From the Spotify Mafia to the Lovable Mafia: inside Stockholm's founder network

0:00This episode of Equity is brought to you by Schneider Electric. Schneider Electric, advancing energy tech. Hello and welcome back to Equity, TechCrunch's podcast about the business of startups. I'm Dominic-Madori Davis, and this is the episode where we bring on industry experts to help us explore a trend in the tech world and dive deep. Europe's favorite vibe-coding startup, Lovable, just raised another$400 million at a$13.3 billion valuation, roughly double the valuation it had just eight months ago. And it's not alone. Swedish startups like legal AI company Lagora and health tech startup Neco Health are also putting up huge numbers.

0:32So what's going on in Stockholm? Is this Nordic ecosystem shifting into a new gear? To help us unpack it, I'm joined by Sophia Benz, a partner at Cherry Ventures and longtime fixture in Europe's startup ecosystem. Sophia spent seven years as a global marketing director at Spotify, has made more than 40 angel investments and previously built Atomico's angel program.

0:55Sophia, welcome to the show. Thank you so much for having me. It's a pleasure to be on. Yeah, I'm super excited about this conversation. It seems like some of the hottest companies in the world are all coming out of Stockholm. I feel like this is a really basic first question, but Stockholm's ecosystem has had like Spotify and Klarna, but recently these AI companies that have been coming out of there, has something, what changed in the past few years that now suddenly, I mean, again, there's always been incredible companies, but has there something that's changed in the ecosystem in the past like five years?

1:26I mean, I think it has matured significantly the last, you know, four or five years. But I think it has been kind of a long time in the making. And, you know, for just my sort of time here, I feel like I've seen, you know, and had the pleasure to work closely with Niklas Sandstrom at Skype, and then Daniel at Spotify, and then invested into companies such as Klarna, with Atomico, et cetera, and seen kind of generations of founders. And I think one thing that strikes me is that it's a small place. You know, Stockholm, you can bump into these people on the street and it's easy to get hold of them.

2:04And I would say majority of them are very generous with their time. They kind of enjoy coaching and meeting up with the next generation founders. So being a small ecosystem, I think, is one of the components that makes it so dense and therefore the access to these people is fairly easy. So like it is definitely, I think, a kind of passing of the knowledge into the younger generation. And then maybe a bit of also, we're this tiny country up in the northern part of Scandinavia and Europe. And, you know, maybe to some extent, we feel like we've been underestimated. You know, people maybe don't think that a Spotify would have the guts to take on Apple, et cetera, or Skype to take on the whole kind of industry.

2:50So maybe an ounce of being underestimated and being coming from a small place has some portion of it as well. And then I think also just lately, we've had this, you know, incredible growth of very talented, super motivated, hungry and disciplined young founders that have supported each other and also learned from the older generation. Yeah, there's actually two points I wanted to talk about what you just said. The first of which is like, so do you think like in terms of passing on knowledge to the new generation, is this a lot of it coming from like the Spotify mafia, in a sense, or what impact did that have on the ecosystem?

3:27Oh, that's a great question. I would love to do some sort of survey or study on it. But I think one example in my day-to-day job, like we are sponsoring a place called Founders House. It is a co-working physical space for young founders that are building AI companies. And many of them have been to Y Combinator or spent time in San Francisco and then coming back. They're like, oh, we're so high on the vibe. We want to sit together also when we get back. So this co-working space is a fantastic place. And me and other people on the Founder House board have then invited the other kind of more senior founders.

4:02So we've had fireside chats with people that have built companies before. And I think that has been one really, really good kind of learning and sharing experiences sort of forum. And I think, you know, no one has said no. It's more like, when can I come? And many of them are busy, so it takes time. But everyone is super happy to get back. And some of the older ones have also been like, oh, wow, I wish I was starting my company now, but the technology is so incredibly, you know, fast moving and interesting. And sorry, I forgot your first question. What was it? How the... Oh, I was saying, did the Spotify mafia have anything to do with it?

