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Cracking Switzerland – a go-to place for tech innovation
Relationship Manager at Future Processing
I think we all agree that in terms of tech hubs, Switzerland has this cozy place in our minds as a go-to place, but have you ever wondered why is that? What makes it so special?
When we think of Switzerland and tech what comes to our mind is blockchain, Crypto valley, startups – concepts which are simply innovative and at the same time sexy. They draw attention, tempt investors and as a result of these and numerous other reasons – make money.
Together with my guest Sheraz Ahmed we will try to understand what the secret behind Switzerland’s status is and perhaps we will be able to find out the recipe for success – many regions have already attempted to reach a similar status, but none of them has reached the goal yet.
Michał Grela (MG): Hello, and welcome to yet another episode of IT Insights by Future Processing. The topic of today’s conversations are the reasons why Switzerland is the go-to place for taking innovation and everything that’s related to cracking Switzerland as a go-to place for tech innovation.
I think we all agree that, in terms of tech hubs, especially in that part of the world, Switzerland has this cozy place in our minds as a go-to place. But have we ever wondered why is that? What makes it so special as a destination? Because when we think of Switzerland and tech, what comes to my mind, privately, is Blockchain, Crypto Valley, startups, the concepts which are simply innovative at the very bottom of them and at the same time, very sexy at the moment. If I can put it that way? They draw attention, they tempt investors, and as a result, these and numerous other reasons, simply make money. Bottom line, affect the bottom line.
And today with, together with my guest, Sheraz Ahmed, we will try to understand what the secret behind Switzerland status is. And perhaps we’ll be able to boil it down to some sort of a recipe for success. Many regions already attempted to reach a similar status, but none of them has actually reached the goal yet. So let’s take a closer look at it. But before we dig deep into the details, a short intro to the guests. Sheraz, the stage is yours.
Sheraz Ahmed (SA): Perfect. Michael, thank you so much for having me. Yeah, I can give a little bit of an intro. So, I’m the managing partner of Storm Partners, which is a solution provider to the crypto and Blockchain space here in Switzerland, and we focus on the European markets. And so we help any of our clients, so be it entrepreneurs, C-level executives, with any challenges they have in this innovative technology space, within the departments of finance, marketing, investor relations, and also digital transformation.
And I also wear a second cap, which is the Head of Business Development of the Crypto Valley Association. Crypto Valley Association is one of the largest nonprofits within the Blockchain world and currently hosts corporate members, such as like CME groups, or such assets exchange, Cracker and Ledger, you name it, some of the really big players within the space. And we’re here to support in the promotion of this ecosystem and in, very much a nonprofit, non-biased way and to grow and support each other. So those are two caps that I wear, and I love innovation, very curious about the space. And I am Swiss, a Swiss believer, and so I’m really looking forward to being able to tell you more about why I believe Switzerland is one of the go-to places.
MG: I’m really looking forward to it. Thanks for that intro. So as you said, you based your company in Switzerland, are Swiss-based. So why do you think it’s a good decision? Why Switzerland is a good place for companies like yours?
SA: Well, the World Intellectual Property Organization, WIPO, has ranked Switzerland, number one in the world for innovation for the 10th year consecutively, right? And I believe that’s due to three main elements, which is money, people, and power. If I kind of decorticate that a little bit, I mean money in Switzerland here. We have one of the highest BMI’s, so the Big Mac Index, it costs you the most in the world to buy a Big Mac, which just shows in terms of the purchasing power. So the purchasing power, people have a lot of money here and with a lot of money, they have that ability to finance projects, startups. If someone has an idea and they want to bring that to life, they actually have the means and resources to do so. So that’s the money part.
People. I think Switzerland has the opposite of what a lot of countries are facing, such as a brain drain. Here in Switzerland, we’re facing a brain gain. There’s a lot of expats that come here to Switzerland to work. And so we have a lot of very smart, intelligent people that are very cross-culturally coming from all over the world. And so you have a great mix, a melting pot, if you will, of people.
