The golden right of first refusal

Erik Byrenius – TALKS WITH PETRI

Transcript

(NOTE: The text may contain errors, misconceptions and even comical unintended contexts. Please use it only as a reference to the actual audio conversation from where it has been transcribed.)

Petri: How does it feel to sleep in a car?

Erik: Oh, it’s cold but you sleep like a baby. You wake up in the middle of the night screaming and wondering where you are. But it’s a good experience because you learn that some things are more important than others and the bed is really nice.

Petri: I thought it’s too cold in the Nordics to sleep in the car. In the US, they do that but how do you do that in Sweden?

Erik: You can’t really do that in the winter. When I slept in the car that was when I was running my own startup and I totally bootstrapped. Me and my co-founders went on sales trips to meet restaurants and try to sell them online ordering system so we could put them on our marketplace.

We couldn’t afford to stay at a hotel or hostel. We had to find a way to bootstrap. One way was to sleep in the car. We tried to get free food as well, which wasn’t that difficult because we sold to restaurants and all the restaurants wanted to show us that they had the best pizza or kebab or salad or falafel in the city. We were offered more free food than we could take.

Petri: Which was first: you wanted to eat pizza or the business? Or is there some crazy story why you decided to focus on pizzas?

Erik: It’s always there, your own needs first. Food was number one. It all started that me and my co-founders, we were slightly hungover on Sunday while we were studying at university in Sweden, in the city of Linköping. We wanted to order pizza, but we didn’t have any cash. We used all of it the evening before apparently. We didn’t remember, but obviously, that was the case. We wanted somehow to be able to pay by card and we didn’t really want to go to the restaurant to pick it up. We wanted to have it home-delivered. We realised that this wasn’t possible. This was back in 2005. It was pre-Facebook and pre-smartphones. We decided to try to build that service ourselves, which lead to become what we in Sweden called OnlinePizza. It’s now under the name Foodora.

Petri: There was a previous episode where Elias Aalto, a co-founder of Wolt, was referring to you. He was saying that “we thought we were up against basically Pizza-Online, which was back then a very web-focused and early 2000’s kind of product.” Then he goes on talking about how they are a mobile-first company. To listen to more of that episode, check it out yourself.

Was there anyone else doing that or you were pretty much the first one in the market? You came to Finland and other markets as well.

Erik: We were the first ones in Sweden. There was one company that had just started in Denmark called Just Eat, which is now a UK-based company. I don’t think there was anyone in Europe as I can remember, at least. We were starting out. We could look up to Just Eat as role models, but they were so early.

We basically had to invent everything ourselves. What we did see there were some attempts to try to do something online for restaurants but nothing that was built into a marketplace and nothing that worked that you could order from. We saw that others had the idea, which encouraged us that maybe it’s not that stupid after all.

You have to remember that this was 2005. Online ordering in general was very immature. I think the only kinds of products that you could order then were like books and some things related to travel like hotel rooms and flights you could book online, but that was about it. Ordering anything else online was weird.

Petri: Can you imagine that there were no iPhones, even paying something online wasn’t that easy and getting orders and getting restaurants in there, a lot of hurdles. The stack was not really where it’s today. It might be even for some people quite difficult to think about all the obstacles you’ve been going through at the time.

Erik: Yeah, it’s a good point. It was early days. It wasn’t just about the consumer behaviour that wasn’t there already. It was also about how you build the business. There was no startup ecosystem. There wasn’t a hoard of angel investors who you could approach. We didn’t have entrepreneurial role models to look up to who had been in the same space before.

We didn’t have an extensive framework on how to develop an e-commerce site. That was basically how we started out. We spent the first five to six weeks learning how to build an e-commerce site and getting it online and writing everything from scratch. Of course, everything ended up as a terrible spaghetti code that no one else than me and my co-founders could understand.

Possibly not even us at the end. Everything was a hassle. I’m so happy for entrepreneurs nowadays. There are so many things that you could just use as a foundation when building a startup and you have lots of guides and lots of events. You can meet entrepreneurs. You can learn from them, just a totally different ecosystem today. I’m so grateful for everyone else who can leverage that.

Petri: How did you get traction? Because you needed to sign up the end-users, the hungry students, whoever they were, the first ones to get to the system, but also the restaurants. I don’t think you had deliveries as a third component or did you?

Erik: No, initially we didn’t. To put it simply, we spent more than a month just learning how to code and developing a very rudimentary online ordering platform. Then we spent one month going around to restaurants locally and trying to convince them that it’s a good idea to be online.

That was very, very hard. But eventually, we managed to convince two or four restaurants locally in the city where we lived. When we had those signed up, then luckily for us, it was about time to go back to school in August after the first summer that we spent building the company. We went back to school and brought some flyers that we were printing at the school printers, and we started handing them out to students.

We assumed that since we were students and wanted the service, then hopefully there are other students who also liked the service. We started spreading the word by flyers and it worked. It wasn’t an overnight success in any way, but after a few days, we saw that we had to first order from someone we didn’t know. It wasn’t one of our friends we forced to order.

Eventually, it picked up speed. It was really a very simple approach to how to get traction. You tell people about the service and then you sit around and wait and hope for them to order.

Petri: When was it exactly? I’m starting to think about Facebook and their early days on campus. It sounded a bit similar type of…

Erik: Yeah, I wish I could compare ourselves to Facebook. Thank you Petri for bringing that up. Of course, there are some similarities in terms of starting on the campus, but I think that that goes for a lot of different businesses worldwide. But going to students is usually the less difficult path than trying to access another user base somewhere. Students are relatively easy to find because they go up to campus every day.

They are usually more open to trying new things and especially if the product was developed by their peer students then it’s easier to convince at least a few of them to try it. That was a good step for us to try and it worked then. It also turned out that later during the year students were a very important customer group of ours.

Petri: You had some trouble obviously as well. You were first fully digital, even though you needed to build quite a lot of things yourself. But then you started to do something in the hardware space as well. Why was that?

Erik: Oh, the hardware. Yeah. Well, so what happened was that we started in the city where we lived. We could do everything digitally. It kind of worked. It started growing. When we went back to school in August after the first summer, we didn’t have much time to spend. We spent evenings and weekends but that wasn’t enough really to grow the business as fast as we wanted to. We decided to spend the next summer, 2006, trying to expand to new cities. We decided to go round to restaurants in other student cities with campuses in Sweden. And try to convince them to join and then copy what we did in Linköping to start from the restaurants and then go to the campus and start handing out flyers.

It totally failed. I think we had 100 or 150 meetings with restaurants that summer. I think we signed one. We couldn’t really figure out why it was so different from Linköping, but eventually, we understood that the restaurants felt it was too complicated with them having to get a computer, getting an Internet connection.

It was still 2006. At least in Sweden, it was rather uncommon with small businesses having their own Internet connection at the time. We had to help them get a computer. We had to help them get an Internet connection. Probably, they didn’t always want to tell us, but they thought it was perhaps too complicated and a little scary, to be honest.

We didn’t always get the true reason why they didn’t want to join, but we eventually understood that the complicated Internet set up was definitely part of it. We realised that we have to find another way to get the orders into the restaurants. We can’t expect them to have a computer. And also for us, we learned from Linköping that even if we help them get a computer then we end up as IT-support for the restaurants and we get called on Friday night when someone working at a restaurant can’t play a game on their Windows machine. It wasn’t the ideal setup for us either. We wanted to be an online food ordering company, not an IT-support company for restaurants. We decided to try a few different ways to get ordering into restaurants.

All this was before smartphones, we couldn’t just get a smartphone or an iPad or something. We had to come up with something else. We tried to give them a mobile phone so you can send text messages, but obviously text messages are very brief and it’s hard to get a big order over text messages.

