S10E03: Expanding into multiple markets simultaneously, with Erik Martinson (CEO, Svea Solar)

An episode of The Impact Multiplier CEO Podcast

S10E03: Expanding into multiple markets simultaneously, with Erik Martinson (CEO, Svea Solar)

We're continuing this season looking at the insights from some of the world's fastest-growing businesses. In this episode Richard speaks with Erik Martinson, who founded solar panel firm Svea Solar in 2013, and has grown it to a 9-figure, 1000-employee business hitting #164 in the FT1000 list of Europe's fastest growing companies.

In this conversation, you’ll discover:

  • What Erik learned as they scaled from one market to four markets simultaneously!
  • The difference between scaling the organisation and scaling the company, and which to focus on
  • How to set the right expectations when recruiting new employees
  • How Svea Solar attracts and retains talent - despite the challenges of growth
  • The inspiring 'essential intent' that the whole company rallies around

"HR is commercial-critical."

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Transcript

Richard Medcalf
Hi Erik, Welcome to the show.

Erik Martinson
Thank you very much.

Richard Medcalf
Hey, it's great to have you today. I know you've achieved extraordinary things over the last eight, eight or nine years, I guess you found its Svea Solar, I think pretty much straight out of university and now, you know, you've got 1000 employees, you're growing extremely fast. You've, you've made the Financial Times 1000 list of the fastest growing companies in the world, and for me, more importantly, you really somebody on a mission, right? What I want I get about you is that you are trying to change the way the world consumes electricity, solve some of the climate issues, and so forth. So tell me a bit about that story. We'll get into some of those secrets of scaling in a minute and like how you've been able to do that, how you'd be able to create it but let's go back to the why. What led you or what, what got you going on this journey and why is it important to you?

Erik Martinson
I mean, basically, I've always been very interested in renewables and how we can sort of push the boundaries on taking away fossil fuels and I mean, the way we're living today, I mean, that's, that needs to be done and I was always wanted to work in that field and I tried to get a job at Tesla a couple of times, that didn't go very well, but me and beyond founded Svea Solar. We, we started together in Linz shopping, and we had different business ideas we looked into when I realized that one windmill was roughly 5 million euros, and we didn't have that type of money. So I looked into solar and like everyone else, we thought that solar won't work in Sweden but then we started looking into the financials and how it works and realize that it does work really well here, as well and then we started to work from there and now have scaled out the company into five countries and will over the next four or five years cover 80% of Europe in terms of rich.

Richard Medcalf
Wow. So let me just pick up a couple of those things that Erik already. First of all, there were these experiences, which perhaps, you know, at the time were so good, you know, you tried to apply for Tesla didn't get there probably at the time was like, Oh, that would have been great and yet, you know, it's that failure was the seeds of huge success afterwards and then also this point of this really pragmatically looking around the market and looking and you know, this is too expensive. We don't have the budget for this. It's just interesting, that iterative process of looking around and exploring and then, and then you talked about the scaling right, so five countries already, I think it's about 1000 employees, you said so and that was eight years, nine years?

Erik Martinson
Yeah. Eight and a half years.

Richard Medcalf
Okay. When just go back, say halfway in that journey, you will get four countries halfway where you still have one country, you know, after the growth can be quite different.

Erik Martinson
Yeah, it's basically the first five years we were only in Sweden. So we became sort of the marketing there and then we actually did our first real fundraising 2020. So that wasn't that far away. So you know, we were profitable running the company quite hard in Sweden, and then we sort of geared up to go into two more markets. So we went into four markets simultaneously. So that also that will fulfill during the pandemic. So you can argue that the timing wasn't perfect. So we actually went in, in March, April, basically and then sort of when that was when people were talking about basically, you know, some problems in China for logistics, and that changed to something else, basically but I mean, now, you know, we're scaling up and growing really, really well and I think by next year, more than half of the employees will be outside of Sweden, basically. So, so it's a good growth in our countries. I mean, Germany, we went in, and we're doing roughly, you know, a yes, a couple of installations per month and now we are basically, I, you know, went from number 3000 installers, you know, in Germany to maybe top five now, in about one and a half year. So, we've been growing quite well in Germany, and are growing really well in Spain, as well, and also in Netherlands and value but I think in general, I mean, our job is basically to scale as fast as possible, with good quality and ensuring that we are, you know, getting everything aligned in the company.

