The story of Gandalf
Preface
It’s been a long journey that has brought Gandalf to where it is today. The path has been filled with both peaks and valleys, yet somehow the company has always managed to land on its feet.
But who knows, perhaps that ability is embedded in the wizard’s name that was chosen—against all odds—when it all began in 1984. So, brew yourself a fresh cup of coffee and join us on an exciting journey spanning over 40 years.
But who knows, perhaps that ability is embedded in the wizard’s name that was chosen—against all odds—when it all began in 1984. So, brew yourself a fresh cup of coffee and join us on an exciting journey spanning over 40 years.
Chapter 1: The founding of Gandalf
The year was 1984. Uno Kraft, a seasoned veteran in the Swedish data industry, was facing a pivotal decision. After working at Datasaab and Facit, he decided to start his own business. It was a customized hard drive for Ericsson’s computers that became the spark igniting the flame.
I was living outside Varberg and commuting weekly to Malmö when I came across a product that eventually led me to start my own business.Founder
A divided PC market
At that time, the market was divided between IBM PC and Ericsson PC. A standard PC didn’t have a hard drive back then; instead, a hard drive had to be installed on an expansion card. Uno came across such an expansion card manufactured in the USA and adapted it to work in the Ericsson PC. This required a modification of a chip, and Uno received Ericsson’s permission to make the change.
Uno sold clock cards, hard drives, and monitors together with Lennart Gustafsson and Alf Pettersson, whom he had worked with previously. Later, Uno decided to bring Lennart and Alf in as co-owners of the company.
The name Gandalf and the early years
The name Gandalf, inspired by Tolkien’s world, almost didn’t come to be. Uno, Lennart, and Alf had recently read The Lord of the Rings and were deeply fascinated by the books. When they tried to register Gandalf as the company name, they discovered it was already taken. But luck was on their side. The Swedish Companies Registration Office did a new check and found that the name had become available after a bankruptcy, and thus Gandalf was born.
Chapter 2: Fate led David to the IT industry
David Nicander’s journey into the IT industry was actually a stroke of luck. The year was 1989, and the then 22-year-old David from Lund saw a job advertisement for a warehouse position.
The first step into the IT industry
David’s first job could just as easily have been in a warehouse for bricks or military bicycles, but fate had other plans. Instead, he ended up at Index Dataprodukter. The owner, Jan Nilsson, was a serial entrepreneur who, at a young age, had already started several companies in IT, including Hobby Data, Europe’s first computer store. At Index Dataprodukter, there were five employees.
David was responsible for the warehouse, purchasing, and order processing, and he also had the opportunity to work in both the technical department and on the financial side. Thanks to these various roles within the company, he gained a deep understanding of the industry and how to run a business.
I was lucky to end up at a great company with great owners.CEO
The next step in his career
In 1994, David found a new job when he was recruited by Berendsen Data, a supplier to Index Dataprodukter. There, he became the purchasing manager and, within just a few weeks, also the head of sales. In the summer of 1996, at the age of 27, he decided to resign from Berendsen Data to start his own company.
The founding of EDN
By selling personal assets and securing investments from friends, David managed to gather 100,000 SEK in share capital. In August 1996, he founded EDN, an abbreviation for Eric David Nicander. The new company had a successful start, focusing on hard drives, which were in high demand at the time.
Although business was good in the beginning, tougher times were just around the corner. In 1997, EDN’s largest customer, Svenska PC-Fabriken, went bankrupt, and only three weeks later, EDN was hit by a robbery. Two men, armed with a baseball bat and a pistol, forced their way into the safe and took the keys to a car. The robbers escaped with products valued between 700,000 and 800,000 SEK.
We reported it to the police, but the investigation was closed after a few weeks due to lack of evidence.CEO
Better times for EDN
The turning point came when EDN was able to capitalize on the high demand for hard drives. The Swedish home PC reform triggered an unprecedented PC boom in Sweden, with strong local production reaching 550,000 units in 1998. EDN quickly grew with the demand and gained the trust to supply hard drives to several of the largest manufacturers.
Gandalf took a somewhat different path and instead began producing computers, experiencing strong growth in this segment. But despite the successes, darker days were looming, and both EDN and Gandalf would soon face a much tougher reality.
Chapter 3: Paths converge
In the spring of 1999, the Swedish home PCs reform was discontinued, leading to a significant slowdown in the market, and particularly in PC production. This hit both EDN and Gandalf hard, and both companies knew that something had to be done about the situation.
