Finland Post Welfare - with English subtitles

Magneetto Media webcast presents
An Aalto Entrepreneurship Society's event
Finland Post Welfare
The panellists:
Welcome. I am Mikko Kuusi, -
Aalto Entrepreneurship Society's Chairman and will host...
Together with me, Heini Vesander, an active member of the society.
Before we begin, I'll explain what Aaltoes is about.
Aalto Entrepreneurship Society was founded in 2008.
It is a students' and researchers' society, that supports -
students and researchers in their efforts to build -
ambitious businesses that wish to take the world by storm.
In other words, businesses like Skype, Spotify, Rovio and Talvivaara.
Our aim is that during the next 20 years, -
Finland will become the Nordic Silicon Valley.
But that is still miles away.
Without skilful businesses, financiers, and culture -
that supports the ambitious growth business with an idea, -
wishing to make it reality, our aim will not be possible.
So, we arrange 50 events a year -
bringing together students, researchers, starting businesses, -
experienced businesses, financiers and others, -
because alone is hard to toil, if you wish to build something -
that will someday become internationally successful.
After Aaltoes was founded in late 2008, -
over 10 similar societies have emerged in Finnish universities.
We share the same aims, the same philosophy.
We want to create a change in the culture.
It may take 20 years, but it will be worth it.
Tonight we'll often speak of "startups".
For us, a startup means a young, beginning business -
which might not yet gain profit, -
focusing on product development.
With a growth business, we mean:
a business that has grown regardless of its area or size -
a certain amount in certain time in its turnover or personnel.
When a startup is referred to as a growth business, -
some startups will become growth businesses -
but not all startups are growth businesses.
On the other hand, all growth businesses have been startups.
The purpose of this panel is to shed light on how sustainable -
the future of this country is.
McKinsey's 2010 report on work and productivity in Finland -
states that during the next year Finland needs over 200 000 new jobs -
just to keep the current incurring of debt.
Due to aging, this means we actually need 300 000 jobs.
Without new businesses, capable of international growth, -
these figures are out of reach.
According to Global Entrepreneurship Monitor, -
3 - 5 % of all new businesses create -
over three quarters of new jobs in new firms.
New jobs are found in growth businesses.
However, new businesses in Finland employ less -
than companies elsewhere in developed countries. There's lot to do.
We need more growth businesses to create those jobs in the next 10 years.
We face great challenges.
But this is not the first time we need to pull together.
Finland is the best country in the world.
Finland has great strengths and possibilities to solve -
some of the worst global problems.
Truly, if no one had invented Finland, it should be invented now.
And this is just the beginning.
The report published in 2010 by the team working on the country's brand -
began with those words.
Attitude is everything, and this is the attitude we need.
Great companies have born in this country: Nokia, Kone, Stora Enso.
Now, it is time to ensure that it will continue.
As one of our panellists said:
We need a culture to encourage ambitious, international businesses.
We need public discourse on the importance of growth businesses, -
and on freedom of business, and breadth of working in a startup.
We need students ready to work in a business in its early stages.
We need stories like Talvivaara, F-Secure and Rovio to inspire.
We need skilful financiers, -
and above all, great many new startups to pick the country up.
Aaltoes and our many partners have assembled this panel, -
because we want to begin a 20-year work, before it is too late.
We have invited the most important leaders in Finnish business life, -
whose enterprises have accounted for many Finnish jobs these past years.
Also, we have younger entrepreneurs, who create the jobs of tomorrow.
We have agreed to call each other by first name.
You can take part in the panel using Twitter.
The messages appear on the screen behind us.
If you wish to ask questions, please tweet us.
If we see interesting questions, we'll ask the panellists for you.
So please use your smartphone, iPad or computer during the panel.
In the age of Facebook, -
you can also give thumbs up to the comments.
Let's try it.
That was a quite 'liked' comment.
After the panel, you are all welcomed to continue the discussion outside.
We have spoken enough.
Without further due, let the discussion begin.
Panellists, you're welcome.
First, a short introduction of our panellists.
From the right, first Ville Miettinen.
Ville has been a co-founder in many technology enterprises.
He started his first business as a student in Helsinki University, -
when he and his friends started Hybrid Graphics up in 1994.
It was later sold to Nvidia.
Among other startups, Ville works in Microtask, -
a pioneer in using crowdsourcing to digitally distribute workloads.
Risto Siilasmaa, second from the right, -
founded Data Fellows while in the Helsinki Uni of Technology.
It became a pioneer in antivirus software.
The company later changed its name to F-Secure, -
and went public in Helsinki Stock Exchange.
Currently, Risto is an investor and a board member in several startups, -
and in many significant Finnish public companies.
He is a significant and internationally known leader.
Tina Aspiala, third from right.
Tina has an international background, she has studied in Yale, -
worked abroad until 2001, when she moved back to Finland.
She has founded Eat.fi, the largest website on restaurants in Finland -
and also founded the Omakaupunki.fi website together with two friends.
Her mother tongue is English, but she speaks excellent Finnish.
A continued from here after all...
Björn Wahlroos sits here, a significant Finnish leader.
He was a professor in Hanken School of Economics -
and then moved to the financial sector.
Today he sits in several public companies boards.
He is the chairman in boards of Sampo Oyj and UPM Kymmene, -
and the vice chair in Nordea.
Not an easy device.
Petteri Koponen, second from left is an investor and startup founder.
He found First Hop as a student and sold it to Airwide Solutions in 2008.
He was a co-founder of the microblog site Jaiku sold to Google in a year.
Today he works on new technologies and startups in Lifeline Ventures, -
having procured funding for many international startups.
These include Applifier, Grey Area and Valkee.
Jorma Ollila sits on the far left.
He is one of the most important financial leaders in Finland.
He was Nokia's CEO from 1992 to 2006, -
when Nokia grew to be one of the largest companies in the world.
Currently, he is the chairman of the boards of Nokia and Shell.
A round of applause to our panellists, please.
Let's begin.
I'll ask a question and the quickest may answer.
The future of welfare state has been a frequent topic lately.
