Volante höll i de två utbildningsdagarna i förra veckan och jag var både föredragshållare och diskussionsledare. Läs mer om programmet här. Första dagen var vi på Subtopia i Botkyrka, där vi mötte verksamhetsledaren Karin Lekberg och några kulturföretagare, däribland Dogge Doggelito som har drivit företag i 15 år.

Här är ett kort klipp från när han talar om hur hans uppmärksammade reklamfilm för Elgiganten påverkade hans liv och karriär. Hans budskap är ”våga var kommersiell”. Men hans resonemang bör nog nyanseras något. Utan sitt ”kulturella kapital” — eller snarare, cred — som han byggt upp dessförinnan hade han varken fått reklamuppdraget eller så stort genomslag för kampanjen.

Nedan några bilder från dagarna. Ni ser bland andra min bloggkompis Emma Stenström från Handelshögskolan, Joppe Pihlgren och Stina Algotson från Tillväxtverket (utlånade från KK-stiftelsen) och ALMI-konsulterna.

För svaret är förstås att kulturföretagare kan tjäna pengar. Men det är inte alltid som de vill – skapandet är ofta en drivkraft i sig. Samtidigt innebär detta en extra drivkraft: kulturföretagare ser ofta till att nå resultat och fortsätter, strävsamt, trots motgångar. Detta hindrar inte att risken inte sällan är mycket stor.

Framför allt är det svårt att bunta ihop alla kulturföretagare till en grupp. För det första består de av stora, vinstdrivande verksamheter, för det andra av små livsstilsföretag, för det tredje av icke-vinstdrivande konstnärliga organisationer.

På måndag och tisdag samlas ungefär 25 ALMI-rådgivare från hela landet i två dagar utanför Stockholm. Den ena dagen i Botkyrka, den andra i Sigtuna.

I oktober blir det dags för tre särskilda län – Dalarna, Värmland och Gävleborg – då vi håller i tre heldagar. Dessa seminarier har vi utvecklat ihop med min bloggvän på Kulturekonomi.se, Emma Stenström vid Handelshögskolan i Stockholm, och på uppdrag av projektet KKN. De har även styrt upp så att jag och Emma har besökt olika ALMI-kontor och medverkat vid några skarpa kundmöten. Det finns massor att berätta om de här erfarenheterna – och vi återkommer.

Över huvud taget går ALMI i täten nu bland myndigheterna för att sprida kunskap om kulturella och kreativa näringar i sin organisation, enligt vad regeringens handlingsprogram förordar. Satsningen inkluderar även dokumentation som kan användas på respektive kontor.

***

Programmet på måndag och tisdag består av gruppdiskussioner, teoretiska föreläsningar (av mig) och några gäster. I korthet, utöver olika gruppdiskussioner:

DAG 1

• Hur hamnade vi här? (Tobias Nielsén)
• Fyra affärslogiker (Tobias Nielsén)
• Studiebesök på Subtopia och samtal med fyra företag (Karin Lekberg, Subtopia)
• Samtal med Dogge: ”90 procent består av annan business” (Tobias Nielsén)
• Studiebesök konstgalleriet Andersson/Sandström

DAG 2

• Framgångs- och riskfaktorer (Tobias Nielsén)
• Information om handlingsplanen (Stina Algotson, Tillväxtverket)
• Bemötandet är nyckeln (Anders S Persson, Västra Götalandsregionen)
• Skapandet som egen drivkraft (Emma Stenström, Kulturekonomi/Handelshögskolan i Stockholm)

För mer information: Tobias Nielsén, tobias[at]volante.se.

Livebubbla och festivaldöd? TV4 Nyheterna har varit här på kontoret och frågat kring detta. Samma ämne har jag diskuterat i TV4:s Nyhetsmorgon (se klipp ovan), liksom i Dagens Industri.

