A positive spiral is spinning in the Danish startup ecosystem, where success breeds success. Resources and know-how from established scaleups are breeding grounds for new ones, and the well-calibrated startup factory means that the next disruptor is never far away.
Teamway is a startup that offers the same thing as thousands of others: helping clients with their IT development. Yet, the company has seen extremely rapid growth since its inception. The company’s revenue in its first financial year was several million Danish kroner; in its second year, this has already been accomplished multiple times over – with prominent companies such as Ikea, Better Collective and Gamerpay as clients.
You see, Teamway is no ordinary consultancy. For starters, their team-based network manages to attract some of the best tech talents around the world and their 627 members are based in a total of 59 different countries.
»When it comes to freelancer marketplaces, most freelancers still feel like they’re at the mercy of the marketplace—just as they were previously at the mercy of the corporations they used to work at. They’re not incentivised to contribute to the network effect of the platform, which is why it was important for us from the start that the platform should be on freelancers’ terms,« explains Teamway’s Co-Founder & CEO Søren Nørgaard. He continues:
»We’re transitioning from gig economy to talent economy. In our model, freelancers are no longer just marketplace assets, they’re co-owners too. When you join us, you’re rewarded with co-ownership when you contribute to the network – you earn tokens when you invite clients or talent on board, screen applications, write content, mentor others, work for a client and so on. In that way, we are creating a new employment model which is more fair, inclusive and empowering.«
Much like other freelancer networks, Teamway is a platform that makes it easy for freelancers to get work and easy for companies to hire talented freelancers and manage their remote and flexible teams. Where Teamway differs—and perhaps the key to its success—is in the alternative ownership structure. When a freelancer is accepted to the platform, they get part-ownership via blockchain tokens. And it’s evidently a popular model: Right now, Teamway gets 1,300-1,500 applications from tech talent every month, of which only five per cent are accepted into the network.
»We attract the best because we have the best conditions. Our fees are low, as all members participate in running the network, which means that freelancers receive almost the entire amount the client pays, and they automatically become co-owners,« explains Nørgaard.
The novel ownership structure also means that members have a say when it comes to business decisions for the network. The core team can not just decide to raise its fee, as the fee is dictated by a smart contract on the blockchain.
»Our model means that we can’t just change the rules of the game without the community’s consent. Things like fees are managed by smart contracts, which can only be changed by a community vote. So basically, we’ve gone from ‘don’t be evil’ to ‘can’t be evil’,« says Nørgaard.
DHD: A budding ecosystem
Teamway was founded during the COVID-19 pandemic, and has therefore been 100% remote from day one. Its members are located all over the world, and the core Teamway team is spread around Europe. Despite the many potential locations for Teamway’s headquarters—including Silicon Valley, where Søren Nørgaard has spent a good chunk of his career—the company has chosen Denmark as their base, and there are good reasons for this.
According to Nicolaj Christensen, Interim CEO at Digital Hub Denmark, Denmark has a good “startup operating system”:
»Our public sector is extremely digital, which makes for a much smoother process—it takes minutes to start a business here. And, generally, we’re also a very digital society. We adopt new technologies quickly and there’s a high level of trust. All of these things considered, Denmark provides a great ecosystem in which to test out new companies,« he says.
He also points out that the ecosystem is a bit of a duck pond, where everyone knows each other and projects like TechBBQ and StartupAarhus encourage this kind of mingling. This means that when a company does well, there’s a ripple effect that everyone can learn and benefit from.
»We had a generation of entrepreneurs who went over to the United States and did well there. They returned to Denmark with capital and know-how, which they injected into the ecosystem we have today. Three or four generations later, we’ve got successful startups like Pleo, which continue to inspire its employees to start new companies. It’s a self-reinforcing spiral, the effects of which we’re only just beginning to see in full,« Christensen explains.
This development is also evident in terms of how ambitious Danish startups have become. These days, it’s possible to start a company in Denmark that grows and becomes international. Instead of selling out to an American competitor for 100 million DKK, companies stay and grow in Denmark until they reach a unicornA unicorn is a term used to describe a startup company that has reached a valuation of $1 billion or more. More valuation. The bar has been raised, but it’s also raised new problems, one of which is lack of talent.
»The problem we’re continually faced with is the talent shortage. That’s our main barrier to growth here, almost regardless of industry. Tech startups require highly specialised talent to help them grow, and if they can’t find it here, they have to go elsewhere. Which is a shame, as it puts a stop to the spiralling ecosystem we’ve managed to develop,« Christiansen concludes.
A startup factory
As the ecosystem has matured, several common models for startup success have emerged. One of the latest trends includes so-called “venture studios”: startup factories that come up with ideas, assemble teams and acquire funding.
One of the most well-known here in Denmark is Kring, who have put an impressive number of startups into the world since their inception in 2016.
»A general rule of thumb is that 80% of startups fail, 19.9% just about manage to survive and the rest become unicorns. We’re trying to flip the statistic so we have a success rate of 80%,« says Jacob Madsen, Co-Managing Partner at Kring. He continues:
»We’re not necessarily better at coming up with ideas than others, but we have a lot of experience validating and testing ideas, and shutting them down if they’re unlikely to work. Ideally, the 80% that would fail, should fail before they become an actual company.«
This method is what Kring calls “Speedbooting”. The venture studio is a co-founder in all the companies they start, and provide some standard frameworks for tricky legal aspects like ownership agreements, accounting and reporting. They also ensure the initial funding, which means that the entrepreneurs who make up the founding team can receive a salary and focus on the product rather than trying to pay rent. All that remains is to match the right team with the right idea.
»Our model means we’re able to attract talent that doesn’t have a typical entrepreneur profile, but comes from a different background entirely. For example, we have people with management backgrounds from Bain, Implement and McKinsey,« says Madsen.
Although Kring has its first unicorn to boast of, their methods have proved so viable, that the venture studio is about to close another round of Speedbooting funding for 100 million DKK, enabling them to invest in their future startups up until they reach Series A rounds.
»Our hands-on approach makes it an investment model that can outperform private equity and traditional venture capitalFuel for startups' rocket ride. Venture capital is pro investors who create pool funds to seek innovation, and to mentor. It is high risk, high reward journeys.... More. As for increasing innovation in Denmark, I think it’s a model that’s very interesting from a societal perspective, because we’re laying the groundwork for the creation of new and viable Danish companies,« says Madsen.
The society of the future
Teamway is on the brink of becoming a fully token-based Web 3.0 blockchain community. And even though the model is brand new, the company’s founders have high expectations for how it could alter the market in the long run.
»It’s likely that this model will utterly outstrip traditional Web 2.0 marketplaces and, to some extent, agencies as well. The challenge is how best to scale. What happens, for example, when we reach 5000+ members? Of course we can adjust things along the way, but we can’t change the basic principles. That’s why it’s important that the economy of the entire community is well thought out from the start,« says Søren Nørgaard.
When a community has its rules tied to the blockchain and said rules are determined by the community itself, the usual “fuck it, ship it” startup approach doesn’t work.
On the other hand, the potential for long term success is enormous. Several startups have already spun out of teams formed in the Teamway platform, hinting at a future where startup incubation could be done very differently.
»This is phase one, where we connect the best tech talent with companies who need it, without too many fees or legal homework. Where we go from here might be to think about how to create similar communities in other contexts: new startups, incubation, funding and much more—the possibilities really are endless,« Nørgaard concludes
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