Jonas Birgersson, Sweden's largest IT icon
Swedish IT entrepreneur, exceptionally successful entrepreneur and visionary world savior. The superlatives surround the legendary Jonas Birgersson, who in the time leading up to the turn of the millennium understood that with fast and cheap broadband, completely new business opportunities could be created.
Jonas Birgersson was loved by many as a leading figure for "broadband to the people" and for his spartan life, where he continued to live in a small apartment in Lund, even after he became wealthy to say the least. He was as far from a typical business profile as one can get. No expensive watches were seen on his wrist and he took the train instead of owning a car. He visited the White House banquet in shorts. The media loved Birgersson's appearance and his ability to enthuse quickly became legendary. He was welcomed in the boardrooms, where at the time he was an odd bird in the orange fleece sweater, which later became his signature. Over the years, the media and investors pondered whether he was the people's savior or seducer. Jonas himself worked tirelessly on his vision, true to his never-ending ideas, and refused to be anyone other than himself. So even today, where he with LABS2 and ViaEuropa delivers advanced broadband services in ten countries. His vision is to show the way to the "Swedish model", so that a Klarna, a Spotify, an Izettle or large trading companies can also emerge in other markets.
Birgersson was just over 20 years old when Telia recruited the gaming nerd, as he was, as a reviewer for the then internet portal Passagen. Then he founded Framtidsfabriken (later Framfab) and the subsidiary Bredbandsbolaget and the rest is, as they say, history. The company became a power factor during the 90s IT boom and had a market capitalization of no more than SEK 42 billion. The broadband company invested in fiber optics at a time when Telia did not consider this interesting. There was an idea to list Bredbandsbolaget at the same time as Telia, but that did not happen.
What was the most significant thing that happened around the turn of the millennium?
“What we a little carelessly call digitalisation. Those who were not there at that time miss how incredibly difficult it was! It is difficult to imagine today how much that did not exist. For example, we were involved in large digital projects with Atea and Volvo. But first we had to find a 1,000 square meter house or build one ourselves to put a lot of floor-to-ceiling servers there. Then we had to build a brand new software to get the servers talking to each other, and then find an internet connection that was strong enough to handle all these new things. It was incredibly difficult to do what is easy today. At the same time, we learned how all things worked. Today you can pull the credit card and get a cloud service and as many servers as you need and you have your applications 80-90 percent ready before you even start coding anything. Much of the software side is already done. We ran into problems all the time. There were setbacks immediately, there was a lack of software and bandwidth for all projects, so there was a lot that needed to be solved.
You became the "voice of the people" - do you see it as a democracy issue that everyone should have access to fast broadband?
Absolutely! My vision was that it would be easier and better for everyone. A wise thing happened that fit very well with everything we did in Framfab and Bredbandsbolaget. The IT Commission introduced the Home PC reform. At that time, there were high taxes on computers, so by introducing a job tax deduction, ordinary working people could buy a PC. Although it was expensive, it was no longer inaccessible. Showing the Internet's capabilities to people with a home PC was a perfect combination to IT-mature an entire nation. Now you had a nice new computer and would connect it. That required speed, 10 Mbit/s, 100 Mbit/s. It turned out to create concern about the price. With the old connections, users were nervous because it could quickly become terribly expensive. Calling was quite expensive per minute and then with ADSL's volume restrictions, it only took a certain amount of time before it started to cost a lot without being noticed. When the phone bill came, the sum was suddenly as much as an ordinary working-class family had to live on for the entire month. Bredbandsbolaget was the first to give a fixed price no matter how much you surfed. For SEK 200 a month, you got 1 Gbit/s. With a new infrastructure, new pricing and a new home PC reform, people wanted to use the opportunities as much as possible, and it created opportunities for completely new businesses.
What was the success factor for the new hyped companies that emerged?