Bakgrunden är att vi har sett Hultsfredsfestivalen ställa in festivalen och Arvikafestivalen ställa in betalningar. Dessutom ett flertal andra tecken på att livebranschen nu tvingas till anpassning på grund av publiken mättnad, högre kostnader och hård konkurrens.

Detta är heller inte en trend som inte enbart syns i Sverige utan pågår internationellt. Under årets första sex månader har intäkterna för de 100 största turnéerna i Nordamerika minskat med 17 procent till 965,5 miljoner dollar. Se en längre analys på Kulturekonomi.se om festivalekonomin.

***

Vi har tillfrågats beroende på våra tidigare analyser av Hultsfredsfestivalen och Rockparty, samt kontinuerliga och generella studier av musikbranschen. Se även våra tidigare mindre undersökningar från festivalsommaren 2009 och 2010.

• Sommarens festival- och konsertekonomi
• Festivalsommarens trängsel (liten undersökning)

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COPENHAGEN, DENMARK.

Dnmark was launched in 2005 by designer and architect René Hougaard and cabinetmaker and product developer Jens Hornbæk. They met when Jens was working at a bigger Danish furniture company where René came to pitch his designs. Dnmark’s concept was based on the idea that the Danish furniture industry was stuck in an intermediate position between a constant demand for the designs of old masters like Arne Jacobsen and a pressure from the market to see something novel from Denmark. Rene and Jens’ company Dnmark is based on the philosophy of embracing simple design and functionality but combining it with the latest technology and Danish craftsmanship. This has resulted in products that are one hundred percent Danish design but at a reasonable price.

Of course, selling furniture involves more than a design on paper: prototypes and demonstration models need to be made. To be able to produce the prototype of what became their first hit piece, the Pablo chair, Jens called on his network. He presented the project to potential producers and asked them to believe in the project and share the risk by giving him as low a price as possible. In this way production costs were held to a minimum. Yet funding was still needed and to finance the production of Pablo, Jens and René went to several banks with their business plan. “Banks are banks” was Jens’ first response when describing how banks reacted to Dnmarks’ first business plan. In total they went to ten different banks which all had different excuses for not wanting to lend them the money needed:

The thing is that bankers don’t understand what we are doing. They basically think we are crazy; because I said no to a monthly salary, a fairly good one, to do a crazy project like this. They would basically say, well you are stupid.

It was a mix of different factors and political circumstances that in the end got them a loan from a bank. At that time it was the government’s policy to financially support start-up companies in Denmark. The government had therefore made an agreement with some banks to lower their risk in lending money to start-up companies by paying back 75% of the loan if the start-up company went bankrupt.

Design and prototypes are only the first phase and once orders come in actual pieces (chairs, tables, etc.) have to be produced and shipped: something that can be very capital intensive. Dnmark’s first project, the Pablo chair, became a big success and the company grew fast. The money Dnmark had borrowed to get started wasn’t enough and to finance the increasing number of orders they were receiving they needed more and more money to produce the furniture. Even though a financial gap between finalising production and getting paid for each order is a constant theme in furniture production these gaps led to struggles with the bank. According to Jens, the bank had put Dnmark on the ‘lowest shelf’ and they couldn’t get higher up to get better loans and more credit. As Jens put it, the bank didn’t understand Dnmark’s business processes so Jens and René were chasing their own tail, getting more and more orders so the financial gap increased and with this the bank became less and less understanding of their situation. The turning point for Dnmark was getting in contact with a financial adviser, Morten Lund, who soon became their business partner and managing director of the company.

Morten Lund was an experienced business man and it didn’t take him a long time to figure out Dnmark’s need for a full time employee or a partner that could take care of the business and financial aspects of the fast growing company. Morten became a partner in Dnmark and changed their approach towards the bank, which resulted in moving their business to a new bank with better service. Morten knew how to talk to bank people and as Morten himself said, it was more or less Jens and René’s own fault how difficult the communication with their bank had become since they didn’t know what to do and how to present their ideas and strategy. As Jens put it:

We could not have done it without him, because he knew his way around accounting and lawyers and talking to bank people the right way.

