The Next Web was in Helsinki last week, and we delved deep into the startup scene that’s bubbling across the Finnish capital.
We started at Aalto Venture Garage, a seed accelerator and co-working space for hackers and startups, touching base with a number of the fledgling businesses.
It was there that we met GigsWiz, a social ticketing company that’s just announced a partnership with The Human League. And then there was ThingLink, an image-tagging service that had just launched a cool new rich media tagging feature.
Founded in 2003, it would be difficult to argue that Rovio Mobile is a startup. And when we visited the plush offices of the Angry Birds creators near central Helsinki, it certainly didn’t look like a startup either. But Angry Birds has taken the world by storm since it was launched in 2009, and today it’s notching up a cool million downloads each day. It’s the recent global success of this game that makes Rovio feel a lot like a startup, in terms of the buzz and excitement going on around the brand. We even got a sneak peek at the forthcoming Angry Birds Cook Book. Cool.
At the other end of the scale, there’s Nokia. The global communications giant is headquartered in Espoo, a neighboring city to Helsinki, though the cities are so close together they do feel like one and the same. And this is where our Nokia story begins.
Nokia in brief
Nokia was founded in 1865, when telegraphy was about as cool as communications got. Back then, telegraphy was pretty cool though. Without dwelling too much on Nokia’s distant history, it actually started life as a paper manufacturer, before evolving through various industries over the decades and it wasn’t until the 1960s that the corporation really started to get involved in telecommunications. Fast-forward to 1987 and Nokia launched the first handheld mobile phone for Nordic Mobile Telephone (NMT) Networks – it was bulky, but it was a classic.
Nokia has grown into the world’s largest mobile phone manufacturer, with over 132,000 employees in 120 countries and recording sales in more than 150 countries. In 2010, Nokia secured revenue of €42bn, with an operating profit of €2 billion. So you can probably understand the effect that Nokia has had on the Finnish economy. In fact, the company is very much part of the fabric of Finland, and Finns are immensely proud of the company’s global footprint.
Nokia: on the slide?
But Nokia has been hitting the headlines for all the wrong reasons of late.
In the past fortnight alone, the company lost a 3G patent case to IPCom, and it announced it was closing many of its online stores across Europe. Throw into the mix the big news that the company is gradually shifting towards the land of Microsoft, and you could be forgiven for concluding that Nokia is a company in decline.
Indeed, it’s the latter of these examples that has had many people
speculating on the company’s future. Back in February, Nokia announced a “broad strategic partnership” with Microsoft meaning that, in the first instance, it would be adopting the Windows operating system. Symbian isn’t dead yet, but it will be within five years.
And Nokia is also using its partnership with Microsoft to help revive its Navteq mapping system in the mobile advertising sphere. The plan, it seems, is to combine the mobile-location and commerce-services sides of the business with Navteq into a single unit. Nokia’s CEO Stephen Elop said:
“We will provide next generation social-location applications and commerce to differentiate Nokia.”
But why doesn’t Microsoft just go ahead and buy Nokia’s mobile phone business altogether and focus on research and development? Well, that’s exactly what has been rumored and these rumors keep arising, even though it has been stated categorically on a number of occasions that suggestions of a takeover are completely baseless.
Indeed, it’s clear that Microsoft won’t be buying Nokia, certainly not in the foreseeable future. It makes no sense – why would they acquire Nokia so soon after announcing a ‘strategic partnership’?
But there’s no denying something isn’t right at Nokia Towers. Nokia is losing its mobile phone market share, though it is still the largest maker by volume of handsets, selling about 124m each quarter. And there has been staff cuts in Finland too, there was a big round of cuts back in 2008/2009, plus there’s been at least 500 this year alone at the last count, whilst it has also been losing key staff to competitors.
So what effect will all this have on the Finnish economy? I went out to see what life after Nokia would look like.
Life after Nokia
I spoke with Juhani Polkko, a marketing and media technology entrepreneur, who is currently VP of Marketing at a Nordic advertising technology company called Freespee. He’s also a former Nokia employee, so he was in a good position to share his thoughts on what’s happening at Nokia and the knock-on effect this could have on the Finnish economy.
Polkko was Country Manager, Nordic, at Nokia Interactive Advertising for the twelve months up to May 2009. I asked him what the consensus on the Nokia situation was:
“There are mixed feelings. I expect Nokia to turn it around and it will definitely stay in business, whether that will be independently I’m not sure, but things need to change. I’m very proud of the success Nokia had throughout the 90s, and it was a major driver of the Finnish economy.”
