How Sweden became the Silicon Valley of Europe | Hacker News Reader

How Sweden became the Silicon Valley of Europe

reuters.com

227 pointslevmiseri289 comments

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).

[0] https://hbr.org/1998/11/clusters-and-the-new-economics-of-co...

You can study all you want but that won't change the reality on the ground: Silicon Valley has a head start that will be hard / impossible to overcome within the next 50 years at a minimum, and any country that has such aspirations would do well to realize this and to aim for something they can actually achieve.

On top of that, even if you are successful in getting a world-class start-up off the ground in another location (random pick: Stockholm), how are you going to stop SV to buy out the founders and the investors and then proceed to reap the bulk of the returns? This is the problem.

Instead of reflexively dismissing, lets look at actual results. For a way to foster a new industry, we can look at Berlin.

SAP is one of the largest software companies in the world and also headquartered in Germany (not Silicon Valley). One of their initial founders, Hasso Plattner, has created the Hasso Plattner Institute [0] in Berlin (Potsdam, really). The Institute's focus has been primarily on business processes and software to analyze and improve those processes. Two of that institutes startups have been acquired in the past 6 months.

Appian buys Lana Labs [1]

SAP to Acquire Signavio [2]

EDIT TO ADD: Before Silicon Valley was the heart of innovation, it was New Jersey and Upstate NY. Things change and governments are wise to invest that way.

[0] https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&c...

[1] https://www.startbase.com/news/appian-kauft-lana-labs/

[2] https://www.summitpartners.com/news/Promoting-Process-Excell...

That's two comments in a row where you've started off with an insult.

And your data? TWO EXITS.

I've been looking in-depth at the actual results for the last 15 years professionally as an investor in Europe and a service provider to a very large fraction of the EU investment scene, and before that as an entrepreneur.

Your proof amounts to absolutely nothing on the scale of any European country versus Silicon Valley and to claim that it does is risible, and does the EU a disservice. If you are serious about making a dent in this then the best way forward is to acquire some background knowledge on the difference in scale that you are looking at.

It is quite possible to start a novel company in the EU. It is next to impossible to do so without either getting a much better funded and faster (and quite often better) executing competitor from the United States to come along and eat you for lunch, acquire you or woo your customers away with a 'free' plan that puts you out of business. That there are a few exceptions to that rule proves the rule, not the opposite.

What are you investing in then?

To date in > 20 start-ups of many different kinds, medical, social media, hard tech, consumer goods and so on, a fairly good mix of various segments.

Edit: updated the count.

Ah and I forgot to mention one of the ones I'm most happy about and which indirectly got generated through HN, a food start-up in America.

Then maybe there is hope for European startups after all and it’s not so all gloom and doom?

Absolutely. But if you have the option to join YC or some other US based accelerator you should probably jump at the opportunity.

I only shared my parent comment with the hope that some people might benefit from the lessons I've acquired quite painfully and over many years. It's not a diss at anyone's country or sense of pride.

From the governments' perspective, it makes perfect sense to do everything they can to turn their countries into the next Silicon Valley. Same with the VCs - there's a lot of money to be made with the local talent that for whatever reason chooses to work in a geo with less attractive valuations and less favorable terms for the same quality of work.

But from the entrepreneurs' perspective, it really does matter if your local VC can get away with shenanigans because they are a big fish in a small pond [0].

[0] In this context, small pond is not a measure of the size of the city or its population, but instead a measure of the opportunity cost. If a NY VC screws over a NY entrepreneur and that entrepreneur somehow gets a big enough megaphone to ruin that VC's reputation, the VC in question would simply just focus on one of the many other sectors of finance that exist in NY (eg: private equity, investment banking, etc). If the same thing happened in the SF Bay Area, that VC would have to relocate their family to a different city in order to have a hope of a career in something related to finance. I am exaggerating a little bit, but not much. That power dynamic is very evident in interactions with VCs in the SF Bay Area.

> SAP is one of the largest software companies in the world and also headquartered in Germany (not Silicon Valley)

It should then be noted that SAP has been left behind and is approaching fossil status. They're not a great example of a thriving European tech company (there are far better examples of that, such as ASML). If they run any slower they'll shortly be the next IBM. Someone should knock them off in Europe, they're begging to be toppled by a local, faster moving upstart.

CRM had $10b in sales in 2018. Now they're at $22b (trailing four quarters).

SAP had $23b in sales in 2018. Now they're at $27b.

Run a reasonable growth projection on the two for the rest of this decade and it ends with CRM being twice the size of SAP.

And of course everyone knows the AWS growth story.

I suppose SAP is keeping growth pace with Oracle, which similarly has little growth and is also a fossil that is hoping to not get killed off in this era's inflection.

In the time that Microsoft has become a planet eating juggernaut with $70 billion in operating income, SAP has been mostly swimming sideways. Azure is an increasingly huge business for Microsoft, and it'll end up larger than SAP all by itself. SAP used to be a substantial peer to Microsoft in the software world, if you go back ~15-20 years ago, in terms of scale. SAP was a very prominent first tier software company, now they're not, they're fading (and yes, I know lots of companies still use their software; the same goes for Oracle).

I like SAP. I think they are doing pretty well with the new direction, common platform etc.

But yes - Microsoft for example, if they decided to play harder / lean in more on the ERP space - going to be compelling for folks. I think microsoft needs a few more years to sort out / gel their story (ie, get to Azure, get rid of some of the crap old ballmer style stuff).

I don't see SAP though as a good example of a silicon valley startup scene. Can you start a new SAP in EU? Not so sure. Can def do it in US (Sap also competes and wins against Workday).

I'm not counting SAP out yet - I think their leadership hasn't been bad - which is key.

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.

Its funny that you feel you have to specify that those are real examples, since those (especially the person coding on the bus) are just such obviously common things that nobody in the bay would even think those might be made up examples.

Right. To anyone in the Bay Area, it's no big deal. But anywhere else, it don't happen.

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.

Unfortunately it falters in every other measure.

how so?

