The State of Innovation in Sweden - June 2013

This is a bold title.

I like bold titles. Like being the Mark "I'm CEO, Bitch" Zuckerberg. Or telling the world what the state of innovation is in Sweden.

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No other comparisons.

It kind of comes with Swedish Mentality (which I studied in the early 90-ies as a part of becoming an urban planner) that you do NOT state anything bold. You will have to eat it up.
We had this conversation today about the change in Swedish Mentality since the 80-ies, based on the queing "system" at McDonalds that used to be organized but now is a boiling chaos as the Swedes are now more "I WANT MY FOOD!!" than "I'll just stand in line and get my food when it's time".

Same goes for Innovations.

A lot of entrepreneurs are yelling like bitches all the time now. "MY INNOVATION IS THE GREATEST!! BUY!!!" and even worse. The funny thing is that Swedish Innovation was more innovative in the 1960-ies to the 1980-ies than it is now. (Cars, mobile, etc)
Now it is Wrapp. Spotify. And worse. Nothing innovative at all besides the exit models for the investors.

So I got this message on the Fb-tube today

"You've gotta love this blog post by the guy's at Tunaspot" and it was linked to http://www.tunaspot.com/dear-coca-cola-thank-you/ so I read it.

Let us go back in time.

In 2006 I ran a startup called Dirigo. Mainly financed by Almi Innovation. It was created on the foundation of Emappz that was the first advertising financed Turn-by Turn navigation "app" (before apps) company. Killed by Google more or less. But Dirigo had something new. A social app (widget) for J2ME that showed the proximity of content (text, music, sound, video) from your epicenter. We had a radar and all. Nice.
Alexander called up, a connection was trying to source the production of a device that could present recorded content to people wearing the device, focused on visitors to parks, resorts entertainment etc and the idea was to rended playlists based on proximity of positioning.

So we designed a device, a platform and the architecture was open so it could be used for any other geo-focused application. The question came up to launch a geo-proximity playlist for iTunes or other mp3-like system. Johan that was involved with Loudeye, bought by Nokia in 2006, told me that this was something that could attract the big kahunas. But would cost a lot of marketing to both sides.

So we looked at it me and Alexander. What we came up with was that it was a) very difficult to go cross platform b) difficult to protect and c) difficult to monetize as people had started to view apps (widgets) as free of charge instead of cool to buy.

Dumped it. Hard.

Back to the future. Now.

Tunaspot. Innovation at its peak. Well, no. It is now copied, killed and wasted effort. The bitterness I was accussed of (!) last week regarding the handling of Qubulus, is now handed over to the guys at Tunaspot (I know them and I feel guilty of using them as an example of non-innovation, sorry guys you are now ok to kick my ass at any time!!) so that I can write this.

Next. Wrapp. What the F-CK is this about?? It is so nice, it is so well packaged. It is so easy to copy, it is nothing to do with innovation, it is an haute coutoure app at it's best-

Spotify. they call it an innovation. Mostly I'd say in it's financial department. Not in the apps and services. I am a HARDCORE heavy metal fan. I have a record collection of +5000 records, cd's and EP's-. My friends the same. What we find on Spotify. Christina Aguielera. And similar. AAARRRGGH:

Innovation? I'll tell you what innovation is.

It is something that changes something. So adding a feature to an existing service. No. It is not innovation. To build an app that offers a service that used to be physical and now is digital. No. It is not an innovation. To improve what someone else innovated. No. It is not innovation.

I think that most people today, in all good intents, use the word innovation instead of adjusted, improved, altered etc.

To come up with a new way of distributing parcels? Innovation. To launch a new way to distribute the same parcels as before? No innovation. Improvement.

To alter physical distribution to digital distribution? Alteration. No innovation. The digital channel is already there, you use it for new things to distribute but the innovation lied in the the creation of the digital channel not the usage of it for new products, that probably lied within the scope of the creation of the channel and cannot be accounted for by the new player using this channel.

You see my point?

So I'd say, looking at the state of the Swedish Innovation of today, it is in really good shape when it comes to biomed and traditional production tech. But for mobile and consumer services? Not good. Not even close.

Go home, do your homework, see what needs to be done in audio, video, cellular, chipset and sensors. Then get back on track.

The Qubulus Story

(All names are fictional and any resemblance with reality is unintentional unless there is an obvious case of public record or similar communication)

Today it was announced that Qubulus is put into bankruptcy.
It was expected. Ever since I exited the company on the 6th of January last year.
Why? When you have (or had) the best technology available? When you have a fast growth market of indoor positioning with smart opportunities for indoor navigation and all the add-ons for that?
When WifiSLAM and Meridian got acquired within the last six months?

Well it's not a mystery. The first problem we hit was investor greed.

The first major investor in Qubulus was Innovationsbron, the Swedish government seed investment vehicle, and the investment manager Qer Jeander was thrilled to invest the first €90.000 and others followed as Nats Xiedmar representing the SW consultancy firm Jayway, Iampus Kacobsson former co-founder of The Astonishing Tribe bought by RIM/Blackberry in 2010, and others.

We got just enough, 1/3 of what we asked for, to run the show for six months. During that period we managed to build what I would call the most advanced engine for indoor radio positioning. It looked great so we asked for a new round of investments. We got it.