As for Polkko’s role at Nokia, the business unit that he was part off hit what he called a ‘speed bump’, and the downturn in the economy meant that Nokia pulled the plug on the unit. Polkko was offered new roles elsewhere in the company, but he chose to move on. He says:
“When I left the company, about 1,500 others left during that spring, across five locations in Finland. That’s when the decline started, when the whole European economy hit the speed bump.”
When Polkko left Nokia, he spent six months doing some consultancy work before starting at Freespee. And he still has his own consulting company too, which advises startups such as PremiumFanPage, XIHA Life, Whitevector, 46elks and Offerium, the latter of which was recently acquired by media company Sanoma.
I asked Polkko if people are concerned about Nokia’s recent ‘decline’?
“I think the company’s been in decline for two years, so these latest developments really are nothing new. Sure, people have been concerned, but a lot of other people with a wider picture of the economy are being forced into being entrepreneurs and working for smaller companies.”
So could it be that Nokia’s ‘restructuring’, for want of a better word, could be a good thing for the Finnish economy?
“It’s too early to say, but there are signs that the economy could benefit”, says Polkko.
Nokia: a brain-drain?
Certainly, I heard from a few people I met on my trip to Helsinki say that Nokia has traditionally taken a lot of the talent out of the market – it’s a brain-drain. I’m not necessarily saying that’s a bad thing – Nokia has had a monumentally positive effect on the country and its economy. But when one company becomes the focal point for all the talent, it’s easy to see how it can lead to stagnation elsewhere.
So using that position as a starting point, it goes without saying that Nokia’s downsizing should in fact be a good thing for the country overall.
Peter Vesterbacka of Angry Birds fame was recently quoted as saying that the freeing-up of Nokia’s talent was one of the best situations ever. “We’re finally getting out of that cycle, where everything revolves around Nokia,” he said.
I looked at some of the other fledgling companies in Finland and it seems that ex-Nokians are everywhere.
HeiaHeia is a social web service providing a fun way to keep fit. HeiaHeia lets you keep track of all kinds of activities, with over 350 different sports already supported.
Olli Oksanen is co-founder and ‘Product Guy’ at HeiaHeia, having launched the company in 2009 following a ten-year stint at Nokia. Ivan Kuznetsov is another co-founder and is Lead Developer at the startup, having worked at Nokia in various roles for over six years.
I asked Oksanen why he left Nokia. It seems that ten years in one company is a long time, and he felt the need to move on and try his hand at being an entrepreneur. Plus, Nokia had been reorganizing quite a bit since 2007, and he felt that he was wasting his time moving from one reorganization to another.
But during the financial downturn, it seems that Nokia’s voluntary resignation scheme proved a pivotal point in Oksanen’s – and many employees’ – future aspirations. Oksanen said:
“Anybody could resign and get a decent-sized ‘golden handshake’. This was an ideal situation for people wanting to start their own businesses and a very humane approach from a big company towards its employees.”
So it seems that Nokia’s plight to cut costs could work out very well for the Finnish economy. But how will Nokia’s restructuring impact on Finland in the long run? Oksanen says:
“This one is a double-edged sword: Nokia has been ‘too big for Finland’ in many ways for a long time. The Finnish economy would be stronger and more resistant to risks with several mid-sized companies in different industries vs. one giant in one industry. So the question is, what can we do with the resources freeing up from Nokia?”
Oksanen tells me that there’s an “unprecedented entrepreneurial drive” going on in Finland at the moment, and it seems the country could be on the verge of becoming a major startup hub, with entrepreneurs emerging from all backgrounds. And there seems to be a shift in the traditional ‘fear of failing’ culture that has sometimes blighted startups in the past.
“We have a first generation of successful serial entrepreneurs in the IT industry, we have lots of startups in different phases, from ex-Nokians and others alike and an amazing startup culture being bred by students from the Aalto university. One cultural barrier which seems to be breaking in Finland right now is the fear of failure: at least the entrepreneurs I know have an (in this case healthy) “Auditioning to Idols” attitude towards failing – if you fail, you’ll try something else, and do not care too much about what anyone else might think.”
So the fear factor is going, and this could be key to the Finnish startup scene’s continued growth. Failure is a necessary part of success and many entrepreneurs encounter at least a few failures before they hit upon a winning formula.
Wantlet has a tagline that says: “Know what your friends want and discover deals for products you want.” It’s a service for you to connect to other people by wanting things, and you can share lists of your wants with friends or family.
Kristian Luoma is VP, Product Management, at Wantlet, and he worked at Nokia for five years in various roles. CTO, Petri Liimatta, also worked at Nokia for five years, part of which was as a sub-contractor.
