These days Sweden has a new new face of IT–Gunilla Alsio, bespectacled and graying, a fiftysomething grad student and mom making her first foray into high tech. Alsio worked for eight years as an ergonomics consultant, and her invention grew directly out of her practical experience. Her company, Senseboard Technologies, is now struggling to launch the Virtual Keyboard–an innovation of keyboardless typing that takes the stress out of repetitive stress injury, or RSI. The product consists of two lozenge-shaped pads that are strapped to the user’s palms and “read” finger movements; imagine touch-typing in the air and seeing the words appear on a screen. The Virtual Keyboard, which won the best-new-technology award at the Comdex computer fair in Las Vegas in November, will be priced between $150 and $200. In January, she squeezed a modest sum out of one investor, turned out the first prototypes this month, and just last week procured additional funding.
From Svensson’s heyday to Alsio’s trudge through the postbubble wilderness, the Swedish IT industry has had a hell of a ride. But there’s good news: the worst seems to be over. And if Sweden is coming out of its dot-coma, then so should the rest of the high-tech world. Sweden has historically been on the global digital economy’s leading edge–on the way up as well as down. Sweden was the fastest-growing venture capital market in the world during the late 1990s. Wired magazine ranks Kista, the “Wireless Valley” outside Stockholm, as the world’s third most innovative IT cluster, after Silicon Valley and Boston. The 2002 IDC/World Times Information Society Index ranks Sweden as the most advanced information economy in the world. As if on cue, with Sweden looking up, other IT hothouses–in Israel and India, Britain and France–also appear to be on the mend.
For the first time in what seems like an eon–a year ago–seed money is slowly becoming available in Sweden again. Steffan Truve of CR&T, a Goteborg-based incubator, says his backers have just authorized first-round financing for the first time since the bubble popped. Industrial financing of new technologies–such as General Motors and Ford investments in telematics research at Saab and Volvo–has picked up even more strongly. Companies like C Technologies that weathered the bad days (sales are up 95 percent in 2001) are positioned particularly well. This spring, the firm’s technology will appear in a new Sony and Ericsson product called ChatPen, which converts handwriting to digital form. Strikingly, employment in the IT industry has been rising sharply; among other things, Old Economy brick-and-mortar companies are hiring laid-off dot-comers.
Though wary of raising expectations as in the recent past, analysts and entrepreneurs alike see cause for optimism. The Stockholm Stock Exchange has been creeping upward in recent months. Sales of personal computers and mobile phones continue to rise. Despite the schadenfreude surrounding such high-profile Swedish e-commerce flameouts as Dressmart and Boo.com, Swedes are still twice as likely to buy something on the Internet as other Europeans. Tim Spangler, a lawyer at Latham & Watkins in London who has handled Swedish IPOs, thinks the slump may have bottomed out: “I feel the ground beneath my feet.” In mid-March he flew to Stockholm on business for the first time in months.
As Gunilla Alsio’s story suggests, the new world order looks different than the old one. The “gold-rush days” are history, says the latest issue of BrainHeart, a magazine founded by Swedish VC Ulf Jonstromer. These days the money is tighter, it’s parceled out more cautiously, and it’s going to products, not ideas. VCs are looking for “something you can feel and touch,” says Mats Engelmark of the Invest in Sweden Agency. And everybody is wary of the old siren song of “market capitalization,” which built dot-coms into paper behemoths. “Values built on expectations should be taken with a grain of salt,” says Per Bystedt, the new CEO who is rebuilding what remains of Spray.
For their part, investors have to be more realistic. “Gone are the days of instant IPOs,” says Sven-Christer Nilsson of Start-upfactory. “You can no longer think in terms of a two-year exit strategy; four or five years is more realistic. You’ve got to stay with your company longer.” This new, more sober era marks what BrainHeart calls “the return of Martin Luther”– “old-fashioned” values and a “modesty of visions and forecasts, small improvements and thrift.”
Gunilla Alsio straddled the old and new worlds. She came up with her Virtual Keyboard concept in the summer of 1999, when things were about as hot as they could get in Stockholm. She found a business partner who epitomized the times: “A woman who wanted to be famous and rich, but didn’t want to work.” By the time Alsio assembled her small team (three full-time employees, three part-time) and began hunting up financial backers, the bottom was falling out of the market. To stay afloat, she mortgaged her Stockholm apartment and cobbled together a few paltry government grants. She couldn’t even afford to go to Comdex in Las Vegas last fall, until the Trade Ministry agreed to sponsor her. She moved into office space in Kista that a struggling dot-com had to give up. Only this year has she begun to see “light at the end of the tunnel.”
The new world at the other end of that tunnel will be less brave, perhaps, than it used to be, but a lot more sensible. There will always be a role for the tech dreamers who in the mid-1990s turned Stockholm into the Internet capital of Europe. “Look,” says Bystedt, “it’s not that we should have done everything in old-fashioned wood-paneled boardrooms. A new generation needs to come along to keep us all young.” That includes Gunilla Alsio.