Early spring 2011 was when the problem started. Qer Ieander called 1-2 times per week to ask for yet another round of investment as he told me he got the investment board on for that. But he/they didn't approve of the valuation of the company. So if I just could accept the valuation (1/3 of what I had been calculating on based on the international market for indoor positioning tech) then we had a deal. I explained that it was counteractive to push for a low valuation if they wanted to make an exit, which they should as they can't invest that much more than €300k in total, but Per, Sorrry Qer, was an eager beaver. I told him to stand back as we had a customer deal in the making that would replace the need for his money.

The deal went through in August.
I bet 1½ minute after the ink had dried up Qer Ieander got me on the mobile and told me he wanted to expand the ownership of Innovationsbron to 30% of Qubulus, no matter what. I told him that at the current state you can't afford it. He got pissed. He wanted in. And in the Investment Agreement Innovationsbron had a veto right on any decision made by the company and the CEO. Which was me.

SO we sat there with a golden Goose egg, a beautiful project with fantastic people to work with at the customer side. I managed with resistance from my co-founder, which is a really nice marketing guy but without any kind of business brain, to expand the team with the right staff, the perfect staff, to meet the objectives of that customer. But the cash flow was running out. Qer had promised over phone that if we just got the project going we could fund it by convertible loans and when the time was right we would be able to pay back. Innovationsbron use this method all the time so I believed him. Which was Stupid no 1.

In September Qer contacted my co-founder to discuss the situation. If they could come to an agreement they could get the veto going and decide to get the investment round approved without my approval on a shareholders meeting. In the mean time we had great results from the project and sales was picking up on the software side. We had launched the first API for indoor positioning on Android Smartphones in September and got really good numbers on the sign up. Jayway supported with fantastic coding under the supervision of their CTO. We were rolling!
Nats Xiedmar promised me that we could run the expanded team on tab and we could convert it into equity whenever the timing was right. Stupid no 2.

Early October we went to the US to set up sales and marketing which was one of the big things my co-founder wanted to do, he was over there in June to scout out best possible setup plan, meanwhile we collected hundreds of leads on customers and VCs, and we executed really well in October over there. Mid October I got an email from Qer that wanted to have a conference call with the board where Nats and he was the leading investors. I said it could wait until I got back at the end of the month and asked him to finalize the deal with convertibles as we needed it now. He refused.

It's like being hung from the lowest branch. Sitting in a distant part of the world, trusting the board and the people around you to back you up and then get the email, not even the phone call, that we don't support the operation any more unless you bend over and take the pain. In this case a stupidly low valuation 1/5 of the closest French competitor when they got their round. At the same year with the same track record, that would only hurt the chances of getting a fair deal from VCs, delay round negotiation time and shoot the whole US establishing trip to pieces.

So I went home with a bag of great promises from US customers and investors and what I faced was a gun squad that had struck a deal with my power-eager co-founder. They wanted to run the round without my approval which they now could with a minimal majority and I was asked to move all product development to Jayway as they and Nats believed "had the explicit competence for this type of product development". I told Natz and his Orch Miklas that they had zero knowledge of product management and product maintenance experience which made them disqualified for the job. They should back us up and continue to do what they were doing, expand the core team with their competent staff and start documenting what they did as they hadn't done any of that hard work so far which is the core of product management.

To no surprise they didn't like what I said.

Things moved on, we had explosive growth in leads, managed to host the API service and growth with customer expectations, followed the product delivery plan with our major customer. But the cash flow was bad. The staff was fantastic, supportive and I love them all.

A asked a thin dude from Canada to look for alternative investors and he was fast, introduced me to a Danish fund that wanted to expand. The first meeting was great, fast moving. I thought that this could replace Innovationsbron and Jayway as I wanted their ghoulish faces out. Greed isn't pretty.

But at the end of October I realized that the Canadian guy had played behind my back to get a job at Qubulus by talking to only my co-founder and Innovationsbron, Jayway and the rest of the board. I suppose the image of their meetings must have been close to the vision of Sauroman sitting down with his staff ;-)

So they struck a deal where the Danish fund invested and funded the cash flow, Qer got his %, Nats got his revenge by firing all developers on Qubulus and run the development in-house at Jay-fucking-way (so unbelievable counter productive...)  and the Canadian guy got a business development job. What a joke. None of the involved had any experience of running any kind of international or global operation, none had any experience running a full product management operation, they put my delusional co-founder in pole position and now they crashed 18 months later.

I could have told that then, my shareholders agreement helped me from doing it openly and I got a good enough exit agreement signed just before Christmas 2011. They thought that they signed a smart agreement but they used the worst possible lawyer in Sweden, VICI, and I played them all over the field which is a benefit from being in legal procedures regarding business since many many years. What you call earned experience. But these guys were bad. I laughed. Still laughing as the company Qubulus was written out of the agreement and now it's the people who signed it that is responsible.

So in the end this whole journey with Qubulus added to my plus account and I can only say that when interacting with dilettantes as Innovationsbron (Almi now), Jayway, Iampus Kacobsson, Darl Tilbersky and my dear dear co-founder the dim-witted Grank Tchuil; best of luck to you all in the future!