I have a pretty good view of the European investment / M&A / Start-up world and while Sweden is definitely a player I think that calling any European country the 'Silicon Valley of Europe' is based on a signal that is well below the noise floor. If someone truly believes this it could mean several things: they have an agenda, they have no idea of what is going on elsewhere in Europe and/or they have never been to Silicon Valley.
This 100 times. It seems that people confuse the term "Silicon Valley of X" with "overindexing in tech relative to expectations."
I have worked in tech in NY, SF Bay Area, and LA. While all three geos were perfectly suitable for launching and running a startup, nothing comes even close to the experience of working in the SF Bay Area. There are many facets to this, but here's a very simple litmus test: take a meeting with a local VC and benchmark their behavior and expectations.
This is the cynical view. In the generous view, other governments are studying the environment that led to the creation/success of Silicon Valley in the first place. Most often, they use Michael Porters framework on "Clusters" to analyze [0] how and why certain geographies have advantages in certain industries. The focus is on marshaling public infrastructure/incentives, private investment, and skills/education to create critical mass in a certain field. Indeed, this article mentions the impact of multiple government programs.
Your tech example comparing NY/LA to SF is the direct inverse of comparing the film industry in LA to SF, or finance in NY to SF. Those cities have their own clusters and vastly outperform in those industries. NY and SF also have good universities minting new engineers and lots of wealthy individuals to invest in those people. They would be silly not to attempt and foster a "new" Silicon Valley based on their specific strengths (look at biotech in Boston for the perfect example).
Right. The vibe in the SF Bay Area, is just amazing in terms of tech companies.
I'm in LA now, and "Silicon Beach" in Venice and Santa Monica is an utter joke compared to the entire Bay Area. Silicon beach is a few square blocks, whereas the entire Bay Area is awash in tech, no matter where you go.
Silicon Valley is entirely geared around tech. You can find anything and anyone there.
It is the same as Los Angeles to movies. You can't beat LA, because they have been doing it 100 years and have a zillion companies backing it up - all the little companies. There are oodles of movie industry lawyers, talent agencies, accounting firms, all geared to specifically the film industry. Are you going to be able to find 10 law firms in Silicon Valley or Chicago or Miami that deal exclusively in the entertainment industry? No.
For me, as an Argentinean visiting NYC, LA and SF, the overwhelming “superiority” of SF in terms of entrepreneurship was seen in the small details. Like riding a bus and siting next to someone that was coding their startup (real example). Or driving a few miles south and visiting a biology/lab in a garage (also real example).
The VCs and all that is probably true. But the air you breath on SF is different.
Every time I've heard "X is the new Silicon Valley" or "Y is the Silicon Valley of/for Z" it's because they are trying to sell me something. Every time.
Silicon Valley is just Silicon Valley. It's its own thing. Just like Florence was Florence during the renaissance.
The fact that someone has to define itself as "just like Silicon Valley" tells me they are imitative rather than innovative. And at that point they already lost the game. Then they list the reasons for their claim. I've heard them all.
- Government funded innovation fund = no interest from the private sector
- Cheaper devs = they are bleeding talent through brain drain
- Better labor pool thanks to lax immigration policy = they are bleeding talent and consider engineering to be a commodity (they think they can replace top performers with lower performers. It's brick laying after all)
- Ties with Regional University = They are bleeding talent to the top X institutions
What I want to see is direct access to private investors, SV salaries, a top 5 worldwide university within walking distance, non-compete and access to a large mature unified consumer market. If some place can deliver that, then it will become its own thing.
Wow that's just so bizarre and cringe but so predictable. I've heard Campinas, Brazil is pretty serious though and has quite a lot of local support measures.
You might be the right person to tell me then why Scandinavian countries are not the Silicon Valley of Europe? They seem to have all the necessary ingredients in place i.e. Wealth, Opportunity, Stable administration etc.?
I've been searching for an answer, Closest I came to was that it had something to do with their philosophy of "Lagom - ‘not too much and not too little, just right,’" i.e. They aren't overambitious?
I for one would love to see more products from small startups of Scandinavia or other EU countries with good democratic values which doesn't ask for pledging soul to provide services.
>calling any European country the 'Silicon Valley of Europe' is based on a signal that is well below the noise floor.
There's worse.
In another country X they call an area "the Silicon Valley of X", only because that's where you can find mutiple computer hardware and software retail stores...
My personal list of causes for why Sweden indeed is doing incredibly good when it comes to tech these days:
- Early broadband investments and subsidized PCs (as stated in the article).
- Good e-government and digital infrastructure, which means little bureaucracy for starting and running a company, but also availability of out of the box tools to build complex products. Example is bankID, an ubiquitous digital ID solution which startups can us for instant customer identification that lives up to all legal requirements.
- Early success in building global tech brands (Skype, Spotify, even Pirate Bay), which laid the foundation for a self-reinforcing ecosystem (self image, newly minted angel investors, media attention etc.)
- Generally a positive attitude towards tech among the population. Unlike in large parts of continental Europe, being a pessimists/naysayer about new things doesn't give you a lot of status in large parts of Swedish society. Being an early-adopter does.
- Hands off regulation. Not necessarily by virtue, but rather as an accidental side effect of Swedish (political) and administrative culture. Sweden is culturally and politically pretty bad at preparing for negative outcomes. "We have been naive" and "we didn't see it coming" are frequently heard statements from politicians about negative societal developments. For the tech sector, this is great, since startups can try new things without too much early interference by the state or bureaucrats (example: Unlike in many/if not most other European countries, rental e-scooters have been introduced with almost no regulation. Regulation is only now happening, after issues became apparent).
While I agree those aren't unimportant I have come to a somewhat different conclusion after spending some time outside of Sweden. Most people in most places are just busy doing other things. I don't think Stockholm's success is so much what was, but what you didn't have to do.