What Morten did is a mix of few things. He was experienced in dealing with banks, hence familiar with the financial environment. According to Morten, it is more important to present a strategy and financial plan to the banks, not necessarily business plans as such, like Jens and René did. The banks needed to get a clear and compelling message about the commercial value of the strategy with an emphasis on prospective returns on their investment. Jens and René know this now and say about their initial business plan:

Sometimes we take it out these days for jokes. We had a good idea about what we wanted to do but it was fairly naïve, I would say. Today we have changed from being a design company to being a production company.

You have to choose which way you want to go. You cannot do both. We tried that for a while but the production company just kind of takes over because you can’t run two companies in one, you need to be very specific and put your energy into one place.

***
This is the tenth part of Volante’s series Creative Business. The series is a complete version of the book ”Creative Business: 10 lessons to help you build a business your way” (Volante, 2010). The book is available for purchase in an ebook version on Amazon or Lulu (Kindle, ePub or PDF), a paperback version distributed directly from the publisher and soon also a print-on-demand version distributed globally.

• Finding a partner is mostly about finding the right one.
• Be careful about your choice of partner, but also have the courage to go ahead.
• Take precautions so that you can back out if things don’t go as expected.
• The investor can function as an active partner who can guide you to the next levels.

Finding a Partner

WHY TWO (OR MORE) IS BETTER

Most businesses consist of more than one key player.

Why can’t you do it by yourself? Of course you can: at least to a certain level and especially if your preference is to create a business that will support your lifestyle and not to grow a company (read more about this choice in Axiom 6).

However, if your goal is to create a growing and sustainable business you might want to think again. It is evident from our study that finding a partner is the key thing many people point to.

So although it is your initial idea and you might know your product really well there are important reasons why you need a partner:

• You will be able to continue to focus better on your core product. Without a partner you have to take care of sales, administration and organization too.
• You don’t know everything (who does?). So why not take advice from someone who knows a thing or two about important issues for your business.
• You alone is a ‘red flag’ for investors and other players in the market. They will ask themselves: What happens if you get ill or just tired? Who will design or create your products then? A partner reduces risk significantly.

THE RIGHT ONE

Finding a partner is very much about finding the right partner. Of course, this is easier said than done, but just knowing this enables you to take precautions.

First, there are a few questions you should ask when choosing a partner:

• Do you share the same visions? Write them down and compare.
• Compatible exit goals? Are you in this awaiting other opportunities, until a good exit opportunity makes it possible to ‘cash in’ or are you in it ‘for life’? Be honest about this.
• How much time and effort will you put into your business? If you will not divide the work load equally, how do you balance that in terms of equity and salary?
• Who will do what? Be clear about expectations of roles in the organization, both at the start and five years from now. Don’t be afraid to play with scenarios.

Second, take measures so there are exits for everybody in the partnership if it does not work out, or so you can start easy. For instance, the entrepreneur as well as the investor can have an option to buy or sell back the share if things don’t go as planned.

A partnership can also start with a small share and an option to buy more at a fixed price if the cooperation works well. This was the case with Murlyn Music and the venture capital firm Novax (see the case in Axiom 1).

Most important is to have the papers in place. Divorces – just like in private life – are rarely nice processes. Bad shareholder agreements have risked the future of many firms – even very successful ones – and even though the company may go on, lacking proper agreements and contracts can eventually cost the founders money and control.

Third, use the partnership. You are now in the same boat.

Remember that partnership is not only about money. A good venture capital partner can help with both strategic and continuous advice. They can be someone to call upon and test your ideas as well as the source of new ideas.

Successful entrepreneurs in the cultural and creative industries often point to the importance of dual leadership – people who can do the numbers are as important as people who knows the product (e.g. who can do the art). The fashion companies Filippa K and Odd Molly, and the design firm Dnmark illustrate this duality.