> It seems that people confuse the term "Silicon Valley of X" with "overindexing in tech relative to expectations."

Isn't that the primary definition of "Silicon Valley" nowadays?

Funny list

https://en.wikipedia.org/wiki/List_of_technology_centers#Pla...

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.

Some of those are... amusing.

> 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.

At the moment Finland is attracting most venture capital per capita and soon passes Sweden even in absolute terms.

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...

And where does that capital come from?

Capital is created by those who borrow when they issue IOUs, as those liabilities (from the point of view of the firm) are by definition the assets backing the company (from the point of view of those who have purchased those liabilities from the market and hold them as assets). E.g. the stock of a company is the liability of the company but an asset for the shareholders that are funding the company.

But not just any IOU can become an asset. Only "marketable" IOUs have this property as the IOUs should be priced as they circulate in a market, at least conceptually. It is the ability to circulate that gives the IOUs market value, and this market value can be exchanged for the necessary inputs to fund the venture. People accept these IOUs as a form of payment because they can in turn sell them to someone else for whatever they themselves need, again because the IOUs are marketable.

Thus there are two critical pieces: the issuing of the IOU by an entrepreneur and then the pricing of the same in a capital market.

Supposedly you are asking what market institutions exist to price newly issued claims, which is a question of having accountancy, venture capital, and other skills that would allow one to help estimate cash flows in a credible manner. Creating such institutions is not simple, but once they are created they are invaluable as they allow for the creation of unlimited capital[1] to fund entrepreneurs, provided that the credibility of the market instruments remains intact.

[1] Of course while the ability to issue promises of future profits is unlimited, the actual availability of profits is certainly limited by things like GDP, the rate of innovation, the availability of inputs, etc. Thus only some promises of future profits are actually realized in a market, and it is the job of those who price claims to, on average, apply appropriate discounts to these promises in order to, on average, accurately price the claims.

China, partly... A few years back Supercell was the hot new stuff, and they had Tencent funding.

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.

Wasn’t it Barcelona the “SV of Europe”?

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).

> "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 was also used during the pandemic.

That was said during the pandemic.

I feel you are pushing a narrative here.

That I had missed - but that is also not the topic of IT or business, so the point stands

> I feel you are pushing a narrative here.

Your feelings are beyond my control

> Your feelings are beyond my control

Clever, yet generally false. How we behave and what we say impacts other people's feelings in general.

Those specific quotes (or rather direct translations of quotes) were said in regards to bad integration policy (by Stefan Löfven in 2015 and 2019).

There has probably been said things with similar sentiment in regards to the pandemic. But not those two specific ones.

Even though I agree OP is pushing a narrative a bit too much, your correction is also wrong. Since these were not said during the pandemic.

My comment cleared up that the quotes were out of context, and in pretty dry words explained in what context they were said. If simply stating the context is pushing a narrative, we can’t converse.

It was not, I feel you are pushing another narrative here.

> > "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.

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.

It does seem like Sweden is quite a bit easier to start up a business, cost-wise and regulation-wise, than the rest of Scandinavia.

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.

> as long as you pay the massive taxes

You're supposed to set up operations as a charity to dodge the taxes.

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?

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.

German banks have had HBCI later FinTS for decades[0]. What I don't know is why that standard ended up in new Fintech banks rolling their own standards later on. I suspect the implementation, certification and licensing must be a nightmare, but I really don't know.

[0] https://en.wikipedia.org/wiki/FinTS

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).

>Italy they've recently introduced a weird cloud system

Not really weird in itself, but overall stupid, what is weird is how you get it (and how its use is becoming mandatory almost anywhere in governement sites).

The thingy is called SPID, and you get it through a small number of (private) firms (for a fee) or from Poste Italiane (the National Post Office) for free.

What they don't tell you (and that you learn only once you have one) is that there are three levels for it:

1) lowest level basically login+password

2) middle level, login+password+SMS or 2FA via app

3) high level that requires a smartcard (like the new electronic national ID card or the Codice Fiscale card) AND a smart card reader

BUT on some government sites (not all) you can use any among login+pin/password, SPID, CIE or CNS.

It is a mess.

Of course banks do not use any opf them and you have separate login+password+SMS or 2FA via specific bank app.

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.

> 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 favor of a piece of paper which they stick into your passport.

Interestingly, they stepped back from that two years ago, as almost all of the residence permits are now electrical. The only problem is that the electronic properties of the permits are not used anywhere.

I got my EU long-term residence permit in 2019 and it was still a paper kind. Maybe they really changed it now.

> how do you log in to your internet bank and to your government services such as the tax office?

In Denmark both of those are done using the same national 2FA app.

Same in Norway, pretty much everything to do with money uses BankID as the authentication mechanism.

BankID works ridiculously well. Would be interesting to know how the project is run, and how they managed to be so successful.

> your internet bank

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.

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.

[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...

Yes this is right. So for banking, this is what you need and that works across the board. But there is actually competition for general authentication, so for login to government services you can now often use Freja eID. It is independent from banks, and does not work for banks, but their niche seems to be authentication face-to-face, replacing the physical card, and also Covid vaccination proof etc. So there is an ecosystem and some competition, but BankID is the giant.

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.

None of those factors concurred in California or other tech hubs like New York or London though.

That’s because Silicon Valley and other tech hubs need money and talent, everything else is secondary.

SV specifically had bottomless US defense spending and good local schools to create a talent pipeline. Back in the early days, the defense industry was the primary consumer of chips, which built up the industry via public defense dollars.

While I do think things defense spending matters I don't think it is what makes (or made) the difference. Look at countries like Germany, France or South Korea. Arguably they have some of the best education and industries in the world but they don't have an outsized number of new tech companies. That is because most of the time you aren't inventing technology (because that is too hard) but trying distribute or commercialize technology that mostly exists.

Silicon Valley is of course where many things in computing were invented but it is more importantly where business machines became home computers. And in the end that is were most of the graphics cards, operating systems, network switches, software applications and services comes from. Sweden didn't invent many computers or operating systems but it was ready to distribute the next thing once it became available. Just like many good synths and samplers came from Japan but many of the big electronic music artists are from the US, the UK or Sweden.