In the early 00s it was relative easy to become "high middle class". Rent controlled public housing was available so you didn't have to spend $10k-$100k to have stable housing. Public transport was in a good state so you didn't have to spend $5k-50k on a car. Education was available but not generally considered necessary. Mostly cost-free universal health care was the norm. Even marriage wasn't the norm. This meant you had pretty good chance of having your life relatively sorted by your mid-twenties and therefor a much lower cost of doing something else. Compared to other countries where most people are busy trying to attain such things for far longer.
That other countries didn't have the same success because they didn't have good enough broadband is a somewhat safe explanation. Most countries didn't even try, and still don't try, to get good broadband because success is mostly seen as something private.
This is of course somewhat controversial not just abroad but in Sweden as well. As the Stockholm of today would do quite badly by these criteria.
Hands off regulation and overall liberty to pursue both private and business affairs without interference (as long as you pay the massive taxes) was a big surprise for me when I moved to Sweden.
Yeah it's a trade off that can be worth it, as a lot of time and energy is being saved, so mental space can be channeled elsewhere than into frustration about bureaucracy and excessive administrative requirements.
I was thinking of BankID the other day, and that I don't know how the authentication / authorization problem is solved in other countries. Fellow hackers, how do you log in to your internet bank and to your government services such as the tax office?
In Belgium bank sends you a token generator that allows activating your account. You put the bank card in and it produces numbers you can use for the internet banking. I only had to use it once with the KBC bank, as it allowed to authenticate with the mobile app after the initial set up.
The Belgian resident card also allows you to log into government services. You need a card reader for that(~20EUR). Same as with the banking, you can set up a mobile app that can be used for authentication without a card reader, after you complete the initial set up.
When I was living in Germany, my first residence permit(2014) was similar to the Belgian one. However, they stopped issuing those to foreigners in favour of a piece of paper which they stick into your passport. Consequently, I couldn't use any eID in Germany up until 2019 when I moved away. So if you want something done, you get an appointment with the local citizen office. Any paperwork is, well, done with paper. Most of the companies send you a ton of letters.
I can speak for the countries I've lived in. In Spain they use regular digital certificates since ages, in Italy they've recently introduced a weird cloud system. In the UK it's username and password (+ 2FA).
Often: Using a signature. As in, pen on paper, stuck into an envelope or a fax machine (not a scanner and e-mail, oh no, has to be fax).
Government online services that do exist often have their own authentication scheme (each authority has a separate one), typically "we'll mail you an activation code" (snail mail of course) paired with SMS 2FA after the initial registration.
Bank has their own system which uses a token to authenticate. It used to be a 2FA with a physical device but now it's a mobile app.
Government services have multitude of methods to log in, they include using a government issued ID with a card reader or using on of lesser auth methods like using the bank token.
I don't think you can use your government ID to log into your bank, even though it would make sense.
I was surprised when I moved to the US from Sweden. to login into your bank you just use a regular password.
For other government-related login you usually just use your SSN, if someone gains access to your SSN you are screwed. Compared in Sweden I will happily yell out my SSN to a cashier :)
If I understand Swedish BankID correctly, it's a common system owned / operated / used by all the banks together (via some company they all own part of or something, I presume), right?
Here in Finland, each bank has their own. Lots of other entities, webshops -- of both big brick-and-mortar companies and pure online businesses -- and state / municipal agencies alike usually use the banks' services. They have umpteen bank logos to click on their check-out purchase or secure login pages, "Log in with Nordea", "Log in with S-Pankki", etc. For instance, when I want to access my data[0] in the health-care / prescriptions DB of the Social Insurance Institution[1] (i.e. the green "Sign in to e-Services" button on [2]) as a private citizen[3], I click the logo of my bank on the next page the button opens, and then use my bank's mobile app to prove I'm me.
Feels a bit inefficient compared to a common system, but then again there might be a benefit in decentralization: If there is a problem one system, the others still work. Also, if you are going to have a single centralised service, one would have thought the thoroughly registered and bureaucratized Nordic countries would have implemented this as a state service -- in Finland probably run by the Digital and Population Data Services Agency[4]; in Sweden by the Swedish Tax Agency[5][6]. AIUI, that's how it works in our Baltic neighbour Estonia.
[EDIT: Minor wording changes / clarification.]
___
[0] Say, to check if one of my prescriptions for diabetes medicines is running out and needs renewing.
> "We have been naive" and "we didn't see it coming"
For context it should be noted that these two famous quotes by the prime minister and staff were not in the context of software or business, but regarding violent crime and the demographic shift away from natives ethnic homogeneity
> > "We have been naive" and "we didn't see it coming"
> For context it should be noted that these two famous quotes by the prime minister and staff were not in the context of software or business, but regarding violent crime and the demographic shift away from natives ethnic homogeneity
It's been used (and roundly criticised from the right) mainly in those contexts recently, but also for pretty much anything they've screwed up for over a decade now.
IMO the right (both the "accepted" traditional parties and the newer populist ones) is basically right in asking, "If you can't see fricking anything coming, are you really qualified to run the country?" It may work as an excuse the first few times, but it wears out pretty quickly; AFAICS the point where it shows not how hugely unpredictable the consequences of their actions are, but just how bad at predicting / willing to ignore them they are has long since been passed.
Co-founder and CEO Niklas Zennström is a Swede and so Skype always had a clear connection to Sweden. But yes, Estonia also deserves a lot of credit for Skype of course, as the development work was mostly done there.
The article praises the Welfare State as the major stimulus for the startup environment, but then mentions that companies intend to leave Sweden... because of the high tax rate?
It's an interesting paradox and highlights the way that VCs want to suck as much value out of an economy as they possibly can, without the willingness to contribute back to it proportionately.
Corporate tax rates are the same as other countries in Western Europe, and lower than the US.
Income taxes and payroll taxes are (significantly) higher though. Companies don’t need to leave the country but may want to hire top talent elsewhere if they need to keep taxes low.
