Case Analyze

Read Cold Opportunity (A). Based on your understanding of ‘affordable loss’, ‘strategic partnerships’ and ‘leveraged contingencies’, what can Nils do now that it is raining? Be sure to include an example of each.

Individually, read Cold Opportunity (B). Based on your understanding of ‘affordable loss’, ‘strategic partnerships’ and ‘leveraged contingencies’, what can Nils do now that Absolut won’t return his calls? Be sure to include an example of each.

Individually, read Cold Opportunity (C’). Based on your understanding of ‘affordable loss’, ‘strategic partnerships’ and ‘leveraged contingencies’, what can Nils do now? What business is he in?.

UV2034

Rev. Aug. 2, 2016

This case was prepared by Saras Sarasvathy, Associate Professor of Business Administration, Darden School of Business, and Stuart Read, Professor of
Business Administration, IMD, Switzerland, with assistance from Magnus Aronsson, Managing Director, Entrepreneurship and Small Business
Research Institute, Sweden. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative
situation. Copyright  2009 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an e-
mail to sales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form
or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation.

Cold Opportunity (B): The ICEHOTEL Story

Nils Yngve Bergqvist put down the phone in frustration. It was his fourth attempt to connect with Curt
Nycander, the head of marketing for Absolut Vodka. The idea for a partnership with a liquor company had
come from one of the ice artists, whose father ran Johnnie Walker Scotch whisky, a division of Diageo, an
international corporation producing spirits, wine, and beer. But it turned out Johnnie Walker was not
interested.

It was difficult to take the rejection without bitterness. Bergqvist tried to fight it by telling himself that
aesthetically, culturally, and personally it was Absolut that he really wanted on board. To shake off his
disappointment, he walked out toward the new ICEHOTEL (version 1993) taking shape along his beloved
Torne River. The Arctic air outside was −25ºC (−13ºF). When the construction was complete, the
temperature inside the hotel would be a constant −5ºC. Bergqvist had formulated and reformulated his ideas
so ICEHOTEL would look like a “vision”:

The entire hotel is on loan from the mighty Torne River and is a place where time stands still. Just a
short period before, fish swam in the water, and the river was a crashing torrent of whitewater, wild
and frothing. And very soon, when the spring comes and then finally the summer, the rooms, the
suites, the bar, the reception, in fact the entire creation, will once again become part of the rushing
rapids coursing toward the sea.

Guests would sleep in sleeping bags on a bed of snow and ice on reindeer skins—and would be
woken up in the morning with hot lingonberry juice.

Bergqvist realized it was a difficult sell. And what exactly was he selling anyway? He had only recently
even come up with the name while groping for words to describe his vision to a journalist, who had heard
some people had stayed in an igloo in Jukkasjarvi, 200 km inside the Arctic Circle. “Well,” he had said, “It’s
like…a hotel…an ice hotel.”

There was something powerful in the name. He felt it even more deeply than the cold in his bones. Just a
few months earlier, he had not even imagined such a thing, and yet it now felt as though he had been heading
toward the ICEHOTEL all his life. He remembered the first ice sculpture workshop/exhibition he had
organized in Jukkasjarvi, 2 km into the Arctic Circle in the north of Sweden.

That weekend had begun beautifully, as the artists created sparkling sculptures from large blocks of ice
cut from the frozen Torne River nearby. Monday brought rain, however, and Bergqvist saw the exhibit melt

For the exclusive use of H. Yu, 2018.

This document is authorized for use only by Hang Yu in Entrepreneurship Spring 2018-1-1 taught by David Kressler, University of Maryland from January 2018 to July 2018.

Page 2 UV2034

right before his eyes. “Eventually,” he recalled, “we were all led to one reaction: ‘What are we doing? We are
trying to preserve something that belongs to nature. Let it be destroyed and make something new.’ So we
invented that feeling that day.”

The spirit of the ICEHOTEL was born that day, although its name was yet to emerge Instead of viewing
the dark and cold elements of winter as disadvantages, Bergqvist treated the unique elements of the Arctic as
assets.

In 1990, the French artist Jannot Derit was invited to hold an exhibition in a specially built igloo on the
same frozen river. The 60-square-meter building, named Arctic Hall, attracted many curious visitors to the
area. One night, a group of foreign guests, equipped with reindeer hides and sleeping bags, asked to use the
cylindrical shaped igloo as accommodation. In the next three years, Bergqvist and the artists and engineers
who worked with him began experimenting with larger, more elaborate igloos—and the ICEHOTEL became
an increasingly central part of the annual experience for visitors to Jukkasjarvi. Now, Bergqvist was convinced
that he could grow his venture this into a greater venture., if only he could get Absolut to share his
conviction!