4:40Yeah. So of course we invited Daniel and he's always incredibly inspiring. And I think when he is talking about his journey, what people tend to forget is that for many years and for a long time, we were just, like when I joined, we were sitting, you know, 10 people in a very small flat in the midst of Stockholm and nothing pointed to that we would be, you know, a global household brand. So I think it humbles people to hear that, you know, we started out with kind of just an idea. And Daniel is very good at reminding people of that when he speaks to his journey. And yeah, for me, it was a full circle moment when he was kind of sharing his insights with that young generation of AI builders.

5:17When you look at companies like Lagora and Lovable right now, because everyone always talks about, you know, the Nordic model of how countries are run and everything. And so something I was actually curious about is like, how much of lovable success is specifically tied back to kind of this Nordic model and way of living versus like just a really good company catching the AI wave at the right moment? I think probably both, right? So I lived my five years in New York City when I was there launching Spotify. Some of my reflections there was that, you know, people that were starting their own companies, they were so much knife against the throat, because if this doesn't succeed.

5:54You know, I have no, you know, nothing to rely on. In Sweden, we have the social welfare systems. You can risk a lot and you can start a company, but sometimes people do it while studying, et cetera. And it feels like you have a bit more cushiony sort of situation. I don't know if that still holds true, but I do feel like people dare to take great risk. And I think lovable, you know, super big, very bold ambition, Spotify, incredibly bold ambition to go up against those giants. And Skype, very bold ambition. Klarna, the same. So I think there's something about kind of daring greatly, dreaming big, being the underdog that has sort of been proven once or twice.

6:36And then I think that shapes how people think about going on, about building their own businesses. This whole thing, like go big or go home, I feel like resonated quite a lot with some of these young, talented founders. Yeah, I know. I think I was talking to a Danish founder, actually. And we were talking about this system behind like the Scandinavian model. And we were talking specifically about how like, you know, companies here, it's like, well, you have to work really hard because you don't have health care. And, you know, and the safety net is like the floor, like you just hit the ground.

7:05And so we were talking about like when you have a safety net, does that make you more ambitious? But it seems like a lot of founders now are kind of taking advantage of that saying, well, actually, you know, I have all the support. I might as well go big or go home, you know? No, I think so, actually, because I'm a believer at least that, of course, it's good to have some sort of nerve and you need to be super invested when building a company, but not to the point where you feel like, oh, I'm not sure if I or my family will have health insurance. I think that's a very, very incredible stress to live with.

7:35You know, in Sweden, I feel like I'm marketing Sweden now, but in some way, I guess I am. But, you know, we have it. It's affordable with health care. Childcare, we also have solutions for it that you don't have to pay a lot for. It's like 130 euro per month for really, really good healthcare. Education is free. So it's a very good place to sort of grow a family. And I think if you can do that and feel like it's working, then it's, of course, easier to also pour into your company without feeling that you are jeopardizing the situation you have for your family. And I think that's probably different.

8:11Where does a lot of the talent come from? Because I was specifically asking and thinking of like, I was just in London and I was covering a lot about how I think someone said they called it like the new Palo Alto in terms of like how close all of these European capital cities are to each other. But I know also in the London ecosystem, they have all of these universities, you know, where it's like you just go to Cambridge in 45 minutes and get like a really, like really smart person or something. And so when it comes to Stockholm too, like what is kind of the setup in terms of the talent pool? Yeah, I would say one of the really good places to go and visit if you're here is the Stockholm School of Economics, where they have this incubator where Klarna was founded and sort of incubated in Legora as well, Boy as well.

8:55And I'm on the advisory board of that school. And it's incredible to see that track record. I was kind of jokingly saying that, you know, investing into all of these companies would be a fairly healthy investment strategy. So I think that school has the most entrepreneurial density and legacy and history with it. And then, of course, we have KTH, which is the technological university also based in the city with an amazing robotics division. We have, you know, Stockholm University that has a great law education, etc. So we have some really, really good places. But I also think maybe I'm colored by my own experience, but also having worked at startups is probably the best crash course.