For me as a Swede, keeping as little as half of my gross pay isn’t a big issue since I’m not required to pay for my kids higher education (or any education for that matter), nor do I need to save up a lot for retirement or future illness. But I can understand someone who wants to go to Sweden for a 5 year stint and needs to aggregate as much as possible because their kids will go to expensive schools etc. Moving to a high-tax high social security labor market can seem like a one way street in that regard.
I think the biggest issue with Sweden is attracting talent.
Some issues:
Payouts for top talent are not great. Compared to US, you rarely get stock based comp or salaries higher than $80k/y and even then most of it goes to taxes. That is not unique with Sweden though, it's EU in general.
Second. The weather is not for everyone.
IMO that puts a cap in the potential growth as only the top companies can attract and pay the talent (Spotify Klarna, iZettle etc.).
If it were merely a matter of 'a few points more' and you get 'this benefit' ... I think the argument would make sense.
But taxes in Sweden are something to almost choke on, they are extremely high. Not just high ... and I'm not quite sure that the benefits reflect quite how high taxes are.
The payroll taxes are enormous (almost as much as income tax) - and with elevated base + VAT it really makes a difference.
At 'higher income levels' - say at more than $150K USD equivalent, you're going to be paying over 60% in 'total taxes' - though much of that is 'hidden' in payroll taxes. And what you take home, you pay a further 25% on almost anything you consume.
So at upper income, but not necessarily 'rich' - you're approaching $30 in your pocket for every $100 earned, which is quite egregious.
Despite the obvious systematic benefits of many social programs, I don't think it's fair that we can assume some arbitrary levels of efficiency in that taxation. I really do feel the bulk of it boils down to redistribution for almost arbitrary public sector work.
I wish there was a happy place in between Texas and Stocholm on that, but I'm not sure what the answer is.
It can easily bite back. You rely heavily on the state, you bet your welfare on a hope that in 40 years time, there will still be enough cash flowing through the system to support you. Could work, but Sweden is not Norway with its sovereign fund.
Also, world is not binary as you describe it (high taxes&free education vs low taxes&costly education), there are tons of places which don't don't go mental on taxes like Sweden does, and still provide top notch free education.
Great for Sweden, would not be my top choice of residence and raising kids but its a good place nevertheless.
> > The article praises the Welfare State as the major stimulus for the startup environment, but then mentions that companies intend to leave Sweden... because of the high tax rate?
Yeah, the article mentions that Skype threatened to leave in 2016...
> Corporate tax rates are the same as other countries in Western Europe, and lower than the US.
...and it also mentions that they haven't actually left.
Few startups flourish anywhere. Or are you saying that all things being equal, a startup in europe has a lower chance of succeeding long term than in the us?
Well, after the US and China, the UK is the next biggest tech/startup environment worldwide. Startups obviously do flourish at least in parts of Europe, even relative to the rest of the rich world (Japan, Korea, Russia kinda, the Gulf states, even Australia/Canada).
> It's an interesting paradox and highlights the way that VCs want to suck as much value out of an economy as they possibly can, without the willingness to contribute back to it proportionately.
The businesses aren't any more ethical in welfare states. Welfare states set the financial burden on individuals - the contributions on employment contracts, dividend and capital gains taxes there are obnoxiously enourmous. An individual there basically gets a job to take a mortgage and that's it regarding life aspirations.
I wouldn't use the word ethical, or give agency to a legal entity.
It's people who own and run businesses, and it's not unethical for people to want to put themselves in a better financial situation rather than a worse one.
Many who would call a business unethical for moving somewhere with a more favorable regulatory environment are entirely in favor of economic migrants moving to welfare states to be better off. They might argue the business should pay back the benefits it got from the welfare state, but would probably bristle at the suggestion that the migrants were unethical for wanting to benefit without paying into it.
In the end it's the same thing really, human nature. Nothing about a business generates any kind of ethics or generosity beyond what people have.
You base your assertion on what evidence? Do you know what the capital gains tax is in Sweden? I encourage you to look up the ISK accounts.
Also regarding getting a job to take a mortgage for life aspirations, the nordic countries have actually much more social mobility than most other countries in the world.
"An individual there basically gets a job to take a mortgage and that's it regarding life aspirations."
Doesn't that describe most if not all economies that have middle class?
Private mortgage was considered a great way to increase national wealth in "rich" post-WW2 economies. And so it became part of "the expected economic life path of the middle-class employee".
Most people who are employed work to satisfy basic economic needs: 1. house 2. food 3. health and after that 4. leisure. Some even turn to 5. investment at some point.
So I'm not sure what you are trying to say? Maybe expand/rephraze it a little bit?
Found the American... You're kidding yourself if you think that's it for life aspirations. Or if you think the taxes are the end of the world. I am sure most people in 'welfare states' would agree that they would rather that than the American system.
If I had a dime for every time someone wrote "X is the new Silicon Valley"...
Silicon Valley is a place of innovation therefore by saying a place is Silicon Valley 2 you are automatically aknowledging that the new place is a sequel and not an innovation.
Stop trying to copy innovation, to be innovative you have to "Sing your own special song".
The team of Skype and Kazaa did incredible work, they did P2P early and still P2P has not really been used widely in mainstream software nowadays.
It's likely in 5 years no-one will even remember Klarna, don't compare it to Skype or Spotify.
Last weeks Square bought Afterpay. This article is clearly just a marketing stunt to hype Klarna IPO.
I despise both Afterpay and Klarna.
They allow people to buy things they don't need.
This is just US credit card debt in a new package 2.0
Don't waste money on brand expensive clothes especially if you can't pay them all at once.
I have been wearing the same model running shoes from Decathlon that cost 20$ for the past 6 years (buying a new one where the previous one tears down).
In general I agree with your sentiment but it's not the "innovation" that people are trying to copy. It's the loose regulatory environment and easy access to willing financiers that allow experimentation. Not many other cities have been able to cultivate an enivronment of billion-dollar bets on things.