I think you may have misunderstood. It's not defence spending now, but preceding the rise of silicon valley. Vast amounts poured into radio and signals tech in Silicon Valley before integrated circuits even existed. Companies like Shockley and Fairchild laid the groundwork for SV long before home computers or business machines.

No, I understand that. I just think the reason we talk about it is because of later developments. That is why I'm taking Japan as an example because they have made some of the best music equipment around but we don't talk about how good education, research and manufacturing is the source Japanese hip hop and electronic music because that never really happened. Instead most of the world is playing American or European music made with Japanese equipment.

Maybe I'm reading the parent to harshly. I just want to make the point that talent and money isn't everything. Most of Sweden's successes hasn't come from research spending and top talent but from widespread interest and application of technologies. Spotify didn't come out of Fraunhofer. The Swedish video game industry did arguably come out of the demoscene however.

California / Silicon Valley is witness to that unusual and under-reported aspect of climate change where it simply rains money.

I would say they did maybe just not directly. There are plenty testimonials of people crashing on other peoples couches, working out of garages or sitting in on classes at Stanford in the 00s in SV. Of course today SV also recruits from all over the world and spends plenty of venture capital for housing, transportation and health care. But that isn't something most cities or even countries can do.

New York and London are outliers because they are big financial centers. They are still far more like Stockholm than the other financial centers are. In theory a smaller financial center like Zurich should arguably be better for startups than Stockholm but it isn't even a competition when looking at the outcome.

Zurich is in fact a tech hub, Google is there, and many interesting startups come from their outstanding technical school.

Other tech hubs like Paris, Tokyo, Austin, or Boston have not seen the circumstances you describe as far as I know.

> Zurich is in fact a tech hub, Google is there, and many interesting startups come from their outstanding technical school.

That is exactly what I mean. Zurich has prestigious schools and foreign companies that you have to attend because otherwise you can't get things like good housing or health care. In 00s Stockholm you didn't really have to do that. Which is why Stockholm have the homegrown companies and exits.

Daniel Ek didn't attend university. He tried to apply to Google but wasn't accepted. Now Spotify has had a $30 billion IPO. Presumably more than all contemporary Swiss startups exits ever. His co-founder had a degree in civil engineering (as roads and water infrastructure) but had instead founded and exited an adtech company.

Markus Persson didn't attend university either. The company behind Minecraft which he owned ~70% of sold for $2.5 billon to Microsoft. He was a former employee of King, the company behind Candy Crush Saga, which sold to Activision Blizzard for $5.9 billion.

That was the difference between Stockholm and Zurich. And between Stockholm and most other self-proclaimed tech hubs for that matter.

> Daniel Ek didn't attend university. He tried to apply to Google but wasn't accepted.

Amazing, so he combines two Silicon Valley founder narratives of 1) being a college dropout (or lacking a degree at any rate) and 2) being rejected by an established big company.

Who are the others?

1) is a cliche at this point, to the extent that this 2015 listicle has a huge variety of figures both new and old:

https://www.pcmag.com/news/tech-ceos-who-ditched-college-for...

2) WhatsApp founder Brian Acton was famously rejected by Facebook (and Twitter), and is the canonical example, but there are others. There's even a website:

https://rejected.us

So in essence, every other tech hub is an exception to Sweden…

There are however a dozen other places with good social support and public services where startups did not happen on that level.

As it stands, the only real common threads I see among all the startup hotbeds (SV, NYC, Boston, London, Stockholm, etc) are a tradition for trade/commerce/entrepreneurship, good universities for talent, and fairly laissez-faire regulations.

>His co-founder had a degree in civil engineering (as roads and water infrastructure)

I think this might be something that got lost in translation - at least according to Wikipedia, Martin Lorentzon studied Industrial Economics at Chalmers University.

The Swedish word Civilingenjör translates to Master of Science in Engineering, not to Civil engineer.

I was referencing Swedish Wikipedia which says he studied actual civil engineering (väg- och vattenbyggnad numera samhällsbyggnad) at Chalmers. NyTeknik writes that he applied for industrial economics but didn't get accepted.

https://www.nyteknik.se/ingenjorskarriar/karriar/it-bransche...

I'll be damned. Thanks for the correction!

No, they had literal silicon, DARPA instead and then a swarm of investors.

Also it's a country where staying inside is comfy, so being in front of a computer as your job is pretty appealing.

Skype was made in Estonia

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.

A lot of the credit? Estonia is 99% of Skype. There's a reason their tech ecosystem (which is more impressive than Sweden's) is called the "Skype Mafia"

The Skype mafia looks to me rather “diverse” international https://www.forbes.com/sites/samshead/2019/08/21/the-skype-m...

Anyway, my point is that whether correctly or incorrectly, that thanks to Zennström, many people do associate Skype also with Sweden, and he acted as an early role model for other future startup entrepreneurs from Sweden.

You can search the #EstonianMafia. Is Skype, Pipedrive, Wise (Transferwise), Bolt, etc...

> (Skype, Spotify, even Pirate Bay)

Ericsson ?

It's Swedish, but I wouldn't put it in the same category, as the company was founded in 1876.

The UK outdoes Sweden on all of those points. London is the SV of Europe.

As someone not very knowledgeable within these areas, will it continue being that now after Brexit?

Yes. Visas for tech workers aren't a big problem, the UK is still better for starting a business than any EU country and they have the innovator and startup visas, too. Brexit only fucked British manufacturers, non-tangible goods are fine.

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.

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.

"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.

I'm not American, barely ever been in America even...

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.

Both dividend and capital gains taxes in Sweden are 30%.

ISKs (Investeringssparkonto, Investment savings account) are taxed at a flat amount of the account value per year, replacing capital gains taxes. In 2021, it will be 0,375%.

As opposed to americans who... do exactly what differently?

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.

The Welfare State may help startups to born but may help them to fade also. Few startups flourish in Europe. So many seeds, so few flowers.

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?

Any data to back this claim?

