We turned down the highest bid: the whole story of the partial exit from Västerbottenssåpa #103

A warm welcome to a new episode of 0 to 100. With me again today I have Fredrik Ankarsköld, and today is no ordinary day, because today is your second time here, and you are not a guest on the podcast. We have now had so much feedback from the whole community and all of you listening that Fredrik is joining permanently. So a round of applause.

Yay. [laughter] It is so much fun, because you and I have clicked so well, and we already had a good flow before, and we have had lots of lunches, and now we are going to start doing the podcast together for real. So this morning we sat here booking up, you know, the calendar and checking we could sync things so we have several recordings every, one recording a week at least, so we can publish on Thursdays as usual. And there is a lot to talk about. You had a near-death experience just yesterday. Do you want to mention that briefly before we get into today's episode? Yes, for those who see me and wonder why my nose and chin are all red. Is it just because yesterday I wanted to try whether I could fly?

No, but I was riding a Voi to save time, and they had closed off the cycle lane, and when I was turning off it, the curb was a bit too high, so the wheel just folded over and I went flying like a catapult. But I actually got away with just scrapes. I did a face-plant, so that is why my nose and chin are red, and then I scraped up my hands and knees.

But otherwise it went quite well. I did not break anything, which was a relief. I have two acquaintances who work in the emergency department, and they have said they will never ride an electric scooter because too many people come in with bones sticking out and things. And when I got to the office yesterday to patch myself up, one of the colleagues there said his friend broke his collarbone and dislocated his shoulder when he fell. Then I thought: thank God I got off so lightly.

Yes, those electric scooters are lethal. Yes, but I have not got, I have not got any statistics, but it undeniably feels as though it is easy, and you did not have a helmet either. No,

no, because I have bought a helmet, but I had left it at the office. But I have been through worse before, because when I cycled around Sicily when I was younger with some friends and one of their parents, I was hit by a driver.

Oh. So that was closer. But I do not have many memories of that; I mostly woke up in hospital and had scraped the skin off my whole back. Oh, bloody hell, that was not the nicest experience.

So there was a blackout. Yes, I have a photo. They took, one of the friends for some reason took a photo while the ambulance crew was looking after me. But I do not really have any proper memories. I have faint glimpses. But then it is more: was that because they told me, or because I remember it?

Mm. Mm. But another exciting thing I look forward to talking about today is that you have now helped sell Västerbottenssåpa. Yes. Finally. Or, yes, finally. No, that is probably the wrong expression. The plan was never really for us to build a company to sell it.

Mm. But when you have been involved in such a long and, in this case, drawn-out process, mm, then you do think: finally the process is over, so we can focus forward on phase two, or really phase three, of building this company. Phase one can be defined as the founders starting the project sometime more or less as a hobby. Phase two is when we come in as an agency, help them and restructure everything, and really get it to expand, with all the growth everyone has followed on the podcast in practically every episode when I have complained that we have no raw materials, no production, we have changed warehouses, you know, everything. And now phase three, when we have brought in outside expertise in the form of Vendis Capital through its new fund. We are the first investment in that fund, and we

will see where it takes us. But I have extremely high expectations and know we need to roll up our sleeves once again. What made you fall for them rather than someone else? And another thing I also find so interesting is that I film the podcast for Clearwater, who are brokers in mergers and acquisitions.

Mm-hm. What they said is that it is more common for entrepreneurs receiving bids not to choose the highest bid. Yes. Because they often think about the company's future, what it will become. Even if they might no longer remain, they think about the employees. Yes. What was your reflection when you sold?

Roughly the same. We were lucky, or lucky, I do not know, we had skill, or I do not know what you would call it. But when you build a company that is very profitable, especially in retail at least, where it is fairly unusual to have that kind of margin structure and potential margin improvements in the coming years. Because sometimes you might have two or three employees and be very profitable, with 20% on the bottom line. But then when you scale up and have 20, 30, 40 employees, you have built an organization and have too much overhead, and suddenly profitability falls. Here we have somehow managed to prove that we become more profitable over the years.

Marketing becomes more effective over the years, which is very unusual in e-commerce, and customer acquisition becomes cheaper over time. So the more people know about us, the better we have managed to perform. And because we have that, plus these margin improvements we see and can, have been able to prove, and really have that whole retail part still ahead, where physical retail is barely touched. But we have a proof of concept with over 150 stores showing it works really well. They want more from us. They want to buy very often. We will get, we get and will get superb placements, and have purchase contracts on the table where we really just need to produce more and then we will roll out in grocery retail in Sweden. So with that said, we had a kind of [unclear in source: fallos] in retail or the commerce space. We received [clears throat] lots of lovely bids from 10-plus

players, without saying the exact number, but there were very many players. It felt as though the whole industry basically stood still for a while, and no companies were sold, no one received investments. Those I spoke to myself said: no, our owners will not let us invest; they say the directives have changed. People no longer believe in e-commerce. The companies we have invested in are still in the portfolio a little too long. We first need to divest some other old holdings. And this is what the usual e-commerce investment companies are saying.

Then I thought I did not really have any hopes or expectations, but just became more positively surprised that so many bids came in. That was really step one. Then step two was that we now had to sit down as the ownership group and see: what will be best for the company in the short term, in the long term, what will be best for us? Who do we believe in most? Who, yes, how do we make this company not just up-and-coming, but actually a household brand that lives on and perhaps remains when we are gone, hundreds of years from now?

Those aspects mattered most to us. Did we take the highest bid, as you say? No, we did not. Mm. We had better bids on the table. In percentage terms, roughly, how much better were the other bids? Well, to begin with, the lowest and highest bids differed by more than 100–150%.

Yes. So there was a very big difference in how, and then someone interested like me wonders: how are companies valued? It is very difficult. I know Felicia Nordin, I sat talking to her about it because she also works in that area at Clearwater, and she explains similarly that she is fascinated: it is the same numbers, but they have very different calculators for what comes out the other side.

Mm. Because they too have had cases where the lowest bid for one of their companies was 300 million or something, and the highest was 2.2 billion. Mm. But all the buyers have access to the same data. So it is quite interesting what affects it.

And I think that will probably continue to be the case. It has to do with the buyer itself. Some buyers might not be quite ready but put in a bid to see. If no one else puts in a bid, perhaps we get this at a very good valuation.

Mm. We received bids like that too, where afterwards I asked the people who made the bid, because I still thought there were sensible people behind one of the lowest bids. I asked: look, now I have had some guidance on roughly, because you bring in an adviser in a process like this, we brought in, who did you bring in?

We brought in MERGE, and MERGE Group is a newly started company, two fantastic guys, one called David and Anton, who started it. Mm. I did not know them before, but we got to know one another during 2024, formed a bond and saw that these people are sensible, they really want it and they go that extra mile. When you have an adviser, they will sit down and do the whole presentation, the sales pitch. It is like an estate agent making your pitch deck, like when you sell a house and someone else takes the pictures, puts all the material together, handles the viewing, takes in all the bids and guides everyone there.

[unclear in source: Ser tidig har] a nice prospectus, follows up, yes, has different techniques to get the bidding up. Yes. So there is that, and they guide all the bidders: the sellers will not accept a bid below, say, five times EBIT, or ten times EBIT, or 15 times EBIT; this is the minimum threshold. If you come in a few percent below, or ten, perhaps you are still in the game if everything else fits. You know, there are all the other terms you usually have. But if you position yourself 50, 60, 70 percent below, you will be deprioritized straight away. Then you have just spent a load of time. In some cases we also took meetings with firms that were interested.