Richard Medcalf
Yeah, so it sounds like there was this moment when you decided, now's the time to go big. So it sounds like the ignition point, which was probably around the fundraising. But there's obviously a decision as well and now is the time you want to actually raise the money and go for it. What was the catalyst? You know, perhaps when you suddenly went, you know, what we can take this really big or was it always was always the ambition? It just took longer than you thought? Or was there a moment when you said okay, actually, this is this has got legs. This has got potential.

Erik Martinson
I mean, we did do a quite steep sort of plan, because when we were setting up the shop, we were sort of like if we're going to do some difference to the world we need to scale. But we were maybe a little bit limited on how we're thinking because we said yeah, we're going to be the largest solar provider in Sweden, we will focus on that. So so we did achieve that and then we also realized if we can in a very short period of time without any funding become the largest player in Sweden. So there's no sort of no one saying that, why would we not be able to be the winner in Europe, and m&e, if we have a market share of roughly 25 30% In Swedish market, which is the highest market share, basically of any larger European market, we realized that we have something really good going on here. So we started to look into and talk with some investors and they also pointed out that no one else has basically done this type of journey that we are doing. So yeah, we started to look, yeah, I'm quite confident that we can sort of duplicate this and do it in a maybe even easier environment because I mean, if you look, even if it works well, with solar in Sweden, it's still easier to get the financials for heating in Spain, even in Germany, in other markets, we will train didn't quite harsh environment. So when we went into our customers talking with our customers in Spain, and they were talking about, you know, five years of time, we had 10 and you know, it was like selling ice cream in Sahara. So it was super easy. So so that's really I mean, the way we have, you know, built the very lean machinery in Sweden, helps us be very successful abroad, where maybe competition is a little bit spoiled in terms of how easy it is to sell, for example.

Richard Medcalf
Yeah, it's often the case as well, when companies pick up beginning a recession, they often become so lean, because they've done it, then they when things get better they scale, it's a bit it's a bit similar, it sounds that you kind of had to really prove yourself out in Sweden, and then expanding was easier. What was it about the way you operated? Even when you were simply in Sweden, that made you successful? If you look back, you know, what were the secrets of success in those early days?

Erik Martinson
I think that there were a lot of there are a lot of solar companies that raised a massive amount of money and they asked, you know, spent it on a lot of things and build up a lot of layers and so on. We were super lean, I mean, we were to students with student funding, we had basically zero cash. So we, we built only the essentials very, very, you know, specific and that's been, I think, a key thing for us, that we are spending the money, I think quite wisely and that makes that you know, every dollar we spend, you know, we get x amounts where our competition probably could have effects on growth. So that's been good for us but also in terms of really understanding how we're building organization quite early. I mean, we, we started to run into problems when me and Bjorn were running the show, and basically taking all the decisions ourselves and realizing we are limiting our growth for the company and you know, really, you know, empowering other leaders in the company quite early in something that I think have been instrumental to our, our growth journey.

Richard Medcalf
How was that because a lot of founders struggle and we were talking about earlier a lot of managers struggle with, because they're often great at making decisions, they understand quite a lot about the context of the business and how it all fits together and it can be hard to let go.

