Can a Copenhagen based startup scale to global success?
GUEST ENTRY: Pleo’s Jeppe Rindom gives his opinion on Copenhagen’s current ability to attract the best of the best.
Hi! My name is Jeppe Rindom and I am CEO and co-founder of Pleo, a fintech startup that automates expense reporting.
In 2015, my former colleague from Tradeshift, Niccolo, and I founded Pleo in Copenhagen. We had and still have big and global ambitions but with the limited access to digital talent in Denmark, we wondered, right from the beginning, if we would ever be able to scale a global company without moving our base.
It is evident that digital graduates are produced at a much slower pace than what our fellow startups (and desperate ‘we-fear-disruption’ corporates) are screaming for. But hey, our country has pretty architecture, bikes, great food, and the happiest people in the world. So, as bold entrepreneurs we figured; ‘let’s not bring Pleo to the talent — Let’s bring the talent to Pleo!’
Fast forward 30 months, our organisation now counts +40 employees and more than half are non-Danes. What a great success one might conclude, but actually I would argue the opposite, because only in one single case did we, as a company, succeed in convincing an international candidate to relocate to Denmark. And in this specific case, the relocation was caused by a strong friendship to an existing employee.
We consider Pleo a fairly attractive workplace. We’ve been recognized with international prizes and have attracted substantial investments from venture capital firms. I believed so much in our ability to attract international talent that I naively wrote a blog post with the title ‘Let’s conquer the World, not each other!’, which was a shout to the Danish digital ecosystem to hire internationally instead of stealing talent locally. Yet, we’ve never been able do so. But Why?
The Danish ‘package’ is not competitive
As much as I am proud of the Danish welfare system as well as the Capital of Copenhagen, I have come to the conclusion that the Danish ‘package’ sounds much more compelling than it is.
A classic Danish startup package looks somewhat like this:
1) a non-competitive salary, which is really no news if you want to work in startups.
2) high taxation due to our welfare system. Here you might say ‘you get what you pay for’, but that’s actually not true. Most candidates we’ve tried to relocate have a 3 to 7 year perspective for staying in Denmark. They are at a stage in their lives, where access to free education, free healthcare etc. is of very little value.
3) a high cost of living. Being a foreigner without a place to stay in Copenhagen is really tough. Even if you’re willing to settle for just a room in a shared apartment, you will likely end up paying +€1K a month.
On point 1 and 3, Copenhagen is not much different from cities like London, Paris and Stockholm but on taxation, our offering is much worse. And that’s not only a shame, it’s a deal breaker.
So, how have we made it to first base?
I’ve always had mixed feelings when it comes to our ‘open’ (read: free for EU citizens) education system. Today, I praise myself lucky. It saved my a.. Big Time. When we were 1.5 year into the journey, we, as everybody else, couldn’t recruit Danish digital talent, and when our team turned 15 employees, I was still the only Dane. Looking around me, I realised that everyone else were here because of our good and open education system. Luckily for us, many had decided to stay after graduation and in hindsight, I should have done more to build relationships to schools and universities and would encourage any startup to do so.
Second, we right from the beginning had an international company culture. My co-founder is Italian so the Danish way was really never an option. It was of course an obvious thing for us, as our ambitions goes far beyond Danish borders, but our strong international company culture has also become a strong selling point when we hire. Today, Pleo has 14 different nationalities and we still have strong focus on maintaining a welcoming, family-like company culture.
Third, we have had a lot of media attention both inside and outside of Denmark. Today, it mostly relates to our business traction, but in the beginning we did serious efforts to create some buzz, both in terms of being present at conferences, startup events and constantly trying to get media coverage. That helped us tremendously — also in our recruiting.
Fourth, our foreign employees have been great at enabling their networks. Because of that, we today have a handful of engineers working remotely. And it has worked surprisingly well, not something I expected initially and that I believe is strong correlated to the fact that all remote workers were familiar with other Pleo folks (and vice versa) right from the beginning. So get your employees to enable their networks! Chances are that they already know a handful of relevant candidates.
We praise ourselves lucky to have made it to first base. But I fear that more challenges will come when targeting second base and growing our product organisation from 15 to 50 in the foreseeable future.
The bigger picture
We have to join forces on promoting Copenhagen as a European techhub. Organisations like CPHFTW and Copenhagen Capacity are doing a great job building, empowering, and promoting our tech community. But there’s a need for more ambassadors spreading great stories of the Danish tech ecosystem. We just hired a candidate who chose to move to Denmark before having a job. She decided to seek opportunities in Copenhagen (and relocate from Madrid) due to her positive perception of the Copenhagen startup scene. What a win!
We also need shared living at a reasonable price for foreign workers, who relocate to Denmark. Shared living initiatives such as LifeX have also proved to be social catalysts in the tech community. A place to meet like minded people outside of work. Being a foreigner and having social success in Denmark can be hard. Let’s admit it, Danes are pretty reserved when it comes to being inclusive of foreigners. Foreigners with a social headstart are more likely to stick around.
Lastly, I want to come back to our taxation. Our tax society has previously been creative, when facing the lack of talent. In the 90’s, we invented ‘expert taxation’ (in Danish: Forskerordningen), a favourable tax system for researchers and well paid employees recruited abroad. At that point in time, most of the Danish growth arrived from research-heavy organisations.
Today, our world is upside down. Big corporates face challenges maintaining growth and leadership positions and younger growth companies are contributing increasingly to the economic growth.
I strongly encourage Denmark to expand the ‘expert taxation’ agreement, so that tax incentives are created for medium-income but much-needed digital talent moving to Denmark.
Because there is no way we can scale our businesses without help from abroad. So let’s spread those great stories, let’s do our utmost to welcome foreign talent and let’s continue to push our politicians for more attractive framework conditions.
The opinions expressed in this article are those of the author.
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