Welcome to Stockholm
Krönika till Computer Swedens internationella utgåva, mars 2004
Four years ago, in early February 2000, Stockholm made it to the cover of the Newsweek Magazine: “Hot IPOs and Cool Clubs in Europe’s Internet Capital”. An enthusiastic report told about “700 Internet-related companies in Stockholm – more than any other city outside the United States.” Stockholm was described as a boom town, buzzing with Internet start ups, rock music, night spots, and the new economy.
Since then things have returned to normal again in Sweden. We have had four boring years of economic decline, dotcom death, 3G disaster and a return of the old economy. The human capital has been largely unemployed and tax payers have revolted against big company option programs, demanding bonus money to be paid back.
The Internet frenzy in Sweden was an echo of the US boom. When the US went into decline, we followed suit. So, it is with growing anticipation that members of the Swedish IT community now watch as the US Internet companies are climbing the stock exchange again. Is there another boom in the making?
The Swedish IT and telecom industry can be divided into three parts. There are the old computer consultancies that have been around since the 1960s or 70s. Many of these are US subsidiaries, but there is about 15 relatively big Swedish companies in this group, and a great number of small companies. Some of these sell enterprise systems to Swedish SME companies and now fear competition from Microsoft. Others thrive on development projects for Sweden’s large public sector. Many of them have been doing relatively well in the last years thanks to the public sector and Sweden’s strong industry in more traditional segments.
Then there is the telecom industry with our flagship Ericsson, the three big telecom operators, one of which now no longer is Swedish, and a host of companies developing technology for Ericsson and the operators. All of these, except the operators, have been suffering in the 3G crisis, but the tide is turning here and Ericsson is now bouncing back, bringing optimism to the segment as a whole.
Finally there are the companies that were started in the 1990s boom years focusing on web design, Internet technology and mobile services. Most of them have suffered severely in the last four years. Of the 700 companies mentioned in the Newsweek magazine perhaps 150 are left, many of them struggling to survive. These companies made up most of the IT bubble and they have collapsed with the bubble.
Many now speak of the IT boom in the 1990s as only a stock exchange bubble, but that is not true. The IT boom was a powerful surge of enthusiasm for what Internet and mobile Internet would mean and how quickly it would change the world. This enthusiasm was of great importance to Sweden, coming on the aftermath of a painful depression in the early 1990s, with real estate crisis and bank crisis.
Such booms or gold rushes, outbursts of exaggerated enthusiasm, are important to individuals and societies alike. They provide energy, optimism, and a feeling that everything is possible – making almost anything possible. It would be interesting to compare countries on this score, but somehow I think Sweden has more of these booms that its neighbours in Europe.
Sweden in the 20th century was shaped by successful industrial development. Engineers and economists dominated our understanding of society, of how business is made, social institutions function and people behave. But this rational image of societies, companies and people is only partly true. Without emotions there would be nothing at all – no society, no companies and no people.
It is emotions that give us the ambition, the motivation to act, to compete, to make a career. Theories of management, entrepreneurship, innovation that have nothing to say about emotions really miss the essence of it all. Emotions provide the energy to break through and innovate, make something new.
In the depression after the IT boom, we have seen very few start-ups and people have complained about the lack of venture capital. Government initiatives have moved in to provide what the market itself hesitates to supply. This is fine, but more important is of course to bring back the sort of atmosphere we had in the late 1990s. Create an emotional bubble again and entrepreneurs will show, and the economy will grow.
They say that we are boring, that everything is so well organized in Sweden, and that we are so well behaved. No one respects the rules of standing in line as a Swede. Extremism is not our style. We are the “lagom” people. But just because life is so unemotional, so boring, in our country we are willing to go overboard collectively with emotional enthusiasm when we get the chance to do so.
In the 1970s, we went overboard when Ingemar Stenmark swept down the slalom slopes and Björn Borg played baseline tennis. Two teenagers filled us with immense pride, turning a whole generation into aspiring slalom and tennis pros. Sweden is a small nation. All of its attention can focus on a single athlete, on a single sport.
Something similar happened in the IT boom. A large part of the population and especially media, including the tabloid press, suddenly found new heroes and a new spectacle to make life exciting. In the land of equality, trade unions, taxes and safety belts, a large segment of business life suddenly was awarded some of the exceptional status of sports and rock ‘n’ roll. Young IT entrepreneurs could make lots of money, just like Björn Borg and ABBA, and it was alright.
Entrepreneurship, startups, mergers and acquisitions, exits and IPOs, became as important elements in everyday life as offside and double fault – and just as exciting. Teenagers began to dream of becoming a new Jonas Birgersson, an entrepreneur, even an engineer, rather than a rock star, tennis pro or stand up comedian. It was incredible and what energy it gave our nation! Stockholm really became a hot spot.
But that was five years ago, and since then we have returned to our more normal attitude towards business as a necessary evil in a country where the public sector stands for all that is fine and good. In some ways it is even worse than before. When business life makes headlines in the tabloid press these days, it is all about fraud, bribes, greed, and theft. Teenagers no longer check out stock values and engineering educations, but are back to rock music, movie stars, and soap operas.
Normal, boring Sweden is a nation with a well functioning infrastructure and a solid, successful industry built in the 20th century with more global companies than any other country of our size. A traditional industry which is very modern in its use of information technology and position on the market. It is a nation with rational, well educated, competent people with a no-nonsense positive interest in new technology and what it can do.
Normal, boring Sweden believes in progress and change. Unlike the rest of Europe we have thoroughly mechanized agriculture, and don’t believe in subsidizing old industries that have no future. We moved quickly from being poor farmers to becoming successful industrialists and we are ready to move quickly again, outsourcing industrial production to Asia, focusing on knowledge intensive services, research and development, innovation and design.
And we are ready to move, now that it is time again for another IT boom. With Ericsson back in shape, dominating the 3rd generation networks market, we will inflate the IT bubble again with thousands of start ups developing 3G mobile services. We will become a little crazy again, and entrepreneurs will be heroes again. So, welcome to Stockholm again!
The Swedish Research Institute for IT