Why are there so many Sweden successful and famous companies?

[Chim Kan]

Hi,

I hope you are fine!

Have you ever realized that there are many successful Swedish companies all over the world? Volvo, Scania, Ericsson, Ikea, H&M, Metro (the free newspaper, they even have in Brazil!), AstraZeneca, Eletrolux, Tetrapak, Saab and MySQL are originated from Swedes.

It is very impressive to know that Sweden has only 9 million of people, but it does have a huge influence in the world through its companies. As a comparison, I live in Brazil and my country has almost 190 million of people (that's over 20 times the population of Sweden) and we do not have, at least for now, as much famous companies as in Sweden.

I saw from the TOP Global 2000 companies from Forbes, and as you can see, Brazil has roughly 34 companies in the TOP 2000 and Sweden has 29; however, if you calculate the number of TOP 2000 companies per capita (divide the number of the country's top companies vs. the number of population), Sweden will be in a much better situation than in Brazil.

Then, I ask you, why are there so many Swedish companies so successful? Is it because Swedish companies have to think globally to reach more customers because of its small internal market? Or is it something related with its education, culture and business environment?

One last final question is: how does this relate to the startup/venture capital landscape in Sweden? Does Sweden have a strong and favorable environment for startups and venture capital?

Thank you so much for reading!

-chim

[Jonas Bolin]

I think the primary reasons that Swedish companies have been successful in the past is: proper infrastructure, an innovative and educated population combined with a social infrastructure with a decent, non-corrupt bureacracy (how do u spell that?) and people that trust their neighbour and are willing to risk money in other peoples' ventures.

However, I do think that we have lost a bit of our game recently, possibly due to high taxes but also general rigidity in society. I'd say that we have a lot more good ideas than willing people and capital to develop them.

We're going to need more adventurous people and money in the future to keep develop our society and be a successful small country.

/Jonas

[Anders Lorenzen Andersen]

I have been thinking the same as Chim.

Denmark, which have a culture so close to the Swedish, same infrastructure, tax system, education and almost same language, but only has 9 companies on the Forbers 2000list. I don´t understand why Sweden have so many more large companies than Denmark (And Brazil).

One difference between Danish and Swedish companies, is that Danish companies always names them self some thing like Denmark, like "Danske Bank", "Danfoss", "TDC" (TeleDanmark), "Jysk", "Jyskebank" (jysk is a part of denmark), where as Swedish companies focus more on being Scandinavian or international. I believe that focusing on only one contry limit any company or Organisation... THAT ALSO GOES FOR SWEDISHSTARTUPS

I diesagree with Jonas that the high tax in the nordic contries kills Startups. I think that the reason that we are rather succesful in the nordic countries, are that we have a smalle difference on rich and poor, than in many other parts of the world

I think that Swedish companies thinks more global.

/Anders

[Martin Frönmark]

Chim,

I think Sweden is in for a challenge. Most of the companies you mention were started back when Sweden was going strong from the industrialization. Not saying is isn't still going strong. But, we have to make sure that new companies with great potential still have the opportunity to grow. This is going to be a challenge. I think I see signs that Swedish society is beginning to grasp this.

I was talking to a friend a few weeks back and he was talking about the ability for society to automatically change and adapt to something new when, for example, in Sweden a lot of manufacturing is moved to other countries where things can be produced for less. I think there was a study that had been made. Not sure where it could be available.

I don't think taxes are a problem. In my opinion there are things worse than taxes that can kill. Although I see cost of hiring and problems with firing as a problem. There has got to be motivation somewhere. I think that is what Anders is saying.
Usually if you have a great product or service and is good at what you do I believe you'll prevail no matter what is thrown at you.

-Martin

[Jonas Bolin]

Re taxes: Sure, there are definitely worse things than high taxes, such as a corrupt system, non-transparent government, rigid labor, bad education and much more.

However, I think taxes do have a high opportunity cost, meaning that high taxes leave a lot of opportunities unexplored, and that creative, highly capable and mobile people try to find their luck elsewhere.

I think Nordic countries would profit a lot from using a Danish "Flexicurity" labor model, the Finnish Educational system, Icelandic entrepreneurship and Swedish innovation, plus some Norwegian money :-)

[Martin Frönmark]

Good points.

[Chim Kan]

Thanks Anders, Martin and Jonas!

(I was figuring out how to reply; I was guessing what Gör ett inlägg på det här means!)

From Jonas:

"Re taxes: Sure, there are definitely worse things than high taxes, such as a corrupt system, non-transparent government, rigid labor, bad education and much more."

It is essential to solve for each of those problems. For instance, corrupt system allows to happen a lot of inefficiencies in the economy, instead of allowing free market, people bride government employees to have monopoly in some sectors of the economy and it allows zombie-efficient companies to survive. Moreover, it's not very ethical. Also, usually, corruption and non-transparency walk hand-in-hand. All the money the government receives goes to corrupted people's pocket. Then, the country does not have enough money to support a good and efficient educational and health system (I'm not going to even mention about public pension funds, etc.). This lead into an uneducated population, thus decreasing the chance that society to produce great ideas and consequently, less innovation. However, because it's very important to have a good educational and health system, the country increases tax and there's a little vicious cycle going on.

Now, if we continue with this, given that the country has less educated and conscious citizens, using the power of democracy, people will be lured to vote for populist and other gangs of people who are just interested in less honorable objectives like amassing more government control to benefit the elite of the society, which in turns is already benefiting from the corruption. Again, there's another vicious cycle going on.