These are firms expressing greater interest, wanting to prepare a bid and get to know the founders a little better. So then you go around and meet either at our office or theirs. Sometimes there is a follow-up meeting, then another follow-up meeting, then you answer a few emails. You prepare more material, so you do a great deal of preparatory work. Not just on the broker's, the advisory agency's side, but also for us in the selling process, because we want to tell them about our company so they get a fair picture. So you do not get a bid and then during a process they say: yes, but this is missing, or this was not in place. You really want to get all the skeletons out of the closet and show that this is the

actual situation, because it will come out sooner or later anyway. We just wanted to get all that out of the way immediately and show: these are the forecasts. These are the problems we have had. These are the problems we actually have right now. These are the ways we think we can solve them. And know that this is what we are missing. We had, we have a skills shortage in the company. We had no head of retail, even though retail is a big part of our future forecast. So we know this is something missing from the company. This is something we need help with. Those aspects need to be on the table, because then the companies making bids can assess what it costs to fix. Once you have that on the table, only then can you get fair bids and compare

them with one another. And the agency helps with that. In a way the bids come in very differently. Then you have to consider partly the price tag you get, partly the percentage you will sell, partly how much money is in what they call secondaries, which is money for you, so those are secondary shares. They are your existing shares that I am going to sell and transfer to new hands.

Or it is a new share issue, or money into the company. Money into the company is money you also benefit from on the company's behalf, but it is nothing you see in your own bank account. Most transactions in the industry are new share issues, where equity companies or VC or funds usually put money into companies to make them more profitable in the future. Founders think this is a really good thing, because suddenly they have lots of capital to work with in the company, but perhaps you have not taken out that much money as a founder.

On our side, we were already profitable. Things had really been very good for us from the start. So money into the company is welcome, but that was not our first priority. Instead it was: okay, how do you structure a bid where, well, secondaries, as they are called, are prioritized?

Mm. So there are lots of things to consider in a bid. Then you have lock-in effects. You can get part upfront, part in some kind of exit bonus. You can get bids where you receive things over time. You can have targets set, or: okay, you have set a budget. As long as you achieve this budget, you get X, Y, Z. If you do not, there is leverage, and if you fall below 50% of your own budget, then you get nothing. So there are very big discrepancies in how bids come in. Then there are just simple bids. Yes, you have X for 100% of your company. I am bidding for 50.1% of your company.

Mm. Really, perhaps we ought to interview MERGE and talk to them about common pitfalls and those aspects. But I can mention a few. Yes. Because when you look at one of the very most common things, it is when a, the first mistake is when, now perhaps, I do not know, was it you who sought out a bidding process, or was it someone making a bid that triggered the whole thing? First there was a lot of interest in 2024 from several players who contacted us wanting meetings. We had no adviser

and then we said: okay, since we are so early in the phase and already have interest from the industry, is this even something the whole ownership group wants to do? Do we want to bring money into the company to accelerate forward? Because we need to invest in machinery going forward. We will make a larger investment in, yes, then I did not know what it was. But now we know it is Morgongåva, warehousing and building our own warehouse. How much it will cost, we do not know. We will need to build our own systems. All of that costs a lot of money. We did not know how profitable we would be in 2024. We did not know how profitable we would be in 2025. So then we said: okay, it makes sense to get help from an adviser. That is how it happened. Then we started asking around, and we

talked to, yes, the ones you mentioned too, Clearwater. We talked to other advisers in the industry, and we landed on MERGE because they were simply hungrier. They showed initiative, had done much more research before the meeting, and basically knew roughly what the company would be worth if we followed the development curve we had. We did not need to send that many numbers; they found all the numbers themselves. They placed online orders for our products and had tested the products, and said what they really thought about them, which we thought was cool. So we were impressed. Then they turned up in Vilhelmina at production before they had even signed any agreement or anything.

They just wanted to see what it looked like. That is where they went the extra mile, you can safely say. That also explains a bit, considering they were newly started, but still showed that

we will do everything for you to succeed. Yes, I do not remember whether one of them was a partner at Clearwater or both were, or, yes, it was something else. They were partners somewhere, at another place. I do not remember exactly; it was a long time since I heard their

Mm. But then we can mention, going back to the most common mistake, that you take the first bid that comes along because someone might come there. Because one thing some companies do, or companies, institutions, funds and so on, is hope to buy something cheaply from someone who does not know enough.

Exactly. They come there and say: 'Yes, we will give you 100 million for your company,' and perhaps an entrepreneur thinks: wow, 100 million for my company, sold, without reflecting that it might be worth, I do not know, 400 million.

Yes. So the first mistake is taking the first bid, and the second mistake is not getting help from an adviser. Because I think statistically you get at least, on average, 30% more from selling the company if you have an adviser than if you do not. And it does not matter which adviser you have, as long as you have a sensible one, of course. There are bad advisers too.

That is absolutely crazy if it is 30% more. But you felt that during the process too. Mm. I did a process without an adviser with the shampoo company, and [snorts] [unclear in source: befakt] like that. Someone knocked on the door. We got a very good bid. In a way we thought this was very good. We did not need an adviser.

Could we have got more? Who knows? What if we had got 30% more? Yes. And the things that, are they called MERGE? MERGE. Yes. That MERGE does are also, what lots of people do not know is that the first bid you receive is before they know enough about your company. Then some of these have it so they will do everything in their power to bring that price down by finding holes in the company, saying: yes, but this will lower the valuation. Yes, this will lower the valuation. That is one of the things some of these dodgy companies do. Everyone says it went fucking well for you there.

So sometimes it does go well. But yes, that is true. Those were discussions you had both times I have made serious exits. I have said in advance: okay, just so we know, this bid you are coming in with is the lowest bid we will accept in any negotiation. So there will be no negotiation later.

If you find something along the way, we would rather you dropped out. Then you can say so. But you will not be able to lower your bid by X%. And if you set guidelines like that, you know it is take it or leave it.

Mm. And as long as you yourself are willing to walk away from the table, that comes across during the process. I was always willing to walk away. So there was no commitment from any of us that we needed this so much we could not walk away and choose the next bidder or next partner, which means you have a lot of very good cards in your hand. Not everyone has that, so that is the luck in the whole thing, in a way. But as long as you do have it, my firm advice is: set those conditions early. All your non-negotiables, set them early in the process. This is ours.

Then somewhere you get to know one another during the process, and you can compromise on a few things here and there, because you also have to meet halfway somewhere. But valuation is one thing I think is, I think, as you said, it is underhanded to set a high valuation first and then do everything in your power to lower it.

Mm. Because you change the plan or process or something else. Then of course, if you do not follow the budget you said you would during the three or four months you are being examined, it is very strange for you to keep the same valuation.

Yes. And then I come to the second point, that some companies trick you through the clauses. Yes. Because you mentioned earlier that in the future you can get this money. Then some companies say: you get 300 million for your company, you get 50 million now, and the rest will be paid out if all these conditions are fulfilled.

Exactly. Then they might be written in a way that makes them almost impossible to fulfill. Then the million, what is it called, the entrepreneur thinks: I have got 300, when in reality they will get 50. Yes, that is true. I usually reason like this, at least with the companies I go into: if what I am selling for now is all I get, am I happy with that, yes or no?

So if you have an exit clause or exit bonus, whatever you might call it, or something similar where you trade for shares in a listed company, make sure you are happy with what you have got in the first round, because you never know what will happen in the future.

