Nicolai Wadstrom on Tech & Entrepreneurship

Every week I talk to people about Entrepreneurship and what it is all about. Being Swedish of origin and interested in politics it’s quite interesting to follow the Sweden debate about the need for Entrepreneurship and needs for a more Entrepreneur-friendly Eco-system, like the one they have in the UK and US and many other countries in the world (there was a good discussion at the Swedish-US Entrepreneurial Forum the other week, more info on the Enbou blog), but I think many people get it all mixed up.

I think starting a new business (or actually keeping an established business competative) you need three things, or at least two of them.

Innovation
Innovation is not Entrepreneurship, it is about being passionate about creating a inventions or ways of doing things, innovation is a quite wide term, so in general I try to divide innovation into things that require some research and development, maybe can be patented. I would include things such as a very clever algorithm for computing relevance of information, but not a spectacular design or a clever packaging or positioning of a product.

Ideas
To successfully launch a new business you need new ideas, they do not have to be innovations, most successful business are not built upon innovations but new ideas.
Ideas include new ways of looking at the market, new ways to apply an innovation (get to a market segment that was a non-consumer of that product, and maybe changing/packaging the innovation for that market), a very attractive design that nobody else thought about before, or just clever business processes that produce higher quality products.
For example, I would not call Apple an innovations company in general, but a very successful idea company, that take commodity hardware components and build them into a really nice design and package. Apple have done tremendous innovations in the past, but most of the revenues and success today are not based on innovations per see, but on the ideas they use to package and make commodity hardware and phenomenons attractive to target group, such as with iPod, iTunes, which is very clever indeed. In my opinion idea companies are often more interesting (but not always).

Entrepreneurship
So what is entrepreneurship all about them?

• Being brave, and boldly step out of the comfort zone.
• Being attentive, listen to people, the market, what works and what not, what are you good at and what not.
• Lot’s of passion, you got to love what you do! And you got to belief in the idea or innovation that drives your business.
• Like to change things, being in to rattle the chain and make life uncomfortable for the established companies certainly helps.
• Personal leadership.
• Getting the idea/innovation out there.

It’s all about making it all happen, there are many good innovations that never reach their potential market, there are even more ideas that are never realized and many of them are very good. It’s all about execution and making it happen, and that is what Entrepreneurship is all about; seeing a potential to do something, make a change and making it happen.

Building a company takes…
Good Entrepreneurship, good ideas, good innovations (the two first is a must, the third not as needed as most believe), sometimes these things comes in three, sometimes in two, and for most people you will only have one of these, so find other people that complement your own drivers and abilities. If you have an excellent innovation and you are an excellent innovator, make sure you build a team around you that adds the other two aspects.

Established business often lack…
When a business have become well established and found it’s core market and starts to make money (especially if it’s based on an innovation), it starts to focus on improving quality, building sales and post-sales (support & service) organizations to be an attractive supplier for it’s customers. If they do it all right they will be very successful, but many will at the same time be on their downfall. They replace Entrepreneurship with “management”, which is much less prone to change and adopting to an constantly evolving and changing market (excellent reading up on this is of course the Innovators dilemma by Clayton Christensson, more info here), which I will try to elaborate on in a future blog post.

This is just so fun, check it out!

Thanks Erik for sending the link!

In Sweden there is a big confusion in terminology surrounding different types of Investment companies, the Swedish journalists of the leading papers and even the politicians can’t tell Venture Capital companies apart from private equity firms and other types of corporate finances business’, they are all grouped under the term “Riskkapital” (”Risk Capital”, which is the Swedish expression for Venture Capital).

For the past year there have been a debate in Sweden about “Riskkapital bolag” (Venture Capital companies) and their moral. The first thing I think about how investing in startups could be that amoral? Are they all funding startups that will pollute the world, borderline criminal business, or something else terrible?

The debate is really not about VC firms, but about investments companies such as private equity firms that do take-overs of well established companies and break them up. Most people I know i the UK or US would not think of these types of investment companies when I say VC (which is the closest translation to “Riskkapital”), and most Swedish entrepreneurs or people in the Swedish corporate finance sector wouldn’t either. Take a look at the one the larger private equity firms in Sweden, EQT, mentioned in DN today, the describe themselves correctly in English as a private equity group on their website, and they are an investment fund / company not a Venture Capital firm. Why can’t the Swedish journalists get the terminology right?

So why does this matter? Well when I tell my mom that there is a need for more VC’s in Sweden and a climate more like the one I see in London, she says, isn’t that those companies that buy up Volvo to break it apart? And I have to explain it and say “No, it’s the companies that will fund a future Skype or the like (which all of the Swedish “VC’s” where to risk averse to invest in by the way, so Skype have never had even a part of it’s corporate structure in Sweden, but in Luxembourg, where the investors were willing to take a risk).”

These numbers are old; but they indicate that Apple was growing more rapidly in the begining of the year, and if looking at this picture it’s no wonder.

The question is can you spot the PC in the picture?

Still happy with my switch to Mac OS X, it’s working really well for me. The only hazzle has been moving my e-mails from Outlook, which I in the end decided not to do (in theory you can import into Thunderbird on Windows, and then import the Thunderbird files on the Mac Mail, but it will never import all of your e-mails, due some differences in how Thunderbird stores the files).

I think that Leopard will be a nice step forward as well, so will be interesting when that comes out, with some updated features.

Been quite busy working on the latest startup projects, most notably GlocalReach that is doing a funding round right now, and have not had too much time for blogging. Will do better to keep blogging a bit more!