• Filippa K during its first years was characterized by the, then married, couple Filippa and Patrik Kihlborg – a partnership between the designer Filippa, and the business man Patrik.
• Odd Molly had three founders – one working with design, one with storytelling and marketing, one with administration and organization.
• The design company Dnmark found that a new partner and managing director took the company to a new level. The co-founders had struggled to finance the production of the orders they had received when an experienced businessman joined the enterprise and made it possible – thanks to a new bank loan – to move much more quickly.

FINDING AND KEEPING THE TALENT

Partners are not only investors and co-owners. Your first employees are just as likely to be partners in a very close relationship. Finding and keeping talent is of the uppermost importance.

In cultural and creative industries certain talented workers are central to your offering. If you don’t found the company with one, hire one. But make sure you can keep her or him. Your workforce – especially the key talents – will be crucial to your business and how potential investors assess it.

Therefore, make sure you are investing in the employees’ development (e.g. training and education) and in retaining them. Reward structures need to be designed for them: financial as well as other rewards.

The former CEO of Filippa K, Jan Carl Adelswärd, says it is important to identify what drives people. If it is not financial rewards but ‘creative energy’, how do you balance that with moving forward in a planned direction? His answer is to define limits as well as goals – thinking inside the box instead of outside of the box. This can be useful, he suggests, since he believes that ‘the creative people’ like that clarity of purpose which goals entail.

This is also a question about designing good teams. The publishing group Bonnier Tidskrifter, for instance, always establishes a dual management team for their magazines. One editor-in-chief and one marketing director. Furthermore, these people also work with a business controller.

Different stages also need different kinds of competence. A director of a company with ten employees will need another set of capabilities than one with hundred. A small-company director is more operative and works closely with all employees. A large-company director lets other people do the operative work. As Jan Carl Adelswärd at Filippa K says:

After a while, it is necessary to have a CEO who likes numbers.

***
This is the ninth part of Volante’s series Creative Business. The series is a complete version of the book ”Creative Business: 10 lessons to help you build a business your way” (Volante, 2010). The book is available for purchase in an ebook version on Amazon or Lulu (Kindle, ePub or PDF), a paperback version distributed directly from the publisher and soon also a print-on-demand version distributed globally.

NORWAY.

Stigebilen is a company that rents out lighting for TV and film production. They have mounted a generator and what is apparently the world’s largest lamp (175kw) onto an old fire truck. The lamp is attached to a turntable ladder and is a very flexible tool for lighting locations.

However, the founder, Terje Røkke, did not start life as an entrepreneur with a fire truck. With an education in electronics he started working with lighting 13 years ago. After his education he worked for five years at Norsk Filmstudio and only after this did he start Stigebilen.

Talking about his time on the job he emphasises how important the networks and connections he made there were, and are, for getting new jobs. Moreover, he picked-up and developed many of the skills his company is based on at Norsk Filmstudio.

Starting a business in lighting is not cost-free and he needed money to start his firm. He is financed through Terra Finans, which is owned by 78 Norwegian savings banks. In his opinion the financing process went relatively smoothly. He developed and presented a traditional business plan, and had a history of revenues from previous projects before he went to the bank where he was warmly received.

The loan he used to finance his firm is similar to other types of bank loans: it was secured against a physical asset. The asset in this case was the vehicle but since vehicles’ value quickly diminishes the loan had to be paid back in five years. Lending money to buy cars is something banks do a lot of and he thinks this is why the financing process went so smoothly. Thinking about what assets loans can be secured against is an important part of bank financing.

The business has gone very well, and they now have three trucks and are planning to expand into gyro technique. They are carefully considering getting another truck.

***
This is the eighth part of Volante’s series Creative Business. The series is a complete version of the book ”Creative Business: 10 lessons to help you build a business your way” (Volante, 2010). The book is available for purchase in an ebook version on Amazon or Lulu (Kindle, ePub or PDF), a paperback version distributed directly from the publisher and soon also a print-on-demand version distributed globally.

