Swedish Entrepreneurship - Interview with Anders Johnson

Patrik Engellau from Det Goda Samhället interviews Anders Johnson about entrepreneurship and such things.
The full length video interview (40 minutes) can be watched here.
A shortened version (11 minutes) can be watched at DGS-TV Abstracts

An English transcription of the short version follows below with Editor’s comments included.

My name is Patrik Engellau (P.E.) and now we shall make deeper studies into entrepreneurship, how to build enterprises and such things. Today we have Anders Johnson (A.J.) with us. Welcome. You are a former Member of Parliament, former editor in chief for Dagens Nyheter and since 20 years you have done research and written books about entrepreneurship, companies and similar subjects. You have written 130 books. What do you write about?

A.J. History, personal history. I mean that basically it is about people who do things and people that ignore to do things. And above all, those persons that make a difference like starting a new activity, break new ground.

P.E. Break new ground. What characterize those persons? Do they have some common personal characteristics?

A.J. If you take two plain expressions with some importance – think outside the box and ability to see possibilities where others see problems. We all meet annoyances, difficulties and but those persons have the ability to see that this can be solved better. And also that they often choose unconventional ways for the solution. They were often regarded as reckless and not the amenable and diplomatic types that is expected by everybody.

P.E. Can you give an example of such a messy type?

A.J. Yes. Stikkan Andersson who as manager for ABBA, paved the way for the Swedish music wonder. Today all celebrates ABBA and thinks it is fantastic. But many were violently against him personally including ABBA and all others that wrote English music texts. This was horrible.

P.E. And it was the same with Kamprad and the person behind MANPOWER Ulla Burman?

A.J. Kamprad (IKEA), Erling Persson (H&M), Per-Olov Ahl (KappAhl) they invented more effective logistics – sell a lot with small margins thereby threatening the existing trade.

P.E. You mention that during the 1600's and 1700's came the leading Swedish entrepreneurs. They were immigrants and refugees. Which ones do you think about?

A.J. Louis de Geer and Willem de Besche were refugees from the Spanish Netherlands. Later during the 1700's came Robert Finlay and John Jennings from Scotland and Ireland respectively.

A.J. They were our first capitalists. De Geer and de Besche received in July 1618 a leasing contract for the Finspång gun and general merchandise factory. The got full freedom by the state to run the business as they wanted, Earlier all Swedish large companies was under state leadership. The king decided. They had full freedom and the state realized that this was a brilliant idea. The results for Finspång and other factories run by de Geer and de Besche compared so in the 1640's the state sold out all the crown factories.
July 1618 was the birth of the Swedish capitalism. The first free large companies in Sweden. The general conclusion was to re-establish the whole Swedish business policy.

Editor’s comment regarding freedom to run a business: It may be a bit far-fetched to compare today’s activities with what happened in the 1600's. The first Swedish portal Passagen was an intrapreneurship activity within Telia. It started within Telia Corporate Strategy section. It had considerable freedom in developing a new business based on a Master Theses. This development started 1994. It also had a very strong financial backing. After a couple of years Passagen was put under a new management with different ideas than the original business ideas. The new management withheld information and made agreements above the founders of Passagen. This caused a lot of turbulence and in 1996-97 the leading persons left Passagen.

A.J. During 1840, -50 and -60 many de-regulations were done culminating with the free business policy and free trade from the 1860's. 1864 full free trade was established for men and women in towns and in the countryside. 1914 World War I started with barriers and when the war was over there was a stronger state with regulations and with established companies. It was no longer possible for individual actors to do whatever you wanted. 1864-1914 was the window in time for the industrial development in Sweden.
This was also the liberation time for women. Now women could create and start companies on their own for e.g. tourism. Sofia Gumaelius founded the first lasting advertising company. But a special branch was the hotel and restaurant business since it was close to what women usually was occupied with. This is lasting up until the 1970-ties.

Editor’s comment regarding women as entrepreneurs: Women are still very active. Monica Lindstedt created 1996 Hemfrid, a company concentrating on offering help with most household activities. Monica Lindstedt created Hemfrid out of her own needs. (About Hemfrid in English) At that time there were no such companies but a black market. See the so called “maid debate (pigdebatten)”. Hemfrid services focused on upper management. Hemfrid paved the way for so called RUT- services (RUT: services close to the household), today gaining more and more attention as one business branch that can solve the unemployment problem for persons with moderate education.
Lina Gebäck founded 2008 “Linas Matkasse” a company delivering food based on developed menus.
Both Monica Lindstedt and Lina Gebäck were in the forefront within their areas and have got many followers.