Mm. And things can happen. That is also part of why you usually lock in gains in deals like these, by selling perhaps a portion, and then you really want to be part of the journey and go the whole way. That was the case for us too, that we really want to, we all believe in the case. We wanted to keep as large a share as possible. So it was also that if we find a fair bidder who wants to buy a smaller portion, we find that a more interesting bid than someone wanting to buy a larger portion, like the whole company.

Did you have any division with A and B shares and voting rights that affected how you, I cannot go into specifics, but there were bids around those things. Yes, there were, there always are

or I do not know if there always are, but I think there almost always are, because it is not underhanded, but it is quite common in the industry that you get, they want to buy a minority but act as a majority. So by buying just 20, 30 or 40% of a company, you can still get control over the company if you have different types of share classes where they control the voting rights, control the board, control other parts that indirectly give them a veto on things.

Mm. But you hold a majority of the shares. That, yes. Yes. Because some people think that if you own 51%, you have a majority. Yes, if you have the wrong type of shares, you do not.

Yes. And even if you have the right type of shares and everything, the stars are aligned, and you have over 51%, you need a clear majority to pass certain kinds of decisions. So 51% is not enough. Then there are a fair number of minority protections, and we do live in Sweden, so there are laws and regulations. As long as you follow industry practice, you come out quite well in terms of minority protections.

Mm. So there are advantages. It is not exactly like the US. No, if you sell to an American entrepreneur, you know they want both belt and braces. Something I know certain funds also have today is insurance, so if they buy the company and things do not go quite as they expected, there is insurance even for funds.

What? I did not know that. Is it, I had no idea. What do you mean by insurance, like an insurance company? Now I do not know the details of this, but there are certain types of insurance such that if it turns out after all the due diligence and everything that not exactly everything was as it should have been, there is insurance that can cover some of those things.

Okay. Fair enough. I had no idea. What they do there is not our concern as entrepreneurs. But no, what I do know is that the processes themselves are very expensive. Mm. Whatever the process, some kind of M&A lawyer is always involved. So law firms have to review, draft, write and guide you through the contract law.

What due diligence did they do? Because they can sometimes spend several million on that. Yes, it can easily cost. I do not know what it cost, and I do not know what it usually costs. From what I have discussed with people in the industry and with MERGE, just a law firm can cost between half a million and two or three million in transactions like these.

Mm. Then you have a finance M& or management consultant, usually one of the big four: PwC, Ernst & Young, Deloitte, something, who usually go through the numbers, check that the finances are in order and everything has followed laws and regulations, that the accounting is done properly, the inventory is not inflated, or that things in the books are as they are. They usually find things here, and their job is to find things. So you also become a better entrepreneur after going through a process like this. It is welcome. They can also cost from half a million upwards to a few million.

Mm. Then you have advisers or specialist consultants you bring in depending on the case. I have been involved in a number of cases and helped many VC companies look at e-commerce companies they want to buy. What I look at then is from the marketing side or the e-commerce side. What does the tech stack look like? What is the potential? Are these inflated figures in the forecast? Do I see a declining trend somewhere? You do basic, not basic, but fairly fundamental interviews with the owners. You also look at the numbers and really the different platforms, connect the data and then try to understand: is the forecast realistic?

Has the company reached its peak? Or is there more to get from the existing market? Because of course, if you say in your forecast that we will expand to ten new countries, yes, but a bird in the hand is better than ten in the bush, as people say. And that is

mm, a true story here too. So it is much better to dig where you stand. Is there more to get where you are already good? In this case an international marketing agency with several thousand employees was involved, and they were going to do their due diligence on us, which I thought was a little strange, because we knew e-commerce marketing much better than that agency. Their job was more: okay, what does the market look like?

where they operate, and what does the market potential look like? Was there anything you learned from them? I learned, yes, I did. They researched the market, and it was very granular. They had gathered and bought a lot of data. I do not remember the name of the company they bought data from, but they looked, for example, at how quickly certain products move off the shelves. How large a share, very precise figures for turnover, speed, and, yes, they did well. Then they made me create very good cohorts. Mm.

For our own range. We had a fairly good handle on it, but not that granular a grasp of seasonal variations, all the launches, historical data. They were very good cohorts, and then the discussions that followed were: okay, should we focus more on a particular product than another?

Mm. Perhaps we should, because clearly people come back more. There is more underlying value. People are happier with that product. People who buy that product often come back and buy another product. So more those kinds of discussions. It was really good. I loved the marketing part of the process, because then you could air your own thinking, get a sounding board, have people with different views and ideas. I like it when people want to discuss things.

Mm. So those kinds of consultants exist too. We also got a consultant who is very good at retail and brand aspects, who could come in and really examine the bottles and say: yes, but our bottles are quite [unclear in source: intressande]. If you just saw the bottle

mm, outside the country, for example in Germany or Denmark, it tells you nothing. What do you mean, såpspray? Soap spray. What is it? What is it good for? What is it bad for? What is it for? Which room is it for? How should you use it? It is very unclear, but online it feels very descriptive. You can, I have lots of space on a PDP, but you do not have that when it is in your hand. On the product page or product detail page, you can have lots of pictures, videos, instructions, questions and answers, guides, PDFs, but you do not have that in the shop.

I think like an e-commerce retailer. I am optimized for e-commerce, the product is optimized for online and for being mainstream in the home. Better-looking than what I thought then was on the shelves, but not so good-looking that it feels like a super-premium [unclear in source: luxury bereda] and similar product.

It makes me think of Mathem when they changed typefaces and colors to feel, to give a cheaper impression than before. Yes, but that is, I would not take it quite that far, but I know I have seen other shops do it. Mm.

I know a shop in Flemingsberg in Stockholm that they had renovated, completely renovated, really modern, minimalist, everything looked good. But people shied away from going there because they thought it was expensive. Then they just put products in piles along the way so it almost felt like a bazaar in the grocery store. [clears throat] Suddenly sales just [unclear in source: sju hög] and, yes, shot through the roof.

It is fascinating how things like that affect it. Yes, psychologically. It feels cheaper, you perceive it as cheaper, so you are much more likely to buy it. But I think the same about supplements, because I remember wondering before why some containers were so large in proportion to what they contained. Until I got the explanation that it would have been different if they only sold through e-commerce. Then the containers could be quite small. It would even have been an advantage.

Yes. But because they are sold in shops, the container itself is advertising space. So you want the container to be larger because it takes up more space. Mm.

On the shelf. Which makes it easier to see compared with it being tiny to optimize the size. I also think it can be that you think it is bigger, you probably get more, more stuff, more value for money.

Mm. But you are shipping air, so there are disadvantages. But I understand that it needs to be a larger surface in a shop, that you want to take up space, you want what you see as an advertising pillar.

But something I like that you did, because of what you are saying about those birds in the tree versus the ones you have in your hand. Before, you could say: yes, we could expand to 25 markets. The problem is that today most people trying to sell their companies talk so much about how we could expand to these 25 markets. Then I think of Såpa, because you did tests in real stores in retail.

Mm. So you could say: here we already have a bird in the hand. Look how well it went. That can also lead to a higher valuation because you have actually proved stores work. It is not just a made-up number.