It just led to failed orders. We tried using a fax machine. It sounds crazy today, but that was the best solution we had for quite a while. We helped them get the fax machine. I don’t remember how long it was used for, but especially in Germany where we later made some business through a partner, I know that they used fax machines quite broadly, many years after the release of the iPhone. Fax machines, they’re not that bad. From our perspective, you can send the full page or several pages. It’s easy to read. There’s an automatic printout. It’s not as a digital message that someone at the restaurant has to put down on paper and give to the kitchen.

You don’t get a full confirmation that someone at the restaurant actually read the fax messages sent, but you do get the confirmation from the fax machine that it has received the message. You somehow knew that probably they have received this message.

Petri: Unless it’s not out of paper!

Erik: Exactly! There were some of those risks and that was one of the reasons why we couldn’t keep going with fax machines because we couldn’t really know if they actually read it or not. And of course, for us, one failed order was a disaster. We wanted it to be a hundred percent success rate in delivering the orders.

Otherwise, we would lose trust from the consumers. What we did was to try to create our own fax machine that corrected all the flaws with fax machines. We didn’t want it to occupy the phone line when it was used. We wanted it to have some sort of bi-directional communication.

When a restaurant had received the message, they had to push a button or something and give a delivery time. So, we could show that to the end-user and give them confidence that the restaurant has really seen your order because they even said when it would be delivered. That was the ideal step we wanted to reach.

And we couldn’t find anything on the market. We were thinking that, okay, so maybe it’s not worth doing this. Maybe we’re just too early. We have to wait until something comes along, but we were still studying. We didn’t really have that much else to spend our time on. We thought it was really fun.

We said, okay, why not? Why not try to, instead of us just closing down the business, why don’t we try to build something? Then we’ll learn something more. The option wasn’t really just to focus on running a digital business. The option was to stop running a business because we couldn’t keep going the way we did.

Petri: This was like two years in?

Erik: So, this was autumn 2006, after our very failed sales summer that was when we realised that we have built something. Then we started googling. Luckily, Google was there. We did get some support. We realised that there were different kinds of hardware components we could put together probably somehow.

We started ordering what we found online. In the end, after months of trying, we realised how hardware works and how programming hardware works. Eventually, we did create something that became an ordering terminal that we could put at restaurants. They just plugged it into the socket and we could send orders wirelessly to the mobile network.

It was basically an ordering terminal with a mobile modem inside using GPRS to transfer data. We put a SIM card inside. We put a small speaker inside so we could let the restaurant know when there was an order. We built in a receipt printer, a very small printer that could print the order for the restaurant as they didn’t have to type it on paper themselves.

And we attached some buttons so they could reply and say that we will have a 30 or 40 minutes delivery time today. And that totally changed the business for us. All of a sudden from being those complicated dudes going to restaurants and asking them to to get engaged into Internet and computers we were the ones coming with one piece of hardware and saying, if you take this piece of hardware, you put it on your counter and you plug it in it won’t occupy your phone line or anything. Then you will just get more orders. And we only charge you per additional order you get. That was a no-brainer for restaurants to try at least.

That was the turning point for us from being close to closing the business, to realising that, wow, this really works. Now, it’s just about scaling. There was a Eureka moment for us.

Petri: Until that point, at least, you were bootstrapping. There were no external investors.

Erik: True. We invested ourselves about $80 every month, the three founders. We had $240 per month. That was our burn rate for the first three years, basically. And then, of course, we started generating some revenues that we could use that as well.

Petri: But do you need it to build the hardware as well? Isn’t that expensive?

Erik: The hardware, we saved for a few months. We saved those $240 for three months before we could order the components we needed to build the first version. Then what we did was we didn’t charge the restaurants. They didn’t have to buy the hardware from us. They could borrow it but they had to leave a deposit.

They’d left a deposit of, don’t remember exactly, let’s say $300. But the hardware only cost us $200 to build. We promised them that you can any day call us and say, I don’t want to be part of this anymore. I want my money back and I’ll give the hardware back to you.

That was the promise to restaurants. But of course, when we received the money from the restaurants, we used that to order more hardware so we could build for the next restaurant. And all of a sudden we were in a situation that if 10 or 15 of the restaurants would call us on the same day as they would want our money back it wouldn’t be possible because we used all this money to buy new hardware. Our bet was completely upon being able to deliver value to the restaurants. Otherwise, we would fail from one day to the next. From that perspective, hardware wasn’t that expensive. It was a few hundred dollars per piece and we could finance it by revenues or in this case deposits from the restaurants.

But I mean, you’re definitely right that if we would have had more external money somehow, then we could have grown much faster because then we could have ordered much more hardware and probably had lower prices on our hardware. But we didn’t really need that because we were also limited by our own time. We were still studying.

We couldn’t spend all the time going around for restaurants selling. We were anyway limited in how fast we could sell and scale up and add new restaurants to the system. We couldn’t spend the time needed to do marketing anyway. It was kind of okay for us to grow slowly.

Of course, if we would have started the business in today’s climate, we would surely have had investments early on from angels. And we would have probably quit our studies to focus full-time much earlier than we did, but for us it worked okay.

Petri: How did you scale? How did you manage to get new restaurants in new cities? Eventually, you started to do also acquisitions and go abroad as well.

Erik: The first scaling in Sweden, we did basically the way I will describe in terms of ourselves going around to two different cities, knocking on doors, sleeping in the car, eating free food at restaurants. Still bootstrapping. That worked pretty well. After a while, our name OnlinePizza in Sweden became more well-known among restaurants and consumers, of course, but especially restaurants.

Then all of a sudden it started becoming possible to sell by phone as well. We didn’t need to visit all restaurants because they already understood how the concept works, because they read about it somewhere or they knew someone who used us. Then we started scaling a little bit faster and that was about the time when we also realised that it can’t just be the three of us founders.

We started recruiting people both in customer care, people helping us with entering all the menus and delivery data into the system, and salespeople’ as well. Then we started scaling. When you start scaling in terms of employees then also the business goes faster and then we could scale even faster.

At some point, we realised that, okay, this is going really well in Sweden now. We should try to focus on going international as well. And that was when we started looking into acquisitions and mergers in other markets. It’s a bit funny, but I think when you explain something in retrospect, it sounds like everything was so clear and strategic. But I think like most entrepreneurs know it’s never like that you’re being very opportunistic and you change your mind from week to week because you learn new things.

And for us, when we started the international expansion, the plan wasn’t really to do any mergers or acquisitions. The plan was just to make a brief market analysis of all the countries in Europe and close to Europe, realise which countries are the best and then we’ll just launch in those countries.

It sounds so simple. And of course, it wasn’t so hard to make a market analysis and see where do we have e-commerce growing quickly, where do we have a card payment going quickly? But when you know which countries are on top of the list…if I remember correctly, I think Greece was really high on the list for us. I think that was like the number one priority.

Okay, we know we want to launch in Greece, but how do you do that? How do you launch in Greece? We can’t just sit in our office in Sweden and run a Greek business. We need to find local people. How do you find a country manager for Greece if you don’t have the network, you only have been students living in Sweden, all of you? It’s really hard. Do you put an ad on the job board somewhere saying, Hey, we need a country manager for this online food ordering business? Probably won’t work. Probably won’t find the right people. What we realised after a while was that we have to think the other way around. We have to start looking for people in any of the top 15 European markets on our list.

Then when we find the right people, then we decide which countries to go to. And that was also what led us to do some acquisitions in other markets because we realised that maybe the right people to run our business were people who had recently started building their own similar business because they understood the business already.

