stockholm are low.

BUT - as soon as you get some experience under your belt, you can rise quickly
in salary by job hopping for a year or two.

------
nikanj
Completely 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.

~~~
adventured
> 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.

Way to propagate an ignorant myth. The US has a massive welfare state and
social safety net. The average poor person in the US can typically draw
$25,000 to $30,000 in benefits per year depending on the state they live in.
Those benefits include free healthcare, housing, food, work training, etc. For
some states, such as Hawaii, it's nearly $50,000 per year.

Just drawing on several of the most common welfare benefits programs in the
US, gets you near $20,000 per year.

According to a fact check by the Washington Post in 2014, the median total
individual welfare benefits package in the US was $28,800.

Let's put it another away. These welfare benefits numbers are so high, they
exceed the median income in all but a few very wealthy nations.

~~~
fish_fan
You’re only addressing half the comparison. Yes, the US has welfare, but it’s
conditional and often insufficient.

~~~
adventured
Of course it's conditional, as it should be. If you're at or below the poverty
line you can draw on the most welfare benefits, if you're earning a median
income the benefits you can utilize are diminished.

Proclaiming it's often insufficient is a comically loaded premise. How often?
In which states? Under which circumstances? I've got the perfect response for
that: it's often sufficient.

According to the OECD's numbers, the US poor live better than almost any other
poor people on the planet save for those in a select few countries (eg Canada,
Norway, Sweden, Australia). [1][2]

[1]
[https://www.forbes.com/sites/timworstall/2013/06/01/astonish...](https://www.forbes.com/sites/timworstall/2013/06/01/astonishing-
numbers-americas-poor-still-live-better-than-most-of-the-rest-of-humanity)

[2] [https://mises.org/blog/poor-us-are-richer-middle-class-
much-...](https://mises.org/blog/poor-us-are-richer-middle-class-much-europe)

~~~
fish_fan
Living better is a relative term. Having access to cheap junk food and TVs
does not pay medical bills, nor the debt that follows.

------
skookumchuck
Here'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
Did someone also inject 4.5T dollars into the finance industry of Sweden?

~~~
hueving
Yes, 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
But 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
Feel free to use a different starting year for those charts, whatever you
like.

------
JensRantil
American 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.

------
james1071
Suspect the reasons are:

1 very good free secondary and university education system

2 good English language skills

3 social safety net

~~~
Jommi
Those same things apply to other Nordic countries, yet they are not as
succesful.

------
johankmagnusson
I'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
"please fill me in here Norwegians, Danes and Finns!"

Well, Skype is half-Danish, so there's that :-)

Others that I know of are Unity (founded in Copenhagen), Zendesk (started in
Copenhagen), Steelseries, Endomondo, Just-Eat, Tradeshift, Trustpilot, Flying
Tiger, Sitecore, TC Electronic, Soundboks, Navision.

It kinda depends on how you define "startup". Bu no, not quite as many as
Sweden, but we do have our own established large companies that have spun off
into daughter companies in different areas or helped create successful
startups.

~~~
moogly
t.c. electronics is 40 years old (and legendary) and probably shouldn't be on
that list IMO.

~~~
KozmoNau7
Well yeah, I guess.

It was a startup at one point, though ;-)

------
mixedbit
With 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?

~~~
mstade
High 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.

------
gragas
The 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.

~~~
wnoise
anti-monopoly laws seem to be the exact opposite of "less government
regulation".

~~~
nerfhammer
maybe pro-competitive market would be a better intended description

~~~
meowface
That's still a form of government regulation.

~~~
nerfhammer
competition is what all the benefits of markets comes from, not non-
intervention.