The Pitch to Absolut

Returning to his office, Bergqvist again reviewed the following ingredients in his pitch to Absolut:

 The cold, dark, long nights of Jukkasjarvi

 The pristine ice from the Torne River

 Artists from around the world sculpting against the backdrop of the Northern Lights

 The mix of curious and romantic adventurers who came to experience the Arctic

 The experience of sleeping in a spacious igloo guest room

 The happy couples who got married in an adjacent Ice Chapel

 A hotel that melted away every summer…and had to be built from scratch every winter

 The welcome fire of Absolut cocktails served in glasses made of ice

 “Here, have a drink in your ice…not ice in your drink…Skol!”

He went over possible reactions: Absolutely unnecessary? Sure, but that’s the beauty of it. Rather
improbable? Perhaps, yet that is exactly the lure. Highly profitable? Certainly. Especially if they could find a
way together to replicate the experience in other places. Anyway, what did Absolut have to lose by getting
involved? Bergqvist simply could not see how the company could refuse to at least give it a shot.

But Absolut was not returning his calls, and he was left wondering what to do next.

For the exclusive use of H. Yu, 2018.
This document is authorized for use only by Hang Yu in Entrepreneurship Spring 2018-1-1 taught by David Kressler, University of Maryland from January 2018 to July 2018.

UV2035

Rev. Aug. 2, 2016

This case was prepared by Saras Sarasvathy, Associate Professor of Business Administration, Darden School of Business Administration, and Stuart
Read, Professor of Business Administration, IMD, Switzerland, with assistance from Magnus Aronsson, Managing Director, Entrepreneurship and
Small Business Research Institute, Sweden. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an
administrative situation. Copyright  2009 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order
copies, send an e-mail to sales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or
transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation.

Cold Opportunity (C): The Absolut ICEBARS Story

Like most expert entrepreneurs, Yngve Bergqvist knew that, if your stakeholder is not taking your calls,
you should get the stakeholder to call you. Even though he began simply with the doable and worth doing at
relatively low costs, Bergqvist had learned not to rest, but to keep pushing the frontiers of what most people
would consider doable. Pushing a bit here and there, and then pushing some more with each new partner had
led to what he considered the beginnings of a great venture, even a great adventure.

By 1993, when the ICEHOTEL was established, Bergqvist’s next move was consistent with other moves
that had come before—to continue to find partners and stakeholders who found value in helping him build
and grow his venture. ICEHOTEL already served cocktails made with Absolut Vodka, but Bergqvist was
inspired to take the association a step further. He did so by focusing on the doorway into the ICEBAR.
Unlike the ICEHOTEL guest rooms, whose doorways featured reindeer skin curtains for privacy (it was
impossible to craft traditional doors out of ice), the bar needed no such curtains. Bergqvist had the sculptors
cut out the ICEBAR’s doorway in the shape of an Absolut bottle—which, of course, was the heart and soul
of the Absolut brand. And inside, placed on bar shelves made of ice, was a distinctive row of actual Absolut
Vodka bottles.

Then, with the help of the Swedish Tourist Board, ICEHOTEL issued a press release targeted at
thousands of outlets in Europe and the United States. “We wanted to hook Absolut,” Bergqvist recalled, “so
we put Absolut bottles in that bar, which we sent as the press release and called it “ICEHOTEL ICEBAR,
−5ºC/26ºF, Jukkasjarvi, Lapland,”1 (Figure 1).

1 Case writer interview with Nils Yngve Bergqvist. All subsequent quotations derive from this interview.

For the exclusive use of H. Yu, 2018.

This document is authorized for use only by Hang Yu in Entrepreneurship Spring 2018-1-1 taught by David Kressler, University of Maryland from January 2018 to July 2018.

Page 2 UV2035

Figure 1. ICEHOTEL ICEBAR, −5ºC/26ºF, Jukkasjarvi, Lapland.

Source: Courtesy of N. Y. Bergqvist.

“Suddenly, the marketing manager of Absolut was phoning me,” Bergqvist said. Apparently, the
extensive media coverage and accompanying images featuring Absolut had attracted the attention of
Absolut’s New York PR agency. “So he asked me, ‘Are we involved in that project? Everyone here is asking
about it.’ I took a deep breath and told him, ‘No…but that is our wish…’ So he sent a guy up here, and we
made an agreement.” Bergqvist smiled at the memory. “Buy-in is so much better than sell-in,” he said.