Mm. But I think that matters, because PE and VC and whatever they are called, when investing in a brand, want to see substance behind the numbers. How did you arrive at the forecast? If it feels as though the numbers were plucked out of thin air, they will quickly poke holes in it. If, as we did, you can show that they are, we have statistical significance, not just in one local retail area but across Sweden, where we have carefully selected certain locations and stores, and have data from all of them showing a clear average. There are better stores and worse stores, but this is the average, and we see we outperform everything else on the shelves. We get high repeat purchase rates. We get, we have good margins and so on. Then you can scale

it up. Mm. And we have, we have orders. In the US people talk a lot about purchase orders that have not been delivered. In Sweden people talk very little about that. But if you have a purchase order from Walmart that you need to deliver, of course it raises your valuation, because fulfillment is usually seen as much easier than selling in and getting onto the shelves. In our game we will make haste slowly. We have always said that. We do not want this to be a fast-growing rocket, but it has happened to become one. We make haste slowly. It is much better to build something stable over time than just up quickly, then get growing pains, then down just as quickly.

Mm. If that makes sense. Yes, I follow completely, and I also think that is one of the things that can be a mistake. Sometimes you can grow out of a problem, but sometimes if it does not work on a small scale, scaling up means you scale up the problems.

So there are different approaches. Some scale themselves out of a crisis, and others have to fix the crisis first before they can scale up. Exactly. In our case it was not a crisis at all, but we did have some growing pains, obviously, and we need support with some larger purchases, and you want to minimize risk. So there were quite a few things we discussed in the ownership group that we felt were important aspects in bringing in an outside party.

Then I also usually say that what took us here is not always what is going to take us there. So if we have taken the company from 0 to 100, now it turned over 116 or 119 million, depending on how we look at last year, with very good profitability and above all margin improvement year after year after year and going forward. Is it the same team that should take the company from, say it reaches 200 million, to 2 billion?

I am not entirely sure. We might need reinforcements in the team. We might need to adjust the team by rotating some people. We might be far too weak to go from 200 million to 2 billion with the existing constellation. So you have to be humble and question that situation too. But what made you choose to bring someone in to grow with, compared with simply thinking: well, we can just hire more people?

We have hired more people too, but if you hire someone who does not share the same risk you do, that person is sitting in a different chair. But when someone has firmly committed money and time, and has an upside in the same company as you, in a way the discussions become different.

Mm. And I, at least, will trust the person taking a risk more. That is also a big reason I know small brands come to me and Porobic Group and want us to get involved, because we come in with hard-earned money I have earned myself over time. It is not as though someone else gave it to me. And people know I am all in, there is no plan B.

Mm. And I, you want it to succeed, and because I have risked something in the whole thing, both time and money, as an entrepreneur you understand we are in the same boat. But if you just go to an agency that will help you, you are not on the same side. You are not in the same boat, unfortunately.

You really are not. What do you think, then, because you have two, there are loads of kinds of investment, but two of them are: one is bringing in capital and using that capital yourself to grow. The other is that you also value the knowledge of the company coming in.

Why did you choose Vendis to invest in Såpa? Partly their fund was one of the few focused on [unclear in source: återbruksaliterat], the green aspect. They believe, or everyone believed in Såpa as a case and a company, and liked the constellation of the founding team, Fedja, Porobic Group, Stefania who ran things as growth manager. Everyone liked that constellation, so nobody questioned the team and that the team we have is good.

However, there are different kinds of investors. There are family-owned companies, small companies that want to be very operational. There are those who are very good at strategy, leadership. We needed help there, and that is Vendis. There are those who want to make something better in the world. And both we, I have said since the start of this podcast, so everyone listening might have heard it, that I want to invest in impact companies, and Vendis wants to do that too. So we found each other there, and I know Sara, who also founded Såpa, wants to do that too. A core value for us has been precisely the green transition and showing that reuse can be profitable, so other companies can follow in our footsteps, because very few companies in circularity receive large investments. I hope we can

change that when people see and read about this. Time will tell. But I know Vendis is one of those driving that change. Then there were very many funds started from 2015 to 2020 with circularity and a green idea in the background. They explicitly said we will only invest in companies that are green in their transition, or green, or have a mission. But then in the end, when they were going to get round two or round three in their fund, nobody invested in that kind of fund because they turned out to be less profitable.

Mm. That has meant there are fewer of those kinds of funds today, which made them stand out, at least when we got to choose. But as I said there were several good interested buyers, and perhaps I clicked even more with another one, and then Vendis came into the picture and you click really, really well with them too, and you are put on the spot and do not know what to do yourself. For me it was very, very difficult as a part-owner.

At the same time we have an ownership constellation. We have to consider many part-owners in the brand. We have the founding team, Porobic Group's team, me, and it is difficult. We also had our fantastic chair of the board, Daniel [unclear in source: Dernhagen], who is involved with me in lots of cases too. All the cases I have gone into in recent years, he has been involved and played a big role. Not least in this case, he was a key person and a real driving force behind Såpa's progress, Såpa's success. Just as Stefania and [unclear in source: Sergion] on the growth and marketing side were equally driving, or equally, they were very instrumental in holding the company together and driving the marketing.

Daniel worked a great deal behind the scenes, very close to the founders, a great deal in between, and not least now during the process. I do not think he, some days he slept [unclear in source: typ inte tr], I was so worried when I saw him, I have never seen him like that, ever.

He is always happy, always bubbly. He was still happy and bubbly, but you could see: Daniel, you are bloody tired. [laughter] And yes, we both know how important sleep is, so I tried to tell him, but it did not work because he is in Bali's time zone, so when he wakes up

mm, everyone here is asleep, and yes. What was he doing in Bali? He works, usually every winter he goes to Bali and works there for a few months. That is smart. Getting away from, yes, all the wet, dreary stuff and the darkness here in Sweden.

More hours of sunshine. More hours of sunshine. Many more hours of sunshine. No, but Daniel is brilliant, and Stefania is world class, so we have an insanely good team. We are, the team makes the company. I might be fronting a lot of what you now see in the media, but in all honesty it is not to my credit. Far from being to my credit that things are going well. Yes, I sat, I helped set the strategy at the beginning. I helped build it up, how it should look, and ideas, and that we should have refills instead of just sending big bottles. Those parts were the starting shot, we, like that. But then the actual operational part, carrying everything through, project management and all the creative quality, all the ads you see, all the emails written, come from Stefania and those closest to her on the team. And then all this operational work on

the legal side, all the bureaucracy, making sure all the paperwork was correct, comes from Daniel. Mm. So yes, I have been sitting doing the podcast. I have focused on my health for the last two years. So I have not been the absolute key person in Såpa's case. But now during the process I was very involved, because I am very good at reading e-commerce and marketing.

And this is a tip I can give those, you listening too: if you are thinking of selling your company, get help from an adviser, whoever you feel matches you and your values. But do it now, because there are certain documents you need, will need in place, and you do not want to be in that crisis and stress in the middle of selling the company, trying to sort all these things out. You would much rather have done it one or two years beforehand and sorted everything out.

Plus, as in your case, perhaps an adviser can say: if you show this as a proof of concept, for example as you did with the stores, it will probably increase your valuation by X percent. So you can get tips in advance that can take several years to implement, rather than thinking: I will call an adviser the day I am ready. Yes, and that is how it was for us too. We got help from MERGE a year before the process even was, it was planned then, we got help and then said: when is best? They advised us: wait a year, get more traction, deliver this budget and forecast. We beat the budget, if the idea was that we would, I

think the first forecast we showed MERGE was that we would turn over somewhere around 100–110 million in 2025. But we beat that budget by quite a lot. Mm. Especially on the bottom line, they did not believe we could make such a big margin adjustment. They had not seen it and said: this is an enormous margin shift. Are you sure? Yes, I am sure. I am very confident in my marketing data.