9:38So like Anton at Lovable, he used to work at Sauna Labs, which is one of these breakout companies as well. So I think they also go and visit companies, see how it's done, and then also get inspired to start their own companies. I think we also see a lot of people now kind of leaving Lovable because they also see all of these opportunities for companies that can be built with that technology. So talent hub vice, I would say like people that are, you know, have worked at Lovable and Agora seem to be very entrepreneurial driven and keen to start their own companies. I was actually going to ask, is there a Lovable mafia now?

10:13Like, is that the next mafia taking over? Yeah, no, it's very, very interesting and fun crowd that, of course, are in the midst of it. And I think, yeah, me and Sarah are planning an event and I'm doing this fireside chat with people from Legora and Lovable. And I think they are very, you know, in the forefront of how to go about things, which is inspiring for other companies. And I think they also set the bar a bit high, which is great. Yeah, and especially when it comes to kind of taking on their U.S. counterparts. I know one of the big themes of speaking to like a lot of European investors and founders has been of like sovereignty.

10:50And so I was going to ask, what are some of the conversations that are happening in the ecosystem right now? And is sovereignty and creating kind of your own technology that isn't so dependable upon the U.S.? Is that one of the big conversations? I would say it's definitely is. Yeah. In Europe and in Sweden, I think everybody has been kind of, you know, awakened in a way. and therefore building with that perspective. I think from both ends, both from investors and sort of the industry and also builders. How far off is an ecosystem like Stockholm from having a self-reinforcing, kind of having that ecosystem where you don't have to depend on U.S.

11:30technology or big tech? I think we have a way to go. I think we're always looking to the U.S. Most ambitious companies are always kind of planning for the U.S. launch. I think we, you know, when it comes to growth around the capital, mostly we look into the US and US investors. So we have some work to do there. But I think everyone is incredibly excited about sort of strengthening our own position and building and being more aware of how to create that. So I think it's definitely kind of in the making. Yeah, that was always another thing I ask founders in Europe. Everyone's always really bullish on their own ecosystems.

12:07But then I'm like, so where do you want to IPO? and they're always like New York. And so it's jumping. Yeah. Is that also kind of a bottleneck that the ecosystem is looking to kind of fix? I don't know if it's the same problem where it's like I talk to a lot of British founders and they're always like, yeah, we're going to New York because we don't want to IPO on the London Stock Exchange. Is it kind of the same sort of growth trajectory in Stockholm? Yeah, I mean, it will be interesting to see some of these young companies where they go for their RPOs, but I would not be surprised if it's also New York.

12:39And I think looking at both Spotify and Klarna, that's what they did. So it feels like it has sort of become a bit of a standard for the ambitious ones. So I think there we also have some work to do. What are some of the most exciting things happening? I mean, the new generation founders, they feel younger than before. And they feel very kind of well-educated upon the space and incredibly ambitious. And also more fast-moving because of everything that's available. Like, you know, when I joined Spotify, we only had the amount of hours and the number of hands that could, you know, build code. And then we had a product.

13:15Now, you know, it's so different. You can build products and create companies in much shorter space of time. So the speed and also ambition level, I would say. Is it good or bad that these founders are getting younger? Like, do you have like a wave of like college dropouts now? Or has that always been a thing in Stockholm? Like, is it good or bad that these kids are so young? Yeah, that is a great question. I think it depends on who you are as an investor. Me personally, I love working with really young people. But of course, there is a, I think, golden combination of sort of experience from, you know, a second time founder and that ambition level from the young ones.

13:54So like pairing one of the young ones with a more experienced one, I think would be ideal. Because I mean, I met founders that are like 16 years old and dropouts and, you know, then you're really young. I think it is good with experience.

14:34How much U.S. capital has been flooding into Stockholm as of recently? Oh, that would be interesting to find that number. To me, it feels like quite a lot. We have a lot of American funds that are flying in on a regular basis and sort of giving term sheets without proper DD, etc. So it feels like a very active and vibrant market. You said without proper due diligence. They're bringing the Silicon Valley method over there. Yeah, I think for some of the big ones, they can do some of these checks without having an IC, etc. So that is, of course, a bit different from how most other funds here operate.