Trying to cultivate a "billion-dollar bets" is like trying to cultivate GROWN-UP SEQUOIAS. First of all you have to start with seeds and probably if you are new gardener you should start with something smaller and easier.
People want to copy the Silicon Valley of today without the decades of smaller and organic growth. Rome wasn't built in a day. Rome started as a bunch of farmers on a hill next to a river. The Silicon Valley started around a tech university where geeks really wanted to build stuff so much they did in their parents garage. The money is only the petrol added to an existing flame.
I'd also add that you need at least one pretty good technical university nearby to lure talent from. Stockholm does indeed have one (KTH). Other candidates would be Zurich, London, Munich, or somewhere near Delft.
I wonder if I'm the only one that hears "x is the new Silicon valley" and thinks "high housing prices and naive SEs everywhere, so somewhere to avoid."
These words don't really mean anything. Hamburg is the next Silicon Valley, depending on which useless Hamburg startup you ask. Berlin as well. London has the Silicon Roundabout. Louisiana and Texas the Silicon Bayou. Just google "next silicon site:country" and you'll find some hits.
"you are automatically aknowledging that the new place is a sequel and not an innovation."
Ouf I don't think this is a good statement.
We admire Silicon Valley because it produces innovation, not because it, and of itself, is an innovation.
Copying it is a good idea where it makes sense.
The Western University system was spread throughout the world in the 19th century, and then took off in the 20th century. Those Centers of Excellence (and Innovation) are basically foundational and critical institutions without which countries would not advance.
They were 'copied' and modelled after much older institutions.
If a country can 'copy' the Silicon Valley in such a manner that it yields benefits, then this is a good thing, not something to be avoided.
That said, it's to complex to copy and probably cannot be copied. Anymore than anyone can copy Shenzhen. Some principles can be grafted but need to be done so contextually.
Also, Sweden is nothing like the Silicon Valley, rather it's a country that's producing some good startups.
Most notably, Sweden doesn't have the underlying tranches of incredible knowledge in actual silicon, hardware, it's not building operating systems, it has good schools but not the best, (The Valley has Berkley and Stanford which are 'pillars' of the critical mass) Sweden not hugely over represented in terms of IP or intellectual contributions.
I think the UK / London area contributes a little more heavily in those areas.
Sweden is just a well run country that has well educated people, confident, articulate, outward looking, organized, a history of excellence, a strong sense of identity ... and so they've made some good startups.
With some ideas about Venture Capital Financing, and grafting some business models that have proven well in the US over to the EU, they've done a good job of it. But I don't actually think it's like the Valley at all.
I also run in them.
As I said already:
"buying a new one where the previous one tears down"
I do not use the same pair for 6 years, I use the same model of shoes and remove the wasted time of choice and fashion.
Actual sales cost for a small-medium company: 1 084 050
Included: VAT ca 25%, social fees ca 31%, other misc ca 10%
Net income after taxes: 420 492
So, about 61% is lost in taxes from gross billing to net income after tax, for someone earning at 90th percentile. "The world's highest taxes" is misleading. It really depends on your family situation and lifestyle:
For those 61% you get quite a lot when the system works. Free health care, education, child care, work-life balance, freedom, nature, social life, etc.
I do not recommend living in Sweden without a good private medical insurance. The public health care is top notch when it works, but without private insurance odds are it will not work well in your case. If you are willing to put in 10-15MSEK for a house/apartment you can choose areas with very good schools, but it will take you many years to find a decent rental below 30k/m.
Society is generally very nice, open, liberal, clean. Nature is wonderful. 6 month winter is made for working, 4 month summer is made for swimming. I generally expect to get ca 1500h efficient time on target from the people I had in Sweden, and I expect to pay around 1kSEK/h effective.
I used to hire people and place them in Sweden. I have sadly not done that for several years. Slowness of immigration, severe lack of rental housing, etc. A good gemeinde+canton in Switzerland is much faster and smoother.
I've never heard anyone pay 30k a month for their rent. People consider 12 high, the median is around 6 IIRC.
I live in what is generally considered a "fancy" area (lots of bank directors and some ABBA people) and 10-15 million is what you'd pay for a nice house sure but our row house was way less and our previous apartment significantly so.
It is of course not common to rent for 30k because most people feel they can't afford that but it is essentially the "spot price".
Many apartments in central Stockholm are ~100k SEK per square meter to buy. So a 100 square meter apartment is 10 million. That is 16-17k per month just to beat the inflation target. Then you have the building fee which is probably 4-5k. And then profit on top of that of 8k per percent. So with 1% profit you are more or less at 30k per month.
I am curious about what you consider a good gemeinde+canton. I've been thinking about moving to Switzerland but coming from a much more unitary country I am not used to finding a particular gemeinde this improtant!
If the gemeinde wants more of the kind of professional skills you bring they will process the paperwork within a week.
There is a huge difference between cantons and gemeindes. There are tons of information online, but I cannot recommend without knowing, a lot, about what you are looking for.
> I do not recommend living in Sweden without a good private medical insurance. The public health care is top notch when it works, but without private insurance odds are it will not work well in your case.
What is this FUD? I've never had a problem here. Everything is far better than anything I ever had in the US private or public.
> If you are willing to put in 10-15MSEK for a house/apartment you can choose areas with very good schools, but it will take you many years to find a decent rental below 30k/m.
Again, you're just misleading people. There are plenty of places to live besides Stockholm and Göteborg and many of them even have startup incubators or large corporations with plenty of jobs.
I am really not trying to be an asshole. This is my limited experience.
Real estate prices are what I see as current. I am sure they were lower before, and outside the main tech regions, as always, everywhere.
Rental prices are accurate if I want the person to start within a few months. I am aware that the "normal" prices are much lower. But there are 5-15y queues to get a regular contract. None of my people have managed to get a "normal" apartment contract. Ever. We have had to rent from the private market pool which is much more expensive.