I see we will have roughly the same team. We do not need more people in themselves just because we grow revenue. The budgets grow, but we do not need more people. Going forward it is the same.

I strongly believe in AI help. We have built lots of tools. We have built our own systems. Then there are things that drive costs too, relocating warehousing. But having two warehouses also provides a kind of security. Partly, yes, it drives costs because you must have products in both places, a team in both places, perhaps a bit more idle time that they are not paid for, that you pay for but cannot use. But if someone falls ill, or if, I do not know, something else unforeseen happens, you still have products you can get out to customers and send. That actually happened very many times in our case, that we had major delivery delays that created customer dissatisfaction, which then

created marketing problems. A great many marketing problems, and mm. All of that piles up, and you do not want too many such incidents when you are scaling fast. Yes. One thing I know can happen to some companies, I have heard of some whose sale did not go through because perhaps they had grown, had good figures, and then lost focus because they put too much into perhaps selling the company, and then lost their sales momentum.

Mm. Which in turn meant the valuations they received became too low, because they no longer had momentum in the right direction. Yes. And that is very common. I do not think you can say it is a mistake, because it will happen in every process. Partly processes are often quite long.

Mm. It can take months to a year to get all the paperwork finished and the due diligence in place, and you also want it to take time. You do not want it to go fast, because you want to get to know the buyer during the process. It is a bit like dancing tango. You want to get to know your partner very well. And during the process you are focused on that process.

Mm. In our case, what I did was take care of the process, because I was not, I am not the most operational person in marketing and commerce for Såpa. I am a strategist and adviser, yes. I am not the most operational person. I attend board meetings. I receive reports. I give feedback. But I am not the one organizing anything. Which means I can take care of the process.

I protect the team. Mm. The team basically had to attend a few interviews and meetings with [unclear in source: tätsitt]. I produced all the numbers and documents and everything needed for the process, which lets them focus on revenue. It still affects us like everyone else. But imagine when you do not have that division of work on the team. Of course if you put your main focus on one thing, the other thing will suffer. If you are used to putting 200 hours a month or 200% into X and then suddenly shift that to 50% because you need to put, and then lots of things come in from the side, because all these advisers they bring in, everyone wants supporting material, everyone constantly demands material, so you need to respond to everyone, which means

in a way that, yes, your time is split with or without an adviser. But without an adviser you are screwed. Even with an adviser there is a great deal to do, because the adviser can help you with 60% of the answers and produce the required material and make it attractive and presentable so you do not have to. But you still have to put in that 40%.

That was also what we discussed, that some of that work can be done beforehand, before the process starts. Much of it can be done in advance, and if you do not, then it is tough.

So before selling the company, what should you prepare in that process? As far as I know, you need a very good grasp of the numbers. You need a financial foundation to stand on. You must know your inventory inside out, and have a good handle on forecasts. Once you have submitted forecasts, you need to make sure you can follow them.

Because if you end up just 10–15% below your own forecast, the whole case can fall apart, because people start questioning your credibility. But of course, the longer from the date you submit the forecast to closing, the greater the probability of a difference or variation. So you can also update the figures along the way and say: this is the new reality we see right now, because market conditions have changed.

The Strait of Hormuz has caused oil prices to rise, which makes our purchasing prices rise, because we needed to increase the price to the customer. That reduces, or something else can happen. The team changes, someone leaves. Yes, God forbid something happens. That is something you need to know inside out. But then all the legal structure can be prepared beforehand: cookie consent, having worked with influencer marketing sensibly, having the agreements, owning your own IP with the brand and site and domain name. All of that can otherwise take time in the middle of a process. But God, all the things you mention here, we could get into IP and [unclear in source: Vipe] and

[unclear in source: USP], all these that handle the different trademark protections, and likewise, as we discuss, design protection too. There is so much you could devote a whole episode to. Perhaps we will in the future, because the thing with this podcast is that we also need to be a little hands, there have to be hands-on ideas and tips you can take away when listening. That is the feedback we hear from you. Do you disagree? If you want it to be broader, we are happy to do that too. We are good at talking very openly. But it is also about having depth in the conversations and getting hands-on tips, right? There are lots of interview podcasts where you get a historical breadth of what has and has not been done, but perhaps you do not learn that

much. Yes. And we, I think we should try to explain as many of the terms as possible. One tip afterwards, because this is on YouTube and YouTube makes an automatic transcript, is actually just to take it from YouTube. You can click to show it, then put it into NotebookLM and ask questions about the chat.

Mm. That is the best. Or paid ChatGPT works too. Yes. Perhaps you cannot fit the whole transcript in. Then you have to split it up. But I would actually like to mention one of the very first things you should do in your preparations. This is almost before you have even built the company: owning your shares in the company through a holding company, not privately. Can you talk a bit about that?

We, yes, I have a holding company, but not all the part-owners of Såpa had one. So what we did was move people's shares from the individual private person to a holding company as soon as we were going to start paying dividends. Why? Well, if you own your shares as an individual and get a dividend and/or sell a company and need, that dividend and/or payment will be seen as direct salary. And salary is taxed very aggressively, in Sweden at least, especially over a certain threshold.

Then after some six or seven million, it goes down too. So it is only taxed at 30%. If you take out, say, 50 million all at once, or 100 million all at once, there is some break-even where, okay, it is fine to take it as salary.

Mm. Because then it becomes almost as efficient as if you had taken it as a dividend from a holding company. But the other thing is that you can defer the tax. Mm.

The first thing is that when you take it out personally, to you as an individual, you will have to pay tax almost immediately, or at least around the same time. Whereas if you take it out later or take it into a holding company, you can pay tax on it later. That also means you can reinvest part of the capital in other projects, or perhaps you have a company you want to create, or an idea you want to realize. Then you can do that with untaxed funds. But if you have taxed it once and then put it into the company, you are working with taxed funds, and there is much less of them.

There is a gigantic difference between having 100 million untaxed and having taxed money you have taken out personally, is there not? Because then if you take, what is it, say at least 30 million extra you get from that.

Yes, it is more. Yes, then, yes, it is more than that. But just think of the return on 30 million, if you only take the part that goes to tax, which

Yes, good God. Yes. Yes. Think of the compound interest effect on that. Yes. So a large part of what I at least plan with the exit money, or exit money, we are still in the company, but the transaction money, is the compound interest effect. You put it into the stock market and the money builds more money. In the future you can invest even more.

Mm. So I always think money now is worth more than money later. For the simple reason that when you have money now, you can invest in different projects. Here I also think of some startups now where you have option programs, where instead of, for example, an occupational pension, you get an option program. What many employees do not know is that they choose to take them privately, which means, let us say it goes, they are among the first employees, the company grows hugely and is sold, and perhaps an employee receives 5 million. But because they have registered it not in a holding company but to themselves privately, they are taxed enormously on it. It is like pension saving in itself, only you do not have to

wait 35 years to get it; you receive it quite early. Mm. The advice you can give here is that you can restructure into a holding company or a limited company even during the process, in the final stages when selling. So there is really nothing strange about it. You just explain: I am doing this for tax-law reasons, or because I do not want to pay tax on the money immediately, I will do it along the way, or I have other projects I want to invest in, whatever. So it can be done, as long as you do it and are transparent about it, it works.

Can the Swedish Tax Agency not see it as a sale when you, between private companies? No, because they are your own, so you have the right to move shares between your own companies. You also have the right to move shares from, sell shares from yourself to yourself, and so on. Then I am not an expert in this field. That is why I have Daniel with me in all these cases.

