Swedish Startup Space

Erik Starck on the Swedish startup-community and ‘The Wheel’

Written by on July 1, 2013

Today I’m speaking with Erik Starck – somewhat of a startup-veteran I guess you could say. After having his first company acquired before the age of 24 – Erik has been heavily involved in the Swedish startup scene and has spearheaded numerous initiatives designed to help foster entrepreneurship and startup-culture in Sweden.

We spoke a lot about ‘The Wheel’ – a concept that Erik believes is vital to the success of any startup-community, his background and how he thinks the startup-community has developed since the early days.

Hi Erik, tell us about yourself?

I’m Erik Starck and I’m 37 years old. Well… I have a few different “hats” but most of my time right now goes in to being the CTO of The Frank Family, a newly formed communication agency in Malmö. I also run the Swedish version of Hacker News: Hackernytt and co-organise startup events such as Startup Dojo in Malmö.

What attracted you to entrepreneurship?

I started my first company when I was 21. This was back in the late 90s just at the beginning of the internet boom of 1999. It was a small consultancy business with a few student friends. We didn’t have any larger plans, just that we thought that working for Ericsson wasn’t as attractive as doing something of our own. Well, a little over 2 years later we were acquired by a public company.

I learned quite a lot during those years. One thing was: don’t sell your company for stocks at the height of valuation bubble…

Another thing, which was actually wrong, was that I thought “hey, that was easy”. We just started a company, got customers and then BOOM we were acquired without really knowing what the heck happened – and I wasn’t even 24.

Surely this startup thing isn’t that hard!

Well… I was wrong. It’s damn hard and we were just lucky to be at the right time at the right place. Those were two very expensive lessons, but I was hooked.

Tell us about your upbringing and how that molded you, regarding entrepreneurship?

Hard to say. I remember importing cassette tapes from China at the age of 12 or so and trying to sell them. It didn’t go very well, it ended with my Mom buying almost all of them.

I think I share a few traits with other entrepreneurs: curious, restless, somewhat hard to fit in to existing authority structures and in possession of a strong desire for freedom.

The difficult part is taking those traits and focusing them in to action. Otherwise you’re just a dreamer. This is, to be honest, a constant struggle for me and I know I’m not alone in this. I see it all the time in the first time entrepreneurs I meet at the Startup Dojo or other events I’m part of organising. In fact, that is precisely the reason we do them: to force people in to taking action. To stop dreaming and start doing.

You’ve been involved in the scene for a long time – tell us about how you became involved and what are the main differences nowadays?

The internet boom days of the late 90s was very different from today. I’d say that 1999 is the 1968 of our generation. It was a year when everything was possible. But I missed most of that, spent most of that time just working.

In 2007 I moved to Stockholm and started another startup. This was a fun time to be in the startup world. The “dark years” after the .com crash were ending and there was a sense of renewed hope and a also new generation of entrepreneurs – who didn’t even know of a world without the internet.

The extravaganza of 1999 was gone and Facebook was just starting to take off. In a way I see it as the start of the third phase of the web. The first phase was the “surfing” phase with big names such as Yahoo! and Netscape. The second phase was the “search” phase with Google as the dominant actor. The third phase that started to take off in 2007 is of course the “social phase” which we’re still at the beginning of. Another big thing was the iPhone release which spawned a whole new type of startup: the app company and the “mobile first” way of thinking.

Yet another thing that took off at about the same time was the startup accelerator concept with YCombinator as the leader (started in 2005). This was a sign of a new kind of startup: smaller, faster, better and a new way of doing startup investments that was far removed from the 1999 days. Also worth mentioning is the entire lean startup movement which Eric Ries started to formulate and put a name on in 2008.

From a Swedish perspective, Spotify was founded in 2006 and Klarna at about the same time. The leaders of the new generation of super startups from Sweden. So a lot of important things happened around the years 2006-2008 and we still live in the tidal waves after that.

What does Sweden need to become globally recognised as a tech hub worth raving about?

‘The Wheel’ needs to start spinning.

The Wheel is when a startup makes an exit and the founders take the money from the exit and invest in new startups that in turn creates more exits. Repeat. That’s The Wheel.

When this happens, not once per year or ten times per year but a few hundred times a year, when the number of experienced entrepreneurs turned angel investors are counted in the thousands – that’s when you have a thriving ecosystem that people from the rest of the world travel to to be part of.

It will also lead to a mental shift in the minds of students taking their first steps in to working life. Doing a startup will be a very real option.

What we started back in 1998 wasn’t really a startup, it was a consultancy business. Those was our options: getting a job at LargeCorp or starting a consultancy business.

Doing a “real” startup with a product of our own wasn’t really an option – too risky, too expensive. Today, it’s slightly better, but we still have some way to go.

As I mentioned, we were lucky to be at the right place at the right time when our company was acquired but it is also true what ski legend Ingemar Stenmark said when asked if he was “just lucky” after once again winning with a thin margin, “Perhaps, but it’s funny, the more I practice the luckier I get.”

That’s exactly what we as a startup community needs to do: practice. Try, fail sometimes, succeed sometimes but always try again. That will make us all more lucky and make The Wheel spin faster.

There are also lots of other things. Tax funded organisations (which we have alot of in this country) can be better at acting as first customers for startups (see: “innovationsupphandlingar”). Large companies can be better at buying innovation by acquiring startups, thus creating a local exit market (some people don’t like when that happens but I think it’s an important part of the puzzle). Tax rules could be changed to improve how employees of startups receive shares. And so forth.

But really, anything that keeps The Wheel spinning is important. Your site is an important part of that, so thanks for doing it!

Thanks Erik!

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