Three things paved the way for a new type of company. Sweden got an internet infrastructure, a fixed price for broadband and upward communication at the same speed. 10 Mbit/s was a lot at that time and suddenly the webpages flew onto the screen. It led to a lot of new things. I will not disapprove of the founders' fantastic entrepreneurial brains, but, since we could give them inspiration and a little better infrastructure with Bredbandsbolaget and then that the home PCs were available, more people could see the possibilities of starting a company and selling services. With a fast PC, people got used to being on the internet and think it was fun. All of a sudden, they wanted to be able to pay their bills on the internet and take care of their affairs. People did not want that until they had a good connection. All this paved the way for the founding of a new type of internet-dependent company in Sweden, such as Spotify, Skype, Minecraft, iZettle, Spray and Klarna. Sweden was early.
How do you see the IT bubble? Did it crack or did it not crack?
There is talk of the IT bubble, but the technology behind IT was never a bubble. An example is boo.com who got very bad press when they wanted to sell designer clothes via e-commerce. The company went bankrupt in May 2000, and became one of the first and one of the largest bankruptcies in the internet bubble in the early 2000s. Everyone was pretty shitty towards the founders. What analysts confidently said was that people would never buy clothes online. Today, the majority of all clothing is sold online. I myself was criticized for questioning whether, after 100 years, we can maintain the world's highest prosperity by just living on industrial companies. It was considered very provocative. But look at computer games, where Sweden is far ahead. Computer games today generate more revenue than Hollywood movies do. History has shown that it was right to question. When we talk about bubbles and the valuation of companies, it must be clear that a company's market capitalization unfortunately does not always have a connection to the company's operations. It would have been nice if that was the case, but it's just saying one word that explains everything, and that's Gamestop. The price of the company is set by how many people want to buy and sell. They have wanted to build up almost a science around this so that fine financial analysts can say they understand it, which you do not understand. But the truth is that if you underestimate one clothing company or overvalue another, we still need clothing.
Did you fall victim to the stock market mechanisms?
It's double. In a way, it created a lot of attention so we got the chance to talk about our ideas. Then I thought there was far too much focus on our company's market capitalization compared to what we actually did. A consulting company can be valued based on two factors. One is "how many hours can they bill and how much can they charge per hour?" Then there is a limit to the value because there are only 24 hours a day and there is a limit to how much you want to pay a consultant per hour. But you should look at the values the consulting company is creating. If, for example, we had been able to complete the project to help Ikea become Europe's largest e-commerce, the value of what we created for Ikea would have been much greater than what they paid us per hour. In Framfab, we created Bredbandsbolaget, which offered broadband with high speeds for Internet access, mobile telephony, IP telephony, telephony, digital TV and other services. That in itself became a billion-dollar company.
When Bredbandsbolaget was then sold to Telenor, the owners of the Framfab share were paid and then the price was no longer set based on consulting hours. This begs the question: could Framfab have continued to start that type of new exciting company? In the valuation of Framfab, the price would then have been based both on charged consulting hours and based on the potential to start more such new companies which in turn can be valuable - both for shareholders and in the perspective of promoting Sweden's digitalisation. Now Framfab was pulled down when the so-called IT bubble burst. Everything happened in a very short time. Then there was a big nail up and then a huge nail down. Had they had a smoother course and had more time, Bredbandsbolaget would have had time to be priced correctly.
What lessons do you learn in Europe?
Something we take out in Europe as a lesson from Sweden is the Swedish innovation - open networks. We worked with broadband before people knew what it was. And we will work with broadband after people know what it is, and now think it is completely unexciting, much like having water in the tap. On the broadband side, for example, Germany has a lower fiber expansion than Albania. The Germans are generally good at infrastructure, but broadband infrastructure in particular is not seen as benefiting the German industry's other infrastructure, motorways, airports and railway stations. Deutsche Telecom does not earn extra money for building fiber, they want to use the old copper network as best they can. It is true that Sweden has lost momentum, but what we did in Sweden 20 years ago on the broadband side, there are still many countries that have not done and they have not done it in a smart way. Even though some have built fiber, they have stuck to downpipes, which makes it a monopolist on fiber.
Are you trying to convince other markets about the "Swedish model"?