They believed in the market, but maybe they didn’t have the resources to grow quickly. And they most surely didn’t have the hardware terminal that we had developed. If we could invest in them or acquire them somehow they could use our technology, then it was just a win-win. That was how they ended up. But to be honest, it wasn’t planned. We learned along the way.

Petri: Do you remember what was the first acquisition you did? How old was the company? What were your revenues and how many people you had, how early-stage were you?

Erik: We didn’t do that many acquisitions. What happened was the first international expansion we did was to Poland. Where we found a Swedish-Polish entrepreneur who we tried to convince for a while to run this business. The problem was he was living in Sweden at the time and he had no interest in going to Poland.

We thought it was brilliant. You speak Polish. You have lived in Poland. Of course, you go to Poland. You start this business. He didn’t really understand why he would go to Poland. He was living in Sweden. We didn’t really understand each other, but after a few months, maybe up to a year he got back to us and said, Hey I met my girlfriend.

She lives in Poland. Do you still want me to run the Polish business? And we were like, oh, okay. Yeah, for sure. Let’s do it. That’s how we started in Poland. But then we realised that this process was also quite complicated. You have to try to find the right people and start from scratch. After launching in Poland, we said that, okay, let’s see if we can find acquisition targets instead. The first one we did, to be honest, I’m not sure which country it was, but it was either Finland or Austria because those were the two next markets where we launched via not full-scale acquisitions, but first step as investments and we later acquired those companies.

Petri: Can you give some tips or hints or share some experience for those who are thinking, or maybe now starting to think about it: maybe I should actually start to do acquisitions instead of building everything from scratch?

Erik: I think what we learned was that we were very happy that we didn’t fully acquire the businesses because then that would mean so much more overhead for us at the headquarters. We would need to probably find new people to run the businesses if we would fully acquire them. We want the local entrepreneurs to have very strong incentives.

We want them to still have the majority in the companies. We had shareholders’ agreements. We still had some vetoes and some control, but we wanted the entrepreneurs to have a huge financial upside. We want them to feel that it’s still their company. Just going in acquiring something is in my view very complicated and you need a strong organisation to be able to actually make use of that acquisition.

There’s a big risk that the business loses its value if you don’t take care of it properly after that acquisition. It usually looks better on paper than in practice after the acquisition. That’s something I would be careful about. Really thinking, how will we run this business afterwards? There’s a difference between if you run a business like ours, where you need a strong local presence. In those cases, it’s obvious that you need a strong local team. There are other kinds of acquisitions where you don’t really want the team. You’re more looking for some assets. Maybe I have a global business where you sell software online and then it doesn’t really matter.

Maybe you don’t need the team. Maybe you just want to buy the customer list or the IP. Then it’s different. Then it’s more easy to incorporate that into your business, I would assume. It’s also easy to just start doing it prematurely. You need to understand your own business.

You need to understand the market well before you start acquiring others. Otherwise, you won’t know how to incorporate them in the best way. I think we were lucky in the way that we had spent several years bootstrapping ourselves, learning a lot about how to run this business at a detailed level.

We didn’t acquire anything that we didn’t understand. We understood completely, exactly, where they were, what they needed. You can look into their metrics and see that they should be able to improve that metric by 10%. And we could also learn that they’re really good at that metric and we could probably prove 5% on that metric.

If we would’ve had totally different businesses, but just sharing some customer groups, then it would have been much more difficult. But since we acquired more or less identical businesses to ours it was easy for us to understand.

Petri: What was the process of convincing other entrepreneurs to join forces? Because I would assume that quite many of them have ideas that they’re building their business and they don’t need anyone else. And maybe they were not even thinking of anything along the lines of joining forces?

Erik: I think the key for us was this hardware box that we had and potentially that we could also invest some capital in the businesses. Because the acquisitions we made in Finland and Austria, they were still in the early days. It was before the bigger startup hype. It was still pretty hard to attract investors to that kind of business.

For us coming with the hardware box and showing them how it works, showing that it really helped us scale in Sweden and Poland and also being able to inject some capital in the business, I think that was very tempting. I would guess that those entrepreneurs, you should ask them, but I guess that those entrepreneurs considered us to be a helping hand along their journey of building their business.

Petri: Sounded like you were more like a hardware company than an actual direct competitor.

Erik: On a global level, we were strong competitors. I would guess that if any of the entrepreneurs that we approached for acquisitions, if they would have a global target, then it probably wasn’t the best strategy to have us on board. But if they were more focused on building a strong local business in their country and possibly neighbouring countries than us running a business in Sweden or Poland, didn’t matter. Then we just benefit to be part of something bigger where we could learn from each other and use money more efficiently.

Petri: Were there some markets you wanted to enter but you didn’t find good acquisition targets or cooperation partners? Or you were just flat out maybe outed from the market by other competitors?

Erik: When we did our market analysis we also based that partly on how strong the local competition was. Luckily for us, the competition was very weak in almost all the markets. There were very few players that had popped up in a few markets, but it didn’t really limit us that much. There were so many more completely open markets to attack.

I mentioned Greece that that was one of the countries very high on our list, but where we just couldn’t find the right team or entrepreneurs and we couldn’t find anyone else who did it in Greece already. It was the market that we would have liked to do but we couldn’t at the time. After we had made acquisitions in Finland and Austria we started looking for new, bigger markets after that. We became market leaders in all of our foreign markets, but we also felt that if we’re going to take another market, it should be a much bigger market. We started looking into especially China and South Korea as possible next steps that would make a big difference for the company.

But of course, it’s hard to find the right team in those countries. We were a little more mature ourselves as a team and an organisation at the time. We’re probably about a hundred people in our four countries. We had some better network and some more capital. We had some more resources trying to find the right people.

This was about the same time as we started thinking about being acquired. It wasn’t so much about us planning that it was more about two other players on the market being interested in acquiring us at the same time. While we’re thinking about either we declined those acquisition offers and we go all-in on one new big market or we start discussing with these potential acquirers to see if this is good timing for us to exit. So, it wasn’t really planned, but we realised that having two of the biggest players in the world in our space who wanted to acquire us at the same time, put us into a very good negotiation position.

Petri: Can you name those who were interested of you?

Erik: Yeah, sure. One was the previous Danish company, I mentioned Just Eat, which at that time was a UK company.

They were the biggest ones in Europe at the time. To make a long story short, they had also invested in us before and they were on our board. We were already somehow partners with them. They knew everything about our business almost. They felt that it’s probably about time to acquire by now, before we grow too big for them.

And at the same time, we were also partners and we had made a small investment in German Delivery Hero when they started up in 2010. All the major players in Europe are really interconnected. It’s quite complicated. Us investing in Just Eat’s worst competitors while Just Eat was on our board. That was complicated.

Petri: What was the reason behind that? Was it some kind of hedging or keep your enemies closer type of thing?

Erik: Yeah, I guess you could say that. From Just Eat’s perspective investing in us, I don’t think they would ever confirm it, but I think it was a way out for them initially when it first happened. Because they had launched in Sweden in our early days. We were fighting head-to-head with them in Southern Sweden. Especially, they were running some of their operations from Denmark.

We were running it from Stockholm and Linköping at the time. We were really fighting hard with them. They had all the capital they needed. They were well-funded at the time. They had experience. They also had a hardware solution quite similar to ours. But they didn’t have the strong Swedish team. They tried to do it mostly from Denmark.

We were fighting that big giant with energy, passion and trying to innovate all the time. In the end, I would say it was too hard for them to succeed in Sweden because they didn’t find the right team. They had to somehow explain to the world and to the shareholders what happened in Sweden.

