Reading recent media, it's not unreasonable to wonder if the technology, journalism, and investment communities are inadvertently hoping for an AI “bubble.” Whether a bubble exists is debatable, but the conversation has taken on a life of its own. Every article predicting the collapse of the Nasdaq makes investors nervous, which leads to another article about the collapse of the Nasdaq, and the world spins endlessly.
Often, the most effective way to prevent market volatility is to ensure that the technology of the day is ubiquitously embedded in the fabric of society and does not quickly lose its value. Problems can loom when there is a disconnect between people's real-world experiences and the excitement they feel on the trading floor or in the boardroom.
In this regard, we can learn from my home country of Sweden, the 89th most populous country in the world. In the 1990s, the Swedish government introduced legislation called Hem-PC-reformen (Home-PC reform), which aimed to put a computer in every home. This move is often credited as the launching pad for the subsequent decades of technological advancement and “punch above our weight.” This wasn't a corporate strategy manifesto or some shiny new tech tool built by a CEO. It was a national policy for all of us, aimed at firmly entrenching new technologies into our lives.
Fast forward to today and Stockholm has the highest number of unicorns per capita of any city in the world outside of Silicon Valley. Swedish AI startups are growing rapidly. Legora, which automates the work of lawyers, is raising capital at a valuation of $1.8 billion. Electric vehicle unicorn Einride recently announced a $100 million investment to scale up its self-driving cargo fleet. Lovable, a “vibecoding” platform that helps people build apps using AI, is one of the fastest growing businesses in the world. And last month, enterprise technology company Workday acquired our business, Sana, for $1.1 billion.
Not bad for a country surrounded by the Arctic Circle and home to half the population of New York state. People keep asking how a country like ours can achieve so much. There's no secret sauce, but there are a few essential ingredients.
The aforementioned Home-PC reforms were prompted by winter darkness, which can last up to 18 hours. This meant that we Swedes spent hours at our computers experimenting with the early Internet environment.
A digitally savvy generation has built the world's leading technology companies. Skype was founded in 2003 to popularize video calling technology. So did King, the maker of Candy Crush. In 2005, Klarna was born. 2006, Spotify. In 2009, Mojang laid out the first block of Minecraft.
We Swedes are very proud of these success stories. They show us what is possible on the world stage. They have also brought a moment of great liquidity to our ecosystem. Skype and Mojang were acquired by Microsoft, and Activision was acquired by King, both with multi-billion dollar price tags. Spotify went public in 2018, and Klarna went public earlier this year. Each of these success stories has created another group of billionaires, many of whom feel an obligation to reinvest in Sweden's technology and startup sector.
This flywheel effect is what made the AI sector what it is today. Our scale-up stands on the shoulders of giants in an environment that's conducive to building a business. There is capital available to qualified entrepreneurs, often funded by quality investment firms such as EQT, Northzone and Creandum. Setting up a company here is relatively easy and our stock option system encourages building your business. Stockholm is home to both the engineering university KTH and the business school Handelshogskolan, and many founders have earned degrees from both (and many successful entrepreneurs have ignored university altogether). Also, the rate of English proficiency is very high.
Governments also continue to play an important role. Sweden spends a higher proportion of its GDP (3.57%) on research and development than any other European country. Any employee in Sweden can take six months off to start a business. This is a system known as tjänstledighet. And, mirroring the successful PC home reform policy of the 1990s, this year the Prime Minister supported Sweden's AI reform plan to make agent AI free for all civil servants, students, teachers, research institutes and non-profit organizations.
There are also aspects of our culture that help us build a great company. We are the land of Volvo and IKEA, with a Swedish design ethos known for the marriage of function and form. Many of the software engineers I know here are passionate about aesthetics, which means that an app's landing page is given as much attention to detail as a Bruno Mattsson chair.
Finally, we are also a humble people (he said this while writing an article about how great a country we are!). Sticking your head higher than others is usually frowned upon. While this may have social drawbacks, it has helped foster a more trusting, less ego-friendly environment in our technology. Information will be shared freely between different organizations and entrepreneurs, recognizing that Sweden's AI success benefits everyone.
Of course, we still have challenges, ranging from the seemingly trivial (Scandinavian Airlines, please launch a direct flight to San Francisco) to the fundamental (we still rely on US investors for late-stage funding).
But there's no denying that Sweden's approach to technology, which has been widely and deeply embraced, is a story instructive for the rest of the world. If you're worried about how quickly AI companies are rising in value or when other economic indicators will catch up to prevent a bubble, you need to factor that technology into your daily life.
The opinions expressed in Fortune.com commentary articles are solely those of the author and do not necessarily reflect the author's opinions or beliefs. luck.
