design:CASE / Muuto

design:CASE Muuto is the first design-based company in Denmark to receive venture capital from VÌkstfonden. In less than a year and a half, Muuto’s strong business strategy has enabled this entrepreneurial firm to develop a business idea into an award-winning enterprise with exports to 15 countries. danish design centre

This entrepreneur case tells the story of Muuto: a newly founded company that has been successful in integrating design as a key element in its business concept from day one.

FACTS ABOUT MUUTO APS Muuto was founded in 2006 as a design-based company in the field of design accessories, lighting and small pieces of furniture. Kristian Byrge and Peter Bonnén make up the management team. The Danish venture capital fund Vækstfonden became Muuto’s financial partner in 2007.

Muuto has exports to 15 countries; since early 2008, the list of export countries has included Australia, Japan and the USA. In 2007, the Danish market accounted for just under 20% of turnover.

‘Muuto’ is a Finnish expression, derived from ‘muutos’, which means change or new perspective.

Muuto collaborates with some of the best new Nordic designers from Denmark, Sweden, Norway and Finland: Norway Says, Claesson Koivisto Rune, Harri Koskinen, Ole Jensen, Matti Klenell, Ilkka Suppanen, Pil Bredahl,

NORDIC Thomas Bernstrand, Jakob Wagner, Timo Vierros, Louise Campbell, Julien de Smedt, Michael Geertsen, Teppo Asikainen, Helle Mardahl, Tveit & Tornøe.

TO.COM

THOMAS Muuto ApS 4, Peder Hvitfeldts Stræde 1173 Copenhagen K, Denmark Tel +45 3296 9899 info@muuto.com www.muuto.com Vækstfonden 104 A, Strandvejen 2900 Hellerup, Denmark Tel +45 3529 8600 vf@vf.dk www.vf.dk

A UNIQUE MARKET POSITION

For Peter Bonnén and Kristian Byrge, founding a company was

Director Kristian Byrge comments: “In terms of marketing, it is

not only a long-held dream, it was also an opportunity to be

difficult to stay true to the universe of the new designers, if at

‘at the other side of the table’, as they had both worked with

the same time you are trying to sell an Arne Jacobsen design.

business consultancy, strategy and branding in their previous

That’s easier for us, as we don’t carry the old designs. The new

jobs for major Danish companies, including TDC and Carlsberg.

generation of designers, they all bring strong personalities and creativity into the process, and that makes for products with

After months of talks and the development of a business draft,

character. We are convinced that they are the ones who can pick

they agreed it was time to take the plunge, and in 2006 they

up the baton from the old designers. We believe the time is right

both quit their jobs to launch ‘Muuto’.

– that this is the generation that’s going to take over.”

Their goal for Muuto was to seize the position as the only

From the outset, Muuto had international ambitions; the design

design-based company exclusively based on new Nordic design.

products were not just aimed at the Nordic markets but should

Muuto was to represent the best up–and–coming young

be available in leading design stores around the world. The

designers from Denmark, Sweden, Norway and Finland. With the

vision was equally ambitious – Muuto was to help Scandinavian

slogan ‘New Nordic’ they dedicated their brand to the common

design regain the lead position it held in the golden age of the

Scandinavian quality. This was a business idea that was absent

1950’s and 60’s.

from the market, as most companies represented a mix of older and newer design products.

Packaging graphics for Muuto A/S Design: DYHR.HAGEN A/S

“The designers find it exciting and appealing to be part of a Nordic context. And in business terms, we find that it has boosted demand. We are very relieved and happy about this, as we weren’t sure whether the common Nordic image had a real potential outside the Scandinavian countries.”

THE BUSINESS STRATEGY

Kristian Byrge

DEVELOPING AN INTERNATIONAL DESIGN BRAND Peter Bonnén and Kristian Byrge’s goal for Muuto was to establish an international design brand, and they knew from the outset that it would take substantial resources to achieve this. In addition to attracting the right designers to the firm, they needed a financial partner, as the export efforts would be costly. They also decided that they would personally be in charge of manufacturing, i e the coordination and management of both domestic and foreign production.

Kristian Byrge explains: “The first thing we did was draw up a five-year business plan. That took us three months, but then we had a 70-page business plan that defined our goals and objectives – including everything from the choice of designers to quality criteria for the factories and the choice of logo. That takes time, but we were determined to do it properly.”

SELECTING DESIGNERS Based on their business plan and vision for Muuto, Peter Bonnén and Kristian Byrge began to approach designers – a crucial process, which proved to be easier than they had dared to hope.