The greatest challenges in Finland are aging, -
reduced growth of productivity and the rising structural change.
Is Finland's economy on an untenable foundation looking 20 years ahead?
Björn.
I fear, not only Finland's, but the economy of Europe is tottering.
We are so accustomed to praise our model of economy, -
that we haven't noticed we are alone.
Have you ever heard of a developing country, China, India, Brazil, -
where a political consensus would arise: yes, we'll follow Finland!
This is a serious matter, and I fear that there is conflict between -
high hopes, negative incentives of welfare state and budget deficit -
can't be resolved without significant political solutions.
Jorma.
I find it easy to agree.
We simply find that the political elite can't accept or sell -
the concept to the nation. That we need to explore new things, -
and rationalize old things.
Both, in fact, to facilitate economic growth.
We are in crossroads.
As the paradigm, where the nation is, -
isn't faced even before elections.
Risto.
A few years ago, when I contemplated the nation's economic balance, -
I asked ETLA's researchers to draw a graph comparing the growth -
of national debt and increase of private sector jobs.
It is the private sector jobs that pays the budget and the expenses.
The graph clearly showed a trend.
There was a jump during the 1990's recession, -
then we came down, but never reached the figures of 1980's.
The next 20 years it's a steep uphill battle.
McKinsey made a great report on the balance:
if the nation takes more debt, -
but in balance with its GDP growth, -
we'd need 200 000 private sector jobs more during the next years.
For that, we need 300 000 workers more, -
as more people leave jobs than take them.
And, as people are aging, the public sector needs workers, -
who would be needed in the private sector.
In other words, we are not in balance today.
The nation is running into debt, and all important figures are negative.
The situation is difficult.
Is the situation worse than ever before in the recent history?
It's difficult to compare. We are not in war, and that is important.
But on the other hand, -
since 1950's, Finland has been following Sweden, -
10 years behind, developing a welfare nation in a downward spiral.
The bad news is that Sweden turned around 5 years ago.
So we're going down another 5 years.
What would be the solutions towards growth and balance?
So that we won't slip into recession?
Where will the jobs be found?
New companies.
They will be in startups and growth businesses.
300 000 jobs means 15 000 businesses of 20 employees.
Cheers for digging up those.
In fact, that's not true, because growth businesses produce more -
than normal domestic businesses that do not aim at international growth.
I have an example. I just got a permission to announce this.
A company called Digium, that some of you may know. I've been a part of it -
for five years now. It was recently sold.
Between 2006 - 2010 its turnover grew from 1.8 to 4.4 million - not much.
But at the same time, it paid almost 9 million in taxes.
Partly due to capital gains taxes from selling the company, -
but there were also other duties.
It paid taxes equal to half of its turnover.
Much more than a company aiming at a domestic market.
During 2006 - 2010, the company received 900 000 in subsidies.
The government's profit for its investment was 9-fold.
I made a similar calculation for my firm, -
which I founded in 1997. I left the firm in 2005.
2006 I estimated that the firm -
hadn't made profit after 2000, but increased its turnover.
Its sales were 95% to foreign markets.
It had raised 20 million in venture capital.
The sum, which I call 'money footprint', -
that stayed in Finland, -
was around 30 million in salaries, taxes and other costs.
Even a firm that doesn't make profit, may be significant to a country.
Now we got much larger firms, raising bigger money, growing faster.
Carbon footprint bad, money footprint good.
According to the McKinsey report, -
in Finland, 6.1% of starting firms -
believe to employ more than 20 people after 5 years.
Are Finns limited by lack of ambition?
Why don't we have larger growth businesses?
Two problems exist related to growth.
We have exceptionally few startups.
We have no new IT or other entrepreneurs to found new firms -
with growth potential.
The structure of Finnish industry and service businesses -
are exceptionally centralized.
The Nordic countries Sweden and Norway are in the same situation.
Whereas Denmark has the central European Mittelstand tradition -
where employing yourself is valued, and the situation is different.
This is clearly a problem for us.
Another problem is, even more severe now during globalization, -
when resources to operate globally are needed, -
is that we lack businesses with 100 - 500 million turnover.
We lack medium-sized growth oriented companies.
Both, small startups, which are too scarce, -
and medium sized companies share the same problem:
they set their aims to a safe level, according to these polls.
We're on a right track believing a company should be profitable, -
so it can be given to the next generation, or even sold at a point.
But the aim is not set so that the firm would really grow.
We are not venturous enough.
This is odd.
I've tried to figure where this timidity originates.
It must have to do with our overtly egalitarian culture.
We don't want to stand out from the masses, and say:
"our competition is great, but I'm even better".
We lack the right kind of self- esteem to set aim towards success.
Tina, a comment?
Pardon, I want to make sure I heard right.
Did you say Finland doesn't have many IT businesses? -Yes I did.
Not nearly as many as in other similar sized countries.
Compare to Sweden, Israel, European countries of the same size, -
which all are more active in starting up IT businesses.
I'm not sure, if that is entirely true.
At least the image I have of Finland, -
I've met many IT business owners, -
and there is more media attention in US than in Finland.
I don't know, if you have seen numbers, -
but I have the feeling -
that there are great many firms, but only a few get media attention.
That's true. -And that's a pity.
Especially as it's the US media that covers them first.
Björn. -I thought about an element in Jorma's argument.
For some odd reason Finns avoid risks more than others.
There is statistical information, -
above all Lasse Lehtinen's study in Who Wants to Be a Millionaire?
This is serious!
The program was produced in numerous countries.
And in no country did people bail out as early as in Finland.
2 000 Euros! I'll take that home!
Exactly!
This is boring. If this "I'll take the 2 000" culture is introduced -
with a political discourse, which as Jorma said is very egalitarian, -
that during campaigning only repeats that the rich don't pay enough taxes.
When the discussion on taxes includes only percents and never millions,-
in the way you did here. That is the only reasonable way -
to discuss how successful firms and individuals contribute to society.
The current attitude to taxation encourages to take 1 000 - and go.