I think they couldn’t really say that we just failed. We lost it to these three students who didn’t have any money and experience or time. They had to find a way out. Their way out was to accept to invest in us because we really needed the capital at that time to go international. We accepted their investment and they got a strategic stake in our business.

Then when Deliveroo decided to start up slightly later in Berlin we knew the team from before. They learned a bit from us about how to run the business. We strongly believe that this team will be able to build something big. They had a slightly different strategy from ours.

They really had a landgrab strategy and growing as quickly as possible, raising a lot of money, which wasn’t very suitable for us. We were much more focused on building a strong presence, becoming market leaders, driving revenue and reaching profitability. We had quite different ways of running businesses, but we realised that they’ll probably succeed with their strategy. Then we thought it was better to keep them close. We did a symbolic, tiny investment to them. Partly, so they could show to other investors that these OnlinePizza guys believe in us. They have even invested in us, even though we would eventually somehow globally become competitors.

I think it really helped them. We also licensed our hardware to them. They could get going quickly when they launched. And of course, this was a complicated thing with having Just Eat on board because Just Eat also had partly a landgrab strategy. They would become more direct competitors with Delivery Hero.

Petri: How do you navigate all that? You obviously have some information you don’t want to share with everyone and everybody’s competing with each other and then you are all in the same board meetings, maybe.

Erik: Yeah. How do you navigate that? Maybe it sounds more complicated when you describe it later because now it sounds like everything was so chaotic, but at the time it was spread out over a couple of years. We had a lot of time trying to understand what are the incentives of everyone? How are we working with everyone? What do we have to share? What are we legally obliged to share to a board member? In the end, I would say that, of course, it was complicated, but I think it was probably slightly less complicated for us than for Just Eat and Delivery Hero because we were so different in our approach to scaling. Since we focus so much on our core markets and being very, very strong footholds on those markets and Just Eat and Delivery Hero were more direct competitors. Of course, for us having competitors as shareholders and board members pushed us to really understand what does our shareholders’ agreement say? How can we adapt our shareholders’ agreement so we don’t end up in a trap somewhere?

 But in the end, it’s business. It’s about relationships in the end. Of course, we could have a shareholders’ agreement, but in the end, we had to make sure that no one felt that we were being hostile to them. And that’s about building relationships. That’s something you must never forget even if you end up being in legal discussions: in the end, the agreements are usually just a reflection of what you have anyway agreed upon and the handshake is sometimes more important than what it actually says on paper.

Petri: When you wake up one Sunday morning and you want to exit your business, what’s the button to push? I guess there’s no PizzaOnline box where you say that I want to exit now, please?

Erik: No, but the truth is we didn’t really want to exit. It wasn’t that we didn’t want to, but we were definitely not looking for an exit at the time. We had probably realised by then that at some point in time we’ll make an exit. We are probably not the ones who will run this to a huge IPO and be global leaders. We will probably make an exit someday.

We already had a few acquisition offers that we declined naturally. We had mentally accepted that at some point in time, we would probably be acquired. We also felt that we probably need to do this for a few years before we will be in that position. What happened was that Delivery Hero had just raised even more money and decided to grow very quickly using M&A.

They didn’t want to start from scratch because it was too slow. They wanted to do M&A in lots of markets at the same time. Their storytelling to their investors and to the market was that they were very early in a few markets. They were early in China. They were early in South Korea.

They had come some way in Germany and a few other European markets, but they also needed to show that they could be really profitable at some markets so they could tell the story that look, we’re having these really profitable businesses in country X, Y and Z. Then we have these other huge markets following the same trajectory and in a few years they will eventually be at the same profitable level. And then we’ll be super valuable. They wanted to sell that story, but then they needed the really profitable countries, which they didn’t. Of course, they looked around and see who are having some really profitable countries with nice margins.

And to be honest, we were the only ones that even remotely could be acquired. They started looking at our countries. Especially, Sweden and Finland that were the most profitable countries and realised that if they could tell their story and show that Sweden and Finland have these nice margins, then fundraising would be so much easier for them.

If they were able to generate some revenues they didn’t need to do as much fundraising. I think that was the rationale why they more or less suddenly realised that we should acquire OnlinePizza.

Petri: Did you realise at the time that you have leverage that you were the only one? You had that position when starting to go the valuation and exit prices.

Erik: We realised that it was probably important to them. Yes. Even more, what was important for us in terms of leverage was that we had Just Eat as a shareholder. We had a shareholders’ agreement that said that all shareholders have a right of first refusal. It means that if the other shareholders wanted to sell their shares to someone, then the existing shareholders have the first opportunity to buy those shares at the same terms as the third party offered to buy the shares for. It means that if we want to sell the company to Delivery Hero then Just Eat could say, okay, but we’ll do it instead on the same terms that Delivery Hero offered you.

This meant that we could convince Delivery Hero that if you’re going to make an offer on us then there is no point doing it for a valuation that is rather low because then Just Eat could just say, great, we’ll take it. And then we would be legally obliged to sell it to Just Eat. We wouldn’t have an option then. There’s no point for Delivery Hero doing it unless they could put the valuation at the number that they thought that Just Eat wouldn’t accept.

Because that’s the only way for Delivery Hero to be able to acquire us at all. And they only had one shot. If they missed, if they put the too low number, then Just Eat could just acquire it and they would lose the deal. And that would be the worst possible scenario for Delivery Hero. It would be Just Eat acquiring us.

Petri: That sounds so beautiful afterwards!

Erik: Yeah, it was beautiful. That’s one of the few things I’d say it doesn’t sound much better afterwards than it was at that time. We were obviously in a very nice spot at that time. We were lucky. Of course, we built a business that was sustainable and profitable and we were not in a rush. That put us in a good position as well, but the specific timing of Delivery Hero being afraid of Just Eat acquiring us and Delivery Hero needing us to tell their story. That was luck. We could without telling Just Eat that we could negotiate with Delivery Hero and push them to put a number that we together thought might be too expensive for Just Eat.

It turned out that Just Eat didn’t think it was expensive enough. Eventually, we received an offer from Delivery Hero, and then we had to go to Just Eat and say, Hey, okay, now we received this acquisition offer from Delivery Hero. Do you want to take it?

Then Just Eat started thinking for a few days. And then they said, yes, we definitely want to take it. And then we thought we put too low a number. Not that it matters so much to us who would acquire us that wasn’t a big thing. It was more like, we realised that, okay, we probably could have pushed this number higher, but then it was too late for negotiation.

We had the number on paper. We told Just Eat that we have received this offer, which meant that according to our shareholders’ agreement we had to sell to Just Eat at the same terms if they accepted it. That was their right. And they said we take it. That gave them 60 days to complete due diligence and to negotiate final purchase agreements with us.

The offer from the Delivery Hero was more a term sheet saying that these are the headline terms: this is the valuation, we should complete in this time and some other major terms such as how is it paid, and so on. But it didn’t include all the specific details on warranties and all that you put in the share purchase agreement.

Just Eat had to spend some time doing their final due diligence before the board would decide if they really wanted to acquire us or not, and negotiate the agreements with us. Just Eat were in a slightly difficult position at the time, because they were just planning their own IPO, which meant that everything they did, especially bigger deals had to be formally a hundred percent correct and compliant in every way.

They couldn’t take the risk of missing something in a due-diligence that close to the IPO turned out to be a disaster because that could ruin their own IPO. They had to do a full, complete due diligence with us, even though we were still quite a small company. It was quite a small deal. I think it was a $55 million deal.

It wasn’t huge, but it was big enough for them having to do a proper DD that took a lot of time. We were quite an unorganized company at the time. We had businesses in four countries. We had about a hundred employees. We had never had a big formal investment from any VC before.