Erik Martinson
Yeah, I mean, it's super tough and we're not saying that we do very well, I mean, we actually did run into a lot of problems me and VR was quite overworked. I mean, the more we grow, the more we had to do and it was not scalable at all and we worked a tremendous amount of hours and we sort of just, you know, almost like, you know, the more we scale, the more work we get the this is like, this is not going to work and we started to realize, oh, so what are we going to do? And you know, we didn't have any experience previously on how to structure any organization. So we started to really look into things. So how can we really make this scalable? Instead of just you know, that in the beginning, we said, we're gonna scale the company and then we realized, no, we're gonna scale the organization, it's a big difference. I mean, scaling the company, we looked at revenue, basically but scaling organization is basically, you know, working with leadership's working with really talented people and this is the reason why, you know, we started to sort of look into what is the key factors for us, to in a five to 10 years plan really achieve our goals and we sort of realized, like, is it that we have the best product offerings that we have the best marketing and like, yeah, all of those are super important. But when it comes to the essence, it's how we can attract, and how we can keep and develop the talent within the company. Those are the three top priorities of the entire company. So we started to really think about this in another type of way that a lot of companies are doing, especially sort of in an installation sort of industry. So like, really get good people out there and that's why we have you know, we have evolved this idea over time and at the moment, right now, you know, since February, we actually have our HR officer and a member at the very top of the company together with me running the management team. So like really focusing on the HR questions in a way that I think very few companies are doing. I mean, a lot of people are always talking about, yeah, we'll take care of our employees but it doesn't really show in how they put their management team together or how they, they're structuring the organization. So we have really tried to work on that and, you know, also to scale culture. I mean, we have, you know, really focused on how can we build a culture that scalable with, you know, really being clear and transparent on how we deal with certain things its way and what are sort of words mean to us and what we're trying to do as leaders, and talk a lot about, you know, how can we empower our leaders and really get from sort of talking points to actions, and I think that have been quite successful for us.

Richard Medcalf
Yeah, it's interesting. So first of all, I love it, I've just been, I've just been two days myself working with the senior HR leadership team of, of a large billion, multiple billion dollar company and they do have the ear of the CEO, you know, CEO, introduced me to that team and wanted, you know, wants to develop it and, and yet, what they've experiencing in terms of not nestle the CEO, but other parts of the business, it is, yeah, that it seems that HR is still seen as a bit of a nice to have, and yeah, it's the middle of the tech sector, where there's a war for talent, where, you know, and actually, it's a services business and so people are actually everything, and yet, not every company really deeply walks the talk around that. So I'm curious, like, what did you? How did you make those things real in your business because everyone can kind of say, you just said the things that you're saying, so how did you kind of, you know, how did you have to invest yourself or your time or your focus?

Erik Martinson
First of all, you know, it's very important to understand that HR is commercial critical, not a benefit for employees. So, you know, I got the question and one seminar because we were talking about HR things, and we were there to talk about how we're doing the setup, and how we're working with it, and so on and I guess one question, so from the audience is like, so how do I get my CEO to talk more about, you know, HR stuff instead of us profits and why can we have, you know, some money more spent on HR instead of getting us higher profits every year? And I said, you need to change that completely around and said, why don't your CEO spend more on HR questions to get higher profits. I mean, it's not the other way around. So first of all, you need to understand that strong inflation, that is not a trade off, you know, if you can really lie in a recession, it's a fantastic boost for all your KPIs and you know, you'll get more out of your employees to be happy, or they will stay longer, they will, you know, be more empowered, they will get, you know, all of that. So creating that culture is is not only, like good for the company is critical, especially if you don't have a high growth base. I mean, yeah, if you're not gonna grow anything with a company, maybe you can have a decent company that does, okay, but every company with more HR folks, I would argue, would be better but, you know, so how do you then go from sort of those words to action? I think that, you know, it's like, you know, if someone asks like, so what are you spending your time on? I mean, usually what you do is, you know, if you really want to do look what people spending time or you bring up the calendar, basically, what meetings do you have what you're doing, you know, basically, so, you know, yes, showing the org chart, I think, shows a little bit. So where do you put your HR people? How do they work? And what kind of forums are they in what kind of man like to have and that is, I think, one way to start, but it's super important, I think this is where a lot of companies go wrong, it's basically just taking a regular HR person that are not thinking in a commercial way, saying that they should get their power, because what they weren't going to first thing they're gonna do is yesterday's benefits, and like, not think about is this holistically The good thing for the company, and it's not necessarily always nice, it's things you need to do. It's really being, you know, true to the company and the employees, what is the best fit, and it's also about, you know, being very, you know, targeted, what type of culture do you want to have, and bringing that type of people. So being very consistent in recruiting, being very transparent. I mean, when you're recruiting people, one, one mistake that I think a lot of people are doing is that they really want the candidate so that bad, they will basically say anything to the candidate about what the company is doing and the problem is anything in an interview, I can be quite transparent, and say, This is the problem we have, you're here to fix that problem. If you think that's exciting, you're more than happy to come here but if you are looking for, you know, things that are done, and Instructure, and you know, that are super easy, or already set, this is not the type of company you want to come in here is a company where you can be challenged, you can really, you know, change the world in a good way but it's gonna require a lot of hard work and a lot of people are really, you know, inspired by that, but not everyone but if you're inspired, and you think that, you know, I want to be part of, you know, this power shift, as we call it by taking away fossil fuels completely, then you would really, you know, fit our culture, but it means that, you know, we do not come into a set table, you will be part of setting the table basically.

