Tag Archives: politics

Why Will Finland Fail?

“To understand your customers, get out of the building says Steve Blank. Mika Marjalaakso says that to find a big problem and understand customers, get out of Finland.wink

A week ago or so I had a really good discussion thread on my personal Facebook page about why Helsinki and Finland as a whole suck as a location for most startups, and what should be done to increase our chances for success. Don’t get me wrong. I LOVE startups but I “HATE” the hype. I do get it that to drive things forward and inspire people hype is a vital element.

I personally think – may be I am old or something – that it is better to say MY AIM IS to become the King of Norway instead of saying I AM the King of Norway. So, whenever anyone says (i.e. claims) that Finland or Helsinki is something that it clearly is not – that doesn’t inspire me because it is not a fact but a reality distortion of grand scale.

This is my list of three reasons why I believe Helsinki will never become the #1 startup hub in the world.

There are A,B, and C startups. A will be successful without any accelerators. They are the best of the best. B are good guys that some coaching in some cases might help a bit. C will fail anyway no matter what you do.

1. A good place to set up a business is a place where you have lot of customers who can buy your products, and you can be close to them to make sure that you are solving THEIR problems.

2. A good place for a startup is place where you are close to an epicenter of an existing or emerging ecosystem and its dominant players … and the cutting-edge, close to guys who will buy your company unless it becomes a really big.

3. A good place for a startup is a place with enthusiastic consumers and companies that are more looking at the positive side what a new product can bring to their lives and businesses and less worried about what can go wrong.

Abundance of capital is not that harmful either.

The above three reasons are not that important if your product can fully be distributed digitally, i.e. games. Many big problems, however, are far away and it is difficult to fully grasp them from Finland – you got to be there, not here.

So, I do believe that Finland can become one of the leading locations for startups in Europe for the B class, but it is extremely difficult to find reasoning why the A class would come here. We are still only five million people, far from big markets and the whole EU is a declining continent. Finland always do well in all kinds of nonsense competitions – and politicians just love that – but still nobody does direct investments here – if it would make sense, they probably would.

Is there anything we could and should do?

To summarize the three big ideas from my Facebook post comments:

  1. Finland can’t copy the Israeli model which is working due to very unique history and close ties.
  2. There are hundreds of wannabe Silicon Valleys, but there is only one Silicon Valley.
  3. Our neighborhood is pretty amazing, three neighboring countries, Finland, Russia and China.

So, instead of west we should look into east. Politicians should take immediate and drastic measures to build strong ties with China and Russia, and make it ridiculously easy for the best minds in Russia and China to relocate to Finland, enjoy our excellent infrastructure and thousands of lakes. For Finland’s future, this is more important than investing in those unemployed people that don’t like to work.

Finns are traditionally at their best when put against the wall. The world is at war. Nations are fighting over scarce natural resources and control over various ecosystems that control value creation, and most importantly value capture for a nation. Our Welfare State in its current form is unsustainable. I have coined up a new term – the Entrepreneurial State – which means a dream state where majority of citizens understands how value at the national level is created, and the underlying legal and moral framework that offers strong incentives for each citizen to create value. This doesn’t mean there wouldn’t be social security at all but too much social security seems to kill motivation for a way too many.

To summarize the primary ways how value at the national level is created:

  1. You sell your unique resources (e.g. oil, salmon) to other nations.
  2. You steal from other nations or borrow money but never pay back.
  3. You have competitive companies that export products to other nations.

Clearly Finns can’t create value through the first two options. So, our only and last hope is to build companies that are globally competitive. That’s our only option. We have a great infrastucture, skilled and educated workforce, beautiful nature etc. – these, however, itself don’t create any f***ing value. But, they can be leveraged to build great companies, to lure tens of thousands of Chinese and Russian people to move over here, and perhaps with the value arising from these companies we can better support our aging people.

Let’s open our borders for skilled Chinese, Russian, Brasilian immigrants to help us understand what are the big problems out there and build great companies here to address these problems, and win rather in direct investments and lose on these plethora of non-meaningful statistic competitions.

I believe Finland could prevail but there are too few smart politicians who could quickly drive through the required unpopular changes, many of which go against the social democratic agenda. Why not to start right away from simple, concrete things.  Things like making it easier for skilled foreigners to come over, get a working visa and set up a business. Things like making it easy for our expats to move back and get a citizenship for their spouses. Little things, every day, right now.