We hadn’t gone through a proper DD process. We didn’t have our papers in order. It took a lot of time for us and for them trying to finalise the DD. Eventually, they did complete the DD, but there was still some question marks that they didn’t have time to dive into.

There was some question about the VAT levels in Austria if I remember correctly. It was like one of those things that they didn’t have time to figure out. In the end, they said after the 59 days, okay, we need three more days. We need to figure this out. We can’t sign the papers until we figure this out, but we are confident that we will. But we need to have it on paper before we sign.

And we said, okay, but you know, you have 60 days to sign the papers. We are ready. Just call us in the evening on day 60 and we sign the papers. But eventually, they never called. They said that they needed one or two more days. Of course, Delivery Hero knew this. We said to Delivery Hero that, okay, now 60 days have passed, it’s 1:00 AM in the night. We haven’t had any phone calls from Just Eat. Now we’re up for grabs. Then Delivery Hero flew in their management team from Berlin to Stockholm. We met at 9:00 AM in the morning. They started doing their DD in parallel with negotiating the final purchase agreement.

We had parallel tracks at the lawyer’s office. It took some time but compared to Just Eat’s 60 plus days, after 21 hours, 6:00 AM in the next morning, they were happy enough with what they found in the DD and with the share purchase agreement. And then they signed the papers.

They by being super quick and entrepreneurial, and of course, to some extent, being willing to take some more risk because they couldn’t finalise all the legal DD, they decided they trusted us. They’d worked with us for a while, not as long as Just Eat, but still long enough for them to understand that this is a good business.

They could compare our metrics to their metrics. They didn’t care so much about the legal details, more about the commercial details. Just Eat was much more focused on the legal aspects of things, not so much on the commercial. They were just much quicker understanding that even if there would be some legal trouble somewhere, it doesn’t matter so much to us.

Petri: Did you manage to do something with the price?

Erik: No, we couldn’t. We were not allowed to. That’s how the right of first refusal works. We received the first offer from Delivery Hero. And then we had to show that to Just Eat. We couldn’t negotiate the price with Just Eat because we also had to show them what we had already accepted.

Then after those 60 days, then if we would change anything in the terms, then we would have to go back to Just Eat again and say, okay, so now we have received this new offer. Now we have 60 more days. We had to do everything on the same terms not to lose the deal. Unfortunately, we couldn’t leverage that, but we could instead leverage the situation with Delivery Hero to push them into having a very friendly share purchase agreement because those details were not in the offer. They needed the offer that we showed to Just Eat. There were still some details to negotiate and we could get those very seller friendly. They didn’t have to pay everything upfront because they didn’t have the money.

They paid some upfront and then they paid some things a year later. Then we could have our whole company as collateral. If they wouldn’t pay, we just get the company back and we didn’t have a long lock-in. I had six months lock-in, which is quite short in that kind of business where the founders are still expected to run and grow the business for a long time.

We could negotiate some of those things, but not the price. We ended up at 55 million, which compared to today’s numbers, it’s ridiculously low. But given where we were and where the state of the startup ecosystem was at that time, it was quite a lot. Especially for us, the founders who still owned the majority of the company.

Petri: You were in the university when you started. Was this your first job? And then you exited it. It’s a quite nice number from there.

Erik: Yeah, it was. We started in university. And I like to stress that starting a company while you are studying is probably the best time in your life when you can start a company because you don’t take a lot of personal risk. In Sweden, at least, you can live decently on what you can get in terms of grants and loan for being a student.

We didn’t need more income. We could take $80 per month and invest in the company instead. That’s a really good time. If it fails, okay, that’s it. Then you go back to focusing on your studies or start something new. You don’t take a lot of risk. We did start doing and then pause the first attempt. I had been involved in other projects before, but nothing related to starting a business.

I had met my co-founders at the university while we were active in student organisations. We hadn’t built a commercial business before, but we had worked on projects before, so we knew each other.

Petri: What happened after that? Again a Sunday, but now you have a bit more money in the bank and probably nothing to do?

Erik: I had money on the bank account, but still that money was never the primary driver for running a business. It sounds like a cliché possibly. I’m very well aware that money makes things so much easier, but it doesn’t change so much in your passion and your day-to-day activities.

I still wanted to see things grow. I still wanted to learn. I’m a curious person. I couldn’t just sit around and try to live off the interest rate. I would be depressed by doing that. From that perspective, it doesn’t change so much. I mentioned that we had a six months lock-in from the buyer, but I stayed for almost one and a half years in the business trying to recruit new people to replace me and my co-founders and making sure that those people learned the business before I left. The business was still my baby. I didn’t want to leave. I had a gradual phase-out from the business.

But eventually, I started thinking about what to do next. Should I start a new business? In that case, what business? I made a list of different potential businesses that I wanted to start, but I also realised that I shouldn’t just jump the gun and start something immediately. I should spend some time learning about the different markets, the different business models that I was curious on and possibly learn from other entrepreneurs who had different experiences than I had. I started reaching out to entrepreneurs, asking them to tell me everything they knew about their market and their business models and learn from their backgrounds. Of course, they started asking why should I spend my time doing that? That strategy didn’t work. But then I realised that if I invest money, what do you do then? Then I became an angel investor, offering money basically to learn.

From that perspective, it’s probably more for the money but still, that worked. I became an angel investor to learn while figuring out what is the next big step for me? What is my next business?

Petri: How many companies have you invested in?

Erik: By now about fifty. I don’t know the exact number. it’s about fifty.

Petri: Fifty lessons to learn.

Erik: Yeah. You never learn everything you want to learn. What I did realise was that It’s so much fun doing investments because of all the learning you do. I started doing investing in 2013, a year after our exit. I did realise that I enjoy doing angel investments so much that six years later I was still looking for the next thing to do myself.

I had to confess to myself that, at least, right now in this phase in life, I’m probably not going to start a new business. I’m probably going to spend more time on many different businesses. It was just the model that attracted me slightly more than starting my own business at the time.

At that time, I didn’t have fifty investments. But I did realise that I have to do something more focused. Then I started looking at a few different side projects where I could spend some more time myself. I started thinking about not only investing generally in software that was my only focus at the time but trying to be more niche somehow. Because then it could learn more about the one or a few spaces that interested me even more.

Petri: What are your experiences and the lessons learned from being an angel investor? I understood that you were also learning that process by doing and having different stages and steps, and different approaches also to investing?

Erik: Yeah. That’s a good question: what have I learned? I did this for so many years. I learned so much. It’s maybe hard to tell what was the learning from actually doing the investments and what was the learning from life itself. One thing that’s become more and more obvious to me is that I think all investors think that later-stage investors, they lack conviction. Yourself, you see that, okay, this is the future. This is going to happen in a few years, I have to invest now. And then when it’s time for them to raise the next round, you think that the later-stage investors, they don’t have the conviction.

But you also always think that the earlier stage investors, they are just shooting from the hip. I think this is true for every stage in investing. You can ask a Series-B investor and they will think that Series-A investor is shooting from the hip, and Series-C investors, they lack conviction. It’s so easy to convince yourself that at the stage you’re at, if you’re investing at seed or A-rounds, it’s so easy to convince yourself that this is the next big thing and I want to be part of this hypertension journey, even though it’s high risk. When you looked at it a year later, when it’s time to raise the next round, then others don’t think at all that it’s that obviously, this is the next big thing or that these companies are the ones who are going to solve it.

 I learned a little bit about not falling too much in love with a product or an idea or one potential or one team but trying to be a little more realistic about what will the next round of investors think. How will they determine if this is a proper series-A investment for them or not?