Yes you could say that. This can be done anywhere. We operate 150 networks in ten countries and have built software that helps people keep track of their broadband networks so customers can freely choose their provider. At Bredbandsbolaget we were the first in the world with 10 Mbit/s and we were the first in the world to have internet, telephony and TV in the same cable. This means that you can have different operators on the same connection so that each resident can choose which service provider they want. That possibility is scarce in Europe. In Sweden, it is about a third of the Swedish market with speed connections where households have chosen service providers who are not the traditional large operators. This is actually unique in Europe and large parts of the world.
Do you still want to save the world?
It is the same journey and you need to do the same thing in other countries like what we did in Sweden. We were unique in Sweden with these new entrepreneurial operations with new business models whose business concept is completely dependent on the existence of fast and reliable connections. Sometimes I get reactions like "it was fun that at that time there was a lot that was undiscovered, now everything is finished". That's really not true. On the contrary, there are much greater opportunities now. There is much more that is undiscovered now than it was then. Today you can just withdraw your credit card and for SEK 0 get access to Amazon or Azure's clouds. This is how the entrepreneur can focus on his idea. Therefore, the amount of things that are possible to do has increased enormously. The technology will continue to develop and new values will be created because of it.
What opportunities do you see in front of you?
The Internet is the infrastructure of the infrastructure. It is the nervous system for the whole society and we have not benefited from it at all in very many areas, where we need to be better and more efficient. Sectors such as food production, healthcare, water, electricity and education are areas where many opportunities open up thanks to the internet. See for example with Coronan: Sweden did not need to take a single action when people were to start working from home. The network worked anyway. We saw urgent problems in Italy, people had to be at home and the network did not cope. But in Sweden when the networks went up 15–20 percent during the day, no problems arose, because the networks were strong enough. It is interesting what this will mean for society. Do we need to be in the workplace, do we need to be in school, do we need to be in the hospital? If we do not need it, it creates many opportunities to help more people in a better way.
Do you think the networks are robust enough today to handle, for example, care at home?
The networks that are good can handle a lot. But the state has made it far too easy for itself, where it is said that the market will fix this. It does not hold. One must understand that infrastructure is so important that certain basic things should not be up to the market. Here are opportunities for an improvement process if you only dare to take responsibility. When it comes to all other infrastructure, only the state is allowed to deal with it. For example, it is forbidden to build parallel electrical infrastructures, but on the fiber side, the state does not take responsibility. None of these extreme models are optimal, but we need a conversation about it. Because when it comes to democracy itself and how we organize society, we have not changed anything, even though we have fast internet - for me, a society with or without internet is like night and day. These are two completely different societies. Still, we have not benefited from it in health care, school and care. And we have absolutely not changed or adapted in how we make political decisions or how we should distribute power between the state and the market. Can we in Sweden in the next 5, 10, 15 years be the best at adapting society, ie. to become the world's most modern country, Internet Edition, we get benefits again, while we can try to find new forms of services and new companies that can export this knowledge and services to the other countries.
Is it cumbersome?
Yes it absolutely is. Abroad especially, but also in Sweden, although we still have the advantage of being a small country and it is fun to challenge politicians - what do they think Sweden should be good at to maintain our prosperity? Now, maybe it's been a long time since dot.com years. They have had 25 years to reflect on it, so it's time for me and others from that time to get involved in the debate again so that something starts to happen. It's so easy to be against things but you miss that what was most positive from the dot.com era, apart from the fact that we built infrastructure, was that there was a fantastic forward spirit. It was fun that Sweden was out early, it was fun that other countries watched what we did. I'm also thinking of young people growing up now. It is important to feel that "it can go better for me than it did for my parents". There is no discussion that now that we have the opportunities, what are we going to use them for?
What did you do yourself on Millennium Night?
I never thought anything would happen so I did nothing special. If you knew what it was, there was nothing to worry about.
Jonas Birgersson himself bought Framfab's development part, Framfab Labs, and ran it under his own auspices. The business is today divided into two parts, Labs2 - a software company that developed the business support system BRIKKS and ViaEuropa, which is a broadband provider that monitors and administers the traffic in the network. Because ViaEuropa is not linked to any specific supplier, competition for the end customer is free, just as Jonas Birgersson wants it to be.