Gandalf reaches out to EDN
When the founders of Gandalf were unable to sell the company, it was instead listed on the stock exchange. The journey began in 1995, but things didn’t go as planned and ended in disaster. It was a highly capital-intensive business with low margins, and that type of operation struggled to survive on the stock market.
The question of how to resolve the situation ultimately led to a merger with EDN. In the summer of 1999, Gandalf reached out to EDN to discuss a collaboration, as EDN also needed to find a solution to the increasingly challenging situation.
EDN needed to implement more processes and routines. It was a good way to capitalize. We were ten people and also needed to expand our channel.CEO
Gandalf merges with EDN
In December 1999, Gandalf acquired EDN, and it was during this time that Uno left the company, and David became the largest shareholder and CEO of the publicly listed company.
Chapter 4: A fresh start for Gandalf
David’s journey as CEO of Gandalf began in the toughest way possible, with major actions across several areas, including staff reductions.
The great trial by fire
In December 1999, 95 people were employed at Gandalf. A year and a half later, in June 2001, only 14 remained. During that time, the company also managed to close its operations in Finland and sell both the Norwegian and Danish parts of the business.
I had to learn how to lay people off. If the company is to survive, sometimes you have to make cuts.CEO
A pivotal recruitment
In 2000, Gandalf made a pivotal recruitment when Bo Lönnqvist was appointed as head of purchasing, a role he still holds today, playing a central part in the company’s success. During 2001 and 2002, Gandalf’s revenue dropped to 200 million SEK, and in 2002, David and Bo, along with a few other investors, bought the company out from the stock exchange.
Thanks to dedicated employees and loyal customers who saw the potential and drive in the dynamic duo, David and Bo, Gandalf not only managed to survive on its own merits but also slowly and methodically rebuilt the business.
Brighter times for Gandalf
Over the years, Gandalf has faced many challenges but also many successes. It wasn’t until 2007 that Gandalf stood on more solid ground. The company had found the right model in an exciting industry that was naturally growing as homes and businesses became increasingly digitized. The model in question was to get closer to customers and suppliers by offering added value in the form of various services.
Chapter 5: Gandalf goes on the offensive
Now that Gandalf has the wind at its back, the company is seizing the opportunity to go on the offensive with successful customer initiatives and the acquisition of a competitor.
The acceleration with direct marketing
The Direct Marketing (DR) Partner Program, launched in 2005, had gained momentum among Gandalf’s customers by 2007. Together with 75 resellers, Gandalf was able to reach 1.6 million households and strengthen relationships with both resellers and suppliers. Gandalf produced all the material in-house and printed the flyers. The only thing the resellers had to do was specify which postal codes in their areas should be targeted.
The resellers paid for distribution, while Gandalf covered the production and printing costs. A week before the campaign launch, Gandalf sent out products to the stores along with signage, caps, banners, PR material, and more. This was the perfect way for Gandalf to get closer to and support small retailers while simultaneously boosting sales.
I would guess that it was part of our recipe for success. With our DR Partner Program, we added value to both our suppliers and resellers.CEO
Gandalf acquires Marinex
The offensive continued, and a few years later, in 2009, Gandalf made an important acquisition by taking over the competitor Marinex. David is particularly pleased with this deal because it exemplifies how business should be conducted, where the most important thing is that both the buyer and the seller are satisfied long after the ink has dried.
It was truly a win-win. We made a good deal, and Peter made a good deal. It’s great to be able to say that both parties were satisfied.CEO
Marinex, owned by Peter Ljung, primarily worked with monitors and printers, while Gandalf had been more focused on components up until that point. One of the major advantages of the acquisition was that Gandalf gained access to LG’s monitors, making the company more attractive to customers in a new way. The company became more of a broadliner, offering monitors from a major brand, which resulted in an increase in turnover by nearly 200 million SEK the following year.
Chapter 6:
The dramatic year
If the journey so far has been filled with ups and downs, the peaks and valleys converged into a concentrated form during what is likely Gandalf’s most dramatic year.
Gandalf loses 25 percent of revenue
On July 11, 2011, Gandalf’s largest customer by far, ONOFF, went bankrupt. ONOFF was a nationwide retailer of consumer electronics and appliances. This was one of the biggest challenges Gandalf had ever faced, as 25 percent of the company’s revenue disappeared overnight. The company incurred a loss of 8 million SEK, a third of its equity, and a quarter of its revenue was lost, but despite this, Gandalf managed to survive.