I don't know why, where, when and what starts this kind of vicious cycle, but I'm sure it's very hard to get over it.

Now, in countries in situation like this (I could list a bunch of them, but for the sake of not degrading them, I am not going to list it), they do not have resources - money, people, culture and institution - to support an innovative, highly added-value, open and competitive environment for high-tech and innovative start-ups. As a consequence, in those countries, you cannot find Venture capital industry as well (the industry that I want to work with in the future, no start-ups, no venture capital firms!)

Given that I only have a very superficial knowledge about Scandinavian+Finnish economic-social-culture environment, from what I know as an external viewer it is that I do believe that none of any of Nordic countries is in that bad shape at all. I do believe that you guys do have the minimum requirements to sustain a great and innovative culture and environment.

I would make an analogy to farming. Nordic countries have the land, people and knowledge of how to plant crops. Now, you just have to know what seeds and plants you want to reap in the future. There are many choices, but which ones are going to be highly valued in the business market years to come?

Taking as an example from Silicon Valley, they had the land (plenty of space), people (a lot of talented US and foreign students), knowledge (they have a lot of research centers and excellent universities) and they were trying experimental business like computer in the early 50s and beyond. After decades, the plant that they planted grew a Silicon Valley. As you know, the Fifties was the post-war period. Even though there might be corruption in the US government at any time, it is not as great to create vicious cycle in the economy. Also, they have a very strong research/educational system (specially the universities) and they pour billions of dollars in research. They do not have a very high-tax system. Also, they have a quite transparent government system regarding about its spendings and stuff. So, they did not have to worry about what political system to choose (like in many Latin America countries at that same time that had to fight against dictatorships and communism), Americans didn't have spend time and resources to fight of starvations (like in Africa). US like Sweden had the basis for development of more sophisticated industries.

- Chim

[Jonas Grimfelt]

By studying psychology, one can find many answers on questions related to human behaviour and actions. In this case I would like to argue that before you can change or affect the world, you must first believe that you can do so so that you can motivate yourself to do this. One way to get this motivation is to live in a transparent and non-corrupt society that don't force people to think in a certain way. Even if there practically are no such places, Sweden is one of the better examples; open democracy, traditions loose focus, religions have less impact, etc.. There are less taboos - more ways to get where you want (sort of "thinking outside the box"). But before you get in this mind set, one must have satisfied the lower levels of the self-actualization pyramid (proposed by Mazlow, which might not bee 100% true but a good framework). One living under pressure (little money, litte food, life threats, etc.) will probably not be able to believe that he/she can affect the world in the near future - hard to plan the future.

As Martin mentioned the more traditional Swedish companies started during the "right times", i.e. during/post World War II, where Sweden had a neutral position which probably increased business opportunities. I have't studied this, but that is my perception of what I've seen and read.

[Erich Nielsen]

Besides the established companies listed (quote: "Volvo, Scania, Ericsson, Ikea, H&M, Metro (the free newspaper, they even have in Brazil!), AstraZeneca, Eletrolux, Tetrapak, Saab") you have a lot of new (the last two decades) upcoming companies not mentioned creating added value for stakeholders.

What I've experienced is that much of this is based on the fact that researchers and scientists can do their "doktorands" and still keep their immaterial and material rights of the output regarding their research.

This is probably the major reason for the new successful companies from Sweden. An interesting point is that the result could have been even better. The tricky part is that most innovators (it is important to differ between innovator and entrepreneur) don't see their opportunities on emerging markets making it hard for them to fully utilize the potential of their ideas.

Looking forward to seeing some of you May 30th.

Erich N

[Anders Lorenzen Andersen]

Erich>> So right... Very few of the e.g. the e-shops cross the borders. I can only count 5 swedish E-shops that have entered the danish market, and none of then are small innovative shops driven by entrepreneurs, but large ones like komplett.se and other large companies.

Anders

[Jonas Bolin]

This is so true. I think a "tighter" nordic market with streamlined financial and communications systems would be extremely beneficial for our countries, and perhaps set a good precedent for european integration, without all the bureaucratic babbles of the EU.

[Anders Lorenzen Andersen]

It is my mission to make e-commerce Nordic, insted of national:-)

[Erich Nielsen]

Surprise to y'all!

The financial and communication infrastructures exist!

But if you apologize, I would like to go back to some basic concepts - you have to differ between innovator and entrepreneur. The most bright ideas come from innovators - the most successful ideas are being implemented by entrepreneurs. From time to time, you find an individual capable of taking both roles, but that is more rare than often. With the risk of swearing in the church, I think that there are a lot of great innovators in Sweden as well as in the other Nordic countries, but we lack the entrepreneurs or the combination of the two roles. Although this statement may seem a little pessimistic, there is an upside to it: You can learn to become an entrepreneur faster than you can learn to become an innovator.

There are some psychological factors that form the basis of that thesis. You can find it easily by using the PIC-NIC-model (meaning that all actions have three main characteristics: they can be Positive or Negative, Immediate or Future and Certain or Uncertain).

When presenting an idea for a potential investor, a VC or even a friend, the entrepreneur predicts a Positive, Immediate (or future) and Certain consequence in his/her presentation. The innovator on the other hand presents a (possible) Negative, Future and Uncertain consequence. Feels familiar?

Again, looking forward to meeting some of you May 30th.

You have a great day,

Erich N