How Sweden became the Silicon Valley of Europe

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.

My personal list of causes for why Sweden indeed is doing incredibly good when it comes to tech these days:<p>- Early broadband investments and subsidized PCs (as stated in the article).<p>- 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.<p>- 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.)<p>- Generally a positive attitude towards tech among the population. Unlike in large parts of continental Europe, being a pessimists&#x2F;naysayer about new things doesn&#x27;t give you a lot of status in large parts of Swedish society. Being an early-adopter does.<p>- 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. &quot;We have been naive&quot; and &quot;we didn&#x27;t see it coming&quot; 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&#x2F;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).

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?<p>It&#x27;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.

If I had a dime for every time someone wrote &quot;X is the new Silicon Valley&quot;...<p>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.<p>Stop trying to copy innovation, to be innovative you have to &quot;Sing your own special song&quot;.<p>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.<p>It&#x27;s likely in 5 years no-one will even remember Klarna, don&#x27;t compare it to Skype or Spotify. Last weeks Square bought Afterpay. This article is clearly just a marketing stunt to hype Klarna IPO.<p>I despise both Afterpay and Klarna. They allow people to buy things they don&#x27;t need. This is just US credit card debt in a new package 2.0<p>Don&#x27;t waste money on brand expensive clothes especially if you can&#x27;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).

Let&#x27;s get some data, Sweden, 2020 SEK&#x2F;y:<p>Approximated historic exchange rates: SEK &#x2F; euro-dollar-franc: ca 0.1 - 0.12<p>Gross salary income at 90th percentile: 567 600<p>Actual sales cost for a small-medium company: 1 084 050<p>Included: VAT ca 25%, social fees ca 31%, other misc ca 10%<p>Net income after taxes: 420 492<p>So, about 61% is lost in taxes from gross billing to net income after tax, for someone earning at 90th percentile. &quot;The world&#x27;s highest taxes&quot; is misleading. It <i>really</i> depends on your family situation and lifestyle:<p>For those 61% you get quite a lot <i>when the system works</i>. 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 <i>when it works</i>, 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&#x2F;apartment you can choose areas with very good schools, but it will take you many years to find a decent rental below 30k&#x2F;m.<p>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&#x2F;h effective.<p>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.<p>* sources: statistics office, tax office: SCB, SKV

Meh, a sponsored article of Klarna and Swedish state. They&#x27;ll succeed once Sillicon Valley will call itself &quot;the Stockholm of California&quot;.

I am from Europe. But I don&#x27;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.

In February of 2000, Newsweek ran a cover stating: &quot;Stockholm: Hot IPOs and Cool Clubs in Europe&#x27;s Internet Capital&quot;. 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: <a href="https:&#x2F;&#x2F;www.newsweek.com&#x2F;shining-stockholm-162345" rel="nofollow">https:&#x2F;&#x2F;www.newsweek.com&#x2F;shining-stockholm-162345</a><p>Quote: &quot;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&#x27;ve done so in a lavishly funded state education system that also places a high value on science and engineering.&quot;<p>This is the same period as the &quot;staff PC&quot; programs were running, where you got tax-deductions for personal computers as is stated in the reuters article (&quot;.. government policy to put a computer in every home&quot;). So while these seeds were sown here, they had not yet born fruit to cause the the Newsweek cover of that era.<p>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&#x27;s good news. I am glad Reuters was officially able to declare Sweden as the next Silicon Valley thus ending the tyranny of &quot;X is the next Silicon Valley&quot; articles and news segments. Congratulations Sweden, and really, all of us.

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

There are a lot of cool tech companies in Sweden but I wouldn&#x27;t call that the Silicon Valley of Europe.<p>There are also a lot of tech companies in Dublin, London, Berlin, Paris...<p>I don&#x27;t think any one of those can claim the title of &quot;Silicon Valley of Europe&quot; as in &quot;the place to be for tech companies&quot;.<p>I&#x27;d say most of the US Big Tech have their European HQ in Dublin. And most European startups&#x2F;tech companies have their HQ in London. That might change with brexit but so far it&#x27;s what I&#x27;ve seen.

