#DoingWellByDoingGood: Niklas Zennström, Founder of Skype, on investing in NextGen entrepreneurs and the future of the planet simultaneously
In 2008, after selling my fourth startup, Phonevalley, to Publicis Group, I attended an event in Europe where I first met Niklas Zennström. Just through our introduction, it was obvious that I was speaking to a man that embodied success not just in business, but in life.
Niklas has never been one to exaggerate his path to success. With his intelligent wife by his side, he’s the first to tell you- there are no shortcuts to achieving your goals, there is only hard work. 20+ years of hard work that is. Niklas is one of Europe’s tech giants. As the founder of both Skype and KaZaA, he has catapulted European tech innovation to the next level. His latest gig, Atomico- a venture capital fund- is diving deeper into the world of tech innovation by investing in ambitious technology startups at Series A and beyond, which will help birth a number of amazing companies across the planet.
As one would imagine, his honesty and bluntness are not isolated to his identity as an entrepreneur. He is a firm believer of owing his success in part to his community, which is why Niklas and his wife founded Zennström Philanthropies to fight against some of the most pressing problems of the world today. They work tirelessly to combat climate change while also tackling several human rights initiatives, among them: banning child marriage, eradicating modern slavery and ensuring fair trials. I remain in awe of your accomplishments, Niklas, especially as I’m about to jump on my next Skype call.
Niklas, let’s talk about Skype. You’re the founder of one of the most popular social platforms in the world, but you had a rocky start. Tell me about how you developed the idea and what troubles you came across on the outset.
Back in 2002 when we founded Skype, the European tech ecosystem was very different. For a start, this was just after the dot-com bubble when few investors were willing to back such a disruptive business as we were trying to create, especially in Europe. Skype was actually my third attempt to build a startup based on peer-to-peer technology. To make matters worse, my previous company KaZaA was in a massive litigation battle with the US entertainment industry, which meant we had to bootstrap Skype to get it off the ground.
It was also pretty much impossible to hire anyone with experience of scaling a tech company in Europe, something which we now specialize in at Atomico. I think these tough experiences helped Skype become the success that it did, and they’re certainly lessons we use to inform our work with our portfolio companies at Atomico today.
While working on your next two ventures after Skype- Joost and Atomico you simultaneously launched Zennström Philanthropies with your wife in 2007. What prompted this move?
For my wife Catherine and I, setting up a philanthropic platform seemed the obvious thing to do. Catherine had spent a number of years at non-governmental organizations, while I was inspired by previous generations of successful entrepreneurs like Bill Gates, who had set up their own foundations. What was really important for us was for our philanthropy to have a strategic impact, rather than just being an exercise in giving money away. Like with Atomico, our platform at Zennstrom Philanthropies has developed over time.
In the beginning, we took an opportunistic approach to our charitable work, supporting a number of social entrepreneurs and an assortment of organizations with great missions. Over the years, we’ve refined our processes and narrowed our scope, ensuring we can use our resources and talents to create the biggest impact. Our selection and management process is very similar to the one we have at Atomico, so developing both platforms at the same time made a lot of sense. In both Atomico and Zennstrom Philanthropies, we find the organizations with the highest potential, challenge them, and invest with more than just capital- you really have to go all-in.
One of the organization’s areas of focus is improving conditions for the Baltic Sea. Is this initiative connected to your Swedish roots? What improvements have you seen through your involvement?
The Baltic Sea is hugely important to me. I spent my childhood there, learning to swim, fish and sail. I thought of it as my back yard growing up and I still do today. Now, tragically, it is one of the most threatened major bodies of water in the world. This was really brought home to me one summer, during an offshore race, when the entire stretch of water we sailed had been covered by algal blooms. I felt we had to do something.
When we sat down to analyze the situation, we realized that there were no quick fixes. To get anything done, we had to take a long term view. At the beginning, we joined up with a number of NGOs to start “Race for the Baltic”, which was initially an awareness campaign.
However, we realized that we needed more than that. We learned from the debate around climate change that we had to show that environmental sustainability and economic success were not mutually exclusive, but in fact mutually reinforcing. According to a report we worked on with the Boston Consulting Group, environmental clean-up around the Baltic could produce over 900,000 jobs for the region — a fact that has since convinced seven municipalities to join the Baltic Sea Accelerator Program. This is a great start, but we won’t stop there. By 2020 we aim to have 100 municipalities on board.
Zennström Philanthropies also works with policymakers and NGOs across Europe to defend human rights. Why do you think the protection of vulnerable groups throughout the continent has fallen in spite of major human rights laws in place and acknowledged by each country?
We believe in working with civil society and NGOs to increase respect for human rights. At this point in time, we must use our voice to keep governments accountable, and do what we can to preserve the rights of individuals to uphold their own rights or those of others. For example, there’s been a worrying increase in restrictions on human rights activists in a number of countries, something Zennström Philanthropies is keen to address. We need to work with these activists and defenders to help individuals without a voice, and make change happen — whether that’s ensuring fair trials, eradicating modern slavery, or banning child marriage.
In 2006 you were named one of Time’s 100 Most Influential People. At that point, did you feel pressure to be more successful?
That was certainly a crazy period! We sold Skype to eBay for around $3bn, which in those days was a huge exit, and caused people to take notice. While I did feel some extra pressure, it also gave me the confidence to do much more. The one thing I was really excited about was supporting the growth of the European tech community.
When I was starting out there were not a huge number of successful European founders. I was very keen to try and help other founders where I could, and so I decided to start Atomico with Mattias Ljungman. Now, our team helps founders with the hardest part of their journey, scaling their company to becoming global category winners. What’s great is that there is now so much more help available to these companies. Our team includes people who’ve founded or scaled companies like Facebook, Uber, Skype, Supercell and Google; this kind of help just wasn’t available back then.
Atomico invests and supports the growth of small businesses in the technology center. What are some of the factors you look for in entrepreneurs and their companies when making your decision?
At Atomico, we believe that entrepreneurs are the ultimate agents of positive change, and will continue to have that impact on the world in the coming years. To that effect, we want to work with the most ambitious and talented founders, who are using technology to change the status quo, are determined to win and want to have an impact on the world. We look to partner with them at Series A onwards as we want to share the hardest part of their journey with them.
Do you see more and more of our peers thinking of how they can positively impact the world? Do you see this evolution as a deep trend?
We’re certainly seeing more and more successful tech founders who want to go into philanthropy, which is fantastic. What’s even more exciting is that we’re also seeing more and more young entrepreneurs building companies which aim to have a positive impact on the way we live, as well as being commercially successful businesses. A great example of this is Daniel Wiegand and his team at Lilium Aviation. They want to transform mass commuter transport with their electric vertical takeoff and landing vehicles. This initiative can have a big impact on the environment, while being a commercial success.
What is the greatest lesson you’ve learned so far as an entrepreneur?
Entrepreneurship is a mission, and, as long as your mission is to have a lasting impact, you can make it happen.
Finally, do you think that by doing good, you’re more successful?
Businesses in the future will have to have sustainability at their core if they are to succeed. We already see that the most talented millennials want to work for companies that are doing good, and that many millennial consumers prefer to buy from sustainable companies. Technology and shifting attitudes have ensured that you no longer have to make a choice between having a profitable business or a company that does good in the world.