Petri: How do you evaluate now new startups if you’re thinking of investing in them? This is also maybe advice for those who want to approach you. What is important?

Erik: I have learned more and more that even if it’s a cliche, it’s true that the team is super, super important. I spend more and more time trying to figure out how the co-founders work together. What the relevant experience is? Have they run a startup before? That can be quite important. How are they at recruiting people?

How were they at pitching to investors? Because I realised that most of the companies I invested in, they will definitely need to raise quite a few more rounds. They need to be good at pitching to later stage investors as well. I think initially I was more focused on the product and the solution and the product/market fit. But I have come to realise that teams are really, really important.

That’s definitely one advice to early-stage founders. Think about the completeness of the team. Maybe you need a third co-founder, who has more experience from something that you’re lacking. If you’re a deep tech company you need strong scientific expertise somehow or technical expertise in the business, but you will always need that startup/commercial experience as well. And by that, I don’t mean someone who just worked with selling stuff before. Because sometimes I feel that technical co-founders think of commercial as one thing. And assuming everyone is good at selling, they’re good at everything related to commercialisation and raising money and recruiting, but it’s really different things.

Understanding how to run a business, it’s not the same thing as being a commercial co-founder. You have to understand how to recruit people, how to maintain them, how to pitch to investors. There’re lots of things related to operations as well. I mean, someone in the team has to like doing the operations.

There’re so many different aspects, but it all depends a lot on what kind of business you’re running. But really think about the completeness of the team and think about the skills that you are lacking or are they so crucial to the business that there should be a co-founder with this skill or is it enough to recruit someone who is more of a senior role in the company with this skill, or could it be an advisor even? It’s not always clear to me how much of that skill you need on a daily basis and how much it could be as an advisor. But I think you as a co-founder should probably understand it better. That’s one advice: focus on the team.

Petri: With +50 companies there must be so many stories, a lot of drama, a lot of successes and failures.

Erik: There are quite a lot of failures, for sure. Some of the worst ones I’m not sure the entrepreneurs want me to speak openly about them.

Petri: Maybe if you can do it anonymously. The point is here to learn and not repeat the mistakes. If you can pick the wisdom from there.

Erik: I can definitely do it on an aggregate level because I’ve seen enough of them. A very common mistake is to be way too focused on the product itself and not being enough focused on the value that you’re actually creating for the customer, understanding the customer needs.

I understand this is something that’s been repeated quite a few times, but I have to stress it again and I’ve seen it so many times in my own companies. That goes partly back to myself that I’ve been too focused also on investing in teams that have a good product.

Maybe I myself haven’t understood the market needed enough. Definitely not saying that it’s the fault of the entrepreneurs only. It’s also the investors. But that’s a very common thing. I’ve been pretty lucky in not seeing too many co-founder dramas. But I know that there are. I have a few of those in my portfolio and there are quite some investor friends of mine who have more. But I guess my focus is on the team. Especially, in the last few years have hopefully led me to companies where the co-founder team is more stable.

Petri: You’ve been doing good as well. There’ve been some initiatives. I understood you’ve been trying to help free someone from prison and you’ve been also pledging a bit of your money to other causes.

Erik: That was actually how I got to know my co-founders for OnlinePizza in Italy. They were both active in the campaign for a Swedish citizen, who was a journalist, who was born in Eritrea but lived in Sweden and was a Swedish citizen. Then he returned to Eritrea to help start a newspaper there.

Then just a few days or a week after 9/11 2001, the president of Eritrea decided to become a dictator. He closed all media, imprisoned all the journalists and opposition politicians. Almost all of them have been in jail since then. That’s almost 20 years ago now.

This journalist, Dawit Isaak, he’s still in prison. There are quite some signs that he’s one of the few people who are still alive in that Eritrean prisons. At the time, when we started learning about this case in 2004 he was and maybe still is the only European citizen that Amnesty adopted as a prisoner of conscience.

There might be a few more now. From that perspective, the case was quite unique and should have received a lot of attention. What we realised was that we didn’t know about this case. This was about three years after he was imprisoned, which we thought was weird. If there is a Swedish citizen and a journalist in prison without a trial for three years why don’t we read about that every day? Why don’t we hear politicians talk about it? Why isn’t that the big thing for the Swedish government or the European Union? Eventually, we learned that people didn’t know about it. We spent some time trying to inform people about this. We started working with his brother who lived in Gothenburg trying to spread the word about it, get media attention and get politicians to act.

After about a year of doing that, luckily, the major newspapers started picking it up. There were other freedom of press organisations in Sweden that picked it up and started to run the campaigns. That was how we got to know my co-founders. Initially, we had worked together on that, also bootstrapping as students. That was one of the learnings about how politics works by being not involved in politics directly but by trying to affect the politicians to run things and understanding why hasn’t the media been writing about this? Well, because he is black, it’s a country far away from Sweden.

That was the honest truth that we heard from the major newspapers in Sweden why they didn’t focus on this case. If it would have been a Swedish name, white skin and it would have been in Russia then we would be pretty sure that he would be on top of the agenda every day. It was kind of depressing to learn about how reality works as naive students as we were at the time. At least, it led to the EU and the Swedish government engaging in it.

From one perspective, it’s still a failure because he is still in prison. But from our perspective, the most important thing was to get bigger organisations with better networks and more money and political power to start running the campaign instead of us. We couldn’t do that much we felt at the time. Of course, it led us to start a new business. That was also something good that came up from it.

Petri: And that leads us to the Founders’ Pledge. Now, we have closed the loop on how you started your business and went to angel investing. Now, you have to do something with the money and you have pledged some.

Erik: Founders’ Pledge is an organisation that approached me a few years after they were started. Founders’ Pledge is an organisation that helps founders and investors to do good even before they have liquidity. Which sounds weird, but they do it in the shape of a pledge where you as a founder promise and you’re legally bound to, by signing a pledge agreement, you promise to when you have an exit, works for investors as well, when you have an exit from your portfolio, then you promise to invest a certain percentage that you decide of your exit proceeds to charity. You decide yourself to what charities, you decide yourself how much. I think there’s a minimum threshold, a few percent. You can do anything from a few percent up to a hundred percent, if you want to. It’s up to you. And by signing this pledge you become a part of the Founders’ Pledge community, consisting of all other founders and investors who also care about philanthropy and doing good. The basic level, it’s a pledge, but it’s really more about building the community and meeting other people and you also get to meet very early-stage charities who have good traction, but still early days.

Maybe you as a philanthropist want to support them in the early days so they could show and get metrics that what they’re doing is this really effective. And the way Founders’ Pledge works is that when it’s time to donate, they have their own research team. They’re also working with an external research team trying to figure out which are the best charities that you can donate to given your own criteria. They are very much experts in understanding the charity landscape and how to convert one donated dollar into real value for the world. That follows the effective altruism idea or trying to do as much good as possible for a certain input.

I’ve been supporting them since I heard of them and trying to help them get going in the Nordics, especially in Sweden. I can really recommend them. Maybe this sounds like a sales pitch, but I think it’s worth it since they are really that good and inspiring.

Petri: I think it is a sales pitch. There is also the counter-argument, just to take another point of view. You’re saying that you cannot allocate the money better and do more good with doing by yourself, maybe investing in some startup companies or you just take the portfolio view.

Erik: It’s a good question because it’s really one big debate in effective altruism and Founders’ Pledge working a lot of this as we speak on how to balance between doing long-term investments, growing the capital and donating later compared to donating to the best charities today.

That mathematical model, how to model the value of doing investments today, is quite hard. There are strong indications that, at least, some of the money should be invested long-term, not so much because we expect that the value of the money that will grow so much faster than the value that is created by donating today.