There's a distinct lack of mega-successes coming out of Europe.

From the article the difference doesn’t seem that huge:

Stockholm - 0.8 unicorns per 100,000

Silicon Valley - 1.4 unicorns per 100,000

Unicorn is just a threshold.

Of those in both regions that crossed it, how many went through the next, then the next order of magnitude?

That's almost double in SV, that's pretty huge.

Given the differences in available capital and labour forces, reads more like stockholm is performing like an order of magnitude better.

I'd also be interested in seeing long term outcomes. I'd wager stockholms is stronger.

In Silicon Valley terms a Unicorn is a company that can burn through 0.5-2.5 billion dollars a year for an unlimited number of years.

Silicon Valley has very few "unicorns" beyond those.

I don’t know if that’s a good success metric. Feel like a lot of smaller, but revenue sustainable startups would be better for economic health than one mega-Corp crushing competition

> Few startups flourish in Europe.

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).

Remove startups that burn through literally billions of dollars of unlimited VC money... and how many flourishing startups do you have left in the US?

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)

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.

> Corporate tax rates are the same as other countries in Western Europe

Except for Ireland with its 12.5%

"12.5%"...there is relatively little evidence that tech companies are paying anything close to this rate (yes, after the loopholes were closed...still plenty of loopholes left).

Makes you feel the solution to the Brexit-induced problem with the Northern Ireland border is to kick Ireland out (if they don't shape up ASAP).

Why stop there? Kick out Poland and Belarus for being undemocratic, kick out the rest of Eastern Europe for being homophobic, and then kick out Greece and Italy for the unsustainable deficits — maybe Spain and Portugal, by that point, too.

> Kick out Poland and Belarus

You really shouldn't show off your ignorance like that.

Are you saying you haven’t seen the media express a concern that those two are becoming less democratic, or are you more concerned that my plan to kick out nations who don’t fall in line with the EU bureaucrats’ vision of the ideal economic and social policy is doomed to end in the dissolution of the bloc in a reductio ad absurdam?

Because if it’s the former I can find you lots of links, whereas if it’s the latter that’s merely the point.

https://ecfr.eu/article/for-europe-losing-britain-is-bad-kee...

https://amp.france24.com/en/live-news/20210501-human-rights-...

No, I'm saying it would be bloody hard to kick Belarus out of the EU, since it was never in it.

Ah! I'm sure we'll find a way.

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.).

The weather is definitely not for everyone. For the whole package to be attractive I think you need to weigh in the whole package with long holidays, parental leave, walkable cities, good work-life balance, cheap childcare and so on. It’s definitely not the place to go to work 3 years then buy a sports car. It’s a good place to go if you feel ready to switch a pay cut for a different style of life if you just had a couple of young kids perhaps.

> walkable cities

I know this is not what you meant, but I have a story about city walks for you:

Got lost and had to walk alone in downtown DC one late night. Made me decide to not take that job in NY and move back to Europe.

So if you had gotten lost in actual NY, say, in Greenwich Village or another tourist-friendly rich neighborhood, you would’ve stayed?

Well, you don't always get to choose the area you get lost in :)

Source: got lost in another country a month later. In a city with the highest homicide rate in the world.

Exactly my point.

This lifestyle suits a chill family life, not "Let's freaking build the next facebook and code 24/7".

I interviewed at somewhere that iZettle acqui-hired...salary terrible, no benefits, next-level bad interview process (they had someone from HR doing technical interviews, I asked why, the HR person actually said they didn't know). Almost every other local tech company, admittedly not a backwater, paid higher.

In my experience, generally, there isn't a straight read from "company you have heard about" to "has any clue what they are doing".

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.

It’s funny that this meme of “Sweden has the worlds highest taxes” is prevailing when they in fact barely make the top 10 anymore.

I see what you mean but there isn’t really much choice under a high tax system. My payroll taxes means someone saves for me. If they screw it up I have some backup in private savings, but I don’t have any opportunity of not paying payroll taxes taking home a higher net. In the end I have to hope, but not assume, that the state manages my pension savings at least as well as I would personally. Making a high income and hoping to work to 70, it shouldn’t be a big issue to live after that anyway. The situation is worse for those that struggle to make it to even 65 without wearing out, and can’t put away a lot until then either (that is, blue collar)

>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.

Yeah. Finland has a system similar to Sweden in many ways, in general it has worked great. Though during last decade or so without much economic growth and upside down demographic pyramid, some young people who follow the news have started to look at it with some suspicion. Current pension payments from our salary goes to current pensioners, but our retirement age is moving up and estimated future pension payments going down. Then in last year or two the birthrate dropped dramatically, and I updated from "concerned" to "heavily worried".

As a non-EU foreigner, it only makes sense to move there if there's a clear naturalisation path.

I understand completely. If I were to move to SV it would feel like a temporary move to make more money for a period of time and then get out.

The equation moving to Sweden obviously isn’t the same. If you don’t intend to use the benefits (like childcare) taxes are very high compared to if they are offset by benfits. As a parent tech worker I feel like I’m having more money out than I’m paying at the moment.

It’s pretty easy (as far as I’m aware) to get permanent residency in Sweden as a professional.

Proportionality does matter.

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’s not as bad as you make it sound; top marginal rate is 55% and you pay 30% tax on a decent/higher-end salary. Yes there are costs for the employer, but that’s the case in other places too.

A ~P75 software engineer can accumulate 1 MUSD within 15-16 years given 7% growth and decent city center living. <10 years for someone really good. Still, it’s not the US, but at least it’s possible.

"Yes there are costs for the employer, but that’s the case in other places too."

Yes payroll taxes are everywhere, but they are considerably higher in Sweden at ~30% in some brackets.

For average earners, France/Belgium are the highest, but for upper income earners, Sweden is the highest [1]

[1] https://taxfoundation.org/taxing-high-income-2019/

> > 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.

> VCs

Same applies to most companies, right?

> Same applies to most companies, right?

Same applies to most people (and animals too).

Civilization would never have happened if it depended only on "most people" or animals.