A.J. After 1970 very few big companies have been founded. Jan Stenbeck in the area of telephony and media is the exception.

P.E. During the last 20-30-years how many big companies have been founded?

A.J. Since 1970 and almost 50 years after it is only Jan Stenbeck who has created a really successful company. Then there are a number of actors that have taken existing companies and rebuild them.

Editor’s comment: Over the years about 76 science parks have been established in Sweden. (Reference SISP). Unfortunately they do not seem to produce very many large companies. One reason for this may be that most of the Swedish large companies are active in these parks and many results are probably absorbed rather early in these companies.
Similarly to get support for research from EU research funds and Swedish funds from Vinnova a requirement is often such that a project shall have a certain number of partners. One or more of these partners is often a large company and it is likely that most the results are assimilated early by the large companies. The agreements between the partners are also such that it is possible for all partners to use the results and thus it can be a long way just to pick out a result and make a company based on this result.
Most Universities in Sweden also have entrepreneur schools giving education about how to make start-ups. No one seem to have made significant results.
Many of the start-ups created from research results have had the focus to be bought by larger companies. Very few have had the idea from the beginning to become a large company.

A.J. But now the shopkeepers and traders are coming – IKEA, KappAhl, H&M and this is new. In Sweden trading companies have never been accepted as particularly important.

Editor’s comment regarding retail business: The following is a very short abstract from Lisa Seligson (Lancelot Asset Management) who published a short article in Svenska Dagbladet 3 June 2017. We shop more and more on line. It is however still quite low – about 8% - but with an annual increase of 60% one can expect that it will have large implications. Today it is very easy to get goods sent home and returned if it is found not to be according to the expectations. In 30 towns in US it is possible via Amazon to have the goods (from food to clothes) delivered within 2 hours without extra costs.
During 1864-1914 many companies are created that are still the foundation for our economy. Today not so many new companies are founded. The politicians are talking about how important entrepreneurship is. Personally I do not see very much happening. Would it be possible to recreate the former time of free establishment?

A.J. We have the possibility with information technology and Internet. Almost all large information technology companies are US based except within telephony. We have also Swedish based game companies but such companies do not recruit a large number of persons.

P.E. If you were Minister of Industry what would you propose?

A.J. The individual most important cause for US and other countries to do better is the possibility to give stock options. A company with a brilliant idea in many other countries but Sweden is able to give stock options. In short it works like this – provided you accept a lower salary you may buy shares in the company for an agreed low price later when the company has a higher value. The result is a company with lower costs and personnel which can earn more if the company makes a large profit on the market. This is unfortunately not interesting in Sweden due to tax regulations.

Editor’s comment regarding stock options: Stock option solutions are considered to be one of the success factors behind many of the quick growing companies in Silicon Valley. The innovation power and dynamics in Silicon Valley were not possible until rules for financial placement for pension funds as well as a capital and stock option taxation promoting risk taking and market experiments.
Today’s fond capitalism in Sweden – where the major part of the financial net savings is pension savings locked to funds – cannot function well without a favorable entrepreneurial climate. It is not enough to have a taxation system which is favorable for the already wealthy. It must be globally competitive for innovators and entrepreneurs with limited resources. The hard taxation of wage income and the difficulty to have advantageous taxation of risks if you do not have the financial resources yourself. (Reference: Pontus Braunerhjelm et al: Skatterna och entreprenörskapet – företagsbyggande, optioner och tillväxt.) The report in Swedish is here,

P.E. Now I will give you a question to which you do not have an answer. Me neither. What will happen?

A.J. Two technical changes has happened and one is the 3D printer. With a 3D printer you can in principle build everything anywhere. You can move manufacturing out from a factory and thereby create new logistic patterns. Information technology and Internet is the other important change with enormous potential.

Editor’s comment regarding 3D writers etc: To support material research is very important. New materials will open up new possibilities with 3D writers.
Note that:
Semiconductor research paved the way for computers and integrated circuits.
Research on glass turned out that glass could be very, very transparent which paved the way for fiber optic transport of information.
Research on radio propagation paved the way for radio communication, mobile and smart phones.

A.J. No one has knowledge about the brilliant breakthroughs but the ones who are making them.

A.J. Many of the great inventions are results of mistakes. Someone solves wrong problem and thereby creates new possibilities. Someone will make an annoying mistake and be clever enough to understand that a new world of possibilities is around the corner.

Editor’s comment on mistakes: One recent mistake was made in Uppsala University Nano-Technology and Functional Technologies – Upsalite. Upsalite has “mind blowing properties”.