And then the third element there is just power. The headquarters of some of the world’s largest organizations are here, some of the world’s biggest banks are here, just kind of bouncing off the second element of people. It really is a melting pot, not only of people as well as organizations. So you have that layer of support, right? So you have all these three elements of money, people, and power that just come together into one place that is rather small. There are only 8 million people here, and I think that is a catalyst in between these mountains. I think that is really the catalyst of why people come to Switzerland and why it’s been growing in innovation for the past decade.
MG: Cool, thanks for that insight. My next question would be around what could you provide with us with a recent case you’ve observed on the tech scene of Switzerland, which you think of as very impressive or surprising? Just to showcase that success stories do happen on a daily basis in that miracle area.
SA: Yeah. I’m coming from the cryptocurrency and Blockchain world, so I’ll give you an example related to that. It’s a larger one, and I can go a little bit more granular if you want, Michael, later, but it would be the rise of the Crypto Valley.
MG: Mm-hmm (affirmative).
SA: The Crypto Valley is in a small place, a small city or even village, if you will, called Zug, which has very… It’s like around two kilometers squared, right? It’s quite a small village and it kind of rose in 2017 with the Ethereum Foundation being founded there. And now, in just a few years, there are over 500 companies, crypto and Blockchain-based, within this Crypto Valley. I think that’s just impressive, 500 different companies.
And that’s really due to the relationship that these entrepreneurs have with government officials. I was, I remember it very well at 18 months ago, when it was one of the last meetups before this pandemic hit, you would just see kind of a cantonal of representatives, representatives of the state. They’re having a beer at the meetup, trying to understand what cryptocurrency and Blockchain is, and really this openness of kind of the private and public sector coming together is wonderful, and I think that’s really been driving this rise of the Crypto Valley. So for me, that’s a use case, which I’m like, “Wow, there are seven unicorns now that have come out of the Crypto Valley and it’s incredible.”;
MG: You’ve mentioned unicorns, so let’s put a spotlight on this startup scene now. How would you describe it in Switzerland at the moment? What’s its focus?
SA: The focus, I would say, is between kind of the Biotech, MedTech space, and FinTech, of course, with all the banks. It’s a lot of tech, a lot of technology. Maybe I’m a bit biased, I see it’s growing exponentially, not only within the Blockchain space, but within all the others. There’s so much cantonal state support for startups that are coming up. I think, as I mentioned before, the people in Switzerland, they normally have a lot of the means to kind of start projects, so we’re just seeing a lot coming out.
And I think through this pandemic, Switzerland being a safe haven in a lot of different aspects, not only in the finance side, but here throughout the pandemic, we never really had like a lockdown at any point in time during the past 18 months. People have been able to go out rather freely. There’s not been like a curfew or some of these things, so I think people are still kind of mentally healthy and physically as well, right? I think in some places around the world, it’s been quite hard for people that have been locked down, actually not even being able to go out, had curfews.
And so, I think that’s really helped, and so I think the startup scene has been growing because people have had time for them for themselves. And this time that they’ve taken for themselves, they’ve been able to really create some side projects and grow from it. So I’m rather positive about the startup scene at the moment,
MG: I guess I understand what you just said as, it boils down to just generally eliminating hurdles on the way towards an apprenticeship or starting new businesses. But maybe it’s just generalizing, but a lot of that, what happens tech-wise in Switzerland, is about Blockchain and crypto. Is that actually the main thing that’s happening, or is the innovation scene in Switzerland much broader?
SA: I think it’s definitely rather broad. I think people will come to Switzerland as well because they want a certain status symbol as well. A lot of companies within the crypto and Blockchain space that we find, that migrate here, is because they want to be more regulators. They want to be trusted by their audiences and really have a kind of a footing here. So I would say it’s a lot of regulated entities that want to be affiliated, for example, with an SRO, get non-action letters from FINMA, et cetera.