Yet Absolut’s approval did not automatically lead to the ICEBARs that eventually opened in London,
Tokyo, and other cities around the world. The first step in the partnership led to a series of ads. And always,
even as Absolut ads spread the word about ICEHOTEL around the world, Bergqvist was insistent that
promoting Jukkasjarvi be part of the deal; Absolut responded with an advertisement that named Bergqvist’s
beloved town by name. He never forgot the vision that had been his inspiration for the venture in the first
place: the colors of that winter Arctic night and the coldness of the pure ice from the Torne River. Not only
was this a matter of his personal passion, but Bergqvist knew that local partnerships were key to the
quintessential ICEHOTEL experience.

There were several other partnerships along the way, including Fritz-Hansen, SAAB, Philips, S-J rail
service, and SAS, along with several regional hotels. In 2008, ICEHOTEL joined forces with the energy-
producing company Gävle Energi, which Greenpeace called one of “Sweden’s most environment-friendly
energy companies.” The goal was for the ICEHOTEL and the ICEBARS to become CO2 negative by the
year 2015.

Bergqvist valued ICEHOTEL’s partnership with the local church in Jukkasjarvi as much as its
relationship with Absolut. Every year, artists built a new Ice Church complete with a working chapel where
couples from around the world married or renewed their vows, and children of diverse backgrounds were
baptized; clergy from the local church officiated. And ICEHOTEL’s considerate relationship with the
neighborhood paid off for both the venture and the local economy. For the people who came from
everywhere to enter the Ice Chapel, the experience itself was of real value. As the website described it:
“Perhaps the shared memories and experiences are stronger for the very reason that the chapel is
impermanent. When no architectural memento exists, the memories and the vows exchanged are especially
cherished” (Figure 2).

Page 3 UV2035

Figure 2. Inside the Ice Church.

Source: Courtesy of N. Y. Bergqvist.

This passion for a place that celebrated the transience of human experience and the vastness and depth
of nature’s indifference to it was sometimes unsettling for outsiders—and it was an aspect of the venture that
Absolut understood. Perhaps that was why a proposed ICEBAR in Stockholm at first met with reluctance on
the part of the vodka company. ICEHOTEL engineers and artists sought to replicate the Jukkasjarvi
experience, complete with ice glasses shipped from the frozen Torne River, but Absolut balked. With a
characteristic chuckle, Bergqvist described the situation as “a funny story”:

The ICEBAR Stockholm was set up in 2002. It was just a test. Absolut didn’t believe in it. They told
me, “It is a wrong location,” and “It is too risky of a project,” and “Don’t use our trademark inside.
If you take the risk, we can be with you but be careful.” After six months, we were the best sellers of
Absolut Vodka in all of Stockholm.

After one year, they came from Absolut and said, “We think that we were wrong about the location
question, and also about this concept. So how can we proceed?” And I said, “I have, during the
whole time, believed in this project,” and that we were selling Absolut products the whole time.
Now, we have a concept. Why don’t we make a bigger concept and spread it around the world? So,
we set up the franchise agreement project. After Stockholm came Milan—and a number of other
cities.

The idea was not simply to make money from selling vodka in a theme bar—although the cover charge
for 15 minutes could cost upward of 15 euros. The idea was to sell vodka in ice—instead of on ice—just like
in Jukkasjarvi. The slogan? “Purer than water.”

Ice from the Torne River became one of Swedish Lapland’s most successful export goods. Each year the
ICEHOTEL produced half a million ice glasses for the ICEBARs in such cosmopolitan cities as London,
Tokyo, and Copenhagen. ICEBARs attracted 600 to 1,000 clients per night throughout the world, which
Bergqvist noted “is a lot of ice glasses and a lot of vodka.”

It took approximately six weeks to construct an ICEBAR, with ice sculptures made by artists who came
from around the world to work their magic in places as disparate as Cambodia and Australia. In keeping with
the spirit of the artists who helped sculpt the ICEHOTEL in Jukkasjarvi every year, ICEBARs attracted
artists who replaced the sculptures with new ones every six months.

Although ICEBARS gained an upscale reputation internationally, not all locations were trendy nightspots.
“We also make small ICEBARs like in one of Sweden’s parks, for example,” Bergqvist noted. “Even for
individual tourist groups…just one or two boats sometimes. We try new things all the time. And mostly, it is
learning by doing, because no one else has done it.”