The issue with health care is anecdotal. But too many times my people and my friends have had excessive waiting times for simple consultations and treatments. This can be drastically reduced by having private insurance. Compare days vs months or years.
When the health care works, it is very good.
I don't think that Klarna's direct competitor of Paypal or Stripe. Maybe AfterPay and Shopify are more direct competitors.
I also don't think Klarna is doing better than Stripe.
I am from Europe. But I don't think sweden is the new silicon valley. Maybe from the perspective of extreme costs.
Berlin, Amsterdam, Dublin and even London are much bigger in terms of startups, scaleups. The world is more than Klarna and Spotify.
> Why _even_? Fairly sure London has more startups than the previous 3 mentioned cities combined.
Leaving out Germany for the moment, Britain (actually even England alone, I think) also has a much larger population than Sweden, the Netherlands and Ireland combined, so of course it may have more startups total.
As for Berlin, I'm guessing "talent" and opportunities are more dispersed in Germany than in Britain: Does it really have much of a "Silicon Valley of <<X>>" besides London? As I understand it, Germany has Hamburg, Munich, perhaps Frankfurt and I don't know what more (the greater Stuttgart region, from at least CureVac in Tübingen to SAP in Walldorf; maybe Mainz-Darmstadt, with BionTech and Software AG?).
Also, Britain has screwed itself over royally with Brexit, which makes it hugely less attractive and competitive.
Of course, there are lots of cities who wants to be the Silicon Valley of Europe. I wonder if there are any objective facts one could compare in order to make the discussion a little more fact-based.
Amount of invested venture capital per capita…? Or maybe there are better measures.
In February of 2000, Newsweek ran a cover stating: "Stockholm: Hot IPOs and Cool Clubs in Europe's Internet Capital". This was at the apex of the dot-com boom. Swedish economy was boosted by the success of Ericsson and the explosion of mobile phone connectivity around the world. One of the articles from that issue is here: https://www.newsweek.com/shining-stockholm-162345
Quote: "How did Sweden get so young, hot--and competitive? Deep technological roots and some recent bright blossoms have helped. Communication has long been crucial in Sweden, with a small population (today 8.9 million people, barely more than Greater London) spread across an often-inhospitable land mass a little larger than California. Swedes loved the telephone when it was new (Stockholm in 1900 had more phones than London or Berlin), and they took to wireless phones and the Internet with equal enthusiasm. Education and a commercial mind-set are factors too. Because of their relative isolation, Swedes look abroad for ideas and opportunities. For generations they have learned English, now the language of the Internet--and they've done so in a lavishly funded state education system that also places a high value on science and engineering."
This is the same period as the "staff PC" programs were running, where you got tax-deductions for personal computers as is stated in the reuters article (".. government policy to put a computer in every home"). So while these seeds were sown here, they had not yet born fruit to cause the the Newsweek cover of that era.
If Sweden is the Silicon Valley of Europe, which I personally doubt, it is at least something that has been in the making for 40 years or more.
Readit News
I have worked in tech in NY, SF Bay Area, and LA. While all three geos were perfectly suitable for launching and running a startup, nothing comes even close to the experience of working in the SF Bay Area. There are many facets to this, but here's a very simple litmus test: take a meeting with a local VC and benchmark their behavior and expectations.
Your tech example comparing NY/LA to SF is the direct inverse of comparing the film industry in LA to SF, or finance in NY to SF. Those cities have their own clusters and vastly outperform in those industries. NY and SF also have good universities minting new engineers and lots of wealthy individuals to invest in those people. They would be silly not to attempt and foster a "new" Silicon Valley based on their specific strengths (look at biotech in Boston for the perfect example).
[0] https://hbr.org/1998/11/clusters-and-the-new-economics-of-co...
I'm in LA now, and "Silicon Beach" in Venice and Santa Monica is an utter joke compared to the entire Bay Area. Silicon beach is a few square blocks, whereas the entire Bay Area is awash in tech, no matter where you go.
Silicon Valley is entirely geared around tech. You can find anything and anyone there.
It is the same as Los Angeles to movies. You can't beat LA, because they have been doing it 100 years and have a zillion companies backing it up - all the little companies. There are oodles of movie industry lawyers, talent agencies, accounting firms, all geared to specifically the film industry. Are you going to be able to find 10 law firms in Silicon Valley or Chicago or Miami that deal exclusively in the entertainment industry? No.
The VCs and all that is probably true. But the air you breath on SF is different.
Isn't that the primary definition of "Silicon Valley" nowadays?
The fact that someone has to define itself as "just like Silicon Valley" tells me they are imitative rather than innovative. And at that point they already lost the game. Then they list the reasons for their claim. I've heard them all.
- Government funded innovation fund = no interest from the private sector
- Cheaper devs = they are bleeding talent through brain drain
- Better labor pool thanks to lax immigration policy = they are bleeding talent and consider engineering to be a commodity (they think they can replace top performers with lower performers. It's brick laying after all)
- Ties with Regional University = They are bleeding talent to the top X institutions
What I want to see is direct access to private investors, SV salaries, a top 5 worldwide university within walking distance, non-compete and access to a large mature unified consumer market. If some place can deliver that, then it will become its own thing.
This is because of the massive mobile game sectors and dozens or so unicorns in progress. Mobile games are 0.5% GDP and growing.
https://www.helsinkitimes.fi/business/19280-european-venture...
https://en.wikipedia.org/wiki/List_of_technology_centers#Pla...
> Silicon Valley of the North
Pretty much dead after the bankruptcy of Nortel and whatever remains of BlackBerry.
> Silicon Forest: Portland, Oregon
Not false; Intel is there. They are making Silicon...
> Silicon Spuds: Idaho Falls, Idaho
Micron is in Idaho, so again, not wrong.
I've been searching for an answer, Closest I came to was that it had something to do with their philosophy of "Lagom - ‘not too much and not too little, just right,’" i.e. They aren't overambitious?