He restructured things so that the team's shares, which they held privately, ended up in their companies. He restructured it so their company then became two companies. He restructured it so the founders' shares, which they had separately for themselves, moved into a joint holding company, and everything in between, all the agreements that have to be written, and

mm, exactly how it is sold, you know, yes. Yes. He sorted it out. I remember when I sold, there are tax effects that can be triggered when you make this kind of transfer. So I sold, or I had two different companies. One company, let us call it company A, and then I have a company that is Porobic Group. Porobic Group is 100% owned by me. But now I want company A to own 100% of Porobic Group, which becomes my ultimate holding company. Because I want the holding company to own an investment company and a consultancy business separately, so the consultancy business, if we call it that, not traditional consulting, but on paper it is a consultancy business,

is separate from my holdings in limited companies. When I made that transfer, it triggered a tax effect, and it was X number of, so we were, I had to sell Porobic Group to my holding company, so the holding company needed to buy it

and because I am selling the shares, I have to do it properly at market value. So you establish a market value, and it came to X million. On X million you have a tax effect of, I do not know whether it is 20% or something like that. That 20, the state has to get it somehow. So the following year I got this from the Swedish Tax Agency: hello, you need to pay 800,000 or whatever it was.

Mm. Or whether it was one or two million. It was a lot of money that had to be paid in one go anyway, and I thought: good God, I have not actually received that money from anywhere. I have only moved shares from one company to another. How will I get the money out? So I had to, yes, partly make a profit, pay a dividend, pay tax on the dividend to be able to pay the state's tax on something I had not earned any money on. But then there is a debt in a document somewhere from the holding company to me as a private person.

Mm. Because it has bought the shares from me, and sometime in the future you can, like now when you sell shares in Såpa, perhaps get the money out of your holding company without needing to pay tax on it, because you have already paid tax on it once. Yes, that is smart, and it was one of the things I thought of, why it is important really. You can simply google starting a limited company, and there are shelf companies you can buy. I know [unclear in source: Speedis] even has, and you get the shelf company free, although you still pay 25,000 kronor in share capital.

You have to do that regardless. But [unclear in source: speedistar] does not charge anything extra, because they have X number of shelf companies just sitting there, so you get a limited company within a few hours, basically.

That is fucking great. I had no idea. I know I have bought shelf companies, things like Grundbulten, and then you buy them for a few thousand kronor, 3,000 or 4,000. Yes. And you still have to, the whole reason for buying a shelf company instead of doing the process through Verksamt is that historically this process took a very long time. It could take up to months before you had a limited company in your hand that you were listed as controlling. But lately, when I have started companies, it takes days or weeks. So it takes, or weeks means one or two weeks.

Then you might as well go to Verksamt. Yes. So you can do it on Verksamt, and Swedish company formation is very simple. I have built companies in Italy and other countries. Not nearly as uncomplicated there; you need to go to notaries, sign documents, and the process can take months, and you can get questions and loads of things. Yes,

I remember I started a company when I was 23 in Greece, because I had a bar there. Oh my God, there were so many stamps and trips back and forth. The tax agency needed a stamp, and then you had to go to the next office so they could stamp that the first one had stamped, and you carried on like that

forever. Yes, I know. It is still like that today. Mm. That is how it is in many countries. So that is why I say we should be fairly grateful to have a simple system in Sweden, relatively simple. There are simpler ones. The Emirates' system is incredibly simple. You can start the company without even being in the country.

Mm. It is fairly simple. Anyway, we are not going to talk about that, but what you gain from buying a shelf company is this time that the startup process takes. But that time is quite useful to spend if you go into Verksamt, which guides you step by step. Okay. What should the description be? Think about this. How should the company be governed? Think about this. Which [unclear in source: aktiebolagsförordningen], and all those things that are really requirements that must be included, Verksamt guides you through, for example the number of shares.

Yes, exactly. SNI codes. SNI codes. It guides you through a lot of that, so when you buy a company and take it over, you still have to keep changing and updating it later. It is just that you get the company registration number and access as beneficial owner quite quickly. Another addition is that there is a cost even if you, as people say, file a zero return, because it is not, you still have to file a tax return for the company, so it still means annual costs.

Oh yes. To have this. Yes. Yes. So whether you have a limited company or a holding company, as we call it, a holding company is a limited company. The only reason it is called a holding company is that you have no active operations in it, but

you have no [unclear in source: momsing efterskatt]. It has no [unclear in source: momsing], because the idea of a holding company is to hold securities or assets in other companies that might be operational, or simply be that.

Okay, back to the process, then. The preparations. If we go through what the first preparations are once you have the holding company in place? You need a data room. Sometimes the adviser can set it up for you, or you engage a law firm or M&A firm to help with it. So in the data room, as it is so grandly called, it is like a Dropbox or Google Drive that is secure, more secure.

It is encrypted. There you should really start pre-populating it with data, and today it is so easy that you can ask ChatGPT what documents a data room in your niche needs. It says: you need these folders, think about this, think about this, think about this. You can start pre-populating it right now: agreements really since the beginning of time, accounting since the start. Some things are digital, and really almost everything is digital nowadays, so everything needs to be found or documented again, uploaded and prepared.

Otherwise it can be very stressful during the process when you need, yes, who created that brand? Are you sure you have the rights to it? Was it a brand you perhaps paid for? Where is your receipt showing you bought it? Do you have an agreement saying you bought it? Are you the one who created it, or? So it can become very difficult when you have to search for things during a process. Especially, say, eight years later

or 80 years later, I thought. Yes, 80 years. [laughter] I am thinking of before, when data rooms were physical piles of paper, because it was only, not that many years ago. Before, due diligence was done, people used to create war rooms, so a room like this one where we are recording the podcast could be filled with books, a whiteboard and people sitting around the clock, and

mm. Yes. Is there some way to automate parts of these processes so they happen continuously? There is, yes, there probably is. A large part of our reports

mm, we had in the data room, so instead of having to deliver them manually, we had connected the data room to our Google Drive and just had a simple script transferring certain files. So as soon as we upload it, it will appear there over time.

What kind of reports were they? Monthly reports, weekly reports, commerce reports, things everyone should have constant access to, so you do not have to keep sending the data over. Otherwise they are waiting on Monday morning: how have sales gone?

Mm. Because in a process everyone wants to know how sales are going. You do not want them to deviate from the budget, and especially not be on a downward trend compared with the previous year.

Mm. Otherwise you can be penalized quite heavily. And if they are, it is not the end of the world if you can clearly explain why it is happening and revise it. Is there anything you had not done that you regret afterwards, saying: I wish I had done this in advance?

Yes, now you can say I am experienced, I am seasoned. No, but both Daniel and I have done processes before, so we have learned and made mistakes before that we could fix in our process and prepare a great deal. Above all, perhaps, Daniel has acted as legal representative for extremely many companies in sale processes. I have only sat on the DD side, helping venture capital and private equity companies.

They always bring in specialist advisers, and there are only a handful. You might think there are lots of specialist advisers in Sweden, but there are only a handful of people I know of who rotate around all these big transactions you read about on Breakit.

Mm. Because I have done that, I have seen firsthand what matters to have and what is valued. There they say quite openly and transparently: this is what we are looking for, and this is what you have to prove the company meets or does not meet when examining it.

Are there any, which are the most important points there, then? One was that profitability does not fall, or? No, not that it does not fall. If it falls, there must be a clear explanation of why it does.