Page 4 UV2035

Wherever its location, publicity for an ICEBAR brought publicity for the ICEHOTEL. “Every time
when they are writing something about the ICEBAR, they also write about the ICEHOTEL here,” Bergqvist
said. “So our idea is that when people visit an ICEBAR, they get a small idea or maybe a big idea of going to
the ICEHOTEL. Hopefully, we will be successful in that, [and] then we can do something really good for the
tourists in this area.” By 2006, more than 135 international artists competed for 30 places on the ICEHOTEL
artists list—many of whom had never before sculpted in ice.

Arctic Export

The success of ICEBARs throughout the world led to a new enterprise, Bergqvist said:

We are sending the ice out in the world in trucks. And then in boats, in container ships. So a
container, when we are sending ice from here and it goes to Tokyo, we need about four a day, but
the price of sending the ice glass to Tokyo is no more than double what it costs to send to
Stockholm. That is around 1 kroner per ice glass to ship halfway across the world—nothing at all.
Then we are sending ice also to other events, so today we were shipping a lot of ice for Hamburg.

Next Stop: Space

In 2009, the ICEHOTEL website calmly announced its partnership with Virgin Galactic, Richard
Branson’s space tourism company, cofounded with Burt Rutan of Spaceship One and Paul Allen (previously
of Microsoft). The first trip was scheduled to take place in 2012.

UV2032

Rev. Aug. 2, 2016

This case was prepared by Saras D. Sarasvathy, Associate Professor of Business Administration, Darden School of Business, with assistance from
Magnus Aronsson, Managing Director, Entrepreneurship and Small Business Research Institute, Sweden. It was written as a basis for class discussion
rather than to illustrate effective or ineffective handling of an administrative situation. Copyright  2009 by the University of Virginia Darden School
Foundation, Charlottesville, VA. All rights reserved. To order copies, send an e-mail to sales@dardenbusinesspublishing.com. No part of this publication may be
reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without
the permission of the Darden School Foundation.

Cold Opportunity (A): The Nils Bergqvist Story

Nils Bergqvist was born in central Sweden. His father was Norwegian and from a family of seafaring folk,
who worked in the Norwegian Sea. His oldest cousin was captain of a big boat. Bergqvist’s first dream was to
be a captain:

When I was just five or six years old, he was standing there with his big white hat and I said, “I shall
also be a captain.” I became a captain, but actually, I have not been working at it. As I was growing
up, I decided to see the world, so I went on one of those boats around Sweden several times and to
many parts of the world. As I was doing that, I was also skiing, and all the time when I was out on
those boats, I missed the skiing. So when I came home, and the snow was gone in other places, I
went up to the North, and I was skiing about three or four weeks until the last snow was gone, and
then I was standing there and was thinking about being a sailor or starting with something here.

Bergqvist’s interest in the environment led him to become an environmental engineer. As he was
finishing school, he applied for a job at a big mining company that had interests in Kiruna (in northern
Sweden). He described his stint there:

The most boring part of working in a mine company was that you have a number. My number, what
do you call it, an employee number, I had 3717 or something. That was before your name. So they
were calling me 3717, not my name. I couldn’t stand that. I was thinking of it often.

Bergqvist also observed that his colleagues seemed to be marking time until Friday rather than being
engaged in their work. “Anyway,” he said, “I felt that this is not my place.”

During the eight years Bergqvist was working for the mining company, he did quite a bit of canoeing and
river rafting. He began taking tourists with him. He would wake up very early in the morning and head to the
tourist bureau to see if anyone wanted to go down the river by kayak. Almost every day there were people
interested. What started out as a casual hobby turned into a business of sorts:

I had one client who paid me, and then there was someone who wanted to pay me to come pick him
up. It was not exactly a business, but it was fun. The tourist bureau sold the ticket, but I was an
independent tour guide for my own project. I took just one client in my kayak and went down all the
rapids—40 km every day, big rapids. That was fun, and they were wet. It was not very economical. I
was getting paid from my day job at the mine company. I did this for fun. But what I earned was
coffee money.

For the exclusive use of H. Yu, 2018.

This document is authorized for use only by Hang Yu in Entrepreneurship Spring 2018-1-1 taught by David Kressler, University of Maryland from January 2018 to July 2018.

Page 2 UV2032

For me it was training paddling. In my mind, I was strong, I was with a guest, and it was fun, I
showed him my river, and I was training, training four or five hours hard down the river.

Bergqvist realized that his guests seemed to enjoy the trips, too. That got him thinking about expanding his
operation.