I for one would love to see more products from small startups of Scandinavia or other EU countries with good democratic values which doesn't ask for pledging soul to provide services.
There's worse.
In another country X they call an area "the Silicon Valley of X", only because that's where you can find mutiple computer hardware and software retail stores...
- Early broadband investments and subsidized PCs (as stated in the article).
- Good e-government and digital infrastructure, which means little bureaucracy for starting and running a company, but also availability of out of the box tools to build complex products. Example is bankID, an ubiquitous digital ID solution which startups can us for instant customer identification that lives up to all legal requirements.
- Early success in building global tech brands (Skype, Spotify, even Pirate Bay), which laid the foundation for a self-reinforcing ecosystem (self image, newly minted angel investors, media attention etc.)
- Generally a positive attitude towards tech among the population. Unlike in large parts of continental Europe, being a pessimists/naysayer about new things doesn't give you a lot of status in large parts of Swedish society. Being an early-adopter does.
- Hands off regulation. Not necessarily by virtue, but rather as an accidental side effect of Swedish (political) and administrative culture. Sweden is culturally and politically pretty bad at preparing for negative outcomes. "We have been naive" and "we didn't see it coming" are frequently heard statements from politicians about negative societal developments. For the tech sector, this is great, since startups can try new things without too much early interference by the state or bureaucrats (example: Unlike in many/if not most other European countries, rental e-scooters have been introduced with almost no regulation. Regulation is only now happening, after issues became apparent).
In the early 00s it was relative easy to become "high middle class". Rent controlled public housing was available so you didn't have to spend $10k-$100k to have stable housing. Public transport was in a good state so you didn't have to spend $5k-50k on a car. Education was available but not generally considered necessary. Mostly cost-free universal health care was the norm. Even marriage wasn't the norm. This meant you had pretty good chance of having your life relatively sorted by your mid-twenties and therefor a much lower cost of doing something else. Compared to other countries where most people are busy trying to attain such things for far longer.
That other countries didn't have the same success because they didn't have good enough broadband is a somewhat safe explanation. Most countries didn't even try, and still don't try, to get good broadband because success is mostly seen as something private.
This is of course somewhat controversial not just abroad but in Sweden as well. As the Stockholm of today would do quite badly by these criteria.
I looked into starting a company in Denmark and was quickly put off.
The regulation is still pretty high compared to the US though. Especially once you plan to start employing people. Not that that'd a bad thing.
You're supposed to set up operations as a charity to dodge the taxes.
The Belgian resident card also allows you to log into government services. You need a card reader for that(~20EUR). Same as with the banking, you can set up a mobile app that can be used for authentication without a card reader, after you complete the initial set up.
When I was living in Germany, my first residence permit(2014) was similar to the Belgian one. However, they stopped issuing those to foreigners in favour of a piece of paper which they stick into your passport. Consequently, I couldn't use any eID in Germany up until 2019 when I moved away. So if you want something done, you get an appointment with the local citizen office. Any paperwork is, well, done with paper. Most of the companies send you a ton of letters.
In Denmark both of those are done using the same national 2FA app.
A proprietary scheme specific to that one bank.
> to your government services
Often: Using a signature. As in, pen on paper, stuck into an envelope or a fax machine (not a scanner and e-mail, oh no, has to be fax).
Government online services that do exist often have their own authentication scheme (each authority has a separate one), typically "we'll mail you an activation code" (snail mail of course) paired with SMS 2FA after the initial registration.
Government services have multitude of methods to log in, they include using a government issued ID with a card reader or using on of lesser auth methods like using the bank token.
I don't think you can use your government ID to log into your bank, even though it would make sense.
For other government-related login you usually just use your SSN, if someone gains access to your SSN you are screwed. Compared in Sweden I will happily yell out my SSN to a cashier :)
Here in Finland, each bank has their own. Lots of other entities, webshops -- of both big brick-and-mortar companies and pure online businesses -- and state / municipal agencies alike usually use the banks' services. They have umpteen bank logos to click on their check-out purchase or secure login pages, "Log in with Nordea", "Log in with S-Pankki", etc. For instance, when I want to access my data[0] in the health-care / prescriptions DB of the Social Insurance Institution[1] (i.e. the green "Sign in to e-Services" button on [2]) as a private citizen[3], I click the logo of my bank on the next page the button opens, and then use my bank's mobile app to prove I'm me.
Feels a bit inefficient compared to a common system, but then again there might be a benefit in decentralization: If there is a problem one system, the others still work. Also, if you are going to have a single centralised service, one would have thought the thoroughly registered and bureaucratized Nordic countries would have implemented this as a state service -- in Finland probably run by the Digital and Population Data Services Agency[4]; in Sweden by the Swedish Tax Agency[5][6]. AIUI, that's how it works in our Baltic neighbour Estonia.
[EDIT: Minor wording changes / clarification.]
___
[0] Say, to check if one of my prescriptions for diabetes medicines is running out and needs renewing.
[1] https://en.wikipedia.org/wiki/Kela_(institution)
[2] https://www.kela.fi/web/en
[3] They also happen to be my employer, but work is a whole separate VPN.
[4] https://dvv.fi/en/about-the-agency
[5] https://en.wikipedia.org/wiki/Swedish_Tax_Agency
[6] https://www.skatteverket.se/servicelankar/otherlanguages/ine...
For context it should be noted that these two famous quotes by the prime minister and staff were not in the context of software or business, but regarding violent crime and the demographic shift away from natives ethnic homogeneity
I feel you are pushing a narrative here.
> For context it should be noted that these two famous quotes by the prime minister and staff were not in the context of software or business, but regarding violent crime and the demographic shift away from natives ethnic homogeneity
It's been used (and roundly criticised from the right) mainly in those contexts recently, but also for pretty much anything they've screwed up for over a decade now.
IMO the right (both the "accepted" traditional parties and the newer populist ones) is basically right in asking, "If you can't see fricking anything coming, are you really qualified to run the country?" It may work as an excuse the first few times, but it wears out pretty quickly; AFAICS the point where it shows not how hugely unpredictable the consequences of their actions are, but just how bad at predicting / willing to ignore them they are has long since been passed.
