FURNITURE DESIGN AND PRODUCTION.

COPENHAGEN, DENMARK.

Dnmark was launched in 2005 by designer and architect René Hougaard and cabinetmaker and product developer Jens Hornbæk. They met when Jens was working at a bigger Danish furniture company where René came to pitch his designs. Dnmark’s concept was based on the idea that the Danish furniture industry was stuck in an intermediate position between a constant demand for the designs of old masters like Arne Jacobsen and a pressure from the market to see something novel from Denmark. Rene and Jens’ company Dnmark is based on the philosophy of embracing simple design and functionality but combining it with the latest technology and Danish craftsmanship. This has resulted in products that are one hundred percent Danish design but at a reasonable price.

Of course, selling furniture involves more than a design on paper: prototypes and demonstration models need to be made. To be able to produce the prototype of what became their first hit piece, the Pablo chair, Jens called on his network. He presented the project to potential producers and asked them to believe in the project and share the risk by giving him as low a price as possible. In this way production costs were held to a minimum. Yet funding was still needed and to finance the production of Pablo, Jens and René went to several banks with their business plan. “Banks are banks” was Jens’ first response when describing how banks reacted to Dnmarks’ first business plan. In total they went to ten different banks which all had different excuses for not wanting to lend them the money needed:

“The thing is that bankers don’t understand what we are doing. They basically think we are crazy; because I said no to a monthly salary, a fairly good one, to do a crazy project like this. They would basically say, well you are stupid.”

It was a mix of different factors and political circumstances that in the end got them a loan from a bank. At that time it was the government’s policy to financially support start-up companies in Denmark. The government had therefore made an agreement with some banks to lower their risk in lending money to start-up companies by paying back 75% of the loan if the start-up company went bankrupt.

Design and prototypes are only the first phase and once orders come in actual pieces (chairs, tables, etc.) have to be produced and shipped: something that can be very capital intensive. Dnmark’s first project, the Pablo chair, became a big success and the company grew fast. The money Dnmark had borrowed to get started wasn’t enough and to finance the increasing number of orders they were receiving they needed more and more money to produce the furniture. Even though a financial gap between finalising production and getting paid for each order is a constant theme in furniture production these gaps led to struggles with the bank. According to Jens, the bank had put Dnmark on the ‘lowest shelf’ and they couldn’t get higher up to get better loans and more credit. As Jens put it, the bank didn’t understand Dnmark’s business processes so Jens and René were chasing their own tail, getting more and more orders so the financial gap increased and with this the bank became less and less understanding of their situation. The turning point for Dnmark was getting in contact with a financial adviser, Morten Lund, who soon became their business partner and managing director of the company.

Morten Lund was an experienced business man and it didn’t take him a long time to figure out Dnmark’s need for a full time employee or a partner that could take care of the business and financial aspects of the fast growing company. Morten became a partner in Dnmark and changed their approach towards the bank, which resulted in moving their business to a new bank with better service. Morten knew how to talk to bank people and as Morten himself said, it was more or less Jens and René’s own fault how difficult the communication with their bank had become since they didn’t know what to do and how to present their ideas and strategy. As Jens put it:

“We could not have done it without him, because he knew his way around accounting and lawyers and talking to bank people the right way.”

What Morten did is a mix of few things. He was experienced in dealing with banks, hence familiar with the financial environment. According to Morten, it is more important to present a strategy and financial plan to the banks, not necessarily business plans as such, like Jens and René did. The banks needed to get a clear and compelling message about the commercial value of the strategy with an emphasis on prospective returns on their investment. Jens and René know this now and say about their initial business plan:

“Sometimes we take it out these days for jokes. We had a good idea about what we wanted to do but it was fairly naïve, I would say. Today we have changed from being a design company to being a production company.

You have to choose which way you want to go. You cannot do both. We tried that for a while but the production company just kind of takes over because you can’t run two companies in one, you need to be very specific and put your energy into one place.”

TV AND FILM LIGHTING.

NORWAY.

Stigebilen is a company that rents out lighting for TV and film production. They have mounted a generator and what is apparently the world’s largest lamp (175kw) onto an old fire truck. The lamp is attached to a turntable ladder and is a very flexible tool for lighting locations.

However, the founder, Terje Røkke, did not start life as an entrepreneur with a fire truck. With an education in electronics he started working with lighting 13 years ago. After his education he worked for five years at Norsk Filmstudio and only after this did he start Stigebilen.

Talking about his time on the job he emphasises how important the networks and connections he made there were, and are, for getting new jobs. Moreover, he picked-up and developed many of the skills his company is based on at Norsk Filmstudio.

Starting a business in lighting is not cost-free and he needed money to start his firm. He is financed through Terra Finans, which is owned by 78 Norwegian savings banks. In his opinion the financing process went relatively smoothly. He developed and presented a traditional business plan, and had a history of revenues from previous projects before he went to the bank where he was warmly received.

The loan he used to finance his firm is similar to other types of bank loans: it was secured against a physical asset. The asset in this case was the vehicle but since vehicles’ value quickly diminishes the loan had to be paid back in five years. Lending money to buy cars is something banks do a lot of and he thinks this is why the financing process went so smoothly. Thinking about what assets loans can be secured against is an important part of bank financing.

The business has gone very well, and they now have three trucks and are planning to expand into gyro technique. They are carefully considering getting another truck.

INDEPENDENT RECORD LABEL.

ÅRHUS, DENMARK.