• Get experience first
• Working for another company in the industry is a free way of learning the business.
• Investors like experience – so do customers.
• Even if your experience is from another industry you have probably learnt important lessons, for example, about how organizations work.

GET A JOB BEFORE CREATING ONE

TRIAL AND ERROR BEFORE SUCCESS

Many successful businesses start out doing something completely different than what they end up doing. For many entrepreneurs the first step is usually trial and error. Equally many entrepreneurs try time and time again to set up businesses in the area they love working with. For a variety of reasons many of these ventures are destined to fail. Perhaps the timing was wrong and the market was not ready or the people involved did not yet know how to run a business.

However, not all businesses arise from the ashes of failed ventures. Many successful small businesses are founded by people who worked hard for someone else before going it alone.

As we shall see later: Michael Ivarsson had years of experience of different parts of the music industry before turning around the music festival Sweden Rock; Terje Røkke worked for years at Norsk Filmstudio before founding his TV and film lighting company Stigebilen; Sarita Christensen and Anders Morgenthaler worked together at Zentropa before they decided to start up on their own and concentrate on the kind of content they were especially interested in.

So before creating a job for yourself consider getting one with someone else first.

Indeed, starting your business by getting a job can have several benefits:

• Your experience of somebody else’s business will help you know what to do with your own and help you act faster and more effectively when you start your own.
• You will have a network that will know you and hopefully trust you from day one.
• Your business plan will be more accurate since it will be built upon industry experience. Potential investors will look favourably upon this and will perceive you as having a track record, even if not as an entrepreneur.
• You will earn some money (investment capital) and buy yourself some time to prepare for the start-up phase.

Starting your business with a job is common. The founders of fashion firm Whyred worked for H&M for several years. Co-founder Jonas Clason points out that in addition to the experience, they had the opportunity to collect lots of favours from suppliers, grateful after having gotten important contracts with the giant H&M.

The advantages are more obvious when sticking to the same industry. But there is always something to learn and a business is always a business. Putte Svensson, co-founder of Rockparty, first worked in manufacturing but the lessons from organizing projects dealing with water, electricity and construction have been important in his job as area manager of the Hultsfred rock festivals. As Putte Svensson says, experience of all sorts of types of activities can directly help your new venture:

Besides, we all had experience from sport clubs. This experience was important when we organized our association.

START AGAIN

Perhaps your first attempt did not work out as well as you expected?

But at least you have some more experience and can ask yourself: What did I do well? What did I do badly?

Even if the experience does not come from another company or another industry, don’t be afraid to regard your first attempt as a lesson learned and move on and start again. Just as people quit jobs they are not happy in, people need to understand when it is time to restructure or wind down firms they are not happy with.

In any case, you should not expect that the road ahead will be smooth and straight. (Read more about this in the next Axiom.) Rather, expect everything to take time and be ready for frustration. Don’t forget that you will at least get something important out of it – experience.

Another aspect of industry expertise is that you know what you don’t know. This kind of experience will enable you to realize that you have to strengthen capabilities with employees, consultants or partners. (Read more about this in Axiom 3.) Through experience you will learn a little more about what your core competences are: what you are good at and what you really need help with.

Experience will also reveal to you whether you should avoid certain activities. Don’t try growing strawberries if you don’t have the right soil or enough water. Don’t sell fresh juice if other juice companies already have exclusive distribution rights with the most important stores. Don’t sell anything if your profit margin is worse than the industry average.

***
This is the seventh part of Volante’s series Creative Business. The series is a complete version of the book ”Creative Business: 10 lessons to help you build a business your way” (Volante, 2010). The book is available for purchase in an ebook version on Amazon or Lulu (Kindle, ePub or PDF), a paperback version distributed directly from the publisher and soon also a print-on-demand version distributed globally.

ÅRHUS, DENMARK.

Most independent record labels start with one band. In this respect Morningside is no different from any other label. Jesper Broderson had some songs, and to get them heard he put a few of them online for people to download. If people liked the songs they could e-mail him and Jesper would print a CD and a cover and mail them. Cost was thus really kept to a minimum; the hosting of the website the biggest one.