Next people don't take even that, but go straight to social services.
Risto, a comment?
There are many studies, and one of the most memorable made asked -
different nationalities, what is their most defining characteristic.
Finns said 'to follow rules'.
Some 86% of Finns thought this was a defining character.
Compare to French: 16%. Of course, you can see that if you drive there.
In entrepreneurship, there has been a huge change -
during the last 10 - 20 years.
When I founded my first company, I actually believed -
an entrepreneur is a person who can't get a job.
Really. I was brought up like that.
Not that my parents did it consciously, it was in the culture.
A self-employed was a mechanic who couldn't get a job at a garage, -
and had to found his own.
But luckily, this has changed entirely.
Now Finland has entrepreneurship and courage to take risks much more -
than 10 - 20 years ago.
I also feel that Finns value and focus on academic degrees too much.
Do you have a degree to do this, before you start?
And I feel there are many things you can do without a degree.
Without a PhD.
Consider the audience. Could you have gathered such a crowd around -
entrepreneurship 15 years ago?
Back then, would students of a Finnish university have set this up?
This is a remarkable achievement.
Ville, a comment?
The concept we need to be careful with is serial entrepreneur.
Because HS (a Finnish broadsheet), has decided it means a criminal -
who makes a series of bankruptcies.
Some would more readily accept me if I said I'm a serial killer.
That's why I say "parallel entrepreneur".
And 'business angel' is confused with a Hell's angel.
Or government professional.
Not to mention businessman.
There's a related story to this. Pentti Kouri had a problem, -
when he was successful, he was called a professor, -
and when he fared worse, he was called investor Kouri.
And when he faired really bad, he was called businessman Kouri.
This is a dull quality in our society.
In fact, we could discuss the Finnish culture in length.
Tina, you have moved back to Finland from the US.
You're cosmopolitan and speak many languages.
Why did you come back to Finland?
And if you compare business cultures in the US and Finland, -
what could we learn? Concrete actions to improve our culture.
Shortly, I came back after 9/11, -
because I felt myself more a European than American, -
and my family asked me to come back.
Although they had taken me elsewhere in the first place.
The main differences are, as I have mentioned, -
I think that, for example in arts, -
if someone in an art school decides she wants to make sculptures.
The sculpture has a bottle on a table. She goes to a coffee shop, -
and she tells about it to everyone.
And they all start to suggest things. How about a mug? Different tables?
You start to throw ideas around together.
In Finland, someone quietly comes up with the idea, alone in a corner:
a bottle on a table. Then, you don't tell anyone.
Then, you write a doctoral thesis on what kind of bottles and tables, -
and then you open an exhibition -
that has one perfect bottle and table.
A good C minus work.
In US, they'd made a million different tables and things, -
most of which are rubbish, -
but 5% are pure genius.
Finns don't iterate.
In US, the idea is not the valuable part, -
it's how you realize the idea.
And the stereotypical Finnish artist doesn't let anyone in his gallery, -
because he's afraid someone will steal his idea.
Attitudes have radically changed.
World is so small, that if you have a startup,-
you read international blogs, and travel more than before.
We have people who've lived abroad, -
and they don't learn their outlook from Finland.
They're as crazy as in Silicon Valley, or even more.
They still don't find employment in Finland, which is good.
They become entrepreneurs.
And another thing: Finland grows things like Aaltoes and others.
Kind of undergrowth, most of which might be rubbish, -
but there are jewels too, and that's what we need.
People start businesses, and throw money there to see if they grow.
That culture is gaining ground here very quickly.
True. There's been advance.
It's a trend, and this group show's it.
Somehow, the universities are the most important places.
That those have a true, supporting and encouraging atmosphere.
I think the Aalto University -
has some quite good shoots.
And in a way that was nonexistent when I was a student in the 70s.
We've advanced. The problem is that other nations run pretty fast.
We should find ways to...
I don't think it's taxation, it's atmosphere.
It's the way how entrepreneurship is supported every day.
What reforms do our universities need to win through internationally?
We've many students here and we're all interested surely.
Risto. -I expected Björn to begin.
As a polite gesture.
Go ahead. -Let the professor speak.
That's good. Björn, if you please?
The question is: what reforms do our entire university system needs.
An average Finn waits 3 years to get in to a university.
After that they study 7 years to pass a 4.5 year program.
It takes 10 years to get through a 4.5 year degree.
That's incomprehensible. All on tax money. Senseless.
Of course we have to understand... Don't applause. It's horrible.
Generally speaking, there's been a revolution during the past 5 years -
not only in Aalto Uni, which is perhaps the most visible example.
There is finally a change going on, -
after an outside factor has been introduced -
to shuffle the professors' in-fighting. It's unbelievable.
I can see it in Hanken, a small uni, where the change is apparent.
The in-fighting that's been going on for decades has reduced significantly.
If this can be combined with sensibly aimed private funding, -
combined with better structured office and salary system, -
that quickly hires first class, international people.
If this can include incentives for students to study successfully, -
to get rewards from the uni, most of all as they leave the place.
And, a good outplacement service combined with a university culture -
where everyone works towards a common rallying point.
That's it.
It's stupid to just sit here and talk, but I'm optimistic.
Universities have went through a huge change in the past years.
That's why I'm optimistic, but if we can't get the average student -
to use less than 10 years for a basic degree, all goes to waste.
Jorma?
I agree, but I'd add one thing.
It's what distinguishes a Finnish university from an Anglo-American.
The student is not at the centre of attention in Finland.
What I've seen in graduate school and in US every day, -
there the student is at the centre.
The way professors and lectures -
take care of the student -
determines how the professors do there.
Professors and lecturers are evaluated on that basis.
Of course scientific work is also a criteria.
It's imperative to bring the students at the centre of attention.
The university reform has brought a world of good.
Uni of Helsinki, which is the largest and stiffest of all, -
suddenly has movement.
After they've seen that Aalto and many small universities -
started to run fairly fast and take the students' point of view.
That's why I'm interested in Uni of Helsinki, -
and agreed to be in its board.