Mm. No, but there are lots of different things. One might be brand awareness, that it is not faltering, and then you look, for example, at Google Trends and other tools and compare the brand. You could also, as we did for Såpa, physically phone lots of people. Now you did not do it on video, but you must have an outside company do it and validate that it has been done, and then they have questions about the industry as a whole.

How much brand awareness does the brand in question have, and do you have a trend line like you have on Google Trends, for example? How many Google searches do you get for your brand? That is quite a clear direct effect. Then you have, well, there are so many different things depending on the industry. One, many red flags you might encounter can be if you have too many dependencies. If you do not own your own data, if you depend on an outside agency that holds the expertise, if you depend far too much on an employee who has a major role and cannot easily be replaced, and you have built in different dependencies.

That is the kind of thing that can slaughter valuations. That is also what you can get help with if you go to a specialist beforehand or ask ChatGPT beforehand. Yes, exactly. You have to ask ChatGPT or go to a specialist, but you have to go far, this is far in advance. It is very easy to review your own company and see what would happen if you removed X, Y, Z, for example an app or a company or a consultancy, or when the site crashes. What would happen?

Or a customer accounting for half the sales. Or a customer accounting for half the sales, or a platform accounting for 80%. So lots of people might be Google-heavy

or Facebook-heavy, or heavy in one country or one county, everything creates risk. As I mentioned, we had risk with the warehouse, because many incidents have happened at the warehouse where we do not get the goods on time. Now we have two warehouses, so I have minimized risk. Suddenly it is very hard for us not to get the goods out on time. Or you are too dependent on a raw material we know is volatile, like gold.

Mm. What happens if gold increases in value, in cost? What happens to your jewelry? Because then your purchase price becomes extremely much higher, so the selling price has to as well, and can the market accept that price?

Exactly. It could be raw material costs. There are so many different dependencies you can have. It can be anything. It is worth reviewing very early if you intend to bring in a part-owner or sell your company sometime in the future. That is my strongest advice: review it. And if you have questions, I promise you can bounce ideas off others in the industry. I bounce ideas off lots of people.

I know lots of people bounce ideas off me. I have no problem answering on LinkedIn if someone asks: I am thinking of selling my company, what do you think? And as a rule of thumb, if you are growing very fast and are profitable in commerce, you have a multiple of 8–15 times [unclear in source: EBT]. That is, how much profit you make after depreciation and so on.

If you grow slowly, on the other hand, or do not grow at all, that multiple might be down between three and six instead. So yes, it can vary. One simple thing is to look at the stock market. Listed companies are usually valued a little higher, and then there is this P ratio, profits divided by earnings.

Mm. If I remember what it stood for, you can check. I can look it up. Wait a second. In any case it is an important key figure. If you look at Nelly on the stock market, for example, the P ratio might have been below ten, well below ten, a few years ago, and then it now went up to well over 20 for a while, and perhaps stabilizes between ten and 15 or 20. If I can buy, if as an investor I can go in and buy Nelly shares on the stock market for ten or 15 times PE, why would I then buy an unlisted company where it is difficult to liquidate the shares, very difficult to liquidate the shares, moreover, at a lower, at that lower multiple?

Right. So that is quite a good benchmark to look at. Mm. I am fact-checking. It actually says it is price divided by earnings. The price divided by profit. Yes.

It is, and really it is how many years' profit you pay for the share at the current price. A P/E ratio of 15 means you pay the equivalent of 15 years' profit, assuming profit stays constant. A P/E ratio of 40 means the market is pricing in strong earnings growth ahead. Otherwise it is expensive.

Yes. There is all sorts of data from millions of companies showing: okay, ratios above X, Y, Z are expensive, this is cheap. Then the future is often priced into the stock market. It is not in unlisted companies; you need a closed financial year or trailing 12, as it is so grandly called.

That is, you take today's date and the last 12 months, and calculate [unclear in source: EBT] for that period. You cannot think: okay, in three years we will be here, or in two years, we have this great potential ahead. Then you should not sell the company or bring in a part-owner; realize that first.

Then you can go to the market with it. It is very hard to get paid for a future vision. Of course it can be done. It has even happened to me once or so, but it is very rare. It was more common, I would say, before Covid, because lots of companies were sold on a speculative future then. I think perhaps a period like that will come again soon, because there is now a very big transformation in the industry where many companies in retail become very profitable. Partly through simplification in the industry, Shopify and other technology, technological development has come a long way, so it becomes easier and more accessible. There is not that much overhead in that part. We also have major shifts in AI that lower OPEX, if you can benefit from it. At the same time as having a strong

brand or a good idea, you will have quite low costs, which means even though marketing has become more expensive, you are more profitable on the bottom line. It could also be that OPEX goes down, but more data, I saw, for example, that Facebook is firing, will fire another 8,000 to spend that money on cloud and AI development instead. So OPEX could also be moving to another area.

Could be. But now Facebook is quite radical, because it has explicitly said it wants to be one of the, yes, AI infrastructure companies. Mm. Those of us just adopting it, yes, of course tools might become more expensive instead of people. But I find it hard to see a tool replacing, well, a regular worker's salary in Sweden.

Mm. I find it hard to see costs being that expensive. I think so too. Then I could be completely wrong; it is speculative. But my speculation is that more very fast-growing profitable companies will emerge as technology becomes easier and the backend becomes easier. What then becomes harder now is that we could see strong globalization for many decades. Now there is more nationalization, so it becomes harder to get out into the world, with tariffs here and there and import taxes, and shipping gets harder and, above all, very volatile. If you have a factory in China producing things, it can shut down one day because it cannot get energy.

Mm. Or they cannot ship because there is a global pandemic or something. There are so many things that have happened just in the last few years. Wars breaking out, a hole in something, and you cannot get your goods.

Mm. So it has become harder with global developments, but they still do not cancel each other out. Overall it has become much easier to run commerce.

But I am thinking there is so much, because people talk about data, but the problem is that there is a great deal of it. What is the difference between noise and signal, and how do you know what kind of data to collect? I like the terminology. I have read a lot about noise and signal, which I have heard a lot about from, yes, with Elon Musk. Yes, it was, what is his name, Walter Isaacson, the author behind Steve Jobs's autobiography.

I do not remember who the author was, but I think his name is Walter Isaacson, and I think that is his name. Then he has also written Steve Jobs's book.

Mm. And then he says, sorry, he has also written Elon Musk's book and refers a lot to how these great geniuses have a very large part of their everyday lives made up of signal. Meaning you are very focused and do what you have told yourself you will do. Very few things, very efficiently, instead of taking in a lot of, yes, noise, the world writing to you, you get a cat, your cat running in the street, taking you away from your signal.

I recently listened, just the other day when I was out walking, to an interview with the person who was president of Tesla, which I think would be CEO in Swedish.

Yes. But is that not Elon Musk? No, but president is probably below the CEO, then. Okay. Yes, one of the more senior executives anyway. He explained how he distinguished signal from noise. What was interesting was that this was just before he had been hired. Elon had an interview with him where they asked: 'Okay, our sales are not going as planned. We have promised to sell this many cars. We are selling almost no cars at all.' That was the question he was given. But then he himself went and booked, under different names, lots of different drives, getting to try driving a Tesla.