“We asked around in the design business, talked with professors and designers, kept an eye on designers who were winning awards abroad, and visited trade fairs and exhibitions. Eventually, we had a list of 20-25 young Nordic designers, whom we considered promising. We contacted the ten that we were most keen to work with – and they all accepted!”

STOCKHOLM, LONDON AND PARIS The process of selecting and contacting designers took almost six months, and then came the next phase: finding the distribution channels for Muuto’s design products. This was a similarly hand-picked process, which took almost as long as selecting designers. The two founders wanted to find the five best stores in cities like Stockholm, London and Paris, and as a criterion, the store image had to match Muuto’s story of new Nordic design. The stores were selected based on quality rather than turnover quantity, in keeping with the founders’ overall goal of marketing Muuto as a unique and exciting design brand.

As the final phase, Peter Bonnén and Kristian Byrge now had to find the best production facilities; they always pick the best in the business but on the same terms as other companies.

WORKING WITH THE DESIGNERS

“The design phase is at the very heart of what we do; it’s also the hardest part – and the most enjoyable. In a way, I am pleased to find that it’s hard!

Things that are interesting often require a special effort. If they didn’t, anyone could do the same. A good design should be unique, functional, fit for production, and marketable, and that is a process that requires time and resources from everybody involved,” Kristian Byrge points out about working with the designers.

The design stage for a Muuto product typically lasts 3-6 months. Based on the current product portfolio, Kristian Byrge and Peter Bonnén decide what new products should be added to the collection. In selecting the best designer to develop the product, they consider the designer’s personality and characteristics. For example, when they wanted a designer towel that was both simple and luxurious, they chose a designer who represented a minimalist style and personality.

“The designers are briefed on the sort of product we want them to design.

We offer some ideas for the design, but since we want to see their particular creativity, style and personality represented in the design, we are careful not to limit or restrict the designers. However, a brief often requires more than just saying that we want a vase. We want to tell the Muuto story in all our products, and we brief the designers on that. We have to provide motivation,” says Kristian Byrge.

Once the design is in place, the product development stage begins; this stage lasts about six months. During the product development stage, the designers are involved in sparring and in approving the product prototype.

Then Muuto’s product development team takes over the production process itself. Today, the company has a product developer on staff to offer expertise during this final phase.

“In terms of payment, the designers receive a percentage in royalties; this was important for Muuto in the early stages, since otherwise we would have had to pay the designers substantial sums before we could even get started.

It was great, and very fortunate, that we were able to do it that way,” says Kristian Byrge.

VITAMIN CONTAINER Bowl, design Ole Jensen OTO 100 Storage system, design Pil Bredahl FOUR Flower vase, design Matti Klenell COSY IN WHITE Lamp, design Harri Koskinen

STATUS AFTER TWO YEARS

CRUSHED BOWLS, design JDS Architects

After a little less than two years, Muuto’s staff has expanded

As for future goals, Kristian Byrge says, “Our financial goal is to

to eight. “We’re happy that we have been able to attract good

match some of the biggest Scandinavian players in our field and

employees,” says Kristian Byrge, adding: “It’s crucial for our

preferably be among the top three. In terms of design, our goal

future success to have qualified people on our team.”

is to make Muuto the leading Scandinavian design brand in our product categories in the minds of both consumers and designers.”

Muuto’s design products are exported to 15 countries, and in early 2008, the export list grew to include Australia, Japan and

CHOICE OF FINANCIAL PARTNER – VæKSTFONDEN

the USA, among others.

From the outset, Kristian Byrge and Peter Bonnén wanted to include an investor, as their business goals demanded an injection

The plan is to launch 5-7 new design products every six months,

of additional capital. Around the time that Muuto was founded,

and several of the products have already won international

the Danish venture capital fund Vækstfonden released an analysis

acclaim. In early 2007, the international design magazine

of the growth potential in the design business, which showed

‘Wallpaper’ picked two of Muuto’s designs as leaders in their

positive perspectives. Thus, Vækstfonden was an obvious

respective categories – the storage system OTO 100 by designer

possibility, although Muuto also talked to other potential investors

Pil Bredahl and designer Ole Jensen’s bowl VITAMIN CONTAINER.

before reaching a decision.

The More The Merrier Candlestick, design Louise Campbell

GOOD ADVICE from Kristian Byrge, director, Muuto • Patience is essential. It takes a long time from

having a business idea to launching a business.

Enjoy the process!

• Know your strong points as well as your weaker

points. Team up with people who excel in the areas

where you do not always seek out the best.

• Even though design is exciting, remember the

business aspects, not just the excitement and

the fun.

