A curious mindset makes us thrive in dark times

Schibsted has a history of thriving during periods of disruption and when times are tough. Andrew Kvålseth, Chief Investment Officer, believes that the secret behind this success is an entrepreneurial culture that takes calculated bets and is willing to disrupt itself.

In California there are forests with tens of thousands of mighty redwood trees that have stood there for hundreds – and sometimes thousands – of years.

Slightly less common, but even mightier, are the sequoia trees. Some of them have been standing proud for more than 3,000 years in the Sierra mountains. The world’s most famous tech VC firm, Sequoia Capital, had a pretty good reason for picking their name from the famous tree. Sequoia has been an early investor in companies including Yahoo!, Google, YouTube, LinkedIn and WhatsApp, and an investment from them is considered an honour that often triggers a cascade of other investors wanting to join the investor ranks.

So, how do you live for thousands of years?

Well, the trick is almost awkwardly obvious. You don’t die. If you never die, you live forever.

Foundation for transformation

And the redwoods and the sequoias have a trick up their sleeve: A tannin in their bark that is flame retardant. That is, some weird scientific potion that helps them survive the forest fires that typically plague any large forest every 20–50 years or so. Besides this amazing chemical compound, their bark can be up to 12 centimetres thick. They’re like the tanks of the forest, almost impossible to kill.

So let’s bring this wooden metaphor home to Schibsted and the tech scene in the Nordics. Schibsted is a company with a number of valuable assets (including Aftenposten in Norway and Aftonbladet in Sweden) that were born in the 1800s, after the printing press but before the car was invented, and roughly 100 years before the humble transistors paved the way for the digital revolution. These companies survived the great depression in the 1930s and dozens of recessions in their 100+ year lives.

In late 1990s and early 2000s, these companies formed the foundation of a massive digital transformation taking place inside of Schibsted: The creation of our early, online marketplace business and a culture around innovation where we started partnering with some of the best entrepreneurs in the Nordics, both inside and outside of our company.

And it all could have ended there. The dotcom crash, our own version of a forest fire in 2002–2003, was so severe that some pundits back then actually thought that the Internet itself would contract and potentially disappear. But at the same time, consumers kept on moving online, kept on adapting to digital news consumption patterns, and they bought and sold their stuff online at a pace that led to continuous, massive changes in consumer behaviour.

Seeing permanent changes

Schibsted understood this. The mega trends and changes in consumer sentiment are for real and permanent. Revenues will come back. So will profits.
So, we doubled down on our marketplace business and in the next year, we began replicating our marketplace platforms globally.

The Lehman crash of 2008 was another massive forest fire in our industry. Ad revenues plummeted and many of the tech VCs that survived the dotcom crash were wiped out.
What did Schibsted do?

We invested in and built some of the most attractively valued and best-run tech assets in the Nordics and beyond, including Lendo, Kundkraft (sold to Tibber) and Leboncoin, to name a few. These and other organic and inorganic investments made during that time have created enormous value.
And now we’re here again. There are dark clouds over the global economy and perhaps even darker for us in Europe as we face compounded humanitarian crises with unstable energy markets and rising inflation.

But Schibsted sees opportunity during these times. And I think we might have found our secret formula for survival: A curious mindset that explores opportunities when few others see any. An entrepreneurial culture where we choose to take carefully calculated bets on those opportunities. And a culture of coming together to save money in different parts of our business to fund the new opportunities we see.

Based on our learnings, these are our five key strategies, when investing during hard times:

1. Think long-term – for real!

Booms and busts come and go but mega trends in consumer behaviour sometimes stretch across decades. Invest in long-term ideas and in people who never lose sight of their vision. Most companies you see turning into unicorns today were actually conceived 10-15 years ago and lived a quiet life outside the hype (as was the case for all our marketplace businesses at one point in time).

2. Stick to what you know and focus where you can add more value than others

Schibsted has tons of experience embedded in our various teams in the Nordics. We also have strong brands which reach the majority of the Nordic population daily. This is the time to use those assets and experiences and invest in ideas where we can help accelerate them beyond what other owners can.

3. Revenues are vanity, profits are sanity

A start-up or new organic business doesn’t necessarily need to be profitable in the near term. But your unit economics need to be! That is, selling a customer a product for 1 USD that costs you 2 USD to acquire is not a sound business model (it’s scary how often founders miss this).

4. Love your founders and leaders who can adapt to changing conditions

If the world changes, your plans need to change with it (although the vision can remain). Smart founders and lea­ders are the ones who are ready to pivot and change both strategies and short-term plans when customer sentiment rapidly changes or when the funding environment or technology evolves.

5. Understand that companies are built, not born

If you’ve built, or supported, an entrepreneur from company conception to success, you know that success truly is a factor of thousands of gruelling fights and mistakes. In a start-up, you chew glass and barbed wire for breakfast, but you always make sure to make one good decision for every two bad decisions. You also incorporate those tiny feedback loops from your customers into corporate strategy and culture on a weekly basis. Over months and years, those tiny, accumulated improvements could be tomorrow’s category winner.