Richard Medcalf
Yeah, I love it. So many great points there. First of all, that real reality check, looking at the organizational chart and just said being, yeah, being honest, I'm having a hard conversation now about what's going to happen rather than trying to have it afterwards when people are more committed or like they're in and their paycheck and everything else and I think this point about for HR leaders, translating what they do to business language, I just see it all the time. In fact, with this group that I was working with, hopefully, you know, you, you will not sell what you're talking about in this room outside the organization until you do what you said, right? Until you say, you know, this is the issue we have so All beings, like we're not going to, I don't know, employee value proposition, right? That who cares, right? They don't, they don't care. Nobody cares about that they care well, that provides it provides clarity. It allows you to attract the right people to the business, it allows you to retain people, and so forth. I think when you have that conversation, then people get interested. So, yeah, so I think that's great. So, so tell me a bit about what was what it was sort of been your learning, as you've expanded, obviously, the last two or three years, you've expanded into five, that's four countries. So what's been the biggest challenge there that you've had to overcome?

Erik Martinson
I think I mean, not being able to work, like at the very, you know, you see problems, that organization that you want to fix right away. You know, it's kind of, you know, it will take your enthusiasm away from a lot of colleagues and leaders, if you go in and solve problems that you see can be fixed right away. Sometimes it's better that the problem takes longer time to solve gets solved, if you have to have the right people solve it, and you train the organization to solve problems in the future because in the beginning of the journey, even if we were sort of getting leaders, you know, to train leaders to delete other people, meaning we are we're still running around on fixing a lot of problems that I think caused a little bit of inertia in terms of what's happening within the organization. So I think that you know, really understanding that when you're handing a task to a team, that you're there to support the team not to solve the task for them. I think that's super crucial and it's still hard for me sometimes to do that and I struggle with it every day because if you're an entrepreneur, you want to go forward, you want to solve the problems, and that's what you're usually good at, is you need to really constantly think about what happens, what's the trade, if you solve this task, maybe a week earlier, I mean, yes, you will get the week faster on that problem but you might end up at, you know, losing out both talents, but also enthusiasm, and maybe the decision wasn't even better. So it's really about because you're hiring experts, right? To solve task, if you if you come in and solve them for them, it's basically going to make them feel uninspired, it's going to make them be less likely to work hard for you in the future and solve an even more complex problem but it's also going to create that the organization is stalling. So I think those, those are the one the number one learnings or that sort of, to work on, really ensuring that you get the top talents in that you need, and get them to sort of really build their own organizations in part of the company and solve the problems by themselves, obviously, you know, in tune with the rest of the organization and my job, then it really becomes to sort of get the organization in tune rather than doing any tasks, basically and that's very far from actually installing the panels yourself on the roof. So I mean, I think that both me and Bjorn have developed quite a lot as leaders during the eight and a half years of the company's time.