Ericsson ?
It's an interesting paradox and highlights the way that VCs want to suck as much value out of an economy as they possibly can, without the willingness to contribute back to it proportionately.
Income taxes and payroll taxes are (significantly) higher though. Companies don’t need to leave the country but may want to hire top talent elsewhere if they need to keep taxes low.
For me as a Swede, keeping as little as half of my gross pay isn’t a big issue since I’m not required to pay for my kids higher education (or any education for that matter), nor do I need to save up a lot for retirement or future illness. But I can understand someone who wants to go to Sweden for a 5 year stint and needs to aggregate as much as possible because their kids will go to expensive schools etc. Moving to a high-tax high social security labor market can seem like a one way street in that regard.
Some issues:
Payouts for top talent are not great. Compared to US, you rarely get stock based comp or salaries higher than $80k/y and even then most of it goes to taxes. That is not unique with Sweden though, it's EU in general.
Second. The weather is not for everyone.
IMO that puts a cap in the potential growth as only the top companies can attract and pay the talent (Spotify Klarna, iZettle etc.).
If it were merely a matter of 'a few points more' and you get 'this benefit' ... I think the argument would make sense.
But taxes in Sweden are something to almost choke on, they are extremely high. Not just high ... and I'm not quite sure that the benefits reflect quite how high taxes are.
The payroll taxes are enormous (almost as much as income tax) - and with elevated base + VAT it really makes a difference.
At 'higher income levels' - say at more than $150K USD equivalent, you're going to be paying over 60% in 'total taxes' - though much of that is 'hidden' in payroll taxes. And what you take home, you pay a further 25% on almost anything you consume.
So at upper income, but not necessarily 'rich' - you're approaching $30 in your pocket for every $100 earned, which is quite egregious.
Despite the obvious systematic benefits of many social programs, I don't think it's fair that we can assume some arbitrary levels of efficiency in that taxation. I really do feel the bulk of it boils down to redistribution for almost arbitrary public sector work.
I wish there was a happy place in between Texas and Stocholm on that, but I'm not sure what the answer is.
Also, world is not binary as you describe it (high taxes&free education vs low taxes&costly education), there are tons of places which don't don't go mental on taxes like Sweden does, and still provide top notch free education.
Great for Sweden, would not be my top choice of residence and raising kids but its a good place nevertheless.
Yeah, the article mentions that Skype threatened to leave in 2016...
> Corporate tax rates are the same as other countries in Western Europe, and lower than the US.
...and it also mentions that they haven't actually left.
Except for Ireland with its 12.5%
Any data to back this claim?
Well, after the US and China, the UK is the next biggest tech/startup environment worldwide. Startups obviously do flourish at least in parts of Europe, even relative to the rest of the rich world (Japan, Korea, Russia kinda, the Gulf states, even Australia/Canada).
BTW here's a look at Y Combinator's bestest startups: https://news.ycombinator.com/item?id=27485360 (full thread: https://news.ycombinator.com/item?id=27482589)
Did you just define arbitrage?
Same applies to most companies, right?
Same applies to most people (and animals too).
It's people who own and run businesses, and it's not unethical for people to want to put themselves in a better financial situation rather than a worse one.
Many who would call a business unethical for moving somewhere with a more favorable regulatory environment are entirely in favor of economic migrants moving to welfare states to be better off. They might argue the business should pay back the benefits it got from the welfare state, but would probably bristle at the suggestion that the migrants were unethical for wanting to benefit without paying into it.
In the end it's the same thing really, human nature. Nothing about a business generates any kind of ethics or generosity beyond what people have.
Also regarding getting a job to take a mortgage for life aspirations, the nordic countries have actually much more social mobility than most other countries in the world.
Doesn't that describe most if not all economies that have middle class?
Private mortgage was considered a great way to increase national wealth in "rich" post-WW2 economies. And so it became part of "the expected economic life path of the middle-class employee".
Most people who are employed work to satisfy basic economic needs: 1. house 2. food 3. health and after that 4. leisure. Some even turn to 5. investment at some point.
So I'm not sure what you are trying to say? Maybe expand/rephraze it a little bit?
Silicon Valley is a place of innovation therefore by saying a place is Silicon Valley 2 you are automatically aknowledging that the new place is a sequel and not an innovation.
Stop trying to copy innovation, to be innovative you have to "Sing your own special song".
The team of Skype and Kazaa did incredible work, they did P2P early and still P2P has not really been used widely in mainstream software nowadays.
It's likely in 5 years no-one will even remember Klarna, don't compare it to Skype or Spotify. Last weeks Square bought Afterpay. This article is clearly just a marketing stunt to hype Klarna IPO.
I despise both Afterpay and Klarna. They allow people to buy things they don't need. This is just US credit card debt in a new package 2.0
Don't waste money on brand expensive clothes especially if you can't pay them all at once. I have been wearing the same model running shoes from Decathlon that cost 20$ for the past 6 years (buying a new one where the previous one tears down).
ftfy.
In general I agree with your sentiment but it's not the "innovation" that people are trying to copy. It's the loose regulatory environment and easy access to willing financiers that allow experimentation. Not many other cities have been able to cultivate an enivronment of billion-dollar bets on things.
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Ouf I don't think this is a good statement.
We admire Silicon Valley because it produces innovation, not because it, and of itself, is an innovation.
Copying it is a good idea where it makes sense.
The Western University system was spread throughout the world in the 19th century, and then took off in the 20th century. Those Centers of Excellence (and Innovation) are basically foundational and critical institutions without which countries would not advance.
They were 'copied' and modelled after much older institutions.
If a country can 'copy' the Silicon Valley in such a manner that it yields benefits, then this is a good thing, not something to be avoided.