The energetic dusting down is a pleasure to look at.
First Ville and then Risto.
For 17 years I've taken part in startups... -I thought studied.
That too.
But in startups and in Helsinki, -
there's been a huge change in attitude during the past 2 years.
And it's started as a bottom-up movement, -
from student's entrepreneur societies and has spread.
Of course now there's massive input from for example Aalto.
They help a well started momentum.
It's a bit like that bottle.
Universities look at their output like that bottle that'd be perfect.
Then there's one exception. That's when the Ministry of Education -
6 - 8 years ago decided that funding will be allocated according to -
the number of doctoral theses.
What do you think happened?
There was one hell of a flood of these bottles.
And those are produced at such a pace... This is typical of Finns.
We go from one extreme to the other over night, -
playing around with market economy, which is very dangerous.
I'll approach this by a detour, so don't worry, I'll get there.
I've sat in groups analysing the problems of innovation systems here.
Why Tekes, Finnvera, Veraventure and other organisations somehow -
do not work from the entrepreneur's point of view.
We've thought of numerous improvements, but then -
we understood it's silly to try to improve every single problem -
with single suggestions, because it can't be done from outside.
It should be done from inside.
Then we thought the organisations need a shared board of directors.
One board, perhaps one CEO, but separate organisations.
The board is the changing force.
These organisations have smart people, but as long as everyone -
defends their own interest, there will be no change.
This is what happened in the universities.
I think this is an important addition to these excellent lists we heard.
Let the universities change themselves.
But incentives must be right, otherwise they turn strange.
There's all sorts there, and the right soul must be drawn out.
What should those incentives be?
Firstly, all fake market economies will fail.
The doctoral degree reform is a classic.
The principle was used in Soviet Union.
They set quantitative targets.
Like how many tons of nails to produce.
Anyone who runs a nail factory understands that if you add -
you reach the target more easily, if you add lead to the nails.
That makes the nails useless, but the goal is reached.
This applies to Finnish doctoral theses.
And that's why... -Björn wrote his in the US.
No no! I defended it here, though I wrote it abroad.
The problem is you can't play market economy. I agree fully with Jorma.
Students are the main consumers of universities products.
Their voice counts. But it's hard to be heard without dough.
In market economy, you put your money where your mouth is.
In the end, when SYL and other student organizations -
oppose tuitions, you dig your own hole. You need money you can use to vote.
That is term fees.
Petteri and Ville, you both founded your first business in university.
What should the universities role be in creating successful startups?
I think Björn's and Jorma's views are conservative, if you say that -
universities should bring students at the centre.
When Aaltoes was founded, I don't think it was the university, -
but it was the students who brought themselves at the centre.
And started to organize these events and Stanford cooperation.
The university did react quicker than in the years past and gave support.
Students in other universities can do the same -
and elevate themselves.
This startup discussion, on government subsidies and all, -
is a bit useless. Can we found something? Do we need subsidies?
Startup entrepreneurship is very simple. If you want to help it, -
start one, work in one, or fund it. That's it.
All support from the government or culture is a plus.
In principle, like Risto said you need to be in it. Find, work or fund.
In a country the size of Finland a handful of people can create -
major changes, and others follow. A snowball effect ensues.
That's about to begin here. I'll probably burn for this prediction, -
but I'll bet that we'll have a significant number of firms.
Firms like Rovio and others.
How much do you think Rovio got in subsidies?
A few hundred, I suppose.
As much as they were able to get.
I'm just surprised.
They got nothing from the government they needed to succeed.
That was cunningly said.
That's not necessarily true.
Rovio is a good example, Applifier another. Frosmo as well.
These companies got their success -
through a near death experience.
It might be that things would've been different for Rovio -
without those subsidies during the hard times.
This makes investing interesting.
Often the first thing you invest in is not the one that succeeds.
It's the second thing.
Tina, how much have you got in subsidies for Eat.fi?
None. -How many users do you have?
150 000 per month.
You have an odd understanding of business.
Burn rate is not a guarantee of success.
Our iPhone application, I won't say what we'll put in it, but anyway, -
it has more users, or downloaders, than Sampo bank's application.
I just want to say, Danske Bank has ruined Sampo's excellent old app.
This is a different thing.
I have to tell a story... -It's a beautiful app.
I have to tell a story, that when we sent Björn a...
Sorry.
We sent Björn an email on this gathering, and I made the mistake -
of using words Sampo Bank, in ten minutes an angry phone call came.
Sorry the mistake.
Let's ask a question from the audience.
How many knows Eat.fi?
Pretty good.
Rovio, Applifier and Frosmo. How many have heard of all three?
Not many. An interesting question. Risto?
Regarding subsidies, back in 90s during the horrible slump, -
when I often lacked the money for food, because I paid salaries first.
It was really hard for F-Secure for years. I never applied for subsidies.
Perhaps the most stupid thing I've ever done.
I had this silly preconception that Tekes is an alms-house.
You go there when you can't make it on your own.
I was totally wrong.
That's not how it is.
You get money for a bit more product development and marketing.
Why not use it? Thankfully I learned this in 1994.
Six years after founding the company. It did a lot of good to F-Secure.
I don't mean you have to Tekes tomorrow, but it's no harm either.
If I quickly reply why haven't I applied, when I came here, -
people said go to Tekes, it's free money.
I thought why doesn't everyone apply for it.
They said it's for market research.
I thought I don't need it for that.
I need it to create the product, and you can't get it for that.
They said you do, but you need to write in 'Tekes language'.
What's this Tekes language?
They said just send a business plan there.
I might have misunderstood this all, -
but perhaps that's why more people don't apply for subsidies.
It's complicated and difficult.
And that's a poison pill for a startup, where you don't want to wrestle -
with bureaucracy for six months, you want to do things.
A short question for the audience.
How many knew that if you start a business with three friends, -
you startup a business, that you can apply for hundreds of thousands?
Quite a many knew that. Jorma? -A pretty good message.
Yes, this funding issue is interesting.
It's in a sense very central, but there're many misunderstandings.
