Founders is a startup studio based in Copenhagen. We are proud of our origins and we really hope to participate in building a strong tech ecosystem in this town.
Copenhagen has captured a lot of media attention recently. It’s labelled as a true “up and coming” tech hub. There are plenty of conferences, plenty of talks, plenty of good hopes. And some good realities.
All this can have a positive spin. It can help an entire community suspend disbelief and take the risks required to actually build something real. It’s “fake it until you make it” applied to a city.
But there are issues we have to discuss, and some bad signs that if not stopped in time can ruin even the little good we have.
Here is my list of challenges, bright spots and two suggestions.
Drought of tech talent
Copenhagen has too little tech talent. Not enough people chose that type of education in the past and most of them got lured by attractiveness of “safe jobs” in large corporation or IT consulting firms. The rest are fragmented in a multitude of startups, either too small to matter or just not going anywhere. There is an obvious problem with abundance of grants and generosity of seed and angel investors which are keeping too many small teams alive. A sign of maturity would be to cut losses on many of these teams and let the best people join the best companies.
This is not something we are immune from at Founders and we are working on fixing it.
Startup lifestyle vs. building large companies
Working on a startup is still more of a lifestyle choice than the desire to build a long lasting company. Too many founders are motivated more by the goal of avoiding corporate life (or having a boss all together) than by true ambition.
I have nothing against bootstrapping and being solo-entrepreneurs (especially if you can turn 40k in MRR with a product in autopilot while learning new skills and travel the world). But an agglomerate of micro teams and lone wolves working from co-working spaces won’t turn Copenhagen into a tech ecosystem in the same way it is not turning Bali into one.
Too much of the asshole gene pool is wasted in corporates
Great companies are created by people with the right amount of “asshole” gene. Characteristic of these individuals is an insatiable drive for success and since success and money are too easily equated, big business and finance have been for a generation the natural destinations of the asshole gene pool. We might not like it, but the booming tech scene in the US owns a lot to the flow of assholes-in-the-making opting for Silicon Valley instead of Wall Street and for Computer Science instead of an MBA.
In Copenhagen today there is still enough fat in the corporate ladder to attract most of the assholes. Many will find enough purpose in a nice house in the suburbs and will satisfy their competing edge with their ironmans and triathlons. Others will realise, maybe too late, that they made the wrong bet. This is already happening and it’s only growing. Just check the amount of business school, consulting, banking profiles going around looking for a technical co-founder.
No real tech industry
Beside a few startups breaking out from the pack there are some large IT consulting companies (admittedly doing quite well) and some old school software companies, mostly spin-offs from government IT services. This is not a tech industry.
The issue goes beyond the lack of tech talent. It involves marketing, hr, growth, customer support. More developed ecosystems like Berlin, London, Stockholm even - for not talking about NY and SF - have score of people working in tech, in one role of the other. This alone creates an entire awareness of where the future is. It forces people to consider the skills that are in high demand and creates an entire generation of potential founders or executives for new startups.
The lack of a tech industry is also the lack of modern middle size companies that are open and willing to innovate. This is particularly important for new startups that need early adopters for their products. B2B startups in Copenhagen are faced by the dilemma of serving the local enterprises with the entire burden of super-long sales cycles, layers of approval and fear of change, or go straight into to the UK or US “modern SMB market”. This puts us at real disadvantage compared to places where you first ten customer (or at least beta users) are all within a block from your office.
Too many suits
Large companies in the city are jumping en masse on the startup wagon. They have the illusion that innovation is something you can appoint an agency to do or you can achieve by sponsoring events, running incubators and maybe making some investments.
It is no coincidence that innovation in tech has always come from startups. There is something cultural about it that has nothing to do with ping pong tables, but with the way risks are taken, the way “waste” is allowed to spread and how (little) the entire process is managed. I haven’t see any of it in the many corporate “digitalisation” programs in town. And no, mobilpay is not enough proof of the contrary.
What you see instead is this:
Everything I am trying to convey in one sentence. Take off your jacket, loosen 2 buttons and you have a startup. With a single strike you insult the people that are working hard on your core business and you perpetuate all the wrong cliques about startups.
Too many politicians
Why when you think of Silicon Valley you never, ever, can think of a politician associated with it?
I believe there is a clear role for politics (for policy actually) to create the conditions for an ecosystems to prosper. The main rule: get out of the way. The second rule: work a lot in the background to remove obstacles. Make it easier to recruit from abroad, make it cheaper to live, rent, start, go bust. Finance universities and research programs (if you want) but don’t set any specific goal. Let waste and spillovers take the turn they like. Invest in serendipity.
There are too many politicians willing to claim their spot on the stage. Too many grand plans of becoming “the capital of xyz”. Lots of words, few facts.
Some foreigners will stay
Go to any tech company larger than 10 people and you will clearly see the pattern. >50% of them come from abroad. Copenhagen is an amazing place to stay and despite serious issues with living costs and lack of rentals (and the weather, maybe) it’s a place where most people would be happy to settle. If we avoid committing suicide by making it even harder to bring, and keep, people from outside, we stand a chance to at least attract the talent we lack.
Universities reclaiming a space
At Founders we are guilty of not having been close enough with the local universities, in particular DTU. But even from a detached position it is easy to see that there is plenty of potential. The new wave in technology, particularly around the (often overhyped) fields of Machine Learning and AI, will require deeper skills than “simpler” web applications of the past. Technical universities in the city have the resources and structure to play an important role. I don’t believe that people attending Standford are necessarily much better, is what they get there, and the inspiration around them, that makes most of the difference.
Some good companies are obviously being built
I won’t make names to avoid forgetting somebody but we all know which companies I am thinking about. Companies reaching that 50+ size where things start getting more stable, where you can train people properly, where it’s easier to enter if you come straight from school are the lifeblood of a real tech ecosystem. At Founders we are trying to play our part and although none of the companies we co-started are at that size yet, by pooling resources and building an infrastructure around them we are gradually reaching that scale.
I’ll round off with 2 suggestions, knowing that there is a lot more to be done and a lot is being done as I write.
Recognise real successes, also beyond tech
Too often we make the mistake of considering tech the “elite” of the city entrepreneurial movement, even when the results are so-so. When I look at “real” businesses being built, however, retail is beating us big time. Tiger and Joe & The Juice are two examples successful businesses growing fast and rapidly expanding abroad. They might not have the “inevitability” or the glamour that tech has these days but they have something to teach all of us when it comes to winning. And that’s what matters. Let’s tell winner stories and let’s learn from them.
Make it easier to import talent
I cannot repeat myself enough. We need to import talent from abroad and we need to make it easier. Visa application, relocation, accommodation, schooling for children. All this can be done much better. Just think about the absurd CPR-address-bank account catch 22 situation every foreigner needs to go through (don’t know what I am talking about? just ask you foreign colleague).
We can also make it cheaper. Living costs, and by reflex salaries, are very high. Building a successful company requires an initial process of testing and failing. And that initial phase needs to be as cheap as possible. The fact that the only real tax break on employees is restricted to “highly paid employees” is a clear sign that we put attention in “maintenance” of existing companies and not on the creation of new ones.
You might say I am seeing the glass half-empty. Maybe. But the difference between a wannabe and a real tech ecosystem is also about stop pretending to be one.