15:16So it can be a bit like, ah, that's interesting. But, you know, I think it's also just a testament to that. We have a lot of great people building companies here. So in the end, I'm sort of glad that it's happening because, you know, it's just a sign that we're doing something right. and I think all investment firms have different strategies that you know they have found working best for them that is interesting though like has that brought any culture clashes between like you know the Nordic investors and the U.S. investors or like do founders are they like oh cool this investor is not doing a lot of dd like that's great or are they kind of like hey maybe they should ask a little bit more questions like is there kind of like some tension yeah I mean you have some founders that are like oh I don't want to take money from that fund because I feel unsafe if they don't know me properly.

16:01So I think that is a more mature way of looking at it. Then we have some founders that are like, oh, but this is an amazing brand and I'm just going to take the money easy. But then if they don't succeed, you're not an important player in that big fund's portfolio. So then you fairly quickly get sort of not getting the attention that you want. So we normally talk about stage specific and that it's really good to have someone who understands where you are at in the early stages rather than just taking easy money. Have you been seeing like a wave of US investors coming in and saying, well, if you want this capital, you have to come with us back to the US?

16:40I was talking to a lot of British founders and they were saying that American investors were, they were coming in offering money, but only if they moved. Interesting. Yeah. I've heard, you know, investors from the US coming and saying like, yeah, great, you can build here. But then And at some point, you need to come to the US because it feels like Europe alone is not a big enough market for that investment. So, yeah, pushing them a bit to kind of coming to the US sooner or later is something I hear often. And then I would also say many founders here really kind of crave that because the speed and the excitement and also the talent that is, you know, gathering in San Francisco or New York is also exciting for them.

17:21So many, many founders here that I meet are not thinking about it as a bad thing. But of course, it depends on where they are in their lives and if they want to move and can move. Is the issue of growth capital like a European venture-wide problem? Or is that like, does Stockholm also have that issue that I know a lot of other euro venture markets have? Yeah, I mean, I think it's something we've been talking about for a long time. And we have done initiatives and, you know, it is better than before. But I do think that most companies in the later stages, they look to the U.S. funds and I would love for that to change.

17:56But it feels like it's been a while where we have kind of talked about it. So we need some more growth investors in Europe. It's so funny because I feel like I always ask, I'm like, how do you just get more growth capital? Like, where does that come from? Is that something, is it like a government scheme or is it just like you need more like family offices or like the old generation of money kind of taking more risks? Like where does that come from? Yeah, I think it's probably a combination, right? But I would think that it's more institutional money that wants to see investors also doing the later stage rounds, like the growth rounds, rather than maybe family and such offices because they are normally not.

18:36I mean, I think it's better with the institutional ones. So if the existing LP or investor basis would deploy more money and funds would set up growth funds, I think that is not a bad idea, and especially not with the generation of companies that we see coming out of Europe now. I think it's a fantastic opportunity to invest in those and to try and keep them in Europe. How has your role as an or how has your job as an investor changed over the past few years in terms of what founders are looking for, what founders are like helping them expand? How has like your job description changed seeing like the ups and downs of the market?

19:17I mean, I think in one way, a lot has shifted and changed, but in one way, it remains kind of the same. And I think our job is to identify and find the founders that are incredible and that are standing out in different ways. And then once we have done the investment, it is to support them in the best possible way ever, which could be through multiple things. It could be kind of hosting a brand workshop or helping them to roll out in Germany and help them with meaningful intros or help them prep a launch in the U.S., etc. So we are very hands-on in the way we work with founders. But one thing that I've seen, which I actually like, is that founders are more aware now of kind of what they can expect and that money itself is kind of generic.

20:05So it's more about like, all right, but how can you help me? And I think that question comes back to the kind of learning experience being shared. So nowadays I meet a lot of founders. They're like, how can you contribute to my growth journey? They are asking me that in the meeting, which I think is incredible because that means that they have read up and that they're smart and not just taking money that is, you know, a check, but also taking strategically and smart money. And at Cherry, all of us have been part of building companies before. So that's something that we take great pride in that, you know, we know how it is.