Greedy VCs/companies don't deserve to reap the benefits of civilization.

> 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.

Did you just define arbitrage?

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).

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.

> I have been wearing the same model running shoes from Decathlon that cost 20$ for the past 6 years

what? Do you run in them?

Either this person does not run or they have serious foot issues.

I'm reading this as:

GP is rebuying the exact same model every so many kilometers and throws the old shoes away.

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.

You not liking something (Afterpay, Klarna) has no bearing on whether or not it will be remembered in 5 years.

Absolutely. I also do dislike Klarna and I believe the chances it will not be remembered in 5 years are higher than it will be remembered.

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."

"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.

> Silicon Valley was a place of innovation

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.

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.

Copenhagen has DTU and a small number of companies that hire from it. It also feeds some of the hiring in Malmö.

Not really, as long as you can bring needed talent to your location. I have barely seen graduates of Berlin universities on the job market, but Berlin startups are a thing and we have plenty of big names here. „Weltstadt“ can be attractive itself. On the other side, St.Petersburg does have at least one great technical university (ITMO), but is it more vibrant and innovative?

Is Delft related to ASML?

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.

Let's get some data, Sweden, 2020 SEK/y:

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 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!

From my limited experience:

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.

Like I said, there are plenty of tech centers (with incubators and/or big corps) outside of STHLM and GBG, where none of this is a problem. It doesn't sound like you're a native or here anymore.

Waiting times is kind of a "first world problem" when the alternative is dying, getting no treatment, poor treatment or becomimg homeless if you do get treatment. All you're saying is pay more if you want to skip triage.

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.

A 100sqm apartment is very big. To give some perspective on hemnet.se (_the_ way to look for housing in Sweden) there are around 100 apartments in Stockholm up for sale that are 100sqm or larger. Around 1000 apartments in the ordinary range of 45-90 sqm.

Meh, a sponsored article of Klarna and Swedish state. They'll succeed once Sillicon Valley will call itself "the Stockholm of California".

To be fair, klarna was a tiny stockholm startup that is now beating SV giants PayPal and stripe in many EU counties.

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.

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.

A competitor of Paypal would've been iZettle (from Stockholm), but Paypal bought them!

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.

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.

https://content.sifted.eu/wp-content/uploads/2021/02/1111224...

The UK and Germany appear to have the most active venture capital out of all European countries, significantly more so than Sweden.

Would love to some amounts invested as well. (Can’t dig for that now, maybe later…)

> even London

Why _even_? Fairly sure London has more startups than the previous 3 mentioned cities combined.

> 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.

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.

That's good news. I am glad Reuters was officially able to declare Sweden as the next Silicon Valley thus ending the tyranny of "X is the next Silicon Valley" articles and news segments. Congratulations Sweden, and really, all of us.

Thanks for making me laugh out loud, appreciated

I might have heard this statement from every single country in the planet by now.

Agree. The whole world is becoming the new Silicon Valley. :')

Silicon Valley is the old Shenzhen? (Words from the future).

There's something about how they get things done there that is truly novel and not yet at full scale.

Agree. Here in Spain we have 4 european Silicon Valley. I have heard this for Malaga, Barcelona, Madrid and Valencia.

Interesting. I knew Barcelona and Madrid but I was surprised to see Malaga and Valencia. What start ups based in those two? Both of those seem like really nice areas to be based out of.

There are a lot of cool tech companies in Sweden but I wouldn't call that the Silicon Valley of Europe.

There are also a lot of tech companies in Dublin, London, Berlin, Paris...

I don't think any one of those can claim the title of "Silicon Valley of Europe" as in "the place to be for tech companies".

I'd say most of the US Big Tech have their European HQ in Dublin. And most European startups/tech companies have their HQ in London. That might change with brexit but so far it's what I've seen.

Dublin is a mere presence used to funnel out due taxes and contributions. Some real tech stuff might be happening in London though.

https://www.siliconrepublic.com/people/developers-programmer...

According to this, 9% of the population in Dublin are software developers. By comparison, London seems to be at 7.7% according to the same metric.

Dublin is a small city - I was surprised myself for the first time when I was there I expected it to big european capital. In fact population of Dublin is ~500k and they even market it as "Dublin Town". From the city center most of places are available within 5km radius.

And to clarify, the size of Dublin is relevant because even if smaller cities have a relatively lower mean proportion of software developers, the law of small (!) numbers tells us the variance in the proportion of software developers will be larger, meaning some smaller cities will have the lowest fraction of software developers, and others (perhaps like Dublin) will have the greatest fraction -- just by chance, not due to underlying causal mechanisms.

Ireland is small! Much smaller than I thought, I was shocked when I learned that Ireland has half the population of Sweden.

Looking at the available jobs in Dublin for e.g. Google, I don't think that's wholly accurate. Ireland's tax story does attract US multinationals, but they're not just shell companies.

At least until a few years ago, large corporations had their support centers in Ireland (Dublin), but the focus may have shifted in time.

The specific engineering positions[¹] seem to have a significant rate of customer support/sales/market; it seems that Ireland isn't a technical research center. I haven't looked at how the mix of open positions is in SV/USA, though.

¹=https://careers.google.com/jobs/results/?category=DATA_CENTE...

True, but they move peripheral services there (e.g support) but not the more lucrative positions.

I'm a US expat living in Dublin so I have some "on the ground" views. There are some rather significant software dev operations here, but most are offices of large multinationals (Google, Microsoft, Hubspot, Activision, TikTok is building a massive office currently, etc). There is a massive drop off in salary and interesting work when you look for more "local" (Irish or even European headquartered companies). I get linkedin messages from Irish companies talking about paying 70k euro for senior software positions when the going rate is more realistically at like 120k.

My view is that if Ireland hadn't done their tax shenanigans then none of these companies would be here and it would be an absolute backwater (software dev-wise). Ireland has some really great education and talent but the culture, infrastructure, and personal taxes don't lend themselves to a bootstrap/startup friendly environment imo. So even today a ton of Irish people move to the UK, Canada, or Australia for better jobs.