But rather that we learn so much every year from how to use the money, the donated money, integrating value. The effective altruism movement is still very young and I’m learning a lot every year. And we expect that in 10 years, maybe we’re twice as good at converting donated dollars into value.

That’s a strong reason why it might be good to invest instead of donating today. But the research on this topic is definitely far from clear yet, and it’s still going on. It’s kind of hard to know at this point. I’m doing both. I’m not investing only to donate everything later, but I’m also investing to learn and to have a lot of fun while doing it.

I try to balance between doing the investments and donating as well. But it’s hard. It’s a hard question and it will definitely be up for debate for many years ahead. We might still not come to a strict conclusion on what is best. What is clear though, is that if everyone would only invest their money and there would be no donations creating value today that would not be good.

There’s a strong reason to believe that investing some of the money could probably lead to even higher value creation in 10 or 20 years.

Petri: You’ve been also doing something for the Nordic startup community by means of documents, Startuptools.org. What was the reason behind it and can you explain briefly what is it about?

Erik: Right. That was one of the learnings when I started doing my own angel investments in 2013. I realised that when I was about to invest in a company, I couldn’t figure out myself what are decent terms to invest on. It didn’t seem like anyone else knew either. I started asking around a lot, what are normal terms in a seed round in Sweden, and I got a lot of different answers.

I started more or less crowdsourcing different term sheets from seed rounds and realised that very few terms existed in all the term sheets and very few ones that were very odd compared to the other term sheet. I summarised this, picked everything that seemed to be more or less common and said that, okay, now I have my own term sheet.

This is a normal term sheet. It’s not founder-friendly. it’s not investor-friendly, but it’s balanced. It’s basically both investor and founder-friendly in that sense. I started using that, but realised very quickly that, okay, now I crowdsourced this, why don’t I share this with others so others can use it as well?

I put it online and it gained some traction. It led me very quickly to understand that it’s not enough to only have a term sheet. You also want the investment agreement and the shareholders’ agreement that correspond to the headline terms in the term sheets. I started working with a lawyer in Sweden to develop these agreements, put them online, started receiving even more traction and more questions about other kinds of documents.

Entrepreneurs wanted employment agreements and agreements for stock options, NDAs, convertibles. I realised that, okay, I should probably spend some time working with lawyers to create these standardised, balanced templates and put them online. I spent some time doing that and it’s all for free.

The lawyers are working for free in exchange for exposure to documents. They basically get leads from companies, who want help with documents. It started in Sweden, but now it’s also in the rest of the Nordics. The latest launch was in Finland in December together with seriesseed.fi. Now, I have some plans to grow this into a sustainable business. Today, it’s fully supported by my personal money that goes into the project to pay for everything. Like most charities, many of them would be better off if they also had some sort of revenue model. It would be sustainable and not dependent too much on donations.

 That’s the plan for Startup Tools to try to keep it going to make sure that it can keep delivering balanced, standardised documents for at least the Nordic startup ecosystem, but hopefully more in Europe as well.

Petri: I think one of the exceptional things when I first some years back learned about Startup Tools was that you were also checking the taxation, which is not usually the case. Lawyers are so good with the legal stuff, but they don’t want to bother with taxation. And that’s very important in Scandinavia and Nordics because of the high taxation and sometimes the laws are not exactly on the side of the founder when you’re doing exits or you’re doing some kind of transactions and giving incentives for employees as well. You may have some consequences in the taxation perspective, and those may not be reflected in the contracts.

Erik: This is something that’s bothered me for a while. Lawyers tend to be experts in one field. Either you’re a tax expert, and then you’re only know tax, but you’re usually not that good at understanding a startup journey and understanding how to adapt contracts to them. You only know the tax rules or you’re an expert in something else but you don’t know tax.

That makes it difficult for founders who might not be able to afford to have several different lawyers coming in and working on helping them. But as an entrepreneur when you’ve been through some of that, then at least you learn where it is important to think about the tax consequences.

I could then support entrepreneurs via Startup Tools by having tax experts take a look at a few specific areas where I know that it can be tricky for founders. Especially, when it comes to taxation for receiving value from the company in terms of options or founders with vesting and so on that are traditionally more risky areas than, for example, a sales agreement or an NDA.

Petri: Where is Trellis Road?

Erik: Trellis Road is…that is a good question!. Where is it? It’s a place in the future where we have, sorry, I can’t explain that one. Sorry!

Trellis Road is the company that I started with my now co-founder Anna Ottosson. She was running a company that I invested in myself before. They were doing a deep tech, B2B solution for the distribution of data. So, very different from the food tech that we are now focusing on.

Petri: Pizza again!

Erik: Pizza is food but pizza is not that much food tech. Online delivery is food tech. We focus on the impact aspects. We started talking more than a year ago about doing something together. Yet, again I thought that maybe I’m about to start my own company again, a real startup. But I realised that it probably wasn’t the right timing for many different reasons.

We started talking about doing something together, and we had both been through starting a company, exiting a company, started to think about what to do next. We’re in a similar personal situation as well. I just had my first baby and Anna was about to have her first baby. We both had started thinking more about our legacy as well to the next generation.

We concluded that we have to work on something that really reasons with us that aligns with our passions. It sounds like a cliche but when you are in the luxury situation that we both were not being dependent on a daytime job you would have the luxury to start thinking about what is my passion.

We both concluded that we want to feel that we help to improve the world somehow as a combination of impact but also startups. We know both worlds and we see there is a huge overlap that traditionally has been a bit neglected. The overlap between high impact and high profitability. I think five to ten years ago investors at least thought that you had to choose between impact and profitability.

It has been obvious that it’s definitely possible to build huge businesses that combined both. Where one unit of economic growth in the company also generates one more unit of impact. I mean, looking at the food industry that we decided to focus on, you have like Swedish for example, that replacing milk with oat drinks, growing tremendously in aiming to 10 billion IPO now in May, I think. Beyond Meat with the plant-based burger replacements who didn’t IPO in the US, there are some of those cases that I know went all the way to an IPO and there are much more coming. We definitely see that this is a great idea for entrepreneurs and artistic investors to focus on.

We also looked into a few different areas before deciding on food tech. We look at the energy sector, for example. But realised very quickly that to make a big dent in the energy sector, you need a lot of money. It’s quite dependent on big corporates and it’s quite dependent on policies. We didn’t really want to be dependent on those things.

We thought that we want to find some area where you can make more of an impact as a small startup and small investor and realise that food tech is that space. And there are lots of things happening in food tech, both on the research level but also on the commercialisation level.

That shows that even small startups can have a path to become huge, without being too dependent on policies or big corporates and letting them grow. You can compete as a startup. I think it’s partially because of the consumer focus of all food. In the end, there is a consumer that’s going to eat the food.

Everything along the food value chain all the way from agriculture to packaging and e-commerce is to take the consumer into account. If consumers start changing behaviour, if they start being attracted by new brands, for example, then that trickles down all the way down to agriculture in the end.

That’s a way for startups to affect the whole industry without being too dependent on external factors.

Petri: Is this a journey you’re planning to do as you go or is there some big idea already behind it?

Erik: If you ask me in five years, I’ll tell you there was an excellent strategy on how to become what we have become in five years. But, like most other things I have to admit that it started out as we decided that last year we should spend at learning as much as possible.

I had spent some time in food tech, but not high-impact in any way. That was online food delivery. I didn’t really know how the high impact aspects of the food industry work today. We didn’t have the networks in that niche. We didn’t have the connections with the entrepreneurs that we wanted to invest in either.