From the start Jesper was aware that having more than his own songs on the website would make it more interesting to every-body. That way the website would not only be a band site, but a record label. So this was naturally the next step.

For me it was a hobby project, so I had no ambitions of making a record label that would grow big fast, the focus was always to have good bands for years.

When he started the label, Jesper was studying and on a state study grant which covered his living costs, and even as the label has grown and he could allow himself to take some money out of the company, he still kept a job alongside the record label. As the label grew bigger, it got increasingly hard to do all the work himself and this was when Jesper Mejdall entered the picture.

He had shown interest in the business side of the label and because it had at that point grown so much already I was looking for somebody to share the work with. I asked if he wanted to participate.

Even though Mejdall also has another job alongside his work on Morningside it was important for Jesper that he was interested in the business side of the label. There is no lack of people who are interested and want to help, but they always want to get involved with the creative stuff, and he wants to do that himself.

Along with Mejdall, Brodersen also has an accountant who does the books and taxes. To begin with he did this work himself but now thinks that getting the accountant is one of the best things he has done. All in all Morningside’s finances have been very conservative. The company was started with an overdraft of almost 7,000 Euros, which, as Jesper admits, is peanuts. Yet the 20 year old Jesper took this very seriously and made a business plan, outlining the cost of producing the record, keeping the breakeven point as low as possible, and this as well as the personal guarantee of two people secured him the overdraft.

In spite of the relatively low overdraft, they have been able to keep within its limits. Although Jesper admits that this has at times been difficult. The label can only support one act at a time and if the money runs low they have to wait for it to start to come in again before embarking on the next project. This has been particularly limiting for their work in the UK market, where they have been working with their biggest band, the Figurines. Yet, Jesper seems weary of looking for external funding.

No, I have too much work with the everyday work, so that it would take me a lot of time and energy to start going out and maybe looking for people that would invest, so it is probably not going to happen … And because I hate money. I’m scared of it. It really blocks me.

Although this attitude limits expansion, it keeps the company running in the way he has chosen.

***
This is the sixth part of Volante’s series Creative Business. The series is a complete version of the book ”Creative Business: 10 lessons to help you build a business your way” (Volante, 2010). The book is available for purchase in an ebook version on Amazon or Lulu (Kindle, ePub or PDF), a paperback version distributed directly from the publisher and soon also a print-on-demand version distributed globally.

REYKJAVIK, ICELAND; OSLO, NORWAY; ESPERGÆRDE, DENMARK.

What could an Icelandic book publisher and a fictional farmer possibly have in common, apart from fiction that is? For those of you not acquainted with Iceland’s most famous fictional character ‘Bjartur of Summerhouses’ the question might be irrelevant. Yet the book publishing company Bjartur not only takes its name from the main character of Independent People by Halldor Laxness but also its philosophy: “not owing anything to anyone.”

This means that the publishing house has never taken out a bank loan, even if their bank managers have found this strange:

The bank manager came up to me when I was in the bank one time, asked if I didn’t have a book publishing company, and asked if I didn’t need a loan? Don’t you want a loan? Why don’t you? You never take out any loans here? I told them thanks but no thanks, I know I’m a rather bad bank customer, says Snæbjörn.

In spite of the philosophy of not owing anything to anyone, Snæbjörn claims that it is almost impossible to start a book publishing company without capital to take you through the first two or three years. Yet when he himself started the company alongside his literature studies he had no external financing. He got the capital needed for publishing through doing other jobs alongside the company; claiming that his needs where meagre as he was used to a student life style.

Although he claims he never made a business plan and would not even know what one looked like, Snæbjörn outlines the plan for the business when it started:

We wanted to start small, the idea was to start off with two books, then four the next year and eight the year after that. To grow little by little and that has just about worked out.