Both Luoma and Liimatta left Nokia ’round about the same time, and I asked them why:
“A great opportunity called, first and foremost. We discovered a great idea that just needed to be done, so we jumped on board this startup and just went for it. Also, we were both obviously excited to be working on something slightly smaller than we were used to at Nokia. In Nokia’s scale, whatever needed to be done had to be the biggest in the world and cater for billions. One of the luxuries startups have is being able to start narrow and widen the value proposition over time. Agility was important too – literally we can decide in the morning how to make the product better for our users – where as in a bigger machinery, changes take more time.”
In terms of where Nokia is heading and the company’s downsizing, Luoma was very positive about the impact this could have on the Finnish economy:
“For the region, as a lot of talent is released from Nokia, these changes will likely be the best thing that have happened in years. Now there’s a lot of buzz in the grass-roots and new ventures are starting.”
Luoma also noted that because everything has been so Nokia-centric in Finland, this has had a tendency to stifle other innovations:
“You could argue that is one of the reasons why Sweden, for example, has been so many years ahead of Finland in Internet-business development. For companies starting, it was simpler to start subcontracting business over product businesses. Now, we’ll have to think again – which is only healthy. Early signs indicate that a lot of Finnish startups will be creating life-changing companies.”
There is an overwhelming sense of positivity surrounding the startup scene in Finland, and there is a real entrepreneurial spirit emanating across the country.
Besides HeiaHeia and Wantlet, there are countless other startups being driven forward by ex-Nokians, as we’ll see here.
Uplause was founded in 2009 and it proclaims to be “The world leader in developing social games for big crowds.”
Veli-pekka Marin and Heikki Aura are two of the three company co-founders, and each held a number of positions at Nokia over a ten year period. Both were in senior roles before leaving in 2009 to launch Uplause. And Chief Operating Officer, Markus Heikkila, also worked at Nokia for around ten years too.
I asked Marin why he left Nokia, and he said:
“I felt I needed new challenges and wanted to start something on my own. The last couple of years I had been creating a few business concepts with my friends so those were kind of ready to be taken forward when I left Nokia. Nokia was a great experience for me, almost like an “international business school”. I had about 7 different jobs, many of them global, so I really got to understand international business, mobile and high tech and where it is going. This gave me a lot of self confidence to start up my own business and aim for global markets. “
Marin also believes that Nokia’s restructuring is likely to have a positive impact on Finland overall:
“There is a huge amount of talented people who can now pursue their “crazy” ideas, something that was not possible at Nokia.”
And there’s more…
Fambit is a social time-management tool – a shared calendar for everybody – that uses the tagline ‘organize your life’. Fambit was founded in Helsinki in the spring of 2009 by two senior experts in Internet and mobile communications. Pertti Kasanen worked in several senior roles at Nokia over a four year period to 2009, and Markku Ranta worked there for around 15 years in various roles.
Mobile Brain Bank is a Finnish non-profit organization running a network which joins the skills of experienced individuals who have left a safe corporate career behind. It was founded in 2009 to help encourage people leaving Nokia to launch their own mobile startups. It has around 1,500 people in its network today, and it will be launching an online service later this year where application developer entrepreneurs and startups can offer their skills to SMEs and corporate customers.
Petra Söderling, Chair of the Board of Directors at Mobile Brain Bank, tells me that there are “tens if not hundreds” of ex-Nokians who have gone on to form their own companies. In particular, from the round of job cuts that took place at Nokia in 2008/2009.
And Hanna Manninen, founder of Finnish PR firm in2PR, directed me towards a plethora of startups with former Nokia employees at the helm, such as Marko Anderson/Futureful, Jos Schuurmans/Cluetail, Kari Laurila/Newelo & Bjong, Heikki Ailinpieti/Saagatec, JP Salmenkaita/Osumus Recommendations, Harri Honko/GreyCrunch, Yasin Hamed/Sfonge, Oliver Bremer/Founder2be andRisto Suoranta/Notava, to name but a few.
Nokia and the future of Finland
Nokia isn’t going the way of the dodo any day soon. Nokia is still a massive company and it’s likely that it could actually regain a lot of the ground it has lost to rivals, but it will need to change. Veli-Pekka Marin from Uplause said:
“Dramatic changes are hard to execute when you have a strong market position. It often happens that companies only change through crisis. This is what Nokia faces now and I think there is an excellent opportunity to make the right change, as it is being forced to do so.”
But if Nokia ever did sell a big part of its business, there would need to be a whole lot of ‘Rovio’-type companies on standby to fill the void. The drive to renew the economy needs to start now, and from the look of things, there seems to be plenty going on in Finland to ensure it continues to prosper far into the future.