20:36We've been in your shoes. We have all been building companies. So therefore, we are in a good place to help you in a meaningful way and not just write a check and then say, see you at the IPO. Yeah, that's actually so interesting that now that they're like, what can you do for me? What do you mean? It's like a very important question that founders should ask. But I imagine that's also kind of funny. It is so funny. And maybe I can mention this. We had an event lately and I was interviewing Max at Legora, who is in our portfolio. And he is so funny and fantastic and outspoken. So he was sharing on stage and the audience was founders.

21:09And he was like, yeah, I have this, you know, leaderboard where I'm measuring all of my investors on behalf of how many intros they have made. And then I'm rating them. And he said, and when they're not in top and I send them the results, it's so exciting because they, you know, they don't want to be the last one. So I think that's a funny example of how good founders can be at understanding how investors can bring value. And I think he's doing exactly the right thing. That's how he should work with his investors. Honestly, that is so important. I feel like there was a time period, at least like when I was on Twitter and I was like all these like VCs were just popping up randomly.

21:47Like I think it was like 2020, 2021. And like founders were entering these crazy deals. And I'm just like, is anyone asking the investors what they're doing? Like what's going on with them, actually? Oh, I love it. I think it's a very relevant question. Something I actually did want to talk about are kind of the big conference. I've been trying to get the slush for years. like I've been trying to get I'm trying to go to one of those little sauna parties but I know there's also like Nordic Tech Week Tech Barbecue is this week how like can you talk a little bit about the importance of those conferences especially when it comes to building and reinforcing the ecosystem so talent is built and stays in the Nordic ecosystem yeah I think I'm super impressed with Slush especially since it's been around for so long and it's definitely like a grassroots level, you know, organization in a way.

22:37I think, you know, they have 2000 volunteers, like young people working for free that week. So the whole city is just vibrant with excitement and people who are hungry to learn and meet new people. And yes, you should definitely come and I'm very happy to help you. I have been there for 10 years now. And I think if it's one conference in the Nordic region, you should focus on if you're new here, then it's because it has this incredible global audience and always super relevant speakers and always also gearing towards the entrepreneurs, which I like. But then I would also say here, you know, Tech Barbecue this week is also incredibly well organized and super fun and lots of great speakers.

23:20And Nordic Tech Week and Tech Arena here in Sweden have been massive last years. And I think it's also a testament to like how the society is interested in this field. like now it feels like so many more people want to attend and want to go which is fun because you know when Slush started out you know not that many people were interested or aware even yeah does it seem like being a founder and having a startup and being an entrepreneur is slowly becoming part of like the myth and the legends of um of I guess like the Stockholm ecosystem I say it in the sense of like you know in the US we have like this this myth of a founder it's like the Mark Zuckerberg you drop out and everyone wants to do that.

24:03And so, so many people are now so interested in this founder and entrepreneur, your life cycle. You see it all over social media. Is that kind of like a cultural societal thing now where it's like, you know, people really, really want to have this life now, or is it still kind of like, you know, oh yeah, you know, I'm interested in the tech and the conference and I want to go, or are people, do you see a lot more, I don't know, people saying, I want this whole lifestyle and everything that it encompasses. I think so. At least if I look back and kind of compare it to how it was when I joined Spotify, which is many years now, but then the word startup wasn't used, founder as a theme wasn't really used, and people were excited to go and work in banking or consulting.

24:45That was the cool thing to do. Now, I think a lot of people optimize for creating stuff and optimizing for both sort of freedom and probably wealth. So I think we have had so many people showing that, you know, I did this even though I'm a dropout, even though I know nothing from before. So I think that inspires people. But I also do think that a lot of people understand how an all-consuming experience it is. So I think it's not for everyone. And that I think is something that people know, most people know. But for the ones that are super dedicated, you know, it's definitely one of the most fun things you can do to build something to get with other people.