FB and Google have enormous buildings in central Dublin. AWS runs a very large facilities and developer group. Apple has a headcount of about 4000 people in Cork in a facility that's been there for nearly 40 years.

They're here because of tax, yes, and Ireland is in no meaningful way a leading startup centre. But Dublin in particular has more people working in software than (say) London.

Dublin doesn't have more people working in software than London. It isn't even close.

I have seen estimates which suggest the total tech industry employment in Ireland, not Dublin the whole country, is something like 100k. London had this many open vacancies in tech per week earlier this year. And that is assuming all these jobs are equal which, of course, they are not (you are unlikely to open a support centre in London).

London's VC market alone is multiples of the next largest city in Europe (which I believe is Paris). I think Manchester is actually a larger VC market than Dublin (and Edinburgh is probably coming close).

> I'd say most of the US Big Tech have their European HQ in Dublin.

That's due to tax reasons. US companies extracting value from Europe while avoiding taxes at all costs.

Also it is (and was) the only English speaking country in the eurozone.

Tax was a huge factor in drawing some of the big names but the double-Irish (the worst aspect of tax avoidance) had been phased out. Corporate tax is 12.5% which is lower than the majority of EU countries [1] but the existing ecosystem of companies has also helped create an attractive labour pool. If it's purely tax everyone would move to Hungary (9%).

1: https://taxfoundation.org/2021-corporate-tax-rates-in-europe...

A number of European countries have near 100% English literacy and allow for document workflow and accounting in English. I suspect it's mostly the taxes.

>A number of European countries have near 100% English literacy and allow for document workflow and accounting in English.

Like he said, there are places with tax rates below Ireland (eg. Hungary, Bulgaria). Taxes are a significant aspect but it's a combination of things.

> A number of European countries have near 100% English literacy and allow for document workflow and accounting in English.

Is there a handy list of such countries?

(I'm genuinely curious.)

The three Scandinavian ones plus Finland, Iceland and possibly the Netherlands. Maybe some others too.

English documentation is customarily recognized throughout the EU.

English literacy in Finland is pretty bad.

According to this ranking Finland is on 3rd place for English skills in Europe, only behind Netherlands and Denmark.

https://www.ef.com/wwen/epi/

It's a useless metric:

https://www.ef.com/wwen/epi/about-epi/faq/

> What is the methodology behind index?

> The EF EPI calculates a country’s/region's average adult English skill level using data from three different versions of the EF SET. Two versions are open to any Internet user for free. The third is an online placement test used by EF during the enrollment process for English courses.

> In order to calculate a country’s EF EPI score, each test score was normalized to obtain the percentage of correct answers for that test. All the scores for a country/region were then averaged across the three tests, giving equal weight to each test. Regional and global averages were weighted by the populations of each country/region within each region.

People who don't know english in the first place won't have any reason for taking those tests.

That list says that Nigeria and Hong Kong have "moderate" skills in English, their official language. Sounds a little weird to me.

Obviously anyone who have visited Finland knows they are way behind the rest of Northern Europe.

I totally agree that English can be used entirely for businesses in other euro countries but for a US company it is attractive for employees/families to be in country where English is an official language.

Taxes AND rule of law

20 years ago the area around Edinburgh was known as "Silicon Glen". Then there's "Silicon Roundabout" on Old Street in London. Every area where there's tech gets compared with "Silicon Valley".

It's telling that everywhere is compared with SV, not with Scotland or London.

It’s in absolute terms smaller than London etc, but relative to population it must be pretty tech-dense. Software developer is the most common occupation these days in a labor market of 2 million. That’s surely unusual?

> labor market of 2 million

Maybe I misunderstood - where does this number come from? There are more than 5 million in working age in Sweden.

I think the comment was referring to Dublin

Sorry this refers to the capital region only. I’m so used to seeing “Stockholm is the SV of Europe” that I didn’t notice this headline being “Sweden”. The population of the Greater Stockholm area is around 2M

Maybe we have different views on what "Silicon Valley" means, but I think of it more in terms of startups than big corp. From what I've seen there is mainly grunt work at large companies for developers in Dublin. Like big corp ships over their latest printing software to be localized for 18 different markets and similar.

I could be wrong, but a quick search for unicorns in Dublin turned up rather empty...

You must have had poor luck with your Google Search -- heres a few from someone work works in the Irish Dev Scene:

Intercom, Workhuman and CarTrawler and others are in the pipeline like Pointy and Manna. Plenty of Irish software developers -- they also leave Ireland and found companies in other countries like Stripe.

I dont use Google. Never heard of any of the companies you posted, but I took a look at the website of the first one (Intercom): "The company was founded in 2011 in San Francisco"...

I'm sure they have some Irish connection, but it's obviusly not a Dublin company.

Product is built in Dublin -- their investment came from the US -- all four founders are Irish. No company at that scale is exclusively a single nationality.

Your Dublin unicorn examples:

* Intercom - Founded in San Fransisco according to themselves.

* Workhuman - Founded 20+ years ago.

* CarTrawler - Founded 30+ years ago.

Not really signs of a "Silicon Valley"-startup/unicorn kind of atmosphere in my book :)

> Plenty of Irish software developers -- they also leave Ireland and found companies in other countries like Stripe.

Geez, the smarminess in this comment - unreal.

2 students who graduated secondary school went to college in usa, lived in usa and started a company called stripe. they were college students who dropped out.

It's like how people claim greatness from some American or European emigre from their country who was able to excel precisely because of the opportunities offered by the West.

Few months back, when a friend told me he might move to Stockholm from NYC I had no idea what to think. Sounded a bit nuts frankly as he has young kids and stuff.

These type of articles do help with such decisions, making locations more attractive etc. There will be a beauracrat somewhere in all govts pushing these narratives with press. How else do you attract talent in such a competitive world?

One downside if you work for a startup, which can't really pay top dollar, is that stock option possibilities are quite limited so attracting top talent needs to be done using other advantages such as parental leave and child care and judging from your comment that could have been a deciding factor. Another major problem is housing.