Two points: firstly, -
4% of Finland's GDP is research and development.
R&D funding is exemplary here.
But we must remember how it's structured.
Public versus private funding is 30 against 70 percent.
3/4 is private funding, 1/4 is public funding.
In the US, the share of R&D of GDP is slightly larger.
Guess the ratio?
Public funding is proportionally greater there than in Finland.
It's the homeland of innovation, where many things regarding -
startups and their dynamics are exemplary.
Public funding is a significant in the way the US creates innovations.
This is good to remember. I can't remember the exact percentage, 40?
Clearly higher than here. National Science Foundation and Pentagon -
and so forth. And both small and big companies use them.
One should be careful not to fall to stating the obvious.
Then another thing, which is more important and interesting.
I'll use an example.
Jeff Bezos, whom I know well from 9 years back, CEO of Amazon.com.
The company's around 12 years old.
How many of you knew that Amazon, -
during its 12 years of existence, -
for the first 10 years made loss. For the first 10 years.
Their work was complete agony. Funding was always a problem.
Jeff Bazos gave an interview 3 years ago saying, -
that all their great ideas and development came during -
their darkest hours, when the till was empty.
This has something fundamental. Money is a good servant.
But it's best when there's not too much of it. Many good startups -
have been spoiled by too much money.
And many large companies have been spoiled by that.
And I've been thinking about this.
There are no quick clear truths here.
And the problem of scarcity, -
and that Tekes is good at solving it -
when used properly by small companies.
In all its red tape, the Finnish innovation system is reasonably good.
Ville, if you please.
If you think, when for example internet businesses are created, -
it's mostly about gathering a solid team -
and starting to fuss about something, to build something, -
and then see what happens.
This is what Tina was talking, iteration.
In addition to product development, you also get feedback, -
but also the working environment changes.
Anyone who started something 3 years ago on Facebook, -
sees that the rules have been redefined.
US firms in California use the term 'pivoting'.
From time to time, after three or six months, -
you keep the team and most of the firm, -
but you make a certain change of direction.
You estimate, if you adopt a wholly new business model.
I use the sailing term 'tacking', which illustrates your going -
against the wind, that you have a general direction -
but you make corrective moves.
Where we have challenges in public funding is that its project based.
You commit to a certain long time plan in advance.
And you stick to the plan even when you know the direction has changed.
That's why the instruments of public funding should be changed.
Petteri, do you have an investors point of you to this dilemma?
Well, our great opportunity and problem is -
is that we don't have angel investors. Risto is an exception.
Jorma also. -Well Jorma too, but if you...
Björn isn't yet.
And I've thanked myself often of this wisdom.
Angel investing is often more a hobby for the rich than a business.
For several reasons there are no people -
who've exited a big web firm, -
and now invest in small startups and help them.
Then the role of the government -
is to sprinkle small sums around, -
to anywhere, because choosing the right firm is nearly impossible.
We have a sharp focus, we all have over 10 years of experience -
and still we have to almost throw dice when we choose where to invest.
How can Tekes or other body decide what is a success idea?
In principle, scattering small sums around works.
If something doesn't succeed, don't fund it more.
That's important I think.
There are stories of firms that live on subsidies and never die -
even if it would be better for everyone.
In the beginning, sprinkle it around and let all flowers blossom.
Try to provide incentives for angel investor, that if they put in money -
the government can add a certain amount, -
and private investors can buy them off.
Tell me, if it's really profitable to invest in 20 cases, -
and you can safely calculate one of them will be successful, -
and you get your money back, why don't private people invest?
Why the government? I don't understand.
It's a culture thing. The investments are very small.
If you had invested in our portfolio, you'd be well-off today.
At least on paper, these firms haven't been exited yet.
But taking care of the investments is hard work.
But why do you need the government?
I can accept that if we have a genetic fault -
that we don't want to take risks, so the government can compensate.
But it doesn't sound very credible.
For example Israel is relatively... -Yes, in these countries, -
where a lot happens via defence budget, the argument is valid.
In the US too, a large part of the subsidies are for defence.
Even in Israel, where 90% of startups appear to have began -
on defence money, and there are good mechanisms to bring -
the products to private market, even they build an acceleration program.
That's self-evident, Israel is socialist, but why should we have it?
Björn, government is needed to catalyse change.
When I sit in these panels, it's great to have one social democrat -
but now here are five.
Björn, do you think that if our system has deficiencies, -
dry patches where nothing grows... -And you think it's good to have -
government to fertilize it? -If someone has to water it, -
the government is a good candidate. -It shouldn't be only watered, -
but fertilized. -Well, let's fertilize it too.
The target being, that government doesn't have to put nothing in later.
That's why the acceleration program was a good idea. We had none before.
Only institutional ones attached to universities.
Tell me... -Please wait, Björn.
The argument is, why don't you accelerate that dry patch?
If it's such a good idea to accelerate a dry patch.
Because it's not my patch.
You can buy it. It's cheap.
We're talking of a patch that no one owns.
It's an abstract phase of growth business.
Do you think that helps your argument?
Is this sophistic or business?
Why on earth it needs government?
Because no one else does nothing.
Because it's not worth it.
Try to listen. This is a good example.
Finland had no acceleration programs. The government had only to -
name a work group I chaired... -Ah! That clarified it.
We called out acceleration teams. We'll select the best, -
and give you a tag saying you're Vigo acceleration teams, -
but sadly nothing else because the government doesn't provide more.
We got a mass of applications. Serial, international entrepreneurs.
Good people, two being here.
They started acceleration teams. Some are now raising funds.
It's completely private, but the government catalyzed it.
What did the government do? It was your committee, -
you didn't give money, just stamped them as Vigo teams.
What did the government do? -It started it.
So you didn't even invent it?
No, it was Ministry of Employment.
So was it Mauri Pekkarinen?
I don't know, you can ask him.
I'd believe in the idea, if it'd be yours.
It was nevertheless a good idea, even if Mauri invented it.
Björn, they're chairing this panel.
Jorma, you've always been the formalist.
