Niklas Zennstrom a speaker at Le Web 2011, is one of Europe’s best known and most successful entrepreneurs. The tall Swede co-founded three companies over ten years – KaZaA, Skype and Joost. recently met with Informilo Editor-in-Chief Jennifer L. Schenker in Stockholm, just hours after he invested in a Swedish start-up called Wrapp. They talked about mobile, social and local and how Zennstrom sees the European market evolving.
Skype not only radically changed the telecoms industry, it made Zennstrom a wealthy man. He and co-founder Janus Friis sold Skype first to eBay for $3.1 billion, bought it back, and then sold it again to Microsoft for $8.5 billion. Like a growing number of other European serial entrepreneurs, Zennstrom is helping to finance Europe’s future by plowing some of his money into the next generation of start-ups. Atomico – the venture firm he co-founded in London- is investing in start-ups across Europe, including Fon, a Madrid-based global WiFi sharing service and Rovio, the Espoo-based company behind the widely popular mobile application Angry Birds. Below find his views on how the market is evolving:
Q: The prevailing wisdom is that the center of gravity in the mobile sector has shifted to the U.S. What does that mean for Europe?
A : When it comes to infrastructure –-in this case operating systems — there has been a shift from Europe to the U.S. The world has moved to the mobile Web, and Apple and Android have become very successful by approaching it from the perspective of the Internet industry. There are only a few companies providing the infrastructure –-I don’t think there is room for 10 different operating systems –-but that doesn’t mean Europe loses out. Smart people can deliver services from any other location. Angry Birds, the most popular mobile application, was developed by a Finnish company. There are a lot of innovative companies developing mobile applications in places like Sweden, Germany and the UK. The industry has shifted to different operating systems but this does not mean that the whole market has shifted to the U.S. and Silicon Valley. On the contrary, I see mobile applications and services being developed all over the world.
Q: What kind of innovation are you seeing at the intersection of mobile social and local?
A: Wrapp, the Swedish company Atomico just invested in, is targeting mobile and social and is also doing commerce. It drives traffic to local stores and retailers. It was started right here from Stockholm, a great test market. Europe is made up of many countries, it is not one market. If you start in one market, and the domestic market is large, there is a danger you can get stuck there. A lot of French and German companies, for example, end up depending on their home markets. The advantage of Sweden is that it is small so you have to think internationally from the start. If you go through history and look at global companies like Ikea, H&M, LM Ericsson and Electrolux, they all recognized that Sweden was not a market. Wrapp understands this too. They have a great team.
Q: London and Berlin are trying to become global hubs. How can these cities compete with Silicon Valley?
A: Berlin and London are attracting people from other countries because those cities are cool places to be. London is a melting pot whereas Silicon Valley is somewhat of an echo chamber. Silicon Valley is today not necessarily the best place to start a business. It is really hard to recruit and retain good engineers because you are competing with Facebook and Google. If you are a start-up, even if you attract good people you are likely to lose them. This is not the case in London or Stockholm or Berlin or Tallinn. That said, it is politicians and the media that place importance on hubs. The reality today is that innovation is a lot more distributed. Look at Tallinn. A lot of people who were working on Skype are doing something else now and they are doing it from London or Copenhagen or Stockholm.
Q: How is the European market evolving?
A: In 2002 to 2003 it took over a year for Skype to raise capital. Today capital is available in Europe; Atomico plays a role in that. Other European entrepreneurs are also investing in new companies. For example, the MySQL guys have started Open Ocean. What you see is an ecosystem evolving. From here I am going to Berlin to speak at a university. We need to inspire students to become entrepreneurs. In Silicon Valley they think big –-sometimes too big –-but here in Europe people tend to be more modest, it is deeply rooted in the culture. The important thing to remember is that although historically the big tech companies tended to come out of Silicon Valley, going forward it is highly likely that the next big things will come from other locations, including Europe.