What Sweden Can Teach Us About Entrepreneurial Success

Since the mid-20th century, when Ivan Kreuger’s ambition drove him to become the “match king,” controlling most of the world’s match supply, Sweden has been heart and home to the entrepreneurial spirit.

In recent years this climate of entrepreneurship has bloomed, allowing companies such as Ikea, Spotify, Klarna, Skype and Axo to enter the world market as major competitors. 

From Small Beginnings

Kreuger wasn’t the only one selling matches in Sweden, in pursuit of a dream. At age 5 Ingvar Kamprad began his first business doing the same thing.

Realizing that he could buy matches in bulk, and sell them individually for a profit, the little entrepreneur peddled his wares from his remote farm, gradually upgrading his services to flower seeds, Christmas tree decorations and ballpoint pens.

Eventually, he began designing furniture, and IKEA was born.

Never one to stop innovating, Kamprad expanded furniture sales, adding products that allow customers to customize and improve livability in small spaces, the ultimate in Nordic efficiency. Now his stores span the world in the bright yellow and blue of his country’s flag.

This spirit of entrepreneurship and determination seems to be a common character trait among Swedes.

In 1924, a few years before Kamprad began selling his first matches, economist Assar Gabrielsson and automotive engineer Gustaf Larson met over a dinner of crayfish to discuss the beginnings of Volvo.

Dissatisfied with imports from the United States, the two visionaries hoped to create safer cars that better fit the Scandinavian climate and roadways.

Using high-quality Swedish steel, they created cars that were so strong that they are known worldwide for their durability and high quality.

Their first car, named Jakob, rolled off the assembly line in 1927 and by 1932 the company was producing 900 cars each year. 

Government-Boosted Innovation

After years of economic growth, Sweden began to struggle. In the 1990s the government decided to control monopolies through deregulation, allowing for what was dubbed “creative destruction” by 20th-century economist Joseph Schumpeter.

This new regulatory direction allowed smaller companies to compete in a larger playing field, and the economy, as well as start-up companies, began to boom.

“I think if you want to be an innovative country, you have to give people security so they dare to take risks,” said Mikael Damberg, Sweden’s minister for enterprise and innovation.

He said that, because of the high degree of social safety nets in Sweden, the fear of failure is minimized. This decreased level of risk gives entrepreneurs the freedom to let their ideas grow to fruition.

It’s not just a matter of regulating to even the playing field. Sweden is so committed to the idea of innovation that the government allows its employees to take a six-month unpaid leave of absence to begin their own businesses.

If the venture doesn’t work out, employees are guaranteed their old job, or one similar, when they return.

Many employees who have dabbled in hobbies on the side have taken advantage of the program to see if their part-time gig could become a full-time job, safe in the knowledge that they can return to work if it doesn’t pan out.

“To my knowledge, this is the only country (Sweden) that offers a legally-enshrined right to take a leave of absence for entrepreneurship,” said Claire Ingram Bogusz in an interview with BBC. She is a post-doctoral researcher in entrepreneurship and information systems in Stockholm at the School of Economics.

This risk-taking atmosphere is being furthered by the higher education system. Lund University, in Scania, is often listed among the top 100 universities in the world.

Calling itself a hub for innovation and commercialization, it is here that students are encouraged, and even funded, as they test out their ventures through programs such as LeapFrogs and VentureLab.

Leapfrogs is available to students from four different universities, allowing them to test out their business ideas in an environment surrounded by knowledgeable help and assistance.

Through VentureLab, students can get mentoring and even office space as they make a plan and then test out that business plan for three months. 

Entrepreneurs Today

Though Swedish education is ranked as one of the best in the world, entrepreneurs often find their own way, even without school.

Daniel Ek is one such free spirit. The founder of Spotify, he was born in Stockholm in 1983.

By age 14 he began creating websites and ran his first business from his bedroom. When he applied to Google at age 16, he didn’t let their rejection letter get him down. Instead, he tried to create his own search engine.

After briefly attending college, Ek dropped out to create his next company, an online marketing firm, which he sold in 2006.

Then, from the country that brought us ABBA, Ek and co-founder Martin Lorentzon began working on an idea to allow people to stream digital-rights protected music without paying fees to download each song.