We all have our ways to get our turn.
I would return to the influence of culture, -
because it's significant.
Israel isn't a bad example. I've travelled there and examined it.
Israel is the size of Finland, -
there's the same understanding of the importance of education, -
since there are no natural resources.
Israel has 83 startups listed on NASDAQ.
Not small though. 83.
Finland has none. Sweden has 8 or 9.
If you talk to Israelis, they say 'Yes, it's pretty nice, -
but our real problem is, that after they're been on NASDAQ for 5 years -
they're sold away'. And the founder thinks: "Great, cashed out".
They say, what we need is a firm like Nokia, a big company that dares to -
grow long term.
For them, a real problem is the culture of founding a firm, -
but there's no industrial tradition, so it's just an instrument of trade.
NASDAQ is just the vehicle used to sell firms. Many Israelis say this.
They've tried to find ways to make the firms midsized or large.
Checkpoint, which is the largest, isn't very large.
150 to 200 million.
It's much more in turnover. From billion to two. -Well, okay.
Finland has an entirely different culture.
Startups are rare.
We need watering cans, private or public.
As long as they don't create permanent subsidy mechanisms.
That's what I worry. I said how permanent subsidies are harmful.
They create weird safety mechanisms -
that are a pest in our economy, not only in IT-business.
Especially elsewhere.
And I've had my nose put out: "That's not right, we need subsidies."
I agree, but there shouldn't be permanent subsidy mechanisms.
These culture elements have an effect. I think we need watering cans -
in Finland, whether it's wielded by Stefan Wallin or Pekkarinen.
Tina, please.
That's interesting: why wouldn't private investors fund small firms?
What I've seen is that Finnish investors don't have -
full understanding what goes on in the net. They invest in a business -
that's hyped, but whose product is rotten.
The question is, should subsidies be targeted to those just starting, -
when they're making a demo that can be shown to private investors:
"This is how it works and how it makes money".
But I don't know how investors can be educated to spot -
what's a good product and what's hype.
Let's change the subject.
Ville, you started Hybrid Graphics during your freshman year.
13 years later it was sold for 30 million Euros to nVidia.
Can you tell about the beginnings? We hear a lot about growth business.
We hear we need it, but no one can name firms or tell what they do.
Could you tell the story of Hybrid Graphics from the beginning?
We didn't create "Hyba" to be a growth business, -
but to be able to do computer graphics technology.
There were no jobs in the trade in Finland.
Neither could you study it in university. In fact, you still can't.
The only possibility was to do things on your own.
And we didn't understand business at all. We were a bunch of hackers -
living on pizza and soda, and that's how we spent the 90s.
Amazing, if you compare it to today.
No startup has the chance to play around for years.
Today you have to go international immediately.
Actually, two people here helped us become a growth business.
A known Finnish mobile phone firm contacted us in 2001, -
and asked if it's possible to bring 3D technology to mobile phones.
So we did a research project, and said yes, it's possible, -
and that it's a damn good idea.
So we started to grow and license the technology -
to mobile phone manufacturers.
From that we were able to quickly grow the business, -
and partly thanks to Risto, we got a big Finnish investor, -
Nexit Ventures to put in the necessary million.
After a few years we sold the firm to the US, because Finnish companies -
like Nokia simply don't buy Finnish firms. We have no exit markets.
For example, Google buys a new firm roughly once a week.
Jorma Ollila, why doesn't Nokia buy Finnish startups?
There's no corporate policy. If it's interesting, we consider it.
The essence of business isn't the habit of Cisco or Google -
to constantly buy firms.
There are many big IT firms that work exactly like that.
It's largely a corporate culture thing.
Nokia's DNA is different, -
but it's not an alien idea to buy businesses.
But the idea that, because Nokia is Finnish, -
it should buy Finnish firms regularly and do charity.
That's philosophically very far.
That's odd.
There has never been a principle not to buy Finnish.
We seldom go out shopping. That's the reason.
Turning our attention to national economy, -
Rovio, who developed Angry Birds, recently raised 30 million -
from foreign investors.
The chairman, Kaj Hed, said recently -
that Rovio is planning to go public in NY Stock Exchange, -
within a few years.
What is the effect of these capital injections to our economy?
Björn, do you have a comment?
I'd connect this with what Jorma said, and others...
Somehow Finnish... Jorma, this goes against what you said, -
I know I have less patience when looking at economy.
I think it's extremely important that people can make money.
That they can realize their investments, and give them to -
the hands of the more skilful.
Because the startup founder isn't necessarily the best -
to run a firm with a 100 million turnover.
An economist's view point is that market economy creates -
an automatic distribution of work.
When people get a high enough price to sell the firm, -
it's worth to consider.
That's part of the way market economy works.
In fact, the great problem in the Finnish culture -
is the fear to get rich.
Or disapproval.
If you sell your firm after 3 years and you become -
a serial entrepreneur, as you say, it has negative associations.
It's very important that we can develop exit markets -
domestically, Nordic, European, whatever.
It's vital to our economy that the exited entrepreneurs stay here.
And invent new things, or act as business angels or entrepreneurs.
The main thing is that after you've made money, you stay here and -
invest it here. All tax decisions now made take us to the opposite.
Supporting this outlook in the politics, that we need capitalists, -
technologically focused capitalists, we need finance capitalists.
The country doesn't develop without investors.
I fully agree with Björn.
But I'm an industrialist, and interested in long term work, -
and growth from that.
Growth and midsized businesses and bigger.
I have nothing against making money. You can cash out when you want.
I just didn't realize it in 2001 in Israel, when there was 43 in NASDAQ.
Now there are 83 after 10 years. Really interesting.
I hadn't realized it was a grief for them.
That it couldn't be trading activity. That they wanted an industrial logic.
In fact, the synthesis must be -
that a society is healthiest -
when there's a balance between the two.
Or, in Mao Tse Tung's words: "Let thousand flowers bloom".
Petteri. -I have to say, after 14 -15 years -
in business, I've never seen an entrepreneur who'd care about -
Finland's tax rates. It doesn't stop you from starting a business.