Okay. At lots of different locations in the area, or wherever he could manage to travel to. Then he just documented: 'What is my experience? Nobody here knows, nobody working here knows who I am, and what happens?' He noticed nobody asked: how was your drive? Would you be interested in a car? None of all the places he visited called him up and asked: 'Are you interested in a car?' So that is how he found the cause. What he changed in the system was

mm, that you have to ask, because the mistake, you have to ask for a purchase, which is quite basic. But one of the problems they had created was that the previous manager had hired people who had worked at Apple or Nike and so on. Then he said: yes, but most people working at Apple are order-takers. They are not salespeople.

No. So they just had lots of order-takers working at Tesla who did not call up and sell, and that was why they were not selling any cars. What he changed was, first, finding companies, finding salespeople who actually work with products that are not so good, so they prove they can hit their quota with something that is not so good, instead of looking at order-takers. But just by changing the rule, they set a hard stop that they got no commission whatsoever until they had called everyone who had already test-driven with them.

Mm. Then immediately, within a few days, sales took off. It is not really that strange. When you say it, it sounds very banal. Yes, exactly. But nobody had been, none of the other managers had gone and test-driven a Tesla to see what the experience was like. That is how he and Elon also talked about doing a great deal afterwards, that he went out to the production line. There are some books I can recommend later. I do not remember them off the top of my head, the ones I am listening to right now.

But you can put them in the show notes. I can put them in the show notes there. Because they said: 'These are our favorite books about how we distinguish noise from signal.' Then immediately I was like: 'Then I want to know what they are.' It is within manufacturing, but you can apply it to lots of other things. One of the principles was to try the products as though you are the customer. But this is not about data collection, though it is a noise, a signal, anyway.

But I like it. Yes. No, but it does sound like a simple thing. Of course you should live your own product, like we produce soft soap. I have ordered lots of soft soap home. I have handed out lots to all my friends, acquaintances, family, because I want them to test it.

I have even ordered soft soap. I do it every month, so that is nice. But I want to get feedback, and when you get it you can develop the product better. We are doing the same now with Twistboxes. Of course I am not, I have never had a roof box, but all the same I go, I want to put those things needed on the roof to get a roof box up there, those rails, and then start using a roof box to see what the experience with the product is like.

Do you also try having a plastic box compared with a Twistbox, or do you just use a Twistbox? Now I will only, I have not done this yet, but I will, and I will just use a Twistbox. I will live that product first, then I will compare. Perhaps I will buy a plastic box too to test and compare the difference, but it seems so cumbersome and big that I do not know where you would store it afterwards.

But I am thinking you can rent one on Hygglo. Yes, perhaps I will do that. Yes, I probably will, 100%. 100%. But it is a common thing that you should live your own product. It is very strange that if you have a service, you do not, test it yourself. I very often go to our shop at NK, the Mockberg shop, to see what the customer experience is like. I have gone through this [unclear in source: behind the currencies], where you sit down and order and tailor your product, together with my wife. Then I have been to the shop several times. I have been there with my mum, just to get impressions: are there things we can improve in the shop?

Do they know who you are? They did not know. I think now they know who I am. But for a while we had [unclear in source: slash den], which before is a very good

agency to hire staff from. Then you were doing real mystery shopping. Yes, then it was real mystery, they had no idea. Mm. No, absolutely no idea. Then I have deliberately sent people there, like: since you are going to be nearby anyway, could you just go into the NK shop, see what it looks like at Mockberg and take a few pictures so I can have it documented?

Mm. And if we connect that to selling a company and collecting data, how can you actually use these things? Fundamentally, if you improve the company, you will probably, better over time, make customers happier and achieve better profitability.

Yes. But how do you think about those questions? Well, happy customers and good, fast-growing profitability are fundamental in a company. Somewhere in the Swedish Companies Act it says you should run a profitable company. You should make a profit, [laughter] or at least have the ambition to want to make a profit sooner or later, even if you run at a loss for a period.

Mm. You should be able to do it over time. So it is very important, and you should want to run profitable companies. It has not always looked that way in the commerce industry, but everyone has had the ambition, believing that once you reach scale, everything will solve itself. But often problems grow with scale. So it does not all become easier. You have to make sure you show: okay, when we scale, it will become easier because more people know about us, or because we have greater purchasing power, or something else. But saying marketing will be just as expensive then as now without having proved it, that probably will not happen. Marketing usually gets much more expensive as you grow.

What did you do at Såpa that made yours cheaper? Awareness. It is very hard at the beginning to introduce a new brand to people in, if you have bought cleaning products from one company, you have often inherited the idea of those cleaning products from perhaps your mum or grandmother. When you move out, you take the same things you have always had. There are two or three giants in the industry that have been around for 100-plus years sometimes. They develop, of course, a few new things sometimes and so on. But yes, if my mum used a laundry detergent, when I moved out I used the same detergent, because that was what I saw at home. I knew, you understood how it was used.

Mm. And you are, you take, people are quite lazy. You do not do your own research. There was no [unclear in source: köttkeppt]. Now you can ask your own assistant and get quicker tips and direct tips. So it is quite an outdated industry in the first place.

Mm. So you needed to educate it that you could also have refills. You do not need to ship water. You can order online. Ninety-eight percent of all sales happened in physical stores, and still largely happen in physical stores. So okay, the move online, the move between a very unknown brand, a known brand to an unknown brand, we sometimes have quite innovative products. Our laundry detergent is an all-purpose detergent that works for both colors and whites. That is very unusual. People would rather sell you two different detergents so you buy twice as much product to have at home. Ours works absolutely fine for both. Making a laundry detergent that is effective without enzymes also requires education in itself. So there is really a great deal in parallel that you need to think about and work towards.

I know, because we are both health geeks, we have discussed chemicals in laundry detergents, dishwashing liquids, anti-caking agents and all sorts of things. And you have even, thanks, was it Såpa, sent in

mm, things to a laboratory to actually see what is in them. Yes. Yes, we have, and you are astonished at the results. I do not know. Sometimes you think, and now I am speaking as a private individual, that you are quite protected by society because you think: we live in Sweden, everything we ingest is controlled. And sure, it is checked against causing you direct harm here and now. If it is not, it will say so quite clearly on the packaging, you have a big warning triangle. In the cleaning industry warning triangles are very common, so if you get it on your body, in your eyes, on your skin, in your body, there are really big warning triangles; they are hard to miss. Our products have no warning triangles. That is one of

one of, one of our USPs: we have none, because we have no harmful chemicals. Even if you get it on your skin, just wash it off and you are fine. Perhaps you are a bit sticky.

Mm, it is no more dangerous than that. But with that said, we are not as protected as private individuals as you might think. Yes, against direct harm, that it will not, it will not corrode your hands if you get it in, but it can, the long-term effect is never tested, and it is quite easy to bring completely untested things to market. Also accumulated, and compounding. Because lots of people do not think that perhaps they have one product, and that in itself does not do much, but then they might have five different cleaning products plus what they get through the water. The whole cocktail makes it rather difficult to stay healthy unless you make sure to protect yourself and read up.

Yes, it is like a chemical cocktail. [laughter] That is true. I completely agree. We ought to do a whole episode about this too. We could do one about even dishwashing liquid.

Yes. If you want to hear more about health, write a comment on LinkedIn or send a message. I promise, Fredrik and I are crazy health geeks. Yes, we can almost do, we can do half an episode about it.

We can. Cool. Shall we put a full stop to a good episode? I hope you take away some of the process, what it was like, why we did it, and all the tips and tricks and things around selling a company.

I am thinking I even have more questions, but we will take them in coming episodes instead. That will surely come. We will have to do a follow-up. Mm.

Cool. Thank you, Fredrik, for another week. We will see you again next Thursday. Bye. Yeah.