Richard Medcalf
Yeah, it's fantastic. Yeah, and what's exciting about these journeys, is it's, it's never ending, right? There's always new things to learn and once you get, you know, once you break out of one comfort zone into another area, then there's another area with available. Yeah, I love this point around thinking for the second order consequences of the decisions you're making. The moment I often say to leaders, you've got a choice, you go fast now, or you build momentum, right, you build the capability of the organization and the temptation is always to go fast now and just get it done but as you said, the second order consequences. People become even more dependent on me, they lose, they lose motivation and probably as a result, I feel even more strongly that I need to solve all the problems because I'm not seeing the energy around me anymore. So it can become a vicious circle. Let's switch gears, Erik, for the sake of time here, I've got a couple of quickfire questions. I'd like to ask guests and find out a bit about who or who, what has helped structure their own leadership thinking? What's the favorite quote that, that you live by? Or that you're always telling the people around you or that inspires you?

Erik Martinson
Oh, that's a very tough one but I would say that, you know, I mean, thing difference, which is sort of, maybe more of another campus quote, but I mean, I think, really, you know, doing that, you know, inspires good innovation. I think that's, you know, you need to really, you know, what is the best way of solving something. I think that that, you know, that quote, takes it down to basically, you know, don't just take it for granted, you know, everyone else have done it this way. Well, can we do it in a better way?

Richard Medcalf
Yeah, yeah. Nice and what about a book, a book that's really inspired or influenced you perhaps the way you operate?

Erik Martinson
Well, I think that, you know, Bill Gates had a, you know, wrote a book about climate change. I think he's very, very good. I mean, and I would put maybe not say that that was completely game changer for me, but it's a very good structured book that I think have breaking down the problem in a good way that can be very sort of easy to form. myself and others to sort of get into and really sort of look at, you know, if you sort of break it down, you know, what do you need to do to fix the climate crisis, you realize that sort of energies is maybe the major problem here and I'm happy to keep working on solving that together with other great people.

Richard Medcalf
Yeah, and actually, I would just want to use this point. Yeah, thank you for working on these topics, they are doing really important for our world, right and it's exciting to see people who are all in and making it happen. So thank you for that. What about advice, you know, what advice would you give, if you were to go back and force yourself at the start of this journey, ineffectual 20 year old self, you know, what advice would you have given him?

Erik Martinson
I think there's a couple of things. I mean, I'm still a very impatient person in many ways, but I mean, being a little bit more calm, meaning that, you know, not that run, sort of slower, but you know, be more consistent saying that, like, if you have a small problem, it can be sort of the whole word for you right now but if you look at your problems that you have right now, and think about that in like, three, five years time for the company yourself, is those problems are big, usually they are not, and don't get too stressed about small problems that you can can sort of just calmly fix and be more focused on the long term agenda. You know, going back to what we said there with, you know, empowering leaders and all of that we really build long term. I think that that, you know, we have tried to do that but I think we could have been more calm, be more sort of, you know, always looking at the long target, rather than you're solving problems quickly and, and be very, very nervous about things that doesn't really matter. I think that, that is something that I've tried to work on a lot today, when when you see something that you get really annoyed about or takes a lot of your energy or stress. Then really think about is this really that bad and usually the answer is no.

Richard Medcalf
Yeah, yeah, it's great. So yeah, so often, we get consumed by these short term issues, and actually zoom forward a month, six months?

Erik Martinson
It's really, if you think about it, I mean, will this long term hurt myself? Any colleagues or the company? And the answer is usually no but I mean, obviously, if it's yes, then you should worry about it, and you should fix it right away but normally, I mean, if you can spend less energy on sort of day to day problems, that that really aren't moving the needle, you can then start to think long term, especially as the CEO of the company, I mean, your job is not to work on the operations all the time, it's also to really align the company, as I mentioned before, also get everyone else in the management team and in the company to work together, and fine tune the company, and also, you know, attract talent, and so on but I think, you know, having that mindset that you always, you know, remind yourself, is this that bad right now? And the answer is very, very often, no, it's not that.