Most independent record labels start with one band. In this respect Morningside is no different from any other label. Jesper Broderson had some songs, and to get them heard he put a few of them online for people to download. If people liked the songs they could e-mail him and Jesper would print a CD and a cover and mail them. Cost was thus really kept to a minimum; the hosting of the website the biggest one.

From the start Jesper was aware that having more than his own songs on the website would make it more interesting to every-body. That way the website would not only be a band site, but a record label. So this was naturally the next step.

”For me it was a hobby project, so I had no ambitions of making a record label that would grow big fast, the focus was always to have good bands for years.”

When he started the label, Jesper was studying and on a state study grant which covered his living costs, and even as the label has grown and he could allow himself to take some money out of the company, he still kept a job alongside the record label. As the label grew bigger, it got increasingly hard to do all the work himself and this was when Jesper Mejdall entered the picture.

”He had shown interest in the business side of the label and because it had at that point grown so much already I was looking for somebody to share the work with. I asked if he wanted to participate.”

Even though Mejdall also has another job alongside his work on Morningside it was important for Jesper that he was interested in the business side of the label. There is no lack of people who are interested and want to help, but they always want to get involved with the creative stuff, and he wants to do that himself.

Along with Mejdall, Brodersen also has an accountant who does the books and taxes. To begin with he did this work himself but now thinks that getting the accountant is one of the best things he has done. All in all Morningside’s finances have been very conservative. The company was started with an overdraft of almost 7,000 Euros, which, as Jesper admits, is peanuts. Yet the 20 year old Jesper took this very seriously and made a business plan, outlining the cost of producing the record, keeping the breakeven point as low as possible, and this as well as the personal guarantee of two people secured him the overdraft.

In spite of the relatively low overdraft, they have been able to keep within its limits. Although Jesper admits that this has at times been difficult. The label can only support one act at a time and if the money runs low they have to wait for it to start to come in again before embarking on the next project. This has been particularly limiting for their work in the UK market, where they have been working with their biggest band, the Figurines. Yet, Jesper seems weary of looking for external funding.

”No, I have too much work with the everyday work, so that it would take me a lot of time and energy to start going out and maybe looking for people that would invest, so it is probably not going to happen … And because I hate money. I’m scared of it. It really blocks me.”

Although this attitude limits expansion, it keeps the company running in the way he has chosen.

PUBLISHING HOUSE.

REYKJAVIK, ICELAND; OSLO, NORWAY; ESPERGÆRDE, DENMARK.

What could an Icelandic book publisher and a fictional farmer possibly have in common, apart from fiction that is? For those of you not acquainted with Iceland’s most famous fictional character ‘Bjartur of Summerhouses’ the question might be irrelevant. Yet the book publishing company Bjartur not only takes its name from the main character of Independent People by Halldor Laxness but also its philosophy: “not owing anything to anyone.”

This means that the publishing house has never taken out a bank loan, even if their bank managers have found this strange:

“The bank manager came up to me when I was in the bank one time, asked if I didn’t have a book publishing company, and asked if I didn’t need a loan? Don’t you want a loan? Why don’t you? You never take out any loans here? I told them thanks but no thanks, I know I’m a rather bad bank customer”, says Snæbjörn.

In spite of the philosophy of not owing anything to anyone, Snæbjörn claims that it is almost impossible to start a book publishing company without capital to take you through the first two or three years. Yet when he himself started the company alongside his literature studies he had no external financing. He got the capital needed for publishing through doing other jobs alongside the company; claiming that his needs where meagre as he was used to a student life style.

Although he claims he never made a business plan and would not even know what one looked like, Snæbjörn outlines the plan for the business when it started:

“We wanted to start small, the idea was to start off with two books, then four the next year and eight the year after that. To grow little by little and that has just about worked out.”

In the beginning the company mostly published translations of books that were successful in the country of origin. It then slowly started publishing Icelandic literature, and is now one of the biggest publishers of Icelandic literature in Iceland.

The continuous growth of Bjartur in Iceland was further facilitated by acquiring the rights to Harry Potter: a windfall for any publisher.

“It is usually the case that only a few titles pay for the whole lot. Maybe 70% of the titles never work, financially, but 30% do and make up for it.”

One of the successes in Iceland is a concept called Neon, a line of translations of interesting foreign literature. As this worked well in the small market in Iceland, the idea was to bring this concept to a bigger market.

“The Danish market is 20 times bigger than the Icelandic, so one should be able to sell at least 10 times the amount sold in Iceland. It would at least be nice to try. Then of course it turns out that the sales of translated books in Denmark is just about the same as it is in Iceland. Maybe slightly greater in Denmark. But in turn, if you get an international bestseller the difference is huge. Then we would be selling hundreds of thousands in Denmark, while a bestseller in Iceland sells only 12,000.”

In this respect Dan Brown’s books have proved to be important for the company and even if the strategy of the early years was to grow the number of titles published every year the emphasis has shifted and is now more on having a selection of interesting literature mixed with crime novels.

All in all, the original strategy of the company is still in play: To grow, stay independent, not owe anything to anyone, publish good literature. In fact, Snæbjörn thinks of book publishing as an art form, and to make the business side a bit livelier the line between fact and fiction is not always very clear. This is true for the story about how the rights to Dan Brown’s work were acquired. The official version includes a swimming pool in Slovenia and meeting the author; the truth involves seeing the title, liking it and negotiations through a literary agent in the USA. Fiction or fact, the company has taken a long-term commitment and lots of successive small steps.