February 19, 2015
How We Built Excosoft: The First Bubble 1986-1991
Small and Lucky
In September 1986 we were on our own. Some lucky circumstances helped us survive:
- Ericsson Information Systems (EIS) was one of our customers and they were focused on the newly evolving PC market. We got an order from EIS to adapt EXCO for DOS— the Disk Operating System from Microsoft. We needed somewhere to be and they let us sit in a room, together with other consultants, in the big building very close to the Kista Center. After 6 months, we were ready. We got 80,000 Swedish Crowns for the job which was a lot of money.
- One of our biggest customers, ABB Automation in Västerås, had been holding off on some orders until Excosoft was officially founded— these orders were now occupying most of Lennart’s time.
- My father, 69 years and newly retired, asked me if I needed help with accounting. He had studied law and worked in the Department of Agriculture his whole life, though he claimed he had taken a course in Double Entry Bookkeeping.
I accepted his offer without knowing how extremely important his contribution would turn out to be. Keeping track of the financial transactions, paying taxes in due time, establishing bank relations and getting a credit check, paying salaries and invoices, and much more— all this just to function, to support the basic survival needs of the company. Meanwhile, we nerds focusing on programming didn’t have a clue! But my father, he solved the task splendidly. And he didn’t even charge us anything!
After the EIS job, we rented a little room from Radiosystem AB which had its own entry. It was located in the north of Kista. Now we started to feel like a real company. Pär joined the company. And then we hired Anette, realizing we needed a receptionist.
Here we are in 1987— Anette, Peter, Pär, me, and Lennart:
What happened next? Radiosystem was growing and needed our room. We found our next office in a corridor of this building located in the south of Kista:
Getting Help from an Expert Doesn’t Guarantee You Anything
I knew all about the so-called “entrepreneurial trap,” i.e. the entrepreneur who tries to micromanage everything and doesn’t trust anybody else. Determined to avoid the trap, I engaged a consultant who claimed expertise in building and running companies.
The consultant facilitated a workshop in which we sought to establish the company mission. This was extremely important, according to the expert consultant—everything we did should emanate from the company mission. Sorry to say, we did not find our mission in this workshop. A few months later, the consultant company went bankrupt!
Looking back, I now have a different view on experts. Engaging an expert does not guarantee you anything. In the world of market competition, expert rules can be valuable— and useless. The expert I value most highly today is my gut. My gut feeling has, over and over again, been correct, though I haven’t always paid it proper respect. In the years to come I would make a lot of bad decisions.
I decided to step down as CEO and hire an eager young man, Per, to run Excosoft and expand the business. Per had a lot of good ideas, but we experienced a clash of cultures. Especially Lennart, being extremely customer-focused, did not enjoy the hard negotiations Per initiated in order to get more money out of our customers.
We engaged a recruiting company, The Erva Group, to quickly increase our staff. There exists an inherent problem in the recruiting company concept: You specify a profile, they introduce you to candidates, you reject them, they introduce more, you reject, etc. After a while, the relationship starts getting inflamed and you feel obligated to approve of the next candidate.
We quickly hired 15 people. Many were excellent, but some were catastrophes:
- We hired a Financial Manager, Yvonne. Yvonne came from a very big company with hundreds of millions in turnover. Her first step was to hire an economy assistant to do the actual accounting. I now had 2 people doing the very job my father had done for free.
- We hired a Consultant Manager, Gunnar. Gunnar came from SE-banken Data and he was used to having budgets. At a workshop he proposed the following structure:
My horizon in those days was a couple months ahead. Now, according to Gunnar, we should produce theoretical plans 3 years ahead in 5 different areas with a total of 37 items. This resulted in another clash of cultures.
- We hired a VAX/VMS expert, Jan. Jan had been a successful consultant with a high fee and 100% utilization. However, we were not able to sell his services to any of our customers.
- We hired a CEO secretary, Anita. Anita was a traditional secretary who had helped CEOs with writing letters and administrating travels.
After helping us hire the last person, the Erva Group went bankrupt.
Lennart listened to his gut feeling and he and Anette, together with a few others now left the company.
The corridor was not so “sexy,” so we moved again. This time, to Pronator’s House in Akalla, just north of Kista:
It was so fancy. Everything was in glass, there was a fountain in the reception, our conference room was a narrow triangle, we had a bar in the center of the office, etc. Fancy, but hopeless: Freezing cold in the winter, too hot in the summer.
We decided we wanted the interior furnishings to match the elegance of the building and engaged an interior specialist. This is one of their offers:
The sum, excluding VAT, amounted to over one million Swedish Crowns which was extremely much money in those days— and especially for us.
The First Bubble Bursts
Then, in 1991, Sweden experienced the real estate crisis. Everyone believed estate value would continue to rise but as with every bubble, it suddenly collapsed. In a strange way this affected the whole economy, including our customers. Our incomes suddenly decreased, but our costs were still huge. I had to fire 8 people, including Per. I was back as CEO.
The office was too expensive. Our landlord released us from our contract and we were allowed to move to Storgatan in Solna, not so fancy but very functional:
We survived the bubble, but we were hurt and beaten by the stark reality it presented us with.
But we were also wiser. Now followed many years of sound growth and inspiration-fueled development.
Nine years would pass before we would be absorbed by the next bubble— the IT bubble of 2000.
In the meantime, feel free to explore our blog for more stories and insights from our techcomm experts!