Funny the article didn&#x27;t mention the recent Tink acquisition by Visa[1] when talking about Fintech. A 1.8 billion Euros acquisition is a pretty big thing.<p>[1] <a href="https:&#x2F;&#x2F;techcrunch.com&#x2F;2021&#x2F;06&#x2F;24&#x2F;visa-to-acquire-open-banking-platform-tink-for-more-than-2-billion&#x2F;" rel="nofollow">https:&#x2F;&#x2F;techcrunch.com&#x2F;2021&#x2F;06&#x2F;24&#x2F;visa-to-acquire-open-banki...</a><p>Full disclosure: My employer is Tink.

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

Seems to be lots of startups launching in Sweden these days!<p>If anyone wants to keep up with Swedish startup news I can warmly recommend Martin Weigert’s formidable news letter, Swedish Tech Weekly.<p><a href="https:&#x2F;&#x2F;swedishtechweekly.com&#x2F;" rel="nofollow">https:&#x2F;&#x2F;swedishtechweekly.com&#x2F;</a>

&gt; 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.<p>Didn&#x27;t Skype come from Estonia not Sweden?<p>Edit: Scrap that I looked it up, Estonian, Swedish and Danish founders.

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.

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 &amp; income taxes make it difficult to retain talent in the country, but that can be offset by the welfare and lifestyle benefits.<p>Source: <a href="https:&#x2F;&#x2F;taxfoundation.org&#x2F;sweden-competitive-spite-high-tax-burden&#x2F;" rel="nofollow">https:&#x2F;&#x2F;taxfoundation.org&#x2F;sweden-competitive-spite-high-tax-...</a>

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.<p>It&#x27;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&#x27;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<p>I&#x27;ve heard both social safety nets and low taxes, which would seem to be at odds, cited by armchair economists as things that are &quot;good for business&quot;, so it&#x27;s odd to see one examined and the other merely mentioned

It&#x27;s not just that you have a welfare state to fall back on, it&#x27;s also that a lot of ordinary jobs are quite boring. There&#x27;s a huge government sector where you can play with red tape, and then there&#x27;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.<p>So why not give it a go?<p>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 <i>IT-bubblan som aldrig sprack</i> (en: <i>The IT-bubble that never burst</i>).<p>[SVTPlay]: <a href="https:&#x2F;&#x2F;www.svtplay.se&#x2F;video&#x2F;30165160&#x2F;it-bubblan-som-aldrig-sprack" rel="nofollow">https:&#x2F;&#x2F;www.svtplay.se&#x2F;video&#x2F;30165160&#x2F;it-bubblan-som-aldrig-...</a>

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 &quot;you stupid ___king Americans need to get the ___k out of Sweden&quot;. 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 &quot;but we&#x27;re Canadian, eh!&quot; That&#x27;s when I learned how much (some?) Canadians hate being called Americans.<p>These articles never seem to discuss xenophobia and how it can&#x27;t be so overt if you want it to be the SV of X.

How common is it for European companies to hire developers living in other EU countries to work remotely or for a local office?<p>I&#x27;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&#x27;t seem great. Assume knowledge of English, Spanish, and a willingness and ability to learn the language of the hiring company.<p>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.

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 &quot;Detroit of X&quot;. Will we be cringing a few decades from now to similar tropes regarding Silicon Valley?<p>Don&#x27;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&#x27;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: <a href="https:&#x2F;&#x2F;www.verksamt.se&#x2F;en&#x2F;web&#x2F;international" rel="nofollow">https:&#x2F;&#x2F;www.verksamt.se&#x2F;en&#x2F;web&#x2F;international</a>

<a href="https:&#x2F;&#x2F;archive.is&#x2F;ThdBX" rel="nofollow">https:&#x2F;&#x2F;archive.is&#x2F;ThdBX</a>

Requirements:<p>1. Permissive environment<p>2. Concentration of talent<p>3. River of money<p>SV certainly had&#x2F;has them, Sweden did&#x2F;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 &#x27;Silicon Valley of Europe&#x27;<p>As european, if had to look for a tech job in Europe, I would consider:<p>- London<p>- Amsterdam<p>- Berlin

My sympathies, Sweden.

Did it?

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

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.