Especially capital gains tax. -I have a story to tell you.
Last week I met a team with very promising technology.
My advice to them was: since you have this technology, -
whose taxable value is nought, -
be careful where you establish the business, -
in case it makes a lot of money.
This is what a responsible adviser does. A pity you stayed in Finland.
My advise would've been don't waste your time...
This was a larger organization, they even had lawyers.
Björn, let all flowers bloom, even those who don't think of the taxes.
There are many. -Yes, though it's an interesting process -
how there are less in the second round.
It's exactly like that. -No one thinks about taxes in the first round.
That's why Mandatum was a Finnish firm.
Ville, we must return to you.
After Hybrid Graphics was sold for 30m, what happened to the money?
This violates your intimacy.
What happened?
A large part went to investors, because they carried a great risk.
And when investors gain funds, and since there was a few other -
successful exits in their portfolio, they were able to raise a new fund, -
and invest more money in domestic technology firms.
We founders, who'd done long hours for 12 years for small pay, -
got a compensation, like the employees who had options.
The government got a significant slice.
It's important, what happened to the money left to the founders.
We all have started new tech firms -
and, or, work as investors.
Or we work as sparring partners. I'm hugely proud what it's evoked.
I counted that around 14 firms have born from it all.
Most of all, I'm proud that none went to work for a corporation.
As time's running out, -
we've invited here politicians, economic leaders, -
students, researchers, and others, and would like to hear a message -
from the panel to each of these groups.
Starting with politicians, what should be done to create jobs, -
instead of supporting unemployment?
Make Finland more able to compete.
How? -Cut taxes, there's nothing else.
I'd suggest that a few central politicians, -
you can decide who...
They should gather 5 - 6 central politicians, -
a similar group of economic leaders, -
and sit down to think why Finnish firms do not invest in Finland.
No one in Finland invests here today.
After facing the facts, execute the necessary changes to create -
investments in Finland. -Jorma, so what's the change?
It's taxation and supporting central growth parameters.
Not only taxes.
Tina, a message from a startup entrepreneur?
To who? What? -A message to politicians.
I'd say treat small firms differently than large, -
regarding e.g. hiring and VAT reporting that has to be done -
when putting up a stand to sell apples.
If you want to hire someone to hand out flyers, it's quite a process.
I've been said, find someone who's self-employed. Not a good sign.
Others, a message to politicians on subsidies or something else?
You should look at the capital chain as a whole. I mean the chain from -
funding an idea by investors, which is patriotic work and should be -
recognized. So Björn would too become a business angel.
From there to acceleration programs, VCs, private equity players, -
listing markets. How many new firms have came public in -
Helsinki Stock Exchange in the last 3 - 5 years?
Hardly any.
Ones that made an initial public offering.
Talvivaara came through London. It wasn't an IPO.
Tikkurila, not many. In Stockholm, there are 90.
And that's really modest.
The whole chain is crippled. There's low hanging fruits, -
small steps that would help, catalyze.
The private sector does its thing, and builds a solid foundation for -
the capital chain, but the government is needed as a catalyst.
Petteri. -Perhaps for the universities.
Let the innovations flow away.
Building venture organizations for schools is useless.
It should be lean, so that researchers can leave with the innovations.
Because the idea is not valuable, and it's pointless to build obstacles -
to prevent the ideas from leaving.
The organizations don't help the ideas.
Another thing, I admit taxes should be cut.
When I sell the next firm, I want to pay 21% instead of 22%.
A modest aim. -It changes things.
Media is also present in numbers. What do you want to say to them?
Ville? -It would be great if media, -
particularly business media would seriously follow startups.
It easily comes down to just showing numbers.
Angry Bird's 30m doesn't feel anywhere, if you compare to -
the largest corporations' turnover.
Startups must be evaluated by startup criteria, and understand their -
influence in the future.
That Accel and Atomico, some of the greatest European funds, -
invest 30 million, is a cosmically huge thing.
I'm surprised it hasn't been headline news.
Björn?
If we agree that there's another problem in addition to taxes, -
it's the culture.
A common nominator that Finns don't want to startup -
with the speed you'd wish.
Media has central influence. If something shapes culture, it's media.
It's true almost by definition.
If media would make a new year's resolution, and use the word success -
more often than filthy rich.
Because if someone succeeds in here, the first thing -
after an article saying it's a success, there's 15 articles -
in yellow press where words like filthy are used richly.
Unless we're not allowed to build even small heroes who succeed, -
who do things for economy and homeland, -
it's all useless.
Risto? -Two things.
We've several examples of growth businesses that've been first -
covered in Times, NY Times, or elsewhere.
After that Finnish media finds these firms. How can that be?
If even then. -Well, they find them after that.
Journalists read these papers.
Another thing has to do with incentives.
Think about business angels, if you want honorary councillors to invest.
Where do you get the idea they have money?
Otherwise they wouldn't have time to hunt.
It's on the firms tap.
Not in entrepreneurs firms. Except for the entrepreneur.
We should build an upside -
taking part into a risky new business.
So that media wouldn't -
see that as an opportunity to shoot him down, that he's bound to fail.
Ventures are risky, it should be accepted.
It may fail, but it's great if a successful person comes along.
It's patriotic.
Tina, please. -I want to fully agree.
Finnish firms are covered more in the US than here.
Secret Exit's Zen Bound got an Apple Design Award and many others.
And I haven't seen that in Finnish Media.
But I've also heard that journalists don't want to write about these, -
because what if it goes bankrupt, or isn't the next Google.
I think there's a golden mean. In US, they look for the next big thing.
They really embrace the idea that they found something first.
You don't have to write: "This'll be the next Google killer!"
You can say: "This is coming and exciting."
"These are the challenges."
You can be neutral, -
but still say later: "I was first, I scooped the NY Times."
Wouldn't that be nicer than vice versa?
Ville? -This might be the time -
for a business journalist to learn from a sports journalist.
They hype Finnish athletes, though we know they'll lose.
To students?
Here's a 1 000 students. What's your message to them?