• Combine the creative aspects with the business

aspects – this is crucial!

• Develop a sound business plan.

• Your personality has to match the demands

of running your own business.

WORKING WITH MUUTO Ulrik Jørring, deputy director, Vækstfonden Why did Vækstfonden choose to invest in the design business?

“Vækstfonden invests in young Danish companies with a potential for considerable international growth. We are interested in the design business because Denmark holds a position of strength in design, which we would like to promote in order to help build competitive Kristian Byrge describes the process: “It took 4-5 months from

global companies. Our general mission is to engage

our first meeting with Vækstfonden until we had a signed

at an early stage in promising markets that currently

agreement. During that time, Vækstfonden checked all the

lack private capital to achieve their growth potential.”

conditions in our business plan and talked to designers, retailers and production companies; they gave us a very professional

Why did you choose to invest in Muuto?

check-up.”

“Muuto combines an understanding of design with “The negotiations were tough. It’s a real killer – it’s a lengthy

a strong grasp of business and strategy, and despite

process, and at times you simply don’t know where you stand.

their age and size they have already achieved impres-

It was important for us to be able to rely on our investor.

sive results outside Denmark.”

We know exactly what Vækstfonden demands of us, but we also know exactly what we get in return. This transparency is essential, and consequently, we have a very extensive,

What criteria should a company meet for Vækstfonden to want to invest in them?

50-page contract. We had a lawyer involved in drawing it up, so that we knew exactly where the process was going.”

“There has to be strong management and a business model with substantial growth potential. Many small

“Vækstfonden is our financial partner, and we respect them.

companies are constructed around one designer and

But they are not involved in daily operations, and they have not

the sale of this one designer’s products. Their success

interfered at all. They won’t interfere as long as we live up to our

depends entirely on that designer’s potential. In our

end of the agreement,” says Kristian Byrge.

view, that makes it harder to build a major business, and it’s harder for us (as outsiders to the field of

Vækstfonden has invested just under 10 million kroner in Muuto,

design) to assess the potential. What we like about

but Kristian Byrge and Peter Bonnén still hold a controlling share.

Muuto is that they are businesspeople working with a number of leading designers.”

What makes you see the Danish business as a growth industry?

“The high level of professional design competencies in Denmark, a good global profile and an expanding market.”

Vækstfonden is a government-funded finance company

What might hamper the growth potential of the Danish

and a part of the Danish business promotion system.

design business?

Vækstfonden’s mission is to promote development and renewal in the Danish business sector by financing

“Sometimes, business competencies are lacking.

promising projects in small and medium-sized enter-

It’s difficult to create scalable business models.

prises. The ultimate goal is to help Denmark build

The potential is difficult to assess for outsiders to

the most efficient market for innovation financing in

the design trade, and it’s difficult to build lasting

Europe. In 2007, Vækstfonden had a capital base of

competitive advantages (compared with other

2.1 billion Danish kroner.

businesses where new companies are protected by patents etc).”

WORKING WITH DESIGN

Published by:

Below are some useful links for your company’s work

Danish Design Centre

with design, exports, etc.

FINDING A DESIGNER www.ddc.dk/ddcnet The Danish Design Centre’s web site can help you find

H C Andersens Boulevard 27 1553 Copenhagen V Tel 3369 3369 Fax 3369 3300

a designer to match the competencies your company

design@ddc.dk

is looking for. DDC Network has profiles of more than

www.ddc.dk

2,000 designers and design firms.

Text: Pia Dandanell Parrot

BECOMING AN EXPORTER www.eksportstart.dk The Danish Trade Council offers small and medium-sized enterprises free advice on export planning. Follow-up assistance for new exporters is offered at half price.

ADVICE ABOUT GROWTH www.startvaekst.dk Denmark’s five regional Growth Houses offer free information and advice for entrepreneurs and small companies.

Every year, the Danish Design Centre publishes a number of design cases. In 2008, we will publish four master cases and two entrepreneur cases.

A MASTER CASE highlights the value-generating and company that has worked strategically with design and achieved results that are reflected in value generation.

Key economic figures confirm and document progress following design investments.

An ENTREPRENEUR CASE is the story of a newly founded company that has been successful in integrating design as a key element in its business concept from day one.

Since key economic figures are usually not available, the company’s economic viability and future success cannot be assessed.

Additional information about the Danish Design Centre’s activities and about creative capital in the Danish design business is available at www.ddc.dk/kk

Design and layout: Scandinavian Branding A/S and Susanne Schenstrøm, DDC

business potential of design by telling the story of a