> Sounded a bit nuts frankly as he has young kids and stuff.

May have sounded nuts otherwise, but "as he has young kids"? That would be a reason for moving to Stockholm (or Scandinavia in general), not against.

I think Berlin is a better place to be as the salaries are still alright when you look at the prices. Renting becomes more expensive each year. However, groceries, restaurants, and alcohol are dirt cheap compared to other capitals like Stockholm, Paris, or London.

Yeah I pay 700€ for a nice 2 person flat in Berlin, and groceries + all fixed costs come out to around 500€. SE salaries here are largely relatively low (entry between 40-50k), but you can still have a very relaxed life here in the sector.

Is that €700 total flat cost or your 50% share of €1400 total?

It's possible to pay 700 if you signed a contract 5 years ago and the rent was raised by a moderate amount every year. 800-900 should still be doable though.

Total, including internet and the likes. The flat has some issues though like really old electricity and small hot water tank. The building is 130 years old and I suspect there are mice living in the walls somewhere.

The contract is from last year, and it is only slightly below the average rent for my area (Neukölln). Even the most-wanted areas still have plenty of openings like this, but they are usually not posted on the open market, you need to have a network of people to recommend you.

Funny the article didn't mention the recent Tink acquisition by Visa[1] when talking about Fintech. A 1.8 billion Euros acquisition is a pretty big thing.

[1] https://techcrunch.com/2021/06/24/visa-to-acquire-open-banki...

Full disclosure: My employer is Tink.

I thought Eindhoven, the Netherlands was the Silicon Valley of Europe. After all, ASML is based there.

I hate to dissapoint you but PR of every country is pushing hard the "X is the Silicon Valley of Y". While setting the contributions on employment contracts at >40% and allowing for the real estate market bubble...

And NXP started in Eindhoven (spin-off of Philips) and still has a large presence:

https://www.nxp.com/company/about-nxp/worldwide-locations/ne...

Well, technically ASML is based (as in, headquartered) in Veldhoven, but that's part of the same conurbation really.

Meanwhile, check out the 235 (at last count) technology companies located on the High Tech Campus in Eindhoven (where NXP is headquartered): https://hightechcampus.com/companies

We've got the Silicon part covered, but no Valley here :)

No, that would require mountains around it.

The Dutch mountains... :)

We have a few hills, but not in this area.

I admire the Netherlands but how much value was created in the last 15 years? ASML was founded in the 80s. Booking in the 90s. Adyen early 2000. You have Messagebird and Catawiki and maybe 3-4 new names that are new. Mean time Israel has maybe 40-50 unicorns from the last 10 years. NL has the talent and workforce to be at that level but the Dutch startups think too local and the VC money isn't flowing enouhgh.

Seems to be lots of startups launching in Sweden these days!

If anyone wants to keep up with Swedish startup news I can warmly recommend Martin Weigert’s formidable news letter, Swedish Tech Weekly.

https://swedishtechweekly.com/

> Stockholm has become such rich soil for startups, birthing and incubating the likes of Spotify, Skype and Klarna, even though it has some of the highest tax rates in the world.

Didn't Skype come from Estonia not Sweden?

Edit: Scrap that I looked it up, Estonian, Swedish and Danish founders.

As I remember Skype was a Luxembourg company with effective HQ in London, and developers in Estonia.

Founded by a Swede and a Dane who were at the time living in Amsterdam

Swedish taxes are high for individuals, but the system is regressive. Sweden has abolished all kinds of wealth tax and only has three income tax bands. It is a great place to live if you are rich.

Yes, I wondered if anyone was going to point that out. The lowest rate of personal income tax is relatively high, extremely low income tax threshold, sales tax is 25%. Compare this to the US where close to a majority of the population doesn't even pay income tax, it is quite different.

I don't think either system is better than the other. But talk to someone on $60k in the US and ask whether they want to pay 53% over the 22% they pay today. You get more public services in Sweden but these services are fully-funded by your tax revenue, and there is very little redistribution.

Why is a sponsored article by Klarna and the Swedish government on the HN frontpage?

This article completely ignores that Sweden has a competitive corporate tax rate, one of the best in developed European nations. This creates a strong environment for startup growth. Payroll & income taxes make it difficult to retain talent in the country, but that can be offset by the welfare and lifestyle benefits.

Source: https://taxfoundation.org/sweden-competitive-spite-high-tax-...

and a capital gains tax less than that of France and not much higher than the UK's.

I like how the article goes into detail about how the social safety net and investment in putting computers in every home provided by Sweden may have fostered a situation where both people are likely to create startups and those startups are pretty likely to survive at least three years and decently likely to reach $1B evaluation.

It's strange to me that this is followed up by a section where claims that this situation is somehow made precarious by higher tax rates are basically quoted without any supporting evidence or examination. Sure, the prior bit didn't go cite any studies or anything, but they at least speculate about the causal link and list some outcomes that the writer seems to believe are associated with those causal factors. No such thing is even explained for the effect of a high tax rate, and I would have liked to see a little more detail about that claim

I've heard both social safety nets and low taxes, which would seem to be at odds, cited by armchair economists as things that are "good for business", so it's odd to see one examined and the other merely mentioned

It's not just that you have a welfare state to fall back on, it's also that a lot of ordinary jobs are quite boring. There's a huge government sector where you can play with red tape, and then there's the well-known corporations where you can do the same. Or you can scrape by in a small business like a restaurant or hairdresser.

So why not give it a go?

As for the Silicon Valley, the VCs seem to be concentrated in London AFAICT.

If you can access Swedish national television (SVT) you can also see the 2021 documentary IT-bubblan som aldrig sprack (en: The IT-bubble that never burst).

[SVTPlay]: https://www.svtplay.se/video/30165160/it-bubblan-som-aldrig-...

Sorry, the categories are all mixed up. SV is a region in the SF Bay Area. Sweden is a country. Nice PR piece though.