Instead, customers could listen for free if they were willing to listen or view ads between songs, or for a few dollars in monthly subscription fees, they could have ad-free listening.

Launched in 2008, Spotify, which was originally frowned upon by the music industry, has quickly gained a global following and now has 40 million tracks for its 207 million monthly users to choose from. 

Technology has created many opportunities for entrepreneurs to expand their digital horizons.

Fintech

Financial technology companies, called fintech, have begun taking bold moves in creating a smoother global online market.

Last year economist and entrepreneur Sebastian Siemiatkowski revealed, at Forbes 30 under 30 Europe Summit, that his company, Klarna, would launch an innovative new hybrid debit card.

From humble beginnings as a Burger King employee, Siemiatkowski and his co-founders have created a unique approach to shopping with a card that blends the best of debit and banking.

They have turned it into a business valued at over $2.5 million. Klarna users can make purchases at 90,000 different retailers and choose to pay now or pay later, in four interest-free installments which are collected automatically every two weeks.

This shift moves Klarna, and other competitors, from being a payment processing company to more of an online bank. Siemiatkowski believes that in the future, cards such as those made available through Klarna will expand banking from traditional local businesses to global possibilities. 

Klarna is not the only fintech company to try making financing a global enterprise.

The Norwegian company, Axo Finans is a consumer credit and loan broker expanding its reach.

People seeking loans no longer need to contact individual banks to compare interest rates and loan details. After customers fill out a form, Axo Finans will contact multiple affiliated banks and, because the lenders know they are competing for a customer, they offer very competitive rates and payment plans.

Axo Finans then presents these options to the borrower, who has no obligation to accept the loan.

For those seeking unsecured loans with no collateral, this revolutionizes loan procurement. This unique form of capitalism may prove a boon when compared to the high-interest rates charged by credit cards.

Customers can also consolidate their debts by taking out a private loan, possibly finding a lower interest rate through the comparisons offered by Axo Finans. It’s changing the world of banking.

Skype

Another couple of entrepreneurs banking on a high-level of collaboration were Niklas Zennström and Janus Friis.

Zennström was working in the telecom industry when he hired Friis. They soon began working together on their own side business ideas, the first of which is KaZaA, the first music-sharing site.

Then, in 2003 they launched a revolutionary way to connect with people from around the globe — for free.

The technology advanced quickly and by 2006 Skype, as it became known, could convert voice signals into data that would transmit across the internet. Suddenly you could conduct video calls with people anywhere in the world.

Soon Skype became part of our cultural lingo — it’s a verb, in case you’re wondering. It’s much easier to say, “Let’s Skype at 1 p.m. tomorrow” than to use terms like VoIP.

Skype now has over 300 million monthly users. 

Culturally Collaborative

Swedes traditionally have a high level of trust among each other, though this doesn’t necessarily extend beyond the country’s boundaries.

According to a social anthropology professor at the University of Oslo in Norway, the Swedish hierarchical society has always been very egalitarian.

This equality creates trust between members of society, and trust leads to collaboration without complicated legal documents to block the flow of information.

In a small country such as Sweden, it’s not uncommon for new entrepreneurs such as Birk Nilson, co-founder of Tictail, to reach out to businessmen at Spotify and Klarna for guidance in his venture.

This high-level of collaboration brings a high level of productivity nationwide.

“Intrapreneurship” is also encouraged.

One telecom company, Ericsson, has a division call Ericsson Garage where employees can dabble in new ideas that spark their interest, even though they may be unrelated to the telecom industry.

Trust among supervisor and employee gives the employee a broader scope for imagination in accomplishing the required assignments and this can spark innovation.

This spirit of exploration is so prevalent that, according to a study conducted in 2017 by Stockholm’s Research Institute for Industrial Economics, nearly one-third of all Swedes were engaged in some kind of intrapreneurial activity within the last three years, as compared to only 11.7 Americans. 

Innovation and creativity thrive in countries like Sweden, where the culture, economy and government all work together to create an environment for entrepreneurial success.

Nearly three-fourths of all start-up companies there survive past the first three years, which means more jobs and more ways to change the world of business.