That said, it's to complex to copy and probably cannot be copied. Anymore than anyone can copy Shenzhen. Some principles can be grafted but need to be done so contextually.
Also, Sweden is nothing like the Silicon Valley, rather it's a country that's producing some good startups.
Most notably, Sweden doesn't have the underlying tranches of incredible knowledge in actual silicon, hardware, it's not building operating systems, it has good schools but not the best, (The Valley has Berkley and Stanford which are 'pillars' of the critical mass) Sweden not hugely over represented in terms of IP or intellectual contributions.
I think the UK / London area contributes a little more heavily in those areas.
Sweden is just a well run country that has well educated people, confident, articulate, outward looking, organized, a history of excellence, a strong sense of identity ... and so they've made some good startups.
With some ideas about Venture Capital Financing, and grafting some business models that have proven well in the US over to the EU, they've done a good job of it. But I don't actually think it's like the Valley at all.
what? Do you run in them?
Approximated historic exchange rates: SEK / euro-dollar-franc: ca 0.1 - 0.12
Gross salary income at 90th percentile: 567 600
Actual sales cost for a small-medium company: 1 084 050
Included: VAT ca 25%, social fees ca 31%, other misc ca 10%
Net income after taxes: 420 492
So, about 61% is lost in taxes from gross billing to net income after tax, for someone earning at 90th percentile. "The world's highest taxes" is misleading. It really depends on your family situation and lifestyle:
For those 61% you get quite a lot when the system works. Free health care, education, child care, work-life balance, freedom, nature, social life, etc. I do not recommend living in Sweden without a good private medical insurance. The public health care is top notch when it works, but without private insurance odds are it will not work well in your case. If you are willing to put in 10-15MSEK for a house/apartment you can choose areas with very good schools, but it will take you many years to find a decent rental below 30k/m.
Society is generally very nice, open, liberal, clean. Nature is wonderful. 6 month winter is made for working, 4 month summer is made for swimming. I generally expect to get ca 1500h efficient time on target from the people I had in Sweden, and I expect to pay around 1kSEK/h effective.
I used to hire people and place them in Sweden. I have sadly not done that for several years. Slowness of immigration, severe lack of rental housing, etc. A good gemeinde+canton in Switzerland is much faster and smoother.
* sources: statistics office, tax office: SCB, SKV
I live in what is generally considered a "fancy" area (lots of bank directors and some ABBA people) and 10-15 million is what you'd pay for a nice house sure but our row house was way less and our previous apartment significantly so.
Many apartments in central Stockholm are ~100k SEK per square meter to buy. So a 100 square meter apartment is 10 million. That is 16-17k per month just to beat the inflation target. Then you have the building fee which is probably 4-5k. And then profit on top of that of 8k per percent. So with 1% profit you are more or less at 30k per month.
If the gemeinde wants more of the kind of professional skills you bring they will process the paperwork within a week.
There is a huge difference between cantons and gemeindes. There are tons of information online, but I cannot recommend without knowing, a lot, about what you are looking for.
What is this FUD? I've never had a problem here. Everything is far better than anything I ever had in the US private or public.
> If you are willing to put in 10-15MSEK for a house/apartment you can choose areas with very good schools, but it will take you many years to find a decent rental below 30k/m.
Again, you're just misleading people. There are plenty of places to live besides Stockholm and Göteborg and many of them even have startup incubators or large corporations with plenty of jobs.
Real estate prices are what I see as current. I am sure they were lower before, and outside the main tech regions, as always, everywhere.
Rental prices are accurate if I want the person to start within a few months. I am aware that the "normal" prices are much lower. But there are 5-15y queues to get a regular contract. None of my people have managed to get a "normal" apartment contract. Ever. We have had to rent from the private market pool which is much more expensive.
The issue with health care is anecdotal. But too many times my people and my friends have had excessive waiting times for simple consultations and treatments. This can be drastically reduced by having private insurance. Compare days vs months or years. When the health care works, it is very good.
Dead Comment
There are also some big fintech startups around Klarna that seem to do very well.
So I don't see any problems with their involvement with the article.
Why _even_? Fairly sure London has more startups than the previous 3 mentioned cities combined.
Leaving out Germany for the moment, Britain (actually even England alone, I think) also has a much larger population than Sweden, the Netherlands and Ireland combined, so of course it may have more startups total.
As for Berlin, I'm guessing "talent" and opportunities are more dispersed in Germany than in Britain: Does it really have much of a "Silicon Valley of <<X>>" besides London? As I understand it, Germany has Hamburg, Munich, perhaps Frankfurt and I don't know what more (the greater Stuttgart region, from at least CureVac in Tübingen to SAP in Walldorf; maybe Mainz-Darmstadt, with BionTech and Software AG?).
Also, Britain has screwed itself over royally with Brexit, which makes it hugely less attractive and competitive.
Amount of invested venture capital per capita…? Or maybe there are better measures.
The UK and Germany appear to have the most active venture capital out of all European countries, significantly more so than Sweden.
Quote: "How did Sweden get so young, hot--and competitive? Deep technological roots and some recent bright blossoms have helped. Communication has long been crucial in Sweden, with a small population (today 8.9 million people, barely more than Greater London) spread across an often-inhospitable land mass a little larger than California. Swedes loved the telephone when it was new (Stockholm in 1900 had more phones than London or Berlin), and they took to wireless phones and the Internet with equal enthusiasm. Education and a commercial mind-set are factors too. Because of their relative isolation, Swedes look abroad for ideas and opportunities. For generations they have learned English, now the language of the Internet--and they've done so in a lavishly funded state education system that also places a high value on science and engineering."
This is the same period as the "staff PC" programs were running, where you got tax-deductions for personal computers as is stated in the reuters article (".. government policy to put a computer in every home"). So while these seeds were sown here, they had not yet born fruit to cause the the Newsweek cover of that era.
If Sweden is the Silicon Valley of Europe, which I personally doubt, it is at least something that has been in the making for 40 years or more.