Funny story: Years ago I (an American) was in Stockholm having a picnic lunch in a park with a couple of Canadian colleagues. As we were eating and talking a (presumably) local man sitting nearby overheard us and started throwing coins at us one by one. When asked what he was doing, he started yelling at us in pretty good English "you stupid ___king Americans need to get the ___k out of Sweden". He went on in some detail about how arrogant Americans are (I generally agree) and meddlesome our military is (also true). Meanwhile, my colleagues were aghast and kept protesting "but we're Canadian, eh!" That's when I learned how much (some?) Canadians hate being called Americans.

These articles never seem to discuss xenophobia and how it can't be so overt if you want it to be the SV of X.

There are racists everywhere.

That was most likely what we here in Sweden call an "a-lagare", in other words an alcoholic.

That was my impression, as well.

It is fairly common for the internet to ignore the kind of alienation felt by immigrants in an (intentional or accidental) ethno-state.

We hear more about racism in the US, UK and similarly 'diverse' countries because there are more interactions that enable that. We hear of religious tensions in India and France because both countries have enough diversity for discussion/conflict to be a possibility. In ethnically homogeneous countries, you get drowned out before you even realize it. The part that often gets ignored, is that it has very little to do with the human development of said country. Scandinavia and East Asia have the same or even greater propensity for racism as the common offenders. They just don't have enough interactions for it to get surfaced.

Scandinavia, or at least Sweden and Norway are pretty diverse places now. Sweden's population is 20% foreign born and Norway's 17%, compared to 14% for both the US and UK. (Finland and Denmark are much lower at 7% and 8%.)

Are you saying that xenophobia is a rampant problem in Sweden and that this chance encounter with an obviously mentally unstable individual somehow proves it? Tied with the Netherlands, I doubt there are any countries in the EU where it's easier to be an American than Sweden.

These SV of X articles always talk about the technology infrastructure, the venture capital, the universities, the mega-corps, the number of start-ups, etc. but I have yet to see one that mentions any sort of ethnic diversity as a key ingredient. Stockholm might be the Silicon Valley of Sweden, but unless it is attracting (and keeping!) global talent, it will never punch above its weight and compete with the actual Silicon Valley.

Your basis for the conclusion that Stockholm is not "attracting and keeping global talent" is that some random person once was very rude to you? Or is this a general experience you've heard from other people?

SV's success is largely built upon immigrants. Does TFA mention foreigners? Neither does any other SV of X article I've seen.

Not really SV is built on defense funding from the 40's onwards - widespread h1b is much later

Why stop there? What about Dave and Bill's shed in '38? Or maybe it was Leland opening the university in 1891? Surely that was the start of Silicon Valley?

Actually, it was probably Rock and the Traitorous Eight in '57 as the genesis of Silicon Valley. And you might be familiar with some of these US immigrants, none of whom were H1b's: Jerry (yahoo), Sergei (google), Pierre (ebay), Elon (paypal).

> I have yet to see one that mentions any sort of ethnic diversity as a key ingredient

English is the #1 language in most tech companies because there are people from all over. Ethnically there is perhaps not much diversity in tech, however. There are lots of americans, canadians, australians, french, german etc.

I have started ordering drinks in bars in english by default in Stockholm, because seeing a Swedish speaking bartender is so rare now. They are surprisingly often Irish for some reason.

> how it can't be so overt if you want it to be the SV of X.

This anecdote could happen precisely anywhere in the world with N=1...

... and may be a major reason why there is only N=1 SV.

Because there are zero disturbed people? Is that really what makes SV unique?

I thought it was the universities (talent) paired with all that capital or something.

>universities (talent)

UC Berkeley, one of the two marquis colleges in the area, is sometimes jokingly referred to as UC Beijing. Any guess as to why?

How common is it for European companies to hire developers living in other EU countries to work remotely or for a local office?

I'm not planning on leaving my current company or country soon, but Spain seems like a nice backup plan should things go south in the US. Unfortunately, their economy doesn't seem great. Assume knowledge of English, Spanish, and a willingness and ability to learn the language of the hiring company.

Is this a pipe dream? It seems like the ability to hire across the Schengen zone would be a great advantage to European tech companies.

Without a local legal entity it is not possible for a company to hire you. (sadly)

Sweden has oodles of talent and great institutions, but the missing ingredient, much like with the rest of us Europeans, is the abundant venture capital that made SV.

So now sweden is spying on me?

Not that many decades ago, we were referring to cities as being the next "Detroit of X". Will we be cringing a few decades from now to similar tropes regarding Silicon Valley?

Don't be the next Silicon Valley of anything. Be the first X of your industry and help encourage your local ecosystem to support that industry and you'll forge a real path to the future.

A recruiter contacted me to work as a freelander in the Stockholm office of Klarna, where I needed to work the first two months onsite. Travel and accomodation had to be payed by me upfront with just a small raise in the rate because expense reports are too much work for this fintech company.

Stockholm is also very close to copenhagen and partnerships have formed across countries for many successes, some that comes to mind are skype and unity, but we danes for sure was very jealous of their great internet back in the day when this was reformed :)

In case anyone wants to move to Sweden to start a business: https://www.verksamt.se/en/web/international

https://archive.is/ThdBX

Requirements:

1. Permissive environment

2. Concentration of talent

3. River of money

SV certainly had/has them, Sweden did/would need them too.

I’ve heard that phrase said with every other capital city in europe

uhm I am not sure about Sweden being the 'Silicon Valley of Europe'

As european, if had to look for a tech job in Europe, I would consider:

- London

- Amsterdam

- Berlin

My sympathies, Sweden.

Did it?

I thought the SV of Europe was generally thought to be Berlin?

Only Berliners think that so as to have a reason to consider themselves better than the obviously all-in-all superior Munich ;)

It is definitely London as far as new startups go and Eindhoven as far as literal silicon is in question.

But none are even close to the original as far as the culture goes.

I always thought about London / Zurich of tech cities of EU

Berlin is SV without the sun, with grumpy people, and with entry level salaries.

Evne Apple has discovered this. Of course they still implement at-will employment and they pretty much exclusively hire people from their Scientology contracting partner - I am surprised no one in Sweden has caught on to them.

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