Richard Medcalf
Perfect. So, Erik, many of our best guests come on the show actually come from referrals. So I always love to ask people who's somebody who inspires you, right? Who's an impactful CEO, you know, who perhaps you've dealt with, you know, you've you've encountered in your, in your own life or business, you know, who would be a great guest for this kind of show, you know, who comes to mind who inspires you?

Erik Martinson
I think that I mean, if you look at great startups in the renewables, I mean, there's, there's very, you know, there's some really great entrepreneurs out there and, I mean, I used to try to get a job at Tesla a couple times, obviously. So there's some, you know, really good people and some people that work there and, you know, Peter calls on that now started, what, Northvolt, a couple of years ago, that are now building up the largest battery factory in in Europe, they're doing a fantastic job and I think that's really, you know, pushing the boundaries. So I think that, you know, listening to Peter would be a fantastic.

Richard Medcalf
Yeah. What inspires you about him?

Erik Martinson
I think that, you know, the idea of thinking really big, you know, changing an industry from, you know, basically, you know, everyone said that there's basically not going to be any better factories in Europe and China and USA, you know, they're taking that market and I think that, you know, by showcasing that, you know, you can build a massive battery factory up in the north of Sweden have, you know, attracted a lot of capital to that area and now you see a lot of other, you know, battery factories being started up in all over Europe. So, I think, you know, I think it's inspiring to take an industry from basically zero to 100% and a couple of years time is super impressive.

Richard Medcalf
Yeah, thank you. So, no matter what we've achieved is always a next level. So I'm always kind of curious to know, you know, what, where do you go from here from here as a business? Where does fear thought I go, you know, obviously, you've achieved a lot. You're, you're in five markets. I know. You said you wanted to expand more into Europe, you know, what's next couple of years got in store for you, do you think?

Erik Martinson
I think that I mean, that we are at 1000 employees, and our goal is to reach 5000 employees in upcoming four years. So quite a scalar but I mean, there is no boundaries on what we can do. I think that in 10 years time, I think it's doable that we so company are eliminating as much co2 emissions that entire country of Sweden is emitting every year. So I think that's a target that we're trying to work for as a starting point but I think, you know, what I think it's inspiring and I'm going back to sort of the sort of potential for solar, I believe long term that solar will stand for roughly 70 to 75% of all the world's energy and if you sort of go back to sort of break it down, I mean, industry, energy, and transportation is basically somewhere around roughly 80% of all the co2 emissions, if you electrify all of those, and then you say that roughly 70, 75% of that energy will come from solar, you could argue that solar would offset roughly half of all the co2 emissions in the world and I think just working on that is super inspiring by itself and that's why you know, going back to our company, the faster we can scale, the more sort of co2 emissions we can eliminate. So that's why you know, scaling is in our DNA. I mean, we have started set up the company to scale and we will keep pushing the boundaries on what we can do and how fast we can scale a company.

Richard Medcalf
Yeah, beautiful and what do you need to do personally to multiply your impact, right? What's your next level? What's the stretch in all this for you?

Erik Martinson
I think you need to be very humble and understand that I mean, you as a CEO, and founder can be a great asset to a company, but also a great liability if you're not evolving with the company. So it's a constant learning process and it's my job to be able to cope with the growth of the company and if I can't do that, someone else we need to take over that role.

Richard Medcalf
Yeah, well, it's gonna be interesting journey ahead. It's really exciting to, to hear a little bit about Erik. So thank you so much for taking some time. You have somebody with a mission, I really truly respect that. I always get inspired when people are out there literally trying to change the world and I think you are so thank you for showing some of the journey and some of the really practical and pragmatic lessons right along the way about how you actually create this, this great distinction that you shared, I think, which is just scale the company but scale the organization, right? And actually you need to build that organization that can multiply as the business grows. So I think some fascinating learnings from you today. So thank you, Erik, and look forward to hearing how the story evolves.

Erik Martinson
Thank you very much appreciate for being on.

Richard Medcalf
Take care. Goodbye.

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