And I think a lot of the trends that ended up happening, not only in the crypto and Blockchain space, but rather to worldwide encompassing. If we take an example such as the NFT’s, for example. I think NFT as of this kind of three-letter acronym has been everywhere. I don’t think a lot of people know that NFT’s have been around for a long time, but if you take NFT’s within digital art, for example, there was a big boom over the past couple of months. And now we see things slowing down, but we have a lot of clients that come to us and they say, “Well, we would like to do some digital art, not in the way that it’s just done now by issuing some digital art and nobody knows who actually owns the copyrights and all of this. We want to create something a bit more regulated where it’s understood by everyone and it’s a bit more official.” And then they come to Switzerland. And I think that’s why Switzerland really attracts a lot of these serious people.
MG: My last, but not least, question comes, or circles back to the first one, I guess. I was preparing to that conversation and I was wondering what makes Switzerland so great at growing as a tech hub, Blockchain hub. And when I thought about it, some examples cross my mind of other regions that are trying to replicate this recipe for success. For example, Malta, or right now Dubai, or Ireland, for example, is very focused on tax incentives and so on and so forth. But they’re not there yet, say euphemistically. So what do you think makes Switzerland so special? I know that there’s no silver bullet and the Swiss people don’t have a magic wand in their closet next to watches and chocolate, but for some reason, others are trying and are failing and Swiss are not. So if you were to… What would be, from your perspective, the most important ingredient of this recipe?
SA: You’re definitely right. It is the chocolate, cheese, and milk that we drink and eat. But I think further from that, it’s the longterm mindset. There are areas you mentioned too, right? Malta and Dubai, I can tackle each one of them. For Malta, for example, they had this big boom. I remember in 2018, Malta was really one of the places that a lot of companies wanted to set up because it was cheaper than Switzerland than to other locations. And they’re like, “Wow, this jurisdiction is going to boom, things are going to happen.”;
And then slowly, they found out that it was a lot of marketing, to be honest. A lot of companies tried to get bank accounts and they found that very hard to do so. Regulation legislation wasn’t actually there yet already, and so it just ended up fading. And I know that they’re still trying a little bit, but it just, not all the pieces of the puzzle were there and completed. And because they kind of went out and did a lot of marketing of Malta, they might’ve done better to kind of built the infrastructure around that first. Whereas on the other hand, right? Switzerland doesn’t do so much marketing, it just normally attracts itself. It doesn’t really kind of go out and say, “Hey, come to Switzerland.”;
On the side of Dubai, we were actually just speaking about this, right? I just came back from Dubai. I think it’s incredible. There’s a lot of great things that are going to happen. The Crypto Valley Labs, actually, they just opened a new office in Dubai that’s going to link both Zug, Switzerland, and Dubai. And I think it’s going to be a growing space. I think it’s really going to be a hub, not only for the Middle East, but for the world, and some of the predictions there is incredible. I was speaking with the head of the organization and he was telling me that, Sheraz, he predicts that in the next 18 months that there might be double the amount of crypto and Blockchain startups than there are actually in Switzerland, based in Dubai and actually kind of legitimate projects. But we never know about certain things, and I think Dubai is known for really going out there, being innovative. Okay, we want the biggest building, the biggest this, the newest this, the latest this. And so it’s very glamorous, but sometimes the tech side isn’t always so glamorous.
So let’s see, I am personally rather positive and bullish on Dubai. I think they’re putting together a lot of great things. I think crypto and Dubai kind of sounds quite good together, but I think they will have to take the time to really push on the foundational level. And I think that’s what Switzerland has always done, right? If a Swiss authority is going to make a decision, they take their time to do so, but then they don’t end up going back on it, or rarely. So they really, once they’ve taken a position and a decision, they really stick with it. And to summarize it for you and to summarize what I see as the success of Switzerland, it boils down to slow and steady wins the race.
MG: Well, that was a good summary. I won’t even try to put it in other words. Thank you for us. It was really, really interesting talk, and it was great to have you.
SA: Thank you, thank you for the invitation.