25:31And I think now with AI available, you have more opportunities than ever to do so. Yeah, something I'm actually really interested to ask you is, what do you think will be the thing that the Stockholm ecosystem is known for? Like what is going to be the winning thing that comes out of it? Oh, I think it's probably like number of really big companies that are solving hard problems. Density of talent, inspiring others, fueling back into the ecosystem, meaning that a lot of people that have been at these companies, very few of them go back and like do nothing. Most of them are like, oh, I want to support.

26:10I want to help here. I want to angel invest. Like they want to put their hard earned experiences to use. And I think that's one of the components that makes it so exciting. So, yeah, I think it's some sort of shared success with a number of. Oh, a shared success. It wouldn't be like you would say like maybe deep tech would be the thing where it's like, oh, everyone in Europe knows us for for this thing. You think it's going to be more of a mixed combination of things, maybe a balance, a balance of things. Yeah, maybe. But I mentioned to someone the other day, I was visiting this co-working place down in a harbor called Magazine X, which is builders that are doing physical AI.

26:51And then I was blown away. You were bumping into like a robot dog and then another manufacturing robot, et cetera. And I was like, wow, all of this amazing talent that are building things. So, yeah, then I was like, oh, maybe it's robotics that we'll be known for. But with the background and having seen Skype, Spotify, Clarina, etc., I think probably it's a combination and maybe the common nominator is that daring to build big from day one, maybe sort of challenging status quo is the thing. I think we have been good at design and user design and UI, aesthetics, but who knows? Maybe it will be robotics or deep tech.

27:30TBD, I think. Robotics. The dancing robots. Yeah. Those, they're always so funny to watch. I feel so bad because it's like someone put so much time into it for like these things to just collapse. So funny. I was talking to a researcher and they were like, maybe robots are just entertainment. And I was like, of course, like they're used in manufacturing, but those like dancing, like what is like, what is that being used to? I agree. Yeah. Maybe Sweden will figure it out. Sweden's going to figure it out. Let's hope. We're almost out of time. But before we wrap up, is there a place where our listeners can connect with you uh yeah sure on linkedin linkedin no are you on x i am but i'm not so active nowadays but yes x as well x linkedin you don't need to be on x it's crazy it isn't it used to be good when it was twitter but now it's a bit like oh much is there is there like a stockholm x like how there is and or is it just like mixed in with the rest of silicon valley twitter yeah I think it is.

28:28It's a bit of a mix. So I think I really like, I try and be available like physically at Founders House and SSE Business Lab for the people in Stockholm. Otherwise, I think LinkedIn and X is best. And Founders House, that's like a hacker house type of concept? Yes. That's really fun. That's exciting. There seems like, has there been a lot more of those popping up over, all over Europe, basically? Yeah. I mean, Founders House also have a Founders House in Helsinki. So it feels like the interest is definitely there. And I think it's kind of basic, but still brilliant. It is ambitious and talented people that want to sit together in order to exchange knowledge because the world moves so fast.

29:07So the need for that is greater than before. Is there anything that makes these founder houses different than the ones in America? Are you guys doing the seven days a week, 24 hours a day? Or is there a difference? I don't know, since I haven't visited them in the US lately, but I think, no, there's no, nothing forced. It's just pure kind of here is the arena for everyone. And then I think they are there 24-7, seven days a week, but more because pure joy and excitement than anything else. It's more fun when you build stuff together with people. And it's so much fun to learn from other people. So if you can put those two elements at play, I think then you have a good concept.

29:54And yeah, thank you so much again for joining us. I think that's a perfect place to wrap. And to our listeners, you can find me on Instagram. Please follow me on Instagram. I'm once again begging for followers. But I'm also at LinkedIn at Dominic Midori. Thank you so much again and see you at Tech Barbecue. Thank you so much. Yes, I look forward to it. equity is hosted by tech crunch senior reporters and produced by teresa loconsolo with editing by cal subscribe on youtube or wherever you get your podcasts and find out what's next at techcrunch.com slash events thanks so much for listening and we'll talk to you next time