Don't study for 7 years.
Risto? -Entrepreneurship is a great career.
It's a grand career. Try it.
See the possibilities. Make it an option.
It's no longer a career risk.
Google looked for people from startups.
Everyone had a degree from Harvard or MIT, but the difference was, -
who'd been an entrepreneur.
If you want to the big league, -
entrepreneurship is a big thing to have in a CV.
In fact, you can do a post-graduate, just don't think it's useful.
It actually has one benefit: you understand it's useless.
That makes life a lot easier. You don't have to wonder about thinking -
do you need to do post-graduate to get the job.
If you understand everything relies on entrepreneurship, and attempt -
to create something. It's easier to do without a standard image of -
what successful people are like. That's easier if you've done -
a useless degree in the beginning.
Tina, please?
I'd say take responsibility to learn things you don't know yet.
Nobody's gonna spoon feed you.
If they're doing it, you're doing it wrong.
In the age of Google, if you're thinking "this should be done, -
"but I'm no coder or designer". Google it and learn how to do it.
Do it, if you want to do it, or be silent.
Another thing...
Another thing, study abroad while in university.
It's a national shame, that Finnish students are offered more places -
to study abroad than they are willing to take.
It's a great opportunity to learn when you study a year abroad.
The last question:
We've talked a lot about the current state of the nation, -
not so much about welfare.
How do you help this country to be a great place to live after 20 years?
Starting from Ville.
Now I'm building a growth business as quickly as I can.
The rest of my time I spar domestic startups.
And I invest as much as I can.
Risto?
I use 2/3 of my time to growth entrepreneurship, -
contributing to prosperity.
That's investing and board work, sparring, helping.
The rest is arguing with state officials and politicians, -
with officials of the Confederation of Finnish Industries, -
and with everyone who should be doing something for welfare.
Tina?
Who am I addressing here? -How are you helping Finland?
I was thinking that it would help many, if you'd put up a Wiki -
on basic small things, -
like the penalty interest when bills go overdue.
How much is the percentage you demand when someone doesn't pay.
The small things that make people hesitate.
These things keeping people from starting, because they don't know.
You learn these from others from mouth to mouth, -
but there could be a guide:
if you have an idea, do this next, what do you need, -
which paper goes to which bureau, and what you should write.
That might be useful.
Björn? -I use 3/4 of my time with 3 CEOs.
Trying to tell them the world has changed for good, -
that the future world has different demands.
I tell them that by sitting in interest groups or committees -
they don't achieve anything.
We don't talk much about technology, it doesn't change much in our trade.
We talk more about how to rationalize these companies, -
how to find the customers.
The future of many of these companies', and Finland has -
big firms too, and especially those in forestry, future depends on that.
The last 1/4 I speak in front of an audience, 1/3 of which thinks -
I'm a total dummy, some think why is he like that, and 1/10 agree with me.
I still think it's meaningful. Someone has to say out loud -
that the consensus is not always right. We need new thinking.
Wasn't it 15% -3/4 and 1/4 make 1.
But there's some left over.
Petteri. -I use 4/4 of my time with -
not 3 but 8 CEOs, we've invested in 12 firms during the last 15 months.
That's when we started. If it picks up pace, after 5 years, -
we have a portfolio of 50 firms that's known globally.
Our firms have raised 30 million internationally, and we want to -
accelerate it, and get 100s of millions from abroad here.
We'll get many good firms, some will die, some will be successes -
like F-Secure or Rovio. That takes my time.
Jorma?
I use 3/4 of my time with CEOs of 2 large companies, -
to make sure they survive the pitfalls we've talked.
They have a lot to do with Finland.
1/4 sometimes goes to seminars, I had 3 today.
This was a peculiar day.
I still study, because it keeps my mind active.
I have about 6 startup investments, a fantastic experience.
I've seen good times and bad, all. Some really good ones too.
Finland is in a sense closer, though I spend 3 - 4 days a week abroad, -
all vectors begin to turn towards Finland.
If I retire at 70, I'll stay in Finland.
I'm truly interested in this country, how it could do well.
Thank you, our brilliant panellists: Ville Miettinen, Risto Siilasmaa, -
Tina Aspiala, Björn Wahlroos, Petteri Koponen and Jorma Ollila.
We thank our panellists, have to say we've a tough row to hoe.
We only need a hoe and a worker. The shop was out of hoes, so we -
got each a pair of gloves so they can pick the hoe when they find one.
We got the mitten.
Before we started organizing this panel, we were told Finns -
say thanks too seldom. Take a comfortable position, now we thank.
We thank all those who helped to make this panel possible.
After panellists, we thank the Centennial Foundation of -
The Federation of Finnish Technology Industries.
Thank you, Mervi and Jukka, you've been indispensable.
Thank you, PricewaterhouseCoopers, TFiF and Sini-products for support.
Special thanks to student unions, entrepreneurship societies, -
and other student organizations for helping to organize this event.
We got 9 busloads of students from 9 towns in Finland. -Applause, please.
Thank you, Tuula, Hannu, and Aalto University for consistent support.
Thank you, Arctic Startup, -
Confederation of Finnish Industries, and Net Profile, but -
special thanks to the wonderful Aalto ES team that's organized this event.
Without this skilful team, Aaltoes wouldn't be anything.
You can't find a more flexible team.
And finally, thank you, Mikke, Patrik, Markus, Kristiina, Peter, -
and many others, who've spend a lot of time helping us.
Thanks to all coaches for being there for us.
Special thanks to you, the audience for being here today. Thank you.
However, the event doesn't stop here. You're welcome to continue -
the discussion outside on the piazza, which is in your disposal tonight.
You can share opinions on paper, video and Actpoint touch screen.
The best ideas are simple and often come true when said out loud.
We urge everyone to participate. -Twitter feed provided this, -
although I'm not good with sarcasm, -
the real content of this panel will be the startups formed on the piazza.
Looking forward to that. -Good luck and success. Thanks!
Subtitles: Johannes Sumuvuori Saga Vera Oy, Oulu 2011