“Then I was thinking about bigger boats: Maybe we could do something,” he recalled. “I heard about
rafting in the Ganges or something in Nepal.” Bergqvist connected with a Swedish journalist who had
traveled in those areas; although rain had prevented him from taking a boat tour, the journalist was able to
provide Bergqvist with some brochures from boat tour companies he had learned about. Then, he said, “I just
bought a boat and started to go with tourists. I saw that I needed more boats, and [eventually] I had more
than 30 boats on the river.”

Bergqvist resigned from the mining company when he purchased his first boat. He had no earnings after
the tourist season was over, but he was single and confident he could find seasonal work. In any case, he had
so many guests through his tourist business that he was surviving. He grew the business to about 40
employees in the summertime. And even though the competition began to increase, with 30 to 40 companies
in the region, Bergqvist’s business was doing well, at least partly because it had been the first one there.

Now a member of the growing local tourism industry, he also entered the restaurant business. That
required him to hire full-time employees. But the seasonal nature of the tourist trade began to worry him:

We tried to find out something for winter. But when I asked here locally what to do, they said that
this was not an idea, because it is too cold and too dark, and no reasonable person would go there.
For me it was something else, because I like snow, I like skiing, and cold, cold climates. We have
beautiful light, fantastic light, and even the Northern Lights. I love skiing when it is a full moon; it is
fantastic. You can see your own shadow, and it is night. It is fantastic. All the time I see that.

The local tourist office, however, did not share Bergqvist’s enthusiasm; in fact, it closed during the winter.
“So I tried to find guests from other countries,” he said.

Bergqvist Meets Sakata-San

In his quest to find something to do during the winter, Bergqvist traveled to other winter destinations
such as Anchorage, Alaska. He heard in Alaska that many Japanese people came to see the Northern Lights.
He contacted the Swedish Tourist Office, which had offices all over the world, to find out if it had any
representatives in Japan. That led him to the Scandinavian Tourist Board in Tokyo. When Bergqvist asked if
there were any travel agents in Japan who were interested in Scandinavia, the board gave him Sakata’s name.

Sakata was a businessperson. His family had a small factory in Japan that made beautiful gift boxes. The
family also owned a small bar called Bar Finland, a nod to Sakata’s father’s having worked for the Japanese
Consulate in Finland. Sakata was interested in Scandinavian travel. After one phone call, Sakata agreed to
meet with Bergqvist in Sweden. Bergqvist described the meeting: “I told him that I would like to learn from
him what we could do or what he believed we could do together. I had just ideas about doing something with
snow and winter; I was focused on that, to find out something. But I didn’t know what.”

As a result of that meeting and the ensuing relationship with Sakata San, some Japanese tourists began
traveling to Swedish Lapland. And Bergqvist began visiting Japan.

Page 3 UV2032

Trips to Japan

On one of his visits to Japan, Bergqvist went to Hokkaido, where they have the big snow festivals. Seeing
the ice art outside his hotel, he asked the desk clerk whether any of the guests were artists. After having a beer
with the artist Miho Aoki, Bergqvist invited her to come to Sweden. Miho Aoki and other invited artists came
and created a small workshop where they demonstrated how they worked with ice (Figure 1).

Figure 1. Bergqvist’s ice sculpture workshop.

Source: Courtesy of Nils Bergqvist.

The Ice Sculpture Workshop

The proposed workshop received a lot of press. About 14 artists including locals came to the north of
Sweden on a Friday at the end of November 1989 and worked through the weekend getting ready for
Monday’s workshop. Local people also came by and took photographs as the artists sculpted eagles and
reindeer out of the ice that Bergqvist and his people had cut out of the frozen river nearby. There was
growing excitement about the beauty of the art, the skills of the sculptors, and the interest of all who stopped
by. Bergqvist described that Sunday evening and what followed:

The evening was cold and clear, and I was working here. I had a family during that time. So we were
watching it, and they were so impressed, so happy, it was so beautiful. People were photographing it
all the time, local people here in the village. The next morning when I woke up at 6:00, I heard
something strange. I couldn’t believe it, but it was raining! It was raining, and it was plus seven
degrees! It is true. I was making coffee, and I felt what would happen with that ice, and our tours
start at 11:00. So when I came down, two of my people who were working were standing with sheets
over the ice art. They asked me, “What should we do? It is terribly wet already. This is going to be
destroyed.” I remember also when the tourists came here at 11:00, the ice-art reindeer lay down—it
was destroyed. I was thinking, “What are we doing?”

With the rained-out ice-art exposition in front of him, tourists and press pouring out of the train into
Kiruna, and concerned local people beginning to arrive on the scene, Bergqvist sat down to think about what
to do next.

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