Finland, Public Policy and the Helsinki Spring

Steve Blank

www.steveblank.com

Twitter: sgblank

Slides: www.slideshare.net/sblank

Corporate Lifecycle, Innovation, Startups, Founders, Ecosystem

Corporate Lifecycle, Innovation, Startups,

Founders, Ecosystem

Why Should I Care?

Why Start New Companies in Finland?

Because Old Ones Die

Corporate Lifecyclesare Getting Shorter

Disruption

Technology, Globalization, Regulation, Consumer Taste

Disruption

Technology, Globalization, Regulation, Consumer Taste,

Competition, etc.

Job Growth From Existing Companies will decline

Job Growth Will Come From New Companies

Job Growth Will Come From New Companies

Startups

Entrepreneurs are Coming to Finland to Start Companies

First -What’s A Startup?

Six Types of Startups

Startup

Lifestyle Startups Work to Live their Passion

• Serve known customer with known product

• Get paid for their passion

Small BusinessStartup

Small Business StartupsWork to Feed the Family

• Serve known customer with known product

• Feed the family

Small BusinessStartup

Exit Criteria- Business Model found

- Profitable business- Existing team

< €100K in revenue

Small Business StartupsWork to Feed the Family

• known customer known product

• Feed the family

ScalableStartup

Large Company

Scalable StartupBorn to Be Big

Goal is to solve for:

unknown customer and unknown features

Search

ScalableStartup

Large Company

Exit Criteria- Business model found- Total Available Market > €300m- Can grow to €50/year

Scalable StartupBorn to Be Big

Search Execute

ScalableStartup

Large Company

Scalable StartupBorn to Be Big

• A scalable startup is designed to grow big• Needs “Risk capital”• What Silicon Valley means when they say “Startup”

Search Execute

ScalableStartup

€3 to 30M Acquisition

Buyable StartupBorn to Be Sold

Goal is to solve for:

Internet, Mobile, Gaming Apps

Search Sell

ScalableStartup

€3 to e0M Acquisition

Buyable Startup

Goal is to solve for:

Internet and Mobile Apps

Search Sell

Sell to larger company

Transition Large Company

ScalableStartup

Sustaining Innovation

• Existing Market / Known

customer• Known product feature needs

Large Company Sustaining InnovationInnovate or Evaporate

Large Company

Sustaining Innovation

Large Company Sustaining InnovationInnovate or Evaporate

• Build• Partner• Acquire

- IP - Talent

- Product

- Customers

- Business

TransitionScalableStartup

Large Company Disruptive Innovation

New Division

Large Company

Disruptive Innovation• New Market• New tech, customers, channels

Transition

Large Company Disruptive Innovation

New Division

Large Company

Disruptive Innovation• Build• Partner• Acquire

- IP - Talent

- Product

- Customers

- Business

Transition

Large Non-Profit

Social Startup

Social Entrepreneurship Startups

• Solve pressing social problems

• Social Enterprise: Profitable

• Social Innovation: New Strategies

Each of these startups require different skills

They Can Not Be Taught the Same Way

Each of these startups require different

Government Policies

They Can Not Be Built the Same Way

Scalable Startups Will Provide the Highest Job Growth

Scalable Startups Will Provide the Highest Job Growth

They Require an Ecosystem You Do Not Have

Entrepreneurs

Scalable Startup Ecosystem

• Take risk• No funding• Building product• Thinking through business model

Incubators

Entrepreneurs

Scalable Startup Ecosystem

• skills training • mentoring = experience• networking• shared office• small funding ~ €30K• limited time ~ 6 months

Incubators

Angel Funds Entrepreneurs

Scalable Startup Ecosystem

• it’s now a company• searching for a business model• limited funding ~ €300K• mentoring

Incubators

Venture Capital Funds Entrepreneurs

Scalable Startup Ecosystem

• Large funding > €2000K• Found a business Model• Scale• Multiple rounds of money• Startup Experience outside of Finland

Startup Ecosystem Challenges

• Current policies in:- Capital Gains- Investment Incentives- Immigration

• Cultural view of Risk and Failure

All actively discourage Scalable Startups

Startup Ecosystem Challenges

• Consultants are paid with Tekes money not equity- Few are willing to change or criticize - Are on the wrong incentive system

• Missing experienced startup entrepreneurs- Tekes, incubators, VC’s, etc.

Each of These Steps Must Require Risk

Each of These Steps Must Require Risk

For the Entrepreneur and For the Investor

Public Funding of Private Capital Does Not Work

Public Funding of Private Capital Does Not Work

Each Party Needs to Have Equal Risk

The Goal of Public Funding Should be to Create a Private Capital Ecosystem

The Goal of Public Funding Should be to Create a Private Capital Ecosystem

Fund and attract experienced Incubators & Venture Capital

What Is the One Vision of Sitra, Tekes, Aalto, Finnish Technology Industries?

Find It and Put Yourself Out of Business

Thank You