We had to spend lots of time learning about the space and finding entrepreneurs, finding investors, finding the experts. We decided to spend last year investing our own money in high-impact food tech startups at the seed stage, alongside big investors who have been in this space for longer. That was the way for us to learn.

We did about seven investments last year, $50-200k tickets. Just as the way to learn. Now, I’d say that we have learned a lot. We have realised that this is the perfect space to focus on from our respective, both us small investors, but also from an impact perspective. The more we learn about the food industry, the more we learn that it’s really one of the few key areas in reducing the negative effects of climate change and human health can be radically improved by the food system as well. It’s a super interesting area from both of those aspects. We have also seen that it’s definitely doable to change things from the startup perspective, which was also one of our assumptions.

We are going to spend all our time on food tech. We are thinking about how to leverage that more than just investing our money in super small tickets. But that’s up for discussion what it will look like. We have spoken to a few other individuals and organisations that are also doing their own direct investments.

We’re thinking that maybe we should start working together somehow pooling the money, perhaps. But it’s still too early to tell. I’ll probably have a great story in a few years on exactly why we chose a certain path, but, right now, it’s still a bit up on there. What we do know is that this is happening.

We definitely see that food tech is changing the world for the better. It could be faster. We think we can help accelerate it. We should definitely be active and do a lot of investments in the space that will be great both from an impact perspective and financial perspective if we don’t mess up. But it’s hard to tell exactly what the best model is. We definitely want to jump on the train before it leaves.

Petri: What is your favourite word?

Erik: It’s serendipity. I have love that word for many years. Ever since I went into the best ice cream bar in the world, I think, in New York in Manhattan. There’s an ice cream bar called Serendipity, which I didn’t understand the word by then, but I thought it sounded funny to say serendipity, just tasted it.

It’s so fun to say. And then when I realised that it means happy coincidence I just fell in love with it. I wanted to name my own company serendipity when I started investing, but then I realised there was another investment company in Stockholm named Serendipity. I couldn’t do it. I was frustrated for days I couldn’t use the word serendipity, but at least I get to say it here. That’s fun.

Petri: What is your least favourite word?

Erik: I don’t think I have one. I tend to dislike negativity, so I guess maybe the word no is something I usually don’t like to hear. I don’t like the idea of limitations or negativity or obstructions to people who want to be creative but are limited by other people or by systems, like stopping things, I guess.

No is a word that symbolises that. I also think we tend to as individuals value the negative consequences of actions higher than positive consequences. Even if an action has total positive consequences, humans are likely to oppose it if there are also obvious negative consequences or risk. Especially, if the negative consequences come first. I’ve been so frustrated more and more, but especially like the last year or so when I spent more time in food tech and realise how, even though I do claim and think that startups can really make a difference by being innovative and creative, but I still get so frustrated every time I see that there are big corporates or politicians trying to stop creativity, trying to stop the future from happening. There was a tweet not long ago from the French Minister of Agriculture when he read that Singapore was the first country in the world to open up for cultivated meat, lab grown meat to be sold to consumers. Then his first gut reaction was to go to Twitter and say: “This will never happen in France. Not under my watch. The meat will always be natural for animals and never be grown in a lab.”

I think it’s just such a tragic attitude that the new things cannot happen because…well, you should ask him why. But, the French are known for protecting their farmers. By protecting an old industry that we know is in many ways crazy, especially, for the climate. It’s just tragic. Sorry. That was a long rant on the word no.

Petri: What turns you on creatively, spiritually, or emotionally?

Erik: I really get excited, when I’m around people who are intellectually honest and have that curiosity and energy to question their own beliefs. I think intellectual dishonesty is increasing or at least it’s become more apparent lately with the filter bubbles on social media and access to the information on the “facts” that you prefer yourself.

Maybe that makes me appreciate it even more when people obviously are willing to question their beliefs and not make up their mind too quickly, but showing their willingness to listen to contradictory information. There’s a model I heard about, not long ago called strong opinions, weakly held, which basically means that you try to make up your mind early, on a certain topic, which helps you structure your thinking about it.

And if you wake up in the middle of the night gun to your head you know what your decision or your thought is, but the opinion itself is very weakly held, which means that it can always be changed when new information appears. And if you commit yourself that this is my approach, it’s easier to accept that.

Yes, of course, I do have opinions, but they are also changeable. I have been using that more and more the last few weeks since I heard about that. I think it really helps to structure your thinking and being more open to changing your mind.

Petri: What turns you off?

Erik: But that has to be the opposite. Sorry, boring answer. When people are not curious and don’t want to learn or improve things, just lazy and happy with the status quo. Partly, that’s a good thing from a happiness perspective that you can be happy with what you have.

That’s great. And I practice that a lot and you should definitely try to do that, but only doing that and not being curious, not trying to learn that really turns me off.

Petri: What is your favourite curse word?

Erik: It has to be Swedish fan, which basically means the devil. But, I guess, more translated it means fuck or something. I’m not sure if I used it that much, but it feels like easiest to say when you ask for a curse word.

Petri: What sound or noise do you love?

Erik: It has to be my one-year-old daughter laughing. I guess this is a cliche as well, but that’s just irresistible.

Petri: What sound or noise do you hate?

Erik: I really love my daughter, but when she wakes up at 5:00 AM in the morning and I hear her say “daddy play.” I know that now it’s going to be impossible to get her to fall asleep again. I mean, hearing that it’s not what I’m looking for.

Petri: What profession other than your own, would you like to attempt?

Erik: It has to be something where I can use both my body and my brain and create something, see something being built like a baker or building furniture. But it has to be a baker. I enjoy bread more than furniture.

Petri: What profession would you not like to do?

Erik: Definitely, a politician. There are probably lots of them, but top of my head being a politician. I mean, just looking at the politics taking place in a hundred person startup that’s more than enough for me. I really hate when things are not focusing on rational, improving things or if people are not focused on meritocracy where the best ideas win or the best facts wins, but you start running politics either in an organisation.

I think that’s just politics on a high level when you become a real politician. I spent some time trying to figure out how politics works. I can’t even imagine what it would be like to spend my days working with that in practice.

Petri: If you could be a co-founder of any startup in any era, which one would you choose?

Erik: One of the ideas I had when I came out from my own business and started thinking about a new business, which I still haven’t seen happen, and I’m happy to give that idea away. It’s tricky to execute, but I really want to start a startup or see someone start a startup. I’m happy to fund it!

Ping me, if you’re starting this. It’s a health tech startup that somehow is able to collect lots and lots of global anonymous, of course, health records, including personal background, symptoms, diagnosis, treatments, results from those treatments, long-term effects. And ideally also collect things like DNA, regularly measured blood tests, poo samples, like everything that we today think is important to the health of an individual.

If you can get access to all that data, then by applying machine learning, I’m pretty sure that we could create virtual doctors that are much better than anything we can imagine today. And by doing that, we would also be much better too proactively realise that something is going on or soon going on in a human being and be able to prevent that before it even becomes a disease. I think that would be a major leap forward in terms of human health. I’d like to start that startup.

Petri: Any final words for the audience?

 Erik: If you are thinking about starting a startup, do it! It’s all just easy to sit around like I am doing or have been doing for a few years, trying to wait for the perfect moment. But if you have the opportunity to do it and especially if you’re still quite young, maybe you’re still studying, maybe you have somehow secured your personal financial situation. Then even if you don’t have the perfect idea, it doesn’t really matter. You can do it just for learning. And then when you have the perfect idea, maybe it’s easier for you to make the decision. Yes, just do it!

Petri: Thank you, Eric. This discussion has made me hungry.

Erik: Thank you, Petri! Me, too. Let’s have a pizza!