A dramatic rescue
It goes back to the built-in magic of the company’s name. The rescue was hardly less dramatic—it quite literally washed in. In the fall of 2011, hard drive factories in Asia were hit by severe flooding, and 60 percent of the world’s hard drive production was underwater. Overnight, a global shortage arose, and for Gandalf, which had a well-stocked inventory, it became a literal goldmine, saving the company from bankruptcy.
Our hard drive margins went from 3 percent to 23 percent, which meant that we ‘only’ ended up with a 1.1 million SEK loss that year.CEO
Chapter 7:
ELKO Group's entry into the Nordics
The next major transformative step for Gandalf came in 2017, when the business was sold to the Latvian ELKO Group, which remains the owner today. However, the deal was not a foregone conclusion.
ELKO Group contacts Gandalf
ELKO Group had reached out to Gandalf as early as the summer of 2015, but David had just bought out one of the former co-owners and was not interested in selling. However, it turned out that the Latvians were not so easily discouraged. As the market became increasingly tough, with ever-thinner margins and suppliers starting to shut down smaller distributors due to poor profitability, the owners realized that Gandalf was in the crosshairs.
ELKO Group reaches out again
The owners of ELKO Group returned a year later to once again explore the possibility of a merger. The timing was perfect for Gandalf, given the increasingly challenging situation, and the owners realized it was time to start talks with ELKO Group’s owners. In 2017, Gandalf was sold to the Latvian ELKO Group, and David chose to remain as CEO. He initially planned to stay for another two years but later decided to stay on longer.
Yes, it’s fun. They are a very good employer, and they believe we are doing a great job. I have the privilege of having a great team around me in the Nordic organization.CEO
A perfect match
ELKO Group is owned by four private entrepreneurs with strong values and long-term plans, much like Gandalf. They share a similar history and understand that the market is changing very quickly and constantly faces new challenges. Under ELKO Group’s ownership, Gandalf has more than doubled in size and continues to grow and evolve.
Chapter 8:
Gandalf today and in the future
Today, David is the CEO of Gandalf, now called Gandalf Distribution, and Uno’s passion for Tolkien’s world lives on under a different name. Many changes have taken place, but the vision remains the same as when Gandalf was founded: “To be the preferred long-term partner in the market.”
Uno Krafts journey continues
The hard drives and computers have been replaced by monitors, a product Uno was introduced to during his time at Gandalf. After leaving Gandalf, he wanted to specialize and has now worked with monitors for 24 years at a new company called Olorin. Olorin is, in fact, Gandalf’s original name in Tolkien’s works. In a way, you could say that Uno left Gandalf to create a new version of it.
Gandalf today
Today, Gandalf is stronger than ever. With operations in Lund, Stockholm, and Gothenburg, and a significantly broader range of products and services, Gandalf continues to evolve to better meet customer needs.
Gandalf’s product range has grown from solely PC components and storage products to include consumer electronics, such as robot vacuums, electric scooters, mobile phones, personal care products, and other interesting categories. At the same time, PC components and storage products, such as hard drives, still represent a large and important part of Gandalf’s business.
Today, Gandalf sells world-leading brands to the largest Nordic players in IT, consumer electronics, and telecom. This is largely thanks to our skilled team, but also due to the vast resources of the ELKO Group, which has given Gandalf the boost it needed to grow faster than ever.
Gandalf i the future
In the crystal ball, we see Gandalf continuing to grow and develop as a reliable distributor of innovative and high-quality IT and consumer products for the Nordic market. With our deep understanding of market demands and consumers’ changing needs, we strive to constantly be at the forefront of technological advancements and innovations.
We also envision Gandalf becoming more of a complete one-stop shop, offering not only products but also knowledge and tailored services that empower both our customers and suppliers. Our role is to act as a strategic partner, not only meeting today’s needs but also helping to navigate the opportunities and challenges of the future.
It’s the people who make the difference
If Gandalf were to point to one defining trait that has been present throughout its history, the company highlights its culture and carefully selected colleagues. Gandalf has had a slogan since 1999: "Det är människorna som gör skillnaden. In English: "It's the people who make the difference".
When Gandalf hires, we don’t do it solely based on merits but because they are sensible people, and we make sure to fill their days with meaningful tasks.CEO