In the beginning the company mostly published translations of books that were successful in the country of origin. It then slowly started publishing Icelandic literature, and is now one of the biggest publishers of Icelandic literature in Iceland.

The continuous growth of Bjartur in Iceland was further facilitated by acquiring the rights to Harry Potter: a windfall for any publisher.

It is usually the case that only a few titles pay for the whole lot. Maybe 70% of the titles never work, financially, but 30% do and make up for it.

One of the successes in Iceland is a concept called Neon, a line of translations of interesting foreign literature. As this worked well in the small market in Iceland, the idea was to bring this concept to a bigger market.

The Danish market is 20 times bigger than the Icelandic, so one should be able to sell at least 10 times the amount sold in Iceland. It would at least be nice to try. Then of course it turns out that the sales of translated books in Denmark is just about the same as it is in Iceland. Maybe slightly greater in Denmark. But in turn, if you get an international bestseller the difference is huge. Then we would be selling hundreds of thousands in Denmark, while a bestseller in Iceland sells only 12,000.

In this respect Dan Brown’s books have proved to be important for the company and even if the strategy of the early years was to grow the number of titles published every year the emphasis has shifted and is now more on having a selection of interesting literature mixed with crime novels.

All in all, the original strategy of the company is still in play: To grow, stay independent, not owe anything to anyone, publish good literature. In fact, Snæbjörn thinks of book publishing as an art form, and to make the business side a bit livelier the line between fact and fiction is not always very clear. This is true for the story about how the rights to Dan Brown’s work were acquired. The official version includes a swimming pool in Slovenia and meeting the author; the truth involves seeing the title, liking it and negotiations through a literary agent in the USA. Fiction or fact, the company has taken a long-term commitment and lots of successive small steps.

***
This is the fifh part of Volante’s series Creative Business. The series is a complete version of the book ”Creative Business: 10 lessons to help you build a business your way” (Volante, 2010). The book is available for purchase in an ebook version on Amazon or Lulu (Kindle, ePub or PDF), a paperback version distributed directly from the publisher and soon also a print-on-demand version distributed globally.

STOCKHOLM, SWEDEN.

A LONG AND WINDING ROAD TOWARDS SUCCESS

Today Murlyn Music is one of the world’s most respected music production companies. Murlyn has written or produced songs for artists such as Madonna, Janet Jackson, Céline Dion, Jennifer Lopez and Britney Spears.

But 22 years ago, with hardly any previous experience, everything was at stake. Murlyn’s co-founder Christian Wåhlberg was running a record store with two friends. They took out a bank loan of 200,000 Euros in order to promote a compilation they had put together out of a few licensed songs from southern Europe. He loved the animated commercial for the compilation, which was called Party Zone, and launched the first TV campaign ever in Sweden for a record.

We needed to sell 40,000 copies to reach break-even. I think we sold 120,000 copies so, for us, the profit was huge, says Christian Wåhlberg.

However, from then to now has been a long and winding road. A success story usually focuses on the most recent part of the story, however, for Christian Wåhlberg and Murlyn Music the story goes back decades and is about failures and restarts as well as hits. Although he has come out well in the end, the choice of “wrong” partners has cost Christian Wåhlberg millions of Euros.

He started 25 years ago at the bottom of the music business, as an assistant in a record store before starting his own store. Although only in his early 20’s he reached out to investors and venture capitalists. He did not find anyone who was interested in his record store, but got a bank loan as well as financing from the state-owned SME investor Almi.

We did not really make a big profit in those years and I was never even close to affording expensive watches or cars. But it was a great life. I worked with my hobby and had my record store and enjoyed life. After a while, however, I felt that I needed new challenges and it was then we started the record company.

After the hit with the Party Zone compilation album, Christian and his partners invested in a rap group called Infinite Mass.

We decided that if we would release their record,” says Christian, “we must not make a cover or product inferior to what regular record companies would have. So we put a lot of money into this record and made a type of music video no one had ever seen before in Sweden. A lot of personal favours were collected at that time.

Looking back on his career hits and misses, Christian says:

There are a few milestones in life. A few turning-points where you have to have the courage to go ahead with your ideas. This step was really important, but at that time I never thought about the consequences. I was 22, without a family… it was a situation when it was alright to fail, so I was a bit incautious. But you need to be that. You need to be fearless.

Infinite Mass’s record became a big hit and was the first urban music record to be awarded a Swedish Grammy.

Suddenly we were a player in the Swedish music industry. But we were not prepared for that. There were lots of new opportunities but we did not have any money for them.

The company was too big to remain small, and too small to be big. A few of the big record companies made offers, but they were turned down. With some help from a consultant, Christian and his partners partnered with a German company. Suddenly they had a big office but the new and former owners disagreed on important issues.

I felt that our company acted too cowardly. So I made a deal and was able to leave and bring my bands, my artists.

Soon after that, Wåhlberg bumped into the songwriter Anders Bagge.

That was the first time I was in contact with production and I noticed how unstructured he worked, but the talent was obvious… So I asked him, spring 1997, why don’t we start a company together. You produce and I sell, and we do it from your basement. He was not really prepared and said, okay but only if I can have my own studio.

But again there was no money, so Christian Wåhlberg went back to the venture capitalists he had once approached with his ideas for a record store. As with the German company, the fact that the partner had money did not necessarily make them a good partner. In fact, the investor and new partner did not actually have any money and had to secretly borrow. Out of 400,000 promised Euros only 100,000 were delivered. Nonetheless the new partner had already gotten a big share of the company. The newly established company, called Murlyn Music, had an amazing start with a few international hits. New deals were made, but new money did not come from the external partner.

We had to get rid of him after a while, but that cost one million Euros. We had not asked proper lawyers to write a good ownership agreement.

A good partner was finally found in the venture capital firm Novax and this was a new milestone. It was not so much about the money, but rather their continuous advice: the opportunity to call someone every day and test a new idea.

I believe that entrepreneurship needs a dual leadership. Someone in addition to the entrepreneur, who is driven by the idea, can run the numbers, ask questions, set a new diagnosis and, if needed, turn down the idea.

Novax bought 12% of the company to begin with, besides a convertible loan based on a higher valuation of the shares; all in all approximately 3.5 million Euros and eventually 41% of the company. Wåhlberg emphasizes that it was not the money that was most important, but the business and strategy advice from the investor as well as the new board.

Advice was necessary in order to take the next steps. One was about selling the catalogue with copyrights for a number of international hits. Christian Wåhlberg failed in his first attempt despite having an extensive, well-designed and printed business plan.

That attracted people who thought we were on the brink of bankruptcy, so we got quite bad offers and withdrew the whole thing, says Wåhlberg. Next time only two pages of information were presented in a very simple way, and we focused our efforts on the presentation when we had some serious potential buyers.

Analyzing the different phases of his company, Wåhlberg points out the risk of the transition from rapid growth to a more mature, constant trend. It is easy to take on high costs in terms of employees and production facilities. The point is that it is easy to start a company, but difficult to keep going.

Murlyn Music has had to redefine its role in the rapidly changing music industry. Murlyn Music went from a production to a management company, with 5 instead of 20 employees, without losing a single client. It went from “a love-all and serve-all mentality” to a tighter organization where they had transformed their creative employees to small-company owners who had to own or lease their studios.

Wåhlberg concludes, although the road might seem to have been well-planned, it was not grand plans but smaller steps that were important:

It has only been about doing it. Instead of having big goals, break them down into small ones. When we first worked towards America, it was not because we had planned to instantly work with Madonna. That came a couple of years later.

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This is the fourth part of Volante’s series Creative Business. The series is a complete version of the book ”Creative Business: 10 lessons to help you build a business your way” (Volante, 2010). The book is available for purchase in an ebook version on Amazon or Lulu (Kindle, ePub or PDF), a paperback version distributed directly from the publisher and soon also a print-on-demand version distributed globally.